From the outside, start-ups can seem confusing and murky. They can seem chaotic – that there’s no order to them. Because it lacks order, it is hard to figure out the best way to approach StartUpLand, know what jobs are to be done, and figure out the best ways to explore and exploit professional opportunities.
I can’t tell you how much time I’ve spent in my office talking to students about how to get into the start-up world. And not just young professionals; interest in joining start-ups cuts across all ages and stages of careers. I have had many meetings with lawyers, doctors, scientists, professors, and experienced professionals who are intrigued by the magic that StartUpLand represents.
But often, they’re afraid because they don’t know how to begin. They have functional experience; they may come from the marketing department at IBM, for example, or the product management department at Staples, or the finance department at GE. Yet, they have trouble knowing how to find a start-up that fits their passions and skills.
Having had this conversation over and over again has helped me build up a methodology. The methodology is straightforward and involves four steps that make StartUpLand more approachable and accessible for everyone
1. Pick a domain
Start by asking yourself a bunch of questions.
Am I more of a B2C type or a B2B type? Serving the needs of large businesses or small businesses? What are my favorite three apps on my phone? What’s my favorite product? What brand do I admire the most? What’s my favorite online service? What’s my favorite company?
Answering these questions should help narrow your focus down to a set of domains that you are excited about. You can land on more than one, but you shouldn’t let your search become too broad and unfocused. An easy way to irritate the network of friends poised to help you enter StartUpLand is by saying, ‘I don’t know what I’m interested in’. The landscape is too broad to be helpful to someone taking this approach.
2. Pick a city
If you don’t already live in a start-up hub, I very highly recommend moving to one. Pick a city with a cluster of companies in the field you’re interested in, and if your start-up happens to fail, you’ll have other companies in related fields that could be a fit. Here’s why picking the right geography is so important: once most people choose a particular start-up community, they tend to settle in and stay there. It’s a natural phenomenon – they build relationships over time that lead from one opportunity to another. Your co-workers in one start-up could become your co-founders in another. So in thinking about geography, think about playing chess, not checkers: think three to four professional moves ahead.
3. Pick a stage
The framework I like to use of the three stages of a start-up is jungle, dirt road, and highway.
If you are a risk-taker and enjoy the challenges and roller-coaster ride, then the jungle phase is for you, and you should bias toward seed-funded or recently Series A-funded companies that are pre-revenue and have not yet achieved product/market fit.
You might seek the dirt road stage, where the path is more laid out. It’s bumpy and winding, but there is a path. Typically, you would be post-product/market fit and starting to find a repeatable business model and address the early challenges of scale.
Or if you are more conservative, want a good salary, and prefer to pick a ‘safe’ winner, then a highway-phase company that is post-product/market fit and either pre-IPO or recently IPO’d is the right choice.
It’s all about the degree of uncertainty – the amount of chaos – you’re comfortable with.
4. Pick a winner
This piece of advice is the hardest one to execute. Picking a company that you think will be a massive success in the marketplace and therefore provide you with tremendous growth opportunities is a subjective exercise, and one rife with mistakes.
In the end, you should apply your own judgment based on your assessment of the company and its team. You can evaluate each company along the same criteria we venture capitalists employ, which are typically three simple ones:
- Team: Is the founding team compelling? Can they articular a vision that inspires you and others? Would you want to work with them again in their next company?
- Market: Is the market that the company is operating in massive (i.e., greater than $1 billion in revenue potential)? Is the market experiencing some kind of disruption that might lead to opportunity for a new entrant like this start-up?
- Business model: Are the unit economics (i.e., the comparison of revenues and costs of each customer unit or product unit) attractive? Is the company already able to articulate the lifetime value of each customer, the acquisition cost of each customer, and compare the two? If it has customers, do they appear loyal and have growth potential over time or are they cancelling the relationship (churning out)?
This series of steps – picking your domain, your city, the stage you’re most interested in, and companies within that city that fit that stage in that sector – generally results in a small, manageable list. Thus, at that point, you can decide which companies to focus on.
Now you have your target list; it’s time to get started.
Jeffrey Bussgang is an entrepreneur, general partner at Flybridge Capital Partners and senior lecturer at Harvard Business School.
Reprinted by permission of Harvard Business Review Press. Excerpted from Entering StartUpLand: An Essential Guide to Finding the Right Job. Copyright 2018 Jeffrey Bussgang. All rights reserved.
Image credit: g-stockstudio/Shutterstock