Jason Fried challenges your thinking on fundraising, goals, growth, and more

[00:00] The reason I think it's great for entrepreneurs to start bootstrapping is because they just have more practice making money and they get better and better and better at the fundamental skill you need to have ultimately. [00:08] to run a successful business, which is to make money. Hopefully, I don't come off as encouraging everyone to be like me. I'm not saying that at all. What I am saying is this is a way to be. [00:17] it's an alternative to what you're often hearing in our industry, which is like go big or go home, raise a bunch of money and get huge and unicorn status and the whole thing like, [00:26] That's a way. Just know, though, that [00:28] Basically, almost nobody makes it that way. [00:31] Like really almost nobody. [00:34] really makes it that way. And there's a lot more room to make it [00:38] and to build a successful business. [00:41] throw out that outlier and look at all the other places you can land as a business. [00:48] Today, my guest is Jason Fried. Jason is the co-founder and CEO of 37 Signals, which makes Basecamp and Hay, and soon a few more products, including a competitor to Slack. [00:59] 37 Signals is a very different type of company. [01:03] They have no investors, no board, they have no plans to go public, they never want to sell their business, they've made a profit for 24 years in a row, they have over 100,000 customers and make tens of millions of dollars in profit each year, which most VC-backed companies never make a dollar of. And all of this profit filters down to the founders and employees because they have no investors. Most founders, by default, will go down the venture route, raising money from VCs and angels, and for many types of companies, that is necessary.

[01:33] But it's also important to know that there is a different option available, and it can be much more fulfilling and fun and even much more lucrative by bootstrapping your idea. In my conversation with Jason, we get into why constraints like small teams and less cash often lead to better outcomes, why gut and instinct is underappreciated as a decision-making tool, why planning long-term is often a mistake, why work doesn't have to feel like war, why we should focus on playing infinite games, when it makes sense to consider raising. [02:03] venture capital versus bootstrapping, how to actually bootstrap your startup, so much more. Jason is fascinating and he's got a lot of wisdom to share. I'm excited to be able to bring you this conversation. With that, I bring you Jason Fried after a short word from our sponsors. [02:20] This episode is brought to you by Coda. You've heard me talk about how Coda is the doc that brings it all together, and how it can help your team run smoother and be more efficient. I know this firsthand because Coda does that for me. I use Coda every day to wrangle my newsletter content calendar, my interview notes for podcasts, and to coordinate my sponsors. More recently, I actually wrote a whole post on how Coda's product team operates, and within that post, [02:49] including managing the roadmap, their OKR process, getting internal feedback, and essentially their whole product development process is done within Coda. If your team's work is spread out across different documents and spreadsheets and a stack of workflow tools, that's why you need Coda. Coda puts data in one centralized location, regardless of format, eliminating roadblocks that can slow your team down. Coda allows your team to operate on the same information

[03:19] for startups. Sign up today at coda.io slash Lenny and get a thousand dollar startup credit on your first statement. That's coda.io slash Lenny to sign up and get a startup credit of $1,000. Coda.io slash Lenny. This episode is brought to you by Sidebar. Are you looking to land your next big career move or start your own thing? One of the most effective ways to create a big leap in your [03:49] create a personal board of directors, a trusted peer group where you can discuss challenges you're having, get career advice, and just kind of gut check how you're thinking about your work, your career, and your life. This has been a big trajectory changer for me, but it's hard to build this trusted group. With Sidebar, senior leaders are matched with highly vetted, private, supportive peer groups to lean on for unbiased opinions, diverse perspectives, and raw feedback. Everyone [04:19] Thank you. [04:49] by visiting sidebar.com slash Lenny to learn more. That's sidebar.com slash Lenny.

[04:56] Jason, thank you so much for being here and welcome to the podcast. Thanks Lenny, it's good to be here. [05:04] It's [05:05] Really good to have you on. [05:06] I have this new segment on the podcast that I call Contrarian Corner, [05:10] And I have this feeling like this entire episode is going to be contrarian court. And so I'm excited to dig into all kinds of stuff. I have so many questions I want to ask you. [05:19] I thought it'd be good to just start with giving people who aren't that familiar with your story and 37signals [05:25] a sense of just how successful the business has been. I think people don't quite get [05:30] the business you've built and the scale you've built. [05:33] So whatever you can share in terms of [05:35] Profits, anything you are comfortable sharing, I'd love to give people, especially things that might surprise people, just a sense of like, "Wow, this business is not what I imagined." We don't talk about things that don't really matter so much, like revenues don't really matter because you can go broke generating a lot of money. We talk about profits. We've historically, let's say over the past 10 years or so, we've been talking about [05:55] We've been profitable every year for 24 years, but let's say over the last 10 years, we've been doing double-digit million-dollar profits on an annual basis, which is really nice. We have about 100,000-plus paying customers, so that's a rough number. And we have about currently 75 or so employees, so relatively small business in terms of the number of people who work here. [06:16] big customer base, big profits. And that's sort of how we like to keep it. And that's sort of something that we've always focused on versus, you know, a lot of these other metrics that I hear a lot and they're usually, there's acronyms attached to them and I kind of don't even know what they are and I don't really care about them so much. It's like, we just want to make more money than we spend, have good healthy margins, which allow us to sort of,

[06:37] experiment and play and not be afraid to do things that may not work and just enjoy ourselves. So that's what we've been doing for about almost 25 years. Next year will be our 25th year in business. [06:46] So the bet, just kind of following the same thread, the bet that companies are making, obviously, going down the venture route is, [06:52] They are going to lose money for a long time so that they can make much, much more money in the future. [06:57] And so the idea there is grow as fast as possible, as big as possible, and then we'll make money. [07:02] You're a big advocate of not raising venture and bootstrapping. So just like, what's your advice to founders? [07:08] for when raising money makes sense. I actually wrote this article once called [07:13] your startup is probably not venture scale. Just trying to convince people like you may have a really good idea, but it doesn't mean it's a venture scale business. [07:20] And I feel like we're aligned on this. What's your advice to founders there? [07:24] I think, you know, obviously, if you're I think if you're building cars or you need a factory or you're opening a restaurant and there's actual like things you need to buy, like ovens and you need to hire people or have the bat and need to pay rent, you need capital. And it could come from you come from friends and family or could come from an investor can come from a bank loan. There's lots of places to get it, but you'd need it. [07:45] you know, [07:46] Software businesses, though, [07:48] And businesses like ours, we just make software, and a lot of people in our industry are like us in that respect. They need a couple laptops and a couple people, and it's pretty cheap. It's really pretty cheap to get going, and the margins are incredibly healthy in software, or they should be. What's interesting is that...

[08:07] Silicon Valley has found a way to make the most profitable style of business the least profitable. Like software has, there's like no physical costs. The margin should be close to 80 or 90%. And it turns out that they're barely even, you know, most of them aren't positive in the end. Or they're just slicing or sliding by basically. I don't understand how that works. [08:29] Well, I do. I mean, they have too many people and they spend too much money on customer acquisition and all that stuff. But it blows me away. Most businesses in the world would die, love, I should say love, to have Silicon Valley style economics, like make something that doesn't cost much to make and then sell it for high prices. But everyone, the corner store, the pizza shop, they wish they could do this and they can't because they have physical products that they have to sell and they have to buy [08:59] and convert that into a pizza and there's just costs involved with that and they can't sell for too much because the other place down the street sells it for less and [09:06] Again, I'm kind of getting off track, but if you're going to start a business that really, truly requires cash, typically capital expenditures, expensive things, hardware, whatever, of course, you need that. But I don't think you do otherwise, and I think it actually hurts you if you go out and think that you do because there really is only one outcome for venture-backed companies, [09:29] go huge. And if you think about all of the space between [09:35] kind of a small business and a massive, huge, unicorny business. There's so much room there that you could normally find your own way and slide into a slot or a place that makes sense for you.

[09:46] But if you're venture backed, you just don't even have the opportunity. You blow right past those. [09:51] They want you to blow right past those. And if you don't, you kind of wither on the vine and die, essentially. And it's just too bad. [09:58] Coming back to something we touched on a bit is this idea of smaller teams. [10:02] So you tweeted a similar stat, so I'm just going to read these numbers. [10:05] in terms of your competitors. So Asana has 1,600 employees, ClickUp has 1,000 employees, Slack has 2,500 employees, Smartsheets has 3,000 employees, and Monday has [10:16] 1,500 employees. [10:17] You have, I think you said 70-something employees? Yeah. And you have similar numbers of customers, about 100 to 150,000. [10:25] And you make a lot of profit, and they generally don't. [10:29] How is it? How is this possible? We run a very different kind of business. So, uh, [10:35] We are focused on efficiency. We're not focused on growth. They're focused on growth. And so typically when you have a lot of people, you think you can do more things at once and you probably can. And you do more things at once and have different kind of offerings to different people and different tiers and salespeople and all the things that build up an organization. [10:53] We don't have any salespeople. We don't have 15 different versions of Basecamp. We're not after enterprise. [11:01] So we don't have the enormous support costs and enormous support infrastructure required to service customers like that and customize this and customize that to keep a whale happy who's paying you $300,000 a year. We don't have any of those things. [11:15] One price, basically. Well, we have two prices on Basecamp, one price on Hay.

[11:20] Actually, two priced on hay. Two, basically. But one code base, one product we offer everybody. And let's take Basecamp, for example. Nobody can pay us more than $300. [11:31] I don't care how big your company is. The most you can pay us is $299 you get unlimited users. And what that allows us to do is to just build one product. [11:41] do a really nice job, keep it tight and simple and clear, and not have the complexity that comes with trying to service and satisfy so many different kinds of companies at different price levels with different price points and different expectations. That's why these companies tend to get bigger and bigger and bigger. They also, I think, frankly, build products just differently. We build products with two people at a time. So every feature we work on in Basecamp or whatever we're building is two people, one programmer, one designer, and they have a maximum of six weeks to deliver the feature that they're working on. [12:11] you [12:11] Most of them are usually a couple weeks, but they have a maximum of six weeks. So we don't get stuck in these big, huge projects with meetings with 18 people and slow decision making and indecision and complexity and all the things that come with it. [12:26] trying to do too many things for too many people. [12:29] Now, all that said, we could still make the mistake of hiring hundreds of people because we could afford to do so. [12:36] but to spend money because you have it on things you don't need, I think is something that Silicon Valley has gotten quite good at. [12:44] but we're quite bad at intentionally. I don't want to spend money on things we don't need. So we think that constraints, simplicity, small teams actually are where it's at and keep us honest and allow us to do great work for our customer base that we know small businesses, very, very tight kind of companies like ours and satisfy them versus trying to go after the big companies and have to have salespeople and have long sales cycles and whatnot.

[13:09] I don't know. I mean, I wouldn't. Honestly, if you gave me a thousand people, I wouldn't know what to do with them. We would we would fall apart. [13:15] If you gave me 500 people, I wouldn't know what to do with them. We would fall apart. We would be a worse off company with 500 people. I'd be completely lost. [13:23] So [13:24] That's the other thing. I don't even understand how they run and the amount of layers they must need and the amount of complexity organizationally that they must have to, like the latticework they have to build up to support all that weight. [13:35] is just remarkable, and it's foreign to us. [13:39] Okay, so I definitely want to talk about how you operate in your way of working. [13:42] because it's really interesting and there's a lot of companies can take away. But I want to follow on this thread of small teams. I have a few quotes that you've shared that I love. Oh, no. [13:51] No, good. No, it's good. Hey, if I said it, I said it. Let's go. No, they're great. So around this idea of staying small. So one is small is not just a stepping stone. Small is a great destination itself. [14:02] Also, [14:03] If you think you're too small to be effective, you've never been in bed with a mosquito. [14:07] Now, that's not my quote. That's someone else's, to be clear. Okay, okay. It's a great quote, though. Okay, and then there's one more. You don't need to outdo the competition. It's expensive and defensive. [14:15] under do your competition we need more simplicity and clarity [14:19] And I think a lot of these things point to, like there's a few paths to success and goals for people. One is build like, [14:25] I've massively scaled. Everyone's using kind of product like Figma and Notion and build a venture scale, $100 billion company. [14:32] And then there's this path, which is we're just going to make a bunch of profit [14:35] we're going to make individually. We're going to take home a bunch of cash. We're not trying to have everyone in the world use it.

