DHH: $100M+ Advice That'll Piss Off Every Business Guru

0:00 Are you able to give any ballpark for previous numbers? Let's just say ridiculous. I think that's a that's a good ballpark, right? I feel like I can rule the world, I know I can be what I want to I put my all in it like my day song on a bolest street. When you are introducing yourself, what do you even say because you've done so many different things that I don't even know like what you take credit for most or what you like hang your hat on. Well it all depends on the audience. If I'm talking to a bunch of car nerds, I talk about winning Lamont. If I talk to a bunch of programmers, it's all about Ruby and Rails. And if it's a bunch of Entrepreneurs, it's usually about building base camp and thirty seven signals. So did you have you ever said base camps revenue?

0:39 No, we've never disclosed the full revenues nor full profits. Um I think we've said Tens of millions or something? I don't even know. That's one of the great privileges of being a private company. It certainly served us well for many, many years when we had the entire project management space in SaaS to ourselves. And we were laughing all the way to the bank because clearly someone else must have realized this was a highly profitable Not even niche, but category of software.

1:07 And it just Took a decade until anyone else woke up to the idea that This could be a good business and then we have competition. So um Very much enjoy the privilege of being a US private company and not having to disclose it.

1:24 Goddam thing. Sam, have you ever been to thirty seven signals website Sam, have you ever clicked at the bottom, there's this little tad that just says nineteen ninety nine. Have you ever seen this? Uh no, I'm going to it now. What's it say? It's amazing. So So in general I feel like you guys have done an amazing job of like

1:43 planting your flag in the ground. I'm like, Yeah, this is what we believe. And Rework was a fantastic book. Your website right now is basically Kind of like rework. It's just a thirty chapters of shit we believe. Um rather than trying to sell you on our software, like let me tell you our philosophy as founders and entrepreneurs.

1:59 But if you click nineteen ninety nine, Sam, what do you see? I see a website that a page that looks sort of like it's from the year nineteen ninety nine and it's all white and it says thirty seven signals manifesto and it's a thirty seven chapter book in plain text. And there's chapters like chapter twenty four. My cousin's buddy, and it says My cousin's buddy is a web designer. And then he you guys wrote then let him do it. The money you'll save having your cousin's buddy build your website will be nothing compared to the cost of time and money to undo his mistakes. And so like very much just like

2:28 This blast from the past of You guys have been doing this for like, you know, whatever, twenty seven years or something of Saying what you feel unapologetically and having that be Something that uh Like leading with the philosophy rather than leading with like, Hey, here's our features and here are pro here's our products, please use us.

2:45 Yeah, so a lot of it is simply based in the fact that neither Jason nor I can shut up about what we believe. So it is a natural byproduct of us existing and working that we keep Coming up with Takes on different topics in our industry, how to build a company, how to run a company, how to Do technology, how to do design, and it would be an awful waste in my opinion if we didn't try to capture some of those observations and lessons and distribute them more. Broadly.

3:17 But there's certainly also a more economic side to it. When we got started, I think it's in Rework, there's a chapter about uh how to out teach rather than outspend the competition. And that was really our operating paradigm. Since the beginning because we never raised B C. We never had more money than anyone else. We always had to Earn the money we wanted to spend first.

3:46 And that meant a whole host of constraints on how we could run our business and certainly how we could run marketing. Because if you don't have a bunch of money to buy ads and awareness that way, you have to earn it. And the way to earn it is simply to be

4:02 Interesting. No. I don't Sit out. to be interesting as a objective, I try to be ruthlessly honest.

4:13 And very forthright in everything that I learn and that in turn turns out to be interesting to some people some of the time. Because so much of Business advice. Is either being given by

4:29 People who aren't doing More observing and deducing and Higher category of that, usually padded to fit exactly. Three hundred pages and maybe it has a

4:42 Funny exclamation point in the word f Most popular genre right now of How to quit my Job or something. That's what I see at the airports all the time right now.

4:54 Yeah. It is from entrepreneurs who are active but very often have all sorts liabilities in terms of what they can say because they have Investors or they're publicly listed or whatever. And basically Jason or I had none of the constraints. We were in the thick of it, are in the thick of it, running our own business, having to Make more money than we spend.

5:19 And it also we don't have any of the constraints. We don't have anyone. Who can tell us no? No. Some days I wish there were people who could tell me no when I

5:29 Tweet out something stupid or write something harebrained. But and the net sum, the moving average of that arrangement. Of doing something. That is successful enough that people Care about what you have to say. And then not having that

5:45 coarse filter of oh I wonder what my investors are gonna think about this. Has produced over the last twenty five plus years a steady stream of Observations. mission statements Crazy attempts to do this, that, or the other thing that

6:03 Very often ended up not being what everyone else was doing. Partly because we weren't consuming the same water. Now, neither Jason nor I have been In Silicon Valley. We're not products of that.

6:15 However much I have tremendous respect for everything that's come out of that place, it does have a tendency to produce Uniform thinking around a whole host of big topics. And Thirty seven Seagulls was born in Chicago. At a time where that had zero

6:32 Tech. Community. Of note. It wasn't until much later and Groupon and all these other things that some life was bred into the Chicago tech scene. But when we were coming up, There was no one there. So we just had the luxury of distance to everyone else's eco chamber, which meant that original thought was possible.

6:51 I did I'm not gonna claim that all the original thought was good. But I will claim that if you look back upon some of the things that we wrote now twenty years ago. Getting Real, the first book, that Manifesto from 99, Rework from 2010. A lot of that stuff still holds up because it's focused on fundamentals. And focused on

7:12 Extracting lessons from our work Producing something that was worthwhile and lasted. All right, so this episode is all about excellence. A while back, I shared my personal framework for building excellence in my own life.

7:28 And the team at HubSpot turned it into a thirty day operating system you can check out right now. It breaks down the systems. It took me ten years to figure out. And shows how I actually use them day to day. These are systems that genuinely changed my life. So

7:42 If you want to build a good life Scan the QR code or click the link in the description. Now. Let's get back to the show. So twenty years ago you were in your twenties.

7:54 And I don't know how successful you were. I would imagine uh mildly successful, but still had a lot to go. And yet you were giving advice. I think a lot of people listening, myself included, when I hear you talk about teaching versus uh teaching versus spending, I think that's great advice, but I'm like I don't wanna give advice when there's so many people that are more successful than me. They should be giving advice, you know, this sort of imposter syndrome stuff. how did you justify teaching fundamentals, teaching advice, and writing a book on work when you're still in your twenties and

8:24 There was probably a thousand people that were above you. That could have been like, What the hell does this guy know? Part of it I think is genetics. I've been blessed with a completely irreverent personality that thrives in exact those kinds of circumstances. I don't give a damn. What people think I can and can't say. I'm gonna um

8:44 Call it like I see it, when I see it, whether I'm nineteen or fifteen, or forty six, or Thirty seven. And The other aspect of that is that both Jason and I Did spend.

8:57 Quite A long time working for other people. Now long time in the grand scheme of things, but did we spend twenty years? No. But I'd been working since I was fifteen. Uh well, even earlier than that. But I've been working for other people directly in the sense of I have a boss Since I was fiftin, so by the time I'm twenty six.

9:14 I Been In business. To whatever degree that is, either as an employee or running myself for A decade.

9:22 No. I don't even think you need that. I think what you need is exposure to Novel terrain. With enough sort of influences and being

9:33 informed somewhat of what other people think and then like your token generation machine will start producing if you are of the kind of constitution that I am, which is One of the ways I try to internalize the best lessons. From what I'm going through. Is to share.

9:51 Is The old adage that Nothing makes you Learn a subject better than trying to teach it. Right. Very much true when it comes to this.

