37signals Earns Millions Each Year. Its CEO’s Model? His Cleaning Lady

Don’t build a fast company, Jason Fried tells Fast Company. Build a slow one.

Jason Fried is a founder and CEO of 37signals, a software company based in Chicago. Fried also treats 37signals as something of a laboratory for innovative workplace practices--such as a recent experiment in shortening the summer workweek to just four days. We caught up with Fried to learn how employees are like fossil fuels, how a business can be like a cancer, and how one of the entrepreneurs he admires most is his cleaning lady.

FAST COMPANY: You have your employees only work four-day weeks in the summer.

JASON FRIED: Sometimes people are not really used to working just four days and actually want to stay to get more work done.

You’re saying you have people who actually want to stay the fifth day?

When we first started this a few years ago, there was a small sense of guilt in a few corners. People were like, “I have stuff to get done, it’s Thursday, so I’m gonna work Friday and just get it done. But we actually preferred that they didn’t. There are very few things that can’t wait till Monday.

How many employees would stay to work Fridays?

I don’t know.

Because you weren’t there!

We don’t track things in that way. I don’t look at that. I don’t want to encourage that kind of work. I want to encourage quality work.

As CEO, wouldn’t it simply be rational to let people work the fifth day for you if they wanted?

If you’re a short-term thinker you’d think so, but we’re long-term thinkers. We’re about being in business for the long haul and keeping the team together over the long haul. I would never trade a short-term burst for a long-term decline in morale. That happens a lot in the tech business: They burn people out and get someone else. I like the people who work here too much. I don’t want them to burn out. Lots of startups burn people out with 60, 70, 80 hours of work per week. They know that both the people or the company will flame out or be bought or whatever, and they don’t care, they just burn their resources. It’s like drilling for as much oil as you possibly can. You can look at people the same way.

Are we reaching “peak people”?

It seems like in a lot of companies we are. There’s a shortage of talent out there, and if there’s a shortage of resources, you want to conserve those resources.

So you think there’s a slash-and-burn mentality in the tech world?

For sure. I think there’s a lot of lottery-playing going on right now. Companies staffing up, raising a bunch of money, hiring a bunch of people, and burning them out in the hopes that they’ll hit the lottery.

You seem like too nice a guy to name names--but do you have certain companies in mind?

I won’t name names. I used to name names. But I think all you have to do is read TechCrunch. Look at what the top stories are, and they’re all about raising money, how many employees they have, and these are metrics that don’t matter. What matters is: Are you profitable? Are you building something great? Are you taking care of your people? Are you treating your customers well? In the coverage of our industry as a whole, you’ll rarely see stories about treating customers well, about people building a sustainable business. TechCrunch to me is the great place to look to see the sickness in our industry right now.

Our magazine is called Fast Company, but it sounds like you want to build a slow company.

I’m a fan of growing slowly, carefully, methodically, of not getting big just for the sake of getting big. I think that rapid growth is typically of symptom of... there’s a sickness there. There’s a great quote by a guy named Ricardo Semler, author of the book Maverick. He said that only two things grow for the sake of growth: businesses and tumors. We have 35 employees at 37signals. We could have hundreds of employees if we wanted to--our revenues and profits support that--but I think we’d be worse off.

What industries do you look to for inspiration, if not the tech world?

I take my inspiration from small mom-and-pop businesses that have been around for a long time. There are restaurants all over the place that I like to go to that have been around a long time, 30 years or more, and thinking about that, that’s an incredible run. I don’t know what percentage of tech companies have been around 30 years. The other interesting thing about restaurants is you could have a dozen Italian restaurants in the city and they can all be successful. It’s not like in the tech world, where everyone wants to beat each other up, and there’s one winner. Those are the businesses I find interesting--it could be a dry cleaner, a restaurant, a clothing store. Actually, my cleaning lady, for example, she’s great.

Your business icon is your cleaning lady?

She’s on her own, she cleans people’s homes, she’s incredibly nice. She brings flowers every time she cleans, and she’s just respectful and nice and awesome. Why can’t more people be like that? She’s been doing it some twenty-odd years, and that’s just an incredible success story. To me that’s far more interesting than a tech company that’s hiring a bunch of people, just got their fourth round of financing for 12 million dollars, and they’re still losing money. That’s what everyone talks about as being exciting, but I think that’s an absolutely disgusting scenario when it comes to business.

