The Cashflow King: “Here’s How I Do It”, Negotiating w/ Jeff Bezos, Elon’s Cracked Rocket

1. 0:00 – 3:15

   Intro

   1. SPShaan Puri0:00

      I got four words for you. Self-funded cash cow. That is what today's guest, Jason Fried, has built. His company, 37signals, is awesome. You've probably heard of it. I heard of it because I read his book. This is Rework. I read this thing, like, a decade ago. I still have so many of these pages folded because they're just, it's full of gold. Uh, but the best part is he's not just an author, right? He actually is an entrepreneur. He runs his own company. He's done it for, like, 25 years now. And these guys, they say next to nothing about their numbers. The only thing they've ever said is, "We make tens of millions a year in profit." Um, but I do think this is actually kind of a juggernaut. This is a juggernaut of a business. Jason Lemkin, a great investor, once said that the two greatest self-funded cashflow companies he's ever seen are Craigslist and 37signals. And the best part is they do it by kinda like kicking the, the traditional playbook to the c- to the curb. They set no goals. They work four days a week in the summers. [laughs] They spend next to nothing on marketing. And so I wanted to ask Jason three questions. The first is, how did you build this low-stress cashflow company, right? You are the Cashflow King. How did you do it? That's the first part. Then we asked him, what was it like being face to face with Jeff Bezos negotiating a deal? He got to know Jeff Bezos 20 years ago. I wanted to know, what is it like to be in the room with him? And lastly, he's got this skill where he's able to generate massive interest in his products pre-launch, and I wanted to steal that superpower. How do you do this? Before you've even launched a product, he uses these founder letters to blow up his products. And so we talked about it, and we got him to sort of explain bit by bit how he does those, how he writes those things. All right, no more teasing. Enjoy this episode with Jason Fried. [upbeat music]

   2. SPSam Parr1:42

      We were doing research, uh, before [laughs] this podcast, and I've looked into you a bunch. I, I'm inspired by you. Is it weird that we know that you spent something like $30 million on homes in the past, like, two years?

   3. SPShaan Puri1:56

      [laughs] Yeah.

   4. SPSam Parr1:56

      You know, you s- you started, like, a tech company not looking to get into this, and now, like, your home purchases are on the blogs.

   5. JFJason Fried2:02

      It's fucking embarrassing, and frankly, I, I tried to hide them. [laughs] I tried to do all the things, like double LLC and the whole thing. I, I like architecture. I like houses. I like land. It's just that's, like, really the thing I really found myself liking a lot, and unfortunately, it's very hard to just-

   6. SPShaan Puri2:19

      How, how do they find it? How do they know? 'Cause they're like, "Jason Fried bought this house," and me and Sam, we're supposed to be prepping for this pod, and we spend, like, 20 minutes clicking through these photos being like, "This house is sick."

   7. JFJason Fried2:28

      No.

   8. SPShaan Puri2:28

      [laughs] How do they actually find it?

   9. JFJason Fried2:30

      Um, I don't know. My guess is... So, like, technically, it's, i- it- it's- it's hidden in a sense, but I think that all they gotta do is probably ask, like, you know, a real estate agent.

   10. SPShaan Puri2:39

       Gotcha.

   11. JFJason Fried2:39

       And, you know, you, you kinda have NDAs, but, uh, you know, someone knows. Some... Or, like, the electrician or the cable company. It could be someone hangs out and finds out [laughs] or they look in the mailbox and see the... You know, there's a million ways, unfortunately.

   12. SPShaan Puri2:51

       Well, what's cool about you and what I honestly admire, we started off talking about how big the business is, but the reality is what I admire is some guys are into, to beautiful eyes, some guys are into butts. Me and Sam on this podcast, we're, we are into people who play their, who define their own game and then play it, and that's the one thing I think you do really, really well. And you've gone viral many times by putting out there some of your philosophies on how you approach business. What I wanna do is I

2. 3:15 – 8:13

   Long term planning is a fantasy

   1. SPShaan Puri3:15

      wanna kinda read you a quote, and I want you to react to it. I want you to explain and unpack a little bit for each one of these, and we can go fast. So the first one is you're anti-long-term planning. You don't, you don't do long-term plans, and here's the quote I like. You go, "Long-term planning is a fantasy. I don't plan long term because I wanna do what I think, not what I thought." [laughs]

   2. JFJason Fried3:34

      That's right.

   3. SPShaan Puri3:35

      Um, explain that one.

   4. JFJason Fried3:36

      Yeah. Long-term planning is, is, is what you thought, and, like, doing, figuring out as you go is what you think, and I don't like the idea of having a thought six months ago or eight months ago or 12 months ago and feeling like I have to follow that whim because I happen to have it and happened to write it, or wrote it down. I don't, I don't get that. Um, I know a lot of people think there's a lot of certainty or comfort in, like, setting out a plan and, like, you know. But really it's, that plan is then just based on a moment in time. And, and then people are like, "Well, you can adjust." Well, if you're gonna adjust, just adjust. Just, just don't even do the first plan. Um, so my feeling is, uh, just make it up as you go, frankly. We, we think about things six months, or sorry, six weeks at a time and, uh, and go from there and adjust all the time, and that's fine. We've always done it that way, and I feel most comfortable, frankly, just paying attention to reality in the moment and making calls along, along the way.

   5. SPSam Parr4:26

      You also wrote that, uh, you've never had a goal. So you said, um, you had this whole blog post that you don't like goals. I, I think you might've be- you maybe were quoting another person, but you said, um, "The reason that most of us aren't happy most of the time is that we set goals not for the person we're going to be when we reach them, but we set our goals for the person we are when we set them." And I don't think you explicitly said that the company doesn't set goals, but you sorta implied it. Is that the case?

   6. JFJason Fried4:52

      Yeah. By the way, that quote is from a fellow named Jim Kudel, who is a good friend of ours and r- runs Field Notes, which a lot of people know. You know, our goal, our only goal is to be profitable on a given year. We've been profitable every year for 25 years. That's the only thing we look at is we wanna make sure that we make more money than we spend. Otherwise, we don't really set goals or have expectations other than just to do our best work. I'm not a fan of thinking that you're gonna do better work if you set a goal. I think you should do your best work all the time as best you can, and again, let the chips fall where they may. You know, the way I think about this, that I think helps people understand this more, is if you wanna go out for a run and run a six-minute mile, and you go out, and you run a six-minute mile, and you end up running a 6:04, you're, you, like, didn't hit the goal, and you're maybe upset. Like, "Ah, I almost got it," whatever. Now, some people might say you're gonna work harder next time. But what if the goal was 6:05 instead? Like, it's five seconds difference, and you would've beat it, and you would've felt differently. It's like five seconds. Does that matter? Like, to me, the right question is, like, was it worth it? Did I enjoy the run? Did I have a good time? Do I feel good now? Do I wanna do that again? Am I injured? No? Great. Did I get some fresh air? Yes. Like, if you ask different questions Then you're not so obsessed with like this, this point, this, this goal line that you set up that is really arbitrary and made up to begin with. So I've never believed in goals. I just kinda do the best I can and, and see where it goes.

   7. SPSam Parr6:14

      So I, like I, I, I want to agree with you, uh, because I, I prefer... I think I would be happier if that were the case, but there is like some logistical pushback of like, well, you guys launched hey.com a few years ago, and you, um, you have to plan, uh, like how much to allocate towards that project, otherwise potentially you could be unprofitable. So how do you justify like looking at like, well, this needs to, this needs to hit this metric or-

   8. SPShaan Puri6:38

      Let, let's ask the question slightly differently. I come to work, you're the CEO, you're like, "No plans, no goals." I'm like, "All right." [laughs]

   9. JFJason Fried6:45

      Yeah.

   10. SPShaan Puri6:45

       "So then what are we doing here? How do we do it?"

   11. JFJason Fried6:47

       Yeah.

   12. SPShaan Puri6:47

       What, what is the answer? What-

   13. JFJason Fried6:48

       Well, this is gonna sound strange, but we don't think that way. We look at the big pile and go like, "At the end of the year, do we have more money than we spent? And is it because of this product or that product or this endeavor or that endeavor or this cost savings or that expense?" Like I don't really care, frankly. Like to me it's just one big pile. It's a range. It's a feeling. Like we feel... We actually-- It's more of an aesthetic for us. David and I talk about the aesthetic of running a high margin business. It feels right to do it that way. I don't wanna run a business where I'm nervous all the time, and you're nervous when you're looking at one or two points here and there and you're like, "Shit, we're barely breaking even." Like I don't wanna be in that kinda company.