10:00 Now the other fact of that is There's this great paradigm of uh liquid versus um crystallized intelligence. If you look at Nobel Prize winners who went in physics and chemistry and math and so on.

10:16 They all do their formative work in their twenties, basically. Then there's a a decade of of application in their thirties, and then they get the Nobel Prize for that work they did in their twenties in their forties. Part of that Is just biology. I mean I remember when Mark Zuckerberg

10:33 said this and it was hugely controversial. I think this was in the two thousands. He said something to the Effect of Young people are just smarter. And everyone was like you can't say that like that is just so

10:46 Wrong. Well. It's not wrong. In a certain category of intelligence, this form of Liquid intelligence, smart uh fast sign ups.

10:57 Firing stuff. Young people are smarter. Just like they run faster, right? Like you don't have a lot of uh, I don't know, hundred meter sprinters or forty two. That's just not Part of the human physique.

11:09 No. You get The payoff When you get older, that you have more of the crystallized intelligence, you can make more connections. If you look at Nobel Prize winners in history. I think the average age is like eighty.

11:20 Right, like those connections come. Later. I have tremendous respect. For Dad liquid

11:29 Intelligence that's at once both very smart. Very quick. And also totally ignorant. has no sense of the broader world, has no sense of what you're allowed to do and not allowed to do, have no sense of Someone knows more, therefore I should shut up.

11:46 Right. I look upon back upon that time and go like I am so glad I embraced all that ignorance with the Hebrews. Of her early twenty something.

11:56 Like that's how we change the world in a very literal sense the new ideas. Very often come from That vector. That's uh no nobody loves a cautious twenty year old. Uh the founder of uh co-founder of HubSpot came on this podcast and he talked about in his first company He was making everything up and his second company he said, Oh, now I I know how I'm gonna do everything differently.

12:18 And it totally failed and he goes Just'cause I was ignorant doesn't mean I was wrong. And there's there's something to the uh to to that idea of like you can be both ignorant and correct. I'd go so far as to say that Ignorance is a

12:31 Benefit. For a huge class of problems. Then you are cursed. When you've been through

12:38 The loop. Once. When you know too much. You Cena An side In the same way.

12:44 You will be locked into paradigms and thought patterns. And If you want to break those paradigms, if you want to break those thoughts You kinda Gotta start from clean slate. Now that's not universally true in all cases.

12:57 But I do think it describes the case that Jason H went through. That we had some input which was working for other people, working At a crazy time in our industry. Maybe Second crisis time.

13:09 Next to right now. Which was the dot com boom and bust. Both of us went through it, both on the way up. And on the way down. And saw all the dynamics play out where

13:21 I think if you compress those years from let's say ninety seven to two thousand and one, like that's only four years. That was Instruction worth a decade, at least, maybe two. Because there was just so much happening. You got all the explosion of here's the internet, what are we gonna do with it. Build it into the wild

13:43 Castles in the sky that came tumbling down in two thousand and one as the dot com boom. Burst. So we had all those inputs, right? Like all those experiences and then We kinda started in the desert. When Jason and I got going with

13:58 Base camp. This is back two thousand and three. We start working on it. It's still a wasteland. Right.com. Bust have

14:07 exploded everything, you got programmers going back to being chefs or gardeners or whatever. There's simply no work to be had because the whole industry Blew itself up. And in that wasteland we just go like uh Do you what? We now have to be scrappy.

14:22 We now have to rely on ourselves. We have to be tremendously productive because we can't hire a team of fifty. We can't buy tons of servers. We have to use open source because we can't afford licenses for Oracle databases. All of those constraints apply themselves to our situation and then just produces an explosion of creativity. 'Cause that's what very often happens. When you are deprived in all the right ways You will find out.

14:51 Oh, there's a better way to do this. You will find out the optimizations. Like a parallel to today is The big Scary moment. For the US

15:01 AI industry was with deep seek put out. R one. And some of this is mythology, some of it is bullshit. But the storyline at the time was they could not buy NBDS GPUs due to export Uh restraint.

15:14 They trained the whole thing on five million. I know there's Reservations and asterisk behind that. But the fundamental principle was they came up with some novel new techniques of using vastly less compute. To still get Quite.

15:28 Far. And I think that applies very much to our situation at the time. We just We didn't have millions of dollars. We had a Consulting business that we had to make pay for all these experiments we wanted to do and therefore we just had to be

15:41 radically more productive. I mean this In my case On the technical side. Was the birth of Ruby on Rails?

15:49 I could not use The same technology as everyone else was using. Because I had a tenth, a hundredth, uh Thousand of the capacity, therefore I had to use something else. I had to use something or come up with something that allowed me as an individual programmer and technical person and the whole operation to build Basecamp by myself.

16:10 On the technical side. I am Фореградфу. That these were the constraints we were under. If we had raised, I don't know, twenty million dollars and hired a hundred people, we would just do just the same shit as everyone else and we would never have come up with Ruby on Rails. Do you guys want to hear Chris's stat?

16:25 Uh Nobel. Winning prize scientists. are twenty two to twenty five times more likely to be in some type of performing class. So acting magicians singing or some type of like art, like drawing or whatever.

16:39 Twenty-two times more likely. I read about that in Bill Gurley's book and then I just looked it up uh and it's like a it's like a a study. And the reason I'm bringing this up is I've been I've been obsessed over that fact. That just seems astronomical. And then you brought up the idea of crystallized versus liquid uh knowledge. And it just solidifies that. It kinda adds to that. That is wild. And do you know what's funny? I mean we all read in whatever we want into factors like that. But when I was a kid, what I really enjoyed being was the dungeon master. So I played Dungeons and Dragons and other role playing games and most people they just wanted to be a character.

17:17 I wanted to run the world. So I think there was some um sort of uh early indicators that I like to sort of world build. Mm.

17:28 Al also in game, my favorite game of all time is Civilization One, the original Sid Myers game. Which is obviously all about world building. So some of those things were were present early on and having positive experience. Building and bootstrapping. With others, having to convince Others.

17:48 before you even have money to pay them salaries that they should go in your direction and we should work on this thing together and you should Come into my dungeon. is I think exceptionally good. Preparation for Running communities, running open source, running a company.

18:03 You know who else's favorite game was Civilization? Mark Zuckerberg, you know who else? Oh no way. Yeah, both of them have talked a lot about uh Playing civilization early on.

18:14 And I feel like they almost had to stop talking about it for a while when the PR got kinda bad and it's like they want to play you know play God a little bit. But now it's it's cool again. Today's episode is brought to you by HubSpot. Did you know that most businesses only use 20% of their data? That's like reading a book, but then tearing out four fifths of the pages. Point is, you miss a lot. And unless you're using HubSpot, the customer platform that gives you access to the data you need to grow your business. The insights that are trapped in emails, call logs, transcripts, all that unstructured data makes all the difference because when you know more, you grow more. And so if you want to read the whole book instead of just reading part of it, visit hubspot.com. Speaking of Facebook and Zuckerberg, do you fame you've gotten a lot of things right. You know, I think you guys were really early to remote work as a

18:55 Concept and you know, obviously you know, being profitable as a strategy is that is you know, was you know, somehow contrarian at the time. But one thing you got wrong famously was you wrote this post called Facebook is not worth Thirty three billion. And he wrote this Great post in twenty ten.

19:11 I think Facebook had probably just gone public or was close to it. And you basically said Facebook's a great success, five hundred million people use it, but it's not worth thirty three billion. He laid out this case as to Why that was not true. Looking back on this now, I guess Is it do you just look at that as I got it wrong or is it Actually I think the kernel of what I was saying was right, but you know I guess how do you think about this blog post now?

