[ryandrake]

> I could have tried roughing it without venture funding, what the industry calls “bootstrapping.” The venture world has a condescending label for bootstrapped companies without scale potential: a “lifestyle” business, which roughly translates to: Good for you, now back to the sandbox until you’re ready to play with the big boys. Given my professed aim, this could have made sense. But there was so much funding for the taking, and part of me figured that if I was swinging, I may as well swing big.

From this bit (and honestly the whole first half of the article) it sounds this guy just wanted to gamble on the lottery instead of being a businessman. You could replace this guy's bio with that of a professional poker player and not change many words. Did he even want to run a business, or did he just want to spin the wheel for a low-probability chance to turn as little time as possible into as much money as possible? I know this is heresy on a site hosted by a VC firm, but the world needs fewer of these "entrepreneurs" and their gambles and more of those icky "lifestyle people" and their actual businesses that serve people.

[BoxFour]

While it does sound this particular author was just interested in a cash grab, the author and you are both recognizing the stark reality facing many aspiring founders: the choice often boils down to taking a high-stakes gamble with venture capital or settling for the security of a 9-5 job.

The current financing landscape offers limited options for those aiming to establish lifestyle businesses in unpredictable markets. One can either secure a small business loan for a conventional business model or take a leap of faith with venture capital—unless, of course, they have the personal wealth to shoulder the financial risk.

Edit: While the reasons behind the absence of such financing are clear, it is perfectly valid to feel disheartened by the situation.

[encoderer]

The third way is to add sweat equity and build a business slowly around your normal 9-5.

There is just as much downside to this route, it’s also risky, you take time away from hobbies and relationships, and even if you’re successful there’s a period where you will basically just have two full time jobs.

That said, I did it this way, and I know a lot of others that have, and I was able to see it through. Timeline:

2012 - hired as a senior engineer at a tech company

2014 - founded my startup Cronitor with a friend. Launched after 3 months of weekend hacking.

2015 - promoted to eng manager in my day job

2017 - promoted to senior manager

2019 - promoted to director

2020 - left job as director

2023 - still working on Cronitor, still growing, we have grown roughly 5x since I left my day job.

[ryandrake]

This path is also fraught with legal risk, depending on your "normal 9-5" employer. If it's a FAANG or other large tech company, most of them (at least the ones I've worked for) lay claim to every single IP you create while working there, on or off the clock, using your own equipment or theirs. It doesn't matter whether or not they legally can--you are unlikely to be able to afford a legal defense against them.

[OkayPhysicist]

California has pretty friendly laws on this. Unless your startup is directly competing with your employer, or you work on it at work, they have very little ground to stand on. As in "within the realm of someone representing themselves"-type deal.

[LastNevadan]

You're presumably referring to California Civil Code §2870 [1].

When I had a side project going on and asked my California attorney if this was enough to protect me from my BigCo employer, she said something like, "No. If they want to stop you they'll just drown you in legal procedures that you can't afford to pay. That you're right isn't really that relevant."

[1] https://casetext.com/statute/california-codes/california-lab...

[encoderer]

Definitely a risk - just not one I rate too high if there is no overlap in the business.

[flashgordon]

Except when you are at a faang almost anything can be seen as competition. It is quite miraculous that the Crontic founders employer was this lax!

[encoderer]

Yeah you need to be aware of what contracts you have signed. In my case, the day we launched on HN in 2014 I notified my VP (via email), highlighted how this work is not related to the company at all, and I only worked on it at home with my own equipment. I asked him to release any IP claims and he replied in minutes and said it looks great and that I’m free to pursue it.

And that was the end of it.

I would not let fear of legal reprisal stop me from starting.

[fourseventy]

No its not. Just dont sign any rediculous IP assignment documents. These are illegal in a lot of states now anyway.

[s0kr8s]

In a service business, sweat equity is an awesome tool, not just for paying yourself, but also for paying your early employees.

One of the biggest obstacles you face when bootstrapping is that you need employees to grow your revenue, but you need revenue in order to pay your employees. It's a chicken-and-the-egg problem, which sweat equity can help to solve, at least to a limited degree: grant some sweat equity that vests over 5 to 10 years as a form of deferred compensation, then hope that your new employee / business partner boosts the value of your remaining equity in that time-frame by some multiple that is much larger than than the value of the equity you are giving up today. Then everybody wins.

I have found this approach very successful in my own business. It also increases the likelihood that when you want to retire some day that your own employees might be able and interested in buying you out, which means that you won't have to shop your medium sized businesses to private equity groups or search funds in 20 or 30 years when you want to get out of the game.

