Is it time to quit your job at a unicorn?

Welcome to Dalton and Michael. Today, we'd like to do a follow-up on a video that we recorded a year ago. That video was why you should leave your fang job. All know these people that wanna just tell you their darkest secret, which is they wake up every day and they like dream of quitting.

Like they have fantasies of quitting every day. Those are people that.

probably should quit. This video is why maybe you should leave your failing unicorn startup. Oof.

Tricky topic. And let's say signals. We don't know. We don't have all the information. Hints. But there might be some hints. There might be some signs you wanna be looking for Yes. That it might be time to reach greener pastures.

And if you're an employee of one of these companies, you probably have the best perspective, a better perspective than investors, maybe sometimes even better perspective than founders Yes. On what's really going on. So maybe we should start this by saying there are 1,400 unicorns now. Is that right? Yeah. Wow. Well, I'll ask you. I don't know what you think.

Do you think all 1,400 will go public successfully?

I think the odds are pretty slim that they're all Yeah. Doing amazing. Yeah. I think that's I think that's a fair statement. I think that's a fair statement. And so if you kinda divide this out,.

even if you're really optimistic, like, what what do you think an optimistic count or what percentage of the 1,400 were being super optimistic, they do an IPO, and everyone's really happy? Third? I'm just making this up. A third? Third. Yeah. Third. Great.

So in that case, two thirds of that 1,400, it it's not gonna work out. And I think what's unfortunate is that, like, when things don't work out, employees usually don't.

They are yeah. And the who takes one for the team? They're usually in the category who take one for the team. Right? Yeah. And again, like brass tags here, what what this means is your equity. Most likely if you joined a unicorn that is late stage Yep. The strike price of your options is going to be tied to the valuation that the company raised at.

Yep. And so if the company is sold for less or if it's perhaps overvalued, your options are likely underwater. Yes. Right? This is just Yes. Simple fact of life. And often the people running these companies don't love this line of questioning. And so we're just sort of telling you the truth, which is, you know, the later you joined a company, the higher your strike price will be on options.

And so the folks that are most likely most of the people weren't hired at the end of the you know, when they became unicorns, a lot of people came in, so the strike prices are very high. Yes. And so, man, you'd be you just you need to be smart. Yes.

Well, and the second thing is if they do end in acquisition, and many will end in acquisition, oftentimes, you have to reinterview for your job. Like, oftentimes, they don't wanna bring everyone over in the acquisition, and so that's tricky. And, also, you might end up at a the big tech company you're running away from That's right. When you're doing a start up.

So I think that I I I'd love to put in a kind of a little bit of a note here. I think that those 30% that will do well, will probably do counterintuitively well. Like Yeah. Think Like, really well. Yeah. Like, very well. Extremely well. Yeah.

Even going to work at those companies now is probably a good idea. Absolutely. Yeah. And so I think that's what's so tricky about this is you have to be smart. You can't really be, like,.

following the bullshit press or stuff that you're Or, like, the memes on Twitter about what's doing well and not doing well. You gotta attack us. Let's be specific. So, Michael, what would you do if you were an employee? Say you were a software engineer Yes. At a unicorn Yes. How what what would be the signals you'd be looking for to know if this was like a.

smart move to stay? I think the first thing I'd be thinking about is revenue. I would say that at the end of the day, when a market when a company goes public or when a company is acquired for a lot of money, the market is looking at how much revenue that company is making, and is that revenue growing?

And I would say that, you know, for example, if I'm at a company right now that's making 50 to a hundred million in revenue or more, that's a unicorn. Like,.

that's pretty good. Yeah. That's it's That's it's reasonable that it's a unicorn. Yeah. If they have a hundred million plus in revenue, okay. Yeah. That's that pencils out. Right?

Yeah. That's pretty good.

I think that if I'm work if I'm, like, working in a company that's, like, 50,000,000 or less in revenue and is a unicorn, now I'm starting to ask myself the question, do users like the product? What's retention look like? Are we charging as much as we could? Could we charge more? Do we actually have product market fit? Do we actually have product market fit?

Again, not likely to be a popular question Yeah. In management if you ask management this, but Yeah. Worth considering. And I think a lot of these questions can really be answered by looking at what are the customers doing. Right?

I I I think what's so funny is that if you're an employee inside of a company, most likely information you need to tell whether the company's doing well or not is, like, literally available to you. Yeah. Well and I could imagine there actually may be some folks out there that work at companies where the information is not available to them.

Is that okay? Like, what do you think? Is that normal to not would say that like numbers. What's interesting is that.

maybe there are certain financials or Yeah. Certain, you know, cash on hand or something that it's important for the company or a founder might decide to keep private. But I would I would say in most companies, product analytics in some way or another is available. Yep. It's like widely available. And so you can tell whether the users who are paying for your product are actually engaging with it.

And and, man, I think that's, like, hilariously, the simple leading indicator of whether you have a good product is you sold somebody the product, they've successfully onboarded, and they're actively using it. And then And then renew. And then they renew. Business model of the company. Hey. They keep using it, and they keep paying for it forever.

What we also need to attack is this idea that because smart investor invested, my company is doing well. Yep. Like, I just don't I think that, you know, when you're the press or when you're on the outside having to judge, you have to use these kind of weird secondary.

Yeah. It's not revenue focused. All you your only signal as an outsider is fundraising rounds. Yeah. And there there can be companies that are still struggling that aren't gonna make it. They could still somehow raising money. One trick, by the way, friends out there, that's very common, is a fundraising round may have happened a year ago. Yes.

