Infrastructure worth investing in

I analyze data for a living. I occasionally do some other things for Basecamp — help with marketing, pitch in on support, do some “business” things — but at the end of the day, I analyze data. Some of the data is about feature usage, some about application performance or speed, some about our great support team, some about financial matters, and some of it defies categorization; regardless of the type of data, my job is to identify business problems, use data to understand them, and make actionable recommendations.

If you ask almost any data analyst, they’ll tell you that the biggest chunk of their time is spent cleaning and preparing data — getting it into a form that’s usable for reporting or analysis. Ironically, I don’t have any actual data about how much time that process consumes, either personally or for the profession as a whole, but I’d guess that the time spent on acquisition and transformation of data outweighs actual math, statistics, or coming up with recommendations by a factor of five to one or more.

Over time, both personally and as an organization, you get better at capturing and preparing data, and it eats up less and less of your time. I’d characterize the time I’ve spent at Basecamp as being four fairly distinct phases of increasingly greater sophistication in terms of how I prepare data for analysis:

  1. The CSV phase: In my early days at Basecamp, I was just happy to have data at all, and everything was basically a comma separated value (CSV) file. I used `SELECT … INTO OUTFILE` to get data from MySQL databases, `awk` to get things from log files, and the ‘export’ button from third party services to get data that I could then analyze.
  2. The R script phase: After a month or two, I graduated to a set of R scripts to get data directly into my analysis environment of choice. A wrapper function got data from our MySQL databases and I wrote API wrappers to get data from external services. Our first substantial automated reports showed up in this phase, and they were literally R scripts piped to `sendmail` on my laptop.
  3. The embryonic data warehouse: Eventually, a fledgling “data warehouse” started to take form — a MySQL instance held some data explicitly for analysis, a Hadoop cluster came into the picture to process and store logs, and we added a dashboard application that standardized reporting.
  4. The 90% data warehouse (today): today a centralized data warehouse holds almost of all our data, every type of data belongs to a documented schema, and Tableau has dramatically changed the way we do reporting. It’s not perfect — there are some pieces of data that remain scattered and analyzed only after cleaning and manual processing, but that’s the exception rather than the rule.

Over the course of this transformation, the time that I spend preparing data for analysis has fallen dramatically — it used to be that I started any “substantial” analysis with two or three days of getting and cleaning data followed by a day of actually analyzing it; now, I might spend twenty minutes getting vastly greater quantities of already clean data and then a couple of days analyzing it far more deeply.

That evolution didn’t come for free — it took substantial investments of both time and money into our data infrastructure. We’ve built out two physical Hadoop clusters, bought software licenses, and poured hundreds of hours over the last five years into developing the systems that enable reporting and analysis.

I used to struggle with feeling guilty every time I spent time on our data infrastructure. After all, wasn’t my job to analyze data and help the business, not build data infrastructure?

Over time, I’ve come to realize that there’s nothing to feel guilty about. The investment in our infrastructure have paid dividends many times over: in direct time savings (mine and others), in greater insights for the company, and in empowering others to work with data. In the example analysis case I described above, the transformation infrastructure saved a day or two of my time and delivered a better result to the business; I do perhaps thirty or forty such analyses per year. That makes a few weeks or even months of total time spent on those investments look like a bargain.

I often hear people argue that “investing in infrastructure” is just code for giving in to “Not Invented Here” syndrome. The single biggest impact infrastructure investment we’ve made was actually abandoning a custom developed reporting solution for a piece of commercially developed software. Just like any sort of investment, you can of course spend your resources poorly, but done properly, investing in infrastructure can be one of the highest returns you can possibly achieve.

Seth Godin had an excellent take on the topic recently:

Here’s something that’s unavoidably true: Investing in infrastructure always pays off. Always. Not just most of the time, but every single time. Sometimes the payoff takes longer than we’d like, sometimes there may be more efficient ways to get the same result, but every time we spend time and money on the four things, we’re surprised at how much of a difference it makes.

