Ask HN: Should I work for a startup who's sole purpose is to be flipped?

[justinkelly]

Hi Guys,

I've been approached by a funded startup that is developing a web-app and who seem to have the sole intention of making a product so that the company will get purchased by a large corporate/whoever in a few years?

Any thoughts on working for this type of startup?

Cheers

Justin

[kbutler]

"approached by a funded startup" implies to me that your are being asked to be employee #N. You are unlikely to have any significant equity percentage, and that equity will almost definitely be in a category that only receives any money after the funders and founders are well-compensated.

In short, consider it a job - any payout from the acquisition will be minimal. Evaluate the job based on the work you'll be doing and the immediate compensation you will receive, and even more than when working for a stable company, be prepared to move on whether by your choice or events beyond your control.

[kanwisher]

Exactly I just moved from BigCo to a little startup, always negotiate on that the stock options aren't worth anything. There are a lot of advantages working at the small company being able to direct the technology, instead of using J2EE on a windows xp machine

[PanMan]

In the end the purpose of almost all VC backed startups is to have some form of exit: The people providing the funding will want their money back (with a big return), and only really seldom that happens by paying back the investors from profits made.

[hundredwatt]

If it is a smart team working on an interesting/challenging problem and you think you would enjoy it, then the fact that they want to flip the business should only be a secondary consideration.

Just remember to set your expectations correctly about cash/equity incentives: http://www.bothsidesofthetable.com/2010/09/06/how-to-discuss..., http://www.bothsidesofthetable.com/2009/11/04/is-it-time-for...

[willvarfar]

Get a hot salary and be skeptical about deferred rewards

[justinkelly]

thanks will

wondering if any of the original developers stay on in the next/purchaser company ?

[nlh]

I've always had mixed feelings about this sort of project.

On the one hand, it _could_ turn out wonderfully for all. Spend a few years playing with some fun tech, don't have to worry too much about profits/long-term viability - just keep enough cash to operate, and exit with a nice chunk of change and move on to the next.

On the other hand, it's a VERY risky strategy -- it doesn't necessarily build a fundamentally strong business (it certainly might though) and if the exit doesn't happen (or doesn't happen quickly enough), the company could very easily vanish with nothing left to show for itself.

I personally prefer the more fundamentally sound approach - build something great, viable, and long-term successful. Maybe you exit with a huge acquisition. Maybe you exit with an IPO. Maybe you don't exit and reap profits for years to come. But that doesn't mean that the flipping approach doesn't have the potential to reward or should be avoided (heck plenty of people are doing it and making a ton of money).

I'd say the key points to consider are these:

1. Do _you_ believe this is something that one of the large corporate/whoevers will want to buy in a few years? Or do you think that's an excuse for a lack of a viable business model?

2. Do you like the project? Regardless of exist, it'll be your home for a few years, so you should enjoy the work and make sure it will help your long-term aspirations beyond the next few years.

3. Since the goal is a flip, that means that equity is key. Will you have enough equity to reap the benefits? If the flip doesn't happen, will you be paid enough to make the time spent worthwhile?

Just consider all angles and make sure your interests are looked-after. That's the best advice I can offer.

[manuscreationis]

Like i'm sure everyone will say...

If the pay is great, and you don't get locked into chasing the dream of a big payout in 3-4 years, and it'll be technology you want to work with, why not?

If it's a good job opportunity otherwise, just don't marry yourself to the work, as its likely to burn you down the road.

If it turns out to be a bad move, or you're otherwise wary, just keep your feelers out there and don't be afraid to jump ship to a better opportunity if you see fit to do so.

[cmer]

It may actually work, but if it doesn't, their only option will be to fold. If you end up work there, make sure you get plenty of options to benefit from a potential acquisition. Your risk level is higher, after all.

[fran6co]

Make sure that the product is good and not just a hack to attract buyers. If not you could get in a company that worries more about looking like a startup with a killer product instead of actually doing it.