The path to profitability doesn’t need to be complicated. (Photo: El Photopakismo)
I’ve known the guys at 37Signals for a little while.
I first met Jason Fried at SXSW in 2008, and I then got to know David Heinemeier Hansson (DHH) over e-mail and in person last year. On a fundamental level, I think, our philosophies just mesh well.
Comfortably situated in Chicago outside of the “start-up” echo chamber, 37Signals is focused on getting sh*t done instead of chasing the Silicon Valley venture capital death spiral. Financing has it’s place, but it’s a means to an end and shouldn’t be confused with an end.
The end is a profitable business. Now, let’s be clear: there are ways to play the acquisition game (or even financing game) and make millions without ever turning a profit. But don’t let the media fool you–you hear of the few successes because the stories are fun to tell. The thousands of failures that die sad but unspectacular deaths don’t get on the magazine covers.
More than 3,000,000 people worldwide use 37Signals products, including me. I use one of them, Basecamp, for project management, and it rocks in its simplicity. I’m not the only one who thinks so: Basecamp generates millions of dollars in profit every year.
37Signals’ employees–fewer than 20 total–are spread across 8 cities on two continents, and no matter how many rules they break, profit seems to be the end result…
This is part of the reason I was excited to get an advanced copy of Rework, their new book, which I encourage people to think of as an Elements of Style for building profitable businesses in a web-savvy world. Each chapter is 2-5 pages long and delivers their tactics and principles fat-free, without fluff. Just like their business models.
Here are a few excerpts to whet your appetite. Profitability doesn’t need to be elusive. It’s a simple process… if you have the right recipe from the outset.
People ask, “How big is your company?” It’s small talk, but they’re not looking for a small answer. The bigger the number, the more impressive, professional, and powerful you sound. “Wow, nice!” they’ll say if you have a hundred-plus employees. If you’re small, you’ll get an “Oh . . . that’s nice.” The former is meant as a compliment; the latter is said just to be polite.
Why is that? What is it about growth and business? Why is expansion always the goal? What’s the attraction of big besides ego? (You’ll need a better answer than “economies of scale.”) What’s wrong with finding the right size and staying there?
Do we look at Harvard or Oxford and say, “If they’d only expand and branch out and hire thousands more professors and go global and open other campuses all over the world . . . then they’d be great schools.” Of course not. That’s not how we measure the value of these institutions. So why is it the way we measure businesses?
Maybe the right size for your company is five people. Maybe it’s forty. Maybe it’s two hundred. Or maybe it’s just you and a laptop. Don’t make assumptions about how big you should be ahead of time. Grow slow and see what feels right—premature hiring is the death of many companies. And avoid huge growth spurts too—they can cause you to skip right over your appropriate size.
Small is not just a stepping-stone. Small is a great destination in itself.
Have you ever noticed that while small businesses wish they were bigger, big businesses dream about being more agile and flexible? And remember, once you get big, it’s really hard to shrink without firing people, damaging morale, and changing the entire way you do business.
Ramping up doesn’t have to be your goal. And we’re not talking just about the number of employees you have either. It’s also true for expenses, rent, IT infrastructure, furniture, etc. These things don’t just happen to you. You decide whether or not to take them on. And if you do take them on, you’ll be taking on new headaches, too. Lock in lots of expenses and you force yourself into building a complex businesss—one that’s a lot more difficult and stressful to run.
Don’t be insecure about aiming to be a small business. Anyone who runs a business that’s sustainable and profitable, whether it’s big or small, should be proud.
Scratch your own itch
The easiest, most straightforward way to create a great product or service is to make something you want to use. That lets you design what you know—and you’ll figure out immediately whether or not what you’re making is any good.
At 37signals, we build products we need to run our own business. For example, we wanted a way to keep track of whom we talked to, what we said, and when we need to follow up next. So we created Highrise, our contact-management software. There was no need for focus groups, market studies, or middlemen. We had the itch, so we scratched it.
When you build a product or service, you make the call on hundreds of tiny decisions each day. If you’re solving someone else’s problem, you’re constantly stabbing in the dark. When you solve your own problem, the light comes on. You know exactly what the right answer is.
Inventor James Dyson scratched his own itch. While vacuuming his home, he realized his bag vacuum cleaner was constantly losing suction power—dust kept clogging the pores in the bag and blocking the airflow. It wasn’t someone else’s imaginary problem; it was a real one that he experienced firsthand. So he decided to solve the problem and came up with the world’s first cyclonic, bagless vacuum cleaner.
Vic Firth came up with the idea of making a better drumstick while playing timpani for the Boston Symphony Orchestra. The sticks he could buy commercially didn’t measure up to the job, so he began making and selling drumsticks from his basement at home. Then one day he dropped a bunch of sticks on the floor and heard all the different pitches. That’s when he began to match up sticks by moisture content, weight, density, and pitch so they were identical pairs. The result became his product’s tag line: “the perfect pair.” Today, Vic Firth’s factory turns out more than 85,000 drumsticks a day and has a 62 percent share in the drumstick market.
Track coach Bill Bowerman decided that his team needed better, lighter running shoes. So he went out to his workshop and poured rubber into the family waffle iron. That’s how Nike’s famous waffle sole was born.