   14. SPShaan Puri7:31

       Right.

   15. JFJason Fried7:31

       So we keep our costs low. We have a huge customer base, over 100,000 people pay us on a monthly basis for a variety of different products. And, um, given the fact that our costs are low and our revenue is high and we have a very diverse customer base, things are, things can be sloppy in a good way. I feel like it's a comforting way. It's not like a reckless way. We are careful about costs. We think about costs a lot actually, but we don't worry too much about points, you know? That's just not how we, how we look at things.

   16. SPShaan Puri8:02

       And so this approach where you're like we... I, I, let me, let me give you a, what I see from the outside. You tell me which parts of this are, are me f- fantasizing versus reality. So

3. 8:13 – 14:12

   The 6-Week Sprint Playbook

   1. SPShaan Puri8:13

      the way I view you guys is you kinda think about what needs to exist in the world. So for example, you're like, there needs to be email that doesn't stress you out or software that you pay for once and not every single month for the rest of your life that y- a- and every additional employee you have it costs more and more and more, right? Like it's sorta like first there's a point of view on what needs to change in the world or the way you want things to be or what, what you wish existed. Then you're like probably some second check which is like can we build it? Are we the right team to build this? Do we have a, a, an approach that we think might work? And then you budget this like six-week sprint where you're like, let's try to make a version of that that we like and then we'll iterate from there. And we're willing to tolerate like six weeks of a, a, attempt at this to get to the next milestone of belief. Like we'll give it, you know, a leap of faith to six weeks and then w- after that we reevaluate and, and decide what, what to do from there. Is that correct? Uh, t- what parts of that are incorrect?

   2. JFJason Fried9:07

      Partially. Um, so we will spend a lot more time than six weeks on exploring an initial idea. So for example, when we're gonna make a brand-new product we might spend six months wandering around an idea and seeing where it ends up and then at some point where, again, I don't know, it's just a feeling, like we've spent enough time on this. We're feeling good about this. This is feeling better and better and better as we go. Let's do this. And then you commit to doing it and then you do it six weeks at a time. Or you get into something and you just wander for a while and you go, "Eh, I'm just bored," or like, "I don't know where else to go," or, "This isn't really... This doesn't seem interesting," and you stop, uh, and you just give up frankly. You just give up which is something I think more people ought to do.

   3. SPSam Parr9:51

      All right everyone, a quick break to tell you about HubSpot and this one's easy because I'm gonna show you an example of how I'm doing this at my company. When I say I, I mean not my team. I mean I'm the one who actually made it. So I've got this company called Hampton. You can check it out, joinhampton.com. It's a community for founders and one of the ways that we've grown is we've created these surveys where we'll ask our members certain questions that a lot of people, a lot of times people are afraid to ask. So things like what their net worth is, how their assets are allocated, all these like interesting questions and then we'll put it in a survey and I went and made a landing page so you can check it out at joinhampton.com/wealth. You can actually see the landing page that I made and the hard part with this is with Hampton we are appealing to a sort of a, a higher end customer, sort of like, like a Louis Vuitton or a Ferrari so I needed the landing page to look a very particular way. HubSpot has templates. That's what we used. We just changed the colors a little bit to match our brand. Very easy. They have this drag and drop version of their landing page builder and it's super simple. I'm not technical and I'm the one who actually made it and once it's made I then shared it on social media and we had thousands of people see it and thousands of people who gave us their information and I can then see over the next handful of weeks this is how much revenue came in from this wealth survey that I did. This is where the revenue came from. So it came from Twitter. It came from LinkedIn. Whatever it came from I can actually go and look at it and I can say, "Oh well that worked. That didn't work. Do more of that. Do less of that." And if you're interested in making landing pages like this I highly suggest it. Look I'm actually doing it but you can check it out. Go to the link in the description of YouTube and get started. All right now back to MFM.

   4. SPShaan Puri11:21

      Sam do you do this wandering thing too? Like I, I, I've seen your process. I feel like it's kinda similar.

   5. SPSam Parr11:26

      Yeah. I, [clears throat] it's, you know, I don't wanna sound, uh, like I'm sniffing my own farts but it's a little bit of an art where-

   6. SPShaan Puri11:33

      [laughs]

   7. SPSam Parr11:34

      ... like it's, I, I feel like an artist a little bit where I, I'm exploring a concept and then I, it takes six months for some inspiration. Like I, I, I feel inspiration and then I have to wander to like, like kinda hone in on the painting and the concept a little bit and it's sorta like one of those things where you take a lot of showers and like you get different ideas or you go for a, a walk and you get a different idea for like six months until it's like all right I think I've honed in this concept. Let's move forward. I- is that what you do?

   8. JFJason Fried12:01

      Yeah. Yeah that's, that's really a big part of it. It does feel like an art and not to, again not to get stuffy about it like- I'm not an artist. I, I, uh, not... But like, we just, we, we, we explore, and we leave room to explore, and the margins allow us to explore, and being profitable allows us to explore. Not having, uh, investors allows us to explore. Not having a board allows us to... Like, all these things allow us. This independence allows us to do the things we wanna do the way we wanna do them. But at some point, you know, you, you, you also don't wanna be, um, you know, reckless with, with money and time and people. At some point, you go, "This is just isn't going anywhere. Let's stop." Or... So, so we really do take our internal sort of motivation temperature. A lot of it is wrap- wrapped around motivation like, "Are we, like, pumped about this? Does this feel good? If so, let's keep doing this." And then, and then you finally kinda come into something. So for example, with HEY, briefly, HEY didn't start out as an email service. It started out actually as a rethink of HiRise, which is our CRM product, which we stopped developing years ago. We still offer it to existing customers, but we don't sell it anymore. But we had this thought, like what if we explore that again? So we began to explore that, and through that exploration we realized what we were doing was building this sort of email system that we wanted for all of our emails, not just like business communication emails, but like all of them. And so we go, "Ah, you know, that's interesting. This is actually like an email thing." I remember br- bringing this idea to David. I had been exploring with one of my designers for a while, and he's like, "Yeah, that, that is interesting. Like, let's see where this goes." And so we started kind of hooking it up. So we, we did the UI first. This is what we always do, and showed him a bunch of UI, and then we started making it work. And like this, there's something here, and you feel this pull of something here. There's a certain gravity to these ideas, and it pulls you towards it, and you keep going for a while. And then at some point, though, you gotta get serious, and that's when you begin to, you know, break this into six-week chunks essentially of work, or monthly chunks, depending on it. But you gotta have some end to these things so you can get onto the next feature, and the next feature, and the next feature. Otherwise you'll spend too much time trying to perfect just one thing, yet a product has to do a lot more than just that. So you kinda have to, you gotta time box these things in a sense.

4. 14:12 – 16:02

   Using 'no' as a precision instrument

   1. SPShaan Puri14:12

      Well, uh, uh, you said two things that I liked. One, you said one of your superpowers is focus. Uh, sorry, I was saying this about you. Um, and what, what you said was, "No is just saying no to one thing. Yes is saying no to a lot of things." As a... And I really love that. No is just saying no to one thing, but yes is saying no to like kinda the wh- the whole future set of things 'cause you've now taken up your mind share and your talent and your hands with, with the thing you said yes to.

   2. JFJason Fried14:40

      Yeah. N- no is a very precise s- you know, precision instrument, um, because you get to evaluate a thing and say no to it, and you have the whole spectrum of everything else that's possible available to you at that point. So, uh, n- I, I think no is a great tool. It's very specific. Uh, yes is a blunt force instrument that kind of damages a lot of things essentially. Now, it might be worth it because that thing you choose to do might be the thing that you needed to do, but it does force you to say no to a bunch of other opportunities. And the longer you spend on that yes, the more nos you are throwing off, and you don't even realize it. So I do think it's very important to figure out what you're doing and then, you know, why you're doing it, and then commit to doing it, and then get it done in a reasonable period of time, partially because you don't know if it's gonna be any good or not. I mean, you might have a feeling, but the market's gonna tell you for sure. So you wanna get out in the market as soon as you can ultimately, and then you'll find out, and then you can iterate from there. So that's kind of our general approach to things, and we don't make new products that often. Like, we used to make them a lot. Like, when we first launched, we had Basecamp in 2004, Backpack 2005, Campfire 2006, HiRise 2000. We were making a new product every year, and then we did a bunch of other things, job boards and whole bunch of other things. Now we, you know, we'll make a new product once every handful of years. But yeah, in general,

5. 16:02 – 18:04

   Does Jason regret selling We Work Remotely?

