Questions to ask in your next tech startup interview

Photo by Lala Azizli on Unsplash

Every few weeks I write a blog about product management, career in tech, and navigating life as a technology professional. In this post, I’m sharing a few tips on what to look for when interviewing with early stage startups.

This post was originally published at https://www.theproductthinker.com. I’m re-posting a revised version here on Medium.

Despite the overall slowdown in the tech jobs market, early stage startups continue getting funding and expand hiring. For jobseekers, this means many more options.

Startups, however, are risky. The top question that should be on your mind is: how healthy is the business? While most startups fail, it’s possible to see signals of potential success early on. The search for those signals starts with questions about the company’s strategy.

Some of those questions you can ask directly in an interview. Some you will have to answer yourself through research, industry analysis, and by talking to current or former employees.

Before we go any further, though, I will make a big assumption. I will assume that you already know your career goals for the next few years and that you know the kind of company you aspire to work at. If you don’t, you can check one of my earlier posts on this here:

Now, let’s dive in.

Four dimensions of startup potential

Dimension #1: Strategic advantages

Most startups don’t have a fleshed out strategy until later stages of growth, think Series C or D. This is a fully expected situation, because the whole point of a startup is to iterate on the business in order to find a strategy that can lead to sustained profits in their market.

That said, even in their larvae stage high-potential companies have one or two markers of success that will help turn them into butterflies.

Advantage #1: They have strong differentiation
Differentiation can take many forms, but simply being unique is not enough. What’s true for high-potential startups is that they are the only solution in their specific market segment which gives customers a massive increase in experience or value.

Design tool Figma leapfrogged their competitors InVision and Sketch by making collaboration between designers and frontend engineers easy. Tinder helps users land a date an order of magnitude easier. Uber does the same for getting a ride in rush hour.

To sum it up, high-potential startups:

• Offer a unique solution
• Serve a specific, often narrow, customer segment
• Give customers an increase in performance unmatched by other solutions

You can evaluate a startup’s differentiation in three ways:

➡️ At the bottom of the post I added a list of questions which you can ask in your next interview.

Advantage #2: They have something that’s impossible to replicate
In business strategy, this is sometimes called a “cornered resource”, which is basically a secret sauce that competitors can’t replicate or obtain. Most often, these are patents or a deep research experiences of the founders.

This type of strategic advantage is common in deep tech startups, while it’s relatively rare in other kinds of companies.

Dimension #2: Market conditions

The footnotes of technology history are filled with mentions of dead startups which in their heyday were considered breakthrough successes: Webvan, Better Place, and many others.

While so much went wrong with each of them, the number #1 factor was the market: they were either too early, served the wrong customer, or operated in a regulatory environment that didn’t support innovation. The bottom line is that even the best products can’t win in a bad market.

Unfortunately, assessing the market is not easy. It requires a set of skills that take time to develop. The shortcut is to ask questions about the market and the industry during your conversations with employers.

Dimension #3: Quality of execution

The world is dynamic. Strong differentiation, having a cornered resource, and being in the right market are not enough to ensure sustained strategic advantage. Practically, this means that superior business performance is a moving target. A company runs the risk of failing in the long run if doesn’t make full use of or doesn’t expand their advantages.

Now defunct Fab.com is a good example of that. The company started out strong, found an initial product market fit, but was unsuccessful in sustaining it. After raising a total of $300M between 2011 and 2013, Fab crashed and burned. Its core assets were sold-off in an all-stock transaction in late 2014 — for just $30M.

Unlike strategy and external market conditions, I find the quality of execution hardest to evaluate. Most startups are black boxes, and as a job seeker it’s hard to see what’s happening on the inside — until it’s too late.

In order to understand how well the startup executes their proto-strategy, we need to ask questions about:

• The actions they are taking to deepen their differentiation
• Their rate of pivots, i.e. how frequently they evolve their strategy
• Their approaches to measuring business and product performance

Dimension #4: Talent strategy

And finally, there’s talent strategy. Startups approach hiring in three major ways:

1. They can hire junior specialists to put out burning fires
2. They can hire senior specialists to build out a specific function
3. They can hire mid-level specialists who excel in frontline work but can scale up their contribution as the company grows

First and second approaches are risky. If the startup hires too many junior specialists, e.g. more than 20% of staff, coaching will stretch and distract the more experienced contributors. As a result, productivity will suffer, and with lack of oversight the junior specialists may veer off track, leading to a drop in the quality of execution.

If the startup hires too many senior specialists, they risk staffing the team with people who are unable to function in fast-moving unstructured environments. Another subtle risk here is that some senior specialists might be overly attached to processes and tactics that worked in their past companies but may not work at startups.

The last approach, which is hiring mid-level specialists, avoids both risks. By hiring strong contributors with several years of experience under their belt, startups can ensure high quality of execution without breaking the bank. They also have a higher rate of success at growing those specialists into leaders.

Thankfully, getting a sense of how the startup thinks about seniority and specialization is as easy as checking their LinkedIn profiles.

Extra reading: Gergely Orosz who runs The Pragmatic Engineer newsletter in is advocating for a similar approach. Check his thoughts on LinkedIn: Gergeley Orosz on building engineering teams.

Summary

Based on everything that I talked about so far, here are principles for deciding your next startup gig:

1. Always pick a company with the strategy that you believe in: their differentiation, unique advantages, and value proposition all must make sense to you.
2. Great products aren’t enough — the market must value them.
3. Good strategy without good execution is luck. It runs out.
4. Talent strategy should support execution.

Sample list of questions to ask during your next interview

💡 Tip:Save this post, so that you could keep track of new questions. I will be adding them over time.

Core business

• [Value prop] What is your value proposition?
• [Differentiation] How do you differentiate from [name the top incumbent / competitor]?
• [Differentiation] How big of a gain in value or performance do your customers get?
• [Differentiation] How satisfied are your users with the product? Can you share customer success stories or feedback?
• [Cornered resource] Does the company have a core strategic advantage that competitors and incumbents are unable to replicate? If yes, what is it?

Market

• [Market dynamics] What changes have you observed in your market and industry landscape that can help your company become a breakthrough success?
• [Market dynamics] What changes have you observed in your market that unlocked new ways to create value for the customers?
• [Industry dynamics] What has happened in your industry that made it possible for you to challenge the incumbents?
• [Segmentation] In your current market, what are the customers that you decided to not serve?

Execution

• [Quality of iteration] Can you tell me about the last time you killed a product or invalidated a hypothesis? What did you learn? [This questions helps you understand how well they iterate on their tactics and strategy]
• [Quality of iteration] Looking back at the past 3 months, can you tell me about the initiatives that failed? How did those failures help the company evolve its strategy?
• [Roadmap] What does your high-level 2023 roadmap look like? What influenced it?
• [Overall direction] What’s your vision for 2025 and 2030?

Talent strategy

• [Team composition] What can you tell me about your people strategy? Does the company prefer to hire junior specialists, senior specialists, or mid-level specialists?
• [Team topology] Can you tell me about the structure of the team? Who will I be collaborating with most closely?

Originally published at https://www.theproductthinker.com on January 20, 2022.