8 ms·

Why 37signals advice is irrelevant and unhelpful

136 points by mathewi 16y ago

cschep 16y ago
Irrelevant and unhelpful ... to you.
ThomPete 16y ago
The majority of start-ups are social web oriented. They operate in a consumption-services market. That line strikes me as both wrong and missing the point. Perhaps then the majority of start-ups should consider a different service to sell.
- jacquesm 16y ago
  It's wrong enough that it casts doubt on the rest of the article, but he does have a - small - point, which is that any advise should be evaluated in the context in which it is given, which I think is pretty obvious. I think the author operates from a limited perspective in to what startups are generally busy with and then assumes that everybody takes the 37signals advice as gospel.
  - ThomPete 16y ago
    Exactly It's not like it's a secret that the map is not the territory. But perhaps, if you would excuse my pedantic tone, that's what one might think being an economist from an Ivy League University.
- davidw 16y ago
  Yeah. I keep waiting for the definitive article taking on some of what 37signals is saying, but this wasn't it. It's not something I dedicate a lot of time to thinking about, but I think they don't spend enough time talking about their "following"/fame, which is really their biggest competitive advantage. That's probably the thing they've worked the longest and hardest to build, in some ways, because they most patently are not "doing less" marketing and promotion of their ideas.
  - joshuacc 16y ago
    They don't say that you should do less marketing. They think that it's better to market through teaching than traditional channels: http://37signals.com/svn/posts/451-whats-your-cookbook http://37signals.com/svn/posts/451-whats-your-cookbook This idea is something that Jason and DHH have covered in a lot of their interviews. My impression is that it is in Rework as well. (Haven't read it yet.)
- sethg 16y ago
  The majority of start-ups that the author remembers hearing of may be social web oriented, because we are all social animals. If you come up with a clever new Web site that people can use to schmooze with their friends, then lots of people will hear about it and be interested in it, because we all like to schmooze with our friends... but you’ll have a hard time getting anyone to pay for the service directly, because we all have plenty of ways we can schmooze with our friends for nothing. By contrast, if you come up with a clever new Web site for managing a dental practice, then the only people likely to remember its name will be dentists... but they will pay for something that makes their lives easier, which means that you could turn it into a nice fortune, if not fame.
barkmadley 16y ago
The author does a good job of identifying who will find the business model advice from 37 signals unhelpful. The title certainly is sensationalist. A short summary: 37 signals is a B2B. The economics of the B2B model do not translate to a B2C model.
- shadowsun7 16y ago
  A better short summary: because 37signals is B2B, and because they sell productivity tools, companies are more likely to view their 37signals product purchase as an investment. What this means is that people believe the purchase will help their company's productivity (and therefore increase revenue). This is the real reason behind the high 'willingness to pay' that we see in 37signals's business model.
  - jacquesm 16y ago
    Investments are typically done in capital goods, say a machine shop buying a new lathe or a real estate company deciding to put up a new building. This is just cost/benefit, investment does not really enter in to it.
roc 16y ago
I'm fuzzy on where he draws the line between consumptive services and productivity tools. Which is dropbox? flickr? instapaper? I also can't say I've yet enjoyed the pleasure being part of an organization that views business-services costs as anything but costs. MSDN subscription? cost. Server lease? cost. Conference? cost. Support contract? cost. They aren't considered investments any more than the electric bill; which itself could be arguably interpreted as an investment under the logic of this article.
- Qz 16y ago
  Hmmm... HN - consumptive service or productivity tool?
  - jacquesm 16y ago
    That depends on the user. It is the opposite of a productivity tool for some.
- macco 16y ago
  Actually there is no difference between investment and consumption. The principles of the internet are not different to the old world. It is demand and supply. The thing is: if a service is free and scalable, its supply goes up to infinity and this pushes the price down to 0.
mikecarlucci 16y ago
The main point is that advice from 37signals is pushed too hard. It's not all bad, but it isn't a business model or company philosophy that can work in every situation. I read and enjoyed Rework. It's refreshing to hear from a source that is trying to take on the business world by pulling a George Cosntanza and doing the opposite, or at the very least, an alternate. The best use of their advice is to become a disciple of simple. Don't create huge goals, stick to small ones. Don't include every feature you think of, just the best/necessary ones. Don't have lots of meetings, only the ones that are vital (and good communication can fill in for formal meetings entirely). And don't be afraid to show your flaws. It's the advice we've gotten from parents and teachers and friends for years: be yourself. None of these things guarantee success, but they shouldn't lead to failure either.
