9 ms·

Lifestyle Startups Stigma

74 points by hristiank 15y ago

rokhayakebe 15y ago
I agree with you. However sometimes it feels as if building a lifestyle business takes the same effort (in the beginning) as building a large business. For example think about all the small web development companies with 3-6 people in their teams. That is a lifestyle business. On the other end think of Instagram, 10M users, 6 people. Or Weebly, millions of sites, 3-4 people. Or Craigslist hundreds of million in revenue, 30ish people.
- dmor 15y ago
  I totally agree with you, they take the same effort at the beginning. Because of that, I think a lot of people figure they might as well swing for the fences.
  - Zimahl 15y ago
    I think the point is that it's fine to swing for the fences, just make sure you don't skip other 'lifestyle' opportunities in the mean time. You may never get your homerun pitch, nothing wrong with a base hit. You watch enough pitches go by, you end up striking out.
dmor 15y ago
I think this stigma exists because on some level, sometimes, when things suck at your high growth crazy startup (even if its just a bad day or week) you think, "man I wish I ran a skate shop in Huntington Beach with an online store". And it stings to see other people doing that. It's a lot harder to delay gratification and swing for the fences, not just intellectually harder but emotionally harder. Sometimes I feel like my friends doing lifestyle businesses just don't understand what I'm going through, and other times they give me really bad advice that would be great if I was building a company to operate like their's but doesn't do anything for me at scale. My family business is a lifestyle business in finance, I worked there from age 14 - 20, and its a totally different animal from a startup. Because it isn't a startup, its a self-sustaining business. Was after 12 months. So it makes me think a lifestyle startup is a myth - these aren't startups, they're small businesses trying to dine out on the glory of the name "startup" without takin the risk. What do you think?
- gujk 15y ago
  Most startups are flights of fancy trying to dine out on the glory of the name "startup". Let's all get back to work trying to create real value for customers and enjoying our world, and not posture for social rank among friends and strangers.
- generalk 15y ago
  > these aren't startups, they're small businesses trying to > dine out on the glory of the name "startup" without takin > the risk The only difference between a "lifestyle" business and a "high growth crazy startup" is that in one, you're betting small amounts over a long period of time. If one of your bets fails, you're not broke. In a more VC-style startup, you're betting most everything up front. Pardon the gambling metaphor, but this allows you to play higher-stakes games, but this also means that when you lose, you lose your whole roll. They're all businesses, the founders are all entrepreneurs. We're all in this together.
- viscanti 15y ago
  I disagree. You need to solve a problem you're passionate about. Not all problems are BIG problems that require massive scale or raising money. Lifestyle startups aren't a myth. They're just working on a different scale of problem than the VC backed startup. I don't know that there's anything inherently better about either, but treating a lifestyle startup as a scalable startup, or vice versa is a mistake. They're separate entities, with different goals. Each has it's pros and cons.
  - dmor 15y ago
    some businesses are just businesses, not startups, and thats ok.
    - viscanti 15y ago
      I suppose our definition of "startup" differs. It seems a startup can only be a startup if it's attempting to solve a problem that requires significant upfront capital and scaling. I disagree with that view. For me, a startup is a company exploring the solution to a problem. That can be a BIG problem and that requires significant scaling, or it can be a smaller problem. Once that solution is found, and can be replicated easily, it's no longer a startup. The question is, how long can a startup be a startup? I'd argue that as soon as any scaling is involved, it's no longer a startup and it's just a business. Startup implies that it's the start. Lifestyle businesses and regular businesses can both be guilty of claiming to be a startup long after they've become "regular" businesses. When it comes down to it, they're all just businesses, but it can be helpful to have terms to distinguish the scale of the business. If you feel that lifestyle businesses and lifestyle startups are diminishing the prestige of startups, then you're probably in business for the wrong reason. That smacks of too much ego and too little passion for solving the problems you should be solving.
