In “A Radical Business Plan for Facebook: Charge people” [Slate], Farhad Manjoo proposes “something crazy”: Tech companies should start charging people to use their services.
David is interviewed in the piece and explains why “having a price is really cool for making profits.”
“[Hansson:] “You have customers, they pay you money for the product or service, and you get profits! It’s almost too simple to work.” Of course, 37signals didn’t come up with this idea on its own, either: “I’ve heard that over time—hundreds of years actually—this has been how most businesses have made their money. But somehow that notion got lost in the Web world.”...
“People tend not to look closely at the odds,” Hansson told me. “There will always be people winning the lottery, but that doesn’t mean a good financial strategy is to go out and buy lots of lottery tickets.”
Instead of taking a heap of venture capital money—lottery tickets—in the hope of one day getting a huge payout, Hansson says that Web entrepreneurs would be better off starting their businesses in the way most offline entrepreneurs do: Use a small amount of seed capital to make a good product that appeals to a client base that is willing to pay you for it. Then, over time, use the money you make from your customers to improve the product or to create more products—allowing you to attract more paying customers, which then lets you invest more into the business, and so on. It’s a cycle that has proved quite successful over the millenniums that humans have engaged in economic activity.
Also recently published: Die Kraft des Mittelfingers [brand eins] is a recent article (in German) on 37signals. Even if you don’t speak German, you may be able to get the gist:
David Heinemeier Hansson ist vulgär, und das ganz bewusst. Seine “Fuck you! ”- und “That’s bullshit”-Sprüche setzt er dosiert ein, wenn er Gesprächspartnern seine Sicht der Dinge nahebringt.
Related: The Secret to Making Money Online [SvN]