“Lifestyle Businesses”: The topic came up at yesterday’s Montreal Tech Entrepreneurs Breakfast after the Montreal Start Up crew joined Darrel and I.
Lifestyle Businesses are businesses that are set up and run by their founders primarily with the aim of sustaining a particular level of income and no more; or to provide a foundation from which to enjoy a particular lifestyle. (wp: Lifestyle Business)
Why wait until an IPO, after you are already addicted to the 80 hour weeks? Freelancing already affords me the opportunity to make a healthy income and pursue other interests - dancing, community building and more.
When I got home, there was an Amazon parcel waiting for me with two books:
- Paul Hawken’s Growing a Business
- Stephen T Beckett’s The Science of Chocolate
I actually bought a chocolate maker, beans and chocolate. Just for fun. It’s the kind of lifestyle I would want after a successful start-up, only I get to have it now. If you are waiting until you’re a millionaire to enjoy the life you can have now, you are crazy.
VC’s naturally dislike these businesses. Investing in Daniel Haran simply won’t scale. Once I can charge more per hour, I’m more likely to work fewer hours. I could hire sub-contractors and grow but the margins are small - if there is growth, it will be organic.
If you ask a VC to invest in your lifestyle business, you will just annoy them and waste everyone’s time. As Daniel (from MSU) pointed out, there’s probably some way to make money at it - however the structure of a VC fund isn’t appropriate (they have to return the money to their investors at the end of a fund, usually around 7 years).
Around this time, Aran Rasmussen joined the conversation: Would micro-finance or another type of fund structure help us get some sustainable lifestyle businesses? More than a handful of high-profile successes (like RIM), Montreal could have a vibrant tech business scene if we could figure out a funding model for these companies. Fortunately, people like Daniel are thinking about it.
I may one day decide I want to start a company. Working at a small business should hopefully increase my odds of success - I’ve built relationships and learned valuable lessons already.
The motivation would be different. I believe the lottery ticket approach to startups is a personal and spiritual dead end. I already have enough money to afford a comfortable lifestyle, a few millions will not make me happier. Well, not for very long.
Hopefully the discussions at these breakfasts will bear fruit. The most potent one could be a vision of entrepreneurship that did not sacrifice community, family or sleep. As the Silicon Valley prophets of greed and workaholism continue blogging their tired message, we could be using the web the way it was intended and creating lasting wealth.
2 comments ↓
The obvious answer, and what the people I see talking about a lifestyle biz the most often (37 Signals) would be to do it with your own money, that you don’t need investment money to build something.
The more interesting answer of course is that for people who don’t always have the resources to work on something for free for a while and/or who can’t do the whole thing themselves and possibly don’t have the partners, there seems to be a space for something new.
It reminds me something Hugh and I have spoken of a number of times, some kind of structure where it’s possible to find “free” or cheap help on small projects where people are able to devote work hours they are payed for in more than potential small shares of something that probably won’t make that much money.
A 100K of money available for cool projects, where you can simply (as in quick proposal / process) get under 10K or even under 5K to supplement the building of something would help launch A LOT of things which currently linger in the “a few hours at night when I have the time” zone for months or years.
The Saje Montréal has the STA program where you can get 11K (one year at minimum salary) to basically start something that helps you create your own job. You fill in a project form, it goes through a “filter” of acceptation, then you present to 2-3-4 people, they say yay or nay and bam, the money starts coming (ok, you have to follow classes too).
This “fund” would hand out money to either build something that benefits the general “webtech ecosystem”, locally or internationnaly, and/or helps someone create their job / lifestyle company. In the first type, Hugh could have gotten cash for Librivox, we might have gotten something for Station C (although we’re probably too meat space based for this), Heri could get something for his new version of MTW. In the second type, things like http://www.timmyontime.com/ or … all the things we are discussing and haven’t completed yet could get a kick start.
The angle wouldn’t be to make money or even to have it returned, it would be to act as a bunsen burner to heat up our local petry dish. The people deciding wouldn’t be bureaucrates but rather people who get it and could even redirect some projects towards angel funds if the projects looks like it can be something big money wise (and would kick out people trying to get a free website out of it). A kind of STA for internet stuff.
Programmers, designers, UX people, etc. Could associate with the fund and offer a preferential rate for projects funded that way, to make the 5 or 10K go further. Some kind of monthly meetup / Camp could be setup so everyone can support each other with something similar to the help Y Combinator gives it’s fundees.
Considering the millions spent on Capazoo and some other dubious investments, 100-150K specifically meant to foster small scale innovation that nourishes the whole field sounds like a good investment to me, if you don’t only invest in money return.
(that was long, I think I’ll repost to my blog!)
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