Here are my key takeaways from my interview with venture capitalist and author, Patrick McGinnis, from Boise Startup Week 2020.
Part I
Patrick actually coined the acronym FOMO, which stands for “fear of missing out,” in 2004 as a student at Harvard Business School. There were so many opportunities at school, and he wanted to take advantage of all of them. As a result, he was constantly stressed out, a feeling he dubbed “fear of missing out.” Ten years later, it made its way into the Oxford English Dictionary.
His approach to entrepreneurship is deeply influenced by FOMO, as he still has lots of it. He’s also too risk averse to put all of his eggs in one basket. Contributing just part of his time and money toward an entrepreneurial idea or ideas allows him to explore lots of different areas in a low-risk way. and he’s written a book about it: The 10% Entrepreneur.
Why did he choose 10%? It’s a meaningful amount, but not one that requires people to upset their entire lives.
The pandemic only increases the value of part-time entrepreneurship, as we embrace the change COVID has brought into our lives. So many of us are pivoting and trying new things rather than just letting the world happen to them. The beauty of 10% is that you can test out a new project comfortably rather than going all in.
Part II
During our interview, Patrick shared his part-time approach to entrepreneurship. What advice does he have for others considering this path?
The first step is to think deeply about what you’re good at and what you like to do. What you’re good at will make you successful, and the fact that you like to do it will help you commit.
Next, think carefully about how much time and money you can devote to this endeavor. If you only have an hour a month, for example, you shouldn’t be the primary mover. Get involved in someone else’s project as an advisor or an investor. Meanwhile, if you have an abundance of time, but little to no money, don’t take on a project that requires a ton of cash up front (there are tools to help you determine an effective strategy based on your circumstances on Patrick’s website).
Patrick also advises that you should pay attention to what excites you and what doesn’t. If the side project you’ve been working on no longer makes you light up, that’s important information. To help clarify how you feel, ask yourself, Why am I doing this? What’s an acceptable outcome for me? The great thing about 10% is if it’s not working, you can just walk away.
Part III
Patrick provided insight on a common question among burgeoning entrepreneurs: How do you know when it’s time to truly commit to your side project and go full time?
Roughly 40% of millennials are working on something on the side, making this top of mind for so many people these days. Keep in mind, though, that there’s a difference between 10% entrepreneurship and having a gig—like driving for Lyft or Uber. Why? Entrepreneurship requires an ownership stake in whatever you’re building. Don’t confuse entrepreneurship for trading, either, which is what Patrick would call selling items on Etsy or eBay, for example. If it’s not scalable, it’s not entrepreneurship.
So, when is the right time to take the leap?
Patrick says if you can either live off the money your business is producing or raise what you need, go for it.
On the other hand, even if that’s the case, if you want to maintain a level of comfort and keep some of the pressure at bay, or if you feel you can’t manage it all on your own, it might not be the right time to make the jump. Instead, focus on getting to a point where you can reasonably devote more time to it.
Regardless of your circumstances, this is a great time to rethink your perspective and get creative. “We all have to pivot in terms of the way we do things and ask questions. If you don’t,” he says, “You’re in trouble.”
For more from Patrick, check out his website.