4 ms·

"If every developer was to focus on the very achievable goal of building a lifestyle/micro business – the entire house of cards would crumble." If that happene

by pg 16y ago

"If every developer was to focus on the very achievable goal of building a lifestyle/micro business – the entire house of cards would crumble." If that happened, the whole world would crumble, because we wouldn't have any technology bigger than could be built by lifestyle businesses. Anyone who wanted to build a lifestyle business on the Internet, for example, would find that there was no Internet. You wouldn't have servers or routers or clients or backbones or local cable.

richcollins 16y ago
Not if you view a lifestyle business as a lilypad for something larger. But even better, once you have the knowledge that comes along with building a succesful $10k/month business, you also posses the exact same knowledge that it takes to build a $100k/month business.
- nupark 16y ago
  I run what would likely be classed as a lifestyle business (though I prefer to think of it as a large business in the process of bootstrapping). The more people there are running lifestyle businesses, the bigger the 'lillypad'. With a sufficiently large lifestyle-driven economy, we could move away from the VC model where very few people have the majority of the capital necessary to fund big ideas. We're already moving to a world where industrial costs continue to decrease, small businesses specialize in providing specific services (such as manufacturing), and computers and machines provide enormous leverage. Examples range from Amazon EC2 to affordable, low-scale manufacturing of injection molded plastics and cheap, on-demand PCB manufacturing. On the subject of building "big things", it's worth reading this blog post on how the Glif (http://www.theglif.com/ http://www.theglif.com/) was created by a small team of two, funded by Kickstarter, from design to manufacturing: http://www.therussiansusedapencil.com/post/2794775825/idea-to-market-in-5-months-making-the-glif http://www.therussiansusedapencil.com/post/2794775825/idea-t... In comparison to pg's example of a router, it is a small thing, but it's a great demonstration of how the bar is being lowered, and what was only accessible to large, capital-rich entities is now available to two guys with limited initial capital.
- pg 16y ago
  If it worked well to self-fund giant companies using the income from small ones, we should see instances of it happening in the wild. There is nothing to prevent that happening now. And yet it doesn't seem to happen. Few if any of the big technology companies grew that way. It seems like if you're good what happens is that your initial lifestyle business just grows bigger. E.g. as has happened to 37signals. But 37signals is not Google or Amazon.
  - nupark 16y ago
    If it worked well to self-fund giant companies using the income from small ones, we should see instances of it happening in the wild. We don't have much of a history to work from, and the majority of the enabling tools available to us simple did not exist prior to or during the emergence of the current economic and business environment. I think developments such as Kickstarter provide a glimmer of where things are headed.
  - tptacek 16y ago
    One reason why you wouldn't expect to see this so often in the wild is that by the time you get to be as successful as 37signals, the drive to make speculative bets on shoot-the-moon business plans is diminished. Presumably after your second supercar, you don't so much feel like gambling people's jobs on a Google-killer. Successful businesspeople may not be risk-averse; they're happy to start electric car companies for the joy of it. Successful businesses, on the other hand, don't think like that.
    - ScottBurson 16y ago
      Yes, I think this is exactly right. The pattern you'd expect to see wouldn't be a small business spawning a large one; it would be one of the principals of the small business cashing out and leaving to start something that eventually got larger. Ah, but this reminds me. I know three people who have made $500M or more on their earlier businesss who have cashed out and gone on to found new startups. Only one of the three funded the startup entirely out of his own holdings; the other two have other investors involved. I imagine the latter two think that they get more value (advice, connections, etc.) from these other investors (who I think include VC firms) than they give up in equity. FWIW, the business funded entirely by the one founder eventually failed (I worked there for several years). Arguably, this was a failure of marketing, as we had a small number of wildly enthusiastic customers that never became a large number. Also arguably, had experienced VC firms been in on the deal, they would have made sure that the marketing was done competently. So I'm suggesting that if you want to start something that you hope will get large, you may be well advised to involve professional VC even if you don't need the money.
sep 16y ago
I think he's trying to say that venture capital isn't the only route to typical entrepreneurial goals; such as self-fulfillment, being your own boss and a comfortable life. Note that he doesn't say that every typical goal could be satisfied by a lifestyle business (goals such as changing the world in a matter of years, or making loads of money).
jdp23 16y ago
It doesn't have to be every developer making that decision. The house of cards potentially starts to crumble once it's a big enough minority of developers -- and a chunk of the media starts to say "hey that's really a lot more interesting than the entreporn".
Eliezer 16y ago
I'll carry your data packets for $50!
- Vivtek 16y ago
  I'll do it for $40.
  - danssig 16y ago
    I'll do it for $60.
wingo 16y ago
Free software is a third perspective which uses other forms of capital than Amazon does. It's not as fast as a targeted, talented, VC-backed firm, but it does get there; so I'm inclined to interpret the "omg-no-internet" sentiment as hyperbole, even without mentioning public funding sources like academia.
deleted 16y ago
[deleted]
A1kmm 16y ago
Except that instead of a big business doing those things, there could be a network of small businesses. Each business does a small part of the whole, buying and selling what they need from other businesses. The reason these networks don't come into existence is the problem of how an interdependent network gets bootstrapped. For example, suppose that gadgets are currently made by a large corporation, Acme, because making a gadget requires designing and making a widget, a vidget, and an xidget, a design for how to put the bits together, and the final assembly, and that is too much for a lifestyle business, and Acme doesn't buy or sell the parts as the whole process is vertically integrated. If there were widgets, vidgets, and xidgets on the market, and designs for building gadgets from them on the market, then there could be lifestyle business building gadgets - and likewise for any other part of the supply chain being removed. However, without any lifestyle gadget makers, there will be no demand for widgets (unless they are useful in another industry). Maybe there is a business model for helping to bring a network of interdependent companies into existence simultaneously.
