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Bootstrapped, Profitable, & Proud: VoiceBunny

Emily Wilder
Emily Wilder wrote this on 4 comments

Alexander Torrenegra is cofounder (along with his wife, Tania Zapata) of VoiceBunny and Voice123. This Q&A is part of our “Bootstrapped, Profitable, & Proud” series which profiles companies that have $1MM+ in revenues, didn’t take VC, and are profitable. It has been edited for length and clarity.
Tell me a little about VoiceBunny and Voice123.
Voice123 is a marketplace and VoiceBunny is a production house.

Alex Torrenegra

With Voice123, when you need a voice actor, you can post a casting call or you can perform a search, and once you find the voice actor you like, you talk to the voice actor directly and you transact directly with the voice actor.

In Voicebunny, you can post a casting call, you can search voices and you can also opt to simply give us a script and we’ll pick the voice for you. You pay us, and then we pay the voice actor fees that we have agreed upon with the voice actor previously.
How did you get started — what got you interested in this particular field?
I cofounded multiple companies. Then I met my wife, and she’s a voice actress. And I learned about the voice industry and how cool it is, and how widespread it is. If you pay attention, you’ll realize that every single day you probably listen to 100 different professional voices in radio, in TV, phone systems, broadcasting, video games, hotlines, anything you can think of.

Tania Zapata

By knowing Tania, I learned that finding a professional voice used to be really cumbersome. You had to go through a casting director, and a talent agent, and auditioning studios, and recording studios, and the union, and people who were in the middle of the process just to audit the payments and royalties. We realized, you know, maybe we can do this online and make it faster and actually allow people to talk to each other directly.

Both businesses ended up taking off relatively fast early on. That’s why were able to bootstrap. We didn’t require venture capital, since we came up with business models that we could have cash flow from the get-go.
So how did you fund yourself at first?
We had saved $30,000. Back in the day, we were consultants, doing online marketing consulting full-time. The rest of the day and on weekends, we would work on Voice123. Eventually Voice123 grew and we launched VoiceBunny. We invested our savings on pay per click, and that’s how we got the initial traction.
Can you tell me a little bit about the period between launch and profitability? Who were your first customers?
It took six months for us to become profitable. Initially, the first three months, the service was free, both for buyers and sellers (the voice actors). After three months we realized it was going to be quite difficult to charge money to the buyer, because they were not used to paying for the casting service, or the search service. We realized we should charge the sellers a subscription fee instead of a transaction fee — we don’t want to be in the middle of the transaction, because of the industry requirements. Usually there is a lot of paperwork signed between the voice actor and the client.

The other benefit of going with the subscription fee for the seller is that usually when a seller pays a subscription fee to participate in the marketplace, they are paying you, the marketplace, based on the amount of money they expect to make from the marketplace in the long term. That is great for a bootstrapped company because it gives the company cash flow early on, even if you don’t have a lot of buyers in the marketplace yet. So we took that money, and then we started looking for buyers. And since we had a great product, buyers came in really fast, and the word spread quite fast.

Before VoiceBunny and Voice123, getting a professional voice of 30 seconds used to take $3,000 and three weeks. After we launched, very quickly, the price average came down to around $400 and it took less than three days to complete the entire process. Now, today, it’s $200 and takes 24 hours with Voice123. With VoiceBunny, it’s $50 and it takes around 20 minutes. It’s way faster now than before.

If you listen to the free version of Pandora, most of the ads are created with the VoiceBunny platform.
What is your culture and work environment like?
We have an office in San Francisco and we have an office in Bogotá, Colombia. Research, development and operations and ops is done in Bogotá. Project management, marketing, and sales is one out of our office in San Francisco. We are almost a family. We always have lunch together at the offices. We hang out a lot after work. We make sure that every time we hire a person, we hire people that we would like to hang out with. We hire people that we would like to be friends with.

Because we have two offices, we invest heavily in making sure that we are highly connected. We communicate pretty well — for example, we have 24-7 video conferencing between the two offices. So we can simply come to the screen and wave hello. In fact, sometimes when we need somebody in a rush, we simply go and yell the name of the person and they’ll come running to the screen.

I hire people who are smarter than I am and do things better than I do. A good way of doing that is trying to hire former entrepreneurs. They usually have good advice, and they have experience. They value a lot the fact that we have been able to build a company bootstrapping it.

The VoiceBunny and Voice123 office in San Francisco

Why San Francisco and Bogotá?
We have offices in Bogotá because I’m Colombian and I went to college in Colombia, and that’s where I know most of my friends and tech people, so it was natural for us to build our tech team down in Bogotá. The fact that Bogotá doesn’t have a strong startup culture yet actually makes it easy for us to attract really top-notch top talent. We are kind of the 37signals of Colombia.

