The Art of Manliness - #251： Be an Entrepreneur Without Quitting Your Day Job

00:00:00.000 brett mckay here and welcome to another edition of the art of manliness podcast the popular idea

00:00:19.220 of the entrepreneur is that he's a renegade risk taker that goes all in with following his passion

00:00:23.560 so that he can quit the nine to five rat race what if you enjoy your day job at the office or

00:00:28.120 have other reasons for wanting to work for someone else heck maybe you're a doctor a firefighter or a

00:00:33.200 teacher and working for someone else is just part of the gig if you fall into one of these categories

00:00:37.100 does that mean you're completely barred from entrepreneurship well my guest today says no

00:00:40.980 his name is patrick mcginnis and he's the author of the book the 10 entrepreneur live your startup

00:00:45.340 dream without quitting your day job today on the show patrick and i discuss the myths of becoming an

00:00:49.660 entrepreneur including the one that you have to go all in to be one and discuss practical ways you can

00:00:54.380 invest just 10 of your time and money into entrepreneurial endeavors we also talk about

00:00:58.500 the benefits of becoming a 10 entrepreneur like boosting and diversifying your income streams

00:01:02.340 as well as becoming more competitive in the traditional job market really great show with

00:01:06.320 a lot of practical takeaways after the show is over check out the show notes at aom.is

00:01:10.300 slash 10 for links to resources we can delve deeper into this topic

00:01:13.880 all right patrick mcginnis welcome to the show thank you for having me it's great to be here

00:01:23.220 so you got a book out called the 10 entrepreneur um which is kind of interesting name for entrepreneurs

00:01:29.100 usually when you think entrepreneur like you go all in you're putting skin in the game you're

00:01:33.320 putting soul in the game but you're saying that you can actually be an entrepreneur and just put

00:01:36.380 10 of your life or your money into it um so what do you mean by that and are you a 10 entrepreneur

00:01:42.180 and how did you become one yeah so that first of all that is absolutely uh correct i mean i think

00:01:48.240 a lot of people come at it at the all or nothing mindset i call it the old the mark cuban perspective

00:01:54.020 which is this idea that if you're not living in a you know apartment in the middle of nowhere eating

00:01:59.740 ramen every night you sort of putting everything you have into a startup somehow your chances of

00:02:05.540 success are a heck of a lot lower and what i really want to explain to people and the perspective

00:02:11.360 i'm bringing to the table is the fact that in fact you can customize entrepreneurship to your life

00:02:15.860 in a way that works for you and the reason i came to this realization was because i actually did it

00:02:21.300 so i was working on wall street everything was great and in 2008 i was working for a division of

00:02:27.680 aig and although our division had nothing to do with all the things that happened at aig that brought

00:02:33.640 the company down didn't really matter and i had stock then that i had bought up over time that fell

00:02:38.880 97 in the space like a week and i realized that this safe conventional corporate lifestyle

00:02:45.120 was hardly safe and in fact i'd gotten it wrong the whole time and that even though i thought

00:02:50.000 entrepreneurship was so inherently risky and that i couldn't have entrepreneurship as part of sort of

00:02:54.620 my life i realized and in fact i should have been thinking about it completely differently and used

00:02:59.280 entrepreneurship to diversify myself while holding down that day job and so that's what i started to

00:03:04.500 do i actually started i basically took 10 of my savings and then tried to allocate about 10 of my time

00:03:10.080 to doing things on the side and since that time i've invested in over 20 projects everything from

00:03:14.720 startups that some of you have heard of we can talk about later to real estate projects even um i invested

00:03:21.020 in the london stage production of the last king of scotland so it's it's been a really great way for me to

00:03:26.640 diversify and actually to learn what it means to be an entrepreneur and what i've learned is i've done

00:03:31.520 that and what i tried to bring into the book is the fact that we can engage with entrepreneurship in all

00:03:35.780 kinds of different ways and it's not just about the all or nothing and where do you think that

00:03:40.260 idea of all or nothing came from um i mean it's out there yeah i i think i think that there is a

00:03:48.320 reality that if you want to scale a business to be a extraordinary large company you do need to put

00:03:55.880 all of your effort into it but the problem with that mindset is that you leave out lots of people who

00:04:03.800 could be entrepreneurs in different sorts of ways so for example if you look at the people who are

00:04:08.160 entrepreneurs in silicon valley or in all over the world oftentimes in tech sector there are people

00:04:13.720 who are working full-time building a business and they're typically either people who are willing to

00:04:18.380 live very inexpensively because the average startup founder makes about fifty thousand dollars in a

00:04:24.120 place like new york city or it's silicon valley so you that's you know it goes towards people that

00:04:28.520 are very young or maybe don't have a family to support or it goes to people who've made money in

00:04:33.480 their previous jobs or it goes to people that have family resources and they can call upon those

00:04:37.740 resources and that's totally fine the problem is that leaves out everybody else and so you always

00:04:43.800 hear these stories about the person who persevered who put everything into something and overcame

