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

Episode 564: Shaan Puri (https://twitter.com/ShaanVP) and Sam Parr (https://twitter.com/theSamParr) talk to Jason Fried about his 6-Week Sprint playbook, how he’s planning for the end of subscription revenue, and what it’s like to have Jeff Bezos as an investor. Want to see Sam and Shaan’s smiling faces? Head to the MFM YouTube Channel and subscribe - http://tinyurl.com/5n7ftsy5 — Show Notes: (0:00) Intro (2:30) Long term planning is a fantasy (8:30) The 6-Week Sprint Playbook (14:00) Does Jason regret selling We Work Remotely? (16:00) Cash flow king (21:00) Taking money from Jeff Bezos (29:30) Who does Jason admire? (33:00) Non-recurring revenue is back (37:00) The Founder Letter Launch strategy (45:30) Campfire v. Slack (50:40) Pile on the wackier stuff early (in life and business) (53:30) Taking financial risks that don't put you at risk (57:00) Where does Jason spend his profits? — Links: • Jason on Twitter - https://twitter.com/jasonfried • Rework - https://tinyurl.com/38mfc66n • 37Signals - https://37signals.com/ • Basecamp - https://basecamp.com/ • We Work Remotely - https://weworkremotely.com/ • Once - http://once.com/ — Check Out Sam's Stuff: • Hampton - https://www.joinhampton.com/ • Ideation Bootcamp - https://www.ideationbootcamp.co/ • Copy That - https://copythat.com • Hampton Wealth Survey - https://joinhampton.com/wealth — Check Out Shaan's Stuff: Need to hire? You should use the same service Shaan uses to hire developers, designers, & Virtual Assistants → it’s called Shepherd (tell ‘em Shaan sent you): https://bit.ly/SupportShepherd My First Million is a HubSpot Original Podcast // Brought to you by The HubSpot Podcast Network // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano Past guests on My First Million include Rob Dyrdek, Hasan Minhaj, Balaji Srinivasan, Jake Paul, Dr. Andrew Huberman, Gary Vee, Lance Armstrong, Sophia Amoruso, Ariel Helwani, Ramit Sethi, Stanley Druckenmiller, Peter Diamandis, Dharmesh Shah, Brian Halligan, Marc Lore, Jason Calacanis, Andrew Wilkinson, Julian Shapiro, Kat Cole, Codie Sanchez, Nader Al-Naji, Steph Smith, Trung Phan, Nick Huber, Anthony Pompliano, Ben Askren, Ramon Van Meer, Brianne Kimmel, Andrew Gazdecki, Scott Belsky, Moiz Ali, Dan Held, Elaine Zelby, Michael Saylor, Ryan Begelman, Jack Butcher, Reed Duchscher, Tai Lopez, Harley Finkelstein, Alexa von Tobel, Noah Kagan, Nick Bare, Greg Isenberg, James Altucher, Randy Hetrick and more. — Other episodes you might enjoy: • #224 Rob Dyrdek - How Tracking Every Second of His Life Took Rob Drydek from 0 to $405M in Exits • #209 Gary Vaynerchuk - Why NFTS Are the Future • #178 Balaji Srinivasan - Balaji on How to Fix the Media, Cloud Cities & Crypto • #169 - How One Man Started 5, Billion Dollar Companies, Dan Gilbert's Empire, & Talking With Warren Buffett • ​​​​#218 - Why You Should Take a Think Week Like Bill Gates • Dave Portnoy vs The World, Extreme Body Monitoring, The Future of Apparel Retail, "How Much is Anthony Pompliano Worth?", and More • How Mr Beast Got 100M Views in Less Than 4 Days, The $25M Chrome Extension, and More

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Shaan Puri?

  I got four words for you. Self-funded cash cow. That is what today's guest, Jason Fried, has built. He's got this company, 37 Signals. It's been around for, I don't know, 25 years. And they're very hush, hush about their numbers. But the only thing he's ever said is that they make tens of millions of profit a year and have been doing that for a long time. In fact, the investor, Jason Lemkin, once said that the two greatest self-funded cash cow companies he's ever seen are Craigslist and 37 Signals. And even better, they do this without setting any goals. They work only four days a week during the summers and they spend next to nothing on marketing. And so I was dying to ask Jason three questions. And that's what we did in this episode. I said, how did you build this low-stress lifestyle company that has no goals and no long-term plans?

• 0:46Shaan Puri?

  How do you do that as a CEO? The second thing I asked him was, what was it like being face-to-face with Jeff Bezos when he was negotiating his deal with him? And lastly, I want to know the step-by-step process. How does he generate massive interest in his products pre-launch? He's done this over and over again. He has this strategy where he uses a founder letter pre-launch and he uses that to generate a lot of interest. I wanted to understand how he does it. What is the strategy behind that? So, no more teasing. Let's do it. Here's the episode with Jason Fried.

• 1:23Sam Parr?