[14:40] I know your focus is the, you call it the Fortune 5 million versus the Fortune 500. So maybe just whatever you want to share about just like this. [14:48] what success means to you, how you think about what success is for [14:51] you or the company like you're building? For me, you know, it's really, [14:56] about [14:57] would I want to do this again? If the answer is yeah, like that was enjoyable, I enjoyed that, that was worthwhile, I'm glad I did that, I'd like to do that again, then it was successful. Now, [15:08] You could carve out some extremes there. I'm sure someone who's addicted to drugs might go, "That felt great. I should do that again." You got to be careful with that, in a sense. Obviously, I'm not talking about that. Addiction's a whole different story. But in general, with this kind of stuff, "That was fun. Let's do that again. That worked. Let's do that again." Or, "That didn't work. I didn't like that. That was a pain in the ass. That was too complicated. That took too long. Let's not do that again." It really is about, "Do you want to do that again?" That's what success is to us. [15:36] sort of root level. Now, [15:38] On the business side of things, we have to be profitable. [15:40] Now, that doesn't mean that everything we do needs to be profitable. So I am not driven by data or I don't I don't have different P&Ls for each product in a way where we're looking at them very carefully. It's like in total. [15:56] collectively. [15:57] Are we making more money than we spend? [15:59] and that's the only thing we ultimately look at. Whether or not this product is more profitable than that product and this is behind that, it's all the things we do.

[16:10] It's all the things we do. And I don't even think you can actually draw lines back to everything and go, that was worth it. That wasn't worth it. [16:16] I mean, it's like, what is the value of saying thank you to somebody? I mean, would you want to A/B test that and go, "Well, if it turned out that it was worse to say thank you to somebody, would you not do that?" Like, no, you would do it because it's still the right thing to do. So a lot of our things are like, what feels right? What seems like the decent thing to do? [16:34] What kind of things do we enjoy making? [16:37] And as long as we can, at the end of the year, look back and go, well, collectively, we're [16:42] More work than didn't work, then we're okay. That's kind of how we look at it. We don't have financial goals. We don't have OKRs or KPIs. I don't have revenue targets. I don't have... [16:54] growth targets in terms of the number of customers we need to pick up this year versus last year. I don't look at any of those things. It's just like at the end, [17:02] we make more than we spend, we did, then the things we did this year were worth it. [17:06] And that's kind of how it goes. You also have no investors. You have no board. You have no plans to go public. You have no plans to sell the business. Right. [17:14] There's this book, I don't know if you've read this book called Finite and Infinite Games. [17:17] No, I've not. Okay, I think you would love it. So the whole premise of this book, it's like a terse. [17:24] Kind of tricky philosophical book, but it's very short. [17:26] And it, [17:27] kind of espouses, you want to be playing [17:28] infinite games to be happy in life. Games that never end. [17:31] Versus games like, I'm going to build a business and sell it. I'm going to go public. That's my goal. [17:36] or I want to achieve this [17:37] Promotion. [17:38] You get most joy out of things that never end, like building great relationships, building a company you want to keep working at forever.

[17:44] I like that. And you know what's interesting is I've always thought of my career this way. So when I got my first job, I was 13. [17:51] I worked in a grocery store for a bit, and then I worked in a shoe store. And after that, like maybe when I was 15, I got a reseller's license, which was this thing you could, this is way back in the day. I think they still exist, a company called Ingram Micro D, which had this huge thick catalog of electronics equipment. [18:11] And if you had a reseller's license, you could buy these things at wholesale prices and I could sell them to my friends for [18:16] retail, which is like almost 2X wholesale. And even though I'm not selling electronics equipment today, I'm selling software instead, I feel like I have the exact same job as I did when I was 15, that this is a long continuum of... [18:29] Finding stuff that I like, in this case today, it's building things that I like, and selling them to like-minded people who also would find them useful or like those things too. So whether or not it's software or electronics or stereo equipment or whatever the heck it is, or music organizing databases, whatever it is, it's all the same to me. And I just want to keep doing it. This is my day job. I think the other thing that's interesting about entrepreneurship is... [18:53] Sometimes, there's a sense of like you can get a job or you can be an entrepreneur. Well, an entrepreneur is a job. [18:59] And like I want to this is my job. And so I want to create the company that I want to work at. [19:06] And I want to keep doing this job for as long as I can, as long as I'm useful. I'm good at it. I enjoy it. I want to keep doing that. And so to get in bed with an investment that would say, like, in five years, you have to stop doing what you're doing, you're going to get a big paycheck, maybe.

[19:22] But you gotta stop doing what you're doing, because we're gonna sell this business, and you're gonna have to work for this other company for two years and do their thing, and then eventually after that's over, you'll leave and you'll go start another thing. [19:31] That just has no appeal to me at all. I'd rather just keep doing the thing that I'm enjoying doing as long as I can continue to make it work. And what's cool about having a company like ours, which is an independent business, [19:41] We don't have to ask anyone for permission. [19:43] No one can tell us no. And so we can turn this into anything we want. It's this vehicle more so than it is a software business. It happens to be, of course, what it is, but it could be something else. [19:55] as well. And there's no limits to what it could be. And that's kind of a fun way to go through life too in this all-terrain vehicle, which can kind of go anywhere on road, off road, whatever. And you can kind of get anywhere you need to go. And that's sort of what's really, I think, quite fun about the kind of business we have. [20:11] You have this term you call, instead of a startup, it's a stay up. [20:15] Yes. [20:16] I'm so sick of the startups. I mean, it's cool to start a business, obviously, but I'm sick of that term dominating. [20:22] Because frankly, starting a business is actually way easier than staying in business. Now, none of it's easy. So I want to like... [20:32] be supportive of people who are starting businesses, but just they should know that that's actually not the hard part. [20:37] I mean literally tomorrow I can start a new business. You can come up with a name and you can make a thing and you can put it in the app store and you can sell for two bucks and like you got a business going, right? [20:45] But are you going to be there in two years? Are you going to be there in five years? [20:49] when competition rushes in, when you have employees. Like, are you gonna be there? Staying is harder than starting.

[20:55] And so I'm here to celebrate stay ups. Plenty of other people are here to celebrate startups. [21:00] I feel the same way with it. I always say this about newsletters and it's also true for podcasts. Easy to start a newsletter. [21:06] Hard to keep it going. [21:07] Totally. Yeah. I mean, I've seen your newsletter kind of fly. Right. And and we have we have a newsletter and like it's been pretty like flat. I'm like, how does he do it? [21:16] It's hard. It's really hard. It's hard to build a podcast audience. It's hard to build a newsletter audience. So yeah, starting something is really easy, but then you're going to end up in this, most people end up in this plateau area because they get some initial growth. The word gets out, whatever, and they end up with like 6,000 somethings. And then you're kind of like stuck there. And then it's like, well, do you want to keep doing this? Were you just high on the growth or do you actually like the thing? And if you want to do the thing for a long period of time, [21:46] issue. [21:47] you know, endure, [21:48] these moments of plateaus, which is kind of what staying up is all about. And sometimes those go down. I mean, we've had wavy years, right? Always been profitable, but our profit's different every year. And sometimes it's more, and sometimes it's less, and sometimes our margin is more, and sometimes it's less. If you compare yourself to the previous year, you can kind of like, [22:06] get demoralized to some degree. But like, I just kind of like, what do we want to keep doing? And then, and then we're in it to stay in it. [22:13] Speaking of enduring, [22:14] You've been at this for 25, almost 25 years now, I believe. [22:18] Yeah. Have there been periods where I like that sigh that you just had there? It's a long time. So maybe along that path, one, is there a point at which maybe you started going off-track and you realized, "This is not what I want to be doing. Why did I do this to myself?" And then two is just, I don't know, what have you learned being at this for this long? I would say over the past few years, I've had more thoughts of like, "How long should I do this for?"

[22:40] Um, and I, I go back and forth. I can tell you what's interesting is like right now, I'm probably more excited than I've been in many years, but a year ago I was not so excited. And I think that, uh, after you've been doing this for a while, you do tend to just sort of compare like what was it like in the early days and what's it like now? And all the new things that are harder, weren't harder before and now they're hard today. And like, do I like doing this kind of hard work? Would I rather do it? You just kind of amass this history. And so you, you tend to just call back to it. [23:10] and look back to it. You kind of opine for the early days or you reminisce, I should say, and you go, "It was so much easier when we were 20 people." "Yeah, but we weren't doing [23:20] Times are different and you can't go back anyway and whatever. But it's interesting. Like next year I'll be 50. We'll be 25 years in the business or, you know, we'll be doing this 25 years. I've been running this company for 25 years. Like part of me thinks like, is that enough? Like is maybe that's enough. But right now I'm really excited about what we're doing. We're doing some really great product work, probably the best we've done in many, many years, launching this new thing called Once, which hopefully we're going to build three or so products next year under that category. I would like to write on their book. [23:50] I don't have another idea for another book. [23:52] So there's just this [23:54] kind of right now this outpouring of energy i'm trying to be very conscious of like my energy interest like right now i'm getting energy from the business there are times in the past where the the business sapped energy for me and if it saps too much at some point you start to think is it worth it do i want to keep doing this right now i'm fueled again by it but i don't know what it'll be like in a year from now i really don't know and i think i'm more conscious of that

[24:19] than I've ever been given how long I've been doing this. And also like, [24:22] I always have this strange fantasy. I'm always curious, like, what would someone else do with this place? [24:26] Like what if someone else could just step in tomorrow? How would they run it? You know, no one's ever had a chance to run it, but me, like what would they do differently? I'd have to be, [24:35] completely detached from it to let them really run with it but what would they do i always have this sort of [24:41] Curious about that, I would say, and not curious enough to find out, but but still curious. It's always in the back of my head. [24:48] What do you think they'd do? I think they'd probably be focused on growth. I think there's opportunities that we miss all the time. I think that we are... [24:56] Stuck. [24:57] in a certain, it stuck sounds like a negative term, but I don't mean it that way. But we're stuck in a certain groove. Like we do things the way we do things. We change the way we do things here and there, but we're not really jumping into a new groove. [25:11] So I think someone would jump into a new groove and run the company differently, maybe make a lot more products than we're making today. Maybe resurrect a couple of things that we did in the past. Probably spend a lot on a lot on advertising, a lot of marketing, probably take our margin way down and try to focus on growth. Like what if we spent 70 percent of our margin on growth? Like what would that look like? I just feel like that's what most people would probably come in with a business like ours and do. They go, oh, my God, there's so many missed opportunities here. [25:35] Look at this and look at this and look at this and you got this brand and people know about you and you got 100,000 paying customers. [25:41] Think about all the things you could do. I'm not really thinking about all the things we could do. I'm thinking about what we're doing. [25:46] So I think someone else will come in and think about the things we could do. I'm thinking about the things we are doing. And with a little bit of a look ahead to things we could also sort of do, but they're still pretty close to what we're doing today.

[25:57] That's what I think would happen. It would be interesting. It would be neat to live in a reality where there could be a second reality running right alongside you, truly. Not like an A/B test, which is hard to do. You can't really A/B test an entire company. Obviously, you can A/B test small things, but it would be kind of cool if that was something that could happen. Maybe there's some simulation down the road. I was just thinking. Maybe we're in the simulation variant where you're still running it. Could be. There's another. That's a cool exercise, actually, just to think about. If I were to bring in a new leader, what would they do as a thought exercise? [26:27] This is a weird way to think about it, but I almost would be sort of embarrassed by what someone would come in and look at and go, oh, my God, you guys are missing so many opportunities here. And I'd be like, yeah, I know. I know we are. But I'm totally fine with it. But but there'd be like this moment of judgment and reckoning with like. [26:44] Do you realize how much you're leaving on the table? And you could have five different pricing tiers and make a lot more money, and you can maximize this and maximize that and squeeze this and squeeze that and address this market. And you could have special versions of Basecamp. Wow, churches are using Basecamp. We could do a special version for churches and for synagogues and religious institutions or education or nonprofits. Think of all the slight different things you could do with these different – I'm certain that all those opportunities exist on the table. They don't interest me personally in terms of making multiple products.

