By Phillip Bogdanovich
Being part of an early-stage start-up is exhilarating, but it can also be scary. There is no certainty of longevity. The company is always one bad decision away from burning down. For me, this sense of unknowing translates into adventure and excitement. I appreciate the nimbleness of start-ups and being able to see, in a very short time, the impact of changes I’ve made. The volatility that makes start-ups terrifying for most is what makes them a great fit for me.
The start-up landscape is precarious for many reasons, not the least of which is that it’s often driven by passionate people with little real-world experience. These people are bolstered by the widely held belief that start-ups should be run by young, innovative leaders unbiased by years of exposure to big business. While innovation plays an obvious and critical role in lighting the start-up flame, structure and experience are equally vital for keeping it from turning into a brushfire.
If you’re considering involving yourself in a start-up but you are uncertainty- or risk-averse, it probably isn’t the best fit for you. But if you don’t mind the possibility of burning to death, here are a few tips on choosing a company that poses the least fire hazard.
Get to Know Your Peers
It seems obvious, but before you decide to join the leadership team of a company, you need to spend time getting to know the founders, CEO, and other executives. Arrange meetings with as many of them as possible during your interview process. Make sure you share their vision.
If a company is promising and my peers are inexperienced but driven and reasonable, I’ve found that I can position the company—and myself—for success. On the other hand, even the most promising company will be handicapped by fatal flaws of inexperience like self-centeredness and stubbornness. Put in the time to identify whether these are present.
Watch for These Red Flags
The presence of any one of these factors would make me say “Thanks but no thanks” to an opportunity, no matter how promising it looked on the surface. These are my top five red flags for early-stage start-ups.
- The CEO or other executive(s) have another job. No one involved in running a start-up, especially the person responsible for driving the vision, should have a second job. Getting a company off the ground is an all-or-nothing commitment. No one gets to keep an escape route.
- Executive(s) are using the company as a piggy bank. It doesn’t matter who you are or whether you are a founder. It is irresponsible (arguably illegal) to use company funds for personal purposes. If you get wind of this kind of activity, it’s likely a warning sign that there are many larger, yet-to-be-discovered problems in the company.
- The company lacks financial controls. No one in a company should be able to spend money unchecked, even founders and investors. Lack of financial controls often but not always coincides with piggy-banking (see above). It can also mean spending carelessly on things the company “needs.” If something can go wrong, it will, and lack of financial controls creates an environment where money can be spent irresponsibly.
- Leaders are risk-averse. There is a difference between pragmatism and analysis paralysis. If your fellow leaders aren’t willing to take calculated risks, you will always be fighting an uphill battle for change. You will end up handcuffed, forced to leave or become a yes man (or woman).
- Narcissism. Some degree of narcissism is to be expected among your fellow leaders, especially the CEO. In fact, recent studies show that it’s even healthy for the early growth of a company. But the kind of narcissism that doesn’t leave room for anyone else or their skills will kill a company. Leaders must be allowed the latitude to make decisions and succeed or fail, to do their jobs. If, during the interview process, you get the sense that your executive peers aren’t interested in your perspective, run for the hills.
Find a Fit, Then Act
Is the company a good fit for you? Are you a good fit for the company? It’s possible for a group of entrepreneurs and managers who are independently good at what they do to get together and form a terrible company. Similarly, if I’m not the right fit for a company, it doesn’t mean I’m bad at what I do. Bad fit is bad fit. It means you have listened during the interview process, articulated your needs and goals, and on some level you are not aligned. If you can’t (or won’t) identify a bad fit with a prospective employer, you may have some self-reflection to do.
During and after an interview process, I reflect and discuss my experience with people I trust like advisors and my wife. I get feedback and I listen. If the opportunity has no red flags, feels like a good fit for me, and the people I trust don’t recognize any potential problems, I’ll take an offer or make a counter.
It’s important not to waste anyone’s time. Don’t interview for a job you aren’t willing to take under the right conditions. Decisiveness is an important quality in a leader—you don’t want to become known for kicking tires and wasting the time of companies and interviewers. This problem can compound if you’re interviewing where you live or working with a recruiter. It’s possible to interview yourself right onto the “do not review” list.
If you’re ready to embark on your next leadership adventure, do your research, avoid the red flags, pay attention to how the company feels, and get feedback from people you trust. I have suffered through bad fits and even become part of a negative work environment because I ignored one or more of the warning signs above. It’s important to trust yourself and your instincts. Remember: It’s ok to say no for the right reasons, but it’s critical to say yes for the right ones.