  We were doing research before this podcast and I've looked into a bunch. 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? You know, you started like a tech company not looking to get into this and now like your home purchases are on the blogs.

• 1:43Shaan Puri?

  It's fucking embarrassing. And frankly, I, I tried to hide them. I tried to do all the things like double LLC and the whole thing. 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...

• 2:00Sam Parr?

  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 spent like 20 minutes clicking through these photos being like, this house is sick.

• 2:10Shaan Puri?

  How do they actually find it?

• 2:11Speaker 02

  Um, I don't know. My guess is so like technically it's 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. And, you know, you, you kind of have NDAs, but you know, someone knows some or like the electrician or the cable company, someone hangs out and finds out or they look in the mailbox and see that, you know, there's a million ways, unfortunately.

• 2:31Shaan Puri?

  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 that, 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 want to do is I want to kind of read you a quote. 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 liked. You go, "Long-term planning is a fantasy. I don't plan long-term because I want to do what I think, not what I thought."

• 3:15Speaker 02

  That's right.

• 3:16Shaan Puri?

  Explain that one.

• 3:17Speaker 02

  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. 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. So my feeling is just make it up as you go. Frankly, we, we think about things six months, or sorry, six weeks at a time, and, and go from there and adjust all the time. And that's fine. And we've always done

• 3:59Speaker 02

  it that way. And I feel most comfortable, frankly, just paying attention to reality in the moment and making calls along, along the way.

• 4:07Sam Parr?

  You also wrote that you've never had a goal. So you said, you had this whole blog post that you don't like goals. I, I think you might have been, you maybe were quoting another person, but you said, the reason why most of us aren't hap, or 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 sort of implied it. Is that the case?

• 4:36Speaker 02

  Yeah, by the way, that quote is from a fellow named Jim Coodall, who is a good friend of ours and 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 want to 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 going to 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 want to go out for a run and run a six-minute mile and you're going to run a six-minute mile and you end up running a 604,

• 5:18Speaker 02

  you're like, didn't hit the goal and you're maybe upset like, I almost got it, whatever. Now, some people might say you're going to work harder next time. But what if the goal was 605 instead? Like, it's five seconds difference and you would have beat it and you would have 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? Don't want to 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 kind of do the best I can and see where it goes.

• 5:58Sam Parr?

  So I like, I, I, I want to agree with you because 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 hay.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?

• 6:19Speaker 02

  Looking at like, well, this needs to, this needs to hit this metric or

• 6:22Shaan Puri?

  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. So then what are we doing here? How do we do it? What is the answer?

• 6:31Speaker 02

  Well, this is going to 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 want to 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 want to be in that kind of company.

• 7:14Shaan Puri?

  Right.

• 7:15Speaker 02

  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 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.

• 7:46Shaan Puri?

  And so this approach where you're like, we, I, let me, let me give you what I see from the outside. You tell me which parts of this are me fantasizing versus reality. So the way I view you guys is you kind of 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. And every additional employee you have, it costs more and more and more, right? Like, it's sort of 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, an approach that we think might work?

• 8:29Shaan Puri?

  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 an 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 after that, we reevaluate and, and decide what, what to do from there. Is that correct? What parts of that are incorrect?

• 8:51Speaker 02

  Partially. So we will spend a lot more time than six weeks on exploring an initial idea. So for example, when we're going to 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.

• 9:18Speaker 02

  Or you get into something and you 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 and you just give up. Frankly, you just give up, which is something I think more people ought to do.

• 9:34Shaan Puri?

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

• 9:39Sam Parr?

  Yeah, it's, you know, I don't want to sound like I'm sniffing my own farts, but it's a little bit of an art where like it's, I, I feel like an artist a little bit where I, I'm exploring a concept. And then I, it'll take six months for some inspiration. Like I, I, I feel inspiration and then I have to wander to like, like kind of hone in on the painting and the concept a little bit. And it's sort of like one of those things where you take a lot of showers and like you get different ideas or you go for 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. Is that what you do?

• 10:14Speaker 02

  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, but like we just, we explore and we leave room to explore and the margins allow us to explore and being profitable allows us to explore, not having 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 want to do, the way we want to do them. But at some point, you know, you also don't want to be reckless with money and time and people. At some point, you go, this is just isn't going anywhere. Let's stop. Or, so we really do take our internal sort of motivation temperature. A lot of it is wrapped around motivation. Like, are we pumped about this?

• 10:58Speaker 02

  Does this feel good? If so, let's keep doing this. And then, and then you finally kind of 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 Highrise, which is our CRM product, which we stopped developing years ago. We still offer 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 bringing this idea to David. I had been exploring with one of my designers

• 11:41Speaker 02

  for a while. And he's like, yeah, that is interesting. Like, let's see where this goes. And so we started to kind of hooking it up. So we did the UI first. This is what we always do. And showed them a bunch of UI. And we started making it work. Like, 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 got to 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 got to have some end to these things. So you can get on to 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 kind of have to, you got to time box these things in a sense.

