The Co-Founders of 37signals Share Their Secrets

This article is an excerpt from the Shortform book guide to "Rework" by Jason Fried and David Heinemeier Hansson. Shortform has the world's best summaries and analyses of books you should be reading.

Like this article? Sign up for a free trial here.

Who are 37signals? What do the company founders attribute their success to?

Co-founders Jason Fried and David Heinemeier Hansson of 37signals, a company that creates project-management software and other online management tools, believe that anyone can start and operate a business with fewer resources than they think. Based on their own startup success, they champion a simpler, cheaper, less labor-intensive way to manage any company. 

Here are 10 insights they gained while keeping 37signals intentionally small and lean.

1. Create Something Meaningful 

The business you’re starting should make a positive impact on the world. Any business that doesn’t will quickly feel meaningless. If your product or invention makes even a few people’s lives better or easier, you’ll gain deep satisfaction from your work. Plus, your business will have a much greater chance of success. 

Model for success: Craigslist was started by one man, Craig Newmark, and it’s one of the Internet’s most influential websites. It makes people’s lives better by helping them connect with each other within their local communities, whether to find a job, rent an apartment, sell an old refrigerator, or find a new tennis partner. Craigslist has survived on the Internet for a quarter of a century, and Newmark is now a billionaire.  

2. Invent a Product You Need or Want 

If you’ve ever wished you had a tool that did X or an app that made Y easier, you should invent that tool or app. Create something that you personally want or need, and you’ll make the best product possible.                      

Model for success: James Dyson was vacuuming his house one day and got frustrated by how often the vacuum lost suction, so he invented the Dyson cyclonic vacuum. 

3. Stop Dreaming and Build It

Everyone thinks they have a million-dollar idea, but very few people act on their ideas. Why? Many people fall back on the lame excuse that they “just can’t find the time.” But if you want something badly enough, you always find time, no matter what else is on your schedule. You can start a new business at 6 p.m. after your day job ends. You can do it on the weekends. You can get up an hour earlier every morning.   

Instead of making excuses, devote one hour a day or a few hours a week to creating your dream business. You’ll quickly learn if you’re genuinely enthused about the business or if you’re just day-dreaming.  

4. Stand Behind Your Creation

Once you’ve created a product, stand by it wholeheartedly. Have bold opinions about why it’s the best in its class, and express those opinions without reservation. You may come up against some haters—not just your competitors but even some of your own customers—but that’s okay. Not everybody has to love your product—just enough people to keep you in business.  

Model for success: Whole Foods is often mocked for being an elitist, expensive grocery store, but they stand by their commitment to selling only healthy, natural foods—and they don’t apologize for it. 

5. Walk Your Talk  

Your company’s mission statement—and all its communications—should accurately reflect who you are and what you do. If you say that you care about your customers, “walk the talk” by offering incredible customer service. If you say that your company cares about the environment, get outside and plant some trees or take steps to reduce your carbon footprint.   

6. Don’t Seek Outside Funding 

You might think you need outside investment to start your business, but you’re better off without it. Sure, it sounds great to have a big influx of cash to spend. But it comes with strings attached, like a board of directors who will boss you around and tell you how to run your company. You’ll find yourself working to please your investors rather than your customers. 

7. Do More With Less 

You can avoid the outside-funding trap by practicing frugality. It’s easy to assume that a startup business “needs” all kinds of things, but consider whether you can do without them. Ask yourself questions like these: 

  1. Can you get away with two employees instead of 10? 
  2. Can you work at home or in your garage instead of renting office space? 
  3. Can you publicize your business without hiring a PR firm? 
  4. Can you sell your product online so you don’t need a brick-and-mortar store?  
  5. Can you do your own accounting so you don’t have to hire an accountant? 
  6. Can you build your prototype in two months instead of six? 

8. Don’t Ignore the Bottom Line

Startups are subject to the same economic rules as long-established businesses. You can’t ignore your profit and loss statement just because your business is in its infancy. Every business succeeds or fails based on the basic laws of revenue minus expenses. 

Don’t tell yourself you’ll focus on the numbers later. From the first day you launch, pay close attention to every dollar of “revenue in, expenses out.” 

9. Don’t Build a Business to Sell It

If you create a business for the sole purpose of selling it, your priorities are wrong. First, the odds of success are terrible—there’s only a minuscule chance that some corporate giant will come along and acquire your business. Second, even if that happens, your only satisfaction will be a big, fat check—which pales in comparison to the personal fulfillment of running a business. Third, you’ll be so focused on finding someone to buy your company that you won’t pay attention to more important tasks, like getting customers to love your brand.  

Rather than concerning yourself with your exit strategy, put your efforts into nurturing a successful business where you’ll want to work until the day you die. 

10. Stay Small 

Don’t underestimate the value of being a small business—in fact, do everything you can to stay that way. According to the founders of 37signals, staying small gives you priceless flexibility: you can be creative, take risks, and make mistakes. You can adapt to the needs of your customers. You can wake up one day and change your product or business model. You can easily take action. 

Every time you see your company gaining size or mass—more employees, more meetings, more inventory, more long-term planning, and so on—ask yourself if you can avoid it. 

The Co-Founders of 37signals Share Their Secrets

———End of Preview———

Like what you just read? Read the rest of the world's best book summary and analysis of Jason Fried and David Heinemeier Hansson's "Rework" at Shortform.

Here's what you'll find in our full Rework summary:

  • Why the old-school process of starting a business doesn't work anymore
  • Why you should completely ignore your business competition
  • How to hire employees and help them thrive

Darya Sinusoid

Darya’s love for reading started with fantasy novels (The LOTR trilogy is still her all-time-favorite). Growing up, however, she found herself transitioning to non-fiction, psychological, and self-help books. She has a degree in Psychology and a deep passion for the subject. She likes reading research-informed books that distill the workings of the human brain/mind/consciousness and thinking of ways to apply the insights to her own life. Some of her favorites include Thinking, Fast and Slow, How We Decide, and The Wisdom of the Enneagram.

Leave a Reply

Your email address will not be published. Required fields are marked *