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Signal v. Noise: Business

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Ta-da List – Until the end of the internet

David wrote this on 12 comments

Almost ten years to the day, we launched a free service called Ta-da List: A simple way to manage and share to-do lists online. It’s funny to read the announcement now. You need a MINIMUM of Internet Explorer 6 to run it! Ha.

Well, we retired Ta-da List in May, 2012, as it had run its course, and we weren’t looking to update it to keep pace with progress. But what we didn’t do, was to kick off everyone who was happy to use what they had. Ta-da List is part of our legacy, and the courteous thing to do is to respect your legacy.

If you have a Leica M3 – a camera produced between 1954 and 1967 – they’ll still fix it for you in Germany. Half a century after they stopped selling it! That’s legacy, and an inspiration.

In 2014, there were just under 5,000 people still happily using Ta-da List to track their todos. That makes me smile. No, it’s not the best to-do tracker in the world. There’s no mobile app. It’s antique software. But it’s our legacy, and it feels good to be there and be dependable for the users who are happy with what they got.

When we Became Basecamp that was a theme we talked about a lot. The internal phrase is that we want to produce software that’s around #UntilTheEndOfTheInternet. So much software and so many services these days are unreasonably flaky and undependable. Not in the sense that they crash (well, that too), but that they simply disappear from one day to the next because of whimsy, acquisition, or worse.

I don’t want to be a digital landlord that evicts people who placed their trust and their data with us, just because “our priorities have changed”. At the same time, we also don’t want to continue selling or offering antiques to new customers. This is the compromise: No new users, but the ones we got we’ll take care of forever.

So cheers to Ta-da List and the 5,000 people still using it. We’re glad you’re still here, reminding us of who we are and where we came from.

Why are some people so good at persisting?

Nathan Kontny
Nathan Kontny wrote this on 13 comments

By 1933, at 22, a Taiwanese-born entrepreneur had built a successful clothing business importing socks from Japan. Six years later, he moved to Japan, and his company was booming. During World War 2, he expanded his business empire to include selling slide projectors to the Japanese government for all the training they were doing during the war. And he kept expanding into other products – like charcoal mining and air-raid shelters.

The war was good to him, financially, for a time. Eventually, he found an accounting problem with one of his companies. The government was giving him raw material to manufacture engine parts, but inventory was missing – probably being sold by an employee on the black market.

He went to the Japanese military police to get help investigating. But they arrested him, and put him in a military prison where he was starved and tortured. Released 45 days later, the torture and starvation had taken its toll. When he finally recuperated, Japan had lost the war. The economy was in shambles. His factories and businesses were destroyed. He had little left.

But he started again. This time buying real estate people were now selling off at huge discounts. In just a few years, he was sitting on a million dollar real estate empire. His experience with starvation and inadequate food in prison inspired him to start a food business. He began paying young kids to collect sea water, which he’d evaporate, then sell the remaining salt.

But then, the occupying American force arrested him for tax evasion on the $50 a month he was paying the young kids – an amount he claimed was meant for their college scholarship (a non-taxable expense). He countersued, but the lawsuit dragged out, leaving him stuck in prison again, this time for years.

He was eventually released with a clean record, all charges dropped. But the government had already confiscated and sold off everything he owned – all the real estate, the salt company, the charcoal mine, his home. He was flat broke.

So he started again. He helped start a new bank, which got off to a good start. Except the company executed a number of bad loans. And the bank was forced to file bankruptcy. Depositors went after what little he had begun to accumulate.

So he started again. He still had a strong urge to create a food company. He turned his tool shed into a makeshift laboratory, and worked for a year trying to invent a new food product. Experiment after experiment failed.

But in 1958, at the age of 48, this entrepreneur finally hit on an idea that eventually became a company worth 700 billion dollars on the Tokyo stock exchange.

Momofuku Ando invented instant ramen noodles. Ando’s story is an inspiring tale of perseverance. And yet, I know most people reading this discount the tale: Ando possesses a willpower most of us will never have. We might be a little inspired by Ando, but we can’t possibly imitate his perseverance.

But, I don’t think that’s true. Ando’s story goes much deeper than that.

Why do kids drop out of college? A lot of reasons. Academic, monetary, even legal. It turns out though, there’s something much more fundamental.

Vincent Tinto is a professor at Syracuse University. He’s well known for his theories on students’ persistence through higher education. His research produced what’s known as the “Model of Institutional Departure”. He’s figured out why kids don’t succeed in college and dropout.

