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> I think you could run a reasonable lifestyle business here if you don’t take VC, but I’m skeptical this can ever be truly mass-market.

You Need a Budget (YNAB) is proof of this. I don't believe they've taken any VC funding and are a pretty successful lifestyle business in the Budgeting/Finance space.

They’re great, but they aren’t super quick with features and I wish the product had more, especially when it comes to the graphical reports.

It’s also an expensive product for most people. But we do need more of these sustainable low-growth non-VC style SaaS companies out there.

I just wish their imports were a bit more reliable. Although some of that comes down to the fact they use 3rd parties that scrape the screen of your bank, so any time something changes, it breaks the imports. (it would be great to get an API standard, with proper authentication, etc)

Also, there is a plugin that gives you more reports: https://www.toolkitforynab.com/

https://en.m.wikipedia.org/wiki/Open_banking

If a product is good, we shouldn't judge it on its inability to continuously add new features.

Not sure I understand that. If I want feature X, and <app> doesn't have feature X, then that's a negative. Doesn't mean <app> is not "good", but it's certainly criteria by which to judge it.

Arguably, though, an app is more than just the sum of its feature list. Also, even if a feature is desirable when considered in a vacuum, that doesn't necessarily imply that adding it will improve the product.

Somewhere in between $very_long_ago and $long_ago, I stopped using a well-known personal finance app because I grew dissatisfied with it overall. It gained all sorts of genuinely useful capabilities over that time period, and didn't shed any, but still managed to become less functional (for my purposes) at the same time. I ended up replacing it with a competitor whose feature list was much, much, much smaller.

If <app> is good, then its nice to focus sometimes on the fact that its good, rather than on what it doesn't have. Its similar to judging a Honda for not being a Maserati that gets 200 miles per gallon.

Sure, but whether or not I decide to stick with <app> depends on many factors. One of those is "does it do everything I need/want." If the answer is no, then that factors into my decision.

No app is gonna rub your back at night or hold your hand on your deathbed (well, yet, google is probably working on something), so "everything" isn't... really a thing.

Who said "everything"? You're just making up arguments I never made. Can we agree that an app with zero features is useless? Assuming we can, the utility of an application is a function of which features it has and how well those features are implemented. So the features are important, and how they're implemented is also important. I don't understand why that's (apparently) controversial.

I love YNAB but definitely not for the reports. I've been downloading my data and analyzing it in Rstudio whenever I want prettier charts.

Agreed. Their reports are horrible and for all practical purposes useless. It has a few other warts and areas of improvement, which bother me, but none as much as the lack of reporting.

The question is what happens to these lifestyle businesses when a VC backed company comes along with a $100MM raise in the space and a free product. Do they survive? Does the team lose their livelihood?

VC money does not fix TAM, be it 100M or 1B. What is does; allows startup to pivot and find other areas of growth (hopefully really fast), which is not easy or guaranteed to work either. Recent examples like WeWork, Zume and many more... I must also add, sometimes not everything that one sees fits in the definition of TAM... by true definition of TAM, AirBnB and UBER would have been a lifestyle business when they were first started....

I hate the phrase "lifestyle business." Look: it's a business. No, it's not going to make VCs billionaires. But it's a perfectly respectable business nonetheless. Nothing wrong with that.

Do not worry. There is only a tiny group of people who know the meaning of the term.

So I went to Wikipedia and found this definition:

"A lifestyle business is a business set up and run by its 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."

Seems like a useful concept. What's wrong with it?

It's a useful concept when used appropriately. There is nuance that you are missing.

When used it's a description that the business owners provide based on how they run their business, then it's OK. When you use it to describe someone else's business it's often considered a slur (unless they've previously shared this with you and you know that fact.)

Many smaller companies are not actually lifestyle businesses although that term is thrown around here. The owners may be part-time because they actually operate a group of companies, grow niche companies to sell outside of the VC world, etc. They are indistinguishable from lifestyle businesses, but the owners are looking to do a lot more than sustain a level of income.

