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David Heinemeier Hansson
Creator of Ruby on Rails
with his wife, Jamie at their part time residence at La Zagaleta, Spain

 

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In his early 30s, Denmark-born David Heinemeier Hansson is without a doubt one of the major players in the programming world, having opened up the way with ruby on rails, an open source program that serves as the foundation of many popular sites like twitter and groupon. And he’s found his way to La Zagaleta in 2011 with his wife, Jamie Heinemeier Hansson, in search of a mediterranean backdrop and sharp curves to feed his photography and racecar driving obsessions. Opening up their beautiful home to La Zagaleta lifestyle, David explores his work as partner at 37 signals, why working more doesn’t always equal results, and everything in between.

What is Ruby, and how does Rails simplify it?

Ruby is a programming language that was created in 1995 in Japan. It didn’t reach widespread adoption in the West until the early 2000s, but once it did, the mission of “making programmers happy” made it spread like wildfire.

Rails is the toolkit that I created to make it easy to use Ruby to create web applications. Rails includes everything in the box to create applications like Twitter, Groupon, Yellow Pages, or any of the other amazing applications that have been created with the toolkit.

What other companies currently apply Rails and how many Rails-related jobs are out there?

The big flashy names are startups like Twitter, Living Social, Groupon, Hulu, and AirBnB. But Ruby on Rails has become the technology stack of new initiatives at plenty of Fortune 500 companies.

The big enterprises are just as tired as everyone else of mega software projects that run over budget and fails deadlines because of unproductive tools and environments. They’re just a little slower to pick up on new technology than startups who don’t mind risk, but now that Rails has been out there for a good 7+ years, they’re starting to come around in a big way.

It’s always hard to know exactly how many jobs are based on a certain technology stack, but I’ve seen estimates in the hundreds of thousands and forecasts for four million by 2015.

You are a partner at 37 signals, which offers various business organizational and project management tools, all of which are built upon the Rails framework. Tell us about the objectives behind Basecamp, Backpack, etc?

Basecamp was born out of a desire to have a better way to manage and collaborate on projects. Most people these days just use email. But that quickly turns into a mess. What version of the file do you have? How can we get John up to speed with all that we’ve discussed so far?

So Basecamp gives you a central web page where everyone can see what’s going on with the project. They have access to all the important discussions, documents, the project calendar, and all the todo’s that need to get done. But the key difference over similar software is that we consciously try to do less than the competition. The reason email keeps winning as a project management tool is that it’s so simple. Most project management software is a project in itself to learn. Few people have the time or the patience for that.

So we try to be a lot better than email, but only a little more complicated. That’s been the same mission for our customermanagement tool Highrise and for our internal communication tool Backpack.

How can these programs benefit “traditional” companies not accustomed to using web applications?

The vast majority of our customers never used dedicated project management or customer relations tools before. They usually come to us from a background of email, spreadsheets, and Word documents. So we’ve really tuned our software to work well for people with no prior experience.

The same goes for the whole sales process. All our applications are completely free to try and if you want to use all the features, you just pay a low monthly subscription ($50-100/month, usually) and there are no long-term contracts. It makes it a no-brainer to try and there’s no risk if you don’t like it.

This is a big contrast to how competitors like SAP and Microsoft Sharepoint does things. Where you need big implementation teams, month long projects, and huge budgets. If it turns out that your employees don’t like the system after all that, it’s usually too bad. Too much money has been spent, so they’re going to have to use it whether they like it or not (They rarely do, by the way. We have lots of “insurgents” from big companies fleeing the poor enterprise software they’re being forced to use and pay us with their personal credit card just to get something done!).

You co-wrote the New York Times Bestseller Rework with 37 signals co-founder, Jason Fried, which, it would be fair to say, has revolutionized and harshly simplified the way we think about guiding a productive company. What is the single-most important concept that we should get from reading Rework?

It’s also about how small is beautiful. The industrial revolution is over and today’s economies of scale do not come from hiring armies of people and opening physical offices everywhere. We’ve built a fantastically profitable software business with 1/10th to a 1/100th of the headcount you would expect. To this day we’re still less than 30 people.

Hansson by the pool

But that’s the wonderful thing about information and software businesses. There is not a linear relationship between the number of customers you can serve and the number of people you need. We’ve had more than five million people from upwards of 100 different countries use our products. All with less than 30 people.

Rework describes all the techniques we used to stay ultra productive with that small of a team and how to use the advantages of small to still reach millions of people in the market place.

