The first time I joined a startup, I did almost no diligence. A colleague I trusted from a prior job brought me in during the dotcom boom. The upside seemed enormous. The founder was someone whose judgment I respected. I was early in my career and genuinely excited to be on what felt like a rocket ship. I did not look very hard at the business. I just said yes.
When the dotcom bust came, the rest of the exec team lost interest and walked away. I ended up buying them out and running Embarc myself. Revenue, morale, and client logos were all at an all-time low. It took years of repositioning into biotech and pharma, which were booming in Boston at the time rebuilding the service model, and investing in repeatable frameworks to bring costs down before the business was worth something again. We eventually sold it to a boutique PR firm in Philadelphia that operated in the same pharma and biotech space. Good outcome. Much harder road than it needed to be.
The lesson I took from Embarc was not to distrust friends. It was that trust is not a substitute for diligence.
I got lucky that the business was salvageable. I should not have needed the luck.
The second startup taught me a different set of lessons. I co-founded EditMe with the same person who had brought me into Embarc. He was CEO. I ran product and marketing. Which meant the dynamic flipped entirely: at Embarc I had been running the business, at EditMe I was working for him. We had been friends for years. Our families were close. That made some things easier and some things considerably harder.
EditMe had real technology. PC Magazine gave it an Editor's Choice award. But it was a classic case of a solution looking for a problem. Customer acquisition was poor. Churn was high. We had built something technically interesting without starting from a customer need. I did the classic customer development work to find our real sweet spot nonprofits and small businesses and we rebuilt the funnel around that. Acquisition tightened. Onboarding improved. Churn came down.
At that point the CEO had just read The 4-Hour Workweek and concluded we had it figured out. Set it and forget it. I wanted to raise a round and go after our competitors directly. We had a real technical differentiation. PBwiki was the main threat. I thought we had enough to win if we moved.
We had that argument over beers. Mid-debate, his phone rang. A mutual friend of ours called to say he loved what we were building and asked if we would consider selling to Wakefly. That phone call settled the debate. He took the acquisition. I took my share and left for my next thing, which was Alleyoop.com - a startup with bigger scale ambitions and a much larger market.
I do not tell those stories to suggest the outcomes were wrong. Embarc was a good exit. EditMe was a reasonable one. I tell them because both situations would have been clearer earlier if I had asked better questions going in. Here is what I ask now.
Understand who is actually running the company
Ask five people independently who sets priorities when there is a conflict. If you get five different answers, that is a leadership clarity problem that will affect every decision you touch. The founding team at Embarc looked coherent from the outside. Under pressure, it was not. I only found out when the pressure arrived.
Check whether the strategy starts with a problem
EditMe had a technology before it had a clear customer problem. That is not a death sentence, but it is a risk factor that requires honest assessment. Before you join, ask the founder to describe the customer problem in one sentence without mentioning the product. If they cannot do it cleanly, the business may be built backwards.
Talk to customers before you accept the offer
Founders are optimists by necessity. The version of the customer relationship you hear in the interview is the best version. Ask to speak with two or three customers directly as part of your diligence. What you are listening for: does their description of the product match the founder's? Is there a gap between the value narrative and how people actually use it? That delta is where a lot of startup risk lives.
Understand the burn rate and runway in plain numbers
Ask directly: how much cash is in the bank, what is the monthly burn, and when do you need to raise again. This is not rude. It is basic diligence. A founder who is uncomfortable with the question is telling you something. Your equity vests over four years. If the company has eight months of runway and no clear path to the next raise, you need to price that risk before you say yes.
Be honest about the team dynamics, especially if you know the founders
Joining a startup with a friend or former colleague feels lower risk. In some ways it is. In other ways it creates complications that a professional relationship does not. At EditMe, the personal relationship with my co-founder made certain conversations harder to have directly. The strategic disagreement we had at the end should probably have been resolved six months earlier. It was not, partly because of the friendship.
If you know the founders personally, apply more rigor to the diligence, not less. Trust is not a substitute for alignment on strategy, risk tolerance, and what a good outcome actually looks like.
Know what you are actually optimizing for
I joined Embarc for the upside and the relationship. I co-founded EditMe for the building experience and the belief in the technology. Both were honest reasons. The mistake in each case was not being clear enough about what a bad outcome would look like and whether I was prepared for it.
If you are joining for equity, model the realistic outcomes, not the pitch deck scenario. If you are joining for the learning, confirm the company is at a stage where that learning is actually available. The decision to join a startup is a concentrated bet. Make it with eyes open.
