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The whole thread really boils down to missing this key point from 37 Signals: | 5. Spend less than they make Had they done that, they could survived long enou

The whole thread really boils down to missing this key point from 37 Signals: | 5. Spend less than they make Had they done that, they could survived long enough to find their niche. But throwing out multiples of your revenue out of your own pocket means you're on borrowed time.

jariel 6y ago
Asana, the company that crushed them literally spent considerably more than they earned and beat them. The story is not 'save your money' frankly the story is 'have the most leverage'. There's probably a lot more to it obviously, but it doesn't matter what this CEO did, he was going to be outgunned most likely.
- imtringued 6y ago
  The idea that a todo app is a capital intensive business is laughable. I have more impressive ideas that can be realized with much less money and that even includes hardware projects that would require hundreds of thousands in machine tools. All these guys really needed to do was make one really good iOS app and make sure they don't spend too much money on it.
  - objclxt 6y ago
    > The idea that a todo app is a capital intensive business is laughable It’s not just the building of the app that’s capital intensive - it’s the customer acquisition cost. A highly capitalised startup with a war chest can afford to spend $100+ per customer. You can’t. It’s like the OP thread says - you can’t field of dreams this. “If you build it they will come” is not a business strategy when your competitor is spending millions of dollars on ads.
- Germanika 6y ago
  Both approaches can work, but lead to different outcomes. The market for "todo list" apps is absolutely big enough there's room for more than one company. The beauty of the bootstrapped model is you don't need to "win the market" or "beat the competition". Is it making a profit? Congratulations! You're now the owner successful company. Want to grow the company? Re-invest the profits, not your personal life savings. If the goal is to "win"... ya, you're probably going to need to spend money like it's someone else's, and should take that VC money.
  - jariel 6y ago
    This idea that you 'only need 1% of the market to be rich' is not always so great. There are not that many companies that can do this, usually early movers, people who caught a wave of interest. For something just a bit more complicated than 'To Do' he was going to need to take on VC money.
stephenhess 6y ago
That's true.. though you could also look at it the other way which is that they didn't capitalize effectively enough to stay competitive with Asana. The niche is not always a safe place to hang out.
- clusmore 6y ago
  You are basically describing the Ben and Jerry's vs. Amazon decision from Joel Spolsky's blog [0]. > Both models work, but you’ve got to pick one and stick to it, or you’ll find things mysteriously going wrong and you won’t quite know why. [0]: https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-ben-and-jerrys-vs-amazon/ https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-...
  - heterodoxxed 6y ago
    20 years on, it feels like everyone should be strongly considering the Ben and Jerry's model. Even if there is literally no competition in the field, the threat of Google or Amazon or Facebook throwing buckets of money and top engineers to put a company in the grave before it's even properly born is more of a reality than we ever could have imagined in 2000.
deleted 6y ago
[deleted]
brongondwana 6y ago
Yep, that's how Fastmail remains bootstrapped too. Our hiring plans are basically: 1) "how much profit have we managed to make?" 1a) (modulo exchange rates - it's more balanced now, but a few years ago almost all our expenses were in AUD and our income is all in USD) 2) "how many people can we hire with that profit?" 2a) (save a bit for a rainy day) 3) "hire the next roles off our roadmap while fitting within our means"
- appplemac 6y ago
  Right, and beyond the value proposition of the email service, you are also serving your customers _by_ being profitable. Because this suggests that your service will be around in many years and hopefully won’t change in ways that users won’t appreciate (which is common with funded companies these days).
  - brongondwana 6y ago
    That's definitely the plan! One of the SaaS providers we use recently did an "upgrade" and now our team is struggling with everything being much slower and worse than it was before. It was a good instructive point to tell everyone in our all-hands Quarterly meeting yesterday that we are that SaaS for many others, and we have a responsibility to keep providing them a good service.
nemothekid 6y ago
One area that is missed is that 37Signals didn’t really compete with heavily VC backed startups. The question becomes what happens when your growth rate goes to 0, and your customers are churning because your VC backed competitors is cranking out features? It’s not clear that “just” spending less would have saved Flow.

