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

I got four words for you. Self funded Cash cow. That is what today's guest, Jason Freed, has built He's got this company, thirty seven signals. It's been around for I don't know, twenty five y years. And they're very hush hush about their numbers.

But the only thing he's ever said is that they make tens of millions of profit a year and have been doing that for a long time. In fact The investor Jason Lemkin once said that the two greatest self funded cash cow companies he's ever seen Our Craigslist. And thirty seven signals.

And even better, they do this without setting any goals. They work only four days a week during the summers and they spend next to nothing on marketing. And so I was dying to ask Jason three questions. And that's what we did in this episode. I said, How did you build this low stress lifestyle company? That has no goals and no long term plans. How do you do that as a CEO? The second thing I asked him was

What was it like being face to face with Jeff Bezos when he was negotiating his deal with him? And lastly I wanna The step by step process. How does he generate massive interest in his products pre-launch? He's done this over and over again. He has this strategy where he uses a founder letter. Pre launch and he uses that to generate a lot of interest. I wanted to understand how he does it. What is the strategy behind that? So

No more teasing. Let's do it. Here's the episode with Jason Freed. I feel like I can rule the world, I know I can be what I want to We were doing research uh before this podcast. And I've looked into a bunch. I I'm inspired by you.

Is it weird? that we know that you spent something like thirty million dollars on homes in the past like two years. Yeah, you you started like a tech company not looking to get into this, and now like your home purchases are on the blogs. It's fucking embarrassing. And frankly, I I tried to hide them. You try to do all the things, like double LLC and the whole thing. I I like architecture, I like houses, I like land. It's just that's like really the thing I really found myself liking a lot.

And unfortunately it's very hard to just How do they find it? How do they know?'Cause they're like Jason Free bought this house, and me and Sam were supposed to be prepping for the spot and we spend like 20 minutes clicking through these photos, be like, this house is sick. How do they actually find it? Um I don't know. My guess is so like technically it's it it's it's hidden in a sense, but I think that all they gotta do is probably ask like, you know, a real estate agent. And you know, you you kinda have N DAs, but uh you know, someone knows some or like the electrician or the cable company, could be someone hangs out and finds out or they look in the mailbox and see that you know

There's a million ways, unfortunately. Well what's cool about you and What I honestly admire, we started off talking about how big the business is, but the reality is what I admire is Some guys are into to beautiful eyes, some guys are into butts. Me and Sam on this podcast we're we are into People who play their who define their own game and then play it.

And that's the one thing I think you do really, really well. And you've gone viral many times by putting out there some of your philosophies on how you approach business. What I want to do is I wanna kinda read you a quote. I want you to react to it. I want you to explain and unpack a little bit. For each one of these. And we can go fast. So the first one is You're anti long term planning. You don't you don't do long term plans and here's the quote I liked, you go Long term planning is a fantasy. I don't plan long term because I wanna do

What I think, not what I thought. Um explain that one. Yeah, long term planning is is is what you thought. And like doing figuring out as you go is what you think. And I don't like the idea of having a thought six months ago, or eight months ago, or twelve months ago and feeling like I have to follow that whim because I happen to have it and happen to write it or wrote it down. I don't

I don't get that. Um, I know a lot of people think there's a lot of certainty or comfort in like setting out a plan and like, you know, but really it's That plan is then just based on a moment in time. And And then people are like, Well, you can adjust. Well, if you're gonna adjust, just adjust. Just just don't even do the first plan.

Um, so my feeling is uh just make it up as you go. Frankly, we we think about things six months or sorry, six weeks at a time. And uh and go from there and adjust all the time. And that's fine and we've always done it that way and I feel most comfortable, frankly, just paying attention to Reality in the moment? And making calls along along the way.

You also wrote that uh you've never had a goal. So you said um you had this whole blog post that you don't like goals. I I think you might have be you maybe were quoting another person, but you said um The reason why uh most of us aren't happ uh The reason that most of us aren't happy most of the time is that we set goals not for the person we're going to be when we reach them. But we set our goals for the person we are when we set them.

And I don't think you explicitly said that the company doesn't set goals, but you sort of implied it. Is that the case? Yeah, by the way, that quote is from a fellow named Jim Cudal, who is a good friend of ours and runs field notes, which a lot of people know. You know, our goal, our only goal is to be profitable on a given year. We've been profitable every year for twenty five years. That's the only thing we look at is we want to make sure that we make more money than we spend. Otherwise we don't really set goals or have expectations other than just to do our best work.

I'm not a fan of thinking that You're gonna do better work. if you set a goal. I think you should do your best work all the time, as best you can. And again, let the chips fall where they may. You know, the way I think about this that I think helps people understand this more is

If you want to go out for a run. and run a six minute mile. And you go I gonna run a six minute mile. And you end up running a six oh four. You're you like didn't hit the goal and you're maybe upset, like I almost got it, whatever. Now, some people might say you're gonna work harder next time. But what if the goal was six oh five instead?

Like it's five seconds difference and you would have beat it and you would have felt differently. It's like five seconds. Does that matter? Like to me the right question is like was it Worth it? Did I enjoy the run? Did I have a good time?

Do I feel good now? Do I want to do that again? Am I injured? No, great. Did I get some fresh air? Yes. Like If you ask different questions then you're not so obsessed with like this this point. this this goal line that you set up that is really arbitrary and made up to begin with. So

I've never believed in goals. I just kinda do the best I can and and see where it goes. So I like I I I want to agree with you, uh, because I I prefer I think I would be happier if that were the case. But there is like some logistical pushback of like, well, you guys launched hey.com a few years ago. And you um you have to plan uh like how much to allocate towards that project. Otherwise potentially you could be unprofitable. So how do you justify like

looking at like well this needs to this needs to hit this metric or let's ask the question slightly differently. I come to work, you're the CEO, you're like No plans, no goals. I'm like, all right, so then what are we doing here? How do we do it? What what is the answer? Well, this is gonna sound strange, but we don't Think that way. We look at the big

Pile. And go like at the end of the year, do we have more money? Than we spent. And is it because of this product or that product or this endeavor or that endeavor or this cost savings or that expense? Like I don't really care.

Frankly, like to me, it's just one big pile. It's a range. It's a feeling. Like we feel we actually it's more of an aesthetic for us. David and I talk about the aesthetic. Of running a high margin business. It feels right to do it that way. I don't wanna run a business where I'm

Nervous. All the time. And you're nervous when you're looking at one or two points here and there and you're like shit. We're barely breaking even. Like I don't wanna be in that kind of company. Right. So we keep our cost low.

We have a huge customer base, over a hundred thousand people pay us on a monthly basis for a variety of different products. And um Given the fact that our costs are low. And our revenue is high and we have a very diverse customer base. Things are things can be sloppy.

In a good way. I feel like it's a comforting way. It's not like a reckless way. We are careful about costs. We think about costs. A lot actually, but we don't worry too much. About Points. You know, that's just not how we how we look at things.