• 12:25Shaan Puri?

  Well, 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 you said was no is just saying no to one thing. Yes is saying no to a lot of things. As I really love that. No is just saying no to one thing, but yes is saying no to like kind of the whole future set of things. Cause you've now taken up your mind share and your talent, your hands with, with the thing you said yes to.

• 12:53Speaker 02

  Yeah, no, is a very precise, you know, precision instrument. Um, because you get to evaluate a thing and say no to it. And they have the whole spectrum of everything else that's possible available to you at that point. So, uh, 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 no's 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.

• 13:37Speaker 02

  And then get it done in a reasonable period of time. Partially because you don't know if it's going to be any good or not. I mean, you might have a feeling, but the market's going to tell you for sure. So you want to get out of 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 base camp in 2004, backpack 2005, campfire 2006, high rise 2000. We were making a new product every year. And then we did a bunch of other things, job boards and a whole bunch of other things. Now we, you know, we'll make a new product. Once every handful of years. But yeah, in general, we don't say yes that often. And when we do, we try to get it right.

• 14:18Shaan Puri?

  So you mentioned the job board. There's an interesting story here. So Andrew Wilkinson bought the job board. You guys created We Work Remotely because 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, I want to ask you about this because for him, it's like, he loves this story because 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 five million a year of profit comes off the job board.

• 14:50Sam Parr?

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

• 14:53Shaan Puri?

  Okay, so let's say four, let's say four 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 because it's now a lot more profitable? Or is it, no, that was the right thing to do because it cleared us up to do other things? How do you think about that, that transaction?

• 15:09Speaker 02

  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 or consolidating to 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. I think they got a very good deal, let's just say.

• 15:30Speaker 02

  And the thing that I will say bugs me about our decision about that is that that was the easiest month, 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 close, 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 I wish we still had that. We could still launch another one, like, nothing says we couldn't do it again.

• 16:03Shaan Puri?

  Work remotely.com.

• 16:05Speaker 02

  We still work remotely. I think we 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. Not on the other side.

• 16:17Sam Parr?

  You, uh, Jason, what I think is cool is If I remember correctly, you guys, I think you started almost as an agency and then kind of like became a software company because you saw recurring problems 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 great resource out there that says your guys' revenue, but 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. 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.

• 17:02Sam Parr?

  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 the game. What would you say to that?

• 17:09Speaker 02

  I think you're right. By the way, as far as numbers, we, 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.

• 17:21Sam Parr?

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

• 17:27Speaker 02

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

• 17:57Sam Parr?

  I don't have to.

• 17:58Speaker 02

  Don't have to. Like, 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. We've got a couple of really, really big hits. We've done it the way we wanted to do it. 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 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 going to 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 going to happen. But right now it would feel like a loss to sell the company.

• 18:42Speaker 02

  So that's why I'm actually frankly nervous about that. I'm afraid of what I would. I'm afraid of having nothing to do that I'd be good at. I know I'm good at this. I like doing this. Why would I want to stop? You know, it's sort of how I look at it. But yeah, to your point, I don't, I don't take credit for being able to do this again. And I think a lot of, I mean, you guys speak with a lot of entrepreneurs. Sometimes people hit it big twice, sometimes. Sometimes, though, those are more like sales. You know, we're 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

• 19:25Speaker 02

  and really successful businesses, it's not that common. It's really hard to do.

• 19:29Sam Parr?

  By the way, that was my big fear. So I sold my company and I had a guy sit down and talk to me. And he said, how many people do you know who have started two successful businesses? And in my head, I was like, fuck you, man. Like, I'm gonna do it. Like, I was angry.

• 19:42Speaker 02

  Right, right, yeah.

• 19:43Sam Parr?

  I was angry 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, you know, there was some skill. There was also a whole lot of luck involved in my exit. And I, 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 feel like a bum. But it was, a lot of starting things was rooted in fear and rooted in, I don't want to be lonely, so I need to create something where I can hire people and be around them.

• 20:16Speaker 02

  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 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 want to do it anymore. I want to keep this thing going until I don't. All in, I think that we really like doing this. We've 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. And 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 don't know. We really don't know.

• 20:58Speaker 02

  But I think David and I both, like, I think if we, one of us decided to go, we would have to sell the business because I don't think that what either one of us would stick around.

• 21:07Shaan Puri?

  One of my favorite stories is the story where Mark Zuckerberg, 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 technically have to discuss this. Got an offer from, I think Yahoo to sell for a billion dollars. Obviously, we're not going to take it. Onto the next matter. And then Peter Thiel and others were like, hey, hey, Mark, hey, yo, you know, you're gonna have, like, whatever, $500 million 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 I go do? I would just want to build a social network. I think that's the coolest thing I could do right now. And I like the one I've got.

• 21:52Shaan Puri?

  Why would I want to go start over and try to build a new one?

• 21:55Speaker 02

  Totally.

• 21:55Shaan Puri?

