1.2: Chapter 1 What is Parallel Entrepreneurship?

What Is Parallel Entrepreneurship?

Meet Cornelius Vanderbilt

YOU CAN’T GET MORE PARALLEL than railroad tracks.

Cornelius Vanderbilt became famous as a railroad tycoon, but he built his first fortune in shipping. He owned both shipping and railroad companies until the age of 70, when he sold his last ship and focused solely on railroads.

Born poor, he quit school at age 11 and became the wealthiest person in all of American history. His fortune in today’s money would be over $220 billion dollars. That’s more than Bill Gates, Mark Zuckerberg, and Warren Buffett combined.

His first business was a ferry service between Manhattan and Staten Island, where he was born. It was while sailing in the waters around New York in the early 1800s that he earned the nickname “The Commodore,” which stuck with him throughout his life.

Vanderbilt quickly found additional income streams. He entered the goods trade with his father, and worked as a captain for another entrepreneur in the ferry business who taught him how to run a complex business and fight in the courts to expand his market.

For a decade, he worked a day job as a ship captain while building his own side businesses. Finally, at age 35, he went full-time into his side projects. The scope of those side projects, now his sole focus, would expand enormously.

Vanderbilt noticed that ferries and steamboats were just one piece of a larger freighting ecosystem. The booming cotton economy drove expansion of rail lines between the Southern states and New England, where his ships connected to railroads at ports all along the Eastern Seaboard.

Seizing this opportunity, Vanderbilt began to take over the railroads too. The railroad business led to other opportunities that didn’t exist at sea: real estate. He bought large tracts of land in Manhattan and Staten Island to protect and expand his railroads, further increasing his influence and wealth. He bought shipyards and passenger steamboats, and consolidated his railroad companies into the first giant corporation in America.

Vanderbilt was an extraordinary parallel entrepreneur, one of many whom we will study in this book.

Indeed, parallel entrepreneurship is nothing new. Among internet entrepreneurs today, parallel entrepreneurship is discussed at conferences, on podcasts, and in many other business books. It’s most commonly referred to as “side hustling.” Google that and you’ll see there’s already a lot of people talking about it.

The unique thing about parallel entrepreneurship today is that it’s easier than ever to do it online, and you don’t need to stick with traditional side businesses like real estate investing, consulting, and producing online courses. You can have an e-commerce business on the side. You can even have a modern software subscription business (a.k.a. “SaaS business”) as a side hustle.

In fact, you can build not just one internet business but multiple internet businesses while still keeping your day job.

The main difference between you today and Vanderbilt 200 years ago is that you don’t need to be rich to build a software company. You don’t need a huge team, massive servers, and a Ph.D. in computer science to become a software tycoon. You can do it all from your couch with a bowl of popcorn and your favorite Spotify station playing in the background.

From trash to treasure

I didn’t start out as an internet entrepreneur. I got my first taste of entrepreneurship while picking up trash in high school.

I’ve always had an environmental bent. I remember riding up into the Sierra Nevada Mountains in my grandpa’s white Toyota pickup truck feeling a twinge of anger every time I saw a logging truck rolling down the highway in the opposite direction with a pile of pine logs in tow.

I didn’t know what else to do so I reacted the way any eight-year-old might react. I stuck my tongue out at them. Each and every one. If my grandpa noticed, he never said anything.

Back at home in the San Francisco Bay Area, I sketched imaginary machines that would suck down and store greenhouse gases underground. These contraptions had huge floating fans connected to pipes that ran to buried storage containers and would safely store the carbon dioxide to keep it from escaping.

I had an early interest in science. My freshman year biology class was taught by Mr. Stoehr. As luck would have it, he was also the sponsor of my high school’s Environmental Club. I did well in his class and started going to Environmental Club meetings every week, befriending the student leadership and getting to know Mr. Stoehr (“Greg”) on a first-name basis.

I made a name for myself by deciding to tackle the littering problem at my school. This too harkens back to those summers spent with my grandpa. He’d never walk by a piece of trash without picking it up and stuffing it into his pocket, lamenting the laziness of the person who dropped it.

Years later my high school friends would tease me about picking up trash. They would ride their bikes ahead of me, call out my name, hold up the 7-11 Slurpee they’d just finished and drop it. Without fail, I’d groan and pick it up, carrying it with me until we came upon the next trash can.

There was a lot of litter at Los Altos High School. I’d see it in the bushes, under the covered hallways, even around the bases of the many trash cans on campus. It drove me crazy!

I was able to recruit two other guys to help me pick up trash every Wednesday after school. We called it “Mission: Trash Pickup,” and for the better part of three years we met and picked up trash every week after school.

