How to Start a Business While Working 101

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How do you start a business while working?

Or, why you shouldn’t quit your day job

If you’re here, it’s probably because you are sitting in your cubicle thinking about starting a business – your own thing - but probably haven’t quite gotten to the “start’ part yet. First of all, that’s OK. Second of all, you can start today.

We want to get you past your own road blocks by learning about how others have actually started a business. “I’m too busy with a special project at work. I’ll start next month”. “I’d rather quit next summer and try doing my idea fulltime! It will work.” No. No. no. If you to start something, something you own, there is probably a way to start today. We made this guide to help motivate you (and help motivate ourselves) to get moving onto something you really want to work on.

The Stuff: This guide is broken down into:

1)      How have people pulled this off? A case study of how Mohnish Pabrai started a very successful business while working.

2)      How to take that first step (even though you’re busy at your day job and frozen in fear and procrastination).

3)      First Steps Checklist.

4)      Resources Checklist


How have people pulled this off? A case study of how Mohnish Pabrai started a very successful business while working.


We think the best way to learn how to do something is to learn how someone else did it first… And in this case a great person to learn from is Mohnish Pabrai. We here are big fans of his.

Currently, he is running a $500+ million dollar investment fund he built from scratch (see our Cloning Investments 101 guide), but prior to his successful entrepreneurial streak starting he was just an average office-bound employee working in IT.

In 1991 he started his IT consulting and systems integration company, TransTech, Inc. with about US$30,000 from his own 401K account and US$70,000 from credit card debt. He sold the company in 2000 to Kurt Salmon Associates for US$20 million. But how?

Mohnish gave a talk at the Ben Graham Centre for Value Investing in 2012, which intentionally or unintentionally included a 101 guide book on how he started his first business while working and subsequent investment fund. We have condensed the relevant parts (Panda Notes) for your reading pleasure.

Mohnish Panda Notes:

Step 0: Change How You Think About Your Week and Your Time

This secret is not like the book the Secret. It is even better than that. The secret – and we will just keep it between us …How many hours are there in a week?...”168.”….There are 168 hours in a week, so how many hours is a typical full time job. “40 hours”. How many hours are left over after you work 40 hours? “128”. 128. OK….people come to me all the time saying they’re going to start their own business or start their own fund and they’re going to go quit their jobs and do this and that. And I find that really stupid.”

Step 1: Change Your Mindset About Your Day Job

“First of all, when someone is paying you 40 hours a week, what are they paying you for? The good news is they are paying for your rent. They are paying for your groceries. They are paying for those nice pants you have on. They’re paying for everything. Okay? And let them keep paying for it. Don’t stop the cash flow. So, if you want to start a business never start a business with saying “I’m going to quit and then start the business”. What you do is a few tweaks to the way your lifestyle works.”

-Lifestyle Change Number 1: “Live really close to work. I live 5 minutes away. Make sure the 40 hours is actually 40 hours. You don’t spend another 20 hours commuting.”

-Number 2: Stop working extra hours. “You know how sometimes you’re trying to get ahead and you work 50-60 hours or 70 hours. We’re done with that, okay? What you do is you just work enough so you don’t get fired. [laughter] And I’m just telling you this is my life story. This is how I started my business. I was this guy that was getting all these great reviews, etcetera, and then I finally decided when I was 24 years old I’m going to start my own business. The first thing I did is “to hell with the reviews. To hell with the reviews. All I need to do is just barely keep it so they don’t fire me.” So I took it way down, exactly 40 hours, minimized, etcetera.”

As a side note, we completely agree that you should leave near your work whether you are trying to start a business or just have a life. Thinking of moving? A new job? You need to do the math where we recommend adding travel time + hours worked and divided by your daily pay = this is what you are being paid. Value your time. And if that house in the burbs that you think you want is the one you buy and keep at least you have valued the true cost properly. (And don’t forget you can always move if you’re already there!)

Step 2: Create the Time You Need à To Work On Your Real Work

“I started my [IT] business in February 1990 while I was working full-time for this company. What I used to do is get up very early in the morning – around 6:00, 6:30 - and I would work right up to 8:45 in the morning and then I would drive to work and get there at 9:00. And then exactly 8 hours [later] – punch the clock – at 5 p.m. and I would leave. And remember for about a year I ate subway sandwiches because it was just so fast. And basically from 5 to midnight or 1 o’clock I would work and of course weekends were for working as well. I had at least another 50-60 hours that I was able to work besides the job I was doing. Then the sleep and everything else I wanted to do…

Then when the business actually had some revenue, it took about – I was very young and didn’t have much experience – it took me about ten months to get the first client. Because I used to go and hit my head against a lot of brick walls trying to figure out a model that works. Your clients actually teach you. You say X, and then they say “no I want Y”. And so you listen very carefully to what they are saying and you adjust your pitch. That’s what I did. I just adjusted my pitch to the point that my clients really taught me what business I needed to be in. And so, a year later, I think January of 91, I had enough – I had two clients – and I had about three months of cash flow, which was more than what my salary was and [beyond] three months there was no visibility. But I was dying to go full time and I was dying to just do this completely. And I felt like if I could just get all my time in the business I could really grow it.”

