Jason Fried is co-founder of Basecamp, a private company based in Chicago that builds the best web tools possible with the least number of features necessary. The launch of Hey, Basecamp’s new email service, has become one of the most talked about product launches of 2020- not least because of the very public fight with the Apple store.
In this talk, recorded online at BoS Conf Online USA, Jason talks about the conception, design and launch of Hey email. This session includes many questions from the audience as Jason discusses some of the learning from Basecamp’s first product launch in a decade.
I run a business called Basecamp And we’ve been in business since 1999 so being doing this for over 20 years now. We’re best known for our product Basecamp which is a project management and collaboration tool We just launched a new thing called Hey recently which is a brand new email service. And over the years we’ve made a name for ourselves being an independent company we’re a relatively small business intentionally. we have 56 people in the company. We’ve kept our company as small as we can. We are self funded, we will remain independent forever. I would rather go out of business than be beholden to anyone other than myself and our customers. We’ve wrote a lot of books and put a lot of ideas out there, i a lot of people would say where we kind of go against the grain in our industry. Again, most companies in our industry are focused on growth, endless growth, chasing growth at all costs growing unprofitably, hiring as many people as they can. And we’re just the opposite. We believe in keeping it small, being profitable, being independent, and doing what we think is right and sharing our point of view as broadly as we can. So people know, there’s an alternative to just the sort of venture backed world of Silicon Valley. Right? That’s sort of, in a nutshell, products, we’re known for some of the ideas we’re known for. And also, I should say, we’ve been working remotely, basically for 20 years. So I know a lot of people are doing that now for the first time. But we’ve been doing this for 20 years. And so we’ve learned a lot about what works, what doesn’t work. And I’m happy to talk about that as well.
Fantastic. So before we get into product, and I think there are two or three things that keep coming up in in questions. One is that some stuff around product and team and building a new, a new breakout, very different product to the one that you’ve got. There are some questions around marketing. And I know you don’t do any marketing, haha. You did in a very different way. And I think people are interested in that. And then there’s the remote working thing. Let’s just wind back to the beginning of Basecamp, can you can you just 30 seconds? Where did the idea come from? Why did you start a business in the first place?
Yeah, basecamp. Well, before when we were called 37 signals, which was ’99 when we launched the business, we were a web design company. And we were doing website design. And I was doing that because that’s all I knew how to do. I graduated with a degree in finance, I didn’t want to work at a bank. That wasn’t my, I don’t know, I just got a degree in finance because I felt like I could I was good at it. Sort of. But I’ve always liked design. And the internet started hitting in ’96 when I graduated college, so I was doing website design. And as we got busier and busier, I’m jumping ahead. But as we got busier and busier, we needed a better way to manage the projects that we were doing for clients. And we were just using email, phone calls, in person meetings. And you know, it works for the first three days. And then you just lose track of who’s doing what and what’s due when and you don’t know where the feedback is. And it was a mess. So we couldn’t find anything that we liked. That worked well. So we built our own thing, which eventually became Basecamp. And that’s why we built it. And that’s how we build everything that we build with it, which is that we need something that doesn’t exist in the world, or we’re not happy with what exists in the world. And we build it and we figured there’s got to be other people like us out there too. So we don’t build things, to anticipate what other people need, we build things that we know we need. And then our job is to find others like us, rather than convincing others who aren’t like us to be like us. So that has been our approach since the beginning.
Mark Littlewood (4:12)
So the beginning so far, no difference at all from any other project managed system in the world, which there is a single origin story for all the things which is people were doing something, they worked out that there was this thing that they couldn’t solve and they build a project management SaaS off the back of it. That’s been very successful, but you started building all sorts of products and going in all sorts of directions. Was that kind of getting carried away with the success? Did you think it was easy? What was? Was it at that time in the cycle? What was going on?
Yeah, we were we were a small company real small with six people. Actually, we launched Basecamp in 2004. We were five People, and we had this hit. But we’re builders, we like to make stuff. And so, but the weird thing is, is that people make something. And the hard work actually begins after that, it’s a lot easier to launch something than it is to maintain something. And so when you get in this maintenance stage, which is what happens after you launch, it can get a little bit boring, to be honest. And then you kind of think, well, I’ve got these other problems we want to solve, we got the other ideas we want. And everyone wants us to do other things. And we’re excited and people like what we’re doing. So let’s do more. And then you end up building multiple products over a number of years, we launched in 2004, we launch Basecamp, and 2005, we launch Ta-da list, and then we launched Backpack in the same year in 2006, we launched Campfire. In 2007, we launched Highrise; we launched a new product every year for like four or five years, basically.
And that was exciting. But again, you forget that the real work comes from maintaining products. That’s the real work. And it became quickly overwhelming for us to have so many products with a small team. And then mobile hits mid 2000s, let’s say. And then you don’t just have one version of everything, you may have to have three versions, you have to have an iOS version, eventually an android version, and a web version. And so every product is three products, you multiply five times three got 15 code bases to deal with and it’s like quickly, you can’t do it as a small company. So we ended up kind of focusing back all in on Basecamp about five years ago, and selling off or spinning off or absorbing different products. For example, Campfire, which is our chat product became part of Basecamp. So Basecamp 3 has chat built in, which was actually originally a separate product. So we’ve absorbed some stuff spun some stuff off, and then refocus on Basecamp. But of which, of course, we just changed your minds, and we just launched something new recently,
Mark Littlewood (7:00)
Because you said at the time, that’s it’s one thing and you change the name of the company. I mean, you were you were pretty all in. And and I remember talking to you at that time, and you were like, you know, it’s just never gonna happen. This is why we’re happy. So what, talk us through that change of mindset from from an entrepreneurs perspective?
