The reason the press writes about funding rather than revenues is not some kind of conspiracy to focus on the wrong things, but simply because reporters know about funding rounds and not about revenues.
It's clear that the press would write about revenues if they could, because they write a lot about the revenues of public companies. They're able to do that because public companies have to disclose their revenues.
Private companies never publish their revenues. Including 37signals. So if Jason really believes this is a terrible problem and wants to set things on the right course, he should set an example and start publishing 37signals' revenue numbers.
From the article: "What matters is: Are you profitable? Are you building something great? Are you taking care of your people? Are you treating your customers well?"
All of those questions can be answered without needing access to a companies ledger. Jason answers those questions himself in the article.
I think his point was that stories about those questions don't get as much readership per unit of reporter effort, hence they aren't being written.
Posting 37signals' revenue numbers would have zero impact on that.
Anyone who proposes that the discussion should focus on profitability rather than funding rounds is presumably not proposing that we simply talk about it as one bit of information: profitable or not. That would make pretty short articles. It also wouldn't be very interesting; there are hundreds of plumbers and barbers and cafes within a few miles of me who are profitable.
And plenty of these plumbers and barbers and cafes probably do great work and treat their employees well. Do you really want to read articles about all of them? I don't. What makes a company newsworthy (unless it's as a case study) is its size, or potential size.
It sounds like you might not be familiar with the author Jason referred to right before his critique of the current focus on size: Ricardo Semler.
In his books he develops a very humanistic look at the role of businesses in our lives. As entrepreneurs, employees, and as customers. I won't be able to do the ideas justice here, but I will try:
A business obsessed with revenue and growth is like a person obsessed with how many breaths they have taken, or how much food is in their pantry -- these are means to an end, not ends in themselves. Food is required for life but it's not the purpose of living. Businesses as conceived by Semler and Fried aren't designed to maximize revenue so much as make the world a better place (#include your essay about google being almost a nonprofit).
It may be that stories of plumbers, barbers, and cafes wouldn't be interesting to you. I like to hear about people living enjoyable lives, delighting their customers, and making their corner of the universe a better place. It's a lot more psychically healthy than reading about people trying to gain the most while providing the least (the tech crunch articles Jason refers to)
So many people seem obsessed with getting a large quantity of money, and only then trying their hand at building a fulfilling life. I have always thought of Semler as running things in reverse: how do we design a seven day weekend that is cash positive?
(Semler's book, The Seven Day Weekend, is highly recommended to anyone who wants to hear more)
I understand quite well the idea of company that isn't focused simply on revenue growth. I've been running one for the past 7 years. And I'm interested in reading about others. But articles of that type are case studies, not news, which is why I explicitly distinguished between them.
first "What makes a company newsworthy (unless it's as a case study) is its size, or potential size."
then "But articles of that type are case studies, not news"
first "Do you really want to read articles about all of them? I don't."
then "I've been running one for the past 7 years. And I'm interested in reading about others."
I think what you want is for Jason to have said "I wish the technical community were focused on case studies of awesome companies rather than news stories about funding and growth." Which I think he would agree with, and would remove your points.
(Not that case study vs news is a real dichotomy -- what's stopping someone from calling news about a round of funding a "case study about getting funding"? Why can't there be news stories about how awesome the customer experience at X has gotten?)
In fact, we see case studies as news (and even less-than-news) all day long here and elsewhere. You can tell by the titles that generally come from blogs and usually look clickbait-y: "How Company/Developer X achieved goal Y," "Why Language Z helped us triple our revenues," etc.
News is, by definition, about current events. Case studies are about past events. So, in general, they can't be the same thing (even if, of course, the publication of an interesting case study can be interesting - and current - news).
"Why can't there be news stories about how awesome the customer experience at X has gotten?": If you really want to know, I advise you to read "Storytelling: Branding in practice".
News is, by definition, about current events. Case studies are about past events.
You are logically incorrect. Well, by your own logic. How can you publish news about a current event? To be written as news it has to be happened in the past.
