Founders Podcast: Jason Fried Interview Transcript — Build for Yourself, Keep Costs Low

Guest: Jason Fried — Co-founder & CEO, Basecamp/37signals Host: David Senra — Founders Podcast Show: Founders Podcast Duration: 2 hours 21 minutes Source: YouTube Analysis: Deep Analysis & Commentary

Table of Contents

1. Build for Yourself & Keep Costs Low 00:00:02
2. Small Teams & Reinventing Products 00:05:22
3. Never Sell — Comfort, Not Serial Entrepreneurship 00:13:39
4. The Envelope vs. The Letter — Thin Business, Thick Product 00:17:48
5. Designer, Not CEO — Staying Close to Customers 00:25:24
6. Day-by-Day Planning & The Beauty of Small Units 00:36:49
7. Narrow Aperture & Galapagos Island Product Design 00:48:05
8. Authenticity — Navajo Rugs & Leaving the Mistakes In 00:55:09
9. A Love Letter to Email & Being a Toolmaker 01:02:33
10. Physical Inspiration, Analog Living & Knowing Who You Are 01:08:12
11. Self-Discovery, Psychedelics & Trusting Intuition 01:18:56
12. Cushy Margins, Blubber & Real Cash for Real People 01:29:33
13. No Rear-View Mirror — Moving Forward, Not Looking Back 01:35:31
14. Timeless Design, The Great Regression & Ruthless Editing 01:56:16
15. Oak Trees, Time as Filter, Pricing & Intuition 02:10:38

1. Build for Yourself & Keep Costs Low

Time: 00:00:02 - 00:05:22

David: I want to start with what you told me last night, that you feel the best way to make a product — or the best way to make a product for you — is by being the actual customer. You are making the products that you want to use.

Jason: Yeah, I don’t know how to do it any other way. This is how I’ve always done it. When I was 15, 16, I started in software making stuff — actually something called FileMaker Pro, which is way back when you can make these databases for yourself. And I made this database to keep track of my music collection because I was loaning out tapes and CDs to friends and never getting them back. So I’m like, I need a way to keep track of this stuff because I keep losing these things.

So I made this product, which I eventually called Audio File. I made a nice interface because I liked art, I liked making stuff. And I eventually just decided I’ll put a little text file in this archive of the software that said, “if you like this, send me 20 bucks.” And I put it up on AOL — this is pre-Internet. And I got this envelope, actually an airmail envelope, one of those with the red and blue check marks, old school envelope, from Germany. And someone had printed out this piece of paper, which was the thing I included with the software, and gave me a crisp $20 US bill.

And that was the moment, I think it all clicked for me, which is: make stuff for yourself. There’s probably other people out there like you, who want what you want. Make it available to sell. You are the customer, you are the audience. It’s you, you, you. And then there’ll be other people just like you. We’re not all that unique. There’s plenty of people who like what we like, plenty of people who don’t. And there’s plenty of products for them, too. But there’s enough that like what you like. And so that’s why I got started.

David: You have this interesting idea where if you’re just making what you want, you just have to go and collect more people that like the things that you like and kind of ignore the people that don’t.

Jason: Yes. And this is all tied into keeping your costs low. If you have high costs, a big company, you have to find a lot of people like you. But if you keep your costs low, keep your company small — at the time, it was just me when I was doing the software thing and I was making like 20 grand a year selling software as a solo person when I was 16, 17. That’s an amazing side business at that age because I had no expenses. I only had to find a few thousand people to pay me 20 bucks.

But if I had a big business with a lot of overhead, I’d have to find a lot of people like me, and that’s harder. So the whole game for me is to make things as simple as possible, as easy for me as possible. Keep your costs low, keep your company as small as you possibly can, and make great stuff. And then you don’t have to find as many people just like you, but the ones you find really love what you do. And that’s enough. That is enough.

David: You put it in a very interesting way. You said your real competition is your costs.

Jason: Yeah, it’s your only competition. A business is very simple. You got to make more than you spend. That’s a business basically. So if you’re making more than you spend, your competition is your cost. That’s what you’re really in business against — how much it costs you to stay in business. It’s not all the other alternatives on the market. They exist and they’re real, but you can’t do anything about them. They’re going to do what they’re going to do. What I can control is how much it costs me to run my business, how much I sell my product for. And as long as I make more than I spend, I get to stay in business.

And isn’t that what this is all about — staying in business? I like this. We like this. I want to keep doing this. I can’t keep doing it if I don’t stay in business. I can’t keep doing it if I make less than it costs me to make the things that I make. So I’m always thinking about the only competition I really have on an annual basis is to make sure that we make more as a company than it costs us to run the company. That’s my real competition.

David: This is something I talk about over and over on Founders, where every single one of history’s greatest entrepreneurs — they were obsessed about watching their costs. Sam Walton, Steve Jobs when he first started Apple, Andrew Carnegie, Rockefeller. This theme reappears over and over again. But it’s fascinating how you can have a software company with insane margins and still lose money. Just go study the early days of Microsoft — the first 30 employees of Microsoft were Bill Gates, his secretary, and 28 programmers.