[27:14] we got to pursue this [27:16] And I'd be really proud if someone did that and made the business... [27:20] bigger, better. And like, I could never have done that. I'm glad someone else did that. But right now we're running it our way. [27:28] Coming back to this as a path people can take with their business versus a traditional venture scale business. So this path is essentially... [27:39] Build something, sell it, make money, live like a chill life, not super stressed, growth focused, obsessed, need to build a billion dollar company. [27:47] Do you think this path is something everyone should do? Is it a specific type of personality, a specific type of product? [27:54] Do you recommend people that are, I don't know, sometimes do go this big shot venture scale route? [27:58] I'm glad there are some people who do that. I mean, I'm glad that there's some businesses that wouldn't have worked out had they not taken a bunch of funding and went big, clearly. And there's many impressive businesses that do that. But let's face it, those are extreme outliers. The majority of companies on this planet run like ours. [28:16] They're bootstrapped. They don't have any money. No one's willing to give them a penny. And they open up a shop somewhere. They do something. They put their shingle out and they launch a website or whatever, and they try to make it work. So most people are doing it our way, even though in our industry, it seems like we're the outliers. We're not. We're actually incredibly boring and mainstream, really. If you were to pick any random business owner on the street, they'd run their business like us. I got to make more money than I spend, otherwise I'm out.

[28:46] sitting in the bank that I can just spend on things. [28:49] They're pretty, they keep an eye on costs. They think about this carefully. But yeah, I'm glad there's people who are going for the moonshot and doing it their way and doing it a different way. And the world moves forward sometimes because of those businesses. And it's great. It's great. I admire them. It's just that it's not the path I would take. And I think, [29:07] Because that's not who I am, and I think this is the important point that I want to get across. Hopefully, I don't come off as encouraging everyone to be like me. I'm not saying that at all. What I am saying is this is a way to be. It's an alternative to what you're often hearing. [29:22] in our industry which is like go big or go home, raise a bunch of money and get huge and unicorn status and all the things like [29:28] That's a way. Just know, though, that basically almost nobody makes it that way. [29:34] Like really almost nobody really makes it that way. And there's a lot more room to make it and to build a successful business if you, [29:44] Throw out that outlier and look at all the other places you can land as a business. [29:49] So my interest is like, [29:52] Optionality. If I could land in 135 different [29:56] positions and have a sustainable business, that's great versus saying there's only one way I'm going to be successful or happy. Those odds aren't really in anyone's favor even though, of course, some people win the lottery. I'm not saying it's luck. There's luck, a lot of luck, including we're lucky that we've made it. There's a degree of that when I say lottery, but really the point is that there's only a few slots.

[30:21] for a few companies like that at any one time. Meanwhile, there are hundreds or thousands of slots for other kinds of companies to make it if they don't go for the moon. [30:30] Just to close this thought around... [30:33] Whether if you have an idea going the venture route makes sense. [30:37] What do a venture scale companies need to achieve? What investors look for for that to even work out? To your point, it almost never works out. What is it you have to do for it to feel like, okay, this is a venture scale idea versus [30:48] This is an awesome idea, we could just make money. [30:50] every year, every month from it and not raise money and life will be great. I'm probably the wrong person to ask, but I mean, like, I would say, like, there are versions of our... Let's just take Monday, for example, right? It's not... [31:00] Basecamp and Monday are quite a bit different, but they live in the same world. [31:05] We could have flipped. Someone could have had the Monday approach and sold Basecamp that way, and Basecamp could have gone big in that way, and Monday could have stayed small in our way. Again, I'd rather be my business than their business. I would not trade Basecamp for Monday's business any day of the week because I love what we're doing. We're profitable. We're happy. We don't have to deal with the things they have to deal with. So I wouldn't trade businesses or places with anybody. [31:35] out. [31:36] So it's not that Basecamp couldn't be this big venture scale, whatever you want to call it. Although, look, hey, we have the same number of customers roughly than they do. So I mean, are we? I guess we are venture scale in that range. [31:50] respect, but

[31:51] Again, point is, is that [31:54] Depending on how you approach it, you can take anything in any different direction. It's more of a mindset. What are you after? We're not after that, and they are, so that's what they do, and we do it a different way. [32:06] There's things like Airbnb is a great example. That has to have a certain degree of scale. [32:11] to really be something that no matter where you go in the world, you're like, "I can get an Airbnb there." [32:18] That's probably going to take money to get there. Same thing with Uber. Uber is another example, right? And these are easy to pick, but they're great examples, really. Like, you know, when Uber was getting started, they had to proliferate all over the country to begin with and all over the world. So it was this reliable thing you could think of just like you would think of a cab. If I went to New York or Chicago, I knew there'd be a cab. [32:40] Was there going to be an Uber? [32:41] I don't know. Well, you have to know that there's going to be one to begin to trust it. So in order to do that, you have to expand rapidly. So those kind of businesses exist and those are great examples of venture-backed companies that kind of need that massive initial push to be available in all the different places because they're actual physical products. Airbnb is a physical product. [33:01] Uber is a physical product. Basecamp, Monday, Asana, they're available everywhere instantly anyway. I don't. [33:09] know what you need the money for other than marketing. And it's interesting because marketing is losing them a lot of money. So it's an interesting thing. But anyway, you can talk to them about that. I want to start chatting about your ways of working, how you operate at 37signals. There's a lot of really unique approaches. One is you mentioned that every project is, I didn't know this, there's two people, a designer and engineer, and then

[33:32] two to six weeks of work. Can you just expand on how you actually do that, how product development works there? Yeah, so we have a framework, development framework we invented called ShapeUp. [33:41] And if you go to Basecamp.com slash ShapeUp, you can read the book. It's free. You can also get a print version if you want. ShapeUp is our methodology for actually building products. And part of this is this idea of... [33:53] At the root of it is this idea of the six-week cycle. [33:55] that whatever we choose to do, [33:58] can take no longer than six weeks. So this is not an estimate of time. It's an appetite. [34:03] which is a radically different approach. It doesn't sound like that much of a different word, but it really is. An estimate is like, how long do we think it's going to take? And however long it takes is however long it takes. [34:14] And most human beings are terrible estimators. We all are pretty much terrible estimators. So that's why things keep going and going and going and going. [34:21] We instead have appetites. [34:23] And our appetite for any individual feature is no more than six weeks. Essentially, that's our budget we're willing to spend. I'm only willing to spend six weeks on any feature. [34:32] So we have to figure out the simplest, most effective version of that to get that done within six weeks. [34:38] and get it done by two people. [34:40] Now, not everything gets the full six weeks. Some things were like, we have a one-week appetite for this. This is not that big of a deal. If we have it, great. If we don't have it, that's fine. We're willing to spend a week on it. [34:49] Not that it could take a week. [34:52] Because it could also take 12 weeks if we give it 12, and it could take 24 if we give it 24. Work expands to fill the time available. [34:58] So, for us, it's about appetite. So the idea of appetite, maxing things out at six weeks, two people max.

[35:05] And then there's a lot of other details and I could go on for an hour about shape up. People can read about it, but it's those fundamental principles. [35:14] Appetites, six week max, small teams. [35:18] And this idea of shaping the work ahead of time, then giving the team a lot of latitude to figure out how to get that thing done. We don't, [35:26] have like a spec we don't create [35:29] to-dos or tasks or tickets for people, they create the work that needs to get done to fulfill the idea that we've written up and designed essentially, and they figure out how to do it. Then we trade. They might get into something that we've said, "We have about six weeks. [35:44] "Well, we're only going to give this six weeks." Two weeks in, they go, "We actually stumbled into something we didn't realize. This is probably not going to be able to be done the way we thought, so can we do it this way?" Then we have a discussion and there's a conversation. There's a lot of molding and changing that happens along that period of time. We call it trading concessions. [36:01] There's all the trade-offs we're always thinking about. So all of these things that come to bear. And then... [36:07] People often ask what if you don't get it done in the six weeks you gave it well? I [36:12] so it depends so in most cases it should die [36:16] Meaning like it just doesn't happen. Because if we say we're gonna give it six weeks, and we give it seven or eight or nine or 10, then we're not really giving it six weeks, we're giving it 10, then we don't really have a system. [36:27] There are times, though, when there's like a couple days left when we're on what we're calling the downslope. [36:31] So we have these things in Basecamp called Hill Charts. [36:35] and things that are on, that's actually work, a project's more like a hill. It's not like a linear line, right? If you're on the left side of the hill, it means you're still pushing this thing up the hill. You're still trying to figure out how to do this. But once work gets to the top, it's downhill from there. It's like just pure execution and we know how to nail it. So if we're like almost at the bottom of the hill on something and it needs two more days,

[36:55] Fine. If there's any work that's left over that's still on the left side of the hill, meaning like we're still pushing it up. We don't know how we're going to do it. And we're at our time limit. It almost certainly dies. So there are some contextual decisions to make at that point. [37:07] But fundamentally, that's how we approach work. And this prevents people [37:11] long-running projects that never end, which, by the way, are the most demoralizing kinds of projects, things that you're stuck on, that you don't want to do, that never end, [37:20] sucks and if people get stuck on a couple of those they want to leave their job [37:26] So the implications here are significant. And so we want to keep people out of that zone of like, I hate this work and it goes on forever. Because sometimes you're going to hate the work. Not all projects are like that exciting. Sometimes it's maintenance stuff. Sometimes it's like, [37:39] updating an internal billing system that's like boring and no customers are going to see, but needs to be done. But you'll know that... [37:45] Hey, at maximum, we've got four weeks on this. I can already see the end from the beginning. No big deal. But if it's like this is going to take nine months and you're on week four and you're like, I hate this. [37:57] Bad. So we want to stay away from that sort of thing. [38:00] You have these quotes along these lines about planning. "Long-term business planning is a fantasy." [38:05] I don't plan long term because I want to do what I think, not what I thought. [38:09] Yes, I love these. [38:10] This whole idea of appetites, it's very appealing. It makes so much sense. It's the ultimate impact to effort to... [38:17] calculation. The effort we will put into this is fixed, and we will not go beyond this because the impact we expect from this is [38:24] pretty clear. And if we get close, if the effort goes up and up and up, well, why did we even do this?

[38:30] But obviously the downside is... [38:33] You can't promise things really to sales marketing, which I think makes sense in your type of business. [38:38] Do you see this work in... [38:40] businesses that aren't your business, this approach? Well, let me talk about promises for a second. Promises are the downfall of every business. [38:48] Every time we've made a promise to get something out in a certain period of time, and we inevitably seem to miss it, it's funny how... [38:57] It would have it's almost like it would have been out in time. But the fact that we promised it made it not deliver in time. There's some strange thing that happens when you promise things. So I just we've we've learned to not promise anything. [39:11] We can share what we're working on if we want to. We can tell people we're doing something. By the way, the worst promise, and by the way, we've made a couple of these recently, we always regret them, is by the end of the year. That's the one promise you've got to be very careful of because it's so easy to make. There's nothing easier than promising work later. [39:29] And the further away it is, the easier it is to promise. And so this whole like by the end of the year, [39:35] Oh. [39:36] Red flag. [39:37] Just remind yourself, whenever you say that to yourself, go, oh, wait a second. [39:40] Wait, wait, wait, wait, what am I doing right now? Because you're probably setting yourself up for disappointment. So as far as other companies running this way, I mean, there are a number of other companies that are running this way and more and more are adopting ShapeUp all the time. But it's a struggle. It's hard. It's hard to change the way you work. And companies form roots and roots like go in the ground and like once your root structure is formed.

[40:02] The plant that grows from that is like the plant that grows from that. Basically, you kind of have to uproot. [40:09] And this is not really a totally clear metaphor because that plant is that plant, but you almost have to plant a new seed somewhere else, let's just say, and then grow something new because it's very hard to change. [40:20] in flight and change what you have and change what you're used to. So what we often encourage people to do is like, keep working the way you're working, [40:28] But some future project, some low criticality project, try this new method on that. So if it doesn't work, it's probably not going to work very well the first time. Just like if I gave you a guitar and you never played before, it'd be unreasonable for me to expect you to play well. You're going to suck for a while. So go pick some things that don't matter if you suck at them for a while and try this method over there. [40:50] and go, oh, you know what? I'm actually getting quite good now. Let's try to bring this into some more critical stuff. And I think that's the important way to approach these sorts of projects, which is to... [40:58] to take the criticality out because what ends up happening is, is that when people try to try something new on something really critical and it doesn't work, [41:05] They will never try it again. They've just like, [41:08] They've destroyed all future opportunities to try this again because everyone knows how bad it went last time on something that really mattered. [41:15] And they would have gone, we could have done it our old way. Our old way worked. I mean, it's kind of sucked, but it worked. And so now you're comparing two things that aren't really comparable, but you're always going to go with the momentum that you had versus the new thing. And so you got to be careful with that. So I know I'm rambling a bit on it, but that's my general sense and feel on how to adopt a different way of working. There's also this cool down period after one of these. What do you call these? A sprint or what's the term for it? No, I hate that term.

