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Doug Richard: Why do people hate lifestyle businesses?

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Re: Doug Richard: Why do people hate lifestyle businesses?

#31

Post by garply »

kbob wrote: post #15

"People" don't hate lifestyle businesses. "Investors" (both VC and angel) hate them, and it's for the obvious reasons: if an entrepreneur doesn't take outside funding, and doesn't shoot for a big exit in 5-7 years, then there's no opportunity for a VC to profit. The early-stage investment community controls the dialog about entrepreneurship, and they're not entirely unbiased.

I find people who flock to these investors (YC included) ridiculous. You know what? Between 5 million and 50 million in the bank, there's not a hell of a lot of difference in how your quality of life is going to be affected. But when you choose a business strategy to generate one of those two amounts, there is going to be a hell of a lot of difference in your probability of achieving those two targets.

Re: Doug Richard: Why do people hate lifestyle businesses?

#32

Post by detst »

83457 wrote: post #21

I am actually a software developer of almost 10 years in a small company which I eventually realized is a lifestyle business. I initially thought that my boss just couldn't grow the company but later realized that he didn't want the stress of running a larger company, wanted time with his family, and that profits were going up so he was probably content once he was pocketing half a mil a year. It can be frustrating t…

> almost 10 years in a small company

> a lot of room for growth and profit in our niche market

> being artificially limited is frustrating

> when I think about starting my own business

Sounds like you have the experience, know a market, want to do something bigger and have a least thought about going out on your own. So, why not?

Sounds like you would be well-positioned if you wanted to. Are there needs in the market for you to leave without having to directly compete with your boss? Maybe you could even complement what he's doing and work together by doing the things he has no interest in.

Re: Doug Richard: Why do people hate lifestyle businesses?

#33

Post by theBobMcCormick »

rythie wrote: post #30
terrellm wrote: post #14

I've owned the same company for 10 years where I've sold software to cattle ranchers and horse owners in almost 60 countries. My company started out as lifestyle business. Then after I got my MBA I was ready to build it to sell so I could become a serial entrepreneur. After my wife and I had our son 2 years ago, I realized having a moderately passive income stream that gave us more time for family was what we were lo…

The risk is, at some point someone will come along and compete and in effect destroy his business. He's relying on the future income stream where as the IPO route ends up with money in your pocket, that can't be taken away. For example, someone runs the local pub that everyone drinks at despite the expensive beer, because it's the only one in town. Then wetherspoons turns up with it's cheap beer and aggressive promot…

Life is never without risks. If he IPO's and takes the "money in his pocket", he could still get wiped out by a bad investment. IMHO that might even be more likely since since most entrepreneurs/small business owners already knows their current line of business quite well, knows the players, the competitive landscape, etc. At the same time, most of these same entrepreneurs/small business owners often know jack shit about investing, so I would think they'd be a lot more likely to make expensive mistakes in investing than they would be on their "home turf".

Re: Doug Richard: Why do people hate lifestyle businesses?

#34

Post by rythie »

theBobMcCormick wrote: post #33
rythie wrote: post #30

Earlier quoted context omitted.

The risk is, at some point someone will come along and compete and in effect destroy his business. He's relying on the future income stream where as the IPO route ends up with money in your pocket, that can't be taken away. For example, someone runs the local pub that everyone drinks at despite the expensive beer, because it's the only one in town. Then wetherspoons turns up with it's cheap beer and aggressive promot…

Life is never without risks. If he IPO's and takes the "money in his pocket", he could still get wiped out by a bad investment. IMHO that might even be more likely since since most entrepreneurs/small business owners already knows their current line of business quite well, knows the players, the competitive landscape, etc. At the same time, most of these same entrepreneurs/small business owners often know jack shit a…

Your assuming he would reinvest the money rather than just keep it a savings account (or several).

Re: Doug Richard: Why do people hate lifestyle businesses?

#35

Post by theBobMcCormick »

pxlpshr wrote: post #8

It's not that people hate lifestyle businesses, it's that a lot of people inappropriately label their lifestyle businesses as "startups". For the people that have worked 70+ hours a week, took no salary, and have lived through the pain, blood, tears, sweat in an attempt to build a sustainable business -- it's kind of a slap in the face. I used to run a lifestyle business (ad agency), worked 40 hours a month and nette…

I don't understand the fascination people have with comparing how many hours a week they work. Like someone is going to applaud you for working 70+ hours a week? I really don't see how that should be important to anyone but you.

