By Alex Morgan, Senior AI Tools Analyst
Last updated: May 11, 2026

5 Unexpected Side Projects Transforming Startups in 2023

Over 40% of successful startup founders revealed that their most effective projects began as side endeavors rather than fully-funded launches. This statistic shatters the long-held belief that transformative startups must originate from sweeping innovations or grand visions. Instead, it underscores a crucial reality: smaller side projects are often the breeding ground for fast user engagement and profitability.

In a year where traditional startup models are waning, these side projects are not only attracting significant investment but also redefining what success looks like in the entrepreneurial landscape. Here, we explore five unexpected side projects that have propelled startups to new heights in 2023.

What Are Side Projects?

Side projects are small-scale initiatives initiated alongside a founder’s primary business efforts. Typically pursued with minimal resources, they allow founders to experiment, learn, and innovate without the full weight of a traditional launch. For many founders, side projects provide an avenue for creativity and customer engagement that a primary product may lack.

These projects matter now more than ever because they pave the way for agility in a volatile market. Much like how a sidecar can stabilize a motorcycle during turns, side projects lend a critical balance to a founder’s primary venture. The ability to pivot quickly based on real user feedback transforms these smaller initiatives into powerful growth catalysts.

How Side Projects Work in Practice

1. Dropbox: The Incremental Innovator

Dropbox started as a side project by Drew Houston in 2007 while he was a student at MIT. The product ran on a freemium model; users received basic storage for free, with the option to purchase more. Initially, the project was merely a solution for Houston’s file sharing dilemma. However, its user-friendly design led to a staggering 700 million users by 2023. This demonstrates the immense potential of incremental innovation—small, user-centered improvements can lead to massive user growth and sustained revenue.

2. Basecamp: A Lesson in Focused Development

Basecamp showcases how focusing on side projects can yield profitable outcomes. Originally a project management tool for 37signals to manage its work, the platform gradually evolved into a widely-adopted solution for teams worldwide. Jason Fried, co-founder and CEO, stated, “It’s often the side projects that teach us the most about customer needs.” By addressing their own internal challenges, 37signals created a product that generated enough revenue to achieve profitability within three years. This reflects how side projects can directly inform full-scale product development.

3. GitHub: From Hobby to Industry Standard

GitHub, which began as a side project in 2008 by Tom Preston-Werner, Chris Wanstrath, PJ Hyett, and Scott Chacon, has grown into the essential tool for millions of software developers. Initially built for sharing coding repositories, GitHub now boasts over 100 million repositories. Its success illustrates how side projects can evolve to fill critical gaps in existing markets and transform industry practices.

4. Instagram: A Simple Starting Point

Before exploding into a billion-dollar platform, Instagram was born out of a side project called Burbn, created by Kevin Systrom and Mike Krieger in 2010. Systrom’s original vision mixed elements of location-check-ins, games, and photo-sharing, but the team quickly recognized that users were most interested in the photo-sharing aspect. Within weeks of launching a simpler version focused solely on photos, Instagram garnered 25,000 users. The app was later acquired by Facebook for $1 billion in 2012, demonstrating how pivots born from side projects can lead to colossal outcomes.

5. Webflow: A No-Code Design Tool

Webflow started with a side project aimed at helping designers create responsive websites without needing extensive coding knowledge. The tool has evolved into a no-code platform that enables users to design, build, and launch responsive websites visually. Today, Webflow is used by 3 million+ users and is helping redefine the workflow for designers and developers alike, further emphasizing how side projects can invite significant industry innovation.

Top Tools and Solutions

To harness the potential of side projects effectively, founders should consider utilizing tools that improve efficiency and engagement. Here are some recommended solutions:

HighLevel — An all-in-one sales funnel, CRM, and automation platform that can streamline project management for startups.

Trainual — A business playbook platform that can guide founders in documenting their side project’s operations and strategy clearly.

Bouncer — An email verification tool that ensures precision in your outreach efforts during project pivots.

CloudTalk — A cloud-based business phone system that enhances communication with users involved in side projects.

WhatConverts — A lead tracking and marketing analytics platform that helps optimize user engagement during side projects.

Lusha — A B2B contact data and sales intelligence platform valuable for nurturing leads resulting from side project experiments.

Common Mistakes and What to Avoid

1. Overlooking Market Validation

The failures of numerous startups often hinge on the lack of potential market validation. A classic example is Color, a social networking and photo-sharing app launched in 2011, which raised $41 million based solely on its vision. Without real engagement or user feedback during development, the product failed to gain traction, eventually leading to its shutdown.

2. Sticking Rigidly to the Original Idea

Quibi, the short-form video platform that raised $1.75 billion, serves as a cautionary tale. Instead of pivoting or adapting its service based on user feedback, it stuck to its original idea of episodic content. Without adjusting to user preferences, Quibi quickly collapsed, highlighting the danger of being inflexible with a project.

3. Ignoring Resource Management

When Sidecar launched as a rideshare competitor in 2012, it faced operational challenges that stemmed from poor resource management between its primary and side projects. The lack of strategic focus led to its eventual downfall when it couldn’t compete with larger players like Uber and Lyft.

Where This Is Heading

The future of side projects appears promising and increasingly necessary in 2023—particularly as traditional business structures struggle to adapt. Entrepreneurs are continuously looking for agile methods to generate customer engagement and drive innovation. As market dynamics evolve, the ability to leverage unconventional ideas through side projects will likely define the next wave of successful startups.

FAQ

Q: What is a side project?
A: A side project is a small-scale initiative pursued alongside a founder’s main business efforts, typically with limited resources. These projects allow for experimentation and innovation, which can lead to significant insights and growth.

Q: How do I start a side project with my startup?
A: Starting a side project involves identifying a problem or opportunity that aligns with your primary business. Begin by brainstorming ideas, validating the concept with potential users, and developing a minimum viable product to gather feedback.

Q: What is the difference between a side project and a main business?
A: A side project is generally a smaller, more experimental initiative that does not require the same level of investment and focus as a main business. Main businesses are usually more structured and depend on consistent revenue, while side projects often allow for more flexibility and creativity.

Q: How much does it cost to launch a side project?
A: The cost to launch a side project can vary widely, depending on the scope and resources required. Many founders start with minimal financial investment, leveraging existing skills and tools to develop their ideas.

Q: How can I implement my side project more effectively?
A: To implement your side project efficiently, focus on setting clear goals, leveraging user feedback, and maintaining flexibility to pivot based on insights. Establishing a timeline and utilizing the right tools can also streamline your efforts.

Q: What are some common mistakes when managing side projects?
A: Common mistakes include overlooking market validation, sticking rigidly to the original concept, and poor resource management. It’s vital to remain adaptable and responsive to user feedback throughout the project lifecycle.

Q: What trends should I watch for in the side project landscape?
A: Trends include the rise of no-code and low-code platforms that facilitate rapid development, growing interest in remote collaboration tools, and an increasing focus on sustainability and social impact within side projects.

Q: What is the best tool for managing side projects?
A: A highly recommended tool for managing side projects is HighLevel, which offers an all-in-one sales funnel, CRM, and automation solutions tailored for startups.