Yeah. First of all, this is the beauty of being an independent company, I don’t have to explain why I’ve changed my mind to a board or an investor, or justify these decisions; we just do what we want, and we live and die by that. And if we die from it, that’s our fault, our problem, whatever. So we were all in on Basecamp happily -very, very happily – Basecamp is doing incredibly well. And, you know, one of the things we realised was from an entrepreneurs perspective to your point is that again, like we just had this itch, and you can’t will an itch away without scratching it. Some you can some just like kind of fade away, but others don’t. And you’ve got to scratch it. So we just kind of felt like, you know what, like, let’s just do something new, because we have an idea. The idea, by the way, eventually became, hey, this email service but didn’t start that way it actually started. Because we wanted to redo Highrise, which is our second most popular product, which is a CRM tool. And as we got into that, exploring that we realised that what we were building was something we wanted to use. It was primarily email based thing. And we want to use it with all the people who email not just business contacts. And so we began to shift but the main thing was, is that we had this company 56 people, we were primarily focusing most of our energy on maintaining an existing product. And it felt like we weren’t really using our company to our fullest capacity or fullest extent, because we have all these great product people here all these great designers and programmers and customer service and ops people. And ultimately, what happens with the product that you’re maintaining that’s been around for a number of years is that you’re only improving it on the margins, you have to kind of launch a whole new version to really get in and like really exercise your skills.
And we weren’t in that cycle with Basecamp at the time. But we were excited to do something new. So we said let’s turn our energy towards this new thing, this new thing, which we didn’t know, eventually it was going to be and it became Hey. And as we began using it, we said we have to keep doing this. There’s something special here somehow we’ve hit on something that’s great. And so we just kept doing it. And again, I didn’t have to, I didn’t have to make I don’t have to come up with reasons why it just felt right for us to do this. The key is, we already had a successful business, which is Basecamp. Basecamp was able to fund the development of hey. And if hey never happened, we’d be okay with that too. But it felt like it was the right time to give it a try again. And the thing is, it’s like
life is only fun if you change your mind.
That’s what I found. It’s kind of boring if you just stick to your guns forever. So it just felt right. And I don’t have anything more scientific or appropriate to say it just felt right. We had an idea. We went for weeks enjoyed what we were exploring. And it turned into something that we’re really pleased with and proud of
Mark Littlewood (10:19)
Brilliant. So, Igor has asked a great question. I don’t know if you can join us on screen Igor. But I think you’ve said you don’t have a board that you’re answerable to? That’s great. Can you just describe the structure? Who makes the decisions in the company and how that gets done? And, you’ve got a team of 50 people How is how is that structured? There’s a core, what does that look like?
Yeah, sure. So at the high level, like product decisions, like what are we going to do? What are we going to do next? Are we going to build a new product? What are the next set of things we’re going to work on? That’s typically me and David, we decide. And ultimately it’s my decision since I am the majority owner of the business, but we don’t really doesn’t work that way, David, and I hash it out. So if it’s high level business strategic decisions, product line enhancement, new features for product, that’s us.
But what we do is we we follow a system we built called shape up, which is our methodology for building products. And if you go to basecamp.com/shapeup, this is our methodology for working. We don’t we’re not we don’t follow agile methodologies, we don’t follow a bunch of different ways of doing things. We do things our own way, and shape up is our way. And so every six weeks, we decide what we’re going to work on next. So we’re only thinking six weeks at a time. A few people think about this, David and I ultimately make the decisions. But the decisions are broad. And that like we’re got, let’s say we’re going to work on, I’m just making a calendar or something like that, right? We outline it in a very broad sense. But then it’s the team’s job, the teams who actually do the work: the developers and designers, we have teams of two or three people typically who work in each individual feature, they decide how to design it, how to implement it, what to cut, they’re in charge of the scope, they’re in charge of the decisions and the work that goes into it. No one assigns them tasks or tickets, we don’t do that. The teams decide how to build the thing. So David and I set the direction, and the strategy and the vision and sort of where we’re headed. And then the individual teams have a lot of autonomy and control over exactly how to build the things that we decide we need to do as a company.
So there are a lot of different levels of decision making directions at the top. And then people decide how to implement the things we’re going to go into do at the team level. And then I’ll jump in and David jumping from time to time to help direct if necessary, or help to cut things or add things depending on where we’re at. But broadly speaking, that’s how we handle things. That’s just on the product side. Of course, we have an operations team, we have a customer service team, and they have their own team leads and they make their own decisions about projects they’re working on. But on the product side, it’s David and I who primarily make these decisions. Also, Bryan Singer, who’s our head of strategy, he’s involved in this as well, the reason I didn’t mention him right now is because he’s more focused on Basecamp 4, which is what we’re working on next. And David are more focused on Hey, so in my mind right now, Hey, is kind of what I’m thinking about what I’m sort of describing.
Right, Igor, are you there? Do you want to come in with your question, which is about talking to the team?
Hi Jason so, I’m just curious, you were saying that it’s great to be independent not to have to answer to the board or anybody else? And that’s obviously great for you. And, DHH, what about the team? When you said this directions, right? Is there any specific culture in the team like how they feel about you giving that direction? What if somebody is not agreeing where the company is going, do you have some way to sort this out?
Yeah, sure. I mean, also, let me say I don’t agree with myself half the time. So disagreement is common and welcome. But once the decision once a direction is set, we have this we have the saying that we that we have, it’s not our saying. We picked it up from Jeff Bezos and some other people have talked about this in the past, which is this idea of disagree and commit.
Basically, if you don’t agree with with a, first of all, there’s a lot of discussion that happens before a decision is made. Like it’s sometimes it can be months. Other times it can be days. Depends on the depth and the seriousness of the idea. So there is discussion and other people involved in that discussion, we consult with other people and other people bring their ideas to us. But at some point a decision has to be made. Once the decision is made, we always explain it in detail. So we write something up long form for the whole company, or the teams that are working on these things, we make our point. And if people disagree at that point, that’s entirely fine. But the decision has been made. Because what we don’t want to do is be in this eternal, like second guessing mode, where there isn’t a definitive direction or decision. So people’s feedback is incorporated early than ultimately a decision has to be made. And then if you disagree, that’s cool. You can disagree, but you also commit to it. And this is true with David and I. So David and I are making decisions, and we often will disagree, and we’ll battle it out. And at some point, like, you know, what, man, I’m not with you on this, but like, I’m with you on this, like, I don’t, this is not how I would do it. But let’s do the best possible thing we can, let’s follow your lead on this. And, you know, so I’ll disagree and commit. So that’s something we talked about what we don’t want, is like, an undercurrent of, of disagreement, and then like, disparaging or disagreement, and then like, you know, half assing it, because that’s not gonna get anywhere. And we’re not all going to agree with each other all the time. So it’s really important that this sort of goes around that we’re like, even if you do something you don’t like that. You’re all in on it as best you possibly can.
