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

1. 0:00 – 3:49

   Jason’s background

   1. JFJason Fried0:00

      The reason I think it's great for entrepreneurs to, to start bootstrapping is 'cause they just have more practice making money. They get better and better and better at the fundamental skill you need to have, ultimately, to run a successful business, which is to make money. 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 you can land as a business.

   2. LRLenny Rachitsky0:45

      (instrumental music) Today my guest is Jason Fried. Jason is the co-founder and CEO of 37signals, which makes Basecamp and Hey, and soon a few more products, including a competitor to Slack. 37signals 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 filters down to the founders and employees, because they have no investors. Most founders, by default, will go down the venture route, raising money from VCs and angels, and for many types of companies, that is necessary. But it's also important to know that there is a different option available, and it can be much more fulfilling and fun, and even much more lucrative by bootstrapping your idea. In my conversation with Jason, we get into why constraints like small teams and less cash often lead to better outcomes, why gut and instinct is underappreciated as a decision-making tool, why planning long-term is often a mistake, why work doesn't have to feel like war, why we should focus on playing infinite games, when it makes sense to consider raising venture capital versus bootstrapping, how to actually bootstrap your startup, so much more. Jason is fascinating, and he's got a lot of wisdom to share. I'm excited to be able to bring you this conversation. With that, I bring you Jason Fried after a short word from our sponsors. This episode is brought to you by Coda. You've heard me talk about how Coda is the dock that brings it all together, and how it can help your team run smoother and be more efficient. I know this firsthand, because Coda does that for me. I use Coda every day to wrangle my newsletter content calendar, my interview notes for podcasts, and to coordinate my sponsors. More recently, I actually wrote a whole post on how Coda's product team operates, and within that post, they shared a dozen templates that they use internally to run their product team, including managing the roadmap, their OKR process, getting internal feedback, and essentially their whole product development process is done within Coda. If your team's work is spread out across different documents and spreadsheets and a stack of workflow tools, that's why you need Coda. Coda puts data in one centralized location, regardless of format, eliminating roadblocks that can slow your team down. Coda allows your team to operate on the same information and collaborate in one place. Take advantage of this special limited time offer just for startups. Sign up today at coda.io/lenny and get $1,000 startup credit on your first statement. That's coda.io/lenny to sign up, and get a startup credit of $1,000. Coda.io/lenny. This episode is brought to you by Sidebar. Are you looking to land your next big career move, or start your own thing? One of the most effective ways to create a big leap in your career, and something that worked really well for me a few years ago,

2. 3:49 – 6:46

   The success of 37signals

   1. LRLenny Rachitsky3:49

      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, but it's hard to build this trusted group. With Sidebar, senior leaders are matched with highly vetted, private, supportive peer groups to lean on for unbiased opinions, diverse perspectives, and raw feedback. Everyone has their own zone of genius, so together we're better prepared to navigate professional pitfalls, leading to more responsibility, faster promotions. And bigger impact. Guided by world-class programming and facilitation, Sidebar enables you to get focused, tactical feedback at every step of your journey. If you're a 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. Why spend a decade finding your people when you can meet them at Sidebar today? Jump the growing wait list of thousands of leaders from top tech companies by visiting sidebar.com/lenny to learn more. That's sidebar.com/lenny. Jason, thank you so much for being here, and welcome to the podcast.

   2. JFJason Fried5:03

      Thanks, Lenny. It's good to be here.

   3. LRLenny Rachitsky5:04

      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 gonna be (laughs) Contrarian Corner.

   4. JFJason Fried5:14

      (laughs)

   5. LRLenny Rachitsky5:14

      And so I'm excited to dig into all kinds of stuff. I have so many questions I want to ask you. I thought it'd be good to just start with giving people who aren't that familiar with your story and 37signals a sense of just how successful the business has been. 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 imagined."

   6. JFJason Fried5:44

      We don't talk about things that don't really matter so much, like revenues don't really matter 'cause you can go broke generating a lot of money. But, uh, we talk about profits. So we- we've historically, let's say over the past 10 years or so, um, we've been profitable every year for 24 years. But let's say over the last 10 years we've been doing double-digit million-dollar profits on an annual basis, which is really nice. We have about 100,000-plus paying customers. That's a rough number.And we have about, uh, currently like 75 or so employees. So, you know, relatively small business in terms of the number of people who work here, big customer base, big profits. And that's sort of how we like to keep it, and that's sort of something that we've always focused on versus, uh, you know, a lot of these other metrics that I hear a lot. They're usually, there's acronyms attached to them and I kinda don't even know what they are and I don't really care about them so much. It's like we just wanna 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, uh, and just enjoy ourselves. So, that's what we've been doing for about almost 25 years. Next year will be our 25th year in

3. 6:46 – 9:58

   When raising money makes sense

   1. JFJason Fried6:46

      business.

   2. LRLenny Rachitsky6:46

      So the bet, just kind of following the same thread, the bet that companies are making obviously going down the venture route is they are gonna lose money for a long time so that they can make much, much more ch- more money in the future. And so the idea there is grow as fast as possible, as big as possible, and then we'll make money. 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- 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. Um, what's your advice to founders there?

   3. JFJason Fried7:24

      I- I think, you know, obviously if you're, uh, I think if you're building cars or you need a factory or you're opening a restaurant and there's actual, like, things you need to buy like ovens and you need to hire people right off the bat and you need to pay rent, you need capital. And it could come from you, it could come from friends and family or it could come from an investor, it could come from a bank loan. There's lots of places to get it. But you need it, you know. Software businesses though and, you know, businesses like ours, we just make software and a lot of people in our industry are like us in that respect. They, uh, 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 profitable style of business the least profitable st- like software has, there's like no physical costs. Uh, it should, the margin should be close to 80% or 90% and- and it turns out that they're- they're barely even, you know, they're, most of 'em aren't positive in the end or they're just slicing or sla- uh, sliding by basically. Um, I don't understand how- how that... well, I do. I mean, they- they have too many people and they spend too much money on customer acquisition and all that stuff. But it- it blows me away. Like, most businesses in the world would die, would 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- 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 'cause the other place down the street sells it for less and, you know. So again, I'm- I'm kind of getting off track, but if you're, if you're gonna make, if you're gonna start a business that really truly requires cash, typically capital expenditures, expensive things, hardware or 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, uh, 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 unicorn-y business, there's so much room there that you could normally find your own way and- and- and slide into a slot or a place that makes sense for you. But if you're venture-backed, y- you just don't even have the opportunity. You blow right past those or they- 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- it's just too bad.

