Lenny's Podcast: Product | Career | Growth - Jason Fried challenges your thinking on fundraising, goals, growth, and more

Starting point is 00:00:00 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 to turn 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. 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, that's a way. Just know, though, that basically almost nobody makes it that way. 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 throw out that outlier and look at all the other places

Starting point is 00:00:44 you can land as a business. Today, my guest is Jason Freed. 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. 37 Signals is a very different type of company. 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 It filters down to the founders and employees because they have no investors.

Starting point is 00:01:25 Most founders, by default, will go down the venture route, raising money from BCs and Angels, and for many types of companies, that is necessary. 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 unconstitutional. 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

Starting point is 00:02:02 sense to consider raising 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 Freed after a short word from our sponsors. 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.

Starting point is 00:02:30 I know this firsthand because Cota does that for me. I use Cota 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 Codas product team operates, and within that post they shared a dozen templates that they use internally to run their product team, including managing the roadmap, their OK-hour process, getting internal feedback, and essentially their whole product development process is done within CODA. If your team's work gets spread out across different documents and spreadsheets and a stack of

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Starting point is 00:03:43 One of the most effective ways to create a big leap in your career and something that worked really well for me a few years ago is to 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,

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Starting point is 00:04:32 listener of this podcast, you're likely already driven and committed to growth. A Sidebar, personal board of directors is the missing piece to catalyze that journey. I spent a decade finding your people when you could meet them at Sidebar today. Jump the growing waitlist of thousands of leaders from top tech companies by visiting sidebar.com slash Lenny to learn more. That's sidebar.com slash Lenny. Jason, thank you so much for being here and welcome to the podcast. Thanks, Lenny.

Starting point is 00:05:03 It's good to be here. It's really good to have you on. I have this new segment on the podcast that I call Contrarian Corner. And I have this feeling like this entire episode is going to be Contrarian Corner. And so I'm excited to dig into all kinds of stuff. I have so many questions I would ask you. I thought it'd be good to just start with giving people who aren't that familiar with your story and 37 signals. A sense of just how successful the business has been.

Starting point is 00:05:29 I think people don't quite get the business you've built and the scale you've built. So whatever you can share in terms of customers, 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 imagine. We don't talk about things that don't really matter so much. So like revenues don't really matter because you can go broke generating a lot of money. But we talk about profits. So we've historically, let's say over the past 10 years or so, we've been profitable every year for 24 years. But let's say over the last 10 years, we've been doing a double-digit million dollar profits

Starting point is 00:06:02 on an annual basis, which is really nice. We have about 100,000 plus paying customers. So that's a rough number. And we've about currently like 75 or so employees. So, you know, relatively small business in terms of the number of people work here. Big customer base, big profits. And that's 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 there are 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 experiment and play and not be afraid to do things that may not work. And, and just enjoy ourselves.

Starting point is 00:06:43 So that's what we've been doing for about almost 25 years. Next year will be our 25th year in business. So the bet, just kind of falling the same thread, the bet that companies are making, obviously, going down the venture route is they are going to lose money for a long time so that they can make much, much more money in the future. And so the idea that it grows as fast as possible as big as possible, and then we'll make money.

Starting point is 00:07:02 You're a big advocate of not raising venture and bootstrapping. So just like, what's your advice to founders for when raising money makes sense? I actually wrote this article once called, 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. And I feel like we're aligned on this. What's your advice to founders there?

Starting point is 00:07:24 I think, you know, obviously 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 right off the bat and you need to pay rent, you need capital. And it could come from you, could come from friends and family, or it could come from an investor,

Starting point is 00:07:41 it can come from a bank loan. There's lots of places to get it, but you'd need it. Software businesses, though, and businesses like ours, we just make software, and a lot of people in our industry are like us in that respect.

Starting point is 00:07:56 They need a couple laptops and a couple people, and like 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 Silicon Valley has found a way to make the most profit, style of business, the least profitable.

Starting point is 00:08:13 Like software has, there's like no physical costs. It should, 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, how that, 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.

Starting point is 00:08:36 Like 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, you know, 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, you know, goods and they have to get raw materials and convert that into a pizza. And there's just costs involved with that. And they can't sell it for too much because the other place down the street sells it

Starting point is 00:09:05 for less. And, you know, so 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 kind of one outcome for venture backed companies, which is go huge. And if you think about all of the space between 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

Starting point is 00:09:44 sense for you. But if your venture backed, you just don't even have the opportunity. You blow right past those, or 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. Coming back to something we touched on a bit as this idea of smaller teams, so you tweeted this similar stats. I'm just going to read these numbers 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. Monday has 1,500 employees. You have, I think you said 70-something employees. Yeah. And you have similar numbers of customers, about 100 to 150,000. And you make a lot of profit, and they generally don't. How is this possible? We run a very different kind of business. So we are focused on efficiency. We're not focused. focused on growth. They're focused on growth. And so typically when you have a lot of people,

Starting point is 00:10:44 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. We don't have any salespeople. You know, we don't have 15 different versions of base camp. We're not after enterprise. 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. We have one price, basically. Well, we have two prices on Basecamp, one price on Hay. Actually, two prices on Hay, two, basically. But one codebase,

Starting point is 00:11:25 one product we offer everybody. And let's take Basecamp, for example, nobody can pay us more than 300 bucks. I don't care how big your company is. The most you can pay us is $299 to get unlimited users. And what that allows us to do is to just build one product, 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 hey, 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.

Starting point is 00:12:12 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 trying to do too many things for too many people. Now, all that said, we could still make the mistake of hiring hundreds of people because we could afford to do so. 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, 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,

Starting point is 00:12:51 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, you know, go after. for the big companies and have to have sales people and have long sales cycles and whatnot. So 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.

Starting point is 00:13:15 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. So 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 lattice work they have to build up to support all that weight is just remarkable.

Starting point is 00:13:37 And it's foreign to us. Okay. So I definitely want to talk about how you operate in your way of working 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. No, good.

Starting point is 00:13:53 That's good. Hey, if I said it, I said it. Let's go. No, they're also. 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.

Starting point is 00:14:02 Also, if you think you're too small to be effective, you've never been in bed with a mosquito. Now, that's not my quote. That's someone else is 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.

Starting point is 00:14:14 It's expensive and defensive. Underdo your competition. We need more simplicity and clarity. And I think a lot of these things point too. Like, there's a few paths to success and goals for people. One is build like a massively scaled. Everyone's using kind of product like Figma and Notion and build a venture scale, $100 billion company.

Starting point is 00:14:32 And then there's this. path, which is we're just going to make a bunch of profit. We're going to make individually. Like, we're going to take home a bunch of cash. We're not trying to have everyone in the world use it. 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, what success means to you, how you think about what success is for you, for the company like you're building. For me, you know, it's really about what I want to do this again. If the answer is, yeah, like that was enjoyable.