00:04:48.320 but there are lots of other people who are involved around them as investors advisors or who started

00:04:53.240 something on the side and then eventually joined it full-time when there was insufficient data to say that

00:04:58.740 it was worth doing and those stories are less i guess they're they're less you know sort of glamorous

00:05:03.840 to tell and they don't play into the industry narrative about throwing everything caution to

00:05:08.460 the wind jumping in full and and sort of going in and i think in a relatively cavalier manner until you

00:05:14.840 succeed or fail right and you also talk about i thought was interesting because i've noticed this as

00:05:18.440 well as in this sort of entrepreneurship culture there's this there's a business that has sprung up to

00:05:24.360 support entrepreneurship you called entrepreneurship inc where yes companies coaches that will tell

00:05:29.620 you how to be an entrepreneur that is right and and what i noticed as i was doing all of my 10 percent

00:05:36.580 and i've been an adventure capitalist for many years so i've invested in companies throughout my career

00:05:41.080 and i always noticed that when i would go to these events uh that were entrepreneurship focused i mean i

00:05:47.300 think it's great that there's passion and i think there has to be some level of hype around this

00:05:53.520 because it's a hard path and so if you can't feel excited about being an entrepreneur i mean what's

00:05:58.680 going to keep you going when you're on day 43 of beta testing your product right so i get that but

00:06:04.420 there's this whole sort of industry of suppliers people who are writing articles and blog posts and

00:06:10.900 and and and our coaches and our speakers and are giving their talks um in various places that gloss over

00:06:18.300 the reality uh of the fact that most businesses fail and that there's a study out of harvard

00:06:23.120 business school uh by a professor named shikhar gosh that shows that 70 of uh startups fail and

00:06:29.140 that's fine i mean that's part of what it takes to build businesses but if you don't realize that and

00:06:34.600 i see this all the time you people i was with a couple of entrepreneurs this morning who started

00:06:40.200 this company without really appreciating the struggle and so they went in with limited cash limited

00:06:45.280 runway and now they're six to eight months into it they've got a prototype it sort of works what are

00:06:50.160 they going to do should they keep going full time should they ask their parents for more money they're

00:06:54.100 in this weird place because they've been kind of sold a bill of goods i'd say and now they realize

00:06:59.380 of course that it's not as great as it looks on paper right entrepreneurs entrepreneur inc uh they

00:07:04.580 sell the dream of entrepreneurship they don't they don't sell the hard stuff and that's like you're

00:07:09.840 right passion plays a role but at a certain point you have to you have to move beyond passion

00:07:14.000 and get to the nitty-gritty you do and i hate you know i never want to be and you never want to sell

00:07:20.040 yourself as like i'm the pragmatic person because you know how how exciting is that but

00:07:24.620 this whole concept of 10 entrepreneurship is in its dna really pragmatic and a lot of times

00:07:31.820 pragmatic isn't quite as exciting but i i came out of having invested in venture capital in startups

00:07:39.340 in the first tech crash and when i saw that and then i went off to harvard business school

00:07:43.800 and i was definitely afraid of doing anything entrepreneurship related because i'd seen

00:07:48.160 tens of millions if not hundreds of millions of dollars lost and i just thought to myself you

00:07:53.020 know this isn't the life for me and frankly you know i don't have family money to fall back on i got

00:07:57.860 to go out there and hustle and make money for myself and so i actually was really afraid of it and so

00:08:02.440 the only way for me to get over that fear was to do things on an incremental basis and what i realized

00:08:07.500 when i did which was kind of the part that kind of surprised me was that yes it was just 10 percent

00:08:12.900 but the impact it had in terms of the way i thought and my willingness to then engage with risk

00:08:18.180 much more actively was outsized right so i love about the idea of the tencent entrepreneurs like as

00:08:24.160 you said it brings in more people to into the world of entrepreneurship that otherwise probably

00:08:28.620 would stay out of it and these include people who are older in their 30s maybe have a family have a

00:08:34.140 steady job i mean why should even people i mean i guess you you have you your life your life study

00:08:39.620 life story gives a perfect example why you should dabble in entrepreneurship even if you have a

00:08:43.520 steady job because your steady job probably isn't really a steady job exactly and and i i think about

00:08:49.600 and you may be that you have you've got a career path that you're set on and you're doing well in

00:08:54.760 but you just end up i mean look at me in 2008 look at all the people on wall street but i also there's

00:09:01.460 a guy in the book whose story i love uh his name's peter barlow he was a lawyer at a firm here in new

00:09:07.720 york city and he did transportation law and he had actually done some things on the side with a car

00:09:12.680 business he started a luxury car brokerage with a couple friends then he got this once in a lifetime

00:09:17.540 opportunity to go be the general counsel of a startup airline and this thing was funded by morgan

00:09:23.120 stanley i mean all the all the chips were aligned and then 2008 came along the whole thing blew up he

00:09:29.200 went back to his law firm and he said that's it i'm never doing this again but a couple uh months

