Signs that your startup is in Trouble
A few helpful indicators that can help you see if your company is in trouble.
I published this article in March and quickly took it down because I felt like it was a bit too depressing but I have been having a lot of conversations with fellow engineers and given the state of the Nasdaq, I felt strongly that this article should be written and be out there. Since I joined the workforce in the dot-bomb days of the 90s, I received the benefit of getting a front-row seat to the disaster that was the dotcom bubble.
Peak Bubble
To understand what changed you must get a baseline read on what my work life looked like before the cracks emerged. My job-interview at my first 1990's dotcom was amazing: HR turned on the radio ( local top 40 station ) before starting my interview. A few minutes into it , I requested that they turn off the radio and they complied. My hiring manager threw a few softballs at me and I was hired.
"Ignore the Stock Market"
This is actually what prompted me to the write this blog in the first place. Back in the dotcom days, during all-hands meetings leaders would bring up the stock market ( Nasdaq ) address the "volatility" and then provide guidance that the market goes up and down and that we should not pay too attention to it and/or read too much into it. I am hearing leaders doing this again in 2022 ( my contacts are telling me this is an agenda point in meetings once more ). Knowing what I know now, I would be 100% concerned about this issue. Startups are completely linked to the whims of the stock market no matter what the CEO says. If the market is pointing downwards and you are a venture backed company -- watch out. Trouble will follow very soon. I was 25, i had no idea how the stock market worked and I actually believed our CEO which is what a 25 year old gullible working class kid does.
Mistakes start Mattering
Long before the full meltdown small changes started to happen that definitely signaled the start of a new era at work for me. When I was hired , the environment was a mix of pure joy and pure chaos all at once. A team would be in the break room celebrating a huge win while at the same time the infrastructure team would be heads down bringing up servers in a new location to escape from a DDoS attack. Inexperienced folks were given huge amounts of power over company assets and 6 figure mistakes were called "teachable moments". All this is well and good as long as Nasdaq is pushing up and investors remain checked out.
As the stock market started frowning on tech stocks in 1999/2000 one of the things I noticed is that management started to look at mistakes made by the young product and account managers very differently. I specifically remember an on-the-spot firing of a hotshot "MIT grad" product manager who agreed to a money losing deal. This was an abrupt change in behavior at our young startup. When I first heard the news, I thought something odd was happening....people can actually be fired? Before this moment we were doing all kinds of sloppy stuff and no one was touched. But when the market bends in the wrong direction management kicks into action.
Pull backs on perks
You will notice that the company lunches are suddenly catered by a different vendor than before. The food quality is reduced. You might notice the company snacks are no longer what they used to be. This is not a big deal by itself, but the taken together with other hints I have listed below this is a strong leading indicator that budgets are getting tighter and that the company is looking to claw back some more cash. It is also likely that the free meals or snacks would be done away with entirely. This could happen under the banner of we are reducing food waste, or some other hippee- dippee excuse but this all points in one direction.
Under the same umbrella you might see a sudden reduction of force happening to office management staff. All of a sudden one person is handling facilities, IT requests, front desk chores etc. Whereas there was a team that was focused on making life easy for the staff a few weeks ago.
Schedule discipline
At the time I was completely oblivious to the small changes that Senior Staff members started making, these were folks with corporate backgrounds and years to work experience. During the dotcom days a lot of folks left their large corporate jobs for the promise of exciting adventures in the world of startups. At the height of the bubble no one had a set schedule and folks would arrive to work at whatever hour they wanted. I knew an engineer that would show up at 10am play ping pong until noon, have lunch and begin work close to 2pm daily. I thought that was wild , But that was the new normal. Once the climate in the office changed, I noticed senior folks were quietly showing up to the office at 9am -- WTF? No one had announced anything or made a statement it is just something that happen in a subtle way. I completely failed to see this when it was happen and stuck to my late schedule.
"Changing of the Guard"
One of the biggest benefits of joining the management team vs being an engineer is that you get a bit more field vision in terms of what is happening on the business side of the company. The first set of folks to see a significant change happening in the company are the executive staff. If you are working away and you suddenly realize that c-suite is turning over. That is a sure fire sign that something is happening. This information is usually shared in an all-hands meeting or an all-staff company email. An incumbent leader is leaving, and maybe a few more follow. I would begin observing the work situation a bit more closely if you spot this.
Do more with less
You may suddenly be asked to push a "little" harder. Management begins taking some resources away , some tools go away , contracts don't get renewed. Some of this is just smart cost management. But if it is happening in concert with drops in revenue, it is definitely a sign. Not everyone truly understands what to do in this situation...for example how can you do more if tools you use are now gone or have severe limitations on them? In this situation nothing that used to work before will work anymore -- and a fresh perspective is needed. If you continue hearing "do more with less" but actually do not see fresh perspectives and ideas come about then it is likely things are going to get worse. If however, you see a sudden burst of activity around "new" ways of doing things:
You self host some systems and move them out of the cloud.
Switch some software to Open Source alternatives and save on SaaS costs.
Ditch product lines that are not performant and double the focus on products that are performing.
Given things like this are happening it is likely worth seeing things through.
Conclusion
Being observant and watching the actions ( not words ) of senior executives and managers at your company is a crucial skillset that many in the technical field have not cultivated it at all. Jobs are generally plentiful so it makes sense not to become an expert in this space. It is an important skill to have if you want to be a step ahead of organization as a whole. It may make sense to stop fighting for a promotion and start pouring your energy into changing organizations.