- taphangum 16y ago
  It's unrealistic and will never happen. The market, overtime, always comes back to its natural state. Which is, 'Survival of The Biggest'.
  - olalonde 16y ago
    "Survival of the fittest", you mean. There are plenty examples of big companies that failed (or would have failed wasn't it for government intervention).
    - taphangum 16y ago
      You're right. By biggest i mean profitability, reveneue, etc. Which is, for a company, an indicator of their 'fitness'. I'm not talking about the loss making whales that had to get bailed out and for whom we are all now paying for..
      - 16y ago
mattm 16y ago
The "if everyone did this" argument is such a poor way to argue a point. I'm sure you would find the vast majority of people think being a doctor is a good thing - you help people, you're well paid and respected. Yet, if everyone was a doctor, everything would crumble. There are many different paths in life. Our system as it now stands needs both large and small businesses. One cannot co-exist without the other.
- nikcub 16y ago
  > The "if everyone did this" argument is such a poor way to argue a point. the op used the same argument
kragen 16y ago
> we wouldn't have any technology bigger than could be built by lifestyle businesses. Anyone who wanted to build a lifestyle business on the Internet, for example, would find that there was no Internet. I think you're wrong, for two reasons. First, this same argument used to be used to explain why long-distance telephone service is a natural monopoly — because if two people are using different long-distance phone carriers, then they wouldn't be able to talk to each other! And it's really true, in some cases. There are still developed countries where you can't send an SMS from one mobile carrier to another in the same city. But it's also obviously false in general. Second, more generally, any relationship that is structured as a coworker relationship within a firm could also, in theory, be structured as a commercial transaction between individuals. http://en.wikipedia.org/wiki/The_Nature_of_the_Firm http://en.wikipedia.org/wiki/The_Nature_of_the_Firm is a Nobel-winning piece of work about why that doesn't happen; it introduced the idea of "transaction costs". But it might turn out that transaction costs can be reduced to a low enough level that services that formerly required big businesses to provide them could be provided by "lifestyle businesses".
jv22222 16y ago
I am totally at odds with what PG has said here. I said - "If every developer was to focus on the very achievable goal of building a lifestyle/micro business – the entire house of cards would crumble." I stand by that. To expand, IMHO the current "chasing after the golden ticket of investment" model would crumble. But we humans are a very diverse bunch. It would be impossible for a few of us NOT to notice large scale problems and go after them. Therefore, out of the masses of self driven "no-investment" entrepreneurs - there would be a few that would create the next internet, or cisco, or cable. Under my Utopian ideal there's no reason why anyone couldn't seize and capitalize on big ideas as they arose. The only difference is that VC's (and dare I say organizations like YC) wouldn't be the hub of the entrepreneurial universe that they now seem to be. Of course there would most likely be a new hub of sorts. I'm not sure what that would look like. Although a while back I did have some specualtion. http://justinvincent.com/page/100/how-to-trump-microsoft-google-twitter-facebook http://justinvincent.com/page/100/how-to-trump-microsoft-goo... Also, if I'm not mistaken, isn't the "lifestyle business" model the exact route that PG took to success? He built Webgen/Viaweb an app that solved a problem for people that were willing to pay money for it. He iterated on it, built up the revenue, and then had the good fortune of selling it to Yahoo. (I'm not even sure if Viaweb had investment did it? Anyone know?)
- nikcub 16y ago
  if developers suddenly started acting as a cartel, all that would happen is non-developers would become developers to fill the demand in building new businesses nobody is saying anything against lifestyle businesses or micro businesses or whatever you call it. the argument is about your claim that capital investment isn't required (although self-funding is still an investment) and that we would have the same world today without the capital markets or the media, just if developers went and got on with it outside capital expedites growth and development. if you don't do it, the next guy will, that is how a free market works. our entire civilization has benefited from this - how would microprocessors have even been invented, designed and manufactured as a non-funded business, let alone kept up with moores law?
- shadowsun7 16y ago
  Viaweb had investment. And it wasn't a lifestyle business - there was a terrifying bit in the middle where they weren't profitable. Plus the investors tried to screw them over multiple times, right up to the point where they got acquired. You really do need to read up on Viaweb's history. My counter-argument to your post can be summed up in one question: name me one lifestyle business that is consumer Internet, of sufficient scale so as to make the world a better place. Almost every startup in the 37signals's Bootstrapped, Profitable & Proud series are in enterprise. Consumer Internet companies (which are what blogs like Techcrunch obsess over) have different rules, different scale.
moomba 16y ago
I'm skeptical about the statement that you quoted. I don't really have the facts to back up my assertion, but I believe we will always have large companies. If the comment is meant to mean that if everyone had the entrepreneurial drive the whole house of cards would crumble down, I still think that is misguided. The distribution of the success of businesses is somewhat similar to the distribution of programming skill among developers. There are many that are in the low mid range. There are very few that are light years ahead of 90% of the other developers.
ecaradec 16y ago
Nobody is building big companies to prevent the world to crumble. They are build because it's possible for their owner, because their market is big enough, because of money, and because of the fun building them. If there were only lifestyle business, investors would simply change the way they invest. They'll begin seeking lifestyle business that could explode with extra investment. Entreprenors would be probably get better terms as they'd be in a better position to negociate, but there would still be big companies.
deleted 16y ago
[deleted]

