
Doing a Startup vs. Building a Business - BitGeek
http://blog.circleshare.com/index.php?/archives/48-Doing-a-Startup-vs.-Building-a-company.html
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BitGeek
This article highlights an area of confusion, I think. Of course, any new
business is a startup. So, even your aunts diner that is opening soon is a
startup.

But when we talk about a "startup" here generally we're talking about a
technology startup, or mroe specifically, a web oriented technology startup.

But we're not necessarily talking about: Funding, organization, theoretical
growth rates, etc, for that company.

So, I think the term "lifestyle business" should be banned or rejected by this
community. Its a derogatory term used to apply to people who are chosing to go
a different path, with the implicit assumption that that path is lame (eg: low
growth, low chance of getting rich.)

There are certainly a lot of choices that founders have to make with regards
to whether they are building a real business or not (EG: something sustainable
that will make them rich even if a $10B+ company doesn't buy them in 24
months... rather than something that's a feature built to flip to someone with
a real product offering.) ... and funding, location, team size, team
composition (eg: when to hire marketing or sales people), etc are all
independant of whether you're building a business.

You could bootstrap a company built to flip, or you could use VC money to do
it. You can use VC money to build a real business, or you can bootstrap a real
business.

But I believe, strongly, that building a real business is the only way to go--
its the most likely path to getting flipped, and its the way you will end up
with something more than an adrenaline hangover after 24 months.

I hope this is making sense...

In summary, focusing on the business is the path to success... and recognizing
all of these choices (including who to take money from) have advantages and
disadvantages for the business case. For instance, one option might make great
short term financial sense but be damaging in the long term-- if its a build
to flip situation then you don't care about the long term. But in making that
choice, you're risking the flip taking longer than expected....

So, build a business.

PS-- Justification for this long post: I was recently talking to a startup,
and they are totally focused on being acquired within the next 18 months.
Thats their plan. Their only plan. Every decision they make is with that
assumption, and they are going to be in a world of pain 24 months from now if
they aren't acquired in that time period. Worse, I think that if the followed
a the right strategy, between 18 and 48 months from now they'd grow from a
$250M business to a $4B business.

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RyanGWU82
Great comment. I'm an engineering student and was enrolled in an
entrepreneurship course at the business school here. This kind of bias was
evident there as well. Our instructor often made comments about our project
having "lifestyle business" potential as if that was a bad thing. If we
couldn't grow to "$50 million in five years" then we weren't appropriate for
venture capital, and we'd have to seek other types of funding, and apparently
that was a big negative to him. It was frustrating and counter-productive,
really.

~~~
BitGeek
Well, you know what they say-- those that can, do. Those that can't, teach.
This goes doubly for entrepreneurship "classes".... though maybe I'm too harsh
and that guy had actually started a business.

In terms of the number of millionaires or centi-millionaires in this country--
the vast majority of them got that way with "lifestyle businesses".