The Bogotá office

How many employees do you have? Are you growing your team?
Thirty. We are hiring tech people in Colombia and marketing people and sales people in San Francisco. Over 1,000 voice actors make most of their income thanks to Voice123 and VoiceBunny.
How is the company doing financially?
One of the benefits of being private is that we don’t have to share numbers. But something we are proud of is that this year we are doubling our income.
Congrats — how’d that come about?
The success we have had — great marketing people, having a great team. I usually try to hire people who do things much better than I do. When you do that, you surround yourself with really intelligent, amazing people, and the consequence is we are doubling in size this year. We expect to do the same next year as well.
What’s your ultimate vision — do you see yourselves selling the company in the future?
There is a quote by Thomas Edison: “My main purpose in life is to make enough money to create ever more inventions.” And that’s how I see the company. Our passion is to innovate; it’s not necessarily to make money. Making money is just a consequence of being really good at innovation. And whether we have the cash flow to continue innovating or whether we sell the company, as long as we can continue innovating, in this field or other fields, we are going to be happy.
What’s been the biggest challenge you’ve had to overcome as a company?
Learning how to be a leader. It’s very challenging. A good leader is a person who can share his or her dreams with others and have those others — the people listening to your dreams — make those dreams their own dreams, and work at trying to accomplish those dreams as hard as you do. And it’s not easy to achieve that. At least for me, it’s been difficult to learn that. Especially because I’m a tech person. And my logical intelligence is higher than my emotional intelligence, and leadership requires both. Fortunately my wife has a really high emotional intelligence, and I have learned a lot from her. I would not have been able to start this business without her as cofounder.
Is there anything you would have done differently, knowing what you know now?
I would have gotten mentors earlier on. There is a misconception that you [should seek outside capital] because angels and VCs are going to come with good advice, and I think they don’t have to be tied to each other. You don’t need to raise capital in order to get good advisors. You can and you probably should look for mentors and capital (if you ever need to raise capital) independently.

I didn’t look for mentors early on, because I thought people would only give me advice if I gave them the option of investing in the company. But later I realized that it’s not the case.

Today I have a really good board of advisors, not only for me, but for other executives of my team. The executives of my team, all of them have access to advisors, and if they want an advisor that we don’t have, I’ll try to find him or her for them. That has helped us a lot, because we ended up learning a lot of lessons the hard way just by hitting the wall. Mentors have allowed us to avoided many mistakes that we would have committed otherwise.
Has anything surprised you along the way?
How slow large enterprises are at adopting technologies. Initially I though that the success of companies like ours, and even companies like 37signals, was to get enterprise-level customers. It’s better to go after small businesses, early adopters. If you can convince them to use your service, eventually enterprises will follow, because they’ll realize that they’re going to have to adopt or they’ll lose. I was surprised to know that going after enterprise clients is not necessarily the best business approach. It’s actually smarter to go after the small clients.

I’m also surprised by the effect we’ve had in the lives of many people — we have many voice actors that are fulfilling dreams that before Voice123 and VoiceBunny they could have never fulfilled. Before Voice123 and VoiceBunny, the only way you could have done it was by moving to LA or New York City. Now you can live anywhere on the planet. Not only the fact that we have been able to achieve that, but how much they love us because of that — they really love what we have done. It’s a great surprise, to every now and then be hugged by somebody at a conference — they know you, but you don’t know them. It’s really nice.
Visit VoiceBunny and Voice123.
Read Torrenegra’s op-ed for Wired about immigration and bootstrapping.

Customer Spotlight: Wildbit

Emily Wilder
Emily Wilder wrote this on Discuss
Name: Chris Nagele
Title: Founder
Company: Wildbit
Established: 1999
Employees: 15 (10 local; 5 remote)
37signals user since: February 2004


Wildbit creates and supports web products that help businesses collaborate and communicate more effectively. Their main products are Beanstalk, a hosted service offering Git and SVN version control, collaboration tools and instant deployments for web apps, and Postmark, which helps businesses deliver and track transactional emails. Wildbit is among 37signals’ earliest customers, so it was an honor to speak with founder Chris Nagele about his company and how they use 37signals products. The interview has been edited for length and clarity.
You’ve been a Basecamp user since the product first launched, in 2004. Do you remember how you first discovered it?
I used to follow the 37signals blog before they did products, back when Jason was doing the 37better project. They would do something like, “here’s FedEx’s home page and what it looks like now, and here’s our take on what it would be if we designed it.” It was a really good way to show off their skills and build some marketing around it. I started following the blog and when they launched Basecamp, I thought it was a cool product and signed up.
What did you use Basecamp for, at first?
Wildbit was completely different from what it is today. Back then we used to build products or applications for other people, so we were mainly just a consulting company — we were using it to manage our projects with clients. It wasn’t until late 2009 that we switched away from consulting and focused on our own products.
When you’re building products for other clients, there’s much more of a service toward communicating with the client, to make sure they always know where you are in the project, how far along you are, whether you’re getting into scope creep or the project is going to cost more. So there’s more accountability in terms of communicating with clients or customers as you’re building the project. We would have milestones and a lot of to-do lists, and a lot of the discussion was around getting approval on certain concepts or discussing roadmaps and things like that.
We don’t do consulting anymore at all. It’s very similar to what 37signals did, where they built and designed products for other people, and then as their own products grew decided to focus on them 100 percent. That’s kind of the same path that we went.