by pg 16y ago

richcollins 16y ago

Not if you view a lifestyle business as a lilypad for something larger. But even better, once you have the knowledge that comes along with building a succesful $10k/month business, you also posses the exact same knowledge that it takes to build a $100k/month business.

nupark 16y ago
I run what would likely be classed as a lifestyle business (though I prefer to think of it as a large business in the process of bootstrapping). The more people there are running lifestyle businesses, the bigger the 'lillypad'. With a sufficiently large lifestyle-driven economy, we could move away from the VC model where very few people have the majority of the capital necessary to fund big ideas. We're already moving to a world where industrial costs continue to decrease, small businesses specialize in providing specific services (such as manufacturing), and computers and machines provide enormous leverage. Examples range from Amazon EC2 to affordable, low-scale manufacturing of injection molded plastics and cheap, on-demand PCB manufacturing. On the subject of building "big things", it's worth reading this blog post on how the Glif (http://www.theglif.com/ http://www.theglif.com/) was created by a small team of two, funded by Kickstarter, from design to manufacturing: http://www.therussiansusedapencil.com/post/2794775825/idea-to-market-in-5-months-making-the-glif http://www.therussiansusedapencil.com/post/2794775825/idea-t... In comparison to pg's example of a router, it is a small thing, but it's a great demonstration of how the bar is being lowered, and what was only accessible to large, capital-rich entities is now available to two guys with limited initial capital.
pg 16y ago
If it worked well to self-fund giant companies using the income from small ones, we should see instances of it happening in the wild. There is nothing to prevent that happening now. And yet it doesn't seem to happen. Few if any of the big technology companies grew that way. It seems like if you're good what happens is that your initial lifestyle business just grows bigger. E.g. as has happened to 37signals. But 37signals is not Google or Amazon.
- nupark 16y ago
  If it worked well to self-fund giant companies using the income from small ones, we should see instances of it happening in the wild. We don't have much of a history to work from, and the majority of the enabling tools available to us simple did not exist prior to or during the emergence of the current economic and business environment. I think developments such as Kickstarter provide a glimmer of where things are headed.
- tptacek 16y ago
  One reason why you wouldn't expect to see this so often in the wild is that by the time you get to be as successful as 37signals, the drive to make speculative bets on shoot-the-moon business plans is diminished. Presumably after your second supercar, you don't so much feel like gambling people's jobs on a Google-killer. Successful businesspeople may not be risk-averse; they're happy to start electric car companies for the joy of it. Successful businesses, on the other hand, don't think like that.
  - ScottBurson 16y ago
    Yes, I think this is exactly right. The pattern you'd expect to see wouldn't be a small business spawning a large one; it would be one of the principals of the small business cashing out and leaving to start something that eventually got larger. Ah, but this reminds me. I know three people who have made $500M or more on their earlier businesss who have cashed out and gone on to found new startups. Only one of the three funded the startup entirely out of his own holdings; the other two have other investors involved. I imagine the latter two think that they get more value (advice, connections, etc.) from these other investors (who I think include VC firms) than they give up in equity. FWIW, the business funded entirely by the one founder eventually failed (I worked there for several years). Arguably, this was a failure of marketing, as we had a small number of wildly enthusiastic customers that never became a large number. Also arguably, had experienced VC firms been in on the deal, they would have made sure that the marketing was done competently. So I'm suggesting that if you want to start something that you hope will get large, you may be well advised to involve professional VC even if you don't need the money.