4. 9:58 – 13:55

   The power of small teams

   1. JFJason Fried9:58

   2. LRLenny Rachitsky9:58

      Coming back to something we touched on a bit is this idea of smaller teams. So, you tweeted this, uh, similar stats, so I'm just gonna read these numbers, uh, in terms of your competitors. So Asana has 1,600 employees, ClickUp has 1,000 employees, Slack has 2,500 employees, Smartsheets has 3,000 employees, and Monday has 1,500 employees. You have, I think you said 70-something employees?

   3. JFJason Fried10:20

      Yep.

   4. LRLenny Rachitsky10:21

      Okay. 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 it, how is this possible?

   5. JFJason Fried10:31

      We run a very different kind of business. So, uh, we are focused on, um, uh, on efficiency. Uh, we're not focused on growth. They're focused on growth. And so typically when you have a lot of people, you think you can do more things at once and you probably can, and you do more things at once and have different kind of offerings to different people and different tiers and salespeople and all the things that build up an organization. We don't have any salespeople. You know, we- we don't have, uh, 15 different versions of Basecamp, you know? We're not after enterprise. Uh, 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, you know? We don't have any of those things. We have one price basically... well, we have two prices on Basecamp, one price on HEY. Actually, two prices on HEY. Two basically. But one code base, one product we offer everybody and let's take Basecamp for example. Nobody can pay us more than 300 bucks. I don't care how big your company is.

   6. LRLenny Rachitsky11:33

      Wow.

   7. JFJason Fried11:33

      The most you can pay us is $299, you get unlimited users. And what that allows us to do is to just build one product, 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 d- 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- 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.... most of them are usually a couple of 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, and slow decision-making and indecision and complexity and, and all the things that come with, uh, trying to do too many things for too many people. Now the... all that said, we could still make the mistake of hiring hundreds of people because we could afford to do so. But to, to spend money because you have it on things you don't need I think is, is something that Silicon Valley's 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, small teams actually are where it's at and, 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 out for the big companies and have to have salespeople and have long sales cycles and whatnot. So I don't know. I mean, I, I wouldn't... honestly if you gave me 1000 people I wouldn't know what to do with them. We would, we would fall apart. 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, um, and it's, it's foreign to us.

   8. LRLenny Rachitsky13:39

      Okay. So I definitely want to talk about how you operate and your way of working 'cause it's really interesting and there's a lot, 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 shared that I love.

   9. JFJason Fried13:50

      Oh no. (laughs)

   10. LRLenny Rachitsky13:51

       Uh, (laughs) no.

   11. JFJason Fried13:52

       No. Good. No, that's good. Hey, if I said it, I said it. Let's go.

   12. LRLenny Rachitsky13:54

       No,

5. 13:55 – 17:08

   Defining success and goals

   1. LRLenny Rachitsky13:55

      they're awesome. They're great.

   2. JFJason Fried13:55

      Yeah.

   3. LRLenny Rachitsky13:56

      So around this idea of staying small, so one is, "Small is not just a stepping stone. Small is a great destination itself." Also, "If you think you're too small to be effective, you've never been in bed with a mosquito."

   4. JFJason Fried14:08

      Now, that's not my quote. That's someone else's, to be clear.

   5. LRLenny Rachitsky14:10

      Uh, okay. Okay. You popularized-

   6. JFJason Fried14:10

      It's a great quote though.

   7. LRLenny Rachitsky14:11

      ... it a bit. Okay, and then there's one more. "You don't need to outdo the competition. It's expensive and defensive. Underdo your competition. We need more simplicity and clarity." And I think a lot of these things point to, like, there's a few paths to success and goals for people. One is build like a massively scaled, everyone's using kind of product like Figma and Notion and build a venture scale, hundred billion dollar company. And then there's this path which is we're just gonna make a bunch of profit. We're gonna make individually. Like, we're gonna 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.

   8. JFJason Fried14:44

      Right.

   9. LRLenny Rachitsky14:45

      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.

   10. JFJason Fried14:53

       For me, you know, it's really about would I want to do this again. If the answer is yeah, like, that was enjoyable, I enjoyed that, that was worthwhile, I'm glad I did that, I'd like to do that again, then it was successful. Now, you could find... you could carve out some extremes there, like I'm sure, uh, someone who's addicted to, to drugs might go, you know, "That felt great. I should do that again." Like, so you got to be careful with that in a sense. Obviously I'm not talking about that. Addiction's a whole different story. But in general with this kind of stuff 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, I don't, I don't have different P&Ls for each product in a way where we're looking at them very carefully. It's like in total, collectively, are we making more money than we spend? And that's the only thing we ultimately look at. 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 w- what is the value of saying thank you to somebody? I, I mean would you want to AB test that and go like if it turned out that, that it was worse to say thank you to somebody would you not do that? Like, no, you would do it because it's still the right thing to do. So a lot of our things are like what feels right, what, what seems like the, the, the decent thing to do? Um, wh- you know, what, 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, uh, more worked than didn't worked... than didn't worked," then we're okay. That's kind of how we look at it. I've just never... like we don't have... we don't have financial goals. We don't have OKRs or KPIs. I don't have revenue targets. I don't have, uh, 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 if 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.

6. 17:08 – 20:11

   Playing “infinite games” in life

   1. JFJason Fried17:08

   2. LRLenny Rachitsky17:08

      You also have no investors. You have no board. You have no plans to go public. You have no plans to sell the business.

   3. JFJason Fried17:13

      Right.

