email: info@cloudsourcesolutions.com

I've been a huge fan of 37signals ever since reading their book rework late last year, and have just finished getting real their book specifically focused on developing a web app, which overlaps some content with Rework.

Having previously been a business book junkie I have slowed down in recent months, as I think it is often easy to overload yourself with information and not take the time to digest and action any lessons from a book properly. 'Rework', however was one of the few business books I have re-read several times, and it lead me to check out many of the 37signals podcasts and blog posts, so at this point I can definitely say I'm pretty knowledgeable about their business and philosophy.

When I founded CloudSource Solutions I wanted the business to be different to my previous business which I had recently exited and in particular to learn from the mistakes we made and the reasons we did not grow as quickly as I would have liked. I already had established a philosophy of location independent teams and low fixed costs, so during a chat with a friend he passed on 'rework'  and I found it was very much in line with the way I was thinking about the business. The reason I embraced the book so much was around 30% of the points were things I was doing already so I had reason the believe the other 70% would be of value too.

In the beginning the business was focused on services around Google Apps but as we began to focus on developing our web app CourseDirector I reread 'rework' and suddenly found actionable items.

So what is 37signals and what have we specifically followed in their approach?

37signals is a company based in Chicago and sells a suite of business web apps for project management, CRM, team collaboration etc. most of their team works virtually. Their philosophy is fairly wide ranging but here are a few of the points which I have found really useful:

• Agile software development - Releasing your software early to confirm there is a market. Then performing iterative improvements. Resisting adding too many features if it takes away from a simple user experience
• No training required - Customers should be able to figure out how to use the App from the help and FAQ pages
• Low fixed costs
• No meetings
• Virtual teams - Ever since reading the Four hour work week I've been fascinated by the location independent lifestyle and being able to live anywhere (I'm writing this post in Barbados :))
• Keep your team and fixed costs small
• Don't take outside money unless absolutely necessary
• Release early then iterate
• Focus on profitability not an exit - The reason web apps are a great business model is they are generally recurring revenue…you get paid monthly or yearly for the lifetime of the client. Why then focus on bogging yourself down in debt. I differ from their completely anti-exit strategy and feel that if you build your client base to be profitable month on month you will be in a better position to be acquired anyway.

What do I disagree with in the 37signals approach?

• Pick a fight - This is a recurring theme they keep coming back to and one of the points I'm not sure I agree with. In our case with CourseDirector we make a tool for schools to share courses online with students through Google Apps (often called a VLE or LMS system). It's simple, low cost and fulfils the needs of most K-12 schools and colleges. In terms of competitors the two obvious large ones are Blackboard with can cost upwards of $100,000 dollars, and Moodle, which although open source can cost huge amounts on consulting fees to set up, plus hosting and maintenance. Our system has simple low cost pricing, and as it is so tightly integrated with Google Apps we are getting faculty and staff to learn standard Google skills, which are far more transferable to them in the job marketplace. Should we focus on positioning ourselves as the anti-Moodle or anti-Blackboard? Possibly. I definitely believe in the Jason Calanis theory that is you fight you 'fight up' and don't acknowledge competitors with a smaller market share than you. I prefer to focus on another piece of 37signals wisdom (which does somewhat contradict their previous one) that don't pay too much attention to your competitors, just focus on your target market.
• I'm also not sure about their insistence to focus on SME's and not the enterprise market. I think especially in the beginning one or more enterprise customers can be invaluable , firstly as references, as although the dynamics of a small business are different to those of an enterprise customer my experience tells me enterprise references will still get you SME clients down the line. Also a few larger customers is a quicker way to ramp up your revenue.

So that concludes my post on 37signals. The amusing postscript to this post is that despite being a huge fan of the 37signals company and their approach I have never actually spend a cent on their products! I never bought either of the books as I was leant Rework by a friend and read the online version of Getting Real.

Regarding their products I genuinely wanted to use them but it didn't work out. I tested Highrise for CRM but on the end chose the free Zoho CRM that was available in the Google Apps marketplace. I liked highrise but didn't take it based on the low numbers of companies you can create. I was keen to use Basecamp as our project management tool but in the end it was beaten out by AgileZen which I love as a tool to track features and bug fixes for CourseDirector. Ironically it was 37signals advocacy of Agile software development that lead us to Agile Zen. I looked at campfire but couldn't justify ditching Skype….who could?

There's still time for me to become a customer and I hope this post drives a few people to their site as well.

info at cloudsourcesolutions.com