A Chat With the
Master It’s not
every day you
get to meet one
of your heroes.
But I recently
sat down with
one of mine
In 2005, I read a book called The
Innovator’s Dilemma, by Clayton
Christensen. It blew my mind,
because it seemed to describe my
business perfectly. 37signals had just
released Basecamp, our Web-based
project-management app. Aimed at
small-business owners, Basecamp
was designed to be affordable and
easy to use. It did only a few things,
but we made sure it did them well.
Our major competition at the
time was Microsoft Project, which
was expensive, complex, packed with
features, and aimed at large organizations. It wasn’t particularly pleasant to use. I’ve yet to meet someone who is excited
about Microsoft Project.
In The Innovator’s Dilemma, Christensen explains how successful companies with well-established products are constantly
being threatened by newcomers. Winners, he argues, don’t lose
when new rivals attack from the high end of market. They lose
when start-ups attack from below. This, of course, was precisely
what 37signals was trying to do to Microsoft. And it was working. Needless to say, I became a passionate fan.
Fast-forward to 2012. Through a series of seemingly
unrelated connections, I was invited to join a small group
to spend a few hours with Christensen at Harvard Business
School, where he teaches. I was thrilled. It’s not every day you
get to sit down with one of your heroes. The group met for
about three hours. Sometimes, a chat with the right person
makes all the difference, and that’s what happened with
Christensen. I’d like to share three insights in particular.
At one point in our talk, Christensen quoted Theodore Lev-
ILLUSTRATION BY LAURENT CILLUFFO
BY JASON FRIED
Jason Fried is co-founder of 37signals,
a Chicago-based software company.
His job often leads to happy surprises.
itt, a legendary professor of marketing
at Harvard: “People don’t want to buy
a quarter-inch drill,” Levitt argued.
“They want a quarter-inch hole.”
I understood what he was getting
at. To most consumers, the hole mat-
ters a lot more than the drill. Yet the
people who manufacture drills gener-
ally do not think this way. They can’t
say enough about their drills, about
features, technology, why this drill is
“drillier” than that one. That’s the
standard approach to marketing most
products, and it’s myopic. It made me
think about our own marketing. Do
we talk too much about features and
technology? Do we use the right
words to describe what our product
actually does? Or do we talk too much
about the drill rather than the hole?
Later, Christensen discussed
something he calls the trap of mar-
ginal thinking. Again, he began with
a quote, this one by Henry Ford: “If
you need a machine and don’t buy it,
you will ultimately find that you have
paid for it and don’t have it.”
The point is that when an estab-
lished company weighs the cost of
new technology or talent against what
it already has, it usually sticks with what’s familiar. Why?
Because the marginal costs of using what you have are almost
always lower than the full costs of investing in something new.
But that’s a trap—and one that companies that are young
and hungry don’t get caught in, because they don’t think in
terms of marginal costs. Rather than basing such selection on
costs, start-ups tend to pick what’s best for the job. It’s a key
reason newbies displace the old guard: They have better tools.
Christensen said one last thing that has really stuck in
my head. It’s often said that someone can’t be taught until
he or she is ready to learn. He put it differently: “Questions
are places in your mind where answers fit,” he said. “If you
haven’t asked the question, the answer has nowhere to go.
It hits your mind and bounces right off.”
Whoa, I thought. It’s like Velcro. The loop side of the Velcro
can’t stick to itself; it needs the hook side to latch on to. Ques-
tions are hooks; answers are loops. Thanks, Clay. I needed that.