> When you use it to describe someone else's business it's often considered a slur

I see.

I find it a bit unsettling that in some cultures stating that a business has priorities other than profit at all costs is considered a slur.

I'm not sure it's specific to a limited set of cultures. I think there would be fairly broad cultural support for it being considered diminutive. Besides, the core of the problem is that it's only valid when that business owner describes itself as a lifestyle business.

I can say that, while competition is part of every capitalist society, at least in my region of Brazil the search for work-life balance is something few entrepreneurs would be ashamed of.

The German Mittelstand is a more positive version of this.

It is literally "Middle Class"

They want to stop at the 'M' part in SME.

You nailed it. It can be either a neutral term or a slur depending on the context, as the above comment says. But I dislike it mostly for the reason you mentioned. It implies that the only really alpha, desirable businesses are those that make a bajillion dollars for VCs and don't have much benefit to customers or the general public.

Yeah, that is awful. And it's a shame that such a useful concept got a negative connotation.

If you are using "lifestyle business" to mean "a business has priorities other than profit at all costs", you are using it incorrectly. A lifestyle business is one where the owners have set a target business size and profit level, and do not try to grow past this; some owners even actively inhibit growth to keep the business from getting too large. The purpose of the business is to give its owners a fixed cash flow.

A company whose owners are working to grow the business consistently and organically is not a lifestyle business; it is also not pursuing "profit at all costs". Most privately-held businesses fall into this category.

As to "lifestyle business" being a slur, it is unfortunate that members of the growth-obsessed communities use it as such. They don't see a business with a fixed target size as serious. Incidentally, many also think the same about the organic growth case I mentioned. I ignore them, and most other things from VC startup culture.

Yes, of course. As you said, there is certainly a spectrum between "profit at all costs" and "fixed growth" or similar constraints. That is easy to visualize.

I find it interesting and even inspiring that some economies allow entrepreneurs to make this kind of choice. That is not my reality at all. In South-America, we grab every chance we get and don't let go. There is much less opportunity.

> A lifestyle business is one where the owners have set a target business size and profit level, and do not try to grow past this; some owners even actively inhibit growth to keep the business from getting too large.

I think this is too far narrow a definition of "lifestyle business". The better definition is simply a business that fits the founder's intent and lifestyle.

I know several founders that started from nothing, built their company to turn a sizable profit and resisted big VC money.

It's demeaning and inaccurate to call them "lifestyle businesses", they made a calculated decision. Roughly, they took a chance with self-financing, and maybe a ~40% chance bet on making a good living, versus taking the VC money and having 3% on becoming unbelievably wealthy.

Given a 40% chance of making several million and a 3% chance of making billions, it's pretty reasonable for folks to take the higher probability, even if the statistical expected value is better with the VCs. These aren't people who "gave up", often, they made the smarter decisions.

People who are looking for VC funding for their business consider it a slur, because VCs will use it as a reason not to fund.

To give an analogy: “family car” is a good way of describing a safe car that fits a lot of passengers. But if you set up your SUV for rock-crawling and somebody calls it “a nice family car” you might consider it a slur.

Yes, I get the analogy. But the actual case to which it refers has much broader implications.

Sort of, but don't read too much into it.

Well, it ascribes an intent that may not be there. Why do you assume that the business is actively limiting growth, as opposed to trying but failing to grow? It's like calling something a pet project. You can say that about your own project, but if somebody else calls it a pet project, it could rightly be construed as demeaning.

It's often set up as a binary. Either you are a VC backed "big play" or you're a lifestyle business.

Which lumps a business that employs 140 people in several states and makes a few hundred thousand in profit every year with a bookstore with a cat that barely breaks even, and is closed every Wednesday so the owner can go skiing.

That's a fantastic description of the business model a guy I know runs his plane tours under. He likes flying. He doesn't earn enough to justify flying just himself around in circles every weekend. So what he does is take people up with him on scenic tours. No real room to grow. He's not competitive if he tries to start scaling and actually completely cover pilots, planes, and the advertising required to keep them busy. But he keeps his hobby mostly cost neutral through word of mouth.

