
Why 37signals advice is irrelevant and unhelpful - mathewi
http://iwasamonkey.tumblr.com/post/872202764/why-37signals-advice-is-irrelevant-and-unhelpful
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mikecarlucci
The main point is that advice from 37signals is pushed too hard. It's not all
bad, but it isn't a business model or company philosophy that can work in
every situation.

I read and enjoyed Rework. It's refreshing to hear from a source that is
trying to take on the business world by pulling a George Cosntanza and doing
the opposite, or at the very least, an alternate.

The best use of their advice is to become a disciple of simple. Don't create
huge goals, stick to small ones. Don't include every feature you think of,
just the best/necessary ones. Don't have lots of meetings, only the ones that
are vital (and good communication can fill in for formal meetings entirely).
And don't be afraid to show your flaws. It's the advice we've gotten from
parents and teachers and friends for years: be yourself. None of these things
guarantee success, but they shouldn't lead to failure either.

~~~
lucisferre
YMMV, yadda, yadda, yadda. Nothing to see here, move along.

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barmstrong
Summary: if your product isn't useful (or doesn't have _utility_ in the
economic sense) it's harder to charge for it.

Duh.

The unfortunate conclusion of this is that social media may just not be that
useful to people. DHH even made this point at his startup school talk - saying
that if people aren't that willing to pay for your app, maybe it's just not
that useful. I believe they've also stated elsewhere that when they moved
Basecamp (or was it backpack) to a B2B product instead of B2C it got way
easier to make money.

~~~
jsomers
That's not an accurate summary, or at least it's not complete. I took the
author's main points to be that (a) 37Signals's offerings are viewed by
customers as investment opportunities instead of as consumable goods, and that
(b) people are thus more willing to pay for 37Signals's stuff than for the
mere "consumption-services" offered elsewhere. The author implies that this is
the case _even if those consumption-services provide a lot of utility_.

Point being that in the author's mind, it's not that 37Signals is making great
products while everyone else isn't. It's that 37Signals is making great
products that are seen as productivity tools and hence as investments, rather
than as simple absolute costs.

~~~
stcredzero
That's interesting. What if social sites focused on being better tools and
less on being time wasting entertainment? I think it would be a good bet that
there are productivity apps yet to be made -- ones based on the social graph
which can be ad supported or freemium based.

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patio11
It has not been my experience that B2C customers are unwilling to pay for web
services.

~~~
rythie
I thought Bingo Card Creator was B2B?

Edit: The product is sold mostly to teachers to save them time and help them
do their job better, so that would make it B2B I would have thought.

~~~
patio11
Substantially all of my customers a) choose to buy BCC for themselves and b)
pay for it with their own money, which are two characteristics more typical of
B2C. That said, lawyers get paid for arguing about definitions and I am not a
lawyer, so you can call it either if it floats your boat.

~~~
rythie
That seems a little odd to me, but I can sort of understand it. Are they using
in their jobs? If so, is there a reason their employer won't pay for it? Or do
teachers routinely buy stuff with their own money to save lesson prep. time?

~~~
patio11
The average teacher spends between $200 and $400 of her own money a year on
instructional supplies, depending on what survey you believe.

~~~
rythie
That's an interesting fact in it's self. From people I know who teach or have
taught, it seemed that they had too much to do outside the core hours, so
maybe they are trying to get some of that time back?

~~~
alnayyir
You're chasing a dragon he's already tired of finicking over.

~~~
rythie
That was to be my last point in the discussion, which ended 11 hours before
your post.

I get it now, people will pay their own money to help their career, it's
technically B2C but if they didn't have that job, they wouldn't buy the
product. Most B2C products are independent of the customer's career, but this
type of product is not. Similar products would be suits, some networking
events, travel costs, smart shoes, working lunches, coffee, smartphones etc.

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ThomPete
_The majority of start-ups are social web oriented. They operate in a
consumption-services market._

That line strikes me as both wrong and missing the point. Perhaps then the
majority of start-ups should consider a different service to sell.

~~~
jacquesm
It's wrong enough that it casts doubt on the rest of the article, but he does
have a - small - point, which is that any advise should be evaluated in the
context in which it is given, which I think is pretty obvious.

I think the author operates from a limited perspective in to what startups are
generally busy with and then assumes that everybody takes the 37signals advice
as gospel.

~~~
ThomPete
Exactly

It's not like it's a secret that the map is not the territory.

But perhaps, if you would excuse my pedantic tone, that's what one might think
being an economist from an Ivy League University.

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mrshoe
This article is pretty far off the mark. 37signals don't advocate charging for
social media apps. They advocate building software that people are willing to
pay for. It's a little ridiculous to simply say "The majority of start-ups are
social web oriented," and then assume that the rest of 37signals' advice still
applies to all those startups.

