Considering, Identifying and Landing A Start-Up Opportunity

by Nicole Hooper and Susan Pieper-Bailey

Recently we interviewed James Celentano, who is currently a Futurestep consultant, about careers in start-ups. Following a background in an entrepreneurial entertainment company, Mr. Celentano developed an entertainment recruiting practice at Korn/Ferry International. In this practice, Mr. Celantano worked with numerous new entrants to the entertainment field. Mr. Celentano recently joined Futurestep, where he is expanding our venture-funded practice. Based on his vast experience, I thought that he would have some great advice for those of you considering a career in a new venture. We summarized some of Mr. Celentano' comments below.

Am I Right for a Start-up?

Mr. Celentano pointed out three questions that you should ask yourself if you are considering a career in a start-up.

1. Do I deal well with ambiguity?

2. Am I an optimist who is willing to face the worst?

3. Am I comfortable knowing that my job will likely change?
The answer to each of these questions should be "Yes." Start-ups often lack the sense of security you might enjoy in larger businesses. Start-ups rarely have job titles and when titles exist, they rarely matter.

Without making light of the realities of working in a start-up, Mr. Celentano did point out some humorous ironies. Depending on your company's funding situation, you might find yourself spending much of your time with venture capitalists or on Wall Street, begging for more money! When you are introduced at cocktail parties, people won't necessarily understand what it is that you do, especially if you don't have a familiar parent company name to which to attach yourself. To offset the business risk in a start-up, you will be working long hours. When you do come home, your dog will bark at you. However, the Fed-Ex person will be a familiar site to Fido! And you will never know what new challenge may sink your foolproof concept. BUT, you will unlock your creativity, you will get a lot of exciting experience, you will make contributions in ways you never anticipated, and hopefully you will realize terrific upside both financially and intellectually.

Still unsure if a start-up is right for you? Your Futurestep feedback can also be useful in determining how well suited you are for the start-up atmosphere. Start-ups require people with a strong ability to be action-oriented. Although analytical skills can be quite valuable in the planning process, the tendency of analytical people to require tremendous amounts of information to make a decision must be tempered. The time frame for decisions in a start-up must be fast. You must be able to recognize when you have done sufficient analysis. If you take too long to develop your business model, you might find that your friendly venture capitalist decided to invest in a swifter venture. Thus if you are highly analytical, the start-up environment may require an adjustment for you.

Identifying the Right Opportunity

Finding the right start-up opportunity can be the biggest challenge. Although start-ups do recruit in traditional ways, they often utilize informal networks to fill their positions. Following are some suggestions for staying connected to the start-up job market.

• Network with Attorneys - Most start-up organizations require legal assistance to set up the company. Therefore, attorneys are often clued into opportunities at the early stages.
• Network with Venture Capitalists - VCs often require start-ups to hire new management talent as a condition of providing funds. As a result they are sometimes directly involved in the recruiting process of start-ups.
• Read Business Plans - Approach them with healthy skepticism, become a connoisseur of good plans and a critic of bad ones. Introduce yourself to the authors of good plans, as they are often seeking talent.
• Introduce yourself to your "favorite" companies - If there's a new company that jumps out at you as having a winning formula where you could also add value, you owe it to yourself to get to know them. Always utilize your connections first, but if you lack contacts at such a company, don't hesitate to introduce yourself (i.e., cold-call).

These tactics will help you make the right contacts to find your start-up opportunity.

Negotiating the Right Opportunity

Negotiating an opportunity with a start-up can also be a challenge. As a member of the management team, you are most likely expected to trade-off cash compensation for options in the company you are building. This strategy not only reduces the cash drain on the company, but also demonstrates commitment to your investors. When determining the split of the cash versus equity trade-off, you should look at how others are compensated. You should expect to be consistent with others in the organization. It is also important to note that your timing in joining the company will heavily influence the equity you receive. For any given position, one can expect either fewer options or a higher strike price as the company gets closer to its IPO. If you are not prepared to make these trade-offs, then a start-up opportunity is unlikely to be right for you. Again, your Futurestep feedback will also help you determine whether or not you'll be satisfied with such an equation.

Start-ups offer tremendous appeal, but they also require significant sacrifices. Before taking the plunge, consider the trade-offs carefully. Such preparation will help ensure that you are satisfied with any move you make.