   1. JFJason Fried16:02

      we don't say yes that often, and when we do, we, we try to get it right.

   2. SPShaan Puri16:05

      So you mentioned the job boards. There's an interesting story here. So Andrew Wilkinson bought the job board. You guys created We Work Remotely 'cause you guys were really far ahead of trend on remote work, and so you had We Work Remotely as a remote work job board. You sold it to Andrew Wilkinson, friend of the pod. He's probably the most frequented guest on our podcast, and that, uh, wanna ask you about this because for him, it's like he loves this story 'cause it's a great buy. He bought it for really cheap, and then now I don't know what that thing does. But let's... I think it's something like 5 million a year of profit comes off the job board.

   3. SPSam Parr16:36

      I think it's four. It's in his annual report. You can kinda dial it down.

   4. SPShaan Puri16:39

      Okay, so let's say four, let's say 4 million of a year profit, and I wanted to ask you, like for you guys, is that a, "Ah, we wish we had kept it" bad sale 'cause it's now a lot more profitable, or is it, "No, that was the right thing to do 'cause it cleared us up to do other things"? How do you think about that, that transaction?

   5. JFJason Fried16:55

      Well, it's easy to look back on it and make a different decision now. The reason we sold that at the time was because we were selling off a bunch of stuff. We're consolidating to j- kind of go all in on, on one thing, on Basecamp essentially. It's kind of around that time. We've since decided to make more things than just Basecamp, so we're kind of in a multi-product world again. Uh, I think they got a very good deal, let's just say. [laughs]

   6. SPShaan Puri17:15

      [laughs]

   7. JFJason Fried17:16

      Um, and the thing that I will say bugs me about our decision about that is that that was the easiest mon- not the sale, but the, the product was the easiest money. We built the job board in two weeks, and it was generating at the time for us something like 30 grand a month, something like that, with no work. Like literally clo- next to nothing to do. It was all, you know, self-service, automated. Maybe there's a customer service question here and there, but like essentially nothing. And, uh, I wish we still had that. We could still launch another one. Like, nothing says we couldn't do it again.

   8. SPShaan Puri17:49

      We still workremotely.com. [laughs]

   9. JFJason Fried17:51

      We still work remotely. I think we'd do something different. I have some ideas on that. We might do something like that at some point. I don't really know. But I would say it was a very good buy. But now, now I'm an investor in his company, so I own a little tiny piece of that anyway. [laughs] On the other side.

6. 18:04 – 23:48

   Cash flow king

   1. SPShaan Puri18:04

      You, uh, Jason, what, what I think is cool is

   2. SPSam Parr18:07

      If I remember correctly, you guys, I think you started almost as an agency and then kinda like became a software company because you saw recurring problems and, and you built that. And I think it's been something like 25 years, and you've... I don't think that there's any r- uh, great resource out there that sh- says your guys's revenue, but it, it, we ha- it's definitely tens of millions. Who knows if it's even north of 100 million, but it's a very big business. You do marketing in the sense of you have these really cool books, uh, Rework is awesome, and you're a public figure, and you blog a lot. But if I'm listening to this from the outside, I would think, "Well, it works because Jason and David were early, and they kept at it for 25 years, and that's the reasons why they have such fat margins, not just because they're smart, but it's because they were early in, in the game." What would you say to that?

   3. JFJason Fried18:56

      I think you're right. By the way, as far as numbers, we, we've... The only thing we've ever shared is that we generate tens of millions in annual profits. Because I don't really care about revenue numbers. You can go broke generating as much revenue as you can imagine.

   4. SPSam Parr19:08

      Do you measure p- profit on a GAAP basis, or do you do, like, a, a non-GAAP where you just look at cash flow?

   5. JFJason Fried19:14

      No, it's GAAP.

   6. SPSam Parr19:15

      Okay.

   7. JFJason Fried19:15

      It's like net profit legit after everything, right? So we're, we're, we, we real- we're proud of that, you know. We're really proud of that, and we work hard at that. Um, but I do think timing and luck, uh, have a lot to do with it, and market conditions. Like could we launch this again today? No, we couldn't. Um, that's fine, too. Like who cares? [laughs] It, it doesn't really matter, right? People ask that all the time, "Could you do it again?" No, probably not. Who cares? Why, why would I need to?

   8. SPSam Parr19:42

      I don't have to. [laughs]

   9. JFJason Fried19:43

      Don't have to. Like you, you know, you... This is why, this is one of the reasons why we've kept this business going for so long. I don't think lightning strikes that often. Um, we've got a couple really, really big hits. We've done it the way we wanted to do it. Um, we've got a lot of momentum. We're well-known. We've, we've built this business our own way. I would hate to give this up. Like selling this would be sad. Like I'd, I'd lose something. You could say, "Well, look at all the money." I'd lose more than I'd make. Now, that's not to say that that couldn't happen at some point down the road. Of course, like a business is either going to die or be handed off or sold. Like it's not gonna last forever and ever, and that could change next year. I don't even know, right? Who knows? But this is the whole we don't plan. I don't really know what's gonna happen. But right now, it would feel like a loss to sell the company. So that's why I'm actually frankly nervous about that. I'm afraid of what I would ha- I'm afraid of having nothing to do that I'd be good at. Uh, I know I'm good at this. I like doing this. Why would I wanna stop, you know, uh, is sort of how I look at it. But yeah, to your point, I, I don't, I don't take credit for being able to do this again, and I think a, a lot of... I mean, you guys speak with a lot of entrepreneurs. Sometimes people hit it big twice. Sometimes. Um, sometimes though those are more like sales, you know, where like they're in, they're in a, a world where you can keep selling companies that don't work. As far as actually finding people who've started multiple businesses that have been profitable businesses and really successful businesses, it's not that common. It's really hard to do.

   10. SPSam Parr21:16

       By the way, that was my big fear.

   11. JFJason Fried21:17

       Yeah.

   12. SPSam Parr21:17

       So I sold my company, and uh, I had a guy sit down and talk to me, and he said, "How many people do you know who have started two successful business?" And in my head, I was like, "Fuck you, man."

   13. JFJason Fried21:26

       [laughs]

   14. SPSam Parr21:27

       "Like I'm gonna do it." You know, like I was angry.

   15. JFJason Fried21:29

       Right. Right, yeah.

   16. SPSam Parr21:30

       I, I was, I was angry be- and I was angry because I was afraid in reality, and after I sold, I dabbled in real estate, and I fucking failed, and I was like, "Shit, I'm human. I'm not like... I'm not the man." I did get a... You know, there was some skill. There was also a whole lot of luck involved in my exit, and, uh, I, I al- I also had that fear. And then after about six months, I was like, "I gotta do something. I can't just do nothing. I, I feel like a bum." But it was r- a lot of starting things was rooted in fear and rooted in I don't wanna be lonely, so I need to create something where I can hire people and be around them.

   17. JFJason Fried22:03

       I hear that. I also think, you know, like I'm turning 50 in a few weeks. Like I don't have the stamina to start another business like and wait 20 years, you know? Like I, I just don't, I don't have that. Like, you know, when I was 25, I could do it. 35, I could do it. I don't wanna do it anymore. I wanna keep this thing going until I don't. All in, I think that we really, uh, like doing this. We have got some new ideas. The One stuff has really kind of injected us with some new ideas. We're about to start on another product, which will be a SaaS product, so we're gonna do SaaS and, and non-SaaS products again. Um, and, uh, we'll see what happens. Again, we'll see what happens, and it could be... This is the thing, like it could be a year from now where I change my mind. I, I don't know. We really don't know. But I think David and I both, like I think if we, one of us decide to go, uh, we would have to sell the business because I don't think that, uh, one, either one of us would stick around.