   4. LRLenny Rachitsky17:14

      There's this book. I don't know-

   5. JFJason Fried17:15

      (sighs)

   6. LRLenny Rachitsky17:15

      ... if you've read this book called Finite & Infinite Games by Gert Westen.

   7. JFJason Fried17:18

      No, I've not. Mm-mm.

   8. LRLenny Rachitsky17:19

      Okay. I think this is... I think you would love it. 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 gonna build a business and sell it or I'm gonna 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.

   9. JFJason Fried17:45

      I like that. And you know what's interesting is I've always thought of my career this way. So when I got my first job I was 13. Um, w- worked in a grocery store for a bit and then I worked in a shoe store and after that, um, I... like maybe when I was 15 I got a reseller's license which was this thing you could... you could, uh... this was way back in the day. There was a co- I think there's... they still exist, a co- company called Ingram Micro D 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 2X wholesale. And even though I'm not selling electronics equipment today, I'm selling software instead, I feel like I have the exact same job as I did when I was 15, that this is a long continuum of finding stuff that I like. In this case, today, it's building things that I like and selling them to like-minded people who also would find them useful or like those things too. So whether or not it's software or electronics or, 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 wanna 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 there's... you can get a job or you can be an entrepreneur. Well, an entrepreneur is a job. And (laughs) like I wanna... This is my job, and so I wanna create the company that I wanna work at, and I wanna keep doing this job for as long as I can, uh, as long as I'm, I'm useful, I'm, I'm good at it, I enjoy it, I wanna keep doing that. And so to, to, 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 gonna get a big paycheck maybe, but you gotta stop doing what you're doing because we're gonna sell this business and you're gonna have to work for this other company for two years and do their thing, and then eventually after that's over, you'll leave and you'll go start another thing. Like that just, uh, 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 that happens to be, of course, what it is, but it could be something else, uh, as well. And, 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, in this all-terrain vehicle, which can kinda go anywhere on road, off-road, whatever, uh, and, and, and you can kinda get anywhere you need to go. And that's sort of what's really, I think quite fun about the kind of business

7. 20:11 – 22:13

   Starting a business vs. staying in business

   1. JFJason Fried20:11

      we have.

   2. LRLenny Rachitsky20:12

      You know this term you hold, uh, instead of a startup, it's a stay-up.

   3. JFJason Fried20:15

      Yes. I'm so sick of the startups. (laughs) I mean like it's cool to start a business obviously, but I'm sick of the like... that term dominating because frankly, uh, starting a business is actually way easier than staying in business. Now, i- none of it's easy. So I wanna like be supportive of people who are starting businesses, but just they should know that that's actually not the hard part. I mean, literally tomorrow I can start a new business. You can come up with a name and you can make a thing and you can put it in the App Store and you can sell it for two bucks and like you got a business going, right? But, you know, are you gonna be there in two years? Are you gonna be there in five years when competition rushes in, when you have employees, like are you gonna be there? Staying is harder than starting. And so I'm here to celebrate stay-ups. Plenty of other people are here to celebrate startups.

   4. LRLenny Rachitsky21:01

      I feel the same way with the, with... I always say this about newsletters and it's also true for podcasts. Easy to start a newsletter, hard to keep it going.

   5. JFJason Fried21:07

      Totally. Yeah. I mean you... I've seen your newsletter kind of, you know, fly, right? And, and we, 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 to build a podcast audience. It's hard to build a newsletter audience. So yeah, starting something is really easy, but then you're gonna end up in this most people end up in this plateau area 'cause they get enou- uh, uh, some initial growth, the word gets out, whatever, and they end up with like a 6,000 somethings and then you're like kinda like stuck there. And then it's like, "Well, do you wanna keep doing this or are you just high on the growth or do you actually like the thing?" And, uh, you've gotta... If you wanna do the thing for a long period of time, you gotta like the thing because you're gonna have to, you know, endure these moments of plateaus, which is, uh, 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 profit's different every year and sometimes it's more and sometimes it's less. And sometimes our margin is more and sometimes it's less. You know, if you compare yourself to the previous year, you can kinda like get demoralized to some degree. But like I just kinda like, "What do we wanna keep doing?" And then, and then, uh, we're, we're in it to stay in it.

8. 22:13 – 27:28

   Lessons from 25 years in business

   1. JFJason Fried22:13

   2. LRLenny Rachitsky22:13

      Speaking of enduring, you've been at this for 25, almost 25 years now, I believe.

   3. JFJason Fried22:18

      Yeah.

   4. LRLenny Rachitsky22:19

      Have, have there, have there been periods where... (laughs) I like that sigh that you just had there.

   5. JFJason Fried22:23

      (laughs) It's, it's a long time.

   6. LRLenny Rachitsky22:25

      So maybe along that path, one, is there a point at which maybe you started going off track and you realized, "This is not what I want to be doing. Why did I do this to myself?" And then two is just, I don't know, what have you learned being at this for this long?

   7. JFJason Fried22:36

      I would say over the past few years I've had more thoughts of like, "How long should I do this for?" Um, and I, I go back and forth. I can tell you what's interesting is like right now I'm probably more excited than I've been in many years, but a year ago I was not so excited. And I think that, uh, after you've been doing this for a while, you do tend to just sort of compare like, "What was it like in the early days and what's it like now? And all the new things that are harder or weren't harder before and now they're hard today. And like, do I like doing this kind of hard work or would I rather do..." Uh, you just kind of amass this history and so you, 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, you, you reminisce, I should say, o- of, a- and you go, "Oh, it was so much easier when we were 20 people. Yeah. But we weren't doing this and times were different and you can't go back anyway and whatever." But you know, there... it's interesting. Like next year I'll be 50, we'll be 25 years in the business or I'll... you know, we'll be doing this 25 years. I'll have been running this company for 25 years. Like part of me thinks like, "Is that enough?" Like is... maybe that's enough. But right now I'm really excited about what we're doing. We're, you know, doing some really great product work, probably the best we've done in many, many years launching this new thing called Once, um, which hopefully we're gonna build three or so products next year under that category. Uh, I would like to write another book. We finally have another idea for another book. Uh, 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, I'm getting energy from the business. There are times in the past where the, the business sapped energy from me. And if it saps too much, at some point you start to think, "Is it worth it? Do I wanna keep doing this?" Right now I'm, I'm fueled again by it, but I don't know what it'll be like in a year from now. I, I really don't know. And I, I think I'm more conscious of that than I've ever been given how long I've been doing this. And also like f-I always have this strange fantasy. I'm always curious, like what would someone else do with this place?

