More is not necessarily better--even when you're talking about profits. Inc.'s Jason Fried explains.
Jason Fried is the co-founder and president of 37signals.
When it comes to making decisions, I'm not what you'd call a numbers guy. Statistics rarely drive me. Feelings, intuition, and gut instinct do.
Of course, a hard look at the numbers can influence my decisions, but that's just one ingredient in a big, boiling pot of inputs. I know plenty of entrepreneurs who are numbers first. They tend to be highly analytical people, and before they pull the trigger, all the numbers have to line up just right.
There's nothing wrong with that. And I'd never suggest that all business owners should be like me. The owner of a company with supertight margins--say, a restaurant, retailer, or producer of commodity goods--would be a fool not to keep a close eye on the numbers. But when I make big decisions, numbers are seldom, if ever, the tiebreaker.
I've found that when you make numbers your main focus, you become a tad, well...obsessive. If you're aiming for 27 instead of 26, why stop there? Why not go for 28? Or 29? Or 29.1? Where does it end? When the overriding goal is improving your numbers, it becomes almost impossible to determine when enough is enough. And I think it's critical to know when enough is enough.
This kind of thinking, of course, is anathema in much of the business world. The CEO of any publicly traded company would be scorned, maybe even fired, for expressing such beliefs. Few venture capitalists would place a bet on an entrepreneur willing to settle for less. Business leaders, we are told, are charged with the task of maximizing--maximizing shareholder value, maximizing employee productivity, maximizing return on investment, maximizing profits.
But I'm not interested in maximizing. I don't care about squeezing my company's fabric so tight that I get every last drop. I don't want, or need, every last drop. This is probably one of the reasons I'd make a terrible public-company CEO.
I don't care if the ultimate ROI on a particular project is 18 percent or 20 percent or even 25 percent--as long as it's not negative. Sure, 30 would be nicer than 25, and 25 would be nicer than 20, but I'm just fine with 15, too. As long as 37signals is comfortably profitable, we're fine. Could our margins be better? Maybe. But working our behinds off for that extra 2 percent? There are better things to do with our time.
Of course, there are certain numbers that interest me: customer numbers. Not how many customers we have or how much money we make off each customer. I'm talking about numbers that customers can feel, that directly affect the customer experience.
How quickly do we get back to customers when they ask questions? Over the past year, we've been working hard at this. We now answer nearly every customer email within 15 minutes, and often in just five. That makes our customers happier. And when they're happier, so is everyone else around here.
If the customer can tell the difference, then I care. I'm pretty sure that no customer can tell whether our profits are growing at a rate of 30 percent or 15 percent. But customers definitely can tell if the app they're using is twice as slow as it was last week. That's a metric that matters.
So I take it back. I guess I am a numbers guy after all. It just depends on which numbers you're talking about.