nmcfarl 15y ago
So what I don’t get is the hate. I run a small crowdsourcing biz, (that was pretty risky to start btw, it ate both the founders life savings and more), and I’ve once or twice been told I don’t belong at various startup/hacker meet-ups. Or to "start a real company." From my perspective the companies are the same size, the tech is the same, the risk to personal wealth is if anything greater, and heck sometimes the market is the exact same. Why I can’t talk about these problems with people just 'cause I didn’t take funding mystifies me. Of course, not for long, as generally the people who make these comments are just rude, and not the kinds of people that I’m going to think too much about. Still in the moment it kinda stings.
davidhansen 15y ago
I wouldn't call it a stigma. I'd call it a general disinterest. It's the same kind of disinterest that follows bootstrapped businesses or any business that chooses to make money instead of burning it. As the cofounder of a bootstrapped business myself, I'm no fan of the shadow we operate in, but I understand it. The story of a company that doesn't have the luxury of positive cash flow to fall back on when things get tough is fundamentally more risky, and therefore exciting. You get larger magnitude successes and a larger number of failures, which is far more dramatic. And narratives with more risk, more reward, and higher drama, are the kind of narratives human beings love.
- dmor 15y ago
  "narratives with more risk, more reward, and higher drama, are the kind of narratives human beings love" I love human beings.
  - dmor 15y ago
    Ummm downvoter I wasn't being snarky, I genuinely think this is part of what makes humans awesome.
- PaulHoule 15y ago
  more to the point, investors don't care. If the average person could work 20 hours a week and make $15,000 a month, they'd feel pretty rich. (even at 60 hours a week) If you want to make somebody else rich, you've got to make a lot more money, particularly if the person is an investor who's already rich.
ctdonath 15y ago
An odd insight to "lifestyle startups" I had (and posted about) a while back... For a while I was fascinated and amazed at projects pursuing absurd mega-goals, attempts to get something off the ground so big it was nigh unto stupid. A floating city configuring an independent libertarian utopia nation. A billion-dollar indoor ski resort just outside Atlanta. A bridge from Spain to Africa sporting a 5 mile suspended span. A world-class [fill in the blank, how much ya got?] facility annex to a super-mall in "why would anyone move there" Syracuse NY. A "fast ferry" across Lake Ontario connecting Toronto with "why would you go there" Rochester NY. And so on, one project after another with big flashing "ain't gonna happen" signs over them. Then I realized. It wasn't success of the project that was the goal, it was keeping a small team of creatives employed in a perpetual state of promotion and study-funding: find someone with deep enough pockets, and they'll shell out a livable fee to be able to say "hey, look at this..." to other deep pockets. No way that Atlanta ski resort would happen, but the idea was exciting enough to elicit enough funding for studies to pay the bills (at least until the vital-to-snow-making nearby lake almost dried up) for a few people in modest offices. You can make a nice, if modest, living promoting stupid ideas. And if the stupid idea actually pans out, takes off, and succeeds, well, the possibility of success is awesome enough to keep trying.
nroach 15y ago
It's simple really: lifestyle businesses supply enough profit to fund the creator and his or her employees and suppliers. They do not typically create enough free cash to interest investors. Investors/VCs/Angels define "success" as an investment that returns enough cash to not only make a positive return on its own, but also to offset losses from the other "misses" in the portfolio. That investment return can come directly from profit, or it can be achieved by telling a compelling growth story that allows others to buy out the investor's position and provide an exit for the early investor. So, the question is really one of audience: do you aspire to provide a good living for yourself, your employees, and your business partners? Or are you swinging for the fences and able to provide returns to the investment community as well? Whether you consider Google, Groupon, or Joe's Garage to be a success really depends on who your constituents are.
pg 15y ago
There's already a word for a lifestyle startup: a business.
- Hitchhiker 15y ago