I'm afraid I have to disagree here. As someone who runs a small business which, for not-immediately-relevant reasons isn't in a position to try for startup-style explosive growth, I'd be really interested in hearing about how people in similar situations run their business. Regarding your examples of plumbers, barbers and cafes, we all think we know exactly how to run these, and in our heads probably think it's a pretty simple thing. What if we're wrong and there's something to learn?
I believe that businesses in this space are run with old-fashioned tools (management methods, process optimisation techniques, technology) for reasons of tradition and lack of information sharing rather than anything inherent to the businesses themselves. My experiences with business growth accelerators leads me to believe we as a community re-invent the wheel an enormous amount, and anything that helps me reduce that is of interest.
Sure, we have a different metric for success, but that doesn't mean there aren't unusually successful small businesses (that will remain comparatively small) that might have something interesting to say.
lay off Paul, he's not making an arguement here that one is better than the other, he's arguing that the press wants stories that pull readership. Writing that Instagram sold for $1B is more interesting than someone that makes a few million in profit a year and has 4 day work weeks.
I myself side with the 37 signals guys that profit is king, but that takes nothing away from my friends that are in start ups chasing big coin.
Either is a viable strategy and i think it's terrible that this community doesnt allow both to co-exist as viable options.
> i think it's terrible that this community doesnt allow both to co-exist as viable options
I think it does. There are many of us that are focused on either lifestyle or profit-driven businesses and those articles are often received well. What isn't are articles attacking the funded companies' approach.
The only way I can see this happening is if dotcom bust 2.0 happens (or major changes in tax code, macro economy, etc), employees totally write off the value of equity, and companies switch to profit sharing payouts. Cash salary is more directly relevant, though, with some guarantee of payout -- quitting a safe $100k/yr job for a $20k/mo job at a startup with $20k in the bank, maybe not.
Companies would also pick vendors based on financial stability, for which profit is probably a major factor, although cash in the bank would also be.
Or maybe it would happen if investment rules relaxed and private equity (Private Equity or direct investment like second market in non-public companies) happened, as communicating financials to lots of investors would still be relevant.
"And plenty of these plumbers and barbers and cafes probably do great work and treat their employees well. Do you really want to read articles about all of them? I don't."
Personally I believe there are many great lessons to be learned from those local/profitable businesses which if written I'd gladly consume. If the press would only dig for those types of stories I'm sure they would come back up with gold.
As an entrepreneur who is interested in growing a long lasting and sustainable business there are many lessons which I can imagine a seasoned business owner, no matter the market, could teach me (i.e,: how had they dealt with times of feast as well famine. What was it like when they had they'r first repeat customer, etc.).
"What makes a company newsworthy (unless it's as a case study) is its size, or potential size."
To be honest I believe this sums Jason's point in one line.
The current tech culture doesn't seem to acknowledge nor celebrate the stories of those founders, entrepreneurs, developers, or business minds whose offerings are geared towards providing impecable customer service; so that doesn't get written about fairly frequently.
Now I may be wrong in my observations but it would seem as if this current generation of the tech vanguard simply aren't interested in those things. The signal, which has become an ever increasing continuous one, seems to be about more, more and bigger, bigger, bigger.
Hey, maybe that's all there is to it, but I'd like to believe we've got much more in us than simply who can amass the largest seed round, or who has had their Series A round over subscribed.
"And plenty of these plumbers and barbers and cafes probably do great work and treat their employees well. Do you really want to read articles about all of them? I don't. What makes a company newsworthy (unless it's as a case study) is its size, or potential size."
The real world is a better movie. Real people, real work, real life make for interesting stories. I would much rather read about healthy business, regardless of size, than sizeable business, regardless of health. Jason Fried was on target.
Apologies, that 3AM comment came off more dickish than I intended. Was meant to be a joke implying there is reason people don't write stories about simple, successful companies: they're boring.
DHH and Jason have both been making big statements on profiability and how it is good to charge your customers etc - in fact when FB was valued at 33 billion DHH wrote something that basically said it was nonsense.
