Words matter.
How we think about what we do, with what words, in many ways informs who we are and stylizes the businesses we create.
‘Lifestyle’ as a term is a case in point of this.
A word I rarely use to describe what a business does or its model, but just can’t seem to avoid when out looking for capital.
It’s an interesting conundrum, layered and ambiguous.
I keep wanting to reject the moniker but it sticks around in interesting ways.
Think of it this way.
There are ideas that change our world.
Reinventing how we educate our children, crowd sourcing innovation or rewiring transportation changes our very culture and stylizes how we live. When they succeed, they create enormous wealth that trickles down and reinvigorates the cities where they happen and the ecosystems they touch.
There is no question that what Uber has done for getting around, and what a rock star chef and restaurateur has done to an evening out over an astounding pizza with an approachable wine list are at different ends of the spectrum.
Culturally and financial obviously.
But life and business and intent are more grey, especially early on.
At inception, at a seed stage, what became AirBnB or Kickstarter and a drive to productize your grandmothers Kugel or your mother’s cookies are really starting at the same place.
Not so crazy as you may think.
Did they ever think Shake Shack was going to be a spun off as public company on its own? Or even Etsy?
We dance around this all the time.
We start projects today as we used to have hobbies.
We follow our passions and toil to find structures that platform them, communities that connect them, and invariably capital to support them.
I run into this divide often on the funding front—between concepts of tech and consumer, between future platforms and present satisfactions, between causes that are just damn right to do and things to make money.
What’s interesting is that while it is trivial to start anything today, it is more capital intensive to be successful and grow at any scale.
Sure, some things are by definition go big or go home.
Huge bets, huge wins by design. But even those, often at the first seed stage are so embryonic that it is unclear what they are about.
Some things are by definition, especially around hard goods, all about brand and figuring out how on a small scale they make business sense from a cash flow perspective, but at scale can be game changing home runs.
As a businessperson, I certainly understand that multiples matters and depending on your investment strategy, you determine how big a bet you need to take to make it pay back. As there are obviously markets that scale and cross sectors with more ease.
But this is breaking down quickly both in tech and out of it.
Within tech—or within an explosive network growth reality–the odds of any idea becoming the next Facebook is about the same as winning the lottery.
The belief and the possibility of creating something of value that can become an acquisition target and fit into one of the infrastructure giants that layer out our world—not as crazy.
Some investors, the most successful ones I know, approach this with a theory. Focusing on possibility more that the how of it.
For others, especially at seed stage, it’s just gut feel, looking for the cool and interesting. Invariably and counter intuitively, this group seems to force a model on the idea from the outset. An unnatural act in most circumstances.
On the consumer side, I’m discovering the same bias, the idea that disruption comes from a distribution strategy rather than a brand perspective.
Just not so, tech thinking on consumer realities is a bad mashup.
Are there more or less brands on the consumer side then on the tech side? Does selling pickles by definition create a limitation what with co-packing, franchising and geo distribution possibilities?
Sure—building something that captures human behavior where the users themselves are the content is more explosive than creating something that needs to get made and distributed.
But the maker revolution is cross sectors.
From consumer hard goods to green city guides to software that is a piece of the stack. The odds and the size of success are equal in my mind.
The power of a consumer brand surfacing above the massive din of social noise, an entity that has value equal if not more than many software solutions.
This to me is food for thought, not data for conclusions.
About the reality that capital is needed for the hard goods startup as much as the software company or a community platform.
The fact that solving problems is only a relevant piece of a plan for a very small, often a very limiting approach, to tackling a market.
The truth that bootstrapping is becoming more and more impossible, and I think often, the wrong way to start a business.
And mostly, the idea of defining and finding market traction that speaks to a future model, more and more aspirational if not stifling.
Where does lifestyle play into this?
Lifestyle in our mind’s eye, speaks to the idea dog friendly offices, sushi on Friday, and fully funded insurance plans.
Interestingly, I surfed over to a hot, well funded, huge-burn research start up job page this morning.
They are in SF, but the job page read like the ad copy for leasing a high end condo in the Meat Packing district in NY. All lifestyle and poise and to the P & L, lots of burn.
Light years away from most early startups and small companies living off credit cards and family support, scraping for the first deal to cover cash flow.
This is the take away thought about dangers of encapsulating ideas and possibilities before they are fully market formed.
Worth thinking about when we pitch for funds. Something for investors to ponder as well.
