37signals
Danish-born David Heinemeier Hansson is the programmer and creator of the popular Ruby on Rails web development framework and the Instiki wiki. He is also a partner at the Web-based software development firm 37signals, based in Chicago.
Ruby on Rails provides a "basic development environment" for programmers, according to Wikipedia.org. Based on the programming language Ruby (developed by Japanese programmer Yukihiro Matsumoto in 1995), Ruby on Rails focuses on user interface and "convention over configuration"; meaning, developers can focus on the unique qualities of their Web site or program rather than the building blocks that every application may require. Released in 2004, Ruby on Rails has been incorporated into many applications used by some of the biggest companies, from Twitter to Apple's 2007 release of Mac OS X v.10.5 "Leopard."
Aside from his development of Ruby on Rails, Heinemeier Hansson also works as a partner for Web-based software development firm 37signals. Joining the company in 2003, he has helped develop Basecamp, Campfire, Backpack and other Web-based applications. Working in similar ways like Web-based e-mail services like Yahoo! e-mail and Google's Gmail, 37signals hosts a broad range of IT services for companies, including project management to information-sharing. The firm's software has been used by Kellogg's, Sun Microsystems and even Obama '08.
Hansson received his bachelor's degree from the Copenhagen Business School in 2005. In that same year, he moved to Chicago and received Hacker of the Year honors for his work on Ruby on Rails from Google and O'Reilly Media. He runs a blog called LoudThinking.com.
Related Links: http://loudthinking.com/ http://37signals.com/
Last Updated: Fri, Jan 22, 2010
David Heineimeier Hansson, the creator of Ruby on Rails and partner at 37signals in Chicago, says that planning is guessing, and for a start-up, the focus must be on today and not on tomorrow. He argues that constraints--fiscal, temporal, or otherwise--drive innovation and effective problem-solving. The most important thing, Hansson believes, is to make a dent in the universe with your company.
David Heineimeier Hansson, the creator of Ruby on Rails and partner at 37signals in Chicago, says that planning is guessing, and for a start-up, the focus must be on today and not on tomorrow. He argues that constraints--fiscal, temporal, or otherwise--drive innovation and effective problem-solving. The most important thing, Hansson believes, is to make a dent in the universe with your company.
"Unlearn Your MBA." It's the most important piece of advice new entrepreneurs can take, argues David Heinemeier Hansson. Hansson estimates that 96.7% of what he learned at the Copenhagen Business School has no impact on what he does today as a partner at 37signals. MBA students need to readjust and recalibrate their thinking away from heavy management theories towards building a product and pleasing a customer.
Long-term planning, strategic planning, tactical planning -- all of these types of planning are really funny for a start-up, chuckles David Heinemeier Hansson, partner at 37signals. The punch line, he delivers, is that a start-up doesn't even know if it will be doing business in five years, let alone five months. These types of planning suit a stable business, like McDonald's in Northern Illinois. But a new business in a new industry has no clue what it will need long-term. In fact, he adds, most decisions for a start-up are incredibly temporary. What does matter more than planning? Simply starting.
David Heinemeier Hansson has a provocative point of view: he believes that Venture Capital is a time bomb and one of the most harmful things for a new business. He explains that a sudden windfall of money provides start-ups with a false sense of security. VC-injected companies often lose the urgency to create a sustainable, profitable product. These companies often become addicted to venture capital funding, requiring round after round of financing.
The key problem with venture capital remains simple: You're playing with other people's money. David Heinemeier Hansson, partner at 37signals, believes that using venture capital removes the accountability that's inherent when an entrepreneurs use their own money. When it's your own money, he continues, you want to make more of it faster, so you don't just put out a product without a price. The urgency you get from spending and making your own money is the most powerful driving force for an entrepreneur.
Skewed expectations present a major risk when accepting venture capital. Most venture capitalists expect to make a lot of money, and they expect the company they help to become billion-dollar ventures. David Heinemeier Hansson, partner at 37signals, compares this type of risk to putting all of your money on red five in a game of roulette. When you build a business that earns a million dollars per year, you're taking a more calculated risk, analogous to that of a skilled poker player who steadily builds up his winnings. "The fact of the matter is that a million dollars is a lot of money when it goes straight into your bank account," asserts Heinemeier Hansson, partner at 37signals.
Being a workaholic is no guarantee of success. David Heinemeier Hansson points out that 37signals' main product, Basecamp, was created on 10 hours a week of development for a total of six months. When you're overworked, you can't think creatively. A great idea comes from a well-rested mind.
David Heinemeier Hansson reminds the audience of a simple fact: you'll never outdo Microsoft or Google; they will always have more resources than start-ups. But an entrepreneur must realize that constraints are your friend. Having some limitations will force you to think differently than your competition.
"Nobody is an overnight success," claims David Heinemeier Hansson, partner at 37signals and developer of the Web platform Ruby on Rails. When some product or company suddenly appears out of nowhere, it usually arrives out of 10 years worth of work. He points out that 37signals and Basecamp took just this length of time to become a success. Accelerated growth is a charade, Heinemeier Hansson stresses. It takes time to develop a sustainable, profitable company.
Asked to clarify the difference between a small business and a scalable business that hopes to earn a billion dollars, David Heinemeier Hansson, partner at 37signals, says they are the same thing. Scalable for Heinemeier Hansson means there isn't a direct correlation between profit and employee count: I can earn 5 million dollars and not hire five people. Many large companies give the impressions that that there is a connection -- i.e., for every $500,000 earned, a company must hire two people -- so smaller companies wrongly focus on organizational charts and meetings. He points out that 37signals is both a small business (15 employees) and a highly profitable company.
A startup, David Heinemeier Hansson argues, will never have the resources to outspend a Google or a Microsoft in promoting itself. Instead, his own company 37signals tries to out-teach. "We're trying to build an audience; we're not just trying to have customers." Through blogs, lectures, seminars and other teachable moments, he explains that 37signals has created a following of the company that may not use the product today. But at some point, these people will either buy our product or recommend it to someone who will. In the end, all sustainable businesses are built by word of mouth.
What was one of the main things David Heinemeier Hansson took away from business school? Buy for $1, sell for $2. While it may seem like a simple idea, some of the most basic lessons are the most difficult to understand. For him, these lessons have helped him better understand capitalism. Through this clarification, he has realized that you have to both appeal to people's own self-interest and assign some value to a job or product.