The lifestyle business bullshit
37signals.com
37signals.com
If they want to prove their constant mantra of "anyone can do it!," then they should try this: Start a new company with a new company name, use aliases for their own names, live on ramen noodles for eight months (or many more), and see if they can repeat their success. If they can do it, then I'll be the first to sing their praises.
They've created exactly one successful company (a huge achievement to be sure). However, that doesn't qualify them to spread general wisdom about how anyone can do the same.
I'm not saying that their ideas for creating products people love are bad or wrong. They're actually quite good (and perhaps even intuitive to anyone who sits down and really thinks about it instead of just wanting to read about it). But one can't extrapolate broad patterns from a single macro datapoint.
Of course anyone is free to say whatever they want and I'm not suggesting that they or anyone else should stop expressing their opinions -- opinions are what make the Internet great. :-)
So... who is qualified?
Steve Jobs, maybe. But even Steve can't meet your crazy criterion: He's not dumb enough to have run NeXT and Pixar under an alias. He used his own name. Because he had invested a lot of time in that name and it remains one of his biggest assets. And because it's probably impossible for Steve Jobs to run away from his name. And because, even if he changed his name and got plastic surgery, everyone would know it was a Steve Jobs company. I'm told that working for Steve Jobs is a really unmistakable experience. His style sticks out from a mile away.
Business isn't a science. All you get is anecdotes. You have to do what everyone else in Silicon Valley does: look at what Fairchild or Hewlett-Packard or Apple or Google did, and try to generalize. You might accidentally overgeneralize. Try to survive anyway.
People's dreams vary. Some people want to change the world in a big way and gain satisfaction from herculean effort against incredible odds. Other people aspire to a comfortable living and a life that has lots of room for non-work activities. There's no shame in either.
You're great at marketing though.
Rails is just a framework, albeit a popular one. Let's see if people still use it in five years, or if they have moved onto the new new thing.
I still don't get this argument I see afloating the past days from 37signals.
Hard work is hard work. It can occur in 6 hour span. It can occur in a 10 hour span.
First-time entrepreneurs will always commit their whole waking and sleeping hours to hard work. When they are burned they will know they need a balance.
It's about character and experience. When someone has succeeded he will surely happily commit to other stuff to provide a happy balance to their life.
MOST of what people would characterize as "lifestyle businesses" are owned by people who have other priorities. And if the mega-risk startup junkies look down their noses at that, it's their fault-- not yours.
One doesn't have to run a 37-signals style business ("do less", no external investment, charge customers immediately) to do this. One doesn't even have to limit themselves to a traditional 35-45 hour work week to do so. This is entirely possible while being a "workaholic", if you aren't wasting your time. I'd say that those who do spend all waking hours on technology (and I used to be one of those) generally do so out of preference, anxiety or combination of those two.
Note: I am also not implying there's anything with either running a 37-signals style business or spending all waking hours working. Depending on what your goals and preference are, all these are legitimate choices.
I don't think a lifestyle business is negative nor am implying that 37Signals is a lifestyle business. Just think you have it mixed up is all...
And from 37signals blog: "We haven’t found the natural size for 37signals yet, but I can tell you that it’s not a thousand people. It’s highly unlike to be a hundred. Right now it’s 10 and it’s been in that vicinity for quite some time."
You can't really complain you get the 'lifestyle business' tag... As far as I see, it's pretty much the definition of one.
Preferably we wouldn't hire another person for the next 10 years, but still dramatically increase our profits. To me, there's no growth in just adding to the head count without increasing profits. That's just deadweight.
But as far as I see it, that's the definition of a lifestyle business - sacrificing growth of the business (In terms of head count), for 'lifestyle'. With a very small team, that profit seems quite risky to me.
(I would also say plentyoffish is a lifestyle business at the moment from what I know about it). From what I've read, there's a very small team, not growing in head count, making a lot of money.
>> To me, there's no growth in just adding to the head count without increasing profits. That's just deadweight.
I think it's a good thing to employ more people, if it's going to work in the long term. Sacrificing 'lifestyle' now, to build a big company.