IMHO, the proper definition of a startup should be a business that's starting up. It's fucking ludicrous to decide that there is only one kind of way to start a business that qualifies it as being a "startup".

If you see it as a "slap in the face" that you're working 70+ hours and someone else isn't, the problem isn't them... it's you. Are you jealous that they're get more done in less time than you? Or perhaps jealous that they picked their business model better so that they don't have to do as much as you do? Or maybe you were hoping that somehow other people would be impressed with your "heroic", "macho" levels of work, when in reality, nobody cares how many hours you put in.

Re: Doug Richard: Why do people hate lifestyle businesses?

#36

Post by cynical »

detst wrote: post #32
83457 wrote: post #21

I am actually a software developer of almost 10 years in a small company which I eventually realized is a lifestyle business. I initially thought that my boss just couldn't grow the company but later realized that he didn't want the stress of running a larger company, wanted time with his family, and that profits were going up so he was probably content once he was pocketing half a mil a year. It can be frustrating t…

> almost 10 years in a small company > a lot of room for growth and profit in our niche market > being artificially limited is frustrating > when I think about starting my own business Sounds like you have the experience, know a market, want to do something bigger and have a least thought about going out on your own. So, why not? Sounds like you would be well-positioned if you wanted to. Are there needs in the market…

Why would he do that when it's so much easier to collect a paycheck and complain about how management is doing everything wrong?

Re: Doug Richard: Why do people hate lifestyle businesses?

#37

Post by jon_dahl »

garply wrote: post #31
kbob wrote: post #15

"People" don't hate lifestyle businesses. "Investors" (both VC and angel) hate them, and it's for the obvious reasons: if an entrepreneur doesn't take outside funding, and doesn't shoot for a big exit in 5-7 years, then there's no opportunity for a VC to profit. The early-stage investment community controls the dialog about entrepreneurship, and they're not entirely unbiased.

I find people who flock to these investors (YC included) ridiculous. You know what? Between 5 million and 50 million in the bank, there's not a hell of a lot of difference in how your quality of life is going to be affected. But when you choose a business strategy to generate one of those two amounts, there is going to be a hell of a lot of difference in your probability of achieving those two targets.

I find people who flock to these investors (YC included) ridiculous.

This is pretty overstated. There are legitimate reasons for "flocking" to investors. Some (not all) businesses will have a better chance of succeeding with a large influx of capital, or with the advice, connections, and pressure provided by an investor.

Just because you don't need an investor to be successful doesn't mean that people who take investment are ridiculous.

Re: Doug Richard: Why do people hate lifestyle businesses?

#38

Post by [deleted] »

83457 wrote: post #21

I am actually a software developer of almost 10 years in a small company which I eventually realized is a lifestyle business. I initially thought that my boss just couldn't grow the company but later realized that he didn't want the stress of running a larger company, wanted time with his family, and that profits were going up so he was probably content once he was pocketing half a mil a year. It can be frustrating t…

[deleted]

Re: Doug Richard: Why do people hate lifestyle businesses?

#39

Post by terrellm »

rythie wrote: post #30
terrellm wrote: post #14

I've owned the same company for 10 years where I've sold software to cattle ranchers and horse owners in almost 60 countries. My company started out as lifestyle business. Then after I got my MBA I was ready to build it to sell so I could become a serial entrepreneur. After my wife and I had our son 2 years ago, I realized having a moderately passive income stream that gave us more time for family was what we were lo…

The risk is, at some point someone will come along and compete and in effect destroy his business. He's relying on the future income stream where as the IPO route ends up with money in your pocket, that can't be taken away. For example, someone runs the local pub that everyone drinks at despite the expensive beer, because it's the only one in town. Then wetherspoons turns up with it's cheap beer and aggressive promot…

There's definitely a risk of losing the modest revenue stream that I've had for the last 10 years and hope continues for another 10. It's something that I'm aware and try to prepare for in both my business (branding, continue to innovate, etc) as well as personally (diversified revenue streams).

There's also a risk in losing a business by pushing so hard for a buyout/IPO at the expense of ROI & profit, only to not get that IPO or buyout and be left with nothing. I went down that road several years ago and was fortunately able to get my business back on track before losing it.

You bring up some good points and I think it's helpful for HN'ers to see the interesting discussion on lifestyle vs IPO/buyout businesses.

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