37signals has a strong brand and dedicated following for making simple and affordable Web-based business software. So I was caught off-guard today when Matt Linderman, writing on the company’s blog, asked readers to explain what the company does.

Like when we’re at a cocktail party and someone asks, “What does 37signals do?” The answer typically starts with “a web software company…” and goes to something like “that helps small businesses organize information…” and ends with the other person snoring.

So here’s another exercise for entrepreneurs along the lines of the escalator pitch. Describe what your company does…in a sentence your grandmother could understand.

This is even more important in an information economy. If you make shoes, that’s pretty easy to explain. If you make Web-based project management solutions, you need to find a way to explain that to people who don’t know or care what project management is. In the comments, 37signals got some good suggestions:

“We help groups of people become more effective in whatever it is that they do.” — Brian Doll

“We make meetings go away.” — Shannon Low

I think it’s a useful way for entrepreneurs to think big about what they do — not what their products or services do. You’re selling the benefit. Not the product, but the cure for the pain.

This is why so many press releases never get opened. The reader sees “leading buzzword solution provider” without hearing what the problem is or how the company solves it. The jargon may be understandable to VCs or people in the industry, but in most cases I don’t think it’s useful even then, unless you’re discussing specific technical details. Explain what you do in as few syllables as possible. Then, if the person you’re talking to wants to know more, you can get into the details — the hows of what you do.

It’s not easy. The fact that 37signals, a firm that prides itself on simplicity, asked its users for help shows how hard this is. But those entrepreneurs who can articulate what they do to a broad audience (people at cocktail parties, grandmothers, etc.), probably understand what they do, in the big picture sense, better than those who can’t. So, what does your company do?

Before it's here, it's on the Bloomberg Terminal. LEARN MORE