Jason Fried: The Truth About Real Estate

http://www.inc.com/magazine/20100901/the-truth-about-real-estate.html

by slater • 16 years ago

155 73 16 years ago

liamk• 16 years ago

The title seems to be a bit of misnomer. The article provides a nice explanation of how to monetize your office space but it doesn't seem to uncover any real estate secrets!

slater2• 16 years ago

It tells you the truth, not secrets ;)

jasonfried5• 16 years ago

Here's something I didn't know until I started writing for Inc: The editor, not the author, writes the title and subtitle.

OoTheNigerian2• 16 years ago

I actually thought they bought the building but Jason provides a good explanation.

I really liked the 37 seats.

napierzaza• 16 years ago

This is probably firstly business porn for people to read and imagine the success. I think it's one of the 37 Signals. Isn't 37 Signals all about training and teaching people? So isn't this actually a really central part of their business model and not something anyone can really do?

It's also strange that they were doing well making classes, and then didn't do that for 7-years! Then they did it again? Was there a reason it didn't matter to them so much to generate 3x their months rent so they could share with another company?

"We built a theater-style classroom, with 37 seats..."

Haha.

brianbreslin2• 16 years ago

thats not their primary business. they are bringing in 8 figures a year in subscription revenue from their SaaS products. why would they devote a huge chunk of their time to a 5 figure line of business. now with the bosses less integral to the day to day programming work, they can focus more time and effort on teaching, which they seem to enjoy.

points4• 16 years ago

I'd be willing to bet the teaching, workshops etc are the funnel into which flow people, who leave thinking "wow they're cool. I better signup to a basecamp account".

Without the teaching, book, blog, workshops etc, who would buy basecamp/campfire?

mattmanser• 16 years ago

It doesn't say they stopped doing the workshops for 7 years, it says:

Holding workshops there has been a logistical challenge, because those events mean that the people at Coudal Partners can't work at their own office for a day. That doesn't scale well. We'd like to be able to do a workshop every six weeks.

So it doesn't sound like they stopped at all to me, just that they couldn't hold as many as they wanted.

jasonfried5• 16 years ago

We held a variety of workshops over the last 7 years, but we had to rent out a separate space each time. Renting out a space was expensive, more complicated than we'd like, and just a general hassle. Having our own space does away with all those negatives.

azsromej2• 16 years ago

I think I submitted this with the same url 6 days ago ? http://news.ycombinator.com/item?id=1629588

slater2• 16 years ago

Yeah but mine's better!

(bug?)

azsromej2• 16 years ago

Bested by slater again! Yeah, the urls looked the same so I wasn't sure if things were working as intended.

mkramlich2• 16 years ago

or subscribe to the magazine like I do and read it a month ago. :)

points4• 16 years ago

tl;dr - We learnt early on that we can make a ton of money holding 'workshops' rather than making software.

Whilst still an interesting study in how you can generate a 'following' religion etc, if you're writing software, there's nothing much here. If you have a large office, and want to monetize it, there's nothing much here unless you're sure you can/want to replicate 37singles cultish following.

As for the title "The truth about real estate"... Blatant linkspam. There are no 'truths' exposed.

"We also believe we'll be able to charge closer to $1,000 a seat." WTF pays $1k to go to some 'workshop'? Is this Scientology or something?

lliiffee• 16 years ago

For better or for worse, it isn't that unusual.

https://support.sas.com/opal/external/dm

bigohms• 16 years ago

With in-depth SAS mining, you are likely to recover the cost of a $2K workshop out of the gates with a day of consulting. I'm pretty sure 37 sessions offer "soft", feel good knowledge.

roc• 16 years ago

The title is pretty bad, but I think you're being a little harsh on the article itself.

I took two things from the article that I felt were useful regardless of industry or desired customers:

. keep an eye out for by-products of your primary business that you can use to add/diversify revenue -- as in the lumber mill/sawdust example

. keep in mind that some pretty unsuspecting things can qualify -- as in 37 signals leveraging office space.

It might help that I've long given up on expecting article content to support, or be supported by, their titles.

Tyrannosaurs• 16 years ago

They've been hawking that message for a while now though and you managed to convey his point in about 40 words (including citing two examples) as opposed to a whole article.

I've long been of the opinion that 37 signals while making genuinely really good products are prone to going on about how interesting and innovative their ideas are way beyond what is actually justified by the ideas.