Step 3: Call It

“So I went in in January of 1991 to my boss’ office and turned in my resignation. And he and his boss, who was the President of the company, they sat me down and said “we finally now know what happened to you the last one year because you just turned off. And you were not so bad that we wanted to fire you but we just couldn’t get output out of you.” And I said “BINGO, that is exactly what I was trying to do!” [laughter]. And so they tried to give me a raise and this and that to keep me interested. Then they made me an offer; they said “look, when you’re business fails” – not if your business fails – they said that “when your business fails, come back and we will give you this massive raise and you will get this higher position and you don’t even need to look for a job. Just next year you can start working.” So I said “wow, what a country.

Here, you quit. You go and do your thing. You can declare bankruptcy. And the next day you have cash flow back in at a higher salary and everything”. And of course, I never went back to them. The business never failed, it actually did fine. And ironically about ten years later when I was starting Pabrai Funds both of them became investors and they are still investors.”

Step 4: Get Creative About Financing - “When I started my first IT business, I had no money.

“So first of all, one part of the secret is you do not need money to start a business, okay? There are venture capitalists, in fact for me the venture capitalists were VISA and Mastercard – these venture capitalists are willing to fund you completely with no equity. They don’t even want any equity. They don’t even want any business plan. This is fantastic, what a country! [laughter]…First of all I applied for every VISA and Mastercard I could get…And I had 20-25 credit cards that I socked away.

And what I did is every time I needed money for the business I just went and maxed the cash advance on that credit card and just kept running that way. And I emptied out my retirement account at that time, [which was] about $30,000. So I had taken about $70,000 in credit card debt, $30,000 from my retirement plan, and of course at 24 I wasn’t worried about retirement. And I was not married, I was single. There was no obligation.

“You don’t need money. And especially now with [the] internet and online.”

Step 4 Continued – Find a Business That Fits

Ideally the business is 1) You are very passionate about and 2) Doesn’t require significant money to get going.

 “The right time to start a business is when you something burning in your heart that is telling you that you have some product or service to bring to the world that will improve the world in many ways. So you have to have something where you are very passionate about it and then you go after it.”

“I have started three business in my career. And I started a few others that maybe petered out in a week or something but I won’t talk about them. But three of them went on for awhile. Two of them took virtually no capital to get going. Pabrai Funds and my IT company TransTech, Inc. They took hardly any capital. The third one, which is one called Digital Disruptors, I thought I was really smart at the time. And I put a lot of my capital, a lot of my net worth in it, and I took a lot of other people’s money into it. In fact, it took about $4.5 million of capital and the four and a half million went to zero in a pretty short period of time. I learned a number of things from that exercise.

One of the things I learned is when you start a business – I said to myself you idiot – when you start a business, remember don’t put money into it. Businesses to get started do not need money. They need brain power and other things and you could put that. One of the things that got seared into my psyche is that I will probably never ever go into a venture which needs money. And if it needs money I will try to find a way to think about the business in a manner where you can get around it. If you look at Microsoft or Walmart, or any of these businesses, they all got off the ground with no money and became massive businesses.”

What about Walmart? In the case of a company like Walmart (and Amazon), the genius of the business model is that they use their suppliers to finance their own business. Selling $1 million dollars of pickles a month? Only keep one month of inventory and pay your supplier in 90 days. At day 89 you now have $3 million dollars of sales in your pocket and are about to pay your supplier only $1 million and $2 million to work with. Not bad.

Sidenote: start as soon as possible.

I think you get a free one shot very early in your life when you have no family, no kids, no nothing, and no assets. The good news is when you are early on in life when you have no assets, it is the best time to declare bankruptcy. So my thinking was I could completely blow up, lose everything, and it would not affect anything.

Step 5: You’re on Your Own Now – Keep Costs Low

“When I ran Pabrai Funds in the early days when I was raising capital, I didn’t even have three chairs in my office so no one could actually come to the office and meet me. What I did is [make] Starbucks the office. And the great thing about Starbucks being the office is I had offices all over the place. So I would go to San Francisco and I would sit in Starbucks and I would have every half an hour a new person in front of me, and line up 15 guys one after another. And of course I would be very heavily jazzed up by end the evening with 14 lattes into me. But the assets came in and there was no problem.”

Mohnish Pabrai was actually a late blooming entrepreneur.