2. Small Teams & Reinventing Products

Time: 00:05:22 - 00:12:25

Jason: We have 62 people at 37signals, and we’ve gotten as high as 80 at some point. We’re about 62 right now, which feels really good. But we also built a lot of things when we were much smaller — 12 people way back in the day, or four people way, way back when we started out.

I’ve always been comfortable with small teams. Small teams work better, are better. There’s less room for miscommunication, because I don’t think companies really have communication problems — they have miscommunication problems. When you have too many people and too many layers and someone misses this and someone has to repeat something that happened — I want to avoid all of that. Get rid of all the things that get in the way of making good stuff. I actually think too many people get in the way oftentimes, and you actually end up making worse stuff the more people who are involved.

Any team we have making something is usually two people. One programmer, one designer. That’s pretty much it. It also keeps us honest — it prevents us from making things that we can’t make with two people. So it just keeps everything tight and simple and clear. You keep parlaying that and adding that stuff up, and you end up with a very tight product with a small surface area that you can see the whole thing. You can hold the whole thing. Your customers can see the whole thing and hold the whole thing. And that’s all people want.

We don’t have any middle management. We tried a little bit — that’s why we had 83 people at one point. We hired a few more people to build out a team and then pulled back and went, “that wasn’t helpful.”

There’s two people on the executive team, me and David, my business partner. That’s it. We’ve had a COO for a while. They were fine, good people. We just didn’t need the work done. When you do stuff you don’t really need to do, you feel bad for them because they’re wasting their professional life doing things that don’t need to get done.

The question we ask after the first year with any new employee is: knowing what I know now, would I hire them again? And that answers pretty much every question — performance, attitude, culture, fit. With the management stuff, it wasn’t even about the people. It was more like: now that we know what we know now, would we create this position again? And the answer was no.

David: Does that work with products, too, or features of products?

Jason: It can. Every five, six years, we kind of reinvent Basecamp, our main product. From Basecamp one to two was a total rewrite. Two to three was a total rewrite. Three to four was not, and four to five, which we’re working on now, is not. But it’s a chance to revisit a lot of fundamental assumptions about what the product does and how it works.

Human nature is about expansion. In the physical world, there are limits that push back on those expansions — if this mug was burning hot, we’d know that’s a bad design. In software, you don’t get that. Software can be anything, it’s infinitely malleable. And what ends up happening is because there’s nothing pushing back, it just expands forever and gets worse. Software slides downhill.

So I’m conscious of that. I’m always trying to make sure every new version is a little bit simpler in the fundamental ways than the previous version. It might have more features, but the experience hopefully is simpler. That’s the big challenge. Actually, frankly, the most fun part of building products over the long term is: can we buck the trend of having them slide downhill?

My favorite thing in life, frankly, is to have an insight. I don’t get to decide when I have them. You just have one. Maybe it’s in the shower. Maybe it’s whatever. And it’s cool to work on a problem in software and then have an insight about how to make it simpler. I bounce into those insights very frequently making software — more so than pretty much anything else I do.

3. Never Sell — Comfort, Not Serial Entrepreneurship

Time: 00:13:39 - 00:17:48

David: You started your company when you were 25. You’ve been running for 27 years. You’ve been profitable every single year. Millions of customers over the lifetime of the business, hundreds of millions of dollars. And yet you told me that if you ever sell the company, you don’t want to look at a computer.

Jason: Yeah, I don’t. First of all, I don’t like being consistent. I’m not that interested in being consistent. It’s all about context. It’s not about consistency. I don’t find consistency interesting in any way. That’s why I don’t like to plan, I don’t have long-term plans. I like to make things up as I go.

But yeah, I don’t particularly like business. I like running my business. I figured out how to run my business, but the idea of me running another business — I don’t want to do that. Maybe I could create another one that’s mine and I would like it, but I don’t think I could actually. We’re a product of timing and teams and the right people at the right time and the right ideas at the right time. That’s what made this thing and continues this thing. But to start over again? No, thank you.

I would never trade my business for anyone else’s business. I don’t want anyone else’s business. I don’t want to put myself in someone else’s shoes. I know how to do my thing and that’s enough for me. The sense of just being comfortable with what you’ve built and what you’re working on now being enough — that’s for me a very peaceful place to be. Unfortunately, that’s not something that’s talked enough about in tech, which is grow, grow, grow, get as big as you can, sell, valuations, do it again. Serial entrepreneurship. It’s boring to me. All that’s boring.

David: You said you would not trade your business for anyone’s business.

Jason: In fact, it’d be a downgrade. Anyone’s. You could pick anyone. I’d take mine over anyone else’s. The underlying thought is: I built the company I want to work at. I built the business I want to be in. No one else has that. I have that. That’s my thing. I love what I’ve built. It’s great. I’m very happy with it, and it’s a good fit for me. I don’t want to wear someone else’s clothes. I don’t want to live up to someone else’s expectations. We have ours. We do our thing our way.

