This Week in Startups - David Heinemeier Hansson (DHH) on the ‘Post-SaaS era' | E1856

Episode Date: December 1, 2023

This Week in Startups is brought to you by… Vanta. Compliance and security shouldn't be a deal-breaker for startups to win new business. Vanta makes it easy for companies to get a SOC 2 report fast. TWiST listeners can get $1,000 off for a limited time at vanta.com/twist Embroker. The Embroker Startup Insurance Program helps startups secure the most important types of insurance at a lower cost and with less hassle. Save up to 20% off of traditional insurance today at Embroker.com/twist. While you’re there, get an extra 10% off using offer code TWIST. The Equinix Startup program offers a hybrid infrastructure solution for startups, including up to $100K in credits and personalized consultations and guidance from the Equinix team. Go to https://equinixstartups.com to apply today. Today’s show: DHH joins Jason to discuss a post-SaaS world and Once.com (2:29), the evolving landscape of remote work (21:31), navigating internal culture struggles at Basecamp (32:53), and much more! * Timestamps: (0:00) DHH joins Jason (2:29) David discusses his new SaaS alternative Once.com, which charges a one-time fee rather than a recurring subscription (10:44) Vanta - Get $1000 off your SOC 2 at https://vanta.com/twist (11:50) David's philosophy on copyrighting (20:17) Embroker - Use code TWIST to get an extra 10% off insurance at https://Embroker.com/twist (21:31) The evolving landscape of remote work (31:46) Equinix - Join the Equinix Startup Program for up to $100K in credits and much more at https://equinixstartups.com (32:53) The state of fundraising and DHH recounts Basecamp's internal culture struggles (49:03) Should AI progress should be accelerated or slowed down? (1:08:08) How willful exposure to hardship can build grit and resilience. * Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp * Check out Once: https://once.com * Follow David: https://twitter.com/dhh https://www.linkedin.com/in/david-heinemeier-hansson-374b18221/ * Follow Jason: Twitter: https://twitter.com/jason Instagram: https://www.instagram.com/jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis * Great 2023 interviews: Steve Huffman, Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland * Check out Jason’s suite of newsletters: https://substack.com/@calacanis * Follow TWiST: Substack: https://twistartups.substack.com Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin * Subscribe to the Founder University Podcast: https://www.founder.university/podcast

I think the big shift that possibly can happen in startups is that far more companies are going to start like we started in 2004. And they're going to realize that all this is possible with AI, with the realization that remote is possible, with just being more effective and more capable as individual entrepreneurs and also realizing, do you know what, the other option is just not available. I'm not going to go out and raise $5 million right now. I'm not going to go out and raise $10 million. Like the window has shut, so you'd have to. This Week in Startups is brought to you by Vanta. Compliance and Security shouldn't be a deal breaker for startups to win new business.

Vanta makes it easy for companies to get a SOC2 report fast. Twist listeners can get $1,000 off for a limited time at vanta.com slash twist. In Broker's startup insurance program helps startup secure the most important types of insurance at a lower cost and with less hassle. Save up to 20% off of traditional insurance. today at a broker.com slash twist. While you're there, get an extra 10% off using offer code twist. And the Equinix startup program provides hybrid infrastructure solutions for startups, including up to $100,000 in credits and personalized consultations and guidance from the Equinix

team. Go to equinix startups.com to apply today. All right, everybody, welcome back to this week in startups, one of my favorite guests and one of yours. DHHH on Twitter on X, David Hanmeyer Hansen is with us again for his fifth official appearance on this week in service. You get your jacket now, David. You get your fifth appearance blazer. It's coming in the mail with a logo on it that you've been on the show five times. December 2010, then 2013, and then 2020 before COVID, 2022.

And yeah, welcome back to the show. How are you doing? I'm very good. a pleasure to be back. This is one of my favorite shows to do. And of course, if you don't know, David is the co-founder of Base Camp, and

also, I guess you were the creator or co-creator of Ruby on Rails? Co-founder of 37- Yeah, there was just the one at the start. But now what, 6,500 people have code in Ruby on Rails, and we're going on our 20th year, so

clearly not just mine anymore. And of course, your co-founder's Jason Freed, who's also been on the program many times. So, you know, one of the things I wanted to ask you about is, obviously, you were one of the early pioneers in SaaS and cloud, got to profitability, and ran the company, you know, I think to be profitable, but I saw you had this once.com, where you have a new mission for people to pay for software once, explain, because you always come up with some ideas that

sometimes are quixotic, sometimes they're brilliant, sometimes they work, sometimes they don't. Explain once.com. Sure. So the history is we were one of the earliest SaaS companies. Base cam was launched in 2004. We didn't even have the SaaS term back then. And at that time, SaaS was just amazing. It was amazing because running your own software was a total pain in the ass.

It was licenses and it was installations and it was system requirements. It was all that stuff. So everyone was so excited when SaaS comes out, oh, I just have to fill in a form and I can use a piece of software. Amazing. And we jumped on that and have been running Basecamp and a ton of other services, hey.com, our new email service, SaaS businesses, 20 plus years. But one of the things I love is this idea of the pendulum swinging, right?

We go from client to server, back to client, back to server. Many times over the history of computing, we've gone from one extreme to the other. I think it's time for that pendulum to swing at least a little bit back towards you being able to buy a software product rather than buying a software service. And that's our thesis with once, that there is a category of software where it just does not make sense to pay on a monthly basis for it and to pay out the nose for something that is essentially a commodity. That's sort of the two-part play. One there being, this is about price, this is about subscription for tea. And then the second part of it is also about commoditization. We have a bunch of collaboration tools, for example, information systems that just

the innovation is gone, like problems are solved. And when that happens in almost any other domain, someone pioneers a new product or service. They get the market for themselves for a few years. And then at some point, competition moves in. And that's how capitalism is supposed to work. We're supposed to have competition. We're supposed to have alternatives and we're supposed to have generics.

So that's the thesis with ones. We're going to make a series of software products that you can install and run on your own servers, but is essentially web apps. Think WordPress. That's one of the most successful software products out there. If you look at total websites running on the internet, I think it's like 40% of all internet websites,

run WordPress, and it runs on that model. You download a piece of software, you set it up on your own little server, And what really connects me to that mission is this idea that this is what the internet was supposed to be. SAS, unfortunately, to some extent, help the centralization of the internet. First, it was just like, oh, everyone is going to run their version of Basecamp or, hey, on our computers. It's just going to be one set of services. Even if we have hundreds of thousands of customers, they're all just running on our computer.

So if our computer goes down, Basecamp goes down for 100,000 customers. Now, we have five nines of uptime, so there's not been a problem for us, but generally speaking, this idea that we have centralization, on top of that now, we have cloud centralization. So when AWS-U.S. U.S. East one goes down, about a third of the Internet goes offline with it, right? That's not what DARPA design. That's not the Internet that I fell in love with. The Internet I fell in love with was we can all run our own stuff. I remember running websites back in the 90s. I just run it on my own box. If my friends, Web server went down, it had no impact on mine at all. So I think there's just a lot of these dynamics where we knew some truths when the internet got started that we kind of sort of forgot or we gave them up for some conveniences that

make sense at a time, but no longer do. Now, I'm not saying SaaS is like totally over. Every piece of SaaS software is going to be a product now. I am saying, though, I think there's a surprising amount of SaaS businesses that could be product businesses instead, and that if you make that jump, the cost structure is completely different, which means the pricing structure can be completely different, which means that you can now have competition in areas where you really couldn't before. One of the ones we like to call out is Slack, right?

I asked Toby, my friend and CEO at Shopify, hey, Toby, what are you paying for Slack? And he was like, oh, dude, don't even get me sorry. It's millions. Millions, right? millions a year on recurring revenue to use this SaaS service that's a commodity. I mean, Slack hasn't innovated in a long time, I think since, well, unless you call that redesign, they just did that everyone hated innovation. It's just, it got bought for sales force.

This is the natural lifecycle of startups. This is what happens. This is not necessarily good or bad or whatever. It's just that this is an example of a piece of software that should be commoditized, but it's difficult to do if you're going to go up against something like SaaS, right? like what, are you going to price it like 20% cheaper? Are you going to add 5% more features? That's a tough competition to go up against when you have something entrenched.

But imagine if I go to Topee and say, hey, do you know what, that's Slack bill? Instead of you paying millions every year, what about you just pay me like $1,000 once? All of a sudden. Super disruptive. Yeah. Exactly. You're dealing with orders of magnitude difference. And I think that's what's possible because like I can't outcompete Slack on operations, for example.

