The revenues of Jason Fried's scrappy Chicago startup are estimated at maybe $10 million annually. Twitter, meanwhile, is about to deposit ten times that in its already-stuffed bank account. Which helps explain why Fried's sniping has reached mocking extremes.
It's great fun. 37signals issued a fake "press release" on the company's influential and freewheeling blog yesterday mocking Twitter's reportedly imminent $1 billion valuation by way of a $100 million investment. "37SIGNALS VALUATION TOPS $100 BILLION AFTER BOLD VC INVESTMENT," read the headline. The post began:
37signals is now a $100 billion dollar company, according to a group of investors who have agreed to purchase 0.000000001% of the company in exchange for $1.
It later declared that 37signals would cease taking in actual money, so investors could fantasize about the company's potential instead of thinking about reality. It's a salient point, and one we've made ourselves. The satire also nails how the adulation and money lavished on Twitter invite disturbing comparisons to the 2000 dot-com bubble.
But as much as we enjoy and heartily encourage this sort of bitchery, we'd be remiss not to point out that Fried seems to have a chip on shoulder. Just look at the context: a series of high-profile public pronouncements in which Fried and his tight-knight crew at 37signals have set themselves up as the marked antithesis of Twitter.
To hear Fried's people tell it, Silicon Valley is filled with flaky startup dreams like Twitter; 37Signals is the level-headed Midwestern outfit. Valley companies conjure imaginary business models; 37signals actually sells things. The message 37signals pushes most energetically is that it charges users for its product, while companies like San Francisco-based Twitter give them away and hope for the best.
"The days of the traditional San Francisco startup approach are numbered," wrote 37signals' David Heinemeier Hansson, in an essay in which he relished the thought that Valley startups who fail to "charge for stuff" would be "flushed down the drain." Hansson cited earlier comments by Fried, who has said "free is not the future of business" and that the idea of dropping "an advertisement into the conversation every once in a while" is "toxic."
Fried also this month lacerated the founders of Mint.com, saying they "bent over" in selling their company to Intuit for $170 million. Presumably they should have stayed in the notoriously breakneck, personal-life-destroying world of tech startups until they reached Fried's serene plateau of self-evident emotional tranquility and nirvana. Oh, and did we mention that Twitter CEO Evan Williams himself sold a series of startups before co-founding Twitter, which is widely expected to be likewise flipped someday? Just like those sumissive Mint.com guys, hmmm.
We'll readily concede that Twitter is a 37signals customer, and Hansson to his credit wrote a post called "Hail to Twitter" a year and a half ago, albeit to make up, we presume, for the one he did a week earlier, "Bitching is the killer app for Twitter." But we still detect in Fried something of a grudging obsession with Twitter which, crazy talk aside, has accumulated an impressive 40 million or so estimated users, a massive ecosystem of related startups and the highest profile roster of users the tech world has ever known. Hey, look, we know from grudging obsessions with the microblogging service and its founders. But even a jaded observer like Valleywag can see that Twitter wasn't valued at $1 billion in a throwaway $1 investment. It took $100 million from serious-as-hell investors who very much expect to get that money back, and then some. Deep down, we bet Fried knows the difference too — even if he can't admit it.
(Pic by Sean O'Shaughnessy)