37 Signals’ Rework: A Missed Opportunity

by Krishna on June 28, 2010

37Signals is one of my favorite companies; their flagship product, Basecamp, one of the best web applications I have used. Their blog, Signal vs. Noise (SVN), is a great resource for application designers and small business entrepreneurs. So I was excited about reading their new book “Rework”. Unfortunately, it turned out to be a major disappointment.

To be honest, this did not come as a total surprise. Before buying the book, I heard an SVN podcast (transcript) where Jason Fried and David Hansson discuss criticism of “Rework” where they made it clear that they were targeting new readers and that if you have been a long-time reader of SVN, then probably the ideas in the book will not be new.

Point taken. But what I didn’t expect was that the book seemed to be simply a collection of past SVN blog posts. It makes for easier reading, but it also makes it much like a PowerPoint slide with bullet points. Do this, do that and, voilà, success! There are a few running themes, but no overarching ones that bring the book together. Bringing out blog post collections as books is fairly common nowadays and could be a good first step to get into book writing. But 37Signals had already taken that step with the “Getting Real” book and this would have been a nice opportunity to get it together.

Taken individually, many articles in the book are very good. The best part of the book was its section on “Reasons to Quit” — a list of questions on whether it makes sense to build the product you are working on. I also liked most of the writing on productivity, making quick decisions, hiring, guerrilla marketing and work culture. For small organizations, these section make excellent points and are actionable.

It is when 37Signals starts talking about the big picture that they go wrong, making dubious assertions without providing enough evidence or addressing counter-arguments. Let’s start with their point about “Outside Money is Plan Z”, where they rail against taking investor money. There is one good reason for fearing outside investment: having to share the power of running the company. Most other reasons are justifications based on the fear of the unknown: what if the investor kicks you out of the company or changes your product, which is possible, but not necessarily true. However, 37Signals makes absolute declarations stating, “It is usually a bad deal”, or “building a quality business” gets short shrift.

What is amusing is that 37Signals does have an external investor (Jeff Bezos) though reading the book, you would not guess this. “Rework” does not make it clear why an investor like Bezos is better than the “other” outside money. There are many examples of companies (notably Google) who have taken investment (while making zero revenue) and gone on to bigger things. And there have been companies that have sunk, too. So is it just investor money, or is it something else? Are there good investors and bad investors? These are questions you will not get answers to in “Rework”.

A regret that many founders interviewed in Jessica Livingstone’s book “Founders at Work” had in common was that they should have traded keeping a larger share for making a larger pie, because they could have achieved much more with greater capital and they greatly overestimated the possibility of losing control. All companies need capital to go to the next level (or even to keep their existing business). And companies can decide what they want to do — increase liabilities (take loans), share equity, lose a few customers — but there is no point in ruling out an option before you have to make the decision.

Many businesses make good money and can sustain themselves without outside funding or taking on debt, but others cannot. For example, if you develop an algorithm that use search results in a unique manner, you may be unable to monetize it unless you are bought out by Google or Microsoft. But that cannot be done until you create a proof of concept that may take dedicated effort over a period of months. (Yes, you could file a patent, but sometimes the patent collects dust.) A venture capitalist may be able to provide the funding to take the concept to fruition. I don’t see anything wrong with such flipping, but “Rework” takes a tough stance against anything that smells of venture capital.

Much of the remaining parts of “Rework” reminds me of what a car salesperson told me when I asked him whether the car I was interested in had ABS (anti-lock braking system). He said, “Why do you need ABS? I would never buy a car with ABS. If I hit the brakes, I want the car to stop.” Obviously having no idea what ABS does.

In the same way, “Rework” attempts to portray anything 37Signals lacks as a virtue (“Embrace Constraints”), becoming almost a militant version of the classic “Sour Grapes” fable. I sometimes got the feeling that 37Signals feels a bit insecure (it shouldn’t be) about being a small company and wants to spin the narrative. This is laying the foundation for accusations of hypocrisy in the future as the ever-growing, profitable 37Signals will “outgrow” its own advice and do things that they are fulminating against in the present.

There is a thing about being a pugnacious entrepreneur surviving against all odds, but the sad truth is that many small businesses are woefully under-funded and under-staffed. Making lemonade from lemons is admirable, but your goal should be to break free of the constraints that hinder your product and deliver a better deal to your customers and employees. Enforced constraints (“sell only to sub-$10million customers”) are a different story altogether, but “Rework’ does not make this distinction.

Some concepts in “Rework” also seem like they would only work for tiny companies; “tiny” as in one to five employees. For example, “Don’t Write It Down”, “Why Grow”, “Planning is Guessing”, etc. seem very juvenile. Even for small companies (<50 employees), many of these concepts should be thought through carefully before adoption.

I could go on with more examples, but I want to go back to my original point, which is that this is not a book. It is just a bunch of thoughts that have been polished, but not been developed carefully. Some of the articles happen to be well-written, but others simply thrown out there. So while there is good value in reading the book, the reader has to be on the lookout for ideas that don’t make much sense.

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