I have come across the company 37signals several times over the last few years, via recommendations from developers, clients and an article in Time magazine. They demonstrate a refreshing approach for smaller companies who successfully compete with corporates in technology and other sectors.
“I don’t have anything against big business,” Jason Fried says. “It’s just not for me.” So he quit and in 1999 started the Chicago-based digital design firm 37signals with three other designers.
But Fried’s jaunt as a corporate employee wasn’t his last experience with big business. Thanks to his firm’s innovative and simple approach to Web design, big clients soon were knocking on his door, and Fried once again found himself working for some of the biggest businesses around—but this time as a contractor and not as an employee.
Fried grimaces as he recalls his encounters with big business: “The decisions being made by these large corporate clients were just so irrational,” he says. “Big business loves mediocrity: They put process first and product second. As long as you go through this process and all these objectives are met along the way, then what comes out at the end is considered successful, no matter what. It doesn’t up set anyone, but doesn’t make them happy, either. It’s safe. I can’t deal with that.”
Still wary of the waste and brain drain of the corporate world, Fried started focusing on reducing his dependency on all things big business. Now his own firm is lean and mean, with only eight employees who are developing a new generation of online services, including the popular project-management software Basecamp.
Fried built his business with a philosophy he calls “Getting Real,” a way of thinking that inspires those with limited budgets and few resources to create successful products. While Fried’s simple, streamlined approach focuses on software development, the principles apply to any small business challenge requiring you to do more with less.
Fried’s mantra about how to be successful in business is simple: Less is more. Being a small business is better than being a big one. Having few resources is better than having unlimited resources. Having less time is better than having all the time in the world. Indeed, having less of anything is better than having more—except when it comes to happiness.
Necessity Is the Mother of Invention
Today, 37signals and the Web-based applications it creates (Basecamp, Campfire, Backpack and Ruby on Rails) have a near cult-like following among more than half-a-million users. More than 60,000 people regularly read the firm’s blog, Fried’s online, self-published book about his streamlined approach to software development—generated almost $200,000 in revenues during its first four months of publication. Fried is regularly invited to speak at top technology conferences and his design work and software products offer some of the most influential approaches in his industry. No list of “hot new tech companies” is complete without a mention of 37signals and Fried. Any review of the “next big thing” typically cites his firm or one of its products.
What’s ironic is that Fried never set out to become the next big thing. His Basecamp project-management system was born out of personal need. “We created it initially for ourselves because we couldn’t find a project-management product that worked for us,” he says. At the time, Fried and his team were scattered among four different cities on two continents. The solution they developed to manage their projects for large clients soon caught on with the clients themselves, who wanted something similar to manage their own work.
Now, projects at some of the world’s largest companies are managed with software created by a business that subleases a few desks in a warehouse district west of downtown Chicago.
Using Limitations to Your Advantage
After graduating 14 years ago with a finance degree from the University of Arizona, Fried returned to his hometown of Chicago. When he started 37signals a few years later, he decided to remain in the Windy City rather than move to Silicon Valley with the rest of the tech start-ups. Fried’s decision was a good one, since his path to success breaks much of the Valley’s conventional wisdom about start-ups. For example, he had no venture-capital backing, though more than 25 firms had offered to invest. Fried says he has no need for their money or connections because Basecamp is already profitable, in part because of Fried’s radically low overhead. “I can only speak about developing software,” he says. “Perhaps if you’re starting a manufacturing company, you need lots of capital to purchase machinery, but with our business, many of the cost barriers have been removed.”
Instead of spending lots of money on services his start-up didn’t need, Fried chose to keep it simple. For example, during the first year, Basecamp was hosted on a single server that cost about $150 per month. The products developed by 37signals were all created using open-source, free software.
And instead of requiring his employees to spend hundreds of hours of their time developing products, Fried obsessively controls the scope of projects. One key to his “Getting Real” approach (see below) is scaling back the number of features on a product so that it isn’t bogged down in unnecessary bells and whistles. “If you have all the time and money in the world, you become Microsoft,” Fried says. “And now, even Microsoft can’t deliver new products: There’s no urgency.”
Success in All Sizes
In reality, the “Getting Real” concept is a more real-world approach to small business than the often mythologised—and likewise, demonized—tech start-up model. Access to venture capital is a rarity in most Main Street retail and service companies. Capital is available for financing equipment, but it comes with plenty of strings and requirements attached.
Fried’s notion of doing more with less resonates with small-business owners who, like him, have discovered that you don’t have to be big to be great. They understand that success doesn’t only come in extra-large. As more businesses operate in a virtual world, small businesses can develop new and efficient products that allow them to compete head-to-head with the big guys — without becoming big guys themselves.
After all, successfully running an efficient business with a low overhead that makes the owner and employees happy is the goal that drives all of us in that huge part of our lives called work. It’s a goal that Jason Fried already has a handle on.
Back to the Basics: How to use your (lack of) size to your advantage
While developed with software companies in mind, Fried’s principles can apply to any small business that strives to do more with less.
Underdo your competition: Businesses get caught up in a cycle of adding more features and services. Great opportunities exist for those who create the same products, but with more simplicity and ease of use.
Create services you would use: Few great product and service ideas come as a result of groupthink and committee meetings. Democracy is great, Fried says, but in the product-development arena, it rarely leads to great results. Great products are the result of solving problems for yourself — and then offering solutions to others.
Fund yourself: The more money you have, the more you’ll waste, Fried says. He admits that outside funding is necessary for capital-intensive businesses, but for many service businesses—especially those utilizing technology or operating online—being able to turn your business concept into reality is getting less expensive by the day.
Take half: List all the features you’d like on your product and cut them in half, Fried advises. Then, cut that list in half. Being driven by time and budget rather than by your dream list of features will result in a much more solid, workable product that won’t break the bank.
Call off the meetings: Fried is not a fan of endless meetings or documents filled with specifications and details that no one reads. He’d prefer to focus on the essentials — and those don’t require a lot of meetings.
Interruption is the enemy of productivity: “Most companies are built to promote interruption, because they think that’s the same as collaboration. It isn’t.”
Don’t hire people: Is the work that’s burdening you really necessary? What if you don’t just do it? Can you solve the problem with a change of practice instead?
Founders: Jason Fried, Ernest Kim, Carlos Segura
Funding: Undisclosed sum from Jeff Bezos, CEO, Amazon.com, and the first outside investor in 37signals,