  lol .. "float like a butterfly, sting like a bee" I think Balsamiq[1] provides an interesting exception to above article as well as many comments. Peldi's a guy with incredible vision. I would not be surprised in the least if he swings for the fences without VC. Institutional folk have tried courting this boutique " lifestyle " business without success. [1] - http://balsamiq.com http://balsamiq.com
- dpapathanasiou 15y ago
  A small business, which has other connotations (i.e., unlikely to turn into the next big thing).
  - thibaut_barrere 15y ago
    I would even add: that you may not want to become the next big thing.
- dmk23 15y ago
  Any startup would benefit from thinking of itself as a business. In fact most startups that are not businesses do not have a very good prognosis, though quite a few still get acquired for technology or team.
- esk 15y ago
  PG, this is only tangentially related, but I've noticed you quite often use phrases like "starting a startup". Considering you're an excellent writer, I figured you must have a reason for employing redundancy. Is there a reason you don't say "starting a business" or "starting a company"?
  - pg 15y ago
    Because I'm writing specifically about how to start a startup and only incidentally about how to start a business. The redundancy is phonetic, not semantic.
cwp 15y ago
Gimme a break. There's no mystery here. "Tech elite" is a code word for venture capital. VCs pooh-pooh lifestyle and bootstrapped businesses because there's no opportunity for them to profit. VC-backed founders have been successful at raising investment, so of course they're not interested in a business that doesn't require it. Both groups want to define success in terms that give them a business advantage.
- timjahn 15y ago
  Perfectly said.
paulitex 15y ago
"Revenue generation is third on the list. It is really “nice” your balance sheets to have 7 or even better 8 zeros next to Revenue. Profit…" This is just wrong. Even Google had early minor revenue. Revenue traction is king, it's the best kind of traction. User traction is a higher-risk proxy and thus must be more impressive to result in the same valuation after the risk discount. Aside: Wanting to start a lifestyle startup does imply, correctly so, less ambition than the swing-for-the-fencers founders. That's why they're easy to pick on, ambition makes for much better stories.
- aaronblohowiak 15y ago
  > ambition makes for much better stories quite a lot of tragedies have ambition as the "fatal flaw" of the main character. Having revenue or profit also starts to give a point of reference for your valuation if you are raising money, which may or may not be what you'd like.
  - paulitex 15y ago
    > quite a lot of tragedies have ambition as the "fatal flaw" of the main character. Agreed - still a good story.
clintavo 15y ago
However, I think a lifestyle business can evolve into a startup. These discussions sometimes seem to forget that life isn't always neatly planned out in advance. For those of us living outside of the Valley, the tech community needs to remember that not everyone and their brother is plotting their next "startup." What can happen is (and this is an amazing thing about the times we live in) that a side project takes off, slowly becomes profitable, allows the founder to quit his job, focus on it full-time and then one day, he looks up and thinks "wow, I could swing for the fences." I guess that could be classified as a "lack of ambition" for not having a vision in the first place. OTOH it could be considered a smart move because the founder has already made something people want. Mailchimp, Balsamiq, DuckDuckGo to an extent, and in a smaller way, my own "startup" are examples.
tlogan 15y ago
I was always under impression that lifestyle business is a startup which cannot or is not willing raise money. Meaning sometimes even if your business is profitable (like my little business), VC will not invest since it lacks growth potentials. So business goes like this: "find business model" -> "optimize business model" -> "scale your business" Sometimes, in the first step you find a business model which is profitable but it can optimized only on small scale or it cannot scale.
- fleitz 15y ago
  Raising money does not necessarily mean taking VC or giving up equity. Have you ever thought that VCs have a vested interest in perpetuating the idea that to be a "real" business you need to give up equity in order to raise money?
fleitz 15y ago
My personal view is that this stigma stems largely from two sources: 1) VCs who have a vested interest in getting people to give up equity in order to raise money. 2) People who have sold equity in exchange for VC money need to make themselves feel good about their decision so they look down on others who have a business plan solid enough not to need to tap the capital source of last resort.

