The 2022 market correction has been brutal for tech employees. Not a day passes without seeing the mention of a layoff on Linkedin. Who is to blame for this? VCs who've pumped so much capital into startups that weren't ready to scale? The government for making cheap money available? Startup founding teams who were irresponsible with their financial planning?
There's plenty of blame to go around. Having said that, as startup employees, what's the point of playing that blame game? Is that going to change anything? No. Let's take control of the situation and become 10x better at evaluating tech startups. This post should arm you with actionable tips for doing so. There's zero value in victim mentality.
I saw this post on Linkedin from Adam Fishman a few weeks ago that triggered me to finally dust off the draft in my backlog and hit publish.
While this post is for GTM folks, I believe the lessons apply to all tech employees.
As I'm sipping my coffee this morning, the first question that comes to mind is, "why do people make bad decisions in the first place?" Candidates rarely take the opportunity to verify the actual reality of a startup they're interviewing for. Startup founders and leaders are great storytellers - that's how they raise millions of dollars in VC money. And yes, some did it despite their storytelling. They did it through the strength of their business. Often, though, it's hard to tell one apart from the other.
How can you verify the reality of a startup? You should look at three things. These three things are also what VCs look for when funding startups. Well, at least they did so before the craziness of the 2021 market, during which due diligence was, erm, not that diligent.
Every startup believes that the market they operate in is enormous. Without that belief, they'll unlikely be in business in the first place. It's your job to do your homework on the market. How you define the market, the target audience, and the startup's positioning in the first couple of years can dramatically change the startup's trajectory. So, figure out how large the market is, whether there are enough buyers of the product the business sells, and how the market is growing organically.
I will look at the team next if the startup operates in a large enough market. In addition to evaluating the talent on the team, you need to assess the team's dynamics. Are they first-time founders, or are they repeat founders? What suits them specifically to address this problem and market if they are first-time founders? If they are repeat founders, what was the process and outcome of their past startups? If there is more than one founder, what's the dynamic between them?
It's also important to look at the team they've already assembled. Precisely assess the "head of" or VP level team members leading various functions. Did they grow from within, or were they hired from outside? Where do founders spend more time vs. feel comfortable delegating? Finally, who will you work for - can you learn a ton from that individual?
A great team and a big market aren't enough. It would help if you verified whether there's real traction. How many customers or users do they have? How much are they paying? How does the team find new customers? How sticky are the customers? Where is the business on the product market fit journey?
Through the interview process, ensure you develop a deep understanding of all three aspects. Otherwise, please don't go through with that role. It's easy to have a great market and team, but the greatness is meaningless if the team can't build something people want, show traction, know precisely why they don't have traction and provide evidence on how they'll fix the issue.
To help you with this research, I've curated a list of questions you can ask in the interview process.
Note that I'm not recommending you ask these questions exactly as stated here. Insert them in the natural dialogue with the company and the interview process. I'm biased, but asking these questions also helps you stand out from the crowd that isn't thinking about these aspects.
Market
People.
Traction.
Coincidentally, Chris Walker recently published a set of questions for marketers that I think are amazing. Add these to the list if you're explicitly interviewing for marketing roles.
The combination of the team, the market, and traction should be enough to give you enough signal on whether it's something that feels aligned with your career goals. Unsurprisingly, this is also how VCs pick which startups to invest in. The only difference is the currency they trade in is capital, and the currency you trade in is your time.
One criterion I didn't discuss at all is the title, compensation, role, etc., as those are pretty personal and vary a bit from person to person. Also, note that the person you work for is probably quite important, so weigh that disproportionately in your decision-making criteria.
Finally, here are some fantastic resources to help you find great companies to work for:
If you liked what you read here and are interested in building your go-to-market skills, follow GTM Digest on Twitter, where I post tips daily on leading go-to-market teams.