Although you can’t predict exactly how a new job will turn out, you can use the interview process to get a really good feel for the health of a company, and how leaders are thinking about steering the ship. With news of tech layoffs and a potential economic downturn, doing due diligence is more important than ever.
I’ve picked out 8 questions that I think will help you spot any problematic companies, and allow the best ones to give you confidence. For many of these questions, you aren’t looking for specific answers. Instead, look for honesty, transparency, and a sense the business is well-run.
1. How are you thinking about runway?
‘Runway’ is the number of months a business has before it runs out of cash. Anything less than 12 months is a worry and any business that doesn’t come across as honest in this question (“I can’t disclose that with you…”) should be a red flag. The best businesses will talk about scenarios and how they’ll respond to the changing market. This shows that they’re thinking about the future smartly since no one truly knows what will happen. Weaker answers will be vague.
2. How has your sector been affected by the economic downturn?
Some of this can be researched by you and should form an important piece of diligence before you decide to make the move. A useful angle here is getting the company’s take on the market changes, and see if they respond with a good sense of perspective versus being overly optimistic (e.g. “We’re on track to smash our Q3 targets regardless”).
3. How has your company been affected by the downturn in tech?
Ideally, you want to see signs that the company can respond quickly to changing and concerning circumstances. A key thing to watch out for is when a company from a struggling sector has overconfidence that it’ll still be able to grow fast. If you’re not satisfied with their answer, it might be worth being more direct with a question like “what’s happened to key metrics since the start of Jan 2022?”.
4. How much do you expect to grow in the next 12-24 months?
This is a broad question and allows a company to talk about the growth of the team, revenue, and product. Will this be a period for the company to survive or thrive? If a business is currently not making revenue, ask them when they expect to start making money. Be wary if the answer sounds overconfident.
5. How have your plans changed in line with the market environment?
Here, you’re looking for clear examples that the company is adapting to the changing environment. If a company says they haven’t changed their plans, this is a chance to probe why the macro market environment means they don’t need to change.
The best companies will show a level of focus here and have a clear strategy that they’re able to articulate confidently with you. Press further with questions like “what are your top areas of investment?” and “how are you going to win?”
6. Have you made any layoffs?
If a company has made layoffs, this isn’t a red flag. It is, however, a reason to probe and see how they respond and talk it through. Do they speak about employees like numbers or people? If they haven’t made layoffs, there’s still value in asking hypothetical questions like “what would cause you to make layoffs?” and “if you were to make layoffs, are there any areas of the business that will be more affected?” to get a feel for how they think.
7. How are you thinking about the value of employee share options given the market adjustment?
Share options are often a benefit of joining an early-stage company. If you join the right company, it can have a big financial impact for you (we’ve written a blog about how to think about stock options here). However, the valuation of tech companies has fallen in the last 6 months and that means some companies are now overvalued. The best companies will talk about how much they were worth at the last valuation, and whether that’s now a fair reflection of their current value. Additional questions to ask here could be “What valuation does the company have to reach for me to get a great outcome?” or “How much upside is there with my options?”.
8. Who can I speak to in the business?
It’s now more important than ever to speak to people working in the company outside of the interview process. This gives you a much more accurate impression of what it’s really like to work there. The main angle to ask people you’re connected to is how they’re feeling: Are they excited by the company’s prospects? Or do they sound cagey? Additional questions include “How transparent has leadership been?” or “Is the culture supportive during tough times?” or “How well run is the business?”.
These questions might be best suited to asking someone in the leadership team, and you likely won’t have time to ask every one during an interview. You might not feel comfortable asking these during interviews and that’s absolutely fine (following up with an email is a great alternative), but I also think that asking them in an interview shows you’re sharp and care a lot.