These people scratched their own itch and exposed a huge market of people who needed exactly what they needed. That’s how you should do it too.
When you build what you need, you can also assess the quality of what you make quickly and directly, instead of by proxy.
Mary Kay Wagner, founder of Mary Kay Cosmetics, knew her skin-care products were great because she used them herself. She got them from a local cosmetologist who sold homemade formulas to patients, relatives, and friends. When the cosmetologist passed away, Wagner bought the formulas from the family. She didn’t need focus groups or studies to know the products were good. She just had to look at her own skin.
Best of all, this “solve your own problem” approach lets you fall in love with what you’re making. You know the problem and the value of its solution intimately. There’s no substitute for that. After all, you’ll (hopefully) be working on this for years to come. Maybe even the rest of your life. It better be something you really care about.
Tone is in your fingers
Guitar gurus say, “Tone is in your fingers.” You can buy the same guitar, effects pedals, and amplifier that Eddie Van Halen uses. But when you play that rig, it’s still going to sound like you.
Likewise, Eddie could plug into a crappy Strat/Pignose setup at a pawn shop, and you’d still be able to recognize that it’s Eddie Van Halen playing. Fancy gear can help, but the truth is your tone comes from you.
It’s tempting for people to obsess over tools instead of what they’re going to do with those tools. You know the type: Designers who use an avalanche of funky typefaces and fancy Photoshop filters but don’t have anything to say. Amateur photographers who want to debate film versus digital endlessly instead of focusing on what actually makes a photograph great.
Many amateur golfers think they need expensive clubs. But it’s the swing that matters, not the club. Give Tiger Woods a set of cheap clubs and he’ll still destroy you.
People use equipment as a crutch. They don’t want to put in the hours on the driving range so they spend a ton in the pro shop. They’re looking for a shortcut. But you just don’t need the best gear in the world to be good. And you definitely don’t need it to get started.
In business, too many people obsess over tools, software tricks, scaling issues, fancy office space, lavish furniture, and other frivolities instead of what really matters. And what really matters is how to actually get customers and make money.
You also see it in people who want to blog, podcast, or shoot videos for their business but get hung up on which tools to use. The content is what matters. You can spend tons on fancy equipment, but if you’ve got nothing to say . . . well, you’ve got nothing to say.
Use whatever you’ve got already or can afford cheaply. Then go. It’s not the gear that matters. It’s playing what you’ve got as well as you can. Your tone is in your fingers.
Say no by default
“If I’d listened to customers, I’d have given them a faster horse.”
It’s so easy to say yes. Yes to another feature, yes to an overly optimistic deadline, yes to a mediocre design. Soon, the stack of things you’ve said yes to grows so tall you can’t even see the things you should really be doing.
Start getting into the habit of saying no—even to many of your best ideas. Use the power of no to get your priorities straight. You rarely regret saying no. But you often wind up regretting saying yes.
People avoid saying no because confrontation makes them uncomfortable. But the alternative is even worse. You drag things out, make things complicated, and work on ideas you don’t believe in.
It’s like a relationship: Breaking one up is hard to do, but staying in it just because you’re too chicken to drop the ax is even worse. Deal with the brief discomfort of confrontation up front and avoid the long-term regret.
Don’t believe that “customer is always right” stuff, either. Let’s say you’re a chef. If enough of your customers say your food is too salty or too hot, you change it. But if a few persnickety patrons tell you to add bananas to your lasagna, you’re going to turn them down, and that’s OK. Making a few vocal customers happy isn’t worth it if it ruins the product for everyone else.
ING Direct has built the fastest-growing bank in America by saying no. When customers ask for a credit card, the answer is no. When they ask for an online brokerage, the answer is no. When they ask if they can open an account with a million dollars in it, the answer is no (the bank has a strict deposit maximum). ING wants to keep things simple. That’s why the bank offers just a few savings accounts, certificates of deposit, and mutual funds—and that’s it.
Don’t be a jerk about saying no, though. Just be honest. If you’re not willing to yield to a customer request, be polite and explain why. People are surprisingly understanding when you take the time to explain your point of view. You may even win them over to your way of thinking. If not, recommend a competitor if you think there’s a better solution out there. It’s better to have people be happy using someone else’s product than disgruntled using yours.
Your goal is to make sure your product stays right for you. You’re the one who has to believe in it most. That way, you can say, “I think you’ll love it because I love it.”
Odds and Ends:
Rework – the first mainstream book by 37Signals
Tim Ferriss on Twitter – Follow my misadventures, experiments, cool findings, and mischief in real-time. It’s fun to watch me stumble.
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200 Replies to “Why Grow? and Other Wisdom from 37Signals”
Tim, this is one of the best blog posts that I’ve ever read. Absolutely love your take on business sizes. Slow and steady growth has been proven to be a successful business model and your examples here explain exactly ehy that is.
You are a great mentor and I really do appreciate you sharing your thoughts with us here. This will be a must read for a long time.
I’m in the theatre and the notion to “scratch your own itch” came up for me just the other day (weird how things converge like this). A friend, not in the arts, asked what kind of theatre I did. I answered that I created the same kind of theatre I wanted to experience.
