Decoding Startup Job Ads

In Part 1, I talked about the seductive appeal of startups—and the sobering statistics that job seekers rarely hear. Ninety percent of startups fail. The median value of startup equity is zero. The dream is real, but the odds aren't great.

Now let's talk about how to read startup job postings. Because some startup opportunities are legitimate—hard, risky, but legitimate. And some are designed to extract value from your enthusiasm while giving you almost nothing in return.

The difference isn't always obvious. But there are patterns.

The "Co-Founder" That Isn't

I saw a job posting recently that caught my attention. It was looking for a "co-founder"—specifically, a technical co-founder with strong GitHub repositories.

Sounds exciting, right? Co-founder implies equity, partnership, being in on the ground floor.

Then I read the details.

What they actually wanted was read-only access to your GitHub repositories so they could train their AI coding model on your work. Then they'd pay you by the hour to "coach" them on making their model better at reproducing your software.

This is an extreme example, but the pattern is everywhere. Startup job postings often use aspirational language that obscures what you're actually signing up for.

"Co-founder" can mean:

• Actual co-founder with meaningful equity and decision-making power (rare)
• Early employee with a fancy title and minimal equity
• Someone they want to work for founder-level commitment at employee-level (or no) compensation
• A target for extracting skills, code, or connections

When you see "co-founder" in a job posting, your first question should be: what does this actually mean in terms of equity, salary, and decision-making authority?

"Competitive Salary Once Funded"

Here's another phrase that should make you pause: any compensation that's contingent on future funding.

"$150,000 annual salary once we close our seed round."
"Market-rate compensation after Series A."
"Salary to be determined based on funding."

Let me translate: we're not going to pay you.

Or more precisely: we might pay you someday, if things go well, if we raise money, if the investors agree, if we're still around. But probably not.

Remember the statistics from Part 1. Most startups never raise any funding at all. Of the ones that do, most still fail. The startup offering you "$150k once funded" is asking you to work for free (or for equity that's probably worthless) in exchange for a promise that depends on things the founders can't control.

If they haven't raised money yet, the odds of you ever seeing that salary are low. If they're a first-time founder with no track record, the odds are even lower.

The Equity Math

Let's talk about what startup equity actually means.

A startup offers you 0.5% equity. Sounds meaningful, right? Half a percent of a company that could be worth billions!

Let's do the math.

First, that 0.5% is almost certainly subject to a four-year vesting schedule with a one-year cliff. So you don't actually have 0.5%—you have the potential to earn 0.5% over four years, and you get nothing if you leave (or are let go) before year one.

Second, that 0.5% will be diluted. Every funding round, every new hire with equity, every option pool expansion—your percentage shrinks. By the time there's an exit (if there's an exit), your 0.5% might be 0.1% or less.

Third, there are liquidation preferences. If the company sells or goes public, investors get paid first. Depending on how the deals were structured, the investors might get paid several times over before common shareholders (that's you) see anything.

Fourth, and most importantly: 0.5% of zero is zero. And the most likely outcome is zero.

Red Flags in Startup Job Postings

Based on what I've seen—both from job searching myself and from talking to others in the startup world—here are patterns that should make you cautious:

No salary mentioned at all. Legitimate startups that can't pay market rate will usually say so upfront: "Below-market salary with equity compensation" is honest. Radio silence on compensation is a red flag.

Equity percentages that seem high. If they're offering 10-20% equity for a non-founder role, ask why. Either they're desperate (which raises questions), or there are strings attached you're not seeing, or the percentage is meaningless because the company has no value.

"We're like a family." This phrase is a red flag in any job posting, but especially at startups. It often means: we expect you to work unreasonable hours out of loyalty, boundaries will be non-existent, and you'll be made to feel guilty for having a life outside work.

Vague funding status. "We're in talks with investors" or "funding expected soon" means nothing. Either they have money or they don't. Ask directly: how many months of runway do you have?

First-time founders with no domain expertise. Everyone has to start somewhere, and some first-time founders are brilliant. But the failure rate for first-time founders is significantly higher than for experienced ones. Factor that into your risk assessment.