4. The Envelope vs. The Letter — Thin Business, Thick Product

Time: 00:17:48 - 00:25:24

Jason: There are two sides of business. There’s the envelope and there’s the letter. The envelope is the outside, the shell, the business, the vehicle that holds the letter. And the letter is the product or products. I’m a product guy. I love product. That’s all I care about. The business side just has to exist to hold the product.

I remember early on when I first started my business, I was thinking about the brand and the business and how big it could be. That’s all envelope work. You’ve got to know who you are. I know I’m not an envelope person. I don’t just want to build shells that get filled and then I sell and build another shell. I want to work on the letter. And the envelope is just the thinnest little thing that needs to be there.

Playing entrepreneur is like spinning up businesses all the time, making all sorts of stuff and giving it a name and a logo and trying to raise money and coming up with valuations and talking about all this stuff. And there’s nothing of substance inside yet. There’s just losses, and then it’s a mad rush to get out at a certain valuation. That’s turning a business into a financial instrument. It’s anathema to me. It’s repellent, actually.

The more mass of an object, the more energy it takes to change its direction. A thick business is hard to change. It’s heavy, it’s massive. There’s too much distance between it and the customers, it and the product. I think the thing that matters should be big, and the rest of it should be as thin as possible. And so that’s what we’ve tried to build at 37signals. It’s a very thin business with a thick set of products.

I like more of a metaphor where it’s like a rocket into orbit. You’ve got to get off the ground and break free of gravity. But then there’s a point where you actually just want to sit in orbit and maintain. Be within a certain range and fluctuate a little bit up, a little bit down. But be in this comfortable place where you’re just orbiting. You’re not pushing super hard. You’re maintaining a level of quality, a level of enjoyment. I think that’s a really wonderful place for businesses to be.

David: You seem to have this inherent natural revulsion against optimization.

Jason: I don’t like optimization around numbers. We’re definitely leaving money on the table. We don’t optimize our pricing, not constantly A/B testing. I’m certain there’s some formula that could lead to more growth, more revenue. And my answer is: so what? I’m very comfortable with where we are. I don’t want to mess that up. People mess it up all the time. You get to the right size and for whatever reason you can’t be content there, and you push a little bit too much, and you lost what was great about what you were doing.

But I am interested in optimizing a product to make it better. That’s a worthwhile optimization. It’s better for me because I use it. It’s better for our customers. That’s fun. But squeezing out an extra 100 grand off 5 million? Not fun. Boring. I’d rather spend the money making the thing I make better. That is the thing I’m here for.

5. Designer, Not CEO — Staying Close to Customers

Time: 00:25:24 - 00:36:49

David: I don’t think you think of yourself as a CEO.

Jason: I don’t. I don’t actually even like the term. Chief executive officer — of what? I make products. I run the company with David. We make decisions. We hire great people. We find people with zero drama. We make good products that we really like. Yesterday I answered 200 emails from my customers. Some people would say that’s irresponsible for a CEO. I think it’s the best thing you can do.

David: When I talk to you, it’s like you just design everything in your life.

Jason: I like to make things. You know, the founder of UPS, Jim Casey, over 100 years ago, he realized his executives would just tell him what he wanted to hear. So he said, “Forget this.” He had a driver, and every time they saw a brown UPS truck, they’d pull over. And he would just talk directly to the drivers — the people actually doing the work. Like Bezos, who made every executive spend time on customer support. We did the same thing. We had this thing called “everyone on support.”

When you sign up for Basecamp, the first thing you see is a letter from me with my email address and my signature. I want my customers to email me. There’s no AI, there’s no assistant. There’s no levels between it all. Just write me. And people do all the time.

I want to get as close as possible to the people who use the things that we make. Not just to make them happy — to make myself happy too. To understand the language they use, how they describe things, who they are. It permeates me and I get to feel what it’s like to be them.

I like real things. A billion-dollar business doesn’t feel like a real thing to me. It feels like a concept. Meanwhile, the dry cleaner down the street — I can drop off my shirt, I pick it up from the person who owns the place. This is their living. There’s something I connect with, something that’s real, that I can hold in my head and understand.

David: Are you proud of how long you’ve been able to stay in business?

Jason: I’m not proud of it. I feel fortunate. Patrick O’Shaughnessy said something like, “I work so I could work more.” The reward for good work is more work. And so 27 years is more interesting than 15. I like this stuff. Somehow we’ve managed to build this system, these products, that sustain over a long period of time and allow us to enjoy our craft. And we are in control of that as much as we can be. I can control my costs, I can control my quality, my messaging. And we can keep making that thing. That’s what I want to do.

6. Day-by-Day Planning & The Beauty of Small Units

Time: 00:36:49 - 00:48:04

Jason: Concept 2 is probably one of my favorite products of all time. The Concept 2 Rower. Under a thousand bucks, has been forever. Different variations, always improving on a theme. The display is black and white LCD with five rubberized buttons. Runs on C or D batteries. No electricity, no plugging in, no recharge. It always works. Incredibly durable. Does exactly what it’s supposed to do with nothing else. A paperclip and a Concept 2 Rower — hard to improve on both of those things.

