There are software businesses which fill specific niches, niches that are too small for the likes of IBM, SAP, and the VC industry to care about, but which can provide a nice living ("nice" meaning generating cash above and beyond just paying school or living expenses).
The reason (for me, at least) that lifestyle businesses suck is because they're not focused on growth. They're more about an immediate, positive, cash flow - the low risk alternative.
Contrast that to startups, where you're building something that could potentially be very big, and positively impact a lot of lives. Now that's a pretty good "lifestyle."
Who are you to say that lifestyle businesses are not focused on growth? Or that they cant' grow fast and change large numbers of people's lives?
There's a big difference between a restaruant and craigslist.
Awesome point. I'm in the same boat to a degree -- I have several businesses that throw off a combined $3-5k per month in cashflow. Nothing to sneeze at, but you have to start somewhere.
Also just sold one "lifestyle business" (was only putting in 1 hour a month on it, literally) for low to mid five figures.
"Startups" seem to have that Get Big Fast mentality, where you're either the next YouTube in 18 months, or you're a failure. But it doesn't have to be that way...
That's exactly the point I was trying to make; well said.
A basic principle of finance is that you can either reinvest profits into your business, to pursue growth, OR you can withdraw profits as dividends. A lifestyle business is one that supports you, paying dividends early on. The owner(s) are withdrawing cash from the company. For a refresher on the definition of a lifestyle business vs. a high growth business, see http://www.indianaventurecenter.org/faqs.asp#7
So the question is - are you interested in growth, or the cash? Personally, I'm interested in growth. I want to build a company that touches as many lives as possible.
It's OK to want to build a company that generates cash, but don't pretend like you can pursue both cash and growth simultaneously. If your pursuing growth, you're spending cash. If you're taking out cash, you're scarifying growth.