   8. LRLenny Rachitsky24:27

      Mm-hmm.

   9. JFJason Fried24:27

      Like what if someone else could just step in tomorrow, how would they run it? You know? No one's ever had a chance to run it but me. Like what would they do differently? I'd have to be 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. (laughs) But, but still curious. It's always in the back of my head.

   10. LRLenny Rachitsky24:48

       What do you think they'd do?

   11. JFJason Fried24:50

       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, um, and stuck sounds like a negative term but I don't mean it that way. But we're, we're stuck in a certain groove. Like we do things the way we do things, we change the way we do things here and there but we're not really jumping into a new groove. So I th- 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. Uh, probably spend a lot on e- a lot on advertising, a lot on 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?

   12. LRLenny Rachitsky25:29

       Mm-hmm.

   13. JFJason Fried25:29

       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 got this brand and people know about you, and you got 100,000 paying customers, like 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 else would come in and think about the things we could do. I'm thinking about the things we are doing. And, uh, with a little bit of a, a, 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, there could be a, a second reality running right alongside you truly, not like an A/B test which is hard to do, with, you can't really A/B test an entire company. Obvis- obviously you can A/B test small things but it'd be kind of cool if that was something that could happen. Maybe there's some simulation down the road where-

   14. LRLenny Rachitsky26:16

       I was just thinking-

   15. JFJason Fried26:16

       ... that's a possibility, yeah.

   16. LRLenny Rachitsky26:17

       ... maybe we're in the simulation variant where, uh, you're still running it.

   17. JFJason Fried26:20

       (laughs) Could be.

   18. LRLenny Rachitsky26:21

       And there's, and there's another... That's a cool exercise actually, just to think about. If I were to bring in a new f- leader, what would they do? And just as a thought exercise.

   19. JFJason Fried26:27

       This is a, a weird way to think about it, but I almost would be sort of embarrassed by what someone would come in and look at and go, "Oh my God, you guys are missing so many opportunities here." And I'd be like, "Yeah, I know. I know we are." Um, but I'm totally fine with it. (laughs) But, but there'd be like this moment of judgment and re- (laughs) and reckoning with like, "Do you realize how much you're leaving 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 that, and address this market, and you could have special versions of Basecamp. Wow, if churches are using Basecamp, we could do a special version for churches, and for, you know, synagogues and religious institutions, or, or education and, or, or nonprofits. 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 could see someone else going, "There's a huge opportunity here. We gotta pursue this." And, you know, I'd be really proud if someone did that and, like, made the business bigger and better. Uh, and, and my guy could never have done that. I'm glad someone else did that. Um, but right now, uh, we're running it our way.

9. 27:28 – 30:30

   Venture scale vs. bootstrapping

   1. JFJason Fried27:29

   2. LRLenny Rachitsky27:29

      Coming back to this as a path people can take with their business versus a traditional venture scale business, so th- this, uh, 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?

   3. JFJason Fried27:59

      I'm glad there are some people who do that. I mean, I'm glad that there's some businesses and, uh, that, that wouldn't have worked out had they not taken a bunch of funding and went big clearly. And, 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 'em a penny and they, they, they, they open up a shop somewhere, they, they do something, they put their shingle out and they, you know, s- 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, we're not. We're actually incredibly boring and mainstream really, you know? If you were to pick any random business owner on the street, they'd run their business like us. "I gotta make more money than I spend, otherwise I'm out." (laughs) I don't have this big cushion of millions sitting in the bank that I can just spend on things. So they're, they're pretty, uh, they keep an eye on costs, they think about this carefully. But yeah, I'm glad there's people who are going for the moon shot and doing it their way and doing it a different way and, and, and the world moves forward sometimes because of those businesses and s- 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 wanna get across is I'm not really... Hopefully I don't come off as 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, um, 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 you can land as a business. Um, so my interest is like e- 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 gonna be successful or happy. Like I, I, those odds aren't really, uh, in anyone's favor, even though of course some people win the lottery. And I'm not saying it's luck. There is luck, a lot of luck, including we're lucky that we made it. Um, so there is a degree of that when I say lottery, but really, uh, uh, the point is, 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.

10. 30:30 – 33:19

    Choosing the right path for your business

    1. LRLenny Rachitsky30:30

       Just to close this thought around whether if you have an idea, going the venture route makes sense. What do venture scale companies need to achieve? What do investors look for, for that to even work out? To your point, it almost never works out. What is it you have to do for it to feel like, okay, this is a venture scale idea? Versus, this is an awesome idea, we could just make money every year, every month from it and not raise money and it'll... life will be great.

    2. JFJason Fried30:54

       I'm probably the wrong person to ask, but I mean like I would say like there are versions of our... Let- let's just take Monday, for example, right? It's not... Basecamp 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, 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 Basecamp could be, 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 on that z- 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, and we do it a different way. So I don't, 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, uh, to, 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 gonna take money to get there. Same thing with Uber. Uber's another example, right? Right? And these are easy to pick, but they're great examples really. Like, you know, when Uber was getting started and they, they had to proliferate all over the country to begin with and all over the world. So it was this reliable thing you could think of just like you would think of a cab. If I went to New York or Chicago, I knew there'd be a cab. Was there gonna be an Uber? I don't know. Well, you have to know that there's gonna be one to begin to trust us. 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-backed 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 is a physical product. Basecamp, Monday, Asana, they're available everywhere instantly anyway. I don't know what you need the money for other than marketing.

    3. LRLenny Rachitsky33:11

       (laughs)

    4. JFJason Fried33:11

       And it's interesting 'cause marketing's losing them a lot of money. So it's an interesting thing. But anyway, you can talk to them about that.

