Ryan Robinson on November 11, 2017 21 Side Projects That Grew into Million Dollar Startups (and How They Did It)
If you want to build a successful business, you need to be laser focused on a single goal, right?
Sure, conventional wisdom says we can’t multi-task and need to stay away from shiny object syndrome. But startups are far from conventional. If you want to be successful—truly successful—you can’t follow the path that’s already been taken.
Think about the most innovative, industry leading businesses: Apple, Facebook, Google, SpaceX. How many people believe they had it all figured out when they first started out?
The truth is that they were all born out of experiments—ideas that seemed crazy at the time, but they tried them anyways.
This spirit of adventure, however, is sorely missing from our current working environment.
Despite all the hype around personal side hustles, and the importance of hobbies and interests outside your job, entrepreneurs aren’t as willing to put their money where their mouth is and fund those crazy, moonshot ideas that could become million-or even billion-dollar businesses.
And this is a mistake. Side projects aren’t just distractions. In fact, some of the world’s most successful companies started as side projects.
Why Side Projects Can Be Shortcuts to Success
Running a successful startup isn’t about sitting back and planning until everything is perfect. It’s about getting in the mud, dirtying up your hands, and working with what comes up. Statistically speaking, 42% of failed startups cite a lack of need as the reason they went under. Which means that more than half of businesses die because they simply don’t know what their users want. And they’re scared to find out.
Finding out what people actually want can mean changing course. It can mean looking from the outside like you don’t know what you’re doing. But we forget that even the most successful companies were run by people just chasing the best ideas they could find, no matter what it looked like from the outside:
“For many people, changing course is also a sign of weakness, tantamount to admitting that you don’t know what you are doing. This strikes me as particularly bizarre—personally, I think the person who can’t change his or her mind is dangerous. Steve Jobs was known for changing his mind instantly in the light of new facts, and I don’t know anyone who thought he was weak.”
Apple’s founder (and the 21 others we’ll look at below) weren’t afraid of chasing ideas. Even Y Combinator—the most successful startup incubator of all time—asks its applicants for a side project idea when they apply (and many end up being selected to pursue that instead of their original idea!)
I think the person who can’t change his or her mind is dangerous.
So if you’re looking to get inspired and learn from some of the top startups that started as side projects, let’s dive in...
21 Successful Startups that Started as Side Projects
1. ProductHunt
Do you need to be technical to start a tech business? What about one that’s based around uncovering the latest tech tools? For Ryan Hoover, founder and CEO of ProductHunt—a platform and community that helps people discover new tech products and engage with their team—that was never a problem. Instead of agonizing over the technical aspects of his side project idea, he decided to do what he knew he could:
“I wasn’t an engineer, so I wasn’t going to invest the time or money in building an entire site from the start, but I could build an email list really easily. I started one and invited a few dozen investors, founders, and other friends of mine who I thought might like this, and who had an inside track of what kind of tech products were cool.”
In the few years since launching, ProductHunt has grown into a community of hundreds of thousands of monthly users and recently sold to AngelList for $20 million.
2. Groupon
How does a social network for activists turn into a daily deals site that scaled to 45 countries and a $1 billion valuation within 2 years of launching? Groupon’s journey to success is the sort of weird, and twisted path that defines the startup mentality.
Originally called The Point, a social network that connected users who wanted to rally behind a specific cause, the seed of Groupon was planted when founder Eric Lefkofsky saw users banding together to buy an item and bulk and receive a discount. Spurned on by the economic collapse of 2008, they decided to launch Groupon locally in Chicago and the rest is history.
3. Twitter
While ubiquitous now, Twitter was once a tiny side project created by podcasting platform Odeo during a company hackathon. It was nothing but an outlet for a few employees and although CEO Ev Williams supported it, investors and the press couldn’t care less. Just look at this decade-old TechCrunch review:
“What is this company doing to make their core offering compelling? How do their shareholders feel about side projects like Twttr when their primary product line is, besides the excellent design, a total snoozer?”
Turns out what they were doing was building an entirely new business and changing the way we communicate online, all without even realizing it at the time.
