Reflecting on My Failure to Build a Billion-Dollar Company

There's that term again, "lifestyle business." Uttered like a dirty word, when in fact Sahil has an actual product that many thousands of people use and pay for. I'm one of them.

Meanwhile, many startups aren’t true businesses – they book no revenue, and they may not even have a sellable product. That’s fine, because almost all businesses start with an idea or a dream or a need or pure desperation, and it’s up to the founders to make it work. They may even need investment, too – sometimes a lot of it. And that’s fine, too.

But when people from the startup world use the term “lifestyle business” to describe real businesses that aren’t pure tech, have solo founders, don’t take VC money, don’t intend to scale to a billion users, or whatever other qualities are not worthy of investor consideration, I find it condescending and misguided. Some startups could actually learn a thing or two from the vendor who sells hot dogs in the park, the person who starts up a specialist marketing agency, the partnership that builds a ceramics factory, or the solo founder running a media distribution and sales platform. They have products or services to sell. They have customers. They book revenue, pay their employees and suppliers, and if they do things right, may even become really successful.

In short, people who run small businesses are not hobbyists or dilettantes. They’re entrepreneurs doing real business selling something, often with limited capital and without the glamor or hype.

Kudos to Sahil for what he's accomplished. But for the love of Pete, please stop using the term "lifestyle business."

I feel like this is exactly what most companies should strive for. They'll make better decisions that way.

> We kicked butt, had fun, didn't cheat, loved our customers and changed computing forever

... and in many ways, it seems like only a "lifestyle business" can really prioritize those over core revenue and growth metrics.

Bryan Cantrill's discussion is also great: https://www.youtube.com/watch?v=-zRN7XLCRhc&t=2000

https://www.youtube.com/watch?v=J8UwcyYT3z0

Really made me rethink my priorities and has had me change the kinds of things I do.

What I dislike is A) the view from startup land that there are only two types of new businesses, "startups" and everything else ("lifestyle") B) and the "everything else" category is somehow inferior or even some sort of hobby or vanity project. Sahil used the term to describe his own company, and at one point felt shame about it, even though he had a real business with real customers and real revenue.

That's how twisted the mindset in startup land has become, where real business owners are supposed to feel shame, and "success" is based on as-yet unfulfilled promises and raising a round?

But really it just means “business that supports a lifestyle”. Which a “startup” does not.

In that light, startup is the bad word when you think about it. What, you run a business that can’t even support your lifestyle? LooooooL

And yes if I’ve learned anything about silicon valkey in the past 4 years of living here is that people are elitist as fuck, hate their lives, and grab onto any little thing to make themselves feel better than others. It’s what they need to endure the grind and that’s okay. I get it.

I think it's funny, though, that non-tech industry leaders critiqued Bezos in the past for running a 'lifestyle business' when in fact Amazon was always a technology company and has become dominant and successful to boot.

I guess it sounds too bourgeois for the young (and not so) SV rebels who are in to change the world and make some billions along the way.

That's when good old "small business" should be sufficient enough IMO. It has a stigma but it shouldn't.

Furthes, he ran this "lifestyle" business with outside investors.

He's written a nuanced, heartfelt essay, and this comment seems to have missed all of that to nitpick on a word.

I think some of the disdain comes from legit growth startups trying to distance themselves from one-man "startups" that could be better categorized as micro-ISVs or side projects.

But there's definitely no shame to running a successful lifestyle business. The 37signals guys have been great at shifting that perspective.

[0] http://www.paulgraham.com/growth.html

If he bootstrapped and reached 780k/mo after 8 years of work that would be a successful lifestyle business and he should be absolutely proud.

I'm absolutely not trying to be judgmental as I've succeeded and failed at businesses myself.

Being a part of the SV startup ecosystem myself, I also see the term "lifestyle business" used as a soft-perjorative for "not ambitious enough".

People seem to forget that the VCs are hidden from the blowback of those cut-and-run decisions, so it's easy for them to make those flippant recommendations. It is the executives who will be publicly shamed for cutting and running and that reputation will follow them and likely catch up to them.

Good on Sahil for sticking it through and getting out of the bubble and realizing that chasing money is not the path to happiness.

The lack of business sense in the startup scene is absolutely astounding.

Too many opt for playing game of thrones instead of creating value and capturing some of that value as a profit.

Perhaps in the US, and probably in just a small part of the US. Everywhere else, a startup is just a new business.

