The Biggest Customer Conundrum

Welcome to Rework, a podcast by thirty seven Signals about the better way to work and run your business. I'm Kimberly Rhodes. I'm joined as always by the cofounders of thirty seven Signals, Jason Fried and David Heinemeier Hanssen. Well, thirty seven Signals is in the business of small business. We don't have a big sales team. Our customers are small businesses, entrepreneurs, nonprofits. We're not going after that one big enterprise client. Jason recently wrote, while many think having a largest customer is an asset, it's actually a company's biggest weakness. Jason, tell us why you think that. Let's dive into that. This is sort of the classic dilemma, I think, for entrepreneurs, especially when they're starting a new software business. They wanna land a whale, and they wanna land a whale because it looks good on their website. They bring a lot of money. Maybe if their business model is based on seats, they can sell a big account. And you can understand why people would feel like they wanna do this. There's legitimacy. There's all that stuff. But the problem is is that if you land only one or two of those, let's say, and you have to backfill with a bunch of other customers at a smaller size, then you have this big disparity between big and small customers. And you have a few customers who essentially run your whole business. You are now beholden to a whale or two whales or a small school of whales, but you have that class, you have a different class of customers, and you're almost a consulting firm at this point where you're just gonna do what they're gonna say because they pay you the most money. They have an outsized bill. And so you're working for them. You're no longer working for yourself. You're not building your product. You're building their product. Look. If you wanna only land big companies, that's one way to do it. But it kinda gets you into a bad spot pretty early on. The other problem is is that if you only have a handful of big clients and one of them leaves, you're really in trouble. And so you find that you're gonna do whatever you need to do to keep them around. And that, again, makes you feel like a consulting firm. So what you don't wanna have happen is you don't wanna be in a situation where you can't afford to lose a customer. And when you only have a few big customers, you simply cannot afford to lose that customer. You'll be screwed. We put ourselves in a position here, 37 signals, basically to say, we don't want this to happen. But if we said, hey, whoever, some random person, you get to pick 10% of our customers and kick them out. Or you get to pick 10, then they they have to leave, whatever it would be. We would be okay with that because we don't have any …