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We Choose Profit at 37signals
- probablyfiction 3y agoWhat the hell did I just read?
- zyang 3y ago[flagged]
- d1sxeyes 3y agoI’m not up to speed on this, is there something I’m missing in the article or is there some other context you could share?
- zyang 3y agoEmployees came forward that 37 kept a list of "funny" customer names - some offensive and racist. Instead of fixing the problem Fried and DHH banned employees talking about it. Later it came out DHH was a contributor to the list. https://www.theverge.com/2021/4/27/22406673/basecamp-political-speech-policy-controversy https://www.theverge.com/2021/4/27/22406673/basecamp-politic...
- devtailz 3y agoI really hope "banged" is a typo for "banned"...
- elzbardico 3y ago[flagged]
- AlexandrB 3y agoImagine if they ever found out what service industry workers say about customers behind their backs.
- zyang 3y agoI agree there are many out there using fake outrage for personal gain and ladder climbing. In this case DHH's frat club behavior was publicly called out. Instead of accepting responsibility he called timeout to cover his own behind. 37 lost business and credibility from the fallout. That's hardly harmless.
- theonething 3y ago> Instead of accepting responsibility "He (DHH) called it a systemic failure on the company’s part." “There was some awareness at the time within the company that that list had existed and it wasn’t acted upon. That is squarely on Jason’s and my record.” The list, he said, “in itself is just a gross violation of the trust … It’s just wrong in all sorts of fundamental ways.” How exactly did he not accept responsibility?
- theonething 3y ago> Later it came out DHH was a contributor to the list. I didn't see that in the article in you linked. Are you referring to another source? Could you link it?
- d1sxeyes 3y agoThanks for the summary!
- crooked-v 3y agoProbably a reference to employee complaints about a list of "funny" customer names and the culture surrounding that list, the CEO in response trying to flatly shut down all discussion of the subject (after having previously encouraged internal discussion of other politics), and in response to that tone-deaf treatment more than one-third of the company's employees deciding to quit. https://www.theverge.com/2021/5/3/22418208/basecamp-all-hands-meeting-employee-resignations-buyouts-implosion https://www.theverge.com/2021/5/3/22418208/basecamp-all-hand...
- d1sxeyes 3y agoThanks for the summary!
- jemmyw 3y agoA few years ago there was a controversy where it turned out some staff at Basecamp had been passing around a list of customer names they thought funny. So gutter highschool humour. Apparently the people or person who did that had left some time ago, someone else found said file and made a big stink, leadership apologised, but not in the right way(?), there was some expressed "outrage". Then the leadership, obviously out of frustration, said no more politics allowed at work and offered redundancy to anyone who disagreed. Seems all forgotten now which is good because the whole thing was dumb. Someone thought having the surname Wang was funny. Ok it's childish but they left already so who gives a shit? One side asking that we all be outraged by this behaviour, sorry no. Another side saying employees can't talk about politics, sorry that's stupid. Anyway, that was my remote reading of the story, I'm sure I missed the important nuances. It shouldn't have been a public thing anyway imo.
- d1sxeyes 3y agoThanks for the summary!
- __loam 3y agoImo a huge problem with the business culture in the bay was that it seemed like, for years, VCs were encouraging some very irresponsible business practices in the name of growth at all costs. The low cost of lending in this environment allowed these businesses to survive by raising money whenever they needed it, which I think had a really negative effect on the software market. When the unprofitable companies can out compete the profitable ones, you essentially move to a regime where VCs are subsidizing the end user, which is unsustainable. When interest rates rose, the car suddenly decelerated and some folks went splat. A lot of user good will got burned by a sudden pivot to profitability (see the discussion on enshittification), and a lot of people's careers have been damaged. I can't help but wonder if things might have been better if we had grown sustainably, or if the current hangover was worth it for the period of blitz scaling we got.