Part of building a middle class is not pulling up the ladder after you, which means you need to aim to enrich others -- specifically others who are not already wealthy -- alongside yourself.

[paulsutter]

There are actually two ways to bootstrap a business: huge savings, or small personal burn rate. I bootstrapped in my 20s without any significant financial support. Yes that was painful, but worth the effort

> One can either secure a small business loan ... unless, of course, they have the personal wealth to shoulder the financial risk

[crazygringo]

> The current financing landscape offers limited options for those aiming to establish lifestyle businesses in unpredictable markets.

Which isn't due to anyone's prejudice or greed, it's just math.

If a bank or fund is going to invest in something with merely lifestyle returns, it has to be extremely low-risk, like a corner pizza shop in a neighborhood without a pizza shop. High-risk and low returns is not something any sane outsider would ever invest in.

If something is high risk, it had better have a potentially high return to compensate.

[robertlagrant]

You're buying into the false dichotomy. A lifestyle business isn't organic growth. It's sitting on a beach pulling in $20k/mo for your Gmail plugin, or getting to buy lots of cool cameras which you love, paid for by your camera-based Youtube channel. There's a whole world of businesses that exists between unicorns and lifestyles.

[busterarm]

Also it's a false dichotomy mainly pushed on you by venture funds to encourage you to play in their world.

Bootstrapped tech startups have such low costs and labor as to make other traditional small-business owners jaws hang on the floor in envy.

Unicorn money is a distraction that's keeping everyone's eye off the ball and deluding people into ignoring the power in their fingertips.

[cjbgkagh]

The low cost base also means it’s really hard to compete against. A lot of VC money is aimed at monopolizing a niche and extracting long term above average returns out of it. Having a lifestyle company operating in their niche destroys that as a possibility and means they’ll never be able to get the returns they want.

[j4yav]

Which is an interesting perspective if you're considering a lifestyle business. Can you build a small but meaningful competitor and draft off all the treasure some VC is plowing into r&d and marketing?

[cjbgkagh]

In my niece they spend all their money on playing dirty with being cozy with govt and basically none on r&d. Eventually I’ll be able to beat them in price and product quality but for now I make a living on being the low cost alternative.

[robertlagrant]

> Having a lifestyle company operating in their niche destroys that as a possibility

Can you give an example of how that destroys what they're doing?

[robertlagrant]

I don't think it's pushed really. Certainly not on me.

[ska]

It can be as simple as where the business is located.

Perhaps the useful definition of a lifestyle business is one where explicitly part of business's purpose is to achieve personal non-business goals for one or more people involved. They can be tiny or fairly large, though at some point the distinction probably loses meaning.

Like the difference between a "startup" and a "new business" they can be useful distinctions but are often used sloppily.

[neilv]

> From this bit (and honestly the whole first half of the article) it sounds this guy just wanted to gamble on the lottery instead of run a business.

Isn't that the norm for the last decade or two of tech startups?

(Not being glib here. I really think that's the recognized norm, not a big secret.)

[davidw]

To be fair, I'm sure most of us have read Paul Graham's essays, including some of the early ones where he kind of breezily talks about "solving the money problem". That's what that guy wanted to do too. Maybe he was even inspired by PG.

[s0kr8s]

I would argue that all businesses are lifestyle businesses. Dreaming of a lifestyle that involves 10 houses and a yacht? Become a VC, or join a company backed by one and hope it becomes a unicorn. Astronomical wealth and power are a LIFESTYLE, the same way that dreaming of a modest home, work that you love, and time to spend on meaningful relationships is a lifestyle.

Just try to avoid judging the lifestyles of others.

[HipstaJules]

When trying to make money out of a company became something to be ashamed? I don't get your comment.

[barrysteve]

What's the point of making a business that serves people, if we're not legally allowed to automate it? People can be served in a higher fashion than they are.

There are too many artificial constrictions, forcing businesses to be hobbled to the slowest performer.

Ditch the labour requirement and half the world's economy can be automated from dawn to dusk.

Good conscience is wasted on business.

[YetAnotherNick]

> more of those icky "lifestyle people"

Running business is already hard as is, don't make it harder for yourself with artificial constraints. Especially not for the reason that it is better for the world unless you want to run charity.

[golergka]

Gamblers are more honest, they take risks with their own money.

[__xor_eax_eax]

>instead of run a business

Running a business is a gamble, always