Today, in 10 minutes or less, you’ll learn:
- 🏃♂️ How I Decided to Quit My Job (It’s Not What You Think)
- ✅ My 8-Question Readiness Checklist & 1-2 Rule
- 📖 An Entrepreneur Case Study & Financial Runway Calculator
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🌱 When I Decided To Quit My Job & Start My Portfolio Career
In December 2022, I quit my 6-figure tech job.
For about a decade, I had worked for growth-stage startups as a product leader, product manager, and even marketer in the early days.
Since I started working in the internet industry, my goal was always to pick up the skills and knowledge to build a portfolio of my own businesses.
After taking my time, I finally felt ready.
In this edition, I’m going to breakdown when I decided to transition from full-time tech worker to portfolio career. Included is a practical readiness checklist, case study, and runway calculator.
I’ll first explain why the timing felt right:
Why now?
Honestly, I had been dragging my heels on this life decision.
Here’s why things changed:
- Satisfied with my career learnings - I checked off what I set out to learn in my career 10 years ago: launch 0-to-1 products, grow products, build a high-performing team, get exposure to various industries (edtech, fintech, and SaaS), and work in international markets.
- Had a practice run in 2018 - I quit my job at Dropbox in 2018 to go on a 1-year travel sabbatical. I started a side hustle, then found a job in Singapore in 2020. Things turned out okay. I gained more confidence in myself to navigate the unknown.
- Experimented with side hustles - For 5 years, I had been running side hustles like career coaching, consulting, and even tea e-commerce. I knew I enjoyed having control over my schedule and gained more confidence in my skills.
- Funded a 12-month runway - Throughout Covid, I saved a nest egg amounting to 12 months of runway to give myself more flexibility. More on the finances later.
Yet, I was still torn. I had several reservations, including:
- Went against reasonable advice - More conservative advice says to grow your business to replace your salary before you quit. I had side hustle income, but it only covered partial living expenses. This gave me a bit of anxiety.
- Major upcoming personal expenses - I was proposing to my now-wife right after quitting my job. So if it all went smoothly, I’d have wedding expenses (we celebrated with family in Singapore, Sydney, and Shanghai).
- Fear of running out of money - This was probably my biggest fear, given I wasn’t planning on raising money. I was self-funding my business operations.
Hence, I was feeling 50/50.
Here’s what pushed me over the edge:
How I decided to pull the trigger
If you read career advice on social media, it tends to fall into 2 camps:
- Burn the bridge and don’t look back. YOLO.
- Start on the side and don’t quit until you’ve replaced your salary. Or you’ll regret it!
I chose a 3rd option:
Establish a margin of safety before making a big change.
I’m not 100% risk taking, nor am I totally risk averse.
If push comes to shove, I lean a bit more towards risk aversion than risk taking.
What the h*ll is margin of safety?
This term comes from the investing world.
For example, when Warren Buffet is deciding to make an investment, he’s looking for a margin of safety so in the event that things go wrong, he has a sufficient cushion against downside risk.
The stock price could drop 30% and he’d still make money.
I also look for margin of safety in my big career decisions.
What was my margin of safety?
I had:
- 12+ months of cash runway
- Side income through consulting & coaching
- Supportive partner open to dividing expenses based on our income
- Built relevant skillset from years of startup and side hustle experiences
- Reduced my expenses through geoarbitrage and living in low cost-of-living cities
Not to mention, I’d gain new skills and network that I can leverage in the future.
Looking at the inverse, if I had:
- 2-3 months of emergency savings
- No side income aside from my day job
- No partner willing to help with expenses
- No relevant skills to what I’m trying to do
- Living in an expensive city like San Francisco…
…then I would have thought twice about making this big change.
So how can you apply this approach to your own career?
I can’t tell you when to quit your job. (nor can any stranger on Linkedin.)
But I created an 8-Question Readiness Checklist… to help you strategically decide when to quit your 9-to-5:
Readiness Checklist
Before you quit the rat race forever, ask yourself a few questions:
- Why do you honestly want to quit? Dig deep.
- If your answer to (1) is because you hate your job, have you earnestly tried to talk with your manager, change teams, move companies, or take a break to reflect? If not, try these first.
- What are your monthly expenses?
- Is your business generating enough monthly revenue to cover your monthly expenses? If not, by when? Give yourself a deadline.
- Do you have confidence in your relevant skills to grow your revenue or have you already started the business on the side?
- Can you generate side income through consulting, freelancing, or part-time work?
- Do you have a partner/spouse or family member who can offer financial support?
- Can you reduce your expenses through geoarbitrage or other strategies?
If these questions were easy for you to answer, then you’re probably on the right track.
If you struggled, then you have more preparation to do.
You might also be wondering, “do my numbers make sense?”
In which case, here’s my rough guidelines:
1-2 Rule Guideline
For people considering quitting, here’s my 1-2 Rule:
- 1 year of living expenses saved
- 2x of your expenses covered from your business
For me, I checked off one year of living expenses.
However, my revenue just covered my living expenses since I didn’t want to wait.
These numbers may sound conservative. But don’t be sucked into the glamor of quitting to build your own startup without revenue. You can find yourself in a world of hurt.
If you have both, you’ll greatly increase your chances of success.
Here’s one more example:
Case Study: Noah Kagan, Founder & CEO of Appsumo
Noah has talked extensively about when’s the right time to quit your job.
For instance, when he was working at Mint, he owned 1% of the company.
He was also working on a Facebook games side hustle, which showed massive potential.
So he asked himself, would the opportunity cost be greater staying at Mint or growing his side hustle into a full business?
He decided to go with his side hustle, but made sure he covered his living expenses of $3,000/mo before quitting:
It was the minimum amount I needed to live sustainably. That was my rent, my credit card, and my entertainment. If I could make at least $3000 a month, I could quit Mint and feel good about it.
A lot of people want to quit their job first so it forces them to make entrepreneurship happen—but I’ve never approached business that way. I try a lot of businesses out, I find the one that finally works, and once it shows potential, I feel comfortable quitting my $100,000/year “safe job” to make $3000/month and work hard on my side hustle.
Try This: Financial Runway Calculator
Want to run the numbers for your situation?
I created a simple financial runway calculator using Claude Artifact.
You can estimate how much you’ll need to save across 3 scenarios: best case, middle case, and worst case.
DM me if you like it, because then I’ll built more tools.
In summary
- Build a margin of safety before quitting
- Use the 8-Question Readiness Checklist to evaluate your own margin of safety
- Consider the 1-2 Rule: 1 year of living expenses saved + 2x of your expenses covered from your business
- Run your numbers with a financial runway calculator
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