MILWAUKEE – In just eight years, the virtual-start-up 37signals has grown into a highly successful business founded on an idea that challenges the web industry’s foundation. Fully embracing the concept of “keep it simple,” this former web-design firm gone web-hosted software company has released a string of popular applications that have garnered press and awards from industry professionals and major publications.
Ryann Petit-Frere of the Wisconsin Technology Council interviewed net-centric entrepreneur and founder of 37signals, Jason Fried, about his business model and the need for continued innovation in the web-services industry. He will speak over breakfast Wednesday, June 13, at the Wisconsin Entrepreneurs’ Conference at the Milwaukee Hyatt Regency.
Competing in an industry where the idea that “more is better” and “don’t share secrets of success” is commonplace, 37signals’ novel approach at web and business development has taken the company to new heights. While releasing eight products (most noted: Basecamp), the company shares its business approach through a self-published book (Getting Real) which has sold more than 20,000 copies, maintained a popular blog (Signal vs. Noise) and hosted its own seminars that have been known sell out in a matter of hours.
RP: What were the major business models (conventional or non-conventional) you employed to start and grow your business?
JF: We make money by charging for our products. Sounds crazy in this day and age, I know. We charge a monthly subscription fee. People can sign up and use the products as long as they’d like. Once they’re done they cancel and they won’t be charged again. We don’t hit people up with set-up fees or termination fees. Cell phone companies do that and we hate that. We try to treat people as fairly as possible.
So as far as the software industry goes, subscription-based pricing is unconventional, but times are changing.
RP: What defining aspects of your products do you attribute their success to?
JF: Elegant design, clear copywriting, and less features. Most software is bloated, ours isn’t. We believe most of the problems people turn to software to help them solve are simple problems. We provide simple solutions for those simple problems. We leave the complex problems for our competitors to solve.
RP: In an industry where many believe “more is better” you must receive a lot of audience feedback requesting new features, products, etc. How have you used their feedback to develop or better your products?
We’re always listening. Our customers are passionate and never short of ideas. We consider their thoughts, our thoughts, and our “keep it simple” vision when deciding where to take our products.
RP: For a growing business, 37Signals has received a lot of press coverage. You were noted in Business Week, PC World, Time Magazine, Wall Street Journal and more. Drawing from your experiences, what advice can you give small business owners to gain publicity?
We’ve found the best way to gain publicity is to share. Share, teach, espouse, and be opinionated. I think chefs and cookbooks are a great example of this. Many of the most successful chefs have cookbooks. They share their recipes. And by sharing and teaching they expand their market and generate great publicity for their restaurants.
Unfortunately, a lot of companies think sharing is dangerous. They think they’re going to give away some highly prized competitive secret. I think they’re over thinking things and giving themselves too much credit for their brilliance. True competitive secrets are few and far between. Most companies would be better off sharing what makes them great rather than keeping it bottled up.
RP: How important is it to remain innovative in the competitive and rapidly growing world of web-based services and what has 37Signals done to remain at the forefront?
Innovation is a tricky thing. There’s innovative business models, innovative technologies, innovative design, innovative ideas, etc. Most people think innovation means something new, something more, something bigger than before. You can also be innovative by doing less than everyone else. Southwest Airlines is a great example of this. No food on the flights, no seat assignments, no pants (the flight attendants wear shorts for flights to warmer climates), less plane models (Southwest only flies 737s), etc. We think that’s innovative thinking. We like that kind of thinking. How can we be better by doing less than everyone else? That’s where we’re focused.
RP: Your technology helps people do a multitude of things like organize information, collaborate and communicate effectively. What do you see the role of technology being in facilitating communications internally and externally (i.e. client communications) in the future?
Technology (software) introduces all sorts of new problems. It can be a great thing too, but it’s not always great. That’s the problem with the software industry — they think they’re too great. They think they can solve every problem with every new feature. We don’t buy it. We think software and technology often gets in the way. We think it’s as likely to cause new problems as it is to solve old ones. Technology and software needs to get simpler in order to help more people with their fundamental communication issues.
RP: Anything else?
Our rule of thumb: Clarity over cleverness.
To register for the Wisconsin Entrepreneurs’ Conference go to http://www.wisconsintechnologycouncil.com/events/ent_conf/.
To learn more about Jason Fried and 37signals visit http://www.37signals.com/.