  I loved that. I don't know how much of the story is true because, you know, there's a lot of like lore, but that's okay. It's still a cool story. Have you guys, did you guys ever have a moment where somebody comes to you and it's, it's an offer you have to discuss? And like, what went down in that conversation?

• 22:11Speaker 02

  We've never been, we've never allowed that to happen. No one, like, I get, I still get a handful of emails every week from VCs or PPE firms, like, and I just say no, like, I have a, I have a default, just no. So we don't even have conversations.

• 22:26Speaker 02

  We did take some money from Jeff Bezos, though, back in 2006, six or seven, six, I think. It was like a secondary thing. So he bought some shares from me and from David. So that money went into our pockets and never went into the business. No money has 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. Because if it all went to hell, we have something to show for it personally. So we did that. Jeff, Jeff found us because a couple of his companies that he was invested in had to use Basecamp.

• 23:13Speaker 02

  He saw me speak at a conference in San Diego in 2005 called E-Tech. 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 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.

• 23:34Sam Parr?

  What does that mean? You're more, you're more harsh or, or more what?

• 23:39Speaker 02

  I was a young punk.

• 23:40Sam Parr?

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

• 23:42Speaker 02

  More punk rock.

• 23:43Shaan Puri?

  I love that the answer to this question is kind of actually that Jeff was a fan. Jeff was a fan, so he reached out.

• 23:48Speaker 02

  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 kind of chatted, you know, we went out to Seattle, met him. I didn't really, I knew this was like an investment opportunity for him because he wouldn't just come, he wouldn't say, come on and say hello. But I didn't go into it wanting to do that. But after a couple of meetings, we really liked him. Uh, he's very likeable. Uh, and, and, um, we had a lot of admiration for him, obviously, for what he's done and what he built at the time and who he was and how he did it. And his whole story and the whole thing, obviously. Bezos, Amazon, amazing thing, right? So eventually we worked out some deal, which was ridiculous.

• 24:32Speaker 02

  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, or like, we don't know. He's like, put together something, I need something. So we put together something, we shared with them and we all had a laugh about it because it was ridiculous. 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.

• 25:13Sam Parr?

  A suggestions clause.

• 25:15Speaker 02

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

• 25:28Shaan Puri?

  So what was he like? You go there to Seattle, take us into the meeting, when none of us will ever get to do that, right? Especially Bezos back then.

• 25:34Sam Parr?

  By the way, have you guys heard this story really quick? It was the founder of Root, or it's W O O T. There's this famous article, Sean.

• 25:42Shaan Puri?

  Oh, woo, yes.

• 25:42Sam Parr?

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

• 25:49Shaan Puri?

  Right?

• 25:49Sam Parr?

  They go to breakfast and Jeff Bezos orders potatoes with bacon and octopus. And he, 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. 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. And it was like, the article tries to paint him as a weirdo, but it doesn't exactly give full context. And so at least now we have someone here who's also been in that, in that situation.

• 26:21Speaker 02

  That seems very Jeff.

• 26:25Speaker 02

  Jeff is probably the most optimistic person I've ever met. And that was very clear from the start. And I'd never been around someone who had that much optimism. That was, I mean, clearly intelligent, very intelligent, but so, but that made it with optimism is really powerful.

• 26:42Shaan Puri?

  Optimism about what? About you, about the world, about his company? What was he optimistic? What do you remember?

• 26:47Speaker 02

  Comes in, it's, it's an aura of like, can do. This just positivity, you know, you've seen him, he smiles a lot, he laughs big, you know, he's just, he has a, he has an enthusiasm about him. That is, I would say, like, formed into an optimism that is unshakable and unbreakable.

• 27:08Sam Parr?

  Is it like a, like, why not? Like, for example, I've met people, I think what you're describing, and I went around them. They like explain their new idea and they're like, it's going to be this, this and this. And a lot of people default to like, well, you can't do that. But all these people default to, well, why not? This all makes sense. Like, I'm going to do this and then I think this will happen in this. Why won't that happen?

• 27:26Speaker 02

  I think if you posed something really unusual to Jeff, he would just start laughing. In a way like, wow, that is interesting. Like, it's all interesting to him. That was my take. And I remember we were showing him Campfire, which was our first chat, group chat tool. This is way, way, you know, back before Slack and there wasn't really something out there like this. There was IRC, but there was nothing really simple. And we put it up on the screen and I started talking to him about it because it wasn't out yet. And like 15 seconds in, he just got the whole damn thing. He just got it. Like, he got it in a way where he got it more than we got it. And he, for people who are always curious, like, okay, well, you're not going to sell the business. How does he make any money on the investment? Well, we're an LLC. So he's a

• 28:08Speaker 02

  member, he has units, and every year he gets distributions. And he's made his money back many times over and he still owns, you know, his shares and we haven't had to sell the business. It's been a great investment for him. Not like a massive exit, but like, it pays for a lot of things, I'm sure. It's real cash.