“So the dreams of a teenager. I went through some trauma, I would say pretty significant trauma, in my childhood. My father was a kind of quintessential entrepreneur. He must of started, sold, bankrupted, cloned, maybe 15 different businesses in 15 different industries. He made a Bollywood feature film. He set up a radio station. He ran a jewelry factory. He had a painting company. Interior decoration. Insurance brokerage. Real estate brokerage. A wide range of things. And some of these things – manufacturing speakers for Philips – some of these things actually scaled quite a bit to several hundred people. Invariably all of them at the end blew up. And the thing is that, the reason they blew up, which is clear to me now, is that my father was very aggressive as an entrepreneur. He always saw the glass as overflowing when there was even a tiny amount of water in it. So all his business were always trying to grow as fast as they could and they were highly levered. Max the leverage, max everything. So when the first kind of headwinds started coming in the businesses had a really tough time sustaining.

But my father was also extremely good. He defeated even bankruptcy. Bankrupt means the point of not even having groceries for next week. And he would from absolutely nothing start the next business. He would bounce back up. I saw both my parents bounce back up repeatedly. So that actually showed me how people can lift themselves from zero. But the thing is that as a child what I noticed is my parents were very poor financial planners. When things were going really well they spent a lot of money and lived well and all that. When things were going really poorly, we had to really [indiscernible] and ask relatives for money and all these things.

As a kid growing through that – I was really traumatized by it. One of the things I wanted was – when I was able to finish my education I became an engineer and got a good job. My goal was to keep that job for my whole life and put 15% of my money into my retirement account. And to let that build over time and to not mess around with ever starting a business. That was my game plan. So actually when I was a teenager that’s what I wanted to do.

And of course my father was visiting me in the States when I started my first job and he started having conversations with me about starting a business. And I started having conversations with him about, hey don’t you remember my childhood. And of course in the end he prevailed and here I am.”

Why did you start a business if you wanted a secure job so badly?

“Because my father and I had some conversations when I was an adult. And what I was finding was that this job was very stable but had become boring. And so I have a rule that I follow, and the rule is that if on Monday morning I’m not fired up to go to work then I will do two things. Number one, I will not go to work. Number two, I will hit the reset button. And this has happened there times in my career….And so the thing is when something inside you is telling you that you’re not happy with the circumstance or you would rather do something else, you have to listen to that inner voice.

So part of it was there was a side of me that wanted absolute stability from the instability I came from. But then I was seeing that, hey this stability is coming with boredom, this thing is getting very boring. And then my father is needling me to start a business. And so the combination of all of that – I said OK I am taking the plunge. But what I tried to do was – I tried to do it in a matter which was very different than him where I tried to cover the downside. I covered with you how I went about it, where looked at all the different aspects, I looked at bankruptcy – I looked at bankruptcy so closely because I went through a zillion bankruptcies in India with my parents and I didn’t want to go through that.”

How to take that first step (even though you’re busy at your day job and frozen in fear and procrastination).

Break down your business into steps – Stephen Dunieier

It’s hard to start. “I want to start my own investment fund” or “a food truck” you say. It’s not starting a food truck, it’s spending less than five minutes on Kijiji searching for “food trucks” to see what’s for sale. It’s googling “food truck bylaws in [city xyz]”. You’re working, you’re busy, and you’re probably tired. You don’t figure out the big questions in one sitting. So if you can’t do it in one sitting you have to break them down into steps, as small as possible. This is because 1) small steps can be done by anyone and so you tell yourself to do it and believe it and 2) every step you take means you are getting farther along towards starting your “thing”. A month later you are well past ground zero and can see the progress you’re making. We cannot stress how important this is. – If you feel stuck, you won’t feel good even if you are making amazing progress, which means you will be less willing to work on your idea and might even give up.

Baby Steps

The best talk we have ever seen about how to structure your thoughts and keep moving is a talk by Stephen Dunieier. His talk gets to the root of how to actually get something done. We all get lost in our thoughts and our rules and our “limits”, and we end up like a lumberjack staring at the forest instead of cutting a tree down. But the thing is that executing on a big idea takes a lot of steps, and all of those steps don’t have to be done right now.

TEDx describes him as follows: “How you define Stephen Duneier depends on how you came to know him. Some define him as an expert institutional investor, while others know him as a large scale installation artist, avid outdoorsman, professor, decision strategist, coach, business leader, mindfulness extremist, author, speaker, daredevil or Guinness world record holder.”

We originally posted the talk here: -

The Kid that Couldn’t Focus

“From kindergarten, all the way through to my high school graduation…every one of my report cards basically said the same thing: Steven is a very bright young boy, if only he would just settle down and focus. What they didn't realize was I wanted that even more than they wanted it for me, I just couldn't. And so, from kindergarten straight through the 2nd year of college, I was a really consistent C, C- student.