00:09:34.600 later he was on a flight and he met a guy who was starting a new car rental company who needed help

00:09:40.620 and peter had worked with air airplanes he had worked with cars and he was sort of like car rental

00:09:45.280 airports like this is right in my wheelhouse he ended up getting involved early on as an advisor got

00:09:50.980 founders equity was an angel investor from day zero that company is now called silver car it's a

00:09:56.740 company that's raised over 30 million dollars of venture capital it's got eduardo severin for

00:10:01.340 facebook in there they've got over a thousand cars at over 10 airports across the usa and peter

00:10:06.780 has been able to generate upside in a way he never could have at the law firm but he's still managing

00:10:12.160 partner of his office so he likes his job it's not that he says you know i hate being a lawyer he likes

00:10:16.740 being a lawyer but he would have never had the opportunity to create the kind of value that he has a

00:10:22.700 silver car if he had just kept his head down working at the firm right so it being an entrepreneur

00:10:27.560 on the side it diversifies your your uh finance your finances right so if something bad happens

00:10:34.480 you have something to fall back on but it also just gives you extra income that you use to pay down debt

00:10:38.080 you know to fund your lifestyle that you want for your family but another thing you talk about

00:10:42.440 the benefit of being an entrepreneur even on the side even when you have a full-time job is that it can

00:10:47.300 actually make you a more valuable employee at your day job uh how's that possible so one of the things

00:10:55.060 that's kind of interesting is that people um when they think about entrepreneurship they forget the

00:10:59.880 fact you know in many jobs today you know we always think about what you need to be entrepreneurial

00:11:05.260 to succeed in the world of startups but in many jobs today uh whether you're goldman sachs or if you're

00:11:11.460 at a manufacturing company in the midwest you need to think like an entrepreneur because technology

00:11:17.040 is disrupting so many industries so quickly and if companies aren't nimble they're not going to stay

00:11:22.420 ahead of the game and as an employee you really need to take responsibility for your education as an

00:11:27.860 entrepreneur there was this interesting article in the new york times about at&t and they have all

00:11:32.840 their employees reading books and taking classes on their own time to learn how to think like an

00:11:38.000 entrepreneur and it made me laugh a little bit because you can read as many books as you want you can

00:11:42.880 read mine three times over but unless you go out into the world and put those things uh into action

00:11:48.200 you're never going to actually learn what it means because you have to take a little risk and you have

00:11:53.220 to feel uh both the risk of failure and also the sort of excitement of upside and you have to see what

00:11:58.560 works and what doesn't for you and so um and so as a result people who do these things actually

00:12:05.060 develop a skill set and a mindset that is very valuable and i've seen it in a bunch of different

00:12:09.500 industries so i have one good friend who i wanted to put in the book but he wasn't comfortable having

00:12:14.560 his name out there but he's works at a big private equity firm and he invests in big consumer companies

00:12:20.580 companies we all buy stuff from all the time but on the side he's invested in a bunch of really cool

00:12:25.520 startups in that space and so he knows what's going on at the cunning edge of his industry and he's

00:12:31.520 investing the kinds of companies that he'll probably be investing in in 10 years down the line

00:12:35.500 at his big firm and at the same time i have another story that i did put in the book uh about a guy

00:12:41.260 named gabe hame he's a car dealer in long island and he started a a beer company um oyster bay brewing

00:12:48.320 and you know obviously art of manliness we manliness we all love our beer right and so gabe started this

00:12:54.280 micro brewery and he has basically used his all the things he developed the relationships and the skills

00:13:01.040 at his day job to build this business on the side but that's also made him much more well known in

00:13:06.020 the community and it's fed back into his day job so it's all very symbiotic and i think that's what

00:13:11.280 great 10 entrepreneurs do is they find projects that build upon what they're good at and then allow

00:13:16.960 them to channel all the things they're getting back into the rest of their lives their day jobs

00:13:20.960 their personal relationships um just to you know win kind of all over the place right all right so i think

00:13:26.660 you made a case compelling case that being an entrepreneur on the side comes a lot of upside

00:13:31.060 diversify your finances you can make yourself a better employee at your just traditional day job

00:13:36.660 that you enjoy so how do you do this because i think when most people think entrepreneur they think

00:13:40.940 i gotta be the guy who founds the company who runs it day to day um and that's like that's a big time

00:13:46.300 suck and a big money suck um but you argue in the book there's other ways you can be an entrepreneur

00:13:50.900 and doesn't require as much time or money commitment so what are some of the ways you could be a 10

00:13:55.340 entrepreneur right so there are five types of 10 entrepreneurs and these will map to the particular

00:14:02.500 resources you have available so if you think about it what can you invest as an entrepreneur

00:14:07.300 you can invest your time you can invest your money if possible and you can invest your knowledge your

00:14:13.980 skills your your human capital as it were and so as you think about those things uh then you need to

00:14:20.560 sort of choose what kind of entrepreneur you're going to be in your part-time capacity and so i

