David Heinemeier Hansson @ StartupSchool08
(Hi ! It’s Cecil here. A carbon copy of this post is available on Heavy Mental)
Big up to the great OMNISIO service for offering amazing video for Startup 08 conferences. Great web app, no question why Google bought this startup.
David Heinemeier Hansson is a partner at the 37Signals start-up extraordinaire.
In this presentation (A Secret to make money online) David goes through the business model and beyond that, all the basic principles that have guided 37Signals to become beyond the very successul company, a genuine example for the whole industry.
This is amazing stuff. Do yourself a favor and spend these 35 minutes with DHH, this is priceless in particular if you’re in the startup business.
On Start-up myths
How lonely I feel up here. At 37Signals, we’re not looking for VC funding, we’re profitable, we’re not hiring. I think there’s not enough talks here after all these guys (note : P. Graham, M. Arrington et al …) on how to build a profitable online business.
On Business Models
The classic conundrum : You have a
- great application and then
- ?????? (something magical happens and then)
- Youmake profit.
We have been doing research, experiment etc … we found out that the best option for us was to 2 – put a price on the application to make profit. It’s too simple to be true but believe me it works. It has been working for hundreds of years (…) People try to be the next Facebook or Yourbube or Myspace and become millionnaire .. and what are the odds ? On the other hand what are the odds for you to build 1M$ a service ? It takes 2000 customers paying each $US40 a month each month. You then have your million dollar company.
On target companies
We are targeting Fortune 5,000,000. There’s a ton of such companies who have many problems not currently being addressed (…) There’s a huge untapped market here.
On marketing 2.0 buzzword
But how about the network effect ? Are you going to be viral ? Are you going to infect the entire population ? Well : forget viral.
On Innovation
Good innovation comes from just solving simple problems that you’re intimately involved with. (Reminder : DHH invented RubyOnRails web development framework, so he knows a couple of things on genuine innovation)
On 37Signals Arrogance
(at the beginning) We initially thought we would call this presentation The Secret to Making. But i revised that because at 37Signals we’ve been accused how being arrogant. To preempt that we call it A secret to making money online.
(and at the end) And If it does not work, we have awesome news : blame it on us and save your ego like that : this is a full proof plan, you get always Techcrunch to write that 37Signals drove you to the deadpool.
Irreverent, arrogant, talented, funny and full of common sense : I want to marry this guy.
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“It takes 2000 customers paying each $US40 a month each month. You then have your million dollar company.”
It does seem to be that simple. Thanks for reminding us, Cecil, that not everything needs to be free to make you rich (which sounds idiotic, when you think about it).
Yep it’s good to remember. I like the bit on targetting to make 1 Million instead of targeting to make 1 billion :
In this business there is about 1 chance out of 10 for making a million and one out of 10,000 for making a billion. You can be pretty happy on a million dollar. Well, most people would be. And people lost sight of that (…) The difference between having one Million and one billion is a lot smaller than the difference between having negative 10,000 and one million.