19:32 I love that blog post and it's funny because people often Pull it forward to dunk. Right? Like hey look. Seventeen years ago you got a thing wrong and what I love even more is it's often B Cs, right? You're like, Hey, wait a minute, isn't your business to be wrong nine out of ten times? Wasn't your last fund just wrong on the vast majority of all the investments that you made? Oh, okay.

19:54 Well let's start from that premise. But I didn't care. I don't even care. I love that article because it's Both a good example of Uh being wrong. And accepting that.

20:04 In terms of outcomes. You're trying to draw better conclusions than just like I got it wrong at the gambling table, right? Like I should have bet on Facebook. If I had bought stock at that time, rather than say they weren't worth it, I would have made so much money, right? And a great term that I learned from this uh poker book. It's called resulting.

20:25 And poker. There's this concept of You analyze well not just analyze. You know what the odds are. Given the cards that you have, the card at the table, what are the odds that you're gonna make Whatever hand you're trying to do.

20:39 Right? And If you Delude yourself into thinking I should keep playing sixteen percent hands. I should just go all in on sixteen percent because do you know what? I won the last three

20:53 You're Idiot. And you're gonna lose all your money. That's not how to win in poker. The way to win in poker is to make sure you predominantly play hands that have the best odds.

21:05 Just as much. If you go all in. On a hand that has eighty seven percent odds of success, and you lose. You're an idiot. If you draw the conclusion that you shouldn't have gone in on that hand.

21:16 Totally should have gone in on that hand. So resulting is evaluating your decision on the basis of the outcome alone. Now obviously you can't Divorce those two things, but you gotta do it on a longer trend line. Everyone

21:30 A shot. Not just one shot that's gonna miss a hundred shot, a thousand shot, a million shots. Over the course of their Careers. In fact, this is why the B C parallel is so important. VCs have gotten tremendously rich.

21:44 Being right ten percent of the time. Isn't that I mean, that's an incredible stat for me that you're able to build such wealth. On being so wrong so often. But

21:54 Let's even dig into the merits because I love the case of that too. When I did that analysis on Facebook, they did not have a monetization strategy. What they had was a lot of traffic. And I pair or or I pattern matched. That traffic on I know if this is

22:11 Two world. But there was something called Blue Mountain. I think back in Yes. Yes. They were

22:20 Tremendously popular. At the time they had a ton of traffic, right? And all the traffic brought them was ruined. mechanism for d turning that traffic into gold.

22:32 Trash. It was trash traffic. It was just people who wanted an e card and what are you gonna do with that? Maybe today you could make it work. They certainly couldn't at the time. My analysis was Фейсбук із т. Traffic.

22:45 It's just a Bunch of people. Talk about all sorts of shit. That isn't Intentional in the way that a Google search, for example, is. At the time

22:56 The surveillance capitalism paradigm was probably already under Well under construction, but not widely distributed. Like that this was the Alchemy. Де вас на тюрь абсолют траш трафік. Into gold.

23:10 Because Surveillance capital. Flipped it on his head that it did not matter whether intent was there. If we know Everything. About everyone.

23:20 Алтайм All that matters is eyeball time. Because now we can pinpoint whether an ad should be shown or not shown on the basis of who they are. Not what they're talking about. So they could be talking about the most Deranged stupid stuff

23:35 And we can make Better. ads happen because we can target those individuals than a golf magazine online can do on golf ads. Right, I I don't know if that person is currently having buyers intent for buying a new set of clubs.

23:51 But do you know what? Facebook probably knows whether you're within ten miles of the Gulf store right now, you're driving towards whether you could be swayed one way or the other, so I didn't see that. I did not realize The power of that alchemy.

24:05 And by the way, no But he else did either. Because if they did they would have gone like holy shit. Facebook has Invented alchemy.

24:14 Why are they only worth thirty three billion? They should be worth Mm. Half a trillion! Let's just go all in bed the house. No one did that, right?

24:23 So Anyway. I love it for all these things. I love it for resulting. I love it for this Example of alchemy. When someone really does figure out like a complete unlock

24:34 On the entire internet business. In that right moment when they also have all this trash traffic that would otherwise have been Worthless. And then I just love Do you know what? I was wrong.

24:45 And I remind myself about that on like at least a yearly basis. Sometimes more often than that when some B C needs to dunk and pulls out a sixteen year old blog post. And I I just sit back and smile. Yes. You should have some humility about your predictions. Can I tell you guys about a uh a funny interaction I had with your business partner, Jason? So Hay dot com. So if you guys are listening, go to Hay dot com. That's one of my favorite landing pages. Uh you guys are wonderful at um writing copy. You're obviously great at design, but like copy, which I think is uh like the forgotten um skill set in in in internet

25:17 Interneting, copywriting is sort of like a lost art. You guys have not lost it. You and Jason both have it. And I texted him and I go, Hey, I'm working on a new landing page for my thing and I'm using hey dot com as inspiration. What's the conversion rate of your landing page? Because it looks great. It sounds great. Is it effective? And he goes You know what? I I haven't really looked at it. And I was like, What do you mean? You don't look at the uh the conversion rate, you don't know if it's working? He's like No, I've I've never really thought about it. Uh I just know that like it felt good and it and I and I think it's good. Therefore, uh we just ran with it.

25:48 And I was I was in awe of that reply. That was the opposite of what I would have expected. Can you talk a little bit about the tension between good taste, which I think you have And also following data because you have bills to pay and you want the you want a good outcome and you want to be great, you know, you're you race race cars data and like the weight of your car and I I don't know anything about racing, but I precision matters.

26:12 Data matters, and yet you seem to be a follower of taste first. This is the luxury of margins. We have had the luxury of margin since day one. Because we built something people liked and we did not balloon the company to follow that. Interest.

26:30 We grew the company as we needed. Exactly to the point where We were not Deadly frustrated by our lack of progress on the ideas that we had. Which meant

26:42 That Right from the early days. And Through some period of time. We had ridiculous margins.

26:49 I mean truly When I was telling in confidence others about our margins, they were like, No, you gotta mean gross, right? And I'm like, No, that's not And they're like, What do you mean?

27:01 I've never heard of a business like any uh frame or any ballpark for previous numbers, if you're comfortable? Not really. I mean let's just say ridiculous. I think that's a that's a good ballpark, right? And certainly if you compare it to any of the public SaaS companies, like as we were in a different industry. Right. Like often industries have a tendency to correspond a certain profit margin. And

27:25 It seems like public market SaaS has corresponded around like I don't know, minus ten percent or something. Minus twenty percent. ridiculously long stretches of unin un Uh unprofitable growth, partly because there's all these other hacks of how you get money out of the business while leaving nothing for the shareholders like stock based compensation and so forth, but that's a different discussion.

27:47 Yeah. Our focus from the beginning was the more margin we have, the more freedom we have. The more freedom we have. The more we could just focus our time on what we like to do. And you know what? It just so happens to be that neither Jason nor I

28:04 Love running. Minutia A B test to squeeze out. Zero point zero one. And That's very often what's needed if you wanna

28:15 Tweak something. You run a thousand of these experiments, right? Like not two. You just you stick to it and you keep grinding away. I think grind is actually a good word here because this is something I often hear entrepreneurs talk with Such a Pride in their voice. Yeah, I I grind. Like this is why I'm working a hundred hours a week or hundred and twenty hours a week. I'm just grinding, grinding, grinding. I'm like

28:37 Okay. I don't want to do that. My life is far too interesting. To waste it.

