New software products are born every day to great fanfare, complete with Twitter back-slapping and a TechCrunch headline. But over time, as growth stalls, they often end up in the shadow world of broken URLs and bounced emails. Or as Jason Fried, cofounder of 37signals, puts it: “Every time a product is released, it’s a ticking time bomb.”
Gracefully retiring a product is one of the hardest parts about succeeding at software. Fried knows; since founding his company 15 years ago, he and his team have launched nearly as many products and books as they have hired people. Then yesterday, Fried made a surprise announcement: 37signals was rebranding as Basecamp, its most popular software product with 15 million users, and would be phasing out all other offerings in favor of a simpler approach. “How to make progress on projects together–that’s the fundamental thing,” he says.
But does this kind of radical focus actually make life simpler for companies and their customers?
“Every time you have to explain something, you’re losing a customer,” says Ryan Jacoby, founder of innovation consultancy Machine and former New York location head for Ideo. “Basecamp means something to buyers in a way that 37signals doesn’t.” So at least in a sales and marketing sense, having one product and one brand should ease confusion.
We know, at least, what happens in the reverse scenario: splitting one company into two. As Netflix CEO Reed Hastings can attest, the backlash can be swift. “It is clear from the feedback over the past two months that many members felt we lacked respect and humility,” he wrote as a mea culpa in September 2011 in response to the revolt that followed his left-field Qwikster announcement.
The carefully orchestrated death of Google Reader was far more successful. Google announced its decision to put the product out to pasture with enough lead time for new alternatives to emerge–Feedly, Digg Reader, NewsBlur, and others were quick to step up–and eased the transition by giving customers a painless way to export their data. But some users still spewed anti-Google venom into the social networks.
To avoid a Reader-like debacle, Fried will try to keep Highrise and Campfire users supported for as long as possible. If he can’t find buyers willing to keep the products alive, he plans to do so himself.
“It’s not a cheap commitment to make,” Fried says, but “that’s our problem, that’s not our customers’ problem. I’d like to see more companies do that sort of thing. The problem is, a lot of companies don’t have a business model that makes that possible.”
Giff Constable, CEO of Neo, a product development shop, says that companies often forget that there’s effectively a second validation cycle to consider when developing products. “It has to be right for the customer–you need to validate that first,” he says. “But it also has to be right for the company: values, resources, domain expertise.”
Sydney-based software company Atlassian represents a different school of thought. Founded in 2002, Atlassian is roughly the same age as Basecamp, it similarly builds software designed to support team collaboration, and it also relies on customer service and word-of-mouth marketing rather than traditional sales.
But the commonalities stop there. Back in 2010 Atlassian announced that it had raised a mammoth $60 million Series A from Accel Partners. Since then its product suite has kept expanding, thanks to acquisitions like HipChat and in-house builds like Stash, which offers teams a way to manage Git repositories behind the firewalls of their own private clouds. With a track record that includes 10 straight years of profitable quarters, Atlassian’s founders are now preparing for their IPO. Between 5 million and 10 million users log in to Atlassian products on a daily basis.
Basecamp is on a different kind of trajectory. It plans to stay small–there are 43 employees scattered around the world, with 14 at headquarters in Chicago–and instead grow in its ability to understand and solve customer problems. “A customer isn’t thinking about a feature; they’re thinking about an outcome,” Fried says.
Still, Fried promises that there is R&D underway. “There’s a lot of room for invention and creation around Basecamp without creating new product lines,” he says, mentioning possible add-ons for integrations, time-tracking, and video conferencing.
All within the bounds of the Basecamp values, of course: “All of these decisions that we made public today come down to maintaining our company culture,” he says. “If we aren’t happy at work, we won’t make good stuff.”
Where does that leave customers looking for solutions they can depend on, built to last? If you’re a large-scale enterprise, you can pay for that security. If you’re a smaller organization, Basecamp is betting that you’re going to look for a product backed by values you can trust–and they might just be right.