But they're choosing to announce it now. Yes. And it looks like they just raised, and that is not true. Yes. So watch out for using the announcements of fundraising Yes. As a as a very reliable signal. Yes.

So, Michael, in terms of market timing, one thing that might be interesting to think about if you're currently working at a at a unicorn, a very late stage company, is now might be a good time to consider going to an earlier stage company as an employee. Yes. Because it's less likely their equity is super overvalued, and there's lots of room for advancement.

Yes. So what how would you think about this if you were an employee of one of these companies? Well, one, think that, you know, you've gathered a lot of experience, and so you might have an opportunity to have more responsibility in an early stage company, which would also probably get you more equity.

I would say too, you could use many of the hints that we gave you to judge that early stage company, and you can actually do a bit of a comparison Yep. To get a vibe for like, oh, like this early stage company seems like it's doing better than my late stage company. And then the third thing is that what's funny is I think it's a little counterintuitive. Right?

It's the it's the moment where your friends are gonna be like, that's stupid. Like Yeah. Why would you go to a smaller company that's not a unicorn? Exactly. Right? And it's it's so weird in my life how many times the dumb move at the moment was the smart move later and vice Like,.

it is just over and over again. Yeah. And so the the dream setup is you go to an earlier stage company that has the same revenue as the unicorn you are leaving and one tenth the valuation, thus your option strike price is much better.

And And you have more responsibility. You have more responsibility. That's a pretty good trade. That's not a bad trade at all. Yeah. That's not a bad trade at all. And, of course, you could always start a company as well, which is just the Uber version of the same trade. Exactly.

Yeah. So I think the what I would say is this is that, you know, this is tricky. Right? I think that when we made the video about Fang, fortunately or unfortunately, I think that, you know, Google is gonna look very similar five years from now as it looks now. Yep. And I think that for those of you who are at unicorns, it can really go either way. So you have to be careful. Right?

Yep. You could leave a unicorn, and that company could do great. You could look back five years from now and say, like, I made the exact wrong decision. On the flip side, you could be the person, you know, shutting the lights off and five years from now being like, I I I'm not making the right decision. So make sure that you're actually doing your own analysis here, think is the point I wanna make.

Like, make sure you're doing first principles analysis. You're looking at data.

You're you're not believing any hype. I I think another point to make is the concept of job hopping. Job hopping is not good either. So sometimes you'll see people that swap. They go to a new unicorn every twelve months or eighteen months. No. It is very hard to ever build a good career or to build expertise. Or even make a lot of money.

Or make a lot of money doing that kind of stuff. Again, don't want folks to interpret what we're saying is, hey, you should be a job offer and just No. Switch jobs. The to the extent you are working at a place where as far as you can tell, the metrics are excellent. Yes. The founders are extremely focused. Yes.

Your colleagues are very smart, and you were very impressed continuing to work with them. Yes. You should probably stay a really long time. Yeah. I mean, like, that's rare. Kind of what Google looked like. Yeah. Facebook looked like.

And and so, again, let me just go through the things I would look at if I were someone in one of these companies trying to decide if my company was doing well. Yes. All the stuff Michael said. But other signs I'd be looking for is, do the founders seem checked out? Yeah. Are they in the office? Yeah. Maybe you don't have an office.

Maybe a remote company. But, like, does it actually seem like senior management is, like Engaged. Engaged in reality? Sometimes when a when a unicorn is doing poorly, management will just completely be on Mars. Yes. Like the numbers will all be bad, but they'll be like, oh, we're doing better than ever. Like that kind of WeWork is a classic example of this.

And so, you should actually be looking at senior management and the founders and just and make a judgment if you think they seem like they're competent. Yeah. And again, this is different. Sometimes the press lionizes people that aren't super competent. The press shouldn't be involved in this decision. So you should make your own decision if they Yeah.

It should be like, is the the message in the all hands line up with the facts that you see in it seem credible? Yeah. I also would look at what the rest of the people that work at the company seem like. And do they all seem busy, and do they have enough to work to do? Yes. And do you just feel like your colleagues are good? Yes.

Because one signal of a company that's going that's not going well is that everyone good is kind of left. Yeah. And the people that are left are just doing make work to try to not get laid off. There's kind of a malaise. Yeah. And often the founders of these companies won't want to, you know, do layoffs or whatever to keep the fiction going that the company's going well. Yeah.

And so again, I think you can make judgment, you know, hopefully you're correct, but of just how good do your colleagues seem and how much do they have really important work to do that's serving customers Yes. Versus going through the motions making pitch decks or slide decks or whatever it is that people do. Companies have quite a lot. Right? Yes.

And so I think these are really you have the information if you're inside of the company You have all the information. Way better than anyone else does. Yes. And, and again, if if this could all check out and you're like, know what? This is going great, and I really like my colleagues, and I'm learning a lot, and And I should double down. You should double I should work harder.

I should try to get more equity. Yes. So,.

yeah. Maybe that's the message that we wanna leave is that, unfortunately, amongst these 1,400, they're not gonna make it. Unfortunately, this unicorn label does not mean you're gonna get in the money. Yep. And you've gotta think critically. And, like, that's isn't that life?

Yeah. And and and in a lot of life is you could be disappointed because other authority figures told you something is true. Yep. The authority figure said, this company raised a lot of money. It's a very good bet. It's the next whatever. Yep. But, ultimately, those authority figures aren't gonna be around.

if it doesn't work out. And if those authority figures you. And if those authority figures are investors, they're hedged. Yeah. They're hedged. So Maybe do math yourself. Every YC unicorn's gonna make it. Everyone.

Every single one. You heard it here. Every single one. Dalton needs personal guarantee.

Alright. Great chatting. Thanks.