- lucisferre 16y ago
  YMMV, yadda, yadda, yadda. Nothing to see here, move along.
patio11 16y ago
It has not been my experience that B2C customers are unwilling to pay for web services.
- zackattack 16y ago
  I don't think that was the point suggested by the article. I think the point is that B2C customers are unwilling to pay for web services that function as long-term investments, but they are willing to pay for web services that function with immediate gratification.
  - stanleydrew 16y ago
    That's exactly the opposite of this article's argument.
    - zackattack 16y ago
      Am I mistaken in classifying 37s as B2B, then?
      - jacquesm 16y ago
        No, but the author does make the mistake that you can apply b2b pricing knowledge to b2c situations.
- shadowsun7 16y ago
  I believe this author is arguing for web services of a specific kind. He says that products like productivity tools represent an investment to the potential consumer: 'buy me now, for a high upfront cost, and I will help you become more productive (aka help you make more money) in the future'. And this makes people more willing to pay huge amounts for 37signals products. Edit: whether this is true I am not sure - I've reread the article a couple of times, and he doesn't really make a watertight argument for his case. Are there counter-examples to this? Or conditions where this is simply not true? His argument relies on the fact that 37signals 'charge a lot', and that this high price is not translatable to other web services. But there's no way to quantify that. And there's no reason to assume that there aren't other reasons for such willingness to pay. Off the top of my head: people pay more because 37signals is a strong, trustworthy brand. People pay more because this is B2B, and business have to tend to buy things only at a certain (high) price. People pay more because they have large teams, and 37signals's tiered pricing forces them to use the more expensive packages.
c00p3r 16y ago
Their blog and their book is the SEO, product placements and self-promotion in the first place. Do not confuse it with something like selfless and sincere help to the community. ^_^ Update: Dear anonymous coward-down-voters! Face the reality - 37signals is a successful business, and it looks a lot like that of MySQL - lot of hype and really good, well-written texts, which means big and active community. Do not assume that they know only programming. Those guys looks like well-read and more or less familiar with Eastern, philosophy. Most of their advises are just adaptations of some well-known Zen (and from other branches) principles. ^_^
mrshoe 16y ago
This article is pretty far off the mark. 37signals don't advocate charging for social media apps. They advocate building software that people are willing to pay for. It's a little ridiculous to simply say "The majority of start-ups are social web oriented," and then assume that the rest of 37signals' advice still applies to all those startups. 37signals' advice is, in fact, irrelevant and unhelpful to you, but the real reason is this: Your blog doesn't have hundreds of thousands of subscribers.
- stanleydrew 16y ago
  This was a good comment until it kind of got sidetracked at the end. I'd say 37signals' advice is irrelevant and unhelpful to him because he's not starting the kind of startup that they are advocating. I think if he had just pointed that out it would have been an interesting observation.
alsomike 16y ago
Counter examples: Meetup.com and dating sites.
- william42 16y ago
  Dating sites are a really bad counterexample, since they have to advertise(except plentyoffish and OKCupid, which are also free) and TV advertising for an Internet business is a sure sign of a failing business. (Think about every search engine you know. Almost every single one has tried to advertise, except Google. Google never ran ads. All their competitors did.)
  - alsomike 16y ago
    Bing has run ads. Google too, at the last Superbowl. Eharmony has been profitable since 2004, with $250 million annual revenue. Another counterexample: Ancestry.com
  - kscaldef 16y ago
    I'd be curious to hear in what sense you consider online dating sites failures. Your assertion that advertising in other media makes them a failure is, well, just that; an assertion. I don't have any numbers on the financials of the companies, but the general consensus of people that I know is that OKCupid is a fine place to waste time, but that if you really want to meet people you need to go to the pay sites (precisely because the financial barrier-to-entry keeps away all the people who aren't really interested in dating).
    - stcredzero 16y ago
      I've heard that okcupid is an excellent way of meeting new people you actually like -- from friends that use it like this. My short time on there seems to corroborate this.
- rythie 16y ago
  The costs of those sites is relatively small compared to the overall monetary costs of being in a relationship like eating out, social events, travel, presents, marriage etc. So maybe that's why people don't mind paying.
GBKS 16y ago
Independent of the argument, I enjoyed the writing style and structure. Not many blog posts are as well written as this one.
prs 16y ago
"I have a degree in economics. I studied this at Oxford University, and have as good a grasp as anyone." This provides a great theoretical foundation for his argument. Now all I want to see is a more practical one.
barmstrong 16y ago
