[0x0001]

Not all startups require VC capital, some of us are just running without venture funding just clients money, some startups are in better shape because are on right market on the right time. You just need to be in the right time.

[wlesieutre]

> some of us are just running without venture funding just clients money

That sort of startup probably also counts as a “traditional small businesses.”

[estreeper]

Receiving investment, or not, or making money, or not, has nothing to do with whether or not a company is a "startup" (at least in the YC sense).

Startup = Growth

http://www.paulgraham.com/growth.html

[pjc50]

Right now, client funding is extremely vulnerable. The startup I was working for in 2001 blew up when clients stopped paying bills due to their own bankruptcy. The one I was working for in 2008 was badly crippled by all the clients we were pre-sales engaged with simply closing their external purchasing.

[markmark]

This is the thing I've seen a lot of tech people missing, they are all "I'll be fine, my company already works from home and our business isn't effected". Yes, but what about your customers businesses? What if they stop paying? Or what about _their_ customers. The entire economy is going to be hit hard, and that will ripple through.

[cinquemb]

I think startups that cater to providing services to government funded organizations will probably do better, especially with all this new government debt globally in the form of "stimulus".

[itronitron]

I don't expect that will turn out to be the case as funding will be reallocated across various government programs in an extreme manner. The impact of Hurricane Katrina on DHS programs is a comparatively small example of what can happen after an event like this.

Companies large enough to serve multiple different organizations may be able to re-balance their services.

[markmark]

Yeah I have a friend who works for a small company (although not a startup) that provides essential services to the government, we think he's as safe as anyone.

[scarface74]

And you’re probably not looking for a large exit. You are trying that unheard of concept of spending less than you make. What you are doing is running a “lifestyle business”.

That’s not a negative despite what the tech bro’s think. I hate the idea of success for a company seems to be “we got another round of funding while losing money”.

[hodgesrm]

The term "lifestyle business" really annoys me. It's Silicon Valley propaganda. There are better ways to build companies than taking hundreds of millions or billions in funding. Pre-crisis startup funding was largely decadence enabled by cheap money.

By contrast early generation SV companies took relatively small amounts of funding if at all. Intel for example took the equivalent of $18.4M US in 2019 dollars prior to IPO. [1]

[1] https://en.wikipedia.org/wiki/Intel#Origins

[hef19898]

I gave that a lot of thought lately. Not that I wanted to, but being a one-man bootstrapped startup kind of let to it.

And with all the stories coming out of Berlin's scene, and to a lesser degree Munich's, I came to the conclusion: "lifestyle businesses" businesses without external funding are hard. They are traditional small companies, the have to rely on positive cash flow, profitability and banks to keep running. Quite tough, especially if the founder and employees have to actually live from the profits.

Startups on the other hand, they life of VC money. As long as the founding team can sell their vision to VCs to get more VC money, they run just fine. So the founders can live the startup life with other people's money. Sounds more like lifestyle businesses to me.

[ghaff]

The thing that annoys me about "lifestyle business" is that it also suggests this idea of short days, tons of vacation, etc. Which is usually not the case.

[brianwawok]

Honestly I think it’s a way for those that owe million to VCs to feel like they have one over us businesses that grew at a healthy pace, have money in the bank, and money in the bank goes up not down every month.

At least that is how lifestyle business is slung here. No one in my local business association would scoff at businesses growing at a healthy pace and no debt. Also nice if no VC gives me another round, I don’t have to shut down tomorrow.

[ghaff]

Yes. However it can also be pitched as there's no big upside and the salary is so-so but it's a "lifestyle business" even though the hours and other time-off are nothing to write home about.

[qes]

I'm the CTO of a "lifestyle" business, though we don't really call ourselves that. Salaries here are excellent for our area (MN). Time-off is better than average, and we have free worldwide flights for vacations as a perk. Highly flexible work hours and location - we have some FTE's 100% remote, living in other states; I'm 90% remote. No overtime culture, no death marches. Maybe every 2-3 years we have a couple weeks of a good crunch but it's with buy-in from everyone doing the crunch.

