thinking about start-ups

i think about start-ups a lot. i presently work for one, and i have worked for them in the past. they’re keen and exciting if you get the right mix of people and ideas and timing.

but, whoah there. let’s not get ahead of ourselves. due diligence is important. when you’re performing your due diligence, you’ll want to assess the cultural and financial health of the company, and the viability of the product/service. first and foremost, make sure you fit in culturally, or you will be hating life.

you have to sit with the ceo and ask the tough questions. questions like these:

• What’s your background? How did you become CEO, and how long have you been CEO? Has there ever been a change in CEO? (If so, why?)
• How long has [co] been around? Who founded it? What was the original vision?
• What are the staffing plans in the next 6 months, 1 year, 2 years?
• Who is funding [co]? What is the investors’ stated exit strategy? And when? If it’s VC money, who else do these VCs fund? How much money does [co] have in the bank, and what’s the monthly burn rate?
• What sort of future plans exist for seeking more funding?
• What’s the most exciting problem you’re trying to solve?
• What keeps you up at night?
• Who are [co]’s competitors, and what characteristics differentiate [co]?
• What’s the plan for generating revenue? When does [co] plan to achieve positive cash flow?
• What’s [co]’s marketing strategy?

some of this is my own, but i got help thinking about the bigger picture from here and here. if you have suggestions on what i should add to this list, send me a note or leave a comment.

update!

Chris brings up a good point. My bullet points above outline questions that should be asked of the company’s CEO. But equally important, especially when the CEO is not a domain expert in the company’s field, is to interview his trusted advisors - the guys that make the company go. These are the technical folks, the marketing folks, the business folks. These are people who have day-to-day exposure of their company’s strengths and weaknesses. All important data points.