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Why employee side projects are good for your company

The first startup I worked for was led by a fantastic founder who still had his day job at a major FAANG company. When I had a question for him, I would send him an emoji on Whatsapp so that he could leave the campus (and Google-provided wifi) to call me and discuss the project. He had heard stories of companies getting partial or full ownership of a personal project because an employee used their wifi or company-provided computer to build something. 
Legally, most companies have the right to do this. Still, it was strange seeing a company kill the passion and excitement of a top engineer. It’s not ideal, for either party. 

What is a ‘side project’? 

It can be almost anything. It’s more a method of building than an end result. Essentially, a side project is something an individual or group of people are working on building outside of their standard day job. It can be monetized or just for fun. It can be something brand new or a project that has been running for years. It could look like anything from an actual SaaS product to a YouTube series. 
The key qualifiers are that it: a) is NOT your primary source of income or time (hence the word ‘side’) b) is something you are passionate about. 
Some may disagree with the second qualifier. I’d argue that if it’s not a passion project, it’s more of a side job than a side project. For example, if I decide to pick up marketing consulting work outside of my role as Head of Growth, this would be side work (but not a side project). If, however, I am trying to build up my own consulting practice with the hopes of turning it into an agency, this is most definitely a side project. The differentiator is passion. 

Why have companies traditionally banned (or attempted to ban) side projects? 

As my introduction story outlined, companies have traditionally been opponents of side work. Many grew up viewing work as a zero-sum game. You have a limited # of hours to work in the day, and any amount of hours spent outside of that are taking away from the company. What’s even worse is the prospect of someone using paid company time to build something unrelated. This is seen as outright theft! 
If you work for a truly evil company, they’ll base their actions off of sheer greed. This is where you hear horror stories of intellectual property nightmares. Some companies will even claim intellectual property ownership over a project that was in any way linked to company time or resources. In these cases, they will try to gain partial or complete control. 
Even in a "best case" scenario, employees have traditionally faced getting fired or shunned politically for working on something outside of the employment work. 
I talk about this mindset as if it’s in the distant past, but in reality, it’s still here. Many of us are starting to escape it in the startup world where being a founder-type person is seen as a virtue instead of a vice. Still, when I tell my friends that I ask for feedback on my projects from co-workers and company founders, they are shocked. “Aren’t you worried about getting fired…?” I want to laugh when I hear this, but mostly out of sadness and empathy. 

Why the traditional approach is wrong 

Resentment and Dishonesty 

If you were to ask a hundred founders and CEOs what kind of team they are trying to build, I’m guessing none of them would answer with “a resentful one”. No one intentionally builds a resentful team. And yet, many companies operate in manners that seem to do exactly that. 
A leader should be attempting to maximize the creative energy of a team, not hamper it. If an employee is passionate about something outside of the company, hampering the passion will do harm, not good. Encouraging that passion comes with zero downsides. What’s the worst that could happen? The employee creates something truly remarkable and decides to focus on it full-time. Suddenly, your company has a reputation as an incubator for successful startup founders. This will make it exponentially easier to attract good talent. 
If a driven person decides they want to work on something, they will pursue it regardless of what their company or leader does. If they know this will be frowned upon, they will try to hide it. Once this happens, the relationship between the employee and employer has already been destroyed. Honesty has collapsed, and secrets have become the foundation. 

Suppression takes resources 

Even if you truly believe you can be successful in stopping your team from pursuing passion projects, it will be massively costly. In essence, you are trying to kill the freedom of expression. Traditionally, similar efforts have been both expensive, time-consuming and unsuccessful.
Think of a dictator who wants to control free thought and expression. You have to have severe punishments. The regime needs eyes everywhere. Entire teams must exist to create propaganda to counter public narratives. This is the life of a company leader who wants to ban side projects. They must create nonsensical policies with harsh penalties. They must invest people and resources into spying to ensure enforcement. An artificial culture will have to be created to cover up the toxic culture that has naturally arisen. You will constantly deal with insurrection, in the form of employees planning (and striving) to be able to quit their jobs. 