We're lucky to have a customer base that spans many industries. We've lost some chunks of income.. chains of malls closing, restaurants, lobbies, DMV offices, customers getting live sports info.. but it's all temporary and we're well in the black. Instead of worrying if we'll make it we're looking for opportunities and how we can best take advantage of our strong position.

[ClumsyPilot]

I feel the phase means something different entirely - let's say I start a software consultancy with my friends, and my goals are to run the firm how I want, be my own boss and that we have fun working on interesting projects together. That to me is a lifestyle business.

If there is a profitable decision I could take, like investment / partners / whatever, I prioritise the fact that I want to keep running this company myself without interference over profit. I prioritise my job satisfaction.

Maybe I could hire a more competent CEO, but that's not what I am trying to do here. I could get a mentor thou.

This business could be funded by debt, or investment, though not normally.

Now I might make a lot of money and grow the firm to 10k people, or I might take long holidays and go bankrupt - that's a different problem entirely.

[vl]

> Pre-crisis startup funding was largely decadence enabled by cheap money.

Arguably with current rates we are going to have cheapest money ever possible. On top of that a lot of traditional investment vehicles are contracting.

[hodgesrm]

It's a fair point but I think that the key issue is different. VC funds are a kind of equity investment; the question is whether they are actually delivering results. In the case of some of the top-notch US funds I would guess the answer is yes and will continue to be so.

On the other hand large funds like SoftBank are clearly under-performing. Cracks in that model were already appearing prior to Covid-19. So yes, interest rates are low, and equities should benefit in general. However it does not follow that VC investment funds are overall a good bet. To make that argument you would have to trade off against alternatives like real estate, more traditional industries, on-shoring of supply chains, etc.

[rmason]

When you raise money it's not a win, it's an obligation

- Mark Cuban

[twic]

That's not a lifestyle business, it's just a business.

[ClumsyPilot]

Not necessarily, a startup could be boot strapped by founders themselves, and they might prefer to keep it a closely held operation with minimal third parties adding pressures. They might still be looking to cash out, just on different terms.

[ElFitz]

It's only a lifestyle business if they aren't interested in hyper-growth & all

Otherwise, "just" spending less than you make and trying to make it on their own only makes them bootstrapped, don't you think?

[scarface74]

Its hard to find investors if you aren’t interested in hyper growth. The financial risk that the company will go out of business is the same but the expected returns are a lot lower. That just doesn’t make sense from an investors standpoint from a risk/reward vantage point.

[burrows]

Raising too much money can increase likelihood of bankruptcy. fight me

[dnautics]

there's a big gulf between "lifestyle" and "SV big startup", like startups that aims for 1.25-2x growth per annum, has taken fewer rounds of funding. There's several of them in SV, too.

[sambull]

But for a whole summer I didn't pay for a ride share app.. thanks VCs!

[grey-area]

Sounds more like a 'business' to me.

[asveikau]

> just clients money

And I imagine some of those clients may have money problems resulting from the crisis too, directly or indirectly. Nobody is totally isolated.

[filmgirlcw]

Absolutely true — but the GP point about startups being “better prepared” because they already have runway and expect zero revenues (an opinion I wholly disagree with), doesn’t apply if the startup doesn’t have funding. As you say, a lot of this is about timing (and I’ll add, luck plays a massive role here too).

[vikramkr]

That's just a small business - the comment above is referring to companies with a huge VC cash raise in the bank and "runway" as being in a better position than companies like yours that rely on cash flow from customers

[Natsu]

I think startups will adapt in time. I mean, I'm surprised there aren't TP-finding apps right now...

[WalterSear]

Get with the times.

https://cryptoticker.io/en/toilet-paper-token-bitcoin/

[cvhashim]

Don’t wanna be pedantic but a small tech-based business isn’t really a startup.

[vikramkr]

Yeah, that's just a small business without any of that claimed cushion of a huge vc raise