But then going into my junior year, I'd had enough. I thought I want to make a change. I'm going to make a marginal adjustment, and I'm going to stop being a spectator of my decision-making and start becoming an active participant. And so, that year, instead of pretending, again, that I would suddenly be able to settle down and focus on things for more than five or ten minutes at a time, I decided to assume I wouldn't. And so, if I wanted to achieve the type of outcome that I desire - doing well in school - I was going to actually have to change my approach.

And so I made a marginal adjustment. If I would get an assignment, let's say, read five chapters in a book, I wouldn't think of it as five chapters, I wouldn't even think of it as one chapter. I would break it down into these tasks that I could achieve, that would require me to focus for just five or ten minutes at a time. So, maybe three or four paragraphs. That's it. I would do that and when I was done with those five or ten minutes, I would get up. I'd go shoot some hoops, do a little drawing, maybe play video games for a few minutes, and then I come back. Not necessarily to the same assignment, not even necessarily to the same subject, but just to another task that required just five to ten minutes of my attention. From that point forward, all the way through to graduation, I was a straight-A student, Dean's List, President's Honor Roll, every semester.

I then went on to one of the top graduate programs in the world for finance and economics. Same approach, same results. So then, I graduate. I start my career and I'm thinking, this worked really well for me. You take these big concepts, these complex ideas, these big assignments, you break them down too much more manageable tasks, and then along the way, you make a marginal improvement to the process that ups the odds of success in your favor. I'm going to try and do this in my career. So I did. I started out as an exotic derivatives trader for credit Swiss. It then led me to be global head of currency option trading for Bank of America, global head of emerging markets for AIG international. It helped me deliver top-tier returns as a global macro hedge fund manager for 12 years and to become founder and CIO of two award-winning hedge funds.”

Do you know how long it takes to buy a website domain? About 30 seconds if you have an account setup. And less than 2 minutes if you don’t. I bought a website domain in-between writing the last two sentences. And it’s for an idea that has be percolating for half a decade. And now, tomorrow I’m going to be thinking about this and say “well, obviously I have to do the next step, I just bought a domain”. Even this website! We said to ourselves “we want to create an online resource for value investing”. Do you know how many hours it takes to create a “resource” of anything? It’s more than an afternoon. And you’re reading this article on a site that is not our end “vision”, but the site exists! And you’re here. And that means we’re making progress (thanks for visiting).

Setting Goals – And Breaking Them Down

“I set a resolution to hike all 33 trails in the front country of Santa Barbara Mountains. And I'd never been on a hike before in my life.  (Laughter) But the truth of the matter is, it's not about the 33 trails. You have to break this big ambitious goal down into these more manageable decisions - the types of decisions that need to be made correctly along the way in order to improve the odds of achieving the type of outcome you desire. It's not about even one trail.

It's about those tiny little decisions…when you are sitting at your desk, putting in just a little extra time at the end of a day. Or you're lying on your couch, clicking through the channels on your remote control, or scrolling through your Facebook feed, and in that moment, make the decision to put it down. You go put on your hiking clothes, you go walk outside your front door, and you shut it behind you. You walk to your car, get in, drive to the trailhead. You get out of the car at the trailhead, and you take one step, you take two steps, three steps. Every one of those steps that I have just described is a tiny little decision that needs to be made correctly along the way in order to achieve the ultimate outcome.

Now, when I say I want to hike 33 trails in the front country, people think about the decisions at the top of the mountain. That's not what it's about. Because if you don't make the right decision when you're on the couch, there is no decision that occurs at the top of the mountain.”

First Steps Checklist

·         Step 1: Write down the absolute most basic first step to get going on your idea. (time: 5 minutes)

·         Step 2: Do this idea. (Time: five minutes)

·         Step 3: Pace Check. Did step 1 and 2 take longer than 10 minutes? If it did, watching Stephen Dunieier’s TEDx talk is now your step one and it will take 17 minutes and 52 seconds.

·         Step 4: Cut down the office hours.

·         Step 5: Be OK psychologically doing just enough to not get fired.

·         Step 6: Go


Side tip: Not making progress? Make a meeting with yourself! This quote is from Tools of Titans by Tim Ferris – A quote from comedian Mike Birbiglia. At the time he was struggling with finding time to finish a script.

“I thought ‘I’m always on time, and I always shop up to things, so why don’t I do that for myself?’ So I put a handwritten note next to my bed that said – and it has three exclamation points – ‘Mike!!! You have a meeting at Café Pedlar [where I was writing] at 7 a.m. with your mind,’ which is so stupid. It’s so embarrassing to admit, but it worked!”


Resources Checklist

·         Read The 4-Hour Workweek by Tim Ferris

·         Watch Mohnish’s video -