I recently wrapped up a fairly large infrastructure project at Basecamp, and my focus is naturally swinging back towards focusing more exclusively on the core of what I do: analyzing data. For the first time, however, I’m moving on from an infrastructure project without much guilt about whether it was an investment worth making. Instead, I’m looking forward to reaping the dividends from these investments for years to come.

Giving less advice

I’m often asked for advice. I’ve decided it’s time I give less of it. There are things I used to know that I just don’t know anymore. I should stop talking about those things — it’s unfair to anyone who’s listening.

If you want advice on product design, copywriting, reducing complexity, business strategy for a well-established small business, or building a team — happy to help. I know I can be valuable there because those are things I’m thinking about and working on every day. I’m current.

But if you want advice on how to start a new business, how to get your first customer, how to hire your first employee, or anything related to starting something brand new, I’m not your man. It’s been 16 years since I started my company. I just don’t remember what it’s like anymore. I’m out of touch.

Advice, like fruit, is best when it’s fresh. But advice quickly decays, and 16 year-old advice is bound to be radioactive. Sharing a life experience is one thing (grandparents are great at this — listen to them!), but advice is another thing. Don’t give advice about things you used to know. Just because you did something a long time ago doesn’t mean you’re qualified to talk about it today.

Think you’ll get a good answer from a 30 year old telling you what it’s like to be 15? Or a 20 year old remembering what it’s like to be 5? Shit, I’m 41 now, and all I remember about being 25 is that I wasn’t 26. How clearly do you really remember anything from 16 years ago? And how many of those memories are actually marred by time and current experiences? How many of those things really happened the way you recall them today?

If you want to know what it’s like to start a business, talk to someone who just successfully started one. If you want to know what it’s like to hire your first employee, talk to someone who just successfully hired theirs. If you want to know what it’s like to make an investment, talk to someone who just made a successful one.

While distance from the event itself can provide broader perspective, the closer you get to the event, the fresher the experience. If I want to know what something’s really like, I’d take a fresh recollection over a fuzzy memory. I think the same is true for advice.

Advice I will give: If you’ve got work to do, and it involves other people too, then Basecamp 3 is for you. Check out the all-new Basecamp 3 for free.

A reasonable man

I spent half of last week in New York, and the other half in Baltimore. But I only packed enough contact lenses for New York.

I wear daily wear lenses, so I have to replace my lenses every day. I usually over-pack lenses so I have at least twice as many as I’ll need, but this time, in a blurry rush to get out of the house on time, I forgot.

I realized this as I was nearing my last day’s supply. Shit!

So I called my optometrist back in Chicago to ask them if they could send my prescription to a local Lenscrafters in Baltimore so I could pick up a box when I arrived in town.

They looked up my prescription and discovered it had expired earlier this year. My prescription hadn’t changed in 5 years, but it had still technically expired so they couldn’t approve it, or send it. The answer was no. Definitively no. No sir. And that was the end of that. Policy ahead of flexibility for a customer in need. I get it, but I didn’t like it.

So what to do. Ultimately we decided to run over to a local Target. They have an eye clinic with walk-ins available. I could quickly get a new exam and then buy a box of lenses there. That would tide me over. Perfect!

So we hopped in the car, sped over to Target, and walked into the clinic.

It was empty, other than a fellow named Ron. He ran the clinic there that day. Ron had a very Wilford Brimley look about him. Friendly. Good sign! I could walk right in, put my face against the crazy contraption, read some letters, and get on with it.

I explained the situation to Ron, and he stopped me. He said “That’s ridiculous. There’s no reason to put you through the time and expense of a whole new exam just for a couple days worth of lenses. You’re stuck, let’s get you unstuck. Call your optometrist at home and put me on the phone with them.”

So I did.

Ron didn’t ask them to transfer the prescription. He just asked them to read it out loud. “What was Jason’s last prescription?” They told him. He said, “Got it, thanks!”.

Then he went into the back, pulled a few spare trial lenses, and handed them over with a smile. I asked if I owed him anything, he said no — but there’s a jar over here where you can pop a few bucks in for kids who can’t afford glasses. And that’s exactly what I did.

