6 ms·

Personally, I have a problem with the term lifestyle business. Without plenty of VC money, building and running a business is hard. VC backed up start-ups fit t

by hef19898 4y ago

Personally, I have a problem with the term lifestyle business. Without plenty of VC money, building and running a business is hard. VC backed up start-ups fit the "lifestyle" business definition a lot better, IMHO. One can play CxO, or chief engineer or whatever fancy title one wants to hold without putting the effort and years in, without actually worrying about those nasty things like profitability, cash flow or actual products. And, with the right connections, if one start-up fails one can still just start a new one.

jacquesm 4y ago
And there is absolutely nothing wrong with a life style business to begin with, the negative stigma is there only because certain VCs feel that you are a horrible person for not cutting them in on the action so they can diversify their portfolios.
- jwr 4y ago
  This. I really dislike the term "lifestyle business". What's wrong with a stable long-term business that makes founders and customers happy? Why does every business need GROWTH GROWTH GROWTH at all costs, even if the result is a net negative for customers? I sometimes explain to customers that if my business were VC-funded, it would grow and be developed much faster, but in the end there would need to be an exit and there is no exit scenario that is good for the customers. Think about it: there could be an IPO, in which case the business would need to start addressing a huge audience and increase growth (which always hurts existing customers), there could be a strategic acquisition or an acquihire, very few of which go right (this usually results in shutting down the service within 2-3 years), or the VCs could decide to fold the company, stopping the service outright. There is simply no good scenario.
  - jacquesm 4y ago
    I've been more than happy to invest in a few of these 'lifestyle' businesses as angel investor. One of them is quite possibly going to be a breakout success anyway. We're all still amazed by it. Not a dollar of external capital beyond the friends-and-family round.
  - mrobins 4y ago
    > What's wrong with a stable long-term business that makes founders and customers happy? And employees.
    - WJW 4y ago
      Last weekend I was talking to one of the initial employees of a relatively well-known monitoring SAAS here in the Netherlands. Apparently their founder/owner had just decided that ~30 employees was perhaps a few too many and that he would like to keep it more lifestyle-business-ish. Fair enough, he's the owner and is allowed to make decisions like that. This early employee was doing some real heart-searching about what he was going to do though, now that any hopes of personal growth at this company had been dashed. He could probably stay a developer there forever, of course, but any career growth would not be in the cards for at least several years since all management positions were filled and he was already the most senior engineer around. I don't mean to imply that stable businesses who make employees happy are impossible, but at some point you will just not be able to make everyone happy at the same time.
      - gghffguhvc 4y ago
        I own and run a lifestyle business of 5 people. I don’t want it to be any larger. My biggest fear - losing key staff due to lack of career growth. Next year we’ll drop to 4 day weeks at some point to further reward the staff beyond ever growing comp.
      - jwr 4y ago
        Seriously curious -- what "career" growth do people imagine? Apart from learning new things (which that employee can still do), what would he be looking for? Managing people? More power? Different position on a business card?
    - jwr 4y ago
      Yes, true. I forgot to mention them because I don't have (or plan to have) any :-)
  - Communitivity 4y ago
    Seconded. I personally try to never use the phrase 'lifestyle business'. Instead I use the phrase 'bootstrapped business', because that is what it is. You have bootstrapped the business yourself organically over time instead of at a fast pace of growth with VC money.
    - spikeagally 4y ago
      My understanding is that bootstrapped and lifestyle are different things. A lifestyle business should be able to run on autopilot with minimal involvement from the founder (hence they can focus on living their life, rather than working). A bootstrapped business is one built with your own capital - it doesn’t necessarily have to become a lifestyle business.
      - shkkmo 4y ago
        This seems mostly correct to me. We wouldn't call 37signals a "lifestyle business" but a bootstrapped business. I wouldn't say that a "able to run on autopilot" is necessarily the defining feature, but rather the attitude towards growth. The simply, the goal in starting and running the business is to support a work-life balance that is more strongly weighted towards life. As such, growing a lifestyle business beyond a certain point is counter productive since that leads to a more responsibility and less time for other stuff. A bootstrapped business does still have growth as a primary goal and there is intention to reach a larger size and complexity. While I'm not sure that I like the term "lifestyle" to describe it, I'm not sure what a better one is since "bootstrapped" means something different in this context.
      - ska 4y ago
        > with minimal involvement from the founder (hence they can focus on living their life, rather than working). I don't think this is right, most of the "lifestyle businesses" I've seen involve at least "normal" levels of work on their part, but are structured so that the work happens where & when suits other parts of their lives, or similar. At least the ones where that term made sense. They are often located somewhere that causes some friction, or have opportunities to grow that they don't take on, etc.
  - j45 4y ago