74 points by hristiank 15y ago

I agree with you. However sometimes it feels as if building a lifestyle business takes the same effort (in the beginning) as building a large business. For example think about all the small web development companies with 3-6 people in their teams. That is a lifestyle business. On the other end think of Instagram, 10M users, 6 people. Or Weebly, millions of sites, 3-4 people. Or Craigslist hundreds of million in revenue, 30ish people.

dmor 15y ago
I totally agree with you, they take the same effort at the beginning. Because of that, I think a lot of people figure they might as well swing for the fences.
- Zimahl 15y ago
  I think the point is that it's fine to swing for the fences, just make sure you don't skip other 'lifestyle' opportunities in the mean time. You may never get your homerun pitch, nothing wrong with a base hit. You watch enough pitches go by, you end up striking out.

dmor 15y ago

I think this stigma exists because on some level, sometimes, when things suck at your high growth crazy startup (even if its just a bad day or week) you think, "man I wish I ran a skate shop in Huntington Beach with an online store". And it stings to see other people doing that. It's a lot harder to delay gratification and swing for the fences, not just intellectually harder but emotionally harder. Sometimes I feel like my friends doing lifestyle businesses just don't understand what I'm going through, and other times they give me really bad advice that would be great if I was building a company to operate like their's but doesn't do anything for me at scale. My family business is a lifestyle business in finance, I worked there from age 14 - 20, and its a totally different animal from a startup. Because it isn't a startup, its a self-sustaining business. Was after 12 months. So it makes me think a lifestyle startup is a myth - these aren't startups, they're small businesses trying to dine out on the glory of the name "startup" without takin the risk. What do you think?

gujk 15y ago
Most startups are flights of fancy trying to dine out on the glory of the name "startup". Let's all get back to work trying to create real value for customers and enjoying our world, and not posture for social rank among friends and strangers.
generalk 15y ago
> these aren't startups, they're small businesses trying to > dine out on the glory of the name "startup" without takin > the risk The only difference between a "lifestyle" business and a "high growth crazy startup" is that in one, you're betting small amounts over a long period of time. If one of your bets fails, you're not broke. In a more VC-style startup, you're betting most everything up front. Pardon the gambling metaphor, but this allows you to play higher-stakes games, but this also means that when you lose, you lose your whole roll. They're all businesses, the founders are all entrepreneurs. We're all in this together.
viscanti 15y ago
I disagree. You need to solve a problem you're passionate about. Not all problems are BIG problems that require massive scale or raising money. Lifestyle startups aren't a myth. They're just working on a different scale of problem than the VC backed startup. I don't know that there's anything inherently better about either, but treating a lifestyle startup as a scalable startup, or vice versa is a mistake. They're separate entities, with different goals. Each has it's pros and cons.
- dmor 15y ago
  some businesses are just businesses, not startups, and thats ok.
  - viscanti 15y ago
    I suppose our definition of "startup" differs. It seems a startup can only be a startup if it's attempting to solve a problem that requires significant upfront capital and scaling. I disagree with that view. For me, a startup is a company exploring the solution to a problem. That can be a BIG problem and that requires significant scaling, or it can be a smaller problem. Once that solution is found, and can be replicated easily, it's no longer a startup. The question is, how long can a startup be a startup? I'd argue that as soon as any scaling is involved, it's no longer a startup and it's just a business. Startup implies that it's the start. Lifestyle businesses and regular businesses can both be guilty of claiming to be a startup long after they've become "regular" businesses. When it comes down to it, they're all just businesses, but it can be helpful to have terms to distinguish the scale of the business. If you feel that lifestyle businesses and lifestyle startups are diminishing the prestige of startups, then you're probably in business for the wrong reason. That smacks of too much ego and too little passion for solving the problems you should be solving.