sep 16y ago

I think he's trying to say that venture capital isn't the only route to typical entrepreneurial goals; such as self-fulfillment, being your own boss and a comfortable life. Note that he doesn't say that every typical goal could be satisfied by a lifestyle business (goals such as changing the world in a matter of years, or making loads of money).

jdp23 16y ago

It doesn't have to be every developer making that decision. The house of cards potentially starts to crumble once it's a big enough minority of developers -- and a chunk of the media starts to say "hey that's really a lot more interesting than the entreporn".

Eliezer 16y ago

I'll carry your data packets for $50!

Vivtek 16y ago
I'll do it for $40.
- danssig 16y ago
  I'll do it for $60.

wingo 16y ago

Free software is a third perspective which uses other forms of capital than Amazon does. It's not as fast as a targeted, talented, VC-backed firm, but it does get there; so I'm inclined to interpret the "omg-no-internet" sentiment as hyperbole, even without mentioning public funding sources like academia.

deleted 16y ago

[deleted]

A1kmm 16y ago

Except that instead of a big business doing those things, there could be a network of small businesses. Each business does a small part of the whole, buying and selling what they need from other businesses. The reason these networks don't come into existence is the problem of how an interdependent network gets bootstrapped. For example, suppose that gadgets are currently made by a large corporation, Acme, because making a gadget requires designing and making a widget, a vidget, and an xidget, a design for how to put the bits together, and the final assembly, and that is too much for a lifestyle business, and Acme doesn't buy or sell the parts as the whole process is vertically integrated. If there were widgets, vidgets, and xidgets on the market, and designs for building gadgets from them on the market, then there could be lifestyle business building gadgets - and likewise for any other part of the supply chain being removed. However, without any lifestyle gadget makers, there will be no demand for widgets (unless they are useful in another industry). Maybe there is a business model for helping to bring a network of interdependent companies into existence simultaneously.

taphangum 16y ago
It's unrealistic and will never happen. The market, overtime, always comes back to its natural state. Which is, 'Survival of The Biggest'.
- olalonde 16y ago
  "Survival of the fittest", you mean. There are plenty examples of big companies that failed (or would have failed wasn't it for government intervention).
  - taphangum 16y ago
    You're right. By biggest i mean profitability, reveneue, etc. Which is, for a company, an indicator of their 'fitness'. I'm not talking about the loss making whales that had to get bailed out and for whom we are all now paying for..
    - 16y ago

mattm 16y ago

The "if everyone did this" argument is such a poor way to argue a point. I'm sure you would find the vast majority of people think being a doctor is a good thing - you help people, you're well paid and respected. Yet, if everyone was a doctor, everything would crumble. There are many different paths in life. Our system as it now stands needs both large and small businesses. One cannot co-exist without the other.