I don’t believe in long-term planning. I believe in being around for the long term. But the best way to do that is day by day. I’m always mystified by people who think they can figure out the next three years today, but they’re afraid of figuring out tomorrow.

I think of our business like a squirrel. You watch a squirrel run across a field. It knows roughly where it wants to go. It runs and scurries and stops and looks around and scurries more. It doesn’t need to get exactly where it wants to go. It knows roughly and course corrects. That’s how I do it.

At our company, we typically think about six weeks in advance and that’s about it. 99% of projects take six weeks or less. And then day to day, the teams figure it out as they go. I set the general direction — not financial targets, but generally where we’re headed with an idea. Figure out how to get there on your own. We’ll check in when we need to. It’s a bunch of course correction.

I find that that is the most honest, real way to get somewhere good. Because in general you know more about things the closer they are to you. I probably have a better idea of what might happen tomorrow than five Fridays from now. Let me worry about tomorrow. Make small decisions all the time and don’t put yourself in a place where you’re making huge ones you’re afraid of.

David: There’s a question I keep getting asked: “What does success look like five years from now?”

Jason: My answer is: I don’t know. I don’t care. So what? My answer is boring: just more of this. People answer those questions today for who they think they’re going to be then. You don’t know who you’re going to be then.

David: All a great life is — it’s just a string of great days. All I need to focus on is making a great day.

Jason: And if one day you decide you don’t want to do this anymore, then you just change. Jeff Bezos told me: “You don’t find your passions, they find you.” I’ve always believed that. I’m into things now that I wasn’t into 10 years ago that I didn’t know about 10 years ago. There’s beauty in just being empty and open to the world and how it presents itself to you.

You want to find tiny units, find small units. A day is a good small unit. A simple decision is a good small unit. The good thing about that is if you screw up, it’s not a big deal. If tomorrow sucks, in 24 hours it’s over. Versus big huge decisions where you take eight months to think about it and it goes south — it’s so hard to deal with the ramifications. Make things small, tiny little units that you can throw away if it doesn’t matter. You become more antifragile that way.

Someone could say you’re going to miss big opportunities. And yes, maybe so. So what? Stop worrying about all the other things you can maybe do and just focus on the thing that you’re doing and make that work over and over.

7. Narrow Aperture & Galapagos Island Product Design

Time: 00:48:05 - 00:55:08

David: Do you feel you have a narrow aperture with the world? You don’t really care what other people in your industry are doing.

Jason: I’m doing what I’m doing and it doesn’t matter what they’re doing. I don’t actually want to pay attention to it. What ends up happening is everyone follows everybody else. Because when you’re paying so much attention to what everyone else is doing, you tend to think that’s the way it has to be done. You’re not open to alternatives. Then people build out of fear — “Gosh, they’re doing this, I have to meet them. There has to be parity.”

If I’m going to take inspiration from anything product-wise, it’s going to be outside my world. The Concept 2 Rower. Not another piece of software. I like buildings, I like furniture, I like watches. Why does everything have to come back to business? These things just happen. They form you and you’re not even aware of most of it.

A few days ago, it’s 4:45, California here, the light is just beautiful at the end of the day. I’m sitting outside looking at the way the sun is raking over the hills. I’d rather look at that than a piece of software. I’m learning more from that. I’m getting enough of the software world by being in it. I don’t want to soak in it. I want to soak outside of it.

David: Tell me about your idea of Galapagos island product design.

Jason: There’s something really cool about islands that have evolved on their own, not influenced by other things. I think of us as an insular group focused on solving a problem our own way without paying too much attention to what everyone else is doing. We see so much copying in our industry. Someone has a successful product, and then all future products for the next three years look just like theirs. That’s a slippery slope.

Our stuff looks different than everybody else’s stuff. Our stuff works differently. Nothing works like Basecamp. Nothing works like Hey. It’s all different. And some people hate the way our stuff looks and works. Fine, don’t care. We have enough people who love what we do.

I do all of our writing. I want every word to land with meaning. Thin, not thick. How can I get to the right point but not be sterile? There should be a little bit of bounce, a little bit of rhythm in the writing. It should feel nice.

If you look at my product demos — they’re long and unedited, and I screw up a bunch. And I don’t care. If I was sitting with you showing you our product and I screw up two minutes in, I’m not going to say “let’s start over.” I’m just going to keep going. That’s how I want these to feel. A real person showing off a real product. My name’s on it, my signature’s on it, my email’s on it. We are who we are. We’re not a corporate entity hiding behind a structure.

8. Authenticity — Navajo Rugs & Leaving the Mistakes In

Time: 00:55:09 - 01:02:32

Jason: I was in Wisconsin, in this little town called Mineral Point. I was wandering through this gallery. It looked like a junkyard inside. I knocked on the door, walked in. There’s some rugs hanging, but also junk everywhere. The owner comes out, a character. He collects Navajo rugs.

I find them very beautiful. Very simply patterned, vibrant colors. They spoke to me. And I noticed they have a lot of what I thought were errors. Geometric shapes that weren’t quite right. A stitch that’s clearly off. I asked him about that.