You can either take the profit, or you can reinvest it in people for the long term, and build something big.
>> "Our measure of growth and success is profit and growth in profit."
Which is more risky? 1 person earning $10m a year, or 10 people earning $1m each a year within the same company?
I don't understand how you can come to that conclusion. Business success is defined by profits, not ever-increasing headcount.
So I can see what you're saying comatose_kid, but if we're talking about lifestyle businesses it makes sense to talk about organizational growth rather than profit growth. How would making more money destroy your lifestyle? And why would a lifestyle business's owners be afraid of making more money?
"Which is more risky? 1 person earning $10m a year, or 10 people earning $1m each a year within the same company?", that simply doesn't compute. If all those 10 guys are making their $1 million each from selling web ads where as the 1 guy is making his $10 million selling subscription software, I know who I'd want to place my money with right now.
I agree @ keep costs low, but I still think the definition of a lifestyle business is one that isn't growing in terms of the business.
If you liken it to a house rental. You could have the best house in the world, and be able to rent it out for $5m a year. That'd give you a great lifestyle, but even if you can manage to rent it out for $6m the next year, that's not business growth. business growth would be renting out 2 properties, 3, etc etc. Reinvesting the profit into the business in order to provide sustainable long term growth.
>> "I would think that's the nirvana description of any business, though."
So I'd disagree with this. Not every business wants profits over future growth.
The low marginal cost of additional customers in a subscription software business makes your argument an apples-to-oranges comparison. You might need to hire additional staff to manage and maintain a growing portfolio of rental properties, but with subscription software you only have to improve your CRM tools and development processes to maintain a growing customer base with near-constant headcount. If better CRM tools happens to be what you are selling anyway, there's a pretty obvious multiplier for growing profits with very low headcount growth.
Because that's the commonly held definition of "Not a lifestyle business" :/
As a rephrase of the statement I was originally going to put:
Why do you not seem to believe that headcount is merely a side-effect of business growth?
* Company grows profits
* Company decides to spend profit on head count
* Profit goes down
I'd say it's more usually
* Company makes profit
* Company invests in more people
* Profits rise, company grows.1. Company makes profit. 2. Company invests in more people. 3. Profits rise, company grows.
Step 2 is not a prerequisite for step 3.
And what you state is my hypothesis is not what I'm saying either.
How about this: 1 - Company makes profit. 2 - Company figures out how to grow profits, regardless of increase or decrease of headcount. 3 - Profits rise.
What, do you work in HR or something? (jk)
Heh no. I'm a single founder with a 'lifestyle business', making money off it currently. But I plan to grow the business (head count+diversify) when I can.
As I say, I'd rate plentyOfFish as a lifestyle business. It's not a derogatory term in any way shape or form. Just means that instead of growing the company (Headcount, diversifying, etc), they are maintaining their own lifestyle.
The issue is profits, not headcount.
Measuring a company in terms of profit is really short term. How about the long term lasting effect of the company?
Paying additional salaries and benefits and taking on additional management and coordination overhead are all losses/drags on the business, unless the added body brings in far more money than they cost.
Yes, you often need them, but successful large companies often have a lot of people because they have a lot of revenue and profit, rather than having a lot of revenue and profit because they have a lot of people.
>> "unless the added body brings in far more money than they cost."
Basic common sense. I never said hiring people who cost more than they produce was a good idea. Obviously it's not.
We certainly don't have a 4-hour work week, but we sure don't keep a 60-hour one either. Yes, there are exceptional weeks here and there were there's a brief spike, but those are just that, exceptions.
On average, we all take time to spend lots of it away from a computer. I think having a healthy hobby and social life outside of computers will only make you a better business person, not to mention a more well-rounded human.
Your 20'ies and 30'ies are your most capable for physical activity. In my mind, you'd do well to spend a fair amount of that potential.
Of course, you're free to do whatever the hell you please. Just don't make excuses like "I have to, that's the only way to be successful". Oh, and stop calling people who do pursue that balance "lifestyle businesses" unless you literally mean that the have both a life, style, and a business ;)
Their perspective is intriguing, even if it isn't generalizable.