Subject: RE: lifestyle businesses
From: "Larry M. Augustin" <lma@lmaugustin.com>
Date: Fri, 20 Sep 2002 08:10:33 -0700

> From: Kragen Sitaker [mailto:kragen@pobox.com]
> Larry Augustin wrote:
> > I'd like to see the discussion focus on non-lifestyle FSBs because I
> > think those are harder to build but ultimately more interesting
because
> > they can employ a significantly larger number of people creating
free
> > software.
> 
> I'd like to see some supporting arguments for that assertion.  Some
> counterarguments (to what I think you meant) follow.

I probably wasn't being entirely clear here.  I think we can all come up
with a list of small, successful FSBs that are making a good living for
the dozen or even two dozen people they employ.  At least some of those
are "pure" FSBs in that they don't depend on selling proprietary
software.

In some sense, I view the problem of small FSBs as solved.

On the other had, I can't come up with a list of large, successful FSBs
that make money both for their employees and a return for investors.
Further, the companies that I would consider candidates for such a list
are not "pure".  They also sell proprietary software.

Therefore, I see the problem of non-lifestyle FSBs as one that is not
solved.  Hence, my interest in focusing on it.

It would be useful to know if the only pure FSBs must be lifestyle
businesses.  Then anyone trying to build a pure FSB business would have
a good framework in which to work.

One other thing driving my interest is that I frequently see business
plans from small break-even or slightly profitable companies with a
dozen or less people making a good living.  They want venture capital
investment because they believe they can grow the company to a large
size, and ultimately make more money than just a good salary.
Unfortunately, they're usually wrong.  Usually what they have is a nice
consulting business that makes them a good salary, and they should
either be happy with that, or go do something else.  

So I try to communicate to as many people as possible that a good
business from the point of view of the employees is not the same as a
good business for investors.  That's all I'm trying to do here.

Maybe FSBs can be good businesses for the employees, but not good for
investors.  Again, that would be useful to know because it would give
people starting FSBs more guidance about how to grow their business.

Larry