00:14:25.200 lay out five and i've actually done four of the five at this point so i feel like i've got a good

00:14:30.080 feel on them um you can be more than one but it's advisable to start with one and so if you think about

00:14:35.360 the five the first is an angel so many of you would know an angel investor is somebody who invests

00:14:41.320 their capital in exchange for ownership in a business right um investing in startups you know

00:14:46.160 with with some of your money and and we can talk about how much money you need but there's a real

00:14:50.000 range because the cost of building businesses has gone down so much over the last 10 years

00:14:54.680 the second is an advisor and that's somebody who doesn't invest money but invests their time either

00:15:00.300 they're a standing advisor giving a little time here or there you know maybe an hour a month two hours a

00:15:05.160 month giving advice and relationships and things like that or it's somebody who has a particular skill

00:15:10.700 you know i'm a carpenter and i build out your store or i'm a web designer and i build out your app or

00:15:15.860 something like that the third is a founder and that's somebody who does own and operate a business

00:15:21.440 on the side so it's that person who has a full-time job but then has you know a full-time sort of side

00:15:27.540 hustle as it were or not full-time yet but something that could potentially become full-time for them

00:15:32.760 and then the fourth and the fifth are types of on 10 entrepreneurship one is called the aficionado

00:15:38.480 and that's somebody who's a 10 entrepreneur but they're doing it to explore a passion that they have

00:15:43.660 that they maybe would love to do full-time in a perfect world like being a chef or something

00:15:47.980 but they're not going to do because of the the realities of that job maybe you know they don't

00:15:52.480 make enough money or there's too high risk for them so they invest advise or get involved with

00:15:57.060 something where they can act in a professional capacity do it as if they were a pro but on their

00:16:01.780 own time and the final one is for all of you who are already entrepreneurs uh this is the 110

00:16:07.820 entrepreneur and it's somebody who is a 10 entrepreneur on the side as a way to diversify

00:16:13.280 that big bet they've made in their entrepreneurial venture that they are running themselves and so

00:16:18.320 those will map to the resources that i mentioned earlier you know your your money your time and

00:16:23.460 your knowledge so the way you figure out which route you go is depending on what you have more

00:16:27.580 if you have a lot more money than time go the angel route yeah i mean it it it goes back to where you

00:16:34.680 want to spend your time and where you think it's most impactful but for example if you're a really

00:16:38.540 really busy person but you have some capital that would be uh the great place to start looking at

00:16:43.680 angel investments because you'll start learning you'll get involved you can maybe join an angel

00:16:47.880 group if you if you need help finding deal flow or if you're trying to learn yet exactly how to do

00:16:52.640 this but it gets you started and then along the course of your life you won't be as busy all the

00:16:57.820 time as you are today people's lives have ebbs and they have flows so perhaps later you'll be an

00:17:02.480 advisor or maybe you can become a founder if you don't have money right now or you're not

00:17:07.200 comfortable with the risk of investing in a startup then being an advisor is a great way to

00:17:11.440 start because you can identify what you're good at and then trade that for ownership in a company

00:17:15.940 all right so you mentioned briefly how you can find angel opportunities um you know join an angel

00:17:20.180 group i mean are there other places online where you can find companies who are looking for angel

00:17:24.260 investment and how much money do you need to do because i think when most people think angel

00:17:28.240 investors they think like you know peter thiel or like you know these really these multi-billionaires

00:17:33.220 who just throw millions of dollars like do you really need that much money or can you invest

00:17:37.100 significantly less so you can invest significantly less and this was one of the things that i struggle

00:17:42.480 with when i started out so when i got going as an angel investor i you know i'd worked for a number

00:17:47.560 of years i had some savings and i was willing to invest but i would go to these meetings and you know

00:17:52.560 i was thinking you know how much do i have to give these people um to actually be taken seriously

00:17:57.940 and i remember hearing oh you need a hundred thousand dollars to invest or something like that and

00:18:03.420 that's a lot of money and so i felt really a little bit nervous actually about being honest about what

00:18:09.000 i was willing to invest whether it was you know 10 000 or 25 or 5 or 50 or whatever and then i heard

00:18:15.180 this great story about dick costolo who is uh one of the early investors in twitter and went on to

00:18:21.580 become ceo later on because his 10 got him a full-time job there and he got this email from one of the

00:18:27.780 founders saying would you be willing to invest you know what what do you think 50 100 and dick costolo

00:18:33.440 had sold his company to google he's a very wealthy guy and he said you know i think 25 is fine for me

00:18:39.460 on this one and he was one of the smaller investors but his 25 000 investment became worth millions of

00:18:45.980 dollars and so what we see is that given the decline in the cost of building a new business i mean you

00:18:52.120 think about building a website 10 years ago it was hundreds of thousands of dollars today it costs

00:18:57.460 you know you can do it for as little as ten dollars a month but uh companies just don't need to raise as

