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My First MillionThe Cashflow King: “Here’s How I Do It”, Negotiating w/ Jeff Bezos, Elon’s Cracked Rocket
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CHAPTERS
- 0:00 – 3:21
Intro: The Self-Funded Cash Cow and Jason's Homes
Shaan introduces Jason Fried and 37signals, a self-funded company that makes tens of millions in profit a year, and lays out the three questions for the episode. The hosts then tease Jason about his publicly reported home purchases, which he says he tried to hide.
- •37signals is run with no goals, four-day summer weeks and little marketing
- •The only number the company has shared is tens of millions in annual profit
- •Three topics: building the cashflow company, negotiating with Jeff Bezos, and founder-letter launches
- •Jason says his home purchases got out despite his efforts to hide them, and he likes architecture, houses and land
- 3:21 – 11:21
Why Long-Term Planning and Goals Are a Fantasy
Jason explains why he avoids long-term plans and goals, preferring to do what he thinks now over what he thought months ago. The only company target is to be profitable in a given year, which has held for 25 years, and he describes running the business by feel with low costs and a diverse customer base.
- •Long-term planning locks you into what you thought, not what you think
- •The company thinks in six-week increments and adjusts constantly
- •The only goal is to make more money than it spends in a year
- •Jason's six-minute-mile analogy: ask whether the run was worth it, not whether you hit an arbitrary number
- •Low costs and over 100,000 paying customers let things be sloppy in a good way
- 11:21 – 14:12
Wandering Before Committing: Six Weeks and Time-Boxing
Responding to Shaan's description of a six-week sprint process, Jason says new products can get six months of exploration first, and only then are they broken into six-week chunks. He tells how HEY grew out of a rethink of the HiRise CRM, and why independence and profitability leave room to explore.
- •New ideas may get about six months of wandering, and giving up is fine
- •HEY began as a rethink of the HiRise CRM and turned into an email system
- •The team builds the UI first, then makes it work
- •Profitability, no investors and no board allow exploration
- •After the exploration phase, work is time-boxed so the product gets finished
- 14:12 – 16:05
Saying No as a Precision Instrument
Shaan quotes Jason's idea that no is a precise tool and yes is a blunt one. Jason expands on it, saying a yes forces many nos, so you should commit and get to market quickly, and he notes that the company now launches new products only every few years.
- •No evaluates one thing while leaving every other option open
- •Yes is a blunt instrument because it forces nos to other opportunities
- •The longer you spend on a yes, the more nos you are throwing off
- •Get to market fast because the market will say whether it's good
- •Basecamp launched in 2004 and other products followed yearly, but now new products come every few years
- 16:05 – 23:58
Selling We Work Remotely and the Value of Timing and Luck
The hosts ask whether Jason regrets selling the We Work Remotely job board to Andrew Wilkinson. Jason says it was sold while the company consolidated around Basecamp and it was the easiest money they made. The talk widens into luck, timing, and why he wants to keep the business rather than start again at 50.
- •The job board was built in two weeks and made about 30 grand a month with almost no work
- •It was sold when the company was consolidating around Basecamp
- •Jason says the company only shares that it makes tens of millions in profit, and profit is measured on a GAAP basis
- •He credits timing, luck and market conditions and doesn't think he could launch it again today
- •Sam shares his own fear and failure after selling his company
- •Jason is turning 50, doesn't have the stamina to start another business, and says one founder leaving would mean selling
- 23:58 – 27:14
Turning Down Offers, Except Jeff Bezos in 2006
After Shaan's Zuckerberg story, Jason says he never entertains acquisition offers and has a default no. The one exception was a secondary sale of shares to Jeff Bezos in 2006, done to take personal risk off the table. He describes how Bezos found them and how the deal terms came together.
- •Jason replies no to VC and private equity emails by default
- •In 2006 Bezos bought shares from Jason and David, and the money went to them rather than the business
- •Basecamp was two years old, and the sale took risk off the table
- •Bezos found them through companies he'd invested in that used Basecamp and a conference talk
- •The deal had a ridiculous valuation, no control or board, and a weak clause allowing suggestions after five or seven years
- 27:14 – 31:16
What Jeff Bezos Is Like in the Room
Jason describes Bezos as the most optimistic person he has met, genuinely curious and quick to grasp ideas, as when he understood Campfire in seconds. He explains how Bezos earns a return as an LLC member through yearly distributions. Shaan adds a similar account of Bezos from the Twitch CEO.
- •Sam retells the Woot breakfast-octopus story
- •Jason calls Bezos unshakably optimistic and says everything is interesting to him
- •Bezos understood Campfire about 15 seconds into the demo
- •As an LLC member he receives distributions and has made his money back many times
- •Shaan relays that the Twitch CEO described Bezos as fully present and asking questions that hit the heart of the issue
- 31:16 – 35:01
Elon's Cracked Rocket and Risk Reduction
Shaan reads Jason's tweet about Elon Musk's biography, which argues that what looks reckless is risk reduction compared with slow corporate decision-making. Jason explains the SpaceX example of cutting out a crack in an engine skirt instead of delaying the launch. He sees it as simple, brilliant problem solving.