Starting point is 00:15:02 I enjoyed that. That was worthwhile. I'm glad I did that. I'd like to do that again. Then it was successful. Now, you could find, you could carve out some extremes there. Like, I'm sure someone who's addicted to drugs might go, you know, that felt great. I should do that again. So you got to be careful with that in a sense. Obviously, I'm not talking about that. Addiction is a whole different story. But in general, with this kind of stuff, like, 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. So it really is about do you want to do that again? That's what success is to us at a sort of root level. Now, on the business side of things, we have to be profitable. Now, that doesn't mean that everything we do needs to be profitable. So I am not driven by data or 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, collectively, are we making more money than we spend? And that's, the only thing we ultimately look at.

Starting point is 00:16:03 You know, like whether or not this product is more profitable than that product and this is behind that, like, it's all the things we do. 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. 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, like, if it turned out that it was worse to say thank you to somebody, would you not do that?

Starting point is 00:16:26 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? You know, what kind of things do we enjoy making? And as long as we can at the end of the year look back and go, well, collectively, more work than didn't work, then we're okay. That's kind of how we look at it. I've just never, like, we don't have financial goals.

Starting point is 00:16:49 We don't have OKRs or KPIs. I don't have revenue targets. I don't have 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, we make more than we spend, we did. Then the things we did this year were worth it. 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. There's this book. I don't know if you've read this book called Finet and Infinite Games. No, I've not. Okay. I think this is, I think you would love it.

Starting point is 00:17:21 So the whole premise of this book, it's like very, it's like a terse, kind of tricky philosophical book, but it's very short. And it kind of espouses, you want to be. playing infinite games to be happy in life. Games that never end versus games like I'm going to build a business and sell it. I'm going to go public. That's my goal. Or I want to achieve this promotion. Like you get most joy out of things that never end. Like building great relationships. Building a company, you want to keep working at forever. I like that. And you know, it's interesting is I've always thought of my career this way. So when I got my first job, I was 13, worked in a grocery store for a bit and I worked in a shoe store. And after that, like maybe when I was

Starting point is 00:17:57 15, I got a reseller's license, which was this thing you could, you could, this is way back in the day. There was a, I think there still exists, company called Ingram MicroD, which was a, which had this huge thick catalog of like electronics equipment. And if you had a reseller's license, you could buy these things at wholesale prices, then I could sell them to my friends for retail, which is like almost two X 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 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.

Starting point is 00:18:37 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, like it's all the same to me. And I just want to keep doing it. Like, this is my day job. I think the other thing that's interesting about entrepreneurship is sometimes there's a sense of like you can get a job or you can be an entrepreneur. Well, an entrepreneur is a job. And like, I want to, this is my job. And so I want to create the company that I want to work at. And I want to keep doing this job for as long as I can, as long as I'm useful.

Starting point is 00:19:11 I'm good at it. I enjoy it. I want to keep doing that. And so to like 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. But you got to stop doing what you're doing because we're going to sell this business. And you're going to work for this other company for two years and do their

Starting point is 00:19:27 thing and then eventually after that's over, you'll leave and you'll go start another thing. Like, 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, we don't have to ask anyone for permission. 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 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,

Starting point is 00:20:05 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. You have this term, instead of a startup, it's a stay-up. Yes. I'm so sick of the startups. I mean, like, it's cool to start a business, obviously. But I'm sick of that, like, that term dominating. Because frankly, starting a business is actually way easier than staying in business. Now, none of it's easy. So I want to be supportive of people who are starting businesses. But just they should know that that's actually not the hard part.

Starting point is 00:20:38 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 in the app store and you can sell for two bucks and like you got a business going, right? But, you know, are you going to be there in two years? Are you going to be there in five years when competition rushes in? When you have employees, like, are you going to be there? staying is harder than starting and so i'm here to celebrate stayups plenty of other people are here to celebrate startups i feel the same way with it with i always say this about newsletters and it's

Starting point is 00:21:03 also true for podcast easy to start a newsletter hard to keep it going totally yeah i mean i've seen your newsletter kind of you know fly right and and and we have we have a newsletter and like it's been pretty like flat i'm like how does he do it it's hard it's really hard it's 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 a 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 you've got to, if you want

Starting point is 00:21:43 to do the thing for a long period of time, you've got to like the thing because you're going to have to, you know, endure these moments of plateaus, which is, you know, kind of what staying up is all about. And sometimes those go down. I mean, like, we've had wavy years, right? Always been profitable, but our profits different every year. And sometimes it's more and sometimes it's less. And sometimes our margin is more. Sometimes it's less. You know, if you compare yourself to the previous year, you can kind of like 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. Speaking of enduring, you've been at this for 25, almost 25 years now, I believe.

Starting point is 00:22:18 Yeah. Have there been periods where, like, that side 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 realize this is not what I want to be doing? Why did I do this to myself? And then, too, 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?

Starting point is 00:22:41 And 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 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 tend to just call back to it and look back to it. And so you kind of opine for the early days or you reminisce, I should say. And you know, it was so much easier when we were 20 people. Yeah, but we weren't doing this. And, Times are different and you can't go back anyway and whatever. But it's interesting. Like next year, I'll be 50.

Starting point is 00:23:26 We'll be 25 years in the business or we'll be doing this 25 years. I've been running this company for 25 years. Part of me thinks like, is that enough? Like 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,

Starting point is 00:23:44 which hopefully we're going to build three or so products next year under that category. I would like to write on their book. We finally have another idea for another book. So there's just this 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 business sapped energy for me.

Starting point is 00:24:07 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 will be like in a year from now. I really don't know. And I think I'm more conscious of that than I've ever been given how long. long I've been doing this. And also, like, I always have this strange fantasy. I'm always curious. Like, what would someone else do with this place? Like, what if someone else could just step in tomorrow,

Starting point is 00:24:29 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 completely detached from it to let them really run with it. But what would they do? I always have this sort of curious about that, I would say, and not curious enough to find out, but still curious. It's always in the back of my head. What do you think they 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 stuck 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.

Starting point is 00:25:04 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. 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 things that we did in the past. probably spend 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% 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. Look at this and look at this and look at this and you get this brand and people know about you

Starting point is 00:25:39 and you get 100,000 paying customers. 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. So I think someone also 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. So that's what I think would happen. And it'd be interesting. It'd be neat to live in a reality where there could be a second reality running right alongside you, truly. Not like an AB test, which is hard to do. You can't really A.B. Test an entire company. I've seen a B test small things, but it'd be kind of cool if that was something that could happen.

Starting point is 00:26:14 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. And there's another. This is a cool exercise, actually, just to think about it, if I were to bring in any fat leader, what would they do and just as a thought exercise? 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, 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 there'd be like this moment of judgment and reckoning with like, do you realize how much you're leaving?

Starting point is 00:26:45 on the table and you know 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 this and squeeze that and address this market and you could have special versions of base camp well churches are using base camp we could do a special version for churches and for you know synagogues and religious institutions or education or non-profits like think of all the slight different things you could do with these different like i'm certain that all those opportunities exist on the table they don't interest me personally in terms of making multiple products but i can see someone else going, there's a huge opportunity here. We got to pursue this. And, you know, I'd be really

Starting point is 00:27:17 proud if someone did that and like made the business 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. Coming back to this as a path, people can take with their business versus a traditional venture scale business. So this path is essentially build something, sell it, make money, live like a chill life, not, you know, super stressed, growth, focused, obsessed, need to build a billion dollar company. Do you think this path is something everyone should do? Is it specific type of personality, a specific type of product? Do you recommend people that are, I don't know, sometimes do go this big shot venture scale route? I'm glad there are some people who do that.