• 28:21Shaan Puri?

  Jeff, good news. Your net worth has gone up by 0.0001% this year. You can thank us for that.

• 28:28Speaker 02

  What's cool is like, we don't matter, but when you talk to him, it's not that way.

• 28:31Shaan Puri?

  Yeah, of course.

• 28:32Speaker 02

  He is genuinely curious and interested in what you have to say. And I always respected that about him.

• 28:37Shaan Puri?

  I love that description. And by the way, I've heard almost the same verbatim thing because Amazon bought Twitch and I've asked Emmett, you know, the CEO of Twitch, I was like, what's Jeff? Like, because that was his, for a while, it was Andy Jassy, and then it was, he would go meet with Jeff once a year when they would present the plan. And he said the same things. He was like, when you're in the room with him, it's like there's nothing else that exists in the world. Like, he's fully engaged, fully paying attention, fully present. And he's like, he's having a good time. He's not like, super, super serious about everything. He's laughing and he's curious and he asks questions and he mostly listens. But then when he asks a question, he almost always like, has like, struck the heart of the issue. And you're like, how did you, he's like, dude, I've worked on the, I run this business. Emmett's like, I founded this business for 15 years ago.

• 29:20Shaan Puri?

  I run it every single day. You think about this for like, one hour a year, but in that hour, you kind of put your finger on the right thing that fast. That is impressive.

• 29:29Sam Parr?

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

• 29:52Shaan Puri?

  By the way, I think it's not like this person, but maybe an aspect of that person or a one way 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?

• 30:02Speaker 02

  We're all a lot of different things. We are all a lot of different things.

• 30:05Shaan Puri?

  Can I read you the quote? You had tweeted this out. 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 he said the following, he 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.

• 30:32Shaan Puri?

  And then he said, 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 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 is possible when you pierce the membrane that holds most things back. That's, that's pretty good. What made you feel that way?

• 31:04Speaker 02

  I would say reading the book made me feel that way. Now, of course, it's a story. Well, it's a biography, but like it's a story. There's a perspective on it, point of view. A lot of the examples in the book are about simplifying, are about cutting out waste, getting to the root of things, figuring out like what really matters, not getting caught up in what other people think it should be. And also not being caught up in things you can't do. And it was that impression and there's a multitude of examples. There's one of my favorite examples, I might be mis-cording this slightly, but there's this example of, there's a rocket, SpaceX rocket ready to go launch and they find like a crack in

• 31:46Speaker 02

  the skirt that surrounds one of the engines. And I think, again, I'm going to get this, some of the details wrong, but like if NASA had found that, there's like a three-month, 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 the skirt and Elon hears about it and they stop the launch or something and Elon hears about it. And 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? And they go, well, if you get rid of the crack, you're going to 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.

• 32:31Speaker 02

  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 going to do this. Okay. Well, what does that mean? Okay, sure, let's do it. So that might seem reckless and I think it was 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, not as recklessness. So that's my take on it.

• 33:16Sam Parr?

  So I know that you guys are, on your website, you're, you have a landing page for this product that I believe you described, I forget how you described it, but it's something like it's a non-recurring software product because it's like you want to take back, users need to take back control of like 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 want to hear more about that. And you also alluded to, you have like a few more products you want to launch. What ideas and businesses are exciting to you at the moment?

• 33:46Speaker 02

  Sure. So 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 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 software in perpetuity. And if you stop paying, you lose it all. Like, okay, some services make sense that are services. But there are 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 want to bring that back. That's how it used to be. We think there's some real advantages to that in certain areas and certain product categories.

• 34:30Speaker 02

  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 Campfire is installable software. We built a whole new tech stack around this to allow people to, you buy it on 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.

• 35:12Speaker 02

  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 Digital Ocean. I bought 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, ad mentions, sharing files. It doesn't have threads. It doesn't have video chat, but it has the fundamentals of what this nugget of this idea is. And the principle around this is that in any industry, generics eventually come in.

• 35:52Speaker 02

  For example, there's a lot of chat tools that exist in software today in the industry. So they're basically commodities, but they're still priced like luxuries. Companies are spending tens of thousands of dollars a month on Slack. It's our teams. It's obscene. Absolutely. I spend that. It's obscene. Okay. You get it, right? It's a lot of money. It's a lot of money for basically chatting with your coworkers for the most part, right? And it's just like, there should be a generic option, essentially. This is what happens in all industries. When there's a commodity or when there's a lot of product commodities, something becomes a commodity, that becomes a generic at a much lower price.

• 36:36Speaker 02

  We're doing something at a high quality and a low price and changing the model around. So anyway, Campfire is 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 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 dollars worth of Campfire in a few months. So we're very happy with the start, but we have to see if it sustains and how it goes. And we're going to add some more products to that category and see how that goes.

• 37:06Shaan Puri?

  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?

• 37:13Speaker 02

  Yes.

• 37:14Shaan Puri?