I totally look forward to getting ahold of REWORK. I’m noticing again and again, lessons from entrepreneurship/ marketing/ lifestyle design often parallel wonderfully with work in the arts…
Good post, Tim. Thanks.
I think that the best business ever created to this day, prove that point. I was just listening to an interview that Andrew Warner had with Gurbaksh Chahal and it’s amazing how he build his company technically from his bedroom. He use what he had which wasn’t much and used it. I mean he didn’t even go to college or finish high school.
We should always be scratching our own itch for sure, most companies have been build from our own issues anyways right? I don’t remember where I heard this, if you write down ten problems you run into a day one of them can be turned into a business it was something…anyway Tim great post I can’t wait for Rework tomorrow will start reading as soon as I am done with linchpin.
Thanks for the preview.
Tim, I absolutely agree with your stance on business size. I went from factory worker/college student to fitness entrepenuer. I followed my passion(and inspiration from your book) and haven’t regretted it once!
I run a profitable personal training and diet coaching company and I love being service based, interacting with clients, etc, but it’s getting hard to extract myself for long vacations(mini-retirements). Any advice?
Great Post. Thanks Tim
Great reminder about scratching your own itch. If we create a product that we need and would buy, it empowers us to convince others to buy.
Great post, Tim!
I am currently learning Ruby on Rails, the programming language that 37signals uses, and it is awesome.
Excellent advice. Reminded me a lot of Paul Graham’s writing and approach, which is of course a compliment!
It’s great to see some cheerleaders in the small business guy’s corner. My two partners and I have successfully kept a Clothing and Apparel business based out of Long Island, NY small (in the number of employees) for over a year now. We’ve receive countless requests of aid from friends, family and outsiders but at our core we truly believe we are self-sustaining in and of ourselves.
Two bits of advice I can provide to start up entrepreneurs would be:
a) Take *calculated* risks. Learn to assess the situation, find the path to the best possible outcome, and pursue it. Too often in the infancy of our company we stalled on critical decisions because of fear. Trust BOTH your instincts and research, with an emphasis on research.
b) “Don’t buy upgrades; ride up grades.” – Eddy Merckx… If you are a cyclist you’ve heard it before. It’s the principal that the human body/condition is greater than any piece of equipment available. Learn to fine tune you’re body and mind and not rely solely on technology. In my business I try to keep key items “physical.” My relationships are for the most part, face to face, my to-do lists are ALWAYS written on paper and I always get outside every day, no matter the weather (a form of meditation for me). I’m part of the generation of technology (and I even worked for a major technology consulting firm) so if I can perform some non-technology based exercises, anyone can.
Again, this was a great post and I truly appreciate the insight you’re providing to everyone here. I will be sure to download this novel onto my Nook in the near future. Hey, I can’t get rid of ALL my technology. 🙂
*Any* success I’ve had in the different areas of my life can be traced back to this simple forumla:
“Create / be the _____ you’d want to _________.”
Develop the product you’d want to use.
Be the friend / father / coach you’d want to have.
Write the book you’d want to read.
Just another way of saying “scratch your own itch.”
Tone is in your fingers. That’s one that has my name written all over it – in a bad way. I’m the gal who buys the running gear and clothes before I can even run a mile. I love the pretty accessories, sometimes more than the activity itself – and sometimes the accessories help me get started on an otherwise challenging task.
Funny thing is, once I start developing habits and some competence, the accessories become less important. My mental gears shift, and I start engaging in the activity for the pleasure of doing it. Now, if I could just figure out a way to motivate without buying a basket-ful of trinkets, I’d save a bunch of money.
Rework sounds like a great resource.
Tim, is that why you invested on Twitter? Because they have 140 employees and are not yet profitable?
Anyway thanks, you and 37s are a constant inspiration.
Hahaha… touche! No, this is a good question. Like I said, there are exceptions to this rule, but they are few and far between. I believe Twitter could be one of them, hence my investment. It’s a real inside-baseball game, and the people who are good at it — repeatedly — are very, very smart. Alas, this doesn’t mean that aiming for lack of profits is a good idea. Nor does it necessarily mean that raising a lot of money is a good idea (Webvan, anyone?).
Tim you should be a preacher! What a convicting message.
An excellent reminder not to play the “keep up with the Jones” game in business. I’ll admit, I’m a little embarrassed when a clients ask where my office is located and I say, I work out of my house. I would feel much more important if I could say we have offices in New York, Seattle, and blah, blah, blah…
“Use whatever you’ve got already or can afford cheaply. Then go. It’s not the gear that matters. It’s playing what you’ve got as well as you can. Your tone is in your fingers.”
Tim, I would rather spend hours each week reading reviews of the latest productivity tools, than do meaningful work. Plus, I’d be much cooler if I could brag about all the new tools and toys I have to help keep me productive.
Looking forward to reading Rework. Keep preaching!
Thanks for the review/recommendation of 37 Signals. Our (very) small, virtual company has been looking for simple, affordable software to keep us organized and give us the ability to share our information, and this may be just what we need. 37 Signal’s philosophy is current, cool, and so relevant.
