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Comment by pchristensen | Hacker News Reader

This is typical of what drives me crazy about 37signals. They say several things that are true but then claim that there's a causal relationship between them.

Take this post.

Premise: Profits = Freedom.

Results:

Company runs without debt: unrelated to profits. Profitable companies can use debt as a tool, and they cite their lack of credit history as causing a problem! Debt free is not the same as profitable.

We trust our employees: this has everything to do with hiring and nothing to do with profitability. They can offer the benefits they list because they're profitable, but profit doesn't make them trust their employees.

We speak our minds: this is because they have controlling interest in the company, not because they don't have debt. Again, no relation.

This would be confusing as hell for someone that tried to build their business based on the advice in this post.

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I read it as profits = freedom. We're profitable so look what we can do with our freedom:

- trust our employees b/c we're not beholden to people who insist we don't

- speak our minds b/c we're ok with losing customers who disagree with us (since they're the only people we're responsible to)

agree with you re: company runs without debt, tho. that's unrelated to their larger point.

When you're in debt, you're in part beholden to your creditors. Ask anyone with a mortgage.

Reconstruction/guessing line of thought: When profitable, you don't need to indebt yourself to stay afloat, hence less people/entities to account to, hence more freedom.

Running a company without debt is liberating; you have a dozen fewer things to worry about.

>> "When you're in debt, you're in part beholden to your creditors. Ask anyone with a mortgage."

heh No I'm not (I have a mortgage). I'm using the banks money, and investing it to make a pretty handsome return. (I'm in the UK, property prices are doing pretty well).

Debt is useful to build big stuff. As far as I see it, 37signals aren't building big stuff, so they don't need debt.

Debt in a company isn't like personal debt. Debt, used properly, is a lever to increase profitability. Even very profitable companies that have no "need" for debt will have a target capital structure that includes some debt. It's about maximizing returns for the shareholders. Or freedom or something..

I enjoyed Rework but I find the canonical way they try to pass of these opinions increasingly distasteful.

I agree that there are no simple answers and the guys over at 37s do tend to come across as if they claim there are. That can be attributed either to brevity (or as some people say, rushed) or to them having a more idealistic and less realistic view of the world.

My point is that without completely agreeing with it, the post still has value.

Spending money you haven't earned yet (either through an investor, a bank loan, etc.) can be a very good way to accelerate growth, and sometimes the only way to allow any kind of growth or even continuity. But I do think there is some truth to the cost of debt in having to deal with your creditors one way or another.

What drives me crazy is that people take pots like this or Seth Godin or anyone writing like this and applying the criticism suitable to a paper on epistemology.

If people had to actually write in all the 'qualifiers for smartasses' to avoid it, they would make pretty awful reading. The frustrating thing is, this reads like it's already been through some of that. He's very obviously not claiming some iron causality between debt and profitability. Just a relationship, in his case, possibly, consult your doctor before attempting.

It's not the purpose of the article and it would be a tangent to go off and explain this relationship. Again, if you were making a subtle epistemological argument about the relationship between knowledge and certainty, go chase down everything. This is a blog post about the joys of running a profitable business.

No one is going to build a business from a literalistic interpretation of a blog post.

If I'm reading this guy correctly, I think you may have missed the point. Well for one, he did say that these three points were possible, just not very common, without a profitable company. But the main point is that running without debt, hiring based on trust, and speaking their minds are things that they can now afford to do. They may be more profitable if they forgo these things, but the point is that since they're profitable, they can instead forgo extra profit and work in a more enjoyable environment. "buying" some freedom, in a sense.

The 37signals posts often seem rushed.

Probably busy counting profits.

Or not worry about losing a little profit here and there for speaking their mind.

Not as much rushed as "good enough". When you have other things to do besides writing, you tend to get to that. Getting the idea off my chest and on to SvN rapidly means that it gets out there. Worrying about endless refining means that it doesn't.

Haven't read the new book yet. Should I expect the same approach?

I kid, I kid ;-)

Actually, the book is probably the most polished and edited product we've ever released. There is a typo though.

I guess it's about having an image to keep up. 37signals has been built on these kind of posts, their business advice should include being a business guru. I doubt their brand would be as successful without these posts.

I had a long conversation with Jason Fried about this at Startup School in October -- his talk focused a lot on restraint and avoiding releasing features, which his business clearly does quite well in their products.

But their SvN blog is the opposite: they post whatever strikes their fancy whenever they want. I prodded and he told me that there's no restraint on publishing -- any of their employees can post with no explicit pre-approval. He said that sometimes people will have him do a sanity check before posting, and he could only recall giving the thumbs-down once.

I connected the dots and posited that the blog acts as the release valve for the whole company's feature angst -- he didn't really have a response (and was tired of talking to my crazy ass), but he didn't have a rebuttal either.

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