In retrospect, it seems pretty obvious, but previously I had really only been exposed to entrepreneurship through PG's blog. I had never heard of 37 Signals before. I appreciate PG's writing because it made me realize that starting my own business was a realistic option, but I wish I had been introduced to entrepreneurship by 37 Signals instead. I wasted more than a half a year building free web services before I figured out I should specifically be building things that I could charge customers money for.
Embarrassing to admit, but true.
I would never claim that starting a startup (= a company designed to grow very fast) was the only way to get rich. Anyone can see that's not how most people get rich. Most people who get rich from starting companies do it by patiently building slow growing service or niche product businesses.
A startup is the extreme end of the spectrum. It's not for everyone. It's not for 99% of people probably. But if you're Steve Jobs, or Larry Page, or Mark Zuckerberg, it turns out that you can do better than the guys patiently building service or niche product businesses.
So lotto tickets appear to be a terrible counterpoint.
What's in question is not the value of working in a startup rather than doing nothing at all, but the value of working in a startup relative to the sort of business that DHH founded. So far as I know, it's an open question whether that is positive or negative -- whether you look at the founder's own interests, or those of society, or the amount by which the founder's extra skill and efforts can improve the chances of success.
Of course I was not suggesting, and do not believe, that founding a startup is exactly like buying lottery tickets. I was suggesting that "for such-and-such people, identified in hindsight by the fact that they were very successful, founding a startup appears to have been a tremendous success" -- which I took to be the point PG was making -- is a poor argument for the superiority-for-some-people of founding a startup over founding a "lifestyle business", since there may be no good way to know in advance which people they are, and it may largely come down to luck.
(Which is not the same as saying that there's nothing at all you can do to help your chances of success. Rather, what making a heroic effort does might be to move you from the "almost certain to fail" category to the "quite likely to fail, and some tiny chance of huge success" category, after which it's a matter of luck. And it's perfectly possible -- and I don't profess to know whether it's true -- that on the whole you're likely to do better in a "lifestyle business" in a startup even in that second category.)
It's just not helpful to draw the comparison; it's like hearing someone say they like a comedian, and then pointing out that John Wayne Gacy was a popular party performer. The fact that distribution A contains outliers from Distribution B doesn't mean that A and B are even roughly comparable.
1. The relevant question is not "startup versus nothing", it's "startup versus lifestyle business". How do you know that choosing a startup in that context is a good decision?
2. I wasn't claiming that startups and lottery tickets are at all the same sort of thing. I was making a point about saying "X, Y and Z founded startups and it worked really well for them": that just isn't good evidence that startups are good in general, or even for any particular (however rare) sort of person, unless you can say what's special about X, Y and Z other than that their startups happened to succeed.
The component of your writing I'm referring to is in How to Make Wealth: "If you wanted to get rich, how would you do it? I think your best bet would be to start or join a startup." Your other writings had really resonated with me, and you had described Viaweb's hackers as really risk-averse, so I assumed that I was among the "you" comprising your target demographic. But, having been exposed to other methods of getting rich, I no longer believe my best bet is to start a startup. I would also guess that it is not the best bet of the majority of your readers. It is possible that I am underestimating the prowess of your readerbase, or that you are not writing to the majority of your readers.
I'm happy that you provided an alternative viewpoint at Startup School - I'd love to hear you address the possibility of getting rich via a 37 Signals model on your blog. I know you've mentioned why you don't invest in software companies in order to obtain dividends (despite the fact that people do invest in things like restaurants and banks in order to obtain dividends, and, as an investor, I think I'd rather own shares in a profitable software company than in a profitable restaurant). Maybe you could tie it all together into a blog post at some point. The topic appears here frequently.
A startup is a company that creates wealth rapidly by creating technology a lot of people need. While I don't know the details of 37signals' finances, it seems likely that they'd count as one by my definition.
I think the thing that makes people think 37signals is not a startup is that they currently seem to have no interest in selling the company, but instead pay themselves a lot of the revenues as dividends. That's a matter of personal preference, but as I explained here,
they amount to the same thing.
It seems to me one could have concluded that just by looking at the nature and history of commerce.
Now, it may be that you did not realise this, and that when you did, it was at 37 Signals' encouragement to do so. But from this it does not follow that the single thing that could've happened that would have been better for you would have been to be introduced to entrepreneurial thought by 37 Signals.
// Part of me wonders if this is just to go in his anti-VC speeches.. "See - we made a "lifestyle" business and now I drive a custom supercar"
not my cup of tea aesthetically, but i'm sure it's good for one hell of a summer afternoon in the alps.