Mind you, if people were willing to pay $1,000 a seat to hear me bang on about things for a day there'd be no shutting me up either.

antidaily2• 16 years ago

yeah, $1000 a head for a one day workshop. it's good to be Jason Fried.

points4• 16 years ago

There's way more important things in life than money.

mcyger• 16 years ago

This is a poorly titled article, very typical of Inc. Magazine. It should more properly have been titled "The Truth About Your Company's Biggest Cost Center" or "How to Turn Cost into Profit". When someone refers to "Real Estate", it usually implies ownership and 37sig does not own any real estate. (One owns real estate and rents/leases space.)

The remainder of the article had good advice and was well written.

famousactress• 16 years ago

I really think it's great that they've been able to make this a profitable venture, but I worry about the portability of the message. I've been at small companies that failed for lacking focus.. I'd be interested to hear more about how they juggled these projects and how much time and attention they took... especially at such a famously small company.

cedsav• 16 years ago

I think the key is that they've been in business for 11 years. You need 100% focus to build a profitable business, but once you get the recipe right (and for 37signals, when was that? 5 years ago?), it gets easier and easier to diversify.

aun• 16 years ago

This is extremely relevant. I suspect those of us who are saying "this advice is non-portable" have in our heads the scenario of an unfocused company, taking needed resources away from their main product to put into the development of their "byproducts."

Making the correct judgement of when the "byproduct" is sellable is key. The problem is that many companies do not make this judgement correctly. They insist, rather, on "maximizing" everything that is done, to the detriment of their main thing.

37signals themselves have posted about this in the past, sort of: "work on your best idea." If 37signals had been running workshops instead of working on Rails or Basecamp, resulting in fewer people in the Rails community or using Basecamp, then Fried's idea would be bad. They didn't do that -- but from what I'm hearing, many of us have (and are) working for companies that do behave this way, and so Fried's advice sounds bad. It isn't -- it's just missing a crucial component about judgement.

ssharp• 16 years ago

The message isn't portable if you think the message is "use your office to do workshops".

I don't think that's the message here.

tptacek9• 16 years ago

You guys all sell yourselves short. Anyone on Hacker News with any technical skill who is running a business that pays for its own decent office space has tons of things to workshop, and as long as you're based on a major metro area, people will sign up. We've done it multiple times. Stop blowing this off.

pier0• 16 years ago

The message is "succes makes you an expert at telling other people how successful you are".

pontifier• 16 years ago

Agreed, I immediately saw my sawdust after reading this article...

lsc3• 16 years ago

But isn't 37signals famous /because/ of their "byproducts?" I mean, I'd never have heard of them but for their extensive blogging.

I know when I wrote my book, I figured all the time was coming straight out of the marketing budget. (now, I've yet to properly exploit all the resulting marketing... I'm not saying I got a good deal but it is pretty nice to have the marketing problem solved for the foreseeable future.)

abalashov2• 16 years ago

I would agree with those below who said the advice is largely nonportable (a trait I find to apply to most of what 37 Signals says, although it is interesting nevertheless), because most companies are not in the business of teaching or evangelism, nor should be/can be in that business.

The injunction to identify and sell byproducts is a pretty bad one for most companies. Growth and success in business is achieved by returns to scale in core competencies, as a general rule. This does not mean you can't "branch out" and have other business units, but in general, loss of focus, especially for a small company and/or startup, can be devastating if already thin resources are cannibalised for some new offering wholly unrelated to the original mission.

jasonfried5• 16 years ago

I went to a pig butchering demo a few weeks ago at a local restaurant. It was on a Sunday morning when the restaurant wasn't open.

Admission was $50. They had about 20 people there. That's $1000 to the restaurant on a Sunday morning when they are usually closed to the public.

They were butchering the pig anyway, but by turning it into a $50/seat class they were able to significantly increase their profit margin on that pig.

It didn't get in their way, it didn't cause them to lose focus. What it did was increase their profits and get people excited about eating at their restaurant. I know I wanted to go back and taste some of that pork.

It's great business.

jakewalker• 16 years ago

Reminds me of Zingermans in Ann Arbor, where Ari & company have turned a deli into a deli, baking classes, creamery, cheese-making demos, business training center, restaurant, dinner events, etc. For every new business Zingermans opens, they find a way to turn the business into a place where they can host events (dinners, earlier in the summer they had a bacon festival, they sometimes teach their method of opening their books to all employees, etc.) and really create profit and excitement in non-traditional ways. See

http://www.zingermanscommunity.com/our-businesses

Jason's right; while not everyone may be able to turn their office into a place where people pay $1,000 a head to attend a workshop, there is certainly something to learn from thinking about how to utilize your business/office space/etc. to earn incremental revenue and promote your business.

abalashov2• 16 years ago

I'm glad it worked for the restaurant; that's why I said "most" companies.

tptacek9• 16 years ago

Did you go to Mado? I just bought a whole pig through them and was considering the butchering demo. Worth it?

