And if you listen to the advice of many business experts, career professionals, and even well-intentioned friends and family, it can also feel like a risky decision.
But that’s not quite the whole story. I have personally found a lot of value and reward from working at startups, and I know that many of my colleagues have as well. My teammate Aidan Davies (Inscribe’s chief of staff) agrees. So we decided to clear up some misconceptions about joining a startup — as well as outline the top three things you should consider before joining a startup-stage organization.
Most conversations about joining a startup or even just a smaller company center around risk, and perhaps with good reason. Roughly 2 in ten new companies fail within the first year of operation, according to data from the U.S. Bureau of Labor Statistics.
But the fact of the matter is that in today’s economic climate, there is a fair amount of risk everywhere – at startups, established tech companies, large post-IPO companies or even seed stage companies. What candidates need to focus on is not just defining risk, but qualifying it.
“Working for a startup can feel risky, but it’s also a mitigated risk,” Aidan said in our conversation. “There are two components to risk: the downside and the upside. Working for a startup, your downside risk is capped because you always have the option of walking away. That’s basically true in any work agreement.”
Bottom line: in today’s environment, risk is rampant. Every candidate needs to do their due diligence and qualify risk for every single opportunity, whether it is with a startup or a mega tech company.
But it’s worth noting that when people focus on the downside risk of working at a startup, they often fail to fully appreciate the upside risk. In many cases, especially for early-stage companies, the value here is practically uncapped.
“The upside of working for a startup is huge – in terms of equity, salary growth, career progression and many other ways,” Aidan added. “When you join a company at an earlier stage, you are part of the growth story. You share in the success of the company.”
Joining a younger company gives people the chance to contribute in a meaningful, impactful, and visible way. Generally speaking, you are not a cog in the wheel or one of hundreds in a certain unit – you’re an integral part of the organization as a whole. That working model will influence everything from the skills you develop, to the advancement of your career to your compensation and equity.
“You learn so much more than you often do at an established company,” Aidan said. “In many cases, you’re the first person in the function. You have the opportunity to build the business the way you want to.”
Many innovative startups operate in an agile and open-minded way. We empower our team to define the processes, practices, and policies that will help the company grow and succeed. For many people, this is an ideal working environment – one that allows them to be creative and independent, while also integrating with a team of highly motivated individuals working toward the same goal.
You might be wondering how to choose a company that will provide great experience at a minimal downside risk. With the help of Aidan, I’ve developed this short list of factors to consider when interviewing at startups.
Product-market fit is a term that’s deeply ingrained within the tech world. Essentially, it means that the company has built something that fits the needs of a customer. When evaluating an opportunity at an startup, it’s important for candidates to consider if the product or service solves a problem in the market.
Here’s Aidan’s take: “There are many qualitative and quantitative ways to evaluate the product-market fit. For example, you can use a proxy, such as revenue growth, to determine if the company’s offering is resonating in the market in a quantitative way. Fast growth, or anything above 3x year-over-year growth, is usually a good sign.”
On the qualitative side, candidates can evaluate the company’s marketing materials to determine how clearly the business can articulate the issue that the company is trying to solve and the organization’s value proposition. This is especially important if there is a gap in the market that the company is seeking to serve.
A recent study that surveyed nearly 500 startup founders and analyzed startup data from CB Insights, revealed that lack of financing and running out of cash were the top two reasons why startups fail.
Evaluating the health and long-term viability should be part of every candidate evaluation process, but especially in the startup world since these answers will help the applicant better assess both downside and upside risk.
“I wouldn’t be shy about asking the founder, or another senior executive at the company, pointed questions about specific metrics, such as revenue growth, net revenue retention, number of customers, number of employees, customer/employee retention, and so on,” Aidan said. “The company might not be able to share all the details, but they should be able to give you enough information to determine what type of risk you would be assuming if you were to join the company.”
I couldn’t agree more, and I always encourage candidates to ask the hard questions to our founders or anyone else they’re interviewing with.
One aspect of the job evaluation process that is sometimes underestimated or overlooked, especially in the startup arena, is the importance of company culture and values. Even a new or small organization should have a clear sense of who the company is and what it stands for.
I am personally very passionate about company values. The fact that Inscribe’s founders had already started crafting them when I was interviewing for a role with the company was impressive, and something that really made me want to join the team. A while later, after the company had grown, we even went through a thorough exercise to refresh our company values and ensure they reflected both who were are today and who we want to be.
Candidates who do their due diligence during the evaluation process and want to pursue a challenging, but often highly rewarding, opportunity may find that working for a startup wasn’t their biggest risk, but their best decision.
“Ultimately, the company is founded by people,” Aidan said. “If the people have built something great that works or if you believe that they're going to do so, then it can be a bet worth taking.”
Ready to join a value-driven growth-stage startup? Inscribe is hiring! in January, our company announced a $25M Series B funding round after seeing a 3x year-over-year increase in ARR and a 4x year-over-year increase in monthly usage in 2022. We were also listed on the 2022 AIFintech100 and SaaS award lists. So there is plenty of upside to the our story!
Check out our careers page to learn more about the exciting opportunities available at our fast-growing company.