artist // designer // entrepreneur

A New Home for Sortfolio.

Yesterday the tech sphere caught fire of 37 Signals announcement to sell Sortfolio, an established directory of web designers and studios that allows these companies/freelancers to be discovered by clients. According to Jason Fried, Sortfolio averages $17K - $20K per month with a total of 10K accounts. It's seemingly a great product with a clientele of reputable designers and great testimonials. The decision to sell comes as a shock to some since 37 Signals' stance is to create a product that scratches your itch, iterate, stay small and never sell. It's sensible to a degree in that they don't feel the product aligns with their core offering especially if they choose to focus on their job board. I can see the conflict that exists and it makes sense to avoid distractions if you call $20K/mth distractions.

If I had the money to lose, I'd purchase Sortfolio as I'm interested in seeing where I could take it with existing products and services I have or am trying to build out. There are two simple problems that complicate it all:

  1. I don't think they'll entertain any offer below 200K. Some say more but I don't think they're interested in the money as they are someone who can take Sortfolio places.
  2. Sortfolio's branding and success heavily relies on 37 Signals.

I won't go into the first one because I'm no financial specialist but the latter is where I'm interested in exploring.

The problem is that Sortfolio's success lies in the fact that it's a product by 37 Signals. I don't think this should be taken lightly at all because my opinion on Sortfolio is that it's nothing special. It doesn't screen companies, it makes no guarantees and for god sakes, in a time when everything is location driven, it cannot even detect my location. Sortfolio has no special or magical execution that cannot easily be duplicated. The value is in the branding, existing clientele and most importantly the backing of 37 Signals.

We’ve had Sortfoio Pro listing pretty much since the site launched. It has generated quite a few good leads (and awesome projects) and still continues to do so. What’s currently great about Sortfolio is that it attracts a lot of startup founders who are looking for excellent service providers. Martin Kivi

This is such an important factor. 37 Signals is a beacon in the start-up realm. Entrepreneurs flock to their blog like moth to a flame and because Sortfolio is promoted through their assets, the result is obvious. Sortfolio loses this type of marketing, it loses value for pro accounts thus putting the new owners at a disadvantage. The only way to avoid this is for the new owners to be at the same level, if not higher, of 37 Signals or invest heavily in a marketing strategy that fits the bill.

Wow, people are so cynical, or maybe they just lack imagination? This is a great deal for the right person, with an established brand and a good size client base (and revenue) someone with ideas and passion could really do something great with this site. - Chris Harrison

Chris might be right but what I can't wrap my head around is if I'm the individual or company described, why am I going to pay around $200K plus for Sortfolio when I can essentially build out a better product? Maybe I'm being cynical or lack imagination but maybe such individuals are being naive? 37 Signals is such a powerful and much respected brand in the start-up, small business and tech world that if they say jump, many will say how high. If they decided to sell socks, people will buy and then buy that business off them because everything they touch is gold.

Why not practice what 37 Signals preach along with Eric Ries lean start-up approach to build out something better than Sortfolio which is very possible? If I can get a reasonable answer to this, I'd fork over any sums of cash if I could.

We’ll be happy to announce the sale and the new launch here on SvN and on Twitter, but we won’t be promoting Sortfolio on 37signals sites once it’s been sold. - Jason Fried

The mere fact that 37 Signals would no longer promote, endorse or back Sortfolio other than announce the sale and re-launch makes Sortfolio of little value. I might as well go out, build a better designed product with smarter technology while still keeping it simple and market the crap out of it. I'm not putting down the brand value of Sortfolio itself but like many, I think majority of its appeal rests with 37 Signals.

Shall we take risks into consideration as well... how many individuals will jump ship because they don't feel confident in the new owners? This could be because users like Martin Kivi feels the marketing strategy of the new owners isn't garnering them the same ROI to justify $99/mth. This is extremely important because you're betting on that 20K/mth to break even in a given period so you can reinvest in the development of the site and marketing. If people start bailing then you're losing in more ways than one.

What would make Sortfolio a win-win investment is if 37 Signals gave the new owners a grace period, that is, a period of time where 37 Signals would continue to promote and endorse Sortfolio. In doing so, the new owner will see continued usage and traffic while they work on relaunching the product. After the period ends, 37 Signals simply stops promoting and endorsing Sortfolio and now the new owner has the responsibility in doing what's promised to the community - afterall, 37 Signals gave them fair time to get their act together.

I'm going to close this off in saying, don't call me a hater as I've seen some people do on Signal vs Noise blog. I like many others respect, admire and consider 37 Signals a demi-god in the start-up, internet world. They're pioneers.