How Much Should Designers Ask About The Business Model?

I posted this over on Quora too. It’ll be interesting to see what responses we’ll get.

We’re starting the see the usual cracks in a tech boom where startups are living high on someone else’s money. Evaluating potential opportunities carefully is important especially because of the  volatility  of our current economy — not all of us are lucky to have great paying jobs.

I’ve seen this dance before.  Most of us User Experience types had to do something else after 2000 — I played a programmer on television for a while). Some of the kids I’ve seen running around at the meetups here in San Francisco, not so. I personally don’t want to see another geo-located photosharing app until they have solved the revenue piece.

Now, I go out of my way to make sure  wherever  I work is a sound idea, if it’s not the equivalent of shipping a 50 pound of dog food cross country for free.

Where I’m working at now, Jobvite, has a great business model — someday I’ll educate you on the advantages of SaaS, and why SalesForce.com has a license to print money. I’ve also turned down other opportunities that were boring, but very, very profitable.

This begs the question — when a designer joins a startup other than own (and maybe especially their own), what should that designer be asking?

Here are the questions I always have:

  • Who’s funding it? (Some of the larger VC firms may not always be the best sign.)
  • What’s the customer acquisition model? (Notice I didn’t say user acquisition model.)
  • What’s the revenue model?
  • How quickly can the startup gain and lose market share?
  • How crowded is the space? (Having competitors is not a bad thing)
  • What are potential pivots?
  • How long does the startup give something away for free before it starts collecting money?
  • How much runway does the startup have?

For that final statement, if it’s less than a year I would think long and hard about how much savings I have in the bank, because you’re probably going to be looking for a job after it.

How much do you look at the business model? How much should we? And, should it be evaluated during future job interviews?

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