Unrealistic timelines. "We're launching in three months and need someone to build the entire platform" is a recipe for burnout, failure, or both. Startups move fast, but physics still applies.

No clear business model. "We'll figure out monetization later" is a legitimate strategy for some startups. But if they can't articulate how they'll ever make money, that's a warning sign—especially if your compensation depends on the company's success.

The 90% Reality

I want to be direct about something: most of the time, if you join an unfunded or early-stage startup, you will build their thing and never get paid for it.

Not because they're evil. Not because they're trying to exploit you. But because most startups fail, and when they fail, there's no money to pay anyone.

The founders aren't usually villains. They're usually optimistic people who genuinely believe in what they're building. They're not lying when they say "this is going to be huge" or "we're going to change the industry." They believe it.

But belief doesn't pay rent. And the gap between a founder's confidence and a startup's actual prospects can be enormous.

This is especially true with first-time founders. They haven't been through the process. They don't know how hard it is to raise money, to find product-market fit, to survive the inevitable crises. Their optimism isn't tempered by experience.

I'm not saying don't work for first-time founders. Some of the best startup experiences come from being early at something that works. But go in with your eyes open about what the odds actually are.

The Hidden Risks: Timing, Focus, and Mission Drift

Here's something else nobody talks about: a startup can have a great idea and still fail.

It might fail because they aimed at the wrong market. It might fail because their timing was wrong—too early for customers to be ready, or too late to beat competitors. And the tragic part is you might watch another startup with the exact same idea become wildly successful three to five years later.

These things often aren't knowable upfront. You can do all the due diligence in the world and still not be able to predict whether the timing is right or the market is ready. A great idea doesn't guarantee anything. And most ideas aren't even great ideas.

And here's the funded company twist: getting funding can actually make things worse.

When investors put money in, they create pressure. Pressure to grow, pressure to hit milestones, pressure to show returns. If the original vision isn't working fast enough, that pressure can force founders to abandon their mission in search of profitability.

This is tragically common. A startup has a genuine insight, a real mission, something that might have worked with enough runway. But investor pressure forces them to pivot away from their original purpose. They chase exits instead of customers. They try to serve markets they were never designed for.

And then the organization loses its soul.

I've seen this happen. The original motivation evaporates. Morale collapses. The thing that made the startup exciting—the mission, the purpose, the sense of building something meaningful—disappears. And ironically, abandoning the mission often dooms the company entirely, because now they're competing in spaces where they have no advantage.

So when you're evaluating a funded startup, understand that the mission you're signing up for might not be the mission you end up working on. The pressure to satisfy investors can reshape everything. That's part of the ride.

What Legitimate Startup Opportunities Look Like

Not all startup job postings are exploitative. Here's what the good ones tend to look like:

Clear and honest compensation. They tell you the salary (even if it's below market), the equity amount, and the vesting schedule. No games, no contingencies.

Realistic about risk. They acknowledge that startups are risky. They don't oversell the opportunity or promise things they can't guarantee.

Defined runway. They can tell you how many months of funding they have. If they're pre-funding, they're honest about that and what it means for compensation.

Experienced team. Not necessarily famous founders, but people who have done this before—or who have deep domain expertise in the problem they're solving.

Clear value proposition. They can explain why they exist, who their customers are, and how they make (or will make) money. The business model makes sense.

Reasonable expectations. They want hard work, but they don't expect you to sacrifice everything. There's some acknowledgment that you're a person with a life outside the startup.

The Question to Ask Yourself

In Part 1, I said the key question is: "If the equity turns out to be worth nothing, would I still want this job?"

Now I'll add a second question: "Is this startup treating me like a partner, or like a resource to be extracted?"

When you're evaluating a startup opportunity, pay attention to how they treat you during the process. It's usually a preview of how they'll treat you once you're inside.

Part 3 will cover how to make an informed decision—and how to structure arrangements that protect you while still letting you take smart risks.

Need help reading job postings in general? Check out How to Read a Job Ad for the fundamentals that apply to any job posting.