The lifestyle business bullshit(37signals.com)
37signals.com
The lifestyle business bullshit
http://www.37signals.com/svn/posts/1686-the-lifestyle-business-bullshit
44 comments
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.
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.
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.
Addressed in http://news.ycombinator.com/item?id=509808
Gah, it's honestly the people who RUN lifestyle businesses who make it such a dirty word. It's not, and you should stop being defensive about it.
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.
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.
Another bullshit dichotomy. We want to change the world in a big way. We certainly face hard odds (building a multi-million dollar business is very hard regardless of how you go about it). We just want to do all of that and do other things at the same time. So far that has been going pretty well.
It's not a dichotomy, it was a generalization and certainly there are exceptions. My point wasn't that it's impossible to change the world with a balanced lifestyle (Reagan famously stopped work at 5 at the White House and he certainly made a dent in the world). My point was that some people love to be monomaniacal and throw themselves at huge problems (or huge risk)-- just because that's not your bag doesn't mean it's the wrong choice.
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.
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.
"I’m not saying that you can’t have success by pouring in all your waking hours. Of course you can. I’m saying that you don’t have to. That the correlation between the two is weak."
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.
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.
I honestly don't think 37Signals is changing the world in a big way. You're not inventing the transistor, you're making one of many online to-do lists and chats. I'm not saying the products aren't nice, they are. But they aren't gamechanging in any way.
You're great at marketing though.
You're great at marketing though.
I'm pretty sure Rails was game changing.
Lisp was gamechanging, C was gamechanging, maybe fortran was gamechanging.
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.
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.
Maybe in the way it's encouraged other web frameworks to adopt MVC, but that's not a huge deal. MVC has been around for a long time anyhow.
It didn't change the whole world just a little bit (which is what most people mean by "change the world"); it changed one tiny segment of the world—webapp programming—a lot. I think that's even more laudable.
It did bring Ruby into the mainstream.
"...still have time for taking flying lessons, learning to play the guitar, nurture your garden, go hiking, enjoy cooking, socialize with people outside your tech circle."
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.
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 think a lifestyle business isn't necessarily defined by the amount of hours you work but rather how much you earn. If your business earns X and you are content earning X because it supports your 'lifestyle', then you have a lifestyle business.
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...
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...
37signals is crossing the line from confident into arrogant hubris. It's understandable. The incentives in the eyeball/clicks world is to be inflammatory. Doesn't mean we should be paying attention.
From wikipedia: "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; Lifestyle Businesses typically have limited scalability and potential for growth because such growth would destroy the very lifestyle for which their owner-managers set them up."
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.
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.
You are equating growth with head count, which is a common fallacy, but still a fallacy. Our measure of growth and success is profit and growth in profit. For the past many years now, we've had spectacular yearly growth and we've yet managed to avoid destroying the lifestyle we're enjoying.
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.
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.
Without a head count growth though, you're just supporting a lifestyle. Surely. That's great, and it depends on your priorities.
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?
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'm on board with the term "lifestyle business" if we make it imply "very profitable business that continues to grow revenues without adding additional cost". I would think that's the nirvana description of any business, though.
"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.
"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'd place mine firmly with the web ads ;)
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.
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.
I know you're not just trolling, because you contribute many insightful comments on HN, but I just don't see why you are so focused on headcount as the measure of business 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.
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.
>> "but I just don't see why you are so focused on headcount as the measure of business growth."
Because that's the commonly held definition of "Not a lifestyle business" :/
Because that's the commonly held definition of "Not a lifestyle business" :/
Come on. If you disagree, comment. Don't just blindly downmod. I'm not even saying one is good, one is bad. I'm explaining the commonly held definition of 'lifestyle business'.
This is probably happening because the same point of fact is being repeated multiple times and you seem to be skipping over the point.
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?
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?
So your hypothesis is:
I'd say it's more usually
* 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.Well I think we've identified the point in which our opinions diverge.
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)
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)
>> "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.
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.
I hate to pile on here,but...
I think the parallax here is that axod may be equating headcount with income diversification. i.e. More people mean your company must be expanding its interests or avenues.
Income diversification, and the headcount increase usually (necessarily?) associated with it is probably a better metric for the "Lifestyle" moniker.
"Without a head count growth though, you're just supporting a lifestyle. "
I don't understand how you can come to that conclusion. Business success is defined by profits, not ever-increasing headcount.
I don't understand how you can come to that conclusion. Business success is defined by profits, not ever-increasing headcount.
The definition axod gave reads, "Lifestyle Businesses typically have limited scalability and potential for growth because such growth would destroy the very lifestyle for which their owner-managers set them up."
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?
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?
That definition is flawed. It's possible to run a huge website with 20 people. If you're a top-100 site, and your staff is measured in tens, are you still a lifestyle business?
I would say so, yeah. If you only have 10 people, I'd say it's still kinda risky. Your company could disappear very quickly.
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.
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.
No way. 10 people creating a 100M business isn't at risk of disappearing. 10 people creating a 1M business might be.
The issue is profits, not headcount.
The issue is profits, not headcount.
I don't see why that would be the case. Profit doesn't really mean anything unless it's sustainable (Apart from providing a lifestyle). To be sustainable, it's worth diversifying, and that means increasing head count.
Measuring a company in terms of profit is really short term. How about the long term lasting effect of the company?
Measuring a company in terms of profit is really short term. How about the long term lasting effect of the company?
I think that headcount is a (n often) necessary evil in growing a business, but keeping everything else equal and increasing headcount alone actually makes your business less likely to be long-run great, IMO.
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.
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.
I think you're talking about exceptions rather than the rule.
>> "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.
>> "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.
I don't disagree with DHH but I bet if you totaled the hours spent blogging, redesigning FedEx for fun, giving talks at conferences, fixing Rails bugs, etc. the 37signals crew works about as much as anyone else. I want to know who is calling them a lifestyle business. Did that even happen?
As much as what? And what are you willing to bet :)?
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 ;)
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 ;)
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These guys really, really – I mean REALLY – like to talk about themselves. We get it, you're cool. Now please help port some more gems for Ruby 1.9.
Judging by how frequently they make the front page, people on HN really, really like to talk about them as well.
Their perspective is intriguing, even if it isn't generalizable.
Their perspective is intriguing, even if it isn't generalizable.
Agreed. 37narcisists.com is more like it!
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. :-)