Building a $1M ARR portfolio of side hustles with a full-time job

Andrew Pierno has a portfolio of companies bringing in close to $1M per year total, but he isn't taking a salary and he still has a full-time job.

I caught up with him to understand why. Let's take a peek at his finances. 👇

Playing the long game (on steroids)

Andrew has a full-time job at a small public company, where he is the head of engineering in the advanced research projects division.

He also has a portfolio of side hustles that should hit 7 figures in revenue next year if the economy doesn't go south.

The idea of keeping your day job while your projects are making that kind of money may seem a little crazy, but Andrew's playing the long game. And it's paying off. He says the longer he waits, the bigger the businesses will get.

💰 "I love starting things, and I can operate, but there are people who are better than me at it and who enjoy it more than I do. I am playing long-term games with long-term people. " —Andrew

Instead of taking money now, he'll be paid in the form of long-term capital gains at an exit event. He says this is way better tax-wise than taking a salary.

It's worth noting, though, that he does take a small amount out each month, which he uses to pay his MBA tuition at UCLA. More on that later.

There's one other reason that he's keeping his day job: He likes it.

He says it's a bigger company with bigger problems and more resources,so he gets visibility into things that he otherwise wouldn't.

💰 "I love startups but sometimes it feels like I’m playing in a small sandbox and I want to be in the major leagues." —Andrew

The numbers

Let's take a look at what he's bringing in:

• Total ARR: $972k/yr
• XO Capital revenue: $57k MRR
• Cold Email Studio: $18k MRR
• Super Send: $6k MRR
• Full-time job: Below market base
• Previous AI exit: A "personally meaningful" amount (enough to buy a house but not to retire)

He wasn't able to give me numbers for the AI exit, but he built and sold it within a year. By 7 months in, he was making $20k MRR and he actually had no intention of selling it, but then he saw a big number and said "yes".

Here are his total business expenses for five of XO's companies. He didn't disclose the others.

• Consulting: ~$9k/mo
• Contractors: ~$5k/mo
• Google Cloud: ~$6.5k/mo
• Opex: ~$5k/mo
• Other: ~$1k/mo

It's also worth noting that, yes, they're on target to hit 7 figures next year, but they've put in $600k to get there. As Andrew says it, XO is buying revenue.

Cold Email Studio's (productized services) expenses:

• Contractors: ~14k/mo

Super Send's expenses:

• Contractors: $1.5k-$2.5k/mo
• Hosting: $1k/mo
• Services: ~$300/mo

After paying his tuition, his co-founders' salaries, and the expenses, all the profit is being reinvested into growth.

💰 "Frankly there is still not much profit left over at the end of the month. SaaS companies trying to grow are not cashflow-ey." —Andrew

And here are his personal expenses:

• Mortgage: $7.4k/mo
• Credit card bill (i.e. everything else): ~$3k/mo

From operating company to holding company

Andrew makes sure that each project is its own LLC with separate bank accounts.

For the bank accounts, he works with Mercury. He says they've been great to him and he can easily swap between accounts (of which he has many). It's also easy to create and cancel cards, which he likes.

XO is not a holding company, by the way. It's an operating company. Andrew says the difference is that his co-founder, Danny, operates the business and hires people to work with him. All the partners are involved in the day-to-day. A holding company would mean hiring someone else to do what Danny does.

💰 "Over the next 5-10 years we will go from an op co to a hold co but we need to get a few more wins under our belts." —Andrew

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Diversification is overrated

Andrew typically invests 1/3 of his cash into XO, 1/3 into stocks, and 1/3 into his house.

As for the stocks, he has no interest in a diversified portfolio, despite conventional wisdom.

💰 "Most of the people you see who are super wealthy started with unbelievably concentrated portfolios. It was usually one thing. Literally one. Diversification is fine for preservation (and yes, of course, compound interest), but concentration leads to outsized returns (and risk!)." —Andrew

That doesn't mean he isn't diversified at all — he is heavily invested in index funds like Vanguard Information Technology (VGT). He just doesn't diversify his stock portfolio. That's because he only invests in what he knows: tech.

💰 "I don’t hedge my stock portfolio, I don’t have collars on any of my trades. I don’t mess around with options much. It’s just easier for me to focus on my businesses and get a marginal customer than it is to constantly be monitoring options. Hence why I’m mostly in companies I know and like and the rest is in index funds." —Andrew

But take all this with a grain of salt. Andrew says that he's a terrible investor because he just invests and leaves the money there forever.

Linear acquisitions

While he might call himself a terrible investor, his acquisitions are killing it.

To get XO up and running, Andrew and his two cofounders each put in $7.5k to buy their first company, which was bringing in $550 MRR at the time.

💰 "We started super super small and you can too!" —Andrew

The second acquisition wasn't much bigger. The third acquisition was barely 6 figures. The size of the businesses they acquired increased linearly over time, with the first 10 coming from their own personal cash.

But they ran out of money after buying #10, so they created a fund and raised $550k for their most recent acquisition, Journey.io. They put in 10% of the capital themselves and they have a 20% carry on the fund.

They did this as an experiment. They could have easily just waited until they sold a company before buying another one, but they wanted to see whether this approach feels good. If it does, then they could potentially raise a $10-$25M fund in the future to buy larger businesses. This would then change them from an operating company to a holding company, as mentioned above.

Other than the fund and $150k still owed in seller financing, they own 100% of the portfolio.

We're talking a lot about XO here, but it's worth noting that Email Studio and Super Send weren't bought or funded; they were both bootstrapped.

Investing in himself

Another thing Andrew invests in is education. He doesn't pay himself a salary, but he makes sure his MBA is taken care of.

💰 "Lots of people now are anti-college, anti-masters, anti-MBA. I view it as an insurance policy. I also enjoy it." —Andrew

All up, he'll be spending about $140k over 2.5 years. But since this is a business expense, it's pre-tax dollars,

He says he doesn't know if it'll pay off. But it could mean the difference between him getting a job/investment and someone else getting it. Plus, he says he's meeting a lot of awesome, talented people. So, worst case, he learns a lot and makes some friends.

Budgeting alone won't make you rich

Andrew admits he isn't a great saver. He doesn't budget. He doesn't really see the point.

💰 "I ignore the rich data poor dad guy. I’m not going to get rich saving on lattes." —Andrew

Money, agency, and control

💰 "Money = Freedom. It's agency and control." —Andrew

Andrew graduated college during the Great Recession. It was not an easy time to graduate. He saw people losing jobs and dropping out of school because of it.

His takeaway from the experience was that no one was going to come and save him. He had to figure it out himself.

And that's where all of this came from.

💰 "When push comes to shove in a capitalist economy, people lose their jobs regardless of skill, etc. Long term, I don’t want to be dependent on anyone else for my financial well-being." —Andrew

So he learned how to make money. And he learned how to not work too hard while doing it.

💰 "Washing machines work hard. “Work hard” doesn’t really capture what I’m going for. Of course, that’s part of it, but the older I get the more I focus on what to work on. And even more recently, who I can hire that’s better than me." —Andrew

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You can check out Andrew on LinkedIn and X. Or keep up to date on the latest from XO.

Please note that the above are opinions. This is meant for informational purposes only. It is not intended to be financial advice.

And if you'd like to be featured as a guest in a future interview for this series, let me know in the comments!