
Jason Fried: The Truth About Real Estate - slater
http://www.inc.com/magazine/20100901/the-truth-about-real-estate.html
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points
tl;dr - We learnt early on that we can make a ton of money holding 'workshops'
rather than making software.

Whilst still an interesting study in how you can generate a 'following'
religion etc, if you're writing software, there's nothing much here. If you
have a large office, and want to monetize it, there's nothing much here unless
you're sure you can/want to replicate 37singles cultish following.

As for the title "The truth about real estate"... Blatant linkspam. There are
no 'truths' exposed.

"We also believe we'll be able to charge closer to $1,000 a seat." WTF pays
$1k to go to some 'workshop'? Is this Scientology or something?

~~~
roc
The title is pretty bad, but I think you're being a little harsh on the
article itself.

I took two things from the article that I felt were useful regardless of
industry or desired customers:

. keep an eye out for by-products of your primary business that you can use to
add/diversify revenue -- as in the lumber mill/sawdust example

. keep in mind that some pretty unsuspecting things can qualify -- as in 37
signals leveraging office space.

It might help that I've long given up on expecting article content to support,
or be supported by, their titles.

~~~
Tyrannosaurs
They've been hawking that message for a while now though and you managed to
convey his point in about 40 words (including citing two examples) as opposed
to a whole article.

I've long been of the opinion that 37 signals while making genuinely really
good products are prone to going on about how interesting and innovative their
ideas are way beyond what is actually justified by the ideas.

Mind you, if people were willing to pay $1,000 a seat to hear me bang on about
things for a day there'd be no shutting me up either.

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run4yourlives
I wonder how many of you that fail to see the transfer of knowledge or
"teaching" as the real web 2.0 revolution are out their building the next
"social" whatever. From the comments it seems pretty common.

Facebook and farmville are the ghettos of the social media world, playing to
the same audience feelings that Jerry Springer did in the 90's. Remember, we
all watched that show back then. The real force in social media is what it
will do to teaching, and 37Signals is recognizing this in spades.

Instead of professionals transferring knowledge to schools and teachers to
transfer into the student; diluting it, by default, they can now transfer
knowledge directly, for better or worse.

~~~
didip
"Facebook and farmville are the ghettos of the social media world"

I thought that title is exclusive to MySpace?

I'd say Facebook is the suburbia of online media. It gives the illusion of
being connected to people the same way suburbia gives the illusion of American
Dream to home owners.

~~~
chopsueyar
OK, so what is the metropolis/urban core of online media?

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famousactress
I really think it's great that they've been able to make this a profitable
venture, but I worry about the portability of the message. I've been at small
companies that failed for lacking focus.. I'd be interested to hear more about
how they juggled these projects and how much time and attention they took...
especially at such a famously small company.

~~~
ssharp
The message isn't portable if you think the message is "use your office to do
workshops".

I don't think that's the message here.

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tptacek
You guys all sell yourselves short. Anyone on Hacker News with any technical
skill who is running a business that pays for its own decent office space has
tons of things to workshop, and as long as you're based on a major metro area,
people _will_ sign up. We've done it multiple times. Stop blowing this off.

~~~
points
Doing workshops seems scammy to me. It's like doing popup ads.

Sure, you could, but eugh.

~~~
tptacek
What a head-explodey thing to say. Care to elaborate?

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nkurz
I tend to agree with 'points', so I'll offer my explanation: Doing expensive
one-day workshops might be a great way to make money, but it might be damaging
to your brand.

To me, it shows that the you are doing everything you can to wring maximum
profit out of your existing infrastructure rather than concentrating on
improving your core product. It has the same feel as a hot experimental band
deciding to license their songs for fast-food commercials --- perhaps a good
choice financially, but potentially bad for your image. It has a smell of
desperation and greed.

As to the 'scammy' part, I'm guessing[1] that not many people are paying for
these sessions of out pocket. Rather, they convince their employer to pay, and
that it's worth it. This presents a conflict of interest if the turns out to
be not worth the money. When your boss asks you if the company's $1000 was
well spent, and it was your idea to go, one might feel compelled to say 'yes'
and even to go again the following year regardless of any price increases.

This said, we'll probably be considering such strategies in the future. I have
a food business, and while there is no way we could charge $1000/seat, there
probably are some things we could do to boost the bottom line.

[1] Jason responds below to point out that most of they are paying directly.
I'm surprised, but presume he's right!

