YC Analysis: "37signals/DHH style" companies? • Hacker News Board

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

#31

Post by subwindow » Mon, Apr 21, 2008, 2:08 PM UTC

The Craigslist comparison comes from:

1) The fact that in SF and NYC, they charge directly per listing in certain categories.

2) The fact that they didn't take VC funding.

3) The fact that they stayed small.

4) The fact that they didn't sell the company.

All of these would have been extremely easy to stray from, but instead they stuck to the core philosophy. What DHH was talking about was just that: a philosophy. Any company can stick by that philosophy, regardless of how it attracts customers or the specifics behind their product or service.

Asking the question "what other web or software companies make a living the 37signals way?" is kind of a weird question. The 37signals way is actually the normal way to run a business. It just seems weird because the scale of the web has thus far screwed up everyone's minds to the point where everybody forgets the past.

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

#32

Post by Mistone » Mon, Apr 21, 2008, 2:16 PM UTC

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…

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 for free is not the only way to deal with competitors.

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

#33

Post by davidw » Mon, Apr 21, 2008, 2:22 PM UTC

subwindow wrote: post #31

The Craigslist comparison comes from: 1) The fact that in SF and NYC, they charge directly per listing in certain categories. 2) The fact that they didn't take VC funding. 3) The fact that they stayed small. 4) The fact that they didn't sell the company. All of these would have been extremely easy to stray from, but instead they stuck to the core philosophy. What DHH was talking about was just that: a philosophy. Any…

The problem with that line of reasoning, in my opinion, is that "normal" businesses sell "normal" products. As a simple example, how much would you pay for a clone of reddit? Not much. The value of the site is entirely in its large community. Same thing for eBay, for the most part. Also, normal products always cost something. There are a ton of information goods that are free: Linux, Apache, all kinds of languages, compilers, editors, browsers - everything you need to run a business, almost, can be had for free these days.

In other words, things do work differently on line, in some cases. Understanding that, and understanding what happens why is crucial to being able to do a 'DHH style' company that doesn't get crushed by a big player, or undercut by a bit of open source software.

I highly recommend the book 'Information Rules': http://www.amazon.com/dp/087584863X?tag=dedasys-20

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

#34

Post by dkokelley » Mon, Apr 21, 2008, 2:28 PM UTC

Also keep in mind that DHH suggested building a product for a business, not consumers. Consumers are used to free, but businesses are more than willing to pay. In fact, a price tag is a way for businesses to justify their corporate use of the product.

I'm constantly surprised when I see companies paying for a service that I get for free (Any premium chat/voice Vs. Gtalk). The thing is, businesses don't like to spend time looking into the best and most cost effective way to solve a problem - they like to throw money at it and make it go away. DHH suggests being that person who makes it go away.

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

#35

Post by mattjung » Mon, Apr 21, 2008, 2:34 PM UTC

mechanical_fish wrote: post #25

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 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.

A large number of Mac users are also professional designers or music producers and not part of that typical Internet user. So Mac users may pay for Mac software, but not for web-services.

My point is: the consumer market offer less niche markets that allows you to build a sustainable business compared to the "Fortune 5,000,000". I know this is not good news, because building software for enterprises (no matter how big they are) is less fun.

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

#36

Post by ericb » Mon, Apr 21, 2008, 2:38 PM UTC

I had one for a while--a shareware business that sold pop up blockers, before they were free, along with a privacy suite. Many shareware businesses fit the description. The Association of Shareware Professionals, which I used to belong to, has many members living this way. Their newsletter had an article series about how to run your shareware business from anywhere in the world.

To answer the article's question, the people who do winzip, pretty good solitaire, clipmate and desktop tower defense are probably good examples.

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

#37

Post by rickd » Mon, Apr 21, 2008, 3:40 PM UTC

pmorici wrote: post #23

asdflkj wrote: post #20

"37signals/DHH style" companies--in other words, not startups? This is interesting, because his advocacy of non-startups is an oblique way of saying "don't start startups". I wonder, did PG and others even know what the talk was gonna be about?

Are you suggesting that they should crush dissent had they known? DHH wasn't saying don't start startups. His point is that people have a warped view of the world and the average startup is more like 37signals than it is like Google/facebook.

I don't know if asdf was suggesting they "crush dissent" - but I do think "WOULD they?" is a good question to ask!

I have always wanted to do a startup that has more mid to long term success as a goal- "37signals-like" if you want to call it that- but I've always felt that there is a HUGE amount of pressure to grow grow grow and sell.

And btw- I really do get the feeling reading news.yc and other venture related sites, that many who are into the startup scene right now look down on anyone who doesn't build-to-flip... but that doesn't jive with all the positive feedback given to companies that buck the trend and hold on longer. anyway that's enough rambling for now.

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

#38

Post by webwright » Mon, Apr 21, 2008, 3:59 PM UTC

blinksale.com followed a 37s path-- consulting firm that eventually gave up consulting, I believe.

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

#39

Post by anewaccountname » Mon, Apr 21, 2008, 4:08 PM UTC

Mistone wrote: post #32

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…

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.

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

#40

Post by anewaccountname » Mon, Apr 21, 2008, 4:12 PM UTC

davidw wrote: post #17

extantproject wrote: post #15

Earlier quoted context omitted.

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.

You are crazy. Clorox still has more end-consumer market share than all store brand bleaches put together, even though it is chemically the same stuff and costs way more.