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37signals Earns Millions Each Year. Its CEO’s Model? His Cleaning Lady

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Re: 37signals Earns Millions Each Year. Its CEO’s Model? His Cleaning Lady

#101

Post by physcab »

paulhauggis wrote: post #2

The long hours mostly has to do with the startup community. They get funding and VC wants to make a profit within a year and get out, at the expense of any long-term goals of the company. The result is 70 or 80 hour work weeks and burnout. The VC don't care because they will be done in the short-term anyway. It's the reason why I refuse to work for startups.

This isn't exclusive or indicative to startups. I have friends who work at large companies (Apple in particular) who work 90 hour work weeks and are completely miserable.

Re: 37signals Earns Millions Each Year. Its CEO’s Model? His Cleaning Lady

#102

Post by davidw »

mikepmalai wrote: post #99
davidw wrote: post #73

Earlier quoted context omitted.

I can't stand going to the beach myself, and if I were wealthy, would see myself continuing to work on things. I'd probably have more 'projects' though, things where there might not be any way of making money off it. And I sure as hell would be spending a lot more time riding my bicycle instead of getting fat sitting at a desk. To each his own, but would someone really want to keep cleaning professionally even if the…

> To each his own, but would someone really want to keep cleaning professionally even if they were wealthy? I could easily seeing less-than-profitable but creative hobbies being way more interesting for hypothetical cleaners who were wealthy and wanted to stay busy. I felt the same way until I actually met a wealthy cleaner. All I can say is never underestimate the power of habit and the difficulty of breaking routin…

Cute story, but I'd put money on people doing cleaning work, statistically, being happier doing their hobby rather than cleaning.

Not all cleaning people work for investment managers that cut them in on sweet deals. Truth be told, I would guess that those are probably a minority.

Re: 37signals Earns Millions Each Year. Its CEO’s Model? His Cleaning Lady

#103

Post by saraid216 »

davidw wrote: post #97
saraid216 wrote: post #85

Earlier quoted context omitted.

> There's something a bit... I don't know quite how to put it. Let's just say that I bet she'd willingly trade places with him, cash out, and go enjoy herself instead of cleaning up after other people day in and day out. See, the typical problem with claims like Fried made is that they're idealizing lives they don't know much about. But Fried didn't walk into that trap. He doesn't remark on her home life. He doesn't…

Her business model is providing a service: exchanging her time for money. 37signals used to be in that business, but moved towards providing products, rather than services. Presumably because it scales better and makes more money, even though doing design/programming/sites certainly makes good money in a sustainable way.

Is Google Search a "product" or a "service"?

Re: 37signals Earns Millions Each Year. Its CEO’s Model? His Cleaning Lady

#104

Post by anamax »

kenko wrote: post #95
briandear wrote: post #90

Earlier quoted context omitted.

You shouldn't need a contract if you're adding value to the organization. If you can get replaced by someone cheaper, then you weren't worth what you were getting. Why the heck should a business pay more for the same outputs? If you're adding more value than you cost, your job is always safe. The union mentality is exactly the reason American manufacturing has left for cheaper pastures. Union employees aren't about a…

Let's stipulate to the first sentence of your comment (and ignore everything that comes after it). If you're adding value to an organization, you shouldn't need a contract. Wonderful! There you are, being a positive influence on your organization, knowing that you shouldn't need a contract. But! Suppose some manager doesn't recognize that you're being a positive influence? Or just wants to throw his weight around? Ce…

> Suppose some manager doesn't recognize that you're being a positive influence?

Then one of you is wrong.

Yes, bad managers make bad decisions. A contract doesn't protect you from bad managers - it merely makes it easier to stay around to be subject to their badness. Why do you think that's worth something?

Contracts actually make bad managers look better that they would otherwise. Yes, bad managers survive longer when unions are involved. Why do you want that?

Life's too short to work for a bad manager. Of course, if all managers are bad (for you), maybe they're not the problem.

> People working manufacturing jobs---a skilled trade, you know---take pride in their work and I'm willing to assert, just as blithely as you were willing to assert the opposite, that they'd be plenty willing to try to improve the product, improve processes, etc., if they were but asked (and lots of improvements can, indeed, come from the rank-and-file in that way).

We can test that hypothesis by looking at what they demanded through their union representatives. Care to predict the result of said "look"?

I'll save you the trouble - they didn't demand anything to improve product quality or increase productivity.

On a related note, the head of one of the US teachers unions said that he'd start caring about kids when they started paying dues.

Re: 37signals Earns Millions Each Year. Its CEO’s Model? His Cleaning Lady

#105

Post by philwelch »

kenko wrote: post #98
philwelch wrote: post #96

Earlier quoted context omitted.

If your employer has been infested by unions and there is a competitor, customers will rush to the competitor and your union will be of no help. Even if your union has managed to infest all your competitors in the same country, imports will ruin you all.

God knows the first thing I do when deciding whether to shop at a supermarket is find out whether it's unionized, and avoid it if it is.

If there's two supermarkets in town and one is unionized, the other one will probably be better for the customer in some way, usually because they'll have lower prices. Customers either don't care about unions or slightly favor them, but the end results of a union do drive customers away.

I don't think it's at all arguable that unions--at least American unions--are detrimental to the health of the businesses their employees work for.

Fundamentally, these unions are parasitic. They treat the wealth of its host as a given and find ways to extract more of that wealth. The flaw behind this is that the wealth of a company is not a given--it depends upon the customers, and the more you try to extract wealth from the company, the greater the impact on the customer. Either that, or the company just goes flat broke[1]. A company that doesn't have these additional costs and distractions is more able to focus on the customer, or at the very least can do just as good a job without going flat broke. The experience of US automakers vs foreign competitors, or Boeing vs Airbus, or unionized retail vs. Wal-Mart and Amazon, bears this out.