nikcub 16y ago
> The "if everyone did this" argument is such a poor way to argue a point. the op used the same argument

kragen 16y ago

> we wouldn't have any technology bigger than could be built by lifestyle businesses. Anyone who wanted to build a lifestyle business on the Internet, for example, would find that there was no Internet. I think you're wrong, for two reasons. First, this same argument used to be used to explain why long-distance telephone service is a natural monopoly — because if two people are using different long-distance phone carriers, then they wouldn't be able to talk to each other! And it's really true, in some cases. There are still developed countries where you can't send an SMS from one mobile carrier to another in the same city. But it's also obviously false in general. Second, more generally, any relationship that is structured as a coworker relationship within a firm could also, in theory, be structured as a commercial transaction between individuals. http://en.wikipedia.org/wiki/The_Nature_of_the_Firm http://en.wikipedia.org/wiki/The_Nature_of_the_Firm is a Nobel-winning piece of work about why that doesn't happen; it introduced the idea of "transaction costs". But it might turn out that transaction costs can be reduced to a low enough level that services that formerly required big businesses to provide them could be provided by "lifestyle businesses".

jv22222 16y ago

I am totally at odds with what PG has said here. I said - "If every developer was to focus on the very achievable goal of building a lifestyle/micro business – the entire house of cards would crumble." I stand by that. To expand, IMHO the current "chasing after the golden ticket of investment" model would crumble. But we humans are a very diverse bunch. It would be impossible for a few of us NOT to notice large scale problems and go after them. Therefore, out of the masses of self driven "no-investment" entrepreneurs - there would be a few that would create the next internet, or cisco, or cable. Under my Utopian ideal there's no reason why anyone couldn't seize and capitalize on big ideas as they arose. The only difference is that VC's (and dare I say organizations like YC) wouldn't be the hub of the entrepreneurial universe that they now seem to be. Of course there would most likely be a new hub of sorts. I'm not sure what that would look like. Although a while back I did have some specualtion. http://justinvincent.com/page/100/how-to-trump-microsoft-google-twitter-facebook http://justinvincent.com/page/100/how-to-trump-microsoft-goo... Also, if I'm not mistaken, isn't the "lifestyle business" model the exact route that PG took to success? He built Webgen/Viaweb an app that solved a problem for people that were willing to pay money for it. He iterated on it, built up the revenue, and then had the good fortune of selling it to Yahoo. (I'm not even sure if Viaweb had investment did it? Anyone know?)

nikcub 16y ago
if developers suddenly started acting as a cartel, all that would happen is non-developers would become developers to fill the demand in building new businesses nobody is saying anything against lifestyle businesses or micro businesses or whatever you call it. the argument is about your claim that capital investment isn't required (although self-funding is still an investment) and that we would have the same world today without the capital markets or the media, just if developers went and got on with it outside capital expedites growth and development. if you don't do it, the next guy will, that is how a free market works. our entire civilization has benefited from this - how would microprocessors have even been invented, designed and manufactured as a non-funded business, let alone kept up with moores law?
shadowsun7 16y ago
Viaweb had investment. And it wasn't a lifestyle business - there was a terrifying bit in the middle where they weren't profitable. Plus the investors tried to screw them over multiple times, right up to the point where they got acquired. You really do need to read up on Viaweb's history. My counter-argument to your post can be summed up in one question: name me one lifestyle business that is consumer Internet, of sufficient scale so as to make the world a better place. Almost every startup in the 37signals's Bootstrapped, Profitable & Proud series are in enterprise. Consumer Internet companies (which are what blogs like Techcrunch obsess over) have different rules, different scale.

moomba 16y ago

I'm skeptical about the statement that you quoted. I don't really have the facts to back up my assertion, but I believe we will always have large companies. If the comment is meant to mean that if everyone had the entrepreneurial drive the whole house of cards would crumble down, I still think that is misguided. The distribution of the success of businesses is somewhat similar to the distribution of programming skill among developers. There are many that are in the low mid range. There are very few that are light years ahead of 90% of the other developers.

ecaradec 16y ago

Nobody is building big companies to prevent the world to crumble. They are build because it's possible for their owner, because their market is big enough, because of money, and because of the fun building them. If there were only lifestyle business, investors would simply change the way they invest. They'll begin seeking lifestyle business that could explode with extra investment. Entreprenors would be probably get better terms as they'd be in a better position to negociate, but there would still be big companies.

deleted 16y ago

[deleted]