   18. SPShaan Puri22:54

       One of my favorite stories is the story where, um, Mark Zuckerberg e- early on, I think he's like 21 years old or something, and he gets an offer to sell Facebook for a billion dollars, and the story goes he goes into the board meeting, and he's like, "Yeah, like, you know, we have to, we h- technically have to discuss this. Got an offer from I think Yahoo to sell for a billion dollars. Obviously, we're not gonna take it. Uh, onto the next matter."

   19. JFJason Fried23:15

       [laughs]

   20. SPShaan Puri23:16

       And then, uh, Peter Thiel and others were like, "Hey, hey, Mark, uh-

   21. JFJason Fried23:19

       Whoa

   22. SPShaan Puri23:19

       ... hey, yo, you know, you're gonna have like, whatever, $500 million aft- if you did that. Maybe we should just chat about this for a second." And they were like, "Well, let's talk." And one of the things he said was like, he's like, "I, but I like this business." He's like, "If I had the money, what would, what would I go do? I would just wanna build a social network. Uh, I think that's the coolest thing I could do right now, and I like the one I've got. Why would I wanna [laughs] go start over and try to build a new one?"

   23. JFJason Fried23:42

       Totally.

   24. SPShaan Puri23:42

       And I loved that. I don't know how much of that story is true 'cause, you know, there's a lot of like lore, but that's okay. Uh, still cool story. Have

7. 23:48 – 31:16

   Taking money from Jeff Bezos

   1. SPShaan Puri23:48

      you guys, did you guys ever have a moment where somebody comes to you and it's, it's a offer you have to discuss, and like what, what went down in that conversation?

   2. JFJason Fried23:56

      Um, we've never been, we've never allowed that to happen. Uh, no one... Like w- I, I get, I still get a handful of emails every week from VCs or PE, PE firms, like and I just say no. Like I have a, I have a default just no, so we don't even have conversations Um, we did take some money from Jeff Bezos, though, back in, uh, 2006. Six or seven. Uh, six, I think. It was like a secondary thing. So he s- he bought some shares from me and from David. So that money went into our pockets. It never went into the business. No money's ever gone to the business except customer revenues, and we did that to take a little bit of risk off the table because in 2006, Basecamp was two years old, the product, and we're like, "This could be a fluke. I don't know what the hell is gonna happen in this industry. Who knows? We could get wiped out tomorrow. You know, could we put a few million bucks in the bank each and just, like, take some of that risk off the table?" And, and also give us some confidence to just go for it at that point, 'cause if it all went to hell, we have something to show for it personally. So we did that. Um, Jeff, uh, Jeff found us because, um, a couple of his companies that he was invested in had used Basecamp. Um, he saw me speak at a conference in San Diego in 2005 called eTech. I don't know if that conference is still around anymore. He was speaking, I was speaking. I think he liked what I had to say the way I w- was. We were very different, as we still are now, but way back then, way different in terms of, like, our point of view and the things we were saying, and he likes those kind of companies and people.

   3. SPSam Parr25:20

      What does that mean? You were more... What, you were more harsh or, or more-

   4. JFJason Fried25:24

      Yes

   5. SPSam Parr25:24

      ... what? [laughs]

   6. JFJason Fried25:25

      I was a young punk.

   7. SPSam Parr25:26

      You're, you're... We'll call it punk rock. You were more punk rock.

   8. JFJason Fried25:28

      More punk rock. Yeah.

   9. SPShaan Puri25:29

      I love that the answer to this question is kind of actually that Jeff was a fan. Jeff was a fan-

   10. JFJason Fried25:33

       Jeff-

   11. SPShaan Puri25:33

       ... so he reached out. [laughs] That's, that's-

   12. JFJason Fried25:34

       He was. I mean, Jeff was a fan. Like, let's just... You know, it's... Anyway, he was a fan. He's a fan of, of, of, of, you know, people think differently about how to run a business, as he thinks differently about how to run a business. So, so we just kinda chatted, you know? We, we went to Seattle and met him. I didn't really... I knew this was, like, an investment opportunity for him because he wouldn't just come and... He wouldn't just, like, come out and say hello. But I didn't go into it wanting to do that. Um, but after a couple meetings we really liked him. Uh, he's very likable. Uh, and, and, um, we had a lot of admiration for him, obviously, for what he's done and what he'd built at the time and who he was and how he did it, and his whole story and the whole thing, obviously. I mean, Bezos, Amazon, amazing thing, right? So eventually we worked out some deal, which was ridiculous. It was a ridiculous, ridiculous deal, and I can't go into the specifics, but, um, we barely had any revenue at the time. The valuation was stupid. Um, he knew it was stupid. He's like, "Put together something. I need..." We're like, "We don't know." He's like, "Put together something. I need something." So we put together something, we share it with him, and we all had a laugh about it 'cause it was ridiculous.

   13. SPSam Parr26:36

       [laughs]

   14. JFJason Fried26:36

       But, like, it had to be something where we could make something happen. And, um, we're like, "Look, we don't want you to have any control. We don't want a board of directors." Um, they had one provision which said something like in five or seven years they had some right to do something like, um, encourage us to do something that we might not have wanted to do, like sell or go public or something, but they didn't have the power to, I think, push it through. Anyway, it was just r-

   15. SPSam Parr26:59

       A, a, a suggestions clause.

   16. SPShaan Puri27:01

       [laughs] Yeah.

   17. JFJason Fried27:01

       Maybe that's what they call it. I don't know.

   18. SPSam Parr27:03

       [laughs]

   19. JFJason Fried27:04

       It was very weak, though. It was a weak... He didn't want... Like, he's like, "I want you guys to do what you wanna do." He's like, "I like long-term thinkers." I'm like, "We're in this forever. We're not in this to sell the business, the whole thing." He liked that.

   20. SPShaan Puri27:14

       So what, what's he like? You go there to Seattle. Take us into the meeting. None of us will ever get to do that, right? Especially Bezos back then.

   21. SPSam Parr27:21

       By the way, have you guys heard this story, really quick? Uh, it was the founder of Root. Uh-

   22. SPShaan Puri27:25

       [laughs]

   23. SPSam Parr27:25

       ... or, it's W-O-O-T. There's this famous article, Shaan.

   24. SPShaan Puri27:28

       Oh, Woot, yes.

   25. SPSam Parr27:29

       Where they go out to eat. J- uh, Jeff Bezos wants to buy this guy's company, and they go out to eat, and Jeff Bezos is sitting there-

   26. SPShaan Puri27:35

       They go to breakfast, right?

   27. SPSam Parr27:36

       They go to breakfast, and Jeff Bezos orders potatoes with bacon and ocu- ocu- octopus. And he g- And the guy's like, "Why'd you order that? That's, like, a weird breakfast order." And he goes, "You're the octopus that I'm having for breakfast," Bezos said.

   28. SPShaan Puri27:51

       [laughs]

   29. SPSam Parr27:51

       "When I look at the menu, you're the thing I don't understand, the thing I've never had, and I must have breakfast octopus."

   30. SPShaan Puri27:57

       [laughs]
8. 31:16 – 35:00

   Who does Jason admire?

   1. SPSam Parr31:16

      Uh, Shaan, I wanna ask him, y- you have on here about this, this Elon quote. So you talked about reading Bezos booked, uh, Bezos' book. You actually had an interesting take on reading Elon's biography that I thought was intriguing. I, I, I just think it's... I admire you, Jason, so it's cool to see, like, who you admire and what your opinions is on different people who I may or may not admire.

   2. SPShaan Puri31:38

      And by the way, I think it's not, like, this person, but maybe an aspect of that person, or o- one way-

   3. SPSam Parr31:43

      Sure

   4. SPShaan Puri31:43

      ... that that person does something, not, like, this person is good and other people are bad, and all things they do are good or whatever. Right? That's not-

   5. JFJason Fried31:48

      We're all a lot of different things.

   6. SPShaan Puri31:50

      Yeah.

   7. JFJason Fried31:50

      We are all a lot of different things. Yeah.

   8. SPShaan Puri31:51

      Can I read you the quote? You had tweeted this out.

   9. JFJason Fried31:52

      Yeah.

