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YC Analysis: "37signals/DHH style" companies?

news.ycombinator.com

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Re: YC Analysis: "37signals/DHH style" companies?

#11

Post by RyanGWU82 »

dcurtis wrote: post #4

rememberthemilk.com kind of goes halfway, with a freemium model. In some ways, that seems more sane to me than DHH's pay-only ideology.

I'm a paid subscriber of Remember the Milk, but I don't think they do a good job differentiating their paid product from the free product. I subscribed because I felt that $24.95 was a fair price for a superior mobile interface, but there aren't many other benefits for paid customers.

37signals does this differently. Their free products are far more limited, and their paid products offer quite a few more features than their free products. This limits the value to the freeloading customer, but I think this makes for a more sustainable business in the long-run.

Re: YC Analysis: "37signals/DHH style" companies?

#12

Post by inovica »

There are LOADS of companies like this. I run a few small ones myself that generate good revenue. Software-related is our www.sourceguardian.com site. Like most things we solved a problem for our own needs and then turned it into a product. We have a healthy income from this which isn't far from being 'passive income'. My suggestion would be to look at a problem that hasn't been solved, or hasn't been solved well. We pick niche markets for what we do and that works well for us. I know of many companies like this.

Re: YC Analysis: "37signals/DHH style" companies?

#15

Post by extantproject »

davidw wrote: post #7

I think another aspect of this to consider is this: Eventually, most things will be commoditized, but this happens slower for some things, and faster for others. How does the 'dhh style company' keep that at bay - or do they? How sustainable is the business in the face of cheaper competition?

They don't; they have good products and tell a compelling story.

Re: YC Analysis: "37signals/DHH style" companies?

#17

Post by davidw »

extantproject wrote: post #15
davidw wrote: post #7

I think another aspect of this to consider is this: Eventually, most things will be commoditized, but this happens slower for some things, and faster for others. How does the 'dhh style company' keep that at bay - or do they? How sustainable is the business in the face of cheaper competition?

They don't; they have good products and tell a compelling story.

There are plenty of good products that people probably wouldn't pay for these days: web servers, unix-like OS's, and scripting languages; just to name a few. Once upon a time, companies made a lot of money selling Unixes, and for a period of time, there were commercial web servers.

Re: YC Analysis: "37signals/DHH style" companies?

#19

Post by mattjung »

RyanGWU82 wrote: post #10
mattjung wrote: post #9

One characteristic is that they all provide enterprise software. The end-consumer market is very difficult since internet-users are used to get everything for free.

The term "enterprise software" usually refers to software products sold to very large companies, or at least "small and medium businesses" which have 200-500 employees. David's examples were geared more toward the "Fortune 5,000,000" -- the much larger market of small businesses with a handful of employees. The economics of the "Fortune 5,000,000" are very different than true enterprise software, as it avoids employi…

You are right. I used the term "enterprise software" only as a contrast to "consumer software". The "Fortune 5,000,000" is probably the best target market for a startup.

Why? Targeting large enterprises (what the company I work for does) is also an extremely difficult market, but for other reasons than the consumer market. Selling to large enterprises requires professionel and experienced sales people with very good industrie contacts. You also might run into the "small company problem", i.e. you don't sell because you look too small and you don't have enough customer references. Not much fun!

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