A Cynical Though Judicious Look @ Startups
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just diedSongwriters: Leonard Cohen / Sharon Robinson
Introduction
Before reading this article, let’s begin with a disclaimer. As in all other things in life, not every single startup or entrepreneur fits this mold. After all, it can be argued that almost every successful high-tech company has begun as a startup. There are obviously many high-tech millionaires who made their money by creating or being part of a startup. Even today, the term “startup” brings up visions of glamour, fun, rich lifestyles and full bank accounts.
However, sticking my proverbial foot in my mouth after the above disclaimer, good intentions do not imply great leadership, smart decisions nor are any guarantee to success. So, it would be wise, for anyone who is considering working for a startup to read the following and make your own decisions.
Over a long career in high tech, working in positions from CTO to VP R&D to Team Leader and just as a developer, I have had the pleasure of working for some great companies. I have also ended up from time to time in some horrible companies. As a CTO, I have lived through a grueling IPO and an Exit. Though the high-tech landscape is ever-changing with new buzz-words, acronyms and often self-aggrandizing job titles, the signs of trouble in paradise have remained fairly stable and easy to spot over the years. The only caveat — you really must pay attention to what is going on around you.
Those of you who read this article should view it as a “road-map” or “warning” while keeping it in the back of your mind when considering working for a company, especially the ubiquitous “start-up” which dots our high-tech landscape in ever-increasing numbers. And yes, you may see some of these points as cynical or showing more than a modicum of suspicion even though, obviously, some “startups” actually deliver and succeed. However, it would be wise to bear in mind that something like 95% of startups fail miserably and for many reasons. (95% is being gracious by the way.)
Recently, I accepted a job at a startup which seemed to meet most of my demands in terms of interest, my specific field of expertise, and challenge to my talents and knowledge, I still carefully followed how the company operated and carried itself. After a long career in high tech it was, as they say, “not my first rodeo”.
To keep this introduction short, and before the reader thinks otherwise, the company did have a fairly viable and decent product in the field of AR. (The use of the past tense “have” here is not a mistake.) Do not ever assume that a company with a good or even great product will always make it. Often the success of a company may have nothing to do with the quality of the product, but rather it will be based on the quality or lack thereof of good leadership. Raise your hand here if you are a fan of the show “Silicon Valley”. As funny as the show is, and it is incredibly funny, the humor is based on brutal truth.
There is no central agency that can tell you if a new company you are looking at is legitimate or not. There is no way of tracing funds deposited into the company’s account, and you will certainly not be privy to the way such funds are allocated, unless you are the CFO. Just because they are working in buildings which cater to “startups” or offer great ambiance for the workers — means absolutely nothing about the exact nature of the project you will become involved in. In other words, as a potential employee for an unknown entity (and that is really what a startup is), you are looking into a black worm hole with only experience and instinct to guide you.
The following are some suggestions and warning signs. The critical factor is to never ignore your inner-voice or instinct when something inside is saying “there is something off here”. If a red light goes off in your head, it is there for a reason. You may not be able to immediately put it in context, but do not ignore it. The longer you do ignore these warning signs the more you will sink into the impending failure of the company you work for. In other words, if warning bells are constantly going off, find another job and get out as fast as humanely possible. If you chose to ignore the signs, if you decide to turn a blind eye to the red lights going off then you will have no one to blame but yourself.
So, for whatever it is worth, here are some pointers to help you avoid the day when you arrive at work and find the doors closed or the proverbial pink slip waiting for you.
The Signs Before Signing The Contract
- Interviews — Many of us go into an interview with the mind-set that we are being tested for what we know and how the company will see us as future employees. In already successful companies the process can be grueling. In startups the process is usually swifter and much different. Even if there is something that can pass for HR, the interview that you really need to pay attention to, is not the one where you talk about salary and demands. What we often forget is that just as important is our subtler interview of the company itself. By nature, especially these days, as an interviewee for a specific job in high tech, you are on the defensive. If you remain in that mindset, then serious questions will never be brought up.
You should not only be prepared to be interviewed but just as equally important be prepared and in the mindset to interview the person who is presenting the company to you. Questions such as “How long has the company been in business?”, “Is the funding adequate?”, “How many employees are currently working in the company?” are all fair and important questions to get answered. Yes, asking such questions may make you feel uncomfortable especially if you really need the job, but responses to these questions may very well let you know if you really will get paid for your work.