37signals' advice _is_ , in fact, irrelevant and unhelpful to you, but the
real reason is this:

Your blog doesn't have hundreds of thousands of subscribers.

~~~
stanleydrew
This was a good comment until it kind of got sidetracked at the end. I'd say
37signals' advice is irrelevant and unhelpful to him because he's not starting
the kind of startup that they are advocating. I think if he had just pointed
that out it would have been an interesting observation.

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barkmadley
The author does a good job of identifying who will find the business model
advice from 37 signals unhelpful. The title certainly is sensationalist.

A short summary: 37 signals is a B2B. The economics of the B2B model do not
translate to a B2C model.

~~~
shadowsun7
A better short summary: because 37signals is B2B, and because they sell
productivity tools, companies are more likely to view their 37signals product
purchase as an investment. What this means is that people believe the purchase
will help their company's productivity (and therefore increase revenue). This
is the real reason behind the high 'willingness to pay' that we see in
37signals's business model.

~~~
jacquesm
Investments are typically done in capital goods, say a machine shop buying a
new lathe or a real estate company deciding to put up a new building.

This is just cost/benefit, investment does not really enter in to it.

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roc
I'm fuzzy on where he draws the line between consumptive services and
productivity tools.

Which is dropbox? flickr? instapaper?

I also can't say I've yet enjoyed the pleasure being part of an organization
that views business-services costs as anything _but_ costs. MSDN subscription?
cost. Server lease? cost. Conference? cost. Support contract? cost.

They aren't considered investments any more than the electric bill; which
itself could be arguably interpreted as an investment under the logic of this
article.

~~~
Qz
Hmmm... HN - consumptive service or productivity tool?

~~~
jacquesm
That depends on the user. It is the opposite of a productivity tool for some.

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lionhearted
> I will note that people are seemingly unwilling to incur costs which they
> know are in place purely to generate profit rather than to shoulder
> distribution and manufacturing outlays (as admittedly unfair this is of
> consumers).

Entirely false. He's basically saying - "People are more willing to pay for
manufacturing/distribution costs than they are willing to generate profit for
a creator."

People don't pay much attention to whether the things they're spending on are
profit-related or are going to manufacturing. It's _completely irrelevant_ to
the average consumer. That's why an App Store app that took 4 hours to code
can bring in tens of thousands of dollars, and one that took 4 months can
bring in nothing. People don't pay according to how much you spent or how much
they perceive infrastructure costs to be - they pay based on how well they
perceive a product fills their needs relative to other options.

Ebooks often sell for more and have higher margins than paperback books.
There's lots of other examples of this.

You don't need to increase costs to sell people. You don't need to put more
time in to sell people. _You have to deliver something they want that they're
willing to pay for_. How much your costs are don't really factor into most
people's thinking on how much it helps them.

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prs
"I have a degree in economics. I studied this at Oxford University, and have
as good a grasp as anyone."

This provides a great theoretical foundation for his argument. Now all I want
to see is a more practical one.

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jcromartie
> ‘People are willing to pay’ say 37 signals to the cowering mass of young
> developers bombarded with an implicit open source manifesto written across
> the social web.

It's not "open source" vs. "selling software." 37signals heads one of the most
popular open source projects of all time. They also sell their software. It's
"free services" vs. "selling software."

Of course someone who is set on never charging for a product as a business
model will not find 37signals' advice helpful.

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abalashov
I like 37 Signals and their general message, and certainly appreciate their
willingness to take a strong, uncompromising public position in support of
what they believe.

That said, my biggest objection to their whole discursive space is that a lot
of their advice is implicitly elevated, both by them and by those who listen
to, interpret and relay the message, to a more cosmological status than it
should be insofar as it's characterised as general "business" advice. It's
not. There is very little in their general methodological core that is useful
_unless_ your business model is exactly theirs: selling subscription-based
hosted web applications. Most of the same advice they give would be extremely
ill-suited toward other domains of commercial endeavour within IT, never mind
anything capital-intensive and/or outside of mass-market technology per se.

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njharman
Because their "advice" is really thinly veiled marketing and advertising.

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chegra
I find the article to offer no insight. I surmise that it was written in a
trollish manner to garner attention. Looking at previous post by the Author,
this is the first to extend over 5 lines.

Also, the Author tries to appeal to his authority[Oxford, Economics] which I
consider poor taste; your logic should be able to stand on its own merits.

I myself was going to write an article on the failings of 37signals
philosophy. But, talk is cheap; they have spent many years developing their
philosophy; a simple cognitive dismantling of their philosophy would not
suffice.

Any counter-arguments must be made in a similar fashion as they made their
philosophy, in the real world with tangible results.

~~~
htsh
Yeah, what's more, it sounds like an undergrad economics degree. I don't care
where you go to school, an undergrad degree in economics does not mean you
understand this stuff as well as anyone. That's just pompous huffing.

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GBKS
Independent of the argument, I enjoyed the writing style and structure. Not
many blog posts are as well written as this one.