Tinto’s model informs us that, above all else, college is a transition from one community to another. Our success at college depends on how well we integrate ourselves into that new community.

What happens if we go home every weekend, to visit high school friends and sweethearts, instead of making friends in our new community? We don’t integrate. We don’t get help from new friends going through the same thing or academic advice from new mentors. Instead, we tend to drop out.

Tinto’s model has proven incredibly useful in improving how we educate, not just undergraduates, but even remote learning programs, and classes for adults continuing their education. And it extends far past education in describing how people persist.

The model wasn’t even unique. It was in large part derived from a model about suicide created by Emil Durkheim in 1897, who found that suicide rates were dependent on the group and society people found themselves in: if people fully integrated into their groups and communities, suicide rates decreased.

If people weren’t alone, they persevered.

While Momofuku Ando was in military prison camp the first time, a fellow prisoner, who Ando befriended, was released. Ando asked him to contact another friend – a lieutenant in the Japanese Army – who eventually arranged for Ando’s release. If it wasn’t for those two friends, Ando would have likely died in prison.

Then he started his real-estate empire. But that wasn’t even his idea. Another friend, Fusanosuke Kuhara, an entrepreneur who helped create what would become the company Hitachi, mentored Ando. His advice when Japan’s economy was ruined after the war? “Buy all the cheap real-estate.”

And when all of that fell apart, and Ando found himself completely broke but still able to start a bank, it was because he still knew enough people who gave him deposits to begin that bank.

And with instant ramen, he is indebted to the understanding of his wife who let him continue to work and chase his dream. It was her idea to create a laboratory out of their tool shed. And it was studying her cooking that actually gave him the idea how to create instant ramen.

Ando’s persistence didn’t come from suffering all by himself. It came from the people he surrounded himself with.

As I look back on the things I’ve accomplished in my life, I can point to obstacles and paths where I might have given up or not started at all. Then, I see the people who gave me a little nudge or lift to get to a better place.

When I wanted to start my first company Inkling in 2005, I applied to Y Combinator, an early stage investment program. Trouble was: the person I was originally going to apply with backed out at the last minute. And Y Combinator often requires its companies to have more than one co-founder.

This would have been an easy place to have just given up. But I had a lot of loose ties to other people who I started reaching out to. I thought of a friend, Adam Siegel, who I hadn’t spoken with in awhile, but who had mentioned a year previously over lunch that he was looking to create a new business. He might be game. And one lunch later, he was on board with my new business idea. We applied to Y Combinator together, got in, and away we went.

Years later I was trying to figure out my next project. I remember a lunch with another friend, Andrew Wicklander. We get lunch every 12 months or so. After a chat about how much we missed Basecamp’s Writeboard, I had the motivation to commit to something that became a pretty successful software project called Draft. And only successful because a lot of other loose connections and friends helped me spread the word.

With Draft, I had emailed a friend I’d stay in touch with every so often: Would he help mentor me a bit with Draft? And he did. And all that turned into him, Jason Fried, asking me to take over a software project he had started – Highrise.

I’ve gotten a lot of help from friends and loose connections I’ve cultivated over the years. And what I’ve found is that it doesn’t take becoming some schmoozing, glad handing, awkward-networking-event-attending extraordinaire. I’m one of the most introverted people I know. If there’s a conference, I’m in the back row so I can be the first to leave. If there’s a party, I’m probably not at it, or was there early and left before you even showed up.

But it isn’t hard to track the people you meet in something like Highrise or a notebook or even index cards. And keep those loose connections alive with an occasional email, coffee or lunch. Just think of all the people you haven’t heard from in a month. What’s stopping you from a just sending a quick: “How’s it going?”

And finally, don’t be afraid to be honest with all those connections and actually ask for help. Too many of us, especially those running businesses, suffer in isolation. While we create and run businesses, we tend to hide the pre-success from friends and people who could help. Why? Because pre-success can feel a lot like failure. It’s often not fun finding and keeping those first customers.

We’re told to fake it till we make it. Nonsense. I can’t believe how many people tell me how well their company is doing, and three months later it’s out of business. If only they had shared their challenges, maybe I or someone in their network could have helped.

On January 5, 2007, Momofuku Ando died from heart failure at the age of 96. Again, we have a chance to see how good Ando was with surrounding himself with people.

6500 people attended his funeral. It was held at a baseball stadium. It was invite only.

