PG context of a startup is a company that has the potential to make it into a leading stock market index. Anything else is considered a "life style" business and not within YC or most other VC's scope of interest for funding.
My response whenever I hear the "life style" label is to ask who's life style are we talking about? For me, the only difference is that in the traditional VC startup case it is the life style of the VCs that is being enhanced.
They hedge your risk of time and effort by giving you resources of capital, networks, IP to make things happen plus a bonus if the startup gets traction enough for a public offering or profitable exit sale. There are many devils in the details but getting paid to do something you are committed to completing is not a bad offer.
I think I may not have made my point sufficiently clear: I'm well aware of the mechanics of VC funding. I wasn't talking about that, but rather specifically the label "lifestyle company". VCs tend to use the term as a pejorative, implying that a person who owns a business should not seek to improve their lifestyle. My observation is that the difference between the self-funded and VC-funded scenario, as regards "lifestyle" optimization is only who's lifestyle is being optimized (the business owner in one case, the VC and their investors in the other case). The VC isn't going to give up their fancy Sand Hill offices and the Tesla any more than the self-funded entrepreneur is going to give up their quality time with their kids and family.
Yes, and I think that is exactly the point - as an entrepreneur, I build my own company, to meet my own goals. Maybe funding is part of my plan, maybe not. Even if so, there are many options for funding. Maybe it all adds up in a way where YC makes sense... but maybe not. HN started out of YC, so the pro-YC bias in understandable... but it is just one perspective. "Startup" is just a word, a label. pg, or anyone else, can call the company I work for a startup, they can call us a lifestyle company, or call us a rutabaga. Whatever, they are just words - they do not impact the work we do every day.
Uh, no. That's not what PG said, and if he ever used the term "lifestyle" he didn't mean it that way.
Most companies YC funds do not have the potential to be on a stock market index, because they are features as much as products at that stage and often addressing smaller markets. They are still startups.
YC and VC are very particular avenues for startups, but they are not what DEFINES a startup. YC and VC are the sillicon valley model and that is really actually a small part of the total startup ecosystem, though it is the one that makes the most noise.
From Note #1, http://www.paulgraham.com/swan.html :
"The biggest exits are the only ones that matter financially, and those are guaranteed in the sense that if a company becomes big enough, a market for its shares will inevitably arise. Since the remaining outcomes don't have a significant effect on returns, it's cool with us if the founders want to sell early for a small amount, or grow slowly and never sell (i.e. become a so-called lifestyle business), or even shut the company down."
Who are you serving? Investors or yourself? The SV model is that this is all that matters but a 50M business is still a damn good business and not a "lifestyle" business.
Also, read the rest of the quite-- lifestyle business was only one of the options.
It's quite possible to build a fast growing business that you never sell, that's not a "lifestyle" business.
The either/or dichotomy is disproven by your quote.
True, I am not trying to provide the exact definitions for what qualifies as a PG or YC startup per se. But I believe you can quote PG as saying the "ideal exit" for any startup YC incubates is a public offering. Additionally the idea of "lifestyle" startups is well known in SV and the concept is also well known to be frowned upon by the VC's who make the most noise who are looking for a big exit one way or the other.
> Additionally the idea of "lifestyle" startups is well known in SV and the concept is also well known to be frowned upon by the VC's
You're confusing hacker news with "silicon valley". That's a mistake. And VCs are irrelevant, really, in this age of angels. Thank god they are going away, though of course they don't realize it yet.
VCs are the enemy. If you want to have a successful company, never deal with them, except at the very latest stages where you give them a bond like return in exchange for them getting to claim they invested in your company.
Angels are generally your friend, though.
Your thinking will be better off if you just don't think of the term "lifestyle" business. It's a pejorative used to manipulate you into wasting your life in service to someone else's narrative.
I'm not some kid with a keyboard- I've spent nearly 30 years in the trenches dealing with VCs and helping startups.
> Your thinking will be better off if you just don't think of the term "lifestyle" business. It's a pejorative used to manipulate you into wasting your life in service to someone else's narrative.
Exactly. I've only ever heard this from someone seeking transaction fees. As in, "Not there's anything wrong with running a lifestyle business." While their body language suggests everything is wrong with that.
