Joining a startup? Read this.

Here’s a braindump of some things I’ve learned over the years. Caveat lector: my experiences inform this, and they aren’t representative of all the possibilities, etc. Ignore this if you want; I’ve been meaning to write some notes for Kiwis or Aussies who are joining startups for the first time, and someone just became my excuse.

Maturity

Startups are very immature organisations, unlike a corporate or university — I always describe it as “there’s more work to do than there are people to do it”. So there’s huge opportunity to do stuff you wouldn’t ordinarily do, which is great. There’s also a lot less support, which can be unnerving. There’s nothing preventing you from working super-long hours and burning out, and only your coworkers to notice (HR is almost non-existent in very early stage startups). And even compensation is weird (“stock options”?) and can bite you if you’re not prepared.

Startups have a life-cycle

• First you do R&D until you’ve found a product. Then you make and sell lots of that product. A product is something you can make and sell to someone for more than it costs to make it. Startups that have taken investors’ money typically need to grow to be really big (billion dollar companies!). It’s widely reported that it takes seven years for a startup to get to the point where it’s considered “big” (it’s worth hundreds of millions of dollars), there just aren’t a whole lot (or perhaps any) overnight successes.
• The point where you’ve found the thing you’ll sell lots of, is called “product-market fit”. There’s a good book “The Lean Startup” that’s aimed at software startups, but has some applicability to other aspects. You might enjoy it. It’ll certainly help you understand the wider Valley mindset.
• R&D is difficult because you don’t know how many problems you have to solve before it’s viable. Academics know this, I’m sure. It’s a bigger and riskier roll of the dice for an investor to fund a company that’s making something that hasn’t been invented yet. Now you have TWO problems: can you do an unknown amount science/engineering to get to something that works and can be mass-made AND can you find a thing that people want to buy.
• (Turns out, building something people want to buy is often the harder problem. A business isn’t worth much if nobody needs what it is selling.)
• Be on the look out for products that aren’t the one you thought you were going to build. Sometimes you fail to invent a good glue, but you’ve invent Post-It notes. Whether your investors will go for it depends on the investor (“hey, we funded an X company, not a Y company!”) but generally they’ll be happy if they think you’ve found a path to a billion-dollar business that doesn’t involve them losing their ownership percentage.
• The early stage, pre-product-market-fit, is exciting grad school type of thing. The growth stage, once it’s got a product and selling gangbusters, is exciting like a rocketship ride. Both are fun, different experiences.

Startups attract interesting people

• Often your managers have no experience managing people. Or nobody’s a manager.
• The driven egotist who thinks they can build a company to invent something and take over the world … is often strong in a few character attributes, but deficient in others. You probably won’t discover the deficiencies until you’ve been working alongside them.

Look after you

• There’ll be more work to do than people and hours. So you could burn out trying to do it all. But don’t, burn out is miserable.
• Burn out for most people feels like their seeing the world in grey, nothing is exciting, they feel exhausted all the time, and dark thoughts enter their head.
• “Passion” (believing super-hard in the mission and product of the startup) is a double-edged sword. It helps you work through the inevitable setbacks of invention, but it can lead you to work past the time where you needed a break.
• Think about the boundaries that’ll be healthy for you. Are you a runner? Climber? Skiier? Reader? Carve time out of your week for the things that recharge you, and do it from the first week you’re there. If everyone gets used to you being in the office until 8, leaving at 6 is going to feel like your commitment has changed.
• Beware stress-eating.

Valley Life

• Bay Area is slow to get around in. Public transport sucks except in SF proper.
• Cars are a trap because of insurance. EVERYONE gives way to pedestrians, without exception, because hitting a pedestrian invites a lawsuit and lawsuits can cost you everything. Make sure you’re an insured driver, even if you’re just renting a car for a day.
• Nobody calls it “San Fran”. Don’t call it “Frisco” either. Locals say: “SF” or “The Bay Area”.
• There are HEAPS of meetups and similar groups where you can find like-minded people. If you’ve been starved for like-minded people, this can be fun.
• Lots of fun outdoor areas for hiking relatively close by. Do check out Yosemite, once the government shutdown has finished and someone’s cleaning the toilets again.
• They are really precious about their cruelty-free micro-batch all-organic gluten-free locally-produced food. The price is typically proportional to the hyphen count. Prepare for a bunch of “gosh, really?” moments with the locals.

Benefits

• Make sure there’s health insurance. I can’t imagine a startup that didn’t offer it, but holy shit you don’t want to get ill in America while uninsured.
• Shares are weird. You won’t get ACTUAL shares unless you’re the founder. Instead, there’s an ESOP (Employee Share Option Program) and you get the option to purchase shares. And you don’t even get THAT … after x months working for the company, you then have the right to purchase shares. The purchase price will be low, and after they do work and sell things, the company is worth more so the stock price rises so your “can buy for 20c” shares are now worth $2 each, say. BUT even then it’s not awesome because typically you have a limited period to exercise your options (aka actually buy the shares) once you leave the company. If you don’t exercise, then those potential shares of yours go away. So it might cost you $100k or more to keep the shares/options benefit once you leave. This got me once. Negotiate so that your options don’t have an expiry date, or have a ridiculously long exercise time like 10 years. This way they can get so big and famous that people will WANT to buy your shares, so you can exercise your options and then sell the shares right away, pocketing the difference as profits.
• Do consult an accountant who knows about options in Australian income tax law. You’ll be subject to both, thanks to the treaties between the countries. You don’t have to pay double tax, that’s what the treaty is about, but you’ll just want to make sure that getting stock options as part of your compensation doesn’t cause problems back home. (And you’ll want to know how to exercise those options so that you don’t end up losing most of their value to tax, or –worse!– paying to buy the options AND then paying tax on the rise in value they have!)
• American work years are ridiculously long. Negotiate for a holiday period that you will be happy with, not the Fuck All Weeks that is standard.

Good luck and have fun!