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How can you tell if a large public company is going in the right direction?

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Software Engineer at Series C Startup2 years ago

I might join a Big Tech company later on in my career, and I know that choosing the right company has huge financial consequences due to the large RSU compensation.

How can one set themselves up for success here and pick a company with a good financial outlook? What metrics should I look at and is there some sort of website to help with this?



  • 6
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    Robinhood, Meta, Course Hero, PayPal
    2 years ago

    This is a very important question, and it's definitely tricky. If it were easy, we would all be millionaires haha. Some thoughts from me:

    • The website to look at is anything that has the core financial info of the company IMHO. I just look at the stock trend, earnings, and the company description if I don't know what it does. All of this can be done with Google.
    • Is the company profitable? I'm very apprehensive about companies that aren't profitable, especially the younger IPO companies that are still using VC money to subsidize their business.
    • Has the business been trending well? There's a tension, because if it's trending too well and at ATH, your RSUs might just drop. So I think the ideal is finding a company that's in a bit of a slump but has shown it can be brilliant in the past.
    • Aside from all that, a lot of it is your product intuition. And evaluating whether a product is actually good is a completely separate topic.
  • 4
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    Meta, Pinterest, Kosei
    2 years ago

    There are 2 broad approaches here:

    1. 1st principles thinking about the financial health of the company
    2. Trust the analysis/perspective of others.

    I usually just do #2 -- it's simpler, faster, and I'd argue leads to a better outcome for your career. Tactically, just figure out people you respect + you think are smart, and use that as a proxy for the financial outcome of the company.

  • 2
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    Series B Startup
    2 years ago

    To @Rahul's point you may be able to crowdsource this by looking at Blind posts; a simple approach would be searching to find people considering leaving a company and people considering joining a company. Specifically in the realm of considering the financial aspect of career decisions, I expect that people who are posting on Blind are spending a disproportionate amount of time figuring out the best choices.

  • 9
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    Meta, Robinhood, Baidu
    a year ago

    In a sense, you can't, at least not anywhere close to a reliable prediction.

    Think about this: If you have the ability to reliably predict a large company's financial direction, wouldn't it be more efficient financially to just invest in the right companies? Why would you pick a single company and work for it?

    Also think about this: If you are trying to do what all those "Wall St analysts" are doing as a full-time job, what gives you the confidence to do this occasionally and still do it better than them? If you believe they can do a better job, would it be straightforward to just purchase the analysis from the one you trust?

    I would suggest using analysis from a source you trust as the base of your decision. Your advantage comes from on-the-ground knowledge that specialized financial analysts don't have. I would look at these things from my unique angle in the industry and inside the company:

    1. Are the founders and other executives growing with the company? Do they learn from their mistakes and get better next time? Do they make the same mistakes again and again without learning?
    2. Are the employees executing the founder's vision efficiently when compared to companies of similar size? Do they have an advantage over companies of similar size because they have some secret sauce in their way of work? Are they trapped in high internal friction like politics (aka misaligned interests) already?

    It's okay to join a company, learn these things internally and fold your hand quickly because you are seeing red flags everywhere. Managing your downside is as important as seeking the upside.

  • 2
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    a year ago

    I think it's definitely possible to identify bad companies based on what Rahul, Alex, and others have suggested in this post. However, once you have weeded out the bad ones, the rest is going to be hard. There are tons of good companies that don't succeed out there, and there is no one magic formula to tell which ones would.

    Along with other heuristics mentioned, I would look out for:

    • Smart and generally kind peers.
    • Backing by good VCs.
    • Transparency during and after the interview process.
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