Ron is a very reasonable man. He considered the situation, considered the risk, and did the reasonable thing. He helped someone out who was stuck in a bind. He imagined what it would be like if he was in my shoes, and I was behind the desk instead. He’d want from me what I asked of him. That’s the best service you can ever give.

It made me think about our business. We should be Ron. We all should be more like Ron. Snap out of corporate policy mode, and act under the good neighbor code.

Business lessons are everywhere (I’ve written about that before). You don’t have to seek out famous mentors, attend expensive conferences, or worship the best minds in the industry. Just pay attention and observe everyday dealings between everyday people in everyday situations. School’s in session at every moment. The best lessons are experienced first hand.

Are we like Ron? I sure hope so! Put us to the test and check out the all new Basecamp 3.

When numbers and words don’t add up

A couple years ago I purchased a new car. A few days later I got an email from Audi asking me to rate my experience. I clicked the link to the survey and ended up seeing this:

Ok, this should be easy.

“Ease of looking at dealer’s inventory” — great, no problems there. A 10, right? Well… was it OUTSTANDING? How about TRULY EXCEPTIONAL? No, it wasn’t those… I can’t say someone’s inventory was truly exceptional. I can’t put my name on that sort of endorsement. So…?

Comfort in the office where we cut the deal? It was fine — I couldn’t imagine it to be better, but was it TRULY EXCEPTIONAL? No. That doesn’t fit. So does that make it a 6 or 7? No, it was better than that… But… So…?

I see this sort of thing in surveys all the time. A simple 1–10 scale (or 1–5, it doesn’t matter), but the labeling of the numbers is so sensationalized that it turns me off. As far as the number goes, I’m happy to give something the highest rating, but the language overshoots the number and then I don’t know how to respond.

I find these sorts of things great reminders of how important it is to choose the right words. Don’t overshoot, don’t sensationalize. Be modest with language. Find the right fit and leave it alone.

Tips for getting clients? Sell cake.

Hasterb asks on Reddit:

Hey Guys, We run a monthly subscription that provides a certain service for other businesses. At the moment we have a few clients but are currently really struggling to get some more. We have only really been in business for a couple of weeks but was hoping for some more clients. At the moment we have a tried a fair bit, mainly trying to build a twitter following and keeping our blog up to date at the moment (daily high quality posts) in order to build some authority. We have also sent out a heap of emails (tried a few different subjects + content) but still not really getting any more customers. So my question to /r/Entrepreneur is, what are some tips you have for getting clients in a service based industry?

Years ago a guy decided he had some talent making cakes and wanted to start a business. But he had no clue how to start. So he went to his dad who is already a successful entrepreneur and PhD in Economics and asked him how to get started. His Dad’s reply? “If you want to have a cake business, you need to sell cake.”

So this wannabe business owner took his father’s advice to heart. He went out and hustled cake. He built the best fake cake he could. Then he figured he needed to be where people naturally were going to become cake customers. Not in the yellow pages. Not on the internet. Not making cold calls. He went and physically hung out where his customers were going to be: wedding venues! Brides-to-be are constantly at wedding venues. Checking them out. Getting ideas. Making reservations. So he went over to the wedding venue by his house and dressed in his Chef whites with this fake cake of his. And he just walked. Slowly. Up and down the sidewalk. He’d lap around and around for 5 hours. Eventually a bride-to-be would stop by the wedding venue to make a reservation for their own ceremony, and they’d see this baker and his beautiful fake cake, and they’d ask for a card. In a couple months of this, he was making cakes for every wedding at that venue.

Today? You might know him as Duff Goldman, or as Ace of Cakes, a very popular show on the Food Network that followed some of Duff’s successful career. There’s a lot to take from Duff’s story.

1. Have a product worth showing off

You have to make good things. You can’t skip this step. You need to look at your product and see if it’s actually any good. Lots of people put out things they aren’t even proud of. Duff knew his stuff was good. People would see this fake cake and want it. You have to get honest with yourself. Would you buy the service you’re selling? A lot of folks are too scared to face this reality. Their product stinks. But then they don’t put in the practice to get any better.