Starting point is 00:28:01 I mean, I'm glad that there's some businesses that wouldn't have worked out had they not taken a much 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. 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, you know, 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.

Starting point is 00:28:38 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. I don't have this big cushion of millions sitting in the bank that I can just spend on things. So 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

Starting point is 00:28:58 way and doing it a different way. And the world moves forward sometimes because of those businesses. And it's great. It's great. And I admire them. It's just that it's not the path I would take. And I think because that's not who I am. And I think this is the important point that I want to get across is I'm not really,

Starting point is 00:29:13 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 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 thing. Like that's a way. Just know, though, that basically almost nobody makes it that way.

Starting point is 00:29:34 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 throw out that outlier and look at all the other places you can land as a business. So my interest is like optionality. If I could land in 135 different positions and have a sustainable business, that's great. versus like saying there's only one way I'm going to be successful or happy. Like those odds aren't really in anyone's favor, even though, of course, some people win the lottery. And I'm not saying it's luck.

Starting point is 00:30:10 There is luck, a lot of luck, including we're lucky that we've made it. So there is a degree of that when I say lottery. But really, the point is that there's only a few slots 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. just to close this thought around whether if you have an idea going the venture route makes sense. 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.

Starting point is 00:30:44 What is it you have to do for it to feel like, okay, this is a venture scale idea versus this is an awesome idea we could just make money 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, base camp and Monday are quite a bit different, but they live in the same world. We could have flipped. Like, someone could have had the Monday approach and sold Basecamp that way. And Basecamp could have gone big in that way.

Starting point is 00:31:15 And Monday could have stayed small in our way. Again, like, 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. But you could imagine it could have been swapped. So it's not that base camp

Starting point is 00:31:37 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 we, I mean, are we? I guess we are venture scale in that respect. But again, point is, is that, you know, depending on how you approach it, you can take anything in any different direction. So it just, it's more of a mindset. What are you after? We're not after that. And they are. So that's what they do.

Starting point is 00:32:03 And we do it a different way. So I don't necessarily think. I mean, there's things like Airbnb is a great example that like that has to have a certain degree of scale to really be something that no matter where you go in the world, you're like, I can get an Airbnb there. Right. And that's probably going to take money to get there. Same thing with Uber.

Starting point is 00:32:22 Uber's another example, right? And these are easy to pick. But they're great examples, really. Like, you know, when Uber was getting started and they had to proliferate all over the country to begin with them 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. Was there going to be an Uber? 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 there's that kind of, those kind of businesses exist. And those are great examples of venture back companies that kind of need that massive initial push to to be available in all the different places. because they're actual physical products. Airbnb is a physical product. Uber's a physical product. Basecamp, Monday, Asana,

Starting point is 00:33:05 they're available everywhere instantly anyway. I don't 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 37 signals.

Starting point is 00:33:24 There's a lot of really unique approaches. one is you mentioned that every project is, I didn't know this, is two people, a designer and engineer, and then 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.

Starting point is 00:33:41 And if you go to Basecamp.com slash shape up, you can read the book. It's free. You can also get a print version if you want. Shape Up is our methodology for actually building products. And part of this is this idea, at the root of it is this idea of the six-week cycle. that whatever we choose to do can take no longer than six weeks. So this is not an estimate of time.

Starting point is 00:34:02 It's an appetite, 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. 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. We instead have appetites. 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 in any feature. So we have to figure out the simplest, most effective version of that to get that done within six weeks and get it done by two people. Now, not everything gets the full six weeks.

Starting point is 00:34:41 Some things are 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. Not that it could take a week 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. So for us, it's about appetite. So the idea of appetites, maxing things out at six weeks, two people max. And then, you know, there's a lot of other details. And I could go on for an hour about shape up.

Starting point is 00:35:10 People can read about it. But it's those fundamental principles. Appetites, six week max, small teams. 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 have like a spec. We don't create to-dos or tasks or tickets for people. They create their work that needs to get done to fulfill the idea that we've written up and designed, essentially.

Starting point is 00:35:38 And they figure out how to do it. Then we trade. So like they might get into something that we've said. We have about six weeks. Well, we're only going to give the six weeks. And two weeks in, they go, we actually stumbled into something we didn't realize. Like, this is probably not going to be able to be done the way we thought. So can we do it this way?

Starting point is 00:35:54 And 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. There's all the tradeoffs we're always thinking about. So all these things that come to bear. And then people often ask, well, what if you don't get it done in the six weeks you gave it? Well, so it depends. So in most cases, it should die, meaning like it just doesn't happen.

Starting point is 00:36:18 Because if it keeps, if we say we're going to give it six weeks and we give it seven or eight or nine or ten, then we're not really giving it six weeks or giving it 10 that we don't really have a system. There are times that when there's like a couple days left when we're on what we're calling the down slope. So there's the, we have these things in base camp called hill charts 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 in the left side of the hill, I mean, you're still pushing this thing up the

Starting point is 00:36:43 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, 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

Starting point is 00:37:06 decisions to make at that point, but fundamentally that's how we approach work. And this prevents 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 sucks. And if people get stuck on a couple of those, they want to leave their job. 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 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,

Starting point is 00:37:45 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, bad. So we want to stay away from that sort of thing. You have these quotes along these lines about planning. Long term business planning is a fantasy. I don't plan long term because I want to do what I think, not what I thought. Yes. I love these.

Starting point is 00:38:10 This whole idea of appetites, it's like, it's very appealing. Like, it makes so much sense. It's like the ultimate impact to effort calculation. Like the effort we will put into this is fixed and we will not. go beyond this because the impact we expect from this is pretty clear. And if we get close, if the effort goes up and up and up, well, why did we even do this? But obviously, the downside is you can't promise things really to sales marketing, which I think makes sense in your type of business. Do you see this work in businesses that aren't your business, this approach? Well, let me talk about

Starting point is 00:38:43 promises for a second. Promises are the downfall of every business. Like every time we've made a promise to get something out in a certain period of time, like, and we, we kind of inevitably seem to miss miss it. Like, it's funny how 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 learned to not promise anything. We can share what we're working on if we want to. We can tell people are doing something. And by the way, the worst promise, and by the way, we've made a couple of these recently. We always regret them. is like by the end of the year.

Starting point is 00:39:21 That's like the, 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. And the further away it is, the easier it is to promise. And so this whole like by the end of the year, oh, red flag. Just remind yourself, whenever you say that yourself, go, oh, wait a second, wait, wait, wait, wait, what am I doing right now? Because you're probably setting yourself up for disappointment.

