Jason Fried: The Truth About Real Estate | Hacker News Reader

Jason Fried: The Truth About Real Estate

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155 pointsslater73 comments

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?

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

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

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.

Do you have any idea how much money people are willing to spend just to feel good?

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.

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.

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

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

Hey, no argument here.

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.

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.

"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.

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

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.

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.

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.

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.

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.

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.

Yes, many probably could. But that doesn't mean that the column's message was primarily about running workshops.

Doing workshops seems scammy to me. It's like doing popup ads.

Sure, you could, but eugh.

What a head-explodey thing to say. Care to elaborate?

I tend to agree with 'points', so I'll offer my explanation: Doing expensive one-day workshops might be a great way to make money, but it might be damaging to your brand.

To me, it shows that the you are doing everything you can to wring maximum profit out of your existing infrastructure rather than concentrating on improving your core product. It has the same feel as a hot experimental band deciding to license their songs for fast-food commercials --- perhaps a good choice financially, but potentially bad for your image. It has a smell of desperation and greed.

As to the 'scammy' part, I'm guessing[1] that not many people are paying for these sessions of out pocket. Rather, they convince their employer to pay, and that it's worth it. This presents a conflict of interest if the turns out to be not worth the money. When your boss asks you if the company's $1000 was well spent, and it was your idea to go, one might feel compelled to say 'yes' and even to go again the following year regardless of any price increases.

This said, we'll probably be considering such strategies in the future. I have a food business, and while there is no way we could charge $1000/seat, there probably are some things we could do to boost the bottom line.

[1] Jason responds below to point out that most of they are paying directly. I'm surprised, but presume he's right!

"As to the 'scammy' part, I'm guessing that not many people are paying for these sessions of out pocket. Rather, they convince their employer to pay, and that it's worth it."

The majority of the people who attend our workshop do pay out of their own pockets. They are often individual entrepreneurs, business owners, or independent designers/programmers who are looking to learn what we have to teach. Anonymous post-workshop surveys have shown that people feel like $1000 is not only a good deal, but a bargain.

I see your point, but it seems to me that there's much more to it than that.

Sure, some people will give workshops primarily to make money. However, many will also give workshops for the experience of teaching. I have given trainings/workshops a few times and I've found it pretty satisfying to look for the best way to present things so that your audience "gets it" and goes out knowledgeable about the subject at hand. (it was particularly satisfying the very first time, two months after starting at my first job, feeling like I've been dropped off in there, ending realizing that I was indeed able to give that training after all :))

The thing is once you decide to give a workshop, you'll likely charge for it... and the price will be decided by the market somehow.

Workshops damage brands. They smell of desperation and greed. They're like fast-food commercials. They're scammy because they're based on conflicts of interest. They sap energy from your core product.

So naturally, you're going to consider doing them in the future.

ka-ploooie

There goes my brain.

Yes. Despite having a truly fantastic product, we're struggling to stay in business. It wouldn't be that much of a stretch to say that there have been times that I would consider robbing convenience stores to make payroll.

I love making a great product, but hate the constant pressure to compromise my ideals to stay afloat. Every day I keep this business going, I fear that I'm turning into someone that I don't want to be, that I can't respect.

But maybe my ideals are wrong, maybe workshops are win-win, maybe we need to consider them even if I don't personally care for them. They're certainly better than some other options!

I also don't really hold it against bands when they 'sell out' --- they know their situation better than I do. :)

The workshops I've done have been free. They have not been low-effort. I did a Crypto for Penetration Testers workshop on a Saturday that sold out the room and involved a team at Matasano writing 9 lab servers, and 6+ hours of scripted lecture. I did not at any point before, during, or after the workshop feel like I had "sold out".

Again: my head is exploding over this. Exactly what part of getting interested people in a room and talking to them seems scammy to you? And: if you're creating value, why is it wrong to ask for money for it?

It's not the asking for money, but rather the amount of money that is asked. I applaud your free workshops, and I'm even comfortable with moderate prices. But I genuinely can't conceive that someone would get $1000 worth of value from a day's training of anything. I want the cost to be commensurate with the value created.

One could certainly argue that the 'market' has shown it feels otherwise, but the market also has proven susceptible to Scientology and multi-level-marketing. I guess I fear that at the price being charged the audience must have expectations that can't possibly be met.

Perhaps my problems are simply my false impressions of 'value', which may be out of sync with reality. But based on the rates of good college courses, for a workshop such as yours, I could probably rationalize $100-$300 per person. Is there price at which you'd start to feel uneasy, even if some portion of the market was still willing to pay? $1000? $10000? $100000? Or relatedly, why didn't you charge?

ps. I don't mean to imply that Jason is not giving a top quality workshop. I have a similar feelings toward the Ted Conference charging $6000 a ticket and toward top colleges charging $50000 a year. It's not the quality I'm questioning, but the 'value'.

how differently would you feel if the same workshops were given away for free?

