Startup vs. Lifestyle Business (a Short Comparison from a Guy Who’s Done Both)

I live in a city obsessed with startups.

San Francisco is the undisputed center of the world for technology startups, and I’ve called this great city home for nearly six years.

When I tell people here about the business I run now, I get all kinds of reactions, from blank looks to pity. In a city full of startups and entrepreneurs, the concept of a lifestyle business isn’t the hippest thing to explain.

Then I explain that I’ve already done the “startup thing” before. From 2006 to 2008, I co-founded and ran a venture-backed startup right here in the city.

We built a product, found advisors, got press, raised money, hired employees and raised a little more money, but ultimately were caught with our pants down during the 2008 financial crisis. With no significant revenue and a product in a not-so-sexy space, we couldn’t keep the VC money flowing. Things fell apart and I left after my co-founder and I couldn’t agree on the company’s future.

I’m telling you these details just to say, I’ve been there, done that. I ran a VC-backed startup and experienced nearly the entire lifecycle of a startup. I know what it’s like as an entrepreneur to run a Silicon Valley startup and I also have dozens of other entrepreneur friends who run VC-backed startups as well.

After the startup, I took off on a six-month sabbatical to Mexico to figure out what I wanted to do next. I started blogging a couple of months into the trip and haven’t looked back since.

Instead of starting another typical software startup and hoping to eventually sell or IPO and make millions, my time away helped me realize I wanted to start a business doing something I enjoy that let me live a great life now.

What’s a lifestyle business? Some consider it a patronizing term that the VCs and startup ecosystem use to put down businesses that don’t consume your life.

There’s a debate between entrepreneurs who say chasing swing-for-the-fences startups wastes your life and VCs who call businesses that stay small on purpose “dipshit companies.”

To me, a lifestyle business doesn’t equate to running a tiny business as an alternative to having a job. A lifestyle business doesn’t have to be small at all, either in revenue or employees. The main requirement of a lifestyle business is just that it allows the entrepreneur/owner to live how he or she wants to live now, while running the company.

A funded startup on the other hand has the primary responsibility of becoming big at the (hopefully temporary) expense of the lives of the founders and employees.

A startup’s job is to grow big enough to provide a return to investors. A lifestyle business’s job is to provide a great quality of life to its owners.

In a startup, the founders are taking a big swing with a low probability of success. Startup founders are hoping for a very big outcome (usually a sale or IPO). The pot of gold at the end of the rainbow is fame and fortune, although I know lots of startup entrepreneurs who run VC-backed companies because they really love the process. Even if those entrepreneurs hit a home run, I suspect many of them would jump back into running another startup.

With a lifestyle business, your definition of success is different. You don’t have the burden of needing a hundred-million-dollar exit to get what you want. If you can build a six-figure lifestyle business, chances are you can build a million-dollar business, but only if you want to. How big you build the business is up to you because you’re calling all the shots, for better or worse.

The question between startups and lifestyle businesses doesn’t have one right answer. Some entrepreneurs would be better off going the startup route, and some would be better off running a lifestyle business.

If you’re debating which way to go, the key is to research both sides of the equation. VC money is easier to come by at the moment, but that doesn’t mean you should take it.

When VCs are in your business, your incentives are misaligned with your investors. As an entrepreneur, you might be very happy with $10 million in your pocket, or even $5 million or $2 million. Once you take money from venture capitalists, those latter scenarios are no longer possible.

Venture capital funds work by earning a huge return from a small portion of investments. The rest typically go bust. With VC money in your bank account, you jump on the all-or-nothing train.

If you want to swing for the fences, VC might be a good option. You’ll get money, which can be helpful to some businesses, and you might get some connections and advice. Honestly though, in reality very few VCs provide a whole lot of mentoring or guidance. Typically you’ll have to look elsewhere for direct advice on product development, marketing and the other important parts of getting your business off the ground.

The real question to me is, what do you want from your business, both in the short- and long-term?

Be honest with yourself and remember that the journey is more important than the end goal. Make sure that you plan for the day-to-day ups and downs and not just for the pot of gold.

After you come up with your answer, dig in and get both sides of the equation. Startups are glamorous, so it’s easy to find stories about startups. They’re in the newspapers and on TV. One of the biggest blogs in the world, TechCrunch, is dedicated to startups.

To get details about what’s possible with a lifestyle business you’ll have to do more research. I suggest starting with the guys at 37Signals. They’re essentially heroes of the lifestyle business movement, even though they don’t like to call it that.

After being on both sides of the equation, I’m 110% happier now running my growing business this way. The control I have over my life is nearly ridiculous, and the future of my “lifestyle” business is brighter than 90% of funded startup entrepreneurs will ever achieve.

What do you think about the startup vs. lifestyle business debate?

Please share in the comments. If you have specific questions for me, ask away. I’m happy to help.

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  • http://www.tropicalmba.com Dan

    I’m 100% on the lifestyle business side, and I also agree that ‘staying small’ isn’t at all a requirement for lifestyle businesses… we are trying to do something at a much larger scale than we are currently at…. I often looked at GoDaddy as an example of a very large lifestyle business (at least from my limited understanding of how Parsons does things there). I worry about taking money from others is basically taking on a new sort of boss… I also don’t like the idea of ceeding your values, time, and passions in order to serve shareholder or market interest. Doesn’t sound like much fun to me….

    • Corbett

      With a name like Tropical MBA, I doubt there’s anyone who would question your commitment to the lifestyle business path ;)

      You’re totally right about taking on money equalling having a new boss. It can feel that way sometimes. I think entrepreneurs who are the most successful with VC involvement usually take money only when they need it and remain more in control of the business.