[41:45] Because how do you feel after a sprint? Exhausted. But also pretty good, you know? You can. Yeah. Yeah, yeah. It's funny because I was a sprinter in high school. So I love sprinting. But if you go all out... [41:57] You might feel high for a minute, but you can't go all out again. You've got to like... [42:04] you know, really catch your breath. [42:05] And you certainly like to sprint. [42:08] I remember my track coach actually ran in college for a year until I realized that wasn't good enough. But he made us run 20 200s in a row with just like two minutes break in between. And the 200 is an incredibly hard... [42:21] race, you're all out for 200 meters or yards. And like after the fifth one, I just threw up. Like I just like threw up. It's like that, that's kind of what work is for a lot of people. It's like 2200. It's like they have these sprints and they never seem to end. And they have one sprint after the other, after the other, after the other, after the other. And that's why I don't like the word because you can't layer that back to back to back to back. You cannot sprint back to back to back to back in life. And you can't do it at work. [42:45] I mean, people do it at work, but I don't think it actually works. So what we do is after our six-week cycles, we're going to do it at work. [42:51] we typically take what we call a two-week cool-down. So we call these cycles, not sprints. [42:57] A two-week cool-down, and we call them cycles because cycles happen. [43:01] again and again and again. Sprints like start and end. Cycles happen, like there's cycles in life, um, and seasons. And I like that idea that you're prepared for this thing to happen again. Take two weeks, cool down. That's when people can sort of internally freelance. They're still working, but they're kind of tightening up a couple of things. Maybe we just shipped or working on a couple extra days on something that didn't ship that's going to ship in two days.

[43:23] Or kind of fixing some bugs and messing around with some stuff that sort of they wanted to get to, but no one ever had time to and was never scheduled. So that's kind of a good time to do that. In the meantime, a few of us are shaping up the Next Cycles projects and finalizing that, writing the pitches up for that. [43:37] So that's what those cycles are for. [43:39] It's not that you're stopping work. It's that you're doing other kinds of work. And that, I think, is replenishing. [43:46] and refreshing. I think that's the important part versus back to back to back sprints of the same kind of work all the time. [43:54] You mentioned also that you have no growth goals, that you make decisions a lot on instinct and gut and opinion. [44:01] which sounds amazing. It's great if you could pull it off. [44:04] feels also very hard to operationalize and maybe make the best decisions in times [44:09] Can you just talk about how you actually operationalize that and what you find happens when you approach things that way? [44:14] I will just admit that that's the only way I've ever known how to work. I don't know how to make decisions by numbers, or I don't find any joy in it, frankly. I've always been intuition-driven and gut-driven, and frankly, to be honest, I think... [44:29] Everyone actually is. And this is part of a... [44:33] a thing I wanna write up, I've been thinking about writing about this, [44:36] I think everything's a judgment call. [44:38] And so, [44:39] Yeah, data can play a part. All sorts of things can play a part. [44:44] But unless you're letting a machine make the decision that's purely rational, if you're asking a human to make it, it's a judgment call. They're bringing to bear... [44:52] thousands of things they know and don't know.

[44:55] that influence them about this particular decision. And it's why when companies hire executives, [45:02] What are they looking for in executive? The typical judgment and experience. [45:06] They're not like they can read an Excel spreadsheet. That's not the thing that matters. Like anyone can read that or anyone can read a chart. You can learn to do that. They're looking for judgment and experience, which is a very... [45:18] amorphous thing. It's like, what is it really? Well, they've been around, they've seen a lot of things, they've absorbed a lot of experiences, and they're going to bring those [45:29] undescribable things to bear. [45:32] to make decisions for the business. [45:34] So, out of all the things, data might be one thing, but there's thousands of things that go into a decision, many of which you don't even know. I just feel like I'm comfortable admitting that. [45:47] that I don't really know why I'm making these calls, but I'm making these calls [45:53] regardless, and I'm not looking at a number and going, "If this is 51% versus 49, I'm going this way for sure." That could be an input perhaps, but it's not the only input. I think people should recognize that even if you're a data-driven person, there's so much [46:10] at play here. So I just feel like just being honest about that and that's sort of how I've always looked at it and I also will admit I do like as I just mentioned I don't know the things that go into my decision making process but I'm absolutely fascinated by decision making. I think it's one of the most interesting

[46:26] human endeavors. [46:28] And I would just say that give your intuition credit. Give your gut credit. It's absorbed. [46:35] Everything. [46:36] Uh, and, uh, and plus the things that, that you don't know it absorbed that are valuable. [46:41] It's easier to do that if you're the founder of... [46:44] running the company obviously. [46:46] Is there something you find that you can do to help your teammates approach things that way too? Do you just trust their instincts also in a similar way? [46:54] Yeah, I mean, you're right, by the way. It's easy for me to sit up here and say this. Like, I own the place. No one can fire me. Like, I get it, right? I can be wrong all the time and go, my God just told me to do this. And, you know, I understand. I do. I'm self-aware enough to understand that. [47:09] Um, [47:10] But I think that by demonstrating that's how we make decisions, it creates space for other people to make decisions that way. And when we have conversations, you know, I'm talking with my team about something. [47:23] I'll often go, "I don't really know. It just feels like this. It feels this way." And they'll say, "I feel this way." And I'll ask them, "How do you feel?" [47:29] How do you feel? What we ask people, [47:32] in general is like, [47:34] We say, what do you think? [47:37] We don't say, "What do you know?" [47:40] We often say, "What do you think?" We might say, "What do you know?" But we also say, "What do you think?" More time, and what does that mean? What do you think is like, "I don't know where these thoughts come from and I don't know what forms them." [47:53] I think it's interesting to look at the things we say, [47:56] And go we actually do at one people to think and and so I'll often say what do you think or what do you feel or how does this feel? I?

[48:03] It's something we talk more about at work than pretty much anything else, which is like, how does this screen feel? How does this flow feel? How does this feature feel? How does this word feel? How does this sentence feel? How does this paragraph feel? How does this website feel? How do these colors feel? [48:16] Because human beings feel. [48:19] and, uh, [48:21] Thank you. [48:22] Thank you. [48:22] While we have a logical side to us and a rational side to us, we're primarily... [48:28] feeling creatures. Even if we don't admit it, we are. And so I'm always curious about that. So I bring that up a lot and I ask other people how they feel. And I think hopefully... [48:38] that [48:39] encourages people to share that side of their opinion. And we almost never, sometimes we look at numbers to sort of, [48:49] be an input, but it's never like, [48:53] Prove that. I'll never say like justify that. [48:57] And that's just not terminology or lingo that we ever we ever bring up. It's not it's not a way. It's how do you feel? It's not like how certain are you? We don't I try to tend to shy away from anything that's about certainty. We're not after certainty. [49:16] I want to know how you think it feels. So anyway, I'm rambling again. But this is, I'm rambling because this is actually how things go. When we talk, there is a lot of this. [49:26] it's not precise in a sense. It eventually becomes precise when it's out there. [49:32] in the world but the thought process is very rambling and very amorphous and you kind of find your way as you go and eventually go yeah yeah that's it that's it that feels right

[49:44] This kind of advice comes up a lot actually on this podcast, especially for product managers that [49:49] There's a lot of power in just trusting your instincts and [49:53] not just being this kind of unbiased participant in a product team, having actual like, here's what I think works from your own experience using the product from your own life experience. But [50:02] This came up with Brian's, Brian Jeske's episode. A lot of people, like he's running the company. He's telling everyone, basically, here's what we're building. [50:09] A lot of people said, okay, that'd be great if our [50:12] CEO is also a designer, very product minded person. [50:16] Many people aren't that. Many people don't have actual... [50:18] like have enough experience to have built amazing instincts. So do you solve that by just hiring people that have a lot of experience? Is it like a hiring thing? Is it... [50:28] trust people that have a lot more experience, more, you know, because not everyone's going to have the right instinct. [50:33] It's true. I mean, look, um, [50:36] Brian's probably one of the greatest CEOs around today, but I like small business. So he knows how to run a bigger organization. I wouldn't. So I can't really step into that answer from that perspective. One of the reasons we stay small is... [50:52] I think it's so we can all rub off on each other. And when we hire, we can be very, very selective because we only hire a few people a year. [50:59] And so when I only hire designers and product people, David hires programmers and different people in the company hire different people. But when I hire designers... [51:09] I'm curious about their taste. I'm curious about what they like. I'm curious about what other products they think are good. I'm curious about what they've seen that they admire. I'm always asking about that because that helps me get a sense of who they are and what lens they see the world through and what kind of influences they're going to bring to bear. That's the kind of stuff I'm looking for. One of the things that we do during the interview

[51:39] people and [51:40] which is the same thing in my mind is, uh, they do a project for us at the end. So the last like five finalists will do a project for them for us. We'll pay them to do the project. They'll have a week to do it. They'll do it. And then, [51:51] I'll critique it with them. [51:53] Even if I love it, I will push back in certain areas. And one of the things I'll often ask is like, if you had another couple of days, what would you do with this? [52:01] And I want to see where people go with that. [52:03] Thank you. [52:04] To me, that is where you can see they don't have any time to think. So where does their gut go? What are their instincts? Where do they arrive after having to riff on the spot with something? So what's behind what they've built? Because what they've built should just be... [52:22] Some of what they had in mind it shouldn't be like everything not now. They're like exhausted of every future idea And I've seen some people who we thought were really good and in that moment. They don't know where to go with it Now that's not to say some people don't need time to think and think it through and what but I'm still looking for people who who just their gut is filled with ideas and so [52:45] Thank you. [52:46] It doesn't always translate, but that's how I try to suss out whether or not someone has a good gut instinct on where to go. And it almost doesn't. [52:55] doesn't necessarily even matter where they go with it because this is raw, just raw gut. But I want to see that they have one and they're willing to lean into it and not be afraid of saying things that may not make any sense. But like, yeah, I've got some other ideas and we could try this and try this. And I kind of play with this idea. And I don't know.

[53:12] Actually, now that I'm thinking about it, maybe we try, what if we did that? What about this? [53:16] And then I would say something and we'd riff and we'd start riffing. And when we start riffing, there's a synchronicity that I'm looking for. And when I feel that synchronicity and that resonance, I'm going to say, [53:24] like the two wavelengths are just perfectly vibrating together, then I know we have something. So that's the kind of stuff I'm looking for when I hire people and I do think that that [53:34] to people with a better gut feel than someone who's more of a, let's call it like an academic [53:40] a product person, which which can be very, very fine other places, but it wouldn't really work here. [53:46] That's really great advice for someone looking for someone that has a good instinct and gut. [53:49] And I think it's interesting because that's often the opposite. What you described is what many people don't want. Someone with just a ton of ideas. [53:55] Because a lot of companies, a lot of leaders are like, we've got plenty of ideas. [53:58] We just need you to help us ship stuff. Can I, can I, because I think, I don't want that either. So I don't want just ideas. So they have to make something that's clear. First of all, it has to be good and clear. And then they also have to be able to riff on the spot and think about how else they could take this. And so they can't, like we've had some people who were just like so scatterbrained and like, they've got a million ideas. But when we asked them to execute something for this project, it was a total mess. [54:24] You can see their time management skills were off and they focused on the wrong things. That is not a go for me. [54:30] That's a no-go. What's a go is like, that's a clever design, well-executed, thoughtful, clear. [54:36] And... [54:37] Here's where they could take it from here on out if they had a few more days, or even if we had 15 minutes, what would you do with that?