Summary: if your product isn't useful (or doesn't have utility in the economic sense) it's harder to charge for it. Duh. The unfortunate conclusion of this is that social media may just not be that useful to people. DHH even made this point at his startup school talk - saying that if people aren't that willing to pay for your app, maybe it's just not that useful. I believe they've also stated elsewhere that when they moved Basecamp (or was it backpack) to a B2B product instead of B2C it got way easier to make money.
- jsomers 16y ago
  That's not an accurate summary, or at least it's not complete. I took the author's main points to be that (a) 37Signals's offerings are viewed by customers as investment opportunities instead of as consumable goods, and that (b) people are thus more willing to pay for 37Signals's stuff than for the mere "consumption-services" offered elsewhere. The author implies that this is the case even if those consumption-services provide a lot of utility. Point being that in the author's mind, it's not that 37Signals is making great products while everyone else isn't. It's that 37Signals is making great products that are seen as productivity tools and hence as investments, rather than as simple absolute costs.
  - stcredzero 16y ago
    That's interesting. What if social sites focused on being better tools and less on being time wasting entertainment? I think it would be a good bet that there are productivity apps yet to be made -- ones based on the social graph which can be ad supported or freemium based.
lionhearted 16y ago
> I will note that people are seemingly unwilling to incur costs which they know are in place purely to generate profit rather than to shoulder distribution and manufacturing outlays (as admittedly unfair this is of consumers). Entirely false. He's basically saying - "People are more willing to pay for manufacturing/distribution costs than they are willing to generate profit for a creator." People don't pay much attention to whether the things they're spending on are profit-related or are going to manufacturing. It's completely irrelevant to the average consumer. That's why an App Store app that took 4 hours to code can bring in tens of thousands of dollars, and one that took 4 months can bring in nothing. People don't pay according to how much you spent or how much they perceive infrastructure costs to be - they pay based on how well they perceive a product fills their needs relative to other options. Ebooks often sell for more and have higher margins than paperback books. There's lots of other examples of this. You don't need to increase costs to sell people. You don't need to put more time in to sell people. You have to deliver something they want that they're willing to pay for. How much your costs are don't really factor into most people's thinking on how much it helps them.
njharman 16y ago
Because their "advice" is really thinly veiled marketing and advertising.
vgurgov 16y ago
Cmn, I usually hate doing such type of comments but here i just have to say: Who the F is "Mr Daniel Leary"?? I think "Mr Daniel Leary" "is irrelevant". Why? Lets compare: 37signals gave me tools that: 1) I am using myself sometimes 2) My friends and clients are using and enjoying day by day. They are willing to pay $$ for it as it get needed things done. 37s doing just fine as a company employing these business methods I learned A LOT from 37s books, talks, blogs etc. I talked with DHH few times at Rails events and personally think that he is a very clever guy. I usually enjoy Jason's posts as well I made a lot of money for my self and my business using tools(like Rails) and methods that 37 signals gave me. I can say that THANKS TO 37SIGNALS ABOUT 10 PEOPLE HAVE JOBS AND GETTING PAID EVERY DAY IN MY COMPANY ALONE. This wouldn't exist without them! Now Daniel. Maybe I am missing something about his biography but who the F is he to tell me what is relevant? What kind of expert is he?? "Let me say from the outset that I have a degree in economics. I studied this at Oxford University, and have as good a grasp as anyone. " Is it that guy http://uk.linkedin.com/in/danielleary http://uk.linkedin.com/in/danielleary ?? If so, then I can understand why this Oxford student explaining why some established business model that i and many other businesses successfully employ "is irrelevant" sounds so stupid and funny to me. Sorry again for getting it so personal, but i believe that most of the HN folks can see why his points are irrelevant so there is no need to explain this here.
timinman 16y ago
Counterpoint: People pay for music. People pay for games. What people won't pay for is something that is a shallow copy of what is available for free elsewhere.
wglb 16y ago
So in regard to The scope of this piece is narrower than that. This post really focuses on their take on pricing and the analogies they often use with their own experiences, which I feel aren’t applicable for the reasons given. Sometimes this advice is pushed harder than it should be, with little awareness of the lack of relevance it has to many start-ups., I wonder how you would evaluate Reddit's model, as it is apparently not a taker of the advice that you disagree with?
chegra 16y ago