  • Jules

    Thanks for the perspective, i’m on the lifestyle path, no turning back now and it’s quite a ride!

  • http://www.moreawesomedays.com John Muldoon

    This is very helpful, Corbett. I’ve worked in (not as an owner) a fast-growing startup and have run more of a lifestyle business since then. Despite opportunities to jump into startups over the years, I’ve never gone back to that world.

    If anyone else is there on the fences, I’ll add my own story to Corbett’s.

    When I worked in a startup, we became the 5th fastest growing company in the US. We did $100M in revenue within 5 years. Sounds good, right? It was wild, fun, grueling, exhilarating. We all made some money while we were at it, but it wasn’t all that great. I slept at the office, under my desk, more than a few times. We worked from 4 am to 8 pm most days. Sometimes we just worked around the clock. It was a great experience in a lot of ways. But I got way way burnt out, left it and haven’t looked back. Oh, and you’d think that a company doing millions a year in business would have reached the pot of gold at the end of the road, but that one didn’t. It folded a few years after I left. That was 9 years ago.

    Since then, I’ve run a very small business (usually just one person). I’ve grown it from nothing into something that supports a nice lifestyle, a house, some traveling, and our mountain climbing habit. In fact, my wife and I have traveled to more than 20 countries since I started down the lifestyle business path, compared to taking zero vacations during my years working in that startup. I work out of my home office, with my dog running around my desk. I go for a run in the middle of my workday, and have lunch in the park with other lifestyle business folks. None of us are bringing in $100M, or even 1 million; but we’re all doing just fine. Money alone isn’t the way I measure happiness, and so it’s not the way I measure success anymore.

    For me, it all comes down to “time and freedom”. Money can enable those things, but if it’s all waiting at the end of some road, maybe that’s not the right road to be on. Maybe that says it all right there.

    • http://www.accessconsciousness.com.au John Mostanov

      Hi John,

      One question of relevance to my life at the moment is:

      How do most lifestyle entrepreneurs make the transition from working for someone else, to running their own company full-time?

      I just resigned from my job, and am in the process of brainstorming creative solutions…

      I’d love to hear how you did it….

      Regards,

      John Mostanov

      • http://moreawesomedays.com John Muldoon

        Hi John,

        That’s a good question. I’m not sure how *most* people get started. I bet Corbett could speak more to that.

        I’ll tell you how I did it. I did it very slowly. When I quit, I had some float to live a few years without working. Keep in mind, I was 19, and my expenses were low. I was putting myself through college at the time, living with my girlfriend in a tiny apartment which we shared with other people.

        I never actually set out to build a lifestyle business, or to be an entrepreneur. It was only when I saw that the money would run out at some point that I decided to look for a way to earn some cash while maintaining flexibility. I decided to do some strategy consulting with other businesses, helping them with their operations and business systems. It just happened to be something I was good at, and had some experience at from my startup days. It was also something I could do with some flexibility.

        At the time, I didn’t want the flexibility so I could travel or do fun things; it was so I could continue going to college. I took a full load of classes in the morning, then drove an hour to meet with clients for the afternoon, then drove an hour back to night school before coming home. It wasn’t easy in the beginning, and it sure as hell wasn’t glamorous.

        I didn’t start to think of it as a business until I graduated college and asked myself, “What next?” I thought about getting a job somewhere because, well, that’s what I thought people were supposed to do. Then it dawned on me that I had a dozen happy clients, and was earning a reputation as a valuable asset to other companies. I guess you could say I had a business before I fully realized it.

        I decided that if I could pay the bills working just a few hours a week while going to school, that I should be able to do even better if I just focussed on the business.

        Long story short: we lived very cheaply for a few years in a studio apartment. I made very little money, but was investing in developing skills and relationships that I thought would pay dividends. As my reputation grew, I raised my prices and scaled up by hiring teams of other specialists to work on bigger projects. It took a few years to actually start doing well enough to relax a bit. Now, we’re comfortable, own a house in the bay area, travel every year, blah blah blah. I still work my ass off, but now it’s because I want to. Things are good, but that only makes me want to push for more.

        That’s how I did it, but I’m only one person. I could have done it faster/better/smarter, and I hope you will. There’s no one right way to do it. My best advice is to constantly hustle and create value. Eventually it will pay off.

        Cheers man. I can’t wait to hear about your success!

      • Corbett

        John (Muldoon) is right: start slowly, live cheaply and focus on bringing in revenue while maintaining your flexibility. You have to think long-term but also be ruthless about putting together a product or service quickly that you can sell right away in the early days.

        • http://www.costa-del-tennis.com Rhonda

          I totally love this….thanks for making it sooo clear & simple.

      • http://www.tropicalmba.com Dan

        My 2 cents here: most first time entrepreneurs spend a period of 2-4 years making less or equal money to what they would at a normal job. Some never get back to earning what they could at a real job. Perhaps the first year they make nothing. I think many people don’t properly recognize or prepare themselves for this “dip.” The second thing I’d say is prepare yourself for the enormous amount of focused energy it takes at the beginning to get things off the ground. This can be a killer combination, especially when other people in your life are putting pressure on you to earn and give them time etc.

      • http://www.smallbusinessunleashed.com/ Chris Green

        My transition from employed to self employed was over the course of 12 months.

        Once I had made up my mind what was going to happen, I started to build my own set of clients offering graphic design, branding and basic websites at the time.

        This was a huge amount of work and you need a partner that is understanding and with you for the journey.

