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

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

#51

Post by run4yourlives »

[deleted] wrote: post #50
run4yourlives wrote: post #48

Earlier quoted context omitted.

As for brands with power, off the top of my head: 37 Signals Salesforce Flickr (picasa is free, and people still use flicker) expedia/travelocity (not startups anymore mind you)

[deleted]

>With Flickr, you have to be careful because there are also network effects because of the community,

That;s the brand right there. At least my definition of it.

> people use because they know it (which is one kind of branding), or because they want to be seen using it, as with your previous examples?

Point is, they're using it and not phoning a travel agent. They're getting something from it, that much is given.

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

#52

Post by run4yourlives »

markbao wrote: post #49
run4yourlives wrote: post #42

Earlier quoted context omitted.

>In some ways, that seems more sane to me than DHH's pay-only ideology. Well, first off, there are free versions of all 37s's apps. Second, RTM isn't profitable (yet/ever?). 37S is. That seems more sane to me.

That's probably because RTM builds their Paid plan from their Free plan, only offering marginal changes in features. 37signals focuses on the price and builds from there, offering a free version on the side.

I'd agree with that concept, yes. 37s's "free" is just enough to have users say: "Well it doesn't suck, and I could really use that X feature".

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

#55

Post by condor »

anewaccountname wrote: post #39
Mistone wrote: post #32

Earlier quoted context omitted.

this is true - but is huddle chat negatively impacting Campfire? Campfire customers are not running for the doors now that some other company has built a free alternative. Building less of an app that serves a real need and provides an elegant solution can also mean that customers love your product and stick with you. Alternatives will always exist, competition is a natural part of business, giving your product away…

Of course it isn't negatively affecting Camfire; they had it removed from the internet.

How many other chat/messaging competitors does campfire have?

I can guarantee you huddlechat was not the only one, so now that its gone campfire can go back to enjoying their monopoly of the chat/messaging market.

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

#56

Post by tptacek »

quellhorst wrote: post #27

Maybe existing DHH style companies are a good area to look for inspiration to build free alternatives with some premiums added afterwards... Like flickr added pro accounts for $25/year. Read Wired's "Why $0 is the future" http://www.wired.com/techbiz/it/magazine/16-03/ff_free Building less of an app also means it will be easier for others to come later and build what you made and give it away. Look at how it took 2 p…

Campfire is a chat app. I don't think 37Signals sees it as a bulwark against competitors. If HuddleChat integrated with Basecamp and Highrise, maybe they'd take notice.

This issue obviously cuts both ways. 2 people at a tiny consulting shop can probably whip up most of what VC-funded 2.0 companies build too. And those consulting companies don't have boards of directors that will flip out and fire the management team when that happens.

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

#57

Post by tptacek »

davidw wrote: post #30
mechanical_fish wrote: post #25

Earlier quoted context omitted.

The end-consumer market is very difficult since internet-users are used to get everything for free. ...except for Mac users, who support a healthy little industry made up of one- and two-person software companies. In other words, consumers don't spend money for software, except for the ones who do.

So - for the analysis part of the question: why? What makes them different?

That's easy. No VC will fund a Mac app. It's just Darwinism.

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

#58

Post by davidw »

run4yourlives wrote: post #51
[deleted] wrote: post #50

Earlier quoted context omitted.

[deleted]

>With Flickr, you have to be careful because there are also network effects because of the community, That;s the brand right there. At least my definition of it. > people use because they know it (which is one kind of branding), or because they want to be seen using it, as with your previous examples? Point is, they're using it and not phoning a travel agent. They're getting something from it, that much is given.

Oops, you responded pretty quickly... I wasn't satisfied with my answer yet:-) In any case:

Branding definitely is not network effects, though. Branding is what your earlier examples are about, like Apple. Network effects can be present even if you're not really that excited about the company - like eBay or Paypal. Actually, in some cases, where there's some exclusivity in the brand, they may actually work in opposite directions. Network effects push you to 'go with the crowd', whereas, say, Apple says to 'think different' and get a computer that not everyone else has.

I think expedia is a good example in terms of advertising/marketing, where people use it because they get out there and sell it. So perhaps that's part of the answer to keeping a DHH style company out front - sell it lots and sell it well. That's not something 37signals has ever shied away from. However, something like expedia is also probably not likely to ever be completely commoditized/open sourced, so there's always going to be some scarcity there.

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

#59

Post by tptacek »

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…

We sell to large enterprises almost exclusively. It's "different" than selling to consumers, but not "harder". Longer sales cycle, higher average deal size.
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