00:19:03.340 much money and so i've seen people invest as little as a couple thousand dollars all the way up to much

00:19:08.500 more than that in terms of finding the opportunities uh you i always advocate that it's good to deal with

00:19:15.040 people you've met in the real world so you can certainly go to angel list and there are lots of

00:19:18.900 opportunities there i um we can talk about this later how to select and validate which deals you

00:19:24.760 should do i'm a little nervous if i've never met the people that's something that's important to me

00:19:28.800 and i think it should be important to you but i like to advise people to either use their personal

00:19:34.420 network or they can also join an angel group there are over 300 angel groups in the united states

00:19:40.080 there are angel groups all over the world and these are groups of people with all kinds of different

00:19:44.300 skills that come together work together you can learn from other people there's lawyers

00:19:48.820 in the group there are people with different skills than yours and so you come together and it

00:19:52.600 helps you to make smarter decisions and learn because the apprentice investment is an apprenticeship

00:19:57.780 business and and working with other people who can teach you and help you along is always helpful

00:20:02.900 so yeah going how do you figure out what to invest in or like whether the company is a good

00:20:08.100 investment what sort of due diligence do you do that's the thing that freaks me out is like

00:20:11.220 okay here's write your check for a thousand dollars my money's gone in two months

00:20:16.840 yeah exactly so i this is the longest chapter in the book and this is where you know a lot of

00:20:23.500 business books have a really great idea and it's like a great headline but then they don't give you

00:20:28.020 the actual tools to do the things that they prescribe and what i wanted to do when i wrote the book was to try

00:20:34.340 to distill my entire career as a venture capitalist into advice in the book and so i have this chapter it's

00:20:40.380 the longest chapter and it it sort of distills the experience that i've had i've invested in over 30

00:20:46.700 companies in my career now and i've looked at many hundreds and so i i distill it down to three

00:20:52.960 big sets of questions and in fact if you go to my website you can find uh you can you can email me and

00:20:58.680 i'll send you the list i'm happy to give it to you anybody who's listening um as a freebie what i what i

00:21:04.240 distill it down to is number one you know really what is this business what does this business do

00:21:10.040 how is it successful how does it make money why is this market interesting and obviously if you have

00:21:16.900 no knowledge of the industry of the market then you're at a disadvantage to answer those questions

00:21:21.540 so i advise people to try to invest in areas where they have expertise or where they can build expertise

00:21:26.520 the second is about the team is this team uh able to do the things that says it's going to do are

00:21:34.640 these people honest do they have a good reputation are they going to be good partners to you and if

00:21:40.340 you're choosing a co-founder say you want to run something full-time is this co-founder somebody who

00:21:44.120 you will be able to work with so the the team and the business are sort of i would say reasonably

00:21:49.340 obvious things there's nothing and if you don't do those things then you're probably um missing some

00:21:54.620 some big risk areas or areas for opportunity but it's the third one that i think as a 10 percent

00:22:00.160 entrepreneur can set you apart and for me it's a bit of the secret sauce which is really understanding

00:22:05.720 your role so i won't invest in a company unless i truly believe that i can move the needle in terms

00:22:12.420 of revenues or bringing an investor or bringing a major insight or getting the company off the ground

00:22:19.420 and so as i look at businesses i try to really think hard about how appropriate it is for me to

00:22:25.200 be part of that business and if i can't move the needle i don't get involved because for me that's

00:22:30.500 the litmus test if i can't move the needle i don't know the business well enough i don't know the people

00:22:34.940 well enough and that's really kept me out of trouble because so many times in silicon valley or an

00:22:40.640 angel investment kind of environments people follow other people they're like will the beast running

00:22:47.560 across the serengeti just following blindly and if you are doing that you are asking for trouble

00:22:53.320 right i've had an opportunity a few opportunities come my way and it's funny that they always the

00:22:57.900 person pitching always is like hey so-and-so is also investing so-and-so is always like they i think

00:23:02.600 they understand the social pressure that can can come in and getting you to to pull the trigger on

00:23:08.400 and writing them a check definitely and the scary part is this is the part that really gets to me

00:23:13.920 it's fine like say you're best friends with peter teal and peter teal is investing and well that's

00:23:18.480 you know that's a good place to be but peter teal may have invested but you may never get a call back

00:23:24.000 if you're just joe anybody right one of the things that we have to as you mentioned is you invest your

00:23:29.420 money it's gone in a couple months i love entrepreneurs but they're busy people and i don't

00:23:34.320 want to piss anybody off here but sometimes they're a little flaky and you may not be their top priority

00:23:39.620 so if you can't make an impact in your business you may not get that call back later on and so if

00:23:45.860 you are part of them what they're doing and you are part of creating value and you are not just a

00:23:51.440 remote control investor you are going to be much more integrated into what is going on with the

00:23:55.880 company and you're going to know a lot more what's going on you're going to have opportunities to maybe

00:23:59.840 become an advisor later on or maybe invest more money later on so it's really about building that