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waxman
37Signals themselves readily admit that charging B2C consumers is hard, which
is why they shifted their business to focus almost only on B2B products. I
don't think they've ever said charging casual users works. They're whole thing
is that the best market for web businesses is the "Fortune 5 million" of small
businesses who will actually pay for stuff.

I don't see what the point of your post is. 37s already concedes these facts
as part of their philosophy.

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geebee
This post teeters near the edge of linkbait.

It should probably read "why 37Signals advice regarding pricing is irrelevant
and unhelpful for some types of software startups." That's the claim that is
actually defended in the body of the post, and I might actually agree.

That said, I don't think the blogger isn't trying to pull a fast one here.
When Nick Carr wrote "IT Doesn't Matter", then defined IT as something much
more limited than the way most of us think of it when it came time to defend
that statement, he knew damn well that his claim vastly exceeded his
definition. The title, not the substance, was what got him attention. Kind of
reminds me of sports writers who wrote "Roger Federer is Finished" headlines a
few years ago, then defined "finished" as "only winning a few more slams."
Strange definition of "finished" you got there. Hey, even with his resurgence,
winning RG and Wimbledon the next year, they're still right!

The body of this article is very clear about the scope of the claim from the
get-go... the title is link-baitish, though.

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camworld
Uh, it's not 37 Signals' responsibility to determine whether their advice is
relevant to your business, your startup or whatever you are trying to do.

Their advice is what you make of it. It will work well for some; probably not
so well for others. It is your job to determine whether that advice will work
for you and is relevant or not to how you want to run your business or
startup.

All these "pundits" fresh out of business school with zero years of experience
under their belt need to take a long hard look in the mirror and decide
whether they want to continue talking out of their ass or actually take a
closer look at how Jason and his team actually run their business.

Just because Jason and 37S figured out a non-traditional way to make money
through providing web services does not mean their approach is wrong. Just
because it's not taught in business school does not mean it's wrong.

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Tawheed
I think the crux of all of this boils down to marketing. You can market your
widget as a consumable or entertainment and people will not pay. On the other
hand, you can market your product as an INVESTMENT to achieving their goals --
and people will quickly take out their wallets.

It connects to what Kathy Sierra has always talked about. Design your product
to make your users fell AWESOME and you will succeed. If you do that, people
will co-relate paying for the product as making themselves more awesome.

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wglb
So in regard to _The scope of this piece is narrower than that. This post
really focuses on their take on pricing and the analogies they often use with
their own experiences, which I feel aren’t applicable for the reasons given.
Sometimes this advice is pushed harder than it should be, with little
awareness of the lack of relevance it has to many start-ups._ , I wonder how
you would evaluate Reddit's model, as it is apparently not a taker of the
advice that you disagree with?

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timinman
Counterpoint: People pay for music. People pay for games. What people won't
pay for is something that is a shallow copy of what is available for free
elsewhere.

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stcredzero
_Now look at consumption-services markets. Social web tools which aid in the
consumption of goods, or which are forms of consumption in their own right,
represent absolute costs. And if there’s anything we’ve learnt about absolute
costs in the digital world, it’s that people are unwilling to bear them._

Why are people willing to pay for a CarFax?

~~~
superuser2
Because it's a smaller cost than the money you could lose on a car with a
troubled past.

~~~
stcredzero
_Exactly_. It has serious utility.

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c00p3r
Their blog and their book is the SEO, product placements and self-promotion in
the first place. Do not confuse it with something like selfless and sincere
help to the community. ^_^

Update: Dear anonymous coward-down-voters! Face the reality - 37signals is a
successful business, and it looks a lot like that of MySQL - lot of hype and
really good, well-written texts, which means big and active community.

Do not assume that they know only programming. Those guys looks like well-read
and more or less familiar with Eastern, philosophy. Most of their advises are
just adaptations of some well-known Zen (and from other branches) principles.
^_^

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alsomike
Counter examples: Meetup.com and dating sites.

~~~
william42
Dating sites are a really bad counterexample, since they have to
advertise(except plentyoffish and OKCupid, which are also free) and TV
advertising for an Internet business is a sure sign of a failing business.
(Think about every search engine you know. Almost every single one has tried
to advertise, except Google. Google never ran ads. All their competitors did.)

~~~
kscaldef
I'd be curious to hear in what sense you consider online dating sites
failures. Your assertion that advertising in other media makes them a failure
is, well, just that; an assertion. I don't have any numbers on the financials
of the companies, but the general consensus of people that I know is that
OKCupid is a fine place to waste time, but that if you really want to meet
people you need to go to the pay sites (precisely because the financial
barrier-to-entry keeps away all the people who aren't really interested in
dating).

~~~
stcredzero
I've heard that okcupid is an excellent way of meeting new people you actually
like -- from friends that use it like this. My short time on there seems to
corroborate this.

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cschep
Irrelevant and unhelpful ... to you.