Chris Nagele, far right, with the Wildbit team during their 2013 company retreat in the Dominican Republic

What kinds of projects have you managed with Basecamp over the years?
We have two main products. The high-level description of what our products do is they allow software developers to collaborate more effectively.
One is called Beanstalk and it’s a version control and deployment service. Software developers around the world use it to collaborate as they build software and write code, and then as they write code and builds the products, they use Beanstalk to review and discuss with their team. Once it’s something that’s ready to deploy to servers and their customers, they also use Beanstalk to ship the code out to their customers.
Postmark is more of an infrastructure product. It allows software developers to send all their application email through Postmark, to make sure that they’re delivered to the inbox. Initially it sounds like an easy thing to do, but if you’re sending things like invoices or welcome emails or password resets or comment notifications like in Basecamp, getting an email to the recipient is extremely important. There’s a lot that goes on in the background.
So you used Basecamp to build both products?
Absolutely, yeah. As we were building Beanstalk — especially in the early days before bug tracking systems and things like that — we used Basecamp primarily to discuss the new features we were working on, to schedule milestones and to-do lists, roadmap planning, all of that. It’s interesting that the new Basecamp has evolved into less of a project management tool and more of a communication tool, because that’s how we evolved into using it anyway.
Can you give me an example of how you’re using Basecamp as a communication tool these days?
One thing we did for the summer was called ‘quiet days.’ We said ‘let’s set Monday through Thursday as regular work days, and then every Friday we’ll call it a quiet day.’ It’s a day you can work on something that’s not related to our road map, whether it’s reading a book on a new programming language or a new design process, or working on an open source project. So every Friday everybody would work on something they were interested in, and on Monday they would go into Basecamp and post what they did that day, what they learned. Basecamp was huge for that because they would post something they worked on, present it to the team, and the whole team would say ‘this is awesome!’ or discuss different ways to use it. A lot of ideas and new features came out of those quiet days.
How has your use of 37signals products evolved over time?
These days, since we’re focusing our own products, I would say the biggest difference is that we have different systems for managing tasks and bugs and things like that, and we primarily use Basecamp for communication and ideas. So as new ideas come up, or as we’re planning things internally in the company, we’ll use Basecamp to discuss them or plan around the calendar. It’s much more discussion-based than it is milestone or project planning.
We’re not using Basecamp Classic anymore because we never really did time tracking. We got completely away from milestones. These days it’s more for internal communication: vacation days in the calendar, any internal policies we have, project ideas and stuff like that.
We’re starting to use Highrise, because we started doing more customer development. Beanstalk is almost six years old; it’s grown very organically. We don’t do much advertising, we don’t really do any marketing, and we’re just now starting to say, ‘what else can we do?’ And that’s where Highrise came in — all these customers use us, and the only time we talk to them is when they have a problem. I want to reach out to customers more when they’re not having a problem. I just want to hear from them. So we’ve started to use Highrise a lot more to kind of keep a log as we reach out to customers — who they are, what they do, are they launching a product soon? And if they are, maybe we can congratulate them on that and send them stuff on their first anniversary.
What’s your work environment like, and how do 37signals products contribute to your culture?
Back when we started using Basecamp we were a 100 percent remote company. It was just myself and my wife here in Philadelphia, and the rest of our team was in Bulgaria, in Serbia, Russia, Ukraine, Germany — really, our entire team was spread out. Since we’re all not sitting in the same office, we use Campfire as that way to feel like we’re all together in the same room. We used Basecamp to communicate, and with a remote team that was extremely important. If somebody had an idea or wanted to discuss something they could do that while we were sleeping and then we could wake up and continue the discussion.
These days we actually have most of our employees in Philadelphia, but our use of tools like Basecamp and Campfire hasn’t changed. Even though we are all in the same office, we still carry the remote team mentality of respecting each other’s quiet time. By using Basecamp, we can post messages and request feedback that people can respond to when they have time, instead of yelling across the room or walking up to their desk. The funny side effect is that our office can be eerily quiet during the work day. A remote team has been a big part of our culture and tools like Basecamp make that process possible, even when some of us might be sitting right next to each other. But that’s been an interesting transition for us. You’re used to remote work all the time and being on your own, and now you have to actually interact with people!
It’s been such a crazy experience for us to have people in the same room, but also maintain the benefits of a remote culture. We used to really enjoy quiet time all day long, and now with everybody in the office, it’s productive but at the same time you kind of find it hard to escape sometimes.
That’s kind of the opposite path a lot of companies are taking now, going from remote to an office versus the other way around.
Totally, yeah. I think there’s tons of value in remote work, and I think it’s really important that people understand the value in it. But there’s also tons of challenges in it as well, but you can’t figure them out until you try it.
What kinds of challenges did Wildbit face?
The biggest challenge for us has always been hiring the right people to fit into our culture, especially being remote. When you’re hiring remote people you have to hire someone who is really a self starter — kind of a mix between an entrepreneur and somebody who wants to work for a company. Finding that type of person is really difficult. Over the years, we’ve definitely learned how to build and grow a remote a remote company better, but with a lot of trial and error as well.
What discoveries have you made about that process?
Being able to know when somebody either doesn’t fit in with the culture or isn’t working out — a lot of times that process is a lot more delayed than when you’re sitting next to somebody in the office, or working with them day to day. Trying to pick up on those cues through things like IM and Campfire and tools like Basecamp is a little more difficult, but over time you start to understand personality through more digital communication.