28:43 Grinding. Grinding is the stupid shit you do in World of Warcraft when you're pee on. No thank you. I don't wanna do that. So can we just get to a place where our intuition

28:57 Affords us The success of our intuition To just do whatever the hell we want, whenever the hell we want it. That'd be great place to be. And we arrived at that place very early on in the lifecycle of the company. But I will also say

29:11 What's interesting about this is that I like numbers. I actually like Statistical analysis. I like rigor.

29:18 I like the confidence into Balls. Not to the point that I want to run these A B tests myself. But to the point that like I have great respect for the statistical tradition. And we for many years had essentially a data scientist sort of on staff. Someone who would Crunch those numbers, do those reports, try to eke it out. And after trying that for over a decade, Jason, I finally came to the conclusion in

29:44 Honesty that we never did what the numbers told us to do. What we would do was We would do whatever the hell we wanted to do, and then if the numbers supported that, we'd go like those are good numbers. And if the numbers didn't support that, we'd go like Yeah, I don't know. There's probably some factor you haven't calculated in. And we just thought at the end.

30:03 Why are we doing this? Well, partly why we're doing is because we listened a little too much to other people telling us this is how you're supposed to do things. Now I am not saying that this doesn't work for some definition of work. I'm saying we didn't need it. And

30:17 That is a much nicer place to be, and if you are able to get there, you should embrace it with full gusto. If you have the margin to not hours you have allotted on this earth. Doing

30:31 Shit that would bore you. Mindless. Don't Th We never had the obligation

30:40 To squeeze the lemon for its last drop. We never had the investors Going like hey. Why is this corner? Fourteen point seven nine percent. You promised me sixteen point two five.

30:53 Go get the last two percentage points for me. We never had that. We never had that pressure. And therefore we got to act Reckless.

31:02 in some definition of Prudent business operations. And I'm immensely proud of that recklessness. First of all, because we have outlasted about seven generations of competitors and others in the SaaS space who did all of that. Right?

31:21 Hm. Did all the statistical analysis who who squeezed the lemon in all the ways, who who Debased. Their copy. Because for a hot second it converted slightly better.

31:34 And we didn't and we're still around. So Part of what I take away from that is A What a nice front. B Maybe all the statistical analysis

31:45 Is a bit of Hocus Pocus. And the reason I say it is not because the numbers aren't right or the math doesn't math. But because very often The missing ingredients to getting to the capital T truth. Is unknown.

31:59 When you keep drilling down. On a set. That is highly limited and does not describe the world as it exists. You're gonna steer yourself blind on that. You're gonna think you found the truth.

32:11 And you're not hearing from all the customers Who's not signing up. You're not hearing from the word of mouth. That takes eighteen months to materialize because those things can't get computed.

32:22 But isn't that an absolute I mean I think your way works wonderfully and I identify with it and I wanna copy you, but you're on the board of Shopify. Uh they probably break so many uh dogmas or rules that you believe in and it's worked out really well. This is the great thing, um Sheck, the is this Polish or Czech, I think philosopher has to create a monologue about how he hates wisdom. I'm like, how can anyone hate Mistake? And the reason he says that is For every wise axiom You can find another that says the opposite that also sounds wise.

32:57 And both of them were extracted from moments of success for that individual in those circumstances. And that's a bit of A deflating thing because it can very easily sort of Descend into nothing matters, nothing is true and everything is

33:12 Just post modern. I don't believe those things at all. But I do believe that Wisdom is very contextual. This is all the way back to Newton and uh

33:22 Einstein and the the theory of relativity when you go fast enough Like all the neat physic rules that are really helpful for calculating the apple dropping on your head, they just start breaking. And suddenly time and space and everything is relevant. So You gotta know your universe.

33:39 You gotta Focus on like your set of circumstances and what works in your context and what works for a startup and a small company selling to Other small companies. Is not gonna be the same as what works for A Shopify.

33:55 What w what's the most interesting thing you've learned from being in the Shopify business or Toby? Uh, you know, w if I just said what are the biggest kind of like lessons takeaways that Anytime you let a smart person go experience kind of a new novel environment. I'm always curious, like what's the one or two things that stand out to you? Good question. Some of it is just awe. I

34:15 Shopify last year grew Almost thirty percent year over year. I'm like I would have been happier to go thirty percent year by year, like I don't know, very early on in our uh life cycle. They're doing it from a base that's just unfathomable.

34:29 Like the law of big numbers gets Kinda wacky. Right. When you're already doing billions and billions and you're growing in that rate it just Yeah.

34:39 Feels like You found a glitch. In uh the matrix somehow, and what I love even more about it is You can come up with all sorts of reasons for why that is. But you know what? Even at the board, even Toby

34:53 We don't really know. Like why did it take Shopify what is it gonna be twenty two years? to get to this moment where it just had its Best years since the craziest of the peak Covid years. Isn't that

35:06 Fascinating. Like in many ways the company's doing what it's done since Toby Created snow devil. I just want a toolkit for me to create a great looking store rather than be in the uh bazaar of Amazon. Right. Like

35:22 Pretty simple. Mission. And they've just been chipping away that for like twenty plus years. Suddenly the charts just go like don't don't don't Uh and All these theories are are just that. Like we don't actually know. The amount of stuff that people don't know is amazing. I mean, I wrote a blog post a while back.

35:42 Basically putting that to the point of nobody knows anything. And I think that's a good General Take on the big questions. Nobody knows anything.

35:53 Whether we're talking about climate change or what AI is gonna look like in two years, or why Shopify is able to grow Thirty percent every year and You're twenty two. No one knows anything. We can have all these theories.

36:08 Very, very little of it gets to be reduced to irrefutable Proof in the sense of a math equation. Um, we can talk about this board of directors of Shopify forever. It's so fascinating. On on Toby's uh bio for board of directors, the last sentences he says that he was on the core team for Ruby on Rails. So I assume that you've known him for close to twenty five years. Is there any cool stories that you've had about him or leadership lessons that we can learn because it's very rare I mean building He's built like the seventeen largest company in in the world. That's rare. It's also very rare

36:39 where he's been at the helm the whole time. Uh, is there anything anything cool about like the evolution of like a computer nerd to being like a proper CEO of a ten thousand person company. Is there anything cool that you can I can learn about that? What's funny to me is that you Posit that as he went from one form to another form. Not true at all. He's still a computer nerd.

36:59 Absolutely. As much as I'm a computer nerd, actually he's more of a computer nerd than I am most days. I the direction of travel of him sending me cool tech stuff and me sending him cool tech stuff, I I think It's in Toby's favor. So he's still That person. Now obviously what he is also is now the head of this giant corporation that is

37:20 Responsible for I think I saw something like fifteen percent of I mean world e commerce. A Notable share of world GDP. I mean That's mind blowing in a way that I'm really happy that

37:32 Toby at least doesn't give any appearance of internalizing into his character composition. He's very much still The computer nerd, and I think this current phase that we're in with the AI and the agent explosion

37:48 Just demonstrates that to T. He was incredibly early. On this stuff. Some of the public memos that are out from Shopify, you can check their dates. And then you can check Toby's predictions.

38:01 And I just gotta give immense respect to that because I was not that early. In fact, Toby helped drag me into The light. on some of this. And some of it was also just like I had to see with my own eyes the agents do what they're now capable of doing before I fully flipped on it. But he was just really early on and and so much of that came from that nerd perspective.

38:22 Most we we've had a lot of really amazing people on here and like the like ballers like Darmash from HubSpot, they will reference Toby as like He's the guy. uh of doing that, of like being able to see a little bit into the future and behaving in such a way that is uh He's just right a lot.

38:38 Totally. And I mean, some of it is because he's real smart, some of it is because he's got that nerdy Conviction? I think similar to what I have, I I'd like to believe that we're similar in many ways, and that's why we get on so well and known each other for twenty plus years, is that

38:57 A little bit of isolation, maybe because of that nerd upbringing that You have the whole world telling you X and you actually go like Let me just check under the cover. Oh, do you know what? It says why. I'm gonna bet on why. Even if the whole world is in on X.

