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The Rework Podcast

By the Numbers

22 min episode · 2 min read
·

Episode

22 min

Read time

2 min

Topics

Productivity, Startups, Leadership

AI-Generated Summary

Key Takeaways

  • Data analyst elimination: After two analysts over multiple years, 37signals discovered heavy data analysis rarely changed their decisions. They now handle occasional analytics through their finance lead using AB testing software, avoiding full-time analysis that produces interesting but unusable insights.
  • Product launch philosophy: 37signals builds new products like Fizzy without revenue projections or success metrics. They view experiments as worthwhile even if they fail because new projects cure boredom, enable fresh thinking, and generate learnings that transfer to existing products.
  • Cost reduction aesthetics: Treating expense management like editing prose creates margin and freedom. Reducing line items from twenty-five to fourteen provides psychological lightness and operational flexibility, though cutting too lean eliminates the value of activities entirely, requiring balance around B-plus efficiency.
  • Conversion rate reality: Rigorous analysis of Basecamp usage patterns revealed only obvious conclusions like people who use Basecamp with others stay longer. The search for a holy grail metric similar to Facebook's three-photo upload trigger produced no actionable single conversion driver.

What It Covers

37signals co-founders Jason Fried and David Heinemeier Hansson explain why they eliminated their full-time data analyst role, how they approach product development without quantitative projections, and which business metrics actually matter.

Key Questions Answered

  • Data analyst elimination: After two analysts over multiple years, 37signals discovered heavy data analysis rarely changed their decisions. They now handle occasional analytics through their finance lead using AB testing software, avoiding full-time analysis that produces interesting but unusable insights.
  • Product launch philosophy: 37signals builds new products like Fizzy without revenue projections or success metrics. They view experiments as worthwhile even if they fail because new projects cure boredom, enable fresh thinking, and generate learnings that transfer to existing products.
  • Cost reduction aesthetics: Treating expense management like editing prose creates margin and freedom. Reducing line items from twenty-five to fourteen provides psychological lightness and operational flexibility, though cutting too lean eliminates the value of activities entirely, requiring balance around B-plus efficiency.
  • Conversion rate reality: Rigorous analysis of Basecamp usage patterns revealed only obvious conclusions like people who use Basecamp with others stay longer. The search for a holy grail metric similar to Facebook's three-photo upload trigger produced no actionable single conversion driver.

Notable Moment

The team calculated that changing their Highrise marketing page without running tests or checking conversion rates for six months resulted in a 10 percent drop in signups, costing the company approximately 2.5 million dollars in lost revenue.

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Episode Transcript

Welcome to Rework, a podcast by thirty seven Signals about the better way to work and run your business. I'm Kimberly Rhodes joined by the co founders of thirty seven Signals, Jason Fried and David Heinemeier, Hansen. This week, we're talking a little bit about analytics. What we look at, what we don't. We don't have a full time analyst here at thirty seven Signals. A lot of small businesses don't, but we did have that role at one time. So that we talk a little bit about that transition and what numbers we look at now. So, Jason, why don't we start with you? This role of just a full time analyst. We've had it. We don't have it. Kind of talk me through that transition. Yes. We've had two in our history. We first hired one because we thought we should. Like, we should know what the hell is going on. Actually, the the initial idea was, like, I think there was a story with Facebook figured out that if someone clicks this or uploads a photo or something, it, like, led to something. We're like, we should figure out what that thing is for us. What is the engagement thing? And to do that, we need to analyze probably a lot of data. And it seemed like a really good hunt and really interesting thing. So we hired a fellow named Noah, who was fantastic at this, like, awesome at this. And he was with us for a number of years. And then he left for a variety of other reasons, and we just didn't hire anyone immediately, I think. Then we eventually hired someone else named Jane, and she was with us for a while as well. And she left, and we kinda realized, like, at that point, we didn't really need someone again. Because what we found is that we're we had this initial insight or this not even insight, but this curiosity, about, like, would there be a trigger? Would there be a thing that if we did this and we did that, and we could look at all this data? And then we found out that we could look at more data and look at more data and look at more data. It turns out, like, it didn't really affect much of what we're doing in the end. There's a lot of data you can look at, a lot of data you can mine, a lot of stuff you can analyze. But, ultimately, if that's just the work that you're doing and you're not really using that information so much, maybe we don't need to do that. Maybe we could occasionally have someone look into something if we need someone to look into something occasionally, but it doesn't need to be a full time job. There wasn't really enough work to make this a full time job, in a way that we could we could use it. So now we have Ron who …

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Books, tools, and gear mentioned in this episode

SignalCast may earn commission on purchases via these links. As an Amazon Associate, SignalCast earns from qualifying purchases.

Tools

  • HighriseBy guest

    by 37signals

    The team calculated that changing their Highrise marketing page without running tests or checking conversion rates for six months resulted in a 10 percent drop in signups, costing the company approximately 2.5 million dollars in lost revenue.
  • BasecampBy guest

    by 37signals

    Rigorous analysis of Basecamp usage patterns revealed only obvious conclusions like people who use Basecamp with others stay longer.

Products

  • FizzyBy guest

    by 37signals

    37signals builds new products like Fizzy without revenue projections or success metrics.

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