Entrepreneur Office Hours - Issue #23
Product-obsessed entrepreneur, entrepreneurs who are too curious for their own good, and the woman who taught us to "surf the Internet"
If you’ve been reading my content for a while, I’m about to jump on a familiar soapbox. But it’s critical and needs to be repeated:
Your product isn’t as important as your customer acquisition strategy.
That’s the core message of this week’s featured article. And by the way, I’m not immune to being product-focused. I often get bogged down in product details when I should be thinking about customer acquisition. So I consider the article as much a reminder for me as it is for all of you.
Also in this issue, I answer a question about whether or not to turn a “side hustle” into a company. And, on Web Masters, I talk with the woman who coined the phrase “surfing the Internet.” How cool is that?
Send your questions if you’ve got them, and please forward this issue to a friend… or fifty friends!
There’s a hidden but very real danger in trying to build something people want. And that danger has nothing to do with what you’re trying to build. It’s that being focused on building a great product means you’re not focused on what really matters.
The Librarian Who Taught People to Surf the Internet
This week, I celebrated International Women's Day with an episode of Web Masters featuring Jean Armour Polly, one of the "mothers" of the Internet, a member of the Internet Hall of Fame, and the person who coined the phrase "surfing the Internet." Jean's pioneering evangelism work helped millions of people get their first taste of the Internet and World Wide Web.
Hear her story on Web Masters:
…or search “Web Masters” wherever you listen to your favorite podcasts.
I Asked 50 Entrepreneurs to Explain Why Fire Trucks Are Red and School Busses Are Yellow — None Could Do It
The best way to learn what you need to know about being a successful entrepreneur is by learning to question the world around you. That means even asking questions you think you already know the answer to, like “Why are fire trucks red?”
Entrepreneurs are naturally curious people, and that's a great thing. But it's also dangerous. If you're not careful, the same curiosity that turned you into an entrepreneur can prevent you from being a successful entrepreneur. Here's how to prevent it.
Office Hours Q&A
I’ve been building a business on my own in the evenings for the past couple of years. It’s generating about $20k - $30k per year at this point, so it’s not making me rich, but it’s nice money to have on top of my day job. I’m trying to figure out at what point does it make sense to take the leap into running it full time versus just keeping it as a side hustle. Any advice? How do you know when it’s time to make a full go at a startup and all the risks that come with that decision?
First off, congrats. $20k - $30k per year is real money.
Second, there’s no right or wrong answer here. Or, at the very least, there’s not a right or wrong answer you’ll know before making the decision. Five years from now? Sure, you’ll probably be able to figure out whether or not you made a good choice. But you can’t know that now.
And one final caveat before I jump into my answer. I can take this response in two directions. The first is more personal. I’d ask you to think about things like your current risk tolerance, who else you’re supporting, how easy/hard it would be to return to the career you have now, and so on. For me, these questions don’t seem like things you need me asking you about, so let’s A) pretend I’ve asked you all those kinds of questions; and B) pretend you’ve been diligently introspective and answered them for yourself in a thoughtful and truthful manner.
Instead, I feel like the value I can add relates to your question’s business/entrepreneurial implications. In fact, let me rephrase your question slightly to this: “How can I tell if/when my side hustle has enough scalability to become a full-time business?”
For me, this is an interesting and important question because it gets to the core distinction between hustling for a few extra bucks versus building an actual company. To be clear, there’s nothing wrong with hustling for a few extra bucks each month. All my podcasts and articles on Medium and what not… they generate money. It’s nice bonus money. And there are lots of ways to do similar things, particularly in the digital age. You can do everything from selling thrift store treasure finds on eBay to picking up extra Uber shifts. But those aren’t businesses.
If I’m trying to assess whether or not a side hustle is capable of becoming a full time business, I’d be focused on three things: sustainability; scalability; and operability. Let me explain…
One of the biggest risks in turning a side hustle into a full-on business relates to the sources of the revenue. How much can you rely on the stability of those sources? For example, I’ve worked with lots of YouTubers. When things are going great on YouTube, they often feel like “sky is the limit” in terms of earnings potential. The problem is that one small change from YouTube -- a tweak to their algorithm, censoring content, whatever -- can shut them down. It’s often not a risk they’re prepared for.
To be clear, the risk might be worth it. Heck, there’s always some level of risk. And that’s what you’ve got to assess when considering the long term sustainability of what you’re thinking about building. Are you willing to trust that the revenue sources you’ve got today will be there a year from now? Five years from now? Ten years from now? If not, do you have a decent sense of how you’ll be able to effectively move from one revenue source to another over time?
Simply put, being able to rely on your revenue sources is a key indicator of whether or not to make the leap.
Let’s take the example of picking up extra shifts as an Uber driver. That might be a fantastic way to pull in an extra few thousand dollars a year. The problem is that it’s not very scalable. No matter how hard you try, you can only be driving one place at a time.
This kind of side hustle has a firm cap on how much you can scale your business. To be fair, that cap could be extremely high. For example, if you’re a consultant charging $1,000 an hour, and if you can consult for 60 hours per week, that’s a $3 million per year business, which ain’t too shabby.
When considering scalability, you want to -- as objectively as possible -- attempt to measure the upper bound of how much income you’ll be able to earn. If that upper bound appeals to you and your personal goals/aspirations in life, then it might make sense to start pursuing your side hustle full time. However, if the upper bound makes you nervous, then perhaps you haven’t found the right opportunity.
Note, by the way, that scalability is about more than just personal time limits. It’s more a question of overall resource constraints, with time being just one type of resource. Other things that can limit scalability include things like the materials needed, the size of the market, and costs of customer acquisition.
If you were thinking carefully about my assessment of scalability, then you should have noticed that one of the biggest obstacles to scale is you and your own limit on the number of hours per day you can work. Even a consultant making $1,000 an hour still only has the same 24 hours in a day as everyone else, and that creates a firm cap on just how big a single person consulting business can become.
However, when the thing being sold can also be created/produced/managed/operated by other people in a cost-effective manner, the temporal limits on scaling become much less problematic. In other words, if you can hire and train people to do the thing that’s generating revenue while moving yourself into a management role, that’s how to go from running a side hustle to running a business.
Just know that running a business will likely require a different type of work than what you’d gotten used to. You’ll likely go from creating products and selling to customers to managing people and overseeing operations. Neither role is better than another, but the different types of work might not appeal to you. If that’s the case, then you have to ask yourself some important questions about what kinds of work you’d prefer to be doing. I’ve seen lots of people excitedly try to move their side hustle into a business only to find themselves making more money while doing work they don’t enjoy nearly as much. That tradeoff might be worthwhile to some, but others might hate it. You need to figure out whether or not the tradeoff is worthwhile to you.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!