The death of creativity

Once freedom of thought and expression is curbed, creativity declines in a steep drop-off. People stop thinking about “what’s the best solution to this problem?”, and instead think “how can I please the boss?”, or “what’s the minimum amount of work I can put into this so that I can go back to my real work.” 
Companies must work extremely hard to avoid creativity-killers like groupthink, politics and the like. Weeding a garden is hard enough, don’t plant them intentionally. 
Having creativity-killing policies will not only hurt your current workforce, but also your ability to hire additional creative talent. The best talent will recognize anti-side project attitudes as an antithesis to creative growth. They will know they’ll have to play politics to get ahead. It’s a massive red flag when considering working with a company. 
As it turns out, people want to realize their full potential. Who knew!

An inauthentic workforce

At SafetyWing, we have a conscious value connected to authenticity. Not every company outright defines this as a value, but most value it highly nonetheless. Few leaders want a team of robots without any unique thought. A good leader wants to know what their team is actually feeling. They want to know what their team really thinks about a problem or solution. 
Asking someone to hide their passion, particularly when that passion is something they are creating, is a cardinal sin. You are asking that person to hide themselves – the definition of inauthenticity. It is impossible for your talent (that you are likely paying dearly for) to be authentic in this environment. 

Why companies should encourage side projects 

It’s pretty easy to outline why a company would want to avoid discouraging their team from working on side projects. But there is a difference between tolerating something and embracing it. I’d like to argue that companies should encourage their team to start side projects. 

Lead a happy and free team 

Frankly, the well-being of your team should be enough to justify almost any policy, within reason. People enjoy freedom. It’s a key reason why people who go remote want to stay remote – giving up freedom is difficult. That means that if you value independent and creative thinkers (something nearly every company claims to do), restricting their freedom will by default make them unhappy. 
If you don’t value these characteristics, or fail to provide people with what they need, you will soon run into a very real retention problem. If you have never led an unhappy team, be thankful. It’s nearly impossible. A pet put on a leash, even out of love, is likely to pull and try to escape. Don’t put your team on a leash. You want to be the environment outside members envy. 

Build trust and transparency 

Beautiful things happen when a team trusts its leader. Problems are brought to attention early, making them easier to solve or avoid altogether. Team members will give honest (and therefore more valuable) feedback, whether it be personal or product-related. 
Transparency also solves some traditional concerns of letting employees work on their side projects. Let’s say their project takes off, and they decide to focus on it full time. If the employee doesn’t trust you, they won’t tell you until the required 2 weeks notice is given when they quit. Anyone who has made a key hire knows it takes more than 2 weeks by a longshot. If the employee trusts you, they’ll keep you posted on the progress and let you know as the time approaches. 
In essence, everything will get better in the company, from the products to livelihood. 

A team of founders

Imagine having a team of independent leaders who are self-sufficient and truly solution-oriented. This is what it’s like to lead founder-type people. They require little management and hate wasting time. That’s because they have real shit to do. No time wasted on “impressing the boss” or doing what looks right. These are the people concerned with solving real problems in efficient ways. 
Founder-type people create better products, better systems, and better experiences. They assume if they don’t do it, no one else will. This is a great attitude because it’s often the correct assumption. Having people who come up with great ideas is a plus. Having a team that will then go execute on those ideas themselves is a win. 
Honestly, these kinds of people are much more fun to work with as well. They are overflowing with energy and enthusiasm. They handle stress better, and boost up others on the team instead of bringing them down. 

A better and more productive culture 

You can probably tell from the above arguments that each of these elements plays a huge role in the internal culture of a company. Imagine a company filled with sad, paranoid robots. Would this make a pleasant culture, or even a productive one? This sounds like a world despised by everyone but dictators and tyrants. 
There are many benefits to having a healthy culture besides just enjoyment. You’ll retain your best talent while finding it easier to expand the team. Your current employees will refer their own network. The company will gain a reputation as a fantastic place and team to join. Your products will improve, and do so at a faster pace. 
There is no downside to having a great company culture. 