But do you always find that you have this rational that you can actually explain the decision? Or do you sometimes just make them on the whim of like, and your gut feeling?
Oh, they’re almost always gut feeling. But they’re explained. Like, we’ll explain the gut, you know. So it’s like, here’s why we’re doing this. I can’t we don’t do market research. I can’t justify any of these things. But that’s why this is why we decided to do this. And I mean, if you look back at our history, we’ve been wrong a bunch of times, we only have two products today, and we built ten, basically, so like, we’re not always right, it’s fine. As long as you’re right enough, on the big ones, then then the small ones, you know, you can kind of just go Okay, well, that was something we tried, and it didn’t work out. And that’s okay. I don’t really reflect too much on the things that don’t work. Because it’s not like, we have a lot of time to do that. We’re trying to focus on the things that work. And so that’s kind of how that goes. But almost all of this stuff is gut.
We use data primarily for certain things in the business, but not for product decisions. So we use data for improving performance, technical performance, like looking at slow spots in the app, or our database, you know, enhancements, or whatever we need to do to make sure things are fast, uptime, that kind of stuff. But product decisions here have always primarily been made, based on how we feel, for better or for worse, but that’s just that’s how we run our business. And we just, you know, hope over the long term that we make more good ones than bad ones.
Let me add one more thing, actually, if you don’t mind about these decisions? Because my guess is some people here are going well, what if you make a really terrible one, you put the company out of business like that can happen. I don’t believe that there’s any way to ever know if you’re right or wrong until you make the thing. So sometimes some people keep searching like, well, if we just ask more people, we’ll find out if we’re right, and we’ll get more certainty I found the more people you ask, the less certain you are, the more uncertainty creeps in the more opinions you hear not more certainty, but more uncertainty. So you know, my feeling is that we’re very comfortable taking risks, but we’re not comfortable putting the company at risk. Meaning unless we’re about to go under, I would never put the company at risk knowingly. So for example, building a new product like hey, like, that took us two years to do. But like all in the whole company took a year like we could, we could weather that storm, regardless of if Hey, didn’t work out. But if it was a make or break, if we were to build a Hey, it was make or break the company, I wouldn’t have built it. So I’m not a make or break kind of put the whole company at risk kind of decision maker. So that that gives you a lot more flexibility and freedom just to make some calls that aren’t going to kill you if you get them wrong.
Mark Littlewood (19:24)
So coming back to Hey, it’s been going for a couple of years and it wasn’t like you tooled up, you weren’t you weren’t taking on a lot more people to build this thing you were maintaining and doing everything you were doing on Basecamp and you build up. Can you just talk us through that two year period and just up to the point where you launched? How did you structure the teams, how to get people focused on the right things? Was there a tension between people doing the shiny new thing and people doing the thing, that it’s kind of working?
So, for about two years have been working on hang the first year-ish, was just a very small team. Four people, me at the time it was me, David, Jonas, actually three people working on some prototypes, just some ideas, some really rough ideas. And then there’s a point where you get to this point. And it’s not cut and dry. But you get to this point After exploring for a while where you’re like, you know, there’s something here, let’s make this thing, let’s build this thing.
When that happens, the way we work at Basecamp, is we go all in meaning for the last year or so nobody has been working on Basecamp, everybody’s been working on Hey, so when building a new product, we shift our entire focus entire company over, and especially something like hey, which is, by the way, I do not recommend anyone build an email service from scratch, it’s fucking hard. And it’s technically incredibly complicated. This, hey, is not an email client, it’s not something that sits on top of Gmail, like we’re building this from, this is an email provider, it’s incredibly hard, we needed the whole company in on this. So that’s how we do things, we shift everybody over to something. And we do that we can only do that, because Basecamp at the time, Basecamp 3, which is the current version was three and a half, four years old, very mature product, very solid, and it can hold its own for a year without updates. And we’re willing to take that risk. Again, we’re not putting the company at risk, but I’m willing to take that risk.
Now, now that we have two products Basecamp. And hey, we’re going to split teams moving forward. So two or three product teams will be working on Hey, two or three product teams will be working on Basecamp. Now we’re going to be making a new version of Basecamp next year called Basecamp 4. So we might, the shift might be more 60/40 on Basecamp till we get that out. But we’re now going to have two concurrent groups of teams working on two concurrent products. But historically, whenever we make something brand new, we shift everybody over. And that’s the risk we’re willing to take. And that’s that’s what we think now I just I saw a question fly by that I want to address about someone asked, let me just scroll up, because there’s so many great questions here.
Rick said, Would you build an MVP before you totally launch the product we don’t believe in MVP is I don’t I don’t believe in building something like that, I believe in building version one of the product. So MVP, whatever you want to call it, it is version one, the version we launched publicly is the only version we built. That’s what we’re putting on the market. And the market is going to tell us if we did a good job or not. I don’t believe in trying to validate things ahead of time, I don’t think you can. Market tells the truth. The only truth in this is what do people think? I don’t know. You got to put it out there, put a price on it and see what people think. Other than that, it’s all artificial. I’d rather make natural decisions than artificial ones. So that’s our that’s our take? Is it riskier? I don’t know, I don’t really think so. But it’s again, it’s harder for companies sometimes. A lot of companies feel like they have to justify everything they do. Because this is about the business structure there. They have to justify it to the higher ups, maybe higher ups in our company, but ultimately to investors. And without having that layer above us, we can kind of do whatever we want the way we want to do it. And it’s worked out well for us. I’m not suggesting it’s the right way for everybody. But everyone’s got to find their own way for themselves.
Mark Littlewood (23:41)
Interesting, and how unique or do you think you’re unique? Or do you think any organisation can do this? You don’t have a board that’s controlling in the way that other organisations do? It sounds like you have the luxury or you know, and have created the luxury yourself of having a team that kind of goes the way that you do.