Great Post! “Scratch your own itch” not “starting from scratch”. Much easier jump off point! Expanding from your existing knowledge base can be scaled much faster and less expensive cause you already know some key shortcuts.
It’s really about the journey isn’t is – Get in the Zone and stay there…
Smaller and higher profits can make you more money then you need, just dont let ego stop you.
Every business I had that has succeeded, has solved a simple problem that I had, so that is sooo true.
I agree it’s very important to produce a product or service that you stand behind and that you want to use yourself. People can see right through you and the lackluster product promotion.
Great post! We live in an exciting time where anyone with ambition and some smarts can change the game. Combine some creativity with the free to low cost technology that is available and you can build a low cost business that is as good or better than what is out there. Revenues are great but it really comes down to profitability and cash flow.
Could not agree more with the size does not matter rule (nothing personal there of course…). The investment fund (Cumbre Capital Partners) I have been running for the past couple years has two people in it. One of them is me. When people ask how big we plan to grow I tell them “two people is about right”. One of the reasons we picked the business is because it’s incredibly scalable. We can be 200x our size in terms of assets under management and still only have two people. There is great inherent leverage in investing in businesses as opposed to shipping a product. I almost make our personelle growth plans a point to make with others because it amuses me to see their reactions.
Been using Basecamp and Highrise for years and love them for their simplicity and price point.
No doubt small is beautiful. And small doesn’t have to be small either. Today, you can outsource almost everything and grow your business without growing your headcount. I much prefer being a client to vendors and consultants than a boss. The fewer the employees, the fewer the headaches and the more time you have to spend on doing what you love rather than admin, policies and procedures.
So true, so true! This article really hits home for me since people constantly ask me how many employees I have. My answer being “It’s just me” always leads to the reaction that you describe. And even when I explain to them that I am using a network of partners (via outsourcing – that’s right, I am a good 4HWW follower :0) ), I often get a blank stare.
In my mind the real question people should ask is ‘how profitable are you?’. This truly allows you to gage the health and overall success of a company. But than this is most likely something most of us don’t like to share.
Thanks for the preview Tim! When I first read Getting Real it was a shock. I work as project manager, and this book helped my to realize how many mistakes we made in our projects. It is difficult to apply these ideas in a large organization but it’s really worth trying!.
I for sure will go for this new book!
I sat for a seminar Jason Fried gave at a Web 2.0 conference last year in NYC and it was unreal. He had such energy, such passion and most of all you could tell that everything 37Signals was doing made everyone else look and feel like they were swimming upstream, whereas Jason & Team were just getting out and walking. Very very inspiring individual if you ever get the chance to hear him speak.
I’ve always believed in the idea of ‘go and make the thing you want’, and you hear it a million times over in the creative community. Ask most bands what inspires them to make their music and they’ll say “well, we made what we wanted to listen to”. Filmmakers routinely say the same thing.
The only problem is that sometimes it goes against the idea of “sell what people want to buy, not what you want to sell them”. You can’t always predict a market based on what it is that you personally want, and to test it and watch it fail can be a pretty emotional thing.
Slow and steady definitely wins the race. Just like the turtle and the hare!
I love what @Joe has to say about this -> “Create / be the _____ you’d want to _________.”
It allows for us to build our business around a life we love and not get stuck hating our work!
I just became aware of 37signals when I was talking with some teams that are over in Manila that I’ve been working on. I’ll need to read up a little more on them and pick up that book now! Thanks Tim
Thanks for these words. I used this sytem to create a ebook and audio program. It centers around using acting techniques for the job interview. I am not a techy person. Just used what felt right to fix a problem I was having in job interviews. Nerves and poor performance. So I invented a system that lets me (re other people) sound great and look confident in less than 10 minutes.
The laws of 37 Signals does not suprise me why they are so successful as a company. Size does not matter in the new economy. Brains and hutzpa do.
Until today I’d never heard of Basecamp. So two mentions in one day has to be more than coincidence. Seems like there are some great tips for bootstrapping productivity and development.
This looks a great read and I’ve preordered it. Thanks for sharing.
Can’t wait to pick this book up. The size issue is something I’m constantly debating with myself. There is an ego element behind a large company, but what really is the point of it all? Thanks Tim.
Great post… I’m a big fan of 37Signals myself, have used Basecamp and it’s fantastic. A great book about avoiding the urge to grow beyond your needs is “Small is Beautiful” by E.F. Schumacher, a british economist.
The topic of this post is great advice because, after a couple of years, growth without profitability becomes bankruptcy.
The way around the “looking small” challenge is to be deliberate. To your point about 37signals, they have a good business reason for operating at a certain size. If you are small but can clearly articulate why, you will always be impressive because you are in charge of your business.
As a business advisor, I meet and work with many owners who aren’t sure why they are taking a specific course of action, and my work with them usually starts with being strategic and deliberate. If you are hiring employees or procuring office space without having a clear business objective in mind, but just because you feel like you should, then you might want to make sure that you aren’t being status-conscious when you need to be results-focused.
Great post and I enjoyed all of the comments to this point as well.
