You’d be surprised to learn how many products that we can’t live without were once modest side projects their founders developed after hours. Examples of small initiatives that grew into multi-million companies? Twitter, Instagram, Slack, and many more.

Conventional wisdom says that multitasking doesn’t get you far. But startups aren’t a conventional type of business.

If you have a great idea, there’s always room to work on it - after work, over weekends, perhaps even sacrificing holidays for the side hustle to move forward. It’s all a matter of passion and dedication.

Startups vs. side projects - how do they differ?

What are the key differences between a startup and a side project? One way to tell is by telling other people about it.

Why wouldn’t you brag about your idea if you dedicate so much passion, innovation, and experimentation to it?

Side projects have the potential of becoming startups. Most of our jobs lack the spirit of adventure we seek. A side hustle opens the doors to bringing that excitement back into your life again. And if you manage to convince people that your side project has potential, then you’re looking at startup material.

Ok, so let’s say that you have a side hustle that is mature enough to be transformed into a business. Where is the best place to start looking for funding?

5 methods to finance your startup

• VC funding - Venture Capitalist companies invest in startups early in their development in exchange for an equity share. If you pick this form of financing your startup, prepare to give up a slice of it to the investor. According to data from PitchBook and the National Venture Capital Association, VCs invested $156.2 billion into US-based startups in 2020. This is around $428 million every single day of the year! Success story examples : SpaceX, Airbnb, Slack.

• Bootstrapping - Bootstrapping means that you try to build a company using your personal finances or the operating revenue of your new company. Success story examples : Mailchimp, Lynda, Shopify.

• Crowdfunding - Crowdfunding is a great financing method for innovative ideas that could potentially engage people. The idea is that you share your side project on a crowdfunding platform and ask people to contribute towards it, often inciting them with a system of rewards or exclusive pre-order. Example success stories: Oculus VR, Allbirds, Popsocket.

• Angel investors - Angel investors work like VCs but are slightly different. They’re usually entrepreneurs looking to support small businesses. If they believe in the idea, they’re more willing to take a risk. Notable angel investors: Jeff Bezos (Everfi, Domo), David Lee (DoorDash, Judicata), Jeff Clavier (Mint, Wildfire).

• Accelerators and incubators - Both help startups grow into successful companies, sometimes for a share percentage. Top accelerators: Y Combinator, Angel Pad, Techstars, 500 Startups.

Let's get inspired! Here are 7 side projects that started small but later became large and successful companies.

7 side projects that grew into million-dollar businesses

1. Buffer

Location: San Francisco, CA

Startup founded: 2010

Funding: $4 million

Users: ~75k (2019)

Breakthrough moment: Successful product landing page

The founder of Buffer, Joel Gascoigne, wasn’t too keen on starting a business too quickly. This approach didn’t work out for him in the past:

“I had spent the previous year and a half building another startup, and I hadn't had too much success. I made lots of different mistakes, such as assuming what people wanted and just adding features without getting any validation.” (source)

He created a landing page that showed what Buffer could do and shared it with his network. Following signups gave him the boost to build the solution that today helps millions of companies and users share their social media updates.

2. Product Hunt

Location: San Francisco, CA

Startup founded: 2014

Funding: $7.5 million

Revenue: $3.3 million (2021 forecast)

Breakthrough moment: A targeted email list for tech industry insiders

Do you need technical skills to build a million-dollar SaaS startup? The example of Ryan Hoover - the founder ProductHunt, a platform for discovering new tech products - shows that you can.

“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.” (source)

As of a few years after Product Hunt’s launch, the platform has become a community housing hundreds of thousands of monthly users. It was recently sold to AngelList for $20 million.

3. AppSumo

Location: Austin, Texas

Startup founded: 2010

Users: 800k

Breakthrough moment: A landing page that costed $70

Building a startup from a side project doesn’t require heaps of money. The founder of AppSumo - the daily deals site for digital products and services - started out with just $50 of capital.

Noah Kagan said in an interview that he came up with the idea while doing marketing for Mint.com. He invested his cash and got $20 from his mom to build a landing page and collect emails of potential users. AppSumo reached $1 million in sales during its first year of operation!

4. Craigslist

Location: San Francisco, CA

Startup founded: 1995

Funding: $13.5 million

Users: 55+ million monthly visitors globally

Breakthrough moment: Craig’s list of San Francisco events

I know what you’re thinking: how is Craigslist a tech startup? Well, not even Silicon Valley moguls could disrupt this 25-year-old classified ads site. How did it all start? The former IBM employee Craig Newmark was a San Francisco newbie in the early 90s, and he created an email list for local events to meet people. Craig’s list, get it now? :)

The project got traction as people started using it for more than just meeting up. Eventually, Newmark quit his job and invested all this energy into building the billion-dollar company Craigslist is today.

5. GitHub

Location: San Francisco, CA

Startup founded: 2008

Funding: $350 million

Users: 56 million

Breakthrough moment: “It all started with a domain, a cheap slice from Slicehost, and some stock art.”

Before GitHub became the billion-dollar company we all know, its founders Chris Wanstrath and PJ Hyett, were busy creating websites for the tech news and review site Cnet.

Since changing open-source code turned out to be very difficult, they decided to build their own repository. It was a side project, but they worked on it nights and weekends. In 2018, Microsoft acquired GitHub for a smashing $7.5 billion, proving that working long hours was definitely worth it.

6. Slack

Location: San Francisco, CA

Startup founded: 2009

Funding: $1.4 billion

Users: 1.386 billion

Breakthrough moment: If one side project doesn’t pan out, build a different one

The billion-dollar business communication solution had an interesting beginning. Its founder Stewart Butterfield was actually looking to build a game.

But then his previous side project Flickr exploded and got sold to Yahoo, so he didn’t have that much time for his game. So he switched his focus to something else - the small communication tool his team has built internally.

Fast forward, and Slack has become the fastest startup ever to hit a billion-dollar valuation (just 1.25 years!). Salesforce acquired Slack in July 2021 for an incredible amount - $27.7 billion!

7. HubSpot

Location: Cambridge, MA

Startup founded: 2006

Funding: $100.5 million

Users: 883 million

Breakthrough moment: Smart validation via blogging

How to validate a side project idea? One way to do it is by writing about it. After he sold his first startup, HubSpot founder Dharmesh Shah opened a blog as he kept on chasing other potential opportunities.

And this worked wonders - as he said, “a tiny blog with no budget generated more traffic than companies with professional marketing teams.” Today, HubSpot has attracted significant funding and is a multi-million dollar company.

Wrap up

Transforming a side project into a startup isn’t easy, but the examples above show that it’s possible. One thing startup founders often lack is technical knowledge on how to build a SaaS solution from scratch. If you need help in this area, get in touch with us - we have supported many US-based startups on their mission to maturity and growth.