Thinking about jumping ship and signing up with a technology start-up, despite the so-called market correction? You might want to first pick up a copy of Daniel S. Rippy’s book, Sizing Up a Start-up: Decoding the New Frontier of Career Opportunities (Perseus Publishing, 2000).
In the book, the first-time author and former start-up veteran gives IT professionals a one-of-a-kind road map for evaluating the potential risks and rewards of working at a technology start-up.
As Rippy points out, the success or failure of a technology start-up isn’t totally unpredictable. He offers numerous processes and insights that IT professionals can use to evaluate a potential employer’s ownership, and the long-term potential and risk.
Rippy, who lives in Dallas, spoke with Holly Hubbard Preston about what IT employees should consider when joining a start-up. Rippy is director of mergers and acquisitions and business planning at CellStar Corp., a wireless distribution company in Carrollton, Tex. In this role, he assesses business opportunities, many that may involve partnering with start-ups.
Preston: What is the single biggest misperception that IT job searchers generally have about taking a position at a technology start-up?
Rippy: That one’s success is fairly assured at a technology start-up, and that there really isn’t all that much risk.
Preston: In your book, you write that 90 per cent of all technology start-ups fail. What do you think are the overriding factors for failure?
Rippy: Hiring the wrong people for key roles, and management underestimating the competition, as well as the time and resources required by the company to bring a product or service to market.
Preston: What criteria do you recommend that IT job searchers use to evaluate a technology start-up prior to taking a job?
Rippy: Quality of the management team; business plan and business model; board of directors – for example, the people affiliated with the venture capital firms funding the start-up. Job seekers also have to have an understanding of the particular role and responsibility he or she takes on…specifically, what experience they will get from that opportunity and what they will be able to do with it even if the start-up doesn’t succeed.
Preston: How probing can or should a job seeker be in an interview with the management of a start-up?
Rippy: Given how hot today’s job market is, there are few questions you could ask that would be offensive. The interview more so than ever before is a two-way process. Job seekers are within their rights to ask for a copy of the business plan, though they should be prepared to sign a confidentiality agreement.
They should absolutely ask about the sort of funding the firm has received to date and who sits on its board of directors. The management team should be asked about the individual track records of its members, what they have learned from their successes and failures. “Why will you win?” and “What keeps you up at night?” are also very relevant questions.
It is reasonable to probe into technology development plans for, say, the next 30 to 90 days and beyond; any risks there might be to that plan. Management should be able to talk very competently about that.
Preston: What are the major career risks a person will have to weigh prior to joining a technology start-up?
Rippy: You might join a company and find yourself out of a job within three to six months, and you will need to explain what happened and why. It does not have to be a setback, but you have to be prepared with a story of what went on and why you didn’t see the failure coming.
If you can explain that decision after the fact, that could be potential knowledge to a future employer. If you end up at successions of failed start-ups and have to defend that track record, a prospective employer may question whether you have good judgement.
Preston: What are the primary points to consider when negotiating a job offer with a start-up?
Rippy: Salary, standard benefits package and possibly an equity stake. There are non-traditional benefits to consider, such as days off or a [Digital Subscriber Line] to the home…benefits can involve an aspect of creative control at the office.
Preston: How much negotiating room should you expect with a start-up? Do you go in there assuming this is a cash-strapped management team that has little more than options to offer?
Rippy: I have seen people get paid a lot more than they would in certain corporate settings. I have also seen people take a 50 per cent cut in pay to join a start-up. You absolutely need to find out what the pressure points are.
Signing bonuses are increasingly common because companies are so desperate for talent but don’t want the recurring debt of high salary. Especially for IT people, there is a lot of flexibility that can be discussed in terms of development milestones tied to performance bonuses.
Preston: How much change in job description should a person expect to experience in his or her tenure at a technology start-up?
Rippy: It is perfectly reasonable to have a discussion about career path and promotion. But to expect that you will come in as a product manager and end up heading a division is probably unrealistic because people are hired for specific slots.
Besides, when a company doesn’t meet growth plans, it is hard to promote people. Make sure the role that you are entering at is one that you are excited about.
Preston: What is the average job tenure for a person who takes a job at a technology start-up?
Rippy: Based on experiences of people I have talked to, it is probably 18 to 24 months. Often, people will move on to a series of start-ups…They get hooked on that way of life.
Preston is a freelance writer in St. Helena, Calif.