Sizing Up a Start-Up

Reader stern contributed this review of Sizing Up a Start-Up: Decoding the New Frontier of Career Opportunities, and it could just save you a few seconds worth of the exorbitant IPO salary you hope starts flowing soon. Or thought of another way, it could save you several days worth if you're working on campus through the student employment office.

Sizing Up a Startup author Daniel Rippy, Matt Kursh pages 275 publisher Perseus Books rating (2,7)/10 reviewer stern ISBN 073820353X summary How to tell if that dotcom is a dog; may be interesting and useful to the completely uninitiated -- otherwise, skim at the bookstore (hence the 2/7 rating, for experts and novices respectively.).

Michael Wolff founded Wolff New Media; it cratered; he wrote Burn Rate. Jerry Kaplan founded Go Corp.; it cratered; he wrote Startup. Adam Osborne founded Osborne Computer Company; it cratered; he wrote Hypergrowth. You know the old story: "If you can, do. If you crater, write a book."

You can understand their motivation. The book gives you the chance to make a few bucks off a failed venture, occupies some time while your emotions cool, and gives you a chance to blame the failure on somebody else. I have to guess that some rudimentary form of this effect drove Daniel Rippy to write Sizing Up a Start-Up. He tells us only a little about his own professional background, except that he was a product manager for a "software start-up" in Seattle that burned through $25 million in investor cash and "had little to show for it."

Rippy's employer seems to have fallen apart with less drama than the almost tectonic failures engineered by Osborne, Kaplan and friends, and his book is somewhat more modest as well. He attempts to explain the rudiments of evaluating startups for others who might want to work in one but who lack the ability to identify a good one. He also provides basic advice on stock options, startup lifestyles, and other topics of interest to anybody contemplating joining an early-stage company.

Though Rippy's advice applies to any young company, he concentrates on technology start-ups, especially software and dotcom. As such, he talks a lot more about identifying a good venture capitalist (which a nice dotcom will have), as opposed to measuring positive net margins (which no dotcom has). High tech startups also provide most of his examples and quotes. Rippy quotes executives of a number of technology companies on topics ranging from sizing up a management team to evaluating your own tolerance for risk.

Most of his advice is quite general. He explains that earlier stage companies are riskier, and that you'll probably work long hours. In a few places, he becomes quite specific, for example, analyzing the strengths of different venture capitalists. He missed a trick, I think, in failing to discuss some of the specific data most valuable to people who have adopted a start-up lifestyle. Where's the table of startup filled neighborhoods in New York City, San Francisco, and Austin, cross referenced by nearby all-night restaurants and gyms?

What's Good?

The best things in this book are also the most basic and practical. If you don't know how to value a stock option, you should figure it out before starting at a dotcom. If your potential employer hasn't actually shipped a product yet, you should probably remember to ask how many months of cash they have in the bank. Of course, these topics are more obvious to most people now than they were in the giddy days before April's collapse in NASDAQ.

The quotes from other people were generally insightful, though Rippy's stable of experts is smaller than it looks at first. He returns to the same people over and over again for more quotes.

What's Silly?

Rippy presents a spreadsheet for calculating your "tolerance for career risk". It's a bit like a spreadsheet designed to determine, in strict mathematical terms, precisely how much prettier you think Boston is than Springfield. The question is fuzzy; the inputs are fuzzy; the output is fuzzy; don't pretend it's physics.

Worst Bad?

His half-baked theories of organizational evolution and some of the space-filling material. Rippy spends chapters on the difference between "organizational infancy" and "adolescence," etc. The filler is quite obvious, and sometimes laughable. To bulk out what is essentially a brief comendium of common sense, he includes lines like "Your base salary must be at some acceptable level because you need to cover your living expenses on a day-to-day basis." (Really!?!? Oh no!)

Is it for you?

Are you thinking about maybe joining a startup? Do you know the difference between qualified and nonqualified stock options? If not, buy the book.

Stern is the president of Information Markets Corp. You can purchase this book at FatBrain.

Comments

Investigate and remain not only wary, but lofty.

[Gendou]

I've worked for a few start-up computer companies, two of which have failed miserably. The third is doing very well - and it wasn't until this third time around did I learn my lesson in deciding whether or not it'd be worth my time. If you are considering working for a start-up, investigate them thoroughly!

After an interview process and they show you around, you should have the option of signing and NDA and asking to see everything they have to offer in terms of the business model, projections, staff, and organization. If a start-up has a business model that fails in general assessment in *anyway* or fails to demonstrate good long-term goals, forget about it. Also, turn the interview around from yourself to the staff. Question your projected boss. What does he/she really know? Is he/she a technical type that has a clue about what you're going to be instructed to do, or is he/she just a figure head that works as an underling for the top people, pushing employees around. Are the higher-ups well educated people that you could truly respect? What about your potential co-workers? Are there a few that are confused by constructors? Are some of them installing RedHat for the 3rd time that same day? Usually lack-luster employees shows that management just wanted to get some quick help together for practically no cost just for the sake of impressing VC's. Bad. Also, observe the office organization model. It's usually a bad sign if everyone is running around between tasks in an aimless fashion. (Yes, that's vague, let me clear it up.) If you see someone who should be writing code stapling papers together in place of an office manager, bad sign. A good start-up company should have people hired for their respective positions and not unrelated ones.

When I say that you should be lofty, you should remember that a good start-up company knows talent and will relentlessly pursue talent. Why? They know that they will only succeed if they can convince the best minds around to join their team. A start-up that is doomed to fail is one that interviews talented employees, but says, 'well, you cost too much, we can find someone cheaper.' Bad. Always remember to turn questions back at your interviewer. If they really want you and your skills, they'll put up with quite a bit.

Lastly, make sure there is a lot of work to do! A start-up company should be busting its ass to become successful and beat everyone else to the punch. They should not be chaotic, but they should have their workload assessed and everyone on the team aughta be shoveling away at the pile, not standing around cubes with coffee mugs preaching how great they are. (Don't forget that if there isn't a lot to do, there's something fishy - and it might also mean that you'll not be needed for too long.)

This is just a collection of thoughts from my own meandering experience with start-up's. Don't be discouraged though! A friend of mine and I have gone through several of these things and it's incredibly frustrating. Many, however, will become successful and you'll know it when you join! Stick with it and someday you'll be cashing in on loads of valuable stock. :-)