Needless to say we didn’t get a lot of attention from the girls on campus, but the custodians sure loved us. They bought us our own green rolling trash bin that we branded with a spray-painted “MTP.” That trash can, which we called the “MTP-mobile,” was my first brand, my first logo, and the first thing I ever started and got people to join.

A couple of years later I was invited to participate in a new community service program that my high school was launching. Mrs. Beman, the leader of this new program, asked if I’d like to include MTP in the list of volunteer activities. I agreed but worried that no one would choose our program. It took a special kind of person to choose to pick up trash. How many of us could be out there?

I was happily mistaken. I convinced a few dozen people to choose my activity and sent them all around the school to pick up litter. When we were done the campus never looked so clean.

I learned later that the main draw of MTP was not the elation of seeing a litter-free campus. They picked MTP because they were forced to choose something and they didn’t want to get onto a bus and travel anywhere.

That too proved to be an important lesson in entrepreneurship. Sometimes you can’t predict demand.

I began my senior year of high school as senior class president and co-president of the Environmental Club. Looking back, this was my first brush with parallel entrepreneurship.

I wanted to take both responsibilities seriously and figured I could manage it because there were no conflicts of interest. Nothing I would do with the Environmental Club would detract from the important responsibilities of a senior class president, which above all else was organizing the prom and fundraising to get ticket prices as low as possible.

I found ways to play both jobs off of each other. I used the familiarity I got with the high school administration as class president to organize an Earth Week that coincided with the national Earth Day 2000 festivities. As class president I also had access to the display case near the main office. One week I filled it with all the litter that MTP collected. Stapled to the wall, using pieces of trash that my fellow students had dropped, I spelled out, “We can do better.”

Likewise, the seniors benefited from my improved organizing skills, respect from school authorities, and admission to the University of California. My admission essays were all about my parallel entrepreneurship experiences. So after I received my acceptance letter I was able to focus full time on organizing the senior prom (which we held at a science museum in San Francisco, obviously) and it was awesome!

That prom turned out to be the highlight of my high school experience. Right up there with the custodians buying me a rolling trash can.

Some nerdy, introverted people like me don’t enjoy high school. But I thrived. I didn’t know it then but I’d already discovered the many varied benefits of parallel entrepreneurship.

Taken after I graduated, it’s the only picture I have of the “MTP-mobile”

Don’t quit your day job and then build a startup

Don’t quit your job to build a startup. Build a startup and then quit your day job. Or keep it and treat it like another income stream. It’s totally up to you. That’s the big idea here.

One of my favorite parallel entrepreneurs, Marcia Kilgore, says, “You don’t give up your day job because you think that your side hustle or whatever it is is going to actually pay off. You always do two things at the same time because one of them may not work, and you want to make sure that you’ve got another one.”

There’s no reason anymore to go full-time into any one thing. If you have the itch to try your hand at starting a business, then you should do it while your employer limits your risk with a regular paycheck.

The thing a lot of people seem to forget is that you can start, run, and grow a real business that makes a meaningful amount of money just by working during nights and weekends.

It does mean some amount of sacrifice. You won’t be able to do this and keep up with the latest Warriors trades and This Is Us episodes.

Still, it’s worth the sacrifice. Here’s why.

It’s getting harder and harder to do traditional Silicon Valley fundraising. The bar is so high that by the time you actually checked all the investors’ boxes you wouldn’t need their money anymore. When you’re a new entrepreneur the finance guys need to de-risk as much as possible, and they do that by expecting you to be flawless.

Similarly, it’s getting harder and harder to earn revenue. Customers are getting harder to grab because starting internet businesses is getting easier. Simply put, there’s more competition.

At the time of this writing, I’ve launched six web applications in the last 12 months. Of those six, only two are making money. I support my family primarily with one of them. With every new project I start, I’m grateful to have even one business that works.

It took three years of nights and weekends to get my side business to a point where I can live comfortably off of it. When I launched it, though, the market for online businesses was much less saturated. These days it might take longer to yield the same result, but it’s still possible.

You need more than one source of income

Having multiple income streams is the ultimate insurance. It’s the same idea that financial fund managers use. It’s always better to diversify your investments. Don’t be all in on tech stocks or bonds or index funds. You should mix high risk and low risk investments whenever possible.

Think about it. Investors don’t move their money serially. They don’t go 100% into stocks, then 100% into bonds, and then move everything into some other instrument.

Not even close. They hold a mixture of all of these securities simultaneously. In parallel. Spread across multiple markets and in businesses of different sizes and risk profiles.

In short, the portfolio theory simply suggests you should not be a serial entrepreneur with 100% of your entrepreneurial time invested in one business. You should diversify and be a parallel entrepreneur instead.