  And the founder letter is basically saying, kind of what you just did, which is, things used to be a certain way. They've changed. It's kind of obscene. I get why they changed, but now it's gotten a little ridiculous, don't you think? We're going to change that. We're going to bring it back. We think it, we think life should be this way. Common sense, logic, don't you agree? And yeah, we're going to do it. If you want to see, if you want to 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 just something called Quilt. And I go click this thing, Quilt, and I'm like, go to the website. And it's, it says some like blah, blah, blah AI jargon with an email sign, with a signup form.

• 38:00Shaan Puri?

  No, just no, 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 like this.

• 38:18Speaker 02

  That's how, that's how this podcast came to be, Sean. By the way, we were talking about copywriting and we're like, man, Jason's the best at this.

• 38:25Shaan Puri?

  Yeah. And you did this for Hey. And 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, nobody's doing is founder letter. There's actually a company called Runway that did an amazing job of this. I don't know if you ever saw runway.com, but 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 kind of had no, 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?

• 39:08Shaan Puri?

  And so I decided like, I'm going to 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 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.

• 39:40Speaker 02

  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.

• 39:52Speaker 02

  And 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 with any product, like any, a novel product, a commodity product. You just have to like, understand the angle that you're taking, although I don't even, I don't like the term angles because it seems like it's almost manipulative, but what? Shtick. You need a shtick. Yeah. You don't like that? I don't know. You need some flavor. What do you want to call it?

• 40:33Shaan Puri?

  He's not gonna like shtick.

• 40:35Speaker 02

  I understand, I appreciate, you're right. Like, that's the category. Shtick also has these like negative connotations, like it's sort of like this. Game and manipulative thing, maybe you don't mean it that way and you probably don't. Just like a flavor. You just need some style. I like flavor. I like style about it. I like, I like the point of view. To me, it cuts. It has a, it has an edge. That's the kind of 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 Buffett and Bezos who write these amazing shareholder letters, who are able to communicate very clearly and can do it in long form writing.

• 41:17Speaker 02

  Now, this isn't that long form. It's a, it's a page, but I want to get excited about that. I want to read something and I want to be pulled through it and by the end feel like it wasn't too long and just it said exactly what I 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, 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, what do you mean? Right. And now they're bought in because they asked themselves the question like, oh, yeah, what did, what do you mean? Something happened. Now they want to find out what happened. And then I kind of go through it and all the way I'm thinking about, how do I find resonance?

• 42:02Speaker 02

  Like, how are they nodding their heads when I'm nodding my head when I'm writing this thing? Like, how do we get to that place where like, yeah, yeah, yeah? And you build up this, yeah, of course. Yeah, you're, yeah, uh huh, yeah. And you're like, yeah, why am I spending this fucking much money on this thing? Like, I should own this by now. I think there's a line like, you should own this shit by now. Like, Sam, you've spent, I don't know how much you've spent on, like, you should own it by now. Come on, right? And, and, and it's, you know, nothing against you, right? It's like, everyone who does this, it's like, wow, I mean, how much money have I spent on this thing? And I'm still spending.

• 42:35Shaan Puri?

  The old, the old, the metaphor that the SaaS companies used initially was like, just pay a couple bucks a month. No big deal, right? Pay as you go. Only pay for what you need. But the problem is it's, it's the renter and you reframed it as renter. Right? Oh, yes, but you can get evicted. Yes, but you don't even own this thing. Yes, but they can raise the hike up the rents. Anytime they want, right? And so reframing it as cool. Yeah, but you're, you're a renter and they're the landlord. And all your data is owned by them, not you.

• 43:02Sam Parr?

  Right. He calls it the church, the church of recurring revenue.

• 43:04Speaker 02

  Church of recurring revenue. So it's done very well for a lot of followers and, and people who attend the church of recurring. But the thing is like, some things make sense like this, like a magazine or newspaper. Like this is kind of old school, right? But you pay subscription, but you'd get something new, literally every weekday, month, whatever it was. Software. I know it's improving, but it's improving around the marginal edges. You already have 90% of it on day one, when you bought the damn thing. And so you're paying over and over and over and over for essentially the same thing. And at some point, if you're paying a lot, you should be like, wow, I should own this by now. This is crazy. Tony, I want to kind of make that point and get people excited and to leave people with some mystery.

• 43:49Speaker 02

  So there's, it's not like the stealth thing where there's like, we're doing an AI thing. You enter your emails. Like, here's a story. It's all legit, but I'm still not going to tell you exactly what it is. And then we kind of, you know, eventually deliver the product.

• 44:00Shaan Puri?

  The, the simple test, by the way, is let's say you did buy Slack or whatever, insert what your favorite product for one year. And then they did all these over the air updates and they, 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 2024 version. Would you buy the upgrade? Like, you know, we used to buy Windows 95 and then you would, you would hear, you're like, oh man, I heard whatever. The next one, Vista or whatever it is, it's got all this new stuff. Okay, maybe it's worth upgrading. But like the reality is almost none of us would buy those up, buy the next edition because the upgrades are so marginal, right? They're not like game changing, but you're charged for it as you go as if those are such game changing updates.

