It's a great article and it asks the right questions, but it puts aside what I consider the biggest problem : impact.
A lifestyle business means to me a life with a very low impact. It can certainly be a good life, but can't we do better for mankind? If the best and the brightest just care about getting a comfy lifestyle, what sort of examples does it sets?
How many people do you need to affect, and at what level of salience, does a business need to hit to graduate from low impact for you? Just give me a number and a suitably important problem, I will find you high impact lifestyle businesses and low impacted funded businesses.
Just to make it clear- I didn't want to disrespect anything you did or the original article (which I did upvote - something I don't do very often), but I like to dream big and I'd like do something good - real good.
If you want some numbers and a problem, say improving the healthcare of at least half a million persons in a first world country where there are no so many low hanging fruits.
I'd think about say merging lab results from various source and running predictive analysis software or gathering imagery (say CT scans) and see if some computer vision techniques could outperform human interpretation - such as detecting abnormals images very early on.
Things like that would require a decent size and funding.
Then I see DrChrono (YC funded BTW) - wow, a glorified ipad data entry form. It is interesting and will certainly do some good, but it seems not so ambitious unless they plan to keep the data and exploit it later, but I don't think HIPAA would look the other way if they did :-/
So you could certainly be right, but at the moment I believe that most lifestyles business aim at low impact problems, if only for a matter of scale.
And to be crystal clear on that - I'd be delighted to be proved wrong.
Ooh nevermind examples of low-impact VC businesses, I like that example even more.
You can improve the healthcare of over 500,000 Americans by successfully outcompeting the nation's primary healthcare communications and recordkeeping technology: Mk1 Reprocessed Wood Pulp. If you think that glorified data entry doesn't improve healthcare, you're optimizing for sexy but not really optimizing for impact.
A similarly unsexy problem is making sure people actually come to the doctor's office by telephoning them to remind them to come to the doctor's office. (The folks who most urgently need to be at the doctor's office are least capable of successfully making that happen without outside assistance.) This is approximately 2% a technical problem, 3% a compliance problem, and 95% a sales problem.
You're welcome to your own guesstimate of whether one can hit 500,000 patients served without taking VC funding. I have my own guesstimate.
This post brought to you by the letters N, D, and A and the number $LOTS.
Changing the medium (dead wood to electrons) will not IMHO make a difference.
However the "unsexy" problem you mention is an excellent example. I wouldn't call it unsexy. It's something that would be nice and interesting, even if low on technical complexity, and there is a clear and mesurable outcome.
The way I see it, it does not matter if 100 businesses are improving the lives of 1 million people at a time, or 1 business is improving the lives of 100 million people at one go. Every problem that people pay are willing to pay for to help someone fix is in some way decreasing inefficiency and improving productivity in some way. Overall, they will add up.
Ofc, there are also large problems that require funding etc. but when you say something like lifestyle business means to me a life with a very low impact - you are looking at the micro picture, and not the macro one.
Echoing patio11, but yes indeed you can have an impact with the sort of business Matt is advocating for, here. For example, his own site: Metafilter. It's made a profound impact on me and many others. There are tons of personal stories, but here's a topical one from the past hour:
Not trying to degrade that VC startup ecosystem but I'm not entirely sure that typical startup is creating more impact than the typical lifestyle business. (Note the word typical) I might even side with the typical lifestyle business probably having more impact. Now that being said I would agree that most likely the small handful of startups that really shoot to the moon have immense unmatched impact.
A lifestyle business means to me a life with a very low impact. It can certainly be a good life, but can't we do better for mankind? If the best and the brightest just care about getting a comfy lifestyle, what sort of examples does it sets?