We tend to think of the job interview process as a test to pass, but really it’s a two-way street: the applicant sussing out the company is just as important as the company evaluating the applicant. But how do we evaluate a company, especially if we want to go beyond the culture and assess if it is financially viable? While this might be confusing for many Software Engineers, student Mario Ponticello has an investment background, and he knows about obtaining this crucial information.
“People here are smart and technical. They have the ability to ask the right questions and come up with logical conclusions,” Ponticello explains. “They just might not have the right questions.”
In a blog post, Ponticello explains the most basic question that one needs to answer about a company to assess its financial viability:
“At a fundamental level, every profitable company is exploiting an arbitrage opportunity between the cost they pay to acquire customers and the revenue they generate from them over time.”
Ponticello spends most of the post fleshing out this idea, but that’s the basic concept: if a company spends more acquiring and maintaining a customer than they earn from that customer, the company cannot be profitable until that balance changes.
How does Ponticello know this (and plenty more)? Business school and an ongoing career as an investor.
“I spent three years working for a bigger company investing in growth stage companies, that wanted to raise $20 to $100 million in capital,” he says. After that, he decided to move to an earlier stage in the funding cycle. He started an investment firm, Hawthorne Ventures, with a few friends, investing $100 to $200 thousand at a time.
“The economics of the business are core to me, because it gives me a better sense of how the business operates and makes me more comfortable with the projections that we make.”
Ponticello found that he learned a ton from working with these early-stage companies, because their paths were less established than more institutionalized companies, and he could collaborate with them on charting a path.
Now at Hack Reactor, Ponticello is learning what it means to be a developer.
The atmosphere at the school reminds him of the entrepreneurial culture he’s been involved in for some time:
“I went to demo day at YCombinator a year ago,” he recalls, “and I thought, wow, I don’t know if I’ve been in a room with so many smart motivated people. Coming here [to Hack Reactor], people are very sharp, and it’s a similar vibe.”
Now that he’s been enmeshed in both business and tech, Ponticello sees a lot of value in demystifying each side. The more investors and developers can speak the same language, the better they can work with each other and produce fruitful partnerships.
“Having seen both the business sphere and tech spheres, I’m surprised at how much opportunity there is to cross the gap between the two. Most business people don’t have a sense of the tech frameworks we use to build products. Most tech people don’t really have a sense of the startup process. I think there’s an opportunity for people who are curious about the other side to take some steps and add value in that way.”