Jed Christiansen's Blog - Latest Comments in 37signals is one hell of a profitable business

Re: 37signals is one hell of a profitable business

jedc — Wed, 25 Feb 2009 12:26:43 -0000

Hi, Scott. Thanks for your note, and I'm glad our respective analyses are similar. I've updated mine a bit, and think that 37signals is doing a better job than I posted here. The new link is here:

http://blog.jedchristiansen.com/2008/12/04/esti...

Re: 37signals is one hell of a profitable business

Scott Sehlhorst — Wed, 25 Feb 2009 02:16:21 -0000

Thanks for the great analysis! I approached the same analysis from a couple different directions (citing other people's work & interviews with 37signals) and estimated that both of those, plus your analysis puts things in the ~ 1% of users are paid users range. Granted, there is not enough data to do an analysis of 37signal's profitability, it is useful anecdotal data to think about economic models, generally, for saas products with freemium models.

Re: 37signals is one hell of a profitable business

jano — Sat, 07 Feb 2009 14:05:10 -0000

In fact, I checked first http://www.einforma.com/ (probabaly the most comprehensive bussiness information database in Spain).

einforma.com queries the D&B database for USA based business,

http://www.einforma.com/servlet/app/portal/ENTP...

so I thought more options would be available searching the source directly.

I wouldn't mind donating some $ for the Company Profile Report.

Re: 37signals is one hell of a profitable business

jedc — Sat, 07 Feb 2009 10:27:10 -0000

Hmmm... I didn't know this was centralized anywhere. (It is in the UK, but I didn't know anyone went state-to-state in the US to get this information.)

Re: 37signals is one hell of a profitable business

jano — Fri, 06 Feb 2009 11:46:08 -0000

Wouldn't this data be available as the Annual Sales (sales, not profits) figure of the D&B Company Profile Report?

https://smallbusiness.dnb.com/webapp/wcs/stores...

This report is available for $19.99. However, it's only available for US cutomers (that's not my case).

According to the example report, the Annual Sales figure is a required field for producing a Company Profile Report.

https://smallbusiness.dnb.com/webapp/wcs/stores...

Re: 37signals is one hell of a profitable business

Nikhil Kulkarni — Thu, 08 Jan 2009 04:19:02 -0000

I have taken the liberty of uploading this sheet on google docs ... find it here

http://spreadsheets.google.com/ccc?key=pAVZB7af...

Re: 37signals is one hell of a profitable business

ed — Sun, 31 Aug 2008 20:18:55 -0000

Uhh....thanks for your great post. Absolutely very useful for me. Very Excellent. Thanks.

Re: 37signals is one hell of a profitable business

jedc — Fri, 23 May 2008 10:49:08 -0000

Hi, John.

My analysis ignored the number of users; it only deals with the number of projects. (It assumes that only 2% of accounts pay for the service, but that those accounts regularly generate new projects.) Obviously 37signals doesn't release a whole lot of data, so I've had to go with what they've provided.

Download the spreadsheet and play around if you think I'm wrong!

Cheers,
Jed

Re: 37signals is one hell of a profitable business

John — Fri, 23 May 2008 10:41:06 -0000

I think you're off.

I personally, for at least 3 clients, have set up 3 accounts (people) with at least 1 project each.

Here at work we have an account -- it has 1 project, but 25 people.

So I think they probably make about half to a third of that, based on my gut.

Re: 37signals is one hell of a profitable business

jedc — Mon, 25 Feb 2008 17:55:22 -0000

From what they've written on their blog, their only office space is a few desks sublet from Coudal Partners in Chicago. Everyone else works from wherever they want to.

True, there's likely a substantial cost to Rackspace per month for servers, but I doubt it's a big percentage of my projected $400k per month.

In the end, their costs are (I believe) an order of magnitude below their revenue.

Re: 37signals is one hell of a profitable business

Eric Meyer — Mon, 25 Feb 2008 16:07:50 -0000

There's one thing missing here: their costs. I don't know what they are, but you'd need to subtract them to determine how profitable 37s truly is.

Costs I can think of right away: office space rental, utilities, equipment, co-location fees, bandwidth, servers, contract-worker payments (if any), health insurance costs, and 401(k) contribution matching. If they have set salaries as opposed to straight profit sharing, then those would have to be subtracted as well. If there is an administrative assistant or two, or any other employees who aren't part of the listed gang of nine, then those are also costs.

Not that I disagree with your basic conclusion that 37s is profitable, but I think the title would have been more accurate as "37signals is one hell of a revenue-generating business".

Re: 37signals is one hell of a profitable business

jedc — Mon, 25 Feb 2008 12:28:56 -0000

Overall, I find it interesting that the people who have posted so far are plugging their own project management software solution (whether directly or indirectly).

I'm curious if anyone has more substantial comments about if/how my analysis is biased in one way or another. (I do believe it is conservative.)

Re: 37signals is one hell of a profitable business

Hugh Hovards — Mon, 25 Feb 2008 12:10:43 -0000

Basecamp is popular and I wonder why. Most probably, cause they have been there for a long time now. However, now there are better apps availble. Like Wrike.com for projects, for example. Wrike has Gantt charts, customizable reports, due dates for tasks, email intergration and so on. Project management is not just about communication, that's what I think.

Re: 37signals is one hell of a profitable business

jedc — Mon, 25 Feb 2008 10:55:36 -0000

That could be very true. I'd be interested if anyone could play with the numbers substantially and have them still match up to what 37signals has released publically.

Re: 37signals is one hell of a profitable business

Kenley — Mon, 25 Feb 2008 07:42:06 -0000

That's why we call them 37$.
I expect we will see this growth slow if 37$ stays with their current model of bad customer service. There are many many alternatives now, some of them are actually legitimate competition.

Re: 37signals is one hell of a profitable business

Isaac Garcia — Mon, 25 Feb 2008 00:52:33 -0000

I think you are off by a factor of 2. Just a hunch.