Starting point is 00:39:45 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 shape up 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, the plant that grows from that is like the plant that grows from that. Basically, you kind of have to uproot. And I mean, this is not really a totally clear metaphor because like 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 in flight and change what you have and change what you're used to. So what we often encourage people to do is like,

Starting point is 00:40:27 keep working the way you're working. 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 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 take the criticality out, because what ends up happening is that when people try to try something new on something really critical and it

Starting point is 00:41:04 doesn't work, they will never try it again. They've just like, they've destroyed all future opportunities to try this again because everyone knows how bad it went last time on something that really mattered. And they would have gone, we could have done our old way. Our old way worked. I mean, it's kind of sucked, but it worked. And so now you're comparing, you know, two things that aren't really comparable, but you're always going to go with the momentum that you had versus the new thing. So you've got to be careful with that. So I know, I'm rambling a bit on it. But that's, that's my general sense and feel on how to adopt a different way 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?

Starting point is 00:41:42 No, I hate that term. I don't like the word sprint because how do you feel after a sprint exhausted? But also pretty good, you know? You can. Yeah, yeah. It's funny because I was a sprinter in high school. So I love sprinting. But if you go all out, you might feel high for a minute, but you can't go all out again.

Starting point is 00:42:02 You've got to like, you know, really catch your breath. And you certainly like to sprint. I remember like 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 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 20-200s. Like they have these sprints and they never seem to end. And they've one sprint after the other, after the other after the other, after the other. And that's why

Starting point is 00:42:36 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. I mean, people do it at work. But like, I don't think it actually works. So what we do is after our six week cycles, we typically take what we call a two-week cool down. So we call these cycles, not sprints, a two-week cool down. And we call them cycles because cycles happen again and again and again.

Starting point is 00:43:03 Sprints like start and end. Cycles happen. Like there's cycles in life 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 things.

Starting point is 00:43:19 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 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 and writing the pitches up for that. So that's what those cycles are for. It's not that you're stopping work.

Starting point is 00:43:41 It's that you're doing other kinds of work. And that, I think, is replenishing 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. You mentioned also that you have no growth goals, that you make decisions a lot on instinct and gut and opinion, which sounds amazing. It's great.

Starting point is 00:44:02 If you could pull it off, feels also very hard to operationalize and maybe make the best decisions in times. Can you just talk about how you actually operationalize that and what you find happens when you approach things that way? 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.

Starting point is 00:44:27 And frankly, to be honest, I think everyone actually is. And this is part of the thing I want to write up. I've been thinking about writing about this. I think everything's a judgment call. And so, yeah, data can play a part. All sorts of things can play a part. 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.

Starting point is 00:44:50 They're bringing to bear thousands of things they know and don't know about, that influence them about this particular decision. And it's why, like, when companies hire executives, what are they looking for in executive? the typical judgment and experience. 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.

Starting point is 00:45:13 You can learn to do that. They're looking for judgment and experience, which is a very 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

Starting point is 00:45:28 undescribable things to bear to make decisions. for the business. 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. And I just feel like I'm comfortable admitting that, that I don't really know why I'm making these calls, but I'm making these calls 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. And I think people should recognize that even if you're a data-driven person, there's so much more at play here. So I just feel like just being honest about that. And that's sort of how I've

Starting point is 00:46:15 always looked at it. And I also will admit, 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 human endeavors. And I would just say that give your intuition credit, give your gut credit. It's absorbed everything. And plus the things that you don't know it absorbed that are valuable. It's easier to do that if you're the founder running the company, obviously. 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? Yeah. I mean, you're right, by the way. It's easier me to sit up here and say this. Like, I own the place. The one can fire me.

Starting point is 00:47:00 Like, I get it, right? I can be wrong all the time. my gut just told me to do this. And, you know, I understand. I do. I'm self-aware enough to understand that. But, but I think that by demonstrating that's how we make decisions, it gives, 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. I'll often go, I don't 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? How do you feel? You know, what we ask people, in general is like we say we say what do you think we don't say what do you know we often say what do you

Starting point is 00:47:41 think we might say what do you know but we also say what do you think more time and what does that mean like what do you think is is like I don't know where these thoughts come from and I don't know what forms them so I think it's interesting to look at the things we say and go we actually do want people to think and so I'll often say what do you think or what do you feel or how does this feel is 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? Because human beings feel. And while we have a logical side to us and a rational side to us,

Starting point is 00:48:27 we're primarily 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 that encourages people to share that side of their opinion. And we almost never, sometimes we look at numbers to sort of be an input. But it's never like prove that. I'll never say like justify that. That's just not terminology or lingo that we ever bring up.

Starting point is 00:49:02 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. 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.

Starting point is 00:49:24 When we talk, there is a lot of this. It's not precise in a sense. It eventually becomes precise when it's out 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. This kind of advice comes up a lot, actually, on this podcast,

Starting point is 00:49:47 especially for product managers, that there's a lot of power in just trusting your instincts and 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 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.

Starting point is 00:50:09 A lot of people said, okay, that'd be great if our CEO is also a designer, very product-minded person. Many people aren't that. Many people don't have actual, like of 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 trust people that have a lot more experience, more, you know, because not everyone's going to have the right instinct?

Starting point is 00:50:33 It's true. I mean, look, 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, I think is 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.

Starting point is 00:51:00 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, 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 or who they, like, I'm always. is asking about that because that helps me get a sense of who they are and what lens they see the world through and how what what kind of influences are going to bring to bear. So that's

Starting point is 00:51:31 the kind of stuff I'm looking for. And one of the things that we do during the interview process for designer specifically and product people, which is the same thing in my mind, is they do a project force 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 I'll critique it with them. 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 days, what would you do with this? And I want to see where people go with that. To me, that is where you can see, they don't have any time to think. So like, where does their gut go? What are their instincts? Where do they arrive after having to riff on the spot with something?

Starting point is 00:52:18 So what's behind what they built? Because what they built should just be some of what they had in mind. It shouldn't be like everything. 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. But I'm still looking for people who just their gut is filled with ideas.

Starting point is 00:52:44 And so it doesn't always translate. but that's how I tried to suss out whether or not someone has a good gut instinct on where to go. And it almost 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 we try this. And I kind of play with this idea.

Starting point is 00:53:12 And I don't know. Actually, now that I'm thinking about it, maybe we try that. What if we did that? What about this? and then I would say something and we'd riff and we 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, like the two wavelengths are just perfectly vibrating together, then I know we have something.

Starting point is 00:53:30 So that's the kind of stuff I'm looking for when I hire people. And I do think that that translates to people with a better gut feel than someone who's more of a, let's call it, like an academic product person, which can be very, very fine to other places, but it wouldn't really work here. That's really great advice for someone looking for someone that has a good instinct and good. 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, because a lot of companies, a lot of leaders, like, we got

Starting point is 00:53:57 plenty of ideas. We just need you to help us ship stuff. 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 thing.

Starting point is 00:54:15 So they can't, like, we've had some people who were just like so scatterbrained and, and like they've got a million ideas. But when we asked them to execute something for this project, it was a total mess. You can see their time management skills were off and they focused on the wrong things. That is not a go for me. That's a no go. What's a go is like, that's a clever design, well executed, thoughtful, clear. And 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?

Starting point is 00:54:43 So that's the kind of stuff that I think ultimately, like, 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. But this product, I want to play with this design. I want to play with this idea. It's play.