Visit Wildbit.


Bootstrapped, Profitable, & Proud: Draugiem Group

Emily Wilder
Emily Wilder wrote this on 5 comments

In Latvia, Draugiem is as much a household name as Facebook is everywhere else.

The majority of the world’s Latvian-speaking population — more than 1.2 million people — uses Draugiem.lv, a social networking site that launched back in April 2004, right when Facebook did.

“We are the last country in Europe standing against Facebook,” says Draugiem Group founder, Lauris Liberts. “We’re still larger than Facebook in Latvia.” He posits that’s because Latvians prefer homegrown brands: “Facebook is very international, Draugiem is very local. Latvia is a very small country. It’s unique. We don’t have room left to grow. All the people who might have joined are already using it.”

Draugiem Group founder Lauris Liberts

In 1999, Liberts was bussing tables in New York. The Internet bubble was at its peak. Intrigued by the abundance of startup fairytales, he wanted a piece — but he didn’t have a clue about the industry. He’d worked at a bank back home in Latvia, so figured he’d stick with finance and copycat a Latvian version of the Lending Tree model.

It didn’t go so hot. Liberts managed to scrape by and make enough for food and rent, until he met some small investors. They took out some small loans themselves; they started brokering their loans. But not everyone paid them back.

His first foray into online entrepreneurship may have been a dud, but Liberts is a hustler at heart. “I think my inner being is experimenting,” he says. “I just love to explore things, and I have to actually back myself off in order not to pursue every idea that comes into my mind.”

On the side, he’d come upon sites offering customized shirts — so he built one of his own. Customers could enter text, preview it on the shirt, and place their order. It was a one-man operation; production was outsourced. The shirt business was small, but more successful than the Lending Tree lookalike.

“I needed to advertise but I didn’t have any money,” Liberts recalls. “So I thought, ‘OK, let’s build something myself that is popular, so I can advertise my shirts.’” He explored different dating sites and social networks, and found Friendster (aw, remember?). “That’s when I got the bug,” he says.

Undeterred by his first inauspicious copycatting attempt, Liberts and his partner, Agris Tamanis, built a simple, invite-only site based on the Friendster format. “Initially, I thought if I get 10,000 people, I could advertise my shirts, he says. “That’s how it all started.”

Liberts, left, with Draugiem Group cofounder Agris Tamanis

“We obviously invited our friends,” Liberts says. “Those friends invited their friends, and we saw these little communities springing up all across the country. ... I think on the first day we registered a couple hundred. On day two we registered 1,000. From then on it just snowballed. For the first three years, we were struggling enormously keeping up with traffic. Our servers crashed; we didn’t have any knowledge of how to scale.”

For instance, the script triggered by a new friendship request had to run through all the relationships in the database, and the site was so slow it could take up to three days to accept it. Draugiem hired some hotshot programmers and decided to rewrite the entire site from PHP to C++, but not before the original site completely broke down. “We had not finished the new version,” Liberts remembers. “I just made this leap of faith that for three days we would be offline.” He sat up on Christmas night, fretting about competitors and wondering whether the venture was doomed. “It was lonely, yet a very interesting time.”

That vulnerability — the threat that despite its early popularity, there were no guarantees it would last — galvanized the company’s first efforts toward diversification. Their first startup, the GPS system Mapon, was established in 2006 and laid the foundation for the Draugiem Group. In 2008, they launched the SMS service that became Text2Reach.

Liberts and Tamanis were approached by VCs, but never really took the bait — “VC funding is not that popular back in Europe,” Liberts says. Of all the startups in Draugiem Group’s incubator, only Vendon, a remote vending machine service, benefited from outside investment. The group also partnered with Lattelecom, Latvia’s largest internet and telecom service provider, for a short while: back when Draugiem was having trouble scaling their servers, they agreed to hand 30 percent of their income over to Lattelecom in exchange for hosting on their service. The barter didn’t work out, and Draugiem bought itself out of the agreement. They’re currently running on about 200 servers of their own.

