5 Scary Reasons to Avoid That Startup

Why do so many of us – especially recent grads who might otherwise go into corporate America — want to start companies? Seeing a handful of your peers become tech billionaires sure doesn’t hurt. And the fact that launching an appor a cloud-based SaaS solution costs practically nothing – well, that makes it awfully tempting. So if you have what you think is a billion-dollar idea, sure, take a stab at it.

But what if you’re not the founder? What if the founder is your college roommate, or that guy you met at that third-tier Demo Day? He has a billion-dollar idea, he swears. And he wants you to join the team.

Not so fast. Going to work for a startup is not the same as founding a startup. Being an early employee sounds enticing, but it entails a whole set of traps that can easily make you miserable and maybe even set back your otherwise promising career. From my experience hiring hundreds of employees at startups, here are the five top reasons why you might want to consider taking a pass on that sexy offer from the “next Facebook.”

1. The founder thinks he’s a visionary, but he’s just a mess

We’ve all glamorized the image of the wild-eyed contrarian entrepreneur, waving his arms and inspiring the masses with visions of disruption. But very often these people lack the fundamental skills to run a business. That may not seem to matter today, but what happens when he forgets to pay the rent or sleeps through multiple meetings with investors? (I’ve even met founders who neglected to incorporate!) Picture yourself walking into work every day and dealing with this person. On a good day, he might be inspiring – but on a bad day, he’s probably going to drive you crazy.

2. There’s no job description

“There’s just three of us. We all just kind of do everything.” Nope. The founder should be the only true “generalist” in the company. Even at the smallest company, everyone else is there to do a job. Even if that job involves ten roles, you need to know what those ten roles are. That’s how great teams work. If you don’t know what you’re supposed to be doing, how will you know when you succeed?

3. The funding isn’t there…or even close

Lots of startups begin hiring employees before they have funding. That’s fine. But especially if you’re forgoing a salary, know exactly what you’re getting in return. Are you accruing salary that will be paid when you get funded, or is it just equity? How long does the founder expect you to work for “free?” Companies can only run on vision for so long. Ask the founder exactly where he is in the investment process. How many leads does he have? How much is he raising? When would he expect to close? In the absence of an honest, believable answer, prepare for a long slog with no salary and few resources. In short: no fun.

4. The equity details are vague

Equity is often dangled as the ultimate incentive to come work for a startup. But all equity is not equal. Employees often join a company with a vague offer of “one percent” or “10,000 shares.” Those numbers may sound impressive, but they’re virtually meaningless. 10,000 shares out of how many? One percent of what? How long will it take for all that to vest? And many founders will hold off on creating an actual option plan, claiming that the paperwork is just a “technicality.” But that’s where all the details are. Accept that explanation, and your equity might as well be a technicality.

5. Even you “don’t quite buy it”

Entrepreneurs thrive on being contrarians. They see opportunity where others just see risk. To join a startup, you need to see opportunity, too; but you need to see the same opportunity as the founder. It’s easy to get caught up in the excitement of an idea without really thinking about it critically. To be an early employee of a startup, you need to truly believe in the idea, not just drink the founder’s Kool-Aid. Don’t take the job just because an idea sounds good. Use your brains, not your ears, and if an idea doesn’t make complete sense to you today, it probably won’t sound any better six months from now.

For a certain type of risk-loving person, this will sound all wrong. Some companies do succeed – and make their employees rich – while violating one or more of these principles. It’s a question of your risk tolerance. But joining a startup is inherently risky. Satisfying these five key concerns will eliminate a whole category of potential downside for your career, while maximizing the energy you can put into maximizing your upside.

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