    5. LRLenny Rachitsky33:18

       (laughs)

11. 33:19 – 37:59

    The “Shape Up” framework

    1. LRLenny Rachitsky33:19

       I wanna start chatting about your ways of working, how you operate at 37Signals.

    2. JFJason Fried33:24

       Mm-hmm.

    3. LRLenny Rachitsky33:24

       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?

    4. JFJason Fried33:36

       Yeah. So we have a, a framework, development framework we invented called Shape Up!. And if you go to basecamp.com/shapeup, you can read the book. It's free. You can also get a print version if you want. Shape Up! is our methodology for, 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, 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 gonna 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. Like, I'm only willing to spend six weeks on 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. Some things we're 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, uh, two people max, and then, uh, you know, th- there's a lot of other details and I could go on for an hour about Shape Up!. People can read about it. But it's those fundamental principles, uh, 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 a s- like a spec. We don't create to-dos or tasks or, or tickets for people. They create the work that needs to get done to fulfill the idea that we've written up and designed essentially, and they figure out how to do it and then we trade. So like they might get into something that we've said we have about six weeks... Well, we're only gonna get the six weeks and two weeks in they go, "We actually stumbled into something we didn't realize. Like this is probably not gonna be able to be done the- the way we thought. So can we do it this way?" And then we have a discussion and, 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. Uh, there's all the trade-offs we're always thinking about. Uh, so all these things that, that they come to, 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, because if it keeps... I- if we say we're gonna give it six weeks and we give it seven or eight or nine or 10, like then we're not really giving it six weeks, we're giving it 10, then we don't really have a system. There are times though 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, work actual-, a project's more like a hill. It's not like a, a linear line, right? If you're on the left side of the hill, it means you're still pushing this thing up the hill, you're still trying to figure out how to do this. But once work gets to the top, it's downhill from there. It's, like, just pure execution and we know how to nail it. So if we're, like, almost at the bottom of a 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 gonna do it, and we're at our time limit, it almost certainly dies. So there are some contextual 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 wanna leave their job. So the, the, 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." 'Cause sometimes you're gonna 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 gonna see but needs to be done. But you'll know that, 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 gonna take nine months and you're on, you're on week four and you're like, "I hate this." Bad. So we wanna stay away from that sort of

12. 37:59 – 39:56

    The drawback of promises

    1. JFJason Fried37:59

       thing.

    2. LRLenny Rachitsky38:00

       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."

    3. JFJason Fried38:09

       Yes.

    4. LRLenny Rachitsky38:09

       I love these.

    5. JFJason Fried38:10

       Yeah.

    6. LRLenny Rachitsky38:11

       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 all put into this is fixed and we will not go beyond this 'cause the impact we expect from this is pretty clear. And if we get clo- 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?

    7. JFJason Fried38:42

       Well, let me talk about promises for a second. Promises are the downfall of every business. (laughs) Like, e- 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've, it's almost like it would've been out in time, but the fact that we promised it made it not deliver in time. Um, there's some strange thing that happens when you promise things. So, uh, I just, we've, we've learned to not promise anything. We can share what we're working on if we want to, we can tell people we're doing something. Uh, and by the way, the worst promise, and by the way, we've, we've made a couple of these recently and we always regret them, is like, "By the end of the year." That's like the, that's the one promise you gotta be very careful of 'cause 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, ugh, red flag. Just remind your- whenever you say that to 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. So as far as other companies, uh, 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. Eh, but it's a struggle, it's hard. It's hard to change the way you work.

13. 39:56 – 41:36

    Adopting a new way of working

    1. JFJason Fried39:56

       Uh, I think 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, (laughs) basically. You kinda 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, 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, 'cause it's probably not gonna work very well the first time, just like if I gave you a guitar you never played before, it'd be unreasonable for me to expect you to play well. You're gonna 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, uh, to, to take the criticality out because what ends up happening is, is that when people try to try something new on something really critical and it doesn't work, they will never try it again. They've just, like, it, 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've gone, "We could've done it our old way. Our old way worked. I mean, it's kinda sucked but it worked." And so now you're comparing, you know, two things that aren't really comparable but you're always gonna go with the momentum that you had versus the new thing, and so you gotta be careful with that. So I know, I'm rambling a bit on it, but that's, that's my general sense a- a- and feel on, uh, on how to adopt a different way of working.

14. 41:36 – 43:53

    The two-week cooldown

    1. JFJason Fried41:36

    2. LRLenny Rachitsky41:36

       There's also this cool down period after one of these-

    3. JFJason Fried41:40

       Yes.

    4. LRLenny Rachitsky41:40

       ... what do you call these? A, a sprint or what's the term for it?

    5. JFJason Fried41:42

       No. I hate that term.

    6. LRLenny Rachitsky41:43

       (laughs) Okay.

    7. JFJason Fried41:43

       Um, (laughs) I don't like the word sprint because w- how do you feel after a sprint? Exhausted. You sh-

    8. LRLenny Rachitsky41:48

       But also pretty good, you know? It's like there's a high-

    9. JFJason Fried41:50

       You can.

    10. LRLenny Rachitsky41:51

        Yeah.

    11. JFJason Fried41:51

        Yeah, yeah. I, it's funny 'cause I wa- I was a sprinter, uh, in, in high school so I lo- I love sprinting. But you're, if you go all out-

    12. LRLenny Rachitsky41:58

        Yeah.

    13. JFJason Fried41:58

        ... you might feel a high for a minute, but you can't go all out again.

    14. LRLenny Rachitsky42:01

        Mm-hmm.

