Preface: I think 37signals is one of the most well run, interesting, and innovative companies of our time. Not only am I a customer of their products, I’m also a fan. I follow founders Jason Fried and David Heinemeier on twitter, their company blog and their popular interviews.
I also acclaimed Jason as one of the top Web Professionals of the year in 2010. These guys can wield innovation, buzz and a cult like following that is unmatched.
But what happens when this power is abused? Half a million bucks and an apology that’s what.
A Bit About Sortfolio
Two years ago 37signals launched a new pet project called Haystack (now: Sortfolio.) A slick and easy to use visual browser of creative agencies or freelancers organized into budget by city location. A new approach to lead generation for us creative types.
I ran to the site and signed up. Listed my company and uploaded some portfolio work.
Enter the premium version. Ninety-nine bucks a month would score me larger more prominent listings and get me more example photos. Just launching Slocum Studio around the same time, I didn’t think $1200 a year was in the budget yet.
Plus, how was 37signals going to drive traffic (read: leads) to my business?
Well, therein lies the rub.
I don’t think they could (effectively.) My customers were not their customers.
It is like marketing for small business to use social media, on social media. They are not there. Thus the need to use traditional media to target them.
The $500 Thousand Dollar Apology
“I don’t really like sitting on something and having people pay us for it. It doesn’t seem fair.” Jason Fried; interview with Mixergy.
Recently Jason was interviewed by Andrew Warner on Mixergy about selling Sortfolio. The above is one of the key quotes I took away from the interview.
I remember an interview with David a while back where he said Sortfolio was built in a few weeks. In this recent interview, Jason said it was a few months.
Half a million bucks, in a few years is not a bad return with that kind of investment.
But it’s not fair and Jason confirmed it.
My assumption is, they were getting a lot of cancellations or complaints about lack of results. Over the span of 2 years, I had received 3 spam e-mails from the listing. Granted I’m listed in the Boston market (even though I’m closer to Providence,) in a median budget range $10k – $25k, and on the free version.
Further in the interview, it was clear there wasn’t enough focus put on the product or driving traffic to the site and to their clients.
Had I signed up for the premium, I would have felt a little slighted from this. Especially had I paid for two years. Maybe the premium folks were getting results – I can’t confirm.
This is all fascinating to me because it is flexing the power of a brand. They were able to make some serious bucks, off a short investment, based on their brand.
The Force Is Strong In 37signals
37signals Jedi or Sith? I’m just kidding – it’s not THAT drastic.
However, I think it’s certainly a very interesting business case study.
Here you have a company, that has a very strong following and can “do no wrong.” They scratch an itch for their largest audience, and slap it on the back of their buzz of awesomeness. A few years later, with very little overhead or investment to the product, they gross half a million and some cash when they exit.
A co-founder comes out and admits it’s not “fair.”
This is business!
I do applaud Jason’s openness, I think it’s what makes him a great innovator and web professional of our time.
But I can’t seem to stop playing some quasi Star Wars script in my head: They wield all this great power and build awesome product. With the (virtual) wave of a hand they can make some damn good profit from their clients based off of their brand buzz. Then just toss it away as if it never happened.
I find it fascinating.
I’m Still A Customer
No matter what, I’m still a customer.
I still find 37 Signals a trend setting company. I still continue to model some of my own business fundamentals after the ideals of Jason and David.
It’s been an interesting last year watching them evolve from a seemingly elite team with a freelancers spirit to what looks to becoming a well defined power house company.
I only wish to have the success they’ve achieved in business and lifestyle.
So you know how I feel, what about you? Were you on Sortfolio? Did you have success? What are your thoughts on the whole deal?
Sound off in the comments below or let me know on the MattReport Facebook page.
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