David Heinemeier Hansson helped transform 37signals
from a consulting company to a product company in
early 2004. He wrote the company’s first product,
Basecamp, an online project management tool. He
also wrote companion products Backpack, Ta-da List,
and Campfire.
In July 2004, he released the layer of software that
underlies these applications as an open source web
development framework. Ruby on Rails has since
become one of the most popular tools among web
developers and won Heinemeier Hansson the Hacker
of the Year award at OSCON in 2005.
...

companies to manage projects. Microsoft Project and the other heavyweight
approaches to this relied on critical path management and things that might
work fine for a 200-person project on a construction site, but not well for 3 people
trying to deliver a web application.
So we started out just thinking, “This is going to help us solve our consultancy
needs.” And as we got more feedback, we realized it was a good time to
start thinking about how we could make this 37signals’s product.
Livingston: Do you remember the moment?
Heinemeier Hansson:...

the other stuff.” There wasn’t time for us to say, “Wouldn’t it be cool to do this
and that?”
It turns out that when you build only software that you absolutely need, you
don’t get more software than you’ll actually use. And that’s why we didn’t fear
competition from the big guys. If Microsoft decided to go after Basecamp,
they’d say, “Get a team of 20 people to do this and we’ll give them 6 months to
come up with something.” Because when you’re in a big corporate environment,
you throw a lot...

David Heinemeier Hansson 311
anything when you first sign up. If you just need to manage a single project, the
product is free for life. So a lot of people got in just testing it out for a certain
project.
As soon as they realize that they’d like to use it again on another project,
there’s an upgrade path for them to go down. They can buy the first paid version
that gives them three projects and gives them file uploading for $9 a
month. So we have a shallow upgrading curve where...

money if we went out of business a few months into a $500 agreement. They
wouldn’t allow that because we didn’t have a long history with them.
So now we had this extensive billing system focused on billing once a year
and we couldn’t use it. We had to go back and make it monthly instead. But this
turned out also to be a blessing. So we pushed back the launch about a month,
and now we charged monthly, but we charged twice as much. The plan that was
before $99 a year is...