    Most problems in a Startup are product or distribution. Most people who look down on lifestyle businesses often have the lifestyle to begin with, or are their… yet to be accomplished followers. It’s koolaid that can lose a decade of so many peoples lives. Anyone who looks down on lifestyle businesses should introspect on where it came from that it’s ok for them to look down kn another’s choices and personal formula. Not everyone has a safety net and building one for yourself let’s you really swing for the fences if you wanted. Or not. Lots of business skills transfer from small business to big things. All big things consist of small things. Getting really good at small things is what makes you really good at big things instead of having the details to others. Learning enough business skills before you need them means you can self fund though paid customer discoveries but being a well paid enough consultant. But that takes years to get really good at, and many times we don’t really consider if we’re going to love an area for the rest of our lives it’s going to be decades and not years. Having 5 figure monthly skills puts you on a very different and equal footing with investors who buy the time of people in their 20s like a toy. Others are much more conscientious. Anyone who wants to help you investment or not needs to bring more tot he table than money, specifically relationships that are meaningful to you. How small, is there not just as much innovation and vision required to make an atom work compared to a molecule or something bigger? Lots of things must be learned by learning to sit stand and walk before running. Entrepreneurship is a pretty harsh self development mirror. Entrepreneurship is a marathon, as much as people feel it’s a sprint. If founders take vc money save for angels, founders are almost guaranteed to be replaced as founder by a corporate type one day because founders usually don’t have or develop the business skills quickly enough. Investment is not for the many, it is for the few. Most startups in all sectors are self funded. I feel this is one of the biggest sleights of hand for our time. Investment isn’t success either, it’s just a different kind of pressure to grow at any cost even if it’s not the right one or the one you might have picked had you waited a few months extra. If you don’t want any investor to tell you when to go home, it’s often valuable to learn the difference between freelancing -> contracting -> consulting —> product. Lots of transferable skills the least of which is understanding jobs to be done. You can benefit from a natural relentless curiousity and resourcefulness. Otherwise building a startup falls to being about tech and not learning how to build distribution. Customers don’t care what you code in. Spending more time hanging around hanging out in online communities vs with customers and their pains is a red flag. Indiehackers is a great read, product hunt is nice too but none will replace doing the work that is hitting the streets and talking to elope face to face even if on video. To the OP: It’s ok to go build other skills and often they will shed a more positive light on this time. You will discover you certainly have picked up a lot of valuable skills that others will pay for. That experience can uncover lots of needs that have no solution. Or, you may find something that you can do, and consider with a different perspective. You have value. You will add value. You will create value. You will continue becoming more well rounded.
TAForObvReasons 4y ago
VC-backed startups have a very different "lifestyle" from bootstrapped startups. Building the business is harder but running the business is much easier since you don't have the weight of exit strategy bearing down on you. Those external pressures are now showing up thanks to rising interest rates and investors asking questions. You can't be coerced to make business decisions like selling out to a competitor or aggressively raising prices if you own the company.
vineyardmike 4y ago
A lifestyle business is one you can do on your own and fit it into your life. Its goal is profitability only to the point of satisfying your lifestyle’s income requirements. Historically to the term, people would retire to vacation towns (the lifestyle) and run things like bike shops or an ice cream stand just to have some income, not to be CxO and get rich.
jsemrau 4y ago
Couldn't agree more. I learned that the hard way. Building a business with a nice funding cushion and salary is way way way different than bootstrapping. Edit: Timebox it. If it doesn't work, it doesn't work.
fragmede 4y ago
Even with VC money, running a business is hard. Just look at all the VC-funded startups that go bust! The term lifestyle business is useful because it frames and contrasts a VC-funded business that must have explosive growth and then IPO or be bought out or else die, and a business that's fine just existing with no need to take over the world, ever. A lifestyle business is one that can be trusted because it didn't take VC funding; it doesn't have the dying need to sell out to Apple or Amazon or Google or Microsoft or Adobe or IPO.
- szundi 4y ago
  I think they meant was that if one of these VC backed lifestyle businesses fails, the CxO guys running the show just shrug and go sink an other one, who cares.
  - fragmede 4y ago
    VC-backed is mutually exclusive with being a lifestyle business. I could see if they just generically said rich, because yeah it's easier to be rich than poor in this world, but that's not what they said.
WJW 4y ago
Even with VC money, running a business is very hard. Accepting VC money means you just sold a big chunk of your business to people who want to see it grow at maximum rate at any cost. Most won't blink an eye at burning out every single employee including the founders, for example. Running a business is always hard and will always be hard, since it's a competitive activity against other humans who are also clever, hard-working and ambitious. Non-hardworking founders need an incredible niche or they will eventually be driven out by competitors who are just as smart but work harder.
- majani 4y ago
  You say this but but VCs are still quite limited in their control until about series C. Literally all the founders I know who have raised over $1m have pretty good lifestyles (house, car, frequent travel). It's worlds apart from the bootstrappers I know who remain frugal despite being profitable
epolanski 4y ago
> wihout plenty of VC money, building and running a business is hard But..isn't that how it always worked?