2. Take your time

You’ve been in business for a couple weeks? “Tried to build some authority” with a blog in that time? Duff on the time it took to get his business in gear:

Within two months, I was making the cakes for every wedding at the place (Two and a half years later, I had my own shop. We did things a little differently, because if I were just to make the same cupcakes everybody else does, nobody would care. So we made huge cakes and cakes in strange shapes. Then came my own TV show, and business exploded.

Two and a half years to get his own bakery! For most people their own shop is something they expect to have… today. But the reality is: to be successful with your own shop you could use a big audience behind you. So he scoped down his dreams and worked out of his apartment until he had enough business.

You’ve been at it a couple weeks. That’s nothing. It took me years of writing to build any semblance of an audience who would consistently read my stuff on Twitter (@natekontny) or Medium. You’ve got to put in some serious time and work to make a blog pay off. It’s totally worth it. But it’s an investment. You can’t get discouraged after a couple weeks.

Success takes time. Give yourselves some goals, but get realistic about how long it’s going to take to become great. Basecamp the company (37signals at the time) was around for 4 years before they even had 4000 blog subscribers to Signal v. Noise. With that, they launched Basecamp the product, and it still took another year to support 4 meager salaries with their software products.

3. Go to where your customers are — physically if you have to

Duff didn’t just spray and pray on the emails. There’s lots of bakers. Lots of websites and yellow page ads. Brides planning weddings are inundated with noise. So he went out and actually pounded pavement where no one else was.

Inkling, was my first business of any success that I started with Y Combinator in 2005. Our first customers were the result of some emails we sent, but we were able to stand out. There wasn’t any other Prediction Markets tools out that were doing software as a service. We could email someone and had very unique things to say about who we were. Is your service unique enough you can email someone about? If they aren’t, you’ll need to figure out how to stand out.

Go pound some actual pavement. Go get some meetings with people close to you. Don’t sell them anything, but set up some time with them to get some feedback on what you’re selling. A common email I would send out starting Inkling and later another business I did (Cityposh with Y Combinator in 2011), was just “Can I buy you coffee?” as the subject line. And I would just layer on the compliments about how much I liked their business and see if they had a moment to give me feedback on my latest project.

If the meeting had to be virtual I’d send “Can I buy you a virtual cup of coffee” and would send them a gift card to Starbucks if they accepted. This worked really well.

I remember sitting across from the owner of a bar in my neighborhood. He didn’t have a need for the product I was selling, but in that conversation he outlined exactly what he had a need for that he would buy from me. That conversation was great feedback to help me mold who I was trying to help, and if I had given up on that idea, this guy had just given me the next thing to work on and he would have been my first customer.

Go get those feedback meetings. Often they turn into their own deals. If someone you talk to thinks you’ve got something great on your hands, just end the feedback meeting with “So is this something we can explore using at your company?”

4. Make a fake cake!

One of our first clients at Inkling was O’Reilly Media. We did for free. Why? Because their logo and name was enough to get us a lot of free attention amongst even more potential clients. We did another deal with ABC San Francisco. They paid us a fraction of what we normally charged. Now they were getting our name on radio and television. One of our biggest deals was with Cisco and that’s because the guy who brought us in there had seen someone on ABC San Francisco talking about us.

These deals were like the fake cake. They weren’t the real high paying deals we wanted, but go find one or two high profile customers that you can leverage for more attention. And figure out how you can help them for nothing. If you have a useful product, you should be able to get at least one person with some clout that would love to have your service for nothing. I wouldn’t do this more than once or twice, but if you find the right one, that freebie is worth a ton.

5. What other fake cakes can you make?

What else can you do to show off your value. Open source everything. Put out lesson after lesson you’ve learned in your life. Share all the ways you’ve gotten these first customers. Share the things that are working and the things that aren’t. Go answer questions on forums where your “brides and grooms” are asking questions. Just like a couple going to a wedding venue, your customers are going somewhere to ask questions and get help. Go answer them. Reddit? Forums? They’re searching for answers to something. Be there to help. The more you do this, the more chances you have to drop links back to your own blog, Twitter account, business, etc.

