Ages ago I told readers they were welcome to submit questions.  I get a couple of questions a week and usually work them into posts.  One that caught my attention this week and hit home was whether it’s best as an entrepreneur to:

1- launch a project while at your existing job to minimize risk

2- launch with outside financing from the get-go, even from existing colleagues.

3- launch ASAP with no outside financing

I won’t get into the details of the person’s situation, but this was a reader who works at a large enough company with interests in various niches of online media.  She’s saved enough money to be able to go a couple of months without salary and develop her idea.

So, here goes:

Option 1 seems least risky but in fact is extremely risky because even if you work on your own time, your employer can come back and accuse you of stealing company data or working on company time.  This might be a moot concern if your idea has nothing to do with your employer but many new media firms do operate in various spheres so be careful. 

While it seems less risky, it is in fact the riskiest thing you can do.  When I was at my old job, I developed a search engine, which was really not at all competitive to my employer’s operations.  I even talked about it quite openly to ensure no one thought I was hiding, the company knew about it (they also monitored employees’ every move) so that was not an issue. 

When I launched WatchMojo.com, I did so after I left because like my old company it was content, too.  Of course, even a drunk donkey would tell you that a video site with content for both genders is not the same as a men’s T&A magazine publishing text content… but I digress, the point is, companies and senior management are extremely greedy and reckless in their territoriality (even though when the shoe’s on the other foot they’ll turn a blind eye).

So generally speaking, while 1 seems like a safe thing to do, I don’t advise it, at all.  Financially it’s challenging, but who said entrepreneurship was easy.

Option 2 seems like a smart strategy too, but you should always leave a company without burning bridges.  Analogously, you should avoid thorny situations.  When you start a company, failure is not an option (to you) but not succeeding is always a likelihood.  So imagine if - god forbid - you wanted to return.  What then?  If you accepted money from colleagues or supervisors and your idea flopped, that’s not an enviable situation.

Of course, if people want to back you, you should not turn them down too long either… my recommendation is to simply bide your time and tell others you’re getting your house in order and will follow up shortly.  It’s always easier to negotiate when you have an existing product or property.  Not only will you have an easier time showcasing your vision but you’ll strike a more favorable deal with investors.  It’s also common sense, if someone is willing to invest in you today, they’ll probably invest tomorrow, the week after or the money after that, too.

Sure, they might forget about you in 3 to 6 months, but even then, there doesn’t seem to be a shortage of money, just ideas, smart entrepreneurs and hard working employees.  So if you can, I suggest, go for route 3:

Option 3 is definitely not easy but if you can hold out for a few months, you should.  You get more leverage and don’t waste time convincing people.  It also depends what you are doing, after all.  If you need $1M to build a beta, you might not have this luxury, but even if you can get a working prototype on the cheap, do it.  Another variable, of course, is what you are doing.  In my case, I’m a media guy first and foremost.  I use technology because it changes media.  VCs are largely IT guys looking to win in a media and advertising space so it makes pitching to VCs somewhat unique… but the point is, the further an investor is to your project, the harder time they’ll have understanding what you do, why you do it, and how they can make money off of it.

All in all, I’m not sure if option 3 works for everyone, but with cheap hardware, open source software and lots of options to raise minimal funds, it just might be the best way to scale your vision.

Oh, one more thing, you can build up the most impressive contact list in the history of business, but once you leave your job understand your old contacts might not put much stock in you, sans company letterhead.

More question?  email me at ash@mojosupreme.com.

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