I respect and admire pg as much as probably anybody on this board, but I still reject the idea that he has any particular standing to declare his subjective definition of "startup" to be "the" definition by fiat.

I would argue that "startup" actually refers to "businesses that are designed to grow big", where the speed at which you do so is mostly irrelevant. If one wants to raise VC money and tie themselves to that particular time-boxed constraint, that's great. But you can just as well do it "slow and steady" by focusing on early profitability and continually and incrementally reinvesting profits back into the company for growth.

Neither is "better" or "worse" than the other, except in context, just as with the quarter-horse/camel example.

Are they, though?

I have looked at the incoming classes of various startup accelerators over the years and see lots of niche-focused products and services that can never grow to anything more than a niche-focused product or service as described in their pitch decks.

I'm not putting down those types of businesses (or proto-businesses). I'm just pointing out that they don't have a high-growth profile or potential, the primary dividing line between "startups" and everything else dubbed "lifestyle" in investor circles.

I find it difficult to call $10M/year a “lifestyle business.”

To me, lifestyle business means a business that can support the owner in their lifestyle. So unless the owner spends millions of dollars every year...

There are a lot of companies like this (big & small), though sometimes its not recognisable from the outside. Note the goal is still ostensibly to make money. You don't run a business when you could have retired if you don't love growing businesses. I cant imagine a founder turning down an offer to expand rapidly, if it made sense. They just tend to avoiding going all in on a particular bet and for obvious reasons don't like ceeding control to outside investors.

> Now, it may look like I am in an enviable position, running a profitable, growing, and low-maintenance software business with customers who adore us. But for years, I considered myself a failure. At my lowest point, I had to lay off 75% of my company, including many of my best friends. I had failed.

> I no longer feel shame in the path I took to get to where I am today. It took me years to realize that I was misguided from the outset. This is that journey, from the beginning.

He acknowledges that he is grateful and proud of his lifestyle business. There's nothing wrong with the phrase itself. I run a lifestyle tech business as well. I'm proud of it. I switch between "small business", "sustainable long-term business" and "lifestyle business" depending on my audience. "lifestyle business" doesn't have to be a dirty word if you don't use it as one.

While I realize people don’t always like to use constraining labels, limiting the word “startup” to businesses that are aggressively seeking a rocket-ship trajectory actually strikes me as a useful convention.

Hackers news comments in a sentence.

I don't think I've heard the phrase lifestyle business used that way. I'm not in the US let alone silicon valley so that might be relevant.

Rather I've heard lifestyle business used to describe a business, typically with zero to half a dozen employees, which the founder can run without putting in a whole bunch of time.

A real but deliberately vague example. A company that acts as an authorized dealer for a manufacturer. The sales company handles the sales process and takes orders through a website supplemented with phone calls. Actually shipping the merchandise and handling after sales customer support is done by the manufacturer. Why they don't want to do their own sales I don't know. Staffing requirements are one person to answer any phone calls and someone to do the books. Owner's required time is maybe a few hours a day.

Commissions on sales cover all the bills etc and let the owner pay themselves handsomely but it will never be a giant enterprise.

On HN, a "startup" is a moonshot backed by venture capital, and is seen as a failure if it doesn't achieve a massive valuation and take over the world. You read about businesses with "mere" million-dollar-plus revenues being shut down because they're "unsuccessful". It's insane.

$65k is the gross profit, which appears to be before operating expenses are accounted for. He doesn't list the net profit in the tweet (as he does elsewhere in the post). In the other mention, net profit was just under 1/4 of gross profit. So he's probably netting somewhere around $15-25k/mo, depending on how much of his costs are fixed/variable. Still good, but considering how many millions went into the business, not great.

They now have come around and appreciate their success. Their use of "lifestyle business" was chosen to convey their own negative attitude at the time.

The comment I replied to totally missed that the author wasn't critcizing their own business! They just felt badly about it a few years ago. See the part of the comment where they praise gumroad.

A more self aware comment would have merely decried the prevailing VC attitude that led the founder to feel bad. Instead the commentor seems to think the founder needs cheering up and convincing.

To me vanity is a major red flag. That sort of self serving quality needs to describe the founder as somebody willing to ask for cash and drive necessary growth, but must not be a goal driving the business. The difference is that the qualities (appearance) of vanity are attainable early.

It's refreshing to see this perspective from founders. It's a story not often told and does well to characterize the grinding rollercoaster of hard decisions you won't easily find in the sea of "A-co raised $40mm!" press releases.