It takes a lot of people to run SaaS software. It's actually still complicated to have millions of users. You need a lot of operations people. You need sophisticated setup, all this stuff. In the meantime, all these computers have gotten so much faster, so much cheaper. You can now run so much more software on your own. But I think it hasn't clicked. And this is what often happens in technology.

Same thing. Like iPhone comes out and go like, oh, a phone, I don't know what we're going to use this with. Five years later, everyone has figured out exactly what you use this with. All this innovation. And I think we're a little bit in that space right now with what's been happening with computers, how fast they've actually gotten just in the last five, six, seven years. How much scale you can have on even the laptop I use for my development is faster than all my cloud computing. You have an M3.

I assume you got the M3. Exactly. Yes. It was like 16 cores. I'm running like my tests faster than when we're paying astronomical bills to run continuous integration in the cloud. there's something going on, there's something in the water, I think something is brewing,

and we're going to give it a try. Now, ironically, slack is an example of us being early. Like, we had Slack in 2005. It was called Campfire. Yep. And we were just like a decade too early. In 2005, people just did not see it.

And there was, what was the one that, it wound up getting bought by Atlassian? Maybe that was Hipchad, I think. It was Hipchat, yeah. Yeah, I mean, there were competitors, and now, I guess Discord is the only better. They were too early.

There needs to be an open source or, you know, $1,000 and have as many people you want on the server because what they've done now is like I have a Slack for my founders, so all the investments we've made. It's got 700 people in it. And they're like, we want $8 a person a month, $100 person. I'm not paying you whatever this is going to wind up being $70,000 a year. That's insane for just our founders to talk to each other. So if there was one for $700 or even $7,000, I would actually pay because I can't get the archives and then I would pop it on a server and run it.

And all these clouds are so cheap. I mean, it is amazing your point, though, about what's happened with Silicon. Like, this, I have the M2 MacBook Air with a like a terabyte SSD and like 16 gigs of RAM. I cannot believe that for whatever it is, $1,500 or $1,800, this, their entry-level computer is absurd.

It is absurd how much power it is. Listen, selling software is hard enough right now, man. It's hand-to-hand combat out there in B2B land. The last thing you need to do is slow your sales team down because you don't have your SOC2 dialed in. So if you're SaaS or a services company and you store consumer data in the cloud, you know what you need to do.

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customers, the big fish, the whales because of silly stuff like lacking compliance. Just work with Vanta. I'm an investor in the company. It's a great company. Get your compliance automated. Get it tight. Tight is right. And close those big deals. Here's the best part. Vanda's going to give you a thousand off because they love this weekend startups. They love startups. Vanta.com slash twist. That's V-A-N-T-A-com slash twist to get a thousand dollars off your stock to. I want to ask you a question here about copyrighting.

If you go to the once.com, you're so good at branding. You know, I'm a sucker for a great domain name. Once.com. That's a man, I don't know how much Once.com cost, but that's like a $100,000 or $500,000 domain in a little bit. I have to sell quite a lot of suffer products to just recoup on that one. I got to give credit to Jason here. Like, Jason really just believes in the power branding. It was not just once.com.

Really, we bought Basecamp.com back in, like, 2012. We started on BasecampHQ.com because we're like, domain names don't matter and so on. And I still would advise that to most startups. Like, don't go out a million inbox and a fancy domain name. But at some point, it sort of sends a signal like we're serious. And so we bought Basecamp.com for what I thought at the time, a lot of money in like 2010, 12 or something. And then we bought hay.com

in like 2020. That one was just like, oh, man, brutal. And then of course, we were like, all right, we were launching a major new thing. We really think that there could be a pivot in all of SaaS here. We've got to do it justice. We've got to do one subcom even if it's going to hurt.

And so this is going to, so I say, your copywriting is so good. You know, I'm a writer and I just, I can, game recognizes game here. Like, when you write, stuff. Jason, I don't know if you or Jason or you guys work on it,

but my God, if just go to oncecom and read it, like, it's actually just so crystal clear. Something happened to business software, period. You used to pay for it once, install it and run it. Whether on someone's computer or a server for everyone,

it felt like you owned it. And you did. I mean, it's just so well written. You have a philosophy of copywriting at 37 signals? Yes. How do you think about it? I'm glad you're

really recognize it because I think this is, of all the unique things about 37 signals, I would call out writing as being in that top three that we take writing not just seriously, but incredibly seriously. Jason and I co-authored all the books that we wrote together ourselves. We didn't hand it off to a ghost writer, rework, which sold over half a million copies worldwide. We wrote it. It doesn't have to be crazy at work. We wrote it. All of this stuff resolve around writing. This is connected also to the fact that we're a remote company, have been for 20 years. This is the way we communicate everything. There's just not this same oral tradition as you would have in a company with an office and a bunch of meetings and all that stuff.

So we really hone it. And as Jason liked to say, copywriting is design. This traces it all the way back to 99. So 37 signals get founded in 1999. It's a web design company at that time. And the homepage is just words. There were not a graphic insight. In 1999, it was really weird.

to be a web design company and not have any graphics at all on your website. It was all just words. So this really originated with Jason. I'm passionate about writing as well. I write a tremendous amount on my Hey World blog and elsewhere. And we try to pour all of that into it when we do product design, and especially for something like once. I always think back on that introduction of the iPhone that Steve Jobs spelled out,

here, here are the three things. First, let me tell you your problem. You don't even know you have a problem yet. First, I'm going to tell you, you have a problem, right? This is what we're trying to do with once. Most people go go around thinking, oh, SaaS is a problem. They may go thinking, oh, this is too expensive, or I can't run my 700-person community on it because it just doesn't compute. But they don't know the problem is SaaS.

That's what we're trying to articulate. And you've really got to do it so succinctly these days, even more so than ever. I mean, TikTok generation, everything just clip, clip, clip, everyone's going to scan. unless it actually speaks like a human whose intent of conveying something of importance to you. It can't read like marketing garbily, googly, gong. No. And I think that, I mean, for us, it's just baked in.

Before things were called content marketing, that's basically what we built the entire business on. We build an entire audience and just sharing well, what we've learned and what we've identified and our observations and so on. And it all flows into a crystallization like something like once.com. So once is going to have its first product at the end of this year, which is coming up. I think you're down to like 30 days to get this product on the door.

You may need to update the webpage and put first quarter. But is the first one going to be a Slack competitor? Yeah. You could put two and three together and see maybe this is where we're going. Okay. Now, what's funny of course is. But that would be a good one. I'll be the first customer.

I'll tell you that. Actually, let's just do it. Yes, it is. And I would love to have you and the 700 people on this as the beta tester. We'll get you set up. And the crazy thing is I started one for this week in startups as well, this very podcast, and I added all the people who had come to launch festival in all of our events. So there's like an import feature.

So I just took all my emails, people came to the event and I said, hey, we have a Slack instance. And all these people came. And so thousands of people start talking during COVID. And it was really inspiring until we realized they're talking so quickly that I'm hitting whatever the thousand or 10,000 messages, and then it goes into frustration mode and they're like, can't see this conversation.

And like, I'm in a thread where I can't see the start of the thread. And I'm like, oh, God. And then Discord is like chaos. I don't know if you've ever used it, Discord, but. I have. Yes, it seems like it came out of another problem it was trying to solve.

It's a video game. Like, it literally is a video game for a video game community. So when you try to use it, like, in a business context, I'm like, I don't need flare and things blowing up. Yes. way too distraction part of the identification is part of generics to me is that

you take the epicenter of an idea and you boil it down to basically just that Jason and I signed up recently for Slack I don't know if you've done that recently but it's a great product and I don't want to Slack on there's nothing more boring to hear and compare it to go like oh the competition

sucks but just sign up for it and just this happens to every product I'm sure this happens to some extent to our own products something's been around for a while it has been the recipient of hundreds of programmers, thousands of salespeople who all promise the next deal, something, and it all shows up in checkboxes. If you go through and scroll through,

the same thing with Gmail, the same thing with the bottom of software. This is the natural entropy of software, right? This is just what happens. But you sign up for Slack today and you go like, holy shit, there's just so much like stuff. Frank and Software.

