Avoiding the legal glare when moonlighting

It’s a perennial dilemma for the wannabe entrepreneur – do you ditch the safety of regularly-paid employment for the uncertainty and initial austerity of starting your own business?

Increasingly, however, this question doesn’t result in a binary answer. Changing working practices and the ease and falling cost of starting up means that many new businesses are born while the founder has another job.

It’s a strategy that makes sense – instead of sacrificing a steady income; entrepreneurs are using that money to fuel their ventures while having the safety net of employment if things go wrong.

But what can go wrong when would-be entrepreneurs use other companies’ time and resources to pursue their own business interests?

For US entrepreneur Eric Simons, using another company’s facilities proved to be his big break.

Earlier this month, it was revealed 20-year-old Simons spent two months “squatting” at the offices of AOL in California.

Simons was granted access to the AOL offices when, after graduating from high school, he was selected to participate in the augural class of Silicon Valley incubator Imagine K12.

Imagine K12 is hosted by AOL, so Simons received a security badge as part of his involvement in the four-month program.

Simons also received $20,000 to work on his start-up ClassConnect, which helps teachers build lesson plans and share them with their students and other teachers.

By the end of the four months, Simons had spent the entire $20,000. Unable to afford rent, he decided to start living at the AOL building.

Because AOL failed to deactivate Simons’ security badge, he was able to sleep on the company’s couches, eat the company’s food and shower at the company’s gym.

His guise as a hard-working AOL employee held up for two months.

“The security guys would walk by and just assume I was working late, which, technically, I was. They thought, he’s just working really hard,” Simons told MSNBC.

Simons was finally detected by security – stripped of his security badge and forced to move out – but he went on to score $50,000 in funding from Ulu Ventures and venture capitalist Paul Sherer.

According to Ulu Ventures’ Clint Korver, tenacity and commitment are key attributes of a great entrepreneur, and Simons “has these in spades”.

But Peter Strong, executive director of the Council of Small Business of Australia, believes Simons’ behaviour was completely unacceptable, saying he put himself in a dangerous position.

“We all admire what he did in some way, but we cannot condone what is basically theft,” Strong says.

“The main consequence would be the company suing for illegal use of premises and resources, and taking all the profits and IP.”

Rather than pursue their own interests on another company’s watch, Strong suggests budding entrepreneurs join a co-working space such as The Hub, based in Melbourne.

“The Hub… is a great start-up place for people like this fellow – lots of support and help,” he says.

New spaces such as The Hub and Fishburners, its Sydney counterpart, offer entrepreneurs a more flexible and sociable solution than trying to build a business on their employers’ time.

Indeed, some employers are happy for their staff to operate from co-working spaces and even work on their own projects, provided it doesn’t interfere with work tasks.

Australian businesses may not yet be aping Google’s famous 20% rule – where employees can spend 20% of their time on their own projects – but things are slowly changing.

However, legal issues continue to be a regular barrier to any fledgling business owner who thinks they can use company time to develop their venture.