   10. SPShaan Puri31:52

       I thought this was pretty fascinating. You said, "I'm inspired by the business side of Elon's biography. There is one word that's overused and I think inaccurate in the book, 'reckless.' What seems like risky, actually to me strikes me as risk reduction." And then you said the following. You said, "Compared to traditional corporate America, corporate America takes the riskier route. It's fear, marginal decision-making complexity," and I love this line. You go, "Mediocrity slathered in marketing." [laughs] And then you said, uh, "Mistakes come in all shapes and sizes, but the ones that come from slow decisions, committees that dilute responsibility, sloppy cost controls, and requiring pseudo-certainty before making a move, those are the worst ones, and Elon doesn't make those, but his critics often do. His mistakes are real and he, and they have consequences, but they're rooted in forward motion. I'm glad there's someone who is out there unafraid of making those kinds of mistakes and showing us all what ha- what is possible when you pierce the membrane that holds most things back." That's, that's pretty good. Uh, what made you feel that way?

   11. JFJason Fried32:49

       I would say reading the book made me [laughs] made me feel that way. Now, of course, it's a story. Well, it's, you know, a biography, but, like, it's a story. There's a perspective on it, point of view. Um, a lot of the examples in the book are about, um, simplifying, are about cutting out waste, getting to the root of things, figuring out, like, what really matters, um, not getting caught up in what other people think it should be, uh, and also not being caught up in things you can't do. And it was that impression, and there's a, there's a multitude of examples. There's one my, one of my favorite examples, I might be misquoting this slightly, but there's this example of, of, uh, th- there's a rocket, you know, SpaceX rocket ready to go launch, and they find, like, a crack in the, in the skirt that surrounds one of the engines. And I think, again, I'm gonna get this w- some of the details wrong, but, like, if NASA had found that, um, there's, like, a three-month, you know... Uh, launch is scrapped, multi-month delay, rebuild the whole engine, kind of that sort of thing. So, so there's, there's a crack in, in the skirt and, and Elon hears about it, and they, they stop the launch or something, and Elon hears about it. And, uh, he goes, "What's the problem?" He goes, "There's a crack in the skirt." He goes, um, "Let's get rid of the crack. Can we get rid of the crack?"

   12. SPSam Parr34:01

       [laughs]

   13. JFJason Fried34:02

       And they go, "Well, if you get rid of the crack, you're gonna lose some propulsion." He goes, "Okay, how much propulsion are we going to lose?" They're like, "This much." He goes, "We can lose that. There's enough margin here, so let's cut the crack out and go." And that's what they did, and the launch was successful. And it's, like, the kind of question that nobody else would even think to ask. Like, "Well, what is the problem? It's a crack. It's not the engine. It's a crack. Let's get rid of the crack. Can we get rid of the crack? Yes. But how? This way. Well, that's gonna do this. Okay. Well, what does that mean? Okay. Sure. Let's do it." So that might seem reckless, and I think it was position or pitched almost as reckless in the book. To me, that's like common sense, fundamental, smart problem solving. And you think about all the other risks it saves and all the other things it prevents, and the time that goes by, and all the other things that can happen during that time that can go wrong. I just see that as brilliance, um, not as, as, as, as recklessness. So that's my

9. 35:00 – 38:51

   Non-recurring revenue is back

   1. JFJason Fried35:00

      take on it.

   2. SPSam Parr35:01

      So I know that you guys are, on your website, you're, uh, you have a landing page for this product that I believe you desc- I, I forget how you described it, but it's something like it's a non-recurring software product because it's like you wanna take back... Users need to take back control of, like, their, their wallets and not pay a company every single month. They just could pay one time. So that seems like that excites you, and I wanna hear more about that. And you also alluded to you have, like, a few more products you wanna launch. What ideas and businesses are exciting to you at the moment?

   3. JFJason Fried35:31

      Sure. So, uh, what you're talking about is this thing called Once, which is more of an umbrella brand. So once.com, O-N-C-E.com, and it's a one-pager, and people can read it. The, the fundamental idea behind Once is that we think that people should be able to buy products again. Right now, pretty much all software is a service. It's a rental. You're renting servi- you're renting software in perpetuity, and if you stop paying, you lose it all. Like, okay, some services make sense w- that are services, but they're also, I think, a large collection of products, old school products, so you'd buy and you'd own, and it's yours, and you don't have to keep paying for it. We wanna bring that back. That's how it used to be. We think there's some real advantages to that in certain areas, in certain product categories, and we think companies should have the option to spend money once, and not a lot, a few hundred bucks, and own the thing. And not only own the thing, but get the code too, so you can modify it and screw around with it as much as you want. This is not something that has been happening for many, many, many, many years. We think it's time to bring it back. So we launched the first product, which is Campfire, bringing back our old chat tool that sort of died on the vine to some degree, although there's still some customers using the original version, but we don't sell it anymore. And, uh, Campfire is installable software. We built a whole new tech stack around this to allow people to... We, we... You buy it on ch- the Shopify store. It's 299 bucks. You buy it. We send you an email with a single line that you paste into a terminal of a server. So it's... There's a little bit of technical knowledge required, but, like, barely any. I'm not technical. I can do it. I've done it on DigitalOcean. I bought a, a shared server and ran this one command, and now you have a chat server running that you own. It's 299 bucks once, unlimited users, and it's basically 90% of what, like, Slack would do. It's the core stuff, chatting, DMs, @ mentions, sharing files. It doesn't have threads. It doesn't have video chat. Doesn't have all... It- but it has the fundamentals of what this nugget of this idea is. And the principle around this is that in any industry, um, generics eventually come in. For, for example, there's a lot of chat tools that exist in software today in, in, in, in, in the industry. So they're basically commodities, but they're still priced like luxuries. It's ex- companies are running, are spending tens of thousands of dollars a month on Slack. It's... Or Teams. It's obscene. Absolutely-

   4. SPSam Parr37:55

      I spent, I spend that.

   5. JFJason Fried37:56

      It's obscene.

   6. SPSam Parr37:57

      Yeah.

   7. JFJason Fried37:57

      You're, um... Okay? You, you get it, right?

   8. SPSam Parr37:59

      [laughs]

   9. JFJason Fried37:59

      It's a lot of money.

   10. SPSam Parr38:00

       [laughs]

   11. JFJason Fried38:00

       It's a lot of money for basically chatting with your coworkers for the most part, right? Um, and it, it's just like there should be a generic option, essentially. This is what happens in, in all industries. When there's a l- commodity or when there's a lot of product, commodities c- uh, something becomes a commodity that becomes a, a generic at a much lower price. We're doing something at a high quality and a low price and changing the model around. So anyway, Campfire's the first one. We're working on a second one right now, which I can't talk about yet, but it's related to writing. And, uh, maybe we'll do another one or two and then see how the model looks in a year from now. Like, are we early? How's it working? So far it's been working really, really well with Campfire. We've sold hundreds of thousands of, of dollars worth of Campfire in, in a few months. Um, so we're very happy with the start, but we have to see if it sustains and how it goes, and we're gonna add some more products to that category and see how that goes.

10. 38:51 – 45:45

    The Founder Letter Launch strategy

    1. SPShaan Puri38:51

       C- can we talk about this strategy you have where before you launch something, you put up a page, a big blue page with a founder letter.

    2. JFJason Fried38:58

       Yes.

    3. SPShaan Puri38:58

       And the founder letter is basically saying kind of what you just did, which is, uh, things used to be a certain way. They've changed. It's kind of obscene. You know, I get why they changed, but now it's gotten a little ridiculous, don't you think? We're gonna change that. We're gonna bring it back. We think it, we think life should be this way. Common sense logic, don't you agree? And, uh, yeah, we're gonna do it. If you wanna see... If you wanna be a part of that, do this. And actually, this morning, I saw something on Twitter that was kind of interesting. Some guy announced his venture round. It was like, "We raised $16 million." I'm like, "Oh, that's interesting. What is this?" And it's this, uh, something called Quilt, and I go to click this thing Quilt, and I'm like go to the website, and it's, um, it says some, like, blah, blah, blah AI jargon with a email sign-up, with a sign-up form. No des- no pr- no tell me... Don't tell me what it is. Don't tell me why I should want it. Don't tell me what it could do for me. Don't tell me why you built this and what was your motivation. Just, "We raised a bunch of money. Give us your email, and you're on the list, and we need to grow this list," basically. And I thought, I can't believe more people don't copy what you do. It's so... And, like, this-

    4. SPSam Parr40:03

       That's how, that's how this podcast came to be, Shaan, by the way. We were talking about copywriting, and we're like, "Man, Jason's the best at this."

