
Ask HN: For employees, is picking a good early startup more luck than skill? - ccajas
I&#x27;ve read blogs and accounts of people joining early stage startups as employees and then seeing the startup go big, either by getting lots of growth and funding, or they become acquired by a billion dollar company.<p>I&#x27;m sure it&#x27;s survivorship bias, since who knows how many startup failures are there (and I think having some of that bias is healthy for aspiring business founders). But when that person joined after being at only one or two companies in their entire career, and then they <i>just</i> happened to join the right company even when it was early stage (when things are most speculative), it feels too good to be true. Did these people end up just being smart enough to predict the winners more easily, and then choosing a job offer from them? Or is it mostly luck at the early stage?<p>I&#x27;ve been at five different early stage companies. Today, two of those still exist and not making much more revenue. One is because they&#x27;re a web agency and not really set to be a huge company. And the other is a startup that seems to be in the same place it was, either spinning their wheel or rather its growth is not very rapid, and still is not really making headlines, four years after leaving the company.<p>I feel like I&#x27;m doing the startup thing wrong, like assuming it&#x27;s mostly luck. When I browse Angel.co picking companies that might be interesting to me, I feel like it&#x27;s just rolling the dice. Is this a correct assumption? Or is there more skill than I take credit for, and I simply lack enough business acumen to make a well educated decision to pick future winners from losers?
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stmw
You are right that there is certainly a lot of luck involved, but there are
many things you can do to improve your odds. Interestingly, the kind of
factors that matter are often counter-intuitive to engineers, so engineers are
probably disadvantaged when trying to pick a good early stage startup.

Some things to pay attention to: 1\. funding and ability to attract
substantial funding from top-tier firms... it's not a guarantee, but it
improves your odds 2\. CEO who values engineering quality and culture: again,
it is possible to be successful without it, but it's far less likely 3\.
business-minded, focused founders 4\. good market for venture-backed companies
with potential for multiple paths to success

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curtis
In my experience, simply finding early stage startups is hard. Oftentimes they
don't even have a web page during the earliest stages, and if they do, you
likely wouldn't be able to find it, and then it might not have any contact
information, and if it does have contact information, you have no idea what
they're doing, to know if it's worth contacting them or not.

I think it might be easier to find early stage startups if you try to
aggressively network in that space, but not being much of a networker I
couldn't say. I guess I should add that I'm in Seattle which seems to have a
much smaller startup scene than the Bay Area.

I got my most recent job through AngelList but in that case I didn't use it to
research companies, I just spammed every startup listed in Seattle that had an
opening I was remotely qualified for, and then just talked to whoever
responded. Before that I had basically scraped CrunchBase for startups in the
Seattle area that had received funding at some point or another. I applied at
a bunch of companies, but I don't think I got a single interview out of it.

This is a long winded way of saying that, yet, in my experience getting into a
good startup is pretty much just luck.

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ccajas
I think I found the last early stage startup I worked at through Craigslist.
This was usually my stomping grounds to find some occasional part time or
contract job and we had a very informal process from first phone call to job
offer.

This guy seemed to have his head on straight, and having both degrees in law
and computer science, felt like a slam dunk combo to run a SaaS business
without getting into hot water. However, sales tanked in my second year of
worked there, and was eventually laid off. Three years later, they're still
around doing buisiness, but I don't know if they're coming or going. You can
sometimes never tell from the outside, when they're not making news headlines
and feels like they could be spinning their wheels.

I live in Chicago, where a lot of startups are B2B more than B2C and don't
really spam hunt most places anymore, because it's hard to find a lot of
information about them.

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mattnewport
You're probably not going to be as good at it as a VC or Angel investor and
there's still a relatively low chance of picking a winner for them so I'd say
yes, luck is probably going to be a significant factor.

You should be able to improve your odds in theory by taking into account some
of the same factors that successful investors look at but since they still
rely on a portfolio to make a decent return and you can't realistically
'invest' in as many companies as an employee as they aim to you're still going
to be quite luck dependent.

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santoshmaharshi
There are so many moving parameters here. You can only improve the odds.

Like joining startups from founder / company which had a good previous exit

Due deligence is ofcourse a good method to choose, but that will also be based
on your own understanding, perception and how convincing the business is to
you. After accounting all, its agains a probablistic choice. By going with 2nd
time startups / businesses, you are increasing your chanceBy going with mid-
age founder you are increasing your chance further.

You can build your own logic this way, of pure increasing the chance type of
parameters. But again, if only 1 percent startups succeed, the other question
is what is success that you want - continual of good salary, getting hired at
nother company, stock option or see the success of company listed and
encashing it. There will be more secondary and tertiary questions to those
questions.

The word "success" will have different meaning here.

By adding tertiary logic to the above explaination you will start finding
answers and selection method to your target. But that too, may increase the
chances for 1 percent to 2 percent.

You may not exactly come to know, what you should know. But you will know,
what you must know - at the minimal level.

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shoo
What are you trying to achieve by being an employee at startups?

Is there an alternative strategy for achieving this goal?

e.g. if the goal is "save a bunch of money and retire to do
$whatever_youd_prefer_to_do"...

> At a big company, we have a career's worth of income in six years with high
> probability once you get your foot in the door. This isn't quite as good as
> the claim that you'll be able to do that in three or four years at a
> startup, but the risk at a big company is very low once you land the job. In
> startup land, we have a lottery ticket that appears to have something like a
> 0.5% chance of paying off for very early employees. Startups might have had
> a substantially better expected value when Paul wrote about this in 2004,
> but big company compensation has increased much faster than compensation at
> the median startup. We're currently in the best job market the world has
> ever seen for programmers. That's likely to change at some point. The
> relative returns on going the startup route will probably look a lot better
> once things change, but for now, saving up some cash while big companies
> hand it out like candy doesn't seem like a bad idea. [1]

[1] -- [https://danluu.com/startup-tradeoffs/](https://danluu.com/startup-
tradeoffs/)

Strategically, it's not great to end up in a position of having to pick
winners, particularly when there's lots of idiosyncratic risk --- it'd be
better to be able to invest in a diversified portfolio of reasonable looking
bets. you can't do this as an employee of startups --- startups typically want
you to work at least 5 days per week, and pay you for at most 5, so its a bit
hard to diversify. you can diversify your capital as an investor, if not your
time. also, investing in things that arent your day job reduces the
correlation between your main source of revenue and your assets (less risk of
both getting wiped out due to a single event like your employer going bust).

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ian0
VCs are an entire industry dedicated to betting on early stage startups and
get it wrong a majority of the time. Seasoned veterans in specific industries
are often blindsided by startups they write off initially. So yes, its luck.

I think more important is to choose a company that has a team you get a long
with, is working on things you find interesting and if possible is aiming to
achieve something you are interested seeing done too. If a sudden layoff would
be damaging for you, look at their runway or stage to mitigate risk.

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0xfaded
I think the unfortunate reality is as a new grad entering the startup scene it
can take a few failures before knowing what to look for. I think I’ve gotten
moderately lucky on try 3, but no exits yet.

My only advice is ask as many people as possible what they think of the
startup, listen to them and don’t be blinded by big promises.

Also, as previous he threads have pointed out, financially you will be much
better if you just go work for a FAANG. If you really want you can use your
accredited investor status to buy into other startups.