[54:43] So that's the kind of stuff that I think ultimately like, [54:47] is the meat of it. Like, ah. And so I always think of it in terms of play. You know, this is play. I want to play with this product. I want to play with this design. I want to play with this idea. It's play. And you've got, you know, play is a thing. It's a very clear thing versus like a rigid thing. [55:03] boring approach to product development, which again can be successful, but [55:10] It wouldn't work at our company. [55:12] Great clarification. I completely agree. [55:42] proportionally by default. No-code animations add sparks of delight while adding custom CSS gives total design control. Bring ambitious client projects to life with any industry with a fully integrated suite of business solutions, from e-commerce to events, bookings, and more, and extend the capabilities even further with hundreds of APIs and integrations. You know what else? The workflows just make sense. There's the built-in AI tools, the on-canvas collaborating, a centralized workspace, the reuse of assets across sites, the seamless [56:12] client handover. And that's not all. Find out more at wix.com slash studio.

[56:19] Okay, so we had some questions come in from the audience when we were preparing for this. We both tweeted to see what people wanted to ask. [56:25] I have two that I picked out. One is from Matt Mullenweg. How cool is that? Oh, my God. And I think you may have seen this question, but the question is, what is a spectacular failure of someone trying to follow your advice and failing when it doesn't stick? What is the reason? [56:40] People trying to make a rapid fundamentally like [redacted address] to fall. [56:48] Flat on your face, basically. So I have seen people who try to adopt, let's say, shape up. And they come back six weeks later like this sucks. This doesn't work. I'm like, I'm not surprised to hear that. [57:00] Like, tell me how you did it." And then they explain like, "Oh, the next project we did, we did this." I'm like, "Yeah, I'm really not surprised to hear that now because... [57:09] You just you can't really do that. You can't turn on a dime. There's this thing called momentum. I always try to think of things in terms of like the physical world, like the more massive an object, the more energy it takes to change its direction. [57:23] This is why big companies move slowly. This is also why momentum, which is like the way you've been working for four years, is going to power you forward in a certain way. It's very hard to turn the corner immediately or turn around. You just cannot do it physically. If you can't do it physically, you can't do it this way. I think that's what I've seen is like these rapid ... Starting tomorrow, we're starting to shape up. It's like, "Well, no. It's not going to work," unless you say, "We're going to do it on this other thing that doesn't matter so much." That's one thing I would say.

[57:51] The other thing is that, [57:52] Pretty much every business is a spectacular failure. [57:55] It's just it just it's like business is really hard and the ones that make it are all outliers. And, you know, this is why most businesses fail. And, you know, it's it's there's a million reasons why and it's always hard to pin it down. [58:10] But we can all look back. This is why, by the way, I don't. [58:14] I don't like to look back on things. I'm not much of a fan of looking back on failures and trying to figure out what went wrong so we don't do it again, because I don't think we know [58:24] what went wrong. I think we can spend a long time trying to analyze it and we're going to find something that we can agree on. It tends to be what you can agree on so you can move on, but that doesn't mean that's what it was. Just like we don't really know why you make decisions, [58:39] You don't really know why things didn't work. I mean, sometimes there's some examples, and I think it's true if you're talking about a mechanistic system. [58:47] You're stamping metal and it's supposed to have perfect circles and it's an oval. You can go back to that machine and see how the thing worked and the line. You can adjust that and fix that. [58:55] A lot of work though is not that way, especially software work. There's a million different inputs and a million different people. And it's not simple stamping machines. It's a different thing. So I don't know, but I do think that trying to make... [59:08] Big changes too quickly is a primary reason. [59:12] And you've seen this. [59:14] approach work at traditional companies, I imagine. It's not just companies that work in your way where there's no investors. They're not obsessed with growth.

[59:22] You've seen ShapeUp implemented at... [59:24] traditional public-type companies. [59:26] Yeah, it's usually smaller teams, so it's not like, you know, Airbnb, Brian's not going to go, "Okay, tomorrow we're following this thing that these guys over 37 signals came up with." But it's typically small teams inside larger companies that experiment with this and sometimes it spreads and sometimes it doesn't and it doesn't always need to. It could be this one division, this one group that works a different way and also, you know, [59:46] It doesn't have to be fully shape up. It could be 30% of it. Maybe it's just simply the six-week cycle thing is the thing that really sort of [59:53] is the thing and the rest of it doesn't matter so much, or it could be this idea of, of, of appetites versus estimates and they can work with that into the way they work. You know, [1:00:03] Take whatever works. You don't have to go wholesale on any of these things. [1:00:08] A second question comes from Leo Polovitz, one of my favorite VCs. He works at Seuss Adventures. [1:00:13] And he asked the question a lot of people actually asked is just what does he think he got right and where has he changed his mind? [1:00:20] If anywhere, you share a lot of strong opinions, very contrarian opinions. So maybe just mostly on that second part is what I'm most curious about. What have you changed your mind about? [1:00:29] A few years, well, a handful of years ago, we switched back to, we used to make multiple products. [1:00:33] Then we went to just doing Basecamp. [1:00:37] And I thought I would be personally satisfied. [1:00:39] for the rest of my career working on one thing, and just making that thing the best it could possibly be. Essentially working on one sculpture, and constantly tweaking it, and chiseling it, and polishing it, and just making it better, and better, and better, and better. I still thoroughly enjoy working on Basecamp, but a few years ago, we built this new thing called Hey, H-E-Y.com, email service, because we just felt like we had to make more things again. This idea that I thought that we could be happy as a company just doing one thing really well,

[1:01:09] which was a major shift. We like... [1:01:12] had multiple products, we basically wound those down. We didn't ever close them down, people can still use them who were using them before, we just stopped selling them. We even changed the name of the business from 37signals to Basecamp. [1:01:24] So we're saying like we're signaling all through, like we're doing one thing. It's just this thing called base camp. [1:01:29] It's a huge, massive decision to make. And so we were all in on it. [1:01:34] And then a few years ago, we go, you know what? We're makers. Let's be honest about ourselves. [1:01:39] I'm talking about me and I was talking about David, but we're just like, you know, we want to make more things again. We have some more ideas. And why are we holding, why are we suppressing ourselves? [1:01:47] Let's not do that. [1:01:48] And so we made hay and now we're doing once and going to make more products and more products and more products and probably do another book, as I mentioned earlier. So so it was that I think that's the biggest major fundamental 180 degree change that I've changed my mind on. [1:02:04] But I change my mind all the time. [1:02:07] I disagree with myself constantly on small things. So product design decisions or the naming of something or how we roll something out or how I'm going to write something or present something or say something. There's probably an answer. I'm sure there's an answer in this podcast that. [1:02:22] If I listen back, I would probably answer it differently. Or I don't even agree with the way I answer that. I mean, there's a million things like that happening all the time. But in terms of big things, I think that's the best example I can come up with. [1:02:33] It's clear that you've designed... [1:02:35] your life and designed your business in this very intentional way because the default path

[1:02:40] And I'll kind of reference this back to this other podcast episode. The default path is [1:02:44] build a company, raise a bunch of money, build massive... [1:02:46] business, generate a lot of revenue, exit, try something else, and you've done something very different. [1:02:53] Can I speak up to that though? Because this is the pathless path stuff. Was this kind of what that was? Yeah. So I'm moderately familiar with that idea. I didn't listen to that podcast, but I saw some clips. So I find it interesting because you've designed your way, your life intentionally, but... [1:03:11] It's funny because there's some principles I hold perhaps or some direction I'm headed, but I don't think about any of this ahead of time. So I'm very much in turn, including the company, like we don't have a, [1:03:23] multi-year plan, I don't even have a one-year plan, I don't even have a six-month plan. We think about everything we're going to do every six weeks. [1:03:30] Every six weeks we rethink what we're gonna do next. So we're very much an in the now company, making it up as we go. And this is true for me personally, my career, the whole thing. I didn't have any of this planned out. I didn't decide I wanted to be like this or like that. I just figure out what works. [1:03:46] and keep doing that until it doesn't, and then maybe we do something else. But it's very much, I'm not on a path, [1:03:54] I'm not on a there's no I can't see the path. I'm on a path. We're all on some we're going somewhere. I don't want to stand still, but I don't know where I'm going. And I'm perfectly comfortable with that. [1:04:05] So for me, it is really much about making it up as you go based on, you know, again, being in touch with like how things feel to you.

[1:04:12] What your intuition is, what your gut tells you, what makes you happy, what do you want to do, what can you do. Sometimes things that make you happy you can't do just because life is what it is. So understanding that and figuring out what the trade-offs are. But really, it's figuring out as we go. And I think, frankly, it's the best way to run a business. I think it's the healthiest, most honest business. [1:04:33] way to run a business, which is to figure it out as you go. I think the further out you plan, the less you know about the decisions you're making. And by the time you get there, you're probably going to be wrong or you're going to want to do something else. And then if you're like, don't do those things, then what's the point of planning? And so people end up doing things they don't want to do because they said they were going to do them. [1:04:53] Obligations in the future, I think, are quite dangerous. [1:04:56] And I think they send people down a path of unhappiness, actually. So I think just staying closer to now is probably the best way to do it. [1:05:04] And a lot of this trickles down from the biggest decision you made, which is don't raise money, keep control of this business. You're the boss. [1:05:11] There's no boss above you. [1:05:12] Yeah, the independence, like if you go to 37signals.com, there's 37 ideas. And the first one, there's a zero zero, which is start here, which is like a read me. But the 01 is independence. Independence is the root of all the things we're able to do. And we did make that an intentional decision. [1:05:30] We didn't know all the tentacles that come out from that and what it's going to impact and touch. [1:05:35] But we knew principally that we want to be able to do what we want to do. We want to be entrepreneurs. And to me, that means working for yourself. And the moment you go out and take money or have these big obligations, you end up working for someone else.

[1:05:49] And I don't really understand. I do understand why some companies do it, but I don't understand why a lot of people do it who probably shouldn't do it. I think staying independent is a wonderfully... [1:06:01] fulfilling, [1:06:02] Uh... [1:06:03] experience and it's very hard to do when you're beholden to someone else's time frame and expectations. So another thing we rarely have here are expectations. This is the point like we launch a new product. [1:06:18] I don't know what's going to happen. Like we launched Basecamp. I didn't know what was going to happen. We launched, Hey, I didn't know what was going to happen. We're going to launch some new stuff soon. I don't know what's going to happen. We don't say like, if this gets 20,000 users, then it is six. I don't know. We don't care. It doesn't even matter. We're making it anyway. [1:06:34] and we're going to see what's going to happen. The market will tell us what happens. [1:06:37] I'll just wait to find out. [1:06:39] There's no sense in spending the time thinking about what could be. [1:06:42] Just to push back, I imagine there are expectations of like, "I hope this works out. I hope people adopt it. I hope it becomes the best email client." [1:06:50] in town, right? There's like a sense of like, we want this to succeed. [1:06:53] That's pride though. That's a matter of like, we want to be proud of the work that we did. We really hope people like it and we want to keep doing it. That's a sense of caring about the work itself. It's not so much about the outcome which you don't control as much as you might think. [1:07:12] Clearly, we want people to accept the work that we do and we want to find enough people who like it to make it sustainable. But I don't have them in mind. I mean, this is going to sound selfish, but I have me in mind first because if I'm not for me first, it's hard to be for someone else. So I'm for us. We want to make things that we're proud of, that we think are really good, that are unique, that bring something new to the world that doesn't exist. Otherwise, there's no point in doing it, that bring a different perspective.

[1:07:41] that only we can provide because everyone has their own. And we want to make sure ours is very visible in the products that we make. [1:07:47] which is why we approach things very differently than most, and our products are very different than most. And that's why they should be there. We should provide alternatives. As I said earlier, I don't like the word competition, because it almost sounds like you could be making the same thing. I want to provide an alternative. [1:08:03] Which is a different approach, a different way forward. It could be in pricing. It could be in the way something works. It could be in the flows in the thing. It could be the entire conception of the thing, but it should be an alternative. If it's not an alternative, it doesn't need to exist. [1:08:19] So that's, [1:08:21] That's how I think about it. But yeah, there are expectations or I should say maybe it's more like there are desires and hopes of acceptance to some degree because it needs to. Otherwise, we can't stay in business. But really, it's like, are we proud of it first? [1:08:35] Like we're wrapping up the Hey Calendar right now, which is the calendar we're building for our Hey email service. [1:08:40] I'm really proud of it. [1:08:41] I have no idea what's gonna happen, it's very unusual. But I'm really proud of the work that we did, and that's enough for me. I think it's gonna do well. [1:08:49] I don't know, though. And it doesn't really make any sense to wonder if it will or not. It just will or it won't. [1:08:55] And all I can do is be proud of the work that we're doing and be proud of the people who are doing it and feel like we're putting something out in the world that we think should be here. Whether or not people agree is up to them. [1:09:04] You mentioned the principles of the company and I was going to touch on one of these actually. What's the URL to check these out, by the way? We'll link to it in the show notes. Yes, 37signals.com. Okay, right. Just the homepage. Yeah, yeah. The homepage, yeah. Okay, so one of them is "Work isn't war".