    5. SPShaan Puri40:09

       Yeah, and you did this for HEY, and, um, I used to teach this thing called power writing, and I would teach them, I would say, "One of the landing page variants that nobody's test- nobody's doing is founder letter."

    6. JFJason Fried40:20

       Yeah.

    7. SPShaan Puri40:20

       Um, there's actually a, a company called Runway that did an amazing job with this.

    8. JFJason Fried40:22

       Mm.

    9. SPShaan Puri40:22

       I don't know if you ever saw runway.com, but, uh, this guy Siki, who's a serial founder, was like, their landing page was a long scrolling thing, but it was basically just of dialogue. And he's like, "Being a CEO is hard for a bunch of different reasons, but one of the annoying reasons that feels like it shouldn't have been hard was that I kinda had no cl- no grasp of the numbers of my business, and that felt... I felt stupid, and I felt insecure about that, and it was important, but I just frankly didn't know how to do it. I didn't know how to use these tools. I wasn't really ever taught it. Why don't I know how many weeks of runway I have left? Why don't I know this? Why don't I know that? And so I decided, like, I'm gonna build a tool that's a finance tool, but it's for founders." And he did it as a letter, and it was awesome, and he got a bunch of people to sign up for it. I think more people should be using this tactic, and the reason why I think they don't, to be honest, is because there is no reason to be building their product. There is no-

    10. JFJason Fried41:08

        [laughs]

    11. SPShaan Puri41:08

        ... intrinsic why. There is no strong point of view that would get people behind it. Their product is either derivative or sort of mediocre, or it's just trend following. And so if they tried to write the letter, there wouldn't be much to say. It's not the writing that's the hard part. It's the having a point of view that resonates with people that's the hard part.

    12. JFJason Fried41:24

        It's the point of view. So this is my favorite thing to do in the business, period. And unfortunately, I don't get to do it that often because we don't launch new things, but I love writing a brief letter, um, and I, I sweat every word, and I just love it. This is my, like, Bezos moment where I just smile and laugh while I'm, while I'm doing this thing. I just love finding the right rhythm and the right rhyme and the right pattern and the right message and the right way to say it. It's super fun. I don't know why more people don't do it, but to your point, I think there is something about, like, you have to have a point of view, first of all. And the thing is, is that you can do it with any product, like any, a novel product, a, a, a, a, a commodity product. You just have to, like, understand the angle that you're taking. Although, I don't even... I, I don't like the term angles 'cause it seems like it's almost manipulative, but what-

    13. SPSam Parr42:10

        Schtick. You need a schtick.

    14. SPShaan Puri42:12

        Hmm. Yeah.

    15. JFJason Fried42:12

        Even worse.

    16. SPShaan Puri42:12

        It's even... Yeah.

    17. SPSam Parr42:13

        You don't like that?

    18. JFJason Fried42:14

        Yeah.

    19. SPSam Parr42:14

        I don't know. You need some flavor.

    20. SPShaan Puri42:16

        If you didn't like angle-

    21. SPSam Parr42:16

        What, what do you wanna call it?

    22. SPShaan Puri42:17

        ... you're not gonna like schtick. [laughs]

    23. JFJason Fried42:19

        I understa- I ap- pre- ex- you're right. Like, that's the category. Schtick also has these, like, negative connotations, like it's sort of like this ... game and manipulative thing. You're, maybe you don't mean it that way, and you probably don't, but you know

    24. SPSam Parr42:31

        Just like a flavor. You just-

    25. JFJason Fried42:32

        A flavor

    26. SPSam Parr42:32

        ... need some style.

    27. JFJason Fried42:33

        You need some flavor.

    28. SPSam Parr42:33

        You need some style.

    29. JFJason Fried42:34

        I like flavor, I like style about it. I like, I like the, the point of view. I, to me, it, it cuts. It ha- it has a, it has an edge. That's the kinda thing... And I think, first of all, it's very hard to do this. Not, I'm not giving myself, like, credit like I can do a hard thing, but it is hard to do this well. I've always been inspired by people like, you know, Buffett and Bezos, who write these amazing shareholder letters, who are able to communicate very clearly, um, and, and can do it in long form writing. Now, this isn't that long form. It's a, it's a page. But I wanna get excited about that. I, I wanna read something, and I wanna be pulled through it, and by the end feel like it wasn't too long, and just it said exactly what it needed to say. And I'm left with some mystery. So one of the things I like to do is, you'll see the first sentence on Once is something like, um, "Something happened to business software." Now, that is planting a question in people's heads. But it's not a question. I'm not asking a question. I'm making a statement, and now they're like, "Well, what do you mean?"

    30. SPSam Parr43:33

        Right.
11. 45:45 – 52:28

    Campfire v. Slack

    1. SPShaan Puri45:45

       The, the simple test, by the way, is let's say you did buy Slack or whatever, insert what are your favorite product-

    2. JFJason Fried45:50

       Sure

    3. SPShaan Puri45:50

       ... for one year, and then they did all these over-the-air updates, and they m- they, you know, they added this, they added that, they tweaked this, they fixed this bug. If they had just charged you for it one year, and then you could buy V2, you know, Slack 2.0 or the, the, the 2024 version, would you buy the upgrade? Like, you know, we used to buy Windows 95, and then you would h- you would hear, you're like, "Oh man, I heard," whatever, the next one-

    4. JFJason Fried46:13

       That's right

    5. SPShaan Puri46:13

       ... Vista or whatever it is, "it, it's got all this new stuff. Okay, maybe it's worth upgrading." Uh, but like the reality is almost none of us would buy those upgr- [laughs] buy the next edition 'cause the upgrades are so marginal, right? They're not like, uh, game-changing, but you're charged for it as you go as if those are such game-changing updates.

    6. JFJason Fried46:30

       Yeah. And look, again, some products, like we have a few products like this. Haze, like a SaaS tool. Basecamp's a SaaS tool. So we're in that world too. I totally get it. Um, that said, we don't charge any of our customers more than $299 a month, period, flat. So with Basecamp, you can have 6,000 users at just $299 flat. Unlimited users at that point. So we don't offer the same thing where people could be spending 50, 60 grand, or 10 grand, or five grand, or three grand a month with us. Like, you can only spend $299 a month max with Basecamp. So I don't feel as guilty, frankly, selling something like that, uh, th- you know, compared to company, asking companies to spend tens of thousands. I get it's good for revenue. I get all that, but man, I wouldn't feel comfortable or confident. I, I would feel like I'm ripping people off, frankly.

    7. SPShaan Puri47:17

       So, so how do you deal with the counterargument, which is you guys were first with Ca- with Campfire before Slack. Slack comes out, kicks your butt, becomes a 20-something billion dollar company, exits, and blah, blah, blah.

    8. JFJason Fried47:31

       Sure.

    9. SPShaan Puri47:31

       How do you deal with that?

    10. JFJason Fried47:32

        Well, first off, Slack is, it was an excellent product. It still is an excellent product, but at the time, it was way better than Campfire. So we sort of let Campfire kinda wither. Uh, we, we, you know, kind of didn't pioneer the idea. I- IRC was before us, and there was a chat thing. But like we kind of pioneered this version of it to some degree, and we sort of let it sit and didn't really make it much better. Slack came around and made a much better version of that idea. So full credit to them for that. I think another problem we had was that we were really early with Campfire. I remember when we launched Campfire in 2006, I don't know when Slack launched, I think it was like six years later or something like that, I couldn't get anyone to buy Campfire. People were like, "Why in the fuck would you use a chat tool? Like, what? Like, we're all in the same office. Like, just talk to people or whatever. Like, I don't even get it."

    11. SPSam Parr48:18

        Well, uh, we, we, we used to use like Gmail chat, and then for a while Hip, HipChat, which I hate.

    12. JFJason Fried48:23

        HipChat, yeah, that was another one. Yep.