Although one part of me says that the message is good, the other part says - why dont they publish their size? Like you rightly said, the value that many people would attribute to their words would vary based on size.
And the other thing is, many of these concepts that they tout might only work for a particular size. that is another reason we need to know how big they are.
The press loves to talk about changes, because news only comes out when something changes. The timeless pieces only exist in opinions section.
In startup's context, fund raising is definitely a change, and revenue numbers may be a change (when they are surprising or previously undisclosed). But building a sustainable business, treating customers well or even being profitable should be long-lasting and timeless. It's interesting to keep reading about these issues in Hacker News, but these are not exactly news.
It's like business fundamentals ("common sense"). The press never talks about them but it doesn't mean the industry doesn't care or doesn't treat them as important.
This is a fair point. Journalists are just using available public information.
37Signals' numbers are not public. "Talk is cheap" as they say.
I don't disagree with what he is saying in the quotes - that people focus too much on raising money as "business success". This is without question. But then again I still do not understand the value of 37Signals (compared to any other software company with aggressive marketing), at least not from the press they get. How are they being any more transparent?
All I know from recent reports is employees supposedly work 4 days a week and they have some sort of brainstorming sessions to come up with new ideas. What does the 37Signals software do? Specifically, not just some marketing buzzword. What does it do that I can't otherwise do without it? Are there some YouTube videos showing the software in action?
How do I know it's not just a Ruby on Rails consulting business for a few steady clients (who have an inseparable attachment to Rails), as opposed to a "unique" software company with amazing products? How do I know they're not just selling a Rails framework? So I have to install Ruby, Rails and a gazilion of their custom scripts to use their "product"?
Forget what I say. It's just me. "5,000 companies sign up every week." But "keep all project discussions, emails, and stuff in one place" just doesn't draw me in. I don't have a problem with "keeping all project stuff in one place". 37Signals appears to be aimed at solving a "problem" I do not have.
I have looked at their website several times. It just never grabs me. And I'm not inclined to give them my email address to try out their amazing "solution".
I participate in a few Basecamp projects operated by clients and from my point of view, it just forum software (like phpBB, IPB, etc.) with, arguably, a better interface.
I personally don't think it is that great, with many pain points that I encounter - which, I will concede, may be a case of using the wrong tool for the job over any shortcomings in the product itself - but it is better over having no group messaging system at all if you are working with multiple people at a distance.
Assuming what you say were true (i.e., that I "have a problem" with 37Signals), do you "have a problem" with me "having a problem" with that?
Do you also sell something people do not need? And does it make you uncomfortable when people who do not need it mentions that to an audience via HN, the same way 37Signals keeps working to make mention of itself, or have others do so, in publications with large audiences.
If I have no need for a service someone is selling and I never hear about that service, then I have no reason (maybe even no ability) to to state what I think about that service. But if in the course of reading the "news" I am continually reminded of the service's existence, I may be inclined to comment. That is the risk you take with PR and advertising, or internet-based hype in general.
So it seems that 37Signals sells the use of their forum software (constructed from Ruby on Rails, i.e., free software), hosted on 37Signals' computers. I am getting a clearer picture now.
What you are saying is akin to somebody from the revolutionary war going forward in time to the age of the cell phone and saying "People are talking through these boxes but I communicate just fine with the people in my house. I don't need these boxes. It's okay if you do."
I'm not by any means suggesting that you're stupid or out of your league, but simply that you are talking about something that you are clearly completely unfamiliar with. Have you ever managed a team of people and projects? Once you do you will understand what an incredible pain in the ass it is to rely on email and spreadsheets. Full disclosure- I am NOT a 37Signals customer, nor do I know anybody affiliated with the company. Simply that project management software is a very real need for a very large number of teams. One of their partners created Ruby on Rails to create Basecamp, then released the framework for anybody to use and remained as a core contributor.
And your response is akin to someone being concerned about the words of a person from the 1700's reading about cell phones and asking what all the fuss is about, and maybe even stating he does not need one.
