Product People vs. Business Shells

`0:17:48`

Let's get into the envelope thing, because this is kind of part of that. — Okay. — And I remember when I was getting started being an envelope guy. So, the envelope, to me, there's this two sides of business, basically. There's the envelope, and there's the letter. The envelope is the outside, the shell, the business, the vehicle that holds the letter, and the letter is the product or products. I'm a product guy. I love product. That's all I care about. The business side just has to exist to hold the product, right? That's the vehicle in which the product travels in. But I don't care about the envelope so much, but there's lots of people... And I remember this early on, when I first started my business, I was thinking about the brand, and the business, and how big it could be, and how do I describe it, and what do I call it? That's all envelope work. That's all on the outside.

`0:18:33`

And I think there's a number of people... And by the way, it's fine. All this is fine. What I'm getting at is, you've got to know who you are and what you want out of yourself and what you want to do. And if you're an envelope person, that's fine. If you're a product letter person, that's fine, but you've got to know who you are. I know I'm not an envelope person. I don't just want to build shells that gets filled, and then I sell it and build another shell. It gets filled, and I sell it and build another shell. It gets filled, and I sell it. I want to just work on the letter, and the envelope is just the thinnest little thing that needs to be there to hold the letter. I think playing entrepreneur is like spinning up businesses all the time, making all sorts of stuff, and giving it a name, and giving it a logo, and trying to raise money, and coming up with valuations, and talking about all this stuff, and there's nothing there of substance inside that yet. Maybe there will be, but in a lot of cases, there's nothing.

`0:19:20`

There's just losses. And then it's like a mad rush to get out at a certain valuation for other people who put money in. That's like turning a business into an asset, a financial instrument. It's just not interesting to me. I want to make things. I want to build products, and that's what I do. Again, that's what we do, and just the idea of a business being a financial instrument is just like, it's anathema to me. It's repellent, actually. — You just used the word thin shell to describe the envelope. Why do you want a thin shell? — I want it to be a thin shell. — Oh. What does that mean? — Well, I would say this, the more massive an object, the more energy it takes to change its direction, right? This is just like getting back to basic physics.

`0:20:06`

When I think of this stuff, and sometimes these metaphors don't perfectly line up, but in my head, I think of a thick business. It's hard to change, it's heavy, it's massive. There's too much distance between it and the customers and it and the product. There's space, right? If you just imagine something very thick, this is the thing that matters, and you've got to go through all this and compress all this down to get to the thing that matters. Like, I don't like that. I think the thing that matters should be big, and the rest of it should be as thin as possible, and so that's what we've tried to build at 37signals. It's a very thin business with a thick set of products that are good and solid and real and generate real profits and are real businesses, and then the rest of it is just enough to hold it all together.

`0:20:53`

That's my vision for business. It's not the only vision. Plenty of people, way more successful than me don't see it this way. I don't care. Like, this is just how I see it and how I'm sharing it. And it's mainly just to show people that you don't have to go big. It doesn't have to be a big, thick, heavy, busy company. It can be very thin and then focus on the product and get to a place where you can find out people like you, get to this place where enough is enough, and then maintain. Another way to think about this for me, I always go back to these sort of weird metaphors, is there's the hockey stick chart, right? That is unappealing to me. I like more of a metaphor where it's more like a rocket into orbit. You've got to get off the ground, and you've got to break free of gravity.

`0:21:41`

But then there's a point where you actually just want to sit in orbit and sort of maintain. You want to be within a certain range and fluctuate a little bit up, a little bit down, but be in this comfortable place where you're just orbiting. You're not breaking a force anymore. You're not pushing super hard. You're maintaining and maintaining a level of quality, maintaining a level of enjoyment, and just orbiting now. And I think that that's a really wonderful place for businesses to be. But I wouldn't encourage you to be trying to get to orbit in year two. You've got to be on the ride up to break free of all the forces that are holding you back. But then you should also find a place where you can settle in an orbit, versus people who I think are just busy constantly trying to grow, grow, grow, and get as big as they possibly can, and I always say, "Why?" I'm like, so what if you're massive and you're twice as massive?

`0:22:27`

So what? Why? Why? What's that all about? And they may have an answer for you. I don't know what the answer would be, other than just growing for growth's sake. But I'm a big fan of getting somewhere and then holding. — When I think of you, I think one of your maxims that you repeat the most, is that idea. I hear you say, "So what?" all the time. — Yeah, so what? With all those questions. — Yeah. — Explain more about that. — Well, you'd have to ask a question, and I would be like, — It's like... — "So what? I don't know." Like, why grow? I mean, or maybe that's not a good one, but... For example, we're definitely leaving money on the table. I'm sure of it. We don't optimize our pricing. I'm not testing pricing, not constantly. We're not A/B testing constantly. I'm certain there's some formula that we're not following