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, similar to insights discussed in articles like 5 Reasons stockARmobile is Revolutionizing Inventory Management for SMEs.
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, much like 5 Ways EachLabs’ AI Logo Maker Disrupts Design for Startups illustrates disruption through innovation.
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. This aligns with trends in side project success that resonate with findings in articles such as Unlocking Control: How SaaSMail is Redefining Email for SaaS Teams on Cloudflare Workers.
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, reflecting the spirit of innovation seen in 5 Startups Defying the Hype: Why LLMs Are More Than Just a Buzzword.
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:
Constant Contact — Email marketing and automation platform.
Syllaby — Create AI videos, AI voices, AI avatars, and automate your social media marketing.
InstantlyClaw — AI-powered automation platform for lead generation, content creation, and outreach scaling. Perfect for scaling side projects.
Instapage — Create high-converting landing pages fast using an AI-powered page builder.
Typeform — Interactive form and survey builder to gather customer feedback effectively.
Amplemarket — AI sales automation and lead generation platform that streamlines outreach for your side projects.
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, as founders leverage smaller initiatives to navigate market complexities and validate ideas in real time.
FAQ
Q: What is a side project in the context of startups?
A: A side project is a small-scale initiative that entrepreneurs conduct alongside their primary business efforts. These projects allow for experimentation and creativity without the resource commitment of a full-scale launch.
Q: How can startups effectively manage side projects?
A: Startups should set clear objectives and allocate dedicated resources to their side projects to ensure efficient management. Regular feedback loops and agile methodologies can also enhance project development.
Q: How do side projects compare to traditional startup launches?
A: Side projects typically require fewer resources and can pivot quickly based on user feedback, making them more adaptable than traditional startup launches, which often involve significant upfront investment.
Q: What is the cost factor of pursuing a side project?
A: The costs associated with side projects can vary greatly, often depending on the resources needed. They can potentially be more cost-effective as they generally require less funding and can utilize existing infrastructure.
Q: What are some advanced strategies for implementing side projects?
A: Founders can leverage data analytics and customer feedback tools to inform the direction of their side projects. Iterative testing and scaling can transform initial prototypes into sustainable business models.
Q: What common mistakes do entrepreneurs make with side projects?
A: Many entrepreneurs may overlook the importance of market validation, leading to uninformed decisions. Others may cling too tightly to their initial ideas without adapting to user feedback, which can stifle innovation.
Q: What trends are emerging around side projects in entrepreneurship?
A: Increasingly, entrepreneurs are finding success through agile methodologies, prioritizing small iterative changes, and leveraging technological tools that facilitate rapid deployment and user interaction.
Q: What are the best tools or resources for managing side projects?
A: Tools like Constant Contact for email marketing and Syllaby for content automation are great resources to streamline engagement and outreach efforts for side projects.