The Startup Side Project Bubble
davidhauser.com
davidhauser.com
The MBAs have made this bed via all this "money doesn't really motivate people, here's how to hack motivation..." BS, and now they have to lie in it. If they want employees' full attention, they have to compensate it. People have to have a stake-- either stock or the real possibility of a meaningful promotion. You get what you pay for.
Bingo! What's the point in going "above and beyond the call of duty" for a dayjob employer, when they aren't going to recognize you for it, compensate you for it, or acknowledge it in any way? Of course, this isn't true of all employers. Sometimes people do get recognized and compensated for merit... see the recent post about the guy at Google who got $100MM. But most people know if they work for a company where merit is rewarded or not. And if you don't work in one of those, and you have some ambition, the rational choice is to work on a startup.
Although I'm sure there are several companies that do incentivize correctly - there's a growing awareness of creating an "intrapreneur" spirit and opportunities, though in most companies it's just that - empty talk.
Businesses MUST focus on incentivizing their capable employees correctly. If they did, there would be far less of these side-projects which double as portfolio support.
I know a few people who are very well-incentivized inside of the company they work for. They are very entrepreneurial, but they've been bought-off by very smart managers. When they retire, they will have done very well indeed without ever having to launch anything.
The problem for companies has become that it is so easy for many more people to create a startup on a shoestring budget that you have to incentivize many more people than you used to. What's a company to do? I'm not sure. I think this frustration is at the heart of David's grievance.
"Help ! My little wage slaves are not giving their maximum effort to me and instead putting it towards an effort that might at some point make them independent from me. This means I have less absolute control over them and they only do as good as I can reasonably expect them to do, instead of working their ass of to get me more money without any advantage to themselves."
Dear employers, you pay your people $x to do at least <y> effort. If y => y' does not translate into $x => $x' in a predictable and fair manner, you have no cause for complaints.
Oh, your segment isn't that interesting? Oh you're actually probably not going to make payroll on Friday? Actually, your employees "side-gig" is called a lifeline: something to talk about in interviews that's rather more pleasant than your crash and burn and a project that has a rather longer life expectancy.
If you want your employees FULL attention, EARN IT.
It's not "shooting yourself in the foot" to work on a startup while working a dayjob, it's called "funding your startup with your dayjob salary". And if you don't have a pile of capital just lying around waiting to be spent, or aren't (interested in|willing to|able to) raise outside capital, it's essentially your only choice.
And why exactly should I care about "stringing along my present employer"? I show up, do the work I'm asked to do, and they pay me some amount in return. What I do on my time is my business.. If my performance drops, they are welcome to fire me. If anything, this should be seen as a call for employers to recognize their entrepreneurial minded employees and find a way to leverage their talent to do something entrepreneurial within that firm. Better yet, invest in the employees startup and tell them to get out and work on it fulltime. Now that's a win-win for everybody.
But don't think you get to call who is or isn't a "real entrepreneur" based on who has or hasn't quit their dayjob. If anything, the folks doing it "the hard way" deserve more respect and recognition than the people running around acting like raising a round was an end unto itself, and who seem to think that the point of a startup is to raise money (as opposed to making money).
It is hard to argue that spending 40+ hours in a week on something other than you startup shows you are committed to your startup. You are committed to making money and then working on your startup.
I have personally invested in many employee's startups but that does not change the fact that trying to do both is a distraction that does not serve you or your job.
But, realistically, I don't have the capital reserves to just quit, and work on it full-time, so that simply is not an option. No amount of philosophizing, or Monday morning quarterbacking or commentary from the peanut gallery can change that. But if anybody thinks I'm not committed to this, I have two words for them...
I am not saying you should raise money. I bootstrapped my company and am very proud of it.
And if you aren't sitting on a big pile of capital already, you have two choices: Go out and raise a round, or fund via your salary. And going out and raising money has a lot of disadvantages, not the least of which is that every minute you spend chasing investors is a minute you're not working on the product, talking to customers, doing market research, writing marketing content, looking for partners and affiliates, or any of a zillion other things you could be doing to advance your cause.