        Once I had the confidence that I could just do this on my own, I handed in my letter of resignation and just went for it…

    • Corbett

      Thanks so much for adding your story here John. It’s so similar to mine. I had a long stint in corporate consulting before the startup, so I’ve worked in just about every corporate situation you can imagine. There’s no question, the lifestyle business path has been the most rewarding.

      That’s crazy that your $100M revenue startup didn’t survive. How the hell that happens is inconceivable. I understand how “pre-revenue” companies don’t make it, but wow.

      • http://moreawesomedays.com John Muldoon

        Yeah. When we’ve talked offline about our backgrounds, I’ve been struck by some of the similarities. The common thread might be a willingness to experiment, launch, fail, learn and then do it all again (minus the fail).

        Of course I can’t get into specifics here, but yeah it was crazy at the time to have that company go under. Basically it was fairly low-margin non-tech business that was bootstrapped and scaled way too fast. Big projects, heavy service. Overhead was a tiny piece of revenue, but it eventually ate up all the profit. That made things unstable, so when the inevitable little problem came up, it kicked off a deadly spiral. If it were grown more conservatively, I think it would still be going strong. A capital injection may have saved it, too, but we’ll never know. There were a lot of reasons.

        It was still a great experience for me to work there for a few years as a teenager, being mentored by the founders and working on exiting projects for big clients. I call it my “real world business school” period, but, yeah, that was enough for me.

  • http://zeropassiveincome.com Zero Passive Income

    Great read! Thank you for giving us your perspective. I’m working on a project that we have been contemplating getting VC funding on. Maybe we’ll have to think twice.

    • Corbett

      Definitely think twice. VC could be a good fit for you, but you owe yourself some thorough examination before jumping in. You’ll be thankful you did either way.

      • http://barroncuadro.com Barron

        So Corb, my understanding is limited in this area, but I’m under the assumption that angel money is a bit different (after reading some of the techcrunch articles you linked to).

        Do angels put as much restriction on your decisions as VCs might? Or are they more present as an advisor and to inject a bit of capital to help you get a leg up?

        I was also watching this Random Show ep with Tim and Kevin, where they kinda talk about Angels and startups from their points of view: http://bit.ly/ikGguV

        Pretty interesting for people who observe that world but aren’t really in it.

        • Corbett

          It’s all about control and expectations and finding a good fit. What you guys did with Kickstarter was great – fundraising without giving up equity.

          Angels can be good, but it depends on the type of angels. Look for professional angels: people who know what they’re doing. Some high-profile angels can bring a lot more to the table than just cash. Saying “so and so invested” can do a lot for your brand profile.

          Avoid potentially needy angels who don’t have a proven track record. You don’t want someone calling you every week to check up on their investment.

          Also, always consider the cost of an investment. If you don’t need a whole lot of money you might be better off with a loan than angels because you don’t have to give up any equity.

    • http://www.smallbusinessunleashed.com/ Chris Green

      Hi Jeremy

      I’m slightly confused as to why you would call your site ‘zero passive income’ ?

  • http://www.accessconsciousness.com.au John Mostanov

    Great post Corbett!

    For me, it’s all about lifestyle…

    What’s the good in being a millionaire if you don’t have free time? Or freedom, full stop?

    My goal is to be in TOTAL CONTROL of my life, as you are Corbett. I will call the shots in my life, no one else. :-)

    The other big thing for me is health…. I’m a Natural/Alternative Medicine Practitioner and especially after going through my own big health crisis, health is a major priority for me.
    Though, as John Muldoon points out, most companies simply don’t care about the health and wellbeing of their employees.
    I graduated uni as a Software/Electronics Engineer…and that’s the type of thing that is common in that industry. Some of my peers are now working in the industry, and working ridiculously long hours.
    ….They earn more than me, for the moment – but I have my time and freedom. I have time to myself to think, and work on my dreams. That’s what I value.

    John Mostanov
    Melbourne, Australia

    • Corbett

      Working at startups is a young person’s game, partly because your health can support the long stressful hours when you’re young. Don’t get me wrong though, starting a business requires long hours in the beginning, no matter if your goals are lifestyle or fame and fortune.

  • http://www.likoma.com Bradley Charbonneau

    This says it all: “let me live a great life now.” It seems more than my fair share of friends and family have died or have gotten some disease in the past few years. Every time it happens, even if someone gets mildly sick, I just keep reminding myself:

    Now is the time.

    I’m just so far from the 65-retired-play-golf thing. I never want to retire, I have too many fun things to “work” on. I want to live my life now, not later. Well, sure, we can live it later, too, but now’s not a bad time to start.

    Thanks for the inspiring post, Corbett. Keep ‘em coming.

    • Corbett

      It sounds so cliche, but life is short and sometimes you don’t realize it until someone close passes or becomes ill.

      I’ve learned to balance short-term and long-term goals. You have to live in the present because tomorrow may never come, but you also need to plan for the future because your future self will appreciate it.

  • http://bizdevsamurai.com Damian Thompson

    I have always come from the PE / VC side of the game looking for the BIG idea and pouring every effort into the magical finish line (IPO or sale).

    It was the definition of these attempts that has me changing my life. In 2 of my 3 start-ups if we had personal money invested they would be considered a HUGE success throwing off a Million dollars a year of profit or more. But due to oversized expectations from backers the plugs were pulled when It was clear that neither was going to be a Billion dollar business.

    This ridiculously narrow definition of success is not for me anymore, and I find the game is more about ego and “tech street cred” than actually serving employees and clients. After some serious soul searching the past year I am proudly in the lifestyle business camp now.

    How about a 7 figure lifestyle business? Sounds good to me.