nmcfarl 15y ago

So what I don’t get is the hate. I run a small crowdsourcing biz, (that was pretty risky to start btw, it ate both the founders life savings and more), and I’ve once or twice been told I don’t belong at various startup/hacker meet-ups. Or to "start a real company." From my perspective the companies are the same size, the tech is the same, the risk to personal wealth is if anything greater, and heck sometimes the market is the exact same. Why I can’t talk about these problems with people just 'cause I didn’t take funding mystifies me. Of course, not for long, as generally the people who make these comments are just rude, and not the kinds of people that I’m going to think too much about. Still in the moment it kinda stings.

davidhansen 15y ago

I wouldn't call it a stigma. I'd call it a general disinterest. It's the same kind of disinterest that follows bootstrapped businesses or any business that chooses to make money instead of burning it. As the cofounder of a bootstrapped business myself, I'm no fan of the shadow we operate in, but I understand it. The story of a company that doesn't have the luxury of positive cash flow to fall back on when things get tough is fundamentally more risky, and therefore exciting. You get larger magnitude successes and a larger number of failures, which is far more dramatic. And narratives with more risk, more reward, and higher drama, are the kind of narratives human beings love.

dmor 15y ago
"narratives with more risk, more reward, and higher drama, are the kind of narratives human beings love" I love human beings.
- dmor 15y ago
  Ummm downvoter I wasn't being snarky, I genuinely think this is part of what makes humans awesome.
PaulHoule 15y ago
more to the point, investors don't care. If the average person could work 20 hours a week and make $15,000 a month, they'd feel pretty rich. (even at 60 hours a week) If you want to make somebody else rich, you've got to make a lot more money, particularly if the person is an investor who's already rich.

ctdonath 15y ago

An odd insight to "lifestyle startups" I had (and posted about) a while back... For a while I was fascinated and amazed at projects pursuing absurd mega-goals, attempts to get something off the ground so big it was nigh unto stupid. A floating city configuring an independent libertarian utopia nation. A billion-dollar indoor ski resort just outside Atlanta. A bridge from Spain to Africa sporting a 5 mile suspended span. A world-class [fill in the blank, how much ya got?] facility annex to a super-mall in "why would anyone move there" Syracuse NY. A "fast ferry" across Lake Ontario connecting Toronto with "why would you go there" Rochester NY. And so on, one project after another with big flashing "ain't gonna happen" signs over them. Then I realized. It wasn't success of the project that was the goal, it was keeping a small team of creatives employed in a perpetual state of promotion and study-funding: find someone with deep enough pockets, and they'll shell out a livable fee to be able to say "hey, look at this..." to other deep pockets. No way that Atlanta ski resort would happen, but the idea was exciting enough to elicit enough funding for studies to pay the bills (at least until the vital-to-snow-making nearby lake almost dried up) for a few people in modest offices. You can make a nice, if modest, living promoting stupid ideas. And if the stupid idea actually pans out, takes off, and succeeds, well, the possibility of success is awesome enough to keep trying.

nroach 15y ago

It's simple really: lifestyle businesses supply enough profit to fund the creator and his or her employees and suppliers. They do not typically create enough free cash to interest investors. Investors/VCs/Angels define "success" as an investment that returns enough cash to not only make a positive return on its own, but also to offset losses from the other "misses" in the portfolio. That investment return can come directly from profit, or it can be achieved by telling a compelling growth story that allows others to buy out the investor's position and provide an exit for the early investor. So, the question is really one of audience: do you aspire to provide a good living for yourself, your employees, and your business partners? Or are you swinging for the fences and able to provide returns to the investment community as well? Whether you consider Google, Groupon, or Joe's Garage to be a success really depends on who your constituents are.

pg 15y ago

There's already a word for a lifestyle startup: a business.