4. Craigslist
You just can’t kill Craigslist. While you might not place it in the top echelon of tech companies, but there’s got to be something said for the more than 20-year-old classified’s side ability to whether the times. But where did it all start? As a newcomer to San Francisco in the early 90s, former IBM employee Craig Newmark created an email list for local events to help him meet people (Craig’s list, get it?). It caught on, and people started using it for more than just meetups, eventually inspiring Craig to quit his day job and build Craigslist into a billion-dollar company.
5. Unsplash
What do you do with photos leftover from a photoshoot for your startup’s landing page? Build the web’s best depository for royalty free photos, of course. When Canadian startup Crew hired a professional photographer for a shoot, they got more than they could use. But rather than let those photos disappear on a hard drive, they threw them up on a site and gave them away for free. One viral HackerNews post later and the photos had been downloaded 50,000+ times. Today, Unsplash hosts tens of thousands of gorgeous photos, still free to download, and has become the go-to place for free imagery.
6. AppSumo
You don’t need huge buckets of funding to build your side project. If you don’t believe me, just look at AppSumo, the daily deals site for digital goods and services, which was started for a measly $50. Founder Noah Kagan shared with me the story of how he was doing marketing for Mint.com when he recognized the need for a discount site for online companies. He invested his own cold-hard cash (plus a $20 cash injection from his mom) to build a landing page and collect emails. They hit $1 million in sales in their first year.
7. Oculus
There’s lots of stories of famous companies starting in garages: Apple, Google, Amazon, HP. And Oculus. After a long day working at USC’s Mixed Reality lab, founder Palmer Luckey would retire to his garage to try to build the future of virtual reality. After one of the most successful Kickstarter campaigns ever, Luckey quit his job, dropped out of school, and would go on to sell Oculus to Facebook for a cool $2 billion (before they even had a consumer product out)
8. Houzz
If you search for anything home decor or renovation-related, you’re more than likely to stumble across a listing on Houzz. The marketplace/community/directory services more than 40 million monthly users and employees over 1,000 people. But its beginnings were more than humble. Frustrated with the lack of online resources available while they were renovating their home, the founders—husband and wife Adi Tatarko and Alon Cohen—built their own with twenty parents from Adi and Alon’s kid’s school, and a few architects and designers from the Bay Area as its first users. Today? They’re worth $4 billion.
9. Khan Academy
While tutoring his cousins, Khan Academy founder Sal Khan got a bit of a backhanded compliment: They preferred seeing him online, rather than meeting him in person. What could’ve been easily brushed off stuck with Khan, and so he began creating 10-minute YouTube clips on subjects ranging from biology to art all while being employed as a hedge fund analyst. When things started to take off, Khan quit his job and now employs more than 100 people.
10. Gumroad
How do you know you’ve got a killer side project idea? When you’re a college dropout who somehow became employee number 4 at Pinterest and decide to quit to pursue it. That was the case for Sahil Lavingia. While still working at Pinterest as a designer, he realized it was unnecessarily tough to sell digital products online. He tweeted his idea to get validation and then built his side project—Gumroad—in a weekend. It’s now used by everyone from Eminem to Tim Ferriss.
11. GitHub
“It all started with a domain, a cheap slice from Slicehost, and some stock art.” Before GitHub became the billion dollar company it is today, founder’s Chris Wanstrath and PJ Hyett were building websites for Cnet—the tech news and review site. They were upset with how difficult it was to change open source code and so they built their own repository, working on nights and weekends. Now, with close to 20 million users and hundreds of millions in venture capital, their side project is front and center.
12. WeWork
One of the world’s most valuable startups almost didn’t happen. Before starting WeWork, founder Adam Neumann was selling baby clothes with padded knees called Krawlers out of a small building in Brooklyn—a decision he boils down to being “misguided and putting my energy into all the wrong places.” As a way to bring in a bit of extra cash, Neumann and his co-founder leased some space in the building they both worked out of for cheap and opened a ‘green’ co-working space. While they sold their stake in Green Desk (the original co-working company), they used the money to start another, different co-working space, which is now worth $20 billion.
13. Udemy
How many happy IT consultants do you know? Chances are you either don’t know any at all, or you don’t know any happy ones. So, when Udemy co-founder Gagan Biyani was looking for a way to get out of his position at consulting firm Accenture, he turned to his side hustle, Udemy—a platform where anyone can create and sell online courses. Today, he’s probably pretty happy as Udemy boasts 42,000 courses and has raised over $170 million to date.
