Great companies have a vision and a set of ideals that binds people to them. There are plenty of companies that exist purely to make a buck, and many of them can, but they don't inspire us. Great companies also have great aspirations. I had the chance to speak with Jason Fried, founder of 37signals, to talk about how 37signals came to be the company is it today and also where it might be going. While Jason's corporate philosophies may not translate well into every company, it is clear that many people are excited about the work his company has done and how they see the world.

Erik Levy: Can you give some background on your role at 37signals?

Jason Fried: I was one of the original 37signals founders in 1999. I originally had two other partners. I'm the only one left from the original three.

Erik Levy: Was this your first company as a founder?

Jason Fried: Sort of. I used to have a small company that was just me. I did free-lance web site design in the mid 90's. I also did a little software interface design and some Filemaker Pro work too. But 37signals is the first company that wasn't just me working for it.

Erik Levy: What about the other 37signals founders? Were they first time founders?

Jason Fried: Carlos Segura had a few other companies still going on at the time. Ernest Kim had never started a company before.

Erik Levy: What made you want to start 37signals - what was the impetus?

Jason Fried: Well, I was sort of tired of just working on my own. So I hooked up with two other guys who shared the same point of view on web design.

Erik Levy: Initially, you did just consulting work?

Jason Fried: Initially, 37signals was a web design firm. We just did design. Did that from 1999 until about 2005ish. We launched Basecamp, our first product, in February of 2004 (almost 5 years ago!). In mid-2005, Basecamp was making more money than our consulting work, so we stopped doing consulting and design for clients.

Erik Levy: A lot of consulting companies find it hard to make a change to products because they find it hard not to bill for their time; what happened that allowed 37signals to make the jump?

Jason Fried: What happened was that Basecamp made more money plus it was a lot more rewarding and fulfilling. Working for clients sucks. Building your own products for your own customers is great. I don't miss client work for a second.

Erik Levy: How did you decide to move to being product centric? When did it hit you that that was something the company should focus on?

Jason Fried: It hit us when we were making more money than doing the consulting work. We said "this is for real, we can do this, let's do this."

Erik Levy: But at some point, before you had any sales, one of you had to think it was worth selling, right?

Jason Fried: We had sales on day one. We didn't switch over to being a product company on day one. We were a web design company. Basecamp was a side project.

Erik Levy: What kind of investment did you make in time and money for Basecamp?

Jason Fried: It took 3 months. It was a side project. We treated it as a client.

Erik Levy: Who was coding it?

Jason Fried: David wrote the initial code. I did the initial design. David wasn't working for 37signals at the time. I hired him as a contractor.

Erik Levy: Why do you think it worked? What made people notice it?

Jason Fried: He only had about 10 hours a week since he was still in school. It worked because it works. It's simple. It makes sense. It's as simple as that. Honestly. Hard software isn't used. Simple software is used.

Erik Levy: Do you find productivity software interesting

Jason Fried: We focused on the basics, focused on the interface, made it look good, work good and solve real problems. Lots of software solves imaginary problems. Basecamp (and our other products) solve real problems. All software is productivity software unless it's entertainment software. All tools are about productivity. So we're always thinking about that.

Erik Levy: How do you decide if something is worth investing your time and money into? Is it a group process or something else?

Jason Fried: Making sure that what we're building is going to help someone get their job done. That's the focus. And the only way people get things done with software is when the software isn't a hassle. We build things for ourselves. If we need it, we build it. It all comes back to not solving imaginary problems. When you try to solve other people's problems, you are just guessing. When you solve your own you know what you are doing and why you are doing it and if it's working.

Erik Levy: I want to go back to the beginning - what was it like then? Were people working from home? Did they work near each other?

Jason Fried: We've always been a remote company. We have 12 people now, but we're spread out across 7 cities all over the world. We get more work done when we aren't together.

Erik Levy: Is that hard to manage?

Jason Fried: Nope, it's simple. Way easier than having everyone together in one office. Everyone is responsible for their own work. We don't need to manage anyone. People get to work where they are most comfortable, when they are most productive. The business world spends a ton of time trying to manage people in offices because offices are generally terrible places to work. They are too loud or too quiet, they are too open or too closed, they assume everyone is productive in the same ways and at the same times, et cetera.

Erik Levy: If folks have children, I imagine working from home could be difficult - do any of them use offices?

Jason Fried: A few of our people have kids and *love* working from home. That's one of the reasons they work for us. They get to see their kids grow up. And you like the free agent mode. They do have offices (or extra bedrooms) in their houses where they go when they need quiet.

Erik Levy: What are your day-to-day responsibilities?

Jason Fried: Day-to-day I design, write, set strategy, figure out what we should be doing, think about new products and ways to get the word out. I'm very free agenty in that way -- I just do what needs doing. I do like the free agent mode. I get bored easily so I always like working on new stuff.

Erik Levy: Do you have a technical background?

Jason Fried: I don't and I'm not a technical guy. I'm not a programmer. I am an interface designer who also loves writing. Writing is design. I do have a degree in finance, but that's just because I needed a degree in something. My parents said so.

Erik Levy: Can you talk about why the other founders left?

Jason Fried: Carlos left about a year in because he had other companies to run. Ernest and I were giving 100% and Carlos just couldn't. Plus, Carlos wasn't really a web guy -- he loves print and paper too much. We're still best friends and hang out often. Ernest left before Basecamp. I think it was about 2003. He left to get out of the web world and move with his wife to rural Oregon.

