Earlier this week Bijan Sabet at Spark Capital wrote a post, “An inspiring way to join a startup“. The post describes how a couple of companies in Spark’s portfolio had individuals offering to work for free in exchange for the possibility of a full-time position. I don’t know what the exact circumstances were for each candidate, but if the candidates were switching industries and this was their first startup, I’m a little surprised that this path is considered unique. Having lived this process as both a newbie and an employer, below is the story of how I got into the startup world and some thoughts on “try before you buy” hiring based on my experience.
In August 2001, after I had worked for a couple years at JPMorgan (my first job out of undergraduate), I finally decided to quit and join a startup. I had known since before day one that I didn’t want to make a career out of banking. To me banking was a two-year graduate school program that would provide much-needed skills in finance and accounting that I didn’t get while studying economics and Russian in college. By the time I left, I thought I had the wind at my back. I had been offered a promotion to Associate and naively figured it would be easy to get a startup job. Wrong.
During my two years at JPMorgan I had been reading everything I could about the NY startup scene and keeping a spreadsheet of all the NYC-area startups. I had even gone on a few interviews to test the waters. About a month after I left, I was out in San Francisco visiting a friend and woke up early on September 11, 2001 to catch my flight back to New York. I won’t recount that terrible day here, but needless to say I was in San Francisco for another week. Returning to New York many days later, I arrived in a different city than I had left.
This was not a good time to be looking for a startup job. New York was reeling from 9/11 and the internet bubble had burst. Then I tore my ACL playing soccer at Chelsea Piers. Awesome. The day it happened, I had 24 hours left to send in my COBRA before it expired. I had the surgery and then focused my efforts on getting a job at Colloquis (then called ActiveBuddy), a developer of natural language software systems. I had already been following the company’s progress for some time. To me, Colloquis’s technology was indistinguishable from magic. I totally fell in love with it and decided I had to work there. My initial application (through the company’s website) was rejected. Then I had a stroke of luck and was introduced to the CEO, Steve Klein, through a mutual friend. Finally, I got a meeting with him. I remember it well. Steve was firing questions at me, and at one point he asked, “how much did you make at JPMorgan?”. I told him and he laughed. “That’s ridiculous!”, he said. “You’re two years out of school. You have no real experience. Nobody is going to pay you that outside of finance.” I told him I knew that and that I wasn’t expecting a similar salary. Of course, the other Colloquis-specific factor at play here was that the company was in major trouble. Management had been recently replaced and the company was scrambling to close necessary financing.
Regardless, Steve was absolutely right. Sidebar: there’s no chance in hell that a startup is going to pay someone with no operating experience a six-figure salary. In fact, if you find a startup willing to pay you a six-figure salary when you have no experience, you should run in the other direction. They’ll be toast in a year.
Despite my lack of experience, Steve saw how fired up I was and he gave me a shot. I asked that we formalize the arrangement in a letter. We worked out an offer letter outlining what my responsibilities would be, success metrics, etc. While I agreed to work for free he offered to pay my expenses: cell, internet, etc. It was April 2002 and the company was still trying to close its next financing round. A few months after I began working, Steve unfortunately had to lay off 75% of the New York office. It was terrible and those were the worst days, but the short story is that the remaining team turned the company around, built it back up, and we successfully sold Colloquis to Microsoft in 2006. I started earning a salary around the time Steve pared down the company to five in NY (I was the only person left on the business side plus Steve), and by the time of the sale I was a member of the management team. It was an amazing experience to have worked with such incredible people and to have lived through all the ups and downs with them. If there is any lesson to be learned from this it is that sometimes you need to realize that you know nothing – you must take a few steps back before you can start climbing again.
Years later, and having the experience of hiring individuals as an employer, I am a big fan of “try before you buy” hiring practices, particularly for job seekers switching industries. It’s very difficult to know how someone will perform until they’re actually working. A period of purgatory gives a company the opportunity to get to know the individual, and likewise. These trials can take many forms and don’t necessarily translate into working for free. One path might be to give candidates a discrete paid (or unpaid) project to complete. In any case, timing and objectives should be laid out in writing beforehand so that both parties go into the evaluation period with the same expectations. While “try before you buy” is not possible (or even preferable) in many circumstances, it can be an effective tool to ensure that you get the right people on the bus.