It is hard to argue that spending 40+ hours in a week on something other than you startup shows you are committed to your startup. You are committed to making money and then working on your startup.
First of all, I don't need to "show" anybody that I'm committed to my startup. All this back and forth banter is amusing, but in the end, the only opinions that matter are those of myself and my cofounder, and the people we are selling to.
And who are you to tell somebody else what they are committed to? Fuck that... I'm committed to paying my rent, and putting food on the table, just because those are prerequisites to everything else. Beyond that, my dayjob salary is just seed funding for the startup.
Stuff I learn at work is often applicable in my side project as well - and vice versa. I can re-use the code (as most of the work-code is open source) and use the project as a testing / learning opportunity for things I may use at work.
The things which do reduce my motivation is the projects legal side (having signed a disadvantageous contract...) and not knowing if there really is a market for the kind of application I write ("$megaCorp can do this probably sooo much better.").
What does this mean, exactly? Yes I know in context it means your capital raising strategy primarily involves going to work on a regular basis, which possibly is a local maxima for at least some unusual situations, but it reads just as well for "sleep", "personal grooming", "recreation and relaxation", "social relationships", "raising children", "elder care", "athletic / exercise activities".
I'm just saying if you want to guilt trip people for raising capital by having a job, you need to do that very specifically, a extremely generic guilt trip about spending time being modern civilized humans in a generic sense with having a job being a tiny subset of the possibilities of being a modern civilized human, is likely to be relatively ineffective.
Even if we agree that a lot more people are working on side projects, instead of calling it a bubble, which has negative connotation, what we should be looking at the positive side that more and more people are taking the first step and recognizing that they don't necessarily have to just keep working for an employer and are at least trying to create something of their own. The tools and technology have become more accessible, be it cloud or even 3D printing, and will become more accessible in future which will motivate even more people. The whole Maker scene is another such. People used to have different hobbies, now a lot of that energy is channeled into side projects.
We should be celebrating this, rather than call it a bubble.
1. People usually start a side project because they are unhappy at work. If they are unhappy, they are unlikely already giving their best
2. On another note, a side project often gives your a great deal of satisfaction, accomplishment, control and responsibilities that you wouldn't get in your daily job. This balances your morale and will make you perform better both at your daily job and at your side project
3. I worked on a number of side projects in the past. Some successful, some not. But in ALL of them the learning was priceless. I didn't start side projects because I wanted to start a business and go all-in. I did start them because I wanted to learn things that spaced beyond my daily tasks at work. And it worked brilliantly.
Also, if you've a mortgage to pay and a family to maintain, you have some responsibilities that make the "go all in" move quite a big risk. And I do believe it is possible to start a business starting as a side project first - it just takes much more time and energy and, most of all, patience.
I am all for doing stuff on the side so as not to get bored, to learn and 50 other things but then let's not call it a startup and a business. An entrepreneur takes calibrated risks and makes things happen when others can't or won't.
Agree on your second point - it should be called a side project. It's a startup / business from the day it actually _does become_ a business.
Sounds exactly like the person who plows every cent of otherwise disposable income into a startup, while risking their employment by reserving a portion of their mental/creative energy for their own thing, instead of whatever shitty product their employer is churning out.
People with real families and real responsibilities normally can't quit. Doesn't matter how much they want to.
>> It’s a problem because side projects create a talent bubble of people who aren’t fully engaged and are just doing enough at their "real" or full-time job to get by until their startup is up and running. This means their productivity suffers at their full-time job, an expense the employer ends up paying. The side project owners justify it by assuming it will only be for a short period of time.
Here's a surprising fact: almost no one is "fully engaged" at work. They're thinking about camping or football or shopping. We don't owe our employers anything but our time and productivity. At least if my coworker is working on a side project I know she's learning things that will make her better at her job.
>> And actually, we need to be honest. Not everyone is an entrepreneur. Part of being one is accepting the risk of starting your own company and taking the leap to be committed full time. It’s not good for startups or for companies to have employees that are partially engaged in both and committed to neither.
Because side projects never succeed and full time startups never fail. (Dell, Craigslist, Bingo Card Creator, Twitter, and Facebook.)