39:13 And to see that continuity, as you say, is incredibly rare, and I think part of That is the answer to why now would Shopify and you know what? Compounding determinism. Over twenty some plus years Has a tendency to add up.

39:31 And it adds up in irregular Ways where It sometimes takes quite a long time before poop. The inflection point comes now. I mean we say this, but

39:44 Shopify went public. I mean Over a decade ago. At a one billion dollar valuation. I mean that's a hall of fame early investment you could have made because

39:55 Shop if I didn't do as so many other companies do now, which is essentially reserve all the upside. to insiders and their VCs and then go public when it's already kinda plateaued, right? Like From where they were to where they are now, an amazing ride for the public investor if they were along for it. But Yeah, I mean

40:15 Tremendous respect. It's funny because I mean I just Joined the board uh a year and a half ago. And it came out of a conversation actually where I was making the argument to Toby That boards are bullshit. And that all the boards I've ever been on were boring snooze fests.

40:32 Dealing with minutiae to rubber stamp. Things for auditors and Whatnot. And he was like

40:40 I don't know. I think we have a pretty good board. I was like Okay, and we started talking and then we had talked for a few hours or five, and then suddenly I did come to realization, do you know what? Yeah, I probably just

40:53 Been bored. Because I've been dealing with things at a scale too similar to my own and I'm not learning anything. Shopify's dealing. In a universe apart in terms of scale. While still using some of the same things that

41:06 I'm passionate about it. Shopify is the biggest Ruby on Rails shop in the world. Obviously I'm very passionate about that. Um, many of the other aspects of it has great overlap, but I don't know that scale. I'm like, that sounds like a fun challenge. Let's just do it. And

41:21 Of course Toby War's right. Like, is there bullshit on a board of that scale? Of course there is, but it's actually a small minority and most of it is just really interesting stuff. Dealing with problems I would never see day to day in my own business. You mentioned uh with AI, you're like Toby kinda dragged me into it a little bit. What's been your

41:41 uh evolution with AI. So, you know, a couple of years ago, what was your opinion? What were you playing with? And then now what do you see I thought it was amazing since day one and been a chat GBT user since the first days of that interface and just love that we were able to make computers do this right from the get go. I really like computers. I just like them for their own sake, not even always for productive purposes. I just like computers. Some of my favorite time is just sitting in front of the computer.

42:11 Doing stuff. Learning computer things. Even if it's not directional towards a specific goal. And this Even from the get go, even when Chat GPT was

42:22 Dumb as rugs and couldn't count DRs and strawberries. Which is fascinating. I'm like I still don't get it. I mean now I look into a lot of it now, Transformers Works and whatever back forth and temperature and all of it.

42:35 I'm like I still don't fully get it. Like How is it? Yes, I know next token. But how does it turn into this? How does it cosplay so well as an intelligent

42:46 being maybe the reason I'm surprised is because I have the wrong model of human consciousness. Maybe Human consciousness is far closer to token prediction than any of us would have cared to admit or even investigate seriously before. And The models as we have'em as as they came to be

43:06 We're quite close to that. And we have discovered intelligence in some sense. But The timeline is still dead from the get go. Awesome.

43:15 Love it. It's not Changing my day job. And the reason I say that is I'm very particular. about how code looks and what it feels like and

43:26 Um I was about to say correctness. That's not even like at the top. Part of it. I'm like, I'll get to correctness when I love the aesthetics. And on aesthetics alone. The models are just not that good. For a really long time.

43:41 That's one part of it. The other part of it was the early Eight. Not even agents, because they weren't agents. They weren't doing tools. The early LLMs, the early AI was autocomplete. Right. You're in your editor. And then it tries to complete the rest of it. And I hated that.

43:55 It was like having someone interrupt my train of thought every five seconds. To usually be wrong. And I say wrong not in a factually correct way of does this program execute, but wrong in the sense of like this is not the code I wanna write. And I don't like what you're producing, so I didn't like that form of using AI. And therefore didn't really use it that much for quite a long time. I used it as a

44:19 Pair programmer as a better Google, as a better Stack Overflow, as a Here I have a problem. Can you have a look at it? Oh, you taught me what the solution was, let me go off and write it. And This Takes us all the way up.

44:32 Two The interview I did with Lex Friedman in the summer of last year where I was Essentially giving this spiel, right? Like, hey, I don't like what it produces, I'm Extremely impressed. You'd be a fool.

44:45 Not to take this. Super seriously. And as a directional path for where we're going. But it's not yet.

44:53 It's not in my business yet. And then I even I think early December I did another interview. I Had some revisions on it. And then from there. It was like those realms could have been a decade apart.

45:04 Because the models that dropped in late November, I think Opus four five was November twenty seven or something. That class of intelligence suddenly switch from I don't like what it's making to Holy shit.

45:19 What? Wow. Okay, I'm gonna merge. So The last three months I'd say

45:27 Has been the most churn in my mental Approach to computers. In the entire time I've been using them. More

45:40 The questions and more workflow changes have entered my personal life, my day to day life, my Eight hours in front of that little screen that is. Any time before that. And now I'm probably and thoroughly pilled.

45:55 Mm-hmm. And I don't necessarily say that with like because That also means like I'm actually now in the herd. Right. Like the herd certainly out of Silicon Valley is like AGI is Imminent.

46:07 And Even between now and AGI we're gonna go through such an intelligence explosion that Hold on two stocks, right? Yeah, I'm actually now in the in the consensus on that, which I'm always a little skeptical about. I always wanna Try to look for the other angle?

46:22 But it's just undeniable. At some point you just gotta Admit. That the math maths. And that the Agents.

46:29 Are incredibly capable programmers. I thought Вона так лекс ламер. Dad. It was gonna turn everyone into a project manager of the old type.

46:40 The kind of project manager who's not really Doing the things, just telling other people what to do, and then yeah, you got this little sh churn and then you get the feedback. And I realized that's not true at all. It is more like I've grown eighteen arms and seven more brains, and I'm operating twenty two screens and I'm still doing all of it, even if I'm not typing every character myself.

47:03 And my progress When the stars are just right, it's just unbelievable and incredibly addictive. And that's In some sense a little bit like that.

47:16 Facebook thing. Wait do you know what? I was wrong about how quickly this was gonna radically change everything. Like I thought it was gonna happen. Um

47:26 I thought I Gotta have a few years, right? And then suddenly From December onward We live in a completely different world.

47:34 I have to thank you for that Lex Freeman podcast. A Great podcast, six hours long. B. I bought three ads with Lex Friedman.

47:42 the fur for my company Hampton, the first ad went on like he doesn't tell you what it's gonna go on. The first ad went on like Iran war And I was like, That was not my target audience. That's not gonna work. The second one was like I

47:57 Jeffrey Epstein video or I don't I it was like some kind the third one was you and I was like Yes. Got it. So your your episode actually made our ad uh profitable. So thank you for that. Um there we go. Uh are you um you know, so I read your work, I've read your books, I think it's great, I copy a lot of your stuff, I'm inspired by your stuff because I want to build a company like you. What about what you guys have built today? Do you think is foolish or w what have you built over the last twenty years that a lot of people admire, a lot of entrepreneurs and business owners admire? That you think is

48:30 silly to replicate today. And and you would like advise someone who has like a two or three million dollar company if you want to be a bootstrapped five fifty million dollar or whatever you guys are company a year and be as profitable as we we are and have this life. Don't actually copy what you see now because that won't work today. I don't have a straight answer to that. And partly it is because I can see some of the things we've historically Been doing Work less well.