A great method for avoiding burnout 

This might be counterintuitive, but having side project work is actually a fantastic way to avoid burnout in your “day job”.  Regardless of how excellent a company or specific role is, hard times happen. Things get stressful, unwanted drama arises, and frustrating days happen. It’s only natural! When these days happen, it’s incredibly valuable to have something entirely separate to focus on. It’s almost like a reset. Sometimes people are fortunate enough to have a diverse number of products and people they work with, meaning they can toggle things internally. But this isn’t very reliable. Having an external side project is. 
This is also a benefit in the reverse direction. Having a frustrating setback on a side project feels less intense when you go back to work. You’re likely to even solve problems accidentally while working on something else. 

Create new products and projects

I personally have had many ideas for companies I work for while working on my side projects. In fact, I’ve even brought side projects into my company work. 
When the pandemic hit and the world locked down, I started a project called Nomad Alerts. It was a newsletter that sent out updates on travel alerts for people waiting to go somewhere. In just over a month I had 1,000 subscribers. It wasn’t really what I wanted to spend my time on, however. It was also expensive, as I was paying a VA to research the updates and send them to me. Since it had the same market, I moved the project to SafetyWing under our BORDERLESS platform. It increased the quality of the project, took the cost away from me, and also helped company growth. 
If SafetyWing had an anti-side project mentality, I still would have built the project. It just would have been in secret and without any benefit to the company. Because they were open to it, it became a new growth project. 

How to create an environment that promotes side-projects

So let’s assume you're convinced. Either you want to start encouraging side projects, or even move away from a negative attitude towards them. How do you implement such a policy and new cultural element? 
Thankfully, this is the easy part. 

Writing the policy and making it official 

You need to clearly document and share your positive outlook on side projects. Then, you need to make it official to take away the legal threat of action. After all, words are only words, and sometimes they mean only so much without some muscle behind them. 
The policy need not be complicated. The first step is to explicitly state that you allow employees to work on side projects. Something as simple as “We hire founder-type personalities, and therefore recognize and encourage team members to start and work on passion projects on the side.” What an inspiring thing to read as a team member! 
Next, include a statement saying that employees will not be punished for using the same laptop or wifi connection to work on their side projects. The exact language will differ depending on the company and how it’s set up. There are reasonable exceptions, particularly with regard to sensitive data, that may need to be outlined. Just because you need to make some particular exceptions doesn't mean you just shouldn’t encourage side projects. In fact, setting needed parameters will let employees know that you truly are okay with this and have thought it through fully. 
The important thing is for team members to know that they won’t be fired, or have the company take control of their project. When in doubt, be reasonable with the policy. If someone does spend too much time or cross the line, have a conversation with them.

Offer tangible help and feedback  

Official policies aside, one of the best things a leader can do to encourage side projects is to actually offer help and guidance. In your 1-1’s, ask what they are working on outside of work that excites them. Offer guidance, and more importantly, constructive feedback on their projects. 
You may even go so far as to have a Slack channel or similar for people to post their projects and discuss. SafetyWing has many of these! We have team members with YouTube channels, agencies, apps and more. It’s a delight for everyone on the team to see and share. 
The other benefit of offering help is you’ll never be surprised. The team member will share everything along the way, both successes and failures. 

Conclusion

There are many reasons to have a side-project-friendly culture: 
  1. Build trust and respect in your company 
  2. Increase creativity and new ideas 
  3. Solve problems faster and with better solutions 
  4. Have a happier and more authentic team 
  5. Increase your team's productivity and avoid burnout 
  6. Create new products and a better experience.
Any one of these reasons is enough of an excuse to embrace this new spirit of building. Much like remote work, it’s an attitude that is central to the future of work. It’s an idea with little cost and no downside. 
At the end of the day, this very well may be the difference between your greatest employee joining you, or your competition.

About the author

Sam Claassen

Head of Growth
SafetyWing
Sam Claassen is the Head of Growth at SafetyWing and a serial advocate for remote work. A longtime nomad himself, he has been to 65 countries while doing growth and remote work consulting for startups and accelerators. Through his work at SafetyWing, he is working with a team to create BuildingRemotely.com – a podcast, online resource and soon to be book on building a thriving remote company.