6. Make crazy cakes

We did things a little differently, because if I were just to make the same cupcakes everybody else does, nobody would care. So we made huge cakes and cakes in strange shapes.

We can’t just keep doing what everyone else is doing. Today I’m the CEO of Highrise, web-based CRM software. When Highrise first came out in 2006, it was unlike a lot of things. It was simple unlike Salesforce. And it was software as a service unlike all the local databases and address books people were using to manage their contacts.

But today, Highrise was recently spun-off from Basecamp to get the love it deserves, and the market is really different. There’s a ton of CRM competitors. Good ones too. We can’t just do whatever everyone else is doing. So I do everything in my power to be different. I send feature announcement newsletters to our customers with pictures of my family to stand out from the soulless news everyone else is sending. I write and teach what you can learn from the inventor of Instant Ramen noodles vs. the content marketing garbage everywhere. We built a way to send simple text based bulk email vs. the trendy, graphic laden, slick email campaigns other vendors are trying to steer everyone to make. And on and on, we realize no one would care unless we offered something others weren’t.

Is your service different enough from everyone else? If it isn’t then I’d spend a ton of time figuring out how you can get it there. Two really important books that have helped me make products that are different and innovative enough to stand out from the competition are Blue Ocean Strategy and Something Really New. Spend a ton of time thinking about how you’re going to be different.

I hope this helps some of the folks looking for ways to reach their first or even their thousandth customer. If I can be of any help to anyone please let me know on Twitter or shoot me a brief email (nate.kontny on Gmail).

And to see how we’re living our own advice, you should follow what we’re doing at Highrise.

Poor design — “doesn’t say tea”

Reddit user earthtokeebs posted a design he had worked on for his client, Natural Warrior Tea.

Some of the reaction:

It’s very pretty but nothing about this package says ‘tea’ to me

Exactly. Cool tea products usually have that “zen” vibe. Not “let’s go rock climbing”.

Definitely. This doesn’t say “tea” at all. Reminds me of a company that tried to take on the wine market.

There’s so much wine. And wine has always had a culture. There’s historically been a typical way to design a wine. How it tastes. How you talk about it. The history you share on the bottle. How many varieties you have. Even how white and red is supposed to come in different shaped bottles. And wine has become something that you need to educate yourself about to be able to pick something when you visit a store.

But a company comes in and decides, screw it, let’s not make wine for wine drinkers. Let’s make it for people who buy things like ready-made cocktails and beer. People who are in and out of a liquor store and know nothing about wine. So they made only two kinds of wine: a single red and a single white. They used the same bottle design for both. They made them a bit fruitier and less complex in taste which made them more easy to drink by people used to drinking cocktails and beer. It got rid of all the junk about the history of the vineyard and typical stuff on the bottle — going with a simple logo of a Kangaroo.

Critics hated it. “Too sweet.” “Won’t make wine drinkers happy.” But that was the point. This isn’t for wine drinkers. The result: [yellow tail] in just 2 years become the fastest growing wine, and then quickly reached the number one wine in the US.

I agree. This design doesn’t say “tea”, but that’s really the strength of this. Tea is a ridiculous commodity. There’s already a lot of what you think about when you think fancy, “cool”, “zen” tea products. Why not make the tea for rock climbers? Why not focus on the people who want energy and caffeine from tea, but don’t really care for all the flavors and culture that the rest of the tea market caters to.

This [yellow tail] story is just one of a bunch of awesome case studies in: Blue Ocean Strategy. Anyone making products and business should give that book a thorough read. Our goal should be to find market space that is uncontested. A blue ocean. If you try and compete with everyone else you end up in these bloody red oceans competing on things like price alone.

P.S. To see how we ourselves are taking on the bloody space of CRM and finding uncontested waters since we spun-off from Basecamp, you should follow what we’re doing at Highrise and the story on Twitter: here.

