Financially, as if you were an investor. They're the people whose job it is to evaluate startups' prospects, and they care above all about two things: the founders and the market. The founders should be relentlessly effective, and the market should ideally be of a size that can only be obtained by riding on trends beyond the startup's control (but visible to few besides the founders, or the market would already be full). Joining the young Microsoft, for example was a bet on Bill Gates and microcomputers, both of which turned out to be very good bets.
As a hacker you may be able to judge market bets as well as or better than many investors. E.g. I think HN readers knew Dropbox was onto something before most investors did. So if you go wrong it will be in judging founders. For many hackers, especially the unwordly sort, it's hard to distinguish true Bill Gateses from mere good talkers.
I wish I could offer some advice about distinguishing, but that would take a whole essay. The best simple hack I can think of is completely self-serving, but I'll offer it anyway: piggyback on our filter. YC specializes in distinguishing between genuine Gateses and good talkers. We're occasionally fooled, but far less often than a typical hacker looking for a job would be.
If you receive equity, then sure, take this into consideration.
But OP isn't a professional investor. He isn't risking other people's money. He is betting his own financial stakes on the venture.
The outer scope is as you say -- will this company go on to greater heights?
But the inner scope is -- given my personal appetite for risk, can they make pay day?
This person is, I presume, young and without obligations like children or a mortgage. So his or her appetite for risk has much more latitude. But that doesn't mean it isn't there.
I opined on this a while back and was downvoted heavily for suggesting that interviewees ask to see some sort of financials -- the consensus in the ensuing discussion was that it was ok to ask what kind of runway the employer had as a proxy for the underlying financial realities.
In a tough job market, I agree that would be an important factor to consider. But it's not a tough job market for hackers now, to put it mildly. I've never seen such demand for hackers. A good hacker who wanted to ditch a dying startup today could find a new job more or less instantly.
Ok, yes, that's true; lack of job "liquidity" can negate the effects of a hot market. If there are only two places to work in your town, you have to think twice before leaving the safer once.
I never considered it before, but this is another benefit of startup hubs for the best startups: it's easier for people to leave their employers to come work for you. Of course you die by that same sword when you get sufficiently big, but that's a good problem to have.
Having moved from Perth to Silicon Valley I've got to second this. In Australia I'd get approached about jobs maybe every couple of months while in Silicon Valley I get approached every couple of days.
While I primarily do security rather that software, in Australia the approach would be "Are you interested in contract work for Reputable Government Agency / Mining Company / Bank?" while in Silicon Valley is "Hot new VC funded startup looking for a rockstar to secure the social local cloud!".
It's funny how we hand-wring about why there's only an anemic startup culture in Australia. Leaving aside the storied legal barriers, there's the fact that the E-3 visa makes it much easier for bright Australian technologists to decamp to the USA.
Until certain developments in my life made it an impossibility, I was thinking of moving to New York. Because it's the most unalike English-speaking place with a vibrant startup scene I could think of to live in.
 unalike from Darwin. Even Perth is a megapolis compared to that beautiful flyspeck.
A million times this. I'm in Auckland, New Zealand and it's quite scary sometimes when you run in to people trying to pretend they're in the valley the way they run their startup. It just is not the same out here: less money, less funded startups, less startups in general, very few supporting anything more than the founders, if they even do that. SV and NYC are outliers globally.
I would agree, to an extent. (Even) in tech work right now there's a huge bias against remote workers.
The market is hot.... Assuming you live in SF or NYC. It's pretty dry - even for tech - if you live somewhere else. (just look on github jobs and count the number of jobs accepting remote workers)
I'm not sure better tools would solve the problem. Between web based trackers/document collaborators/Skype/Google Hangouts, it feels like we have most of the tools we need (except maybe a good whiteboard tool).
There are biases against remote work (in most cases). In some cases it might be, "oh, we neeeeeed high Bandwidth of seeing people in same room" (maybe, maybe not). In some cases it might boil down to someone equating "seeing butts in chairs" with "working". Or, "we've always been in one room, why change?"
The tools are there: Web based bug trackers, email, Skype/Hangouts, pairing via screen/tmux (granted pairing is an market ripe for even better tools), GitHub... And yes it's some effort to use these tools, but it's a pretty low barrier.
I think the virtual office will become a reality once people overcome their bias... Which is a human problem, not a problem we can solve with Mr Turing's Machine.
Surely I can't be the only person who would be fascinated to read an essay about distinguishing between the talkers and those with real substance. I sometimes wonder myself which one I qualify as: sometimes I feel like a genius sometimes like a fool. Part of the startup mood swings, I suppose, but I see talkers sometimes and think to myself, "Please let there be more substance to me than that."
Unless the OP will be getting a significant portion of preferred stock (viz. it won't be clawed back and it will receive money in the exit), I doubt that evaluating the company as an investor would is a good idea. Piggybacking on the YC filter would mean joining a company that already has VC money, so potential employees should be doubly careful about their percentage of stock and their stock options.
I think what you mean is preferred stock. And (a) the distinction only matters if the startup does badly, in which case it doesn't matter much, and (b) the founders don't have preferred stock either, so an employee is in the same boat as them. (It is vanishingly rare for individual employees to get their stock/options taken back. Zynga is the only recent case I know of.)
It is certainly not true that joining a YC company means joining one post VC funding. Even if it did, it doesn't matter, because (as investors know) the startup you pick affects returns way more than the stage at which you pick it. That's why VCs are willing to invest in B and C rounds at high valuations when they could invest in other (less promising) companies' A rounds at much lower valuations.
As you say, I did mean preferred stock. You caught me before my edit :)
I still stand by the assertion that investors are looking for something different than the typical employee. It seems to be a large risk for a large reward; I don't want to presume to speak for you, but usually investors are both looking for a large exit that an employee will not really benefit from, and can be involved with many companies at once to minimize their risk.
I definitely agree for investors that the startup you pick is more important than the stage its in when you pick it. But that's still involving a significant chunk of the stock even in later rounds. Ultimately, unless the employee is getting a large chunk of the company (in which case he should think as an investor and would be wise to go for YC companies) the decision process should be different.
That article has some dangerous inaccuracies. For example:
If the first technical hire gets 1% while the CEO gets 5% and the other 94% has been set aside for employees and investors, and the CEO has been going without salary for a year already, well, that’s much more fair.
Any startup that's keeping 94% of the stock for future employees plus investors has a serious problem. The CEO has very little incentive to continue working on the company, as opposed to either selling out early for a deal that gives special treatment to the CEO, or just directing resources from the company to himself. You don't want to work somewhere that the founder gave himself 5% of the company.