If You Were 37Signals Would You Sell?
If you read Wired Magazine, this month you would’ve seen a one-page article (page 056) on the top 10 Web 2.0 acquisition targets for 2007. In order the list was:
Looking at the list 37signals is the only one that stands out as a subscription-based company. They are making real money over fake money and you can count all of their employees with your fingers. The only investment that I am aware of was done by Jeff Bezos and that was more of a partnership than a traditional VC stuck up your ass type of deal.
So why not sell the company? To me that is the wrong question. The right question is why sell the company when everything is going so well? They will be releasing more apps this year and therefore increasing their reach and revenues and because of their strong userbase they can almost do no wrong.
You would think that the only reason that they would sell the company is because they are tired of running it and not a moment sooner. You can’t blame them, they run their own show and control their own profits. How many other online companies today can vouch to do such a thing? And even though you can create their apps on your own for free and some people have done such a thing, the well-oiled machine just keeps on moving.
So if you were Jason Fried, do you sell the company and go live on the beach or do you keep the good times rolling? If you do continue to keep chugging along when do you decide to sell? You can’t run a company forever.
Related reading:
I think that all depends on what Jason Friend and the others value. If they value having complete creative control and being about to do whatever they want (like being brash, bold, and arrogant in public), then they should not sell. If, on the other hand, they value making a ton of money, then they should.
Yes, that sounds like an oversimplification, but that’s really what it boils down to.
By Jeff Croft on January 8, 2007 1:46 pm
Hey ;)
Just saw that the “digg”-link misses one “g” in the url ;)
Greetings from Germany, Martin
By Martin on January 8, 2007 1:59 pm
It was flattering to be on the list, but we’re not for sale. Everyone has a price but I don’t think anyone is willing to pay ours. We put a very high price on having a good time, building products we believe in, and doing things our way.
But we can definitely do plenty wrong. We can definitely make mistakes. And there are plenty of companies and people out there that wish us failure. We need to focus more than ever on our game: Clear, focused, useful products that solve common problem the simple way.
By Jason Fried on January 8, 2007 2:54 pm
I think something that entrepreneurs don’t normally think of is essentially the opposite of the buyout — what do you do when you’re making $20k, $50k, $100k a month as a sustainable business and you have absolutely no monetary reason for selling? When you and all your partners have higher-than-comfortable salaries and are now doing things because you love doing them, not because you’re trying to create some corporate entity that is ripe for a purchase (not that anyone should start a company with the only intention of selling it.)
It’s essentially the dream scenario: holding onto the company you love while making a ton of money from it, but without any loss of control. 37signals isn’t a startup since they’ve been in business since the late 90s, but when you think of Web 2.0 entrepreneurship people rarely think of sustainable businesses, rather the built-to-flip mentality.
By Mike Rundle on January 8, 2007 3:02 pm
Jason, I for one am glad to hear that you guys aren’t for sale. Keep on making the great products, and I’m sure you’ll keep on making money. :)
Like Mike said, it’s nice to hear that some people are still just wanting to do what they love and making enough money to live comfortably doing it, rather than just starting companies with the ultimate plan of flipping them.
By Jeff Croft on January 8, 2007 3:22 pm
BTW, I just realize I spelled “Fried” wrong earlier. Sorry about that, Jason.
By Jeff Croft on January 8, 2007 3:22 pm
I don’t see them as selling products, but rather pushing a philosophy which can be made into profitable products.
Sell the company and risk losing the spirit of the philosophy? Nah..
By Mark on January 8, 2007 4:38 pm
[...] Apropo kupna i sprzedaży - Czy sprzedaÅ‚byÅ› firmÄ™ gdybyÅ› nazywaÅ‚ siÄ™ Jason Fried? - pyta Paul Scrivens w kontekÅ›cie listy 10 akwizycyjnych pewniaków magazynu Wired. W komentarzach odpowiada osoba najbardziej kompetentna czyli… Jason Fried [...]