Why would you care about that? How could this person from antiquity know anything useful?
On the other hand, a "sickness in our industry" doesn't have to be the majority behavior. It may seem more common than it actually is since it's easier for the press to talk about the businesses that just care about quick exits, but there are still companies behaving that way.
Jason's problem doesn't seem to be with the reporting; it's only coincidental that it's easier for press to report on the businesses he finds fault with.
" So if Jason really believes this is a terrible problem and wants to set things on the right course"
Well you know that's not going to happen especially since he made this statement below:
"We have 35 employees at 37signals. We could have hundreds of employees if we wanted to--our revenues and profits support that--but I think we’d be worse off."
So he isn't simply saying that he feels he could expand his business and have "hundreds of employees". He is saying that his "revenues and profits" would support "hundreds of employees".
Think for a second how much profit you need to support "hundreds of employees".
I'll give him the benefit of the doubt that he was misquoted on that. If not, he's simply full of shit. This is BS to challenge Donald Trump.
First, 37signals has a large (for our field) in-house customer support team, so the mean fully loaded head count cost of a 37s employee is lower than the number you're thinking.
Second, I think you are underestimating just how profitable 37signals probably is. They have scaled a few tight products with high recurring revenue to a very large number of customers with a tiny team. I've worked at companies with hundreds of employees and knew their revenue numbers and the model 37signals is executing puts those numbers well within reach.
As an aside to this discussion: If they are actually that profitable it's a good idea to fly below the radar and resist making statements about how wildly profitable they are. Doing that might entice competitors to enter the same market and regardless of whether they succeed or not that could kill the goose.
Sometimes of course things are out in the open and it can't be avoided (lines at the restaurant or with public companies, or Oracle posting their 24x7 software support rates where a guy out of his house can do the math). Sometimes you want the publicity for one reason or another. But despite the openness of the internet there are still things that you want to keep to yourself lest everybody and their uncle decides to move into your neighborhood.
I think this is one of those cases that's akin to the famous quote by Supreme Court Justice Potter Stewart when he said "I can't define pornography, but I know it when I see it."
I think a lot of people are sick of the crap written on TechCrunch for reasons that are hard to define. Mostly they have turned the innovative process into a form of TMZ, which glamorizes a field that is meant to build things to make lives better. Very few articles have anything to do with companies building these types of innovations, and profits have nothing to do with it. A response might be, well Scientific American writes those stories. Yes, and that's precisely why Scientific American is a respected publication oft-cited by Steve Jobs.
Too many stories on TechCrunch are titled something like "[Insert clever startup name] raises [insert some absurd amount of money] to become the [Facebook, Twitter, Foursquare, Birchbox] for [Work, Finding a cab, Healthfood]. These stories are ridiculous and cover mostly crap ideas that don't solve any real problems.
I would think that creating articles, or blog posts, talking about situations of how they specifically treat customers well, how and why they are building something great, how they take care of their people, etc.. would solve this more than posting revenues. Though that might come across too strongly as stroking your own ego.. Obviously being profitable allows you more benefits to how you treat people, the time you give or allow.
It certainly is true that reporters can't write about numbers that they don't have. But I also think that a startup going for broke is more exciting to read about - both when they succeed as well as when they crash. A race car is more exciting to watch than a tractor.
It's surprising that 37 signals isn't labeled a "lifestyle" company, which is practically like leprosy when it comes to funding and media attention.
Also, TC (and others) have a huge following from startup community. For early stage companies, funding and hiring have big impact, perhaps next only to customer acquisition (and that is usually not shared). So i wonder if they are only serving their big target segment well by reporting on these.
It's clear that the press would write about revenues if they could, because they write a lot about the revenues of public companies. They're able to do that because public companies have to disclose their revenues.
Private companies never publish their revenues. Including 37signals. So if Jason really believes this is a terrible problem and wants to set things on the right course, he should set an example and start publishing 37signals' revenue numbers.