As one who is usually the loudest, especially for lightning talks, Chris Powers’ message on silence is one you should to listen to.

The Sweater Song

Wailin Wong
Wailin Wong wrote this on 4 comments

It all started with an Ewok.

That’s my two-year-old daughter on Halloween. To complete the effect, I decided to dress up like Princess Leia in Return of the Jedi (her jaunty Endor speeder outfit, not the metal bikini) and went on the hunt for a sweater that would resemble her camouflage poncho but be something I’d wear again. Browsing the Nordstrom website, I discovered the Bobeau Asymmetrical Fleece Wrap Cardigan in “Heather Pinewood” and remembered I had seen it recommended on a fashion blog I follow. I ordered the sweater; it fit great and at least two people recognized me as Leia. A success!

Photo courtesy Nordstrom

Then something happened. I started wearing this sweater almost every day. It was the perfect layering piece for my work-at-home wardrobe while also looking refined enough to wear for errands around town, and I didn’t want to take it off.
Before long, I began noticing this sweater everywhere in my orbit. I ran into a friend at my local coffee shop and she was wearing it. I tweeted about my love for the cardigan and heard back from friends saying they had it too. I wore it over my workout clothes to my exercise studio and an instructor said not only has she seen other clients sporting it, but that she owns it in gray and brought it to a weekend getaway — only to find her friend wearing it, too, in a dusty pink. My husband spotted a woman in the cardigan at our local public library. I ordered the sweater in a second color for myself and bought two more to give to family members as Christmas presents.
As of this writing, the Bobeau Asymmetrical Fleece Wrap Cardigan has 4.5 stars from 2,385 reviews on Nordstrom’s website. Apparently I’m not the only satisfied customer, especially when you consider that the other items in the “People Who Purchased This Also Purchased” section only have a few hundred reviews. And when I sorted women’s sweaters to look at just “Featured” products, I found that most of the items on that page have zero reviews. Somehow the Bobeau Asymmetrical Fleece Wrap Cardigan, which is essentially a fancy Slanket with an awkward name, had gotten incredibly popular. And I wanted to know why.
Nordstrom’s public relations department was unsurprisingly loath to disclose details about the sweater, like how its sales compare with other women’s apparel items or whether it did any special marketing for the cardigan. Trend Request, the Los Angeles-based company that owns the Bobeau brand, was similarly reticent, although it did credit Nordstrom for popularizing the “one button,” as it referred to the cardigan. (The sweater is also sold at Dillard’s, but only in three colors online, compared with 30 plus on Nordstrom, and has no reviews on the Dillard website.)
“We can’t share specific numbers about what makes this a best-seller, but we can say that it’s very popular with customers, especially during the holiday season,” wrote a Nordstrom spokeswoman, whose colleague had told me earlier that she owns two of the sweaters herself and put another three on her wish list.
I wondered if Nordstrom had heavily promoted the Bobeau sweater among fashion bloggers, who in recent years have proved remarkably powerful in driving sales toward retailers. After all, I’d first heard about the cardigan on Extra Petite, a blog that has published Nordstrom-sponsored posts and uses affiliate links. But Jean, the writer behind Extra Petite, mentions on her site that she learned of the sweater from her friend Kat at Feather Factor, another lifestyle and fashion blog. And Kat, when I asked her about the cardigan, said she found it “randomly at Nordstrom one day wandering around,” then alerted her readers when it went on sale.
It turns out my other Bobeau-owning friends also came across the cardigan by seeing friends and co-workers wear it, or by browsing at Nordstrom like Kat. Not only that, but they were all as oddly enchanted with the sweater as I was. One friend, who owns it in four colors, wrote me five emails in rapid succession because she kept remembering more things she wanted to say, like how she also bought a black Bobeau maxi skirt because she was so impressed with the brand. Another friend, the one from the coffee shop, said she was “excited with glee” to get my email and needed time to compose her response so she could tell me her “exact feelings and love for this piece of clothing.”
