You don’t have to go big to succeed: Lifestyle Startups according to Jason Glaspey

[Editor: Thanks to Dale Davidson of TrekDek for another guest post.]

In the tech community, it has become an axiom that a startup, or any newsworthy startup, should have the goals of building a revolutionary product, receiving venture funding, scaling up massively, and selling the company for hundreds of millions of dollars.

As awesome as that sounds, Jason Glaspey, Product Manager at Urban Airship, talked a little bit about the downsides of pursuing this type of path and the benefits of the often ignored lifestyle startup. The title of the talk, “Think Smaller: How smaller, lifestyle startups are more likely to succeed,” was hosted by the Continuous Web Meetup group at the Bagdad Theatre in Southeast Portland and sponsored by Cloudability (thanks for the free beer).

WTF is a lifestyle startup?

Good question. A lifestyle startup is something that is difficult to define.

Jason pointed out that the goal of the lifestyle startup is to enable and support your… well… lifestyle. Many startups grow to the point that it becomes an entity in itself. Supporting the founders is not the primary concern when you reach a certain point in a startup’s lifecycle—mainly funding.

Funding, however, brings with it responsibility to shareholders, the burden of employees, and general growing pains. This isn’t to say that going down this path is a terrible idea, but as a founder, if your goal is mobility, time, and income, the venture funded startup is probably not the path for you.

Jason talked about some of his lifestyle startups, most notably Bac’n and the Paleo Plan. Bac’n was a website that sold bacon. Awesome. Jason and his co-founders sold it about a year ago. More awesome. Jason still runs the Paleo Plan, a website that promotes the Paleo diet and supplies its subscribers with information on how to follow the diet and a bunch of delicious Paleo recipes. The Paleo Diet generates more income than any job he’s had except his current one at Urban Airship. The real kicker? He currently only spends about a 4-5 hours per week working on it.

Requirements for a lifestyle startup according to Jason

The lifestyle startup has certain requirements and characteristics that help the founder:

1. Scalability – If the amount of income your startup brings in is directly proportional to how many hours you work, it’s not scalable. You should be able to build something once and let it generate revenue on its own.
2. Low overhead – This applies to both time and cash. Once the site is up, it shouldn’t take more than a few hours per week to maintain it. Monthly costs should limited to things like hosting and PayPal fees (scratch that, Jason says to avoid PayPal if you can).
3. You should be able to make more money than you would at a job if you break it down to income vs time spent.

Though these are not iron clad laws of lifestyle startups, they are good filters if you have to choose from several different ideas. Basically, if the startup helps you achieve your goal of living the life you want to live, go for it.

How and why you should build a lifestyle startup (even if it fails)

If you’ve read The Four Hour Work Week by Tim Ferriss, many of the techniques Jason described to launch a lifestyle startup will seem familiar to you.

The first step is to test your concept. This involves little more than buying a domain name, putting up a landing page describing your product, and launching a budgeted Google AdWords campaign. If you meet a certain threshold of potential customers that sign up even before you launch your product, you can continue.

The rest involves building the product, setting up a way to receive payment, and putting the project on auto-pilot. Hopefully your site takes off and you wake up every morning with more cash in your bank account.

This isn’t to say that you’ll be successful right away. Jason says he has started about 20 of these lifestyle businesses and only 4 have had any success. Does he regret it? Absolutely not. He has made an effort to take away some important lessons from failing. They include things like

• Making sure you and your co-founder are on the same page (preferably working in the same room)
• Be able to create the core content of your start-up yourself (or else get a good co-founder)
• Don’t build a product that is crucial to a customer’s livelihood (yea, counter-intuitive but if you don’t want the stress, don’t do it)

Plus, just starting a lifestyle startup is enough to open up some opportunities. Jason talked about how he started a car review blog that eventually got on the radar of a car magazine. Currently, he gets to drive a new car every Thursday. Somewhere along the line he also managed to get some good pro-deals on Burton snowboarding products.

The message? Start!

Why Portland is awesome for lifestyle startups

In my humble opinion, the lifestyle startup is the tech equivalent of a food cart. Granted, I don’t have a lifestyle startup or a food cart, but from the outside it appears as if they have similar characteristics. The food cart has low overhead, low risk, and can generate significant income for its owner [in comparison to a full blown restaurant].

The lifestyle startup has all the same qualities as compared to a venture funded startup.

It seems as if every native and adopted Portlander has a side project they are working on. The entrepreneurial spirit can be found throughout Portland, and yet most of it seems to be in the context of building a great life, not just building a great company. I can easily see Portland turning into a city that builds lifestyle oriented tech food carts and delicious start-ups… or did I get that backwards?

(Image courtesy Scott Kveton. Used under Creative Commons.)