He told me: the Navajo don’t see those as mistakes. They’re just a moment in time. If you’re climbing a mountain and you trip or stumble, you don’t start back. You can’t take that stumble back. It just happened. The Navajo leave these in their rugs because they just happened. This is a record of what happened.

I love that. I’ve tried to do that with the things I do. If I make a mistake in a video or whatever — that’s what you would do in the real world. These are not mistakes. Mistakes are a concept we put on ourselves. Why does that have so much weight? Are these rugs worse because there’s a stitch off? No, they’re better.

Companies are afraid. They have PR people and have to talk to lawyers before they publish anything. Everyone’s afraid of saying something wrong, doing something wrong. I think people want to do business with people. Maybe this is why I like the dry cleaner, the grocery store, running my business my way. People are dealing with people. We’re all accessible, all reachable.

David: There’s an aesthetic value to that directness that can’t quite be explained.

Jason: Like Christopher Alexander, the architect, who talked about buildings in native villages. No architect made any of that. They had people making places for them to live. And there’s a certain quality to that which is beyond high quality — it’s a perfect fit for what they wanted. That’s the kind of stuff I like to build.

This is why I was drawn to podcasts. You’ve heard some podcasters speak for hundreds of hours. You can’t hide who you are at that point. You’re going to hear the mistakes. And that’s endearing.

My friend Lulu texted me this morning — she was listening to one of my old podcasts on Napoleon’s Maxims, and it was hilarious that I didn’t edit out the fact that I was mispronouncing all these French names. It was endearing to her that I didn’t act like I speak French. I was just guessing phonetically. And no one gives a damn because you’re you. That’s not the point of the story. Figuring out the stuff that actually matters — that’s what’s important.

9. A Love Letter to Email & Being a Toolmaker

Time: 01:02:33 - 01:08:11

David: Going back to you writing these letters for the landing page — do you do it before the product is created, like Bezos?

Jason: In the middle, usually. With Hey, our email service, before we launched — before the product was anywhere near done — I wrote the letter. It was about why email is a beautiful thing. For the longest time, people have hated email. They despise it because email has gone off the rails. I’m like, we can bring it back on. Do you remember when you used to get an email from someone you loved or your grandparent or an old friend? It’s a wonderful thing. The problem is that most emails now are spam and sales and garbage and meetings.

David: I bought Hey just because I wanted to give you money. You built up so much goodwill by teaching me through your writing that I was like, I’ve got to pay you back somehow.

Jason: It happens so much. It’s cool. Sometimes the use is the support, not the actual use of the product. We identify with people, not companies.

The letter was a love letter. It ended, if I remember correctly, “this is a love letter. Hey is our love letter to email.” And I meant it. There’s a certain warmth and tone that comes through when you make something you’re really proud of. I’m really proud of the products we make. The business is the envelope. I’m not proud of the envelope. I’m proud of the things that sustain the business, the products.

David: The creation of email is actually a miracle.

Jason: It’s amazing that anybody in the world can get in touch with anybody else. There’s no platforms — everything else is a platform. Want to write someone on WhatsApp? They need WhatsApp. Email — anyone can reach anyone. It’s as beautiful as the web. These are wonders of the world. And how did they become so despised? I blame Apple, I blame Google, I blame Yahoo, I blame Microsoft for making terrible email products that they just didn’t care about.

I’m a toolmaker. I make tools. That’s how I think about it. I’m not tech. I’m not a tech person. I make tools. They just happen to be made of software. A lever that lets you do more with it than you could without it. That’s what a tool is for — to make progress.

10. Physical Inspiration, Analog Living & Knowing Who You Are

Time: 01:08:12 - 01:18:55

David: A lot of your inspiration seems to come from physical things. Architecture, watches, cars, the Concept Rower.

Jason: If I ever do anything else, it’s going to be physical. Mark Leonard of Constellation Software said one of his most fulfilling jobs was building stone walls. He could go to where the stone wall he worked on 30 years ago and point to it: “I did that. I made that.”

Why do I draw so much inspiration from physical things? I like being able to hold things, touch things. I like texture. A lot of our software products actually have texture — simulated, but present. A lot of software these days is very flat. I like gradients and colors and lines and some texture.

I like patina. I like age on things. Software doesn’t age the same way. A great brick — bricks are beautiful because they look even better as they get older. They collect age. There’s something about the physical world that is just fundamental. We are part of it.

If you want to find great colors, look at a bird. Don’t look at a book. Look at a leaf. Look at the ocean. Go to a tide pool and look at the colors. That’s the real stuff.

David: You said if you sold your business, you’d never use a computer again.

Jason: I’d like to close my laptop for a year and just not use it. Computers are probably the most amazing tool humans have ever made. I don’t despise them. But I could take some time away. Time away from nature would bug me way more. If I couldn’t go outside for a year, I’d go insane.

David: One of the people I most hope to get on the show is Christopher Nolan. He desires to live in an analog world.