Yeah, it's Franken Software. It's like they bolted so many pieces on. Like you're saying, some corporate person's like, hey, you know, we can get Oracle to sign up for for $8 million if we add these four Oracle specific features and now it's like, okay, just ruin the experience for the other

9,999 companies, yeah, too complicated. And you get killed by a thousand cuts, right? Like every single salesperson who's about to close that deal for, I don't know, 10,000 seats is going to go like, it's 10,000 seat. It could really move our next quarter. Of course, can't you just add like one more checkbox? And before you know it, you run like that for five, six, seven years

and you have a million checks boxes, right? I think it's going to be... It's going to be... It's going to be so disruptive when you launch this because I think there's a lot of frustration out there with that product specifically because of what you're saying. I think there needs to be a fresh start. And it's such a critical part of the infrastructure today of working remote. And listen, there's no more charged conversation than working remote. But post-COVID, everybody got into it.

And it's like, I just wrote a blog post today just about my thinking and how it's evolved on it a bit. one of the things I learned is once you've managed somebody who was in your office previously, you know them, you've got that social fabric, you've got the culture, and now they're working in Napa or Lake Tahoe or they move to Hawaii,

wherever they are, living their best life. It's pretty easy to manage them. But then you start adding people and okay, get some people in Canada, oh, you got somebody in Uriqui and then you got somebody in Manila,

it becomes the same. But what's different is the salary structures and the cost structures are radically different. So the thing I'm seeing over and over again in our startups, is they go on Fiverr, they go on Upwork, they find all these websites, and they hire people locally at local prices. And so this is just totally changed the cost structure.

All right, listen, we work with startups, and they are all over the map. Most of them, very early stage. Pre-seed, seed, you know, going on to their Series A. But some of our investments have gone on to raise those late-stage funding rounds. They've gotten acquired. Hey, and a number of them have gone public. And there is one thing that unites them all. They need to have their business insurance tight if they want to succeed.

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We love in Broker. Thank you for all the amazing support over the years, both on this program and the love and care you give to our startups. So maybe you can talk a little bit about, you guys were so early on the work from home thing, what's your latest thinking on it and then how it's impacting startup culture. I think it's really interesting. For us, we've run a profitable software company for 20 years. So we can afford sort of the luxury setup.

The luxury setup we have is that more than half of 37 signals employees are outside of the U.S., but we pay top 10% of San Francisco rates, even though we don't have anyone in San Francisco. So this is base salary comparison. It's not R's U comparison. So it's not like everyone is getting like Netflix a million bucks with the all-in. But still, top 10% of base San Francisco salaries are pretty damn high, especially if you are in Spain or in Scotland or in any of these other places. Yeah, Puerto Rico, right?

But that is a very luxury setup because we, I don't know, through luck or skill, whatever suit you, got into this thing with base cam and was just phenomenally profitable. has been so for a long in time. I don't think that is true going forward for startups. I actually think there is absolutely an opportunity here on the cost basis that, whatever, the average median salary in San Francisco is what, a quarter of a million for a software engineer or something just on base pay plus a few other things, right?

That'll get you five programmers or 10 programmers in different locales, right? And because of all this technology now getting so good. And everyone realizing that it's so good, that remote is no longer this exotic thing that we can poo-poo and say, oh, I mean, the magic of whatever we're creating can't happen if we don't have a water cooler, if we don't have a whiteboard and we're in the same room together. I think it's going to change things. But I think it's also one of those lacking things where we haven't seen the full effect of it.

Kind of like, as we talked about with ones, computers have gotten so much faster. We haven't really realized what does that do to business models? There's often a huge lack in terms of culture and business models when new technologies and new paradigms come in, where we don't realize, like, we had the tools five years ago. This is the reason with remote, for example, we wrote this book, Remote Office Not Required. In 2013, at that point, we'd been working remotely, Jason and I for 12 years, 13 years, and we thought like, hey, we're just stating the obvious. And it was totally exotic at the time.

Most startups were absolutely not working remotely. It wasn't until COVID that everyone really just switched over, right? All the technology was there, like seven years ago. What changed was the COVID culture shock. We have to, right? Now we realize we can and so on and so forth. So I do think that this cost pressure is going to come. I think AI is going to be part of it.

I think this idea that SaaS and the lavish profits or at least lavish revenues could extract on huge enterprise contracts that that's going to last forever is really foolish. It's really foolish to think that companies are going to continue to pay hundreds of thousands or millions of dollars on SaaS service contracts forever, once the alternatives either through products or through SaaS services run far leaner, orders of magnitude leaner, start competing. That's going to be fascinating. We were seeing some folks throw their hands up and they're like, you know what,

this experiment is too frustrating for me as a founder. I saw the Roblox guy was like, you can come back or here's your package, the end. And I guess for him, that was the end. I think Apple's now at four days a week. I think now, uh, and they're basically saying, hey, we got to be in the office together doing stuff. We just want to have that kind of culture. And so it feels like it's going to bifurcate where some people are like, you know what,

experiment over. I need to lay people off anyway. So this seems like a pretty good excuse to if I want to, I call it the gentleman's riff. And I, I joked with it with a friend of mine, uh, you know, like, if you ask people to come back to the office, you're automatically going to have, 30% of people quit. So if your goal was to get rid of 30% of people, just tell people, hey, we're going back to the office on January 1st and mission accomplished.

Like, people will quit. The problem might be that it's your best 30% quit and not your bottom 30%, right? That is a challenge, yeah. You don't know which ones will quit. But it does seem like the remote work jobs, because the compression that you're talking about is the key factor. People are doing more with less. They're starting to realize everything was overstaffed.

Everybody was spending too much money. We're in a ZERP environment. Everybody was hiring two years ahead of plan. And you don't actually need that many people. So if you looked at Uber, Dara has 1% less people. They grew 30%. And you're like, well, you're growing 30% and then your headcount has gone down.

Whoa, that's weird. And I think Airbnb had a very similar thing. They're growing 30% a year over a year or whatever it is. And their head count went down. So there's something about this essentialism. And then also with AI, as you point out, all at the same time. Remote work, offshoring, and then co-pilots helping developers go faster, and then all of a sudden,

management realizes we can do more with less. And then that means eventually, I think you're predicting, correct me if I'm wrong, that once management figures that out, some group of managers say, you know what, we can charge less for this product. That's how capitalism is supposed to yield productivity gains, right? This is how society progresses, that we can get more for less than there are more available resources that can plow into other things and we can become richer and more prosperous. So to me, it's like that capitalist soul that really just goes like, this is delicious.

This is what's supposed to happen. This is how we grow the pie. This is how we all get richer. And I think what's so fascinating is that sometimes it is just like a mind shift you need to see in reality to feel it. To me, the pivotal point was what Elon diss at Twitter. Now it's. I was there for it.

8,500 employees to, I believe, the latest count is 1,400 or 1,500. He got rid of 85%. Yeah, basically. That compression, while largely not just maintaining the product, but actually accelerating product experimentation and so forth. Now, there's a whole other discussion whether the business model is sort of creaking a little bit, but that seems separate from can you run this company in a more efficient way? And I think once Elon proved that,

sort of at a large scale for a major billion-dollar company, the pressure's going to kick in because you're going to have investors that other companies going like, why are you so fat? Get on the freaking treadmill year. Start working out, get leaner, get more efficient, because if you don't, eventually, not next year, maybe, maybe not the year after, but in year three, someone's going to show up and they're going to be ripped.

They're going to be ready and they're going to compete you way out of business, which is, again, goes back to all these anecdotes we have. Once there is an order of magnitude jump, right? Blackberry folks going, ha, ha, ha, those computer folks are not going to waltz in here with their phone and, like, teach them. Yeah, yeah, they are. If you have an order of magnitude advantage in product, in pricing, in distribution, in any of these things, the whole world is going to tip.

And it's going to tip first very slowly and then all at once. Yeah, as we've said, how did you go bankrupt? Exactly. Very slowly, all at once. Yeah, things tend to... That's what's exciting, right? I find it super exciting because I'm, seeing young founders come to me, you know, first-time founders, they got three or four people

in their company, and I'm like, how are you getting all this done? And they're like, well, we have two developers, a designer, and I'm a growth hacker. And it's like, the four of you are doing more work than 40-person companies that are burning a million a month, and you're burning $40K a month. And oh, and by the way, you're charging a reasonable offer your product, and people can't believe it's so cheap, and there's a line out the door. So I think for startup culture, the price of starting a company, when you and I started, you remember these days,

you had to rack and stack a bunch of servers, you had to get an office space. It was probably $1.5 million to kind of fire it up in the first year. You get 10 employees, servers, and an office. Probably a million five, two, something like that. That was definitely the standard going rate, but the irony is that Jason and I lived in the future 20 years ago. Yeah.