Great post – Thank you for all of your insight to help us all out! Trust me…I need the additional help! I am re-reading your book for the 3rd time and can’t believe what I missed the first time around…
Small can be wonderful. This adage is understood by many small business owners that have started and grown sustainable small business models.
Many of the small business owners I work with share one thing in common and that is single minded focus. They don’t let anything get in the way of growing their business. They do it by focusing intensely on their customers.
I firmly believe that it will be the small business owner that brings our economy out of the doldrums because there is passion and drive that can’t be matched.
Many small business owners vs. few large employers is also a lower risk (economically) proposition for all of us at the end of the day ( IMHO).
“Use whatever you’ve got already or can afford cheaply. Then go.”
Whoever made this statement is a genius who knows his stuff. 🙂
i love your videos, but I even more love reading your stories.
Thanks for a great message!
Inspiring as always.
Thanks to you (and the 37Signals team) for giving us some solid content here in the form of excerpts. This is all really useful and challenges my own thinking in some areas. Again, glad I visited your blog Tim.
“And remember, once you get big, it’s really hard to shrink without firing people, damaging morale, and changing the entire way you do business.”
Excellent point. Small and fluid is often better.
I’ve heard that Tumblr is run by 4 people. That’s an awesome sweet spot to be at, and I know they are making BANK right now!
Your “teasers” are always so meaty, Tim! “Why grow”, “scratch your own itch” and “the tone is in your fingers” are the guiding principles I’ve been using for more than 20 years to have a successful solo-preneur business. Just pre-ordered the book, ‘cuz I’m sure there will be tons more good content that I can apply to make it even better!!!
Thanks for all you do to make us successful…no matter how we define it. You’re one terrific cyber mentor ^_^
Guys from 37signals are awesome. I just ordered their book Rework and can’t wait to get it.
Love 37Signal’s wisdom here. “Grow or die”, the idea from Ainsworth-Land has become a cornerstone in organizational transformation and in mass culture that lots of businesses worship it as the guiding principle. We saw the
execs obsessed with quarterly results because it is how their performance is
I have never thrilled by the sheer growth in terms of size or turnover. Why
did we have to publish more books this year than last year only in pursuit
of growth? Can we still appreciate some 3rd-generation ramen shop in the
countryside of Japan, who insists only selling to a limited amount of
customers every day? Do we really want to teach those charming little shops
how to grow and become Starbucks?
In the biological and physical sense, I agree we either grow or die. But
growth for entrepreneurs comes in many forms besides profit or
infrastructure. We become more aware of what our values, strengths, dreams
and desires along the way when building a business. We grow in the level of
our awareness. We try to find better ways to serve our customers and grow
our ability to be compassionate with other human beings and the environment.
The owner of the ramen shop grows every moment when he devotes his
un-divided attention to make the best bullion.
Without growth from a deeper level, the growth in the ‘visible’ level only
brings temporary satisfaction and leaves us die little by little inside.
This got me thinking. I’d really like to see an occasional round up of interest articles you’ve read lately. Stuff within the general themes covered on this blog.
What has astonished me a lot with Basecamp is that they did not engaged yet a translation process … I would love to get Basecamp for my company but my clients are french, and I need it in French … If they hear me I would pe happy to help in the translation process …
Sage advice. Couldn’t agree more that funding is too often viewed as an end, rather than a means to an end.
I’m much more impressed by those who have built profitable businesses from scratch than I am with companies that have raised x amount of dollars.
Wonderful post. Nice succinct examples and no one can argue with the success 37folders is having.
I love this post. Best post ever!
Can’t wait for the book to come out!
I was just about to give up on you. One month no posts then the last one which was good but not worth the month wait. This post made up for the hiatus and then some. I guess you also have been busy on the book so all is forgiven.
In the late ’90s, my answer would have been “we need to grow so that we can establish critical mass and be acquired”.
I was a part of a great, well-envisioned, high-quality services startup then. We went from 7 to 15 to about 35 employees in two years, and leveled off there comfortably (and profitably). Then we grew for the sake of growing. And we were acquired in 1999. The guys who had the most equity did pretty well, and the rest of us were left with a company that was just not as engaging as it used to be.
We stuck with it for a while and eventually all went our own way. I have been slogging it out in a market leader, taking orders, for several years now waiting for the right opportunity to come to run my own set of plays again. This time, my thinking will be very aligned with this post. Nice work.
Can’t wait to check out the book. I have followed 37signals for a while. May have to jump into BaseCamp too.
LifeExcursion & The Minimalist Path
Posts like that act like a kick in the butt. It seems it’s in the human nature sometimes not to want to advance efficiently towards your goal but instead, do things that you think as cool (e.g., using fabulous tool A or B etc etc).
Maybe this could be explained through the Maslow pyramid (http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs). If your basic needs are covered and you have food to eat, water to drink, a shelter etc, then the needs of belonging to a group and of self-esteem (Yeah, you are so cool for doing all this really complicated stuff to grow your business!) are the ones that should be satisfied. So thinking about it this way, ti makes total sense that people tend to procrastinate doing non-value adding but cool and sexy activities in the sake of “growing their business”!