I find the article to offer no insight. I surmise that it was written in a trollish manner to garner attention. Looking at previous post by the Author, this is the first to extend over 5 lines. Also, the Author tries to appeal to his authority[Oxford, Economics] which I consider poor taste; your logic should be able to stand on its own merits. I myself was going to write an article on the failings of 37signals philosophy. But, talk is cheap; they have spent many years developing their philosophy; a simple cognitive dismantling of their philosophy would not suffice. Any counter-arguments must be made in a similar fashion as they made their philosophy, in the real world with tangible results.
- htsh 16y ago
  Yeah, what's more, it sounds like an undergrad economics degree. I don't care where you go to school, an undergrad degree in economics does not mean you understand this stuff as well as anyone. That's just pompous huffing.
jcromartie 16y ago
> ‘People are willing to pay’ say 37 signals to the cowering mass of young developers bombarded with an implicit open source manifesto written across the social web. It's not "open source" vs. "selling software." 37signals heads one of the most popular open source projects of all time. They also sell their software. It's "free services" vs. "selling software." Of course someone who is set on never charging for a product as a business model will not find 37signals' advice helpful.
stcredzero 16y ago
Now look at consumption-services markets. Social web tools which aid in the consumption of goods, or which are forms of consumption in their own right, represent absolute costs. And if there’s anything we’ve learnt about absolute costs in the digital world, it’s that people are unwilling to bear them. Why are people willing to pay for a CarFax?
- superuser2 16y ago
  Because it's a smaller cost than the money you could lose on a car with a troubled past.
  - stcredzero 16y ago
    Exactly. It has serious utility.
waxman 16y ago
37Signals themselves readily admit that charging B2C consumers is hard, which is why they shifted their business to focus almost only on B2B products. I don't think they've ever said charging casual users works. They're whole thing is that the best market for web businesses is the "Fortune 5 million" of small businesses who will actually pay for stuff. I don't see what the point of your post is. 37s already concedes these facts as part of their philosophy.
Tawheed 16y ago
I think the crux of all of this boils down to marketing. You can market your widget as a consumable or entertainment and people will not pay. On the other hand, you can market your product as an INVESTMENT to achieving their goals -- and people will quickly take out their wallets. It connects to what Kathy Sierra has always talked about. Design your product to make your users fell AWESOME and you will succeed. If you do that, people will co-relate paying for the product as making themselves more awesome.
geebee 16y ago
This post teeters near the edge of linkbait. It should probably read "why 37Signals advice regarding pricing is irrelevant and unhelpful for some types of software startups." That's the claim that is actually defended in the body of the post, and I might actually agree. That said, I don't think the blogger isn't trying to pull a fast one here. When Nick Carr wrote "IT Doesn't Matter", then defined IT as something much more limited than the way most of us think of it when it came time to defend that statement, he knew damn well that his claim vastly exceeded his definition. The title, not the substance, was what got him attention. Kind of reminds me of sports writers who wrote "Roger Federer is Finished" headlines a few years ago, then defined "finished" as "only winning a few more slams." Strange definition of "finished" you got there. Hey, even with his resurgence, winning RG and Wimbledon the next year, they're still right! The body of this article is very clear about the scope of the claim from the get-go... the title is link-baitish, though.
abalashov 16y ago
I like 37 Signals and their general message, and certainly appreciate their willingness to take a strong, uncompromising public position in support of what they believe. That said, my biggest objection to their whole discursive space is that a lot of their advice is implicitly elevated, both by them and by those who listen to, interpret and relay the message, to a more cosmological status than it should be insofar as it's characterised as general "business" advice. It's not. There is very little in their general methodological core that is useful unless your business model is exactly theirs: selling subscription-based hosted web applications. Most of the same advice they give would be extremely ill-suited toward other domains of commercial endeavour within IT, never mind anything capital-intensive and/or outside of mass-market technology per se.
camworld 16y ago
Uh, it's not 37 Signals' responsibility to determine whether their advice is relevant to your business, your startup or whatever you are trying to do. Their advice is what you make of it. It will work well for some; probably not so well for others. It is your job to determine whether that advice will work for you and is relevant or not to how you want to run your business or startup. All these "pundits" fresh out of business school with zero years of experience under their belt need to take a long hard look in the mirror and decide whether they want to continue talking out of their ass or actually take a closer look at how Jason and his team actually run their business. Just because Jason and 37S figured out a non-traditional way to make money through providing web services does not mean their approach is wrong. Just because it's not taught in business school does not mean it's wrong.

