Title: Everyone has probably read about or seen DHH's talk by now, where he advocates attempting to create small/medium sized, sustainable companies with a simple, direct business model (sell something directly to your customers).<p>A lot of his examples are from 'real world' products (Italian restaurants, say), that clearly have very different economics from on line businesses.  The marginal cost of another bottle of Bardolino is not indifferent, even though the markup is also going to be good.  The marginal cost of another basecamp customer is very small.  Also, his Craigslist example was not particularly compelling for me.  Those guys dominated their market, but more because people flock to the site because everyone else does (network effects).  Their choice to keep things small/real seems like a very conscious one, but not necessarily something they could get away with if, say, they were kijiji and eBay were the owner of Craigslist.<p>So, my question: what other web or software companies make a living the 37signals way?  What are they key characteristics of their markets?  Obviously they can't be in a winner take all market dominated by network effects.
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