I go a step further and suggest that you should do the same with your career. You don’t need to rely on a spouse or partner to have the stable or high-risk job. You can have them both by yourself. You can have a low-risk day job and high-risk startup without sacrificing anything from either one.

Parallel entrepreneurs start businesses all at once

Serial entrepreneurs start one business after another. Parallel entrepreneurs start them all at once. It’s not for the faint of heart, but the rewards are tremendous.

One of the most successful and prolific parallel entrepreneurs I know is Jonathan Siegel, author of The San Francisco Fallacy, co-founder of RightSignature, and owner of Xenon Ventures. When I asked him about parallel entrepreneurship, he lamented that he talks to “fallen angels” every day. These are entrepreneurs who raised anywhere from $4 to $40 million and their companies didn’t work out. They didn’t necessarily do anything wrong. As we’ll see in this book, building a business is hard and a lot of it is unpredictable.

These entrepreneurs had to fully invest 100% of their time into one company while the people who invested in them got to spread their money across dozens of investments. The investors aren’t surprised when a business they invested in fails. The entrepreneurs, on the other hand, are stunned. Some never recover.

Starting a business is risky because it takes a lot of time and at least a little bit of capital, and it may take years before you know if it will pay off. There will be a lot of noise along the way, and indicators that you’re failing faster or soaring higher than you really are. It just takes time until the ultimate arbiter of truth—cash in the bank—shows its pretty face.

Until then, you keep toiling away, losing out on the low-risk paycheck you might get from a day job or a higher-yielding opportunity that you set aside in favor of the business you’ve already started.

You’re an entrepreneur. You have a million ideas, but you have to pick just one of them and then fully commit to it.

Or do you?

Actually, there’s no rule saying you can’t do more than one small business at a time. There’s no physical constraint preventing it.

Look at it this way. You can work a day job and be married, have kids, get a pilot license, binge watch Game of Thrones, and play on an intramural softball team. That’s pretty normal to do outside of your day job.

So why can’t you also start a business? Or two? Or three? If you can have a personal life outside of your day job, why can’t you have a professional life outside of your day job too?

The answer, of course, is you can do both. Some of the greatest entrepreneurs of our time are parallel entrepreneurs.

What if Elon Musk had to choose between Tesla, SpaceX, and The Boring Company (his enterprise devoted to digging tunnels)? What if Jack Dorsey decided not to start Square, his payment company, while he was still at Twitter?

We’d all be worse off if these guys decided not to be parallel entrepreneurs because they believed it violated some mysterious unwritten rule that you can’t start and run multiple companies at once.

Musk and Dorsey are exceptional businessmen. They’ve made accomplishments at the highest levels, higher than I will ever reach, and the extent of their successes actually contradicts a lot of what I suggest in this book.

But that’s okay. Let’s not compare ourselves to the superhumans among us. My point is, the path has already been paved not only by Musk and Dorsey but also by a thousand others like myself who are not brand-name entrepreneurs.

The theories, tools, and techniques are proven and available. Now come on. Let’s go.

There’s work to be done!

MARCIA KILGORE

Bliss, Beauty Pie, Soap & Glory, FitFlop

I learned about Marcia Kilgore on the “How I Built This” podcast published by National Public Radio. Her story is incredible.

Raised by a single mother in a rural Canadian town, Marcia decided at a young age to earn her own money. She worked hard and was accepted to Columbia University in New York, where her sister lived and worked as a model.

Unfortunately, Marcia wasn’t able to make her tuition payments and never attended Columbia as full-time student. Instead, she earned money providing personal fitness training while taking classes at NYU at night. She noticed her skin health deteriorating, and one fateful day Marcia went to get an expensive facial. She had a terrible experience. This was the unlikely event that set in motion her career as a parallel entrepreneur.

After taking a crash course in skin care, Marcia started giving facials to her sister’s model friends in her apartment. She maintained her personal training practice too, working those gigs in parallel with her growing skin care business.

Word of her outstanding facials spread and a couple of years later, in 1993, she opened her first small office. In 1996 she expanded into a first three-room spa and named it Bliss. Three years after that, in 1999, Marcia sold Bliss to Louis Vitton. She stayed through the acquisition and remained for a couple of years after Louis Vitton sold Bliss to Starwood in 2004.

Marcia took some time off and in 2006 launched Soap & Glory, a distributor of affordable designer cosmetics. The following year, while still running Soap & Glory, Marcia launched FitFlop, a shoe designed to properly align your body ergonomically as you walk.

Marcia sold Soap & Glory in 2014 to Boots, a large department store in the United Kingdom. She continued to launch more businesses, building Soaper Duper in 2015 and Beauty Pie just last year, in 2017.

Today Marcia is actively working on FitFlop, Soaper Duper, and Beauty Pie. This is parallel entrepreneurship executed to perfection.