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What To Watch Out For When Working For A Startup - PROGRESSING YOUR CREATIVE CAREER


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What to watch out for when working for a startup

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As I said in last week’s blog, I’ve worked for a couple of startups and had nothing but bad experiences. To be honest, there were a few key things that I should have paid more attention to and maybe I wouldn’t have ended up in the position that I did, but lucky for you, I’ve lived it and I can share my experience with you, so hopefully you don’t go down the same path as I did.

Here are some things that you should look out for when working for a startup.

1. Their Business Model

Businesses need to make money to stay afloat and, more importantly, they need to make money so that they can pay their employees (face palm). During your job research and interview process, try and figure out how the startup company that you are applying for makes money, i.e. what is their business model?

Let me give you an example; I worked for a tech startup in Vancouver. It was essentially a messaging app that was available for download on the IOS and Google Play stores. Seems legit, right? Of course, it was free to download, but so are tons of apps. Essentially, apps that are free to download sell advertising space to cover their costs. So I know what you’re thinking; the app I was working for sold ad space to other apps within itself to cover costs… WRONG! Nope, we were a free app, that didn’t sell ad space… Interesting business model, right? How did I even get paid at all, you ask.

Well, it’s pretty interesting, every startup goes through different stages of investments and this is my understanding of this process:

  • It starts with someone who is classified as an ‘Angel Investor’; an individual who invests his or her own money at an early stage in exchange for a share of the company.

  • The ‘early stage’ of investment is referred to as ‘Seed Investment’, which is essentially a preliminary investment stage geared towards helping a startup founder establish the direction and goals of their business.

  • The second stage of the investment process is called the ‘Incubator Stage’. This is when a business gets sequential rounds of investment from ‘Mentors’ who, again, get a stake in the company. The money from this round of investment should be used by the startup to get an office space and help build a team, i.e. pay for employee wages.

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There are several other steps, but the company that I was working for was somewhere in between the ‘Seed Investment’ and the “Incubator Stage’. Essentially, what was happening was that the ‘Mentors’ from the ‘Incubator Stage’ were taking it in turns month by month to cover wages and costs (in order to keep their stake in the company). In turn, this was how we were getting paid.

The reason we were getting paid late all the time was because it was a poorly set up ‘Incubator Stage’. Instead of the money from the ‘Mentors” each month being paid into the company bank account and then into ours on time, it was being paid into a non-business account and then it would be transferred into another non-business account belonging to someone from the company, who would then take all of the money out and go to each of the employees’ specific banks and make a direct deposit… PRETTY BLOODY DODGY RIGHT?

From my understanding of what was going on at the company that I was working, the ‘Mentors’ were not seeing any return on their investments in the form of business growth, i.e. the app was a money pit, and thus they started to to pull out when it came time for their turn to cover the wages for the month. Thus leaving the business owner with no money to pay our wages. This is why we never got paid on time.

Now this is my belief, but I think the people who owned the business were never truly ‘invested’ in the product. Another business term used for startups is called an ‘Exit Strategy’ which essentially means “The way you envision getting money out of your company… the future plans for the company. Either you want to sell it, get acquired, merge with another company, go public, or liquidate the business completely”. My understanding of the general consensus was that they planned to get app to a certain amount of users and sell it and keep the profit, which is fine, in theory, but you want the product that your company is offering to not already be in a saturated marketplace and want your product to have a big enough point of difference that will differentiate you from the rest of the competition. Which this app was not. The whole situation felt like the little pig who built his house out of straw.

2. Your Interview

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Now, I think we’ve all had weird job interviews. I would say the weirdest come from when you apply for jobs on craigslist… i.e. you get invited over to a 60-year-old lady’s house to discuss video editing or you get told to meet at a pool hall in a shady part of town for an art assistant interview. Yes, they both happened to me…  But the interview that I had for the tech startup that I mentioned above was probably the most random of all. It was conducted in a random Starbucks. A tech company that employees 40 people, interviews me in a random Starbucks…. The way in which a company conducts their interview process can tell you a lot about their company and whether or not you want to work there.

It later became apparent to me that the reason that they interviewed me in a random Starbucks was because…

3. Who are you replacing and why?

Now, this can be hard to figure out, but you really want to know why the person who originally had the job that you are applying for left. You can scope this out during the interview process by simply waiting for the cookie cutter question that you get at the end of every interview ever…

“Do you have any questions for us?”

Politely ask the question, “why did the person who previously had this position leave?”

The answer will usually give you a good understanding of the environment that you are potentially going into.

During my interview with the tech startup I didn’t ask this question and it got to my first day. I arrived, very excited, with a newly ironed shirt that I had bought from an op shop the day before, solidly tucked into my pants and a big ‘can do’ smile plastered across my face. I walked into the repurposed retail space and was quickly ushered into the back room and was told to stay there. Turns out they hadn’t told the gentleman whom I was replacing that his services were no longer needed. They proceeded to throw him out on his ass, the minute he arrived. I then got his desk still smelling of his aftershave. Again, you can tell a lot about a company by the way in which they treat not only their current employees but also their previous employees.

4. The old paper shredding routine

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Now, I’m not sure who’s been an on a physical sinking ship before. I certainly haven’t but I can assume that it feels very similar to being at a company that is about to go under. In the office you can hear nothing but the squeaking of chairs and rustling of paper - the tension is palpable. And when certain members of the company’s inner circle get the paper shredder out and start erasing any documents that suggest the company ever existed, it’s probably time that you dust off the old resume and start looking for new work.

Now, that's not to say that all startups are like the ones I’ve mentioned in this article. There are a lot of good ones out there! To help ensure you get a job at a good one, take into consideration all the points I raised today and it will help ensure you get the most out of your employment.


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Oliver Lee HansenComment