For the longest time, I thought I was an outlier. Looking back on a 20+ year career as an entrepreneur, I can count at least five times I found myself actively running two companies at the same time.
Every time it happened, I believed it to be a simple case of bad timing: Two opportunities would gel quickly in parallel. Or a succession plan blew up in my face. Or I found myself caught in a fun little opportunity that turned into a job.
Turns out I’m not such an outlier. In fact, since I’ve been advising other startups, I get this question at least once a month:
“How do I run two startups at the same time?”
And I get this question quite a lot too:
“How do I know when to quit my job and run my startup full time?”
Look, I don’t want to be the guy that preaches against loyalty, whether that loyalty is to the people you’re paying or the people who are paying you. But I will tell you this:
If startups were only founded when the timing was right and all the conditions were perfect, no one in their right mind would ever start a company.
Opportunity doesn't check to see if you're dressed before it knocks.
Almost always the first question: How do you split work time?
Here’s the first thing you need to know.
Running two companies at the same time is almost exactly like having a full-time job plus a side gig, even when considering where to prioritise your time. There’s no “choosing” where to spend your time. One company always takes priority.
Choose one company as your priority, and stick with that choice.
The priority company is always your full time job. Now, let me make this clear for the purists: Neither a side gig or a second startup should require you to be in a certain place at a certain time for certain hours. If those rules are true for you, you do not have a side gig or a second startup, you have two jobs, and the rules are completely different.
A side gig or a second startup is anything from a hobby to a mission to a full blown company, where your focus is turning something satisfying into something rewarding. You should be open, honest, and clear about what your intent is.
If you’re going to have a side gig or a second startup, you’re going to have to get up early, stay up late, and work weekends. You’re not going to have lunch, you’re not going to have much of a social life. If your side gig or your second startup isn’t providing you the satisfaction and fulfilment that hobbies, friends, and alcohol would otherwise provide, don’t do it.
If you’re doing the side gig or a second startup for the money, I’ll say again, you have a second job.
Now, with that said, the golden rule about splitting time is as follows: As much as possible, avoid any function that requires you to be mentally available at the second company when you should be mentally available at the priority company.
Sharing resources: Same advice, different reasons
Whether you’re running two companies at once or running a side gig, never, ever use one company’s resources, time, and especially money and people, for the other.
For the side gig, it’s unethical and can put you into hot water in terms of ownership of the intellectual property and work done. The money and people part can get you into legal trouble as well. I can’t think of a scenario where this would be worth it. It’s just lazy.
But the same rule is true even when you own and/or run both companies. Make it clear about what you’re doing and for which company at all times. And unless the second company is a spinout and at least partially owned by the first, never share resources, equipment, or money for the same ethical and legal reasons.
I’d also recommend against sharing people, because you don’t want to destroy everyone’s brains and priorities. But again, if one company shares ownership with the other (on paper), then some of this is viable, as long as you account for it at tax time.
The benefits of creativity and changing perspective
The truth is, if you’re truly an entrepreneur, and you want to be successful, you probably need the distraction of a second thing. You need that distraction like Coke needs Pepsi or Apple needs Google.
I like to help entrepreneurs. It’s what I do on the side. I can’t tell you how many times I’ve solved someone else’s problem and gained new perspective on some of my own problems. On the flip side, the reason I’m good at helping other entrepreneurs is that I’m not just giving them slogans and motivation, I’m actively and constantly solving my own problems, and I’m able to relay what I’ve done for others.
The truth is that your brain needs to switch gears in order to find new solutions. If you’ve ever stared at a problem for hours, then taken a walk, then sat back down and immediately came up with a new solution, that’s exactly what happened. Imagine on that walk you talked to someone else about their own problem. It’s like supercharging your creative centre.
Now, this is radical thinking in some circles, and I understand that. So…
Transparency: Always be more honest than you have to
I’ve never done a side project that the world didn’t know about. An off-hours project that stays off hours is good for everyone. An off-hours project that bleeds into your day-to-day and has you constantly struggling is bad for everyone.
Your priority company is going to demand your unwavering focus. And when you can’t do this anymore, it’s time to divest.
When to divest
If you’re good at what you do, at some point one of the entities will grow large and rewarding enough to force you divest from the other.
My classic example here is when we decided to raise a Series B at Automated Insights. I had started ExitEvent at the same time and that was growing way more quickly than I had planned. I knew I had to divest and, even though I went into founding ExitEvent with zero intentions to sell, it had acquisition interest almost from the very beginning, and the ownership was all mine, so the choice was obvious.
And it’s what I had to do. As soon as we closed our Series B at Automated, a private equity firm swooped in, so I wound up selling both companies within a 12-month period.
I could not have sold ExitEvent while trying to raise a Series B or negotiate an acquisition. And vice versa. You have to be prescient about what’s in front of you, and make arrangements before those arrangements become a fire drill.
On the other side, I’ve quit my priority job to do my startup a couple times. But that said, I’ve never quit my priority job unless I had a solid assurance that the only thing keeping me from success with the second company was a lack of my time and effort. I’ve never quit a job just so I could be my own boss.
Can you hand the second company off?
In my newsletter I ask readers for their input into my next post. This response brought back a horror story from my past.
“I’m running two startups. One is the moneymaker and I spend 95% of my time on it. The other is something new and I’m trying to recruit people to run with my vision. Finding passionate individuals who can dedicate themselves is my primary challenge. I am willing to give equity generously for the right individuals.”
From my own experience, and yours may be different, this is probably not going to work. Here’s why:
- People don’t follow an idea, they follow a leader. You can distill ideas, strategy, even execution, but you can’t distill passion if you’re not actively living it, even part-time
- You especially can’t do this with equity if you’re not 100% active in the venture. I understand that your time needs to be spent working on the first venture to fund the second, but even in that situation, you’d need to pay the employees of the second venture
- I tried to hand off my PRIMARY priority company to start another company, and when the person I put in charge realised how hard it was to run that company without me, the lure of ownership was no longer worth it, and he bolted.
In other words, without you there, there’s no “there” there.
And that’s what it takes to run two companies at the same time. That’s why I say you have to choose one as your priority, but make sure you’re involved in the second enough to make it obvious that you are involved and running it.
Then, at some point, you have to let one go.
This article was originally published on Medium by Joe Procopio
Joe Procopio is a multi-exit, multi-failure entrepreneur. In 2015, he sold Automated Insights to Vista Equity Partners. In 2013, he sold ExitEvent to Capitol Broadcasting. Before that, he built Intrepid Media, the first social network for writers. You can read more and sign up for his newsletter at www.joeprocopio.com