00:24:03.920 long-term relationship with people who you can do deals with for the rest of your career

00:24:08.160 and are there any like tax or regulatory issues someone might need to be aware of when investing

00:24:12.560 in a startup because i i thought there was like some sort of limit you had to like the sec said you

00:24:16.500 had to have like at least a million dollar net worth before you can invest or is that not the case

00:24:21.080 so it's a little tricky it's uh and this is something that i would encourage everybody to read up on

00:24:27.760 because i if i were to give you sort of the whole story we'd be here for another four hours

00:24:32.240 but basically if a company is doing a general solicitation so it's somebody who's put together

00:24:38.120 a book and is going to strangers then it must only market that company to accredited investors

00:24:44.400 so if it's getting angel investors those people must i believe the test is you must have 250 000

00:24:49.700 of income or a million dollars in the bank in order to invest however there are a couple of

00:24:55.560 exceptions that are really critical that make it that most people are able to invest if they want

00:24:59.920 to the first is if you know the people already then it's not considered a general solicitation and so

00:25:05.320 those people can invest so it's if your mom and dad want to invest in your company they don't have

00:25:09.120 to worry about that rule the second is the jobs act has actually liberalized some of these things

00:25:14.940 and there are there are certain uh very relaxed rules about your ability to invest and and and you

00:25:20.460 don't have to meet certain thresholds to put put money in at lower amounts so it's become much

00:25:25.420 more flexible um but what i would tell people is even if you don't have the money to make an

00:25:31.180 investment as an angel you can still become a 10 entrepreneur by using your time which

00:25:36.220 these days capital isn't usually the problem for startups the problem is expertise talent and

00:25:43.120 resources and therefore trading your time and your skills can be as impactful or more impactful than

00:25:49.560 capital alone well yeah let's talk about the advisor rule so how do you set up those i mean how do you

00:25:54.400 find advisor opportunities and how do you set up the the arrangement for that so the advisor uh a role

00:26:01.700 is pretty standard these days actually in in in the world of startups and it's interesting um the story

00:26:08.540 i love to tell about the advisor role because people say to me well what do you mean like what kinds of

00:26:12.840 things could one trade there's a great story about uh an artist named david choy and he did a mural at

00:26:19.740 the facebook headquarters in uh in in silicon valley and they were going to pay him in cash i don't know

00:26:24.860 how much maybe ten thousand dollars twenty thousand dollars but he took stock instead and when facebook

00:26:29.520 went public it was worth several hundred million dollars right so that's that's an example of an

00:26:34.360 advisory position that is it's a little bit of a a different position but it can be that you would

00:26:39.440 trade something like that in exchange for stock but what typically happens is that when startups are

00:26:44.780 looking to grow and expand they can't afford to hire all the people they need on their team right

00:26:51.560 they just don't have the resources yet and so they're looking for people who can bring those

00:26:55.880 skills to the table but can do so in a flexible way so either they need you know that expert in

00:27:00.780 sales who can come in and give them a couple hours advice every once in a while two they need that

00:27:05.840 person who can build the financial model or design the marketing plan or build the website maybe

00:27:11.620 working on a project basis for a couple weeks here and there and so when that happens um you know in

00:27:17.480 order to position yourself for that if you're interested in doing that what you really need to do is

00:27:22.140 identify what is it that you bring to the table and then network and start talking to advisors

00:27:27.640 people who are looking for advisors just be in the startup scene and give advice and and you know

00:27:32.980 don't come with your handout necessarily in that first meeting but just try to meet people and explain

00:27:37.060 to them how you could be impactful to them right um in terms of in terms of actually putting those

00:27:42.620 deals together um the these are not particularly controversial at this point uh somebody who spends

00:27:49.080 a couple hours a month working with a startup gets in between 0.25 percent to as much as one percent

00:27:55.520 that will vest over a couple years so you will get a little bit of stock every month making sure you're

00:28:00.420 doing what you say you're going to do and then for somebody who does a project-based uh advisory you

00:28:06.200 actually try to figure out what the market value is on that and then look at the value of the company

00:28:10.300 today and you'll get paid in stock based on sort of the conversion of what you're doing to the value

00:28:15.280 of the company today what's really important when you think about these advisory positions is that

00:28:21.320 you want to as somebody who's aspiring to be an advisor you want to be out there mixing up with

00:28:26.300 entrepreneurs because what happens is once you get one advisory position and i've seen this with so

00:28:32.320 many people that i know uh who do this once you get one you get many you the phone starts ringing

00:28:37.580 all the time so the critical thing is to find the area where you have expertise meet people who do

00:28:43.340 that and then get that first position can you do this sort of thing with businesses that don't plan

00:28:50.060 on having stocks right like they don't plan on creating shares it's a privately held business

00:28:54.860 but you know maybe there's like a profit share thing you could possibly do or is i mean are you

00:29:00.340 just limited to startups with stock options no i think that's actually it's a great question and

00:29:06.700 one that i've never had before so you can do that in fact one of the people who um i know who's been

