<aside> ℹ️ About
This document is about how the company 37signals is managed.
First of all, via their homepage:
37signals is a private software company best known for making Basecamp, HEY, and ONCE; writing business and software books (Getting Real, REWORK, REMOTE, It Doesn't Have to Be Crazy at Work, and Shape Up); and inventing the Ruby on Rails framework.
Grabbing my attention
I started reading their website and was immediately pulled in. It paints a picture of a so-called “calm” company that rejects hustle culture. It does this without diluting the job-to-be done — create excellent software.
To do this, the company has clearly given tremendous thought to what conditions are required to repeatedly achieving this goal from which all growth, opportunity, profit follow. Many of its principle will be familiar to those who study Amazon’s customer-centric focus but because 37signals is a small, private, remote-first company (which has been succeeding for over 20 years itself) many of its practices might be feel more relatable and approachable.
They strike me as the kind of place that appreciates all the new-age lip-service towards being a company that serves all of its stakeholders but has found a path to doing that by being unapologetically profit-focused by doing one simple thing — delivering beautiful products to serve their customers. And to do that, in the most undistracted manner possible, they select for employees who are aligned with a culture of both craft and calm.
Caveats, disclosure, and personal angle
That said, I don’t know anyone who works there. There’s no way I can know if their way of working is the source of their success. I also listen to and love the Founder’s podcast which can feel like a hagiography of maniacs (like the robber barons or Michael Jordan). I’m not pretending 37signals has found The Way to run a company. But they seem to have a found A way and that way is unconventional, contrarian, refreshing, and most of all resonant.
I started my career at SIG. As a young fish in the bowl, I couldn’t appreciate the culture they cultivated. I had no reference points and also didn’t even think about organized behavior as a matter to even consider. In hindsight I understand how intentional the culture was. How their training and pedagogy was deeply researched and deployed.
Of course there was brainwashing…
…every powerful team’s cohesion is rooted in a shared identity that flows from some mix of internal propaganda to norms of what is honorable and what is weak. As the saying goes, the poison is in the dose.
So why did I write this guide?
I simply found what I read inspirational. I like how the founders think. I like the beauty-through-simplicity of their design, their books (I’m reading Rework), and website copy (goated copywriting…it’s a delight to read the original sources both in form and substance).
But there’s a personal reason too.
When I started reading their stuff it reminded me so much of my friend and cofounder on moontower.ai, Emi Gal.
Emi is an extremely bright, energetic, optimistic, positive and successful entrepreneur (he built a software company in college that he exited a decade later before founding Ezra where he currently serves as CEO). As we build moontower.ai, I saw so much of the 37signals influence in him.
We’ve discussed it and indeed he’s a huge fan of them. He’s read all their books (and recommended Rework and Shape Up to me) but we also talked about how he came to many of the same conclusions while running his first company. I think that’s why reading the 37signals philosophy conjured Emi so strongly — the focused, can-do, undistracted spirit wrapped in a deep care for a holistic well-being which enables you to be excellent, rather than being at odds with professional commitment & performance.
A great hire isn’t someone decorated with credentials. That’s not a knock on credentials so much as a redirection to what matters — people who solves problems autonomously or as Emi puts it, can read a Jira (or in our case Notion) ticket and get to the finish line without needing a meeting for every clarification. Being able to do a task but understand the wider solution the task serves and course-correcting in space. In other words, thinking like a founder. The 37signals people call it a “manager of one” (described below). You can have the type of culture 37signals advocates if you select for it. And that means finding evidence for the traits you are looking for not proxy prestige accomplishments.
In the movie Boiler Room, the senior brokers warn the trainees “no writing wood”. Writing wood is the act of making lots of phone calls to pad your stats to claim you did your job but the leads generated are useless because the junior broker was anxious to get off the phone instead of aggressively selling. There are lots of impressive sounding people with sterling resumes whose entire body of work is just a pile of wood. Often these smokescreen sophists will come out of prestigious place with a business so fantastic it has enough fat for useless employees to hide inside.
(It’s tempting to give credit to the cultures of highly profitable companies but if you’re a near-monopoly I’d guess it’s just as likely that a fantastic business masks a trash culture — the business might rock despite its culture. Not because of it.)
The principles laid out below strongly suggest that it’s possible to have a deeply accountable, bs-free, low politic, transparent, rewarding & remunerative culture all while preserving the balance to be excellent at work without work being your master.
If the principles sounded soft I’d accuse them of being idealistic. Instead, I see an honest approach to tradeoffs — it’s demanding in ways that lead to right answers not performative ones. More right answers = less waste.*
I simply extracted the points I wanted to memorialize and keep as a guide although the links to the original sources are embedded. This document should serve as a convenient pointer to a bunch of 37signals writing re-factored to be linear and distilled.
I included my own comments where I felt the urge.
As you read it, it’s useful to think of how the ideas might apply or completely backfire where you work. This will either reveal an exception with their methods, or diagnose a problem with yours. Perhaps you even noticed a problem with your own organization but seeing how its handled here sparks a lightbulb moment.
*This is major cost of all the proxy measures and signaling that strangle school, work, healthcare but that’s way beyond the scope of this. I just appreciate the little crusades, like a specific company culture, that aspire to real flourishing not just its patina
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<aside> 💵 Why We Choose Profit
Select quotes:
Profit is true vertical integration
Cash is an unusually special raw material because you can transform it into anything (cash is basically like a stem cell). And when you make your own, you can use it any way you want, no strings attached. You can take it all home. You can give it all to your employees. You can put it back into the business. You can do stupid shit with it since it’s your shit. But when you have to source raw materials from a very limited number of suppliers (investors), the money comes with all sorts of strings attached. Money with strings attached isn’t really yours, it’s someone else’s property that you’re renting on their terms. We prefer to own.
Profit is the ultimate shield against bullshit
When you’re profitable you don’t have to play games, succumb to smoke-and-mirrors metrics, cross your fingers, or grovel for other people’s money, validation, or acceptance. You simply make more money than you spend — and run a fundamentally sound, economics 101 business. When profit’s a requirement, it becomes a lot harder to step in the bullshit.
$1 in profit is the ultimate FU money
“Fuck you money” is an ugly term, but we’ll use it here to make a point. Typically when people talk about FU money, they think about millions. Once you have millions you have FU money. Well, actually, all you need is $1 in annual profit. Because once your company is self-sustaining and profitable, and you don’t owe anyone anything, then you can say FU to just about anything. You don’t need to do anything you don’t want to do when you don’t have to rely on anyone else to be sustainable. You don’t have to dance on anyone else’s stage, or play by anyone else’s rules. FU money isn’t about buying an island, it’s about being an island — your own sustainable entity.
Profits are just simpler
We’re still an LLC at 37signals. The simplest pass-through structure you can have at our size. That means fewer lawyers, fewer accountants, less paperwork, less hoop-jumping. Our books are so silly simple, our operating agreement hasn’t changed in a decade. Keeping your corporate structure this lean means making time for much more interesting things, like building a better product and taking even better care of your employees and customers.
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