Let me let me address the two which is a business is a series of decisions, one after another and there’s 1000s of them we’ll make every year. I don’t think that there’s anything special about us. I think we may have created a special situation. But that’s been through making certain decisions. And I think the important thing to keep in mind is that some decisions have lasting structural impact that prevent you or provide you opportunities to do certain things. The fact that we’re an independent company, without a board without anyone on the outside who has any power over us. Allows and enables us to do all sorts of things that might seem special today, but they’re based on a decision we made early on. So they’ve enabled a degree of autonomy and flexibility. It’s not that we are more flexible inherently as human beings, I don’t believe that at all. I just believe that the structure we’ve set up allows us to do certain things, they might prevent us from doing other things. Also, like a might prevent us, let’s say we needed $100 million to do it, like, we’re just not going to get that money, we’re not going to have that money. And so there’s certain things we can’t do. We have to grow within our means, which might seem like it. Like we’re hamstrung in certain ways. I think it’s an advantage, but there’s a lot of things we also can’t do. So, and also, like, we’re an LLC, structurally as our corporate structure, which means like, there’s a lot of companies, and we’re not for sale, we don’t ever intend to be, but like, a lot of companies wouldn’t buy us, they wouldn’t invest in us because of our corporate structure. LLCs are not typically what a lot of companies invest in for a variety of reasons. So like, we prevented certain things, we’ve enabled certain things, but we’re just, we’ve just made a series of decisions. And what’s important to us is independence is the most important thing we have, and the most important thing we want to maintain. And so most of our decisions have been based on maintaining independence.
I did see a question about Jeff Bezos Yes, Jeff Bezos owns a small piece of Basecamp, which we sold him in 2006. But he does not have any controlling stake controlling power, he cannot force our hand in any way. And his ownership is the is the most is the smallest. It’s just me, David and Jeff. So we are fully independent.
Mark Littlewood (26:44)
Why did you sell? What was that a PR thing? Or?
No? Yeah, in 2006. So so we did this in 2006, we’d been approached by dozens and dozens of VC firms, and we didn’t need anybody’s money, didn’t want anybody’s money. We want to remain independent, always have. Jeff offered us well, first of all, getting a call from Jeff was like, Oh, well I didn’t get a call from Jeff, I got a call from just people. Eventually, you got to get Jeff. But you know, especially at the time, like, deep admiration for him and what he’d been building and who he was and what he stood for. And, you know, we took a call he’s like, would you come out to Seattle to meet me. And of course, she’d be an honour to do that. So we did that. And we kind of hit it off. But the more important thing was that what he was offering, this was something very different.
He was offering to take risk off the table. venture capital firms don’t take risk off the table, they add risk. They add risk by giving you money. And then the risk is like you have to achieve such an unlikely outcome, you basically have to be a unicorn, essentially, for them to be pleased with what you’ve done. That is increasing risk. That basically means there’s only one way to really succeed in that scenario, which is hitting it massive. I don’t want that. So Jeff was offering to take risk off the table, which was to buy a share of our business, but not really buy a share of our business, buy a share of David’s shares and my shares, founder shares. So David, and I got to put some money in the bank for ourselves, which took risk off the table for us. Because this whole Basecamp thing could have been a massive flop we were two years in it was being successful, but I don’t know, like, this thing can blow up tomorrow, like when we launched Basecamp; originally, Basecamp was run off a shared server. And like a cooking like at night, even a co located box, like a shared web server, old school ISP kind of thing, like this thing that we didn’t know we were doing this thing could blow up. So hey, look, I mean, I’ll just be honest, like, we were able to take a few million bucks off the table for each of us and put it in the bank. And that gave us the confidence to do what we wanted to do. In case this was a flop, we’d still be okay. And not for our whole lives. It wasn’t that kind of money. But it was like for now we’re more than Okay, and it took the risk off the table and lightened our load a little bit. That’s why we did it. And we also did it because Jeff, we thought Jeff would, you know, give us some important advice, and we’d rather have him on our side than against us. And, and that sort of thing. We haven’t really talked, I haven’t talked to Jeff in five years. It’s been a long time since we’ve talked to him. But early in our early days, he helped us with a number of things that were really valuable.
Mark Littlewood (29:41)
So I’d be curious, is the one piece of advice that he gave you that became meaningful. And also, what on earth is in it for him?
What’s in it for him? Yeah, I’ll answer both of those.
just in terms of kind of materiality of investment
Yeah, I’ll do the advice and what’s in it for him advice, the best advice you ever got from him was focus on the things that don’t change. He says businesses are always focused on change. And they’re always trying to keep up with the new things, and you want to do some of that, but the majority of your focus should be on the things that will not change. And he gave us three examples, he goes:
in 10 years, people are not going to wake up and say, I wish Amazon had worse selection. So Amazon, investing in Amazon’s selection today is going to pay off forever, because people are always going to want a broader selection of products,
People are not going to wake up 10 years from now and go, I wish Amazon’s customer service was worse. So investing in customer service today is always going to pay dividends, people are not going to wake up in 10 years and go I wish everything on Amazon was more expensive.
So now, Amazon’s not the cheapest place, but I don’t know it depends on the item. But like, you want to be price competitive, at least. So he invested heavily on that. People are not in that to add another one,
people are not going to wish that it would that people are gonna wake up 10 years from now and go, I wish it took longer to get products from Amazon.
So Amazon has been investing, of course in prime and distribution centres and fast delivery and all that stuff. So those are the things that don’t change. Now, there’s a lot of things in Amazon, that change for our business is similar, which is people are not going to want to wake up 10 years from now and hope Basecamp customer service is worse. So we’ve invested I think more than any company in our field, in incredible customer service fast customer service; if you email us, you’ll typically get a response within 10 minutes from a real person who’s going to actually not an autoresponder. But someone with an answer to your question, within 10 minutes, we have an amazing customer service team, people are not going to wake up 10 years from now and go I wish Basecamp and Hey was slower. So we’ve invested heavily on our infrastructure, those kinds of things.
So, you know, it’s that that nugget of advice has really stuck with us. And so we kind of keep doubling down on the things that will always matter. That that was that was the best piece of advice he ever gave us. The second thing about what’s in it for him, it’s a great investment. So we’re an LLC, so which means that we pay out distributions at the end of every year to the to the members of the LLC, that’s me, David and Jeff, Jeff owns a piece of the business. And if profit’s leftover, he gets his share of that. And so his investment is paid has already paid off for him many, many, many times over, even though he has not had to sell anything, unlike a venture capital firm, which has to sell to make their money back just making money every year. So it’s a great investment. It doesn’t really matter for him. He’s what the wealthiest man in the world. But like it’s a good investment. Like he’s a shrewd business person, you know, a good deal for him. And he got the other thing is he likes to at least back then I haven’t talked to him for many years. But he likes to support companies that do things differently. He’s just that’s the kind of guy he is. And he loves to do that. So I think for him, it’s kind of a thrill to back companies that are doing interesting things in different ways.
