37Signals : Alternative Software Business

Code will tear us apart

There is this Alternative rock scene that blossomed back in the late 70s/early 80s on the ashes of the punk music. This encompassed bands like XTC, Wire, The Cure or Joy Division in the UK and Husker Dü or R.E.M in the US.

They basically had the energy and the DIY approach of the punk bands but as opposed to the latter they have a much more realistic view of the business, were not so self destructive (except maybe Joy Division Ian Curtis).

They had a proper plan : offering an alternative to mainstream (hence the name) pop music, driven by their vision of what it should be : quality pop song with an attitude, with an independent (hence Indie in the UK) artistic approach, ignoring business driven advices from major record companies marketing executives.

Viewing this Jason Fried (co-founder of web2.0 start-up extraordinaire 37Signals) video, I thought of the many similarities of their business approach in the software industry with that very musical vogue. Thinking about it, this analogy also gives some hints on 37Signals success …

Faith 2.0

Web 2.0 companies : DIY approach and energy of the first wave of start-ups. With more hindsight, less self-destructive temptations (no cash flow burning) and a real vision : offering simple, sensible and quality user experience with the smallest and most agile team.

Best example : 37Signals. 8 profesionnals offering web based tools (Project Management, CRM, etc …) awarded Business Week best of the web awards and ranked in the Top 10 Vendors winning the SMB Online experience race, amongst the likes of IBM, Dell, Microsoft, ahead of Verizon.

Making plans with Jason

37Signals strategy is built on radical opinions (published in their manifesto) and simple principles : independence from investors, alternative approach, no structure overhead, simplicity and focus on good products. Replace products with songs and here you go.

All these are explained by Jason Fried in that video interview : 5mns of sheer business vision against current main trends.

• No external investors. Only Jeff Bezos is entitled to join because he agrees to leave them with a complete autonomy on their strategy.

• Not growing any bigger : 8 is enough for the current job. Small is the new big indeed as Seth Godin put it.

• No middle/long term plan. Where will they be in 5 years time ? In the business.

• Constant communication is the enemy of productivity. Meetings should be the exception, not the rule.

• Less functions, less options, more focus on GUI

• Forget Java, .Net, PHP etc … : 37Signals came up with a brand new framework : RubyOnRails. This had IT Professionals laughing in 2004. They no longer do now as many open source Gurus has switched to this excellent and very productive platform, used by Twitter for instance.
  

(This last point is not addressed in the interview but it definitely could)

Talk about the passion

Reading 37Signals blog you’ll find out that their influences come from many different areas : cult designers, Car manufacturer’s, novelist, poets, escape artist/performer, cult video-clip director, alternative (how strange) rock star.

This allows them to keep a fresh perpective on the business, a perspective that fascinates their following (users, young IT entrepreneurs, cool bloggers).

The end result of this alternative, radical, independent and fresh business approach is that it gives a real sexyness to 37Signals products. And a genuine differentiator to the brand, the kind people gives the nod for.

Oh! and incidentally this has also brought them over 1 million users. An exemplary success.

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