There is something about this sweater that inspires women not just to buy it, but to practically stockpile it, recommend it to friends and talk about it with an almost religious fervor. What’s interesting about the Bobeau one-button is that it’s neither an example of a generalized trend like peplums nor an example of a luxury fashion item achieving “It” status like Valentino Rockstud shoes. This is a sweater that currently retails for about 40 bucks. I think about how wishy washy I am about purchases, constantly filling up virtual carts and abandoning them, and marvel at how easily this cardigan tips shoppers from “Hmm, that’s nice” to “I’ll take four and tell my mom about it.”
“So — I bought the grey version, wore it to work, and got tons of compliments,” wrote the sister of my coffee shop friend. “I immediately told my two office mates to order one each….They in turn ordered theirs, and then turned around and ordered more, after realizing the awesomeness of the Bobeau. I was also convinced to order another one, in pink….Our office laughter from Bobeau Fridays spilled out to the (small) department of women, and it caught on. After tallying it up, I think we had 12 other women order one each, some ordering two.”
Any business that aspires to make money from a product or a service — including, say, makers of project management software — dreams about this kind of natural and positive word of mouth. And as a consumer, I have no problem with this either. I seek out opinions from friends, and in turn I routinely recommend all sorts of stuff to friends, whether it’s a restaurant or a lip gloss or a thought-provoking magazine article.
And yet my devotion to the Bobeau one-button made me feel weird. With the advent of social media and targeted advertising, I’ve learned to be suspicious of word of mouth. Is it a genuinely organic process, or is it just shrewd brand management in an exceptionally cunning disguise? These days, brands want to be our friends. Brands want so desperately to be approachable and human that you get sanctimonious tweets from companies commemorating September 11 and equally sanctimonious tweets from other companies announcing that they won’t be tweeting on September 11. People throw around terms like “brand evangelist” and they are being perfectly earnest and we go along with it.
I worry sometimes that my tastes and preferences aren’t as considered as I’d like to believe. Why did I buy a Sophie the Giraffe teething toy for my daughter? Why did I binge watch True Detective? Why have I turned into a brand evangelist for the Bobeau Asymmetrical Fleece Wrap Cardigan? It’s vaguely depressing to think it was because I was in the thrall of a brand.
None of my other Bobeau-wearing friends seem to be having this consumerist crisis over whether Nordstrom subliminally — or overtly — influenced them to buy the sweater. They just really like the one-button for all sorts of reasons, many of which are echoed in the online reviews. It’s machine washable and comes in more than 30 colors. It has a pert little button. It’s cozy but not frumpy, ideal for wearing on plane rides or keeping at the office. Its drape flatters a variety of body shapes and it comes in Petite and Plus sizes. “Makes you realize how many articles of clothing DON’T fit that bill!” one friend wrote.
My coffee shop friend, who bought her first Bobeau while pregnant and now has two sweaters and two small children, said: “I feel like pregnancy and motherhood make you give up so much when it comes to fashion choices….Everything you own ends up getting stained or ruined so you can’t have anything really expensive or hard to take care of. But this is one amazing item that allows you to keep your fashion style without having to give up any of the other practical considerations.”
Maybe Bobeau and Nordstrom pulled off that rare feat of making and marketing a product that has mass appeal, and I should acknowledge that instead of acting like I was in a brand-induced fugue state when I bought my sweaters. It does feel oddly freeing, I’ve realized, to like something that thousands of other women of different sizes and shapes and lifestyles have also embraced. In an era of ever-increasing online tracking and data collection, it’s liberating to wrap myself in something whose ubiquity provides a kind of anonymity. The sweater is my invisibility cloak; marketers can’t discern anything unique about me because everyone has it. I could be a bosomy frequent flier or a lean Pilates instructor or that lady in your office who’s always cold. Or maybe I’m just a mom who started with a Princess Leia costume and ended up with a closet full of sweaters.