So question that’s echoed by a number of people. Rick Morris, are you there? I think you put it pretty well.
This is the kind of follow up to the one you know, I’d asked you before Jason, in regards to the, you know, to the MVP, and you said you guys don’t do MVP you just go to version one. So, you know, my question was, how much of that is, is I guess, based on or the fact that your product tends to be a lot of newer a lot of users but lower cost, right, as opposed to like our model, my company’s model is we sell an enterprise system, right? So it’s expensive. So it’s, it’s maybe a higher risk for us. So we tend to try to build an MVP first, when we go to market to validate and things like that, before we go full bore and create the version one. I was just curious as to you know how that played into your thinking?
I’d say a little bit more philosophical than price point, because we’re about to launch Hey for work, which is our business email system. And it’s going to be expensive. So we’re doing it the same way, which is, to me like version one and MVP are the same thing, which is that, for us at the same thing, they’re not set… maybe for you, perhaps you’re saying they’re separate things, you bring a minimum viable product to a few customers and see what they think of it and then you get some feedback, and you kind of eventually mould it into maybe the 1.0 that you offer everybody.
I think that it’s hard to ask someone else to tell you how they feel about something, when they don’t have the whole idea in front of them. So if you’re giving them an MVP, like maybe that’s just your version one, and you only offer to a few people versus thinking like this is partially what we’re going to release, like version one is going to be more than this. I think maybe your MVP is just your version one, which is basically it’s not every idea you have, it’s only the stuff that made the cut. So there’s a lot of things that you’re not going to get into 1.0, Basecamp at version three, which has been around for 16 years in total as a bunch of stuff, it’s, it’s still not in there that I want to get in there, you’re never gonna have everything in there. The point is, you have to draw a line at some point and call it your product. That to me, is it’s the same thing. What I was getting at is that we don’t, we don’t put a partial product out to the market, ask for ask people what they think we put, we just put the whole thing out. But the whole thing is can be relatively small, and get real feedback from real people based on the real thing, not the partial thing. So again, this is more of a philosophical point of view. I know it’s very much antithetical to the way for example, for example, like lean development or lean startup, or you know, the adult or agile runs, but we just have a very different point of view on it that like, if you want to get real feedback, you got to give people the real thing. And if the real thing is the MVP, then that’s actually version one. If that’s not really the real thing, then I wouldn’t show it to anyone yet. I just wouldn’t. That’s my take, my way, not saying it’s the right way. That’s just how we do it.
I know it’s not really a satisfying answer, I totally recognise that, but I think there’s something to it. That’s that’s important, which is that the market is what validates things, not three customers, when you might have 100, three don’t validate, they only validate for those three. And you just got to put the whole thing out there eventually.
Mark Littlewood (36:54)
So let’s just get back to Hey, and the launch, you’ve got your pretty much your whole team not working on Basecamp, very focused on the dev and making the product launch. I hey, what was your expectation at launch? What was your kind of range of wildest dreams to greatest fears?
We don’t have any expectations when we launch our new product. Truly, because you’re just guessing it’s like, I don’t know. “5000 people?” Like, first of all, the way to know that expectations are bs is that they’re always round numbers. It’s like 5000. Well, why? Why 5000? Why not 4922? Because you’re making it up. That’s why. And so, you know, our expectation is, is that we’re going to be working on this for 10 years, 20 years, that’s our expectation, going into something, we’re committing to something, we’re gonna we’re gonna use it, we think it’s great. And we’re going to do our best to introduce it to the market.
I will say that we were caught way off guard with this launch, and that it was a far- even though we don’t have expectations, we never expected it – but basically 200,000 people signed up in the first six, seven weeks, which was way higher than anything we’ve ever done in the past ever. So we clearly tapped into something pent up demand. The way I was talking about I think resonated in that email hasn’t been interesting for 16 years. That’s when Gmail launched 16 years ago. And I remember waiting to get an invite to Gmail 16 years ago, and since then, it’s been kind of stagnant. So I think there’s this pent up demand, people are ready for something new. We got caught up in the within the whole Apple fiasco, which we can talk about with Apple.
I’ll come back to that.
Yeah. And like, it’s kind of a perfect storm, but we were not ready for it. And actually, it hurt us because we weren’t ready for it. we endure two to three weeks of terrible stress. And we’re generally a very calm company, we work 40 hour weeks, eight hour days, no weekends, no nights. And for about two to three weeks, we were just, it was terrible.
We had to hire five more customer service people in three days to just handle the load. And we’re getting 2000 customer service emails a day. Out of nowhere like we just weren’t prepared for this. It was good. You know, it’s good, like a good problem. But it was it was hard on us. So maybe we should have anticipated it. But I don’t think we ever could have we just never thought anything like this would ever happen. So we’re thrilled with the launch. And it’s been wildly successful. We have tens of 1000s of paying customers already. All of them switching from free email. So Hey is not free. Hey costs 100 bucks a year, 99 bucks a year. every customer we have switched basically from Gmail or some other free service. So to get tens of 1000s of paying consumer customers switching from free email, which is free emails just taken as free to pay thing. We’re we’re thrilled with the response so far.
Thanks, David Carter, question that a number of people have been talking about David, are you there?
I am. But I’ve been thinking about all these other questions, I forgot what my specific question was!
Your specific question was about expectations and measurement.
So how do you measure success? If you if you don’t have any expectations, is it if you got four people signed up, you’re like, Well, we’ve got an email system that we can use. So what does success look like when you’re watching something? Because at some point, it’s not financially viable, right?
Yes. Yeah. It’s a good question. We really, truly, I will answer this very specifically. But we really, truly don’t have metrics for success. Other than we need to be a profitable business. So we are a profit. We’ve been profitable for 20 years, every year, every quarter being profitable. So like, that has to be true, overall. But I mentioned success this way, assuming we’re still we can remain in business, which is like, of course, the number one thing to your point, like, I can’t just get four people and spend two years and get four people that wouldn’t work. It’s do we want to keep working on this thing? Do we feel good about this thing? Is this thing going in the right direction? Are we excited to put more energy and time into it? Or would we rather be doing something else? If we’d rather be doing something else – it’s not successful for us?