    13. SPSam Parr48:25

        Yeah, but for the longest-

    14. JFJason Fried48:26

        But you were on-

    15. SPSam Parr48:26

        ... it was Gmail

    16. JFJason Fried48:27

        ... you were on the edge though because a lot of people didn't even Like chat was, like now everyone can't imagine working without it, but like it was not a thing that companies used. Individuals used it a lot, but companies, it's just this-

    17. SPSam Parr48:38

        Totally

    18. JFJason Fried48:38

        ... persistent chat room was just not a thing. So because we were early on it, we kind of didn't think there was a future in it because it was selling okay, but not that well, and so we just didn't pour more energy into it. Then along came Slack. I remember actually, it was interesting, Stewart Butterfield, um, sent me an email before they launched Slack. We were friends, and he said, "Hey, just wanted to let you know we're launching this thing. It's competitive with Campfire to some degree. Um, we're buddies, I just wanted to like let you know." You know, like that's cool. I remember looking at it the first time and like my stomach dropped, I'm like, oh shit, we're dead or this thing is dead because it's fucking good. And the thing that ex- i- impressed me the most about it was the onboarding experience. I think that, in my opinion, there's two things of course, the, the bot integration stuff was really innovative, but the onboarding experience was so good where you basically talk to the chat and create your user account and stuff. Those, it just took, I, in my opinion, those two things. The chat itself isn't better or worse. Chat is chat essentially. Onboarding and, and, and bots were the thing, and we didn't have them and they crushed us. So yeah, that's how I'd answer that question.

    19. SPSam Parr49:47

        Dude, you're um, you're cool to me because you're, uh, like... All right, so for the listener, go to basecamp.com, go to hey.com and once.com. Your landing pages, like we're internet dorks, all three of us. Like we're, we're talking about like CRMs shit. Like we're talking about like-

    20. JFJason Fried50:03

        Yes

    21. SPSam Parr50:03

        ... something that's not inherently like a punk rock thing, but you have like a punk rock vibe about you. Like if you look at your landing pages, they're all like kinda cool and they're fun to read and you make non-cool things kind of cool.

    22. JFJason Fried50:15

        It, it, it's, it's, yeah, for me there's a degree of like mining for novelty and recognizing like what's interesting and what isn't. How people can look at something and go, "Oh man, I never thought of that, but of course." Like that's what I'm always looking for. I wrote this, this post recently about towel bars and hooks. I dunno if either of you saw it, but-

    23. SPSam Parr50:32

        Riveting.

    24. JFJason Fried50:32

        [laughs]

    25. SPSam Parr50:34

        Ri- ri- riveting concept.

    26. JFJason Fried50:36

        Riveting. You ready for this?

    27. SPSam Parr50:36

        No.

    28. JFJason Fried50:37

        Okay. This is-

    29. SPSam Parr50:37

        I've not read it, but I'm sure it's great. What is it?

    30. JFJason Fried50:39

        So we're doing a bathroom renovation and, and the designer, the, the architect's like, "Do you guys want hooks in your bathroom or towel bars?" And for me, the choice was like, it was so obvious. It was like hooks.
12. 52:28 – 55:13

    Pile on the wackier stuff early (in life and business)

    1. SPShaan Puri52:28

       One of my favorite things I did in my, in the research for this, I'm, 'cause I'm always looking for in the research it's like what, what are the big ideas? What are the important ideas but they're not necessarily new to me? And then what are the new ideas? And one of the new ideas I thought you put out there was really great. Super nerd, but we're, that's where we are right now. We're in the nerd zone.

    2. JFJason Fried52:45

       Uh-oh.

    3. SPShaan Puri52:45

       Which is really the place we should be all the time. Uh, but you said, "When prototyping, always try the wackier, quirkier stuff first. Uh, the deeper you go into a project, the more conservative it tends to get. Stranger ideas are more at home earlier in the process." I love this. This is so true.

    4. JFJason Fried53:02

       Yeah, that was pretty great.

    5. SPShaan Puri53:02

       I never heard anybody say this. It's something that if you embrace it you can actually, you know, Sam's, uh, old company, I think their only cul- company culture thing was let your freak flag fly.

    6. JFJason Fried53:11

       Yeah.

    7. SPShaan Puri53:11

       It's like that's what you wanna do in product design. It's also kinda good life advice too, which is the weirder, quirkier things are actually, it's easier to get away with them and do them when you're in your early 20s versus when you're 37, right? Like you tend to mo- get more conservative. It's product development, it's life advice. I thought that was brilliant.

    8. JFJason Fried53:28

       Thank you. I, I, we really take this to heart and, um, the reason why is like for example I'll take the calendar example again. If you're building a calendar and you think that there's all these table stakes features that you, like you need to be on par first with Google Calendar. Like if you're like you want people who are gonna buy this, like if they're gonna use Google Calendar they're gonna expect Google Calendar fidelity and functionality, and then maybe we add a couple other things. Like no one's gonna buy your thing because Google Calendar is Google Calendar. Like why just make that other thing with a couple other things? So we always start with the novelties, the things that don't exist anywhere else. That's what makes your product differentiated. That's what makes it worth considering. Like to say like we made Google Calendar a s- a little bit better, like not worth it. But we made something totally different that is not just different 'cause it's different, but it's we actually think there's some novelties here that matter, that make sense, that are radically different in good ways. That's what we pile on early. And to the other point of that quote is that if you just wait till the end to try to add those novelties you'll never have enough time. You're always running out of time at the end, and you're never gonna try new things. You're not gonna have the tolerance or the The, the, uh, the patience to, to wander. So then you end up leaving those things out, and then you never get around to them because once you launch to the public, the public then demands even more normal stuff. The w- the public doesn't demand unusual things. The public demands normal stuff. It's on you to find the unusual things, the things they didn't consider, but once they see, they go, "Of course, where's this been my whole life?" That's the kind of stuff. Basecamp is packed with these things, and HEY is packed with these things, and HEY Calendar's packed with these things, and those who use those tools understand that. Those who don't, don't know. But they are packed with things, you're like, "Oh my God, where's this been my whole life?"

13. 55:13 – 58:58

    Taking financial risks that don't put you at risk

    1. SPShaan Puri55:13

       That's amazing. Um, by the way, what do you do? You guys pull out, uh, profits every years out of the LLC. I like that. You don't reinvest it. You basically get the benefit. Are you like a boring kind of like index funds and bonds guy? Like Sa- Sam is more on the conservative kind of, uh, side. I'm more like-

    2. SPSam Parr55:27

       That 80/20-

    3. SPShaan Puri55:28

       I'm like exotic-

    4. SPSam Parr55:28

       ... index bonds life, baby.

    5. SPShaan Puri55:30

       Yeah. My... I'm like the two sexist words in the English language are like exotic instrument.

    6. JFJason Fried55:34

       Oh, God.

    7. SPShaan Puri55:35

       It's like, "We got an exotic instrument for you." I'm like, "Tell me more," and then I regret it later.

    8. JFJason Fried55:39

       Yeah.

    9. SPShaan Puri55:39

       What do you, what do your shakes are?

    10. JFJason Fried55:40

        What is it? What's that, a sexy trombone? What the hell?

    11. SPShaan Puri55:41

        Are you like a 70% guy? [laughs]

    12. SPSam Parr55:41

        Sexy trombone.

    13. JFJason Fried55:42

        What's an exotic, what's an exotic instrument? [laughs]

    14. SPShaan Puri55:44

        It's, it's the thing that you're, uh, you know-

    15. JFJason Fried55:46

        You're gonna lose money on. That's, that's what that means

    16. SPShaan Puri55:46

        ... your shitty wealth advisor gives you to lose money.

    17. JFJason Fried55:49

        Yeah.

    18. SPShaan Puri55:49

        It's called an exotic instrument.

    19. JFJason Fried55:50

        [laughs]

    20. SPShaan Puri55:50

        It's code.

    21. JFJason Fried55:51

        I mean, our exotic instrument is our own business. That's where most of our risk is tied up. So, so I'm more on, on Sam's tip here, which is to be very conservative with, with, um, investments outside my business. So primarily index funds. I do invest in a few individual companies that I really know and really like and have liked for a long time. I might even know the CEO. I might have a good sense of who this company is and what they do. I'm not jumping on the meme stocks, that kind of thing, right? Um, I have an advisor. I, I've done some like other kinds of investing around like, um, uh, some, some PE deals and some stuff like that, but primarily I'm pretty much straightforward index funds, like play the, the US economy long-term essentially, and some, maybe some other companies or countries' economies, but primarily US. That's my main thing. I, I also like... I, so I do that, and then I also like to spend money on things that I, I enjoy and that my family enjoys. Um, and but I, I'm not a, I'm not all, um... I don't... What I don't like to do is ever put myself at risk. I don't like to put my business at... I'll take risks, but I don't take risks that put me at risk. That is not an interesting risk for me.