Starting point is 00:54:58 And you've got, you know, play is a thing. It's a very clear thing versus like a rigid, boring approach to product development, which, again, can be successful. But it wouldn't work at our company. Great clarification. I completely agree. This episode is brought to you by Wix Studio. Your agency has just landed a dream client, and you already have big ideas for the website. But do you have the tools to bring your ambitious vision to life?

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Starting point is 00:56:09 the reuse of assets across sites, the seamless client handover, and that's not all. Find out more at wicks.com slash studio. 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. I have two that I picked out.

Starting point is 00:56:27 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?

Starting point is 00:56:38 What is the reason? People trying to make rapid fundamentally, like 180 degree changes quickly is a great way to fall 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 and like, this sucks. This doesn't work. I'm like, I'm not surprised to hear that. Like, tell me how you did it. And then they explain like, well, the next project we did, we did this. I'm like, yeah, I'm really not surprised to hear that now. because you just, you can't really do that. You can't turn on a dime. There's this thing called momentum.

Starting point is 00:57:16 I always try to think of things in terms of like the physical world. Like the more mass of an object, the more energy it takes to change its direction. 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.

Starting point is 00:57:38 it this way. So, so I think that's what I've seen. It's like these, these rap, like, all right, starting tomorrow, we're starting to shape up. It's like, well, no, you're not, 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. So that's one thing I would say. The other thing is that pretty much every business is a spectacular failure. It's 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, there's a million reasons why and it's always hard to pin it down. But, and so we can all look back.

Starting point is 00:58:13 This is why, by the way, I don't, 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 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. And 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.

Starting point is 00:58:39 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, 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. A lot of work, though, is not that way, especially software work. There's a million different inputs and a million different people.

Starting point is 00:59:00 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 big changes too quickly is a primary reason. And you've seen this 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. You've seen ShapeUp implemented at traditional public type companies.

Starting point is 00:59:27 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 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 is the thing and the rest of it doesn't matter so much or it could be this idea of appetites

Starting point is 00:59:59 versus estimates and they can work that into the way they work. You know, take whatever works. You don't have to go wholesale on any of these things. Awesome. A second question comes from Leo Polovitz, one of my favorite VCs. He works at Seuss Adventures. And he asked the question that a lot of people actually asked is just, what does he think he got right? And where does he change his mind, if anywhere?

Starting point is 01:00:21 You share a lot of strong opinions, very contrarian opinions. So maybe just mostly on that second part is what I'm most serious about. What have you changed your mind about? A few years, well, a handful of years ago, we switched back to, we used to make multiple products. and we went to just doing base camp. And I thought I would be personally satisfied 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

Starting point is 01:00:46 and constantly tweaking it and chiseling it and polishing it and just making it better and better and better and better and better. And I still thoroughly enjoy working on base camp. But a few years ago, we built this new thing called, hey, h-y-y-y-com email service, because we just felt like we had to make more things again. And so this idea that I thought that we could be happy as a company just doing one thing really well, which was a major shift. We had multiple products. We basically wound those down.

Starting point is 01:01:15 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 37 signals to base camp. So we're saying like we're signaling all through. Like we're doing one thing. It's just this thing called base camp. It's a huge, massive decision to make.

Starting point is 01:01:32 and so we were all in on it. And then a few years ago, we go, you know what, we're makers. Let's be honest about ourselves. And I'm talking about me and I'm talking about David. But we're 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?

Starting point is 01:01:47 Let's not do that. And so we made hey, and now we're doing once and going to make more products and more products and more products. You're going to probably do another book, as I mentioned earlier. So it was that. I think that's the biggest major fundamental 180-degree. change that I've changed my mind on. But I changed my mind all the time. I disagree with myself constantly on small things. So product design decisions or the naming of something or how we roll

Starting point is 01:02:16 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 if I listen back, I go, I would probably answer it differently. Or I don't even agree with the way I answered 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. It's clear that you've designed your life and designed your business in this very intentional way. Because the default path, and I kind of references back to this other podcast episode, the default path is build a company, raise a bunch of money, build massive business,

Starting point is 01:02:47 generate a lot of revenue, exit, try something else. And you've done something very different. Can I speak up to that, though? Because like 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,

Starting point is 01:03:06 you know, like, you've designed your way, your life intentionally, but 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 multi-year plan. I don't even have a one-year plan. I don't even have a six-month plan or a court. Like, we think about everything we're going to do every six weeks. Every six weeks, we rethink what we're going to 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 and keep doing

Starting point is 01:03:47 that until it doesn't. And then maybe we do something else. But it's very much not, I'm not on a path. 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. 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, 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 like life is what it is. So understanding that and figuring out what the tradeoffs are, but really it's figuring out as we go. And I'm, I think, frankly, it's the best way to run a business.

Starting point is 01:04:29 I think it's the healthiest, most honest 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. Obligations in the future, I think, are quite dangerous. and I think they send people down a path of unhappiness, actually. So I think to staying closer to now is probably the best way to do that.

Starting point is 01:05:04 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. There's no boss above you. Yeah, the independence. Like if you go to 37 Signals.com, there's 37 ideas. And the first one, there's a zero-zero, which is start here, which is like a read-me.

Starting point is 01:05:22 But 01 is independence. independence is the root of all the things we're able to do and we did make that a intentional decision we didn't know all you know all the tentacles that come up from that and what it's going to impact and touch but we knew principally but like 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 and I don't really understand I do understand why some companies do it but I don't don't understand why a lot of people do it, who probably shouldn't do it. I think staying independent

Starting point is 01:05:58 is a wonderfully fulfilling experience, and it's very hard to do when you're beholden to someone else's timeframe and expectations. So another thing we rarely have here are expectations. This is the point, like, we launch a new product. 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's 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 success. I don't know. We don't care. It doesn't matter. We're making it anyway, and we're going to see what's going to happen. The market will tell us what happens. I'll just wait to find out. There's no sense in spending the time thinking about what

Starting point is 01:06:41 could be. Just to pushback. I imagine there are expectations of like, I hope this works out. I hope people adopted. I hope it becomes the best email client in town, right? There's like a sense of like, we want us to succeed. 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 me that 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. 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

Starting point is 01:07:28 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 brings something new to the world that doesn't exist. Otherwise, there's no point in doing it. That take a, that bring a different perspective 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, 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, which is a different approach, a different way forward. It could be in

Starting point is 01:08:08 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. So that's, 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? Like we're wrapping up the Hey, calendar right now, which is a calendar we're building for our hey, email service. I'm really proud of it. I have no idea what's going to 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 going to do well. Well, 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. 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

Starting point is 01:09:01 in the world that we think should be here. Whether or not people agree is up to them. You mentioned the principles of the company, and I was going to touch on one of these actually. And there's, what's the URL to check these out? By the way, we'll link to it in the show notes. Yeah, 37Signals.com. Okay, right.

Starting point is 01:09:13 Just the homepage. Yeah, yeah. The homepage, yeah. Okay. So one of them is work isn't war. 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 feels like war and then what maybe people could 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 uses war metaphors and war to like you're targeting customers. You are conquering a market. Gosh, now I really want to make sure I get all these. Right. So hang on. I'm just going to look this up because these things are how people talk about work.