Again, yes, it has to make financial sense. But I don’t need a metric. I don’t need to set up specific metrics in advance to know that. And we don’t look at individual product lines as is as profitable. And we look at our overall company. As a company, can we keep? Are we going to stay in business this year? Like that’s how we kind of look at it. It’s very broad in that respect. It’s not very line item me, you know, but really success for me is do I want to keep doing this? We want to keep working on it? Are we still excited about it? Do we have more ideas? Are we fired up about it? Are we thrilled to do it? Is this kind of what we choose to do with our day? And I know it’s it’s a little bit, maybe hard to believe or grasp but truly that is it. As long as the money comes in, as long as we keep our costs low. And by the way, I want to actually speak to this point, I don’t know if the questions gonna come up. So I want to make sure I hit on this. The discussion that’s missing most from entrepreneurship, is the discussion around costs.
A lot of people talk about revenue, talk about profitability, they talk about top line growth, very few people talk about costs. Costs are how you become profitable. Keep your mean not entirely, of course, but as a huge impact, keep your costs as low as you can, and you give yourself a lot more time, you give yourself a lot more flexibility. So as a company, our costs are relatively low, all things considered, we have 56 people, the companies we compete with directly have 1000s of people, their cost structure is totally different. They have to maintain a massive customer base and charge huge amounts of money to support the load. We don’t have that though. We’re thin, intentionally, we’re small intentionally, which gives us a much easier target to succeed. Like, it’s much easier for us to stay in business with 56 people than it is for someone else with 3000 people who’s haemorrhaging money because they’re whatever they’re doing. There’s so many people in our industry, that we compete against it lose money, every year. We don’t lose money. And we’re small. And it helps because we’re small. So anyway, it’s a little bit here and there but gotta stay in business. Other than that, do we want to keep doing it? And I think if no one was using the product, it’d be pretty dispiriting. And we probably eventually wind it down. Like it wouldn’t be fun, wouldn’t be entertaining ,wouldn’t be interesting to us. So I think that is that is part of it four people wouldn’t wouldn’t work for us.
Mark Littlewood (43:43)
Great. So you launch product. You and David are notorious Apple fans always have been, I thought you always would be. And then there was this big old thing and suddenly you weren’t. Just tell us a little bit about and I’m sure some people will know this story in the background. We’ve put some stuff out beforehand. But you’ve got into a big fight with a big player.
Yeah we did unintentionally. I know some people thought it was like a PR Show. Now so what happened was we we built Hey, we put Hey, as an iOS app, an Android app, we submitted the iOS app to the App Store for approval. We got approval version 1.0 got into the App Store. Wonderful. And then we launched we submitted as any 1.0 is got a bunch of problems. So we fixed a bunch of stuff and we submitted 1.02 to the app store, and Apple rejected it on the grounds that we weren’t paying them 30% of our revenues. And that it quote didn’t do anything when you launched it because it required you to sign in to use it. Now, we were simply following the rules that GitHub, Gmail, Slack, you name it, Basecamp, which is if you have a software as a service product and you build a companion app, and you launch the app and requires sign in, that’s, that’s been kosher forever with Apple.
But Apple has changed their mind behind the scenes, basically saying, now you know what, if you charge for something, you need to use Apple internet payments. And also the app can’t just do nothing when you launch it, which were not written rules. These are unwritten rules. These are not official rules. Anyway, long story short, Apple rejected our app, we appealed through the official channels, they rejected us again. And then we went nuclear basically in the press saying, like, What the fuck? First of all, Apple, why are you entitled to 30% of our revenues, like, that’s, that that’s a no, we’re not doing that. First of all. Second of all, we’re bringing our own customers, you’re not bringing us customers. That good. This is not about discovery, where we have our own customer base, we have our own product, we have our own customers, we just need them to use the iOS app, like because they have iOS devices, which they paid for, you’re not entitled to 30% of our revenues. Because we’re bringing our customers, we also know how to charge our own customers, we have a payment system that we’ve centralised but we have all these things we’re not doing, we’re not getting into that. The deeper thing for me actually was beyond the money thing is that this is something a lot of people don’t know is that when you use Apple in app payments, which we don’t use, but if you do, and if Apple forces you to do that you are giving your customers to Apple, they are no longer your customers on the charge on the credit card form, it says Apple, if your customer has a billing issue, you have to say go talk to Apple about it. If your customer wants a refund, you have to say go talk to Apple about it. If you want to give a hardship discount – COVID hit Of course, in March, when we were launching this stuff, like we were giving some of our Basecamp customers half off or suspending their their payments for a few months because they were really struggling – you can’t do that with Apple payments, because Apple is in control of that experience. So you can’t even service your customers anymore. Once they are in Apple’s payment ecosystem.
This is horrible. And as a business owner, I cannot give my customers over to Apple not take care of my customers the way I want to. So we fought hard in the media about this, in the press, I eventually came to some agreement with Apple, we added a little free version of this thing to the app. And they eventually approved it. But it began the roll now things have changed. Apple changed some rules. They just changed more rules based on some of the stuff. So I think we got something started here, which is great. And then of course Epic is involved now with the games and everything. So like things are beginning to change. But it brought us something; it brought us tremendous exposure naturally, but we did not plan for it. And it was horribly stressful. In fact, this was the first existential threat we’ve really ever had to our business, which is Apple really forced us out of the App Store. We couldn’t run Hey, like you can’t run an email service without a native app on iOS. So like that was a pretty scary moment for us. And I actually, I contemplated retirement actually, during this phase, which is that if Apple forced us to do something that I didn’t want to do, I did not want to be in this industry anymore.
I don’t want to be in an industry where an independent small business has to do what a trillion dollar business tells them to do. That’s not why I got into business.
So I will not run my company. If that’s the way I have to run it. It’s not my call. It’s Apple’s call. That’s wrong. So I was like, if this goes the other way, I’m out. I’m not I just don’t want to do this anymore. Luckily, it didn’t go that way. And now we’re very excited that it didn’t go that way. But it was a pretty scary moment for us.
