Can employee's pet projects help startup business's success?

As many of you know, companies like Google and 3M give the employees 20% of their time to work on something that really excite them the most.

I also been thinking maybe this can be a good strategy for a startup that can not give high salary. Has anyone applied this to their startup before? How did it went? Did employees create something that help the business's success with that 20% time? If it doesn't, is it a good approach to limit their pet projects to company's core business only or will that only turn employees down? Or is this a bad idea for a startup company?

Anyone care to share?

Before you get your product released you should be focused on getting something out so you can start making money, otherwise you are paying money for something that may or may not help the company.

Once you get something out and there are no major bugs to be worked on then giving people some time for projects is probably fine, but in the very beginning I think it is a bad idea.

The 20/80 rule in 3M and now Google is there to make sure that the company keeps innovating. That is much more important to an established company then it is to startups, since they are innovative by nature...

Also, startups are in most cases not self sufficient, and burn though the investors cash in order to get the product out. If that is the case, it seems wrong to spend 20% of that cash on things that won't get the company to generate cash any time soon.

Employees choose to work in a startup for different reasons, like the dynamic enviroment or the excitment of doing something that hasn't been done before. While having 20% of the time for pet projects would be nice, it is not what is going to convince them to work at a startup.... They can do that at a big company that seeks innovation.

It seems too expensive to pay 20% more money when you are a startup just for that.

As an early stage start-up all of your employees shoule be very focussed on getting your product out of the door.

Saying that once you start to mature, offering a 20% pet project plan can help in many ways, firstly it will help you attract the very best developers and secondly (the reason you asked the question) you may find some real gems that ultimately become part of your business.

In my opinion until you have 200+ staff, pet projects are a distraction rather then a benefit.

While I agree with both of the above posts, we are trying something different with our company that may prove relevant to your situation.

Currently, we are developing our main product, for which we do not have a release yet. Simultaneously, we are spending approximately 15% of our time developing a tool related to our core business that we will offer for free to drive traffic to our website. It is somewhat a chicken or the egg situation:

Do we:

A. Focus 100% on our preliminary product to develop a release candidate as quickly as possible, or

B. Spend some time developing a side product which will drive traffic to our website and help us build a community, which will greatly facilitate the ease of selling our main product when the time is ready.

Since we don't have any time constraints and we are not running out of bootstrapped money (yet), we have chosen to generate awareness by creating and giving away a free tool. This may be something that does not work well for everyone; we operate within a niche environment and hope that it will get us noticed by the right people.

I apologize if my answer is open-ended. This is because, as I write this, I am unsure what will happen in our situation. I think the key is to analyze your specific variables:

• Time
• Cost
• Purpose of new product development

I will update once we have released the tool and let you know if that has helped us.