Indie Entrepreneurship

I recently read a great posting from bryce.vc called “Rise of the Independents.” Certainly worth a look if you have a minute.

The primary argument discusses the extremes of scale in start-ups that are frequently mentioned. This is the so-called start-up continuum. The first extreme being that start-ups must seek to go big.

The canonical startup path is well trod. Build something, get on the VC hamster wheel and don’t get off until you’ve IPO’d or sold for big bucks to someone looking to fill a hole.

Alas, in that quest to change the world or build the coveted billion dollar company, relationships, family, hobbies and overall quality of life must be offered as a sacrifice to to the startup gods in hopes they will find them worthy and bestow the ultimate reward.

The other extreme is the a “lifestyle” business, or perhaps “bootstrapped” business. A business started on funding directly from the founders, eschewing outside investment capital.

Bryce argues for a new category that is forming of “indie” entrepreneurs. Entrepreneurs that aren’t constrained by the traditional ideas of scale or lifestyle. They use alternative funding platforms to build their businesses, such as crowd-funding. Alternative funding means they don’t have to answer to an investor.

Kickstarter came to mind for me immediately. My friend, Todd, is in fact trying to do just this with a great rainwater harvesting idea. I’ve actually been considering doing Kickstarter myself for some of the product ideas I’ve had.

Indie entrepreneurs also seek niche markets. Markets so small, that perhaps even Angels won’t invest in their ideas. Hence the need for alternative vehicles for funding.

While the idea of the “indie” entrepreneur is imaginative, I find myself pondering the real issue with the justification of why they are coming into existence. The canonical entrepreneurship path does not have to be full of self-sacrifice. I’ve seen numerous businesses go through the stages of funding and the entrepreneurial life cycle without leaving behind littered wreckage of families.

Many careers, such as in medicine, have the same long hours and exhausting effects depicted of the traditional start-up. I’m sure crowd-sourcing certainly can lead to the same effects. After all, the crowd-sourcer must answer to many small investors, not just a handful of big ones. Any glitches with the product / business development could be potentially more disastrous in dealing with large groups of people. I’m sure many of the successful projects on Kickstarter could attest to that (testimonial someone?).

The bottom line is that demanding work is not merely an isolated traditional entrepreneurial phenomenon.

I believe the real key is that crowd-sourcing is making way for a new funding vehicle for entrepreneurs. And the maturity of many of the markets around the world is necessitating more and more niche market players come into existence. Traditional opportunities in big categories, such as financial markets or in technology, are there, but require precise targeting.

Far be it from me to judge, but in my experience the work-a-holic approach to start-ups is primarily because of management. Good management can certainly aid in the work levels associated with any kind of start-up through delegation. You can never learn enough about good management.

Don’t get me wrong. I certainly am nowhere near comfortable saying that I can effectively accomplish all of the challenging management tasks that come with start-ups. I’m merely a student in the school of life myself. The more management training however, the better.

Of course, what do you do when the market opportunity necessitates a reduced funding level? Reduced funding means restricted resources. How can you bring on new resources to assist? As I see it, that’s where equity comes in. I’d much rather have a smaller piece of a large pie plus a great family life than a higher percentage of the reward with no one to share it with personally. I’d certainly be willing to work for equity with the right opportunity.

All of this is easier said than done, of course. Find and align the right resources. Target the right funding vehicle. Take on reasonable amounts of work. Great in theory, but practice isn’t always perfect. I recognize that. It highlights that extremes aren’t always accurate though. There are many shades of gray. As I see it, “indie” entrepreneurs have been around a long time. Now they have more available market targets and newer funding vehicles with which to work.

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