What it is not is a good term for any business that doesn't take VC. There are many businesses where the primary objective is to grow and make lots of money but where VC doesn't make sense. It's probably most businesses. So when someone calls a business a lifestyle business simply on the basis that the market isn't big enough to warrant VC, it's insulting to a large swath of business owners and generally a case of unwarranted elitism. Like if Zuckerberg was looking at businesses earning tens or hundreds of millions a year and went "how cute, lifestylers" it'd be shitty but at least he'd have the success to back it up. Mostly on here you see it from people just leaching off the success of their industry. They earn hundreds of thousands but use their position in tech to look down on people pulling in millions.

Someone making tens or hundred of millions of dollars a year is far beyond the definition of a lifestyle business.

At that point you will have achieved significant scale and all the headaches that come with it.

Getting back to the above post, a budgeting tool is a lifestyle business. It will likely never grow to 100m+ revenue or 200+ employees.

It can however make for a great lifestyle business that generates enough money to cover living costs with minimal investment from the owners (after initial investment of building the business).

What if their lifestyle costs tens of millions?

This just proves how stupid the label is.

It's a positive term....

Sometimes. Depending on the context. But usually in SV VC circles it's a dismissive term.

> But usually in SV VC circles it's a dismissive term.

Sure.

But that's always going to be true because VCs don't invest in lifestyle business.

You pretty transparently have a chip on your shoulder about this. "Lifestyle business" is not a pejorative. It can be, but it generally isn't.

Actually, I don't at all. A lot of people in tech agree with me on this. See thread.

Luckily for most founders, a business that tops out at $10mm a year in net income is still considered a lifestyle business for most VCs.

Yep. You can probably go higher than this today - $25 million these days seems to be too small for the VCs.

That makes a ton of sense to me. In some areas, I think our natural categories obscure human variation that's important from the product perspective.

For example, task management software sounds like a coherent thing. But in practice, people think and work so differently that there will never be a solution that everybody loves. At least from personal experience, personal finance is the same way.

Meta: do you view a product through the customer's eyes or through the eyes of the person making it?

That's been an important insight for me to understand. Describing something in terms of its features/how it works, you might say "photo sharing app". But this core feature could be wrapped, packaged, marketed, and described so many different ways: flickr, Instagram, Getty Images (!!), a scientific collaboration tool, etc.

"Task management" feels similar.

Definitely!

With the caveat that this problem often persists even within the eyes of the customer. A lot of people would agree with the problem statement of, "I need something to help me keep track of what I have to do." But "I", "keep track of" and "what I have to do" varies widely in ways that the customer isn't aware of.

It's sort of like picking a place for a group of people to have dinner. A lot of people think they just want dinner until you say, "How about X" and then they realize their desires are much more specific.

I'm sorry, what is TAM?

total addressable market

Total Addressable Market

Total addressable market

Total Addressable Market - how many people might use your thing.

Good baiting to gauge how many MBA/VC types are lurking....they can't resist!

> The first is that the total TAM is less than you think; for most people, tracking their spending to manage budgets just doesn’t appeal to them. For many consumers, just seeing all of their finances is incredibly depressing.

I think that depends on how you address the market, actually. The Mint way, which requires continuous engagement and ad impressions, is something you’d be right about. But there’s a larger addressable market of people who intermittently think about getting their finances squared away, maybe as a New Years resolution or something. If you market to those people the way gyms do, there might be a larger market.

I think you hit the nail on the head, which is that this is only a successful business if: * The revenue model is stronger than lead-gen. * The product isn't too complex or depressing. :)

> For many consumers, just seeing all of their finances is incredibly depressing.

Fuckin' ay. Consider me one of those consumers! ...I should probably stop consuming.

I was told recently by someone who runs one of these types of apps that TAM that has been tapped so far is <1B. And these apps have been around for a while. So for some of these businesses, their consumer app can be a "wedge" to get them going, but they hedge by exploring B2B opportunities.