Mostly advice: When's the best time to join a startup?
How do you maximize your shot at making millions?
Before we get started - I made a startling revelation last week. Hot Topic, the counter-culture, grunge, gothic corner of your local mall, is PRIVATE EQUITY OWNED!!! Yeeesh. Talk about being a sellout. That is SOOO not Punk Rock.
As someone who used to (secretly) fit into their demographic (I actually think I still have a Sum 41 tee kickin’ around somewhere), they should have asked me or the guys from Fall Out Boy for advice before going the LBO route.
Speaking of advice…
I asked my network of CFOs, VCs, and Substack writers, as well as our punk rock Mostly metrics readers:
When’s the best time to join a startup?
If you are trying to learn, accelerate your career, and maximize your equity outcome, when do you hop on board?
Weighing the chance of failure, if you had to do it 10 times over, you’d bet: [Series X]…
Here are the best responses I got, along with my own take:
Fit, Happiness, and Tours of Duty
Fit is by far the most important consideration - years of unhappiness shouldn’t be traded for an equity outcome, at least to me.
I would argue a Series B with top-decile type traction is the best risk-reward.
Why? Strong potential for equity growth but the amount of capital raised is “small” enough to not need a massive IPO or exit to enjoy some upside, even in good, but not great, outcomes.
When you asked this, the 10 tries stood out. An under-told story: plenty of folks work for multiple early-stage companies and never make a cent on their equity packages. Your realistic window where you are senior enough and stay long enough to earn real dollars is more like 3 tours of duty, not ten.
-Matt Harney and author of
Types of risk, Climbing out of holes, Validating market size
Yo! I’d join a series B. By then you’ve typically eliminated a good amount of product market fit risk and are shifting into taking execution and scale risk. This is where people like us can add the most value!
I’d also want to understand the total liquidation preference stack, and make sure the company isn’t already in a hole. All of the value that comes with climbing out of that hole won’t accrue to you.
And of course - market size. Must be at least a $1B TAM imo.
-Geoff Byron, Biz Ops leader at Workday