    Damian

    • http://bizdevsamurai.com Damian Thompson

      Oh the third start-up? A dismal, blazing failure by any measurement! :)

    • Corbett

      Back in “the day” you needed a lot of capital to get a business off the ground. Back then I think VC made more sense. Some businesses just couldn’t be bootstrapped, or if they could your competition (with investors) would eat your lunch.

      The story is very different now, and that’s why the VC community is worried about the future. If two 23 year olds can build a service together in three months that attracts millions of users, what do they need investment for?

      • http://bizdevsamurai.com Damian Thompson

        Exactly!

        Ten years ago if you wanted to offer managed services, you had to build a Million dollar data canter.

        Now I can pay as I go to a choice of different cloud companies.

  • http://www.virtualcatwalk.co Mercedes

    Corbett;

    I quit my job almost a year ago and it wasn’t really much of a decision to go for a start up or a lifestyle business, the decision was an easy one for me. I knew I wanted the freedom of a lifestyle company.
    The only issue is that when you work alone (or at least me), it is EXTREMELY hard to get a small business off the ground. I thought it would be easy, find some great product to sell and people will come. Not so! and I am not a marketing genius (even though I have a MBA) and I am not funny so people who read my blog I am sure are not thrilled and cannot wait to come back as I have very few subscribers (working on the site today so if you see the ‘image’ problem, will be fixed soon HA HA HA)
    Also thought that if I create a Facebook page and ensure that I have many fans, well….the money will come, not so either so this thing is getting pretty frustrating for me right now.
    If anyone has initiated a successful online business, please do let me know.
    I am not sure as to what I am missing and I keep working on it and working on it and no cash so far. Do you have any suggestions on where I can go find out what makes people buy stuff? or any other suggestions for that matter, would love to hear them.
    Thanks!.

    • Corbett

      It’s sad how poorly an MBA prepares you for really running a business, isn’t it? They’re great if you want a corporate job, not so great if you want to start a company.

      Check out my free business plan workbook for bloggers. I think it will help you ask yourself the right questions about your business:

      http://thinktraffic.net/the-ultimate-business-plan-workbook-for-bloggers

      There is definitely money to be made in the fashion industry, but you’ll have a hard time if you don’t differentiate your site more and provide some unique value. Right now you’re competing head on with dozens of other sites with better content (like the entire Pop Sugar network for example: http://www.popsugar.com/).

    • http://www.thewebsitecreator.com Raymond

      -Enter Random Internet Guy-

      What I immediately noticed about your site is that it’s not personal. I don’t see your name, your picture, or anything about you.

      I don’t know anything about fashion — and even less about women — But I think they take fashion advice from those they know, admire, and trust. Maybe you need to be that….or at least create that persona.

  • http://bookblogbusiness.com Barry Morris

    It’s all about the lifestyle. Everything else is a waste. If you’re not happy and fulfilled by your path, chances are good you’re on the wrong one. Great post, Corbett.

    • Corbett

      I think a lot of people think that delayed lifestyle is the only choice. I used to think that way until I met so many people who live awesome lifestyles now, without being rich or retired.

  • http://barroncuadro.com Barron

    Interesting distinguishing point here:

    A lifestyle business doesn’t have to be small at all, either in revenue or employees. The main requirement of a lifestyle business is just that it allows the entrepreneur/owner to live how he or she wants to live now, while running the company.

    It’s been me and K’s goal to structure 5&B as a lifestyle business, so instead of scaling this thing to the point where we are consumed by it, we’re forcing ourselves to grow as much as possible for 3/4 of the year, and the other 1/4, we want to spend in Hawaii. I don’t hear of many people running fashion labels that way, but we’re gonna do it anyway.

    That’s the plan, at least :)

    • Corbett

      And your plan can be part of your story, which helps differentiate you in the fashion world. Katie did a great job of pointing out differentiating factors in your Kickstarter video. Uniqueness is the cornerstone of effective marketing.

  • http://www.thecloudeconomy.net Jose

    Really good post Corbett! I feel that I lived a similar situation. I founded a startup with 3 partners and we tried to get funding (which is something impossible here in Spain where I live). I spent more time on that (trying to copy the Silicon Valley model) than on building and marketing the product, so it ended up failing. Right at the moment I was leaving the company, I read “The 4-hour workweek” which changed my mind completely. I then started my Lifestyle business based on my blog. My new business is actually successful and let me live the live under my own rules. I think a Lifestyle business is the best fit for me and for those who think that spending time with family and friends is much better than having more money or fame.

    • Corbett

      Awesome Jose, congrats on your success! It’s amazing how much progress you can make when you focus on actually building and marketing a product, isn’t it?

      • http://www.thecloudeconomy.net/ Jose

        Exactly! Those are the most important tasks at the beginning: Product+Marketing!

  • http://17000-days.com Cara Stein

    To me, lifestyle wins hands down. It seems to me a VC startup would be the worst of all worlds: you have all the uncertainty and struggle of trying to start and build a new thing, but you also have to answer to other people. Yuck! If you’re still stuck in an office working your butt off every day, what good does it do you to own the office? Not much that I can see.

  • http://www.kristinlajeunesse.com/ Kristin

    Hi Corbett,

    Great post! I can’t speak to the startup side of things as I’ve only ever worked FOR businesses and organizations. However, as someone who is recently self-employed and currently creating a lifestyle business I can say that it appears to be, hands down, the best business model today.

    Who else gets the chance to work on their own schedule, with people that they choose, and get the satisfaction of knowing that what they put in they’ll get back 100% to themselves. The rewards for my efforts put in no longer go out to my boss or whoever happens to be the face of a particular company, but directly to me.