>> Here’s a quick tip: there are plenty of those already. If you do want to start a company, work on building a real business, not a side idea that’s hoping to be the next Twitter/Facebook/Instagram combination or a better version of Basecamp.
Says the guy whose companies include another Survey Monkey and yet another credit card payment app. (Note: Chargify is a good product, but it's in a crowded market.) Plus, Basecamp is nice, but it's not ideal for all kinds of projects. I'd be very happy if somebody made a new Basecamp that did a better job with software projects.
Well, because Chargify is miles better than Paypal and banks. Maybe that guy next to me has a face-tweet-o-base idea that's miles better, too.
I'm sorry, but where was the part in my employment contract where I was required to live and breathe work every minute of my life?
If you're an employee with no stocks or shares, then doing "just enough" of your job is exactly what you're being paid to do. Do more if you like, but going the extra mile isn't a requirement.
Also, some people enjoy working on side projects because they're fun, and not because they dream of being an entrepreneur.
(Edit: formatting)
For a lot of my friends, side projects are the only thing keeping their passion for programming alive. You say below "If you're not happy with your job, just quit," as if it's easy for people to up and leave the position they're in. Not everyone lives in a tech hotspot and not everyone actually wants to or can just up and leave their roles. A lot of these side projects are explicitly being worked on so that they can get more up-to-speed with certain technologies with the intent to apply for something more satisfying to begin with. And if there wasn't value in side projects, companies wouldn't have any reason to "own" what you work on outside of your 9-5.
If you're not getting value from your employee because they're distracted or they don't have the faith or enthusiasm they used to, that's on you to sit them down and talk to them about it and maybe figure out a way to compromise; telling someone they can't spend time on their hobbies anymore is a petty response that doesn't look at the real issue at hand. Perhaps the problem really lies in your camp, not theirs. If you're so concerned your developers are going to up and leave to work on their own dream, you need to incentivize them more. Or, you know, get over it and realize that's business and people have other ambitions outside of your own and there's no reason that they should have to stick around to fulfill them, especially if this is the attitude you have towards the types of things that keep them motivated. If you're really concerned about not being able to create your product because your devs are going to bail to do what they ultimately want to do in their life, perhaps you should become one yourself instead of telling them how they can and cannot live their lives outside of your payroll.
Incorrect. My side projects have made me a better developer in every way, which actually saves my employers money over the long-term. I learn new techniques, skills, and tools off-the-clock. The kind of training that used to be the responsibility of the employer is now on the employee.
Not just that, but the tone is downright condescending and demeaning towards "side project" people. I mean,
"But don’t shoot yourself in the foot by stringing your employer along and delaying the leap to becoming a full-time entrepreneur. The choice is yours, but too many people are making the wrong one. I hope you have what it takes to commit and become a real entrepreneur."
Really? C'mon man... Who died and appointed you supreme judge and arbiter of all things entrepreneurial? We need your approval to call ourselves entrepreneurs? Right... good luck with that.
Unless there are real consequences for failure—until you’ve personally guaranteed a line of credit and tried to sell your product to an actual human being,’ says Ruhe, you won’t have the motivation needed to build a business that matters -- Thom Ruhe, VP of Entrepreneurship at the Kauffman Foundation
Now, I don't know who Thom Ruhe is, and I don't really care. But what I know is that this armchair quarterback with his fancy title, working for some foundation somewhere, knows bloody fucking bugger-all about my motivation, or lack thereof. You want to talk to me about motivation, dude? Quit your job at the Kauffman Foundation and come work with us. We offer no pay, no benefits (not even free coffee), long hours, sleepless nights, stress beyond belief, non-stop fear of failure, and an equity stake that could make you really wealthy if we succeed. Would you be motivated to take that swap, in order to gain the satisfaction of doing your own thing, the freedom of not having a "boss" and the sense of accomplishment that goes into building something? No? Well, guess what... we are. So unless you want to take me up on my offer, don't fucking talk to me about motivation.
It's like he just heard of bootstrappers, and instead of saying, "Hey that's awesome, let me tell you what I've learned," he says "You'll never be one of us real entrepreneurs. Want a job?"