00:29:12.680 a very successful 10 percenter is a guy who invested in a bar and so they're never gonna take a bar

00:29:19.560 public or they're never gonna um do a big sale but he owns a percentage of the of the bar and the bar

00:29:25.560 pays dividends every month so he invested in this thing this is a bar in new york city it's a sports

00:29:30.280 bar he invested not a ton of money in this thing uh five or ten years ago i can't remember quite when

00:29:37.060 but he actually lost his job and the bar ended up keeping him afloat for a while because he was

00:29:42.720 getting those monthly dividends so it can be that you are partaking in the cash flows as well and that

00:29:48.240 that can be a really great way to create some current income for yourself it's like a good

00:29:52.640 arrangement for that be so like you know if you're an advisor position on a company like that

00:29:56.820 would be like one percent or two percent i mean what what would something be fair

00:30:00.860 well if i would think about it this way i really obviously it's very situational because you know you

00:30:06.200 could also be involved in helping somebody structure a real estate deal which is also something that

00:30:10.660 would be maybe you get part of the dividends or the cash flow but what i would do say you and i

00:30:15.700 i meet you you're opening a bar and i am a i design menus and i design cocktail menus or something like

00:30:21.440 that and i do this for you and and i typically would charge a client five thousand dollars to do

00:30:27.800 that and i think about your bar and i say you know i think your bar at this point you know let's figure

00:30:32.120 out what you think it's going to make this year you think it's going to cash flow a half a million

00:30:35.960 dollars you know why don't you um you know you give me i assume five thousand is i think it's

00:30:42.960 about one percent if i'm doing my math right of five hundred thousand give me one percent of your

00:30:46.660 bar and you know granted you're not paying me up front today so i'm going to give you this kind of

00:30:51.420 deal today and then i'm going to take equity instead of cash but then i'm going to get paid going

00:30:56.160 forward for a long time so i'm kind of becoming a part of your business i may continue advising you

00:31:01.760 going forward on everything that has to do with your bar and i'm your partner and uh that would

00:31:06.840 be one way to do it and we sit down we negotiate and we we figure out what you think i'm worth and

00:31:11.160 and how much time i want to spend and we have that conversation and that's the beginning of a business

00:31:15.620 partnership that could evolve in many different directions very cool i like that that's awesome

00:31:19.600 like how we're broadening to be beyond just startups well um patrick so i mean keeping track of

00:31:26.060 whether you're spending 10 of your money this is the whole idea of the 10 entrepreneur you want

00:31:28.980 to spend just 10 of your time or money um on these entrepreneurial entrepreneurial entrepreneurial

00:31:34.020 endeavors excuse me um so how do you make sure that you're spending just 10 of that i mean i think

00:31:39.980 the money is easy because you just look at your your monthly finances okay i'm spending 10 but what

00:31:44.300 about time because i can see i can see that being something that just sucks up a lot of time without

00:31:48.200 you even realizing it it can be you know i say a minimum of 10 so i i do account for the very real

00:31:55.040 situations where people a lot of people get to 10 they start at 10 especially with time and then

00:32:01.600 they realize how much they love what they're doing on the side and they get their family involved and

00:32:05.720 their best friends and then they end up maybe even going full-time right so one of the cool things

00:32:10.580 about doing 10 entrepreneurship is you know i have a story in the book about a guy named luke holden who

00:32:15.920 had a lobster roll company and he did it really 10 he actually brought in a partner who could work

00:32:21.040 full-time and he was it was just 10 for him then they opened their first store and their 35 000

00:32:27.080 investment paid back in 17 days and then they opened a second store a year later and he joined

00:32:31.820 full-time so for him 10 was a starting point but i have lots of other people who stay around 10 and i

00:32:38.560 think the critical thing that you need to do with the 10 is realize it's not necessarily going to be 10

00:32:45.360 percent of every day or every week it's a general sort of allocation you're making of your mindset

00:32:50.420 and that you need to do things that are closely related you think about you know chris guillebeau

00:32:56.820 talks about i was listening to your podcast with him he talks about flow and the fact that you're

00:33:02.220 doing something that you're good at and it just feels natural to you when you're doing something

00:33:06.140 where you have flow 10 can be very impactful and so what i like to do and the way that i kind of keep

00:33:12.920 on top of these things is i really look for areas where i have flow but the second thing i do is i

00:33:18.300 actually really think a lot about time and i think about how i spend my time and one of the activities

00:33:22.800 that i have in the book is actually sitting down and writing down how you spend your time and when i

00:33:27.780 did that i realized that i was watching a heck of a lot more tv than i probably wanted to so i canceled

00:33:32.600 cable and gave that time over to my 10 but i i do think that you know at the at the end of the day

00:33:39.380 you may find that your 10 becomes such a passion that it goes to 20 or 30 or even 100 and that's

00:33:47.420 okay as long as you're not neglecting the other things in your life you care about like your family