Tim, this is as usual great and interesting post. but I have to disagree with you. I think that most 37signals products are just overpriced basic versions of better products. I’ve used some of them, and people that accept a way of adding mails to your system via sending them in BCC just aren’t aware of better and more advanced products.
I know that 37signals are very hip and trendy, but I think that simplicity should not come at expense of smart. I want to see products that are not just simple to use, but have simple solutions for complicated problems. and this is not the case with 37signals apps. I wish them the best but I really think they are much much better in marketing than in programming and solving problems.
Love 37Signal’s wisdom here. “Grow or die”, the idea from Ainsworth-Land has become a cornerstone in organizational transformation and in mass culture that lots of businesses worship it as the guiding principle. We saw the execs obsessed with quarterly results because it is how their performance is evaluated.
I have never thrilled by the sheer growth in terms of size or turnover. Why did we have to publish more books this year than last year only in pursuit of growth? Can we still appreciate some 3rd-generation ramen shop in the countryside of Japan, who insists only selling to a limited amount of customers every day? Do we really want to teach those charming little shops how to grow and become Starbucks?
In the biological and physical sense, I agree we either grow or die. But growth for entrepreneurs comes in many forms besides profit or infrastructure. We become more aware of what our values, strengths, dreams and desires along the way when building a business. We grow in the level of our awareness. We try to find better ways to serve our customers and grow our ability to be compassionate with other human beings and the environment.The owner of the ramen shop grows every moment when he devotes his undivided attention to make the best bullion.
Without growth from a deeper level, the growth in the ‘visible’ level only brings temporary satisfaction and leaves us die little by little inside.
When it comes to aggregate, there are different ways to grow as well. Comparing between Korea grew to modernity (through the dominance of very few chaebols) and the way Taiwan grew to modernity (with ubiquity of tiny business everywhere). Both countries have devised successful ways to grow, in a way that appealed more to their cultural sensitivities. One is not “better” than the other, even though Korea has larger companies than Taiwan (with few exceptions).
Since you speak German: have a look at the book “Kopf schlägt Kapital” (‘brains beat capital’) by Prof. Dr. Günter Faltin http://tinyurl.com/ygb6ayo
I consider it a very good additional read to your book because it focuses on what in your book is referred to as the pasrt of muse creation. The result is basically the same: if you have a so called ‘concept-creative business’ running you can have even more than one businesses at a time and be a serial entrepreneur because you work with components (outsourcing) instead oif building up everything by yourself.
As much as I love your book for planting the seed of coming up with ‘my own thing’, Prof. Faltin’s book makes it even more tangible how to do it.
Worth looking into. I actually think you guys should connect 🙂 I made it to arrange a personal meeting with him on 19 March and am looking very much forward to find out more. This will also be a good chance to get a high class mentor 🙂
I read their first book online…Just awesome. I can’t wait for this one. Great content as always, man!
PS: I know you dig wine so I thought you might like to try Las Rocas “Garnacha” for an inexpensive wine that tastes niiiice. (I’m not affiliated with them in any way except in probably funding a large portion of their operation through consumption.)
I’m really excited to grab their new book, its been on my wishlist forever I feel like. thanks tim
Great article. I am a guitarist. I just opened my own music school and came across this subject/question again and again- what do I really need to get started? Customers! I had it in my head that I needed more than I really did.
It’s also interesting that you bring in the guitar comparison in this article because while I was reading the first part of this article I noticed a parallel with guitar playing. Many guitarists feel that “faster is better”. But players who work hard to play faster “say nothing”. And often a few well placed notes can speak volumes.
Having said that I can play fast… but I had to learn how to play fast before I saw the value in playing “slowly”. Irony’s great. It’s about the right tools at the right time really.
I love Jason Fried’s philosophy and his work ethics/view did remind me of you, Tim when I read the interview with him in the November Inc. Another one of his golden thoughts he mentioned there was “We keep our products simple. I’d rather have people grow out of our products, as long as more people are growing into them.” Love them and looking forward to the book!
PS the picture usage of the Kyoto shrine made me smile – one of the most fascinating places I have been to.
if only Harvard would expand, then I would surely get in; or not.
This is the link to the article in Inc I mentioned above http://www.inc.com/magazine/20091101/the-way-i-work-jason-fried-of-37signals.html
Wonderful post Tim. I was curious to see if you might cover Rework on your blog.
Check out Jason Fried discussing, “Why you Can’t Work at Work”
My copy of Rework is on it’s way.
Fantastic post, Tim. Coincidental how things like this tend to come in pairs. I just read an article earlier today that had the same “ring” to it. Highly suggested if you have time:
“Your idea sucks, now go do it anyway”
Great message Tim.
Similar to my battles with weight loss – I always thought if I tried this fad diet or that fancy exercise equipment then I would attain the body I want. But it’s the mindset – and not the tools – that ultimately produce the desired end result.
I’m adding rework to my reading list too:)
Ordered – I hope Amazon Japan gets it soon.
In the last month 4 people have asked me to build a backend to their website. Hello elance!
Excellent blog post. Excellent comments, especially enjoyed Annie’s. Thanks to all. What is it Arthur Ashe said: Something like, ‘start from where you’re at, work with what you got, do the best with whatever’s available’..
