37signals

Software

Mentions

Podcasts

Episodes

Podcast consensus

Points of consensus

▶37signals maintains a lean, efficient operational model, characterized by a flat hierarchy with no middle management, small two-person project teams, and a history of slow, deliberate hiring.Apr 2026

▶The company prioritizes profitability and financial independence, evidenced by its 27-consecutive-year profit streak and its intentional avoidance of outside investment.

▶A unique, employee-centric compensation system is in place, featuring a significant profit-sharing program where 10% of annual profits are distributed based on employee longevity rather than role or salary.Apr 2026

▶Product development is structured around short, time-boxed cycles, with the vast majority of projects (99%) designed for completion within six weeks or less.Apr 2026

Points of debate

▶There is a potential tension between the company's strategy of reducing headcount from a peak of 80 to 62 employees while simultaneously achieving high profitability and distributing six-figure bonuses to a third of its staff.Apr 2026

▶Founder Jason Fried's stated belief that he could not successfully start the company today contrasts with the firm's 27-year history of sustained profitability and operational success.Apr 2026

▶The company's strategic decision to migrate off the cloud to save an estimated $10 million is a significant contrarian move against the prevailing industry trend of cloud adoption.Apr 2026

▶37signals' deliberate avoidance of common growth tactics like price optimization and A/B testing presents a conflict between maintaining stability and potentially missing opportunities for marginal gains.Apr 2026

Key themes

▶Radical Financial Prudence and Profitability

37signals has maintained profitability for every year of its 27-year existence by avoiding outside investment and its associated growth pressures. This philosophy extends to current operations, such as migrating off the cloud to save an estimated $10 million and refusing to chase marginal gains through aggressive price optimization.

The company's long-term financial health and independence demonstrate that a venture-capital-fueled growth-at-all-costs model is not the only path to success in the software industry.

▶Lean Operations and Flat HierarchyApr 2026

The company operates with a minimal organizational structure, featuring no middle management and an executive team of only two. New features are typically built by two-person teams (a programmer and a designer), and roles like COO and engineering manager were explicitly eliminated for adding unnecessary layers.

This extreme focus on a flat structure suggests a belief that direct communication and small, autonomous teams are the key drivers of efficiency, though it may pose challenges for scalability and formal career progression.

▶Employee-Centric Compensation and CultureApr 2026

37signals has a distinct approach to employee compensation and evaluation, distributing 10% of annual profits based on longevity. Last year, this resulted in six-figure bonuses for approximately one-third of the staff. Furthermore, new hires are evaluated after one year with the simple question of whether they would be hired again.

The longevity-based profit-sharing model heavily incentivizes long-term retention over short-term performance, fostering a stable, experienced workforce at the potential cost of attracting top talent who prefer performance-based rewards.

▶Disciplined and Time-Boxed Product Development

The company's product development process, known as 'Shape Up', is built on constraint. 99% of projects are designed to be completed in six weeks or less by small, dedicated teams, a methodology that enforces focus and prevents scope creep.

This rigid, time-boxed approach ensures consistent shipping and reduces the risk of large, failed projects, but it may limit the company's ability to tackle more ambitious, long-term initiatives.

Source episodes

Sentiment over time

Not enough data for timeline

Changes over time

Founding Era (27 years ago)

The company was established with a core philosophy of avoiding outside investment to prevent pressure for rapid growth and focused on slow, deliberate hiring.

Peak Growth Period

The company grew its headcount to a peak of approximately 80 employees.

Recent Restructuring

37signals deliberately streamlined its organization by eliminating COO and engineering manager positions and reducing its total headcount to 62 employees.

Last Fiscal Year

The company distributed 10% of its profits, resulting in six-figure bonuses for about a third of its employees, rewarding longevity.

Current Strategic Initiative

The company is undertaking a major migration off the cloud, a move projected to save approximately $10 million.

Future

A second edition of the 'Shape Up' book is reportedly being developed by Jason Fried, expected to detail the company's updated operational methods.

Suggested prompts

How does 37signals' 'no middle management' structure impact scalability and opportunities for employee career progression? &nearr;What are the long-term risks and rewards of the company's contrarian strategy of moving off the cloud and avoiding standard price optimization techniques? &nearr;How does the longevity-based profit-sharing model affect employee motivation and talent acquisition compared to more common performance-based incentives? &nearr;Given the reduction in headcount from 80 to 62, how has the company maintained its long-standing profitability and operational effectiveness? &nearr;

Key concepts

Profitability 1 ep Organizational Structure 1 ep Company Culture 1 ep Hiring and HR 2 ep Financial Strategy 2 ep Product Development 2 ep Leadership Philosophy 1 ep Employee Compensation 1 ep Cloud Infrastructure 1 ep

Notable quotes

“At 37signals, new employees are evaluated after their first year by asking the question: "knowing what I know now, would I hire them again?"”

Jason Fried · Jason Fried: Your Only Competition Is Your Costs

“37signals has been profitable every single year for its 27-year history.”

Jason Fried · Jason Fried: Your Only Competition Is Your Costs

“37signals operates with no middle management and an executive team of only two people, Jason Fried and David Heinemeier Hansson.”

Jason Fried · Jason Fried: Your Only Competition Is Your Costs

“At 37signals, approximately 20 out of 62 employees received six-figure profit-sharing bonuses last year.”

Jason Fried · Jason Fried: Your Only Competition Is Your Costs

Report last updated: Apr 8, 2026

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