From my experience, developing a project (regardless of scale) is a better form of learning than reading about it. You get instant gratification when you see your project render/compile without error. You're learning in real time, seeing your project work, and learning from trial and error.
Having a side project doesn't imply you're trying to create a startup. What happened to just creating for fun/enjoyment? Reconstruct your sandbox and play.
The diluted talent pool is not because of part-time entreprenuers. Based on your logic, they wouldn't leave their job anyway. It's because of over funded full-time entreprenuers.
And since you mentioned basecamp, here's what employee #1 of 37 Signals thinks of the topic: http://37signals.com/svn/posts/1764-the-natural-evolution-fr...
I could not agree more fully with this. This bit here really sums it all up in my opinion:
But the idea that you need to quit your job to do it right is misguided. If you quit your job, you shift everything. You don’t gain time, you lose it. You put a shot clock on your business. You box yourself into a position where you have to profit immediately or the whole thing goes under. You’ve got to make it work now or give up forever.*
Hanging on to your day job gives you a longer period of time to build your idea. It lets you give a sustained effort over time. There’s no get rich quick option. You build it slowly, one day at a time.
Yes, you need to find time to do both your side business and your normal gig. But there’s always enough time if you spend it right. Instead of watching TV or playing Grand Theft Auto, work on your idea. Instead of going to bed at 10, go to bed at 11.
That's exactly it... at Fogbeam Labs we're not trying to get rich quickly, but as long as the founders have dayjobs and we keep our burn rate low, we have - essentially - an indefinitely long runway. This gives us more time to experiment, learn, and iterate, without having to panic in fear of having to shut the whole thing down, if the first few experiments don't go the way we expected.
I keep thinking about what pg said in the "How not to die" essay:
http://www.paulgraham.com/die.html
If you can just avoid dying, you get rich. That sounds like a joke, but it's actually a pretty good description of what happens in a typical startup. It certainly describes what happened in Viaweb. We avoided dying till we got rich.
and
When startups die, the official cause of death is always either running out of money or a critical founder bailing. Often the two occur simultaneously. But I think the underlying cause is usually that they've become demoralized. You rarely hear of a startup that's working around the clock doing deals and pumping out new features, and dies because they can't pay their bills and their ISP unplugs their server.
That's our mindset... as long as we can keep going, we will eventually "break through" and make it.
If an employee's productivity at their day job is not acceptable, then hopefully the employee no longer has a job there.
By doing side projects you are being creative. You learn new stuff. You actually care about your project. You also have to do everything yourself, including planning. Where else would you get such experience?
And the net result is that you learn new stuff in your side projects, something your employer gets for free. Your passion will pay off, eventually. It is nearsighted to assume that just because you "waste" time on side projects you are hurting you employer.
You hurt them more by simply not caring enough about the technology nor the project.
Once you start stringing along your employer, just pushing buttons and not giving them some of your best work hours - then yes I agree it is frustrating, but I don't believe this is the case with the majority of engineers/others who work on side projects. Surely people doing this are the minority and can receive stern talks and/or let go if they are really not worth their salary?
Oh, that definitely happens. I've been there. What I question is whether or not it's a big deal, like the author of TFA seems to think. He seems to have some pretty weird ideas about things. Like, the idea that you're not committed to your startup if you aren't working on it full-time? WTF? How does that even start to make sense? Are you not committed to your wife if you don't spend 24 hours a day, 7 day a week with her? Are you not committed to your kids if you leave them for a few hours a day to go to work? Sheesh... commitment and time allocation are not the same thing!
And as for the effect on the present dayjob employer... who cares? As you say "(they) can receive stern talks and/or let go if they are really not worth their salary?" Yes, exactly. I've been there before. And you know what? It was a shittily run company, pumping out a shitty product, none of the other engineers were even slightly engaged or interested in what we were doing, and every single one of us was just punching the clock and collecting our paychecks. That I was working on a startup on the side is what kept me sane through all that. I don't feel even a pinch guilty that I reserved most of my mental and creative energy for the startup during that time. I did what they paid me to do, and if they had wanted more, they had the option to attempt to find a way to tap into the energy and drive I'm able to channel into something that actually matters. But they never took any initiative to try and connect with or understand their employees, so "tough shit" as far as I'm concerned.