[1:09:18] And you wrote a book about this roughly, about work doesn't have to suck. But I guess just can you just talk about why work? [1:09:25] work feels like war and then what maybe people can do to make it feel less like war. This is about words in a lot of ways. So I don't I'm not looking at the page right now. I could pull it up and read it. But essentially, you know, a lot of work. [1:09:38] It uses war metaphors and war to like, you're targeting customers. [1:09:43] You are conquering a market. Gosh, now I really want to make sure I get all these right. Hang on, I'm just going to look this up because these things are how people talk about work. It says they conquer the market, they capture mindshare, they target customers, they employ a sales force. [1:10:03] They hire head hunters. They destroy the competition. They pick battles and they make a killing. [1:10:08] Thank you. [1:10:09] That's how people talk about business. [1:10:12] I find that to be depressing. [1:10:14] it just feels depressing to me we use words to to establish [1:10:20] a perspective and a way of thinking about the world. And if those are the words that are in your head, then you feel like it's this war. And we're always like... [1:10:29] This is the other thing, people are always like, "What do the Navy SEALs do?" and they're like, "Yeah, that's the Navy SEALs, man. It's not your software business." We always look into Navy SEALs and tell us how to run a business and military, they've got a group of eight and they do ... Yeah, okay, that's that context. Can we not look at that for a second? That's amazing. What they do is amazing, obviously, but what you're doing is you're making B2B accounting software. Let's just chill for a second here, okay?

[1:10:59] and we can exist, let's exist. Let's make something great. [1:11:05] Not like let's beat them. Let's conquer them. Let's make it killing. Let's just make something great. Like I think that matters and it changes the way you think about the work that you do. [1:11:16] It's more about pride and excitement and a spirit of creation than it is destruction. [1:11:23] I think if you go into it with destruction in mind, you're going to end up in a pretty dark place. So that's our point of view. [1:11:31] Awesome. I love that. [1:11:33] Coming back to this bootstrap, [1:11:34] Path. [1:11:36] There's a lot to love about it. Independence with that trickles down all these things that you're able to do with your company that other companies aren't able to. [1:11:43] For someone that's thinking about going down this path and wants to bootstrap their company and doesn't have a lot of money because it takes cash to start a business, do you have any advice for just how to get started down this path? [1:11:52] Yeah, first of all, it's hard. This is hard. I mean, when you have nothing, especially like if it depends where you are in your life, too, you may have a couple of kids and you don't have a lot of time and you got to pay. [1:12:02] It's tough, so this is hard, but it's a reality for almost every business in the world that starts. The best advice I could give you is, and this sounds so trite, but really it's true, is stay as small as you can for as long as you can. The only thing you can really control are your costs. [1:12:21] You can't control... [1:12:24] the alternatives in the market, the competition, you can't control them. You can't determine the market itself. You can't control the economy. You know, you can't control how much advertising costs, you know, but, but you can control your own costs.

[1:12:38] So and the other thing I would encourage people to do is figure out how to do as much as they can on their own before they bring on a second person. [1:12:45] Like really work and struggle through something on your own. The moment you bring on someone else, you've got another mouth to feed. It becomes expensive. You get another personality to deal with. The more you rely on them and if they turn out to be the wrong person, you have to lose them. You don't have anyone to do the work that now you have them doing and now you've got to do it. You're not going to be any good at it. [1:13:15] office like [1:13:16] Don't spend anything on anything, basically, except like the tool you use. Let's say it's your laptop. [1:13:22] or whatever you're going to use. Get a good one. They don't cost much anymore. $1,500 or something like that. You can get a really nice MacBook Air or whatever. And like... [1:13:30] you need an internet connection, and maybe you need to host somewhere or whatever, but like use Squarespace to set up your site for 15 bucks a month or whatever. Don't go hire a web designer. [1:13:39] find all the efficiencies [1:13:42] Keep your costs incredibly low and don't make things hard on yourself. This is the other thing that all businesses at every stage need to keep in mind. [1:13:52] While it's hard, [1:13:53] Things are relatively simple until you make them complicated. Simple can also be hard, but complicated is a lot harder. And I think Brian had a really, Chesky had a really good bit on this, I think, on your podcast about like how companies get complicated. [1:14:08] And I loved that. And when I was hearing it, I kept hearing this unfolding.

[1:14:13] This complex shape that you almost can't fold back. It's so complicated now that you don't even see where it came from and now it is what it is and you can't put it back in the bottle and it's just a mess, right? This happens really quickly and it can happen at a small scale too. [1:14:30] So these are a bunch of things and none of this is to say it's going to work. I mean, you could follow all those things and it could just completely fall apart and it probably will. [1:14:40] It's just the reality and I think something we use at 37 Signals, David kind of taught me this. It's really a stoic thing, which is just the idea of negative visualization. Like what's the worst that can happen? You've got to be at peace. [1:14:53] with the worst that can happen. [1:14:56] and just like role play that and go what's the word like for example [1:15:00] We're doing these new ONCE products. What's the worst that can happen? Well, the ONCE model is totally different. It's not SaaS. It's you pay ONCE. You download the software. You install it on your own server. Like, we're putting a lot of effort into this. [1:15:11] This could be like the wrong time to do it. It could be a total flop. This could not find any traction in the market. So what's the worst that can happen? Well, we spent six months exploring something and having a really good time doing it. Our margins are there, so we can do it. I wouldn't suggest someone does this if they can't afford to do it. But we know this might not work. [1:15:30] and we're already at peace with the fact that this might not work. [1:15:34] That's, I think, how you ultimately are able to move forward is to be at peace with knowing what's going to happen if it doesn't work out. [1:15:42] I want to touch on linear.

[1:15:44] One, it's interesting that you guys have a lot of similar philosophies. And what is it about project management, task management software that creates this sort of approach to business? So that's maybe one question if there's something there. [1:15:58] And then the other is, it feels like they have a lot of similar philosophies. [1:16:02] Growth isn't a focus, it's gut and instinct. [1:16:05] They have paid work trials. They're very profitable. They don't, [1:16:09] spend a lot of time around VC money. Do you have a feeling like this approach could work in the venture route? And do you see them as maybe an example of like, hey, maybe we could adopt a lot of these things? [1:16:19] and also raise money, and maybe there's another direction here. [1:16:21] Yeah, I mean, I can tell you, I don't know enough about them to comment on their, I've heard some about them and it sounds like they have some similar points of view. Where those came from, I don't know, maybe they materialized out of nowhere, maybe they picked them up from someone else, maybe they came up with them themselves. Lots of different ways to work. [1:16:39] It's nice to hear that other people are trying some of these things and it's working for them. So that's great. [1:16:45] The thing with the VC route, the idea of having too much money doesn't mean you can't work efficiently and thoughtfully. [1:16:53] But it does create a degree of sloppiness. [1:16:56] Because you don't have to. When you don't have to, and when I'm saying have to, you could say have to what? Have to do a whole bunch of things. [1:17:05] When you don't have to, we don't have to make money. We don't have to be efficient. [1:17:10] When you don't have to be profitable, you just kind of get sloppy. And so let's hire some more people, whatever we can afford to. In fact, they need to suspend the money, by the way. They didn't give us the money to save it and earn 6% interest, which would be great now. Three years ago, 0% interest. They didn't give us the money to sit in the bank. They gave us the money to spend the money. What are you going to spend it on? Two things, people and marketing.

[1:17:34] Basically, that's what you spend on. We can buy more ads, we can do more of this, more of that, or we can hire more people, build up more teams, do more things simultaneously. [1:17:42] And there's a certain sloppiness in that. So I think it just becomes harder when the environment encourages slop. [1:17:49] Which is why I think the value in bootstrapping is that it teaches entrepreneurs to [1:17:55] It not even teaches, it forces them to have to figure out how to make money. [1:17:59] and [1:18:00] the more time under the curve they have, [1:18:03] making money and practicing making money, the better at it they're going to get. [1:18:07] Like I use the guitar metaphor, but earlier I'll use it again. If you're playing guitar, if I give you a guitar and ask you to go up on stage and play guitar, you're going to suck. And it's going to be horribly embarrassing and you're going to be terrible at it. You might be terrible at it a month later, but you'll be slightly better at it. You do it for six months or a year again. [1:18:22] better and better and then five years, it'll be really damn good, right? [1:18:26] Why do we think that a business that is sloppy, that doesn't have to make their own money, that is just getting pumped full of money by somebody else, can all of a sudden turn on the profit spigot? [1:18:34] and all of a sudden be profitable. What you see is that they oftentimes cannot because they're just not set up to be that way. They've never played guitar before. Now they're being asked to play guitar. The reason I think it's great for entrepreneurs to start bootstrapping is because they just have more practice making money and they get better and better and better at the fundamental skill you need to have ultimately to run a successful business, which is to make money. [1:18:57] If you don't have to do that from the start, you're just not practicing that. You're practicing spending money. Getting good at spending money is not as valuable as skill as getting good at making money. That's why I think it's just harder, but of course it's possible. It's just harder.

[1:19:11] What I'm hearing is essentially to do this well, you need discipline. Like, understand, here's the incentives they're driving me to spend more money, grow faster. [1:19:20] and being really good at not [1:19:22] And then also it sounds like you just need investors that are on board with, we understand, we're not going to focus on growth obsession. We're not going to focus on great routines. We're going to give you space to build it the way you want. And that exists. It's just also an outlier in that industry. I think what you need are constraints is what I'm actually trying to get at. You need constraints. And when you have just like loads of money. [1:19:41] you basically have very few constraints. And so that's what tends to lead to slop versus like, hey, [1:19:48] If we don't figure this out, we can't make payroll next week or next month. Like you just start to figure things out. [1:19:54] One of the best stories I heard about this was Peter Rahal, who started RxBar. [1:19:59] Are you familiar with RX Bar? Yeah, little protein bars or whatever. There's a great article about this years ago where he was talking to his dad about, I think, raising money or something. His dad's like, "Hey, go sell a thousand fucking bars and come back and talk to me." He's like, "Just sell some fucking bar. Get out on the street and sell some bars, man. You've got products. Sell products. Go, sell." Versus all the things you could possibly do if we had more, like, "Go sell some fucking bars." [1:20:29] It's just such great advice. [1:20:32] And it just cuts through all the crap. And so I just I like that scrappiness. And you don't get scrappiness from having largesse. [1:20:41] you just don't it's just it's just too easy not to have to do anything not to say that VC companies aren't doing things they're doing a lot of things obviously

[1:20:50] but are they honing the scrappy skills? Are they learning how to make money and have margin and be profitable? If they don't have to, they probably are not. And I think at some point, and we're starting to see this now, [1:21:04] This is not like an I told you so thing. This is just like, this is what happens. This is not me. This is just... [1:21:09] economic cycles. Money's harder to find. [1:21:12] It's harder to get. Even companies who've raised money, investors are not putting in additional rounds, and there's [1:21:18] Deep cuts happening, layoffs, pain, and suffering. [1:21:22] it's hard to switch from a, [1:21:26] having a lot to not having enough and then having to [1:21:31] Thank you. [1:21:31] work as if you know what to do. I think there's a lot of confusion in the market now, at companies now, I should say, because they don't know what to do. They haven't had to do it before. And I feel for them in a sense because how could they be expected to know what to do? Just like, frankly, as I said earlier, if someone dropped 10 million bucks on me and 1,000 people, I would have no idea what to do with that. Truly, I would not. I would waste it is what I would do. [1:21:56] If you don't have the experience, how are you going to know? Same way with the newsletter and the podcast. There's no way I can grow this thing with money, really. I've tried a bunch of little experiments and nothing really does anything. [1:22:08] It actually comes back to, let me find this quote that you have of just like your business strategy in a nutshell. [1:22:13] Just keep making great shit, keep your cost in check, charge appropriate prices for your work share as much as you can, and let the chips fall where they may.