~~~
tptacek
Workshops damage brands. They smell of desperation and greed. They're like
fast-food commercials. They're scammy because they're based on conflicts of
interest. They sap energy from your core product.

So naturally, you're going to consider doing them in the future.

 _ka-ploooie_

There goes my brain.

~~~
nkurz
Yes. Despite having a truly fantastic product, we're struggling to stay in
business. It wouldn't be that much of a stretch to say that there have been
times that I would consider robbing convenience stores to make payroll.

I love making a great product, but hate the constant pressure to compromise my
ideals to stay afloat. Every day I keep this business going, I fear that I'm
turning into someone that I don't want to be, that I can't respect.

But maybe my ideals are wrong, maybe workshops are win-win, maybe we need to
consider them even if I don't personally care for them. They're certainly
better than some other options!

I also don't really hold it against bands when they 'sell out' --- they know
their situation better than I do. :)

~~~
tptacek
The workshops I've done have been free. They have not been low-effort. I did a
Crypto for Penetration Testers workshop on a Saturday that sold out the room
and involved a team at Matasano writing 9 lab servers, and 6+ hours of
scripted lecture. I did not at any point before, during, or after the workshop
feel like I had "sold out".

Again: my head is exploding over this. Exactly what part of getting interested
people in a room and _talking to them_ seems scammy to you? And: if you're
creating value, why is it wrong to ask for money for it?

~~~
nkurz
It's not the asking for money, but rather the amount of money that is asked. I
applaud your free workshops, and I'm even comfortable with moderate prices.
But I genuinely can't conceive that someone would get $1000 worth of value
from a day's training of anything. I want the cost to be commensurate with the
value created.

One could certainly argue that the 'market' has shown it feels otherwise, but
the market also has proven susceptible to Scientology and multi-level-
marketing. I guess I fear that at the price being charged the audience must
have expectations that can't possibly be met.

Perhaps my problems are simply my false impressions of 'value', which may be
out of sync with reality. But based on the rates of good college courses, for
a workshop such as yours, I could probably rationalize $100-$300 per person.
Is there price at which you'd start to feel uneasy, even if some portion of
the market was still willing to pay? $1000? $10000? $100000? Or relatedly, why
didn't you charge?

ps. I don't mean to imply that Jason is not giving a top quality workshop. I
have a similar feelings toward the Ted Conference charging $6000 a ticket and
toward top colleges charging $50000 a year. It's not the quality I'm
questioning, but the 'value'.

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edw519
My last physical office was basically free.

I rented it out to a Jewish group on Friday nights, a Christian group on
Sunday mornings, and one Saturday night per month for each group. It had
everything both groups needed: the conference room table folded out of the way
so it could seat 30. There was also a piano, a full kitchen, a full bath, and
plenty of parking on weekends. The private offices were locked.

Weekend income paid the whole bill. Not a bad deal.

~~~
iuhjytgfbnjhmk
plus you are insured against acts of God (or at least 2 out of 3!)

~~~
mscarborough
The lower bounds might be two but probably not 2 out of 3 :)

Though that is a smart plan if it works out so well for the GP.

~~~
iuhjytgfbnjhmk
Well you are covering 2 out of 3 of the supporters of the God with the most
previous convictions for wholesale wrath of God stuff. You only need to rent
it out to as a mosque on friday mornings and you should be safe.

Zeus and Thor seem to have retired from the raining down thunderbolts
business, Bhudda was never particularly into it and Krishna doesn't do
overseas.

~~~
iuhjytgfbnjhmk
Was the downvoter anti-muslim or pro-Thor?

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abalashov
I would agree with those below who said the advice is largely nonportable (a
trait I find to apply to most of what 37 Signals says, although it is
interesting nevertheless), because most companies are not in the business of
teaching or evangelism, nor should be/can be in that business.

The injunction to identify and sell byproducts is a pretty bad one for most
companies. Growth and success in business is achieved by returns to scale in
core competencies, as a general rule. This does not mean you can't "branch
out" and have other business units, but in general, loss of focus, especially
for a small company and/or startup, can be devastating if already thin
resources are cannibalised for some new offering wholly unrelated to the
original mission.

~~~
jasonfried
I went to a pig butchering demo a few weeks ago at a local restaurant. It was
on a Sunday morning when the restaurant wasn't open.

Admission was $50. They had about 20 people there. That's $1000 to the
restaurant on a Sunday morning when they are usually closed to the public.

