kottke.org posts about 37signals
Gawker has rebranded their new commenting system...it's now called Kinja. The name is recycled from a project that Nick Denton worked on with Meg Hourihan starting in 2003. Kinja 1 was an attempt to build a blog aggregator without relying solely on RSS, which was not then ubiquitous. Here's a mockup of the site I did for them in late 2003:
Luckily they got some real designers to finish the job...here's a version that 37signals did that was closer to how it looked at launch.
Where is the team that worked on that Kinja? Nick's still hammering away at Gawker, Meg is raising two great children (a more difficult and rewarding task than building software), programmer Mark Wilkie is director of technology at Buzzfeed, programmer Matt Hamer still works for Gawker (I think?), intern Gina Trapani is running her own publishing/development empire & is cofounder of ThinkUp, and 37signals (they worked on the design of the site) is flying high.
I don't really have an opinion about it, but David Heinemeier Hansson does:
Groupon has filed its S-1 and hopes to raise $750M in its initial public offering. Given they're currently losing a staggering $117M per quarter, despite revenues of $644M, they'll be burning through that cash almost as soon as it hits their account.
At the moment, it's costing them $1.43 to make $1, and it doesn't look like it's getting any cheaper. They're already projected to make close to three billion dollars in revenues this year. If you can't figure out how to make money on three billion in revenue, when exactly will the profit magic be found? Ten billion? Fifty billion?
To which John Gruber adds:
I feel like the Groupon IPO is an elaborate practical joke.
It was a different time and (as DHH notes) a different company, but when Amazon IPOed in 1997, they lost $27.6 million that year on net sales of $147.8 million. That's an 18% loss for Amazon compared to Groupon's, hey, 18% loss. Amazon didn't report their first profit until Q4 2001. No guarantee whether Groupon will ever turn a profit but something to consider anyway. Oh, and probably not relevant but interesting nonetheless: Amazon CEO Jeff Bezos is an investor in DHH's company, 37signals...and until recently, 37signals co-founder Jason Fried was on Groupon's board of directors.
Jason Fried reveals how he got good at making money. I am not a full-fledged member of the Church of 37signals, but one of my favorite lessons from them is that a business needs to practice how to make money in order to get good at it...it's not something that you just turn on when monetizing mode strikes.
So here's a great way to practice making money: Buy and sell the same thing over and over on Craigslist or eBay. Seriously.
Go buy something on Craigslist or eBay. Find something that's a bit of a commodity, so you know there's always plenty of supply and demand. An iPod is a good test. Buy it, and then immediately resell it. Then buy it again. Each time, try selling it for more than you paid for it. See how far you can push it. See how much profit you can make off 10 transactions.
Start tweaking the headline. Then start fiddling with the product description. Vary the photographs. Take some pictures of the thing for sale; use other photos with other items, or people, in them. Shoot really high-quality shots, and also post crappy ones from your cell-phone camera. Try every variation you can think of.
A few weeks ago, Matt Linderman asked the readers of 37signals' Signal vs. Noise blog for suggestions for a word or phrase to describe a certain type of small, focused company.
Sometimes I'm looking for a word to describe a certain kind of company. One that's small and cares about quality and is trying to do something great for a few customers instead of trying to mass produce crap in order to maximize profit. A company like Coudal Partners or Zingerman's.
Boutique was deemed too pretentious...small, indie, and QOQ didn't cut it either. Readers offered up craftsman, artisan, bespoke, cloudless, studio, atelier, long tail, agile, bonsai company, mom and pop, small scale, specialty, anatomic, big heart, GTD business, dojo, haus, temple, coterie, and disco business, but none of those seems quite right.
I've had this question rolling around in the back of my mind since Matt posted it and this morning, a potential answer came to me: small batch. As in: "37signals is a small batch business." The term is most commonly applied to bourbon whiskey:
A small batch bourbon is made for the true connoisseur, every sip a testament to the work and love that has gone into each handcrafted bottle.
but can also be used to describe small quantities of high quality products such as other spirits, baked goods, coffee, beer, and wine. When starting a small company that makes high quality web sites (Wikirank) and apps (Typekit), some friends of mine in San Francisco even picked the phrase for their company's name: Small Batch, Inc.
Sometimes all you need is a little text change to save your business a lot of money. Jared Spool once helped a major ecommerce site with their checkout process. The company ended up changing the text of a submit button and making the company an additional $300 million in one year.
The form, intended to make shopping easier, turned out to only help a small percentage of the customers who encountered it. (Even many of those customers weren't helped, since it took just as much effort to update any incorrect information, such as changed addresses or new credit cards.) Instead, the form just prevented sales -- a lot of sales.
