I’m Afraid You Have a Lifestyle Business
It was a monster house. I could have used a golf cart to get me from my car to his front door. It was intimidating. If my startup took off leading to a big exit would I live in a place like this? The thought came and went but my mind was to busy refining the pitch. It felt like my last opportunity for success.
After enduring a year of gut-churning highs and lows, I had bootstrapped my startup to some consistent revenue. Enough to where my company was accepted into a well-regarded incubator in Austin.
It was impossible to ignore the drumbeat when I got there. If I can distill it into one sentence it would be this. If you want to be successful, you will need to raise money.
It’s really hard to argue with it actually, companies that bootstrapped their way to IPOs are about as common as bodybuilding flautists.
It wasn’t only about raising capital, the incubator had a great program developed to teach us everything we needed to know about growing our startup. We had ridiculously easy access to both mentors and investors.
They provided the knowledge and teed up opportunities. It was all right in front of me.
I took full advantage. I scheduled 5+ meetings everyday. Most of these meetings were pitching potential investors. Some of these meetings went really well, at least I thought they did. Ultimately, what I found was that most angels and VC’s I talked to were cool people, they just had an aversion to saying no.
Some just didn’t want to sit two feet away from you and crush your dreams. I don’t blame them, I’d find that extremely difficult too. Who wants to be a dream crushing prick?
Then there were the more seasoned investors. They also never say no. Hard to blame them either though. Why say no when it could create hard feelings and effectively lock them out of a round if we ever blew it out?
I wished I figured this out sooner. I toiled in this rabbit hole for nearly a year. I raised nothing.
As my one year anniversary in the incubator program approached, I was given a prime opportunity to generate interest in my startup. Demo day at the incubator would attract over 100 real deal investors. I’d have the stage, and some decent revenue numbers to browbeat them with.
“Some just didn’t want to sit two feet away from you and crush your dreams. I don’t blame them, I’d find that extremely difficult too. Who wants to be a dream crushing prick?”
I obsessed over the pitch deck, my script, and the clothes I would wear. I fought through some intense anxiety as I waited for my turn, and then delivered about the best performance (that’s really what it is) I could have hoped for.
I received some interest after the pitch but the meetings that followed felt a lot like the meetings I’d been having leading up to demo day. I had no reason to believe they would lead anywhere.
“This is the end, my only friend, the end”
I had been trying to pin him down for months. I’ll call him Rob. Rob had founded one of the most prestigious incubators in the country after a few sizable exits of his own. He still invested, and had been very active in politics (the space of my startup). And if all that wasn’t exciting enough to me, he even lived in my community.
I finally got Rob’s attention after demo day. He agreed to meet with me at his home. It felt like everything I had done to this point had coalesced in this moment. Like all I had learned in the incubator, every meeting I took, prepared me for this.
Despite my futility in raising money, I was usually pretty composed leading up to these pitch meetings. Looking back, the pitch probably wasn’t great, but I was always confident in my delivery.
This one felt notably different heading in. If I couldn’t generate interest from someone who was passionate about my space, loved my demo day pitch, and also happened to live in my neighborhood who the fuck would ever invest?
I thought this was it. I was crapping my pants but inspired at the same time. I was going to will this to happen.
Rob’s house was cavernous. Probably the biggest home I’d ever been in, no, actually the biggest home I’d ever been in. It was right on the lake. He had boats stacked near the docks on his property.
I refined the pitch a bit to appeal to his politics. After all, this was the first meeting I had with a potential investor who was actually interested in the space. We talked about our community, the schools, our kids, and where we came from (very few people are actually from Austin).
He showed me some of his work, and told me the story of his first exit. I was genuinely interested. I thought it was going really well. Rob wasn’t the warmest guy on the surface, but I could feel his compassion for me as a founder.
Toward the end of the meeting, I asked him about his interest in investing in my company. I wasn’t expecting him to go into his desk drawer and write me a check on the spot, but I didn’t expect what actually ended up happening.
He looked me dead in the eye and said “Justin, I really like what you’re doing and you’ve got good revenue, but it sounds like what you have is lifestyle company.” He paused for a few seconds, processing the disappointment evident in my blank stare, then he said, “Some of the happiest people I know run lifestyle companies”.
Rob had made two points, but my ego would only let me react to the first. Lifestyle company? So you’re saying I’ve failed?
I was angry. My ego told me that Rob was a dream crushing prick.
It took me months to realize that Rob was probably right about his first point. Months after that, I realized he was right.
My company really was a lifestyle company. I had been ignoring reality for to long. My ego wasn’t smarter than Rob or the 50 other investors that passed before him.
With some resolution on his first point, I began to pivot Rob’s second: “Some of the happiest people I know run lifestyle companies”.
“Holy shit. Yeah, that makes a lot of sense” I thought. My clients had no problem paying me for the value our platform provided. The technology was stable. It didn’t appear as though my company wasn’t going to die anytime soon.
I can’t tell you how amazing it felt to free myself from the idea that my company would one day be acquired for boat stacking money. That’s when the happiness started to creep in.
In a few seconds, Rob had laid out a two step plan that would have a huge impact on my life. He wasn’t a dream crushing prick, he just spoke a truth nobody before him dared to do.
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