Stuck again

Nathan Kontny
Nathan Kontny wrote this on 13 comments

In 1949, Earl Bakken and his brother-in-law Palmer Hermundslie started a medical device repair shop in Palmer's garage. It was a terrible place to work – freezing in the winter, stifling in the summer.

We used a garden hose to spray water on the roof in a not especially successful attempt to cool the place down a few degrees. At least once during those early days, the garage was infested with flying ants.

Unlike your typical "successful" startup garage stories, they were in that garage for the next 12 years. In their first month of operation, they earned a whopping $8 of revenue. Even in 1949 money, that wasn't good. And, for the next several years, they just kept losing money.

In 1957, a chance encounter with Walt Lillehei, a heart surgeon desperately looking for a way to keep his patients alive during blackouts, led Earl to invent the world's first battery operated pacemaker. Earl and Palmer's company, Medtronic, would become one of the leading biomedical companies of our time. They invented the pacemaker industry. And for the next 30 years, dominated the market.

But by 1986, their company had fallen from a 70% market share to 29%. Despite spending many millions on R&D, the company couldn't compete anymore. The company was stuck again.

Could someone save it?

Mars, similar to Earth, rotates around its own axis every 24 hours and 39 minutes. And when a solar-powered rover lands on Mars, most of its activity occurs during Martian daytime. So engineers on Earth studying Mars rover data, adopt the ~25 hour Martian cycle. Laura K. Barger, Ph.D., an instructor at the Division of Sleep Medicine at Harvard Medical School, wanted to know what kind of effect that has. Does 39 minutes really make that big of a difference?

What she found from her studies was that NASA engineers who could correctly sync their own wake/sleep schedules with the 25 hour day did fine. But they had to make a concerted effort to adapt using countermeasures – take the right naps, alter their caffeine intake, use light exposure, etc.

But those people who couldn't adapt, or didn't bother to try, suffered significant performance problems from fatigue. She also found that on the first Mars rover mission, The Sojourner, engineers were so exhausted after a month that they formed what NASA managers called a "rebellion" and refused to work on Martian time any longer.

We spend billions of dollars on space exploration and engineering, lives are at stake, and simply getting our circadian rhythm synced correctly with our tasks and with our team could make or break an entire operation.

It underscores the importance of what appears trivial: achieving the right rhythm.

In 1987, Mike Stevens was assigned to be vice president of Medtronic's product development. When he looked at what was happening at Medtronic, he noticed that there were actually quite a few good ideas in the pipeline. But when they were just about ready to launch, a competitor would spring up with a similar product. Medtronic would delay the launch, debate, discuss, and try to figure out a superior version to launch instead. The company was in a cycle that led to a decade of no new products.

Steven's solution was incredibly simple. He put the whole company on something he referred to as a "train schedule". He and his executives set dates far into the future for when new products would be invented and launched.

I chose that phrase "would be invented" carefully. Because these weren't product ideas they already had and now just needed development. They didn't even know yet what they would develop and launch – just that they would launch something, anything, on schedule.

The effect was tremendous. The company could still debate and plan, but employees knew decisions needed to be made by a certain date or else they'd miss the train.

Medtronic's market share climbed back steadily from Steven's promotion date, and in 1996, they were back above 50%.

Years ago, I was sick of not having a bigger audience around my writing and software products. My Twitter account was stuck at 200 followers. And I didn't know yet what to improve, how to differentiate myself, or how to market my products better. So, I committed to writing and publishing at least one blog post every 7 days. That's it.

The first post, crickets. The next post, more of the same. And the next and the next. Very few people read what I was writing. But the rhythm got me through the points where many would have given up. And to the points where I started getting better.

And years later, I had gotten so much better that hundreds and then thousands of people began reading my blog posts at Ninjas and Robots. The new audience helped me launch a product, Draft. But of course, I had a familiar feeling of being stuck with Draft, writing software amongst a sea of other writing software.

I had no idea how I was going to compete, what I was going to build, how I was going to market the thing. But I did the same thing I did with writing, I committed to a cycle of launching as many new features and improvements as I could every few weeks. That's it. But the momentum fortunately caused a lot of excitement.

Some folks even compared it to Christmas :)

No matter what my revenue looked like, or how terrible my user growth might be, I knew I had to release something. The rhythm trumped everything and kept propelling me forward.

Back in February of 2014, 37signals announced they were renaming themselves Basecamp to focus on their project management software. They would look at selling off their other products, especially their second most popular product, Highrise, a small business CRM tool.

You can imagine what that kind of announcement did to customer growth of Highrise. Even worse, as soon as the announcement was made, more than a few competitors took the approach of putting up mini-sites that read: "Goodbye Highrise. Highrise is shuttering; here's how you migrate your data to us." Highrise wasn't going away, but that didn't stop them.

So when Basecamp decided to spin-off Highrise as a subsidiary, I faced quite a bit of negative momentum as Highrise's CEO. But this looks like a challenge previous versions of me has faced before on a smaller scale.

On day one, I established a train schedule – we'd make major announcements on a regular basis. If something isn't ready, it misses the train. But an announcement is going out; something better be on it.

I didn't start with a big team. It was just me and one more developer, Zack Gilbert, but we were going to ship whatever we could ship in one month, and make a big deal out of it.