• 44:45Speaker 02

  Yeah. And like again, some products, like we have a few products like this, Haze, SaaS tool, Basecamp's a SaaS tool. So we're in that world too. I totally get it. 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, it's 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, 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.

• 45:30Speaker 02

  I would feel like I'm ripping people off frankly.

• 45:33Shaan Puri?

  So how do you deal with the counter argument, which is you guys were first with Campfire before Slack? Slack comes out, kicks your butt, becomes a 20 something billion dollar company, exits and blah, blah, blah. How do you deal with that?

• 45:47Speaker 02

  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 kind of wither. We, we, you know, kind of didn't pioneer the idea. IRC was before us and there was 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?

• 46:28Speaker 02

  Like what? Like we're all in the same office, like just talk to people or whatever. Like I don't even get it.

• 46:33Sam Parr?

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

• 46:39Speaker 02

  Hip chat. Yeah, that was another one. Yep.

• 46:41Sam Parr?

  Yeah, but if it was Gmail.

• 46:43Speaker 02

  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 a lot, but companies, it's just this 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's interesting, Stuart Butterfield sent me an email before they launched Slack. We were friends and he said, hey, just want to let you know, we're launching this thing. It's competitive with Campfire to some degree. We're buddies. I just wanted to 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.

• 47:26Speaker 02

  Or this thing is dead because it's fucking good. And the thing that impressed me the most about it was the onboarding experience. I think that, in my opinion, there's two things, of course, 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, in my opinion, those two things, the chat itself isn't better or worse. Chat is chat essentially. Onboarding 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.

• 48:03Sam Parr?

  Dude, you're, you're cool to me because you're 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 talking about like CRM's shit. Like, we're talking about like 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, kind of cool and they're fun to read. And you make non-cool things kind of cool.

• 48:31Speaker 02

  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 don't know if either of you saw it, but.

• 48:47Sam Parr?

  Riveting.

• 48:50Speaker 02

  Riveting concept. You ready for this? Okay, I'm not ready, but I'm sure it's great. What is it? So we're doing a bathroom renovation and, and the designer, 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 is like hooks. Hooks all the way. I'm team hooks too in my house. Right. And it's like, why? Well, I'll give you a bunch of reasons. First of all, you can't screw up a hook. You can't mount it wrong. First of all, you can't use it wrong.

• 49:20Speaker 02

  You can put other things besides towels on it. It doesn't take up any space. If you need to add a second one, there's room for that. And sometimes it's nice to have like a two hooks, a few inches apart and you can kind of spread a towel. So it dries a little bit better. There's just all these reasons. And for me, I'm always looking for the hooks in product design. Like what are the little things that just are so simple and straightforward and everyone knows how to use them and you can't get it wrong. You can't use them wrong. And actually you can use them in a bunch of different ways that weren't intended and it still works compared to a towel bar. It's like the only thing you can use a towel bar for is to hang a towel. Or your nine year old will do a pull up on it and tear it off the wall. That's the other thing you can do with it, with the towel bar.

• 50:03Speaker 02

  And it takes a lot of space. And like, if you don't put the towel on just right, it slides off. Like you can use it wrong so easily. It's easier to use it wrong than it is to use it right. So that's why I like hooks. And so I'm always looking for these analogues in other areas. I don't look at other software. Software doesn't really inspire me. Like a hook will inspire me. A piece of architecture, a space, land, a tree, furniture design, print design. I don't know, objects. That's the kind of stuff that I look for motivation and inspiration in. I think there's a lot of really good ideas in there. So that's, that's where this stuff comes from. And then I'm like, oh, this is a hook and this is a hook and this is a hook. And anyway, that's kind of how I think about it.

• 50:43Shaan Puri?

  One of my favorite things I did in my, in the research for this, because 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, which is really the place we should be all the time. But you said, when prototyping, always try the wackier, quirkier stuff first. 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. I've never heard anybody say this. It's something that if you embrace it, you can actually, you know, Sam's old company, I think their only company culture thing was let your free flag fly.

• 51:27Shaan Puri?

  It's like, that's what you want to do in product design. There's also kind of 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 twenties versus when you're thirty seven, right? Like, you tend to get more conservative. It's product development, it's life advice. I thought that was brilliant.

• 51:43Speaker 02

  Thank you. I, I, we really take this to heart. And 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, the only 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 of 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 of 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 little bit better, like, not worth it.

• 52:26Speaker 02

  But we made something totally different that is not just different because it's different, but 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 going to try new things. You're not going to have the tolerance or the patience 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 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

• 53:09Speaker 02

  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 Hay is packed with these things and Hay Calendar is 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?

• 53:28Shaan Puri?

  That's amazing. What do you do? You guys pull out profits of yours 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 Sam is more on the conservative kind of side. I'm more like

• 53:43Speaker 02

  That 80/20 index bonds life, baby.