136 points by mathewi 16y ago

Irrelevant and unhelpful ... to you.

The majority of start-ups are social web oriented. They operate in a consumption-services market. That line strikes me as both wrong and missing the point. Perhaps then the majority of start-ups should consider a different service to sell.

jacquesm 16y ago
It's wrong enough that it casts doubt on the rest of the article, but he does have a - small - point, which is that any advise should be evaluated in the context in which it is given, which I think is pretty obvious. I think the author operates from a limited perspective in to what startups are generally busy with and then assumes that everybody takes the 37signals advice as gospel.
- ThomPete 16y ago
  Exactly It's not like it's a secret that the map is not the territory. But perhaps, if you would excuse my pedantic tone, that's what one might think being an economist from an Ivy League University.
davidw 16y ago
Yeah. I keep waiting for the definitive article taking on some of what 37signals is saying, but this wasn't it. It's not something I dedicate a lot of time to thinking about, but I think they don't spend enough time talking about their "following"/fame, which is really their biggest competitive advantage. That's probably the thing they've worked the longest and hardest to build, in some ways, because they most patently are not "doing less" marketing and promotion of their ideas.
- joshuacc 16y ago
  They don't say that you should do less marketing. They think that it's better to market through teaching than traditional channels: http://37signals.com/svn/posts/451-whats-your-cookbook http://37signals.com/svn/posts/451-whats-your-cookbook This idea is something that Jason and DHH have covered in a lot of their interviews. My impression is that it is in Rework as well. (Haven't read it yet.)
sethg 16y ago
The majority of start-ups that the author remembers hearing of may be social web oriented, because we are all social animals. If you come up with a clever new Web site that people can use to schmooze with their friends, then lots of people will hear about it and be interested in it, because we all like to schmooze with our friends... but you’ll have a hard time getting anyone to pay for the service directly, because we all have plenty of ways we can schmooze with our friends for nothing. By contrast, if you come up with a clever new Web site for managing a dental practice, then the only people likely to remember its name will be dentists... but they will pay for something that makes their lives easier, which means that you could turn it into a nice fortune, if not fame.

barkmadley 16y ago

The author does a good job of identifying who will find the business model advice from 37 signals unhelpful. The title certainly is sensationalist. A short summary: 37 signals is a B2B. The economics of the B2B model do not translate to a B2C model.

shadowsun7 16y ago
A better short summary: because 37signals is B2B, and because they sell productivity tools, companies are more likely to view their 37signals product purchase as an investment. What this means is that people believe the purchase will help their company's productivity (and therefore increase revenue). This is the real reason behind the high 'willingness to pay' that we see in 37signals's business model.
- jacquesm 16y ago
  Investments are typically done in capital goods, say a machine shop buying a new lathe or a real estate company deciding to put up a new building. This is just cost/benefit, investment does not really enter in to it.

roc 16y ago

I'm fuzzy on where he draws the line between consumptive services and productivity tools. Which is dropbox? flickr? instapaper? I also can't say I've yet enjoyed the pleasure being part of an organization that views business-services costs as anything but costs. MSDN subscription? cost. Server lease? cost. Conference? cost. Support contract? cost. They aren't considered investments any more than the electric bill; which itself could be arguably interpreted as an investment under the logic of this article.

Qz 16y ago
Hmmm... HN - consumptive service or productivity tool?
- jacquesm 16y ago
  That depends on the user. It is the opposite of a productivity tool for some.
macco 16y ago
Actually there is no difference between investment and consumption. The principles of the internet are not different to the old world. It is demand and supply. The thing is: if a service is free and scalable, its supply goes up to infinity and this pushes the price down to 0.

mikecarlucci 16y ago

The main point is that advice from 37signals is pushed too hard. It's not all bad, but it isn't a business model or company philosophy that can work in every situation. I read and enjoyed Rework. It's refreshing to hear from a source that is trying to take on the business world by pulling a George Cosntanza and doing the opposite, or at the very least, an alternate. The best use of their advice is to become a disciple of simple. Don't create huge goals, stick to small ones. Don't include every feature you think of, just the best/necessary ones. Don't have lots of meetings, only the ones that are vital (and good communication can fill in for formal meetings entirely). And don't be afraid to show your flaws. It's the advice we've gotten from parents and teachers and friends for years: be yourself. None of these things guarantee success, but they shouldn't lead to failure either.

