💯 Regarding side hustles -- a few notes

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Today, we’re covering something a bit unconventional. It seems that side hustles (or ‘side quests’ as some like to call it 🙂) has been on an exponential rise — most noticeably among youths, but across the board in the professional world.

This quote, from one of the hundreds of young professionals we spoke with in the past month, encapsulates the sentiments:

“…..side hustles are very prevalent today……almost all, including most of my friends, and myself included, are no stranger to side hustling 🤣. This is because most of us believe there is no more such thing as 1 stable stream of income from a 9-5 job.”

Damn. This is a drastic change in attitude from even a few years back. And for good reasons too (e.g., difficulties in today’s job market, rising retrenchments).

Personally, I left Google 4+ years ago to build my own businesses. Here are a few lessons I picked up along the way, for those of you who are interested in running your own thing. I’d love your thoughts — let me know in the poll section below. If helpful, we may have a part 2 or 3 to this!

1) Most important litmus test: the fastest way to assess if a side hustle or business has legs is to literally go out there and get paying customers. If you can get 10 people in your network to open their wallet and give you money in exchange for your offerings, you’re onto something. Do not simply just ask if they’ll buy! Everyone will say nice things and ‘yeah I’ll buy’, but the ultimate test is the actual transaction. Even good friends are unlikely to physically hand you money for something they don’t need or want.

2) Following up on #1 above — if you don’t know 10 people who would pay you for a product or service, then you’re fighting an uphill battle. Should you really be starting a business where you don’t even know 10 people who need your product/service? At worst case scenario, this means you may have a product/service that nobody wants (thus investing more in the idea is futile). At best case scenario, you’ll need to burn lots of cash on marketing just to land customers, potentially leading to negative ROI.

3) Type of business — traditionally, service businesses are the easiest to start (you’re essentially trading time for money, for example building websites for customers, baking cakes for an online side hustle, tutoring). They’re also the hardest to scale, as your time is limited, and you only get paid when you spend time on delivering the actual service. Scale is possible, but slow and linear — for example, you expand your bakery and you’re able to hire more staff to increase output. Service businesses can still be lucrative, however, depending on your ‘hourly rate’ — e.g., lawyers and consultants get paid thousands of $ per hour, so even trading time for money can ultimately lead to lucrative outcomes.

Software and media businesses (the latter includes being a creator) are the hardest to start, but are naturally scalable — you create a piece of software or a video once, and it continues to generate income even while you sleep. This is also why software businesses tend to have the highest margin.

4) AI — I say ‘traditionally’ in my point #3 above as AI has begun to change the rules of the game. For example, many previously manual tasks (e.g., doing taxes or market research) can now be done in 90 or 95% less time with the right AI tools and setup. If you love tinkering with the latest AI tools, then you know exactly what I’m talking about. Thus, imagine a side hustle where you’re building websites or social presence for SMEs — what would have taken 2-3 hours per website / per video post can now take as little as 15-20 minutes. This article by Sequoia encapsulates the concept of scaling service businesses quite well, if you’re interested in further reading.

5) Side hustle ideas & choosing what to actually pursue — would this be a topic that you’re interested in exploring? If so, please respond to me on this email thread. If we get enough interest, we’ll fully unpack this as part of the next newsletter!

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Best,

Vincent (feel free to add me on LinkedIn here 🙂)