We started with exactly four people. It's funny, you mentioned four people. We started with four people. I remember our salaries. They were from $35,000 to I think $45,000. So our overhead was incredibly low. We some police a couple of desks somewhere. I worked from home.

And we were able to bootstrap Basecamp on the back on some consulting revenue. Boom, a year into it, it's paying all the bills. A couple of years into it, it's just spewing money like a faucet, right? And I think it's that sort of sense that the future is already here. It's just not widely distributed. I just love that quote, William Gibson. And it feels like we live that in terms of startup capacity that we could do with four people,

what we saw folks in the valley needing 44, needing to raise millions of dollars just in like the initial funding for it, let alone a seed round for it. And what can you do when your cost are way lower than everyone else? First of all, you can charge less, but you can also make more money, which comes into this whole thing about, What are you starting a business for?

Are you starting a business for some sort of far future crazy unicorn event? Or are you starting a business because you want independence? Jason and I wanted independence and pride us upon that. But anything else, it turned out to be that that independence was also just lavishly profitable. And then you can actually make money and suffer simply by keeping what's left over after you pay your expenses. That it doesn't have to be about selling equity. It doesn't have to be about an exit. that you can make real money just being a profitable company.

And this is one of those things where I think the big shift that possibly can happen in startups is that far more companies are going to start like we started in 2004. And they're going to realize that all this is possible with AI, with the realization that remote is possible, with just being more effective and more capable as individual entrepreneurs, and also realizing, do you know what, the other option is just not available. I'm not going to go out and raise $5 million right now. I'm not going to go out and raise $10 million.

Like, the window has shut, so you'd have to. Okay, cloud computing has revolutionized startups over the past decade. You know that. But the reality is, hey, a fully cloud-based solution is not right for every startup. Sometimes a hybrid solution is your answer. Like if you're working with sensitive data, that can't be trusted to cloud, or if you need to connect to multiple cloud providers at once, or maybe you just want a much more cost-effective solution.

In that case, you need to check out Equinix. Equinix Metal will give you direct access to physical servers, but you still get all the benefits of the cloud, so no need to rack and stack your own servers. No, Equinix provides on-demand infrastructure in over 25 major cities. And here's the best part. They have an amazing startup program for you. The Equinix startup program offers personalized consultations and guidance from the Equinix team. And of course, you'll get up to $100,000 in startup credits. So here's what I want you to do. Head to Equinix Startups. com to apply.

And when you apply, James from Equinix is going to reach out to you directly. That's Equinix startups.com to apply EQU-I-N-I-X startups.com. I would say funding is down 75%. So it will take you, I'd say for the average founder, it's going to take you five times longer

to raise 10% as much money. Yes. You compare it to the peak ZERP environment. And, you know, if you can raise 250K, you can raise 500K, million dollar seed rounds, three million dollar seed rounds, 10 million dollar seed rounds, that's over. And it's much easier, like you're saying, just to have three or four of really good people,

build it yourself, start making money. Don't raise any money or raise 100,000, whatever the minimum you need. Yes. Because not everybody has the money saved. You might need that first 100K. And sometimes it's the constraint that really makes the great entrepreneurs. When you and I started in the late 90s, early 2000s, you know, there just wasn't a lot of available to founder, so you had no choice to be a founder.

Exactly. You had to be able to produce a product, whether Weblogs Inc, which Brian Alvey and I did, or 37 or Delicious or Flickr, that whole cohort was built by people who were builders. And that's it. I was a writer. Brian Alvey was, you know, a coder. Matt Mullenweg was a coder. You know, we made our own CMS, put out a couple of blogs.

We sold some ads. I sold them. And we all of a sudden were off to the races. And a lot of value got created. And now you look at your company, I mean, you guys make millions of dollars or more in profit every year. And just every year that goes by, that just goes to the founders. And I think it's that sense that constraints are actually good. For a long time, at least as I perceived, it Silicon Valley kept telling founders that constraints are bad.

No, you need more money. You need more people. You need to go faster. And you know what? I can, there's a logic to that somehow, somewhere that does produce these outsized paybacks, right? you make a thousand angel investments, one of them or two of them are going to be these blowout unicorns that's going to pay for everything. And there's some wisdom in there too.

But we were always speaking from the other end of it. Do you know what? Out of a cohort of a thousand, what if we could get like 300 great companies or 400 great companies rather than just one or two and then the rest of it gets sort of mangled by this process? And then being our own example, do you know what? Running a profitable company that's made millions of dollars in profits for 20 years, and being conservative with it, just sticking your money like I do,

I'm such a boring investor. I just stick it all in ETFs. And I go like, you know what? I don't need alpha. Can you just give me market returns over 20 years, millions of dollars accumulating?

It's going to add up. Totally. You're not going to be left wanting for a bigger yacht or whatever. And I think that that example, I want to give that testimony. Do you know what? This is a way,

even when there is the unconstrainted path is a choice, which is was during SIRP, right? Money was just flowing everywhere. It was gushing everywhere. Now money isn't gushing anywhere. This choice is still here and it's going to apply to a lot more people because you don't have an alternative and don't boo-hoo about it. It's freaking great.

It is more fun in many ways. To live under those constraints, the creativity that happens when you have to make do and you have to reuse and you have to double hat and you have to play five different positions on the same team. Do you know what? It's amazing. It's great. A lot of founders, or at least a lot of the story goes like, oh, doing a startup is so hard. As long as I get to the next phase, once I have a 200 people, it's going to be so much better. No, it's not. I've talked to so many founders who wish back to the days where they were just four people, 10 people, or whatever. It was more fun. It was more invigorating. It's that pressure cooker,

those constraints that really make you see what you're made of? And it's fun. So let's not poo-poo it. Also, all that entitlement, all of that extra money created a massive amount of entitlement where people came to work and they felt like, I've got to bring my whole self to work. And there's all this extraneous stuff that, you know, we have so much resources. We can sit here and today talk about, I don't know, this war that's happening here or this social injustice that happened here or this tragedy that happened here.

And then work became like this platform for every issue in the world, as opposed to just the narrow focus. You had chaos inside your company for a brief moment in time before you got control of it. I think Brian Armstrong led the charge and saying, hey, listen, I know that this stuff is important to y'all. It's not important to me. What's important to me at Coinbase is like just making the world financially more fair. And that's all we're going to work on here. So maybe you could give us a recap of after all the chaos and you cleaned everything up and you let people who wanted to have a free for all and talk about social issues all day long. You let them exit quite generously.

And you got everybody who's at the company focused on work and making software. So how has it been for you just in terms of enjoyment and this refocusing? Because it's been a couple years now after this, right? This happened in 2020. It's been like two and a half years. And it's one of those things were, I was not eager to conclude anything from it, even six months past, even a year past. It was difficult.

You don't really know how it plays out until you can look back upon it with some degree of distance because there's some emotional aspects tied up into it. Now it's two and a half years. It is without a doubt one of the very best decisions we have ever made in the 20 years that we've been in business, Jason and I. It was very difficult for about a couple of weeks and then it was cumbersome for a couple months and after we passed a one year mark, it was just bliss. Bliss in a way, I had a hard time in envisioning was possible. This is the problem with how the culture changed a lot of tech

companies that we went through basically I see it as Trump gets elected. People start going, becoming far more involved in politics in a way that just wasn't present before. It felt existential to people. I get it. Yes. And it seeped into work at that same time in the same way that now this was something we're all on the same team resistance supposedly all this other stuff, right? And it just builds up and it builds up and builds up. And then it just went nuts in 2020. It just went completely crazy to the point where now I look back upon some of these conversations we had on our work platforms where I just look, this is just insane. Why were we doing this stuff, right? And I think you do it because you get cooked and you do it because the culture around you seems to

embrace it. All companies are doing this. They're all building up a big bureaucracy to enforcees and injected everywhere. The DEI machinery really got rolling in those days. And you just think like, this is the new reality. This is going to be the 10-year reign of whatever the hell this is. And we just went cold turkey. And that's why it was so sort of harsh at the time. It was cold Turkey at sort of perhaps the peak or right around the peak, right, of when this was the most crazy. And the public response was just nuts. We had thousands of people.

We were trending on Twitter. I had 10th of thousand people calling me all sorts of names and white supremacy, this, and racist that. And like, because we don't want to talk politics at work. And then you get these two and a half years, right? And we look back upon it and we go like, wow, amazing. And then I look in the broader culture and I go like, it's not even a, it's not even anything anymore.