    22. SPShaan Puri57:00

        It, it seems like you value being able to sleep well at night. It's like I just wanna be able to, to sleep easy and not do anything that's gonna jeopardize that.

    23. JFJason Fried57:07

        Right. Like people ask in business all e- sh- you know, "What, what keeps you up at night?" And, and typically the answer for most people is like some, the competition. Am I gonna be able to make payroll? For me, like what keeps me up at night when I am up at night because of work, it's excitement. Like I can't wait to start working tomorrow on this thing that we're working on. It's, it's not, it's not like, because our, our marg- it's not like our margins are razor thin and might not be able to make payroll or I'm focused on the competition, hyper-focused, so like they launched something new and now, oh my God, what are we gonna do? Like that one Slack moment I did have was, was one of those moments. That was years ago. Um, I'm, I just wanna sleep well. I don't... I stop work at 5:00. I don't talk about work with my family at all. We just don't... It's just not a thing. It's a separate thing that I do during the day, and I get excited about sometimes at night 'cause I'm just excited about ideas. Um, but it's also recognition David and I both practice this idea of like negative visualization.

    24. SPShaan Puri58:01

        Yeah.

    25. JFJason Fried58:01

        Basically like look, we've been at this 25 years. We've done exceptionally well. We've been incredibly fortunate. If this thing all flames out in two years because of something we, we did wrong, a major market shift, competitive shift, whatever it is, you know what? Like that's okay too. It's will be painful to some degree, but like it's okay. If we, if we have a 27-year run, geez, I mean, what more can you ask for? Now, people lose their jobs and it would suck. I'm very certain many, almost everyone who works here can get another job somewhere else very quickly. Um, we would help people, all those things. I mean, I don't want this to happen, but if it did, we'd be okay. This is not my identity. This is not my life. This is not something that needs to exist forever. Um, I don't want to feel that level of obligation to it. As much as I have a lot of responsibility and feel obligated to our customers and to our employees and to the ideas that we have, it's not the whole world. That's just an important thing for me.

14. 58:58 – 1:05:01

    Where does Jason spend his profits?

    1. SPSam Parr58:58

       Shaan and I are in similar positions, uh, where we have profitable businesses, and a question that I'm trying to figure out is what percentage of the profit, profits to pull out, um, versus reinvest?

    2. JFJason Fried59:10

       Yeah.

    3. SPSam Parr59:10

       Do you have a framework for deciding like that percentage?

    4. SPShaan Puri59:13

       Especially earlier on, right? Maybe in year 27 the answer is different than in year three or two.

    5. JFJason Fried59:18

       Yeah. So I can only tell you what we've done, which is again, a little bit unusual. We pull out everything at the end of the year. Now, first of all, we're an LLC, so we're taxed on everything at a personal level. So if I leave money in the business, I'm still paying personal income tax on that money. It doesn't really make sense to do that. So we have a recurring, you know, recurring revenue model. We have very predictable revenue, so we basically have a little bit of overlap. You know, we take some money out in quarterly distributions, and there's some money left over in January, and we kinda wait till April to take it all out, so there's some overlap-

    6. SPSam Parr59:47

       Got it

    7. JFJason Fried59:47

       ... and then operating cash, right? When we were, when I first started the business in 1999, we were a, a, an agency. And we, our first client, it was, it was, uh, four of us, three partners, one sort of employee. We each put 10 grand in, so we had 30 grand, uh, to start the business. Um, and then our first customer was, was HP. HP was like giving everyone business way back then. HP was like the hot company to get a gig with 'cause they paid a lot, and I think the gig was a few hundred grand to do some website design for them. This is '99 where people are paying numbers like that. And, um, from that point on, we were profitable because we only had a few people. We didn't take big salaries. And that was that, and we were able to pull out all the money every year because... Actually, we started out as a C corp for like a couple years, and then we switched to an LLC. But regardless, we pulled out all the money, um, at the end of the year essentially, uh, and because we had ongoing client work that would sort of span the gap of the calendar year. So we just always had money coming in, and our costs were so low that we weren't ever starving, you know? So it just, it just was a situation where we always had high margins, and that's how I've always run the business. So I, I know it's an unusual setup, um, but I do think it doesn't have to be quite as unusual. I think what ends up happening is companies hire too many people. Their payrolls are... They have too many people on payroll. They spend too much money on customer acquisition, and their costs are really high. So their margins are very low, if there's margins at all, and then it's very hard. It's v- much... It just becomes a much harder business to run. Now, again, like, there's a lot of luck involved with this. We happened to find a way somehow to have very, very healthy margins over two decades. Part of that, though, is a- again, the cost side of it, which is just not considered enough. Do you run any paid ads? No, not right now. Goddamn. We, we have explored that. We've, we've played with it. So here's the thing, like last year we're like, "We're gonna spend 5 million bucks for the first time ever on like ads." And we started getting into it. In a few months, like we spent a bunch of money, and we're like, "This is just, it just, it's vanity money because like this isn't doing anything for us." Now, someone might say, who's listening, go, "You gotta give it more than three months and six months and eight months. You gotta do this for five years before you show returns, and you gotta try a bunch of campaigns." We just don't have the tolerance to spend that kind of money on something that isn't very clearly going to return for us. Also, our price points are so low, our customer acquisition costs are tricky because a lot of our competitors, they're selling things for thousands and thousands a month. We're selling things for Basecamp is 15 bucks per user per month, um, or $299 unlimited. Like there's not a lot of play here, um, to really invest a lot and spend a lot to, to acquire a customer. So it just doesn't work for us, so we don't do anything, not even branded keywords. We occasionally do that if someone's like using our, our brand and we kinda wanna knock them out. But essentially we just don't s- it's all through our own channels, you know, that we've developed over the years. And there's no question in my mind that there is a formula that we don't know that we could figure out at some point perhaps to grow the company in a big way somehow through marketing, advertising, targeted whatevers. We just don't have the, the ta- the tolerance for it, frankly. I just don't think that we're interested enough in that kind of growth. And the answer is always like, why grow that much? Like if you're trying to sell the company at some point, like growth rates really matter, but like for us, sustainability matters, profits matter, margins matter. I don't wanna eat into those for some future whatever. It doesn't really matter. Again, like if we were to sell the business in a couple years and we got a 10X multiple or 5X multiple but could've had a 15X mul- I just don't... It doesn't matter to me. It doesn't matter to me to spend all that money trying to s- search for that. I'd rather just take the money out and put it into investments that I can basically guara- not guarantee, but like have a really good sense of return on and, and just do our thing our own way.

    8. SPSam Parr1:03:42

       Dude, you're the man. I think that if I had to make like a Mount Rushmore, uh-

    9. JFJason Fried1:03:46

       [laughs]

    10. SPSam Parr1:03:46

        ... a Mount, a r- a Mount Rushmore of this podcast, like, you know, I think Shaan opened it up by saying, "We love people who carve their own path." And I don't care if that person is an entrepreneur or an artist or a mother, like just someone who like just says, "This is the way I want the world to be and I'm gonna live that way," um, I admire that greatly. And the way that you write, the way that you think, you're, you're kinda on my Mount Rushmore. I really admire you, and I'm incredibly... I know we both are incredibly thankful that you, uh, spent some time with us. You're the man.

    11. JFJason Fried1:04:13

        That's very kind. I, I, I love the show, by the way. Uh, I listen to it. It's great. Um, and, uh, I, I really appreciate being here. Thanks for, uh, the time and the questions, and happy to do it again anytime. Um, I could go for hours with you guys if you ever want to, so yeah.

    12. SPSam Parr1:04:26

        You have a, uh, you have, uh, an open invitation whenever you wanna-

    13. JFJason Fried1:04:30

        Cool. Whenever you want. Well, I'm not gonna invite myself on. I did this time actually, kinda sorta.

    14. SPSam Parr1:04:34

        [laughs]

    15. JFJason Fried1:04:34

        So I will not do that again. If you ever wanna talk again, I'm available. Let me know. Thanks for doing it, Jason.

    16. SPSam Parr1:04:38

        We appreciate you. That's the pod. Thank you. [outro music]

Episode duration: 1:05:01