And so this approach where You're like we I I let me do let me give you a what I see from the outside. You tell me which parts of this are are me fantasizing versus reality. So The way I view you guys is

You kinda think about what needs to exist in the world. So for example, you're like There needs to be email that doesn't stress you out. Or Software that you pay for once and not every single month for the rest of your life. That and every additional employee you have, it costs more and more and more, right? Like It's sort of like first there's a point of view on what needs to change in the world or the way you want things to be or what what you wish existed.

Then you're like probably some second check which is like can we build it? Are we the right team to build this? Do we have uh A an approach that we think might work. And then you budget this like six week sprint where you're like, Let's try to make a version of that that we like and then we'll iterate from there. And we're willing to tolerate like six weeks of a uh attempt at this

To get to the next milestone of belief. Like we'll give it, you know, a leap of faith to six weeks and then we after that we reevaluate and and decide. What what to do from there? Is that Correct what parts of that are incorrect?

Partially. Uh so we will spend a lot more time than six weeks on exploring an initial idea. So for example when we're gonna make a brand new product, we might spend six months Wandering. around an idea and seeing where it ends up. And then at some point Where again, I don't know. It's just a feeling. Like

We spent enough time on this. We're feeling good about this. This is feeling better and better and better as we go. Let's do this. And then you commit to doing it. And then you do it six weeks at a time. Or you get into something and you wander for a while and you go, uh, I'm just bored, or like I don't know where else to go or

This isn't really This doesn't seem interesting. And you stop. Uh and you just give up. Frankly, you just give up.

Which is something I think more people ought to do. Sam, do you do this wandering thing too? Like I I I've seen your process. I feel like it's kinda similar. Yeah, I It's you know, I don't want to sound like Uh like I'm stiff in my own farts, but it's a little bit of an art where like it's I I feel like an artist a little bit where I I'm exploring a concept and then I it takes six months for some inspiration like

I I I feel inspiration. And then I have to wander to like like kind of hone in on the painting and the concept a little bit. And it's sort of like one of those things where you take a lot of showers and like you get different ideas or you go for a a walk and you get a different idea for like six months until it's like All right, I think I've honed in this concept. Let's move forward. Is that what you do? Yeah. Yeah, that's that's really a big part of it. It does feel like an art. And not to again not to get stuffy about it. Like

I'm not an artist. I don't know. We just we we we explore and we leave room to explore and the margins allow us to explore and being profitable allows us to explore not having uh investors allows us to explore, not having a board allows us to like all these things allow us. This independence allows us to do the things we want to do the way we want to do them. But at some point

You know, y y you also don't want to be um you know, reckless with with money and time and people. At some point go, This is just isn't going anywhere. Let's stop. Or So so we really do take our internal sort of motivation temperature. A lot of it is a rap wrap around motivation. Like are we Like pumped about this? Does this feel good?

If so, let's keep doing this. And then and then you finally kinda come into something. So for example with Hay, briefly Hey didn't start out as an email service. It started out actually as a rethink of High Rise, which is our CRM product. Which we stopped developing years ago. We still offer to existing customers, but we don't sell it anymore. But we had this thought, like what if we explore that again? So we began to explore that.

And through that exploration we realized what we were doing was building this sort of Email system. That we wanted for all of our emails, not just like Business. communication emails, but like all of them.

And so we go, ah Yeah, that's interesting. This is actually like an email thing. I remember pr bringing this idea to David, I had been exploring with one of my designers for a while and He's like, Yeah, that that is interesting. Like, let's see where this goes. And so we started to kind of Hooking it up. So we we did the UI first. This is what we always do. And

showed them a bunch of UI, and then we started making it work, like there's there's something here, and you feel this pull of something here. There's a certain gravity to these ideas. And it pulls you towards it and you keep going for a while. And then at some point though you gotta get serious. And that's when you begin to you know, break this into six week chunks essentially of work or monthly chunks depending on it. But you gotta have some end to these things.

So you can get on to the next feature and the next feature and the next feature. Otherwise you'll spend too much time trying to perfect just one thing. Yeah, a product has to do a lot more than just that. So you kinda have to You gotta time box these things in a sense. Well, uh you said two things that I liked. One you said

One of your superpowers is focus. Uh sorry, I was saying this about you. Um and what what you said was No is just saying no to one thing. Yes is saying no. To a lot of things.

And so I I really love that. No is just saying no to one thing, but yes is saying no to like kind of the whole the whole future set of things because you've now taking up your mind share and your talent and your hands with with the thing you said yes to. Yeah, n no is a very precise s you know. Precision instrument. Um because you get to evaluate

A thing. And say no to it. And they have the whole spectrum of everything else that's possible available to you at that point. So uh I I think no is a great tool. It's very specific. Uh yes is a blunt force instrument that kind of damages a lot of things, essentially. Now It might be worth it.

Because That thing you choose to do might be the thing that you needed to do, but it does force you to say no to a bunch of other opportunities. And the longer you spend on that yes The more nose you are throwing off. And you don't even realize it.

So I do think it's very important to figure out What you're doing. and then, you know, why you're doing it and then commit to doing it. And then get it done in a reasonable period of time. Partially because you don't know if it's gonna be any good or not. I mean you might

Have a feeling, but the market's gonna tell you for sure. So you want to get out of the market as soon as you can, ultimately. And then you'll find out. And then you can iterate from there. So that's kind of our general approach to things. And we don't make new products that often. Like we used to make them. a lot. Like when we first launched, we had Basecamp in two thousand four. Backpack two thousand five.

Campfire two thousand six. High rise two thousand. We're making a new product every year. And then we did a bunch of other things, job boards and a whole bunch of other things. Now we, you know, we'll make a new product. Once every handful of years. Well yeah, in general we don't say yes that often.

And when we do we we try to get it right. So you went to the job board. There's an interesting story here. So Andrew Wilkinson bought the job board. You guys created We Work Remotely'cause you guys were really far ahead of trend on remote work. And so again, we work remotely as a remote work job board. You sold it to

Andrew Wilkinson, friend of the pod, he's probably the most frequented guest on our podcast. And That I want to ask you about this because for him It's like

He loves this story'cause it's a great buy. He bought it for really cheap. And then now I don't know what that thing does, but let's I think it's something like five million a year of profit comes off the job board. I think it's four. It's in his annual report. You can kinda dial it down. Okay. So let's say four let's say four million of a year profit. And I wanted to ask you, like for you guys, is that a Uh, we wish we had kept it bad sale'cause it's now A lot more profitable? Or is it

No, that was the right thing to do'cause it cleared us up to do other things. How do you think about that that transaction? Well, it's easy to look back on it and make a different decision now. The reason we sold that at the time was because we were selling off a bunch of stuff or consolidating to t kinda go all in on on one thing on Basecamp, essentially. kind of around that time. We've since decided to make more things than just Basecamp. So we're kind of in a multi product world again. Uh, I think they got a very good deal, let's just say. Um and the thing that

I will say bugs me about our decision about that is that that was the easiest money, not the sale, but the the product was the easiest money. We built the job board in two weeks. And it was generating at the time for us something like thirty grand a month. Something like that. with no work. Like literally

Clot next to nothing. to do. It was all, you know, self service, automated, maybe there's a customer service question here and there, but like Essentially nothing. And uh I wish we still had that. We could still launch another one, like

Nothing that says we couldn't do it again.com. We still work remotely. I think we do something different. I have some ideas on that. We might do something like that at some point. I don't really know, but I would say it was very good bye. But now I now I'm an investor in his company, so I own a little tiny piece of that anyway. You uh Jason, what's what I think is cool is If I remember correctly, I'm not going to be able to You guys I think you started almost as an agency.

and then kind of like became a software company because you saw recurring problems and and you built that. And I think it's been something like twenty five years. And you've I don't think that there's any Uh

great resource out there that sh says your guys' revenue, but it it we ha it's definitely tens of millions. Who knows if it's even north of a hundred million, but it's a very big business. You do marketing in the sense of you have these really cool books, uh, Rework is awesome and you're a public figure and you blog a lot. But If I'm listening to this from the outside, I would think, Well, it works because Jason and David were ear and they kept at it for twenty five years. And that's the reasons why they have such fat margins, not just because they're smart, but it's because they were early in in the game.

