Evaluating a startup
My question is, what is the best way to evaluate a software startup as a perspective employee from the point of view of viability i.e. economic viability.
I am more interested in hints related to trait characteristics that are big indicators of how viable the startup is.
I imagine noone is going to show the deposits in the bank...
Getting Started Funding Employees Profitability
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Do they have a business model? Does it make sense? Do they have paying customers? How many. These are valid questions that you should be able to get answers to. – Mike Nereson 13 years ago
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@ Mike: It is legit from my side to request the exact number of customers and names? I mean is there any reason for a company not to reveal all their customers?Also could you please expand on the business model? What does this refer to? – Jim 13 years ago
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The way you asked your question, it reads like you've got some relationship with them or are actively trying to build a relationship with them. So thats why I said you should be able to have a dialog with them and ask about the size of their customer base. You certainly should not be able to ascertain their customer's names or contact information. – Mike Nereson 13 years ago
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A business model describes how a company makes or plans to make money. It could be subscriptions, advertising, affiliate, etc (google for more). Be sure their model makes sense. If they don't have a business model and no plan for a model, then they probably aren't viable - although there are exceptions http://goo.gl/I8RKv – Mike Nereson 13 years ago
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@ Mike: You are right on your first point. I mean this is not a theoritical question, but I am in a discussion with some people. How can you know for sure if the cash flow makes them viable? Are the revenues alone a good indicator? – Jim 13 years ago
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Check out http://www.bothsidesofthetable.com/2011/12/27/should-startups-focus-on-profitability-or-not/ – Mike Nereson 13 years ago
1 Answer
When interviewing just ask them point blank: how does the company make (or plan to) make money? If the company is not yet profitable: how capitalized is the company? If they can't answer or have poor or vague answers then it's probably not a place you want to work.
A fellow software developer friend of mine interviewed at a startup (if you want to call it that) a couple years ago. The company was offering a high salary, but had a dubious business model, and he was do be employee #1. Needless to say, he had legitimate questions and concerns about the viability of the business since he didn't want to be out of a job in 3 months. When he started asking questions about the company's finances and revenue model, the CEO started getting touchy/feely and offended. Ultimately, he never heard back from them. Probably the best thing that happened to him cause the company is out of business.
