Is that Start-up for you?

Devashish Chakravarty        Print Edition: April 2012

Devashish Chakravarty
These are interesting times in the Indian job market. While established companies in stable industries are struggling with mixed signals from the economy, the venture capitalist market is booming , indicating a huge growth in funded start-ups. So, what do you do if you're offered a job in such a firm?

Many appreciate the opportunities entrant firms offer. However, it is prudent to weigh the benefits and risks. The only promise a start-up can offer is the challenge of dealing with that which cannot be predicted. You can expect to deal with a lack of operating history, significant business changes in the short term, dependency on quality of teams, generalist roles and a constantly evolving culture.

Let us look at the positives first.

Joining a fledgling firm requires considerable self-confidence and an ability to manage risks. This is a great selling point to future employers. Once you join, you will find yourself part of big and small decisions.

Hierarchy will not require you to be straightjacketed during meetings. This multi-functional experience represents significant professional growth and enables access to a wider variety of roles and responsibilities.

There will always be a shortage of resources and time, forcing you to come up with creative and cost effective alternatives to get the work done. This will invariably translate into a significantly better performance as compared with a role at an established firm.

The breadth of exposure also means that your understanding of the business increases, making you a valuable asset for employers. You learn from experience and there is a sense of accomplishment from seeing the direct outcome of your efforts.

WHAT YOU SHOULD ASK

The great numbers: Is the start-up offering you shares or ESOPs and what percentage? What is the vesting period (i.e the period after which the shares belong to you)? When and how will you be able to encash them? Put these together and you have an idea of whether the dream is a realistic one.

Running on reserve: Few start-ups survive long enough to realise their dreams. The real indicator is how much cash there is in the bank to balance the burn rate. If it will last less than a year, look elsewhere.

Planning to reality: Most products look great on a Power Point. Getting them ready for the market is the important thing. Find out the time required for the product to be released and the date by which the company expects to report a positive cash flow. Longer the period, less likely a profitable outcome.

First-hand information: A good entrant firm will let you speak to it's founders and investors. A great one will let you speak to it's potential and real customers and employees. Avail of the opportunity to get a better understanding of where the business is headed and the dynamics of the team.

HR commitment: A companys hiring commitments are a good indication of it's depth and confidence in it's business. Will more people be hired at the senior level? How will it affect your role? Make sure you know what the future might look like.
You also learn to function in ambiguous situations. The energy will be high, the people committed and your network will include colleagues who are friends. Finally, if the start-up's bets pay off, you will be on the fast track to handling increasing responsibilities and, who knows, the stock options might even help you retire early.

Now, a quick reality check.

This is no walk in the park. It is not for the faint-hearted. The risks are just as high. You will often be called on to help in tasks that you were never suited for or interested in. Unless you are able to showcase extremely unique and relevant skills, you will probably take a small to moderate pay cut. Not a good place to be if you are saddled with burdensome EMIs.

The shortage of resources will also reduce your efficiency at times. Neither is this a job that can assure a work-life balance or an eight-hour schedule. The experience will be the equivalent of having a baby in the house-an endless flurry of urgent activities. There will be no HR manual to plan a career progression. You will be responsible for your growth, successes and failures.

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Do not expect to have the time and space to focus on one area of strength and do not expect stability. When you turn up to work the next day, the business could be drastically different. Or you might find the doors locked. Most start-ups do not survive beyond five years and some not even one.

At the end, it boils down to the specifics of the start-up that you join and how well you manage the uncertainties. The primary risks are to do with either the firm folding up or you getting the pink slip.

The first step is to keep yourself updated with your network and on skills so that finding a job will not be an issue. Keep at learning and familiarising yourself with aspects of management. This will enhance your resume and keep you attuned to the viability of the fledgling business.

Is your start-up burning much more than it is earning? Are you an indispensable employee who will be the last to lose their jobs? How many months of operating cash does your firm have? Have a fair idea of such matters.

Know that having a job at an established firm is no safer than at a start-up when things get rough in the market. Often, a start-ups founders and colleagues are far more loyal to you than those at a large firm and will probably fight hard and take a few chances to find alternative opportunities if the firm's sinking.

Finally, know that such an opportunity is generally great work experience if you are not at risk financially and in your career. Check up on the firm and the industry before you take up such an offer. Be flexible in your attitude to the work and the environment. Be prepared for one of the most challenging and exciting times of your life. It will be worth every moment.

The writer is CEO, Quetzal Verify, an HR solutions company started by four IIM-Ahmedabad graduates.

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