jacquesm 4y ago

And there is absolutely nothing wrong with a life style business to begin with, the negative stigma is there only because certain VCs feel that you are a horrible person for not cutting them in on the action so they can diversify their portfolios.

jwr 4y ago
This. I really dislike the term "lifestyle business". What's wrong with a stable long-term business that makes founders and customers happy? Why does every business need GROWTH GROWTH GROWTH at all costs, even if the result is a net negative for customers? I sometimes explain to customers that if my business were VC-funded, it would grow and be developed much faster, but in the end there would need to be an exit and there is no exit scenario that is good for the customers. Think about it: there could be an IPO, in which case the business would need to start addressing a huge audience and increase growth (which always hurts existing customers), there could be a strategic acquisition or an acquihire, very few of which go right (this usually results in shutting down the service within 2-3 years), or the VCs could decide to fold the company, stopping the service outright. There is simply no good scenario.
- jacquesm 4y ago
  I've been more than happy to invest in a few of these 'lifestyle' businesses as angel investor. One of them is quite possibly going to be a breakout success anyway. We're all still amazed by it. Not a dollar of external capital beyond the friends-and-family round.
- mrobins 4y ago
  > What's wrong with a stable long-term business that makes founders and customers happy? And employees.
  - WJW 4y ago
    Last weekend I was talking to one of the initial employees of a relatively well-known monitoring SAAS here in the Netherlands. Apparently their founder/owner had just decided that ~30 employees was perhaps a few too many and that he would like to keep it more lifestyle-business-ish. Fair enough, he's the owner and is allowed to make decisions like that. This early employee was doing some real heart-searching about what he was going to do though, now that any hopes of personal growth at this company had been dashed. He could probably stay a developer there forever, of course, but any career growth would not be in the cards for at least several years since all management positions were filled and he was already the most senior engineer around. I don't mean to imply that stable businesses who make employees happy are impossible, but at some point you will just not be able to make everyone happy at the same time.
    - gghffguhvc 4y ago
      I own and run a lifestyle business of 5 people. I don’t want it to be any larger. My biggest fear - losing key staff due to lack of career growth. Next year we’ll drop to 4 day weeks at some point to further reward the staff beyond ever growing comp.
    - jwr 4y ago
      Seriously curious -- what "career" growth do people imagine? Apart from learning new things (which that employee can still do), what would he be looking for? Managing people? More power? Different position on a business card?
  - jwr 4y ago
    Yes, true. I forgot to mention them because I don't have (or plan to have) any :-)
- Communitivity 4y ago
  Seconded. I personally try to never use the phrase 'lifestyle business'. Instead I use the phrase 'bootstrapped business', because that is what it is. You have bootstrapped the business yourself organically over time instead of at a fast pace of growth with VC money.
  - spikeagally 4y ago
    My understanding is that bootstrapped and lifestyle are different things. A lifestyle business should be able to run on autopilot with minimal involvement from the founder (hence they can focus on living their life, rather than working). A bootstrapped business is one built with your own capital - it doesn’t necessarily have to become a lifestyle business.
    - shkkmo 4y ago
      This seems mostly correct to me. We wouldn't call 37signals a "lifestyle business" but a bootstrapped business. I wouldn't say that a "able to run on autopilot" is necessarily the defining feature, but rather the attitude towards growth. The simply, the goal in starting and running the business is to support a work-life balance that is more strongly weighted towards life. As such, growing a lifestyle business beyond a certain point is counter productive since that leads to a more responsibility and less time for other stuff. A bootstrapped business does still have growth as a primary goal and there is intention to reach a larger size and complexity. While I'm not sure that I like the term "lifestyle" to describe it, I'm not sure what a better one is since "bootstrapped" means something different in this context.
    - ska 4y ago
      > with minimal involvement from the founder (hence they can focus on living their life, rather than working). I don't think this is right, most of the "lifestyle businesses" I've seen involve at least "normal" levels of work on their part, but are structured so that the work happens where & when suits other parts of their lives, or similar. At least the ones where that term made sense. They are often located somewhere that causes some friction, or have opportunities to grow that they don't take on, etc.
- j45 4y ago
  Most problems in a Startup are product or distribution. Most people who look down on lifestyle businesses often have the lifestyle to begin with, or are their… yet to be accomplished followers. It’s koolaid that can lose a decade of so many peoples lives. Anyone who looks down on lifestyle businesses should introspect on where it came from that it’s ok for them to look down kn another’s choices and personal formula. Not everyone has a safety net and building one for yourself let’s you really swing for the fences if you wanted. Or not. Lots of business skills transfer from small business to big things. All big things consist of small things. Getting really good at small things is what makes you really good at big things instead of having the details to others. Learning enough business skills before you need them means you can self fund though paid customer discoveries but being a well paid enough consultant. But that takes years to get really good at, and many times we don’t really consider if we’re going to love an area for the rest of our lives it’s going to be decades and not years. Having 5 figure monthly skills puts you on a very different and equal footing with investors who buy the time of people in their 20s like a toy. Others are much more conscientious. Anyone who wants to help you investment or not needs to bring more tot he table than money, specifically relationships that are meaningful to you. How small, is there not just as much innovation and vision required to make an atom work compared to a molecule or something bigger? Lots of things must be learned by learning to sit stand and walk before running. Entrepreneurship is a pretty harsh self development mirror. Entrepreneurship is a marathon, as much as people feel it’s a sprint. If founders take vc money save for angels, founders are almost guaranteed to be replaced as founder by a corporate type one day because founders usually don’t have or develop the business skills quickly enough. Investment is not for the many, it is for the few. Most startups in all sectors are self funded. I feel this is one of the biggest sleights of hand for our time. Investment isn’t success either, it’s just a different kind of pressure to grow at any cost even if it’s not the right one or the one you might have picked had you waited a few months extra. If you don’t want any investor to tell you when to go home, it’s often valuable to learn the difference between freelancing -> contracting -> consulting —> product. Lots of transferable skills the least of which is understanding jobs to be done. You can benefit from a natural relentless curiousity and resourcefulness. Otherwise building a startup falls to being about tech and not learning how to build distribution. Customers don’t care what you code in. Spending more time hanging around hanging out in online communities vs with customers and their pains is a red flag. Indiehackers is a great read, product hunt is nice too but none will replace doing the work that is hitting the streets and talking to elope face to face even if on video. To the OP: It’s ok to go build other skills and often they will shed a more positive light on this time. You will discover you certainly have picked up a lot of valuable skills that others will pay for. That experience can uncover lots of needs that have no solution. Or, you may find something that you can do, and consider with a different perspective. You have value. You will add value. You will create value. You will continue becoming more well rounded.