Today, Draugiem Group is an umbrella organization that along with Draugiem.lv, houses 16 startups including a daily deal site, a time tracking app, even a custom bracelet company, among others. Last year’s revenues totaled more than €14 million (Latvian law requires public financial disclosure even for privately held companies), and profits of nearly €800,000. Most of the group’s 100+ employees work out of the company’s swanky office in Riga, Latvia, although a couple work in the satellite office located in Burbank, Calif.

Clockwise from top left: Draugiem.lv office foyer; the data center; the workroom; the office exterior

Draugiem invests substantially in employee wellbeing and morale, with shorter hours in the summer, office catering, and company parties and retreats. Liberts and Tamanis are both late sleepers, so it’s not unusual for them to roll in around 11 a.m. “That’s an acceptable hour,” Liberts says. “You can get burned out. It’s not sustainable in the long term if you are putting in 10- to 12-hour days.” He describes the culture as open and flat, so “anyone can stand up to anyone” and no one is more important than anybody else. “We want people to make stuff they’re interested in,” says Liberts. “If you’re not fond of doing this particular job but you … want to switch to phones, learn a new language, we encourage that.”

Clockwise from left: Tamanis and Liberts at a company birthday party; the office kitchen; an employee meeting; the office terrace

Such liberality comes easily when you’re basically building companies for fun. “Work is not all about maximizing profit,” Liberts says. “Work is a lifestyle.” He encourages anyone who wants to start a business to go ahead and do it, “if they think that there’s a chance of them succeeding — but avoid all the buzzwords that are out there on there on the Internet: cloud, big data, social monitoring. When you have these new technologies springing up, like Twitter, there are hundreds of wannabe services. In the end it’s not the best service that wins, it’s the most well-connected, deep-pocketed business.”

What’s worked for Draugiem is a sustained effort to find under-the-radar, unique niches that can still flourish as a business, Liberts says. “We kind of have a key to the Latvian soul, and that might be what’s working.”
Visit Draugiem Group.


“Bootstrapped, Profitable, & Proud” is a Signal vs. Noise series highlighting profitable companies with $1 million+ in revenues that didn’t take VC.

The next Switch Workshop: September 27th in Chicago

Jason Fried
Jason Fried wrote this on 8 comments

Customers don’t just buy a product — they switch from something else. And customers don’t just leave a product — they switch to something else.

The last workshop sold out in just a few days, so if you‘d like to attend, register now.
It’s in these switching moments that the deepest customer insights can be found. On the 27th of September, a select group of 32 people will attend a unique, hands-on, full-day workshop to learn about “The Switch”.

Most businesses don’t know the real reasons why people switch to — or from — their products. We’ll teach you how to find out.

The workshop will be at the 37signals office in Chicago. The cost to attend is $1200. The workshop will be led by 37signals and The Rewired Group.

You’ll participate in live customer interviews.

You’ll learn new techniques for unearthing the deep insights that most companies never bother to dig up.

You’ll understand why people switch from one product to another and how you can increase the odds that the switch goes your way.

And you’ll be able to put everything you learned to immediate use.

There’s only one simple requirement: You’ll be asked to bring something with you. It won’t be a big deal. Details will be provided one week before the workshop.

Spots are limited. Only 32 people will be able to attend and participate. Want to be one of the 32? Register now. We will see you on September 27.

Share everything

Emily Wilder
Emily Wilder wrote this on 8 comments

Last December, Sam posted the following in our “37signals Newsroom” Basecamp project:

I’ve been trying out an experiment over the past few workdays: when someone asks me for help with something, I show them how it’s done.

In an on-call case, it means copying and pasting the console transcript, cleaning it up a bit, and adding some descriptive comments. ... Other situations call for a different approach. Jamie came to me with a JavaScript problem this afternoon, so we took an hour and paired together on a solution via screen sharing.

Now, the other party might not fully understand the explanation, but I think it’s a positive change to assume that everyone is curious to learn how things work rather than too busy to care. Repeated exposure to these explanations might spark an interest that would otherwise go unexplored.

And obviously there is a practical limit to the amount of time and effort we can put into such explanations. In theory, though, spreading the knowledge means the people who ask you for help are more likely to be able to solve those problems themselves.

So I invite you to try the experiment with me. The next time someone asks you to do something, walk them through your process, or write it up for them to read.

Jason chimed in:

Yes please. This is a great initiative. Whenever someone does something for someone else, let’s make sure it’s taught, too. It’ll be slower in the short term, but faster and better in the long term. 

Since then, we’ve all gotten a little more conscious about teaching one another to fish. Recently, I was frustrated I lacked the skills to update basecamp.com. Mig jumped in and offered to show me some HTML and CSS basics. It’s “one of the most empowering things anyone here at the company could learn,” he told me. “I’d be more than happy to show you the ways.” Rad. Thanks, Mig.

Everyone in the company works at least one day a month answering support tickets, and the support team buddies up with non-support folks to share solutions for the more complex cases. Programmers often share the code they used to solve a problem with support, which encourages support to try to solve similar issues themselves next time. Designers and programmers swap intel all the time. Here’s what Jonas has to say about working with Trevor:

He’s continually helping me get better at programming, and has been super patient and encouraging. He frequently suggests that I tackle certain problems, takes time to help me out when I have questions, and reviews my code when I’m done.