Starting point is 01:09:56 So it says they conquer the market. They capture mind share. They target customers. They employ a sales force. They hire head hunters. They destroy the competition. They pick battles and they make a killing. That's how people talk about business. I find that to be depressing. It just feels depressing to me. We use words to to establish 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, you know, people are always, this is the other thing. People are always like, you know, what do the Navy SEALs do?

Starting point is 01:10:33 And they're like, yeah, that's the Navy SEALs, man. It's not your software business. Like, what is, we always look into like Navy SEALs and tell us how to run a business. And like, military, they've got a group of eight. And they do, yeah, okay, that's, that context. Like, can we not look at that for a second about, That's amazing.

Starting point is 01:10:49 What they do is amazing, obviously. But what you're doing is you're making B2B accounting software. Let's just like chill for a second here, okay? And so I like to think of words that are more additive and alternative. And, you know, we can exist. Let's exist. Let's make something great. Not like let's beat them.

Starting point is 01:11:07 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. It's more about pride. excitement and a spirit of creation, then it is destruction. I think if you go into it with destruction of mind,

Starting point is 01:11:27 you're going to end up in a pretty dark place. So that's our point of view. Awesome. I love that. Coming back to this bootstrap path, 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,

Starting point is 01:11:41 that other companies aren't able to. For someone that's thinking about going down this path and wants to bootstrap their company, And that 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? Yeah. First of all, it's hard. This is hard.

Starting point is 01:11:54 I mean, when you have nothing, especially like 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, you know, mortgage and it's tough. So this is hard, but it's a reality for almost every business in the world that starts. So 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. Like, the only thing you can really control are your costs. You can't control 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 you can control your own costs. So, and the other thing I would encourage people

Starting point is 01:12:40 to do is figure out how to do as much as they can on their own before they bring on a second person. 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,

Starting point is 01:12:58 you have to lose them. You don't have anyone to do the work that now you've, have them doing, and now you've got to do it, you're not going to be any good at it. So I would just, you know, you've got to start as small as you possibly can,

Starting point is 01:13:08 do much of the work, as much of the work yourself as you possibly can, keep your costs in check. Don't spend any money on branding. Don't go get a, get an office, like, don't spend anything on anything, basically, except like the tool you use, let's say it's your laptop or whatever you're going to use. Like, 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.

Starting point is 01:13:29 And like, 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 a month or whatever. Like, don't go hire a web designer. Find all the efficiencies and 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, while it's hard, 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

Starting point is 01:14:05 about like how companies get complicated. And I loved that. And when I was hearing it, I kept hearing of this unfolding, 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. 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. It's just the reality. And I think

Starting point is 01:14:42 something we use at 37 signals, David kind of taught me this. It's really a stoic thing, which is just idea of negative visualization. Like, what's the worst that can happen? You've got to be at peace with the worst that can happen. And just like role play that and go, what's the worst? Like, for example, 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 on your own server. Like, we're putting a lot of effort into this. This could be like the wrong time to do it. It could be a total flop. This could not find any traction on the market. So what's the worst that can happen? Well, we spent six months exploring something and having a really good time

Starting point is 01:15:22 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. And we're already at peace with the fact that this might not work. That's, I think, how you ultimately are able to move forward is to be peace with knowing what's going to happen if it doesn't work out. I want to touch on linear. 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.

Starting point is 01:15:58 And then the other is it feels like they have a lot of similar philosophies. Growth isn't a focus. It's gut and instinct. They have paid work trials. They're very profitable. they don't 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 and also raise money.

Starting point is 01:16:19 And maybe there's another direction here. 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.

Starting point is 01:16:34 Maybe they picked them up from someone else. Maybe they came up with them themselves. Lots of different ways. to work. It's, it's, it's, it's nice to hear that other people are trying some of these things and it's working for them. So that, that's great. The thing with the VC route, it's, like, the idea of, like, having too much money, it doesn't mean you can't work efficiently and thoughtfully. But it does create a degree of sloppiness 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

Starting point is 01:17:05 things. When you don't have to, we don't have to make money. We don't have to be efficient. When you don't have to be profitable, you know, you just kind of get sloppy. And so what's, let's hire some more people, whatever, we can afford to. In fact, they need us to spend 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, zero percent interest. Like, they didn't give us the money to sit in the bank. They gave somebody to spend the money. We're going to spend it on. Two things, people and marketing. Basically, that's what you spend it on. So we can buy more ads, you can do more this, more do that. We can hire more people, build up more teams, do more things simultaneously. And there's

Starting point is 01:17:43 a certain sloppiness in that. So I think it just becomes harder when the environment encourages slop, which is why I think the value in bootstrapping is that it teaches entrepreneurs, it not even teaches, it forces them to have to figure out how to make money. And the more time under the curve they have making money, practicing making money, the better at it they're going to get. Like, I use the guitar method for, but earlier I'll use it again. If you're playing guitar, if I give you 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

Starting point is 01:18:21 year. You're going to be better and better. And then five years are going to be really damn good, right? 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 and all of a sudden be profitable. And what you see is that they often times cannot because they're just not set up to be that way. They've never played guitar before.

Starting point is 01:18:44 Now they're being asked to play guitar. So 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 turn a successful business, which is to make money. And if you don't have to do that from the start,

Starting point is 01:18:59 you're just not practicing that. You're practicing spending money. And getting good at spending money is not as valuable 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. 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 and being really good at not. 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 your teams. 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

Starting point is 01:19:36 constraints is what I'm actually trying to get at. You need constraints. And when you have just loads of money, you basically have very few constraints. And so that's what tends to lead to slop versus like, hey, 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. One of the best stories I heard about this was Peter Ray Hall who started RX bar. Are you familiar with RX bar? Yeah, a little, you know, little protein bars or whatever. There's a great article about this years ago where he was talking to his dad about, like, I think raising money or something. And his dad's like, hey, go sell a thousand fucking bars

Starting point is 01:20:16 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 product. Go. Sell. Versus like all the things you could possibly do if we had more like go sell some fucking bars and it's just such great advice and it's just cuts through all the crap and so i just i like that scrappiness and you don't get scrappiness from having largesse 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 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

Starting point is 01:21:00 not. And I think at some point, and we're starting to see this now, this is not like, and I told you so thing. This is just like, this is what happens, right? This is not me. This is just economic cycles. Money's harder to find. It's harder to get. Even companies who've raised money, investors are not necessarily putting in additional rounds. And there's deep cuts happening, layoffs, pain, and suffering. it's hard to switch from having a lot to not having enough and then having to work as if you know what to do. I think there's a lot of confusion in the market now, it companies now, I should say, because they don't know what to do.

Starting point is 01:21:39 They haven't had to do it before. And I feel for them in a sense because like 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 a thousand people, I would have no idea what to do with that. Truly, I would not. I would waste it is what I would do. And so, you know, if you don't have the experience, how are you going to know? I'm the same way with the newsletter in the podcast.