"Tufff Tufff Tufff; shoo hai? Lamborghini Murcielago? I have never seen a worse car in my life!"
DHH has a lot of critics, but remarkably few of them drive supercars.
as the post mentioned, a lot of despots and autocrats have supercars, and their opponents are peasants. who is right?
Hey don't look at me, it's your analogy after all.
According to Wikipedia, the Zonda Cinque Roadster is limited to 5 units and costs around $2m, so this is probably a $1.5m-$3m project.
Could DHH have amassed several million in the last few years at 37signals? I can't see why not. Blindly assume they have 100k accounts paying an average of $40 per month (not unreasonable given their price tiers), that's $48m per year. With a typically healthy profit margin, there's no reason why he couldn't be taking a dividend of several million per year.
And with no wife or kids (from what I know), dropping even a quarter of your wealth on a single mindblowing car doesn't strike me as particularly extravagant. After all, some people spend thousands of dollars on a TV when they have barely anything in the bank.
Disclaimer: I have no insider knowledge of DHH's affairs and am just pulling numbers out of my ass that seem possible to me given what DHH and 37signals have said over the years.
In response to a similar question in 2006, Jason Fried said:
We’re a private company so we don’t disclose this information.
A few years ago, someone tried to analyze it and came up with vague revenue estimations: http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-...
My model was largely based on a few key numbers they had published and a general freemium business model. Since then, they've dramatically reduced the prominence of their "free" option and also stopped posting any details of their business, so I haven't been able to realistically update my analysis.
That said, I think that by focusing much more on their paid plans, and by branching out into even more business lines has made 37signals more and more profitable. (See their recent string of new hires.) I wouldn't be surprised if they were exceeding $10million a year in profit, which would be ~$5million a year to DHH. Enough to safely afford a dream car like this. :)
Heinemeier Hansson is based in Chicago, but since the Zonda was never homologated to U.S. specifications, reports indicate that the owner bought a vacation home in Italy just so he could drive the thing. Now that's dedication.
"Heinemeier Hansson is based in Chicago, but since the Zonda was never homologated to U.S. specifications, reports indicate that the owner bought a vacation home in Italy just so he could drive the thing. Now that's dedication."
An in-law of mine married a guy who spent the first $90,000 he made as a doctor on a Porsche. He owed hundreds of thousands of dollars in student loans, just got married and was only making about $120K... He just really wanted a Porsche.
I'm sure he's doing well, but it also sounds like he's a real automotive enthusiast. While $350-500k sounds absurd for a "car", if it is his dream, with how well they've done, and his fees on speaking engagements... that's probably not that far out of reach.
Is it a good investment? In happiness maybe. Some of the best times of my life were taking my car out on the track. I miss it dearly.
After all the shit I've mumbled about him, 37s and rails... that he really wants this car--and appears to know what it is--his stock just went up a bit in my book. Us car guys, we stick together.
edit: Just saw someone else posting that it's more like a $1.5m-$3m project. That certainly changes the scale, but I still think the point applies.
DHH may very well have spent a large share of his networth.
Fk it. I'm Jealous. I want to be that rich. :(
Are you working on it? What are your financial goals for 12 months from now, 3 years, and 5 years? How much active cash per year, passive, and how much in the bank over those timeframes?
Start with the numbers, then figure out what you'd have to do to get to the numbers. Nothing's stopping you. Really. Start now. How much do you want in the bank in 12 months?
If you are so obsessed with money, the goal should be to make something that lots of people want and pay money for, and/or in-turn sell it to somebody else who will give you a lot of money for it.
It turned out to be even cooler, though. I've basically commissioned Pagani to build me a special one-off that's going to be called the Pagani Zonda HH. It'll use most of the bodywork of a Zonda F Roadster, but have the upgraded 680 hp Cinque engine as well as the carbon-titanium tub, ceramic coated titanium exhaust, etc. The car is going to weigh around 1210 kg (2670 pounds).
I'm currently in the midst of designing this car with Mr. Pagani and his team of designers. It's going to be complete this year.
Thanks for all the kind words, guys. I certainly don't fit the standard profile of Zonda owners these days. The majority of recent customers either run their own countries, are part of some royal family, sheiks, or distinctively old money. So I think it's been fun for the Pagani team to deal with someone who actually still have to worry what stuff costs and is about the same age as many of the employees wink.gif.
The color is likely going to be Monterrey Blue or a close variety of that. I've wanted a Lamborghini in that color since forever, but it never came to pass, so now I'm trying it on the Zonda. We're currently playing with a few yellow highlights as well, but that's not a sure thing yet.