What would you say to that? I think you're right. By the way, as far as numbers, we we've the only thing we've ever shared is that we generate tens of millions in annual profits. 'Cause I don't really care about revenue numbers. You can go broke Generating

As much revenue as you can imagine. Do you measure p profit on a gap basis, or do you do like a uh Non gap, where you just look at cash flow. No, it's gap. Okay. Net profit legit. After everything.

Right. So we're we're we we really we're proud of that, you know, we're really proud of that and we work hard at that. Um But I do think timing and luck. uh have a lot to do with it and market conditions like

Could we launch this again today? No, we couldn't. Um That's fine too. Like who cares? It doesn't really matter, right? People ask that all the time, could you do it again? No, probably not. Who cares? Why why would I need to? Don't have to. Don't have to. Like you, you know, you this is why this is one of the reasons why we've kept this business going for so long.

I don't think lightning strikes that often. Um, we've got a couple really, really big hits. We've done it the way we wanted to do it. Um we've got a lot of momentum. We're well known. We've we've built this business our own way. I would hate to give this up.

Like selling this would be sad. Like I'd I'd lose something. You could say, Well, look at all the money I I'd lose. More than I'd make. Now, that's not to say that that couldn't happen at some point down the road. Of course, like a business is either going to die or

be handed off or so like it's not gonna last forever and ever. And that could change next year. I don't even know, right? Who knows? But This is the whole we don't plan. I don't really know what's gonna happen. But right now it would feel like a loss to sell the company. So that's why I'm actually frankly

nervous about that. I'm afraid of what I would I'm afraid of having nothing to do that I'd be good at. Uh, I know I'm good at this. I like doing this. Why would I want to stop? You know.

uh is sort of how I look at it. But yeah, to your point, I I don't I don't take credit for being able to do this again. And I think A lot of I mean you guys speak with a lot of entrepreneurs. Sometimes people hit it big twice, sometimes.

Um Sometimes though those are more like Sales? You know, where like they're in they're in a a world where you can keep selling companies that don't work. As far as actually finding people who've started multiple businesses that have been profitable businesses.

and really successful businesses, it's not that common. It's really hard to do. By the way, that was my big fear. So I sold my company. And uh I had a guy sit down and talk to me. And he said, How many people do you know who have started two successful business? And in my head I was like

Fuck you, man. Like I'm gonna do it. Yeah. Like I was angry. Right, I was I was angry and I was angry because I was afraid in reality. And after I sold, I dabbled in real estate and I fucking failed. And I was like Shit. I'm human. I'm not like I'm not the man. I did get uh you know, there was some skill, but there was also a whole lot of luck involved in my exit.

And uh I I will I also had that fear. And then after about six months I was like, I gotta do something. I can't just do nothing. I I feel like a bum. But it was r a lot of starting things was rooted in fear and rooted in I don't wanna be lonely, so I need to create something where I can hire people and be around them.

I hear that. I also think, you know Like I'm turning fifty in a few weeks. Like I don't have the stamina to start another business, like and wait twenty years, you know? Like I I just don't I don't have that. Like you know when I was Twenty five, I could do it.

35, I could do it. I don't want to do it. Anymore. I wanna keep this thing going. Until I don't. All in, I think that we really uh like doing this. We've got some new ideas. The one stuff is really kind of inject us with some new ideas. We're about to start on another product.

Which will be a SaaS products. We're gonna do SAS and and non SAS products again. Um, and uh we'll see what happens. Again, we'll see what happens. And it could be This is the thing, like it could be a year from now where I change my mind. I I don't know. We really don't know. But I think David and I both like I think if we one of us decide to go

uh we would have to sell the business because I don't think that uh what the either one of us would stick around. Well one of my favorite stories is the story where um Mark Zuckerberg. early on, I think he's like twenty one years old or something, and he gets an offer to sell Facebook for a billion dollars. And the story goes, he goes into the board meeting and he's like, Yeah, like, you know We have to

We h technically have to discuss this. Got an offer from I think Yahoo to sell for a billion dollars. Obviously we're not gonna take it. Uh on to the next matter. And then uh Peter Thiel and others were like, Hey, hey, Mark, uh hey, yo, you know, you're gonna have like whatever. five hundred million dollars af if you did that.

Maybe we should just chat about this for a second. And they were like, Well, let's talk there. And one of the things he said was like He's like, I but I like this business. He's like, If I had the money, what would I what would I go do? I would Just wanna build a social network. Uh, I think that's the coolest thing I could do right now and I like the one I've got. Why would I wanna go start over and try to build a new one? Totally. I loved that. I don't know how much of that story's true because you know there's a lot of like lore, but that's okay. Uh still cool story. Have you guys did you guys ever have a moment where

somebody comes to you and it's it's an offer you have to discuss And like what what went down in that conversation? Um We've never been we've never allowed that to happen. Uh no one like w I I get I still get

A handful of emails every week from VCs or PEPE firms, like in I just say no. Like I've a I have a default just no. So we don't even have conversations. Um We did take some money from Jeff Bezos though back in uh two thousand Six. Six or seven. Six, I think.

It was like a secondary thing. So he s he bought some shares from me and from David. So that money went to our pockets and never went to the business. No money's ever gone to the business except customer revenues. And we did that to take a little bit of risk off the table because in two thousand six Basecamp was two years old, the product. And we're like this could be a fluke. I don't know what the hell is gonna happen in this industry. Who knows? We could get wiped out tomorrow.

You know can we put A few million bucks in the bank each. And just like take some of that risk off the table. And And also give us some confidence to just go for it at that point. Cause if it all went to hell, we have something to show for it.

Personally. So we did that. Um Jeff, uh Jeff found us because um a couple of his companies that he was invested in had used Basecamp. Um, he saw me speak at a conference in San Diego in two thousand five called E Tech. I don't know if that conference is still around anymore. He was speaking, I was speaking, I think he liked what I had to say, the way I

Was We were very different as we still are now, but way back then way different in terms of like our point of view and the things we were saying. And he likes

What does that mean? Or what? I was a young punk. We'll call punk rock. You were more punk rock. More punk rock. I thought the answer to this question is kind of actually that. Jeff is a fan. Jeff was a fan, so he reached out. He was. I mean Jeff was a fan, like just

You know, it's Anyway, he was a fan he's a fan of of of of you know, people think differently about how to run a business, as he thinks differently about how to run a business. So So we just kinda chatted, you know, we we went Seattle, met him I didn't really I knew this was like an investment opportunity for him because he wouldn't just come and he wouldn't say come out and say hello. But I didn't go into it wanting to do that.

