Microsoft just bought 1.6% of cool glow for 240 million dollars from the current darling of social networks, Facebook. That priced the latter at $15,000,000,000 or five hundred times expected earnings for 2007!

Now I actually really like Facebook. It’s clean, the guys running it are smart, and tons of people I know are really into it. They got a great audience, growing fast, and all that jazz. But an evaluation of five hundred times earnings?! If that doesn’t taste like bubble gum, I don’t know what does.

Facebook is certainly to be commended for getting as high an evaluation as they can. Bravo to them. They look like masterminds here. But what does Microsoft look like?

A 500x evaluation doesn’t exactly position them as financially shrewd. No, it feels like they’re trying to make a statement that they too can hang with the cool kids regardless of the cost. Regardless of even an obscene cost.

I think Microsoft would be wise to remember that trying to buy cool has a tendency of making you look even more like a dork. I guess they have to try something — anything — to improve their image to investors, entrepreneurs, future employees, and the media.

Maybe that’s also what’s behind the previous hoopla about Microsoft looking at companies heavily involved with open source software. CNet even pitched that we’d make the perfect candidate for that run.

In any case, you’d think that there’d be more critical coverage of this transaction in light of eBay’s write-down of the Skype purchase. In comparison, eBay’s buy looked like a steal. They got a cool media darling with current revenues of $400 million/year for just $2.6 billion a few years ago.

But that’s exactly the opposite of the story being played in some quarters. Reuters frames it as Microsoft beats Google. No they didn’t. Google beat Microsoft with a goading stick and got them to buy-in at bubble gum numbers. It’s Google and Facebook laughing all the way to the bank, not Microsoft.

Brad Madigan asks:

Was Ruby on Rails a planned attack while building Basecamp, or did you realize, “Wow, we have a real MVC framework here” after the fact? Other than the obvious technical aspects, how has Rails helped 37Signals as far as business development is concerned?

In the beginning, there was no Rails, there was only Basecamp. After working on Basecamp for a while, though, I eyed the option of giving all the generic pieces a life of their own. But even then, I continued to work on Basecamp first. Which meant that all the functionality of Rails came as extractions of a real application, not of a “what somebody might need some day” fantasy, so prevalent in framework design.

This extraction-driven nature of Rails attracted a culture of practical programmers with a zeal for delivery, which proved to be perfect hiring crop for 37signals. From the core group of people around the framework, we were lucky enough to hire such amazing talent as Jamis Buck, Sam Stephenson, and Jeremy Kemper for the company. That’s probably the biggest benefit that 37signals has derived from Rails.

But many other benefits are obvious. Including awareness, goodwill, and press. And of course the joy of working with a technology so uniquely aligned with our thoughts on software development.

Ryan Thompson asks:

From a financial perspective, how did you make the move from client development to 100% product development (i.e. private funding, VC, Angel, internal profits?). We’re in a pivotal time of shift in this direction but being internally funded means that client work sometimes (or most times) still takes precedence.

37signals made the move from clients to products one day at a time. Basecamp was developed alongside client work and was treated as essentially a third client. It had to compete for resources on equal footing with other clients, which meant that every hour we spent on it had to really count.

With constrained resources, you realize the value of the marginal hour very quickly. You can’t just goof around with science projects, open-ended explorations, and play time with new whiz-bang technology. Instead, you have to deliver real value, real soon. Otherwise the project is simply going to languish as it loses out to the “real work” of paying clients.

For us, that meant we had to build something for ourselves, something we needed, and something that was valuable enough that we’d assign resources to it over getting billable hours done. It meant racing to running software, deciding that a lot of stuff just doesn’t matter, and building half, not half-assed.

The initial start of extreme resource starvation lead to many of our thoughts on software development. It also lead me to believe that the best work is done when there’s not enough time, not enough money to do it “right”.

Doing it right is a pie in the sky. It’s a misnomer for second-system syndrome and it’s never going to happen anyway. So stop aiming for perfect, start aiming for good enough.

Got a question for us?

We’re looking for interesting questions to answer here at Signal vs. Noise. Got one? Then send it to us at svn@37signals.com (make sure the subject line reads “Ask 37signals”). We’ll cherry pick the most interesting ones and answer them here. Fire away!

Edwin writes:

One thing that bothers me often, is the design of the user interface. I’m a web developer, using Rails and capable of producing valid HTML, CSS and JavaScript. So, I should be able to build a simple interface. But, if you want a more “stylish” interface, you probably also want to play with graphic programs and create neat icons and logos. Hiring a designer is often expensive and can cause the developer to loose sight of the epicentric design decisions.

