What are the key factors to consider when choosing a startup?

When choosing a startup, adopt an investor's mindset. Look for strong growth trajectory (not just current numbers), impressive founders with proven ability relative to their background, and a core group of early users who are fanatical about the product.

How should I evaluate a startup's success?

Instead of focusing on absolute numbers, pay close attention to the growth trajectory of key metrics. A startup showing rapid month-over-month growth, even from a small base, is often more promising than one with stagnant large numbers.

What makes a good startup founder?

Look beyond traditional credentials like prestigious colleges or big company experience. Evaluate founders on how well they've succeeded relative to their peers and their starting point. Unusual traits and a history of overcoming significant hurdles can be strong indicators.

Should I worry about the market size of a startup?

Don't dismiss a startup solely based on its perceived market size, as many successful companies like Airbnb initially faced skepticism. Instead, look for intense passion and loyalty from a core group of early users.

What's the most important takeaway when deciding on a startup?

Ultimately, base your decision on the strength and vision of the founders, the genuine enthusiasm of current users for the product, and clear signs of positive growth.

Key Moments

Harj Taggar - Choosing a Startup to Work At

Y Combinator

Science & Technology4 min read5 min video

Feb 8, 2021|9,633 views|279|15

YC Y Combinator

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Key Moments

TL;DR

Startup success hinges on growth trajectory and founder mettle, not just current size or market. Look for fanatical users and founders who defied expectations.

Key Insights

For those happy in their current roles without a strong desire for change, leaving for a startup likely means lower pay and more work.

Focus on a startup's growth trajectory over absolute numbers; a startup with $10k monthly revenue growing rapidly is more promising than one with $1M stagnant for a year.

Evaluate founders not by traditional credentials (prestigious colleges or big tech experience) but by their achievements relative to their background and peer group.

Many great startups, like Airbnb initially, don't appear to be in obviously large markets, so don't dismiss a company based on perceived market size alone.

Early users are often fanatical about great startup products; assess the depth of user passion rather than just the number of users.

Key decision factors for joining a startup include the founders, the passion of current users, and clear signs of growth in a key metric.

Is a startup the right environment for you?

Before diving into choosing a startup, it's crucial to determine if the startup environment is genuinely suitable for your career aspirations. Harj Taggar, a partner at Y Combinator, emphasizes that working at a startup is a unique experience and not for everyone. He references Paul Bhui, an early engineer at Google, who suggests that if you are content with your current job and lack a strong urge to pursue something different, seeking employment at a startup might lead to working more for less pay. This advice extends to college graduates who might prefer a more stable career path with higher immediate compensation and a better work-life balance. If financial stability and a predictable work-life are paramount, a larger, established company might be a better fit.

Assess startup success by growth trajectory, not current size.

When evaluating a startup, think like an investor and prioritize signs of current success, with a keen eye on growth trajectory. While absolute numbers like user count or revenue are indicators, they are less critical than the rate at which these metrics are improving. For instance, a startup reporting $1 million in monthly revenue that has remained static for a year is less compelling than a startup with $10,000 in monthly revenue that doubled from the previous month. This rapid growth signifies product-market fit and future potential. Regularly tracking and understanding this growth metric is essential for identifying startups poised for significant advancement. The accelerating growth curve indicates strong momentum and increasing traction in the market, which often translates to greater opportunities for employees as the company expands. This focus on trajectory over static numbers is a fundamental principle for both investors and potential employees aiming to join a thriving venture.

The critical role of founders and their unique strengths.

The team, especially the founders, is a paramount consideration when choosing a startup. Harj Taggar advises against relying on traditional credentials like prestigious university degrees or past employment at renowned companies. Instead, he advocates for evaluating founders based on their accomplishments relative to their personal circumstances and peer group. For example, a 19-year-old founder from a less privileged background who has successfully raised a seed round and relocated to Silicon Valley to build a company might demonstrate more ingenuity and drive than an individual with 15 years of experience at Google who is just starting their entrepreneurial journey. Look for founders who exhibit 'outlying traits' – unusual drive, resilience, and a unique perspective that suggests they are capable of building an exceptional company. These individuals often possess a deep understanding of their problem space and an unwavering commitment that can propel a startup forward against the odds. Their unconventional paths often breed innovative solutions and a strong company culture.

Don't be deterred by seemingly small markets.

A common pitfall for investors, and by extension, potential startup employees, is attempting to precisely forecast the size of a startup's market. Taggar points to Airbnb as a prime example; many prominent Silicon Valley investors initially dismissed it due to the unconventional nature of people sleeping in strangers' homes, perceiving it as a niche market. The true indicator of a successful startup isn't always an obviously vast market from day one.

Fanatical users signal product-market fit.

Instead of market size, focus on the passion of a startup's early users. Every great startup, regardless of its perceived market, cultivates a core group of users who are exceptionally devoted to the product. Harj Taggar suggests talking to these early adopters to gauge their level of enthusiasm. Even if the user base is small, their deep passion for the product and the company is a strong predictor of future success. This intense loyalty indicates that the startup is solving a real problem in a way that resonates powerfully with its initial customers, providing a solid foundation for growth.

Prioritize founders, user love, and growth.

In summary, when considering joining a startup, the decision should be anchored by three primary factors: the founders' capabilities and vision, the genuine passion expressed by current users for the product, and observable signs of consistent growth in key metrics. These elements collectively offer a robust framework for identifying startups with high potential and a positive trajectory.

Mentioned in This Episode

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Choosing a Startup to Work At: Quick Guide

Practical takeaways from this episode

Do This

Verify you truly want a startup role (it's not for everyone).

Think like an investor: prioritize growth trajectory over absolute numbers.

Focus on founders' relative success and unusual traits, not just traditional credentials.

Look for a core group of fanatical early users who deeply love the product.

Ask about key metrics and their growth over time.

Interview current users to gauge their passion for the product and startup.

Avoid This

Don't join if you prefer stability, higher pay, and less work compared to startups.

Don't solely rely on traditional credentials (college, past employers) when evaluating founders.

Don't dismiss startups based on perceived small market size initially.

Don't focus only on current revenue or user numbers; prioritize growth trajectory.

Common Questions

Working at a startup is a unique experience and not suited for everyone. If you are happy in your current role and don't have a strong desire for a startup environment, opting for a more stable, higher-paying job at a large company might be a better fit.