A company says, like, we don't talk politics. work, it's completely just, no one even shrugs anymore. This is how quickly the pendulum can swing, which is one of those things that just gives me so much optimism. Sometimes we go like, oh, this thing is terrible. It's going to be terrible forever. No, do you know what? Just like give it five minutes.

It made very well totally change. Like a storm. It was like this crazy storm blew in and people were like. It was exactly a storm. And then all of a sudden it clears, yeah. I like the storm metaphor because you know what, no matter how strong you are, if you're caught in a hurricane, you're going to spin around. There was no amount of personal conviction of power you had in that moment at the peak of that moment where you could have stopped the storm.

It just had to pass, right? And this is, I think, why so many companies at the time just laid flat, right? Like a storm comes through and it flattens all the houses. All these executives go out. They say exactly the same thing. There's more work to do, all this nonsense, right? And now the storm has passed. In tech, at least, it hasn't passed at large.

and in academia and other places that's still raging almost at full strength. But in tech, all this stuff just got dismantled. All the bureaucracies that were built up, like you don't even hear about it anymore. And first of all, I think that's wonderful. We were in a really, some dark ages there for a brief moment. But also, wow.

I mean, it's only been two and a half years. You could have told me it was 15 years since we were in the thick of this, and I would have believed you. It was very intense because, It was very personal. Like if you didn't take a stance on something or if you said, hey, we're not going to do this, there was this machine that was the press and social media where it was like, well,

we have to destroy this person for saying, you know, this isn't the mission of the company. And I'm not comfortable with that. And you know, we actually had it where people were like, well, how many of these founders have you funded? How many of these founders have you funded? And it just turned out because I happened to have a lot of diversity on my team in terms of women, that we had funded a lot of women founders. I think looking back on it, it was because women felt more comfortable applying because we had more women. And we had done some events for underrepresented founders. But I had to go back to my team and say, just so we're clear here, we can increase the number of applicants.

We can be supportive of everybody and encourage everybody to start companies. And that's good work. but when we make the investments, we're an investment firm, it has to be blind. We're not investing based on gender, based on age, based on any other criteria.

We do not, we cannot use that criteria. And I, you know, I had this conviction, but it was kind of like, it was a little shaky for me to say it because I was like,

it's illegal for us to do this. And now here we are, you know, the Harvard case and everything, Supreme Court. hey, you know, you really can't pick people and exclude Asian people from Harvard because they're Asian and you have too many Asians and they just did too well. We can't do that. If it turns out some group of people and their startups perform better, I can't say, well, we can't invest in you because of this. And a lawsuit happened for this company, this venture firm, Fearless Founders. Their mission was to invest in more black founders, a female black founders. And I said, okay, yeah, that's great. You know, if you're money, you do what you want. But a group of of Asian women and white women are now, and I think Hispanic, are now suing them. So this is where you realize identity politics is a road to nowhere, because somebody's

going to get left out. Somebody's going to feel bad. And it's going to just result in chaos. And, you know, it's easy for me to say, like, a meritocracy is best. But it does need to be a meritocracy. Let's be honest. I don't think anybody wants a handout. So, you know, and we can have this conversation now.

You couldn't have this conversation three years ago or else people would clip it and say, oh, my God, look at these monsters. saying that it should be a fair process and the person who has the best results should get the opportunity, you know? 100%. And I think that's, it wasn't just a road to nowhere, it was a road to hell.

Identity politics, that's a grip tech and a lot of other domains just led to absolute hell. And you don't even get the outcomes you want for the people you're trying to help. This theory of disparate impact that if you can do a statistical analysis that shows that certain group

didn't get this or didn't get that, that that de facto proves discrimination is just the most insane theory to ever grip an entire paradigm and go like, this is how we should structure everything, that everything has to be subdivided in a bunch of things. What was so interesting for me was, like, I was very sympathetic to a lot of the core ideas, hey, yeah, let's help people who have had a tough break or this, that, and the other thing. I came from Denmark, a society that It has a broad safety net and does a bunch of things to level the playing field however you want. But it's leveling the playing field in terms of opportunities. We're not going to ban you from getting the chances.

But when you step up to the bat, I don't care who you are. What determines whether you make the team is whether you hit the ball. That's it. You cannot go like, oh, well, you can't hit a ball. You're still going to be on the team because like your team red jersey or something. No, no, no, no. And that falsehood, I think, was really the root of all evil as it came to this, right? The disparate impact theory as it came from law first and so forth.

And this evolution that I went through was really instructive. And it was one of those things where there's, I don't know how many colored pills are at this point. But I was pilled in whatever colored was to some degree, starting reading other authors like Thomas Sowell and listening to Glenn Lowry and other thinkers on this who came at the question from, conservative perspective where prior to all this nonsense going, I would have been like, do you know what, I'm a left leaning. I'd probably vote Democrat. I'd do all these other things. And I'd just like, go wherever this flow is going. And then something like that happens together with COVID, which itself was a mind, right? And handling of that. We just go like, you know what? Now, let's take two steps back, revisit things from first principles. Go, do you know what, this disparate impact

theory of how to organize society is just an absolute, not just dead end, but a road to hell. We can't do it. We've got to step back. We've got to get somewhere else. And do you know what the irony is at our company? So we have about a third of the company quit, right? Our company ended up more diverse after the fact. More gender diverse, more ethnic diverse, more diverse in terms of how many people

were in the U.S. versus outside the U.S. These things are not in direct opposition. And this is the fallacy of so much of this nonsense, which is often spewed from people, not necessarily in those groups, although it is sometimes, but also a bunch of other people who, for whatever reason, have guilt that they need to process in a public sphere, and they do it in a way where, do you know what, this is just not true?

This is just not true. And we said, no, we're not doing that. At a time where that was difficult to say, now it's not difficult at all, right? Like, now it's not even the standard. We barely even talk about it. That's how quickly the discussion changed. It went from, if you say anything about this, we're going to haunt you on Twitter.

This is also why, by the way, I think this acquisition that we must did was one of the pivotal changing points, right? You can look at all, like, what made the storm pass, one out of maybe four major factors was that the ownership of Twitter now X changed hands. And Elon

just went in, we're not going to do things the old way. It's not going to be tilted and slanded with this ideological bent. So that was a huge change. As you said, this Harvard decision from the Supreme Court, huge change. And I also just think, at some point, people are going to be tired of being in the storm.

You know what? I think there's something exciting about a storm, right? Storm chasers and all these other. Yeah, yeah. These forces are just so awesome. There were storm chasers in this for sure. Awesome to watch, right? And you go like, do you know what?

It reminds me of public hangings. So I think this was abolished in France than like, what, in late 1700s or something. It was not abolished because the people didn't want the public hangings. Public hangings were amazingly popular. One of the favorite pastimes of people in France, they were like, this is great. We get to see. someone flogged or tortured or hanged, shine me up for that, right? This is the modern equivalent of that when the storm was going crazy.

Every day. Every day, a different person got canceled or destroyed. Public destruction, right? And you're like, I think at some point, even people who might enjoy that for a moment go like, okay, enough. It's enough. Yeah, it's way too much. Now, in terms of optimism, we've got people very concerned about, we saw this pretty

acutely with Open AI and some of the, I guess, people who want to slow down AI progress because they're concerned, and people who want to accelerate progress so much so that we now have this E-Excel thing people are putting in their bios, and then you got people who want to be, everybody wants to be part of some group. I'm not sure who's running these groups, exactly, but what was your take watching this whole crazy Mishugina over at OpenAI and if it was in fact because people some people want to slow down progress and some people want to speed it up where do you land on that speed it up slow it down you're worried so the first thing I'd say is um one of the benefits of being past the age of 40 and having gone through some of this stuff is I have perhaps less stringently sort of one take positions on this. But at the same time, I do lean accelerate.

I do lean optimism. I do lean, this is the better default, that we have to have more to go on and it has to be more concrete than, do you know what, I have this fantasy that robots is going to kill us all. You know what? That's not operational. That it needs more than that. And I am more in Mark Andreessen's camp here than I am in some of the Dumer's camp.

And this idea that we can have a timeout is just gnostic bullshit. It is like we have this sort of ceremony here that we're going to sacrifice some goats to the gods, and then they're going to be kind, and then our crops will grow well next year, right? I think there's this quest right now, search for meaning, broadly speaking. I think that's what powered a lot of the nonsense that was happening with all the woke stuff. It kind of just has drifted into this, because we're dealing. with the same root problem, right? We've killed God, as Nietzsche said, and what are we going to put in this place?