How does 37signals solve this problem? Do you have a full-time designer working on a website or do the CSS-freakz create the website interface?

Thinking of designers as someone who paints the application pretty in Photoshop is a common but unfortunate misconception. We certainly don’t have any designers like that. Instead, our designers apply their talents to the native materials of the web by working directly with HTML, CSS, and occasionally Ruby code or JavaScript.

That’s a slightly odd notion to a lot of web programmers. They consider HTML, CSS, and especially JavaScript and Ruby code to be their domain. If designers work with exactly the same materials, how are they different?

Think of it like paper and pencil. A programmer can use those tools to create a technical diagram of databases and objects. A designer can use those same tools to create a compelling layout with a flow that’s just right.

When designers and programmers work with the same materials, they speak the same language. That’s an incredibly helpful way to work together (contrast with artists speaking in Photoshop and “HTML cutters” trying to adapt that to the web).

Designers decide and design the flow, the copy, the structure of the page, the programmers make all of it come to life by plugging it into the backend. All along both parties trade concessions on how to get the feature done as fast possible by grabbing the easiest value.

So stop thinking about designers as artists who work in a different universe of neat graphics and start thinking of them as someone who decides what goes where, which form elements to use, how to split features between screens, what words to use, and how everything fits together in a coherent experience.

Oliver writes:

I become frustrated at trying to introduce more innovative methods of software development at the large IT consulting firm I work for. Are there any methods to trying to get 1980’s waterfall lovers to even think of rapid development techniques as anything but “silly crap suitable for start-ups but with not place in Real Development Companies” (paraphrased), or should I just quit and find somebody more exciting to work for?

Most people fear change because they overestimate the risks and underestimate the gains. If you want to convince them to change, you have to address both issues.

In my experience, the only way to address the perception of risk is through first-hand experiences that Nothing Bad Will Happen. Anecdotal, or even hard, data rarely sways anyone unless they’re already in a desperate situation.

So pick something small in your organization. Internal systems are usually a good fit. The worst that could happen is usually that you’ve wasted a little time (and organizations running waterfalls should be intimately experienced with wasting time for much less noble causes). You don’t end up looking foolish to clients (a common fear).

Pitch this system as a test balloon for another way of doing things. To smooth things further, you could throw a boon to kick it off the ground, like “Peter and me will come in on Saturday to set everything up for this”, so that you reflect that you have some skin in the game too and that you care.

Odds are that people will like how things work on the test trial (i.e., they’ll start reevaluating the gains). They’ll appreciate that you’re working in iterations, how quickly you can adapt to changes, and how enthusiastic people on that project seem to be.

If all goes well, this will lead to “why can’t we work like this on project X?”. Maybe this call won’t come from top decision makers right away, but it’ll come from anyone else who’s been exposed, and it’ll hopefully start an internal debate based on first-hand experience.

Then again, maybe it won’t. But at least you’ve given it a shot, so you won’t feel bad at all when you hand in your resignation and move on to a place that provides a more rewarding work environment.

April writes Ask 37signals:

As a developer, I often feel overwhelmed by the amount of new technologies and languages to learn. I work long hours as it is, and the last thing I feel like doing when I get home is spending more time trying new stuff out at the computer. Do I really have to be the kind of person that is excited about spending 24/7 at the computer to be a programmer? I love my job, and I love what I do, but I want a life outside of it too.

I think the best programmers are those that do have a life outside of computers. Those who value their time in front of the screen because it’s finite, because it’s competing with other interests. That usually drives you think twice about spending eons just playing around for the heck of it (not that there’s anything inherently wrong with that).

In my opinion, the best way to learn new technologies is on the job. I learned Ruby because I wanted to escape the pain that PHP and Java was giving me and because I had a fresh project to try it on (Basecamp). I built Rails because I needed it for Basecamp. I got into Ajax because we wanted to give Ta-da a compelling UI experience. I got into REST because we didn’t want the API for Highrise to be an afterthought. I picked up on OpenID because the thought of building single-signon for all 37signals’ products sounded like a drag to build from scratch.

Sure, you some times need to do a cursory investigation on a new technology to see whether it would be a good fit for the work you’re considering it for. But that shouldn’t be a two-week project. If the technology you’re considering takes more than a few days to get a feel for, that’s information in itself (I would probably never bother with it). So you go for the taste and if it feels good, you apply it to something real.

That does require that you’re working in an environment that’s open to new technology and willing to invest in your growth as a developer by allowing you to use it. If you’re not working in a place that fits that description, I’d start looking for a place that does.