- •Jason says the word reckless in the biography is overused and inaccurate
- •His tweet says corporate America takes the riskier route with committees and demands for pseudo-certainty
- •The SpaceX story: instead of a multi-month delay, Elon asked to remove the crack and accept some lost propulsion
- •Jason sees this as common-sense problem solving that also avoids other risks
- 35:01 – 38:51
Once: Bringing Back Buy-It-Once Software with Campfire
Sam asks about the non-recurring software push, and Jason explains Once, which revives buying and owning software. The first product is Campfire, sold for $299 one time with unlimited users and the code included. He argues chat tools are commodities priced like luxuries, and says a second Once product, related to writing, is in progress.
- •Once rests on the idea that people should be able to buy and own products again
- •Campfire costs $299 once, is installed with one command on a server, and includes the code
- •It covers about 90% of Slack's core functions but lacks threads and video
- •Generics eventually arrive in any industry, and chat is a commodity priced like a luxury
- •Campfire has sold hundreds of thousands of dollars in a few months, and a second Once product is related to writing
- 38:51 – 47:17
The Founder Letter Launch Strategy
Shaan describes Jason's pre-launch founder letter and contrasts it with an AI startup page with no explanation. They discuss why few people copy the tactic, which Shaan attributes to lacking a point of view. Jason explains how he writes the letters, planting a question in the opening line and building resonance. He also describes the renter-versus-owner framing and the church of recurring revenue.
- •Shaan says few companies copy the letter approach because they lack a strong point of view
- •Jason calls writing the letter his favorite part of the business and sweats every word
- •Once's opening line, Something happened to business software, plants a question without asking it
- •He aims to build a chain of yeahs and leave readers with some mystery
- •The renter versus owner framing and the church of recurring revenue
- •Shaan's test: would you pay for software upgrades if they were sold like old versions?
- •Basecamp is capped at $299 a month, so Jason doesn't feel he's ripping customers off
- 47:17 – 49:47
Campfire vs. Slack: What Went Wrong
Shaan asks how Jason handles the fact that Campfire came before Slack, which became a huge company. Jason credits Slack's better product, onboarding and bots, and says Campfire was too early and sold poorly, so they stopped investing. He recalls the stomach-dropping moment he first saw it.
- •Jason says Slack was excellent and far better than Campfire at the time
- •Campfire launched in 2006 and he couldn't get people to buy a chat tool
- •Because it sold only okay, the team didn't put more energy into it
- •Stewart Butterfield emailed Jason before Slack launched
- •Jason credits Slack's onboarding and bot integrations for beating them
- 49:47 – 55:14
Hooks Over Towel Bars and Piling On the Wacky Early
Sam remarks on how Jason makes non-cool things cool, and Jason explains his hooks versus towel bars post as a model for product design. Shaan then raises Jason's advice to try wackier, quirkier ideas first when prototyping, since projects grow more conservative later. Jason explains that novelty creates differentiation and gets squeezed out if left until the end.
- •Jason looks for hooks in product design: simple, hard to use wrong, flexible
- •He draws inspiration from architecture, land, furniture and objects, not other software
- •Try wackier ideas first because projects get more conservative as they go
- •Starting from table-stakes features means competing with Google Calendar on its own terms
- •The public demands normal things, so it's on the makers to find the unusual
- 55:14 – 58:58
Risks That Don't Put You at Risk: Investing and Sleeping Well
Shaan asks how Jason invests his profits, and he says his business is his exotic instrument, so he keeps outside investments conservative, mostly index funds. He says he takes risks that don't put him at risk, stops work at 5, and practices negative visualization with David.
- •Jason invests mostly in index funds, a few companies he knows well, and some private equity deals
- •He says he takes risks, but not ones that put him at risk
- •What keeps him up at night is excitement, not worry about payroll or competitors
- •He and David practice negative visualization, accepting the business could flame out
- •He says the business is not his identity and he doesn't want that level of obligation to it
- 58:58 – 1:03:42
Pulling Out Profits, Low Costs and Skipping Paid Ads
In answer to Sam's question about how much profit to take out, Jason says they distribute nearly everything at year-end, in part because of LLC taxation. He recounts starting as an agency in 1999 with $30,000, having low costs and high margins since. He explains why a $5 million ad experiment felt like vanity money and why they skip growth-at-all-costs in favor of margins.
- •As an LLC, they pay personal tax on profits anyway, so they take almost everything out each year
- •The business started in 1999 as an agency with $30,000 from partners and an HP project
- •Jason says many companies have too many employees and spend too much on customer acquisition
- •A planned $5 million ad spend felt like vanity money, and low price points leave little room for acquisition costs
- •Sustainability, profits and margins matter more to him than growth rate or exit multiples
- 1:03:42 – 1:05:01
Closing Praise and Wrap-Up
Sam says Jason is on his personal Mount Rushmore of people who carve their own path, and Jason thanks them and says he's available to return. The hosts end the show.
- •Sam admires people who define how they want the world to be and live that way
- •Jason says he loves the show and would happily come back
- •The hosts extend an open invitation
