“If you’re offered a seat on a rocket ship, get on, don’t ask what seat. Just get on.”
Sheryl Sandberg often cites this advice from Eric Schmidt as the best career advice she ever received but how do you evaluate if you are looking at a rocket ship that will reach the moon or one that will never leave the launch pad?
Both potential employees and founders need to evaluate startups through the rocket ship lens. It is important for employees to join growing companies and it is just as important for founders to evaluate their company in order to recruit a generation of talent that is following this advice.
See minute 5:00 for the context around Sheryl Sandberg’s quote.
How to evaluate startups that are scaling or about to scale:
- Is the company solving a real problem for customers? Are customers willing to pay for this solution? These seem like very obvious questions, but it is amazing how many times people assume that because a certain prestigious venture capital firm invested at a high valuation, the company will be successful. The key fact that you need to remember is that this is one of many companies that the VC firm has in their portfolio. Whereas, you are only betting on this company being successful. You cannot rely on another person’s analysis. You need to think critically and know the market before you join it. Without doing your due diligence on the market, the customers, and the company’s business model, you cannot hope to know if you are on a rocket ship that is taking off. Companies can gain traction for a time period on market buzz but ultimately, sales need to be made and cash needs to start entering the company’s balance sheet.
- Who are the founders and management team? This is the biggest area that I see people failing to evaluate deeply enough. A startup is highly dependent on its founders and its core management team. Therefore individual personalities can highly impact the trajectory of a startup. For this reason, I believe that completing a due diligence on the founders and management team is key. You can do this by both talking with those individuals yourself and talking to people who have worked with and invested in them before. History is a good indicator of a person’s character an
d ability and it is important to know it.
- Who are the backers? Rocket fuel is not cheap. While it is not about only working for companies backed by a certain prestigious venture capital firm, it is important to know the startup’s ability to fundraise both within their investor base and with new investors. Nothing stalls a rocket launch like running out of money.
- What process did the company take to hire you? This is another area that people often overlook when evaluating. Was the company and
its employees thoughtful and prepared when talking with you? Were you able to get your questions answered? Good companies pay attention to who they hire and take the process seriously.
In the end, no one knows for sure which company will succeed but going through the due diligence process of evaluating the rocket ship is critical in order to avoid foreseeable failures. That way, you can enjoy the ride.