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What about the other possibility, Paul? 37Signals or Smugmug stay small & profitable, grow organically, but never straying from their true self. There is no big

What about the other possibility, Paul? 37Signals or Smugmug stay small & profitable, grow organically, but never straying from their true self. There is no big exit, but people (founders as well as other employees) are happy. Would that be another logical outcome of your original essay? In fact, going public introduces all manner of considerations that often inherently introduce "bossiness", so this alternative seems even more logical to me! For one, public companies have to grow, grow and grow and a lot of the bad stuff about companies you point out in your essay arises from that one source. They do bad deals, they start to think very "strategically" (ignoring the human element) and so on.

stcredzero 19y ago
In E. F. Schumacher's Small is Beautiful (http://en.wikipedia.org/wiki/Small_is_Beautiful http://en.wikipedia.org/wiki/Small_is_Beautiful) there is a corporation described chartered in such a way as to not get "too large." In this case, "too large" is considered to be more than 350, which was considered by some to be the upper bound for a functional "village." But the particular value of N is not important. What is important is that this corporation was chartered to undergo mitosis and divide in half, forming two new companies with an equivalent charter. In _Small is Beautiful_ each corporation would have a relationship with one being a subsidiary, which would introduce "bossiness." Perhaps the charter could be modified so that neither spawn was subservient to the other?
pg 19y ago
37Signals and Smugmug don't prove much yet because they aren't that old. I'd be willing to bet both either die, go public, or get bought within the next 10 years. It's easy to stay medium-sized if you're a consulting firm, but hard if you're a product company. As a product company you tend to either extreme: you either keep growing, or die. And if you keep growing, you'll eventually either go public or get an acquisition offer so big it's hard to turn down. I might turn out to be wrong. This world changes fast. But there aren't a lot of 20 year old 37Signalses around. Bezos seems to agree with me. He invested in 37Signals. He would not have done that if he didn't expect some form of exit. And in fact 37Signals probably had to say explicitly that they expected some form of exit in order to get his money.
- startingup 19y ago
  I grant that they are not that old yet. One counter-example of a software company that has kept growing organically is SAS Institute (now $2+ billion and counting). Don't know anything about their internal culture - they say attrition rate is very low. I would modify the "grow or die" to "adapt or die" because it is really lack of adaptation that seems to kill, and lack of growth may be a manifestation of lack of adaptation. I am not sure size is actually a benefit or hindrance to adaptation (it may be neither). It is theoretically possible for a small company around in 1985 to have adapted itself successfully through waves of change. But alas the only company I can think of that has come anywhere close to adapting through waves of change is Microsoft (and even it hasn't adapted that well). An example of botched adaptation is the Altavista search engine from Digital. I remember the time it was the most advanced search engine (at a time when Gates didn't think search even mattered). The parent company entirely missed their value.
- tonystubblebine 19y ago
  Thanks Paul and everyone here for such thoughtful responses to my post. I got a lot out of reading them. It does look like the presence of large acquisition-minded companies means that no matter how you push the YC companies, to work toward acquisition, toward a next round of funding, or even toward small business--if they are successful someone will make them an offer. It was interesting to hear from the people here who were taking so many different routes with their companies. Kudos.
- altano 19y ago
  I doubt that Bezos invested in 37Signals to make a lot of money, or at the very least, I doubt it was the primary concern.

stcredzero 19y ago

In E. F. Schumacher's Small is Beautiful (http://en.wikipedia.org/wiki/Small_is_Beautiful http://en.wikipedia.org/wiki/Small_is_Beautiful) there is a corporation described chartered in such a way as to not get "too large." In this case, "too large" is considered to be more than 350, which was considered by some to be the upper bound for a functional "village." But the particular value of N is not important. What is important is that this corporation was chartered to undergo mitosis and divide in half, forming two new companies with an equivalent charter. In _Small is Beautiful_ each corporation would have a relationship with one being a subsidiary, which would introduce "bossiness." Perhaps the charter could be modified so that neither spawn was subservient to the other?

pg 19y ago

37Signals and Smugmug don't prove much yet because they aren't that old. I'd be willing to bet both either die, go public, or get bought within the next 10 years. It's easy to stay medium-sized if you're a consulting firm, but hard if you're a product company. As a product company you tend to either extreme: you either keep growing, or die. And if you keep growing, you'll eventually either go public or get an acquisition offer so big it's hard to turn down. I might turn out to be wrong. This world changes fast. But there aren't a lot of 20 year old 37Signalses around. Bezos seems to agree with me. He invested in 37Signals. He would not have done that if he didn't expect some form of exit. And in fact 37Signals probably had to say explicitly that they expected some form of exit in order to get his money.

startingup 19y ago
I grant that they are not that old yet. One counter-example of a software company that has kept growing organically is SAS Institute (now $2+ billion and counting). Don't know anything about their internal culture - they say attrition rate is very low. I would modify the "grow or die" to "adapt or die" because it is really lack of adaptation that seems to kill, and lack of growth may be a manifestation of lack of adaptation. I am not sure size is actually a benefit or hindrance to adaptation (it may be neither). It is theoretically possible for a small company around in 1985 to have adapted itself successfully through waves of change. But alas the only company I can think of that has come anywhere close to adapting through waves of change is Microsoft (and even it hasn't adapted that well). An example of botched adaptation is the Altavista search engine from Digital. I remember the time it was the most advanced search engine (at a time when Gates didn't think search even mattered). The parent company entirely missed their value.
tonystubblebine 19y ago
Thanks Paul and everyone here for such thoughtful responses to my post. I got a lot out of reading them. It does look like the presence of large acquisition-minded companies means that no matter how you push the YC companies, to work toward acquisition, toward a next round of funding, or even toward small business--if they are successful someone will make them an offer. It was interesting to hear from the people here who were taking so many different routes with their companies. Kudos.
altano 19y ago
I doubt that Bezos invested in 37Signals to make a lot of money, or at the very least, I doubt it was the primary concern.