DHH: The whole point and problem with this is that
these private successes prefer to be private.
So I’m certainly not going to out and name the people
who confined in me personally about how well they are doing.
Well if some business really wants to remain private about their success, then why blame the media or anyone else for not talking about them. I would have well understood the complaint if media was not giving them enough attention even if they were looking for it and deserved it.
Little what i understand about publicity, if you have a reasonable story (of an online success) and are willing to push it, you have a fair chance of getting it covered a fair bit. Obviously, to reach Google & Facebook news levels, you have to become as big as them.
p.s. This could be an opportunity for some 'website' (not a startup) to cover successful online businesses and their stories. Or may be there already is a one ..
"if some business really wants to remain private about their success, then why blame the media or anyone else for not talking about them"
Because it's the news media's job to tell us about interesting and important things that are happening in the world, regardless of whether the people directly involved want us to know. If you get your facts from the news, you get a distorted picture of how money is being made, and that means that the news has failed you.
The cynic in me says "37 signals surprised that people can make a lot of money without raising as much of a ruckus about it as they do themselves", but that's a bit uncharitable, as it works well for them, and they produce lots of good stuff, including Rails, which I use myself. And in any case, his point is a good one (I keep thinking of patio11's bingo cards... sheesh:-). I just wish I could find my own niche:-/
My basic rule of thumb is that anything you have ever seen sold makes $100,000+ for someone because otherwise it couldn't justify having multiple people devoted to it. Consider bingo cards, for example: Scholastic, a Real Company (TM) which has Real Capital Expenditures (TM) and pays Real Salaries (TM) publishes on-dead-tree bingo cards through stores which habitually do 100% markups over wholesale. So for Scholastic to expend their corporate efforts to author, print, and stock that, it must sell tens of thousands of units per year.
Bingo Card Creator is strictly superior to about half of their bingo products (can't do pictures), costs less at the quantities my teachers use, and has such an astoundingly better cost structure (what, you mean I don't leak 50% of the MSRP to the retailer?) that I'm essentially guaranteed to make money on sales.
After that, it is only a matter of marketing. (He says with a twinkle in his eye.)
Incidentally, I found a niche because someone came up to me and said "Oh bugger I would pay if this problem would go away." When is the last time you talked to someone who wasn't a techy but had money and problems?
Whatever the buzz factor & whatever the love/hate relationship people have with 37S' pointed and sometimes downright obnoxious blog, it's nothing compared to Facebook or Digg, while 37s has real products that generate actual money.
They are closer to being a "no ruckus" businesses than the others.
It depends what you're after. Some people would rather a guaranteed lower income, rather than the chance of the big time. 37s have gone for the former, Digg+Facebook have gone for the latter.
Both are valid strategies, but the latter has far more potential upside (With way more risk). That's probably why it gets more press.
Who wants to read about another software company that sells products and makes a few million?
I'm not sure I buy the equivalence of no revenues = higher upside. There are plenty of companies that got big & famous by making products & selling them. These include software companies.
Sure there is something you might call a 'type' that can be built on your latter. But it's not the only type.
"ruckus" just means they make a lot of noise about themselves, via the blog, their book(s), conferences, and so on. In terms of their business, it seems to work, so one can hardly blame them for it.
I agree with the point that it would be interesting to hear about more companies that are enjoying more "modest" success . It seems like most of those folks are too busy running their businesses to leave much time for PR though.
I think a bigger problem is not hearing about massive successes that fall outside the tech elite's interest. For instance WebKinz the virtual world/stuffed animal hybrid probably generates 9 figures of revenue per year, given Club Penguin was doing ~$75MM when it got acquired. How many TechCrunch stories have they had? A quick search yields 0 dedicated results. Thats huge revenue for what amounts to a startup within a toy company and no coverage in the publication of record. However we hear about every stupid ad based socialgraphwidgetfacebookappgcasualgame startup that raises $500K.
Also, it seems a little silly to say "We want to stay small!" and then to say "Why doesn't the press want to write about us!" Rails is awesome, but the rest of their offering has been eclipsed by Google Docs. They have done a great job attracting press compared to the value their products create. Same goes for other small companies where there isn't a lot of "there" there.
I think 37S is only able to generate revenue because of their huge time investment in PR. Really profitable, small web companies are based on niche markets. 37S has no niche market, other than innovators that love rails and similar stuff. As you say, their offer has been mostly eclipsed by Google, Zoho, and other web outfits. So, they need to keep the PR strategy to continue making decent money.
Companies that have a well defined niche, on the other hand, don't need to spend much time or money on PR. And many of them are more successful than 37S.
And they go to conferences, and give speeches, and create user experience commercials, and (probably) hustle the media for articles. Hell they might even pay a PR firm! Or advertise!
"We’ve advertised here and there, but all things considered the number would round down to zero. We’re currently advertising Highrise on The Deck, for example.
