There are three different things that I've heard it mean:

• A business that is meant to support a particular lifestyle of its stakeholders, and would not risk that lifestyle for higher growth. This is the proper and non-derogatory meaning.

• A small business. Usually one that has something in its DNA to keep it small – market size, product focus, etc. These businesses would often be hurt rather than helped by a capital injection and accompanying expectations.

• The thing a bootstrapping startup gets called after "ramen profitable". The founders still aim for high-growth, but without external capital. Here the term is damning by faint praise.

They're all businesses that at a given point may be about the same size, but the term becomes condescending as you move along the spectrum above towards the second and third instances where the goal is not to be a lifestyle business.

I run a lifestyle business and I don't think anyone would say anything bad about it including VCs. I just think they probably wouldn't want to invest in it. That's cool with me because I'm not sure I would want investment in this particular business. I escalate my goals with it after meeting each new goal but I don't think I want to sell it or go public ever. I just want to run a profitable business that makes my customers happy. I end up reading a lot of VC news and blogs and I never feel like anyone is putting me down or discouraging me from doing what I'm doing.

I do my thing and they do their thing. That's the end of it.

I'd like to read about your experiences. Do you have a blog?

I'd like to see more posts on HN about small lifestyle businesses (which I define as "generates enough money to comfortably support the owner's desired lifestyle") since it's the path I'm aiming for myself.

Nah. If I spent any time on a blog I wouldn't have time for my family or any of the other things I have going on. Maybe in a few years :)

I agree I would love to hear more about lifestyle business as mine is a lifestyle business at the moment.

I'm in the same boat, and I think you nailed it. If anything, HN provides some valuable insight that is transferrable to any type of business. Plus, the tech talk is very good.

i always felt that "lifestyle business" implied a business that not only was bootstrapped, but also wasn't really high growth/pressure. something that you could do to make a living and spend your time however you like, not something you push really hard to grow and succeed like you would with a standard startup, bootstrapped or no.

That's exactly what it is. I don't know where they got this tinfoil hat definition from.

Both definitions are correct. Your definition is the one used by people who run lifestyle businesses (as well as most normal, sane people).

The tinfoil hat definition is used primarily by VC's and founders of VC funded startups, almost always condescendingly. (I've been on the receiving end a few times)

So a "lifestyle business" is a business that's not governed by the "business lifestyle" mentality?

i'd say that it is not necessarily governed by it. it could be, if you want it to be. or not. its that flexibility that defines it, more than anything else, imo.

I agree with the referenced article, the term has been devised to be derogatory. In the past these sorts of businesses, with no VC ownership, were called software companies. Now they are called "lifestyle businesses", a term that calls to mind a precious hobby, but one that is not taken seriously by customer, the market, or even the owner. Hearing that the business is not a serious one but just a means to leisure, customers get the message that when the owner tires of his hobby he will move on, and customer support is at the whim of his leisurely schedule.

I don't use the term. I call it a software business. Call it an independently owned small software business if you like, but lifestyle business is definitely a derogatory term carefully chosen to make independent software companies seem non-serious.

Corporate fool here.

I take issue with the use of "derogatory". I would be ecstatic if I could bootstrap a startup into providing myself with $100k+ per year, with no potential for substantial growth from there.

My impression was that the term also strongly implied that the business owner had the freedom of spending their time how they liked. I have a friend who lives relatively comfortably and does freelance development. If he wants to work 16 hours one day on a cool project and take a long weekend for some biking or hiking, he can. He isn't going to be a rich, rich man in terms of money anytime soon, but he is not wanting of much, either. He is happy, satisfied, locally respected, relatively stress free and content. That sounds like a lifestyle I would enjoy.

"I would be ecstatic if I could bootstrap a startup into providing myself with $100k+ per year"

Me too, except that I would prefer that 100k to be (relatively) passive income. With passive invcome it is easier to be creative, innovate an existing product without too much time pressure, learn etc... Freelancing does not differ from corporate work that much (except if you earn so much money that you have to work less.)

One of the things I've learned through years of bootstrapping is that there's no such thing as truly passive income(other than investments). There's always something demanding your attention.

I imagine that is true but I am striving for something less "active". I work 45 hours a week for an upper middle class income. But including the commute, the inflexibility of 9-5 and being just plain drained from working in an uninspiring environment, it feels like 60 hours a week. I'd be ecstatic with a 30 hour a week business of my own at the same income level. (Of course maybe I'd start a second business with that extra 30 hours...)

My feelings are almost exactly the same. I work 60+ hours a week and make an upper middle class income. I'm trying my hardest to change that because I'd like to have time to enjoy life while I'm young (I'm 23).

Here's an alternative: save as much money as you can. This buys you tremendous flexibility when you're in your 30's (compounding interest plus a healthy savings buffer).

That true, but it's worth noting that "passive" when used in this sense is a reference to income, not to work. Passive income to me means a business earns profits when the owners are sleeping. I've never taken it to mean a business where due diligence is not required, or does not require hard work.

Very good point about the passive income.

So, why are you not going for it? It doesn't sound like such a long shot to achieve that (yes, and I know, even with that it's still a big jump from a comfy corporate job).

Oh, I definitely am! I have a nice long "Seinfeld streak" going of days I have been teaching myself coding and dev. I started the wireframe for one of my ideas/projects this afternoon during lunch. I have gotten myself some good contacts in the local start-up scene and was just this week was asked to do some (part time, off hours) work for a very promising one.

I knew the "release early" mantra, but I am still getting momentum and knowledge behind me. It's starting for me, I am excited.

I agree. Also if a business seems to be 'lifestyle business' at a moment (whathever this means) it does not necessarily mean that it cannot grow huge. (E.g.: Ikea, Microsoft)

I just don't see the "plot" by VC's.

A lifestyle business is one that isn't meant to grow beyond a certain point because it's "enough". Obviously, a business like that is not likely to "change the world" ala Google or Apple or something, but it's probably more realistic for many of us.

It's not a plot, just a derogatory term they use to belittle a trend they are most definitely not happy about.

I don't think they really give a rat's ass. There have always been small businesses. It's not something VC's invest in. If the economics of industries change, so be it; VC's will always have to seek out those industries where a big injection of capital makes success more likely. I know, you know, and they know that, so it's not some trend they need to quash, just a fact of life they will need to deal with.

And yet craigslist seems to have done a fair amount of world-changing...

As I wrote, "not likely". For every Craigslist, there are a zillion companies doing their small niche thing.

And that's ok by me, that's where I'd like to be too. Just that I don't think that road is very likely to lead to world-changing stuff, either.

If you want to tell people you've got a great lifestyle business but don't want the baggage - tell them you run a "small business" or a "small software company."

"Lifestyle business" focuses on what you're not rather than what you are. It is loaded with all sorts of "no ambition" or "that's nice, son" connotations.

"Small software company" is something most people can understand and appreciate. Even VCs.

I've been at four startups. Of the ventures, one of the two with investment is successful, the rest are not.

I can't know if the secret ingredient is having a VC. But having someone whose interests are aligned, has experience in the industry, and can contribute more than just sweat seems really valuable. Maybe that's not every VC (good god, if it's not find someone else!). But that seems like a requirement for a good investor.