00:33:51.200 and your health and of course your day job um you clearly want to keep uh respecting and doing a great

00:33:57.360 job at your job at your day job because that's what pays for and allows for all the 10 percent you do

00:34:03.320 on the side so yeah there might reach a point where you're doing the 10 10 entrepreneurship thing

00:34:08.840 and um you had the decision to make whether to go full-time how do you decide whether to do that

00:34:15.060 and why would you decide not to go full-time even though you possibly could it's a great question and

00:34:22.920 what's cool about doing things on the side and then maybe deciding if you're going to go full-time

00:34:27.480 is that by doing something on the side you have de-risked the entire proposition to a point where

00:34:33.660 you're making a pretty smart decision based on data so there's a great study out of the university of

00:34:39.220 wisconsin that shows that people who launch a side business and then do it full-time are 50 percent

00:34:45.780 more successful than people who just jump in full-time and try to make a go of it because when you do

00:34:51.560 something on the side you give yourself runway to figure out if your assumptions are correct and if this

00:34:57.000 actually makes sense from a business perspective before you go in and do it full-time right and so

00:35:03.140 when you're thinking about jumping in full-time the advice that i always give to people and you know

00:35:07.480 what i've seen with with people who've made that transition is first of all if you're going to do

00:35:12.700 it full-time you want to know that it provides the basic lifestyle that is acceptable to you so if

00:35:18.880 you've got a high cost basis and then you jump into a project where you're not making enough to pay for

00:35:26.120 your lifestyle puts a lot of pressure on you your business on your family on everything so you want

00:35:31.120 to at least make sure you're able to live a life that is acceptable yeah the second thing is if you

00:35:36.920 get to the point where you cannot continue maintaining a 10 just getting going too quick but

00:35:42.480 you can't quite live off of it the question there really comes down to are you going to find somebody

00:35:49.460 who can help you maybe bring in a partner and i've seen that happen a lot or are you going to slow

00:35:54.920 down the business's growth until it gets to a point financially where you could actually consider

00:35:59.680 leaving full-time now many people won't ever leave full-time as you mentioned some people you know

00:36:04.880 why wouldn't you leave full-time and i think for some people their 10 are just that there's something

00:36:10.520 that gives them something they would never have at their day job but they really like their day job

00:36:14.620 they like that stability and a great guy that i met as i was interviewing people um named steve

00:36:21.220 siegel and he's a big executive at cbre the the real estate company he's head of global brokerage

00:36:27.100 and he's been in that business for a long time he's very successful but over the course of his life

00:36:33.260 for the last nearly 50 years he's been doing 10 he's done everything from hotel investments to

00:36:39.800 buying into investments in properties in manhattan he's an investor in pj clark's restaurant chain

00:36:46.420 he even invested in a minor league baseball team and when i asked him i said steve you know you have

00:36:52.100 hundreds of investments you clearly could go and just do this full-time why don't you do it his

00:36:57.540 answer to me was number one i love what i do for a living it allows me the flexibility to make all

00:37:03.360 these investments on the side but number two you know i just see this as an extension of everything

00:37:08.240 else i'm doing i have my 10 i will always have them no matter what happens in my day job

00:37:12.500 but it's not you know for me i like having that corporate lifestyle i love being part of a big

00:37:17.640 organization where i have all these relationships that come to me and i'm able to just do more by

00:37:22.200 combining all these things together and so he has kind of this super amazing model where he's got

00:37:27.820 you know all his 10 percent his 100 and it adds up to a heck of a lot more than 110 that's great well

00:37:33.940 hey patrick this has been a great conversation where can people learn more about your book

00:37:37.260 so you can learn more about my book at patrick mcginnis.com mcginnis.com you can also if you go

00:37:46.800 there you can actually download a free chapter and you can take a quiz to see what kind of 10

00:37:50.500 entrepreneur you should be you can also find me on twitter at pj mcginnis and on facebook at the

00:37:56.280 10 entrepreneur perfect well patrick mcginnis thank you so much for your time it's been a pleasure

00:37:59.900 thanks so much my guest today was patrick mcginnis he's the author of the book

00:38:04.620 the 10 entrepreneur it's available on amazon.com and bookstores everywhere you can also find more

00:38:09.100 information and get a free chapter from his book at patrick mcginnis.com also check out the show notes

00:38:15.240 at aom.is slash 10 for links to resources we can delve deeper into this topic

00:38:19.880 well that wraps up another edition of the art of manliness podcast for more manly tips and advice

00:38:35.500 make sure to check out the art of manliness website at art of manliness.com our show is

00:38:39.500 edited by creative audio lab here in tulsa oklahoma if you have any audio editing needs or audio

00:38:43.300 production needs check them out at creative audio lab.com and we appreciate your support reviews really

00:38:48.480 helps us out a lot as always thank you for your continued support and until next time this is

00:38:52.160 brett mckay telling you to stay manly

The Art of Manliness - November 11, 2016

#251： Be an Entrepreneur Without Quitting Your Day Job

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