Jason: It’s good to figure out what you like eventually. A lot of people don’t know what they like. They like what other people like. They like what they’re supposed to like. They live up to other people’s expectations. They run someone else’s business in a sense. They don’t have a sense of who they are yet.

What’s important is not what you like — it’s that you know who you are. You don’t even need to know why. You don’t need to pick sides. You can love digital and physical. They’re all the same thing. We live on this speck of dust in space. It doesn’t really matter what you like and why — just that you do and that you know that you do.

11. Self-Discovery, Psychedelics & Trusting Intuition

Time: 01:18:56 - 01:29:33

David: At what age do you think you finally figured out who you are?

Jason: Probably more recently, frankly. I knew what I liked to do, but I’m not sure I fully know who I am. No one should be certain about that. But I’ve come more into my own since getting married and having kids. Looking back, I was more of a punk. I probably resented things. I had a chip on my shoulder. Maybe that was good — you’ve got to prove yourself when you’re breaking in.

The only time I’m ever competitive is when someone slights me. Otherwise, I’m not competitive. I remember submitting a website design to an award thing — the guy wrote me back saying “you suck. Find another day job.” And I loved that. That fired me up.

I probably came into my own in my 40s. I’m 51 now. I also had some psychedelic experiences, which helped.

David: John Mackey keeps trying to get me to do psychedelics. What did you do?

Jason: My favorite thing in life is to have an insight. And psychedelics for me were an avalanche of insights. It was fascinating to know that my mind could see things and understand things in ways I didn’t know were possible. You think of an idea and — this won’t make sense — but I never thought an idea was a three-dimensional object that I could turn around and see from the other side. Not a different perspective, but literally I could turn it around and see what was behind it.

Think of an old car radio from the ’50s with a needle. You’re always in one channel — that’s you, 95.7. And psychedelics let me turn the knob a little bit and tune into something else that’s always been there, but I couldn’t hear that frequency. You’re picking up things that are there that you can’t hear until you turn the knob.

The last time I did mushrooms, I told the guide I wanted to hear the same song from my incredible first experience. She played it — and I had no experience. It was blank and empty. And I broke out in laughter: of course you cannot have the same experience again. You don’t deserve the same experience twice. It’s not even possible to relive something. That thing happened then and this is now. They’re detached, separate, can never be the same.

I’ve used that with my kids. My kids are 11 and 7. I’m never going to have the experience with my 11-year-old again as an 11-year-old. Once he’s 12, he’s 12. You have to really savor those things now.

David: Did you read Rick Rubin’s book The Creative Act? Do you think you think about things similarly to him?

Jason: When I read that book, I was like, “Did I write this book?” The world just works somehow in some magical way that we don’t fully know. Things just happen. You don’t need to know exactly why all the time. Feel into them. Trust your intuition, your gut. I am a fully intuition and gut-driven entrepreneur. I don’t look at numbers. I don’t care about the numbers as long as we’re profitable.

12. Cushy Margins, Blubber & Real Cash for Real People

Time: 01:29:33 - 01:35:30

David: You mentioned your business should have some “blubber.”

Jason: I believe in cushy margins. I don’t want to run a very tight margin business where I can’t make mistakes or I’m afraid of them. We can screw up and it won’t matter that much. We take risks. We don’t put ourselves at risk. I’m willing to take plenty of risks, but I’m not going to bet the farm.

Big margin of safety — cash, high profit margins. We pay attention to costs. David wrote about getting off the cloud saving us something like 10 million bucks. People ask, “Why put in all this effort to save 10 million?” Because it’s our money. We don’t have outside funding. I don’t want anyone’s money. We make money through our customers, through revenue. So we take very good care of that money.

What’s always blown me away is how many companies in Silicon Valley who are in the software business lose gobs of money. The highest-margin product in history — software, with basically no costs. And there are still companies blowing billions, having never made a penny. It seems incredibly irresponsible.

Because we’re an LLC, at the end of the year, whatever money is left over goes to the members. Then 10% of our profits go to our employees every year, based on longevity — not seniority, not which role you’re in. If you’ve been here for 10 years and you’re a principal software engineer, your profit-sharing bonus is the same as someone on customer support who’s been here for 10 years.

All that money goes to real people. It’s real money. Real cash. No options, no RSUs, no stock. About 20 out of the 62 people last year had six-figure bonuses. Year after year. That’s the beauty of a simple business, a simple cap table, an LLC, and sharing real profits.

I want to pay people with real money they can actually put as a down payment for a home, pay for college education, go on vacation. Have a good business with sound fundamentals, high margins, high profits. Distribute every year.

13. No Rear-View Mirror — Moving Forward, Not Looking Back

Time: 01:35:31 - 01:56:15

David: Before the psychedelic experience, what was your inner monologue like at 35?

Jason: I was probably more aggressive. I kind of don’t remember myself actually. I don’t like to look back on things. Jimmy Iovine sat in that exact same chair and said, “I have no rear-view mirror.” That’s how I feel.