14. Instagram
Have you heard of Burbn, the location-based app for whisky lovers? Yeah, me neither. But chances are that you’ve used one of the features that came out of it. While people weren’t flocking to the whisky app to post their location, they were sharing photos on it. And not just of whisky. With that as their validation, the founders decided to quietly launch a side project of just the photo-sharing app. 25,000 people signed up on day 1 and now, Instagram as it’s known, services some 800 million monthly users. Oh, and they sold to Facebook for $1 billion.
15. Buffer
When Buffer founder Joel Gascoigne came up with the idea of Buffer—a social media scheduling tool—he wasn’t ready to dive in with both feet. He’d been burned in the past starting a company too quickly and his current startup wasn’t gaining traction. So instead, he made a website explaining what Buffer could be and shared it with his followers. A few of them signed up, which gave Gascoigne the confidence to build it and now Buffer helps millions of users share their tweets and updates.
16. Imgur
While working through a computer science degree at Ohio State University, Alan Schaaf got annoyed that there were no good resources for hosting images on Reddit. So he built his own, launching it with the now famous post titled My Gift to Reddit: I created an image hosting service that doesn't suck. What do you think? It’s safe to say the Redditors liked Schaaf’s side project as Imgur recently raised $40 million and has billions of daily page views.
17. HubSpot
What’s the easiest way to validate a side project idea? Why not write about it. After selling his first startup, HubSpot founder Dharmesh Shah started a little blog while he chased other opportunities. But his side project struck a chord, and started blowing up. In his own words “a tiny blog with no budget generated more traffic than companies with professional marketing teams.” Today, HubSpot is publically traded and is worth approximately $2 billion.
18. Skry (formerly Coinalytics, acquired by bloq)
Successful side project ideas are all about identifying opportunities and saying ‘why not?’ Which is exactly what Skry founder Fabio Federici did. While studying for his MBA in Switzerland and learning to code at night, he stumbled across bitcoin. Instead of looking at it from a research perspective, Federici decided to dive in and build a startup that gave people analytics and information about cryptocurrencies. In the three years since, Federici went through a million-dollar funding round, name change later, and an acquisition.
19. Planio
There’s no better reason to start a side project than building something you need in your own business. So, when dev and design shop Launch needed a better way to handle complex client projects, they decided to build their own using a custom version of the Redmine open source software. Not only did it help their agency stay on track, but their clients got hooked on the workflow. “In many cases, the clients came to us at the end of a project and wanted to ‘keep’ the project management tool,” explains founder Jan Schulz-Hofen. “They had learned how to use it from us and wanted to apply it internally as well.” Today, that tool is called Planio and it services over 1,500 customers while also being the largest institutional contributor to the Redmine open source project.
20. Twitch
Remember what we said before about chasing seemingly crazy ideas? Before its billion-dollar buyout by Amazon, social video platform for gamers Twitch was called Justin.tv. And what did it do? Simply put, it let you livestream founder Justin Kan’s life, 24 hours a day. However, once they opened it up and let anyone start livestreaming, that’s when the magic happened. Twitch opened a number of categories with ‘gaming’ being a small side project. But when it blew up, they knew that was where the company was headed.
21. Slack
Lastly, we can’t talk about successful side projects without talking about Slack. The billion-dollar enterprise and business communication tool had a very non-business-related beginning. Founder Stewart Butterfield wanted to build a game. He’d wanted to for a decade and had been sidetracked when his last side project, Flickr, became an overnight sensation and sold to Yahoo. But when it was clear his game would never see the light of day, they decided to try the little communication tool they’d built internally. That little tool became the fastest startup to ever hit a billion-dollar valuation (in just 1.25 years!)
Key Takeaways/Lessons Learned
Communication tools, blogging sites, live game streaming, virtual reality. What can possibly tie all these varied side projects-turned startups together? While they might seem like a motley crew, each of their founders saw something in a seemingly bad idea that struck a chord with their community.
