Ryan Thompson asks:
From a financial perspective, how did you make the move from client development to 100% product development (i.e. private funding, VC, Angel, internal profits?). We’re in a pivotal time of shift in this direction but being internally funded means that client work sometimes (or most times) still takes precedence.
37signals made the move from clients to products one day at a time. Basecamp was developed alongside client work and was treated as essentially a third client. It had to compete for resources on equal footing with other clients, which meant that every hour we spent on it had to really count.
With constrained resources, you realize the value of the marginal hour very quickly. You can’t just goof around with science projects, open-ended explorations, and play time with new whiz-bang technology. Instead, you have to deliver real value, real soon. Otherwise the project is simply going to languish as it loses out to the “real work” of paying clients.
For us, that meant we had to build something for ourselves, something we needed, and something that was valuable enough that we’d assign resources to it over getting billable hours done. It meant racing to running software, deciding that a lot of stuff just doesn’t matter, and building half, not half-assed.
The initial start of extreme resource starvation lead to many of our thoughts on software development. It also lead me to believe that the best work is done when there’s not enough time, not enough money to do it “right”.
Doing it right is a pie in the sky. It’s a misnomer for second-system syndrome and it’s never going to happen anyway. So stop aiming for perfect, start aiming for good enough.
Got a question for us?
We’re looking for interesting questions to answer here at Signal vs. Noise. Got one? Then send it to us at svn@37signals.com (make sure the subject line reads “Ask 37signals”). We’ll cherry pick the most interesting ones and answer them here. Fire away!
Shane Vitarana
on 16 Oct 07The “racing to running software” link doesn’t work.
—the guy who ran into you at feast and added the always timestamps feature in rails :)
toddy
on 16 Oct 07I hate to be the one to do this but:
“lose” is to be deprived of something “loose” is not tight
“Otherwise the project is simply going to languish as it loses out to the ‘real work’ of paying clients.”
Everytime someone uses the wrong version and I have to backtrack what I’ve read to understand what was meant, an angel loses its wings.
Don Schenck
on 16 Oct 07My favorite work adage:
Perfection is the enemy of Progress.
Tim
on 16 Oct 07Is 37signals working on any new products?
I as because it’s been awfully quite lately and with last weeks “Ask 37signals: Pressure to grow?”
http://37signals.com/svn/posts/625-ask-37signals-pressure-to-grow
article – it doesn’t sound like much is going on from a new product perspective with 37signals.
john
on 16 Oct 07While reading this, I was reminded of a saying that my brother-in-law, and I use.
“Good enough for the girls I go out with.”
Nothing will ever be perfect, it is ok, as long as it works good enough to reach your goal.
DHH
on 16 Oct 07Tim, we’re always working on new products in one form or another. We just choose not to talk about them until we feel the time is right.
Seth
on 16 Oct 07Follow this advice people. It’s working for me. :)
Darren
on 16 Oct 07great insight and I shall have to read the book again.
eric
on 16 Oct 07@John,
bet your sister feels real special now…
Jason Pontius
on 17 Oct 07I don’t think you’re answering the question that Ryan is asking. Here’s my version of the same question.
We can understand how the eight of you make enough money to do really well selling the products that you do. The $50/month you get from my company, times the X thousand people paying for your tools, minus a guess at your server costs, divided by 9 probably equals a perfectly acceptable salary for each of you.
But when you launched these Basecamp, it couldn’t have supported you financially. And if you were doing application development for clients then, one presumes the price point was much higher, and how’d you transition from $X000 for a custom application to $50/month?
We know you found a generous investor. Is there anything more you can tell us about how you weathered that change of business model?
Jason Pontius
on 17 Oct 07(pardon the typo, it’s wicked early)
JF
on 17 Oct 07But when you launched these Basecamp, it couldn’t have supported you financially. And if you were doing application development for clients then, one presumes the price point was much higher, and how’d you transition from $X000 for a custom application to $50/month?
We did client work until Basecamp revenue was able to support our expenses. Once that happened we stopping doing client work.
We also only had just 4 people plus a single web server back when we launched Basecamp in Feb of 2004 so our expenses were a lot less than they are today. That allowed us to cover our costs more quickly and be able to transition away from client work sooner than we could have been able to had we launched Basecamp with 20 servers and 8 people.
Don Schenck
on 17 Oct 07I don’t mean to sound harsh, but this is Business 101 stuff.
In the end, you worked a lot of hours in order to both keep revenue flowing in and develop what would later become a product.
No shortcuts; Hard work. Hours. Sacrifice.
Jeremy
on 17 Oct 07From the beginning was it your intent to phase out consulting in favor of product development or did that goal emerge one day at a time too? Do you ever still get the itch to work with clients?
Basecamp was a tool that helped manage projects and communicate better, not any old product your clients weren’t immediately interested in. Did this make it any easier for your to prioritize Basecamp development since it was so focused on the problem right in front you and your clients?
Glad you chose this question to answer.
JF
on 18 Oct 07From the beginning was it your intent to phase out consulting in favor of product development or did that goal emerge one day at a time too?
It emerged one day at a time. In fact, we built Basecamp so we could handle our client work. It just turned out that Basecamp was the reason we stopped doing client work.
Do you ever still get the itch to work with clients?
Nope.
This discussion is closed.