Backwards is a story you’re telling yourself about what you remember about something, and it’s probably not true. It’s perverted in a million different ways. And the reason I don’t like postmortems in business — you launch something, spend all this time looking back on it trying to figure out why it did what it did. My general sense is you’ll have no idea. You’re going to find some reasons that you’re going to believe. But had you done that again, it may have turned out differently. If you want to find certainty, you’ll find it because you’ll convince yourself of it.

I’d rather learn by doing something again, making more things. You learn by doing. If you don’t like something that you did, just don’t do that again. That’s the learning. It takes one second.

David: Rick Rubin was asked: “Do you have an engine of constant dissatisfaction, self-criticism?” His answer was: “You couldn’t have done any different than what you did.”

Jason: That’s exactly how I see things. I did what I did. I did the best I could. And there it goes. Now what?

He said, “I’m pleased with the work that we did. Excited to keep working. It’s fun. I like making things. I feel like it’s my reason to be on the planet. If it could have been better, I would have kept working on it. If it could be better, it’s not done. I’ve done everything I can to make it the best it can be. There’s nothing to be critical of.” Everything we make is a reflection and a moment in time.

This is why we don’t have revenue targets except for being profitable. I don’t have sales targets, user targets. A target shouldn’t make me do better work. I should do better work because of the pride I take in the work I do. The product is the measurement, not the number.

David: You don’t think you could start Basecamp again today?

Jason: No way. The amount of friends I have that sold a company and thought, “I’m good at company building” — their second shot doesn’t go well. You don’t know why it succeeded, and you don’t know why it didn’t work. Like Bob Dylan said: “I used to be able to write music like that. I don’t know how I did that. I know I couldn’t do it again. But I can do other things now.” That is a mature human being.

If your identity is tied up into entrepreneurship and you sell your business, you have to go start another because there’s continuity there. And if you can’t achieve the heights — it’s so sad to see that in people, when they can’t just see that what they did was incredible in that moment.

David and I do negative visualization. What if AI just changes the whole landscape and SaaS is dead in three years? Our answer: well, we had a great run. 27 years. Amazing. We should be happy and proud of that experience. I wouldn’t start another business after that. I don’t think I’m good enough again. I don’t have the stamina, the drive, the hunger to build a brand-new software company from scratch. I have the curiosity, but I know that wouldn’t carry me enough.

David: What is success to you?

Jason: The best answer actually came from Steve Jobs: “Did I make something I’m proud of?” That’s great. The way I think about it: would I want to do this again? If so, then it was successful. Not about money. Would I want to spend my time doing that again?

Jason: Even though we crave simplicity, we trend in the trajectory of making things more complex. Rick Rubin’s exchange with Jimmy Iovine — Rick plays him this simple song he produced. Jimmy said: “I wish I could still make something that simple.” You don’t know what you don’t know. You make this beautiful, simple thing, then you tend to think you need to add more.

Part of it is because people get bored of things. Or they take money from the outside world and have to grow a certain amount. They’ve unmoored themselves. They’ve lost connection with why they started in the first place. They’re no longer running their own business — they’re running someone else’s business.

The most important thing to me in business is independence, which is profitability. As long as I make more money than I spend, I can stay in business. That’s independence. No one can tell us what to do. David and I talk about this all the time: “We should do this. No one would let us do this. Let’s do it.”

In my industry, people have an idea and go raise money. The moment they raise money, they’ve cut off almost every option. They think they’ve expanded their opportunities, but they’ve cut off almost every possible off-ramp. Now they have to be a big business or they fail. Most people blow right through what would have been a good business and it’s not good enough anymore. I’m a big fan of optionality.

14. Timeless Design, The Great Regression & Ruthless Editing

Time: 01:56:16 - 02:10:38

David: You have two tweets about the design of a Rolex over time. One went viral.

Jason: Take a Rolex Daytona today and look back at the first one in 1963. The one in 1963 is better, in my opinion, aesthetically. Because it’s the purest form of the idea. Everything else from there has been layered on because they need to sell more and come up with new versions. That’s what happens. Purity — that’s the word. The pure form of the thing. The initial idea, the original concept, the first execution of that idea in three dimensions.

The gym I used to go to had some old Concept 2 rowers. I liked looking at the early ones and the changes over the years. In that case, the changes were more functional — better materials that lasted longer. But the idea was so pure back then and still kind of the same thing. They didn’t just add stuff to add stuff. They added stuff that literally improved things. That’s different from just adding to sell more.

David: The second viral tweet about smart electronics.

Jason: My parents are visiting, so we rented them a house — brand new construction. Everything’s got digital stuff everywhere. The thermostats are touchscreens with the weather forecast on them. The alarm panel is this huge iPad screen. A dishwasher couldn’t be used the first time without an app to register it. My mom wants to do the dishes — they don’t work. Had to call the house manager.

TVs — you don’t turn them on anymore, you boot them up. Takes 12 seconds to get a menu. Before, you turned the TV on and the channel you were on would be on. You can’t do that today. It’s not even a possible thing.

I call this the great regression. Car manufacturers, with the exception of Tesla, put a bunch of screens in their cars — they’re starting to move back to dials and buttons because software is hard and a big piece of glass with no tactile feedback is a bad thing.

