DISQUS

xtech · 11 months ago

I don't disagree with your general point Brent, but Onyx is not a valid comparison against 37 signals. Onyx is hardly a simple product by any measure, except perhaps in comparison to uber enterprise products like SAP. At my previous company, the Onyx implementation was known as the 'space shuttle' project for its complexity. We spent over $200k deploying Onyx in a 400 person company.

An unlimited Basecamp license is $149 a month. Because it's SaaS there is no big deployment curve. Customers and products (services) at the 37 signals price point behave very differently to the market in which Onyx played.

That's not to say that Google couldn't eat Basecamp's lunch of course, but I don't think large enterprise players like Microsoft have it in their DNA to take 37 signals lunch money.

saas · 11 months ago

"the downside of super simple apps is that they are super simple to copy."

Don't confuse a simple UI with a simple application. I have no doubt the back end of Basecamp is quite sophisticated and would take considerable effort to duplicate.

Of course you know this as your company is building a product that competes with Basecamp.

Not mentioning that fact while criticizing 37 Signals strikes me as a little disingenuous.

Jordan Mitchell · 11 months ago

Uh oh, Brent -- you ruffled the feathers of 37 Signals fans!

Now I don't know squat about your product or theirs, I just know they have quite a following.

I also know this: in business there is NO safety. No matter how good your technology, story, product, fan base, IP, etc. there is always the threat of someone about to eat your lunch.

Krassen Dimitrov · 11 months ago

Very interesting article. I remember Onyx and Siebel well, since I was investing in the adjacent space, where a similar scenario played out. Remedy was the nice, simple app with many customers, the "lifestyle" business; and then along came Peregrine who bullied everyone out and eventually Remedy had to sell to them.
Except that Peregrine was all smoke and mirrors and cratered quite badly...
So, there are all kinds of scenarios how these things can play out...

Jeff · 11 months ago

funny how your company seems to compete with 37 Signals.

"smartsheet - Collaborate on task lists, projects, or anything you’re working on"

sounds like astroturfing to me

Brent Frei · 11 months ago

Smartsheet is indeed a good alternative to some of their products, though no where do I disparage in any way their good services. It turns out that they are a company that stands out in my radar given their proximity in our target markets.

Product company vs Marketing company is an age old topic. I simply point out that 37Signals seems to have an amazing opportunity with their very happy customers in a market that should house a billion dollar software winner. Yet it seems they are content with their 'anti-growth' approach and a modest single digit million revenue stream. Using Onyx and my own experience as a proxy to provide advice shouldn't offend any of their customers.

Brandon Teo · 11 months ago

"They have the cache of being the fathers of Ruby on Rails"

This sounds like an intentional pun give the tech context but I think you mean "cachet" , ha ha

T-1 · 11 months ago

Onyx??? was nothing but clanky when we used it. A major reason why many financial services firms bought it (they were used to "clankiness")

We ended up moving to Pivotal which was more intuitive for a sales person. I did enjoy the rest of what you said and I am currently a smartsheet user - I have been very impressed with the UI and workflow. This time around Brent dont abandon the SMB market.

eas · 11 months ago

I have serious doubts that anyone at Microsoft could release a reasonable clone 37 Signals' products before they fell victim to bloat.

If some group managed to sneak out a version without bloat and managed to dodge reorgs long enough to find users, it would get sucked into Information Worker or some other big product group.

It would languish there for a couple of years until they finished their next bloated version of Sharepoint, or Office Live, or whatever their new vision is for iWorker collaboration. At that point, they'd try and get everyone to move over to the bloated service and then shut down the original service 8 weeks later.

Google could probably pull off the simplicity, but after getting burned by their decision to put Google Notebook out to pasture, I wonder if it wouldn't get dropped or neglected.

Mike Schinkel · 11 months ago

I have unfortunately used Basecamp (again, after 2+ years away) with several of my recent clients though it was not my choice. It is painful product to use because it doesn't let me work they way I want to work. If I could get my clients to use something else I'd be much happier.

On the contrary to several people commenting, I think all that Microsoft or Google would need to do is actually listen to what customers need instead of telling them "No, sorry, we aren't going to give you what you ask for because we think you don't need it." <sic>

rick · 11 months ago

yawn... first off, what's wrong with a few people making a few million a year? where's it written that unless you grow to a billion dollars and get covered all over the place you're a failure?

Second, tell me why 37Signals is at risk and Smartsheet isn't?

Third, MS and Google aren't going to attack a market that's a few million a year in size. Probably not even if it's $50m a year unless it's growing swiftly or they feel that by entering the market they can make that happen.

Sorry, but the fear of MS entering your market and killing you is a 1990s story - not a 2009 one. And it was always shortsighted - talk about market validation and education!

As for Basecamp, it's fine if it maps to the way you work. If it doesn't, it's the wrong product. However, this doesn't make it a _bad_ product anymore than GMail is a worse product than Outlook because Gmail doesn't use folders and Outlook does. They differ in how they do a function and that's FINE. This is far better than some product that tries to be all things to all people and ends up doing nothing well. Basecamp and you just don't think alike? Great, use another product. That's kind of why there are different products after all.

Ben · 11 months ago

What about Salesforce.com? Didn't they come along a few years back and successfully eat Siebel's lunch with a lower cost, simpler to deploy and use CRM solution? That's a more compelling analog to what 37 Signals is up to (albeit with a very different approach to marketing and product strategy) than Onyx/Siebel in my view.

The terms on which software companies compete today are fundamentally different than they were 5-10 years ago. Market dominance and competitive differentiation is a function of the quantity and value of the data under management and NOT of the footprint of the technology.

Anonymous · 11 months ago

"Lifestyle business" is the name someone calls a business they'd like to own or invest in, but can't, because the folks running it don't need their money.

This article doesn't demonstrate Frei's wisdom and 37Signals vulnerability. Just the opposite, really.

freefo · 11 months ago

berkshire hathaway was a lifestyle business. he never took money apart from a bunch of people in Omaha. No leverage. Worked from home for many years of the Buffett Partnerships. took it easy. No schedule. The whole notion of speed is stupid. The corporate headquarters has 19 people today. Nice cash generation is not a lifestyle business; it's just business. And controlling one's own destiny is usually the path to really big fortunes. You cannot afford to get diluted on the way; this is more important than growing quickly.

Anonymous · 11 months ago

I thought a lifestyle business was Martha Stewart or food network. A business promoting lifestyle products and services. I guess if your life is working behind a comp, 37 signals could be a lifestyle business.

nirad · 11 months ago

Why wouldn't Google or MS acquire 37signals instead of spending the resources to make a competing product? Isn't this what happens to most successful software companies?

Kendall · 11 months ago

Good synopsis, Brent. Hope to see you tonight at TechFlash blast...