
Lifestyle Startups Stigma - hristiank
http://appicurious.com/2011/10/27/lifestyle-startups-stigma/
======
cwp
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
Perfectly said.

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dmor
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?

~~~
fleitz
Dulce et decorum est pro patria mori is what I think.

I don't care about the 'glory' of a startup, glory is something you tell
stupid 18 year old kids so they feel good about going to die for 60 year old
kids.

If you can make money with out risk you're an idiot to go and find a business
with lots of risk controlled by someone else.

Don't dig for gold, sell shovels!

Did you know that the people who sell plastic wrap for hard drives have a
higher profit margin than those who make hard drives? Think about the
ramifications of that for a second.

Laugh inside when you get made fun of for not having the stomach to risk
digging for gold. Enjoy your life find your esteem from yourself and not from
the opinions of the masses, it's you who has to live your life, not the others
commenting on it. If raising VC makes you happy, then raise VC. If a lifestyle
biz makes you happy run a lifestyle biz. If being a programmer in a cubefarm
at a megacorp makes you happy, do that!

~~~
guylhem
"I don't care about the 'glory' of a startup, glory is something you tell
stupid 18 year old kids so they feel good about going to die for 60 year old
kids."

Beautiful :-) But what about passion?

"Did you know that the people who sell plastic wrap for hard drives have a
higher profit margin than those who make hard drives? Think about the
ramifications of that for a second."

No I didn't, but that's very interesting. Yet I doubt anyone here would be
funding a company making new plastic wraps.

~~~
fleitz
I'd put passion largely in the same category of glory. It's an emotional good
used to get people to accept lower returns.

I'll use the video game industry as an example, people are passionate about
writing video games, their not passionate about not being able to see their
family and friends for weeks. People are told they need to sacrifice to follow
their passion but really they are sacrificing so the company can hit some
arbitrary date and extract more rev from each employee, eventually to be
discarded by the company when they are no longer profitable.

If your passionate about video games it's probably better to get a iPhone /
Android / XNA dev account and make video games than to go work for a video
game company (or your VC).

People are passionate about leaving their mark on the world via a business,
not making sure their VC gets their 2X earn out.

------
ctdonath
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.

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

~~~
JoelSutherland
The author says: "There is a stigma against running a lifestyle startup
(business)"

PG Says: "Please don't even use the word startup when describing what you do."

~~~
pg
In current usage, a startup means a new business that is designed to scale
rapidly. (Most don't actually manage to, but they're at least intended to.) It
would be inconvenient if people started using the word to describe new
businesses generally, because then we'd need to invent a new word for the
subset designed to scale rapidly.

~~~
kbutler
Merriam-Webster disagrees:

<http://www.merriam-webster.com/dictionary/startup> 1: the act or an instance
of setting in operation or motion 2: a fledgling business enterprise

Fledgling also lacks any connotation of scaling.

Perhaps the VC/angel community has adopted "startup" to imply design for rapid
scaling, but the broader community uses startup to mean "new business."

~~~
pg
That's about as precise as most dictionary definitions. It doesn't mean the
actual meaning of the word is that broad, just that dictionaries don't go into
excessive detail.

~~~
rooshdi
There seems to be varying opinions on what a startup actually is. Some
definitions focus on the ability to rapidly scale, while others emphasize the
fragility of startups. For instance, Eric Ries, author of _The Lean Startup_ ,
defines a startup as "a human institution designed to deliver a new product or
service under conditions of extreme uncertainty." This definition would tend
to include almost every new business, while your definition of a startup would
only include those which are structured for rapid growth. Maybe I'm being a
bit too pedantic, but it seems the word "startup" is being used so
inconsistently nowadays that it has lost a bit of its meaning.

~~~
DanielRibeiro
The problem lies in the definition of "new" and "extreme". Both are very
loose.

In the standard Techcrunch definition of "new", and "extreme", "new" is "new"
and hasn't been done successfully before (or at least in the reach of the
startup in question).

And "extreme uncertanty" usually means: you have a burn rate which forces you
to rapidly achieve product-market fit, pivot, get more money, or give up. The
above definition of "new" adds up to the "extreme uncertanty", as you are not
sure what you are currently doing is something people want, and even if you
pivot into something else, you will not be sure about it as well.

Therefore, a new old' fashioned bakery is a new business, but it is not doing
something "new", neither has "extreme uncertainty" attached to it.

~~~
rooshdi
Yes, but won't that new old' fashion bakery still have "extreme uncertainty"
in its successful outlook, especially in today's dire economic conditions?

~~~
DanielRibeiro
The old' fashioned is not creating anything "new", by definition. If it is
delivering it in some way like Zappos delivers shoes, or Uber send cabs, it is
another story.

The "extreme" part usually conceives that you don't know if what you are doing
is something people want. We know old fashioned bakeries is something people
want. This can be seen on how much Eric Ries talk about "pivots". A bakery
pivoting will not be an old' fashioned bakery.

Again, the definition is loose. Eric Ries' mentor Steven Blank has a more
precise definition[1] which removes these cases:

 _a startup is an organization formed to search for a repeatable and scalable
business model._

I don't think these definitions are made to replace one another, they are made
to give different views of the same object. The same way an elephant is not a
wall, snake, spear, tree, fan or rope[2].

 _Edit_ : Swombat recently argued[3] that the difference between a startup a
and a lifestyle business is that _a "lifestyle business" lacks vision._

[1] [http://steveblank.com/2010/01/25/whats-a-startup-first-
princ...](http://steveblank.com/2010/01/25/whats-a-startup-first-principles/)

[2]
[http://en.wikipedia.org/wiki/Blind_men_and_an_elephant#John_...](http://en.wikipedia.org/wiki/Blind_men_and_an_elephant#John_Godfrey_Saxe)

[3] <http://swombat.com/2011/10/19/startup-vision>

------
nroach
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.

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fleitz
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.

------
clintavo
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.

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paulitex
"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
> 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
> quite a lot of tragedies have ambition as the "fatal flaw" of the main
> character.

Agreed - still a good story.

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rokhayakebe
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
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
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.

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nmcfarl
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.

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tlogan
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
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?

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davidhansen
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
"narratives with more risk, more reward, and higher drama, are the kind of
narratives human beings love"

I love human beings.

~~~
dmor
Ummm downvoter I wasn't being snarky, I genuinely think this is part of what
makes humans awesome.

