Taking a job at a startup has always been considered a riskier move than working for a company that’s been around for a while, has a track record of success, and has weathered a storm or two. But if you were feeling hesitant about startup life before, the coronavirus pandemic has likely heightened your concerns. When everything is uncertain, how stable could a relatively young company be? Can a startup even succeed right now? And can you succeed, or will you constantly be worried that your employer will go under?
Contrary to what you might think, joining a startup isn’t necessarily a more risky move than a corporate job, even during a pandemic. Even major corporations had layoffs in 2020, and some startups have been able to pivot more quickly than their larger competitors. For example, startup Clover Food Lab, a popular farm-to-table fast-casual chain, pivoted to meal kits and subscriptions during the pandemic. But especially when the state of the world is so uncertain, it’s important to know what you’re walking into before you accept a new job.
As a founder of two startups and an investor in several others, I’ve learned a bit about how to know which companies are set up for success. Here’s my advice for what steps you should take before jumping in to take a new startup job in the coronavirus era (and beyond).
1. Assess the Industry as a Whole
The pandemic has been devastating to many industries, including travel and entertainment. But for others, the changes brought about by COVID-19 have been a boon. When I started my current company, brain-training-meets-gaming app Solitaired, I knew the gaming industry was popular, but this year it’s seen growth well beyond my expectations. Telehealth and at-home fitness, for example, are also thriving.
So take some time to analyze the industry as a whole, especially if it’s new to you. How have other companies in the space—both competitive startups and more established organizations—been faring throughout the pandemic? Are jobs in the industry growing or are many people facing layoffs?
To research trends, read publications like TechCrunch and VentureBeat (for startups) or The Wall Street Journal (for larger companies). Googling terms like “hiring trends,” “layoffs,” and “COVID” plus the field you want to get into can also surface some industry-specific insights. And nothing beats talking to people. If you know anyone who works in the industry, ask them what they’re hearing from the inside. (And if you don’t, college alumni networks as well as connections of friends and family can be great resources.)
2. Understand the Business Model (and Pivot Plan)
Digging into a startup’s business model—i.e., how it makes money—is important in any economic climate, but in pandemic and post-pandemic times, it’s essential. For example, many companies driven by ad revenue experienced volatile sales during 2020, while subscription businesses had a steadier stream of revenue.
Ask your interviewers how customer acquisition and retention have been impacted by the pandemic to understand how sensitive the business is to the current downturn (and future ones). If users are churning—meaning they’re leaving the service—at a high rate, that could be a warning sign for the future of the company; whereas if they saw an initial dip during the early days of the pandemic but are now back on track, that’s more encouraging.
Most importantly, ask the employees you’re interviewing with how the startup’s business model has changed since COVID hit. How quickly were they able to shift gears and, more importantly, how successful has the new strategy been? For example, many companies in the restaurant industry have suffered, but reservation platform OpenTable was able to quickly pivot to offer users time slots for takeout and grocery delivery instead. If the company was able to adapt and find new means to grow, it’s a sign that management knows how to overcome challenges and adapt to find ways to succeed. It’s a great sign the company will go places.
3. Do Some Digging on the Founders
One of the most important aspects of a company I investigate before investing is the founders. After all, while you can’t always predict what’s going to happen to a startup (especially during a global pandemic), you can look at the track record of the people who are running it.
Especially if the startup is very early-stage and has a short history to glean insights from, see what you can learn about the founders by browsing LinkedIn and Crunchbase and reading news about their past endeavors. Have they founded or led companies before, and how did those companies fare? Did those companies face hardships, and were they able to successfully pivot? Founders who navigated the 2008 recession, for instance, may be less fazed by the pandemic having previously led an organization through economic downtowns.
Finally, ask the company about the investors and advisors helping out behind the scenes. Do those folks have history in the industry or experience leading through tough times? Even the best advisors can’t prevent a company from going under, of course, but knowing the founders have seasoned help steering the ship is a good sign.
4. Review the Financials
Startup investors spend a lot of time understanding a company’s financials to make sure it’s a solid bet, and you should, too. In particular, you’ll want to look at the company’s annual revenue over the past several years. How did they do in 2020 compared to past years—was it a slight decrease or all-out devastation? Pre-pandemic, was there year-over-year revenue growth? Some larger companies make this information publicly available on Crunchbase or through press releases, but oftentimes, you’ll need to ask your interviewers or the founders directly.
You’ll also want to ask about the company’s current runway (how much money they have in the bank to continue operations)—information that’s rarely publicly available but is crucial to understanding whether a company can weather 2021 and beyond.
It may feel awkward, and some companies might not be willing to share every detail, but many will see your asking as a sign that you care about the future of the business. Take it from Rohan Gupta, cofounder and CEO of startup QuillBot, a company I advise: “Some inquisitive and smart candidates will ask about run rate and burn, which we’re happy to provide more context to.” If founders are forthcoming in their answers to your questions, it’s often a sign they know their business well and are confident in where they are going.
5. Assess the Culture
If you’ve been laid off, you might be willing to take any job, but be patient to make sure it's the right opportunity and a work environment where you can succeed. You don’t want to be searching again in a few months in these uncertain times, right?
Understanding company culture can be difficult, especially if you’re not spending time in the office during the interview process, so ask a lot of questions. A few examples:
- What are the core values [Company] holds, and how are they lived day to day over Zoom and Slack?
- What are the day-to-day and week-to-week working norms, and how have they changed during the pandemic?
- How do they anticipate culture changing when everyone’s back in the office—what will go back to “normal” and what new norms and traditions will stick around?
- What type of person thrives at this company?
Ask everyone you talk to some version of these questions and see what general themes emerge throughout your conversations. And then, ask yourself: Does this seem like a place where I want to spend the next chapter of my career?
If COVID’s taught us anything, it’s to expect the unexpected. And while you can’t predict what’s going to happen in 2021 and beyond, you can do as much as possible to assure yourself that the startup you’re considering is on solid footing. Don’t be afraid to research, investigate, and ask as many questions as needed—not only will it allow you to pursue your next steps with confidence, but you’ll also stand out as a thoughtful and sharp candidate in the process.