Evaluating a redesign

When evaluating a redesign, your first instinct is to compare the new design to the old design. But don’t do that.

The first step is to understand what you’re evaluating. If you just put the new design up against the old design, and compare the two, the old design will strongly influence your evaluation of the new design.

This is OK if nothing’s changed since the original design was launched. But it’s likely a lot has changed since then — especially if many months or years have passed.

Maybe there are new insights, maybe there’s new data, maybe there’s a new goal, maybe there’s a new hunch, or maybe there’s a whole new strategy at play. Maybe “make it readable” was important 3 years ago, while “help people see things they couldn’t see before” is more important today. Or maybe it’s both now.

But if the old design sets the tone about what’s important, then you may be losing out on an opportunity to make a significant leap forward. A design should never set the tone — ideas should set the tone. Ideas are independent of the design.

So, when evaluating a redesign you have to know what you’re looking for, not just what you’re looking at. How the new design compares to the old may be the least important thing to consider.

It’s a subtle thing, but it can make all the difference.

Speaking of reconsidering and redesigning, we just redesigned Basecamp from the ground up. Check out what’s new in the all-new Basecamp 3.

Business game en pointe

Illustration by Nate Otto

Basecamp values the long game: Staying independent, growing deliberately and building a sustainable business over time. Yet so much of the current narrative around entrepreneurship emphasizes breakneck growth, colossal investment rounds and—as Michael Lewis might say—the new new thing. As a result, there’s an entire group of businesses being left out of the conversation. We want to bring their stories to the forefront. That’s why Basecamp makes The Distance, a podcast about the old old things in business.

The Distance features narrative audio stories about independent businesses that are at least 25 years old. You can subscribe to The Distance in iTunes or via your favorite podcast app. We’ve visited a laundromat, a lip balm factory and a family farm, among others, and our latest episode centers on a 47-year-old ballet school founded by two women whose disciplined, no-frills approach to classical dance education laid the foundation for a long-running small business.

We release new episodes every two weeks and each story is around 15 minutes long, amounting to a small but potent dose of business inspiration with a deeply personal story at its core. Be sure to subscribe so you don’t miss an episode!

The Distance is a production of Basecamp. Check out the all-new Basecamp 3.

Signal v. Noise moves to Medium

When Jason Fried a few months ago suggested that we should start posting articles on Medium, I was skeptical. What possible gain could we have from sharing our stories on someone else’s platform rather than our 15 year-old blog? Turns out, quite a lot!

First of all, the writing and formatting experience on Medium is just excellent. I’ve yet to find another web editor that makes it as easy to produce great looking articles. It’s just the right mix of flexibility and constraint. Writing on Medium is just beautiful.

Second, Medium has a wonderful community and readership that reaches far beyond our natural sphere of influence. Between just RECONSIDER and The day I became a millionaire, I’ve had more than 500,000 people see those articles. We just weren’t getting those numbers hosting Signal v Noise on our own island.

Third, running our own blog system is a classic case of the cobbler’s shoe syndrome. Yes, we’re well capable of technically making a great blog system, keeping it updated, and keeping the design fresh, but it falls to the bottom of the list of priorities against making Basecamp better. So we don’t, and it languishes. Why not just use something off-the-shelve that others have as their sole mission to make the best?

Fourth, Medium has listened to the concerns of publishers. By offering custom domains, we’re ensured that no permalink ever has to break, even if we leave the platform. By committing to never showing advertisement, unless the publisher consents, we can remain with Basecamp as the sole commercial sponsor of Signal v. Noise. Between these two facts, we feel confident about owning our content and our legacy, regardless of where Medium-The-$82M-VC-Funded-Company goes.

So here we are. Signal v. Noise has been around since 1999. That’s more than 15 years! We’re going for at least another 15. Please follow our publication if you care to be notified when new stories are posted (or subscribe via RSS). And if you want to follow along on Twitter, where we’ll move the shorter-form quotes, insights, and video pointers, then follow @37svn.