With the Iowa caucus taking place this evening, I was compelled (don't ask why!) to compare and contrast selecting a startup employer (ping) and selecting a country leader (pong). While the two are very different decisions, I wonder why, in the latter, the bar is so low and consistently skewed towards a media shaped icon. It would be interesting to see the media apply the same benchmark checklist to pong.
Less than a year ago, I transitioned out of a ping and wanted to codify some of my experience and remind myself to get more comfortable with these issues before taking on a ping role again. While I have no regrets working for a ping, others may choose to be more selective based on the responses to these points:
(ping) What is the track record of the management team successfully launching a company? While academic qualifications, prior work record and general banter given to you by the executive management team may sound impressive, remember to gauge whether this is a on-the-job training for the CEO or based on previous successful outcomes. It is best for new employees to have a good feeling about the CEO/CFO positions and their combined ability to take this startup to the next level. What are their funding requirements? Have they raised money before? Who is in their capital formation network?
(pong) What is the track record of the executive team and their advisors campaigning a new term? I was blown away listening to Allan Nairn who cited the track record of the advisors to the leading presidential candidates. Perhaps the pool of "belt-way talent" is only so deep. Certainly makes one wary of listening to the media framed talking heads. Why don't we get (demand) a CEO/CFO view of at least a first 12-month plan?
(ping) If you are receiving employee options, what is the number of fully-diluted outstanding shares? Options should be granted or committed to on joining the startup. Typically, option grants are a key component of compensation in a start-up and are often promoted as such. But the details surrounding stock options are often complex and confusing for non financially-oriented individuals. It is best for employees to understand as much as possible about their option grants, but the first place to start is to ask how many outstanding shares there are. From that point, one can calculate the percentage of the company an employee will own and a better gauge of the magnitude of this compensation component. It surprises me how many startup employees I know who are excited to have received a grant of x number of options, but never bothered to ask what relative percentage of the company that translates into.
(pong) If the candidate promises "read my lips ... no new taxes," what is the plan for balancing the budget or fiscally staying afloat? It may be wise to ask someone who understands numbers to help you understand numbers based on opportunistic promises. None of us are CPAs or economists but we do understand there is a cost to everything and that there's no free lunch. Make sure the impact of any financial promises are properly articulated. Strange how when we buy a house we demand an inspection, when we vote for a country leader, no comparable test appears to be conducted - perhaps an area where the "fourth estate" needs to unshackle their chains and better serve as the public's surrogate watchdog.
(ping) Has there ever been a down round, a flat round, or a CEO change? Any of these three events are an indicator that the startup has faced some difficulties in the past and may not be on track moving forward. If one of them has occurred, prospective employees should seek out as much information as they can the context of the situation. After all, there are exceptions to blind the assumption that these are a black mark (e.g. a founding CEO stepping aside to make room for professional management could be an indicator of successful growth). However, if any of these issues have arisen, it is a signal to dig deeper into the health of the business.
(pong) Is there any track record of trial through adversity with the President/VP and who will take the place of the President as a contingency? Can the running candidates (and their mate) cite examples in their career that are good tests of character that may set a pattern of good or bad behavior once they are in power. Isn't past performance at least one indicator of possible future performance or should we just roll the dice.
(ping) What is the burn rate and how much cash is in the bank now? Even if a start-up is successfully executing, it could still face a cash crunch if it is not yet profitable. Employees should ask to find out how much longer the company will ride without the infusion of another round capital. While the actual answer to this question won’t necessarily provide a definitive answer about the ability for the company to access both cash and capital, it will open up a discussion about it.
(pong) What is the fiscal plan as it may impact specific programs, and are there consequences for not performing? Are there specific plans in place with specific budgets that have checks and balances in place to make the governing elite accountable with consequences for not performing?
(ping) What is the plan for exit strategy and its timeframe? The answer to this question is a soft one with many factors, and can always change depending on circumstances. However, it is best to find out management’s view of a possible exit strategy. Is the company pieced together for a quick flip, building for multi-year significant value creation, or plan on holding for the long term as an eventual cash cow (for founder/investors)? These expectations will affect not only how long employees may be working for the company as it exists today, but more importantly, the resulting surrounding corporate culture.
(pong) Is the 4-year term limit sufficient or should there be an earlier cutoff? While we can't change the world overnight, it is worth recognizing that once we elect a new governing elite, we are held hostage for a time frame that was established over a hundred years ago. Perhaps as the velocity of change increase, we should be less forgiving to an incumbent to prove themselves. Wall Street will argue for more of the same of course.
(ping) Could you meet the CEO, the founder(s), and those on the management team? Start-ups are all about the people involved. And there are a small number of people who are largely going to affect the organization. Even if an entry-level employee is going to work in engineering, I think it makes sense for him/her to meet the VP Sales; likewise, a marketing manager should meet the CTO. Yet it might not happen unless the prospective employee requests it. The handful at the top are going to have a profound affect on the future of the company as a whole and the position (regardless of function), and therefore it is best to meet as many people possible in the company possible before joining.
(pong) Should there be more intimate exposure of the candidate and his team of advisors and executive team?
Youtube was used in an innovative, but arguably limited, way, by CNN to pose questions to the Democratic and Republican candidates. Surely, we need to find better channels to communicate the warts and blemishes of the executive team in front of a broader audience without having talkshow hosts tell us what to think of them in their "expert summaries"
(ping) How many employees did/does/will the company have six month ago, now, six months from now, a year from now? Employee count is a strong (but not a perfect) proxy for management’s and investors’ outlook on the business. Start-ups hire ahead of growth (or at least predicted growth), which translate into a viable company, a healthy work environment, and future internal opportunities. Financial figures and projections are helpful indicators, certainly, but are often a distortion of the full picture (especially early on in a company’s cycle). The growth in employee count (or lack of) directly signals how much work needs to be done and how rosy the expectations are.
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