lucisferre 16y ago
YMMV, yadda, yadda, yadda. Nothing to see here, move along.

patio11 16y ago

It has not been my experience that B2C customers are unwilling to pay for web services.

zackattack 16y ago
I don't think that was the point suggested by the article. I think the point is that B2C customers are unwilling to pay for web services that function as long-term investments, but they are willing to pay for web services that function with immediate gratification.
- stanleydrew 16y ago
  That's exactly the opposite of this article's argument.
  - zackattack 16y ago
    Am I mistaken in classifying 37s as B2B, then?
    - jacquesm 16y ago
      No, but the author does make the mistake that you can apply b2b pricing knowledge to b2c situations.
shadowsun7 16y ago
I believe this author is arguing for web services of a specific kind. He says that products like productivity tools represent an investment to the potential consumer: 'buy me now, for a high upfront cost, and I will help you become more productive (aka help you make more money) in the future'. And this makes people more willing to pay huge amounts for 37signals products. Edit: whether this is true I am not sure - I've reread the article a couple of times, and he doesn't really make a watertight argument for his case. Are there counter-examples to this? Or conditions where this is simply not true? His argument relies on the fact that 37signals 'charge a lot', and that this high price is not translatable to other web services. But there's no way to quantify that. And there's no reason to assume that there aren't other reasons for such willingness to pay. Off the top of my head: people pay more because 37signals is a strong, trustworthy brand. People pay more because this is B2B, and business have to tend to buy things only at a certain (high) price. People pay more because they have large teams, and 37signals's tiered pricing forces them to use the more expensive packages.

c00p3r 16y ago

Their blog and their book is the SEO, product placements and self-promotion in the first place. Do not confuse it with something like selfless and sincere help to the community. ^_^ Update: Dear anonymous coward-down-voters! Face the reality - 37signals is a successful business, and it looks a lot like that of MySQL - lot of hype and really good, well-written texts, which means big and active community. Do not assume that they know only programming. Those guys looks like well-read and more or less familiar with Eastern, philosophy. Most of their advises are just adaptations of some well-known Zen (and from other branches) principles. ^_^

mrshoe 16y ago

This article is pretty far off the mark. 37signals don't advocate charging for social media apps. They advocate building software that people are willing to pay for. It's a little ridiculous to simply say "The majority of start-ups are social web oriented," and then assume that the rest of 37signals' advice still applies to all those startups. 37signals' advice is, in fact, irrelevant and unhelpful to you, but the real reason is this: Your blog doesn't have hundreds of thousands of subscribers.

stanleydrew 16y ago
This was a good comment until it kind of got sidetracked at the end. I'd say 37signals' advice is irrelevant and unhelpful to him because he's not starting the kind of startup that they are advocating. I think if he had just pointed that out it would have been an interesting observation.

alsomike 16y ago

Counter examples: Meetup.com and dating sites.

william42 16y ago
Dating sites are a really bad counterexample, since they have to advertise(except plentyoffish and OKCupid, which are also free) and TV advertising for an Internet business is a sure sign of a failing business. (Think about every search engine you know. Almost every single one has tried to advertise, except Google. Google never ran ads. All their competitors did.)
- alsomike 16y ago
  Bing has run ads. Google too, at the last Superbowl. Eharmony has been profitable since 2004, with $250 million annual revenue. Another counterexample: Ancestry.com
- kscaldef 16y ago
  I'd be curious to hear in what sense you consider online dating sites failures. Your assertion that advertising in other media makes them a failure is, well, just that; an assertion. I don't have any numbers on the financials of the companies, but the general consensus of people that I know is that OKCupid is a fine place to waste time, but that if you really want to meet people you need to go to the pay sites (precisely because the financial barrier-to-entry keeps away all the people who aren't really interested in dating).
  - stcredzero 16y ago
    I've heard that okcupid is an excellent way of meeting new people you actually like -- from friends that use it like this. My short time on there seems to corroborate this.
rythie 16y ago
The costs of those sites is relatively small compared to the overall monetary costs of being in a relationship like eating out, social events, travel, presents, marriage etc. So maybe that's why people don't mind paying.

