Mahalo and 37 Signals: Apples and Oranges

I am taking issue with the way Stilgherrian has characterized the working style of Jason Calacanis by comparing Mahalo to 37 Signals. Yes, they are both startups, and they are both in the “web 2.0” space, but are very different companies with very different goals.

Mahalo is venture funded. His VCs are expecting multiple returns their investment. Jason probably has a limited time and space to show investors that this project has legs. Mahalo is about cranking content on recent events, and making them rank high in search engines to generate ad revenue. Working in this type of environment is not for everyone. But for a lot of people, working at Mahalo is a great opportunity. Just think of the people who worked for him in the past who have all gone on to do great things like Om Malik, Rafat Ali, and Peter Rojas. I know Sean personally and he is happy there. There are a lot of options in the future for some of the people working there, and their time with Mahalo is worth the investment to them. It probably is not to most of the people criticizing Jason’s advice in his post, but they don’t matter, they just want page views themselves.

37 Signals on the other hand is not as young, and there is no pressure on them to grow exponentially as there is with Mahalo (Jeff Bezos has invested in 37 Signals, but if he started making any demands, Fried and Hansson would definitely hand him his money back). They have designed the company around their own happiness, and not much else. They designed Ruby on Rails to make developers happy to code. They have designed Basecamp, Backpack, and Highrise to satisfy the right customers, the ones whos’ needs are being met with good enough features. They are able to say “f*** you” to their critics’ faces (you know you have “made it” when you can do this, seriously, am I right?).  37 Signals puts all design, features, and business strategy decisions through this filter: will it make me less happy or less free? If the answer is no, they don’t do it. This means saying no to new features, no to customizations, no to monster growth. They piss off investors by saying no to their money. They can afford to loose customers with demands that are too high. They are, in Tim Ferriss‘s words “the new rich.” They have options and freedom. And not just anyone can work for them. They can afford luxuries. Great programmers are not commodities.

Could Calacanis design a company this way? I don’t know about that. That is not what got him where he is today. He is a content guy by choice, becuase that is what he loves. Content always needs to be written and updated, and this is a commodity today, especially with so many newspapers laying people off today. Adhering to a business design philosophy around happiness, and not chasing after competitors or stories is the choice 37 Signals has made becuase they love great apps and great code.

The point: when you have to please investors in the short term, you probably cannot design your business life around total happiness, but happiness (and experience) can still happen despite the imperfect lifestyle design.

Update: Sean Percival, the happy employee at Mahalo weighs in.

PS,
Jason, please hire me.

Do you need a web developer for a Drupal or WordPress project? A marketing strategist to manage your social media profiles, search ads, or SEO? Contact me here.

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8 Responses to Mahalo and 37 Signals: Apples and Oranges

  1. Stilgherrian says:

    Nick, I’m glad you’ve made this point about Jason Calicanis and 37signals being “apples vs oranges”. I agree thoroughly — and that’s precisely why I wrote a follow-up post explaining why employers like Calicanis are dangerous.

    Yes, the two businesses have different goals. Yes, Calicanis is about VC funding and all that “exponential growth” stuff. That “money and fast growth before all else” attitude is truly disgusting and, indeed, dangerous.

    If Calicanus et al always treat fast money as the goal, and screw the health implications for their employees, then I’ll bet they care even less about other, non-employee humans or anything else on the planet.

    This short-term focus of profits above all else is, I repeat, dangerous. For us all.

  2. Hey Nick, very well said. When is some smart startup going to hire and overwork you? 😉

  3. Pingback: » How I Went From Picking up Your Crap to Reading It - seanpercival.com

  4. Marcos Gonzalez says:

    Mahalo “a sweatshop powered search engine”

  5. Nick Dynice says:

    @Marcos,

    “First they ignore you, then they laugh at you, then they fight you, then you win.”
    Mohandas Gandhi

    I can’t wait for phase 4!

  6. Nick Dynice says:

    @Stilgherrian,

    Show us the Mahalo employee in poor health. This is all spin, spin, spin.

  7. Pingback: ZDNet.de IT-Business-Blog » Blog Archiv » Krieg um Profi-Tipps f?r Unternehmensgr?nder

  8. Pingback: Kontroverse Tipps für Startups um Geld einzusparen | Wuensch-Media.de

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