    15. JFJason Fried42:02

        You've gotta, like, you know, really catch your breath. And you certainly, like, to sprint, I remember, like, my track coach, I actually ran, 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. And it's, like, that, that's kinda what work is for a lot of people. It's like 20 200s. It's like they have these sprints and they never seem to end and there's one sprint after the other, after the other, after the other, after the other, and that's why I don't like the word because you can't layer that back to back to back to back. You cannot sprint back to back to back to back in life, and you can't do it at work.... 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 cooldown. So we call these cycles, not sprints. Uh, a two-week cooldown, and we call them cycles because cycles happen again, and again, and again. Sprints like start and end. Cycles happen, like there's cycles in life, um, and seasons. And, and I like that idea, that you're prepared for this thing to happen again. Take two weeks cooldown, that's when people can sort of internally freelance. They're still working, but they're kind of tightening up a couple things maybe we just shipped or working on a couple extra days on something that didn't ship that's gonna ship in two days, or, 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 cycle's projects and finalizing that, writing the pitches up for that. So that's what those cycles are for. It's not that you're stopping work, 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.

15. 43:53 – 46:41

    Trusting intuition and gut

    1. JFJason Fried43:54

    2. LRLenny Rachitsky43:54

       You mentioned also that you have no growth goals, that you make decisions a lot on instinct and gut and opinion. Which, which sounds amazing, it's great if you could pull it off. Feels also very hard to operationalize and maybe make the best decisions a- in times. Could you just talk about how you actually operationalize that and what you find happens when you approach things that way?

    3. JFJason Fried44:15

       I will just admit that that's the only way I've ever known how to work.

    4. LRLenny Rachitsky44:17

       Mm-hmm. (laughs)

    5. JFJason Fried44:17

       I, I don't, I don't know how to make decisions by numbers, uh, or I don't find any joy in it, frankly. I've always been intuition-driven and gut-driven, and frankly, to be honest, I think everyone actually is. And this is part of a 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, um, all sorts of things can play a part, but unless you're let- letting a machine make the decision, that's purely rational, if you're asking a human to make it, it's a judgment call. They're bringing to bear thousands of things they know and don't know about, that influence them about this t- particular decision. And it's why, like, when companies hire executives, what are they looking for in an executive? The typical, uh, judgment and experience. They're not like, "They can read an Excel spreadsheet." That's not the, that's not the, the thing that matters. Like, anyone can read that, or anyone can read a chart, or you can learn to do that. They're looking for judgment and experience, which is a very, uh, a- 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 gonna bring those 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, uh, people should recognize that it's n- 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 always looked at it, and I also will admit, I d- like, as, 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, uh, give your intuition credit, give your gut credit. It's absorbed everything, uh, and, uh, and plus the things that, that you don't know it absorbed that are valuable.

16. 46:41 – 49:44

    Creating a gut-driven culture

    1. JFJason Fried46:41

    2. LRLenny Rachitsky46:42

       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?

    3. JFJason Fried46:54

       Yeah. I mean, y- you're right, by the way. It is, it's e- it's easy for me to sit up here and say this. Like, I own the place, no one can fire me. Like, I get it, right? I can be wrong all the time, go, "My gut just told me to do this," and, you know, I understand. I, I, I do. I'm, I, I'm self-aware enough to, to understand that. Um, but, but I think that by demonstrating that's how we make decisions, uh, it, it, 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, I don't really know. It just, it 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, we say, we say, "What do you think?" We don't say, "What do you know?" We often say, "What do you think?" We might say, "What do you know?" But we also say, "What do you think?" more t- And what does that mean? Like, what do you think is, is like, I don't, I don't know where these thoughts come from and I don't know what, what forms them. So I think it's interesting to look at the things we say and go, we actually do a- want people to think and, and so I'll often say, "What do you think?" Or, "What do you feel?" Or, "How does this feel?" Is something we talk m- 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, uh, while we have a logical side to us and a rational side to us, we're primarily feeling creatures, uh, even if we don't want to 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, uh, opinion. And I, we almost never, sometimes we look at numbers to, to sort of-... be an input. But it's never like, prove that. I'll never say like, justify that. I, that's just not terminology or lingo that we ever, we ever bring up. It's n- it's not a, it's not a way. Uh, it's, it's, it's, it's how do you feel? It's not like, how certain are you? We, we don't, I, I try to tend to, to shy away from anything that's about certainty. Uh, we're not after certainty. Uh, I wanna know how you think it feels. So anyway, I'm rambling again. But, but this is, this is, I'm rambling 'cause this is actually how things go. When we talk, there is a lot of this, y- i- it's not precise in a sense. Uh, it, it eventually becomes precise when it's out in the world. But the thought process is, is very, uh, rambling and very amorphous. And you kind of find your way as you go and eventually go, yeah, yeah, yeah, that, that's it. That's it. That, that feels right.

17. 49:44 – 56:19

    What Jason looks for in new hires

    1. JFJason Fried49:45

    2. LRLenny Rachitsky49:45

       This kind of advice comes up a lot actually on this podcast, 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 is, works from your own experience using the product from your own life experience. But this came up with Brians, Brian Chesky's episode. A lot of people, like he's running the company, he's telling everyone basically, here's what we're building. A lot of people said, okay, that'd be great if our CEO was also a designer, very product-minded person. Many people aren't that, many people don't have actual, like 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, 'cause not everyone's gonna have the right instinct.

    3. JFJason Fried50:33

       It's true. I mean, look, um, Brian's probably one of the greatest CEOs around today, but, uh, I, I, I can't, I like, I like small businesses. So he knows how to run a bigger organization. I, I wouldn't. So I don't know. 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, and when we hire, we can be very, very selective 'cause we only hire a few people a year. And so when we, when I, when I, 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, I'm curious about their tastes. I'm curious about what they like. I'm curious about what other products they think are, are, are good. I'm curious about what they've seen that they admire or who they, like I'm always asking about that because that help, that helps me get a sense of who they are and h- what lens they see the world through and, and how, what, what kind of, um, influences they're going to bring to bear. So that's the kind of stuff I'm looking for. And, and one of the things that we do, uh, during the interview process for designers specifically and product people, w- which is the same thing in my mind, is, uh, they do a project for us at the end. So the last like five finalists will do a project for them, for us. We'll pay them to do the project. They'll have a week to do it, they'll do it. And then 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 wanna see where people go with that. Eh, to me that is where you can see they don't have any time to think. So like where do, where does their gut go? What, what are their instincts? W- where do they, where do they arrive after having to riff on the spot with something? So what's behind what they built? 'Cause what they built should just be some of what they had in mind. It shouldn't be like everything. Not now they're like exhausted of, 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, and think it through and, and w- but I'm still looking for people who, who just their gut is filled with ideas. And so it doesn't always translate. But that's how I try to suss out whether or not someone has a good gut instinct on, on where to go and it almost doesn't, doesn't necessarily even matter where they go with it because this is raw, just raw gut. But I wanna 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 are like, yeah, I've got some other ideas and we could try this and we could try this. And I kinda play with this idea and I don't know, you know, a- actually now that I'm thinking about it, maybe we try, 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, and that resonance, like the two wavelengths are just perfectly vibrating together, then I know we have something. So that's the kind of stuff I'm looking for when I hire people. And I do think that that translates to people with a better gut feel than someone who's more of a, let's call it a, like an academic, uh, product person, uh, which, which can be very, uh, very fine other places, but it wouldn't really work here.

