Seed stage Startup Red Flags
I'm looking for red flags when it comes to seed stage startups that are still pre-PMF/MVP stage
Does number of non technical people make a difference? If a startup has too many sales people is that a red flag?
What are other things I should be concerned about?
![Mid-Level Software Engineer [SDE 2] at Amazon company logo](/_next/image/?url=https%3A%2F%2Ffirebasestorage.googleapis.com%2Fv0%2Fb%2Ftech-career-growth.appspot.com%2Fo%2Fcompany_logos%252Famazon_logo.jpg%3Falt%3Dmedia%26token%3Dff5f2302-08be-43bc-b7b1-d381ba508d99&w=48&q=75){kind=logo}
Discussion
(5 comments)- 0
6 months agoTech Lead @ Robinhood, Meta, Course HeroGreat questions! Here's what I would consider red flags:
- A sales team - For a pre-PMF startup, the founders should be the sales people. If they aren't, they are either lazy or have no clear vision or both.
- Too many people - If you're pre-PMF and you have 10+ staff, I have 0 idea what you're doing. There are some spaces that are more resource-intensive, but for most startups, they should stay <10 people (ideally <5) pre-PMF.
- All growth is paid - If the only way they can grow the userbase is through ads, that's simply not sustainable. Paid acquisition only gets harder over-time as you acquire the most willing users to try out your produce first thanks to the invention of targeted ads.
- Overly complicated tech stack - This is hard to objectively judge, but if their tech stack is starting to look like one of a FAANG company, that's a sign that they're focusing on the wrong thing (overly technical founders do this all the time).
Here's another good thread: "What sort of questions should I be asking during an interview for a startup?"
- 0
6 months agoMachine Learning Engineer [OP]Taro CommunityThe startup I'm interviewing at is B2B SaaS and has 2.5 sales people (2 FT + 1 part time) and 2 engineers ~5 months old. They hired 1.5 sales people and 1 engineer. 1 sales focused founder and 1 engineering focused founder. Should I see that as a red flag?
- 06 months agoTech Lead @ Robinhood, Meta, Course Hero
Hiring sales people is a very common startup mistake (it's parodied in Silicon Valley HBO for a reason), so even smart people will fall into that trap. So it's not like something that makes the company just impossible to work for (a job is a job after all).
That being said, hiring a full-time sales person and one I assume is on contract at such an early stage... Not the best move.
- 06 months agoMachine Learning Engineer [OP]Taro Community
Thanks for sharing. Would you be able to expand more on why its a bad move specifically?
- 06 months agoTech Lead @ Robinhood, Meta, Course Hero
When you're pre-PMF, it's up to the founders to come up with the vision and learn how to pitch it coherently. Only after they do it (you have generally reached some level of PMF if you're at this point) can they hire sales people to take that process and repeat it. This usually happens around Series A or the later end of seed stage.
Hiring sales people early is often a sign that the founders themselves don't have a compelling vision and are (often subconsciously) hoping that sales people will miraculously figure it out for them. That's the sign of a weak founder.
On top of that, hiring people (especially FTE) is just expensive overall and is riskier in the current bear tech market. Sales people pre-PMF is just a waste of money and time.
