The startups are back, and the dollars are flying.
But just like 2001, everything may not be as great as it appears on the surface. When you're looking to take the leap from your safe-haven to the new world of startup-land, use these questions (and others) to be sure you don't end up in the soup-line six months from now.
Guy Kawasaki gives us the lowdown in his usual dressed-down demeanor from his post Nine Questions to Ask a Startup, posted Saturday:
- How many outstanding shares of stock are there?
- What is the monthly burn rate?
- How much cash is in the bank?
- When will the company achieve positive cash flow?
- When will the product ship?
- May I talk to any of the outside investors on the board of directors?
- May I talk to several beta sites?
- How much of a “liquidation preference” do the investors have before common shareholders get anything?
- Are there any intellectual property issues or lawsuits pending?
Unfortunately these are the tough questions to ask as much as they are to be asked. If you've become emotionally attached to the company, you may be convincing yourself, or "going with gut instinct" that the company will make it, the product will sell, and that your salary won't turn to severance any time soon.
I recommend you fashion an email or document and submit it to your recruiter asking them to hunt down the answers and get back to you. Remember, they are being paid to land you this job, whether you ask these questions or not.
Thanks to Nathan Nelson, the LAWntrepeneur, for the link