Side projects and The Internet

Business advice is weird, they are often conflicting. So what do you do with it? Which one do you listen to?

Red mug with yellow writing on it that says go get'em! It has steaming coffee in it. Pot of plant next to it.
Photo by Kyle Glenn on Unsplash

Yesterday’s post was about side projects and the corporate world. Today I want to touch upon some advice I’m bumping into in the real world as I’m figuring out how to ship my ideas.

On venture capital

Or other outside finance

When I was a wee lad, fresh out of high school, dipping my toes into the world of adulthood in the form of a university, I had grand ideas on how to make it big. My parents started a company the moment the government of Hungary allowed private individuals to do so — communism to democracy in 1989. It was fairly successful until my dad’s untimely passing. I had this pattern of what works well, so naturally I gravitated towards that. I also watched a lot of contemporary american movies, read the relevant literature, and the early internet was full of successful startups.

As a consequence I thought in order to be successful, you need to have venture capital. I also didn’t know better, therefore I also mistakenly thought that having venture capital means that whatever I’m building is automatically going to be successful and I’m going to have my multi-hundred-million dollar exit at least.

Ah, to be young, and very wrong! Since then I’ve seen multiple companies crash and burn with venture capital, been part of one that failed to raise funding and decided to get acquired instead, and have friends who are in very similar situations. I also learned that if you do take VC money, the terms are going to be such that you’ll lose a lot of control, and the board will try to pressure you into doing things that won’t necessarily align. You don’t want to lay off people because it literally doesn’t make sense, but if the money people say they want to see people laid off, what are your choices?

The biggest reason I decided to do microsaas is because I do not want to take any outside money. Is it going to limit my growth? Yes. Is it going to keep me from handing over control to anyone else? Also yes. Am I going to be bound by certain terms and have to justify myself and my decisions and actions to a board? Nope. I don’t see downsides.

The way I think about a software business where I provide a solution to a problem for a fee is if I can’t validate it for a small cost, then it’s not a project I want to get into. I am no longer at a stage in my life where I have play time and play money to do experiments.

Either the experiments are low cost, and then I don’t mind them failing, or they end up working and become sustainable.

Once I do have a healthy cashflow coming in, then, and only then, will I consider involving VC money. Saying “no” has no cost, because my thing is sustainable. They aren’t taking away anything, so any term sheet is going to be on my terms, or will benefit me. I can walk away, I have the power.

On business advice

A few weeks ago I attended an event: Oxford Leaders in Tech. There were three entrepreneurs who built something that was ultimately bought by a larger entity after a bunch of years, so the conversation was mostly around their experiences and the process of selling a company. There was also a legal firm present whose niche is helping young and budding startups get to a point where they are attractive to VCs and acquirers.

One of the questions I had in the after-event social meetup was when is the good time to start reaching out for help. I was expecting something along the lines of “once your business has 1000 customers” or some figure of money in the bank, but the answer I got was “now.” Even though I’m in the moonlighting phase where I have a full time job and that puts a lot of restrictions on what I can do with my ideas whether that’s time involvement, effort, or monetary.

I got in touch with them, started the process, only to find out that any advice for budding entrepreneurs still costs a significant amount of money. I mean it makes sense, they are professionals, they’ve done this a bunch of times, but I still feel a bit gaslit about the whole situation. Yes, I can spend the money on their advice, but it’s still an experiment for me, and it would have been much better if I heard “usually it costs about £X, under that it probably isn’t worth our time.”

I wish the industry was just better about surfacing all of these hidden assumptions. Or maybe it’s a selection process and because I did not know about this assumption, I am not their target market, and I shouldn’t be dabbling in the “running a business” thing.

On business advice #2: online

I follow a bunch of people on Instagram that have something to do with business. Either it’s having a laugh about some insane manager’s footguns about being the worst boss, or tips and tricks on how to be the kind of employee who gets shit done by playing the office politics correctly, or just general business advice.

I’m going to pick on Chris Donnely for a hot second with two of his reels, and then compare this with the YouTube version of the second reel. I have zero personal attachments to him, this isn’t anything specific to him, these reels are just recent enough that they’re on top of my mind, but I’ve heard the same sentiments from others as well.

Here’s the first Instagram reel linked: the worst entrepreneurial advices received.