Um, but after a couple of meetings we really liked him. Uh he's very likable. uh and and um we had a lot of admiration for him obviously for what he's done and what he built at the time and who he was and how he did it. And his whole story and the whole thing, obviously. Bezos, Amazon, amazing thing, right? So

Eventually we worked out some deal, which was ridiculous. It was a ridiculous, ridiculous deal, and I can't go into the specifics. But Um, we barely had any revenue at the time. The valuation was stupid. Um, he knew it was stupid. He's like, put together something, I need or like we don't know. He's like, put together something, I need something. So we put together something We share with them and we all had a laugh about it'cause it was ridiculous. But like it had to be something where we could make something happen. And um we're like, look, we don't want you to have any control. We don't want a board of directors.

Um, they had one provision which said something like in five or seven years they had some right to do something like Um encourage us to do something that we might not have wanted to do, like sell or go public or something, but they didn't have the power to, I think, push it through. Anyway, it was just a a suggestions clause. Maybe that's what they call it. I don't know. It was very weak, though it was a weak He didn't want like he's like, I want you guys to do what you want to do. He's like, I like long term thinkers. I'm like, we're in this forever. We're not in this to sell the business, the whole thing.

So what what's he like? You go there to Seattle. Take us into the meeting, when none of us will ever get to do that, right? Especially Bezos back then. By the way, have you guys heard this story really quick? Uh it was the founder of Root. Uh or it's W O O T. There's this famous article, Sean. Oh, woo, yes. Where they go out to eat Je uh Jeff Bezos wants to buy this guy's company. And they go out to eat and Jeff Bezos is sitting there.

They go to breakfast and Jeff Bezos orders potatoes with bacon and occupus occup occupus. And he go and the guy's like Why'd you order that? That's like a weird breakfast order. And he goes. You're the octopus that I'm having for breakfast, Bezos said. When I look at the menu, you're the thing I don't understand. The thing I've never had, and I must have breakfast occupus. And it was like the article tries to paint him as a weirdo, but it doesn't exactly give full context. And so at least now we have someone here who's

also been in that in that situation. That seems very Jeff. Um Jeff is Probably the most optimistic person I've ever met. And that was very clear from the start.

And I'd never been around someone who had that much optimism. That was I mean Clearly intelligent. Very intelligent. But so but that made it with optimism is really powerful.

Optimism about what? About you, about the world, about his company? What was the optim what do you remember? comes in It's it's an aura of like can do. This just positivity, you know, if see him, he smiles a lot, he laughs big, you know, he's just

He has a He has a an enthusiasm about him. That is um I would say like formed into an optimism that is

Unshakable and unbreakable. Is it like a Like why not? Like for example, I've met people, I think what you're describing and I went around'em they like explain their new idea and they're like, it's gonna be this, this, and this. And a lot of people default to like, well, you can't do that. But all these people default to

Well why not? This all makes sense. Like I'm gonna do this and then I think this will happen and this wh why won't that happen? I think if you post something really unusual to Jeff, he would just start laughing. In a way like Wow that is

Interesting. Like it's all interesting to him. That was my take. And I remember we were showing him Campfire, which is our first chat. group chat tool. This is way, way, you know, back before Slack and There wasn't really something out there like this. There was IRC, but there was nothing really simple.

And we put up on the screen. And I started talking to him about it'cause it wasn't out yet. And like fifteen seconds in, he just got the whole damn thing. He just got it. Like He got it a way where

He got it more than we got it. Um and he for the people are always curious, like, okay, well you're not gonna sell the business, how does he make any money? An investment. Well We're an LLC, so he's a member, he has units, and every year he gets distributions.

And he's made his money back many times over and he still owns, you know, his shares. And we haven't had to sell the business. It's been a great investment for him. Not a like a massive exit, but like it pays for a lot of things, I'm sure it's real cash. Jeff, good news. Your net worth has gone up by point zero zero zero one percent this year. You can thank us for that. What's cool is like we don't matter, but When you talk to'em it's not that way. Yeah, of course. Genuinely curious and interested in what you have to say. And I I've always respected that about him.

I love that description. And by the way, I've heard almost the same verbatim thing'cause Amazon bought Twitch and I've asked uh Emmy, you know, the CEO of Twitch, I was like, What's Jeff bought?'Cause that was his For a while it was Andy Jassy and then it was he would go meet with Jeff once a year when they would Present the plan. And he said the same things. He was like, when you're in the room with him, it's like there's nothing else that exists in the world. Like he's fully engaged, fully

paying attention for the present. And he's like uh He's having a good time. He's not like super, super serious about everything. He's laughing and he's curious and he asks questions and he mostly listens. But then when he asks a question, he almost always like has a like struck the heart of the issue. And you're like, How did you he's like, dude, I worked on the I run this business and it's like I founded this business for fifteen years ago.

I run it every single day. You think about this for like one hour a year. But in that hour you kind of put your finger on the right thing that fast. That is impressive. Sean, I wanna ask him you uh you have on here about this this Elon quote. So you talked about reading Bezos books, uh Bezos book, you actually had an interesting take.

I I I just think it's I admire you. Jason, so it's cool to see like who you admire and what your opinions is on different people who I may or may not. And by the way, I think it's not like

this person, but maybe an aspect of that person, or a one way that that person does something, not like this person's good and other people are bad and all things they do are good or whatever. Right. We're all a lot of different things. We are all a lot of different things. Can I read you the quote, you had tweeted this out. I thought this was pretty fascinating. You said I'm inspired by the business side of Elon's biography. There is one w word that's overused and I think inaccurate in the book. Reckless. What what seems like risky actually to me strikes me as risk reduction. And then he said the following. He said compared to traditional corporate America

Corporate America takes the riskier route. It's fear, marginal decision making, complexity. And I love this line. You go. Mediocrity slathered in marketing. And then he said, uh mistakes come in all shapes and sizes, but the ones fr but the ones that come from slow decisions. Committees that dilute responsibility, sloppy cost controls, and requiring pseudo certainty before making a move, those are the worst ones, and Elon doesn't make those, but his critics often do. His mistakes are real and he and they have consequences, but they're rooted in forward motion. I'm glad there's someone who is out there unafraid of making those kinds of mistakes and showing us all what ha what is possible when you pierce the membrane that holds most things back.

That's That's pretty good. Uh what made you feel that way? I would say reading the book made me feel made me feel that way. Now, of course it's a story well it's you know a biography, but like It's story. There's a perspective on it, point of view.

Um a lot of the examples in the book are about Um simplifying. Or about Cutting out waste.

Getting to the root of things, figuring out like what really matters. um not getting caught up in what other people think it should be. Uh and also not being caught up in things you can't do. And It was that impression, and there's a there's a multitude of examples. There's one m one of my favorite examples. I might be misquoting this slightly.

