The Expand2Web Blog

David Heinemeier Hansson, founder of 37 Signals (Basecamp, HiRise, Backpack, etc.) and creator of Ruby on Rails did a presentation at  Startup School 08 called “The secret to making money online.”

He should know something about this; his company 37 Signals claims to have over one million paying customers.

Watch the video below and read the summary to learn how your Small Business can take advantage:


Here is my quick summary of his presentation:

Everyone in the valley seems to aim to be the next $1 Billion business - they want to be the next Facebook. Why? You have much better chances at creating a $1 Million business.

Charge for your product. Didn’t we learn in the last Internet .com bubble that taking in tons of VC money and giving products away for free doesn’t work?

Target the “Fortune 5,000,000″ - small businesses - rather than the big ones. There are so many of them out there, and you are not beholden to any one customer.

Set your work schedule early in the business. Things will only get busier, so you need to set your schedule now. Start working 5 hour days, or whatever works for you. You will get way more done - time limits enhance your creativity and productivity.

There is no such thing as “I’ll put in a ton of hours now and then cash out and take it easy later.” It never works that way. It’s never going to be less work, it will only become more work. The patterns you set, the practices you choose to adopt when you are a startup will stick with you.

Don’t be in a hurry to “cash out”. If you have a $1m/year business, why would you want to give that up? You can make a pretty good living doing what you want.

Throughout his presentation, he describes what I call a “lifestyle business,” one where you call your own shots, go at your own pace, and avoid being in meetings all day. This is certainly the model I am striving for. No VC money; start small with a compelling product and excellent customer service.

On the Omnisio site, you’ll see several other great presentations from Startup School 08, including presentations from Jeff Bezos (Amazon), Mike Arrington (TechCrunch), Paul Graham (I love reading his essays), Mark Andreessen(Netscape, Ning), Paul Buchheit(GMail, Friendfeed) and others.

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