So Mark Stevens, I don’t know if you’re there to follow up with the the Apple question. But again, because you ended up getting back in the store and it worked out, I can’t imagine it was a bad thing for signups. Do you get any sense of where your new customers come from and how many were driven off that kind of press? And I’m not because there’s this great thing about creating the David and Goliath story when you’re launching things, and this is the date you’ve backed into this perhaps accidentally, but it’s the kind of thing that some marketing people would be so excited to have engineered.
Yeah, I mean, this was not engineered, believe me. But the vast majority of our mobile customers are iOS customers. We got a lot of but but we would have, that would have been true anyway, that’s how it is for Basecamp as well. But clearly we got I mean, the press we got, we were in every major publication, we were on TV many times over that week, CNBC and we’re in the Financial Times, New York Times and you name it we got, we couldn’t have bought that kind of exposure and that nice. So it was it was good for us in the end, but it was, please don’t give us credit for being brilliant to do that we, we this, this was not what we wished for. It was a scary, scary two weeks. And it remains scary. It remains scary because Apple is the most powerful business in the world. And we sidestep to that episode, but who knows what’s next. And if you want to be in the software business these days, you basically have to have exposure on iOS to like 1 billion people or 1.5 billion, whatever, like, Apple makes the rules. They’re the gatekeeper and they give you no choice. All we want is choice. By the way, I have no problem with Apple’s in app payment system, as long as we don’t have to use it if we don’t want to, like why should we have to use their billing system? Like, I just want choice. So if they want to make that as an option, great, we’ll consider it. But we’d also like to use our thing, that’s all we’re asking for here is choice. And I think, you know, with the antitrust stuff that’s going on, at some point down the road, things are gonna have to change and people are gonna have to have choice on this platform, and it’s not a matter of well, then just don’t be there. Because that’s just not it’s a duopoly. You have Apple and Google, the only two ways to reach mobile customers, which is everyone is it’s just it’s not a fair marketplace unfortunately,
I saw some one question that came in, like, why not just charge a buck for the for the, for the for the app? And like, because there’s a couple of reasons. First of all, you can’t because you can’t offer different subscription rates outside and inside, I mean, you kind of can, but not really. But also like it’s principle, it’s principle for us. I am not giving into Apple’s shakedown, they don’t deserve 30 cents out of that dollar period. Just be like, they don’t deserve it. And I’m not giving them my customers; not doing it. That’s not why I’m in business. So anyway, that’s why I can go on and on on that.
Clearly quite traumatic. You’ve talked about thinking about retiring; David, who was going to be involved in this conversation. And actually, it’s turned out, okay. I mean, I’m not sure if he’d have got a word in at any stage. So he said he would kind of pick up with another conversation another time. But he’s just taking a break.
Yeah he’s taken a three month sabbatical. This is a brutal time. And on top of everyone’s going through the same COVID, wildfires, climate change, like it’s, it’s not a pleasant time right now. School – I mean, like, I’ve got two young kids – it’s brutal. It’s impossible to to be at your peak these days. So yeah, it’s hard. It’s hard.
Mark Littlewood (53:14)
So we’ve launched your team is moving back into Basecamp Clearly, you’ve been building a team because that’s that’s one thing. But Neil, do you want to kind of come in?
The question I’ve got is that obviously the there are two risks on the table. The one is you’ve got a nice product roadmap for different products. That’s if you are too slow on them, there’s inherent risk there. And on the other hand, there’s this there’s this liability of what you refer to as a 3000 odd size delivery development team. So my question would be how do you strike this balance between growing your development team to deliver key parts of this product roadmap, but also preventing it from becoming so big that it risks increases your cost in your business risk?
Yeah. First off, just to be clear, we don’t have a roadmap. What we have is we work six weeks at a time. So we decide every six weeks what we’re going to be working on over the next six weeks. We’re not pulling from a long list we don’t have backlogs we don’t have that. Every six weeks we think about where we want to go next not what we decided to do in the past so because of that we’re shipping new stuff every six weeks – soon will be Basecamp and Hey, right now it’s just Hey. And we’re able to maintain great a great pace with that where we feel like we’re making the product move in the right direction. We’re not getting ahead of ourselves not doing too many things at once. We’re also not not doing enough. So with that said, we just we just hired or work we haven’t hired yet but we just put an ad out for I think was two more programmers are about to put an ad up for another designer, right now. So we are growing our team a little bit. You know, we typically hire like three to four people a year. That’s it three or four. Like that’s, that’s how we do it. And if we can’t get to everything we want to do, we don’t get to everything we want to do. Like, that’s just the thing, it’s there is no company in the world, no matter how big they are, that gets to everything they want to do. So you can have 5000 employees or 10,000, a company with 20,000 employees, they wish they had 30, they wish the 30,000 I wish they had 40,000. Because there’s always more to do than you can do. So we’re just at a different scale. But that’s still true for us. It’s true for everyone else. So we just have to do what we feel feels right, that helps us feel like we’re in control of our business that doesn’t get our costs on a line or get our ambitions out of line. And that’s kind of how we do it. So we’re just looking to maintain balance. Right now, we’re imbalanced a bit because we’re going about to be working on two products at once. So we do need another product team, which is why we’re hiring two programmers, another designer, and then we’ll be okay. I think if we need to hire more we will, you know, but but we always hire, the way we think about it is we hire after it hurts. We don’t hire in anticipation of what we’re going to need, because we don’t know what that’s going to be what we all we know is does it hurt? Do we need more people right now to just to do a little bit more not to do a lot more, because we’re not never going to decide to do a lot more all the time. But are we a little bit behind what we need to be in? That’s when we hire people? That’s kind of how we do it.
Great. So there are a lot of questions were kind of pretty short of time. And I guess I
I’ll go fast on answers.
Mark Littlewood (56:44)
Question for you, Jason. Actually, because you’ve got a one of the breakout sessions later on today. We’ve got some things after lunch where we’ve got some some smaller groups and people can dig into something. Is there anything that you’d really like, like to dig into in that kind of smaller, smaller group? There’s because I’m working with and we can deal deal with some of the other questions here.