    4. LRLenny Rachitsky53:46

       That's really great advice for someone looking for someone that has a good instinct and gut. And I think it's interesting 'cause that's often the opposite. What you described is what many people don't want, someone with just a ton of ideas 'cause a lot of companies, a lot of leaders are like, we got plenty of ideas. We just need you to help us ship stuff.

    5. JFJason Fried54:01

       Can I, can I dr- 'cause I think that-

    6. LRLenny Rachitsky54:02

       Please.

    7. JFJason Fried54:02

       ... I don't want that either. So I don't want just ideas. So they have to make something that's clear. First of all, it has to be good and clear. And then they also have to be able to riff on the spot and think about how else they could take this. And so they can't, like we've had some people who were just like so scatterbrained and, and like they've got a million ideas, but when we ask them to execute something for this project, it was a total mess. You could 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? So that's the kind of stuff that I think ultimately like i- is the meat of it. Like, ah. And so I always think of it in terms of play. You know, if this is, this is play. I wanna play...... with this product. I want to play with this design. I want to play with this idea. It's play. And you've got, you know, play is, is a thing. It's a very clear thing versus like a, a rigid, uh, boring, uh, a- approach to product development, which can, again, can be successful but it wouldn't work at our company.

    8. LRLenny Rachitsky55:12

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18. 56:19 – 1:00:06

    Advice on making changes and adapting

    1. LRLenny Rachitsky56:19

       Okay. So we had some questions come in from the audience when we were preparing for this. We both tweeted to see what people wanted to ask. We... I have two that I picked out. One is from, uh, Matt Mullenweg. How cool is that?

    2. JFJason Fried56:29

       Oh my God.

    3. LRLenny Rachitsky56:30

       And I think you may have seen this question, but the question is, what is a spectacular failure of someone trying to follow your advice and failing? When it doesn't stick, what is the reason?

    4. JFJason Fried56:40

       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, uh, they come back six weeks later like, "This sucks. This doesn't work." I'm like, "I'm not surprised to hear that." Like, "Tell me, (laughs) 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, uh, y- you, you just, you can't really do that. Y- you can't turn on a dime. There's this thing called momentum. I always try to think of things in terms of like the physical world. Like, the more massive an object, the more energy it takes to change its direction. This is why big companies move slowly. This is also why momentum, uh, which is like the way you've been working for four years, is going to power you forward in a certain way. It's very hard to turn the corner immediately or turn around. You just cannot do it physically. If you can't do it physically, you can't do it this way. So, so I think that's what I've seen is like these, these rapid, like, "All right. Starting tomorrow, we're starting to shape up." It's like, well, no. Y- you're not. It's not gonna work. Unless you say we're gonna 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 just is. 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, it, it's, it's, there's a million reasons why and it's always hard to pin it down. But... And so it's, so, and it, we can all look back. This is why, by the way, I don't, I don't like to look back on, on things. Uh, 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 gonna 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. So just like we don't know, really know why you make decisions, 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 they're 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 where there's a million different inputs and a million different people and, 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, um, is a primary reason.

    5. LRLenny Rachitsky59:13

       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 don't, they're not obsessed with growth. You've seen Shape Up! implemented at traditional public tech companies?

    6. JFJason Fried59:27

       Yeah, it's usually smaller teams, so it's not like, you know, Airbnb. Brian's not gonna go, "Okay, tomorrow we're following this thing that these guys over at 37Signals came up with." But it's typically small teams, uh, inside larger companies that experiment with this and sometimes it, 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, of, of appetites versus estimates and they-

    7. LRLenny Rachitsky1:00:01

       Mm-hmm.

    8. JFJason Fried1:00:01

       ... can work that into the way they work, you know. Take, take whatever works. You don't have to go wholesale

19. 1:00:06 – 1:02:33

    What Jason has changed his mind about

    1. JFJason Fried1:00:06

       on any of these things.

    2. LRLenny Rachitsky1:00:07

       Awesome. Second question comes from Leo Polyovts, one of my favorite VCs. He works at Susa Ventures. And he asked the question a lot of people actually asked is just, what does he think he got right and where has he changed his mind if anywhere? You share a lot of-

    3. JFJason Fried1:00:21

       Hmm.

    4. LRLenny Rachitsky1:00:22

       ... strong opinions, very contrarian opinions. So maybe just mostly on that second part is what I'm most curious about. What have you changed your mind about?

    5. JFJason Fried1:00:29

       A few years... Well, a handful of years ago, we switched back to... We used to make multiple products then we went to just doing Basecamp. And I thought I would be personally satisfied for the rest of my career working on one thing, uh, and just making that thing the best it could possibly be. Essentially working on one sculpture and constantly tweaking it and chiseling it and just polishing it and just making it better and better and better and better and better. And I still thoroughly enjoy working on Basecamp, but a few years ago we built this new thing called Hey, H-E-Y dot 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, like, had multiple products. We basically wound those down. We didn't ever close them down. People can still use them who were using them before. We just stopped selling them. We even changed the name of the business from 37 Signals to Basecamp. So we've changed, like, we're signaling all through. Like, we're doing one thing. It's just this thing called Basecamp. That's a huge, massive decision to make. And so we were all in on it. And then a few years ago, we go, "Eh, you know what? We're makers. Let's be honest about ourselves." And I'm talking about me and I was talking about David. Uh, but we're just like, "You know, we wanna make more things again. We have some more ideas. And why are we holding, why are we suppressing ourselves? Let's not do that." And so we, we made HEY and now we're doing Once and gonna make more products, and more products, and more products. We're gonna probably do another book, as I mentioned earlier. So, so it was that. I think that's the biggest major fundamental 180 degree change that I've changed my mind on. But I change 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 something out, or how I'm gonna 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, "Ah, I would probably have answered it differently." Like, eh, 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.

