Keep your side venture on the side – until it’s time to scale up
When you think of an “entrepreneur,” which personality traits do you think of?
For many, the idea of an entrepreneur conjures the image of someone who has risked it all to pursue their passion. Someone who quits their day job, sleeps on friends’ couches, works out of a garage, and eats ramen for breakfast, lunch and dinner, sacrificing comfort, security and even stability all in the name of dedication and commitment. There is no safety net, no backup plan; they are literally all-in, because, after all, pressure breeds efficiency and ingenuity, right?
The notion of the risk-loving entrepreneur who gives it all up to take a giant leap of faith into the unknown is further from the truth that you may think. And that’s a good thing, especially when you consider the hard, bleak truth that 9 out of every 10 startups will fail. In actuality, the evidence suggests entrepreneurs may lean the other way when it comes to risk.
In his book, Originals: How Non-Conformists Move the World, organizational psychologist Adam Grant argues that successful entrepreneurs are not the extreme risk-takers we often imagine them to be, but rather the more conservative individuals who are more apt, not less, to hedge their bets.
Grant’s theory is supported by a recent study that suggests entrepreneurs may be best served by easing into the process. The study, published in the Academy of Management Journal, tracked a nationally representative group of about 5,000 American entrepreneurs over 14 years.
Researchers found that those who kept their day job while starting a company were 33% less likely to fail than the ones who went all in.
The researchers also conducted personality surveys, which found that those who did quit their day jobs tended to be “risk takers with spades of confidence,” whereas, those who kept their day jobs “were far more risk averse and unsure of themselves.”
And while the cautious and conservative traits may not adhere to the commonly held belief that in order to succeed entrepreneurs must be “all in,” it does align with the stories of some of the most brilliant people in business today. Some of them you might recognize:
Phil Knight: For six years, Knight worked two jobs. By day he was a CPA for Price Waterhouse, and by night, an entrepreneur hawking running shoes and building a company that would eventually become worth $25 billion – Nike.
Steve Wozniak: Even a year after inventing the Apple computer, Woz was still working at Hewlett-Packard. Side note – Woz offered his original design for the Apple I personal computer to HP five separate times, but they rejected him every single time.
Sara Blakely: She sold fax machines door-to-door for seven years before making it big with her footless pantyhose innovation. And all along, she was rejected by every manufacturing company she took her idea to. But her perseverance paid off, and that prototype – Spanx – made her the youngest self-made billionaire in America.
T.S. Eliot: The renowned author kept his London bank-clerk job years after publishing The Waste Land. He subsequently found another day job at a publishing house to bring more stability into his life.
John Legend: The platinum artist released his debut album in 2000, but continued to work as a management consultant until 2002.
Markus Persson: While working as a programmer, Persson built video games in his spare time. He released Minecraft in 2009, and kept his day job for an entire year before committing full-time. Minecraft would go on to become the most popular computer game of all time, and he would sell it to Microsoft in 2014 for $2.5 billion.
Scott Adams: The renowned cartoonist and author kept his job at Pacific Bell for seven years after his first comic strip was published in the newspapers.
Of course, the further along you are on your passion project, the more frustrating it can become still devoting 40 hours a week to a job. But keep in mind that there are a number of benefits that having a day job will provide.
First, it gives you time – time to iterate, and time to approach your business thoughtfully. You won’t feel the pressure to cut corners, and if you don’t turn a positive cash flow immediately, you will still be able to remain afloat.
Having a day job also gives you resources. This capital is particularly important if you are bootstrapping your business yourself. And since you won’t constantly be bombarded by the idea that you gave up your job for this idea, and have already spent your resources on a particular iteration of the company so you better stay committed, you will have more flexibility to pivot. Did you know that Airbnb failed four times before it found success? Having a day job affords you the opportunity to fail, as ironic as that may sound, and this sense of freedom is a welcome space for creativity.
When it comes down to it, keeping your day job until you are cash flow positive is not only the safest, but arguably, the smartest decision you can make. You have the time and resources, not only to validate your business, but to turn it in to a viable business with sustainable growth. You will have flexibility in lifestyle. You will be able to pay both your personal and business expenses. And you will be able to take a more thoughtful, comprehensive approach to building a road map from where you are to where you want to be.
So stop thinking that holding down a day job speaks in a negative way to your commitment or dedication to your business, and start realizing and capitalizing on the benefits of what it means for you as an entrepreneur.