

Ask HN: First startup. What do I ask so I don't get screwed? - throwaway21618

I'm about to join my first startup in SF as the 9th employee at a company that has sucessfully closed a small Series A round ~2M. CEO has a track record of exiting companies ... 5 so far anywhere from 10M-50M.<p>They have not made their offer yet, but what kinds of things should I be looking out for in the hiring terms? What kind of questions should I as them about options, stock, etc?<p>I hear so many horror stories about companies screwing early employees I was hoping you could give me an idea of things to look out for.
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pardner
As an "old guy" founder with multiple exits, may I suggest you consider
reframing the question in your own mind, perhaps to something like "If I join
an 8-person startup, what are the daily qualities I need to exhibit to become
indispensible to the team, and maximize the chances of not only riding this
pony across the finish line but becoming well-positioned to leverage that
success into even bigger and better things going forward?"

A couple of quick observations:

1) It seems unlikely that the CEO you decribe (5 decent exits, and another $2M
series A) got that far by screwing people by any objective measure.

2) I've never met a rockstar who (as far as I know) worried a lot about
getting screwed... they knew they could walk into a better gig any day if they
weren't getting a fair shake.

3) They probably won't have too much wiggle room on their first offer, anyway.
Sounds like they have enough experience to know what it takes to attract and
retain a good team. So if you feel you can do "a lot" better elsewhere (or
where you are) then that would be the right choice for you.

4) It's worth considering that it's one possible stepping stone on your path.
When I joined Xilinx very early, I was pretty darned sure I was worth a lot
more than the stock I got. That said, it was an awesome education on thriving
in a frenetic startup environment with exquisitely talented peers, and fwiw
that seemingly-meager stock offering bankrolled my next deal, which bankrolled
the next one, etc.

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notbitter
Totally disagree on #2. Walking into a better gig is easy, but it means you
lose years of investment in the previous company (due to dilution,
preferences, loss of retention bonus on acquisition, etc). Many of us on the
engineering side consider that "getting screwed" even if folks on the
executive side think of it as business as usual.

To the OP, I would suggest that the only sure-fire way to avoid getting
screwed is to remain indispensable all the way through to a liquidity event.
Even then, employee #9 may not see much from their equity.

~~~
devs1010
I agree, if you're not standing to get a good share of equity then just look
at it as another job. Of course, every CEO-type, like the guy above wants you
to do what he's suggesting and slave away but you should evaluate your options
and maybe a 9 person startup is too small to not have to work hellish hours,
etc but also too big to where you're not getting enough from out of it since
you're not a founder. All I can say is be careful of what you're getting into
and if you don't stand to gain much from equity or are not sure how long you
would stay with them consider working as a contractor then you get paid for
all the time you work, etc

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accomplice
Here some advice from Ryan Freitas

[http://secondverse.tumblr.com/post/5840343627/so-you-want-
to...](http://secondverse.tumblr.com/post/5840343627/so-you-want-to-join-a-
startup)

Here a couple of red flags to look out for. They are looking to be a billion
dollar company. This is another way of saying that they have giant egos and
unrealistic exit plans. Find the people that know the topography of the exit
landscape and how they fit into it.

Business Development personel without a product: For most startups, its just
too early to have a BizDev person around, unless partnerships are critical to
the success of product

The CEO can't code

They have 1 Jr level designer to feed 6 engineers

Everyone uses Windows, including dev-ops. (run away)

~~~
devs1010
I agree with the "CEO can't code" part, I've worked for two very small
companies (one startup, the other basically a startup but was a few years old)
and both had worthless CEO's who hardly understood anything about technology
which made things rather unsavory at points. In small companies the CEO is
very involved in things and they can really muck things up if they don't know
anything about software development.

And, of course, the windows point, if a developer uses windows I immediately
take off credibility points.

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brudgers
The 9th employee of a company sold @ $50 million is very unlikely to cash out
with fuck you money, regardless of anyone else's level of integrity - it would
probably take close to a double digit undiluted stake to put you there...at
least.

In other words, the biggest way to avoid feeling screwed is to have realistic
expectations and to place a realistic value on any stock options. Remember
that the bigger the target number for exiting is, the more likely that all the
options and stocks will be worth exactly zero.

Good luck.

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descentintomael
I'm on my first start up right now so I don't have a whole lot of advice, but
all I can say is personalities count. In a small environment like that you
need to make sure that you can get along well with everyone there. Get to know
the team a little bit and try to spot any red flags. If the team includes a
few friends or relatives of the founders, that could be a red flag for
nepotism over execution.