It wasn't an announcement filled with very big ideas or changes. We only had 30 days to begin learning a large code base, and had plenty of other tasks and support requests to handle. But we had a schedule to keep.

And our first announcement went out. Then another one month after that. And then another. Now with a bigger team, and even more experience with the product and advice from our users, the announcements are getting more interesting.

The result? Highrise HQ LLC has only technically been in business a little over 3 months. But our rate of customer growth has increased by 39%! And we're seeing growth numbers that look a lot more like what the numbers were before Basecamp made their announcement.

It's far too soon to proclaim Mission Accomplished, we have many mountains to climb still and plenty of low points along the way I'm sure, but it's apparent what kind of effect a rhythm can have on creating a product, syncing a team, and communicating with customers. And things are starting to look a bit familiar :)

The other side of version-less software

David wrote this on 9 comments

The wonders of version-less software as a service are extolled from all corners of the internet: Nothing to install! Updates come to you automatically! Everything just gets better all the time. And that’s all true, but it’s not the whole truth.

The flip-side of this automatic wonder is that you’re forcing constant change on everyone. The only way to prevent that from being unbearably grating is to make it incremental, and exclusively additive.

There’s no room to change your mind about the fundamentals once a sizable customer base has been trained to expect the familiar. Anyone who’s ever tried to remove a feature from internet software will likely be so scarred from the experience that they never attempt it again.

This is where it’s so easy to cry boohoo as a developer: “Oh, those damn users just can’t see or accept the brilliance of newness! If only they would be patient, relearn everything for me and my creations, we’d all be better off!”

The fact is they probably wouldn’t. Most software just isn’t important enough to warrant a steady stream of newness friction. Makers eat and sleep their software all day long, so most changes seem small and inconsequential. But users have other worries and changes to face in their daily lives; learning your latest remix is often not a welcome one. They invested attention to learn the damn thing once, then went on with their merry life. And what’s so wrong with that?

Nothing, I say. We have a very large group of customers who still enjoy Basecamp Classic. It’s been 2.5 years since we released the new version, but the Classic version continues to do the job for them. It just hasn’t been a convenient time for those customers to disrupt their work to upgrade Basecamp, or maybe they just don’t like change. It really doesn’t matter.

That doesn’t mean they’re not happy customers. Just the other day one wrote to say how much they loved Basecamp, yet felt obliged to apologize for not yet upgrading to the latest version. There’s nothing to feel bad about! Except that the software business makes us feel like there is.

Installed software didn’t have this kind of tension because of versions. If you were using Photoshop 3, you weren’t forced to upgrade to Photoshop 4 until you were ready. (Though other network effects, like sharing files sometimes forced the issue, but that’s a separate story). Something important was lost when we moved away from those clear versions.

Users lost the ability to control the disruption of relearning and adjusting to changes; developers lost the will to commit to revolutionary change.

Yes, splitting versions, like we did with Basecamp Classic, isn’t without complication. But from someone who’s been through the experience, the complication is not only overstated, but the benefits have also been under explored.

Maybe it’s time to ask yourself: What could we do if we weren’t afraid of revisiting the fundamentals of our software? What if we just did a new version and kept supporting the old one too? 2.5 years after we committed to this strategy, we remain happy with this rarely chosen path.

Acquisitions is where good ideas go to die, part 457

David wrote this on 2 comments

Remember the really cool Farecast app that would tell you whether prices for airline tickets go up or down? We featured them back in 2011, after they had been bought in 2008 by Microsoft for $115M. Then, the story from CEO Etzioni was:

So I’m very pleased that Farecast was picked up by Microsoft, was enhanced to become Bing Travel, and is now widely available and broadly used.

I was just tipped to this story from April: Farewell, Farecast: Microsoft kills airfare price predictor, to the dismay of its creator. Not surprisingly, the attitude post-exit of what happened to Etzioni’s idea isn’t quite as bright:

So, we end up with Bing travel as a thin veneer that redirects users to Kayak, while Google innovates with, which I now use all the time. Google 1, Bing 0.

Getting access to all that money, all those resources, is always the glitter story that surrounds acquisitions. The drab reality is often a lot like the hangover you had after celebrating the check clearing.

Big news for Highrise

Jason Fried
Jason Fried wrote this on 50 comments

Today we have a major announcement to make regarding Highrise, our popular CRM tool. It’s a good one!