- mistrial9 3y ago... where VCs are cannibalizing the end users .. FTFY
- emestifs 3y agoThere's situations where it makes sense to raise $X million. And then there's situations where it makes sense to take nothing, bootstrap and become self sufficient. How do you compete against YouTube, Big Banks, Twitter if you generate $1 in "FU money" profit? A VC approach may make sense if that's your goal. But if you're creating a REST API client, selling it B2B, why are you raising $250 million at a $5 billion valuation [1], when you can just start selling it through organic dev network effects and growth? Context matters. [1]: https://news.ycombinator.com/item?id=39702610 https://news.ycombinator.com/item?id=39702610
- deleted 3y ago[deleted]
- pwthornton 3y agoIf 37Signals invested more money in their products, wouldn't they be doing a lot better than they are? Basecamp is hardly talked about anymore. I don't know anyone who still uses it. They sunsetted a bunch of their other products. Yes, you don't need to take VC money, but this post talks about keeping the profits instead of reinvesting them in the business. I'm sure Fried and DHH are doing great taking profits every year out for themselves, but is 37Signals really a healthy and meaningful company?
- ElevenLathe 3y agoWhy does the health of a company matter at all, independent of the people who comprise it? It matters if there are investors, because then "the company" is shorthand for "the investors". If there are none, and its just a literal "company of people" doing stuff, then the right thing to do is the thing that makes those people happy. The corporate form is a tool we invented, not a god to be worshipped.
- pwthornton 3y agoIf you keep losing customers, market share, and mind share, eventually, you won't have a company. Basecamp went from being an industry-leading product to pretty much something that legacy customers too afraid to switch are still using. You don't need investors to care about the long-term health of your company.
- ElevenLathe 3y agoI think this is another case of mistaking a metaphor for actual reality. A company has no "health". This is a metaphor. If the people who constitute a company care whether or not it has customers, market share, "mind share", or about "having a company", then of course they should pursue the things that will make those goals happen. "having a company" is just one of many goals the people who make up the company might or might not have. The "one man shop" of someone close to retirement might be winding down and therefore not care about acquiring new customers. Maybe the people of the company would rather do something else and don't want to be bothered selling it -- fine, close it down and do something else. Serving the company itself is just serving Moloch, in my opinion. Always remind yourself that its just people.
- richardwhiuk 3y ago> This means every year we take risk out of the company. erm, not sure how a company which doesn't reinvest it's profit is less risky than one that does....
- bgribble 3y agoI don't think the meaning is anything terribly sophisticated. I read it simply to mean that if you invest money in the company, that's money that is at risk of going poof if the company folds. If you take the money out of the company, that money can never be impacted by anything that happens to the company in the future, so the total amount "at risk" in the company is decreased. This is, IMO, an overly simplistic take and I'm not endorsing it by explaining!
- pwthornton 3y agoIf you don't reinvest enough money in your company, eventually, the market moves you by. How many people on here still use Basecamp? I suspect a lot less than ten years ago. I'm at a startup, and we had to select project management software. Basecamp wasn't even in the discussion.
- TylerE 3y agoSo, are they better off having made 10 years of profit, or should they have spent a bunch of money to end up with a product that's still probably irrelevant today, and no money to show for it? Intuitively, all effort spent on a software has harsh diminishing returns. Getting to 50% is easy. 80% isn't too bad. 90% is starting to feel like work. 95% is damn hard. 99% is a mammoth achievement. 100% is unattainable. Increased functionality has value to a point, but it's fairly finite. By continually reinvesting in the same product, you are essentially betting on being at least a 99% product, if not 100%. Most products aren't that. Obviously you want to make a good product, but a lot of times trying to that by just throwing time and money at it just gets you Duke Nukem Forever'ed into irrelevance. That's ok. Most projects end in irrelevance. Wouldn't you rather have a happy life and make a decent buck while on the path there? Many scientifically minded people mock the lottery as "a tax on people who don't understand math", but is extreme VC culture (and I'd paint most of the SF scene with that brush) anything but a lottery? It certainly isn't a meritocracy.