Starting point is 01:22:02 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. It's just, it actually comes back to, let me find this quote that you have of just like your business strategy in a nutshell. Just keep making great shit. Keep your cost and check. Charge appropriate prices for your work, share as much as you can and let the chips fall where they make. that's that's basically it i mean one of the things i don't think i said and there was like enjoy it have fun enjoy the ride you know uh love who you're working with and create a great environment to do

Starting point is 01:22:32 great work and so other people can do great work and thrive as well that's all like baked into that it's it's not like set targets 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 it's not many of those things it's it's like it's maybe it's the midwesterness in me you know growing up in chicago like i don't know like it's just that like my dad best business advice ever got i got for my dad it's just a simple line it's like no one ever went broke making a profit and maybe that's just my guiding light ultimately it's like because you can go broke generating a lot of revenue a lot of companies do but you can't go broke generating a profit and i think it's just really tight what a great quote final question before we

Starting point is 01:23:20 gets our very exciting lightning round. Let's talk about Once. This is a new product slash umbrella 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. 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. Pendulum's always swing. And for the last decade or so, SaaS has been pretty much the only way to run business software. basically you rent it. There's really not a lot of alternatives.

Starting point is 01:23:53 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, that makes sense.

Starting point is 01:24:18 I mean, I know there's new stuff that comes out in software. products, but let's face it, like 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, so we're going to launch this thing called Once, which is essentially a brand and umbrella, a line, a product line of non-SAS products, of products, not services. Things people will download, business software products, people will download, 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.

Starting point is 01:24:58 They get updates. They get support and some of that stuff. But that's it. 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 looking at it, although we already kind of know it because we've been in this world. But we're saying like, what are the commodities out there? 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 in my opinion if you're paying tens or hundreds of dollars a month or in some cases thousands of dollars a month

Starting point is 01:25:33 month after month after month after month after month for when there's hundreds of alternatives and there's no price differentiation really between them that's an opportunity in every other industry you know there's there's generic peanut butter there's generic pencils there's like all 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. We kind of get that right at a high degree of quality. And we can build these in typically three months each with two people. And the maintenance cost is zero to us, essentially.

Starting point is 01:26:15 There's no marginal cost here because we make the software and we sell. 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. So anyway, that's the idea behind once. And we again, 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. And then could you talk about the first thing you're launching or is that not?

Starting point is 01:26:37 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, 2006, we launched a project. called Campfire, which was a group chat tool. How could you not remember Campfire? You know, some people are younger, 22, and they don't know, understandably so. But if you've been around, maybe you remember Campfire, which was a group chat tool,

Starting point is 01:27:01 which is, I think, like, eight years before Slack came out or something like that. So it was really early, and it was really hard to get people to even understand what this thing was, and a lot of people kind of didn't get it. And then Slack came out, of course, and sort of steamrolled it and, like, you know, really, executed beautifully and did a great job. But chat has become a commodity. There are a million ways to chat with people now. And in the business realm, they're all still quite expensive.

Starting point is 01:27:28 And they're all month to month to month. You get slack, you got teams and you got a few others. And it's like, you know what? 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 under the once brand. You'll pay for it once. You'll install on your own servers.

Starting point is 01:27:47 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. And we think it's going to be really interesting. And by the way, the other thing we're thinking about with these ones products, which is interesting to get to this alternative point of view, 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,

Starting point is 01:28:16 but you want a backup for when Slack goes down. Or you want a special air-gapped chat for your executive team that cannot be leaked 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

Starting point is 01:28:38 in different contexts. Now, you probably wouldn't want to pay month to month to month, month, 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, like, that's a good thing to have. That's an insurance policy

Starting point is 01:28:50 we pay for it once and we just have in our back pocket, right? The other thing we're doing with once products is that you get the code. And so if you're a product team and you're curious to see how this product was built, and we've gone to great lengths to make it exceptionally well built

Starting point is 01:29:07 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 and 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. You can't resell it.

Starting point is 01:29:25 There's certain licensing, but it's yours. And so 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. And that's another thing that's really novel. You don't get that in subscription software. So there's a lot of things going on that we're trying.

Starting point is 01:29:40 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, maybe like 30 words. So we're picking tools that are 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.

Starting point is 01:30:09 We're trying to think about it this way. And when we do have a word, 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.

Starting point is 01:30:29 So you can see all the different languages for certain words when we use them, which is a really novel thing. We're kind of playing. This is the whole thing. Like 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

Starting point is 01:30:47 excited again. Like, 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, there's an excitement that's building around this creative exploration again. And that's really firing us up. It's clear how you're excited about this. Like you were saying how you thought you'd be happy just building base camp for the rest of your life. There's a poll here. I'm going to try something totally new and different. Also, the domain is awesome. Once.com, right? Yeah, that was fun. And we're still going to do Basecamp and Hayo.

Starting point is 01:31:16 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. I think this is going to be an interesting experiment because this is how we started with software. And then SaaS 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.

Starting point is 01:31:40 And keep updating me with better features. So I think it'll be interesting to see if we've missed something leaving that world. 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. This is kind of the way software used to work.

Starting point is 01:31:59 It's the same sort of approach, which is like you'll get all the 1.x updates, you know, for free. And 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. If when we get to version 2.0, you'd probably have to buy it again, but we'd probably have a discounted upgrade rate. But that's like you also, totally optional.

Starting point is 01:32:30 I don't know if we'll ever even get there. We might not need to, 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. I think it's also important for people to remember your target is not like to replace Slack at big tech companies.

Starting point is 01:32:56 Like your market is the Fortune 5 million as you described. It's not, first of all, we don't have a sales team. So it's self-service. 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 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 and it's going to be

Starting point is 01:33:28 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. 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.

Starting point is 01:33:58 But it's going to be pretty interesting. The other thing that's really cool about it, this is the tiniest market in the world. but because it doesn't go out to the internet, you can run it in truly air-gapped, like, 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 base camp. But they're like, we're like, we need to install it because we can't obviously host this stuff on your servers. I know I totally get it.

Starting point is 01:34:26 We can't do that, unfortunately. Sorry. But they have security, you know, needs that are just far beyond what most things, you know, allow. But this is a kind of thing where they can actually be completely detached from the public internet and run this kind of software, which is really interesting. Again, tiny market, not what we're building it for, but it's a cool byproduct or side effect, I should say, of running things this way. And 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.

Starting point is 01:34:56 We said by the end of this year, that's why I was getting to that. But we said by the end of 2023, and we're almost there. Here we are in December. So mid-December, 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 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 need to tighten up and tweak. It's not really a beta as much as it's just the limited release, which is the smart way to do this.

Starting point is 01:35:27 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. Yeah, it's funny. Like, we definitely said that. And we said that like six months ago. And here we are. End of the year.

Starting point is 01:35:44 It's happening. So maybe sometimes it works out. Yep. Before we get to a very exciting lighting round, is there anything else that you wanted to share, touch on, or leave listeners with? I think one of the most important things, though, to remember, and I got to it in another answer, it's just like humans tend to complicate things. And a lot of things are hard, but they're still simple until you make them complicated. And just keep that in mind that you can make a lot of

Starting point is 01:36:17 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 do. don't need to know exactly where you're going. And you can be profitable business. And you can find customers who are willing to pay for things. 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

Starting point is 01:36:51 harder in a sense the more because because those things come with expectations and 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 and you got to think about what are those strings attached to and what do they prevent you from doing you don't have a full range of motion anymore so that's I'll leave people with that even if I sort of touch on some of those issues so some of those ideas earlier on. And there's a really great way to summarize it. With that, we've reached our very exciting lightning round. Are you ready? Let's do it. What are two or three books that you've recommended most to other people? The first one is, is this book here? So several short sentences about writing.

