This podcast discusses whether employees should quit failing unicorn startups and highlights signs that it's time to leave. It explores the prospects of employees at late-stage unicorns, including the risks of equity becoming worthless. Important considerations for staying at a unicorn company are revenue growth, product-market fit, and user retention. Reasons to leave a unicorn company include gaining more responsibility and equity at an early-stage company. Evaluating a company's performance involves aligning all-hands meeting messages with facts and thinking critically about information.
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Quick takeaways
Assess the health of a unicorn startup by considering revenue, user satisfaction, product-market fit, and customer engagement.
Timing is crucial for employees at late-stage unicorns, and considering opportunities at smaller, earlier-stage companies can be advantageous for career growth and better equity terms.
Deep dives
Assessing the Odds of Success for Unicorn Startups
With over 1,400 unicorns in existence, the podcast examines the realistic likelihood of all these companies going public successfully. Assuming an optimistic estimate that one-third of the unicorns are expected to thrive and achieve a successful IPO, the remaining two-thirds are likely to face challenges. For employees in later-stage unicorns, the strike price of options tied to valuation becomes a crucial consideration. And in the event of an acquisition, employees may have to reinterview for their jobs, potentially ending up at a big tech company they were trying to avoid.
Evaluating Company Performance and Product Market Fit
Revenue and user satisfaction are key indicators to assess the health of a unicorn startup. If a company is generating $50-100 million in revenue or more, it's generally a positive sign. However, if a company is struggling to generate revenue below that threshold, employees should ask important questions about product-market fit, user retention, and whether the company is charging enough for its product. Gathering product analytics and assessing customer engagement can provide valuable insights.
Considerations for Employees and the Potential for Career Growth
Timing is crucial for employees at late-stage unicorns. Considering a move to a smaller, earlier-stage company can be advantageous as it may offer opportunities for more responsibility, better equity terms, and potential career advancement. Assessing the commitment of founders and senior management, as well as the competence and engagement of colleagues, can help make informed decisions about staying with a unicorn or exploring alternative options.
If you’re an employee of a late stage company right now, how would you know when it’s time to move on vs. time to double down?
The fact is there isn't an easy answer — it can really vary from person to person and situation to situation. In this video, YC Group Partners, Michael Seibel and Dalton Caldwell share some suggestions on what sort of things an employee of a late stage startup should be looking for — the good signs and the bad — to best make this decision.
Apply to Y Combinator: https://yc.link/DandM-apply