48:54 than they had. And some of it is exactly this. Dad. Being able to generate Attention. Is not as transferable as

49:05 to business outcomes as it used to be. And there's a great um Gary Vee has this book, uh Jab Jab Right Hook. Love the book, love the concept. In basis is Give, give, give. Jab, jab, jab.

49:21 Honor times. Just give. Be kind, go out there, share all the stuff. And then occasionally You give it a right hook. You

49:30 Call to action. Buy my stuff. And that's what Pays with a hundred jabs is that occasionally there's a right hook that lands. Вода в сіні

49:40 And some of it is just a reflection of the dynamics of social media. Is that the right hook Doesn't travel anymore. Because All the main

49:50 Uh media outlets. uh or social media outlets, X in particular, where both Jason and I are strong. The algorithm's just never gonna show you stuff. It used to be that having a ton of followers meant that a ton of people just saw your stuff. Now the great irony here is that this is what

50:07 people complained about on Facebook back in like twenty twelve. I have all these followers, but I can't reach'em unless I buy ads. Yeah, that's a demise of b a buzz feed and all these huge companies. That's not actually quite what's happening now because From what I can tell, ads on X still don't really work. We tried them a bit, maybe they work better now. Never worked for us. What works is viral. Right? Like what works is sharing really interesting stuff. I don't mean viral actually in a negative connotation. It also has that.

50:37 But it also is something positive. You sharing something novel. With people who are Interesting. And engage with it. But the trickle down has kind of stopped.

50:48 So that trickle down of like I share a lot of interesting stuff on a daily basis, and then occasionally I'll ask you to check out my new product or something else. Then to check out my new product like that stopped working. So I'm not sure our historic long run strategy

51:05 Uh Build a large audience. And then Good things will ha happen. Is necessarily true anymore.

51:13 I think there's still something to it. But is it viable as your sole strategy being someone new? I don't think it converts or works as well as it once did. So that's the thing that does me Work. Now I still wouldn't say that. I still think

51:27 Just for your own edification, you should try to share interesting things. interesting thing. That's actually how you learn more. When you try to teach what you've internalized, you Make it sink in deeper. And I also think it's just good to share for the sake of it, regardless of the outcomes, but I Can also see what happens to people who

51:44 Share, share, share. And never see something back. The odds of that person ending up Bitter. It's pretty high.

51:53 One of the things that Both me and Sam love is uh anybody who sort of plays their own game by their own rules. And I think Whenever we had Jason on or you on, like that's one of the things that we like and respect the most. In fact, I almost joined thirty seven singles uh when I was very young. I was applying to two jobs. One was in San Francisco and like the tech world, and the other one was gonna be with uh thirty seven signals and I went to it. I went to San Francisco instead. But did you get the interviews, Sean?

52:16 Um I did get the interview, but I got the other job first and so I never even to I never even uh went forward with it. That's awesome. But it was a company I was studying. It was like if I'm gonna join one company, I like these guys, I like how they roll, I like that they have their own like The drum beat, right? And so you guys have for a long time just done things your way. I think both You know, for you, I think you're kind of like an engineering hero for a lot of me and Sam are not developers, but like I think a lot of developers respect you because you

52:40 Yeah, A strong opinion in a way you roll technically. I think there's the thirty seven signals part of things. And then there's the outside of it, right? Like doing the races and Just living life a certain way. We talked to Jason about his houses and how he's like a craftsman and he's got taste and Things like that.

52:55 I'm curious who kind of inspired you. So who are people that you kind of liked something in their blueprint, either how they ran their company or how they had, you know, this these side quests outside of their their work that that was cool. That You know, maybe made you want to do the races and and and you know, dedicate in that side. Is there anybody that you've looked up to that you've you've stolen a little bit from their blueprints? Completely. I mean in fact my entire early career

53:19 Was just finding people Where I really liked and looked up to and said I'm just gonna copy the motions. Like I don't even know if I fully understand it, but if I move my hands in the same way and dance the same dance, maybe I'm gonna get a little bit of that magic. One of the ones that I think maybe Jason has cited us as well is Ricardo Semler.

53:39 Wrote. A book called Maverick. I think it was published In the nineties. Oh, it's the Brazilian guy? Yes. I I've seen that book title. Can you tell us about it? Like I I know a couple people.

53:50 Amazing book, amazing story. So Ricardo Semler, I think inherits or takes over this huge industrial Brazilian company that makes pumps. For I think oil tankers or something like the last company you would imagine. Bing. innovative on work practices and so forth. And he just approaches that company

54:11 With An irreverence to how things are done that would make Both Jason or I blush. And we try to be relatively radical, I think, in what we try to prescribe. But he really gave us It certainly gave me

54:24 permission to think Very different ways about how to do things. Like How do you look at employees and the value that they bring over a much longer period of time? And it gives the example.

54:39 Of this one guy He has that on Almost every week. With a newspaper open.

54:47 And does Nothing. He's just there. And you're like, why would you pay a guy to sit at his desk and reach your newspaper? Well, it just so happens to be that occasionally some of these pum. In really spectacular ways, in far flung places.

55:03 And he's the guy. Having that capacity to get some oil tanker out of some Predicament. Immediately. One of those will pay for a salary.

55:14 Read seven times over. Now I love that. Anecdote because it's one I've struggled.

55:22 At thirty seven signals, which is the best kind, right? I've been practicing this for literally two decades of divorcing this since. Of I don't know, Protestant work ethic of like why are you not moving your hand forty hours a week? With That's not the value this individual brings to the corporation. So I love that. He has a million suggestions On how to run a company. We took a fair bit of inspiration.

55:47 for both getting real and for rework, not quite the form. He tells more of a story. Narrative, which is great. Huge fan of him. Another one is um Kent Beck. So Ken Beck is the

56:01 Author of Extreme Programming. One of the Heretical software methodologies back in the nineties when everyone was stuck on rational or the waterfethod, big upfront designs, like large manuals before you write a piece of code. Ken Beck was one of the absolute pioneers on

56:23 A completely different way of working, the agile way of working. Now that word has Stop meaning. Almost anything because today it just means software development. No one is gonna tell you they're not agile, except for the really edgy people who've now started to turn towards agile, which is fun to watch. But The mainstream adjust got mainstream. It wasn't. In ninety nine.

56:44 Or early two thousands and I saw Kent Beck. on stage in two тан А дайніш конференц. Have complete and other command of the room. As he delivered his sermon on software methodology, and I was just in awe. By the way, his LinkedIn

57:03 His LinkedIn is hilarious. His bio says uh of the handful full of people who have shaped how we build software, can't Is the raised middle finger. And he's giving a uh it looks like

57:16 It looks like he's giving a university graduation speech and he's wearing a tie dyed Oxford button down shirt. Amazing. I love Kent and everything he's contributed to. Self for development. Both in terms of his methodology, but also in terms of his

57:34 Craft, my favorite book. On The nitty gritties. Of programming. Is a small book he wrote in the nineties called Small Talk Best.

57:44 Practices. It's a quite short book. And It is the most influential book on how I write software. That's

57:53 I've ever read. No. It's funny because I've mentioned this book many times over my career, and at one point I think it was not available yet as an ebook. You could only find the print versions. And managed to create so much demand that I think at one point it went for forty five hundred dollars for edition. Now it is available

58:12 Online, you can just buy the PDF. It still totally holds up. In this day and age. From A language most people are not programming in, small talk. It's incredible. And Kent wrote not just that, like a craftsman's book about craftsmanship, but then also reshaped how

58:29 All of software methodology is done. And then finally I'd say uh Matt who created Ruby. Back in the nineties. And Opened my eyes to

58:41 Rearranging the priority list? When I got into programming Most programming languages was sold on dark. I'm the fastest. I'm the most correct. I have the least memory usage. I'm the most like C, I'm the most safe All those adjectives and Yeah, that makes sense. I I should pick the fastest, the the least amount of errors, and then

59:04 Matt comes in and says like No no Ruby is designed to make the programmer feel good. Yeah. What? Wait, what did you just say? It's about programmer happiness?