The internet is full of conditional phantom buys: “I’ll buy if they’d make one for less than $300”, “I’m getting it when it hits version 2”, “Until they add this feature, I can’t get it”. At the surface, all these conditions sound very reasonable. Or well, often they’re not all that reasonable, even arbitrary, but at least they represent a personal statement of value. Until this condition is met, I won’t part with my money.

The problem for anyone driving their decisions off conditional phantom buys is of course that these statements are as fickle as they are cheap. It costs nothing to claim to have ready cash if you can get a company to follow your pet goat. It doesn’t actually mean you’ll have to get money out of pocket when it happens.

The deceiving part of these birds in the bush is that the proposition is proposed as a one-to-one barter. You give me this one thing and you’ll be rewarded with all the gold you can carry from everyone who’s just like me!

Except that most such propositions are just window shopping that gloss over all the other implicit barriers to purchase that’ll surface when the pet goat has been fed.

So take the ultimatum-based shopper’s mirage with a grain of salt. It can undoubtedly contain pointers of interest, but don’t go projecting revenue growth off them.

I hate paper mail. Even when I filter out the spam, the credit card offers, and the endless stream of catalogues from places where I once bought a pencil sharpener, it’s still bad. Because what’s left is usually somewhat important. Bills, receipts, or documents that should otherwise probably be filed properly some where.

For me, that somewhere was always The Pile. A bottom-less pit of guilt that would build up over a few weeks until I would rip through it and find that I was two days over due on paying $14.59 to People’s Gas.

Enter the tag team of organization: The Fujitsu ScanSnap document scanner, a shredder, and a solo Highrise account.

The beauty of the ScanSnap is its utterly brain-dead simple mode of use. You feed it a document, click the scan button on the device itself, and a PDF lands on your desktop. No continuous configuration, just one-click-straight-to-PDF goodness.

After the document is PDF’ed, it goes straight to the shredder. No clutter, no pile, just the pleasurable sound of paper I don’t have to worry about any more.

The final step is upload to Highrise. I have contacts for all the major bills I pay. So one for AT&T, one for People’s Gas, and so on. They’re all aggregated by the bills tag, which with the new tag streams allow me to see everything going through. I also have accounts for all the major service providers I use. There’s one for the lawyer, one for the mechanic, one for the doctor.

With the rhythm of “document goes in, follow-up task is set, and paper is gone” I’ve finally been able to beat The Pile and achieve the same level of inbox-zero zen that I have for Mail.app.

The Real World must be a truly depressing place to live. It’s apparently a realm where new ideas, unfamiliar approaches, and foreign concepts always lose. I’m told that the only thing that works in The Real World is what its inhabitants already know and already do. No matter how flawed or inefficient that way may be.

People who live there are said to be living Real Life. An existence filled with pessimism, despair, and every shade of pitch black imaginable. Yet strangely, these people living Real Lives seem not to be interested in getting out. They are not looking for a change of scenery of the dreary Real World.

Instead, they’re actually trying to recruit! In arguments everywhere, they’re trying to convince those of a sunnier demeanor that they must convert to Real Life or perish. That resisting the Real World is futile. This call persists even in the face of contrary experiences. Tales of people who actually did things differently and still lived to see the sun rise in the morning.

Please don’t be fooled, there’s nothing even remotely attractive about The Real World. It’s a bleak mirage suitable only as a place of communion for those who have lost all hope.

Related: Definte the real world in 10 words or less

There is undoubtedly a time and a place for a buyer’s agent when purchasing real estate in the US. Maybe you don’t know the market, exactly where you want to look, or even what to look for. Getting an agent to help you out can certainly ease your search.

But don’t for a minute buy the baloney that your agent is free. In Chicago, the buyer’s agent picks up 2.5% of the sales price. And that’s how the myth of free lives on, since it’s the seller that actually pays for your services (don’t even get me started on how lopsided that is). The thinking goes that if you’re not using an agent to buy, the seller’s guy gets the full 5%.

Right. Just like everyone actually starts their bidding at the asking price. Of course that fee is negotiable. And by “negotiable”, I mean saying “I’m not represented by an agent, but I want the commission due none the less” and the seller saying “Sure!” (as based on anecdotal, personal experience dealing with 4 sellers in Chicago).

To fellow Danes — and I assume many other countries in the world with no defacto price-fixing on real-estate commissions either — this comes as no surprise. We never had a wide-spread concept of buyer’s agents.

For US buyers who know where and what they want and are willing to do a little work yourself, I suggest you ignore the myth and pick up that $10,000 commission check on a $400K house yourself. That’s probably the best hourly rate on work most people will ever see.