TAForObvReasons 4y ago

VC-backed startups have a very different "lifestyle" from bootstrapped startups. Building the business is harder but running the business is much easier since you don't have the weight of exit strategy bearing down on you. Those external pressures are now showing up thanks to rising interest rates and investors asking questions. You can't be coerced to make business decisions like selling out to a competitor or aggressively raising prices if you own the company.

vineyardmike 4y ago

A lifestyle business is one you can do on your own and fit it into your life. Its goal is profitability only to the point of satisfying your lifestyle’s income requirements. Historically to the term, people would retire to vacation towns (the lifestyle) and run things like bike shops or an ice cream stand just to have some income, not to be CxO and get rich.

jsemrau 4y ago

Couldn't agree more. I learned that the hard way. Building a business with a nice funding cushion and salary is way way way different than bootstrapping. Edit: Timebox it. If it doesn't work, it doesn't work.

fragmede 4y ago

Even with VC money, running a business is hard. Just look at all the VC-funded startups that go bust! The term lifestyle business is useful because it frames and contrasts a VC-funded business that must have explosive growth and then IPO or be bought out or else die, and a business that's fine just existing with no need to take over the world, ever. A lifestyle business is one that can be trusted because it didn't take VC funding; it doesn't have the dying need to sell out to Apple or Amazon or Google or Microsoft or Adobe or IPO.

szundi 4y ago
I think they meant was that if one of these VC backed lifestyle businesses fails, the CxO guys running the show just shrug and go sink an other one, who cares.
- fragmede 4y ago
  VC-backed is mutually exclusive with being a lifestyle business. I could see if they just generically said rich, because yeah it's easier to be rich than poor in this world, but that's not what they said.

WJW 4y ago

Even with VC money, running a business is very hard. Accepting VC money means you just sold a big chunk of your business to people who want to see it grow at maximum rate at any cost. Most won't blink an eye at burning out every single employee including the founders, for example. Running a business is always hard and will always be hard, since it's a competitive activity against other humans who are also clever, hard-working and ambitious. Non-hardworking founders need an incredible niche or they will eventually be driven out by competitors who are just as smart but work harder.

majani 4y ago
You say this but but VCs are still quite limited in their control until about series C. Literally all the founders I know who have raised over $1m have pretty good lifestyles (house, car, frequent travel). It's worlds apart from the bootstrappers I know who remain frugal despite being profitable

epolanski 4y ago

> wihout plenty of VC money, building and running a business is hard But..isn't that how it always worked?