The design and the specs are indeed an open buffet of everything Pagani has worked on with the Zonda for the last 10 years. I've been picking and choosing stuff. My car, I believe, is going to be the only stick car mated with the new, more powerful engine. Most of the recent cars have been paddle cars. Which is kinda funny, because usually I love paddles, but for the Zonda, it seems to fit very well as a manual. The car is very much a simple, mechanical car. Not a lot of computers in there, so a stick seemed to fit it as well.
The default choice, though, is to use the newest of everything. So center-lock wheels, the new F1-based ceramic coated titanium exhaust system (it's stunning, same system as you can see on the Zonda R), carbon-ceramic brakes, the carbon-titanium tub (only road car in the world using that, it's about 30% lighter than carbon-fiber and even stronger), and of course the new 680 hp AMG V12.
We're currently trading renderings back and forth. They'll send me a rendering and I'll draw some ideas on it and we'll bounce back and forth. I'm hoping that we'll have the visual design locked down by next week and I can share some final pictures. It's going to look like a cross between the Cinque and the F. I'm not going to have the Cobra-style air intake on top (that was a little much!) and the front is F too.
Also, I'm definitely buying this to drive and keep it forever. It's not going to merely sit in a garage museum somewhere, which unfortunately is true of a fair number of Zonda's. Although, even at this stratospheric pricing, the Zonda has been doing very well on resale. The incredibly few cars that have come up for sale has been going for 20-30% over their sales price. But short of falling on hard times, I don't really care. To me, this is the best looking, best driving car ever made in the history of cars. Why would I want to sell that?
So far, Pagani has made 118 Zonda's. 3 of them has been totaled, so there are currently 115 left. He's currently wrapping up some of the special editions, like the Zonda R and Tricolore, but the new car is coming soon, so they estimate that no more than 120-125 Zonda's will ever be made. That's about the same number of cars as McLaren made of the F1.
That has photos of the car under construction
I'm not sure what's self-indulgent or flashy about it. The costs involved are perhaps at a scale that you and I are not use to, but its just another level up. And then there's the Jeff Bezos's and Richard Bransons, who have their own hobbies, done at the stratospheric cost scale.
You're talking about conspicuous consumption, buying things for the express purpose of displaying wealth. You don't exactly buy a bespoke 680hp barely street-legal race car that can't even be driven in your own country for that purpose.
So, from an investment standpoint, it's sound.
Plus, it's his money. He (if it is DHH who bought it) can spend it how he likes, and he likes cars, and has the ability to fulfil a desire. You'd rather he buys another house/apartment? Why? Where's the point in that? Why not take a job in a 7/11 and "get-by" at the end of the week? In fact, why not just put all your money in a low-yield bond and sleep in a tent? Why spend money at all? Why earn money at all?
I will assume you don't like cars or see the point in supercars in general? I was lucky enough to drive a Ferrari F355 around a racetrack a few years back and it was one of the best experiences of my life - because I'm a car fan. A part of me loves them, and my desire to own one isn't as a status-symbol, it's for the feeling I get when I clip an apex on the limit of grip on a racetrack.
Also, from my standpoint, someone who'd rather invest their hard earned money in something sensible than something they truly want isn't a particularly interesting person...
He could say, go race a stock car, have about as much fun, and fund 20 startups as an angel investor. Instead, he's blowing his money on expensive thrills.
Besides - why the heck should a private guy have to do anything of social value with his money? What, you want him to fund your startup with his hard-earned cash? Why should he?
There is nothing that says an entrepreneur has to spend their wealth investing in startups. Tom Perkins commissioned the Maltese Falcon, Larry Ellison (co)owns The Rising Sun, Elon Musk founded a freaking space-ship company because he wanted to.
This: "Instead, he's blowing his money on expensive thrills."
Why shouldn't he? It's his money, he's not harming anyone by doing it, is he? Owning an expensive car doesn't mean you do anything illegal or immoral with it.
It's one of my favorite cars, and its beautifully engineered. Kudos to DHH. I've read he's an avid autocrosser so its nice to know this isn't a going to be a show piece.
Its proof that it pays to be long-term greedy.
they flyyyyyyyyyyyyy (had one, almost died many times)
My Kawasaki 650R does 0-60 in about 3.8. I paid less than $10k for it. The ZX-6R can do it in about 3.1s. A Ducati 1098 will do it under 3s.
nobody is buying a pagani zonda to drag race between stoplights.
I saw a Lotus Elise a few weeks back and winced thinking about our +20" pot-holes.