We've killed organized religion. We need to believe in something. We're not going to apparently believe in country anymore. So what's up? Well, you can pick Team Dumerism or Team E-Excelerate, and that can give you some sense of identity. For me, I just go, like, do you know what? This is going to happen anyway. Accelerate.

Step on this pedal. Sure. Until we have something where, like, do you know what, it is more than a thought experiment that there's more to it, we got to go, right? We could have stopped everything. Imagine someone pitching you the internet. Oh, yeah, anybody can say whatever they want.

Any information can be shared with anybody. Yes. There was this actual discussion at the beginning, which was, what if somebody puts a bomb recipe on the internet? It's like, well, then the police come. They arrest them if it's against the law. And there's been a bomb recipe on the internet for 30 years. Yes.

You've been able to find the antikist, handbook, you search hard enough, right? Do you know what? That was not the end of, civilization, if not the end of society. So I think this idea that if you can look at that, and you can also look at another debate, which the encryption debate,

which was really hot in the 90s. That was how we got PGP. They were just about to ban encryption, and then PGP goes out there, whatever, Zimmerman or something else, forget his name, puts the software out there. And would any of us think that it would be responsible to walk around

with a pocket computer that if we dropped it, someone could get all our health information, Someone could get all our communication history. Someone could get all of this stuff. It's almost impossible to think that encryption could have been illegal. Yeah, it's wild. Or could have been banned or could have been backdoor or could have been something else such that we couldn't protect our own information.

I think, again, this is all about odds. It's about the future. We don't know. But I would guess that AI is going to be more like encryption and more like the internet than it's going to be like the atom bomb. Yeah. Right? That it's going to be more like we cannot even conceive that you remember in the 2023s when these Dumer's, we're about to blow up open AI,

just at the cusp of major productivity gains and flourishing and whatever, because of some fantasy about the end of the world, Jesus Christ, that would have been a bad idea. I hope that's how we look back upon it. I think it will be because, you know, I'm looking at the results from it. I think everybody just watches these language models

give them a response, and they're like, oh my God, this is amazing. And then I'm like, did you check those facts? Because I just checked three of the facts, and they're completely wrong. And I think what just, happened was it just read like 20 how to articles and then it just rewrote them and so it's really good at rewriting something but because it's going line by line you actually in the ux think it's

thinking and because it took a second you know and i thought it was very interesting with barred where it's like boom here's the rewritten version but with chat chp t it writes it and so you're like oh i guess it's thinking and it's spinning the wheel and then i look at it i'm like these facts are wrong and this is taken from this how-to article on this website or this core answer, this actually isn't thinking. It's guessing the next predictive word. So I think we're like almost jumping the gun. But that is so human. That is so human. That's what I actually love about it. The fact that this makes mistakes proves that we're on the path of something that perhaps we are running large language models in our heads right now, right? This is why we spew facts that aren't facts.

Why we draw connections that aren't true. Why we come up, why we hallucinate, why we invent facts, right? This to me is actually the most endearing part of the whole AI thing, that it is so human in all its failings that I actually could believe, do you know what? Maybe something profound has been discovered here that like this is actually maybe how consciousness works. Now, now we get really gnaughting about like what is actually going on in there. We don't know. But I look at that and I go like, do you know what? This is, this is very human, which perhaps is the argument for the Dumer's side, right?

Like if it is so human, isn't it going to defend or descend all into savagery at some point and whatever? The Lord of the flies. Okay, fine. But again, we got to see what this goes. To me, it's also just interesting. AI is the most interesting thing that has happened to computing since the internet. To me, it's far more interesting than mobile. It is the internet, right?

is the internet over again. That doesn't come around that often. Like in my lifetime, that has literally only happened once before. Yeah. The other thing I look at is the internet at least once it got going, and you had Amazon.com and a few other things, normal people instantly got it.

Right? You'd put them down in front of something that have a question. They'd search the internet. They'd look something up in Yahoo. They'd go like, wow, this thing, this network can do things and tell me things. I could not do or could not know before. I'm in. I've shown chat GDP to my wife, to my kids.

I've let them play with it. They get it instantly. Not just to get it, right? There's an intellectual understanding. No, no, like, I'm going to use it more. They use it. Don't take it away from me. I need it.

Exactly. Yes. And that to me is the wisdom of the masses, right? We can have Dumers who are very articulate in their theories about how the world is going to end. And then you have a whole millions of people at this point. This is why ChatGCP is the fastest growing product, never. people are voting with their feet.

This is what capitalism open free markets is supposed to give us. It's supposed to direct progress. We should have more of this progress because it's very appealing. It is genuinely making lives better, more interesting, more novel, more everything, right? Yeah. Do you know what? That's a good general predictor. And we should follow that.

Generally speaking, when we follow what people want, we end up in a better place. It was interesting today. I was like, you know what? I released this blog post in my substack and on LinkedIn. And I was like, oh, you know what? I didn't put a header image on it. So I opened up Dolly. And I was like, make me an image for a productivity blog post.

And they gave me this thing, like a desk with productivity. And I was like, you had a cup of coffee and a bulldog. It adds a cup of coffee bulldog. And I put it on the site. It looked like I spent, I kid you not, a thousand dollars hiring an illustrator to make this beautiful image. And I was like, wow, coming from a magazine background in the 90s where we used to hire illustrators, that was probably the best illustration we ever would have paid for. And illustrations took two weeks.

And I just described something and it just happened. Oh my God, this is clearly going to be a situation where I'm going to say, you know what, I really loved the Sopranos and I loved these two episodes. Can you make me a couple more like that? And it's just literally going to be like, you know what? Here's a four episode Sopranos just for you, JCal, and it's in your, it's waiting for you. And I'm going to be thrilled with that. Or I love this Mark Knopfler song and Dio Strait song

and Dio Strait's is never going to come back together. But here's their, you know, here's another five tracks. Here's five Dio Strait Strongs that they never wrote. It's going to be awesome. And it's so, you feel like it's so close, right? Yes. And not even close. It's already here.

I mean, the sense, the degree to which I was shocked by the Daly stuff, the Image Generation, Mid Journey and all those things. That to me was even more mind-blowing than the L&Ms. I would not do. No way you could have asked me in like, whatever, five years ago, that the first thing that AI is going to replace is essentially the creative field or not replace, augment, whatever you want to call it, right? A viable option. A hyperproduct ties. And this is why it's so interesting that we cannot predict where all this is going to go, which is why we must follow the white rabbit.

We must follow where the white rabbit goes because that's just where life is more interesting, more appealing. And this is what my family just did with Dali. They generated my son had this thing, a gang for kids of 10-year-olds who just like to be in a group together, right? They're called the chicken wings. And they're like, I'd like to have a chicken that has a gun with an explosion in the back. And it turned out amazing. And we got it printed on some T-shirts.

And we just went like, this is the future. Like, this is so far future that I could not even have predicted this was remotely possible, like 10 years ago. 10 years ago. Look at me. I went to darling, make me an inspiring header for a blog post

about productivity with the dimensions of this. And it made me these two images. I was like, wow, that looks like pretty amazing. Like fast company would have spent

5,000 other stress. Like, make it even more inspiring and include hot coffee and a bulldog. And I'm like, boom. This is the great.

Like, are you kidding me? This is unbelievable. That's so good. It's so good. It totally understood. This is what's so good. about AI. You don't have to squint and imagine things at a very high conceptual level. You can

literally look at it right now today and go like, holy shit, the world is different now. Now, what's so fascinating about it, you can recognize that change that has already happened. And you could go like, do you know what? I don't have the faintest clue what the world is going to look like in five years. And neither does anyone else, not the doomers, not the accelerators. We just don't know. Isn't that wonderful? Yeah. This is the next one I did. I was on a board call and they had questions about like, you know, like who should run an Amazon web store, right? And I'm literally on a board call. And I just wrote, what are the titles and responsibilities of an Amazon marketplace manager? Because I'm like, I know that's the title, but I don't know what they actually do. And it's like, oh, here's exactly what they do. Here's the responsibilities. And I'm like, ah, yeah, that's it. Thank you for doing that so quickly while I'm on a call. And you think about like the Basecamp original logo. and I was talking to somebody about logos. I remember in the 90s,

when people started companies in the 90s, what did a logo cost? Like if you hired an ad agency or an agency, when you had your agency, what would you charge out for a logo in 1999? Oh, it was thousands. Even the 90s,

it was thousands. Even the 90s, it was $5,000, right? And you would have a meeting and then you do like a back and forth, a presentation. Right. It would be, what, a month engagement, four weeks, six weeks, something like that?

