Comments on: 37signals is one hell of a profitable business http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/ Livin' the dream Fri, 21 Nov 2008 04:16:02 +0000 http://wordpress.org/?v=2.5.1 By: ed http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-57 ed Sun, 31 Aug 2008 23:18:55 +0000 http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-57 Uhh....thanks for your great post. Absolutely very useful for me. Very Excellent. Thanks. Uhh….thanks for your great post. Absolutely very useful for me. Very Excellent. Thanks.

]]> By: 37Signals - a Media-Software-Community Organization « colaboratorie mutopo http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-39 37Signals - a Media-Software-Community Organization « colaboratorie mutopo Mon, 25 Aug 2008 03:32:51 +0000 http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-39 [...] users do not pay and since the company is mum about revenues, one has to rely to some extent on revenue estimates to understand the [...] [...] users do not pay and since the company is mum about revenues, one has to rely to some extent on revenue estimates to understand the [...]

]]> By: jedc http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-56 jedc Fri, 23 May 2008 13:49:08 +0000 http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-56 Hi, John.<br><br>My analysis ignored the number of users; it only deals with the number of projects. (It assumes that only 2% of accounts pay for the service, but that those accounts regularly generate new projects.) Obviously 37signals doesn't release a whole lot of data, so I've had to go with what they've provided.<br><br>Download the spreadsheet and play around if you think I'm wrong!<br><br>Cheers,<br>Jed Hi, John.

My analysis ignored the number of users; it only deals with the number of projects. (It assumes that only 2% of accounts pay for the service, but that those accounts regularly generate new projects.) Obviously 37signals doesn't release a whole lot of data, so I've had to go with what they've provided.

Download the spreadsheet and play around if you think I'm wrong!

Cheers,
Jed

]]> By: John http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-55 John Fri, 23 May 2008 13:41:06 +0000 http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-55 I think you're off.<br><br>I personally, for at least 3 clients, have set up 3 accounts (people) with at least 1 project each.<br><br>Here at work we have an account -- it has 1 project, but 25 people.<br><br>So I think they probably make about half to a third of that, based on my gut. I think you're off.

I personally, for at least 3 clients, have set up 3 accounts (people) with at least 1 project each.

Here at work we have an account — it has 1 project, but 25 people.

So I think they probably make about half to a third of that, based on my gut.

]]> By: jedc http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-54 jedc Mon, 25 Feb 2008 20:55:22 +0000 http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-54 From what they've written on their blog, their only office space is a few desks sublet from Coudal Partners in Chicago. Everyone else works from wherever they want to.<br><br>True, there's likely a substantial cost to Rackspace per month for servers, but I doubt it's a big percentage of my projected $400k per month.<br><br>In the end, their costs are (I believe) an order of magnitude below their revenue. From what they've written on their blog, their only office space is a few desks sublet from Coudal Partners in Chicago. Everyone else works from wherever they want to.

True, there's likely a substantial cost to Rackspace per month for servers, but I doubt it's a big percentage of my projected $400k per month.

In the end, their costs are (I believe) an order of magnitude below their revenue.

]]> By: Eric Meyer http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-53 Eric Meyer Mon, 25 Feb 2008 19:07:50 +0000 http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-53 There's one thing missing here: their costs. I don't know what they are, but you'd need to subtract them to determine how profitable 37s truly is.<br><br>Costs I can think of right away: office space rental, utilities, equipment, co-location fees, bandwidth, servers, contract-worker payments (if any), health insurance costs, and 401(k) contribution matching. If they have set salaries as opposed to straight profit sharing, then those would have to be subtracted as well. If there is an administrative assistant or two, or any other employees who aren't part of the listed gang of nine, then those are also costs.<br><br>Not that I disagree with your basic conclusion that 37s is profitable, but I think the title would have been more accurate as "37signals is one hell of a revenue-generating business". There's one thing missing here: their costs. I don't know what they are, but you'd need to subtract them to determine how profitable 37s truly is.

Costs I can think of right away: office space rental, utilities, equipment, co-location fees, bandwidth, servers, contract-worker payments (if any), health insurance costs, and 401(k) contribution matching. If they have set salaries as opposed to straight profit sharing, then those would have to be subtracted as well. If there is an administrative assistant or two, or any other employees who aren't part of the listed gang of nine, then those are also costs.

Not that I disagree with your basic conclusion that 37s is profitable, but I think the title would have been more accurate as “37signals is one hell of a revenue-generating business”.

]]> By: jedc http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-52 jedc Mon, 25 Feb 2008 15:28:56 +0000 http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-52 Overall, I find it interesting that the people who have posted so far are plugging their own project management software solution (whether directly or indirectly).<br><br>I'm curious if anyone has more substantial comments about if/how my analysis is biased in one way or another. (I do believe it is conservative.) Overall, I find it interesting that the people who have posted so far are plugging their own project management software solution (whether directly or indirectly).

I'm curious if anyone has more substantial comments about if/how my analysis is biased in one way or another. (I do believe it is conservative.)

]]> By: Hugh Hovards http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-51 Hugh Hovards Mon, 25 Feb 2008 15:10:43 +0000 http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-51 Basecamp is popular and I wonder why. Most probably, cause they have been there for a long time now. However, now there are better apps availble. Like <a href="http://Wrike.com">Wrike.com</a> for projects, for example. Wrike has Gantt charts, customizable reports, due dates for tasks, email intergration and so on. Project management is not just about communication, that's what I think. Basecamp is popular and I wonder why. Most probably, cause they have been there for a long time now. However, now there are better apps availble. Like Wrike.com for projects, for example. Wrike has Gantt charts, customizable reports, due dates for tasks, email intergration and so on. Project management is not just about communication, that's what I think.

]]> By: jedc http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-49 jedc Mon, 25 Feb 2008 13:55:36 +0000 http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-49 That could be very true. I'd be interested if anyone could play with the numbers substantially and have them still match up to what 37signals has released publically. That could be very true. I'd be interested if anyone could play with the numbers substantially and have them still match up to what 37signals has released publically.

]]> By: Kenley http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-50 Kenley Mon, 25 Feb 2008 10:42:06 +0000 http://blog.jedchristiansen.com/2008/02/25/37signals-is-one-hell-of-a-profitable-business/#comment-50 That's why we call them 37$.<br>I expect we will see this growth slow if 37$ stays with their current model of bad customer service. There are many <a href="http://www.whybasecampsux.org/">many alternatives now</a>, some of them are actually legitimate competition. That's why we call them 37$.
I expect we will see this growth slow if 37$ stays with their current model of bad customer service. There are many many alternatives now, some of them are actually legitimate competition.

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