I mean, if I can't charge for the workshop, my primary aim is self-promotion, right? is that more or less scummy?

(now, speaking as someone who /has/ given free workshops to nerds, you have to be very careful about that self-promotion. Giving an actual sales pitch at a LUG is about the quickest way I know to get a bad reputation. Much worse than giving a technical presentation and doing it badly, or even doing a technical presentation and revealing incompetence.)

I feel much better about workshops that are given for free, although you are right about the delicate balance between reputation and self-promotion. I could feel just as good about offering the workshop as a bonus for existing customers, or for workshops where the price charged is commensurate with the cost to run.

It's possible that I'm just not a very good free-market capitalist. For example, while I want prices to reflect demand, I get uncomfortable at what I feel are extremes. What's a fair price for a drug being sold to someone with an otherwise terminal disease? Does this change with the actual effectiveness of the drug, or just on the 'buyers' belief in the effectiveness?

eh, you are just used to commodity markets (which really, I think, is where free-market capitalism outdistances everything else so sharply)

In a commodity market, nobody can charge much more than the cost of production or else you get competition undercutting you. Of course, nearly everyone puts a whole lot of effort into convincing customers they are not in a commodity market.

Personally, I'm also much more comfortable in commodity markets as well... and in my space, because everyone else is trying so hard not to be a commodity, this isn't as hard as you'd think.

But yeah, lots of people are offended when you charge more than a reasonable margin over the cost of production, as you would if it were a commodity. But you know what? nearly all software companies don't want those people as customers, simply because if you apply the commodity model of capitalism to software, you get open-source software.

the thing is, companies like 37 signals, I don't think, care that they offend people who expect to pay commodity prices. Most businesses want customers who are willing to pay a premium for a premium product.

Now, if I were to run a workshop, I'd be very concerned, because my customers are people who want to pay commodity prices; people who would be offended by large profit margins.

Some people say those are bad customers to have; I mean, if I can't stay ahead of the crowd price wise, I'll sink pretty fast. On the other hand, serving this market is much easier (well, for me, anyhow) than serving the 'premium' market. It's a market I understand, though, and one that is under served.

There is a business in Ogaki which takes over a room at the local tech incubator (cost: ~$10 for 3 hours) and does a workshop on iPhone development every week. I'm told they occasionally need to split into two rooms, because they're filled.

Can anyone here even point to Ogaki on a map? Do you know how not-very-hard it is to be the most famous developer in a particular technology in Ogaki?

At the local tech incubator, we also put on weekly training events for things like software security, taught by people much less accomplished than anybody on Thomas' team, and we could still pack a room.

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

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

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.)

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.

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

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.

Well you are covering 2 out of 3 of the supporters of the God with the most previous convictions for wholesale wrath of God stuff. You only need to rent it out to as a mosque on friday mornings and you should be safe.

Zeus and Thor seem to have retired from the raining down thunderbolts business, Bhudda was never particularly into it and Krishna doesn't do overseas.

Was the downvoter anti-muslim or pro-Thor?

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.

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.

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.

Zingermans is amazing (it's one of the three things I miss about living in Ann Arbor). But I'm chiming in here to add that Zingermans doesn't just host random events; just like Jason Fried, Zingermans teaches workshops on "how to be like Zingermans". The Marion Street Cheese Market down the street from me in Oak Park went to one, and are rabid disciples.

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

It works for many restaurants. Vie in Western Springs also has a pickling demo I'm thinking about going to; they also coordinate a co-branded CSA basket with classes. Restaurant demos are a very widespread practice.

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).

Yup, it was Mado. The demo was definitely worth it. You get to go home with a few cuts of pork as well.

Get a quarter or a half pig from Slagel Farms through them. It's cheaper than supermarket pig, no-shit blind-test 10x better, and the Mado staff is unbelievably cool about the whole thing (Rob Levitt helped carry my pig out to my car during the dinner rush).

Can't say enough good things about that place.

Gruesome.

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.

" 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.

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.

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!

It tells you the truth, not secrets ;)

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

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

I really liked the 37 seats.

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.

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".

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

Yeah but mine's better!

(bug?)

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

It is all about marketing :). Same product (url) sold differently (headline, timing). one hit number one the other 0 points (I will not include the point for submitting). I have learnt a great lesson here.

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

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

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.

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.

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.

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?

basecamp came before their initial workshops. they taught by blogging alot. workshops/teaching only bring in a small number of people at a time. But they do usually result in high LTV of each of those customers.

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.

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.

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