I’ve tried to return the favor a bit by helping him work through some design problems and CSS.

I think this mutual learning approach and easy back-and-forth has had real benefits to the app, too. Even though it seems like it would be counterproductive to take the extra time, I think we’re ultimately more productive because we can work on different projects simultaneously, then chat a few times a day to figure out the remaining tricky stuff.

We weren’t not working this way before, but it wasn’t an institutionalized value or anything. Making a conscious, enthusiastic effort to work with, not for, each other, has expanded our horizons, empowered us with new skills, and made us a more well-rounded company.

“All businesses need to be young forever. If your customer base ages with you, you’re Woolworth’s,” added Bezos, who created the world’s leading online retailer. “The number one rule has to be: Don’t be boring.”


Jeff Bezos while speaking about the Washington Post.
Jason Fried on Sep 5 2013 5 comments

Better is the enemy of best

Chase
Chase wrote this on 11 comments

I’m a huge geek when it comes to the Apollo space program. I’ve got an autographed photo from the Apollo 11 crew hanging in my office alongside a piece of the parachute line from that mission. My grandmother worked with the NASA team in Huntsville, Alabama, in the 1960s so every time I see her I try to get another story of that era out of her.

Recently I’ve been reading “Chariots for Apollo” from Charles Pellegrino and Joashua Stoff. It’s one of my favorite books on the race to the moon.

One section tells the story of Tommy Attridge, a Grumman test pilot assigned to the lunar module (LM) program. The Grumman Corporation received the contract to build the craft that would carry astronauts down to the lunar surface. However, the LM team kept second guessing themselves with their designs and decisions. Their line of thinking was, “This craft would put a man on the moon so it had to be perfect!”

When he arrived at the Grumman plant in 1967, Attridge focused on one question – “Must we build it better?” And he learned very quickly that better is the enemy of best.

Enter LM-3 (lunar module-3). An engineer finished installing the landing radar on it only to tell Attridge, “We have the best radar in the world today. But tomorrow, I can make it better because just yesterday they invented this new transistor. And if I can put the new transistor in here and add this integrated circuit. You know, now we that we have integrated circuits, we can build it better.”

Tommy answered, “Sure. Why not? We can keep putting a better one in every day. Let’s see if we can’t stretch this thing out till 1990.”

Every new day brings new gadgets and gizmos. Whatever project or product you’re working on, there’s probably something that will make it just a tad bit better tomorrow. And a little bit better the day after that. And a smidge better the following day. But for every thing that makes it better, it means one more day of not shipping.

That engineer ended up going over Attridge’s head to get the landing radar replaced. With the “better” choice came new problems as it kept locking up on itself, which made the new tech worthless. That choice ended up delaying LM-3 so that Apollo 8 launched without it. The Apollo teams found themselves even farther behind in the space race.

Bootstrapped, Profitable, & Proud: LegitScript

Emily Wilder
Emily Wilder wrote this on 4 comments

It wasn’t as though John Horton, President of LegitScript, never sought outside funding for his company. He just didn’t have any luck.

“They all told us we were dumb for the business idea,” he says, “that it would never work.”

To be fair, the idea was a tough sell.

John Horton

After years as a prosecutor working on drug cases and a stint as Assistant Deputy Director at the White House Drug Policy Office, Horton was getting ticked at the vast, complex “rogue Internet pharmacy” problem and the lack of any way to combat it. At any time, an estimated 35,000-40,000 sites are offering prescription drugs online. Of those, a mind-boggling 97% are illegitimate — meaning they violate laws or regulations, fail to adhere to medical and safety standards, or engage in fraudulent or deceptive business practices.

Ginormous companies like Visa, Microsoft, and Twitter had no way to ensure they weren’t doing business with cybercriminals. Some were getting slapped with significant fines; others needed a way to stymie the crummy user experience of clicking on ads for bogus sites. That’s where Horton wanted to step in, by monitoring the web for counterfeit drug sales, shutting down illegal operations and providing trustworthy information to consumers.

It was May 2007. Cocky first-time founder that he was, Horton figured he could get things up and running in about six months. Two and a half years later, he had run his personal finances into the ground. Still no one was buying it.

It was the classic scenario where VC firms scratched their heads, and said, ‘So, wait: you want companies to pay you to help them lose customers … and want to give the rest of the information away to the public for free?’ They all told me it would never work and my business plan sucked. So, I decimated my life savings, maxed out my credit cards, sold my car, refinanced my condo, borrowed as much money as I could, and got down to having $350 in the bank and was probably a few weeks away from bankruptcy.

It was at that moment — when dogged perseverance finally met with good timing — that Google saved LegitScript by becoming its first customer. “The reputation is true,” Horton says. “They’re a pretty open, receptive company. It was one of those things where they weren’t quite ready at first, but persistence pays off.”