[1:22:21] That's basically it. I mean, one of the things I don't think I said in there was like, enjoy it. Have fun. Enjoy the ride. [1:22:30] Love who you're working with and create a great environment to do great work. And so other people can do great work and thrive as well. That's all baked into that. It's not like set targets. [1:22:39] It's not try to be a billion dollar business. It's not aim for an exit. It's not, you know, be on the cover of whatever. It's not any of those things. [1:22:49] It's like... [1:22:51] Maybe it's the Midwestern-ness in me, growing up in Chicago. I don't know. It's just that. My dad... [1:22:58] Best business advice I ever got I got from my dad, it's just a simple line. It's like, "No one ever went broke making a profit." [1:23:06] And maybe that's just my guiding light, ultimately. It's like, 'cause you can go broke generating a lot of revenue. A lot of companies do. [1:23:13] But you can't go broke generating a profit. [1:23:15] And I think it's just really tight. [1:23:17] What a great quote. Final question before we get to our very exciting lightning round. Let's talk about Once. This is a new product slash umbrella of products you're developing. Can you just talk about the thinking here? And then I think you guys are announcing the actual first product within this umbrella. [1:23:32] Yeah, so the idea behind once is David and I kind of feel like, we're probably a bit early here, but we feel like there's going to be a bit of a turn back towards the way things were. Pendulums always swing. And for the last decade or so, SaaS has been pretty much the only way to run business software. [1:23:50] Basically, you rent it. There's really not a lot of alternatives like you rent software. And we think that there's subscription fatigue and also some benefits to that for sure. But there's also a lot of downsides to subscription software. You keep paying the same amount every month for the thing that you had last month. It's not like a magazine where like every month you get literally a new issue. So that's like new. I'm paying for new weekly or monthly. Okay,

[1:24:20] But let's face it, the core of the thing that you're using, 90% of the time, is the thing you've been paying for for four years now, every month. It just seems like, meh. [1:24:31] We're going to launch this thing called Once, which is essentially a brand, an umbrella, a line, a product line of non-SaaS products, of products, not services. Things people will download, business software products people will download. [1:24:44] pay for once, and then install on their own server, or like a shared server, or in the cloud, their own cloud or whatever. But they'll run it, they'll manage it, they'll pay for it once, and there's no subscription fees, no recurring fees, they get updates, they get support and some of that stuff. [1:25:01] But that's it. [1:25:02] And so we're going to launch the first one shortly here and then we plan on doing hopefully maybe three more next year. And the beauty of these things is that what we're basically doing is we're going out in the market and looking at it, although we already kind of know it because we've been in this world. [1:25:16] We're saying like, what are the commodities out there? [1:25:18] There are a lot of commodities in business software and there's like 50 alternatives and they're kind of all sort of the same yet. They're all still charging luxury prices. [1:25:27] In my opinion, if you're paying tens or hundreds of dollars a month or in some cases thousands of dollars a month, month after month after month after month after month for a month [1:25:36] When there's hundreds of alternatives and there's no price differentiation really between them, that's an opportunity. In every other industry, there's generic peanut butter. There's generic pencils. There's generic everything in a sense. So we're out there looking for commodities that are still charging luxury prices that we can create really beautifully tight, simple, essential generics of very high quality that don't do everything that the other products do. But get the core of it right, the 80-20.

[1:26:06] quality and we can build these in typically three months each with two people. [1:26:11] The maintenance cost is zero to us essentially. There's no marginal cost here because we make the software and we sell it and we don't have to maintain it in terms of hosting and the whole thing, which is what the expensive part of SaaS is. Anyway, that's the idea behind once and we don't know what the market's going to think. I have no idea, but we're really excited about trying this and seeing what happens. [1:26:33] And then could you talk about the first thing you're launching or is that not... [1:26:36] Yeah, sure. The first product we're going to be launching is basically an old product that we made way, way, way back when. So years and years and years ago, in 2006, we launched a product called Campfire, which was a group chat tool. How could you not remember Campfire? Well, some people are 22 and they don't know, understandably so. But if you've been around, maybe you remember Campfire, which was a group chat tool, which is, I think, like eight years before Slack came out or something like that. [1:27:06] It was really hard to get people to even understand what this thing was and a lot of people didn't get it. Then Slack came out of course and sort of steamrolled it and really executed beautifully and did a great job. But chat has become a commodity. [1:27:21] There are a million ways to chat with people now and in the business realm, they're all still quite expensive and they're all month to month to month. You got Slack, you got Teams and you got a few others and it's like, you know what? [1:27:35] And there are some open source alternatives, by the way, that are free or cheap. But we want to put something back out there. So we're going to relaunch Campfire.

[1:27:42] under the Once brand, you'll pay for it once, you'll install it on your own servers, and you'll run it. And it'll do 90% of the things that you want to do every day in these other chat tools, and do them very, very well, and very, very simply, and very, very easily. [1:28:00] and we think it's going to be really interesting. And by the way, the other thing we're thinking about with these ONCE products, which is interesting to get to this alternative point of view, [1:28:10] is that these don't necessarily need to replace things. They can be in addition to, like you might still run slack at your company, but you want a backup for when slack goes down, or you want a special, you know, a special, you know, [1:28:20] air-gapped chat for your executive team, [1:28:23] that cannot be leaked [1:28:27] by another company where you're hosting data or having other people involved that might have access to it by accident. You can run things and you can have different tools doing similar things, but for different groups in different contexts. Now, you probably wouldn't want to pay month to month to month to month to month for a backup system when something almost never goes down. But if you only have to pay for it once, it might be really... [1:28:48] like that's a good thing to have. That's an insurance policy we pay for once and we just have our back pocket, right? The other thing we're doing with once products is that, [1:28:55] You get the code. [1:28:57] And so if you're a product team and you're curious to see how this product was built, [1:29:02] And we've gone to great lengths to make it [1:29:06] exceptionally well built for this purpose. This is a book, essentially, of how to build this kind of thing really, really, really well on the CSS, on the HTML, on the Ruby on Rails side, for example. So you'll get all the code and you can look at it and you can modify it. You can play with it and you can tweak it.

[1:29:24] You can't resell it, there's certain licensing, but it's yours. If you want to change the layout, go ahead. If you want to add some features, go ahead. If you want to mess around, go ahead. It's yours. That's another thing that's really novel. You don't get that in subscription software. There's a lot of things going on that we're trying. There's some other really cool stuff. I'll tell you one more quick thing about it is that we're trying to make this first prompt especially have as few words as possible. [1:29:49] 30 words So we're picking tools that are [1:29:55] or picking categories that people already know how to use. And so we're trying to keep as many words out of this as possible, so it's instantly, essentially available for the entire world. It's not, doesn't have to be localized, you know, it's just like, it's universal software, we're trying to think about it this way. And when we do have a word, [1:30:12] we're going to have a panel that shows that translation in a bunch of different languages. So it's not like you install this pack or that pack. It's like you can hit this because different people in the world work in different countries. So we have people in different countries that work for us. I don't want to just have the Indian version because people in India might also have people that work in Brazil and they need the Portuguese version. So you can see all the different languages for certain words when we use them. [1:30:33] which is a really novel thing. We're kind of playing. This is the whole thing. These kind of tools give us a chance to play and explore new realms and new ideas that we couldn't do with SaaS. This is one of the things I'm getting back to the first question you asked me, I think. Or maybe it wasn't the first, but this is why I'm excited again. There's some novelty again. There's some new explorations again. We're able to do things that we couldn't do in other places. So there's an excitement that's building around SaaS.

[1:30:59] this creative exploration again, and that's really firing us up. It's clear how you're excited about this. You were saying how you thought you'd be happy just building Basecamp for the rest of your life. Right. There's a pull here. I'm going to try something totally new and different. [1:31:11] Also, the domain is awesome, once.com, right? Yeah, that was fun. And we're still going to do Basecamp and Hayes. So we're still doing SaaS. I still believe in SaaS. This is not going to replace SaaS, but there should be an alternative. People should be able to buy what they need versus rent what they need. [1:31:27] I think this is going to be an interesting experiment because this is how we started with software. [1:31:33] And then SAS came and everyone loved this idea. I don't have to worry about anything. I'm just going to pay you monthly and you take care of maintenance and hosting all that stuff. [1:31:40] and keep updating me with better features. [1:31:43] So I think it'll be interesting to see if we've missed something. [1:31:45] leaving that world. [1:31:47] One clarifying question for updates, do you buy yearly, kind of like a new campfire every year? Or how does that work if there's updates? Yeah, so the plan is that, let's say you buy campfire 1.0, [1:31:58] this is kind of the way software used to work. It's the same sort of approach, which is like, you'll get all the one dot X updates, you know, for free. And, [1:32:05] you'll be able to decide if you want to update yours or not. So we'll say, hey, there's a 1.1 is out and here are the new things. And you get to decide if you want to download that and update yours or not. So you can stick with 1.0 if you want, or you can skip a version or whatever you want to do. [1:32:19] If when we get to version 2.0, there'd probably be, you'd probably have to buy it again, but we'd probably have a discounted upgrade rate. But that's like, [1:32:27] You also totally optional.

[1:32:30] I don't know if we'll ever even get there. We might not need to. I have no clue. But we're leaving that door open that, you know, if there's a radically new version that we had to sink another six or eight months into or something, it feels right to say you'll need to upgrade. Maybe you get half off because you're a previous customer or something like that. So we don't know, but that's the plan. [1:32:49] I think it's also important for people to remember your target is not like [1:32:53] to replace slack at big tech companies like your market is the fortune 5 million [1:32:58] as you described. First of all, we don't have a sales team. So it's self-service, [1:33:03] It'll always be if some big, huge company says like they look at their bill, their Slack bill, and they're going, we're paying 1.2 million a year for this. Wait, wait a second. I can pay like... [1:33:14] Less than a thousand bucks once for this? Maybe that's worth having. Or maybe like even if we don't use it, it's absolutely worth buying because maybe we will use it or maybe we can experiment with it in this place. One of the things we're trying to do here is find a price point. [1:33:28] It's going to be under a thousand bucks. I won't tell you exactly where, but we're trying to find a price point where it kind of becomes a no brainer. Like, you know what? We should we should buy this. We should have this. This should be in our toolkit. [1:33:39] and we should use this in certain parts of our business even if we don't replace this other thing. Although we still might because we might find that as this group or these two groups or three groups that are using this are making exactly the same kind of progress, like why are we spending all this money elsewhere? So it's a bit of a Trojan horse potentially. I don't know what's going to happen. No idea, but it's going to be pretty interesting. The other thing that's really cool about it, this is a...

[1:34:02] tiniest market in the world, but because it doesn't go out to the internet, [1:34:07] You can run it in truly air-gapped research facilities. There was a time way back in the day where the White House got in touch with us. This is when Obama was running and wanted to use Basecamp. [1:34:18] But they're like, we need to install it because we can't obviously host this stuff on your servers. I know I totally get it. We can't do that, unfortunately. Sorry. But they have security needs that are just far beyond what most things allow. But this is the kind of thing where they can actually be completely detached from the public internet and run this kind of software, which is really interesting. [1:34:48] way. [1:34:49] Then did you share when this might come out? I know you don't promise dates, but is there something you want to share there? Well, unfortunately, we promised. We said by the end of this year. That's why I was getting to that. [1:34:59] We said by the end of 2023, and we're almost there. Here we are in December. So mid-December... [1:35:05] We're going to start to roll this out to the first batch of customers. It's probably not going to be available publicly to everyone in the world. [1:35:13] yet, but that'll come soon after. But the first batch of customers are going to get it and we'll kind of slow roll it out, figure out what we missed, what we needed to [1:35:21] you know, tighten up and tweak. It's not really a beta as much as it's just a limited release, which is the smart way to do this. And then we'll open the doors very, very soon after that. Jason, you're breaking your own rule of not saying by end of the year. Apparently, I learned earlier that that never works.