    It creates a new set of challenges that most people don’t feel they can handle. But once you face that fear and push through, it’ll likely be one of the most rewarding experiences of your life.

    In the short- and long-term, what I want from my lifestyle business is to help people understand that they don’t need permission to create their own life adventures, or to do what they love for a living. In the more immediate short-term I’d like to monetize my business in a way that makes for a comfortable living and supports some of my personal passions: traveling, going out to eat whenever, and dancing competitively.

    Even though I’m just starting out I already feel compelled to help others and share my experience up to this point. I can’t wait for the day that I’m leaving a comment on your site about my glorious financial and personal successes. I have no doubt that I can make this happen for myself and for others. ;)

    As always, thanks for your inspiration and passion.

    • http://minkudesign.com minku

      hi Kristin, well said! I am in a similar place at the moment – quit my job, moved to Europe for art school, and now pursuing a dream of being an entrepreneur. Though I couldn’t put a name to it then, the lifestyle business was what I had in mind all along. I learned some things from looking through your site, like putting a face on things (:-)) and writing an ‘about me’ that readers can relate to. Thanks, and best of luck with it!

  • http://www.pocketchanged.com Caleb Wojcik

    I recently competed in a business plan for my website and the potential lifestyle business I hope to create from it.

    The aim of the event was very VC based. How can this scale? How big will it grow? When could you sell it?

    For me it isn’t about that. I want to build a business to sustain my lifestyle and work for myself. I don’t have the mindset aligned with start-ups. I want to keep working on a project that I’m passionate about, not look for the one big payday.

  • http://advancedriskology.com Tyler Tervooren

    I can certainly see the pros and cons of each route. I started out very much in the lifestyle mindset, but as I get further and further down the road, I’ll be working hard to transition to more of a hybrid model. Not a start-up, obviously, but at least working towards creating something that can someday exist without me.

    The major problem for me with staying in the lifestyle mindset is that I can’t leave a legacy that can be carried on. That’s important to me, and if I get hit by a bus tomorrow, my business and everything that sustains it is basically wiped off the face of the earth.

    Call it narcissistic, but I want to create something that people remember for a long time.

    • http://17000-days.com Cara Stein

      Tyler, I think you’re making an unnecessary distinction here. You can have a lifestyle business that mostly runs itself, either through employees, virtual assistants, automation, or whatever. That’s what Tim Ferriss was recommending in _4-Hour Workweek_. A lifestyle business doesn’t have to be built around your personality; in fact, he recommends making yourself as dispensable as possible to have a true lifestyle business.

      Meanwhile, even if you do a personality business, you can leave a legacy that lasts after you’re gone. Why not? For example, if you write books that change people’s lives, they’ll still be out there after you’re gone. The only obstacle, if any, would be distribution–set up provisions for that in your will if you’re worried.

  • http://www.thepsychosphere.com/ Elana Miller

    It definitely seems from this discussion that it helps to have the more “traditional” start-up business background if you’re interested in having a lifestyle business. I have absolutely NO business background, nor did I even realize that something like a lifestyle business was possible before a few years ago… so I have a lot to learn! I also see what Tyler is saying regarding not just wanting to support a lifestyle, but wanting to create a legacy, whether through a more traditional business or meaningful message that stays around long after you do.

  • http://www.financialsamurai.com Financial Samurai

    Hola Corbett,

    I think it really depends. What if you guys didn’t get caught with your pants down and your startup kept on growing until you did exit for multi millions? I think you would have found incredible exhilaration and like the startup lifestyle more no?

    Progress is what brings happiness, which is why having a small lifestyle business is rewarding. Little wins here and there provide great progress and happiness.

    Hope to see you at Axis this Wed!

    Sam

  • http://www.trafficgenerationcafe.com/high-search-engine-ranking-optimization/ Ana | lead conversion

    Great post, thank you Corbett. We share several of the same sentiments and I am totally for lifestyle business. I think a mistake many new bloggers make is the fact that they heard blogging is great, so they want to also try it. However, they don’t have a short term and a long term goal in mind.

  • Eugene

    Hi Corbett,

    I just wish there was a different name for “lifestyle business” because then it gets lumped into “lifestyle design,” for which there is such an overflow of information. I know this is just semantics, but I think most people would say that they choose lifestyle over money, which of course doesn’t mean it’s how they’ll behave. I am brand new at the entrepreneurial game, and am absolutely designing my business around a flexible life, but if someone wanted to buy me out in eight months, I would probably strongly consider it. After all, isn’t VC vs. lifestyle just one choice of many that you make as a business owner?

    By the way, I just finished “New Economy Superstar” about an hour ago, and loved it so much I’m your newest google reader subscriber. Looking forward to more excellent content!

    Eugene

    P.S. Hi Dan – nice to see you here.

  • http://pen.io Anthony Feint

    “A startup’s job is to grow big enough to provide a return to investors.” – thats wrong, and if you go into a startup with that idea, thats probably why you failed at the startup.

    I built a startup, because, as lame as it sounds, i want to change the world. I want to test out ideas, try new concepts and push boundaries. I’m not going to achieve that selling ebooks. I’ve been there and done that.

    A year ago, I was running what you would call a “lifestyle” business. I was sitting on a beach in thailand living off the earnings of multiple passive income streams. That was cool, but doesn’t even compare to the high I get from the stories I hear from teachers, writers and students using my product.

    For me, a startup is about the big picture.

    • matt

      did your start up take VC investment ?