Also, K-I-S-S philosophy has worked best for me; it’s nice to know other people use it too.
Thank you for the great post. As always, great work. You have inspired me to change my life around in more than one way, thanks.
Love 37Signals !!! Were a ruby on rails web development firm and use basecamp religiously…
Are you gonna speak again at RailsConf???
Awesome post. Going to buy ‘Getting Real’ and ‘Rework’.
“Scratch your own itch’-Probably the best muse creation advice ever.
Great timing for this post, because I’m starting a new company and naturally I’m starting with the end lifestyle in mind. Much of my work will be outsourced, maintaining a small, virtual workforce is a main driver.
The 37s products will work well down the line, I look forward to their integration.
I’ll be waiting for your next post 🙂
Awesome post. That book may be exactly what I was looking for – thanks for that.
Wow! Thanks for posting this Tim. I have needed reinforcement both for myself and my clients along this line for a long time!
One thing that is interesting to note in my experience is that so many entrepreneurs focus on growth at the expense of paying themselves. The opportunity cost associated with this seems to make a lot of ventures not worthwhile if they are not making revenue.
Most businesses will not get huge, so learning techniques such as Direct Response Marketing, learning how to build your presence in the local area, etc. are far more important for generating revenue than trying to build a global scale business.
Excellent work from the team at 37 Signals too! I’ll be keen to see what the rest of the book turns out like 🙂
[insert praise to tim]
Awesome post for all business owners, I will probably order the book, the earplugs you recomended didnt work out for me but the fivefingerfeet did, so I still like you 😉
So many gems here! I particularly loved these two truisms as they have served me well time & again:
“The easiest, most straightforward way to create a great product or service is to make something you want to use.”
“It’s not the gear that matters. It’s playing what you’ve got as well as you can. Your tone is in your fingers.”
“Tone is in your fingers.”
I have never heard this before… and I’m a guitarist.
This is fantastic, I love it. I’ve always thought that the produce of a person is a reflection/representation of them in some way.
The tone is in your fingers.
Great post Tim, and some great comments too. I really like how 37S just cuts to the point. So much of what we do in the regular workplace involves too much extra work that isn’t about getting stuff actually done. I like how they advocate launching early, finding the friction, and improving on the fly. In my experience, this has been not only a low-cost model, but a great way to build quality relationships with customers. Can’t wait to read it!
Thanks Tim, it’s surely the best post I ever read online!
There is nothing more sensible than ‘use whatever you’ve already got, or can afford cheeply. Then go’ After having seen 2 years of rough time in business, that is what I’m doing. It’s so cool, and the only sound way to be healthy and highly profitable!
‘Scratch your own itch’ is terrific, there won’t be any dearth of business ideas hence!
I agree with all three of those excerpts above, especially scratching your own itch. As a consumer, it’s so annoying to encounter a business who doesn’t know their product or service. I’m just starting out, but the muses I have in mind will be developed to fill gaps in my own life. I am my market. I couldn’t imagine doing it any other way.
Thanks for the review. I’m heading over to 37S to check it out. The book sounds great!
Growing doesn’t always have to do with size. You can grow in your product types, in the types of services you offer. The type of audience you product has. Blogging is a very good example of that.
Bravo, Tim, great post! I’m going to pass this along. Gently, since these might be tough-love reminders to some…
Here’s my 30-second reductio:
#1. “Small is not just a stepping-stone. Small is a great destination in itself.”
#2. “When you build what you need, you can also assess the quality of what you make quickly and directly, instead of by proxy.”
#3. “It’s not the gear that matters. It’s playing what you’ve got as well as you can.”
I’m especially keen on #1 which (ideally) enables portability, freedom and balance. Thanks for sharing your thoughts.
It is posts like this one that motivate me the most. It almost seems as if the guys at 37signals, and yourself are portraying the old K.I.S.S. Law. Keep It Simple Stupid. I am here to tell you that law works rather well in many areas in my life, including business.
Thanks for the often great content Tim!
“Growth for the sake of growth is the ideology of the cancer cell.” – Edward Abbey
Danke Tim – das mit der Guitarre passt. Will take a deep breath now and continue preparing the slot for tomorrow – setting up the brain picture world – thx again for your insperation.
Love this = “… to add bananas to your lasagne” 🙂
I really enjoyed watching Heinemeier’s talk he gave at the start-up conference and found it really encouraging … I have to admit that I’m developing a service right now because of it.
The book seems to be just as valuable. Will put it on my want-list.
I’ll make you a deal. You keep saying “No” to your customers for the next five years, and I’ll say “Yes!” and find ways to deliver the value promised. In 2015, we’ll compare results. The company owner with the most self-described “Thrilled” customers buys the other a beer. Deal?
Brings to mind the effectiveness over efficiency argument in your book. I would much rather be a part of an effective organization with 20 employees than an efficient company with 1000 employees. Sometimes we all need to be reminded that we are in business to make money. There are plenty of charity organizations out there if I want to give away time.
Agreed that growth for growth’s sake is not the goal, unless you are running a public company and are driven by the brutal metrics of Wall Street. The goal should be profitability and ease of management; to create a self sufficient cash cow.
