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Transcript: Episode #26: Q and A with Jason and David (37Signals Podcast: May 2011)

Transcript: Episode #26: Q and A with Jason and David (37Signals Podcast: May 2011)

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37signals Podcast transcript
Episode #26: Q and A with Jason and David (May 2011)
Matt Linderman: Hey, everyone. Welcome to the 37signals Podcast. This is MattLinderman. Today we're going to be doing Q&A with Jason and David based onreader questions that you guys posted at Signal vs. Noise. So let's get started.
Joe asks, "Are there negotiation insights to learn from how David became apartner at 37signals? Was Ruby on Rails David's leverage to become apartner versus employee?"
David Heinemeier Hansson: I think it was pure awesomeness that actually tippedthat scale over. No, actually maybe you should answer that, Jason.Jason Fried: Rails obviously had a lot to do with it, but David and I had beenworking together, at that point, for five years or something like that. Is that right?About 2000, 2001.David: I think about maybe three or four. No, actually you're right. Five years. Itwas 2000 when we started working together.Jason: We built a great working relationship. We see things in very similar ways.We get along. We have the same outlook on a variety of things. It was acombination of things. Rails certainly was a big part of it too. It was a variety of things that, I think, all came together at the right time to make that happen.David: I think the other thing that matters in general when you're trying to pick abusiness partner or whatever is that it can't just be about the craft. If all I wasinterested in doing was programming, then I don't think I would have been a goodfit for a business partner. If you want to be a partner in a business, you have to bewilling to wear many more hats than just that of your craft. You have to dive intoall sorts of issues of personnel, building a company, finance, the marketing aspectsof it. There are so many other things than just the technical aspect of it.
Jason: I also think it's important to make sure that you've worked with this personfor a while. I get emails occasionally from people starting businesses looking forbusiness partners. They're like, "Hey, I just met this guy who's a programmer.Should we go 50/50 on something?" It's like a marriage. You have to date for awhile really. You have to work with somebody and get to know them. It is like amarriage. You got to make sure you can get along and you can stand someone for along period of time and all those things. I think it's important to work withsomebody first before you link up in legal terms, because a business is a legalentity and it can be messy if things don't work out.David: I've seen it not work out a couple of times for people. It's incredibly painful.Once you've split things up into equity and somebody owns a part of yourcompany, it is incredibly painful to divorce yourself from that person. You reallyhave to be sure that it's a good fit. The pain you'll go through if it's not, especiallyif the business becomes an ongoing operation that you don't want to step awayfrom, is just really painful.Matt: How did you know when the working relationship was shifting to somethingthat deserved to be an equal partnership or some sort of partnership? Was there amoment? Was it a feeling or a certain stage of the business?David: I think that what brought it around was I had been working with Jason for along time on just consulting with 37signals being a web design company. Then bythe time we shifted into products, that felt like it was a new phase, the secondphase of the company. In many ways, it was a new company. We had actuallydiscussed it as a new company that we were going to create Basecamp LLC, andwe were going to be equal partners in that. But it just turned out to make moresense to keep the existing company structure and me becoming a part of that.
Matt: All right. Let's move on. Tyler asks, "Could you talk about the successor failure of our affiliate program and why we're not accepting newaffiliates?"
Jason: Well, I think actually the affiliate program, last we looked, you wouldconsider a success. The main reason why we're not adding more affiliates rightnow is because the way we built it was a very manual process. In order to pay
people, we actually had to manually go into PayPal and do this. It doesn't soundlike a big deal, but we don't have a lot of slack here at the company. Everyone'sbusy with things that they're working on. Every month to pay out 30, 40, 50 peoplewas just more work than it made sense for us at the time. So as the affiliateprogram was growing, it became more and more labor intensive. Certainly wecould have an intern do it. We don't have interns. Certainly we could havesomeone else do it. We didn't have anyone else to do it. It was just a matter of wecan control it and we can deal with it right now, and until we actually automate it,which is another thing we can do, we can spend time automating it, but again we'rebusy with other things.It's one of the things that we run up against a lot in the business. There are a varietyof things we want to do, a lot of things we want to do, limited resources. Theoptions are get more resources, which also has its own set of costs in terms of culture, time to hire people and that whole thing, and assimilation and whatnot, or just don't do it anymore or do less of it. We decided with the affiliate program notto shut it completely, but just to not accept new people so we knew that it wouldnever grow beyond a point that we could handle at this time. If the companychanges or we have more people or we automate it in some way, we wouldprobably want to consider reopening it again or simplifying it into a differentvariation on the theme.Matt: When deciding to shutter something like the affiliate program or Sortfolio orsomething else, is there a number that you have? Is there a way of actuallymeasuring it? Is it just a feeling like this just isn't worth it? How do you make thatdecision?Jason: It depends on what it is. For example, with the affiliate program, it becamenot worth it pretty quickly because it was busy work. I was doing it and I don't likebusy work. It was easy just to say, "Let's not worry about this right now." Now wehave someone else at the company who does the affiliate payments, so it's a littlebit easier. We could probably open it up again. But I actually think that if we wereto open it up again, we'd want to redo it and simplify it so it's just easier for morepeople to get the word out than the way we have it set up right now.

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