Deep Dive
Why should businesses focus more on controlling costs than worrying about competition?
Focusing on costs allows you to build a business that works for you, regardless of what competitors are doing. If your costs are under control, you can create a sustainable business model that doesn't rely heavily on external factors.
How does 37signals manage costs across its multiple products?
37signals generally looks at the overall package rather than breaking down costs by individual products. However, they do make adjustments where necessary, such as reducing support costs for Hay due to its lower price point.
What are the key categories of products in a business portfolio according to 37signals?
The key categories are cash cows (stable, high-revenue products), dogs (stable but low-revenue products), and shooting stars (fast-growing but not yet profitable products).
Why did 37signals decide to eliminate their physical office space?
The decision was driven by the high renewal cost of the lease and the low usage of the office. They realized the value wasn't there and chose to invest in company meetups in different cities instead.
What are some common areas where entrepreneurs might overlook expenses?
Entrepreneurs often overlook the number of employees they have, potentially overhiring. Additionally, software companies may overlook the high costs of cloud computing and SaaS subscriptions.
How did 37signals reduce their cloud computing costs?
37signals analyzed their expenses and found that a significant portion of their revenue was going to AWS. They decided to exit the cloud and bring their operations in-house, reducing costs by over half.
What is the aesthetic approach to business costs according to David Heinemeier Hansson?
The aesthetic approach involves ensuring that costs feel proportionate and are worth the value they provide. It's about cutting out needless expenses and maintaining a sharp, efficient business model.
How does 37signals balance cost control with the value of company meetups?
37signals believes that while cutting costs is important, the value of company meetups in energizing and uniting the team is paramount. They ensure that meetups are not penny-pinched to the point of losing their value.
- Focusing on controlling costs is more important than worrying about competitors.
- Most markets are large enough for many businesses to succeed.
- Businesses should focus on their own operations and cost structure.
- The customer is not a commodity; different customers value different things.
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