
Questions to Ask When Interviewing at a Startup - xutopia
http://www.instigatorblog.com/questions-to-ask-a-startup/2010/06/18/
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johnswamps
I don't have experience with start-ups, so the question "How much money is
left in the bank?" was interesting to me. I understand that it's important for
potential employees to know the start-up can afford to pay their salary for
more than a few months, but on the other hand I can imagine founders being
reluctant to divulge too much financial information. Does anyone have
experience with asking/answering a question like this? What kind of answer can
you expect? Are there better ways to ask this, such as "How long can you
guarantee that you can pay my salary?"?

~~~
brk
Asking about the funding status, burn-rate, lead investors, and related
details is pretty standard. While most companies won't put this data out in a
press release (well, actually, they usually put out a release when they raise
money, they just don't talk about their burn openly), it's not a taboo
subject. It _might_ be better suited for a round 2 interview though.

They _should_ tell you about funding, if they won't divulge burn rates, you
can usually factor $8K-$15K/employee/month for a grossed up burn rate (ie:
salaries, rent, equipment leases, travel, etc.). Startups that are more
hardware-centric and/or have a large sales force (which == travel) are on the
upper end of that. A dozen guys squatting in Class B office space building a
webapp are going to be on the lower end.

~~~
grellas
These points probably are not relevant to the "interview process" but they can
often be vital to the economic decision whether to join a startup:

1\. What equity will I get and what form will it take? 2\. What are the total
outstanding shares in the company (fully diluted)? 3\. What is the total
dollar value of the investor liquidation preference?

You can get 100,000 options vesting over 4 years, for example, but this could
represent potentially 1% of the company (if 10M shares are outstanding) or
one-tenth of 1% if 100M shares are outstanding or any other percentage
depending on the total capitalization structure. In the one case, on a $100M
acquisition (assuming pro rata participation by all parties), you would get
$1M and, in the other, $100K. Key point: the absolute number of shares is much
less important than the percentage they represent of company ownership.

Same scenario but assuming preferred stock in place holding $50M of
liquidation preference and full participation rights beyond the preference
amount: in the $100M acquisition scenario, your 100K of options would net you
$500K if there are 10M shares outstanding (1% of the $50M that is left after
payment of the $50M liquidation preference) and $50K if there are 100M (.01%
of the net $50M amount). Key point: outstanding liquidation preferences can
(and often do) materially reduce the equity return to common shareholders,
particularly if the company is sold in a marginal acquisition (in an extreme
case, the preferred investors can force a sale where founders and employees
get nothing).

Of course, if you haven't vested in full, and you don't have any accelerated
vesting on acquisition, the numbers get shaved even more. Say you worked 2
years at the startup on a 4-year vesting schedule, you would net $500K in the
best case under the above examples (1% potential ownership that is 50% vested,
no liquidation preference) and $25K in the worst case (.01% potential
ownership that is 50% vested with $50M liquidation preference).

These days, many who join startups as employees after the early stages are
generally aware of the above issues but it never hurts to remember them _if_
the major reason you are joining is for the hope of a large potential equity
payout (if the terms you get are good apart from the equity, and you see it as
more of a "tip" if things happen to go well, then these issues are of course
much less important to you).

Capitalization questions are awkward to raise in an interview but are
important if equity is key to the offer. Interview as is best for you, then,
but make sure to consider these points in deciding how to finalize your deal.

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ieatpaste
"Can I take a glance at your code?" - If applying for an programming position,
this is one of the leading indicators of how well the team works regarding
refactoring, communication, and their philosophy towards coding.

~~~
hga
Hmmm, I never tried that; most firms seem to be very protective of their code.
In general, for a programming position anywhere, it's good to apply the Joel
Test: <http://www.joelonsoftware.com/articles/fog0000000043.html>

~~~
elbrodeur
The chances of you seeing a section of code that is central to their IP and
the answer to the question, "how did they do it?" and, additionally, your
ability to instantly understand it are very slim.

This is a great question for an engineer to ask. Being able to see if the code
is smart (e.g. using shorthand instead of multiline logic), neat and
documented is a great way to get a feel for how your potential future
coworkers work. They've spent the last two to four hours grilling you and know
you, how you code and how you solve problems pretty intimately -- why not get
to know them better, too?

~~~
shasta
Don't you ever watch movies about programmers? That's exactly how it works.
The protagonist looks briefly at some code before declaring "Oh wow, this guy
is good." For added realism, he should be typing the entire time.

~~~
Silhouette
You don't ask to see the code so you can identify the really good places, you
ask so you can run away from the really bad places. It's the flip side of
employers asking for basic coding tests: it's not there to tell you how good
the good guy is, it's there to get rid of the guy with the great-looking CV
who can't write "Hello, world".

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webwright
When my 2nd company got bought (quickly and for a relatively small pile of
money, sadly), I thought I asked a bunch of smart questions of the acquirer
(who I went on to work for for a year and got a bunch of stock from as part of
the acquisition).

The question I WISH I'd asked was around retention. i.e. "Of the people who
touch this product, how many come back a second time? How many are addicted?"
The company was well-financed and the sales machine sold the product REALLY
well. But users didn't love it-- and most eventually churned.

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xutopia
I love the first sentence of his post. So many people forget that job
interviews are _conversations_.

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Silhouette
This sounds a lot like questions someone whose experience of start-ups
consists mostly of reading Hacker News would ask. I wouldn't be offended if
someone I was interviewing asked me those questions, but I sure as hell
wouldn't answer some of them, given that things like detailed financials
wouldn't necessarily even be revealed to current employees. If sound basics
like "we're profitable" isn't enough, that's a no-hire.

~~~
aaronblohowiak
If you expect equity to make up part of my pay, then knowing the financials is
critical. You are basically asking me to be an investor with my time, so this
sentence doesn't make sense: "If sound basics like "we're profitable" isn't
enough, that's a no-hire."

~~~
Silhouette
If we're in this kind of interview situation, where I am openly recruiting for
a position and you are a job applicant, then it is very unlikely that I expect
equity to be part of your pay.

These days, equity is for founders (if you're serious) and prospective
employees who didn't get the memo about the .com bust (if you're both fools).
A fixed salary at a credible professional rate is for prospective employees
you respect, possibly with some clearly defined bonus structure.

YMMV, but I haven't seen any exceptions to this from either side of the table
in a long time.

~~~
abstractbill
_These days, equity is for founders (if you're serious) and prospective
employees who didn't get the memo about the .com bust (if you're both fools)._

Of course it's an outlier, but do you really believe Facebook isn't going to
make a lot of its early employees rich at some point?

~~~
Silhouette
But the point is that it _is_ an outlier. Most people interviewing with a
start-up aren't interviewing with the next Facebook. Even if they are, paying
single-digit employees who are not founders in equity isn't nearly as common
as it used to be IME.

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Aaronontheweb
Well, it sounds like inexperienced bootstrappers like me have a lot to prove
to our potential employees given that we have neither much funding or
experience. Hopefully some early cashflow from an MVP can help make that
easier

~~~
mdg
Just mention all the synergy you have and they will know whats up

~~~
Aaronontheweb
Hahaha!

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quickpost
Engineering Turnover Rate? That's one the of the questions I wish I would have
asked where I work now. The smaller the company, the greater the effects of
turnover are on the product....

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mdg
> Am I going to receive a w2 before April 15?