Let’s look at some of the key takeaways:
1. Build something you would use
“The best way to come up with startup ideas is to ask yourself the question: what do you wish someone would make for you?” wrote Y Combinator founder and entrepreneur Paul Graham back in 2010.
Another, more commonly heard way to say that is ‘scratch your own itch’.
What problem led you to think your side project was a good idea for yourself? Are there other people like you?
Think of the example of Slack, who built their communication tool in-house, because there wasn’t anything on the market that worked for them. Or the husband and wife duo of Houzz, who started building their network because they couldn’t find the resources they needed to complete their renovation. Or Planio, which began solely as an internal tool and only became a product when users started actively asking to use it.
Whatever itch you’re scratching, there’s more than likely a few more people out there feeling the same way. Don’t discount your side project idea just because you think you’re the only one scratching.
2. Listen to the market
“Give the people what they want and they’ll come.” It’s an old show business platitude that is the secret sauce of many successful side projects.
When you’re running a company it can be easy to get tunnel vision. You’re so sure of what’s going on in the world and that you’re building something for them that you forget to take a step back and listen. But some of the most successful side projects came from listening to what users, and the market wanted and then building something just for them.
When Twitch first started out, the gaming community was never high on their list of priorities. But when they started to see more and more people livestreaming their games, they knew that’s what the people wanted. When Groupon started as The Point, they were never trying to make money, but rather support social causes. But when a group of users banded together to buy an item in bulk they saw the potential of what it could be.
3. Get your hands dirty
“Don’t be afraid to bite off what you don’t know you can chew. You’ll learn to chew it.” That was the wisdom that made 19-year-old university dropout and Gumroad founder Sahil Lavingia leave his position as the first designer hired at Pinterest to build his side project full time.
Don’t be afraid to bite off what you don’t know you can chew. You’ll learn to chew it.
Throughout this list, you’ll see this mentality being played out. From WeWork to Buffer to Hubspot, Imgur, and Oculus, they were all started by founders who weren’t 100% confident in what they were doing, but decided to do it anyways.
The truth is that every major startup mistake can be counteracted by simply just trying. Try your idea on a small scale and see if it works. Set up a landing page or some blog posts, send a cold email to 100 potential buyers in your target market and see if they connect with your idea. Side projects are the ultimate way to try before you commit your life to your next idea.
4. Teammates and partners can validate ideas as much as users can
A lot of startup advice hinges on validating your idea with real users. Which is important. But, when you’re looking for side project ideas, or simply want to know if what you’re doing is on the right path, it’s also good to look inside. Talk to your team, employees, or partners about what problems they’re facing, even if it’s unrelated to your company.
For Noah Kagan, the idea of AppSumo came from talking to users at his other startup KickFlip, a payment company for social games:
“I started AppSumo since every game company kept mentioning they needed less monetization tools and more customers. We wanted to solve that for the apps market.”
The same goes for the team at Planio. As a project management tool, they’re obsessed with ways to be more productive and efficient. Which could make it easy to go overboard with features. Instead, they made it a rule to look for internal validation before building and releasing new features:
“When we don’t have a genuine use for something ourselves, we will probably not build it.”
5. Timing matters
The best thing about side projects is that you’re usually under no pressure to get them out. That doesn’t mean you want them to sit around and gather dust while you ‘wait for the right time’. But simply that you can make sure that you’re focusing energy on your idea when it has the best chance of success.
Side projects are a chance to explore the future—to use the tools of today to build apps and products that people might not even know they need yet. Just look at Instagram, which started because of the hype around location-based services like Foursquare, but then pivoted into social photography just as the space was exploding.
Or Unsplash, which came out just as people were finally at their wit’s end with stock photography.
Or even Oculus, which leveraged people’s imagination as well as updates in technology to build a new way of experiencing content and re-launched an entire industry.
These all happened because their founders were looking forward, while keeping an ear to the ground and making sure that when they put their energy into their side project, it wouldn’t be wasted.
Conclusion
Side projects are an incredible source of inspiration, a way to experiment, and in many cases, better business ideas than the ones you’re going after right now. So why not give them a chance?
Don’t just shove your ideas away as distractions, but look at who’s using them, why you think they’re good ideas, what the market is like now, and could be in the future.
Who knows, your side project idea might be on this list one day.