This interview has been condensed and edited. For more from the Fast Talk interview series, click here. Know someone who'd be a good Fast Talk subject? Mention it to David Zax.

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247 Comments

  • I usually don't comment on stories about Jason and 37 signals as I'm in the same business that they are, but it's always refreshing to hear his point of view and I have nothing but respect for him.

    I believe there is plenty of room for all of us at the table. Just like those pizza places, and just as there is room for Chevy, Ford, Honda and Porsche, etc. It's a big world out there and it's not a zero-sum game - and someone is going to like Basecamp better, or Asana better, or Xtrant better - and it comes down to what works for them and where they and their team and partners and clients are comfortable.

  • WebGem 2010

    All the world would be perfect if all CEO would be like Mr. Fried. In Italy there is a similar CEO that had great success in high quality fashion: Brunello Cucinelli

  • Eugene

    Great article about a great person running a great company. It is refreshing to know there are companies  that treat people as grown ups, not kindergartners. It is rewarding to the owners and to the employees. I ran a business for 15 years (closed it in 2009) and always believed that your biggest assets go home at night. Too bad so many corporations talk the big game, but treat people as "liability".

    Eugene Salganik, Co-Founder
    FunderHut

  • HomeDesQ

    Power Of Nice. I'll have to get the book. We clean. We're a wife and husband team on Cape Cod and have actually dropped lucrative clients that were snitty, snobby, and mostly unhappy. Life is too short to have people like that in our little workplace in the world and money is just a small part of what life is really about. I hope America wakes up and gets back to that.

  • Paul225

    Good stuff Jason.  I think there is a bubble in the Start-up world.  At a recent Investor fund raising event for Start-ups I noticed something that is in line with your comments.    Out of the 50+ companies there it became obvious that the majority are following the same path:  The belief that in order to build a successful business you must take investment; as if that is the only path to a start-up.  

    Now I can understand that when it comes to a bio-tech or pharma company who often need large capital to do big things.  But in the online world, why does a start-up need to always raise a seed round to have success?     
    Why not take the challenge on growing a business from the ground up, have control and ownership and make it to something you can proudly say you created on your own (and with your team).   Yet it seems many think that is not possible or are already thinking about the exit strategy before they even have a profitable business model.    

    That's what I was told when we started Easy WebContent http://www.easywebcontent.com to raise capital right away.  We decided otherwise, growing organically with an increasing loyal customer base.  We're not the biggest but we're proud of what we've build on our own and slowly yet steadily growing our business.  

  • Danny K A

    Jason Kudos. Some of the ideas that get funding from VCs simply because of pedigree ( MIT grad founder who was part of Napster, etc) is disgusting too. When they ignore other smart and useful startups simply because they are not connected to the vine is disgusting too.

    I appreciate the insights you've shared especially about building for the long haul. That's the approach at RaveOrBash as we approach our beta launch.

    An inspiring read.

  • Michael Jones

    Jason, how did you come to your current definition of 'success'? Have you always had this perspective?

  • Scott

    If you liked this article, you should read his co-authored book "Rework." It's phenomenal. I try to live by it.

  • Diana Escamilla

    now this is a story worth telling... i have worked in places where they burn employees out... talk about saving costs, remove napkins and tea from the cafeteria... no growth, no vision, just work work work work work work work and after that more work... I wish more companies were like this one... you trust your employees, sounds like you nurture them, help them grow and have a life!

    I know you will be succesful. Thanks for existing!

  • Sunil Bali

    Prophetic words from the author of a brilliant book: "Rework".

    Its a must read.

  • E Mayo

    thank you!!  Slow sustainability leads to better companies, profits, employee engagement and commitment.  Keep it up!!

  • Roger cooper

    I totally agree with Jason. Your employees are your backbone you blow them out and your in real trouble. Your customers are you bread&butter what ever their needs are those should be your needs too. We'll all get their but we'll do it togeather.

  • Miyoshi Rheberg

    I have been preaching a four day week work for several years now.  I know it necessarily doesn't work for every business. When it can though, I truly believe it results in a more productive, motivated and content employee by far.  I hope companies take note of this success and are able to incorporate it in their operation.

  • GoodMoMusic

    Jason, u r one-of-a-kind - u posted the first comment. I find ur regular column in inc. magazine a little quirky but fascinating, and obviously effective.

  • Dayne Ford

    Jason, found your perspective both inspiring and fresh! So many CEO's are stuck on revenue and forget that their employees happiness directly correlates.