  1. “Build it and they’ll come” — stupidest thing he’s heard. He goes on to add that you need to build a brand, have marketing and sales, otherwise no one will know about your thing.
  2. “Get into a highly competitive field, copy them, and charge lower than everyone else” — don’t, because competitors already have their prices set because they’ve done the math and have their margins. Charge less, you’ll lose money.
  3. “Only pivot if you know it’s going to work” — the point of pivoting as a startup is trying to figure out how to create revenue, so you need to experiment.
  4. “Don’t start that because it’s been done already” — Stupidest advice, his first business was an agency business, there are hundreds of thousands of agencies already, they niched and became the best luxury agency.
  5. “Wait until you’re ready and you’ve saved enough money” — If entrepreneurs waited until they were ready, no one would launch, and become an entrepreneur early, because the older you get, the more responsibilities you’ll have. But don’t quit your day job, try a side hustle, and see where that goes.

It’s almost confusing. You need to think kind of hard, because how do you reconcile “don’t get into competitive business” and “copy a model that’s super competitive?” Or the “have marketing and brand and sales,” but also start when you’re young, you don’t have money, you have nothing to lose. How are you going to pay for all the brand / marketing / sales stuff?

Shortly after he posted a list of 7.5 side hustles you can go and do with little money:

  1. Content creation. Yes, if you have a good idea, you learn how to record not shit video / audio, and you’re somewhat charismatic, AND you have incredible luck. Gives example of Khabani Lame of someone who does VERY well, but fails to mention all the hundreds of thousands of others who try this and go absolutely nowhere. “[Khabi Lame] saw the potential of content creation, and just went for it” and now he earns $400k per video. I feel like there’s a lot of other things missing from there.
  2. Online writing. Become a ghostwriter. Sure, but you need incredible luck, connections, sales, talent, time to do this. Clients have deadlines, and if you’re working evenings or weekends, you might not be able to hit these. Gives example of Alex Cattoni, well known copywriter, a rare successful marketing person. What of the millions of writers who might be just as talented as Alex, but never got the success? I don’t doubt that you can start this, but selling it as something you can be wildly successful fast is disingenuous.
  3. [this is missing from the reel] Selling luxury items online. You can become an authorized reseller of a brand, but that also means the brand is going to do their due diligence on you, because they don’t want to associate themselves with someone who’s not going to take care of their customers, so you need some form of established track record which may or may not need money already.
  4. Build an online community around an area of interest or a niche, then monetise that community. Sure, this could work, but are people willing to pay to be part of that community? Do you have the necessary knowledge and experience to form the community around that interest or niche? I am part of a few, James Hoffmann’s coffee Discord is one of them. He most definitely has the expertise and the experience around coffee to have that community form around him. You? Do you have a thing? What do people already recognise you for? Is that something you can turn into a community? Is that viable? And let’s talk about that second half: “... and monetise that community.” Do you have the skills to do it so people won’t feel like you’re fleecing them? Like the community is just a bait and switch?
  5. Online coaching. Again, do you have deep expertise in something that people would want to learn about?
  6. Social media management. This one is the only one I don’t really have any gripes about, because even President Joe Biden House is hiring someone responsible for their dank memes. If you know how to manage a brand’s socials, and do it in a responsible way, go for it! I have no idea how competitive this market is though.
  7. UX / UI design. Yes, if you have the skills, please do this, so many companies need this done to their sites or other electronic interfaces. The hard part here is to convince them that they need this done, and that they should pay for this. Because of this you need to be a really really good salesperson.

The last one, the half, is just investing. I say “just,” because you kind of need to have money to invest, and there are people a lot more focused on investing than Chris.

The YouTube version of the second Instagram reel has a lot more nuance around these points, which is nice to hear. Due to the limitations of the media that we’re watching things, videos need to be shortened, parts cut out, and nuance lost.

Okay, so uh, what happens now?

Business is weird. It’s not something you need a formal degree for, it’s not something you need to be really prepared for, but depending on your luck, your knowledge, and your prep, the results may vary. I put these in order of importance. At the end of the day, if you see a problem that you can solve, you can charge money for it, and get people to actually pay you to fix their problem that they’re going to be satisfied with, you’re in business!

Of course you’ll need to know a bunch of other ancillary skills, like accounting, law, contracts, payments, ads, sales, marketing, but those are fairly easy to pick up, and not knowing them when you start out isn’t going to prevent you from running something.

This brings me to the most important part of running a business: you have to be able to learn new things, you need to be okay being wrong, you need to be okay with others telling you what you’ve been doing, thinking you were doing it right, was actually incredibly harmful. Correct it, and keep moving.

As for me, I’m 40, I have responsibilities, I am doing my side projects in the evening and on the weekends, and I’ll see where that takes me.