  • http://www.onomojo.com Brian McQuay

    I bootstrapped my own Rails development company from the ground up outside of the Bay area. I worked out of my house and hired all remote developers. After a while it occurred to me that I didn’t have to stay in one place. I started traveling and ended up moving to a new city or country every two or three months. I found a nice secluded spot in the jungle, walking distance to a great beach with good waves, and coincidentally had internet access. It was my little slice of paradise and I did it all without VC funding.

    Being so secluded, I felt isolated. I felt a longing to join the party in the Bay area. I swallowed my pride and packed my bags. I moved to San Francisco and started hunting for jobs. I interviewed all over the place at beginning startups, some that were already profitable, and some big names like Facebook. It was a crazy few weeks of interviews and I was starting to get decent offers in.

    However…During every interview I was always asked what I’ve been doing recently. I gave them all the same story: I’ve been traveling, living at the beach in paradise, and running my own company doing what I love: writing software. Almost every single time I gave the explanation of what I’ve been doing recently I was immediately asked “Why are you here then?” and I really didn’t have a good answer either for them or for myself. Pondering that thought on a Friday night after a week packed full of interviews while I listened to the sounds of sirens and the Bart rumbling past and staring out over the city lights from my overpriced apartment, it made me realize this wasn’t the life for me.

    I was already living the dream. I woke up to the sound of birds chirping. I walked down the dirt road to a great surf break during my daily 3-4 hour lunch. I watched monkeys eating the flowers from the trees. My rent for a 3 bedroom castle with a pool was half the price of what I paid for a tiny dump apartment in the Bay area. I made as much as I’d make in the Bay and I could spend it where the cost of living is more in line with reality.

    After all that slapped me in the face, I packed my bags and booked my flight out of that miserable city. I left a few days later. My favorite moment was telling Facebook thanks for the offer but I’ve decided that I’m going to go back to the jungle and keep living the dream. I’m glad I learned that valuable lesson before I accepted an offer and became entrenched in the Bay area curse.

  • http://page.ly strebel

    We have been back and forth, and back and forth again on whether to raise money for page.ly. Every time we start down the path to raise, we flip over some rock that reveals something we don’t like so we go back to growing our business on revenues.

    At every turn when discussing taking a funding which is available and has been offered to us we keep coming back to asking ourselves: “will this money force us to become the company we don’t want to be” and inevitably the answer seems to be yes, it will force us to change. Case in point.. to achieve that vaulted 10x exit.. investors will likely push us to maximize revenue/customer and recommend using all the BS tricks to gain profit by confusion and the like that make companies like GoDaddy hated. It just aint for us.

    We are bootstrapped thus far, and unless I can find that unicorn of an investor that will allow us to run our company the way we feel it should be run, even if that means forging a few cents/customer in trade for a better brand and happier customers, than we will just have to be happy with our ‘lifestyle’ business I guess.

    Truth: There is nothing wrong with a lifestyle business, especially when your ‘lifestyle’ is financed by a 7 figure a year recurring revenue business (Saas).

  • http://instantcarinsuranceonline.com/texas/ Ian Wright

    Really great article. For the past several years I have been working towards creating a true lifestyle business for myself. Over the past 18 months I started to see some real success (although not quite in the same league as you). However, the last month I decided I was trying to do too much and instead I’m just going to focus on doing a few things well.

    Anyway all this is to say that I am really all about the lifestyle business rather than an trying to go for a big payday from a VC firm. Other people here have mentioned hiring outsourced staff, which I have at the moment but I find I don’t really enjoy managing them. If I had my own larger company it would be more of the same. For me anyway small is beautiful.

  • theITgirl

    Great post! I am a software developer currently working full time for a company. Recently, my husband and I started talking about having kids and the first thought that came to my mind was that I don’t want my kids to be left in someone else’s care while I work for someone else. I don’t want to stop working entirely and become a housewife either.

    I started looking into other options. From what I understand, startups are for people who want to run a business and a lifestyle business is for people who want to own a business with a focus on maintaining their preferred lifestyle.

    I am choosing to go the lifestyle business route. We’ll see how it goes :)

  • maro

    Although a lifestyle business sounds like the perfect thing, how many of us could really pass away an million dollar opportunity without really knowing what it entails.

    I run a profitable lifestyle business now, but until I experience what toll a startup business really would take, I don’t think that I could let that idea rest.

    It’s not the potential of a 100 million dollar buyout at all, it’s the thrill and excitement of running a company that really makes a difference and has an affect on millions of customers. The realization and responsibility that comes with running a true industry leader and the sleepless nights that you spend wondering which path you should take.

    It’s a journey of self discovery that you can’t pass out on if you know you have that potential.

    Once you done and succeeded/failed then your heart and mind let you rest.

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  • http://blog.fastfedora.com/ Trevor Lohrbeer

    While I like the re-definition of “lifestyle business” proposed in this article, I don’t like the false dichotomy between startups and lifestyle businesses. Not all startups are VC-funded, and not all lifestyle businesses (in the traditional definition) allow the owner to live how they want to live now.

    In fact, most lifestyle businesses *don’t* give their owners a Tim Ferris level of freedom. Plumbers, restaurants, retail shops and accountants are all lifestyle businesses where owners often toil to keep their business afloat. It’s just as easy to work 16 hour days in a lifestyle business as in a VC-funded startup.

    Likewise, it’s entirely possible to bootstrap a startup, not take VC funding, grow rapidly, and yet provide the founders with quality lifestyles. That doesn’t mean it’s suddenly a lifestyle business.