Persistence continued to pay off and other companies — Microsoft, GoDaddy, Twitter, Visa, various registrars and ISPs, government agencies — began hiring LegitScript to keep their platforms clean, via its combo of automated algorithms and old-fashioned detective work. “We’re basically cybercrime investigators who help major platforms make sure that they aren’t inadvertently profiting from shady or illegal stuff,” Horton says.

LegitScript now has the world’s largest database of Internet pharmacies in over a dozen languages, and its team, currently about 30 strong, continues to grow. Employees speak English, Spanish, French, German, Dutch, Portuguese, Indonesian, Thai, Japanese, Chinese, Korean, Hebrew, Russian, Turkish, and Dog.

That last language would be the native tongue of Parker, LegitScript’s office dog. The chocolate Lab greets visitors, has her own internal email address (you can discuss the finer points of Milk Bones vs. Yummy Chummies with her here), and is a trusted panelist at all job interviews. “There’s only been one time where she just did not like the person,” Horton recalls. “He seemed like a really good developer, and a couple weeks later, the guy ended up getting arrested.”

Good girl, Parker.

Parker’s not the only staff member “doing battle with the bad guys,” as Horton puts it. Due to the nature of the work, which can include tangling with organized crime, LegitScript doesn’t disclose its precise location (the office is somewhere in downtown Portland, Ore.) or reveal other employees’ names. Horton has endured death threats, attacks from rival companies, even a Russian criminal network registering bestiality websites to his home IP.

“The rogue internet pharmacies consider us to be their worst nightmare,” he claims. “We are responsible for making sure they can’t do certain things like advertise with search engines or use major credit cards to accept payment, and we have shut a bunch of them down. These people have invested a lot of time and resources in attacking us and getting us to not do what we do.”

I don’t favor counterfeit versions of anything, but if you have a counterfeit Gucci bag, you don’t eat it.

But Horton has no intention to stop doing what he does. “This is something that can have real consequences for real people,” he says. People overdose; people are hospitalized; people die because some phony pharmacy sold them a sugar pill.

“I don’t favor counterfeit versions of anything, but if you have a counterfeit Gucci bag, you don’t eat it. It shouldn’t happen, but it’s a lot qualitatively different. If it’s Viagra and it just doesn’t work, eh. If it’s an anti-cancer medication and it doesn’t work? You might be dead.”

Fascinating work that makes a positive impact is a pretty good recipe for job satisfaction. “I feel very very lucky,” Horton says. “We get to do something that is not only very interesting, but something that is doing well by doing good.”


Visit LegitScript.
“Bootstrapped, Profitable, & Proud” is a Signal vs. Noise series highlighting profitable companies with $1 million+ in revenues that didn’t take VC.

Letting employees make the most out of their own fitness

Emily Wilder
Emily Wilder wrote this on 14 comments

In addition to general health coverage and a CSA subscription, 37signals employees get a monthly fitness allowance to put toward whatever helps us stay in shape.

What makes this benefit awesome (and effective) is that we get to choose how to make the most of it for ourselves — it’s inspired by the same ethos behind our practice of hiring Managers of One, then leaving people alone and counting on them to do good work. Unlike company wellness programs that include discounted memberships at a particular gym or other specific incentives, the laissez-faire approach trusts employees to decide what works best for them.

While a few of us rarely spend the money or use just part of it, many of us leverage it toward activities that might otherwise by cost-prohibitive: primarily gym memberships, classes and personal trainers. Michael goes to Fulton Fit House in Chicago; Joan belongs to a capoeira group in Portland; and Eron and I are both CrossFit cult members, in Durham, NC, and Austin, TX, respectively. He recently did his first muscle-up!

Andrea uses her stipend toward horseback riding, and Scott puts his toward entry fees for cycling races—when he’s not racing, he uses it to replace stuff that wears out or breaks (tires, tubes, chains, etc.) in the course of training. Other employees use the money for gear as well: Will just bought some weights; Kristin purchased a yoga mat; and Merissa just started tracking her sleep, activity, and diet with Jawbone’s UP band.

Andrea on horseback, Michael at Fulton Fit House, and Kristin in an extended side angle pose. graph
Speaking of Merissa, she wins for most inspiring success story: She used the benefit to hire a personal trainer, works out five times per week at a small club near her place, and is now using UP for motivation to be even more active:

Even doing jumping jacks for one minute every hour or so (during my workday) is making a difference. I’ve lost around 70 pounds in the last year. It’s not even about that number, though — it’s about how healthy I am feeling. It’s incredible to work for a company that supports me just as much outside of work as they do at work.

How does your workplace encourage wellness?

Why did you switch to Basecamp?

Mig Reyes
Mig Reyes wrote this on 5 comments

Truth be told, we haven’t placed heavy efforts on marketing Basecamp. Customers sign up, pay, and are on their way. For nearly a decade, Basecamp has sold itself.