A real hint as to the actual health of the company will be if the person you are asking gets defensive about answering them. Do not be sidelined by non-answers. Your future is at stake here. This is not a game of Monopoly. Serious companies will answer these questions without hesitation. Defensive or evasive answers should set off blinking red lights in your mind.
2. “We always tell the truth” — Be wary of lines such as “We always tell the truth” or “We have nothing to hide”. Startups by nature have a great deal to hide, and apologies for this incredibly cynical comment, but they rarely tell you all the truth. There is nothing stable nor guaranteed about their funding. Also, be very wary of the line, “We are expecting huge funding within XXX time.” In high tech as in all business, nothing can be accomplished on “expected”. Startups cannot run on expected funding. Banks don’t pay out on “expected” deposits. Either there is funding and the money is in the bank or there is nothing. When an investment is announced and cannot be easily verified, do not trust it until you see the proof in the way expansion is going. I realize this is an incredibly suspicious attitude, but it will pay off in the end.
3. Meet the employees and not just one of them — I have, myself, been told in an interview that there are over 25 programmers on staff, and yet when I asked to meet them on my second interview suddenly, only two were around. After asking for a 10-minute break in the middle of the meeting, I cornered the “lead” programmer and discovered that even though this company had rented out half a floor in one of the most expensive and classy high-tech areas, there were in actuality, only 5 people on the premises. The rest of the crews were all offshore, and no one except the CEO had any idea what they were doing. I do not think it is necessary to say this alone was enough to convince me something was very off. The huge floor space was being used to make “an impression” as far as I could tell. Over-spending for the sake of impression or self-aggrandizement is a clear sign that you should run, not walk out of the door.
4. Loyalty vs. Needs — The “We Are Your Family” Speech — Once upon a time, (even before the creation of Storybrooke, Maine), high-tech had a great measure of loyalty between employee and employer (in measure). Perhaps some of this loyalty still exists, but in reality, everyone knows there is no such thing as real loyalty in high-tech these days, especially in startups. If you are working and are offered a better position with more money and better conditions, chances are you are going to take it like a bat out of hell. On the other side, if the company you are working for, hits financial problems, or an expected funding does not come through, you will find yourself out of work immediately. There is no “family” here. No one is going to protect you except for you. Beware of the “We Are Your Family” speech. It really is a great speech, touches all the right emotional chords, creates loyalty and that warm fuzzy feeling inside, but it means absolutely nothing in the end. Do not ever be tempted in a startup to confuse family with work. Be smart. Be cautious. Give it your best and all you have. Just remember, no one is going to treat you like family when the walls come tumbling down.
5. Be wary of the CEO or COO who defines themselves as an Entrepreneur — For full transparency, I really do detest the title “Entrepreneur”. It seems to have come into vogue over the past few years within the startup world and I still cannot figure out what that title is supposed to imply or relay to me. Is it supposed to tell me that the person introducing themselves as such is rich beyond my wildest dreams, or maybe they have genius imaginations, or perhaps they can read the future of technology? I really do not know. What I do know is that based upon long experience the moment someone introduces themselves to me as an Entrepreneur, (unless they are a known VC entity) I immediately play stupid and ask what that means. This forces the person to tell me something about themselves and what they have done in high tech.
6. The “Options” Hook — Within the early stage startups, you will usually hear something about options. It may be made as a future promise or numbers may even be thrown out. Often in such situations, options are used as a hook to bait you into a lower beginning salary. This decision is obviously up to you and it should depend on how secure you feel about the startup. Whatever you do decide, make absolutely sure you have checked all the boxes in what you are looking for. You could be making the best decision of your life or you could be just drowning in a dead-end position.
7. HR (if there is even an HR Department) is only your first stop but should never be your only one — HR has a purpose, but in a startup, even if there is an HR (which is a good thing) you really need to get a look at the premises, the people and talk with, at the very least, your direct boss. If your only interviews take place by an HR person, this should be a warning sign to you. HR should only be your first and possibly your last stop, but they cannot answer the real questions you need information about your forthcoming job. They are in essence, employees just like you, and can only tell you what they have been told.
