"If their employees are happy, shouldn't they be staying overtime anyway?" is precisely the wrong way to look at this.
* If an employee is happy, expecting them to work more hours is probably not the best way to keep them happy.
* Productivity goes down when you spend 16 hours a day at work. Creativity suffers as well.
* Morale goes down when engineers realize that managers are too incompetent to schedule tasks appropriately.
* Morale goes down when engineers realize that managers don't understand that results aren't proportional to face time.
Any hacker aspiring to be an entrepreneur should rebel at being asked to put in 80 hour weeks for $0. You're not going to do your best work, and your life/health will suffer. It defies common sense.
The more time that your job allows you not to be there, the more time you have to pursue passions of your own choosing. This makes for more well-rounded, happier, employees. And it's this well-roundedness that's going to pay off for them in the long-run.
Personally, I love that 37signals is challenging so much of the status quo in business.
I think this is worth repeating every few days until it is thoroughly internalized. I burn out every once in a while...and when it happens, my productivity is shot...sometimes for weeks. I have to be careful to keep exercising every day, spend a reasonable amount of time watching movies or playing music or games and interacting with other people, or a weird sort of do-nothing depression kicks in. I don't even realize it while I'm working, until it's too late. I can even be enjoying what I'm doing, and having some satisfaction about results, but if I overdo it, something clicks and the next time I run into anything slightly frustrating/boring/repetitive it's all over and the burnout kicks in.
- for me it has been months, sometimes years. I guess it could kind of turn you off for a whole career.
It'd be different if you had equity or some further promise of long term benefit.