But There's this example of of uh the there's a rocket, you know, space X rocket ready to go launch. And they find like a crack. in the in the skirt that surrounds one of the engines. And I think

Again, I'm gonna get this some of the details wrong, but like If NASA had found that Um, there's like a three month it's uh launch is scrapped. Multi month delay, rebuild the whole engine, kind of That sort of thing.

So so there's there's a crack in the in the skirt and and Elon hears about it. They they stop the launch or something and Elon hears about it. And uh He goes, What's the problem? He goes, There's a crack in the skirt. He goes, um Let's get rid of the crack. Can we get rid of the crack? And they go, Well, if you get rid of the crack, you're gonna lose some propulsion. It goes, Okay, how much propulsion are we going to lose?

They're like this much. He goes, we can lose that. There's enough margin here. So let's cut the crack out. And go. And that's what they did, and the launch was successful.

And it's like The kind of question That nobody else would even think to ask? Like well, what is the problem? It's a crack.

It's not the engine, it's a crack. Let's get rid of the crack. Can we get rid of the crack? Yes. But how? This way. Well that's gonna do this, okay. Well, what does that mean?

Okay, sure. Let's do it. So that might seem reckless, and I think it was position or pitched almost as reckless in the book. To me that's like Common sense fundamental Smart

Problem solving. And you think about all the other risks it saves and all the other things it prevents and the time that goes by and all the other things that can happen during that time that can go wrong. I just see that as Brilliance. Um not as

As as as recklessness. So that's my take on it. So I know that you guys are On your website your uh you have a landing page for This product the I believe you describe I I forget how you described it, but it's something like it's a non recurring software product because it's like you wanna take back Users need to take back control of like their their wallets and not pay a company every single month. They just could pay one time.

So that seems like that excites you and I wanna he more about that. And you also alluded to you have like a few more products you want to launch. What ideas and businesses are exciting to you at the moment? Sure. So Uh, what you're talking about is this thing called Once, which is more of an umbrella brand. So once.com, O N C E.com, and it's a one pager and People can read it.

Th the fundamental idea behind once is that we think that people should be able to buy products again. Right now Pretty much all software is a service. It's a rental. You're renting service you're renting software in perpetuity. And if you stop paying, you lose it all.

Like Okay, some services make sense. W that are services, but they're also I think A large collection of products, old school products. So you'd buy and you'd own and it's yours and you don't have to keep paying for it. We want to bring that back.

That's how it used to be. We think there's some real advantages to that in certain areas in certain product categories. And we think companies should have the option. To spend money once and not a lot, a few hundred bucks? and own the thing and not only own the thing, but get the code too. So you can modify it and screw around with it as much as you want.

This is not something that has been happening for many, many, many, many years. We think it's time to bring it back. So we will launch the first part, which is Campfire, bringing back our old chat tool that sort of died on the vine to some degree, although there's still some customers using the original version, but We don't sell it anymore. And uh Campfire is installable software. We built a whole new tech stack around this to

Allow people to we we you buy it on ch the Shopify store. It's two hundred ninety nine bucks. You buy it. We send you an email with a single line. That you paste into a terminal. Of a server. So it's

There's a little bit of technical knowledge required, but like barely any. I'm not technical. I can do it. I've done it on digital ocean. I bought it. a shared server and ran this one command. And now you have a chat server running. that you own. It's two hundred and nine bucks once, unlimited users, and it's Basically ninety percent of what like Slack would do.

It's the core stuff. Chatting. DMs. Ad mentions sharing files. It doesn't have threads, it doesn't have video chat, doesn't all it but it has

The fundamentals of what this nugget of this idea is. And the principle around this is that In any industry. Um Generics eventually come in.

For for example, there's a lot of chat tools that exist. in software today. in in in in in the industry. So they're basically commodities. But they're still priced like luxuries.

It's Companies are running are spending tens of thousands of dollars a month on Slack. It's our teams. It's obscene. Absolutely. I spent I spend that. It's obscene.

You're um Okay, you you get it, right? It's a lot of money. It's a lot of money for basically Chatting with your co workers for the most part, right? Um and It's just like

There should be a generic option, essentially. This is what happens in in all industries when there's a commodity or when there's a lot of product. commodities ca be something becomes a commodity, there becomes it a generic At a much lower price, or doing something at a high quality and a low price and changing the model around. So anyway. Campfire's the first one. We're working on a second one right now. I can't talk about yet, but it's

Related to writing. And uh maybe we'll do another one or two and then see How the model looks in a year from now. Like Are we early? How's it working? So far, it's been working really, really well with campfire. We've sold hundreds of thousands of of dollars worth of campfire in in a few months.

Um so we're very happy with the start, but we have to see if it sustains and how it goes, and we're gonna add some more products to that category and see how that goes. Can we talk about this strategy you have where Before you launch something, you put up a page, a big blue with a founder letter. Yes. And the founder letter is basically saying Uh

Things used to be a certain way, they've changed. It's kind of obscene. You know, I get why they changed, but now it's gotten a little ridiculous, don't you think? We're gonna change that. We're gonna bring it back. We think it we think life should be this way. Common sense logic, don't you agree? And uh yeah, we're gonna do it. If you wanna see if you wanna

Be a part of that? Do this. And actually this morning I saw something on Twitter that was kind of interesting. Some guy announced his venture round. It was like We raise 16 million dollars. I'm like, oh, that's interesting. What is this? And it's just uh something called quilt. And I go click this thing quilt and I'm like go to the website. And it's um It says some like

Blah blah blah AI jargon. with the email sign with a sign up form. No just no pro no tell me don't tell me what it is. Don't tell me why I should want it. Don't tell me what it could do for me. Don't tell me why you built this and what was your motivation. Just We raised a bunch of money.

Give us your email. And you're on the list and we need to grow this list, basically. And I thought I can't believe more people don't copy. What you do. It's so like this That's how that's how this podcast came to be, Sean, by the way. We were talking about copywriting and we're like man, Jason's the best at this. Yeah, and you did this for Hay And um I used to teach this thing called power writing and I would teach them, I would say one of the landing page variants that nobody's test nobody's doing is founder letter.

Um there's actually a a company called Runway that did an amazing job of this. I don't know if you ever saw Runway.com, but Uh this guy Sticky, who's a serial founder, was like the landing page was a long scrolling thing, but it was basically just of dialogue and he's like Being a CEO is hard for a bunch of different reasons, but one of the annoying reasons that feels like it shouldn't have been hard was that I kinda had no cl no grasp of the numbers of my business. And that felt I felt stupid.

And I felt insecure about that and it was important, but I just frankly didn't know how to do it. I didn't know how to use these tools. I wasn't really ever taught it. Why don't I know how many weeks of runway I have left? Why don't I know this? Why don't I know that? And so I decided like I'm gonna build a tool That's a finance tool, but it's for founders. And he did it as a letter and it was awesome. And he got a bunch of people to sign up for it. I think more people should be using this tactic. And the reason why I think they don't, to be honest

is because there is no reason to be building their product. There is no intrinsic why. There is no strong point of view that would get people behind it. Their product is either derivative or sort of mediocre, or it's just trend following And so if they tried to write the letter, there wouldn't be much to say. It's not the writing that's the hard part. It's the having a point of view that resonates with people. That's the hard part. It's the point of view. So this is my favorite thing to do in the business period. And unfortunately I don't get to do it that often because we don't launch new things, but I love writing

A brief letter. Um And I I sweat every word and I just love it. This is my like Bezos moment where I just smile and laugh while I'm while I'm doing this thing. I just love finding the right rhythm and the right rhyme and the right pattern and the right message and the right way to say it. It's super fun.