Starting point is 01:37:38 Do you know this book? I love that book. I have it on my coffee table. When anyone ever asked me, like, what book do you recommend on writing? It's this one. Several short sentences about writing. 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 the sentence. Beautifully written, fun to read, really great. The other one is pretty much anything by Derek Severs, but specifically, hell yeah or no. This book is something, I recommend this book to everybody.

Starting point is 01:38:11 It's really had a big effect on me and David specifically, and we use this term, hell yeah, or no. all the time internally. Is this a hell yeah or no? It really clarifies a lot of things. 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 Contemporary Russian Folk Artifacts.

Starting point is 01:38:35 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 because they didn't have anything. They couldn't get, 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 to make like bubbles for his kid, like to blow bubbles, like large bubbles, right? This is a TV antenna made out of forks, you know? And it's just like getting back to the scrappiness. Like I admire this kind of ingenuity among or over pretty much anything and I think that this book is full of there's a couple hundred

Starting point is 01:39:17 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 a plastic looks like a gallon like oil can or some water thing and you know nailed it to a book which nailed it to a door you know amazing and this is also why I've always loved I know this isn't very lightning, sorry, but I've always loved, like, looking at, like, jailhouse creations and tools and, like, you know, how people make, you know, weapons out of combs and pens. It's just, I find this, like, I have nothing. I need something.

Starting point is 01:39:58 I can use my human brain to figure out how to make it. I think that scrappiness is beautiful. Yeah, I was just going to say it speaks clearly to your scrappy mentality. And what is that book called again? This one's called Homemade. contemporary Russian folk artifacts. And there's also an Eastern European one, and there's another one, too, but homemade. What an awesome unusual selection. Okay, next question. What is the favorite recent movie or TV show? I don't watch TV. I rarely get a chance to see movies these days. I really thoroughly enjoyed Oppenheimer, though. I'm just, that was one that, I mean, I went to the theater to see it. And seeing that in the theater was really special. But I just love the movie. It's fantastic. Do you have a favorite interview question?

Starting point is 01:40:42 and they'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 with this idea, you know? Another one is, you know, who's work do you admire? 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.

Starting point is 01:41:12 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. So someone will say like, I like so and so. I'm like, why do you like them? What are they doing that you think is interesting? This is kind of the thing I tend to always ask,

Starting point is 01:41:29 which is like, why do you think that that's interesting? I'm always trying to get behind the words and understand like where this is coming from. 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.

Starting point is 01:41:50 And so whether or not I agree with the work or whatever, in the end, it kind of plays apart to some degree, but I'm more interested in like, how did you get there? Is there a favorite product that you've recently discovered that you really love? Yes. Although it's more of a category. So I recently, I bought an old car and I've fallen back in love with stick shifts. You know, I learned on a stick and then I basically have had like automatic cars for many years. And I got back into sticks.

Starting point is 01:42:24 And actually, it's even deeper than that. I got back into the old analog driving experience and how wonderful it is to feel attached to the machine that you're, using that you you you turn the wheel and it turns it rod and it turns the wheels and that your your leg muscle actually is what is breaking the car you know to some degree right there's something about that direct feel that really surprised me it surprised me like how much is missing in modern cars and it actually 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 We're a very direct business.

Starting point is 01:43:08 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 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. 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. The brakes are just like, you know, sending a command to a computer to squeeze the

Starting point is 01:43:36 squeeze the pads, you know. 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 it's actually a good way to look at business.

Starting point is 01:44:02 And to remind yourself that staying as. connected to the thing that you're doing as possible has a lot of value. That's an awesome metaphor. Next question. Do you have a favorite life motto that you often repeat yourself, share with folks, find useful in work or in life? Yeah, and I don't always live up to it, but basically it's worry less. There's a great Tom Petty lyric.

Starting point is 01:44:27 I can't remember which song it's in, but I think it's on Wildflowers on the album. Most of the things you worry about never happen anyway. And it's just so true. I find myself worrying about all sorts of things that don't matter and never happen. And then you're like, God, I spent like three days worrying about that or like I went to this appointment and it was fine. Like the amount of worry and it's all on your head and it's all about anticipating the future that hasn't happened yet. And 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.

Starting point is 01:44:59 But also I tell other that others that in business like, people are, what? What if people don't like, I don't know. You'll find out, like, worry less about it. It probably isn't going to be a big deal anyway. So that's kind of what I would say. Worry less. Worry less. Final question.

Starting point is 01:45:14 I was going to ask you this before you mentioned this, but you said you're writing a new book potentially. Are you able to share what this new book might be about? Yeah, we haven't started writing it. I can tell you, I'm thinking about it. 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 I think we need to celebrate gut and intuition more in business. And most business books are not about that. They're kind of

Starting point is 01:45:44 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. 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 and 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.

Starting point is 01:46:21 So that's roughly the idea. It's very loose right now, but hopefully we can tighten it up, and that's what I'd love to focus on that next. That's an awesome topic for a book. I was thinking worried less could also be an awesome title for a book if that's another topic. That'd be a great title for book. Yeah, that would be. Also, I was just, I'm reading Charlie Mungers, the poor Charlie Almanac right now. Oh, beautiful. There's a whole thing around, like, the way we misjudge and make mistakes with our psychology, just like a human misjudgment.

Starting point is 01:46:50 Yeah. Exactly. And I feel like that would be a part of this story of like, got instinct or often right, but here's ways we are often wrong. So maybe that's something to think about. Yeah, it's funny. I 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.

Starting point is 01:47:08 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 doing something 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, I've, I've, often found myself 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

Starting point is 01:47:39 loved his answer, 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. And all you have is your gut. All you have is your intuition. All you have is how you feel about the thing, you know, like you don't have evidence. You don't have other examples to follow. You don't have a list of what to do. 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. But it's a beautiful thing to read and to listen to him speak. I love it. Jason, we covered everything I was hoping we'd cover. Thank you so much for making the time for this. Two final questions.

Starting point is 01:48:35 Folks want to follow up and maybe ask more questions. How can they reach you if they can? And then how can listeners be useful to you? Yeah, so you can hit me up on X, Jason Freed, F-R-I-E-D, I'm on LinkedIn as well. And you can also email me directly, just Jason at hey, h-E-Y.com. So hit me up there. How can people help me? I mean, if you like what we're doing, spread the word.

Starting point is 01:48:58 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. So if you like what we're doing, tell people about it because it really helped us out. Amazing. Jason, thank you so much for being here. Thanks, Lonnie. It's great. Bye, everyone. 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.

Starting point is 01:49:22 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 lenniespodcast.com. See you in the next episode.

Lenny's Podcast: Product | Career | Growth - Jason Fried challenges your thinking on fundraising, goals, growth, and more

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