BABY STEPS

The best entrepreneurs understand the importance of the side hustle

As their four-wheelers sped past mine in the Costa Rican jungle, my friends lobbed a new nickname my way: “Captain Safety.” It was true that I was staring straight ahead and following the dirt trail at a sensible pace—as if observing an invisible speed limit.

My friends were just ribbing me, but their words stung. I didn’t think of myself as particularly risk averse. I’d backpacked from Bogota to Buenos Aires when I was a junior in college. I’d moved into Manhattan’s gritty Meatpacking District before it was taken over by stiletto-clad women inspired by Sex in the City. And my job regularly took me to countries like Turkey, Colombia, and Pakistan.

But the more I thought about it, the more I had to admit that my friends were right. Exotic passport stamps aside, I was indeed Captain Safety. Seriously. I worked for an insurance company.

The illusion of safety

I’d always envisioned myself working at a large company. But I also craved adventure—just not of the financial nature. After completing an MBA at Harvard, I joined an emerging-markets private equity fund managed by the insurance giant AIG. The pay wasn’t what I’d get at a more aggressive, independent firm, but I liked the combination of minimal risk and maximum adventure. No matter what happened in Karachi or Bogotá, I could fall back on AIG, with its trillion-dollar balance sheet and its staid corporate culture.

 I was indeed Captain Safety. I worked for an insurance company. I was very wrong. My division didn’t contribute to AIG’s collapse in 2008. But we all went down together. Suddenly, the value of the AIG shares I’d accumulated fell by 97%. Things got especially ugly when a scandal over bonuses paid to the firm’s executives after its bailout made headlines. Protestors picketed outside the AIG building and e-mailed threats to the company included menacing language like, “The Revolution is coming… Your blood will run through the streets in the coming months.” That’s when corporate security told us not to carry items with the AIG logo.

So much for safety. The scarlet AIG at the top of my resume was now as worthless as the stock in my Charles Schwab account. With my faith in corporate America shaken, I decided to reassess my relationship with risk.

You don’t have to be an entrepreneur to be entrepreneurial.

Now that I understood that I couldn’t guarantee myself a safe financial future, it might well be worth taking some chances. If my life were a Hollywood movie, I would have picked myself up, launched a startup out of my garage, and become the next Steve Jobs. That would have been epic. But remember, I was still Captain Safety at heart. I wasn’t going to change overnight.

Entrepreneurship is a learned behavior. Studies show that the children of entrepreneurs are far more likely to start businesses themselves, perhaps by as much as a factor of three.

That makes sense to me. If you grew up with a parent who was always hustling for new customers or researching suppliers, you know what it takes to get a business off the ground. If you didn’t, the world of startups can seem like a hazy path lined with unforeseen risks and uncertain rewards. Since I hadn’t been surrounded by entrepreneurs as a kid, I decided to start slowly, learn the lay of the land, and spread my bets.

So I chose a more pragmatic approach. By day, I leveraged my experience as a private equity investor to earn a steady income advising clients like the World Bank and various multinational corporations. While that work was both rewarding and intellectually stimulating, I missed the excitement of the potential gains that I had once enjoyed as an investor.

 Entrepreneurship doesn’t have to be an all or nothing choice. I decided to use both my capital and my time to start making investments. I rifled through my network of contacts for the types of companies that would value my experience, connections, and enthusiasm for helping entrepreneurial enterprises grow. Over the last five years, I’ve built economic interests in nearly 20 ventures, ranging from real estate deals to the cosmetics upstart ipsy to the intelligent-suitcase company Bluesmart.

As I’ve built this portfolio, I have realized that entrepreneurship doesn’t have to be an all or nothing choice. By investing at least 10% of your time and, if possible, 10% of your capital, in side ventures, you can give yourself opportunity as well as protection—all while holding down a day job. That means that you can ensure that your family has a steady source of income even as you build something for yourself. It also means that you can experiment, take risks, and learn what it means to be an entrepreneur, without putting your entire livelihood on the line right off the bat.

This incremental approach to entrepreneurship helped me to diversify my personal portfolio, turn an extra profit, and build a long-term source of upside. It also taught me, little by little, to push outside my comfort zone. Soon I was investing in a Mongolian mining deal and in the West End production of “The Last King of Scotland.” Both are set to be great investments. But what gives me even greater satisfaction is the knowledge that Captain Safety would definitely not approve.

Patrick J. McGinnis is the author of the new book The 10% Entrepreneur: Live Your Startup Dream Without Quitting Your Day Job.We welcome your comments at ideas@qz.com.

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