I don't know why more people don't do it, but to your point, I think there is something about like You have to have a point of view, first of all. And the thing is is that you can do with any product. Like any a novel product, uh a a A the commodity product. You just have to like understand the angle that you're taking. Although I don't even I I don't like the term angles'cause it seems like it's all almost manipulative, but

What Shtick. You need a shtick. Yeah. You don't like that? I don't know. You need some flavor. I'm not gonna like shtick. I understand I appre ex you're right. Like that's the category. Shtick also has these like negative connotations, like it's sort of like this game and manipulative thing. You're maybe you don't mean it that way and you probably don't know. Just like a flavor. You just flavor style. At least a flavor style. I like flavor, I like style about it, I like

I like the the point of view. I to me it it cuts. It it has a has an edge. That's the kind of thing and I think first of all, it's very hard to do this. Not I'm not giving myself like credit like I can do a hard thing, but It is hard to do this well. I've always been inspired by people like you know Buffett and Bezos who write these amazing shareholder letters. Who are able to communicate

Very clear. Um And and can do it in long form writing. Now this isn't that long form, it's a it's a page.

But I wanna get excited about that. I I wanna read something and I wanna be pulled through it and it by the end feel like it wasn't too long and just it said exactly what I needed to say. And I'm left with some mystery. So one of the things I like to do is you'll see the first sentence on once is something like um Something happened to business software. Now

That Planting a question in people's heads. But it's not a question. I'm not asking a question. I'm making a statement and now they're like w

What do you mean? Right. Another bought in. Because They asked themselves the question.

Like Oh. Yeah, what did you What do you mean something happened? Now they want to find out what happened. And then I kind of go through it and that and all the way I'm thinking about

How do I find resonance? Like How are are they nodding their heads when I'm run nodding my head when I'm writing this thing? Like how do we get to that place where like yeah, yeah. Yeah. And you build up this yeah, of course. Yeah. Yeah. You're yeah, uhhuh, yeah. And you're like

Yeah, why am I spending this fucking much money on this thing? Like I should own this by now. I think there's a line like You should own the ship by now. Like Bet uh Sam, you've spent I don't know how much you've spent on Like you should own it by now, come on, right?

And and and it's you know, nothing against you, right? It's like Everyone who does this it's like Wow. I mean how much money have I spent on this thing? And I'm still spending. The old the old the metaphor that the SaaS companies used initially was like just pay a couple of bucks a month.

No big deal, right? Pay as you go. Only pay for what you need. But the problem is it's it's the renter pro and you reframed it as Spencer. Right. Oh y yes, but you can get evicted. Yes, but you don't even own this thing. Yes, but they can raise the hike up the rents anytime they want, right? And so reframing it as Cool, yeah, but you're you're a renter and they're the landlord.

And all your data is owned by them, not you. Right. He calls it the church the church of recurring revenue. Church of recurring revenue. So it's done very well for a lot of uh followers and and and people who attend the church of recurring but the thing is like some things make sense like this like a magazine or newspaper. Like this is kinda old school, right? But you pay subscription, but you'd get something new literally every week, day, month, whatever it was. Software. I know it's improving.

But it's improving around the marginal edges. You already have Ninety percent of it on day one when you bought the damn thing. And so you're paying over and over and over and over for essentially the same thing. And at some point, if you're paying a lot, you should be like Wow, I should own this by now.

This is crazy. Um Tony, I want to kinda make that point and get people excited and then leave people with some mystery. So there's it's not like the stealth thing where there's like we're doing an AI thing, you enter your email. It's like Here's a story. It's all legit.

But I'm still not gonna tell you exactly what it is. And uh then we kind of, you know, eventually deliver the product. The the simple test, by the way, is let's say you did buy Slack or whatever insert what your favorite product for one year. And then they did all these over the air updates and they mu they you know they added this, they added that, they tweaked this, they fixed this bug. If they had just charged you for it one year.

And then you could buy V two. You know, Slack two point oh or th the the twenty twenty four version. Would you buy the upgrade. Like, you know, we used to buy Windows ninety five and then you would he you would hear, you're like, Oh man, I heard Whatever.

the next one, Vista or whatever it is. It's got all this new stuff. Okay, maybe it's worth upgrading. Uh but like the reality is almost none of us would buy those up by the next edition because the upgrades are so marginal, right? They're not like uh game changing. But you're charged for it as you go, as if those are such game changing updates. Yeah. And look again. Some products like we have a few products like this. Hay is the a SaaS tool, Basecamp's a SaaS tool. So we're in that world too. I totally get it.

Um That said, we don't charge any of our customers more than$299 a month, period flat. So with Basecamp, You can't. Six thousand users. It's just two ninety nine flat. unlimited users at that point. So

We don't offer the same thing where people could be spending fifty, sixty grand or ten grand or five grand or three grand a month with us. Like You can only spend two ninety nine a month max with Basecamp. So I don't feel as guilty, frankly, selling something like that. You know, compared to company asking companies to spend tens of thousands. I get it's good for revenue, I get all that, but man I wouldn't feel

Comfortable or confident. I I would feel like I'm ripping people off, frankly. So how how do you deal with the counter argument, which is You guys were first with C with Campfire before Slack. Slack Comes out.

Kicks your butt, becomes a twenty something billion dollar company, exits. And blah blah blah. How do you deal with that? Well, first off Slack is it was an excellent product. Still is an excellent product, but at the time it was way better than Campfire. So

We sort of let campfire kind of wither. Um we we you know kind of Didn't pioneer the idea I IRC was before us and there was chat thing, but like we kind of pioneered this version of it to some degree and we sort of let it sit and didn't really make it much better. Slack came around and made a much better version of that idea. So full credit to them for that.

I think another problem we had was that We were really early with campfire. I remember When we launched Campfire in two thousand six. I don't know when Slack launched. I think it was like six years later or something like that.

I couldn't get anyone to buy campfire. People are like, Why in the fuck would you use a chat tool? Like what? Like we're all in the same office, like Just talk to people or whatever. Like I don't even get it. Well that we we we used to use like Gmail chat and then for a while hip. Hip chat, which I hate. Hip chat, yeah, that was another one. Yeah.

Yeah, but if it was his Gmail. You were on the edge though because a lot of people didn't even Like Chao was like now everyone can't imagine working without it, but like it was not a thing that Companies used. Individuals use it a lot, but companies it's just this

Persistent chatroom was just not a thing. So Because we were early on it, we kind of Didn't think there was a future in it because it was selling okay, but not that well. And so we just didn't pour more energy into it.

