When Signals Drive Tech Decisions

The quote above from the movie “Lucky Number Slevin” might seem like an odd one considering it’s talking about a Kansas City Shuffle, which is actually both a confidence scam and the name of an old song.

It’s a quote, though, that I can never get out of my head when I’m thinking about strategy.

Because, in practice, pure strategy is pretty much going left when everyone else is looking right.

That’s what Jason Fried and David Heinemeier Hansson do really well at 37signals.

Just to be clear, I am not equating their business to a con.

What I am saying is that out of the many companies on public display in the modern era, they may provide the best example of business leaders that purposefully make choices to participate in activities that other companies are not participating in…or even looking at.

Those activities, as a set, happen to all line up together, and have resulted in years and years of success (according to Fried, they have been profitable for almost a quarter century).

And a good number of those activities have to do with their tech.

Now, this issue won’t solely be about their tech strategy, per se. For as public as they are, they don’t appear to formally have one (helpful hint: very few companies do).

They may not necessarily even have a formal business strategy, but the “37 signals” that drive their business, for all intents and purposes, represent a strategy in the truest sense of the word.

On top of that, I know they like to “make bets”.

(Disclaimer: they have a LOT of content out there, and it’s quite possible they’ve discussed a formal strategy and I’ve missed it.)

Instead, this issue will deal with 3 specific ways that 37signals is being decidedly more strategic with information technology than their peers.

Their Product Offerings

Ok, ok, what does this have to do with tech strategy?

Well, it’s worth noting that they have this sort-of laissez faire approach to product development, where they take a more instinctive approach that could result in them building something different than the original idea. (Their product “Hey”, an email service provider and calendar, was originally meant to be a CRM.)

That’s what makes their three main products so interesting. They have almost organically developed into a set of communication and teamwork tools.

So, it’s not so much about the strategy behind their tech stack as it is that of their customer.

Their portfolio includes a simple, easy-to-use, easy-to-set-up project manager (Basecamp), email and calendar combo (Hey), and group chat system (Campfire).

On top of that, while Hey takes on more of a typical SaaS pricing model, Basecamp gets really cost effective once you get past 15 employees and Campfire becomes cost effective as soon as you purchase and install it (they only charge you $399 once and that’s it).

For the end customer, that means a set of tools that are easy to spin up, can all integrate with each other for increased efficiency and productivity, and will likely run a good portion of their business.

And by the way, they won’t blow up the expense portion of your P&L!

Their Beef with Apple

Ok, who doesn’t have a beef with Apple these days?

They’ve kind of been working on becoming the villain recently, but we won’t go into that.

It is curious, though, how every now and then, you see “beef” becoming the catalyst for strategic change, and that change actually making some sense.

37signals took issue with them over things like progressive web apps and the 30% cut that Apple takes, to name a few (see this podcast transcript for details), but this really wouldn’t be that big of a deal if 37signals hadn’t originally set out to be a Mac-only shop.

According to DHH in this X post from two months ago, it was all in the name of “security and simplicity” to have everyone on Macs. However,

You see, for 37signals, it’s about appetite, and if there’s just as much appetite for their products from Windows users as there is from Apple users, then it’s time to make an adjustment.

In fact, this is a great example of a company knowing when to pivot. Their tech strategy didn’t line up with their business strategy, so they reconciled the former with the latter.

Moving From the Cloud

We posted a primer on this back in April before I even wrote and published our first issue, but it bears repeating.

For possibly a decade or more, companies have been “moving to the cloud”. What many people don’t know, however–unless you’re the procurer looking at the bill–is how expensive the cloud has gotten.

DHH has claimed they will save roughly TEN MILLION DOLLARS over 5 years just by moving their storage on-premise.

On top of that, their servers are theirs, and if those servers go down, 37signals won’t just have to sit there helpless in being unable to serve their customers.

To be fair, on-premise solutions won’t make sense for every company out there. They can get expensive too and require a lot of staff.

The point, though, is this: Jason, DHH, and co. made a decision where they understood the trade-offs and knew which ones they could live with.

Now, let’s bring it all back around…

I can’t even tell you for sure that 37signals has been purposefully differentiating themselves with these decisions as much as wanting to do what is best and yields a good product.

What I can tell you is just what I observe.

They’re doing basic communication tools when everyone else is doing feature-full SaaS or massive platforms.

They’re pivoting on tech strategy to serve customers when so many want to keep the status symbol.

They’re bringing their data back home when the masses have been pushing theirs out to other houses..

Whether they mean to or not, they’ve been going left while everybody else is looking right.