    Ultimately, businesses come in different flavors with each having pros and cons. The best thing is taking the time to identify your own personal goals, and then aligning the type of work you want to do in life with those goals. Then you can determine whether to get a job, start a lifestyle business, join a startup, create a consultancy or panhandle on the streets.

    But, agreed, no one should feel ashamed for constructing their life to make themselves happy. And if a lifestyle business will do it for you, go for it.

    • Corbett

      Hey Trevor, how is running a small business really a “lifestyle business” if it doesn’t afford the desired lifestyle to the owner?

      I like your distinctions though, and it points out the trouble with labels like this in the first place. It seems like we need new terminology altogether.

      • http://blog.fastfedora.com/ Trevor Lohrbeer

        I think the term “lifestyle business” originated around the idea that it’s a business that supports the owner’s current lifestyle, not necessarily their desired lifestyle.

        The way I’ve heard the term used, the focus of a lifestyle business is on getting enough money to pay the mortgage, send kids to school, eat out and maybe go on vacations. The business exists to support to owner (and in enlightened businesses, the employees), as opposed to a growth-focused business, where the owner exists to support the business (and often may have to step-aside to let the business continue growing).

        Some businesses may be able to support an owners _desired_ lifestyle, but I don’t think of that as a pre-requisite for having a “lifestyle business”. At least not in how I’ve heard the term used, which has often been as a derogatory term in the startup world as well.

        That said, I like what I view as your re-definition of the term into a positive term and badge of honor. Having a term that says I’ve achieved success in business to where it supports my life goals is great.

        In fact, having a job might do that as well, so having a broader term that says “I’m doing what I love” would be great. I personally think of the term “lifehacker” as someone who is working on architecting their life to achieve these goals, but not necessarily as someone who has achieved them. I don’t know of a good term for people who’ve found that balance.

  • http://smartcompanygrowth.com Karl Walinskas

    Corbett:
    Great post. I saw your interview with Chris Ducker and it brought me to your blog. I am trying to be the lifestyle guy and have difficulty keeping the focus, but the gains of being at every one of my kid’s events is great to relieve me from the grind of even small business exec working for someone else. It’s funny you talk about VC stuff. My business is a service and I am grapping with traffic and conversion issues. A few weeks ago my wife comes up with an idea that is a freaking game changer that after researching it, doesn’t exist, but I know damn well it will require SF type of VC or Angel money because of the tech involved. Now I’m torn with going down the road of helping her implement this, pitching to sharks, etc. and driving my business.
    By the way, interested in working with you on the business building if you open it up.

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  • http://www.jumptoconsulting.com Daryl Gerke

    Interesting perspective! Hadn’t really thought of it that way, but your point is well taken.

    For the past 23 years, I’ve been part of a “lifestyle business” as a partner in a two person engineering consulting firm. It has been a lot of fun, and has provided a very satisfactory living. Both my business partner and I were able to educate two children each, and still put enough away to feel financially secure.

    Started the consulting firm after a stint with a startup. Founder was a college classmate with a huge ego. Fun a first, but it went downhill in a hurry. Don’t think the angel investor was too happy either.

    So, having tried both approaches, I vote for “lifestyle”. Was asked one time if we wanted to grow the consulting firm — my response was “Why?” Much more satisfying to keep it small, manageable, and profitable.

    Just ran across your blogs — enjoying them. Keep up the good work! Now sharing what I’ve learned on my new blog on consulting. Maybe others will consider this lifestyle.

    .

  • http://lucarea.com Luc

    This is a great article with also very good and interesting comments !
    I have been working as a contractor for big organisations for 10 years and now work in a Startup (that is looking towards VC to ramp up…).
    I have been thinking a lot (and still thinking though…) of a lifestyle business, that will enables me to work how I want to (at 6am the morning or between 22pm and 1am if I want to, being able to pickup my daughter at school, go to the gym when it’s not crowded, going to the supermarket or to the post office when I would not need to queue for more than 30min, …). This also allow you to save time for work.
    Of course, the startup model, with the 0.000001% chance to become millionaire after a couple of year is sometime also attractive.

    I read this morning a quote of the Dalaï Lama (that I will try to translate as I read it in french):

    Men lose their health to get more money and then lose money to get back their health. Thinking about the future they forget the present and then do not live the present and neither the future. They live like they will never die and die like if they had never lived.

  • http://ivesguy.com Dave

    I’ve never been involved with a start-up but I have been involved in the nightmare of buying and operating an existing traditional business. Does the word “yuck” mean anything to you? Also, I worked as an engineer for a company for many years. Again, the word “yuck” applies. Where’s the lifestyle in a traditional business or a JOB? Not for me. So, to answer your question, the start-up appears too risky for my taste. And, looks and feels way too much like the JOB and traditional business world. Has too many similar features for my taste. So, I would prefer to work at something I enjoy, something I’m passionate about, something that makes a positive contribution to society, something that promotes a great lifestyle. Not just looking for the big bucks at the end of the “start-up.” That’s why I’m now a full time property investor and write regularly in my two blogs. Thanks for your inspiration.

  • http://thirstyaffiliates.com Josh Kohlbach

    I think that asking “what do you want from your business, both in the short- and long-term?” is probably a wise first move for me.

    I’ve always thought the idea of running a business would be to “own” it, not “do all the leg work”. I’ve seen what trying to “be” your business can do to you, it’s a stressful route. That’s the startup route to me.

    I can see why you chose to rebuild your life with a lifestyle business. Although, I think that word itself is starting to get a little over-used after all the hype after 4HWW came out and it became the “in” thing.

