Pierre Omidyar, the Founder of eBay had a successful career at a software development firm when he started the e-commerce platform from the comfort of his home in 1995. The French-born Omidyar saw eBay as a hobby that would earn him a few extra bucks on the weekends. Today, eBay boasts of a market capitalization of $36 billion.
There are many others like Omidyar who start working towards their “big idea” while in full-time employment. This not only gives them the financial flexibility to test waters but also helps them understand the nuts and bolts of the industry without worrying about their next paycheck. This is exactly what came to be known as hybrid entrepreneurship. Simply put, it’s an amalgamation of employment and entrepreneurship, and it is particularly popular among highly-educated professionals working in the technology and Research and Development sectors. The first-step entrepreneurial decision is when someone becomes a hybrid entrepreneur while the second-step decision is when he/she chooses to switch from hybrid to full-time self-employment. They are also known as “part-time entrepreneurs”.
Hybrid entrepreneurship is slowly gaining momentum as it allows people to work part-time in regular employment while engaging in a start-up on the side. It is increasingly being preferred as a go-to option for getting a taste of the start-up culture. Most people become hybrid entrepreneurs in order to test their skill set and eventually turn into a full-time entrepreneur also known as second-step entrepreneurship. However, not all hybrid entrepreneurs end up leaving their employment to become full-time entrepreneurs. Studies suggest that over 50% of nascent entrepreneurs are simultaneously engaged in wage-employment.
Who is it meant for?
For many, quitting from their waged work and starting their own company is not an easy decision. However, by simultaneously undertaking both kinds of work, hybrid entrepreneurship acts as a bridge between employment and self-employment. Researchers Smallbone & Welter say that though the notion of part-time or hybrid entrepreneurship is not new, only recently have hybrid entrepreneurs started to attract the attention of policymakers and scholars. Why is that? As compared to full-time entrepreneurs, studies have shown that hybrid entrepreneurs have a higher level of education and as the concept of part-time entrepreneurship is taking a front seat, policymakers have started to recognise the potential of entrepreneurship in creating jobs. It has also been seen that in countries with strong social security systems, high salaries, and other benefits like short working days, health insurance, long maternity/paternity leaves, etc., have more people who are reluctant to take up self-employment. This is in sharp contrast to a country like India where a major chunk of population works in unorganised sectors with minimum or no social security. Hybrid entrepreneurship seems like an idea earmarked for the Indian market.
Some people in India, for example, are also forced to become a hybrid entrepreneur. Their full-time employment might not be sufficient to fulfill their needs which pushed them to do something on the side to supplement their earnings. For others, it could be a way to explore opportunities without giving up their main source of income.
Testing waters
Full-time employment comes with a lot of benefits both monetary and others. Many times, it’s not possible for people to give up on them without any certainty of the future. Hence, hybrid entrepreneurship can be an alternative which lets you earn supplemental income while trying out a new business idea. In case, the idea works out, entrepreneurs can always switch to full-time self-employment. Another important way in which hybrid entrepreneurship works is that it can act as an initial funding option for your new start-up. Nascent entrepreneurs can use the income generated from their regular job and help fund their start-up. These are two ways in which people can fulfill their entrepreneurial ambitions at a lower-risk and in a pretty organic manner. It can also be used to test their business ideas. It gives people the luxury of having a well-paid job while engaging in entrepreneurial activity to satiate their creative selves.
And there are different ways to test waters while they are at it. The first step is to know about the competition and identify your customer base and find your USP. Market research on what the customer wants is again core to hybrid entrepreneurship. It tells you whether your idea will fit in and if there is enough demand for your products and services in the market. In his book Smart Start-ups, Venture capitalist David Silver explains the feasibility of a start-up using the formula V = P x S x E. According to Silver’s First Law of Entrepreneurship, V stands for valuation or wealth, P is the problem the business is intended to solve for its customers, S is the elegance of the solution it will offer and E is the skill of the entrepreneurial team. “A zero on any item produces a value of zero,” Silver says. Hybrid entrepreneurship is one of the best phase to understand whether any of the items could produce zero value or is it already good to go.
One can also use their existing job to build contacts in the same industry. A number of new consultancies, for example, are born out of employees who earlier had employment with bigger firms and later decided to start their own venture. Finding a mentor is another crucial activity that one can undertake during their hybrid entrepreneurship phase. Basically, this can act like a warm up for full-time entrepreneurship.
