I know. There’s LOTS of talk about starting a side projects these days. Bec Evans’s How to Have a Happy Hustle. Chris Guillebeau has banged the side hustle drum for years with books like The $100 Startup and The Money Tree, and his daily Side Hustle School podcast. Organizations like Escape the City, General Assembly, HubSpot, and countless others run talks and courses on it.
Still, I thought I’d chime in with my own perspective.
First, a bit of background. In addition to running Escape The City’s Startup Accelerator this year (out of which 28 founders launched the first version of their own entrepreneurial endeavors), I have a lifelong history of side projects.
From selling Peruvian alpaca clothing to launching an indie travel book; from moving mulch with my best friends in high school to launching Escape The City’s The Escape School. I’ve seen side projects turn into failures and successes, stalemates and hobbies, and frankensteins in between. I’ve watched some side projects die on the vine and others turned into full-time jobs.
I’m no Branson, but I’ve learned a few things. Here’s the first in a series of non-nonsense, possibly counterintuitive, tips from the trenches — lessons learned from bootstrapping revenue-generating side projects from scratch.
Tip #1: Don’t Start From Scratch
“To start from scratch is to begin from the beginning, to set out on some action or process without any prior preparation, knowledge or advantage…To start from scratch meant you had been allowed no odds in your favor.” –Michael Quinion on the phrase “start from scratch.”
In 1997, Darden business school professor Saras D. Sarasvathy set out to discover What makes entrepreneurs entrepreneurial? After interviewing more than 30 successful entrepreneurs who had grown their businesses between $200 million to $6 billion, what Sarasvathy found runs countercultural to the hyped up myth of the entrepreneur.
Common wisdom says → Entrepreneurs start with a big idea.
Then they pull together the resources, skills, and networks to make that big idea happen. In other words, start from scratch.
What Sarasvathy discovered → Successful entrepreneurs take stock in the skills, resources, and relationships they already possess.
Then they combine them together to build a new or big idea.
Sarasvathy coined this entrepreneurial thinking Effectuation. It states:
If you want to increase your odds at starting a successful business, first pull together your current means and then imagine what you could create with them.
The alternative approach, which many of us think is smart entrepreneurship, Sarasvathy calls Managerial Thinking. Which states: first imagine a goal, and then try to find the means to pull it off.
Entrepreneurial Thinking doesn’t guarantee success. And Managerial Thinking doesn’t guarantee failure. Business, like life, is a series of calculated bets. Will it work? Will it flop? Nothing is guaranteed. But you put the odds heavily in your favor with Sarasvathy’s Effectuation.
“Effectual reasoning may not necessarily increase the probability of success of new enterprises, but it reduces the costs of failure by enabling the failure to occur earlier and at lower levels of investment.”–Saras Sarasvathy, What Makes Entrepreneurs Entrepreneurial
Successful entrepreneurs don’t start with a big idea and then find the resources to bring that big idea into fruition; they do the exact opposite. They take stock in the means available to them — their resources, networks, communities, skills, assets, interests — and create something valuable by combining them in new and useful ways.
In other words: starting from scratch sounds sexy, but it’s a terrible strategy.
Where Successful Entrepreneurs Start
Sarasvathy referred to her theory as Bird in Hand Principle (as in “a bird in the hand is worth two in the bush.”). Adopting Sarasvathy’s “Bird in Hand” principle means asking yourself three questions.
1. Who Am I?
- What are my natural strengths or talents?
- What do I find easy that others find difficult?
- What am I curious about or naturally interested in?
- What topics, causes, ideas pull me like a tennis ball pulls a dog?
- If I have a Saturday morning to myself, what do I spend it doing?
- If I wonder into a bookshop, where do I go?
- What articles or books do I read? What movies or documentaries do I watch?
- What do I care deeply about? What breaks my heart?
- What frustrations bug me to no end?
- What problems would I love to help solve?
- What matters deeply to me?