37signals recently changed how they labelled charges on credit card statements and reduced chargebacks by 30%.
37signals is running some experiments with the goal of making people happy in the workplace. So far they have implemented shorter work weeks, funding people's passions, and discretionary spending accounts. The funding people's passions idea reminds me of my time as an internet developer at Nortel in the mid-90s. We set up informal lunch-time sessions where each of us would take turns teaching others something we knew. I learned more in my time there, because of that, than I have in any other work environment. Of course, our sessions were spontaneous and definitely not institutional. They were the result of a great boss and motivated people. The idea that this sort of innovation exists institutionally speaks strongly for the culture 37signals is creating and perhaps hints at why some companies survived the initial internet bubble and others didn't.
Update: This just in:
I am perfectly willing to acknowledge that not all of us excel at the same things, but I'm coming to believe more and more firmly that this whole "typical person" entity is a myth. I've never met a typical person. There are only people who are passionate about what they do, and people who aren't. When the latter become the former, they become "atypical", because suddenly they are self-motivated, insightful, excited, optimistic, and happy.
Every week, I get 3 or 4 inquiries from people looking for jobs in the web design/technology area or for employees (happily, it's more the latter than the former these days). When I hear about someone who needs some work done and I have a friend or friend of a friend who's available, I'm glad to make the connection. For the past couple of years, I've wanted to build a job board for kottke.org to make more of these connections possible, but I never got around to it. So when Jason Fried asked me if I wanted to put a link to the simple, focused 37signals Job Board on kottke.org (you'll find it on every page of the site, below The Deck ad), that seemed to be the next best thing to building my own. I've been referring people there anyway, so a stronger connection makes sense.
37signals recently polled the customers of their online project management application and one of the questions asked what Web 2.0 meant to them. They've posted 500 answers to that question on their site; it's an interesting read. I decided to do a quick and dirty analysis of the most frequently used words by the respondents, hoping that the result would provide a collective definition of sorts for the term Web 2.0. By the time I'd finished (with several timeouts and distractive blog-related detours), I went back to the thread and saw that Jacob Kaplan-Moss had already completed an analysis. Here are his top 15 words:
web - 348
ajax - 107
applications - 93
new - 78
user - 71
apps - 44
desktop - 40
sites - 37
people - 36
internet - 36
content - 34
think - 33
software - 31
services - 30
technologies - 29
Just for kicks, here's my top 30:
For some reason (my shoddy programming skills are a likely culprit), my word counts are slightly different than Jacob's, but they're close. I also left in a few words that he removed but that I thought were relevant, like "more", "use", "using", and "etc". Here are a few more interesting words and their frequency counts:
Not sure this provides much of a definition, but it's fun to play around with.
Big ol' obvious caveat: I performed a straight-up word frequency analysis which did not take into account the context of particular words (e.g. no distinction between different uses of words like "think": "I think Web 2.0 sucks" and "Web 2.0 products make users think"), phrase frequency ("web 2.0", "next generation", "rounded corners"), or anything like that. This obviously limits the utility of the analysis; hence "quick and dirty".
Update: Perhaps a better "definition" of Web 2.0 comes from the related tags at del.icio.us:
Update: del.icio.us did this analysis back in November 2005. (thx, maciej)
Jeff Bezos invests in 37signals, making them bigger and a little less Real. But seriously, I had always wondered how 37s was going to grow and this is a bit of an answer to that question. Congrats, guys. (thx, steve)
Update: Tom has some thoughts on Bezos' next investments, most likely 31functions.com, 25description.com, and 19options.com.
Rebutting Caterina, David says it's a great time to start a business. Good points by both, but they're ultimately arguing different things. ps. Staying small isn't the answer to everything, guys.
37signals has published their latest book, Getting Real, as a PDF download that they are distributing themselves. After more than a day, they've sold over 1750 copies at $19 apiece:
That's exciting. These numbers demolish the sales pace of our first book, Defensive Design for the Web, which was released through the traditional publisher/bookstore model. DIY publishing: There's a new sheriff in town.
If you do the math, that's ~$33,000 in sales in one day. I don't know what the advance would be on a book like that, but they've got to be approaching it, and if/when they reach that figure, the profit margin on subsequent sales will be much higher than the royalties paid by a publishing company. Interesting experiment.
Jason @ 37signals noticed a great feature of the new iMac with built-in iSight. The screen is the flash for the camera so just before you take a photo, the screen flashes a bright white. Fantastic.
Salon profile of 37signals and "the next web revolution". Also noted (for the first time in public, I think): Adaptive Path's secret web app is "a tool to help bloggers measure traffic and other stats on their site [and] will be out by the end of the year".