Erik Levy: How did you deal with the changes of not having the support of the other original founders once they left?

Jason Fried: Didn't bother me. I've always liked running the show.
And Basecamp wouldn't have happened if I had partners originally, so it was a good change.

Jason Fried: I do have a partner now -- David Heinemeier Hansson. He's the guy who invented Ruby on Rails. I think it was 2006.

Erik Levy: Right. How has that helped 37signals?

Jason Fried: Rails?

Erik Levy: Yes

Jason Fried: Rails has done a lot for 37signals indirectly. It's open source, so we don't make money off it, but it's built a tremendous amount of goodwill. Plus,
when people talk Rails they often talk about 37signals or our products so that helps too. And Rails itself has been a huge help to 37signals. It powers all our products.

Jason Fried: We wouldn't be where we are today or have the people we have on our team without Rails.

Erik Levy: What was the hardest thing that happened during the initial years?

Jason Fried: It was pretty easy. I don't say that arrogantly, I say it honestly. Everything worked well for us. We got great clients, good money, Basecamp happened, Rails happened, our book happened, and everything's been great for us. I don't believe in the whole failure thing that seems to be so common in the business world. That you fail a bunch before you succeed. Why does it have to be that way?

Erik Levy: There has never been a day where you thought things might not go well?

Jason Fried: Never. The only time I was a little worried... was when one of our designers left in 2003. I don't remember exactly when that was. But I do remember being a little nervous about it, but I didn't think anything bad would happen. Just that we lost someone really good. But the company has always been cash flow positive. We have no debt. We've never had a problem covering payroll or anything.

Erik Levy: Where do you see things going from here?

Jason Fried: I don't really think much about where things are going. I think about some of the stuff we're working on now, and some of the things
I'd to see us do in the next 90 days or so, but other than that I'm not a big fan of planning or projections. We have some exciting projects in 2009 but that's as far out as I think. I don't believe in 3 or 5 or 10 year plans. Or making financial projections or anything like that. We exist now and that's what we focus on. Now.

Erik Levy: Is there anything you would think would help other entrepreneurs that you have learned along the way?

Jason Fried: Yes, always err on the side of simple. If you are going to do anything, do the simplest version of it first. It's so easy to make things hard on yourself. Don't. There's nothing wrong with taking the easy or simple
way out first and seeing if that's enough. It usually is. If you need to do more later, that's fine, but start simple and stay simple. It makes everything else so much better.

Erik Levy: Is there anything you want to talk about the early years of 37signals that we didn't cover?

Jason Fried: We've been self-funded. I believe that's the best plan. We did take on one investor in 2006, but it wasn't for operating capital.

Erik Levy: What was the goal there?

Jason Fried: It was just for his wisdom and experience and guidance. There was money involved, but we didn't need it to run the business. The investor is Jeff Bezos. His own personal investment, not an Amazon investment.


Erik Levy: How did that happen? Did someone know someone? Or did you seek him out?

Jason Fried: I'm not sure exactly, but it was a bit of triangulation.
I think another one of Jeff's investments used Basecamp or Backpack.
And then someone he worked with at Amazon hired us to do a design project for another company. And then Jeff heard me speak at a conference.



Jason Fried: And I think it just all came together that way. They got in touch with us and a few months later we got together to meet. I was seriously impressed and we had a few more talks and meetings and made the deal happen.

Erik Levy: Have you found his advice to be useful to the company? Did you make decisions based on it you would have made differently?

Jason Fried: Yes, he's given us some good advice. Specifically to focus on the things that don't change.

Erik Levy: What does that mean?

Jason Fried: What are things people will want today and 10 years from now. Simplicity, speed, good service, et cetera.

Erik Levy: But that takes some future planning?

Jason Fried: No, it takes today planning. We design for today. Don't chase fads and trends. Focus on the core strengths and people will still want those things in ten years.

Erik Levy: More future proofing?

Jason Fried: It's not really future proofing. It's just focusing on the basics. For example, for us, speed is a big thing. Our apps have to be fast TODAY and ten years from now. People aren't going to wake up ten years from now and wish things were slower.

Erik Levy: Ruby isn't known to be the fastest computer languages around, does that make it harder to meet those speed goals?

Jason Fried: Ruby, no, it's more than adequate. There's so much other stuff that makes things slow such as web connections, image sizes, caching, et cetera. Ruby's pure speed doesn't really come into play and it's fast enough for us anyway. And for many many people. We handle millions of requests a day and our apps are very quick.

Erik Levy: How do you find employees? Do you hire contractors still? Has it changed over time from the beginning of the company to today?

Jason Fried: We find programmers through the open source world. Every programmer we hire contributes to an open source project (and usually Ruby on Rails).

Erik Levy: Is everyone a programmer/designer or are there admin folks for things like payroll, health, et cetera?

Jason Fried: Designers -- we don't hire often -- but we spot people's work and get in touch. With twelve people, a few are sys admins, some are programmers, some are designers, and we currently have one customer service person.

Erik Levy: You outsource the administrative functions of the company like payroll, et cetera?

Jason Fried: Yes. Paychex does our Payroll. We don't have any HR/accounting/law, et cetera on staff. All outsourced.

Erik Levy: Any other areas you want to cover or talk more on?

Jason Fried: Everyone here is here to make the products better.