“If you’re offered a seat on a rocket ship, don’t ask what seat.”
Picking a rocket ship isn’t as easy as the quote would make it seem. Sure, if a company raises a boatload of capital, it is at least going to have a good run at becoming an enduring company. But as we have seen recently and is becoming even more prevalent, venture-backed companies have to regress to progress. Team reductions among companies that appeared to be rocket ships once are now becoming commonplace. Ask the people who have gotten let go from one of these rocket ships if they made the right decision to pick a seat on it, and you might get an answer that doesn’t align with Sandberg’s quote and perspective.
Rocket ships aren’t as easy to identify, and the timing of when to get on and off of your own volition is even more challenging to determine. We wouldn’t need venture capital if it were easy to identify rocket ships. Traditional forms of financing and capitalization would suffice. The venture capital industry exists because identifying and betting on rocket ships is largely professional gambling. Make a couple of big bets that work out, and the returns can be massive and will make up for all of the losses. Most venture funds and firms don’t provide a positive return. It turns out betting on what companies will be rocket ships is hard, and assessing which one to be a part of is no different.
So how is someone supposed to know whether a company is, will be, and the right time to join a rocket ship? First, ignore Sandberg’s quote. The intent shouldn’t be to take a seat on a rocket ship. The goal should be to do interesting work with interesting people, working on a problem that interests you. These factors make it worth the time and energy for you to ply your craft at a company irrespective of its odds of being a rocket ship. If a company then turns out to be a rocket ship, cool, but joining a fast-growing company for the sake of the company’s rapid growth shouldn’t lead to the decision to join.
A ride on a rocket ship is invigorating. The ride’s intensity, work and demands will get anyone’s adrenaline flowing. The belief is that if you take a seat on a rocket ship, you will be challenged and learn more than you otherwise would. This might be true. The intensity and pressure of circumstances certainly have a way of forcing focus and urgency. The proverbial drinking from a fire hose can be a welcome challenge if you are wired to thrive in such an environment. However, if you prefer to drink from a regular water bottle, you might find the intensity of a rocket ship environment misaligned with your values and how you do your best work.
The timing of joining a rocket ship matters as much as any other aspect. Join at the right time, and you might have the ride of your life. Join at the wrong time, and you might be offered a severance package before you are eligible for any vacation time. Here are some tips for identifying whether the timing is right to consider taking a seat on a potential rocket ship…
- Ask if the company is aligned with the board on strategy, timing, and use of funds. A company’s leadership that isn’t aligned with the board of directors (which often includes key investors) is likely to hit turbulence sooner rather than later around company strategy and direction. Too much strategy turbulence and board pressure can quickly turn a rocket ship into a paper airplane.
- Understand the underlying company fundamentals. What are the keys to the company’s continued growth and success? What could negatively impact things? Are the fundamentals long-term or short-term keys to continued growth?
- What is the company’s financial runway? When will it need to raise more funding, and how likely will it happen? Will new investors and potential new board members see the company in the same light as the current ones or invest in a different path that might impact your role?
- Does the company leadership have a track record of growing a sustainable company on a fairly consistent trajectory? Leaders who haven’t been through it before will be figuring it out on the job, and this can mean significant peaks and valleys you might not want to sign up for.
- How much involvement does your direct manager have with the leadership team and overall company strategy? What is your direct manager’s relationship with the leadership team if they aren’t a part of it? How long have they been at the company?
- How will your position contribute to company strategy and growth? How will your contribution be measured and assessed? How long has the company been trying to fill the position?
- How many people has the company hired in the last six months, and how many does it expect to hire in the next year? In what capacities? Companies with venture funding can fall into the trap and pressure of hiring too many people too fast with the inability to support or lead them adequately. Hiring too many people too fast will test a company’s culture and systems.
- Are you interested in the mission of the company? Does the problem intrigue you and get you excited? Will you be working alongside other interesting people who will challenge you and support you?
Notice I didn’t mention anything about compensation. No reference to equity or stock options. Are these important considerations as part of joining any company, let alone a potential rocket ship? Yes. Do they matter as much as the other considerations assuming the compensation, equity, and other benefits are competitive? No.
The lure of being part of a rocket ship because the company might have a financial exit at some point that would potentially make your equity worth something can be strong. The truth is that most people at a company with equity don’t have the type of shares or the timing flexibility to capitalize on a company’s sale or IPO. A handful do, but most don’t. A potential financial windfall is never a good enough reason to join a potential rocket ship unless you have the type of equity and flexibility to cash out when you want.
Joining a rocket ship might make sense after doing your due diligence and assessing fit. If it does, awesome. Go for it, learn a lot and enjoy the ride. Don’t be discouraged if a rocket ship seat doesn’t make sense for you. There are all kinds of companies with many different seats well suited to you.
For more information, visit awh.net.
This mutli-part sponsored series is presented with paid support by AWH.
At AWH, we solve complex business problems by creating innovative and disruptive digital products. When you choose to work with AWH, you get more than just a product, you get a partnership. We work with you to create products that change businesses, communities, and lives. You get an elite team of digital product creators and data problem solvers, customized to fit your needs. We have experienced developers in virtually every field, so the sky is the limit. Ready to start a conversation?