How to trust a Startup?

Having worked with bitFlyer, TenX, BitPesa, PayPal, and Amazon, I get coffee invitations and lunch and drinks invitations all the time: startup founders would like to pick up my brain and learn something new and promise to hire me when they become unicorn the day after tomorrow:-), and former colleagues ask if they should leave their corporate jobs and join a startup.

This is the question I have been asked over and over (and over) again: How to tell a good solid FinTech startup from a “phony” one?

People from the traditional industry ask this a lot because they are obviously concerned about leaving a stable job and they need to feel safe and secure if they join a startup. At the same time, fellow consultants and service providers (accountants, lawyers, marketers, and freelancers) have the same question: they want to work with new clients, but they obviously don’t want clients who waste their time, ask for a lot of free advice and never become a paying client for various reasons.

I personally find almost all startups to be extremely fascinating and entertaining. But only very few of them are worth my professional attention.

After two years of being an entrepreneur, here are my “golden” rules.

• I like startups where the founder (usually the CEO) is very hands-on, he or she really knows the business well and can do any job function inside their business from CS to accounting to PR.
• I like startups where the founders worked together for many years in their previous companies or previous startups.
• Actually, I really like CEOs who are a bit awkward with PR and marketing, who don’t like going to every single conference, and who like to come to their office and hang out with their team a lot. It’s ok if there is a PR department or an agency or a dedicated person doing these functions, but if this is the CEO, more likely than not, the inside of the company is neglected.
• I do get the idea that the founder or the CEO must be visionary and bold, looking into the future, and aspirational…. It is reasonable to expect that he or she should hire people who are integrators and implementors and pragmatists. It’s all very true, but it’s true to a degree: if the CEO feels like they are desperate and need to embellish and inflate their real accomplishments because otherwise nobody would partner with them or nobody would buy their products or nobody would give them more money, this is a HUGE RED FLAG. If the CEO misrepresents the facts and reality because they feel justified (e.g. otherwise the company would not survive), most likely, they are not going to survive. There is a very rare exception when a dedicated person speaks on behalf of the company and maintains the public image and does the PR, and then there is another leader inside the company, who is usually very private and internal-looking, and this person actually keeps things running.
• I don’t trust CEOs and founders who are just marketing and fundraising and I really get wary of them, when they are inflating their readiness or their accomplishments, or the state of their compliance. If I see a sign of desperation (which usually manifests in attending every single conference and talking about industry trends instead of the next milestones within their own company and heavily investing in marketing and losing developers and other key people), then “Houston, we have a problem”.
• Good startup founders have built a network of trusted advisers and mentors, who help them for free because these advisors and mentors honestly believe in and support the project. In this case, the founding team does not have to figure everything out on their own and they don’t have to pay for every single piece of advice.
• Good startups know very clearly how much money they have and what’s their financial situation. They know their pricing, their competitive niche, and every single relevant number.  They don’t rely on “feelings” and they don’t say “trust me, I know what I’m doing”.
• What is not important in a startup: where the founders went to school, where did they work before, do they have a Ph.D. or several PhDs, how beautiful their website looks, how often Forbes or CNN or TechCrunch wrote about them? I cannot say enough, how irrelevant this is.