    As a bit of a pioneer to the whole lifestyle business idea I guess it must seem funny to see the whole thing come by as a bit of a fad? All that said I think it’s a great way to run a business.

  • http://www.crashutah.com John Lynn

    I personally call it slow and steady entrepreneurship vs. big bang entrepreneurship. Call it lifestyle business if you like. I just like being master of my own domain. Turns out it can pay really well too. Just takes a little more patience and persistence. Something far too many people don’t have.

  • http://www.waterproofeyeliner.net Waterproof Eyeliner

    I love the term lifestyle business. I really think that in this day and age what we think of as a normal ‘job’ is dying. It’s becoming less necessary to clock in at certain times, and work 9-5, 40 hours a week.

    Sure there will always be jobs that require it, but I think the future will be a bit more like the lifestyle jobs you speak of.

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  • http://thinktraffic.net/startup-vs-lifestyle-business Sharon McIntyre

    Hey Corbett, great article. Thoughtful comments from the community too. I’m beginning a doctoral dissertation research project this summer looking into this topic and I’d be interested in speaking with you then. Let me know if you’re interested in participating (feel free to email me at the address provided). Cheers.

  • http://fashion.gokateglobe.com Kate

    yes, lifestyle companies doesn’t necessarily mean small businesses or startups, but most small businesses and startups are lifestyle firms

  • http://www.susanharter.com Susan

    Hello Corbett-

    Great post, loved reading the comments, too – so glad to find this! just what I needed..
    I’ve spent the last fifteen years painting murals in the luxury residential market. My husband developed a new way to copy my room-size murals and print them onto rolls of canvas wallpaper. So now we can paint one, sell hundreds.
    It’s a new business, but we’ve already had a great response
    I just heard the term “lifestyle business” for the first time today, when reading some comments from VCs we gave a mock presentation to as part of the final round of a start-up competition.
    They mostly said “beautiful work, you know the market well, nice presentation – but you’re a lifestyle business, not a real company.”
    Huh? This is such a new world to me that I didn’t understand the distinction.
    But after reading your posts and comments I know they are right. And I’m glad.
    To me the whole point of running my own business is to have a more human, natural life. Work like mad when I’m up to it, sack out with a good novel for an hour or two when I need a break, paint listening to NPR with my dogs sleeping on the studio floor.
    Working this way has let me take more art classes, spend time with our wonderful teenaged foster daughter, be boss-free for years.
    I want to earn more with the new business idea so we can have an even richer life – spend the summers doing plein air painting in the Cotswolds, perhaps adopt more kids from foster care, help my husband free himself from the 9 to 5 grind and have a chance to follow his dreams, too.
    Lifestyle business? Yes, I embrace it with both hands.

    • Corbett

      Hey Susan, thanks for the comment!

      Congrats on the new breakthrough you had with printing your work. That sounds very innovative and scalable for your business.

      It seems like you have it figured out. I’m proud to run a lifestyle business as well. After all, what good is business if you have no life because of it?

  • http://motyar.blogspot.com/ncr Motyar

    Just leaved a my startup, I co-founded, same after two years I left my co-founder behind, BYW that was not a VC funded company.
    I am on the path to my life style business development and this post helped me a lot to understand the both side of coin. Thanks.

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  • Felix

    Maybe the main focus is in factor that most of us don’t realize have most value, maybe the only factor that is irreversible, this factor is time.

    I would like to share my own experience, my story is in the other side of the spectrum, where from having a lifestyle business I went to “lifestyle job” if you will. I became flight attendant. Let’s put it this way; subsidize travel + ladies + hotel + allowance?! (I’m from south america so its not a bad deal at all). In summary, after 3 years doing that I had an amazing experience but I notice that the catch was that the Time I give to the job would not capitalize at the end of the period.

    So, as Voltaire says, too much pleasure is not pleasure. My conclusion is that the balance with the only resource that doesn’t come back (time) with another that may come and go (money) is a fair combination. Thanks

    Pd: you guys are welcome to have some pina colada and talk about business at any Brazilian beach, cheers

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  • http://www.drewburks.com drew burks

    Corbett – great article. as someone who has also lived in several worlds, climbing the corp ladder, to founding a tech start-up in So. Cal in 2000, raising $3MM in funding and was setting up for IPO before the tech bubble burst and losing my dream of IPO I am HAPPY HAPPY to report that I have been living my Freedom Lifestyle Design since 2009 and couldn’t be HAPPIER.

    I just learned about you a few days ago and want to THANK YOU for what you are doing – you are a great inspiration. Looking forward to learning more from you.

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  • http://www.costa-del-tennis.com Rhonda

    Hi there!

    Glad I stumbled upon your site / this particular article. I recently started a Lifestyle company in Spain. Well a tennis lifestyle company to be exact. I have a Spanish partner and we ultimately take groups of experienced players to sexy destinations to play like the pros. No joke. I have worked for lifestyle companies my whole life (in product marketing for apparel companies) & currently teach tennis. These lifestyle brands were a nightmare leaving little personal time to speak of…and little salary in comparison to speak of. So I’m really interested to have founded my own concept and path. With a background in marketing, tennis, instruction & lifestyle brands, hopefully it will all help. It certainly hasn’t been a rough start. Asking for money at the moment is a NO NO. Freedom is a necessity. But the marketing behind it is fascinating learning to do it without the money backed push. It’s funny, you always think – I build it, they come! Not so necessarily. And thus the game begins. We’re only 7 mths in so let’s see what the next couple years bring. I believe in Lifestyle companies that’s for sure.
    Thanks for the great article~

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Millions. Then What? The Lifestyle Business Debate – FZS006

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