[1] If the company just goes flat broke, then the union isn't a problem per se, just a con game on shareholders. Airlines are an example: http://philip.greenspun.com/flying/unions-and-airlines

Re: 37signals Earns Millions Each Year. Its CEO’s Model? His Cleaning Lady

#106

Post by rimantas »

sabat wrote: post #61
whalesalad wrote: post #18

"I won’t name names. I used to name names. But I think all you have to do is read TechCrunch. Look at what the top stories are, and they’re all about raising money, how many employees they have, and these are metrics that don’t matter. What matters is: Are you profitable? Are you building something great? Are you taking care of your people? Are you treating your customers well? In the coverage of our industry as a wh…

He seems to forget that he's not in the same business as startups are; he's viewing startups through a small business lens. see the sickness in our industry He's not in "our" industry. He runs a small business that makes good money, and it happens to use technology. Not the same thing. Are you profitable? Are you building something great? These are not always relevant questions for a startup, depending on what phase…

  > He runs a small business that makes good money, and it
  > happens to use technology. Not the same thing.
As opposed to what? Having no business (making no money), hyping everything out of proportion and having technology for technology's sake?

  > if by "great" we mean innovative
Any justification for this lame definition? I call the service great if it is really useful for customers and make money for the owners. Sure, inventing a way to put pants on over your head may be innovative, but how it is great and what's the point?

I got pretty tired of all that useless social hypeware with no purpose (other than burn VC's money) and business model.

Re: 37signals Earns Millions Each Year. Its CEO’s Model? His Cleaning Lady

#107

Post by lelandbatey »

jmathai wrote: post #94
sabat wrote: post #61

Earlier quoted context omitted.

He seems to forget that he's not in the same business as startups are; he's viewing startups through a small business lens. see the sickness in our industry He's not in "our" industry. He runs a small business that makes good money, and it happens to use technology. Not the same thing. Are you profitable? Are you building something great? These are not always relevant questions for a startup, depending on what phase…

I think you're missing the point. > He's not in "our" industry. He runs a small business that makes good money, and it happens to use technology. Not the same thing. I presume you're defining "our" industry as consumer focused Internet services that plan to IPO or get acquired? Not sure everyone would agree with you, I don't. Your comment actually reiterates what he's talking about. The mentality of what a "startup"…

I have to agree. I read your parent comment, and I just realized what bothers me about "startups", and how they operate.

I guess I had naively been assuming that a "startup" was effectively a phase in business, where you are working hard to build a product early in the businesses life. You are "starting up." However, I assumed that the end goal is to make sure that product grows and supports a viable business that enriches customers lives and provides a stable business for the people involved to do what they love.

Reading Sabats comment though, it sounds like his definition of a startup doesn't involve starting a small business. If it doesn't, then what are you doing? I have some things in mind, but I leave the question open to others to fill in.

Re: 37signals Earns Millions Each Year. Its CEO’s Model? His Cleaning Lady

#108

Post by jmathai »

lelandbatey wrote: post #107
jmathai wrote: post #94

Earlier quoted context omitted.

I think you're missing the point. > He's not in "our" industry. He runs a small business that makes good money, and it happens to use technology. Not the same thing. I presume you're defining "our" industry as consumer focused Internet services that plan to IPO or get acquired? Not sure everyone would agree with you, I don't. Your comment actually reiterates what he's talking about. The mentality of what a "startup"…

I have to agree. I read your parent comment, and I just realized what bothers me about "startups", and how they operate. I guess I had naively been assuming that a "startup" was effectively a phase in business, where you are working hard to build a product early in the businesses life. You are "starting up." However, I assumed that the end goal is to make sure that product grows and supports a viable business that en…

I've been thinking about this for a while.

The biggest problem in Silicon Valley is that people don't think about what they're building. There are so many stories of founders receiving millions in funding and startups being acquired for tens or hundreds of millions of dollars that it creates a really unique subculture.

That subculture is what Jason Fried is referring to. I don't have a problem with it per se but I do wish everyone here would stop and ask "is this the best way to create value for customers?".

There's a lot of talk here about changing the world and delighting customers but if you look deep into most of these venture backed companies it is strictly about big exits. It's what the VCs want, what the media hypes and what founders (blindly?) follow.

Re: 37signals Earns Millions Each Year. Its CEO’s Model? His Cleaning Lady

#109

Post by davidw »

saraid216 wrote: post #103
davidw wrote: post #97

Earlier quoted context omitted.

Her business model is providing a service: exchanging her time for money. 37signals used to be in that business, but moved towards providing products, rather than services. Presumably because it scales better and makes more money, even though doing design/programming/sites certainly makes good money in a sustainable way.

Is Google Search a "product" or a "service"?

Unless Google has legions of Oompa Loompas hiding in its server rooms running around retrieving data as queries come in, it's a product that provides a service: it does not scale linearly with the number of people working on it.

Put another way: each additional cleaning lady client consumes more of her time, and pays her more money in a fairly linear way. Google search users do not fit that pattern, and, more importantly, neither do Adwords customers.

Re: 37signals Earns Millions Each Year. Its CEO’s Model? His Cleaning Lady

#110

Post by harryh »

paulhauggis wrote: post #2

The long hours mostly has to do with the startup community. They get funding and VC wants to make a profit within a year and get out, at the expense of any long-term goals of the company. The result is 70 or 80 hour work weeks and burnout. The VC don't care because they will be done in the short-term anyway. It's the reason why I refuse to work for startups.

Your understanding of VC timetables is wrong. It's almost unheard of for a VC to book a profit within a year.
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