GBKS 16y ago

Independent of the argument, I enjoyed the writing style and structure. Not many blog posts are as well written as this one.

prs 16y ago

"I have a degree in economics. I studied this at Oxford University, and have as good a grasp as anyone." This provides a great theoretical foundation for his argument. Now all I want to see is a more practical one.

barmstrong 16y ago

Summary: if your product isn't useful (or doesn't have utility in the economic sense) it's harder to charge for it. Duh. The unfortunate conclusion of this is that social media may just not be that useful to people. DHH even made this point at his startup school talk - saying that if people aren't that willing to pay for your app, maybe it's just not that useful. I believe they've also stated elsewhere that when they moved Basecamp (or was it backpack) to a B2B product instead of B2C it got way easier to make money.

jsomers 16y ago
That's not an accurate summary, or at least it's not complete. I took the author's main points to be that (a) 37Signals's offerings are viewed by customers as investment opportunities instead of as consumable goods, and that (b) people are thus more willing to pay for 37Signals's stuff than for the mere "consumption-services" offered elsewhere. The author implies that this is the case even if those consumption-services provide a lot of utility. Point being that in the author's mind, it's not that 37Signals is making great products while everyone else isn't. It's that 37Signals is making great products that are seen as productivity tools and hence as investments, rather than as simple absolute costs.
- stcredzero 16y ago
  That's interesting. What if social sites focused on being better tools and less on being time wasting entertainment? I think it would be a good bet that there are productivity apps yet to be made -- ones based on the social graph which can be ad supported or freemium based.

lionhearted 16y ago

> I will note that people are seemingly unwilling to incur costs which they know are in place purely to generate profit rather than to shoulder distribution and manufacturing outlays (as admittedly unfair this is of consumers). Entirely false. He's basically saying - "People are more willing to pay for manufacturing/distribution costs than they are willing to generate profit for a creator." People don't pay much attention to whether the things they're spending on are profit-related or are going to manufacturing. It's completely irrelevant to the average consumer. That's why an App Store app that took 4 hours to code can bring in tens of thousands of dollars, and one that took 4 months can bring in nothing. People don't pay according to how much you spent or how much they perceive infrastructure costs to be - they pay based on how well they perceive a product fills their needs relative to other options. Ebooks often sell for more and have higher margins than paperback books. There's lots of other examples of this. You don't need to increase costs to sell people. You don't need to put more time in to sell people. You have to deliver something they want that they're willing to pay for. How much your costs are don't really factor into most people's thinking on how much it helps them.

njharman 16y ago

Because their "advice" is really thinly veiled marketing and advertising.

vgurgov 16y ago

Cmn, I usually hate doing such type of comments but here i just have to say: Who the F is "Mr Daniel Leary"?? I think "Mr Daniel Leary" "is irrelevant". Why? Lets compare: 37signals gave me tools that: 1) I am using myself sometimes 2) My friends and clients are using and enjoying day by day. They are willing to pay $$ for it as it get needed things done. 37s doing just fine as a company employing these business methods I learned A LOT from 37s books, talks, blogs etc. I talked with DHH few times at Rails events and personally think that he is a very clever guy. I usually enjoy Jason's posts as well I made a lot of money for my self and my business using tools(like Rails) and methods that 37 signals gave me. I can say that THANKS TO 37SIGNALS ABOUT 10 PEOPLE HAVE JOBS AND GETTING PAID EVERY DAY IN MY COMPANY ALONE. This wouldn't exist without them! Now Daniel. Maybe I am missing something about his biography but who the F is he to tell me what is relevant? What kind of expert is he?? "Let me say from the outset that I have a degree in economics. I studied this at Oxford University, and have as good a grasp as anyone. " Is it that guy http://uk.linkedin.com/in/danielleary http://uk.linkedin.com/in/danielleary ?? If so, then I can understand why this Oxford student explaining why some established business model that i and many other businesses successfully employ "is irrelevant" sounds so stupid and funny to me. Sorry again for getting it so personal, but i believe that most of the HN folks can see why his points are irrelevant so there is no need to explain this here.

timinman 16y ago

Counterpoint: People pay for music. People pay for games. What people won't pay for is something that is a shallow copy of what is available for free elsewhere.

wglb 16y ago

So in regard to The scope of this piece is narrower than that. This post really focuses on their take on pricing and the analogies they often use with their own experiences, which I feel aren’t applicable for the reasons given. Sometimes this advice is pushed harder than it should be, with little awareness of the lack of relevance it has to many start-ups., I wonder how you would evaluate Reddit's model, as it is apparently not a taker of the advice that you disagree with?