Okay. Yeah. I mean, I think what the smaller group, I think people are really curious about like, I see some questions about like backlogs and roadmaps, like really getting into product management, I think, not project but product management, I think would be a really good like, deep dive topic for people who really want to know, like, how do we do these things? And how do we structure the teams? And what’s the breakout of teams? And how do we focus on how do we decide what to do and what not to do? And that kind of stuff, I think would be would be kind of good.
Let me just try can actually answer a question I see here. I’ll make it really fast. “Jason didn’t you need a roadmap to launch Hey, in Basecamp 4 whatever’s coming next, you couldn’t launch those things, six weeks in six weeks, right?” No, we can’t launch in six weeks. We don’t have a roadmap, though. We go six weeks, and six weeks, and six weeks, and six weeks and six weeks until we feel like we’ve got what we need to launch the thing. We have what’s called an appetite, not an estimate. We set an appetite. So we set our appetite six weeks at a time. And then maybe we’ll say like, that’s what we call cycle will maybe say like, we’re going to ship this thing in six cycles, six cycles from now. So we’ve got six, six weeks segments to decide what to do. But we don’t plan the six, six weeks segments out, we plan one at a time. As we get closer and closer, the things that we really need to do become more important. We get those done and we move on like there is no long list of features we need for any product. That’s just not how we work. We figure it out every every six weeks as we go.
Mark Littlewood (58:32)
Right. So that’s something that we can kind of pick up. Are there any other questions that you want to kind of just address on this? Because we probably should wrap up.
Whatever you want. There’s so many I don’t want to I don’t want to pick them. Just whatever we think is interesting.
Mark Littlewood (58:51)
The person that had the biggest influence on you? This was a question from much earlier on. So apologies. I can’t remember who it was
I don’t know, I think someone who really influenced us was this guy named Ricardo Semler. Do you know Ricardo Semler? Yeah, I haven’t, like really paid attention what he’s been doing lately, but he wrote a book. I think it was in the 90s called Maverick. And that book really influenced David and I. It was a book about him taking over I think it was his father’s business in Brazil, big old business with 4000 employees making like industrial equipment like oil pumps, and like this old, stayed, traditional business and he kind of knew nothing about business and he came in took it over and there was like a rulebook a manual like this thick and he’s like, I don’t know what I don’t get it. I don’t understand it. None of this makes any sense to me. I’m just like, I’m gonna run a different kind of business and he just threw out all the rules and, and just sort of do what made sense, not what someone else decided made sense 20 years ago, but like what made sense and he was very naturalistic and thinking about like, people and it’s a wonderful book. It’s so beautifully written. I think it’s maybe out of print, but you can still get it. It’s called Maverick by Ricardo Semler. It really motivated.
He wrote another one called Seven day weekend or something followed by, I’d read this this first one Maverick. It’s wonderful, wonderful book. That’s the book I think that really gave what that did was it gave us the confidence. It didn’t tell us what to do. I don’t personally like books that tell me what to do. I like books that like, give me the confidence to do what I want to do. And that book was that, if he could do it, I could do it. That kind of thing.
Mark Littlewood (1:00:44)
Great. Okay. So there was one I just wanted to finish up on, which is, you’re kind of a product of your time. And I mean, that you hit a market at a really interesting time: SaaS wasn’t a thing, Apps weren’t a thing, Your founder invented some thing that made it possible to do a bunch of the things that you do, there’s a really unique set of circumstances there.
People launching SaaS products these days, find it really hard to bootstrap. And maybe that’s not always the case. And I think, you know, we have a much higher percentage than normal of the community in BoS who are self funded, or bootstrap, I mean bootstraped in a positive, sensible, meaningful way. Not a derogatory, I mean, you know, let’s not get involved in the religious debates. How much? How do you think the world has changed today for companies that are getting going? Can you still bootstrap to a meaningful side? Or are people really struggling in a much more crowded market?
The market is very crowded. But you know, here’s the thing, there’s, it’s, there’s always competition, it’s just different forms. Like when we launched base camp, we were competing with Microsoft Project, back then, like, you had to be an idiot to compete with Microsoft. And like, so there’s always something it’s either one company or many companies, there’s always competition, it’s never gonna go away. There are a lot of options today, it is definitely harder. And absolutely, we are a product of our time, I do not think we could we could do what we’ve done. If we launched today, it’s just luck plays, the biggest part in all of business, in my opinion; luck and timing, and you don’t control either of them.
So like, we did launch it at a time where we were able to sort of Pioneer some of these ideas. That said, the majority of every business on the planet is bootstrapped. Very few businesses are given money by anybody. So it all comes down again, to costs. Like if you’re a sole proprietor, one person, you can bootstrap a lot better than a company that hires 25 people. So if you keep your costs low, if you keep your time horizon long, and if you have some degree of income somehow, that covers your basic costs. As long as you’re making more than a penny more than you need, you can stay in business. So like, I think the problem today is not that the industry has changed, although of course it has, it’s that people’s patience has wane. And we are all in this instant gratification culture today, which I think comes down to business as well. And by the way, I’m going to be clear, I’m not saying any of this is easy, this is all hard. All of it is hard. And the chances are none of us are going to make it like that’s just the truth. I mean, many of us will, but the chances are most of us won’t, because the odds are so stacked against us, right? But we now want things quicker, we expect things quicker, we’re less patient, we want to grow, there’s an ego you want to inflate because we’re showing off now on social media, like there’s all these other things. But if you can get in a zone where you close that stuff out, you get down to the basics. Again, you build something simple, that solves a simple problems. Most people’s problems are very simple, and you keep your costs down. If your team’s small. That’s what gives you the best chance. But if you grow too fast and lose control of where you’re going, bootstrapping is very, very hard. Very, very hard. And also, if you don’t really know what you’re building and who you’re building for while you’re building it, it’s very, very hard. You’re gonna have a really hard time. So yes, it’s harder but in different ways. And it’s also easier back in 2004, we didn’t have Twitter, we didn’t have Facebook, we didn’t have any of these ways to get the word out for free. So now you can get the word out. So this everything’s a trade off times are made of trade offs. But really, it’s luck and timing and we, you know, gotta be in the right place at the right time thats what I think.
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Hangout: Creating Software Ecosystems (free attendance)
21st & 28th July
Masterclass: Demand-Side Sales using JTBD with Bob Moesta