The problem for us is, with so many industries using Basecamp in different ways, we’re having a tough time figuring out how to talk about the product to new customers. We have an idea of how our customers use Basecamp, but we don’t know for sure.

Harder, still, is that we don’t even know why our customers switch from one product or system to using Basecamp. Hidden within their stories of over-loaded inbox frustrations and bloated corporate software are key insights about what makes Basecamp great for our customers.

We’re after those insights, and we want to share your stories.

Tell us your “Why we switched to Basecamp” story and you may be featured on an upcoming redesign of the basecamp.com landing page.

Share your story at basecamp.com/switch.

Bootstrapped, Profitable, & Proud: ServerCentral

Emily Wilder
Emily Wilder wrote this on 6 comments

Once upon a time, Jordan Lowe, President and Chief Executive Officer of ServerCentral, found himself hacking the telephone pole outside his student apartment.

The University of Illinois dorms only supported one landline per unit, which presented a happy problem: His little business had grown to a point where that would no longer suffice.

“We had to add additional capacity ourselves through the building, through doors and windows and stuff,” Lowe says.

The little business, at first, was nothing more than a little unused space on a small, private virtual server Lowe and his partner, Daniel Brosk, had purchased for $1,000 or so to support their own websites. They didn’t know what to do with the extra space, so they posted an ad on daily deal site for a free domain name in exchange for an annual hosting contract. They also started offering domain names for $10 — when everyone else was charging around $30 — making just a couple bucks in profit at a time. (Hence the phone ringing off the hook; hence the phone pole hack.)

2000: ServerCentral launches in University of Illinois student housing
2000: Server space opens in Bloomington, Ill., changes from virtual private servers to dedicated servers
2001: Server operations move from Bloomington, Ill. to Chicago facility
2002: HQ moves from U of I to Chicago
2003: Server operations expand into Ashburn, Va. and San Jose, Calif.
2004: Server operations expand into Tokyo
2005: Server operations expand into Amsterdam
2009: Server operations expand into Elk Grove Village, Ill.
2010-2011: Server operations expand within Elk Grove Village, Ill.

The original server soon ran out of room too. “All of the sudden, we had to buy another one and another one,” he says. “We were kind of unprepared to start a real business.”

But as their customers’ needs grew, the business did too. Their web hosting customer base started requiring more and more space, needing racks and additional bandwidth. ServerCentral moved out of the dorms and bought what Lowe calls “kind of a compound” — a three-flat Chicago apartment building with a house behind it. The company’s first employees lived there or in the building next door, and would barbecue together in the evenings.

Even at ~80 employees now, the team clearly still manages to have fun.


“When customers are buying racks and servers, that launches a company. We just kept growing with the customers, and they helped launch this business. We always would do what they said they needed.”

Cabinets and servers eventually eclipsed the web hosting side of things, so ServerCentral unloaded that part of the business in 2008. When they needed better bandwidth, they bought a bandwidth provider — nLayer Communications, which was doing about $1.5 million in revenue at the time of purchase in 2007, and about $20 million by the time they sold it in 2012. This year ServerCentral is on track for close to $30 million in revenue, with facilities in Elk Grove, Illinois; Chicago; Ashburn, Va.; San Jose, Calif.; Amsterdam; and Tokyo.

Although ServerCentral made Inc. Magazine’s 2010 fastest growing private companies in America, Lowe insists the company’s success is due to its slow and steady approach to growth. “Going slowly but surely has helped us through the tech bubble exploding,” he says. Managing growth has been the company’s greatest challenge, since the absence of public funding often means saying no to huge potential customers: They can’t afford the risk of overbuying equipment, only to get dumped later on. “We can’t take a lot of risks, since we’re privately funded. ... We take a safe stance on that kind of thing. We’re competitive, but we’re not cheap.”

High-end facilities and top-to-bottom service cost money, but it’s money ServerCentral’s customers (37signals is one) are willing to pay.

“What we offer is very different from our competitors,” Lowe says. “They don’t have the same level of on-hand staff we do. If you call us, you’re not going to get a call center and open a ticket. With us, you call us, you talk to the person who’s gonna walk out there and do it and fix the problem.”

Every new employee spends their first couple weeks at the data center, working with equipment and interacting with customers. The environment is relaxed and low-stress, Lowe says, because they try hard to hire people who like what they’re doing.

“Did I expect to be doing this 14 years later?” Lowe asks. “No. It’s gone very well. It’s pretty exciting. I still like doing what I do. ... That surprises me, because a lot of people hate their jobs. That’s why we haven’t taken any money.”

Not that there haven’t been offers. “I probably get five emails a week, people trying to give us money,” he says. “It’s ridiculous. Especially this last year; the market’s doing really well. If we wanted to take money, this would be a good time, but we just don’t need it. We want to keep growing in other markets, with this level of service.”


Visit Server Central.


“Bootstrapped, Profitable, & Proud” is a Signal vs. Noise series highlighting profitable companies with $1 million+ in revenues that didn’t take VC.