“How big is your company?” may be a traditional query, but the emphasis should be on revenue and profitability matched with ease of management, not the number of employees (employees = headaches). If an owner can do $20M in revenue and 30% net margin with six employees, and can run without him/her, THAT is impressive.
Regarding the use of Harvard and Oxford as examples of “why grow?”, they are as guilty as any of engaging in company-like behavior. They have each grown massively in the search of prestige, influence, grants and endowment (rather than commercial sector profits) and have expanded way beyond their original intent and size. They are tied to a physical location associated with their brand (Cambridge, MA and Oxford, Eng), but they HAVE added thousands of employees each over the years, now offer hundreds of degree programs, executive education, certifications, joint-programs with other schools in different parts of the globe, maintain research groups, conduct seminars, etc. The list is endless. Harvard could have run perpetually as a theology school with a few hundred students and several buildings. Instead they have hundreds of buildings, thousands of students and billions in endowment.
So, if people are obsessed with tools instead of focusing on providing quality contents then it is too bad for them.
but isn’t it like saying you can just use bloggers blog instead of self hosted site.
There are few types of people: one who can buy a domain name and hosting package, another will be a person who does not have money to invest in domain name and hosting package and last but not least a person who want to test and measure first and later decide to move on..
It is very difficult for me to say no at sometimes to my offline clients especially when I am in service sector.
I hope in future, you will be posting a topic on Cost Effective Offline-Marketing for small companies and start-up.
“If I’d listened to customers, I’d have given them a faster horse.” – I like it! 37signals know when to say NO to clients’ expectations to please them longterm. And I am also under impression when it comes to Basecamp – simple, nice to use and with a lot of new but not overloaded features.
REF: Why Grow?
Agree wholeheartedly; years ago I enjoyed being a good craftsman and as a good craftsmen I was offered too much work which lead to hiring staff. I immediately lost the ‘quality edge’ that made so many want to hire me!
Discerning people WILL pay a premium to receive a quality service (thats why a Bentley cost more than a Mini!), if you present it in the right way that outlines the benefits etc.
You would never walk into a restaurant or a used car lot and ask for the cheapest think on offer would you? No, so why do it regarding other services you buy in life.
Small (and expensive) is a valid option……but only if you are REALLY good!
Stay well man,
One small point of contention though about the “saying no” bit. I agree that saying no is very smart but specifically in this context. Many overly cautious people say no all the time, and miss out on the greatest opportunities. You know the ones, no to social events, no to traveling, no to anything that has the potential to be outside of their realm of control.
I think what it comes down to is whether or not saying no will enrich or detract from your business, your life, your goals. If your saying no from a mindset of fear and “what ifs,” you probably should be saying yes. 🙂
Have a great day!
I don’t think of myself as an entrepreneur, however I took up a service career (trauma therapist) using a technology that is scratching my itch, compared with other technologies I experienced.
I have the same friends who think bigger is better. They take on any customer that walks through their doors and work 80+ hours a week to satisfy all of them. I choose to do one thing great and work with a select group of customers. I never take any work home!
Great post mate and just what I needed. I came up with a software idea that I’d love to use myself and believe that others would too. However I didnt know squat about programming so after reading 4HWW (thanks for the idea!) I decided to outsource the work to various providers. It took a leap of faith from me at first but is working very well (for this and another start-up i have too). Anyways, this post was an awesome reminder/motivator to keep going even though im small time.
Be well and i’ll send you a link once its done.
Totally agree Tim. Reminds me of a quote by Jack Trout – “Businesses don’t have a desperate need to grow, businesses have a desperate desire to grow.”
Businesses looking for ego trips often make the mistake of diversifying and diluting their specialist focus – turning them into more of an undifferentiated generalist.
Thanks for the heads on on what seems to be a great upcoming book. 37Signals had not been on my radar until now but I will check them out in light of this review. Cheers Tim.
Tim You beast.
Another (timely) flash of insight. My business which I opened three months ago is going to shit. I know what I’m passionate about which is… dah the itch I love to scratch… but I just shat myself for two long thinking that others couldn’t possibly be interested in that! So I broadened my market appeal…made it just bland enough so that no one would be attracted to it. It seemed so easy to make the “risky” decisions when I read about them. The reality provded otherwise. Thankyou Tim. I’m going going for a scratch! You’ll hear about it the itch soon!
Here’s my two cents on a costly mistake I’ve chronically made:
The “scratch your own itch” thing often comes naturally to entrepreneurs. But what also comes naturally is to fall in love with a business that provides a product/service that the business owner wants and likes… unconditionally.
To “scratch your own itch” AND build a profitable company requires that the business owner is willing to ditch (or evolve) the product/service if the market tells him they don’t like it by not buying it.
Tim, your focus on performance metrics is well aimed. Scratching your own itch should be well confined to an experiment that has a predetermined evaluation point that results in continuing or killing the idea, based on that evaluation.
Waiting too long to kill ideas that the market didn’t buy into has cost me years of my life, so I thought I’d share this in hopes that somebody out there could avoid having to learn it through personal experience.
Again, great post; it makes your month of blog silence well worth it 🙂