I think 37S is only able to generate revenue because of their huge time investment in PR. Really profitable, small web companies are based on niche markets. 37S has no niche market, other than innovators that love rails and similar stuff. As you say, their offer has been mostly eclipsed by Google, Zoho, and other web outfits. So, they need to keep the PR strategy to continue making decent money.
Companies that have a well defined niche, on the other hand, don't need to spend much time or money on PR. And many of them are more successful than 37S.
And they go to conferences, and give speeches, and create user experience commercials, and (probably) hustle the media for articles. Hell they might even pay a PR firm! Or advertise!
"We’ve advertised here and there, but all things considered the number would round down to zero. We’re currently advertising Highrise on The Deck, for example.
I don’t have anything against advertising, but we’ve found better ways to get our message out than spending money on advertisements.
I like what Amazon.com does: Instead of advertising they give their ad budget back to their customers in the form of free shipping."
Where facts are concerned (as opposed to speculation, which I'm not interested in), I'm still not seeing how any of that is an inordinate expense of time or money. Attending a conference is now a sign that your company is built on PR? Wha?
Companies that have a well defined niche, on the other hand, don't need to spend much time or money on PR. And many of them are more successful than 37S.