37signals and 37signalism

October 6, 2009

In 1996 a small software startup named Radnet received 40 million dollars, the largest venture capital investment on record from a single source. It was approximately 1.4 million dollars per employee. The .com bubble was just starting. I joined the company a few weeks later as employee number 32. I was 18 years old.

Over the next two years it became obvious that Radnet didn’t know what to do with that money. They printed four sets of business cards for everyone, each with a different logo. You could intersperse them like a flip book and make our logo dance. In my two year tenure they ballooned to over 100 people and then laid off half their workforce. They sold off their computers and the handful of remaining developers about a year after I left.

At the time I thought this was how software always worked. You spent a long time developing a first version and then you get bought, go IPO, or go bust. Mostly you went bust. Venture capitalists typically back 20 to 40 companies looking for one success.

Start small, stay small, make money

logo_37signals-gray
37signals did it differently. Their business plan was start small, stay small, make money. 10 years later it still is. Their plan works because they avoid hard problems and focus on real solutions. I grew up in the smart people, impossible solutions, superstar developer culture surrounding MIT and learned that you succeed by solving hard problems. You found a solution where nobody else could and the world beat a path to your door. It turns out a lot of smart people were wrong. Good technology alone doesn’t win.

37signals’ products don’t solve any hard problems. There are 1,000 other teams who could create software that looks just as good on paper as Basecamp, 37signals flagship product. I could sit down right now and recreate Basecamp in a few weeks. Add a database, create a few screens, write the data. We’ve been doing that for years.

Except it doesn’t work that way. My version would fail miserably. I could tell myself they have the install base, they came first, or any other excuse I like. The truth is my product wouldn’t be as good. The genius of 37signals lies in a simple realization: customers don’t care about technology.

Are you running Windows or Linux, customers don’t care. Did you write your code in C++ or Ruby, customers don’t care. I don’t really care and I’m an engineer. I care what software does for me. Good software solves my problems without raising my blood pressure.

Equals parts designers and developers

37signals defines three basic roles inside the company, developers, designers, and support. Almost half the company is designers, but what they design is short on fancy icons. Their interfaces are austere enough to call spartan. Those designers spend their time making sure the software gets out of the way and lets customers do their jobs.

As a company, 37signals famously doesn’t plan ahead. Jason Fried, their co-founder, often suggests we should “call plans what they are, guesses”. They don’t try to prognosticate about what their customers will need at the end of an 18 months long release cycle. They respond to their needs now. Microsoft Office has released 14 versions in 20 years. 37signals does that many releases every year. Over their 10-year history they’ve created hundreds of little releases.

Some people say their culture is driven by their choice of technology: Ruby on Rails. Ruby is fast and .NET (Microsoft’s technology) is slow. Ruby is agile and .NET is bloated. That’s the hype, but I don’t believe it. Ruby is a little lighter than .NET, but technology alone doesn’t make great products. When people say Ruby on Rails makes 37signals successful they aren’t giving the company enough credit.

37signals succeeds because they say no. When someone suggests a new feature the first question is, “what if we didn’t do that?” They are one of the few companies to take features out of their products. Their software gets smaller and simpler over time. They recently redesigned their sign-up page making it easier to understand by giving users fewer choices.

David Heinemeier Hansson, 37signals co-founder, is the first to admit that saying no is extremely difficult. Like most developers he likes to make features, show off what he can do, and impress people. The dirty secret of software design is that creating a bloated product feels good almost every step of the way.

David avoids bloat by limiting his resources. He sees having only 15 employees as a benefit. “If you have 20 programmers and 18 months to work on a product you’ll design the kind of product that takes 20 programmers and 18 months.” His team is set up so they are simply prevented from making software anywhere near the size of Sharepoint.

Throw in a strong design sense, great marketing, a four day work week, and a bias toward telecommuting and you’ll see why it’s so easy to write love letters to 37signals. I get a far away dreamy look in my eye as I imagine working for them. Using a laser-like product focus to drive customers wild. Really caring about design. Creating business models that grow slowly. It doesn’t take long before I think about sending them my resume.

I love them in the way of all unrealized dreams. I love them with a passion reserved for girls I saw in coffee shops 10 years ago and didn’t have the courage to talk to. I love them with the hopes, aspirations, and dreams of everything I thought a career in software would be, and I hate them too.

37signalism

There are times when I feel a fiery hatred for everyone at 37signals. I hate their clean well-designed software, I hate their large customer base, and I hate everyone that ever praised them. Including me.

This happens when I hear a large company announce they’ll be creating their next version the 37signals way. This happens every time someone succeeds differently. Every now and then a company succeeds with a model that is so unusual it gets noticed. It’s a game changer. 37signals is to the .com bubble as punk was to disco.

Punk gave us The Ramones and The Sex Pistols. They aren’t everyone’s cup of tea, but they changed the world of music. They lead to Nirvana, but they also produced hundreds of punk wannabe bands that followed the aesthetics of punk and missed the fundamentals.

It happens in the business world too. Remember the 80’s when all the American companies wanted to follow the Japanese ones. Remember kaizen? Continuous improvements, just in time supply chains, and Japanese philosophy; many companies simply relabelled their existing processes kaizen and were surprised when nothing changed.

Kaizen just means improvement. Fundamentally it’s about a constant struggle to be better than you are. The basic principle is sound, but not very prescriptive. Kaizen was a game changer that didn’t change the game.

37signals is the same way. Not 37signals the company, 37signals the philosophy. Strangely, the 37signals philosophy is not the philosophy of 37signals. 37signalism is a separate movement within the software industry that has very little to do with its namesake.

The founders of 37signals are some of the most vocal opponents of 37signalism. Their first book Getting Real is a recipe against 37signalism.

37signals does have a philosophy. They espoused it in their first book and I’m sure they’ll continue to do so with their latest book Rework. The ideas are pretty simple, stay small, make a profit first, and make constant changes to delight your customers. Like most good ideas they aren’t new. They’re also not the step-by-step guides to success 37signalism makes them out to be.

There are no step-by-step guides for success. If it were that easy everyone would be rich. Whatever we call the next management fad it still won’t change the world. Neither will the one after it.

Every movement succeeds a little and fails a little

Leo Tolstoy said that, “happy families are all alike; every unhappy family is unhappy in its own way.” In business it goes the other way. Successful companies are all alike and every unsuccessful company is unsuccessful in its own way.

Did my first company fail because they got 40 million dollars in venture capital, had a lack of good designers, or a poor marketing effort? The truth is that I don’t know. I never rose high enough to really see the big picture. The only thing I can say for certain is that it failed.

37signals is a great company and I’m glad they’re out there. I was honored and grateful to interview Jason and David as part of my upcoming book and I’m going to keep stealing from their software design whenever I can. You should too.

But I’ll find my own way forward. I’ll learn from their success and realize that it doesn’t apply to everything. I still don’t know how you can follow their model and create the next Adobe Photoshop. I don’t see any way for Microsoft to start acting like 37signals and I don’t think they should. punkprincess

Corporations with company phone books that rival the populations of small countries are just different than those that look more like a large dinner party.

I love 37signals for their possibilities and I hate them for their imitators. I know it’s irrational to blame them for what other people do in their name, but I do it anyway. I hate them because The Ramones eventually led to the Hello Kitty Punk Princess toy I saw at Target last week.
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