Two sides of the coin
The idea of leaving the job and starting a business sounds cool at first but the reality is much deeper than that. According to a study, people who work while starting a business as a side hustle have a 33.3% lower chance of a hazardous exit. Hybrid entrepreneurship has a number of upsides like it’s a way to future-proof oneself. It has also been found that hybrid entrepreneurship can help people deal with failure better. It is a known fact that 80% of start-ups don’t work. In that case, a hybrid entrepreneur will not take it as the end of the world in case her/his start-up doesn’t take off.
One of the downsides, however, of being a hybrid entrepreneur is that you may not be able to lay claim on the venture that you created. While working for another company, one might not be able to claim intellectual for something that they worked on as most employees are bound by contracts. Another deterrent is multi-tasking. Start-up is not an easy investment and it might get physically and mentally exhausting for someone with a job to engage in hybrid entrepreneurship for too long. One has to make sure that they’re good at both. While hybrid entrepreneurship is a great bridge between full-time self-employment and a job, it might not be everyone’s cup of tea. That does not mean that a side hustle cannot turn into a successful business venture unless one doesn’t give it their 100% attention, time and money. But it is also true that side hustle doesn’t just mean side effort, it means double effort.
The right age
Whenever we imagine a start-up founder, we think of young trailblazers like Ola cabs’ Bhavish Agarwal or Ritesh Agarwal, the founder of OYO Rooms but in reality, the average age of a successful startup founder is usually around 40. Young people make better entrepreneurs, popular belief suggests. It is said that younger people are better capable of innovative ideas and they have more time and energy on their hands. However, a recent study, Age and High-Growth Entrepreneurship by the University of Pennsylvania counters the notion that entrepreneurship is a young person’s game. It says that the success of older entrepreneurs to the strength of their networks and experience. “We know that, with age, many benefits accumulate, including your social ties, your relationship with suppliers and potential hires and co-founders as well as the financial wealth and human capital that you gain from working in different companies,” the study says.
It is not necessary that only college dropouts make for successful entrepreneurs. In fact, it’s the opposite. College dropouts who could not become successful entrepreneurs are hardly taken into account. It is therefore all the more necessary to move the right pieces when it comes to starting a business. This is where hybrid entrepreneurship comes into play. There is no right or wrong age to become an entrepreneur. More age certainly brings more experience and has its own advantages but many senior people; especially coming from a corporate background, might not readily-available skill sets of an entrepreneur. An entrepreneur cannot survive without taking risks, being innovative and having a nose for a potential business opportunity. By engaging in hybrid entrepreneurship, they can easily acquire those skills while still getting paid out of their regular employment.
In a research on hybrid entrepreneurship during retirement by three scholars Erno T. Tornikoski, Anmari Viljamaa and Elina Varamäki, they point out that societal interest in hybrid entrepreneurship in the near future is unlikely to decrease for several reasons. “We define hybrid entrepreneurs (HEs) as individuals who retain a principal activity (e.g., wage job) while entering self-employment, whereas retired hybrid entrepreneurs (RHEs) are individuals who have retired from the active workforce but continue entrepreneurial activities part-time,” they write while explaining that as the ageing population pose as one of the biggest challenges especially in developed countries there is a declining size of the active workforce. Hybrid entrepreneurship can thus be seen as an additional way to cope with this societal challenge.
Leap before you look
In the mid-2000s, Eren Bali, the founder of Udemy, was working as a freelance web developer. He is said to have put his spare time towards his passion project and it took him seven years to develop a software for a live virtual classroom and then later saved up to move to Silicon Valley. It is said that Bali and his partners failed 30 times before getting this one right. And within a decade of its launch, Udemy was valued at approximately $2 billion. The moral of the story is that the start-up industry is not easy and there are no sure shot answers of what works and what doesn’t. Hybrid entrepreneurship is just another tool to get you closer to your entrepreneurial endeavour. Taking notes from entrepreneurs like Bali, one realises that hybrid entrepreneurship is one of the ways to turn your side hustle into a successful full-time business. A day job is what has allowed hundreds of entrepreneurs to be able to fund their side hustles, with a dream of eventually turning them into full-time businesses someday. It allows you to leap before you look as entrepreneurs aren’t immune to the side-effects of not being able to do that. There is no need to disturb your financial life before testing the waters. It’s always better to start small and build big. Routinely funding your start-up and dedicating that extra hour every day sounds like a good start until one is fully ready to start up with full swing. And until then, hybrid is certainly the way to go.