Totally. Maybe three or four meetings. It'd be 10 people in the room and you take it out, all this. Now you just like make me a logo for this new company once.com and here's what we do and you just next, next, next, and a couple little things. And all of a sudden

you have a logo that probably would have been $5,000 in expense. Yes. And it's better. And you did it. So this is something that has never existed in humanity. This is the thing I find really inspiring. People who didn't take the time to learn how to draw as but one example, do illustration. And now they can make really compelling illustration. So you've compressed that, right? You've democratized illustration. You're going to democratize

writing copy. You're democratizing and just making everybody at 80%, maybe in the top third of designers. And then, yeah, there'll always be elite designers, elite logo people. But if everybody becomes really good, let's put aside elite. Let's pretend elite's going to exist forever. But if everybody becomes really good at making logos and copy, that's a pretty compelling, world. This is the age of abundance, right? Yes. You look at something and you get so much abundance, so much productivity, orders of magnitude

being, this is how we get growth, right? You look at a lot of growth curves, and they actually look kind of depressing. You think, like, haven't we been doing so much of it, let's just say, the last 15 years or so, right? And you're like, do you know what? The growth curves are a little, yeah, right? They're not actually, not as much has happened as we would like to think, oh, everything's moving so fast, everything's getting so much better.

everything's getting cheaper. You know what? A lot of really important things haven't gotten better, faster, cheaper. Some of the big things in education, for example, this is the one that really blows my mind. Yesterday, I was talking to my son about Einstein's relativity theory,

about quantum computing. And do you know what? I don't know all the specifics about all of these things in the history tracing on E equals MC square. Do you know what? We ask a couple of questions of chat GDP, something that perhaps in the olden days

you would have Googled for it, which is, by the way, why I think this is absolutely an existential threat to Google. I cannot imagine that most people are going to go to Google first going forward for most of their questions. They may still want to find a business or do something else. Okay, great. Am I going to ask Google tomorrow?

Like, hey, tell me what that Amazon marketplace manager did. That would be a Google search for you two years ago. It's never going back to being a Google search, right? You're just going to ask an AI for questions like that. And in education, that is so damn powerful, that not only can you constantly go, tell me more, you can go, tell me more, but you know what, the way you explained it was a little complicated. Can you make it simpler for me? And it will.

So I think there's these massive unlocks of abundance coming. Imagine you had the greatest tutor, the world had ever seen, well-versed in every language ever spoken, know every book, no, every classic, no every field. and you could ask them anything for as long as you wanted and they had infinite patience to teach you? I mean, this is Nirvana when it comes to education just as one aspect of it. Our kids are going to have a much different experience.

I literally was driving with my 13-year-old and they were like, hey, what's this thing with Hamas and like explain it to me? And I literally have set up my action button. There's a thing called the action button on the new iPhone 15. and I set my action button up to be the, you know, with chat GPT, you can have a conversation with it now and it talks back to you. And so I set it up to that.

So I'm driving. I press and hold the button. And I'm like, explain to me the Israeli-Palestinian conflict and what the solutions are. And we just sat there and drove for 10 minutes and explained it to us. And, you know, I've read about it. It was very accurate. And I was like, wow, this is incredible. You could just be driving, like you said, and you have this tutor there who's going to explain everything to you.

and I know you don't like, you know, you're like a big fan of copy, but while we were sitting here, I just decided I'd make the once logo. Here's your one. Ship number one there. Ship it. And then I was like,

you know what? Make it more organic like a forest because I know you like a little bit more. That's good. Oh my God. It's so good. What is happening? Yes.

And this is year, by the way, this is the end of year one of chat GPT 3.5. Like literally this week is when it came out. And you just think about, well, what's year two going to be like? I will tell you, nothing had made me more susceptible to the idea that we live in an simulation than this, because I could not comprehend the acceleration happening.

Like, I go like, you know what, I built software for a living. I know how long it takes to ship a feature. How is it possible? The AI is advancing every few weeks in these major leaps. It doesn't even seem plausible, right? Like everything I know about software does not compute with this, which is, again, why I find it. so exhilarating that it had that same quality of like, I don't fully understand this. I understand some of it and I've looked at some of this and this is Transformers, this,

and this is pairing and it's the next word. Yes, yes, yes. I still don't get it. How do we get from that math to this outcome, right? Like that it feels like we really have created gods out of sand and silicon. And that is just imagine a ton to be alive, right? I think of, do you know what, I'm halfway done. I am 44.

Yep, you're halfway. I'm halfway. How fortunate I should be to have seen not just the internet. Our generation, Gen Xers, were there for the internet and for AI. We have the before and after. It's incredible. Yes. And in my lifetime, I have known people who were born prior to World War I.

Like, the span of human acceleration, this is why whenever I get pessimistic, and I think I'm a recovering pessimist, I'll say. Whenever I used to like, do you know what? The world is shit or this is shit, that's shit. It's like, no, no, no. Zoom out. Look at the big picture on this little blue dot in like people's, I know and could touch his lifetime.

We've gone from not having an airplane to have an AI. That's just incredible. We should be very optimistic people. Of course, trying to make things better and so on. But I think you actually do make things better faster if you are an optimist. This is why I really just can't connect to the Dumerism. because it smells so much of like the drag that often gets injected into innovation with bureaucracy, right? Like, hey, do you know what?

What does this actually mean dumerism? It means that some people supposedly much smarter than all the rest of us should get to decide exactly where the limits are, where the contours are, what should we not go beyond? Do you know what? If we had given the high priests of the Dark Ages the license to forever dictate where the boundaries of astronomy went, do you know what? We wouldn't be firing rockets to Mars. Nope. No, no satellites, no Starlink. No.

If you, it almost feels like there's a generation as well who they've been raised so coddled. They haven't had adversity. And so they don't actually understand like what abundance is because that's all they've kind of had. It's only been abundance. There's never been like a headwind. They didn't have Vietnam. They didn't have any of these, you know, the suffering or pain.

And we might be the last generation that actually, in the United States, at least in the West, that kind of remembers the generation telling us like, who? The Nazis. Oh, Vietnam. They should have to be actually hard.

Yeah, this was really brutal. Your arm got blown up by a mortar grenade. Literal trauma. Like trauma wasn't, I was made to feel bad trauma. These words hurt my feelings, but I literally had physical trauma

where my arm was blown off by a mortar. Or my brother didn't come home. God forbid from this war. Yes. And this is where... I mean, the irony, of course, is, I mean, old men has since forever sat around in circles and talked about how the young ones are, like, not gritty enough, not smart enough. So I think that's part of it.

But that also doesn't mean that some of it isn't real, right? Like, what I just think is, hopefully we're trading it in for something. If we're trading in the grit and resilience of past generations, and I do think we are to some extent, I hope we're getting something back in return. And it's not as obvious right now what that is. What are we getting back from all this grit and independence and so on we're giving up? So I just lived three years in Denmark. And it's really interesting because Denmark, when it comes to raising kids, for example,

exists in what almost can be described as a time bubble of what the United States used to be in 1980, where you could let a nine-year-old out by themselves, walk a mile, take a metro, do something that would absolutely get you arrested in any major city in America today. And you go like, huh, that's so fascinating. Like, I remember being a kid in the 80s. My wife was American. Remember being a kid in America in the 80s where these things were possible. It's no longer possible.

And I don't think we've fully realized, well, some people have, Jonathan Haidt, for example, not only is the great scholar on moral philosophy, but he also looks into this idea of independence with kids, that why the coddling of the American mind covers this, idea that kids have lost so much independence, and this is partly why Gen Z is a little crazy on some things and a little fragile and see trauma and behind every door and so forth, it's because, you know what, if you never gave them the opportunity to face some degree of adversity, some degree of uncertainty, some degree of, like, you got to figure the

shi out on your own. You're not going to develop those skills, right? And this is also one of those things I think I've changed my mind on more, like more gone to, do you know what, I need to make sure that my kids. kid has some days. It cannot be sunshine and

rainbows. Yeah, it's got to be something, yeah. Yes. I have a strategy for that. Taking the kids

skiing on very cold days or taking them on heights in the rain. Turns out weather. Charbica, we talked about the storms earlier, but like literal storms

when it's really brutal. The Germans have some expression. I think it's the Germans that there's no bad weather. There's just bad clothes. The Danes have

that one exactly one. That same one. Yes. So I heard that at some point. And one morning I promised my daughter was 13, when she was six, I was going to take her on a hike. She loved these hikes to the beach. And it is a storm like Bay Area storm like you wouldn't believe. And she's like, I guess we can't go on the hike. I'm like, no, heck yes.

