When we talk of entrepreneurs there is a tendency to think in terms of Hernan Cortes, the famous Spanish explorer who burned his ships upon landing in Mexico in order to convince his men that there was no turning back. Anything but total commitment to the entrepreneurial cause is only going to hamper your chances of success.
Research from the University of Southern California suggests this is a misguided opinion, however. Indeed, the study suggests that entrepreneurs who keep a day job are around a third more likely to succeed than those who go all in.
Hedging bets
The researchers explain that the growth in cloud-based technologies has made it easier for people to start firms, which in turn has made it feasible to run them as side hustles rather than needing a full-time commitment. With the pandemic prompting many people to reassess their lives and career, this reduced barrier to entry has prompted many to dip their toes into the entrepreneurial waters.
“Some of the world’s most innovative and successful entrepreneurs started their companies as hybrid entrepreneurs,” the researchers explain. “For example, Steve Wozniak remained an employee at Hewlett-Packard long after co-founding Apple, Pierre Omidyar launched eBay while working for the software development company General Magic, and, with the help of investors, Henry Ford founded the Detroit Automobile Group while employed by the Edison Illuminating Company. In 1997, 20% of CEOs on Inc. Magazine’s 500 fastest growing private companies list indicated that they continued to work a paying job long after founding their organization.”
The authors believe that this kind of “hybrid entrepreneurship” is effective because it allows entrepreneurs to learn more effectively. They argue that it’s impossible for entrepreneurs to really know whether their idea will gain traction in the market, so the only real way to learn about the opportunity is to test the waters.
Having a plan B
By retaining your job, it’s possible for entrepreneurs to test their proposition while having something to fallback on if that process highlights a lack of viable opportunity, either in terms of the market or indeed themselves as individuals.
“There are multiple ways to start companies. You need to do what you feel is best for you, but at the same time, there is evidence here that there is value in getting first-hand experience, because there is so much uncertainty in entrepreneurship,” the researchers explain. “There is value in gaining concrete evidence, real-time market feedback, that your product or service works. You need to get rapid feedback and be willing to change, because it’s really hard, even with business plans, to fully anticipate what’s going to happen.”
Of course, the approach isn’t completely free of risk, not least in the fact that investors are unlikely to commit fully until you yourself have committed, but one would assume that by the time you’re looking at securing investment that you will have conducted sufficient learning to commit one way or another.
There is also the possibility that your new gig becomes a permanent side hustle as you aren’t able to devote the time and energy required to make it grow. While the authors don’t necessarily dispute the importance of devoting oneself to entrepreneurship if you want to succeed, they do nonetheless believe that their findings provide an alternative perspective that deserves consideration too.