[1:35:36] And I, yeah, it's funny, like, [1:35:39] We definitely said that. We said that like six months ago. And here we are. End of the year. It's happening. So maybe sometimes it works out. [1:35:47] Yeah. [1:35:47] Before we get to our very exciting lightning round, is there anything else that you wanted to share, touch on, or leave [1:35:54] Listeners with me. [1:35:55] I think one of the most important things, though, to remember, and I got to it in another answer, is just like... [1:36:03] Humans tend to complicate things. [1:36:05] And a lot of things... [1:36:07] Thank you. [1:36:08] are hard, but... [1:36:10] They're still simple until you make them. [1:36:12] complicated. And just keep that in mind that you can make a lot of progress with two people and you can do a lot of great work four weeks at a time max. And you can figure things out as you go and you don't need to know exactly where you're going. [1:36:28] And you can be profitable business and you can find customers who are willing to pay for things. Like these are all possible things to do. And you don't need to be a big, huge company to be successful. And you don't need to be a big, huge company to make significant amounts of money. Like you don't need to do that. You don't need to raise money. So it's like all those things make things more complicated. Actually, some people think they might make them simpler. If I have a bunch of money, it's simpler. It's actually not simpler. It's harder. [1:36:52] In a sense, the more because because those things come with expectations. And again, they sort of they erase your scrappiness. And like there are side effects here. Those things come with very, very thick and strong strings attached.

[1:37:07] And you got to think about what are those strings attached to? [1:37:10] and what do they prevent you from doing? You don't have a full range of motion. [1:37:14] anymore so [1:37:16] So I'll leave people with that, even if I sort of touch on some of those ideas earlier on. [1:37:21] And that's a really great way to summarize it. With that, we've reached our very exciting lightning round. Are you ready? [1:37:27] Let's do it. [1:37:28] What are two or three books that you've recommended most to other people? The first one is, is this book here? [1:37:36] So several short sentences about writing. Do you know this book? I love that book. I have it on my coffee table. When anyone ever asks me, like, what book do you recommend on writing? It's this one. Several short sentences about writing. Yeah. [1:37:48] I can never pronounce his last name, but Verln Klinkenborg, I believe, is his name, although I might be bastardizing that. But it's an extraordinarily good book about writing, and it's all about... [1:37:58] It's the sentence. [1:38:00] Beautifully written, fun to read, really great. The other one is pretty much anything by Derek Sievers, but specifically Hell Yeah or No. [1:38:08] This book is something I recommend this book to everybody. It's really had a big effect on me and David specifically. We use this term, hell yeah or no, all the time. [1:38:18] internally. [1:38:19] Is this a hell yeah or no? It really clarifies a lot of things. [1:38:24] And the last one is this design book, which is interesting. There's a few different versions of it. The one I have handy, it's called Homemade. [1:38:32] contemporary Russian folk artifacts. And what this book is, it's a collection of, it's a beautiful book, it's very simple. Basically every spread is a person, a story, and a thing that they had to make

[1:38:45] because they didn't have [1:38:47] Anything. [1:38:49] They couldn't buy what they needed. They didn't have what they needed. So this example here is a guy put a hole in a spoon. [1:38:56] to make like bubbles for his kid. [1:38:58] like to blow bubbles, like large bubbles, right? This is a TV antenna. [1:39:04] Made out of forks. [1:39:06] And it's just like getting back to the scrappiness, I admire this kind of ingenuity. [1:39:13] among or over pretty much anything. And I think that this book is full of, there's a couple hundred pages. They have another couple, a couple different editions of this, but I love this one a lot. Look at this one. This guy had to make a door handle. I mean, in America, we're like, go get a door handle at Home Depot. Like this guy didn't have a door handle. So he made it out of like [1:39:30] A plastic looks like a gallon like oil can or some water thing and you know, [1:39:36] which nailed it to a book, which nailed it to a door. [1:39:40] Amazing. And this is also why I've always loved, I know this isn't very lightning, sorry, but I've always loved like, [1:39:45] looking at like a jailhouse creations and tools and like, you know, how people make, you know, [1:39:52] weapons out of combs and pens. It's just, I find this like, [1:39:55] I have nothing. [1:39:56] I need something. [1:39:58] I can use my human brain to figure out how to make it. I think that scrappiness is beautiful. [1:40:03] Yeah, I was just going to say it speaks clearly to your scrappy mentality. [1:40:08] And what is that book called again? This one's called Homemade. [1:40:11] contemporary Russian folk artifacts. And there's also an Eastern European one, and there's another one too, but homemade.

[1:40:18] What an awesome, unusual selection. Okay, next question. What is a favorite recent movie or TV show? [1:40:23] I don't watch TV. I rarely get a chance to see movies these days. I really thoroughly enjoyed Oppenheimer, though. [1:40:31] I went to the theater to see it. [1:40:35] And seeing that in the theater was really special. But I just love the movie. It's fantastic. [1:40:40] Do you have a favorite interview question that you'd like to ask candidates that you are interviewing to hire? Yeah, I think we kind of actually went over this one a little bit, which was I'm always curious about like what else? If you had more time, what would you do? [1:40:52] with this idea. Another one is, whose work do you admire? [1:40:57] So it's not so much about what you can do, but what are other people doing that you think is great? I find that that really illuminates kind of, you know, what kind of pulse they have on the world and what they're looking at and what inspires them and what they think is good. So I like that question. [1:41:12] In that second question, what do you look for? Is it like someone that you also admire? Ultimately, in the moment, I don't care who it is. It's more about tell me why. [1:41:21] Like so someone will say like I like so and so. I'm like, why do you like them? [1:41:25] What are they doing that you think is interesting? This is kind of the thing I tend to always ask, which is like, why do you think that that's interesting? [1:41:31] I'm always trying to get behind the words and understand like where this is coming from. [1:41:38] Because people can prepare answers and they can sound great, but it's like, "Well, what's behind that? Where are you going with that? Why? What's the genesis of this?" That's sort of what I'm always after. Whether or not I agree with the work or whatever, in the end it kind of plays a part to some degree, but I'm more interested in like...

[1:41:59] How'd you get there? [1:42:00] Is there a favorite product that you've recently discovered that you really love? [1:42:05] Yes, although it's more of a category. I bought an old car and I've fallen back in love with stick shifts. [1:42:16] I learned on a stick and then I basically had automatic cars for many years and I got back into sticks. And actually, it's even deeper than that. I got back into... [1:42:27] the old analog driving experience and how wonderful it is to feel attached to the machine that you're [1:42:36] using, that you turn the wheel and it turns the rod and it turns the wheels and that your leg muscle actually is what is breaking the car to some degree. There's something about that direct feel that really surprised me. It surprised me how much is missing in modern cars. I like to draw these parallels because this is kind of how I see the world. It reminded me of our business actually. I think we have a very stick shift business. [1:43:06] We have a very direct business. [1:43:08] Everything's very, very tight, very straightforward. There are not a lot of layers of abstractions. There are not a lot of things in the middle. [1:43:15] between the work we do and the way it feels. And I think of large businesses as like automatic transmissions and modern cars where you just, everything's simulated. [1:43:25] Like what does it feel, you don't really know what the road feels like, you can't really feel it in the steering wheel or maybe there's some fake feel in there now.

[1:43:32] The brakes are just like sending a command to a computer to squeeze the pads, you know. [1:43:38] The transmission is like you don't control it. It just does its own thing. And there's a beauty in that, too. But there's also a disconnect that I forgot about until I got back into driving the old car, which is like harder to drive and noisier and bumpier and creakier. But there's a real directness to it that's really special. And I think I think it's actually a good way to look at business and to remind yourself that. [1:44:05] Staying as... [1:44:06] connected to the thing that you're doing as possible has a lot of value. [1:44:11] That's an awesome metaphor. [1:44:13] Next question, do you have a favorite life motto that you often repeat yourself, share with folks, find useful in work or in life? [1:44:20] Yeah, and I don't always live up to it, but basically it's worry less. [1:44:24] There's a great Tom Petty lyric. I can't remember which song it's in, but I think it's on Wildflowers on the album. It's a most of the things you worry about never happen anyway. [1:44:34] And it's just so true. [1:44:37] I find myself worrying about all sorts of things that don't matter and never happen. Then you're like, "God, I spent three days worrying about that," or, "I went to this appointment and it was fine." [1:44:47] the amount of worry and it's all in your head and it's all about anticipating the future that hasn't happened yet and [1:44:54] I try to tell myself that and I try to tell others that in business. I try to tell myself that in life and in business, but also I tell others that in business like,

[1:45:03] What if people don't like, I don't know. You'll find out, worry less about it. It probably isn't going to be a big deal anyway. So that's kind of what I would say. [1:45:12] Worry less. Worry less. Final question. I was going to ask you this before you mentioned this, but you said you're writing a new book, [1:45:19] Are you able to share what this new book might be about? Yeah, we haven't started writing it. I can tell you... [1:45:26] I'm thinking about it. [1:45:27] And it's going to revolve around the idea of gut and intuition in business and decision making. I don't really know exactly how they all play in here in a book, but... [1:45:38] I think... [1:45:39] We need to celebrate gut and intuition more in business. And most business books are not about that. They're kind of about the opposite in many ways. You know, you can't whatever. You can't improve what you can't measure or whatever these things are. And I think that's true in a lot of realms like, you know, medicine. And, you know, you can look at your biomarkers and you can do things. [1:45:58] I don't think things are quite as direct in business and I think that intuition and gut is something to be celebrated. So I think what we're probably going to end up doing is looking at all the ways we use intuition and gut to make decisions at work, whether it's hiring or product decisions or policy decisions or whatever it is, maybe break down some of those decisions in the past perhaps or talk about things on a day-to-day basis about how we employ those tools to move forward. So that's... [1:46:22] roughly the idea. It's very loose right now, but hopefully we can tighten it up and that's what I'd love to. I'd love to focus on that next. [1:46:29] That's an awesome topic for a book. I was thinking Worry Less could also be an awesome title for a book, if that's another topic. That'd be a great title for a book. Yeah, that would be. Also, I'm reading Charlie Munger's Port Charlie Almanac right now. Beautiful. There's a whole thing around...

[1:46:45] the way we misjudge and make mistakes with our psychology. Human misjudgment. I feel like that would be a part of this story of like, [1:46:54] gut instinct are often [1:46:56] Right. But here's ways we are often wrong. So maybe that's something to think about. [1:46:59] Yeah, it's funny. I had I've had I had one opportunity to meet with Charlie Munger. Oh, wow. It was on a Zoom call and it was like four of us and we got an hour with him. This is a few years ago. And I only asked him one question. I was mostly just like a student, like listening to other people's questions. I said, like, what's your take on. [1:47:17] Doing something... [1:47:19] well that you know nothing about essentially like is there power in being completely ignorant about something I've because I didn't add this but I've often found myself a [1:47:32] more creative when I don't know how to do something versus like, well, this is how you're supposed to do it. So you kind of fall into this pattern. And I really loved his answer, which was, which was like, yeah, I would just trust your instinct on that, which is like, you know, a lot of great things happen because you don't know how to do them. In fact, a lot of innovations happen because you don't know how other people do them. [1:47:50] And all you have is, [1:47:52] is your gut all you have is your intuition all you have is how you feel about the thing you know like [1:47:59] You don't have evidence. You don't have other examples to follow. [1:48:04] You don't have a list of what to do. [1:48:07] You just kind of do. And I'm paraphrasing here, but it gave me a lot of confidence and hope to continue to follow our gut. And maybe this is ultimately, in a way, what was the seed for this book, perhaps, although I hadn't really thought about that until now.

[1:48:24] It's a beautiful thing to read and to listen to him speak. I love it. [1:48:28] Jason, we covered everything I was hoping we'd cover. Thank you so much for making the time for this. Two final questions. [1:48:35] Folks want to follow up and maybe ask more questions. How can they reach you if they can? [1:48:39] Then, how can listeners be useful to you? You can hit me up on xjasonfried, F-R-I-E-D. I'm on LinkedIn as well. You can also email me directly, just [redacted email]. Hit me up there. How can people help me? If you like what we're doing, spread the word. We don't really spend any money on advertising and marketing. We've explored a little bit here and there, but most of our growth has been organic and it's just word of mouth. If you like what we're doing, [1:49:05] Tell people about it because it really helped us out. [1:49:08] Amazing. Jason, thank you so much for being here. Thanks, Lenny. It was great. Bye, everyone. [1:49:14] Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review, as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lennyspodcast.com. See you in the next episode.