How to build a company

I spotted ReWork on my bookshelf yesterday and it reminded me how much I had enjoyed reading this thought-provoking account of 37 Signals’ business philosophy. That inspired me to see if I could find Jason Fried, the founder, talking about his approach and I found it here.

Here are some of the main points:

Don’t lose control of your growth. The key decision the company took was to limit the maximum price on customer could pay (initially $99 a month). This means the company has hundreds of thousands of customers, but none of them are so big that losing them would cause a ripple. Key to this is not to customise – one product, one code base.

Hire late not early. Many companies hire ahead of when they think they will need resources, especially if they have received funds from investors. This is a big mistake, Fried argues. Hiring early means there’s often not real work yet for the newcomer to do. That leads the company to make up work which is not important – a cardinal sin, in Fried’s philosophy. A related point: never hire for new type of position before you’ve had someone in the company try it first and fail. That way you know exactly what you need to get done and can hire appropriately.

Develop an audience. This is different from developing a fan base. An audience comes back to you time and time again. It takes time to build up, but once there is the most powerful way to get products out. Spend money on teaching and sharing, not marketing. 37 Signals has no salespeople: “We only want to have people who are building the product.”

Focus on the things which will stay the same. Most companies spend most time focussed on new things, innovations. But this piece of advice, from Jeff Bezos, the only investor in 37 Signals, was key. In Amazon’s case the things which will always stay the same are low price, good selection and great logistics. No matter what else changes, these fundamentals will hold true. In 37 Signals’ case the core unchanging things are simplicity, clarity and speed.


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