The Signs After Beginning Your Job
8. The Contract Itself — During the past few years, I have actually had the following scenario done twice to me. In speaking with fellow programmers, I found out this seems to have become somewhat of an illegal norm among startup recruitment. It is really simple. You finish all interviews and negotiations and the contract is drawn up and sent to you. You go over it, make changes if need be, send it back, the company sends you back a corrected contract, and of course, asks you to sign. Naturally, the date you are supposed to begin is also in the contract. You send it back with your signature via email and on the agreed date you show up for your new job. Perhaps even during the time from signing to starting you were given information and code to catch up on. When you get to work on that first day, everything seems to go fine, except for the fact that you still do not have a copy of your contract signed by the company. You overlook this for a while, maybe you even you ask for it and you are told it will be sent to you. But nothing happens, and the days go by.
Let me lay this out for you. You are working, you signed a contract, but you do not have a copy of the official contract in your possession. Every time you ask for it, you are told not to worry. WORRY! Legally you need a copy of that contract signed by both sides.
Avoid problems like this by making sure every single official request you make is done via email. Make sure you have an electronic trail of all requests and answers. Do not feel ashamed to demand a copy of your signed contract on the day you begin work.
9. Atrocious Leadership –Things such as release dates being constantly changed; Feature-creep that never ends; a block party of languages and technologies to which no one really can plan and explain what all of it is doing in the overall plan; conflicting requirements coming down the chain — all are sure signs that something is going wrong in the overall process. These days, many CEO’s have never run a high-tech company. They have no clue what type of expenses are required. I cannot even count anymore how many times “little things” like hardware for the programmers, licenses, WIFI expenses, office expenses — are all left out of the financial planning. All these are part of atrocious leadership.
10. Fish tank mentality — You have to love the new-age designs being used for high-tech offices. Often, you will find a room for meetings situated in a strategic, central place in the office. This is used, of course, for meetings. Keep an eye out on this room. You can actually take the temperature of the company by watching this room and what goes on in there. Too many arguments, too much time spent in secret meetings, too many whispered conversations — well do the math yourself. None of these are good signs and you owe it to yourself to find out what is really going on.
11. Workers leaving without being replaced — If specialists in specific areas are being let go and not being replaced, this can either be a sign of the company moving in a different direction or that serious redaction is going on in the workforce. Either way, you need to find out why and be in the loop of what is going on.
12. No one is doing you a favor by paying salary on time — Different countries and companies have different laws as to when a salary has to be paid. Weekly, Monthly or Bi-monthly. Getting paid on time is not a favor it is your right. Getting paid late, not getting your pay stub, or other such nonsense should never be tolerated. You should never, ever be forced to ask where your salary is and why it is late. This is totally unacceptable.
13. The Octopus Startup — Of all the above points, I will probably get the most flack from this one. Many companies believe in outsourcing. This is not the place to discuss the positive or negative aspects of this practice. However, many startups seem to outsource every aspect of their development into different groups. Teams for IOS are in one area, Android in another, Servers in another, Back-end in another and on and on. This is an Octopus startup and this practice while possibly saving the company funds, will always lead without fail, to a communication disaster. It confuses developers, makes back-end and front-end architecture all that much more difficult, and will cause delays in projects. If a company is run in such a manner, it requires a strong, experienced and very well-organized Project Manager at the helm. Sometimes the CEO of the startup will do this job at the beginning. This type of management and production style only works well under very specific conditions. If you are working in such a company, perhaps even to be that “project manager” you need to be able and willing to take this into account when discussing your job and contract.
Conclusion
All great companies start off as startups. You only need to get lucky once. But the odds are not in your favor. By flushing out those odds with a bit of instinct and knowledge you will be able to help your career advance in a positive manner. For whatever it is worth, I have found that personalities are the key. Even a mediocre company, can turn out highly successful with great people. Suffice it to say the opposite is true as well. A great idea can become a dismal failure with the wrong people at the helm.
Before you become convinced that you are about to become part of the Justice League of High Tech, follow the simple rules below then decide.
Simple rules:
· Listen carefully
· Watch what is going on
· Ask the right questions
· Never ignore that inner voice telling you ‘something is off’.
Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows
Songwriters: Leonard Cohen / Sharon Robinson
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About the Author: Ted Gross served as a CTO for many years with an expertise in database technology, NodeJS, MongoDB, Encryption, PHP and OOP. He has expertise in Virtual World Technologies & Augmented Reality. He has also published many articles on technological topics especially on Big Data & Chaos Theory (in professional journals and online @ Medium & LinkedIn). He is also an author of literary fiction, children’s books and various non-fiction articles. His short story collection, “Ancient Tales, Modern Legends” has received excellent reviews.
Ted can be reached via email: tedwgross@gmail.com; Twitter (@tedwgross); LinkedIn; Medium