Other people have already made great comments here. I just wanted to point out that side projects are how people learn new things and new technologies. Most side projects are never finished, nor do they make it to market. However, the process of working on the project was in itself beneficial as a learning tool. New technologies and new techniques get explored and tested, all during off hours. And guess who benefits from that?
Employers could consider these options ... - hire people that find the day time work to be interesting enough (i.e. don't hire superstars thinking they will bring sparkle to boring work) - provide good incentives to keep people focused on their day job - openly support side projects, people will respect that and give back to you (don't make people stress about working on a side project) - get involved with side projects and offer whatever you can to help - partner with people in their ventures, their idea may be better than yours - directly sponsor internal side projects that people can work on and vent their need to create/explore etc.
This is true of full-fledged, VC-backed, "startups". (The author seems to delineate between "startups" and side-projects as if the latter weren't real - by this logic, PlanScope and Bingo Card Creator aren't real projects)
First, it lets you experiment with new technologies and frameworks outside of your regular duties. (This can pay dividends to the employer)
Second, it can keep you from code burn out by giving you a creative release. (Also a benefit to the employer)
Third, it gives you freedom to experiment with smaller projects that might not be enough to support a person but create value for someone none-the-less.
Finally, one of those side projects might get traction and create a sustainable business.
Not everyone has the freedom to throw caution into the wind. And oftentimes, even if they do, it is not the best move.
Here's my take on it, if you are "working on a side project" + "calling it a hobby" there's no problem with that. If however, you are "working on a side project" + "calling it your start up" there's a good chance you are deluding yourself. Sure... some of you will succeed but less than 1% of you will.
If you want to succeed you need to be fully engaged, you need to be focused and it even helps if there's a strong incentive to succeed like running out of money and being homeless. If you have the comfort and safety of job income, there's a good chance you will slack off because you have "time", you are exhausted from a stressful day at work, your job is running you down so much that you need to relax, you need to buy something to cheer yourself up etc. Also you run the risk that your side project has gotten boring and you want to chase the new "hotness". Of course some of you will feel hip and cool claiming that you are pivoting.
How do I know this? I tried working on side (business) projects as an employee for over 10 years, it just doesn't work. I'm 6 months into developing my product full time, I'm about halfway done. If I had attempted to do this as an employee it would have taken 6 years. That's if I could even stay focused and motivated that long making such slow progress. I know for me that I would have just given up.
As for a bubble, it is a bubble because people are talking about their hobby side projects as if they are legitimate businesses that will take off "some day". A couple will, most will not. The froth is from all the people who will never be anything but an employee getting lots of mileage and good vibes from talking about their supposed business. So much so that they will work even less on the "business" because they have already gotten the positive boost they were looking for and can continue scraping along in their job. This is bad because these people will never push themselves in a way that will actually let them be successful and leave the job that they hate; they are too afraid of quitting because they can't stand the thought of not having a comfortable income.
Want to make it happen, then do what I did. Quit your job, you will find ways to make money. I picked up a side consulting gig where I made 3 times the money I would have ever made in a "job". This opportunity never, ever would have occurred if I was an employee. My desire not to work allowed me to state a very high rate that they accepted, as an employee I would have been so grateful to get side work I would have worked for much less. I saved enough money to live on for 2 years and quit the consulting gig.
Next pay off everything, student loan, credit cards, car loan. Sell most of what you have and rent a room in a house, cut your expenses down to the bone. Get rid of your TV and other distractions. Live, eat and breathe your start-up, when you need a break go for walks, bike rides and go see your friends.
Any of you stuck with a house? I am too, however I moved out and have been renting it out for the past 6 years. It actually makes money, it's an expensive house so I haven't had any problems with renters they always pay.
If you really believe in your start-up you will go all in, you will not play it safe. Otherwise you are just like everyone else, a dreamer that is not really going to accomplish much outside what you do for your employer.