The best interface ever was the switch. On, off, beautiful. The light switch is a lost art. And it will be rediscovered one day. There’s room for advancements, but there are also regressions.

David: Rick Rubin has this concept of a ruthless edit. Pick the five songs you can’t live without. A five-song album might be a perfect album.

Jason: You see this timeless design of the 1963 Daytona and you’re like, there’s nothing to add to it. So just leave it. It is perfect. Jerry Seinfeld says dosage matters. You could see a comedian for 45 minutes and think they’re great. Hour and 15, and you go, “eh.” He should have stopped at 45. It’s so hard for us to stop adding complexity. Just to sit there.

A great vocalist with a guitar — sounded great 50 years ago, sounds great today, will sound great 50 years from now. Rick Rubin’s point with Johnny Cash’s “Hurt” — a 21-year-old talking about regret is one thing. A 75-year-old man when he can’t go back and fix it? It’s a way deeper cut. Go back to the essence of what we’re building.

Jeff Bezos told us way back when to focus on the things in your business that don’t change. 10 years from now, people aren’t going to wake up and say, “I wish Amazon’s customer service was worse.” They won’t say, “I wish it took longer to get a product.” They won’t say, “I wish prices were higher.” Those are the core essence elements. Don’t lose sight of those basics.

David: People who have run companies as long as you have are so rare.

Jason: You work harder than most people. You just spread it across 27 years. 40 hours a week over 27 years — that’s 54,000 hours. How many people have worked on the same thing for 54,000 hours? A tiny amount.

15. Oak Trees, Time as Filter, Pricing & Intuition

Time: 02:10:38 - 02:21:20

Jason: I’ve always thought of our business as an oak tree. Oak trees are very stable. They can withstand a lot of storms. They don’t grow very fast. In the Midwest where I came from, a bur oak is a very slow-growing tree but it lasts a long time, can weather a lot of storms.

Versus a cottonwood — goes really fast, makes a lot of noise. Everyone notices them because there’s cotton all over the place. And they die in about 75 years and come down hard. I don’t need to be flashy. I don’t need to leave signs all over the place. Nice and quiet, build a great business, keep a solid foundation, add a little bit every year.

In the tech world, when something comes out, it’s a “killer” — a Slack killer, a Basecamp killer. When you’ve been around a long time, you see that played over and over. There are a lot of things supposed to kill something else, but very few can withstand and outlive the storms that come. How do we compete? We just stay around longer than everybody else.

David: You just stay in the game long enough to get lucky.

Jason: Time is the best filter. The only filter I trust — for businesses, for ideas, for books, for people. Charlie Munger’s thing: you need to build a seamless web of deserved trust with high-quality people. And the only way you know if somebody’s high quality is time. Durability carries most of the weight.

David: One thing that’s important to talk about is pricing.

Jason: With Basecamp, nobody can pay us more than $299 a month. Doesn’t matter how many users. Many competitors will say, “Hey, 2000 seats? You want to pay us $50,000 a month? We’ll take it.” I don’t want their money.

What I want is a static, equal group of customers. Like an old TV with static — all the dots are equal-sized. You should be able to pick out 10 random customers and lose them and be okay. What you don’t want are outlier companies you cannot afford to lose. By equalizing pricing and not letting anyone pay more than anyone else, we create a bunch of small units which are individual customers. Take one out and the whole thing doesn’t fall.

Then we can develop software for the customer base as a whole, not for a handful of customers that pay a lot more. The enterprise game is landing whales. I don’t find that interesting or durable. Durability is about a lot of small things.

David: One thing we haven’t touched on that’s really important: you are all intuition. How have you refined your intuition?

Jason: Intuition for me is making decisions that you’re comfortable with. Ultimately, you have to be willing to make a human decision about something and stick by it. These decisions come from somewhere you can’t quite define. It’s not one thing that tips it over. Intuition is a collection of a lot of things that you can’t quite split apart that lead you to make a decision.

We don’t test things. We don’t do focus groups. We occasionally A/B test for fun, but not because it matters. I’ve never seen a spreadsheet that’s ever made me do anything. I don’t want to make a product decision because a spreadsheet told me to.

How have I refined it over time? You just do things. You make decisions. It’s all about time under the curve. The more decisions you make, the more time you have, the more intuition you’re refining. But you don’t actively refine it. You don’t practice intuition. You just make decisions. And the more you make, the more it sharpens everything up. It’s like tumbling — eventually, you end up with a nice, smooth orb, and it feels really good to have in your hand.

You want to have this place where when you make a decision, you’re like, “This feels like the right decision. I’m not afraid of it. I’m excited about it. It could go wrong, and I’d be okay with that too.” Intuition has to be used to really be enjoyed. And that requires independence, optionality.

David: Jason, one of the coolest things about my job is that I could have somebody like you that has shaped my thinking over a decade and a half. I really appreciate the time today.

Jason: It’s been a blast. Thank you so much for having me on.

Transcribed by AssemblyAI, formatted by Claude Code video-to-article skill