You’ve also been critical about what MBA students will not get out of their education. What do you think is missing from graduate programs these days?

MBA programs target middle management of established businesses built on the ideas of the industrial revolution and predictable economies of scale. The tools and techniques you need to manage those kinds of businesses are not only largely irrelevant to creating the new crop of startup companies, but harmful to them.

The more time you spend perfecting the 5-year projections in your business plan, the less time you spend making a compelling product. The more time you spend in endless meetings discussing the SWOT analysis, the less time you spend using the internet to get your story out.

The majority of successful 2.0 start-ups are linked to the United States. What difficulties and advantages do you think European start-up tanks are faced with?

The United States is the undisputed leader in software development and the majority of new, successful companies that we all talk about these days are software companies. Europe needs to focus much more on cultivating great software development skills.

But it’s not all lost. There are pockets of great software developers and business starters who know how to use software everywhere. Identifying where they are and helping them will be key.

It doesn’t take much either. Although I’m not a big fan of the venture capital road that too many software companies in the US are taking, I do like the idea of the incubation-style kick-offs like Y Combinator and TechStars. These companies take a small, minority stake in an unproven idea in return for the startups to get a minimal viable product on the market.

In your opinion, what is the most useful and efficient technology-related product to recently have come out?

I love what Apple has done with both the iPhone and the iPad. They’ve taken the best parts of computing for the masses -- communication and productivity -- and made it not only mobile, but dead simple to use.

In addition, I really love Twitter. I have some 50,000 followers and the speed and reach with which I can interact with customers, collaborators, debaters, and more is amazing. The world feels like it got an order of magnitude smaller with Twitter and we cut out many of the middle men in the process. (The fact that Twitter is still not making money is another matter).

Following Steve Jobs’ retirement and recent passing, what does Tim Cook have to do to keep Apple on top?

Allow designers like Jonathan Ive and his team to

continue to make products for themselves. Apple has been so phenomenally successful because they don’t listen to focus groups or cost analysis when it comes to design and execution. They built products that Steve Jobs and Jonathan Ive wanted to use to their personal level of perfection.

It’s the best product story ever told. It took Apple a good decade and a half to get where they are today under Steve’s leadership, I think he has set them up to continue just as strong for another decade and a half, even without him at the helm.

Talking investment: You seem to have a “good eye” for the IT business. Which listed US companies would you recommend to the La Zagaleta Lifestyle Magazine reader with a long-term investment outlook?

First, I’d warn about which companies to not invest in. I think we’re in the early onset of another tech bubble. Lots of social media this and social media that companies that might have big revenues, but no profits dominating the headlines.

I’m short Salesforce (slow customer growth, expensive sales people, weak margins); Groupon (they spend $1.42 to make a buck even as they have billions in sales -- the model will never scale); and LinkedIn (there’s a decent business there, but they’ve overvalued by 10x).

Apple is still my favorite technology stock. They’re trading at 10- 12 forward P/E, which is just a fantastic deal when you consider they doubled profits last quarter. They might already be the most valuable company in the world, but I think they have much further to run.

We hear you are also a motorsport aficionado, and your latest stint was at Le Mans. Where do you hope to take this hobby?

I actually haven’t had a chance to race at the 24 hours of Le Mans yet, but that’s the big goal. I’m currently racing in a variety of series, but just signed to compete in the last three races of the Intercontinental Le Mans Series with the Lotus Jetalliance team. We’re going to race the 6 hours of Silverstone this week, then Petit Le Mans at Road Atlanta, then 6 hours of Zhuhai, China in November.

Next year I hope to hit as many of the major endurance races as possible. Daytona 24, Sebring 12, Spa 24, Nurburg 24, etc. There are so many wonderful and historic races to do and I want to do them all!

You have recently acquired a property in the La Zagaleta Estate. What kind of services and quality-assurance did you expect and what did you receive?

We expected the service to be great, but have been thoroughly impressed with just how awesome it actually has been. Since we only live in La Zagaleta part time, it’s been even more important to know that there is always someone there to take care of things. The experience has made us wish that we could find the same level of service in the US!

We fell in love with our house in La Zagaleta from the first time we walked in the doors. The architecture, the view, the spacious surroundings. At first we weren’t sure that it would be worth the sizable investment since we’d only be able to use the house part time, but that concern has been brought to shame. It’s been an absolute joy and we miss our house dearly whenever we’re away.

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