They were butchering the pig anyway, but by turning it into a $50/seat class
they were able to significantly increase their profit margin on that pig.

It didn't get in their way, it didn't cause them to lose focus. What it did
was increase their profits and get people excited about eating at their
restaurant. I know I wanted to go back and taste some of that pork.

It's great business.

~~~
jakewalker
Reminds me of Zingermans in Ann Arbor, where Ari & company have turned a deli
into a deli, baking classes, creamery, cheese-making demos, business training
center, restaurant, dinner events, etc. For every new business Zingermans
opens, they find a way to turn the business into a place where they can host
events (dinners, earlier in the summer they had a bacon festival, they
sometimes teach their method of opening their books to all employees, etc.)
and really create profit and excitement in non-traditional ways. See

<http://www.zingermanscommunity.com/our-businesses>

Jason's right; while not everyone may be able to turn their office into a
place where people pay $1,000 a head to attend a workshop, there is certainly
something to learn from thinking about how to utilize your business/office
space/etc. to earn incremental revenue and promote your business.

~~~
tptacek
Zingermans is amazing (it's one of the three things I miss about living in Ann
Arbor). But I'm chiming in here to add that Zingermans doesn't just host
random events; just like Jason Fried, Zingermans teaches workshops on "how to
be like Zingermans". The Marion Street Cheese Market down the street from me
in Oak Park went to one, and are rabid disciples.

------
mcyger
This is a poorly titled article, very typical of Inc. Magazine. It should more
properly have been titled "The Truth About Your Company's Biggest Cost Center"
or "How to Turn Cost into Profit". When someone refers to "Real Estate", it
usually implies ownership and 37sig does not own any real estate. (One owns
real estate and rents/leases space.)

The remainder of the article had good advice and was well written.

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liamk
The title seems to be a bit of misnomer. The article provides a nice
explanation of how to monetize your office space but it doesn't seem to
uncover any real estate secrets!

~~~
jasonfried
Here's something I didn't know until I started writing for Inc: The editor,
not the author, writes the title and subtitle.

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patfla
I'm wary of any article that begins: "The Truth About ..." and I haven't read
this one yet.

"The Truth About ..." is designed to get your juices flowing and to get you to
read.

Caveat lector.

~~~
hugh3
Exactly. It seems to be a general law that the presence of the words "The
Truth" on the cover of any book decreases the chance of it actually containing
any truth by about 90%.

If you want to know about evolution or the Holocaust then you pick up the book
called "Evolution" or "The Holocaust", not "The Truth About Evolution" or "The
Truth About the Holocaust".

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azsromej
I think I submitted this with the same url 6 days ago ?
<http://news.ycombinator.com/item?id=1629588>

~~~
slater
Yeah but mine's better!

(bug?)

~~~
azsromej
Bested by slater again! Yeah, the urls looked the same so I wasn't sure if
things were working as intended.

~~~
OoTheNigerian
It is all about marketing :). Same product (url) sold differently (headline,
timing). one hit number one the other 0 points (I will not include the point
for submitting). I have learnt a great lesson here.

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patrickaljord
Why does this article say it was published on sept 1st 2010?

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kgermino
Iirc this is a website for a magazine. Most such websites use the date the
article is printed as the publication date rather than the date the article
becomes available online. Gotta love old media.

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napierzaza
This is probably firstly business porn for people to read and imagine the
success. I think it's one of the 37 Signals. Isn't 37 Signals all about
training and teaching people? So isn't this actually a really central part of
their business model and not something anyone can really do?

It's also strange that they were doing well making classes, and then didn't do
that for 7-years! Then they did it again? Was there a reason it didn't matter
to them so much to generate 3x their months rent so they could share with
another company?

"We built a theater-style classroom, with 37 seats..."

Haha.

~~~
brianbreslin
thats not their primary business. they are bringing in 8 figures a year in
subscription revenue from their SaaS products. why would they devote a huge
chunk of their time to a 5 figure line of business. now with the bosses less
integral to the day to day programming work, they can focus more time and
effort on teaching, which they seem to enjoy.

~~~
points
I'd be willing to bet the teaching, workshops etc are the funnel into which
flow people, who leave thinking "wow they're cool. I better signup to a
basecamp account".

Without the teaching, book, blog, workshops etc, who would buy
basecamp/campfire?

~~~
brianbreslin
basecamp came before their initial workshops. they taught by blogging alot.
workshops/teaching only bring in a small number of people at a time. But they
do usually result in high LTV of each of those customers.