chegra 16y ago

I find the article to offer no insight. I surmise that it was written in a trollish manner to garner attention. Looking at previous post by the Author, this is the first to extend over 5 lines. Also, the Author tries to appeal to his authority[Oxford, Economics] which I consider poor taste; your logic should be able to stand on its own merits. I myself was going to write an article on the failings of 37signals philosophy. But, talk is cheap; they have spent many years developing their philosophy; a simple cognitive dismantling of their philosophy would not suffice. Any counter-arguments must be made in a similar fashion as they made their philosophy, in the real world with tangible results.

htsh 16y ago
Yeah, what's more, it sounds like an undergrad economics degree. I don't care where you go to school, an undergrad degree in economics does not mean you understand this stuff as well as anyone. That's just pompous huffing.

jcromartie 16y ago

> ‘People are willing to pay’ say 37 signals to the cowering mass of young developers bombarded with an implicit open source manifesto written across the social web. It's not "open source" vs. "selling software." 37signals heads one of the most popular open source projects of all time. They also sell their software. It's "free services" vs. "selling software." Of course someone who is set on never charging for a product as a business model will not find 37signals' advice helpful.

stcredzero 16y ago

Now look at consumption-services markets. Social web tools which aid in the consumption of goods, or which are forms of consumption in their own right, represent absolute costs. And if there’s anything we’ve learnt about absolute costs in the digital world, it’s that people are unwilling to bear them. Why are people willing to pay for a CarFax?

superuser2 16y ago
Because it's a smaller cost than the money you could lose on a car with a troubled past.
- stcredzero 16y ago
  Exactly. It has serious utility.

waxman 16y ago

37Signals themselves readily admit that charging B2C consumers is hard, which is why they shifted their business to focus almost only on B2B products. I don't think they've ever said charging casual users works. They're whole thing is that the best market for web businesses is the "Fortune 5 million" of small businesses who will actually pay for stuff. I don't see what the point of your post is. 37s already concedes these facts as part of their philosophy.

Tawheed 16y ago

I think the crux of all of this boils down to marketing. You can market your widget as a consumable or entertainment and people will not pay. On the other hand, you can market your product as an INVESTMENT to achieving their goals -- and people will quickly take out their wallets. It connects to what Kathy Sierra has always talked about. Design your product to make your users fell AWESOME and you will succeed. If you do that, people will co-relate paying for the product as making themselves more awesome.

geebee 16y ago

This post teeters near the edge of linkbait. It should probably read "why 37Signals advice regarding pricing is irrelevant and unhelpful for some types of software startups." That's the claim that is actually defended in the body of the post, and I might actually agree. That said, I don't think the blogger isn't trying to pull a fast one here. When Nick Carr wrote "IT Doesn't Matter", then defined IT as something much more limited than the way most of us think of it when it came time to defend that statement, he knew damn well that his claim vastly exceeded his definition. The title, not the substance, was what got him attention. Kind of reminds me of sports writers who wrote "Roger Federer is Finished" headlines a few years ago, then defined "finished" as "only winning a few more slams." Strange definition of "finished" you got there. Hey, even with his resurgence, winning RG and Wimbledon the next year, they're still right! The body of this article is very clear about the scope of the claim from the get-go... the title is link-baitish, though.

abalashov 16y ago

I like 37 Signals and their general message, and certainly appreciate their willingness to take a strong, uncompromising public position in support of what they believe. That said, my biggest objection to their whole discursive space is that a lot of their advice is implicitly elevated, both by them and by those who listen to, interpret and relay the message, to a more cosmological status than it should be insofar as it's characterised as general "business" advice. It's not. There is very little in their general methodological core that is useful unless your business model is exactly theirs: selling subscription-based hosted web applications. Most of the same advice they give would be extremely ill-suited toward other domains of commercial endeavour within IT, never mind anything capital-intensive and/or outside of mass-market technology per se.

camworld 16y ago

Uh, it's not 37 Signals' responsibility to determine whether their advice is relevant to your business, your startup or whatever you are trying to do. Their advice is what you make of it. It will work well for some; probably not so well for others. It is your job to determine whether that advice will work for you and is relevant or not to how you want to run your business or startup. All these "pundits" fresh out of business school with zero years of experience under their belt need to take a long hard look in the mirror and decide whether they want to continue talking out of their ass or actually take a closer look at how Jason and his team actually run their business. Just because Jason and 37S figured out a non-traditional way to make money through providing web services does not mean their approach is wrong. Just because it's not taught in business school does not mean it's wrong.