59:15 What hippy dippy bullshit is this? How are we gonna get create or correct programs that make us lots of money if we're focused on programmer happiness? That was a real mind blown explosion. And it was also the infliction point of my professional career as a programmer. I'd been using a bunch of other things before as tools, looking at like what's the most efficient and how do I get the fastest. And then suddenly I discover Ruby and realize that

59:46 Writing it. Can be this Hencely satisfying experience. Just getting it beautiful. We talked a little bit about those aesthetics earlier and why I didn't like AI auto completion for so long was because it interfered with that massaging.

1:00:02 Of the Ruby poem. And I've now spent Well over twenty years. Absolutely loving the Ruby programming language because

1:00:12 Some guy. In Japan. Rearrange the priorities of what was permissible to care about. As a software developer. We have this thing, um David, c uh I'm now gonna call it the M F M lean.

1:00:27 Sean, do you want to show'em the the M F M lean? We you you you had us both. We are whatever if we sit like this and we're just like you have gotten us to fall down the if you're listening on Spotify, you gotta go on YouTube and hear this part. But if you're you've gotten us to fall down your slippery slope. What do you do with the money once you've already made it? This is a question Sean and I ask our successful guests all the time. And the reason we ask it is because if you are successful, if you do have a little bit of money, information on how to spend or invest your money, it's actually really hard to come by. And I know this because inside of Hampton, which is my community of founders, people ask this question all the time. People have made ten or fifty million dollars. How do you spend it? How do you invest it? And so to help solve this problem and answer this question, I actually interviewed eighty plus founders, guys like Scott Galloway, Alex Ramosi, Brian Johnson, people who are worth

1:01:11 fifty, a hundred, even billions of dollars. And we got them to reveal everything. So their net worth, how much they pay themselves, their monthly expenses, their portfolio, things like that. And we turn these eighty interviews into one document. And I don't think you can find this type of information literally anywhere on the internet. And it's completely free. So if you want to see behind the net worth of people who are worth billions of dollars and their portfolios, their expenses, everything, you go to joinhampton.com slash reveal. Again. joinhampton.com slash reveal. Check it out. You uh you made a comment about longevity.

1:01:42 Uh which is pretty cool. You you talked about um you know, all these people tried all these tactics, it didn't work, but you know, we didn't we weren't too trendy and and now we're sitting here and we we still have lasted and you've built this amazing company that has made I don't know how much, hundreds of millions of billions in in cumulative revenue. Is there anything that you do on a day to day basis within your company where you are making decisions to last five or ten years out? Uh or being you know, like longevity decisions versus short term decisions. Like do you actively think about that on a regular basis? Or maybe I could even ask you the other way around, whichever is easier.

1:02:15 What decisions would you make differently if you were just trying to like You know, get in and get out. Good question. I think on the longevity front The number one

1:02:26 Objective both Jason and I is to ensure The thirty seven signals is still a place we want to work. Not just want to work. But like to work. Is our favorite

1:02:37 Place to work. I see and talk to a lot of entrepreneurs Or in a hurry. Because they managed to build a company they don't like. And they would love to get out of it.

1:02:49 And I find that tremendously sad. Not because they can't achieve other objectives in their life. Like maybe they have a tremendous exit and then they Grit their teeth for the two to five year exit period when they're on hold up and earn out? And then they go on living merry good lives. Great, lovely.

1:03:08 I I'm glad for you. That's not what I want. I want to arrive at a station in life where I don't have to do Things I don't wanna do if they're not in service of a meaningful burden I have chosen to carry.

1:03:27 And work is full of individuals even at the highest levels The CEOs, the founders. We're stuck in these loops that they actually kinda hate. And

1:03:40 The only reason they're doing it is because of some begrudging obligation to Investors or outcomes or whatever else have you. And

1:03:53 Jason and I from the get go Just set the objectives like We're not gonna fall into that. We're not gonna be instrumental. About how we built this business because we're

1:04:03 Seeking the after. We're committing to the now. And then now it's lasted for Twenty seven years. And in my case for twenty five years I

1:04:13 joined up in two thousand and one. So That seemed to actually counterintuitively Work for longevity. Do you still go through quarters or months of angst where you're like, We're right in the middle of this, this is frustrating to me, I don't want to be doing this, but we have to do it. Or or does that not even exist in your world?

1:04:31 No. It's never been there. I'm not saying I've never I've never been stressed. I certainly have stress points. Not that many. I mean I can literally remember almost all of them. But

1:04:44 It's not because I'm grinding towards some outcome. It's usually those moments of stress because External Forces have conspired against us for a hot moment and we gotta figure out a way out. And that's it's well that's surprising. Like even when you went to launch Hay, you're not like you know, we have a we said we want to launch on this day, we w it would let's get all of our ducks in a row and make sure this launch is good. And if it doesn't feel good, I feel like it it's shocking that

1:05:10 No, and I think that that's an important point. Because A We were fortunate enough to have early enough success that

1:05:20 Many, many years ago we reached escape velocity on If this thing implodes, I'm not gonna be out on the street. Dad to me that baseline, I mean I grew up in Denmark. working class were I did have occasionally like

1:05:36 It's near the end of the month. There's no more money. Okay. Well, great. I guess we're eating at the grandparents for the next couple of days because that's just what it is. I think if you grow up Under those circumstances, I mean and I have

1:05:49 Actually no qualms about that. Most of all of that was great. And I Treasure. Having Being brought up that way.

1:05:58 But It did leave me with for some period of time this sense that like I I would like to be at a place where I don't have to worry about the end of the month. Whatever that means.

1:06:09 And we just reached out quite early. Because in part that we were not just putting it all in. We took money out. Front. Day one. Almost, not quite.

1:06:20 Year two. At the very latest, we were pulling out profits. And then we had Basos buying secondaries from Jason or I That just set a baseline to like all right now we're pretty set.

1:06:31 And then the next couple of years We're very nice. And therefore we ended up really early at a stage where I all w I I felt like we were In over time.

1:06:42 We were in overtime and like Two thousand and eight. Where I'm like It's all gravy. I've already done the touchdown?

1:06:50 I've already secured the The base here, so if this stops tomorrow I would look back upon the whole thing with immense gratitude. What a privilege. Incredibly

1:07:03 satisfying products that customers really like to have Kicked off Ruby and Rails to have been there at the birth of Sass? To have seen everything. Wow. That is

1:07:16 Not something everyone can say, and I got to do it. So now I'm just in I'm in Fluffy Land. I can be at peace with the whole thing.

1:07:27 And I think actually having that Instrumental here I will use the word. Instrumental detachment. From the outcomes of the business. Allowed us to be better business people. Allowed us to have less ego attachment to specific outcomes that we did not have any power to influence anyway.

1:07:46 the vast majority of anxiety that wreck entrepreneurs and builders all the time are about forces outside of their control. The best you can do is do the best you can do. I don't have another two hundred percent in me. I know.

1:08:05 I found the steady state where I get maximum productivity out of myself and it's not by sleeping two hours a night for three weeks straight. I know exactly where that road ends, Neil. And it's not a place where I want to be. I am going to be exhausted. Stupid.

1:08:21 And full of mistakes. So we're gonna build the setup in such a way Dad. If he was gonna flunk Okay.