20. 1:02:33 – 1:06:43

    Planning in 6-week stretches and figuring it out as you go

    1. JFJason Fried1:02:33

    2. LRLenny Rachitsky1:02:33

       It's clear that you've designed your life and designed your business in this very intentional way. 'Cause the default path, and I'll kind of reference this back to this other podcast episode, the default path is build a company, raise a bunch of money, build massive business, generate a lot of revenue, exit, try something else. And you've done, done something very different. You built a company-

    3. JFJason Fried1:02:53

       Can I just speak up to that though? Because-

    4. LRLenny Rachitsky1:02:54

       Please.

    5. JFJason Fried1:02:55

       ... like, this is The Pathless Path stuff. Is this kind of what that was?

    6. LRLenny Rachitsky1:02:58

       Yeah, that's true.

    7. JFJason Fried1:02:58

       Yeah, so, so I'm moderately familiar with that idea. I didn't listen to that, that podcast, but I saw some clips.

    8. LRLenny Rachitsky1:03:05

       Yeah.

    9. JFJason Fried1:03:05

       So I find it interesting because, you know, like, you know, 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, and, and tur- 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 quar- like, we think about everything we're gonna do every six weeks. Every six weeks, we rethink what we're gonna do next. So we're very much an in-the-now company, making it up as we go. And this is true for me personally, my career, the whole thing. I didn't have any of this planned out. I didn't decide I wanted to be like this or like that. I just figure out what works and keep doing that until it doesn't, and then maybe we do something else. But it's very much, uh, 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 so- we're going somewhere. I don't wanna 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 trade-offs are. But really, it's, it's figuring out as we go. And I'm, I, I think frankly it's the best way to run a business. I, I think it's, 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 gonna be wrong or you're gonna wanna 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 wanna do because they said they were gonna do them. Obligations in the future I think are quite dangerous, uh, and, and I think they send people down a path of, of unhappiness actually. So I think just staying closer to now is probably the best way to do it.

    10. LRLenny Rachitsky1:05:04

        And a lot of this trickles down from the biggest decision you made, which is don't raise money, keep control of this business, this is, you're the boss. There's no boss above you.

    11. JFJason Fried1:05:13

        Yeah, the independence. Like, if you go to 37signals.com, there's 37 ideas. And the first one, there's a 00 which is Start Here, which is like a readme. But the 01 is Independence. Independence is the root of all the things we're able to do, and we did make that a dis- intentional decision. We didn't know all, you know, all the tentacles that come up from that and what it's gonna impact and touch. But we knew, uh, principally that, like, we wanna be able to do what we wanna do. We're, we wanna 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, I do understand why some companies do it, but I don't understand why a lot of people do it, uh, who probably shouldn't do it. I, I think staying independent is a, is a wonderfully, uh, fulfilling, uh, 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 gonna happen. Like, we launched Basecamp. I didn't know what was gonna hap- We launched HEY, I didn't know what was gonna happen. We're gonna launch some new stuff soon. I don't know what's gonna happen. We don't say like, "If this gets 20,000 users, then it is succe-" I, I don't know. We don't care. It doesn't even matter. We're making it anyway and we're gonna see what's gonna 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 could be.

21. 1:06:43 – 1:09:05

    Being proud of the work you do

    1. JFJason Fried1:06:43

    2. LRLenny Rachitsky1:06:43

       Just to push back-

    3. JFJason Fried1:06:44

       Yeah.

    4. LRLenny Rachitsky1:06:44

       ... I imagine there are expectations of like, "I hope this works out. I hope people adopt it. I hope it becomes the best email client in town." Right? There's, like, a sense of like, "We want this to succeed."

    5. JFJason Fried1:06:53

       That's pride though. Like, that's-

    6. LRLenny Rachitsky1:06:55

       Mm-hmm.

    7. JFJason Fried1:06:55

       That's a matter of like, w- we wanna be proud of the work that we did. We really hope people like it, and we wanna keep doing it. That's something that, that's a sense of, of, of caring about the work itself. It's not so much about the, 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 wanna find enough people who like it to make it sustainable. But I don't have them in mind. I mean, this is gonna sound selfish, but I have me in mind first because if I'm not in my, if I'm not for me first, it's hard to be for someone else. So I'm, I'm for us. We wanna make things that we're proud of, that we think are really good, that are unique, that bring something new to the world that doesn't exist, otherwise there's no point in doing it, that take a, that, that bring a different perspective that only we can provide because we, everyone has their own. And we wanna make sure ours is very visible i- 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, they should be there. We should, they, we should provide alternatives. As I said earlier, I don't like the word competition 'cause it almost sounds like you could b- be making the same thing. I wanna provide- provide an alternative which is a different approach, a different way forward. It could be in pricing, it could be in, in, in, in, in the way something works. It could be in the flows in the thing. It could be the entire, uh, conception of the thing, but it should be an alternative. If it's not an alternative, it doesn't need to exist. So anyway, that's, that- 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 'cause it needs to, otherwise we can't stay in business. But really it's like are we proud of it first? Like, we're, we're wrapping up the HEY calendar right now, which is the calendar we're building for our HEY email service. I'm really proud of it. I have no idea what's gonna happen. It's very unusual. But I'm really proud of the work that we did and that's enough for me. I think it's gonna do well. I don't know though. And it doesn't really make any sense to wonder if it will or not. (laughs) It just, it 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 in the world that we think should be here. Whether or not people agree is up to them.

Episode duration: 1:49:38