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Summary + Opinion : Mark Suster, the prominent VC writes a highly supported (by Brad Feld, Fred Wilson etc.) article about the current status of his industry.
by csbartus 16y ago
Summary + Opinion :
Mark Suster, the prominent VC writes a highly supported (by Brad Feld, Fred Wilson etc.) article about the current status of his industry.
During their lost decade —since the 2001 bubble— they have realized startups need significantly less investment than before. That’s right, this is the 37 Signal way with no investment at all.
Since there is no need anymore for money to start up many investors will close their business. For the others there is one card left: scalability.
They think a business to become mature, to serve millions needs heavy investment. They only forget 37 Signals has over 3 million customers paying an average $50 monthly fee without any investment, with less than 20 employees and no offices at all.
Don’t repeat yourself and Less is more — staying lean — are amongst the basic principles of scalability.
Their only hope, the Fat model resembles ironically Clay Shirky’s, their mentors principle:
“Institutions will try to preserve the problem to which they are the solution.”
The complete article is at http://metaman.tumblr.com/post/819220481/the-current-state-of-the-venture-capital-industry http://metaman.tumblr.com/post/819220481/the-current-state-o...
- rmah 16y agoThey only forget 37 Signals has over 3 million customers paying an average $50 monthly fee without any investment, with less than 20 employees and no offices at all. Really? 37Signals is generating $150 mil * 12 = $1.8 bil in revenues per year? At the stated 20 employees, that's $90 mil in revenue per employee. I think 37 Signals is an awesome company and I have the utmost respect for them. But I find these numbers hard to believe. More likely they have 3 mil customers using free accounts. and a few percent of that -- I hear 2% is the average conversion rate for freemium, but let's be nice and say 4% -- or 120,000 as paying customers. At $600/yr, that leads to $72 mil per year in revenues or $3.6 mil per employee. Which is both amazingly great and within the realm of believability. P.S. 37 Signals does have an office in Chicago.
- csbartus 16y agoYes that was the hype in me, they say "people" not "customers".
- rimantas 16y agoP.S. 37 Signals does have an office in Chicago. Since today: http://37signals.com/svn/posts/2456-thank-you-coudal http://37signals.com/svn/posts/2456-thank-you-coudal
- rmah 16y agoFrom earlier this year: http://37signals.com/svn/posts/2344-construction-on-the-new-office-continues http://37signals.com/svn/posts/2344-construction-on-the-new-... Guess they're finally moving in.
- deleted 16y ago[deleted]
- borisk 16y ago37 Signals did take some VC money.
- msuster 16y ago37Signals is a phenomenally successful company. The exception does not prove the rule.