Here's your boots. Here's your jacket. We go on this hike. She talks about it to this day. I have the pictures from that hike. We pull them up sometimes. We got to the ocean. It was like chaos.

Yes. There was rivers flowing everywhere. It's just lightning. and everything. And when we got to the trail, I get to the trail end, and there's like three or four people coming up the trail, like, don't go down there. And my daughter and I were like, yeah, we're going down there. And they're like, it's crazy. I'm like, awesome.

And we did it. It was great. And, you know, the same thing happens with skiing. And I remember what my dad going out on these like hard ski trips and the winds hitting in the face. This is my tip. Like the weather and like harshness and being out there in the mountains or whatever,

that's a good way to get some grit going. I mean, for me, in Brooklyn, it was the New York City subway system, but slightly different. I just read a book called The Comfort Crisis that covers this. This idea that we've lost connection to physical hardship and that that is not good for us at all. What's it called? The Comfort Crisis. It's written by a men's journal journalist who goes out on this month-long expedition in Alaska to hunt.

And basically have to just live in Alaska for a month out in the, blizzards and wilderness and hardship and difficulty and so forth. And it was actually reading that book that made me start taking cold showers. It's funny because cold showers is one of those things that, to me, seemed like such a Silicon Valley fat, which I will attest to the fact that, do you know what, if something just comes out of that, I have a natural skepticism that will be less likely for me to just adopt it. And I read that it's the comfort crisis and go like, you know what?

I should also just occasionally feel things that aren't as not. nicest they could be, which the irony of this is this piece of wisdom is literally thousands of years old. You can look back to the Stoics and you can read Seneca talking about, you know what, occasionally you should walk without shoes just to feel the pinch on the bottom of your feet. Sometimes you should just be out in the rain. Sometimes you should embrace this hardship in part such that you can appreciate, as you say, the abundance that you have in your daily life. You can appreciate, oh, do you know what, just having heat is actually a luxury. of immense benefit, having light that you can just turn off all these trappings of modern life.

We take for granted and then we become insolent, entitled, cards. Exactly. So much of the time. I can't wait to read this book. Yeah. Yes. Getting that exposure to the wilderness, getting willful exposure to the fact that the obstacle is the way, I think is another phrase from the snow aches.

Yeah, no, I got it hard because it's hard as good. I got the cold plunge. I got the cold plunge and I do it. And when I do it, I'm like, I really. don't want to do this. But if I do it and I get through it, I feel so alive. And I did all the research on it. And I was listening to Huberman or whatever. And they kind of explained it. They're like, if the temperature and the length you want to do it is what is challenging. So there are people who've gotten so good at this cold plunged up. They get sitting there for five minutes.

I was with a friend who did it for four minutes in like 40, six degrees or something. I did it. I got hypothermia immediately. I started like canting and like, oh, it's just like my body started quivering and shaking. But you have to do it to feel uncomfortable, get through it. And like you're saying, like getting through it is the thing. The obstacle is the path. And being uncomfortable is good. Being cambered all the time will make you soft.

We'll make you weak. And it's one of those things. It's so funny because as we talked about over the last five years, I think I've had personal turning points on more big topics. and the rest of my entire life. And this is one of those things where I just said, it felt so insufferable listening to some of this stuff. Oh, cold plunges this or hardship this or walk around bare feet or whatever.

It's one of those things you can't really convey it. You've got to tell people, but you know what? My best argument is just give it a try. Just for example, I had not taken a cold shower in probably 15 years prior to that. Like I had just lived in a world where the water always came out hot or I could wait for it to become hot. never had to subject myself to anything even cold, which is so ludicrously pampered in the sense

of like the human experience over the period of time, right? Yeah. That, wow, imagine humans can live today and they are never exposed to anything less than that pampering. And then you do it and you go like, oh, no argument, no verbalization, no articulation of the benefits, Hooperman listing, oh, this is good for you because longevity, blah, blah, blah, no, no. You got to feel the shock in your own body. that's going to be the argument for this above all else.

It's easy to be cynical. You know, it's easy. I tell people about this about Burning Man. Like I was like New Yorker cynical about Burning Man. And then I went and I was like, you know what? It's kind of cool to watch people go build art and music and, you know, this community over a week in the desert. And it's super inspiring. And I thought, wow, this is like amazing.

I went to the art projects. And I was like, you know, I never really appreciated going to art galleries. but driving around the plower on a playa on a bicycle and hearing people play music and looking at the art they created, I found like really inspiring. And yeah, it's easy to be like, yeah, Burning Man is a bunch of dirty hippies and weird and whatever.

And it's like, nope, it's kind of cool. It's kind of cool. It's a lot of really soul for art. Because my current mental image is that Burning Man is exactly a bunch of privilege, and this is why I love coming on the podcast because some of that challenge of, do you know what?

I can also just, I can, yes, we'll go to Burning Men together. I mean, literally, I'm telling you, like, and there is a douche, like, these dudes, like, like a bunch of Russians came and, like, set up like a pop-up camp and a bunch of Russian billionaires, like, set it up, whatever, and they were not part of the community, and they just kind of, whatever, did an exclusionary kind of thing. But they actually have this, like, rule set in radical self-reliance and inclusion are, like, two of the kind of rules there. It turns out like being self-reliant,

you don't get to experience that much. And then also, if you have like a camp and you're hosting dinner, you're having dinner, you can't exclude people. Like if somebody walks by, you're, the philosophy of it, it's like, yeah, just invite them in and give them some food.

You know, like, oh, wow. The world can be nice and kind and interesting. And so, anyway, it's absolutely easy to be cynical about it. And then when you go, you're like, wow, this person spent months building this incredible, beautiful art installation and it looks dope. That's great. And I think that that connects exactly to that general sense of optimism as a

recovering pessimist that what I'm trying to work on is just, you know what? The world is more interesting when people are doing different that I can't currently in my position imagine being good or beautiful or whatever. And then they do it anyway. And I should try some of those things more. I should try to lean in harder. I should try leaning harder intellectually into ideas that I find challenging or difficult or even stupid. Even better if they're stupid, right? Even better if you look at something straight in the eye and go, that's the dumbest thing I've ever heard.

And then you just sit back and you keep staring at it. Check this thing out. Oftentimes sticking with that degree of, okay, that's pretty cool. So literally I was, I'm driving, it doesn't stand up. And I see this from miles away. And it was called the tree of Tenere. Anyway, it's Burning Man 2017, and I see this tree that the leaves are made of like LEDs. And you could see it from across the playa, and I'm like, this is the most beautiful thing I've ever seen in my life.

How did they do it? How did these lunatics make each leaf into an LED? I don't know. And I don't know what they spent on this. This looks like this cost $100,000. It could have cost a million dollars. They made a tree of LEDs. Look at all these weirdos like hanging out at this tree.

It was literally far off in the plier at the end of the playa, this crazy tree. Anyway, I... And this is where I can just, I can almost preempt this with the common section. Here's a bunch of privileged venture back... Capitalist, yeah. Weirdos, internet. Just squander money when we could be saving starving children in Africa or whatever effective altruism argument you can make for.

All the resources of the world. should go to these few specific problems and nothing else. And you know what? F*** that. That is such a dead end of thinking of being, right? That everything has to be rendered in this context of like, oh, you could have done this. Do you know what?

We're humans. We can do more than one thing. Life is better when there's also music and art and weird, dirty hippies in the desert. On top of also trying to solve other problems in the world, right? This is the codomy thinking of unless you are paternal pessimist about all the things because there are structural inequities or this, that and the other thing, you're just like, you're just privileged. It's just that's perhaps one of the things I've gotten most over and most tired of watching just in the last few years. I mean, you could literally complain about the, every night the Eiffel Tower has a light show that is delights everybody who comes there.

Exactly. squanders amounts of energy. Shouldn't we be saying? You could get another. There's somebody starving where they could. And it's like, no, there's enough energy that we can light it up and people could feel some joy in their life. And what a great episode. David, thanks for coming on.

We'll book it for a year from now and we'll rant about everything. And we'll catch up soon. And we'll see you all next time on this week and startups. Bye bye.