By yashke.com » 08-01-2007 PrzeglÄ…d sieci on January 8, 2007 5:15 pm
[...] Even though I have already pimped them out today, the only other company that comes to mind that has products and services that people flock around and can stage an event that gets people buzzing is 37signals. Granted, compared to Apple they do things on a much smaller scale, but you can see how they are built around a strong brand and community. Today’s Web 2.0 companies want to be built around VC dollars and TechCrunch links. [...]
By What Web 2.0 Can Learn From Apple » Wisdump on January 8, 2007 7:29 pm
Fake money? Facebook’s advertising and partnerships are fake? Are you saying ABC, NBC, all those guys are making fake money, too?
Just curious..
By Devin on January 9, 2007 12:00 am
With as many employees as Facebook, who knows if their advertising partnerships and revenue are even enough to keep them in the black. If they were profitable than why continue raising cash?
By Mike Rundle on January 9, 2007 2:54 am
The thing about money in general is that it gives you attention and gives your competitors something to grrr at. Even Gaia Online, the immensely popular anime community site got a mention on Mashable when it raised 8.93 million dollars in VC funding.
By Michael on January 9, 2007 5:20 am
Haha, Mike, why must you guys always have that trace of anti-funding attitude? ;-)
Good point, I haven’t kept up with who’s getting money when but I still think they’re a bit more viable business than some may give credit for. Certainly more than MySpace. ;-)
By Devin on January 9, 2007 11:15 am
I really don’t see what could motivate those guys to sell. They’re young, enjoy what they’re doing and do it well.
Even if they didn’t feel like developing the products any further, their whole philosophy is “simple”, so adding features isn’t part of the business plan anyhow. Not to diminish their efforts, but I think at this point the business could pretty much run itself with a few admins and be highly profitable…so there wouldn’t be much to gain by selling.
By Adam Thody on January 9, 2007 12:10 pm
A Bird in Hand is worth 2 in the Bush.
Don’t be a Jon Abrams or Mark Zuckerberg. These guys will be empty-handed for a long time.
By somaking on January 9, 2007 12:52 pm
[...] Original post by Scrivs and software by Elliott Back Share and Enjoy:These icons link to social bookmarking sites where readers can share and discover new web pages. [...]
By TheTopDots.com » If You Were 37Signals Would You Sell? on January 10, 2007 3:43 am
[...] On Monday when I wrote about 37signals and other great Web 2.0 acquisition bait one of the general observations that was made was that most of the companies rely on advertising to get by. It seems that everyone is in a rush to add as many users as possible to their applications and services that they don’t bother with a paid model and decide to rely on the advertising route. So the question is how hard can it be to get users to pay if they already find your service valuable? [...]
By Making Users Pay » Wisdump on January 10, 2007 9:10 pm
[...] Making Users Pay On Monday when I wrote about 37signals and other great Web 2.0 acquisition bait one of the general observations that was made was that most of the companies rely on advertising to get by. It seems that everyone is in a rush to add as many users as possible to their applications and services that they don’t bother with a paid model and decide to rely on the advertising route. So the question is how hard can it be to get users to pay if they already find your service valuable? Could YouTube offer a pro version that provided you with more tools and a greater chance to gain exposure with your videos? Maybe they simply add pro accounts that allow you to upload larger movies ala Flickr. Looking at a lot of Web 2.0 services it is kind of surprising how none of them provide a pro version for any of their services or basically any special type of service that would entice users to pay. Now some services and applications do very will with the advertising model. Facebook is no slouch with bringing in revenue, but they have groups and communities that target niches that many advertisers are going after. WordPress.com does an excellent job of this by providing you with some excellent basic services that can become greatly enhanced by paying them a small fee. From last that I heard these services helped push them into profitability, but I can’t say if that is still the case because so many new people have signed up since then. Do you think that companies fear that users won’t pay for their services? It does require a certain bit of bravado to think that you created a service so good that people are willing to pay for it. If you create a strong enough community though don’t you think many of the members would be willing to pay for something that gives them just a little bit more? This year I am definitely looking for the companies to take that next step and begin to integrate multiple revenue streams into their systems. [...]
By Wicked Digital Dreams » Blog Archive » Making Users Pay on January 11, 2007 5:23 pm