(I f'ing love that place).

mkramlich2• 16 years ago

Gruesome.

tptacek9• 16 years ago

We do open-enrollment training at Matasano for appsec issues. The advice ports to us. I can't be the only one here for whom this article resonates directly.

mikeryan• 16 years ago

" because most companies are not in the business of teaching or evangelism, nor should be/can be in that business"

Actually most companies _should_ be in the evangelism and teaching business. The marketing is invaluable. And I bet more companies then you know do this. For example Google just had an event at the GooglePlex for small business owners on how to better user adwords (or something like that - I heard second hand from a friend thats a local small business owner).

Even if you can't make a profit at it many businesses actively support user groups and evangelism groups. For example I share a building with Engine Yard and Sauce Labs. Both actively support the relevant user groups with space and time.

run4yourlives• 16 years ago

I wonder how many of you that fail to see the transfer of knowledge or "teaching" as the real web 2.0 revolution are out their building the next "social" whatever. From the comments it seems pretty common.

Facebook and farmville are the ghettos of the social media world, playing to the same audience feelings that Jerry Springer did in the 90's. Remember, we all watched that show back then. The real force in social media is what it will do to teaching, and 37Signals is recognizing this in spades.

Instead of professionals transferring knowledge to schools and teachers to transfer into the student; diluting it, by default, they can now transfer knowledge directly, for better or worse.

maw2• 16 years ago

Facebook and farmville are the ghettos of the social media world, playing to the same audience feelings that Jerry Springer did in the 90's. Remember, we all watched that show back then.

No, we did not.

didip• 16 years ago

"Facebook and farmville are the ghettos of the social media world"

I thought that title is exclusive to MySpace?

I'd say Facebook is the suburbia of online media. It gives the illusion of being connected to people the same way suburbia gives the illusion of American Dream to home owners.

chopsueyar• 16 years ago

OK, so what is the metropolis/urban core of online media?

pkaler• 16 years ago

Facebook and farmville are the ghettos of the social media world

They are more like the soap operas of the social media world. In the 70s, 80s, and 90s the decision maker in the household would have nothing to do at 2PM in the afternoon. Companies like P&G and Johnson & Johnson sponsored soap operas to blast advertising about household products at the key decision makers. Hence the term "soap" opera.

In the early 2000s we saw the rise of mommy bloggers. P&G, J&J started advertising on blogs. Suddenly, the key decision makers became sneezers, too. They were purchasing product but they were also writing and evangelizing products, too.

The last few years we have seen Farmville and other social games. Here's the result of a quick Google search for P&G and Facebook. http://www.insidefacebook.com/2010/01/23/facebook-roundup-pa... Farmville becomes another channel for these brand to get their product in front of consumers.

Social games should be called soap games.

patfla• 16 years ago

I'm wary of any article that begins: "The Truth About ..." and I haven't read this one yet.

"The Truth About ..." is designed to get your juices flowing and to get you to read.

Caveat lector.

hugh3• 16 years ago

Exactly. It seems to be a general law that the presence of the words "The Truth" on the cover of any book decreases the chance of it actually containing any truth by about 90%.

If you want to know about evolution or the Holocaust then you pick up the book called "Evolution" or "The Holocaust", not "The Truth About Evolution" or "The Truth About the Holocaust".

patrickaljord• 16 years ago

Why does this article say it was published on sept 1st 2010?

kgermino• 16 years ago

Iirc this is a website for a magazine. Most such websites use the date the article is printed as the publication date rather than the date the article becomes available online. Gotta love old media.

edw519• 16 years ago

My last physical office was basically free.

I rented it out to a Jewish group on Friday nights, a Christian group on Sunday mornings, and one Saturday night per month for each group. It had everything both groups needed: the conference room table folded out of the way so it could seat 30. There was also a piano, a full kitchen, a full bath, and plenty of parking on weekends. The private offices were locked.

Weekend income paid the whole bill. Not a bad deal.

iuhjytgfbnjhmk3• 16 years ago

plus you are insured against acts of God (or at least 2 out of 3!)

mscarborough• 16 years ago

The lower bounds might be two but probably not 2 out of 3 :)

Though that is a smart plan if it works out so well for the GP.

Jason Fried: The Truth About Real Estate

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