Then along came Slack. I remember actually it's interesting, Stuart Butterfield Um send me an email before they launch Slack. We were friends and he said, Hey, just want you let you know we're launching this thing. It's competitive with Campfire to some degree. Um, or buddies. I just want to like let you know.

Yeah. Like that's cool. I remember looking at it the first time and like My stomach dropped. I'm like, Oh shit, we're dead. Or this thing is dead.

Because it's fucking good. And the thing that ex impressed me the most about it Was the onboarding experience. I think that In my opinion.

There's two things, of course. The the bot integration stuff was really innovative. But the onboarding experience was so good. Where you basically Talk to the chat and create your user account and stuff. Those it just took I in my opinion those two things. The chat itself isn't better or worse.

Chat is chat essentially. Onboarding and and and bots were the thing. And we didn't have'em and they crushed us. So Yeah, that's how I'd answer that question. Dude, you're um you're cool to me because you're

Like it. All right, so for the listener, you go to Basecamp.com, go to hey.com and once dot com. Your landing pages, like We're internet. Dorks, all three of us. Like we're we're talking about like CRM's shit. Like we're talking about like something that's not inherently like a punk rock thing. But you have like a punk rock vibe about you. Like if you look at your landing pages They're all like

kind of cool and they're fun to read and you make non cool things kind of cool. It it's it's yeah, for me, there's a degree of like mining for novelty and recognizing like what's interesting and what isn't. How people can look at something and go, Oh man, I never thought of that. But of course. Like that's what I'm always looking for. I wrote this this post recently about towel bars and hooks.

I don't know if either of you saw it, but Riveting. You ready for this? I've not read it, but I'm sure it's great. What is it? So

We're doing a bathroom renovation and and the designer, the g the architect's like, Do you guys want hooks in your bathroom or towel bars? And for me the choice was like it was so obvious is like Hooks. Oh, books. I'm team hooks too in my house. Right.

And it's like why? Well For I'll give you a bunch of reasons. First of all, you can't screw up a hook. You can't mount it wrong, first of all. Um you can't use it wrong. Um You can put other things besides towels on it.

Um It doesn't take up any space. Uh if you need to add a second one, there's room for that. Um and sometimes it's nice to have like a Two hooks a few inches apart and you can kinda spread a towel so it dries a little bit better.

Um, there's just all these reasons, and for me, I'm always looking for the hooks in product design, like What are the little things that just Are are so simple and straightforward, and everyone knows how to use them, and you can't get it wrong, you can't use them wrong, and actually you can use them in a bunch of different ways that weren't intended. It still works compared to a towel bar. It's like The only thing you can use a towel bar for are is to hang a towel.

Or your nine year old will do a pull up on it and tear it off the wall. That's the other thing you can do with it with the towel bar. And it takes a lot of space and like if you don't put the towel on just right, it slides off. Like You can use it wrong so easily. It's easier to use it wrong than it is to use it right. So that's why I like hooks. And so I'm always looking for these

analogs in other areas. I don't look at other software. Other software doesn't really inspire me. Like A hook will inspire me. A piece of architecture, a uh a space, land, uh tree. Furniture design. print design, I don't know, objects. That's the kind of stuff that I I look for motivation and inspiration in.

I think there's a lot of really good ideas in there. So that's That's where this stuff comes from and then I'm like, Oh, this is a hook and this is a hook and this is a hook and and anyway, that's kinda how I think about it. One of my favorite things I did in my in the research for this. I'm'cause I'm always looking for In the research it's like what

What are the big ideas, what are the important ideas, but they're not necessarily new to me. And then what are the new ideas? And one of the new ideas I thought you put out there was really great. Super nerd, but we're that's where we are right now. We're in the nerd zone. Which is really The place we should be all the time. Uh, but you said when prototyping, always try the wackier, quirkier stuff first. Uh, the deeper you go into a project, the more conservative it tends to get. Stranger ideas are more at home earlier in the process.

I love this. This is so true. I never heard anybody say this. It's something that if you embrace it, you can actually, you know, Sam's uh old company, I think their only culp company culture thing was let your freak flag fly. Yeah it's like that's what you want to do in product design. There's also kind of good life advice, too, which is The weirder, quirkier things are actually It's easier to get away with them and do them when you're in your early twenties versus when you're thirty-seven, right? Like you tend to more get more conservative. It's product development, it's life advice. I thought that was brilliant.

Thank you. I I we really take this to heart and um the reason why is like for example, I'll take the calendar example again. If you're building a calendar and you think that there's all these table stakes features that you like, you need to be on par first with. Google Calendar Like if you're like

You want people who are gonna buy this, like if they're gonna use Google Calendar, they're gonna expect Google Calendar fidelity and functionality. And then maybe we add a couple other things. Like no one's gonna buy your thing because Google Calendars to a calendar. Like Why just make that other thing with a couple other things? So we always start with the novelties, the things that don't exist anywhere else.

That's what makes your product differentiated. That's what makes it worth Considering Like to say like We make Google Calendar a s a little bit better. Like Not worth it.

But we made something totally different. That It's not just different because it's different, but it's we actually think there's some novelties here that matter, that make sense, that are radically different in good ways. That's what we pile on early.

And So the other point of that quote is that If you just wait till the end to try to add those novelties, you'll never have enough time. You're always Running out of time at the end. And you're never gonna try new things. You're not gonna have the tolerance or the

The the uh the patients. To to wander. So then you end up leaving those things out and then you never get around to them because once you launch to the public The public then demands even more normal stuff. No the public doesn't demand unusual things. The public demands normal stuff. It's on you

to find the unusual things. The things they didn't consider, but once they see they go, Of course. Where's this been my whole life? That's the kind of stuff Base Camp is packed with these things. And hay is packed with these things and hay calendars packed with these things.

And those who use those tools understand that those who don't Don't know, but They are packed with things you're like, Oh my God. Where's this been my whole life? That's amazing. Um

But what do you do? You guys pull out uh profits every years out of the LLC. I like that. You don't reinvest it, you basically get the benefit. Are you like a boring kind of like index funds and bonds guy? Like Sam is more on the conservative. kind of uh side. I'm more like index bonds life, baby. Yeah, my I'm like the two sexiest words in the English language are like exotic instrument. It's like oh we got an exotic instrument for you. I'm like, Tell me more and then I regret it later. What do you what do you expect to sexy trombone? What's an exotic it's it's the thing that you're uh you know. Your shippy wealth advisor gives you to lose money. It's called an exotic instrument. It's code. I mean our exotic instrument is our own business. That's where most of our risk is tied up. So so I'm more on on Sam's tip here, which is to be very conservative with with um Investments outside my business, so primarily index funds. I do invest in a few individual companies. That I really know and really like and have liked for a long time. I might even know the CEO. I might have a good sense of who this company is and what they do.

I'm not jumping on the meme stocks, that kind of thing, right? Um I've an advisor. I I've done some like other kinds of investing around like Um Uh some some PE deals and some stuff like that, but primarily I'm pretty much straightforward index funds. Like play the the US economy long term, essentially, and some maybe some other companies or countries' economies, but primarily US.

That's my main thing. I I also like I so I do that. And then I also like to spend money on things that I I enjoy and then my family enjoys. Um and uh but I I'm not a I'm not all um I don't what I don't like to do is ever put myself at risk. I don't like to put my business at I'll take risks.