I don’t have anything against advertising, but we’ve found better ways to get our message out than spending money on advertisements.
I like what Amazon.com does: Instead of advertising they give their ad budget back to their customers in the form of free shipping."
Where facts are concerned (as opposed to speculation, which I'm not interested in), I'm still not seeing how any of that is an inordinate expense of time or money. Attending a conference is now a sign that your company is built on PR? Wha?
IMO, the reason that successful businesses like Club Penguin don't get TechCrunch coverage is this:
TechCrunch isn't aimed at successful, profitable businesses.
TechCrunch is essentially a brothel; Arrington fancies himself a pimp. So it is populated by whores, and patronized mainly by people who want to pay for sex.
TechCrunch is about VC, it's about the dream of the big cashout, it's about perpetuating the startup mythos.
Those other businesses simply don't fit that agenda.
How does Club Penguin not fit the startup mythos? Started by a couple of guys to solve a problem they had and figured other people must have (not enough for small children to do online). Made the product themselves based on some Flash stuff one of them had been building. Huge viral growth, big acquisition. Sounds like a classic startup success to me.
The startup mythos as interpreted by Arrington (and, to a lesser extent, HN) does not involve non-whiz-bang stuff. Social bookmarking? Yes, that's great, it's got an API or something right? Flash video games for kids not old enough to ride the bus alone? Not cool enough. Not hackery.
You may be right about Arrington, but that's not how I see HN. I haven't noticed any prejudice here against things like Flash video games for kids. On the contrary, patio11 and his bingo cards (surely a lower bound for whatever definition of 'cool' you're talking about) are kind of local heroes.
OK, that's not how you see HN. I wasn't writing about HN originally. Every sentence fragment began with "TechCrunch." :)
On HN, you have a slew of TC-style masturbatory stories about funding and then you've got a handful of less exciting "hard luck" cases that touch people because they're like orphans who sing and dance.
Like that post about the plumber -- it's Puritan Work Ethic pr0n.
Most HN readers seem to think they're going to end up with the funding (the former), but at the same time they want to hear from those heartwarming orphans (the latter).
"In fact Yunus' story is actually actively counter-productive to the interests of systems like the venture capital system, since that is a system which maintains class division around concentrations of wealth, and this story demonstrates that eroding or circumventing those systems can be more profitable than co-operating with them.
The real reason you won't find this stuff on TechCrunch is because TechCrunch is about power, not money; because this story is too capitalist for the world of venture capital; and because TechCrunch embodies extremely unpleasant class politics." -- http://gilesbowkett.blogspot.com/2008/05/never-hate-only-eve...
Untold when applied to large sums of money actually means uncounted, not untalked-about. It's a variant of untallied. But it would have been a clever pun if they'd done it intentionally.
Most often, people talk non-stop about their success when they want to exit the business. If you have a profitable niche you better remain quiet and get as much growth as you can before the party stalls.
In the investment industry the most bullish articles on a sector/asset class appear exactly near the top of the market. Often these articles are pushed by fund managers who have taken positions earlier and now need enthusiastic public to 'buy them out'.
This is the first sentence: "The media is biased against stories that want to be told."
While the point of the article seems to be this: "In the mean time, many of the real stories are never told. The quiet successes by small teams who stand little if anything to gain by sharing their numbers and telling about their success."
He's a non-native English speaker (writer) and I think this is just your basic editing mistake.
I think the first sentence is supposed to be "The media is biased in favor of stories that want to be told." As in, somebody intends that calling Kevin Rose a boy billionaire becomes a media coup. It's intentional.
DHH uses so many sentence fragments that their frequent preaching about "hiring wordsmiths" really rings hollow. I realize he speaks English infinitely better than I speak Danish.
Reading about solid businesses that make a few million isn't that interesting.
High growth high risk high potential upside is exciting... Disruptive technologies tearing away the old industires. That's news worthy. That's why it gets the coverage.
When I first realized that various small businesses and websites I was familiar with were quietly making millions, it changed the direction of my ambitions and got me interested in starting a business. So, I found that pretty interesting.
I've said this before–I think a blog/podcast/print magazine spotlighting these "untold millions" would be (a) extremely beneficial to entrepreneurs and (b) possibly a viable publishing endeavor.
I know it's not their core competency, but why couldn't 37s write about them once a month? Or perhaps sponsor such an endeavor ...
I couldn't care less whether the small fish get media coverage or not. What buoyed my spirits is that there are market players that make a comfortable living from web app development - which means there's a chance for the rest of us too ;)
Little what i understand about publicity, if you have a reasonable story (of an online success) and are willing to push it, you have a fair chance of getting it covered a fair bit. Obviously, to reach Google & Facebook news levels, you have to become as big as them.
p.s. This could be an opportunity for some 'website' (not a startup) to cover successful online businesses and their stories. Or may be there already is a one ..