jariel 6y ago

Asana, the company that crushed them literally spent considerably more than they earned and beat them. The story is not 'save your money' frankly the story is 'have the most leverage'. There's probably a lot more to it obviously, but it doesn't matter what this CEO did, he was going to be outgunned most likely.

imtringued 6y ago
The idea that a todo app is a capital intensive business is laughable. I have more impressive ideas that can be realized with much less money and that even includes hardware projects that would require hundreds of thousands in machine tools. All these guys really needed to do was make one really good iOS app and make sure they don't spend too much money on it.
- objclxt 6y ago
  > The idea that a todo app is a capital intensive business is laughable It’s not just the building of the app that’s capital intensive - it’s the customer acquisition cost. A highly capitalised startup with a war chest can afford to spend $100+ per customer. You can’t. It’s like the OP thread says - you can’t field of dreams this. “If you build it they will come” is not a business strategy when your competitor is spending millions of dollars on ads.
Germanika 6y ago
Both approaches can work, but lead to different outcomes. The market for "todo list" apps is absolutely big enough there's room for more than one company. The beauty of the bootstrapped model is you don't need to "win the market" or "beat the competition". Is it making a profit? Congratulations! You're now the owner successful company. Want to grow the company? Re-invest the profits, not your personal life savings. If the goal is to "win"... ya, you're probably going to need to spend money like it's someone else's, and should take that VC money.
- jariel 6y ago
  This idea that you 'only need 1% of the market to be rich' is not always so great. There are not that many companies that can do this, usually early movers, people who caught a wave of interest. For something just a bit more complicated than 'To Do' he was going to need to take on VC money.

stephenhess 6y ago

That's true.. though you could also look at it the other way which is that they didn't capitalize effectively enough to stay competitive with Asana. The niche is not always a safe place to hang out.

clusmore 6y ago
You are basically describing the Ben and Jerry's vs. Amazon decision from Joel Spolsky's blog [0]. > Both models work, but you’ve got to pick one and stick to it, or you’ll find things mysteriously going wrong and you won’t quite know why. [0]: https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-ben-and-jerrys-vs-amazon/ https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-...
- heterodoxxed 6y ago
  20 years on, it feels like everyone should be strongly considering the Ben and Jerry's model. Even if there is literally no competition in the field, the threat of Google or Amazon or Facebook throwing buckets of money and top engineers to put a company in the grave before it's even properly born is more of a reality than we ever could have imagined in 2000.

deleted 6y ago

[deleted]

brongondwana 6y ago

Yep, that's how Fastmail remains bootstrapped too. Our hiring plans are basically: 1) "how much profit have we managed to make?" 1a) (modulo exchange rates - it's more balanced now, but a few years ago almost all our expenses were in AUD and our income is all in USD) 2) "how many people can we hire with that profit?" 2a) (save a bit for a rainy day) 3) "hire the next roles off our roadmap while fitting within our means"

appplemac 6y ago
Right, and beyond the value proposition of the email service, you are also serving your customers _by_ being profitable. Because this suggests that your service will be around in many years and hopefully won’t change in ways that users won’t appreciate (which is common with funded companies these days).
- brongondwana 6y ago
  That's definitely the plan! One of the SaaS providers we use recently did an "upgrade" and now our team is struggling with everything being much slower and worse than it was before. It was a good instructive point to tell everyone in our all-hands Quarterly meeting yesterday that we are that SaaS for many others, and we have a responsibility to keep providing them a good service.

nemothekid 6y ago

One area that is missed is that 37Signals didn’t really compete with heavily VC backed startups. The question becomes what happens when your growth rate goes to 0, and your customers are churning because your VC backed competitors is cranking out features? It’s not clear that “just” spending less would have saved Flow.