The story starts back on February 5, 2014, the day we announced that we were becoming Basecamp. We announced we’d be renaming the company from 37signals to Basecamp, and we’d slimming our product line down to one product – Basecamp. This meant we’d be finding new homes for our other products. We said we’d either sell them or spin them off into stand-alone companies.

And wow! Right after making the announcement, floods of emails came in from companies, investors, and individuals who were interested in buying one or more of these products. I expected some interest, but I never expected so much so soon. We were off to a great start!

We decided to start the process with Highrise, since it was our second most-popular product behind Basecamp and it would command the highest price. On its own, Highrise generates multi-million dollar annual profits, so it’s very much the real deal and very attractive to a wide variety of potential suitors.

We fielded the interest, vetted the buyers, and narrowed down the field to about a dozen companies that we felt would provide a great home for our customers and fertile soil to grow Highrise to its full potential. The fit was critical – we outright rejected a few deep-pocket buyers because their plans included shuttering Highrise and rolling the customers into their existing product. That wasn’t an outcome we could live with.

The finalists were notified, we shared the prospectus, and they had a few weeks to submit their bid package and long-term plan for how they’d improve Highrise. I can’t say who was involved in the bidding, but it was some of the usual suspects (big software companies) and some unusual suspects (smaller software companies and PE firms with great track records). A healthy mix, for sure.

In the end, we couldn’t make a deal. Ultimately the sticking point wasn’t the valuation or price, it was the fact that Highrise didn’t come with a team. Everyone who worked on Highrise would be staying at Basecamp. All the serious buyers wanted the team too. No deal. We weren’t downsizing the company, we were just slimming back the product line. Everyone would be staying on board to work on Basecamp.

This meant selling Highrise was off the table. Next we turned to a spin-off. We successfully spun-off Know Your Company a few months prior, so we had some experience with this. Claire Lew was an awesome fit to take the reins and run Know Your Company, but who would be the right fit for Highrise?

A couple names came to mind, but I felt one was a perfect fit. I knew him, I knew his background, I knew people who worked with him, and I admired his energy and drive. He was a great programmer, a great product thinker, a great leader, a hell of a nice and decent guy, and he just happened to be in Chicago. We’d talked before about working together somehow, but there was never anything to do. Until now.

I dropped him an email. I heard back. And a few months later – today – we have a big deal to announce. We just signed the official papers last week. Argggg lawyers!!

Highrise is now its own company (legally it’s a subsidiary of Basecamp). Highrise will run as its own company with its own leadership, its own team, its own board, and its own budget (fully funded by customer revenues). During the transition period, Highrise will lease some infrastructure from Basecamp, but ultimately it’ll be completely self-sufficient. Plus, because Highrise is profitable, no outside money is required to get it off the ground. It’s on very stable ground right from the start.

And who’s running this new company? Nathan Kontny!

Nathan’s a Y Combinator alum (founder of Inkling & Cityposh). He was also an engineer on the second Obama for President campaign. And you may know him for his latest product, Draft. In fact, I’m using Draft to write this very announcement. It’s an outstanding product.

As CEO, Nathan will be tasked with building the team and executing his vision for Highrise. We couldn’t be happier with Nathan. Highrise is going to get a whole lot better.

What does this mean for the product and our customers? Like any transition, it’ll take some time to get up to speed, but he’s already been digging into the code, getting to know the customer base, and riffing on some ideas. There will be no interruption in service during the transition.

We couldn’t be more confident in Nathan and we’ll do everything we can to support him. If you’re a Highrise customer, we know you’ll be thrilled with his leadership, vision, and dedication to making Highrise the best it can be. If you’re not a Highrise customer, you may want to check it out once Nathan and his team hit full stride. 2015 should be a great year for Highrise.

So please wish Nathan and his team well on their new journey! Here’s to Highrise thriving again!

RELATED: Nathan wrote a story about taking over Highrise on Fast Company and a more personal story on his blog.

Clutter is taking a toll on both morale and productivity. Teresa Amabile of Harvard Business School studied the daily routines of more than 230 people who work on projects that require creativity. As might have been expected, she found that their ability to think creatively fell markedly if their working days were punctuated with meetings. They did far better if left to focus on their projects without interruption for a large chunk of the day, and had to collaborate with no more than one colleague.

Decluttering the company [The Economist]

Just took an Uber Black Car to the office today and noticed that they round down the price and make it clear on the receipt. $21.00 is definitely more luxurious than $21.71. Nice touch.

Jason Fried on Jul 31 2014 9 comments