Thinking of joining a startup?

So you are thinking of joining a startup. May be you are fresh from school or have great experience working in a big enterprise and want to take a larger role in a startup. Here are a few questions you want to find answers for, from the founders and/or by yourself. As I wrote last time, entrepreneurs by definition have unbridled optimism and may tend to assign a lower probability to certain risks. It is up to you to build a better model.

These may seem like a lot of questions to answer for a job, but think of yourself as a VC, except you are investing with your time (part of it compensated) and opportunity cost.

Market:

1. Which market is the company's product and services addressing?
2. At what stage is the market in? Is it growing? mature?
3. Are these the only players developing such products?
4. How big is the market? What percentage does the company say they can capture? Is that realistic? What are the probabilities of different scenarios?
5. How is the company's market share growing since inception?
   
6. Who are the competitors? What is their market share? How is their market share been growing?

Products:

1. What is the product/service? Can YOU explain than in plain English?
   
2. Is the company's products ahead of its time? Is there a network effect?
3. What is unique about the product/service? If they can do it why not many other people can do the same?
4. How is the company differentiating their product/service from the competition's? How do the product/services compare to competitor offerings?
   

Customers:

1. Who are the customers?
   
2. What segments is the company addressing? Is the segment growing? If the startup is offering products for a shrinking segment, you can make a prediction about their growth limit.
   
3. How do these segments make purchasing decisions? What drives their decisions? features? quality? price?
4. Is there a customer? Can you find out from them what they think about the products? Startups usually have early adapters, can you find out from your network?
   

Business Model:

1. How is the company making or plan to make money?
2. Do you think this is sustainable and scalable?
   

Marketing and Sales:

1. What is marketing and brand strategy?
2. Who is selling the product? What are their qualifications?

Finance:

1. How is it currently funded?
2. How will it be funded in the future? What are the sources and what is the probability of getting funding from these?
3. What is its current cost structure? i.e what are the expenses? Is that sustainable?
   
4. Is the company leveraged heavily?
5. Can they generate capital to make big investments?
6. Are they cash flow positive? Is more cash coming in than that goes out?
   

After all this is your career decision. When no other information about a privately held startup is available, you have to do the legwork.