Hitchhiker 15y ago
lol .. "float like a butterfly, sting like a bee" I think Balsamiq[1] provides an interesting exception to above article as well as many comments. Peldi's a guy with incredible vision. I would not be surprised in the least if he swings for the fences without VC. Institutional folk have tried courting this boutique " lifestyle " business without success. [1] - http://balsamiq.com http://balsamiq.com
dpapathanasiou 15y ago
A small business, which has other connotations (i.e., unlikely to turn into the next big thing).
- thibaut_barrere 15y ago
  I would even add: that you may not want to become the next big thing.
dmk23 15y ago
Any startup would benefit from thinking of itself as a business. In fact most startups that are not businesses do not have a very good prognosis, though quite a few still get acquired for technology or team.
esk 15y ago
PG, this is only tangentially related, but I've noticed you quite often use phrases like "starting a startup". Considering you're an excellent writer, I figured you must have a reason for employing redundancy. Is there a reason you don't say "starting a business" or "starting a company"?
- pg 15y ago
  Because I'm writing specifically about how to start a startup and only incidentally about how to start a business. The redundancy is phonetic, not semantic.

cwp 15y ago

Gimme a break. There's no mystery here. "Tech elite" is a code word for venture capital. VCs pooh-pooh lifestyle and bootstrapped businesses because there's no opportunity for them to profit. VC-backed founders have been successful at raising investment, so of course they're not interested in a business that doesn't require it. Both groups want to define success in terms that give them a business advantage.

timjahn 15y ago
Perfectly said.

paulitex 15y ago

"Revenue generation is third on the list. It is really “nice” your balance sheets to have 7 or even better 8 zeros next to Revenue. Profit…" This is just wrong. Even Google had early minor revenue. Revenue traction is king, it's the best kind of traction. User traction is a higher-risk proxy and thus must be more impressive to result in the same valuation after the risk discount. Aside: Wanting to start a lifestyle startup does imply, correctly so, less ambition than the swing-for-the-fencers founders. That's why they're easy to pick on, ambition makes for much better stories.

aaronblohowiak 15y ago
> ambition makes for much better stories quite a lot of tragedies have ambition as the "fatal flaw" of the main character. Having revenue or profit also starts to give a point of reference for your valuation if you are raising money, which may or may not be what you'd like.
- paulitex 15y ago
  > quite a lot of tragedies have ambition as the "fatal flaw" of the main character. Agreed - still a good story.

clintavo 15y ago

However, I think a lifestyle business can evolve into a startup. These discussions sometimes seem to forget that life isn't always neatly planned out in advance. For those of us living outside of the Valley, the tech community needs to remember that not everyone and their brother is plotting their next "startup." What can happen is (and this is an amazing thing about the times we live in) that a side project takes off, slowly becomes profitable, allows the founder to quit his job, focus on it full-time and then one day, he looks up and thinks "wow, I could swing for the fences." I guess that could be classified as a "lack of ambition" for not having a vision in the first place. OTOH it could be considered a smart move because the founder has already made something people want. Mailchimp, Balsamiq, DuckDuckGo to an extent, and in a smaller way, my own "startup" are examples.

tlogan 15y ago

I was always under impression that lifestyle business is a startup which cannot or is not willing raise money. Meaning sometimes even if your business is profitable (like my little business), VC will not invest since it lacks growth potentials. So business goes like this: "find business model" -> "optimize business model" -> "scale your business" Sometimes, in the first step you find a business model which is profitable but it can optimized only on small scale or it cannot scale.

fleitz 15y ago
Raising money does not necessarily mean taking VC or giving up equity. Have you ever thought that VCs have a vested interest in perpetuating the idea that to be a "real" business you need to give up equity in order to raise money?

fleitz 15y ago

My personal view is that this stigma stems largely from two sources: 1) VCs who have a vested interest in getting people to give up equity in order to raise money. 2) People who have sold equity in exchange for VC money need to make themselves feel good about their decision so they look down on others who have a business plan solid enough not to need to tap the capital source of last resort.