Basecamp – Finding Signal in the Noise

"We believe software is too complex. Too many features, too many buttons, too much to learn. Our products do less than the competition — intentionally. We build products that work smarter, feel better, allow you to do things your way, and are easier to use." – From "Getting Real" (authored by Basecamp's founder)

Basecamp (formerly 37Signals) had humble beginnings as a web design consultancy, but over the last sixteen years has grown to be a dominant developer of project management software and a thought-leading organization in software development, project management, entrepreneurship, and the “work” of doing work. Basecamp, their flagship product, serves over 15 million users with shared to-do lists, file sharing, time tracking, a messaging system, and other features through a simple and elegant interface.

Business Model

Value Creation

Basecamp prides itself on the simplicity of its product. The company believes that project management is not about creating and managing timelines, but rather about facilitating communication between the people involved in the project, and that the tool which they use to do this should stay out of the way.

Among the core competencies of Basecamp are:

User interface design – Focusing on the design rather than the programming aligns the product more closely with the experience of the customer. Additionally, Basecamp’s “opinionated” interface solves the simpler problems associated with project management rather than adding new layers of complexity.

High touch and responsive customer service – Basecamp does not outsource customer service, and the people who built the product answer technical support questions from customers.

Deep understanding of the needs of their customers – Basecamp has an understanding of their customers that comes from their origins as a web design firm, and the product that they created was designed to solve their own problems.

Value Capture

Basecamp sells its single product directly using a subscription-based software-as-a-service business model, with prices ranging from $29 per month to $3,000 per year.

Operating Model

Product

By offering a single product, Basecamp can be ruthlessly focused and have complete ownership over its development. Basecamp in its current form is the result of a decade of iteration, prototyping, and refinement. 

People

Basecamp hires people who are “quick-learning generalists” rather than specialists, and commits to hiring new employees full-time only after a “test period” where the new employee is expected to complete a project and is assessed on both their technical competency and fit with the rest of the team.

Organization

Remote work – Most of Basecamp’s 43 employees work remotely which allows the company to spend less on office space and hire the best talent despite location.

Meetings – Meetings are held only if absolutely necessary, since the company believes that not much information is exchanged and that people’s time is better spent doing focused work on their own priorities. 

Small project teams – Basecamp uses the smallest number of people as possible on teams, since smaller teams are more agile and communication flows more easily when there are fewer people to communicate with. 

Ecosystem – Basecamp has a loyal community of followers not only because of its product, but also because of its contributions to the software industry and how the company shares its unique philosophy. For example, Basecamp was originally built on a web-application framework named Ruby On Rails which was first developed by one of Basecamp’s founders and made available for free. Ruby On Rails has since been adopted by companies like Groupon, Shopify, and AirBnB.

Additionally, Basecamp openly shares its philosophies on programming, organization design, and productivity on its blog and through books authored by the company’s founder and CEO.

Model Alignment

Basecamp’s business model and operating model are in alignment because the product that they sell is the embodiment of its operating model. Basecamp is uniquely positioned within the saturated project management software market because it is designing a product for people who are like themselves and they make it perfectly clear that they are not trying to be nor compete with well known products like Microsoft Project. By taking an opinionated stance on what project management should be, building products they use themselves and making their operating model public, they not only avoid comparison to other industry-leading products, but they attract customers who will love the company’s message as much as their product.

 

Sources

  1. http://www.forbes.com/sites/benkepes/2014/02/05/37signals-no-more-changes-name-to-basecamp-and-drops-all-products-but-its-namesake/
  2. http://gettingreal.37signals.com/ch09_Interface_First.php
  3. http://gettingreal.37signals.com/ch02_Build_Less.php
  4. https://basecamp.com/3/pricing
  5. http://gettingreal.37signals.com/ch07_Meetings_Are_Toxic.php
  6. http://gettingreal.37signals.com/ch03_The_Three_Musketeers.php

 

Previous:

SpaceX: Bringing the costs of space back down to earth

Next:

Hilton Worldwide: Creating Value for Hotel Owners, Customers and Investors

2 thoughts on “Basecamp – Finding Signal in the Noise

  1. It is interesting that Basecamp avoids meetings as much as possible. I wonder that it came out of engineers’ mentality and the necessity of having a long stretch of time to work on one task versus a “manager’s schedule” with meetings back to back and always on the go. That is probably wise that Basecamp intends to stay small, which allows it to be nimble and stay true to its beliefs such as this one.

  2. Nice post, Scott. I thought that the company’s emphasis on user interface design, high touch and responsive customer service as well as deep understanding of the customer was interesting. While you state that the company only produces a single product, it seemed like their approach to the product that they produce is relatively complex. I wonder if this has some bearing on, or even necessitates, the human-centric focus of their operating model. I thought your point about Basecamp’s engineers producing products for customers that are similar to them was an interesting one.

Leave a comment