• 53:45Shaan Puri?

  Yeah, I'm like, the two sexiest words in the language are like exotic instrument. It's like, oh, we got an exotic instrument for you. I'm like, tell me more. And then I regret it later. What do you, what do you actually do?

• 53:55Speaker 02

  Sexy trombone? What the hell? What's an exotic, what's an exotic instrument?

• 54:00Shaan Puri?

  It's the thing that you're, you know,

• 54:01Speaker 02

  You're gonna lose money on.

• 54:02Shaan Puri?

  Your shitty wealth advisor gives you to lose money. It's called an exotic instrument.

• 54:06Speaker 02

  It's code. I mean, our exotic instrument is our own business. That's where most of our risk is tied up. So I'm more on Sam's tip here, which is to be very conservative with 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? I've been advisor, I've done some like other kinds of investing around like some PE deals and some stuff like that, but primarily I'm pretty much straightforward index funds, like play the US economy long term essentially

• 54:49Speaker 02

  and some, maybe some other companies or countries economies, but primarily US. That's my main thing. I also like, so I do that. And then I also like to spend money on things that I enjoy and then my family enjoys. And but I'm not a, I'm not a, 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.

• 55:15Shaan Puri?

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

• 55:22Speaker 02

  Right. Like people ask in business, all you, what keeps you up at night? And typically, the answer for most people is like some, the competition, am I going to 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 not, it's not like, because our margins, 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 oh my God, what are we going to do? Like that one Slack moment I did have was, was one of those moments. That was years ago. I just want to sleep well. I don't, I stop work at five. I don't talk about work with my family at all. We just don't, it's just not a thing.

• 56:05Speaker 02

  It's a separate thing that I do during the day and I get excited about sometimes at night because I'm just excited about ideas.

• 56:12Speaker 02

  But it's also recognition, David and I both practiced this idea of like negative visualization. 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 did wrong, a major market shift, competitive shift, wherever 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. 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.

• 56:57Speaker 02

  This is not something that needs to exist forever. 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.

• 57:13Sam Parr?

  Sean and I are in similar positions 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 versus reinvest? Do you have a framework for deciding like that percentage?

• 57:28Shaan Puri?

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

• 57:33Speaker 02

  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 with 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 kind of wait till April to take it all out. So there's some overlap and there's enough operating cash, right? When we were, when I first started the business in 1999, we were an agency. And we, our first client, it was four of us, three partners, one sort of employee.

• 58:18Speaker 02

  We each put 10 grand in, so we had 30 grand to start the business. 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 because 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 from that point on, we were profitable because we only had a few people. We didn't take big salaries and that was that. We were able to pull out all the money every year because actually we started out as a C corp for like a couple of years and then we switched to an LLC. But regardless, we pulled out all the money at the end of the year, essentially. And because we had ongoing client work.

• 59:02Speaker 02

  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, 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 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 a bit 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.

• 59:47Speaker 02

  Part of that though is again, the cost side of it, which is just not considered enough. Do you run any paid ads? No, not right now. We, we have explored that. We, we played with it. So here's the thing, like last year, like we're going to spend five million bucks for the first time ever on like ads. We started getting into it in a few months. We spent a bunch of money and we're like, this is just, it's 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,

• 1:00:31Speaker 02

  they're selling things for thousands and thousands a month. We're selling things for, Basecamp is 15 bucks per user per month or 299 unlimited. Like there's not a lot of play here 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 kind of want to knock them out. But essentially we just don't, 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

• 1:01:11Speaker 02

  marketing, advertising, targeted whatevers. We just don't have 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 want to eat into those for some future whatever. It doesn't really matter. Again, like, if we were to sell the business in a couple of years, and we got a 10x multiple, or 5x multiple, but could have had a 15x, I just don't, it doesn't matter to me. It doesn't matter to me to spend all that money trying to search for that. I'd rather just take the money out and put it into investments that I can basically not guarantee, but like, have a really good sense of return on and

• 1:01:56Speaker 02

  just do our thing our own way.

• 1:01:58Sam Parr?

  Dude, you're the man. I think that if I had to make like a Mount Rushmore of this podcast, like, you know, I think Sean 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 likes to says, this is the way I want the world to be, and I'm going to live that way. I admire that greatly. And the way that you write, the way that you think, you're kind of on my Mount Rushmore. I really admire you. And I'm incredibly, I know we both are incredibly thankful that you spent some time with us. You're the man.

• 1:02:29Speaker 02

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

• 1:02:41Sam Parr?

  You have a, you have an open invitation, whenever you want to.

• 1:02:45Speaker 02

  Whenever you want. Well, I'm not going to invite myself on. I did this time, actually, kind of, sort of. So I will not do that again. If you ever want to talk again, I'm available. Let me know. Thanks for doing it, Jason.

• 1:02:54Sam Parr?

  We appreciate you. That's a part. Thank you.