- What do I believe in?
2. What Do I Know?
- What skills do I already possess? Natural or hard-earned?
- What topic, industry or area am I knowledgeable about?
- What work and life experiences are under my belt?
- What unique perspective do I bring? Culturally, cognitively, experientially?
- What assets and resources do I already possess or have access to?
- What trends or connections do I see that others might be missing?
3. Who Do I Know?
- What communities and networks am I connected to? Locally, culturally, digitally, physically, professionally, educationally?
- Who of my personal contacts –first or second degree, close or acquaintance – am I connected to?
- Who do I already know that might become customers, suppliers or partners?
- Who could offer advice or point me in the right direction?
- Do I know anyone with interests, skill or knowledge that could be valuable?
How might I combine these together to create something unique and valuable?
Let’s take look at a some examples. First: How did Peter Thiel started his post-PayPal venture Palantir?
“I pitched Alex Karp, an old Stanford classmate, and Stephen Cohen, a software engineer, on a new startup idea: we would use the human-computer hybrid approach from PayPal’s security system to identify terrorist networks and financial fraud. We already knew the FBI was interested, and in 2004 we founded Palantir…”–Peter Thiel, Zero to One
Who you know
(Alex Karp; Stephen Cohen; FBI)
What you know
(PayPal’s security system; engineering & technology)
Who you are
(What matters = identifying terrorist networks and financial fraud . AKA righting wrongs.)
Instant revenue generating project
Of course Palantir is far beyond a side project. But the principle remain: start first with your resources, and then combine them together to create a business.
Example: London Writers’ Salon
We did something similar with the London Writers’ Salon. We combined:
Who we are:
- I’m writer and facilitator; Parul is an editor and podcaster.
- We have experience in the writing and publishing world and enjoy playing in it.
- We wanted to help writers we know write more, more often, with more success. We wanted the same for our creative careers.
- Selfishly, we wanted to interview authors we admired.
- We’re both freelancers and could afford to dedicate spare time to work on this on the side.
What we know:
- I know how to build communities, facilitate workshops and host events from my work at Escape The City. I also have experience with self-publishing and blogging.
- Parul knows how to edit books and coach writers. She also comes from traditional publishing world and knows how it operates.
- We both know how to launch lean entrepreneurial projects.
Who we know:
- Potential Customers: Hopeful writers I met each week at Escape The City who wanted to break into writing and publishing; established writers Parul works with as a freelance editorr.
- Potential Partners: Parul’s connections in the publishing world; my connections in the startup world. Both of our connections in London.
We combined the above to create London Writers’ Salon: expert interviews, mighty masterclasses, and programs to help writers level-up their craft and build a successful writing career.
Starting something new is tough. But it doesn’t have to be.
Give yourself a better fighting chance with Sarasvathy’s Effectual Reasoning.
Starting with what you know helps you hit the ground running.
Working on what matters to you ensures it’s something you give a damn about.
Reaching out to who you know might just lead you to future partners, customers, collaborators, or suppliers.
Sure, you could start a project from scratch: no relevant skills, zero connections, a waning interest in the problem you’re solving, and apathy for the customer you aim to serve. You could build an app that connects cats with cat lovers because you think it’s a “great idea” — but if you lack the technical know-how to create an app, have no interest to learn, hate cats, and don’t know anyone who has one…
And you’ll spend the next several months (or years, I’ve seen it) trying to round up the money, skills, connections and motivation to make the big idea happen.
Meanwhile, your project-launching peers have already started, stopped, restarted, failed, and maybe even started something completely new. We’ve learned what works and what doesn’t a hundred times over. We’ve gained new skills. We’ve made new connections. Maybe we’ve even generated a little income in the process.
All while you’re getting ready to get ready.
Give your side project a better shot at success. Put the odds in your favor. Use the skills, interests, and relationships you already possess.
No trophies are awarded for building something out of nothing.
Don’t start from scratch.