But I don't take risks that put me at risk. That is not an interesting risk for me. It seems like you value being able to sleep well at night. It's like I just want to be able to to sleep easy and not do anything that's gonna jeopardize that. Right. Like people ask in business all the e sh w what keeps you up at night? And and typically the answer for most people is like some

The competition. Am I gonna be able to make payroll? For me, like what keeps me up at night when I am up at night because of work, it's excitement. Like I can't wait to start working tomorrow on this thing that we're working on. It's it's not it's not like

Because our our margin it's not like our margins are raised or thin and might not be able to make payroll or I'm Focus on the competition, hyper focus. So like they launched something new and now what are we gonna do? Like that one slack moment I did have was was one of those moments. That was years ago.

Um I'm I just want to sleep well. I don't I stop work at five. I don't talk about work with my family at all. We just don't it's just not a thing. It's a separate thing that I do during the day. And I get excited about sometimes at night'cause I'm just excited about ideas. Um

But It's also recognition David and I both practice this idea of like negative visualization. Basically look We've been at this twenty five years. We've done exceptionally well. We've been incredibly fortunate. If this thing all flames out in two years because of something we we did wrong. A major market shift. Competitive shift wherever it is.

You know what? Like that's okay too. It's well Be painful to some degree? But like it's okay. If we if we have a twenty seven year run.

Cheese. I mean, what more can you ask for? Now People lose their jobs and it would suck. I'm very certain many almost everyone who works here can get another job somewhere else very quickly. Um, we would help people, all those things. I mean, I don't want this to happen, but if it did, we'd be okay. This is not my identity, this is not my life, this is not something that.

needs to exist forever. Um I don't want to feel that level of obligation to it as much as I have a lot of responsibility and feel obligated to our customers and to our employees and to the ideas that we have. It's not the whole world.

That's just an important thing for me. Sean and I are in similar positions, uh, where we have profitable businesses and a question that I'm trying to figure out is What percentage of the profit profits to pull out? Um

versus reinvest. Do you have a framework for deciding like that percentage? Especially earlier on, right? Maybe in year twenty seven the answer is different than in year three or two. Yeah. I can only tell you what we've done, which is again a little bit unusual. We pull out everything at the end of the year. Now first of all, we're an LLC, so we're taxed.

On everything at a personal level. So if I leave money in the business, I'm still paying personal income tax on that money. It doesn't really make sense to do that. So we have a recurring, you know, recurring revenue model. We have very predictable revenue. So we basically have a little bit of overlap, you know, we take some money out. And quarterly distributions. And there's some money left over in January and we kinda wait till April to take it all out. So there's some overlap and then operate in cash, right?

When we were When I first started the business in nineteen ninety nine, we were Uh a an agency. And we our first client It was it was uh

Four of us. Three partners one For employee. We each put ten grand in. So we had thirty grand.

Uh to start the business. Um, and then our first customer was was HP. HP was like giving everyone business way back then. HP was like the hot company to get a gig with'cause they paid a lot. And I think the gate was a few hundred grand. To do some website design for them.

This is ninety nine, where people are paying numbers like that. And um From that point on, we were profitable. Because we only had a few people. We didn't take big salaries.

And that was that. We were able to pull out all the money every year. Because actually we started out as a C Corp for like a couple of years and then we switched to an L C. But regardless, we've put out all the money. Um At the end of the year, essentially

Uh and because we had ongoing client work. That would sort of span the gap of the calendar year. So we just always had money coming in. And our costs were so low.

That we weren't ever starving. You know, so it just it just was a situation where we always had high margins, and that's how I've always run the business. So I I know it's an unusual setup. Um but I do think it doesn't have to be quite as unusual. I think what ends up happening is companies hire too many people. Their payrolls are too many on payroll. They spend too much money on customer acquisition.

And their costs are really high, so their margins are very low if there's margins at all. And then it's very hard. It's a vi much it just becomes a much harder business to run. Now. Again.

Like There's a lot of luck involved with this. We happen to Find a way somehow to have very, very healthy margins over two decades. Part of that, though is again the cost side of it, which is just not considered enough.

Do you run any paid ads? No, not right now. We we have explored that. We've we've played with it. So here's the thing, like last year We're like we're gonna spend five million bucks. For the first time ever on like ads.

We start getting into it in a few months we spent a bunch of money and we're like this is just it just It's vanity money because like this isn't doing anything for us. Now someone might say who's listening, go, You gotta give it more than three months and six months and eight months, you gotta do this for five years before you show returns and You gotta try a bunch of campaigns. We just don't have the tolerance to spend that kind of money. isn't very clearly going to return for us. Also, our price points are so low.

Customer acquisition costs are tricky because Well of our competitors. They're selling things for thousands and thousands a month. We're selling things for Basecamp is fifteen bucks per user per month. um or two ninety nine unlimited. Like there's not a lot of

Play here. um to really invest a lot and spend a lot to to acquire a customer. So It just doesn't work for us, so we don't do anything, not even branded keywords. We occasionally do that. If someone's like using our our brand, we kinda wanna knock them out, but

Essentially we just don't it's all through our own channels. Yeah, that we've developed over the years. And There's no question in my mind that there is a formula that we don't know. That we could

figure out at some point perhaps to grow the company in a big way somehow through marketing, advertising, targeted whatever's. We just don't have the the ta the tolerance for it, frankly. I just don't think that we're interested enough in that kind of growth. And the the answer is always like why grow that much? Like If you're trying to sell the company at some point, like growth rates really matter, but like for us, sustainability matters, profits matter, margins matter. I don't want to eat into those for some future whatever.

It doesn't really matter. Again, like if we were to sell the business in a couple of years. We got a Ten X multiple or five X multiple, but could have had a fifteen X multi I just don't it doesn't matter. To me.

It doesn't matter to me to spend all that money trying to Search for that. I'd rather just take the money out. Investments that I can Basically.

guarante not guarantee, but like have a really good sense of return on and and just do our thing our own way. Dude, you're the man. I think that if I had to make like a Mount Rush More Uh a Mount Rush part of this podcast, like You know, I think Sean opened it up by saying, We love people who carve their own path.

And I don't care if that person is an entrepreneur or an artist or a mother, like just someone who likes just says this is the way I want the world to be and I'm gonna live that way. Um I admire that greatly. And the way that you write the way that you think You're you're kinda on my Mount Rushmore. I really admire you and I'm incredibly I know we're both are incredibly thankful that you uh spent some time with us.

You're the man. It's very kind. I I l I love the show, by the way. Uh I listened to it. It's great. Um, and uh I I really appreciate being here. Thanks for uh the time and the questions. And Happy to do it again anytime. Um I could go for hours with you guys if you ever want to. So You have a uh you have uh an open invitation. Whenever you want to Whenever you want. Well, I'm not gonna invite myself on. I did this time, actually, kinda sort of. So I will not do that again. If you ever want to talk again, I'm available. Let me know. Thanks for doing it, Jason. We appreciate ya. That's the part. Thank you. 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's off On a road less travel never looking back

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