ShiftZen Technologies

Let's Make Work Fun Together

Failure is the Path to Success Part 2

One of the most successful companies in the SaaS industry is Basecamp (formerly 37Signals). To give you a glimpse at their success, their web application boasts 1.5 million users. The lowest priced plan they have is $20, so at that rate you are talking about 30 million a month, $360 million a year. Wow, that's a lot of money for a software that is a 'service' (Saas) and doesn't require any software installation, delivery or anything. In fact, they only have 40 or so employees, most of which work in remote offices. In a typical scenario now a days, that company would have a founder (Jason Fried) who would have worked on the idea, pitched it to investors, got a bunch of money, advertised like crazy and hoped that in a year or two it succeeded. Then sell it to the stock market or a larger company. When all said and done the founder of the company will quite often be answering to a board, be subject to being fired and only really have 20% ownership of the company. 

Not Jason Fried. He took the route of bootstrapping when he built Basecamp. Similar to us, he ran a consulting business doing project work for customers. He started in the late 90's doing websites and his business did well. He grew, and they started needing software to manage all of their projects. Their customers started asking where they bought the project management software and Jason realized he could sell it to them. Eventually it overtook the revenue of the website agency and they were a product company, no longer a consulting company. Just like that, he is a successful business man.

Jason doesn't exactly state it that way though. He likes to use analogies of learning a new skill (in this article he references drumming) and the art of 'practicing'. A lemonade stand. Practicing. Door to door newspaper sales. Practicing. Pulling golf balls from a pond, cleaning and selling them. Practicing. Selling mortgage loans at age 22. Practicing. I have to admit, I never really thought of it this way and many people ask me what gives me the audacity to start a business and I guess I now have my answer. I've been practicing my entire life. Creating something that provides value to them and charging them an appropriate fee is business. It really is that simple. I completely agree with Jason when he talks about businesses that say 'We'll make something for free and then figure out a revenue model later' as a poor way to grow. (good youtube interview here) Sure, there are ad based revenue exceptions, but for the most part you MUST learn how to charge and make your customers happy. And, to bolster the theme, practice yields failure. Get over it and move on. Failure=Success.

I'm very happy that my life (and a lot I owe to my parents) has taken this path and I promise everyone that we are still practicing on making a scheduling software that you will happily pay for as it buys you time or happiness.