1:08:29 Still plenty of margin? With the base camp? With a bunch of other legacy products that's Paying the bills and way more than that. So we get to have fun. We get to have fun, we get to chase our ideas.

1:08:42 We get to be ludicrously ambitious in our definition of it, which is let's go head to head with Gmail. A great product that's Three? To ask someone to buy an email system that we just came up with? I mean, that is a ludicrous mission if I've ever heard one.

1:09:01 And It won't Hey Is now what are we on year? Five?

1:09:07 Millions of dollars. It's been a great success. Quite a stressful birth, not because of anything we did up But that's one of those Scenarios I talked about were Outside forces will apply stress to you, and in fact.

1:09:21 You should not s shy away from that. I look up back upon that experience with Apple. With again tremendous gratitude. I'm so happy Apple chose to be such a greedy dit about it. Because otherwise you ha you have to give context. The context is um I think that you you complained that they were taking a they had a thirty percent take from the app store, is that right? Yeah, they we launched hey. On the same premise that we'd always had

1:09:47 Basecamp in the app store which was this is a companion app to a web product Um We're not selling anything here in this app store. And Apple, in the meantime, since we had launched Basecamp, had changed its mind. He wanted More of more. So we were met with this shakedown demand that unless we used in a

1:10:06 purchasing and therefore gave them thirty percent of our revenues. They would destroy our business. And When you first hear that and you go like Wait, we've been building this for Multiple years now.

1:10:18 Invested millions and millions of dollars and it could all disappear if Apple just decides that We shouldn't get to live? Well, that sucks. Sorry, so so what what actually so they said so you have a button in your app that basically takes you to the web where you can pay for it. Great. We didn't We didn't. Oh you oh you just had it where you you signed up on the web as a companion app. And so wait we have to give context. So hey.com or Hay is a Gmail com competitor. So presumably every would you would need your customer to have hey

1:10:50 at the bottom of their iPhone so they can click and read their mail. Correct. You're not gonna be competitive with an emailed service. If you don't have an iPhone app Because as it just so happens to be, most of the people who spend so or money on mobile software

1:11:04 And subscription there on the iPhone. Therefore This was the admission to market. We did not have a viable business without this. And we thought, hey We know Apple

1:11:16 wants to take thirty percent if you're selling something through the app. So let's just not do that. Let's just do The sale entirely on our own property so that we don't rely on Apple for any Marketing. Or anything else would they could have a legitimate claim that they own some of our business.

1:11:30 And Once people have signed up on Hay dot com for their new amazing email address, they will go to the app store and download the companion app and they will log in with the credentials they already have. And that kicked off these completely nonsensical Battle with Apple were At the bottom of it, they were just like no.

1:11:51 I just want thirty percent of your business. So what are you gonna do about it? And they of course assumed that we like Virtually every other software company that they've tried to shake down tractic on who just go like well cost of doing business But Because our circumstances are as they are, and as we've been discussing now for quite a while.

1:12:11 Jason and I just went like No. Yeah. We're not doing that. I would rather

1:12:17 Burn down millions of dollars to build over two years. Than to pay the gangster shake down. So I think that took Apple well, I know it took Apple by surprise because we then entered into a two week long

1:12:31 Very public skirmish over these terms. And ended up in a And essentially rewrote the rules to fit the exception around us and our email product. But not before

1:12:46 Uh causing a tremendous amount of stress in that uh two years. So But you won. You won, right? I mean you got you got the outcome you wanted. Largely, right? We got what we launched, what we thought we were Do Right. We thought we would do that you could launch a free app.

1:13:01 In the app store. If you did no sales activity on that app And then you did all your own business, right? Like Jason Ramber's like, we're not looking for a handout here from Apple. We're not looking for Apple to give us a bunch of customers. We will find our own customers. Thank you very much. But we want those customers to be able to use the computer in their pocket that they're paying a thousand dollars to buy. To use the system with us.

1:13:23 Like how should Apple have a say in whether your personal pocket computer should be able to be used with hate. That just seemed preposterous and Very much the wrong end of where I wanted technology to go. Because if we just Rewind a bit. This entire business, my entire career is premised on

1:13:40 Two main Things. The internet? Open source. And what those two

1:13:48 Share. Is that there's no one If I use a piece of open source software according to its license I can do whatever the hell I want.

1:13:58 If I publish a website on the internet and it's not exactly C S A M Stuff. Illegal things selling drugs. I get to do it!

1:14:08 I don't have to ask anyone for permission. But especially in the early days, no permission. So No permission tech, no permission platform. This is what me likes. So

1:14:20 This whole idea that now computing was gonna be gate Kept. Bye. Two companies. Apple and Google.

1:14:28 Which is completely incompatible with what I Wanted to see in the world. So therefore we had like We had all the margin to be able to do it. This was a new product. Yes, we'd investe millions of dollars, but we still had the other thing. So we went to the map. For the principles of it, for our own integrity, for our own goddamn indignation. over just how wrong this was and how much of a betray it felt like because

1:14:54 I've been a Mac. Super fair. Freaking Twenty years. Jason and I I don't know if you talked about this, but Jason and I did an a For Apple. You can still find it on YouTube.

1:15:04 I think in two thousand and three or something, where we were all about like Apple's amazing and we need these beautiful computers to do all our stuff and it was on the Apple website for quite a while. So it's not like I came in with a grudge here. I came in with like I

1:15:20 There was a mistake This was how the whole thing started. Oh. That turned out as well as it could have. But it did inspire me to explore new terrain. And if I hadn't If I hadn't had that experience

1:15:32 Would I build my own Linux distribution? That is now used by tens of thousands of people? Would I have discovered this wonderful new world of The Linux operating system of Hyperland, of Arch, of mechanical keyboards, and all this other computer stuff that exists outside Of the walled apple garden. No. I would not. I would still be able to do it. What are you on right now?

1:15:55 Uh I'm doing this call from my Framework desktop. Running Amachi. And my uh delicious mechanical low profile keyboard. And it all just worked beautiful. There is a piece of apple?

1:16:09 In the equation, I still have an Apple thirty two inch monitor. I bought three of those when they came out for different locations. And they still work great. In fact they work better than great wonderful monitor. And they work well with Linux. So there's still a little bit of Apple. You know, like the way that your voice goes up and down and There is definitely some uh Fierce uh Viking blood being awakened for it here.

1:16:39 Your ancestors will be so proud. I love this. I hope. This is amazing. Uh David, thanks for coming on, man. We uh we appreciate you doing this. Uh everybody should follow you on Twitter. The blog. Go use all your stuff. Uh you guys are awesome. Like me and Sam said, we've been uh inspired by you and Jason for a very long time of uh

1:16:57 You do things your own way, and I think that's the highest compliment that we can give. You said uh you were quoting someone you said, um, I hate wisdom. And I can I could say that's a beautiful quote, but that it's not the truth how we feel about your wisdom. So thank you so much. No thank you. Um That's it, that's the part. But I want to

1:17:16 I'm putting my all in it like my days off on the road, less travel, never looking back. If you made it this far, then you're gonna love what I'm about to tell you. So there's this amazing entrepreneur his name's Neil Patel, he's been on MFM, he's one of our favorite guests, and he has a podcast that's called Marketing School, and it's brought to you by the HubSpot Podcast Network. Marketing School brings you daily actionable digital marketing lessons learned from years and years of being in the trenches. They have over a hundred million downloads and over 2,500 episodes. Marketing School gives you bite-sized marketing wisdom that you can implement immediately, whether you have a new website or you already have this huge established business. You're gonna learn About the latest SEO, content marketing, social media, email marketing, conversion optimization, and general online marketing strategies that work today. You can get marketing school. Wherever you get your podcasts.

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