- solumunus 3y agoAre they trying to gaslight people or are they really this stupid? If you don’t have any viable ways to reinvest then invest profits in bonds and index funds, that would truly be financially responsible and reduce risk for the company. The reality is they ARE reinvesting the money, in their personal accounts... What complete nonsense.
- santoshalper 3y agoThat's... the entire point of a for profit company. Why on earth would they put company money in an index fund? What an absurd idea.
- deleted 3y ago[deleted]
- solumunus 3y agoEvidently my original comment wasn’t clear enough. First of all plenty of companies do invest money into equities, bonds, real estate, etc. That’s completely standard and in no way absurd. I have no problems with companies taking profit, I have a company and I take profit. I would just find it incredibly embarrassing to attempt to convince my customers that me taking profit is for their benefit, and somehow the optimal way for me to increase my reliability as supplier, against the alternative of investing in product improvement. It’s not that they’re taking profit, it’s that they’re advertising it as if it’s some kind of noble deed they’re performing on behalf of their customers. It absolutely does not remove risk from the company, that’s complete nonsense. The whole post is just strange.
- joecot 3y agoThe point of a company should be to benefit the people who work for it. Reinvesting money into a company can help with growth, but as they say, it's a risk. The point of the company is the workers, so there's nothing lost by just ... giving the money to the workers. If it's time to look for growth, they can reinvest it. Being profitable gives that flexibility. But if you're not an investor driven or publicly traded company, contrary to popular wisdom, the line doesn't always have to go up. Sometimes sustained customer base or just slight growth is enough.
- jmisavage 3y agoThey’re such a unique company, but they’ve always fail to recognize just how unique their situation is and how most people can only dream of being so lucky. - First you have DHH who is one of the creators of Ruby on Rails. He has a large cult-like following - You have relatively simple projects that are profitable from day 1 - They have a series of “self-help” style books for running a business that are popular. Rework was their most popular by far. - And when you do take on money you get an extremely unique business arrangement. Bezos invested in them early on and only became a member in a LLC. All the VCs I know make you reform as a Corp. The only other places even remotely close to that might be Vercel and Netlify. And I only say that because of their widely popular open source projects. https://medium.com/signal-v-noise/the-deal-jeff-bezos-got-on-basecamp-b7a1cb39179e https://medium.com/signal-v-noise/the-deal-jeff-bezos-got-on...
- Zanni 3y agoThey are rare (not unique), true, but I don't think they fail to recognize that. In fact, this post is the opposite of such failure. They're saying they're special because they choose to be--because they're clear on the tradeoffs and willing to make them. There are plenty of other small, profitable, SAAS businesses out there, but you don't hear about them because they don't operate on the same scale (and they're not as outspoken).
- TylerE 3y agoThere's hitting a home run, and then there's reaching home from 3rd on a sac fly. Don't confuse one for the other. It's easier to be a unicorn when you start with a horn already on your head.
- JackSlateur 3y agoSeriously .. this is non-sense, right ? tldr : "profits = good, investments = bad" Lewis Carroll's "Through the Looking-Glass" has a great way to show it things are done : you have to keep running to stay in the same position. If you stop investing (= stop working), then you fade behind, become less competitive, eventually die. So, back to the original post, what they actually do want to say is, perhaps : "once we invest our money in things, we use what's left as profit". Which is obvious and a useless things to do. Or perhaps the post argues against "invest everything and never take 1€ of profit" ? Or "only do invest with the money you earned" ? What a mess.
- catchnear4321 3y ago> Profit protects you from your ego the whole thing was an ego trip. the profits pay to host the page. this is far from the first braggadocios piece out of there. clearly much protection is needed.
- slantaclaus 3y agoIf by egotrip you mean exit from the mainstream then yes. It’s refreshing to hear this simple methodology.
- catchnear4321 3y agono, not hardly what was meant. the failure of a humble brag was tiresome, and quite mainstream.
- tetrisgm 3y agoCompany chose profit. Bold.
- slantaclaus 3y agoIn the context to the tech startup environment of growth and grandeur it is, but from your perspective yeah, nothing to see, time to move on and stop commenting.