Apple

`3:43:01`

— Since you mentioned Apple, I have to ask somebody in the internet submitted the question. Does DHH still hate Apple? I believe the question is. So there was a time when Basecamp went to war with Apple over the 30%. Can you tell the saga of that battle? — Yes, but first I'll tell you, I fell in love with Apple, which was all the way back in also early 2000s when Microsoft was dominating the industry in a way we now see Apple and Google dominate mobile phones. Microsoft was just everything when it came to personal computers, and I really did not like the Microsoft of the '90s. The Microsoft of the '90s was the cutoff the air supply to Netscape kind of characters was the Bill Gates sitting defiant in an interview with the DOJ asking about what the definition of what is.

`3:44:03`

And just overall unpleasant, I think. You can have respect for what was achieved, but I certainly didn't like it. And as we've talked about, I came begrudgingly to the PC after Commodore fell apart and I couldn't continue to use the Amiga. So I already had a bit of a bone to pick with PCs just over the fact that I love my Amiga so much. But then in the early 2000s, Apple emerged as a credible alternative because they bet the new generation of Macs on Unix underpinnings. And that allowed me to escape from Microsoft, and suddenly I became one of the biggest boosters of Apple. I was in my graduating class at the Copenhagen Business School. I started with the first white iBook, first person using Mac. And by the time we were done in graduating, I had basically converted half the class to using Apple computers, 'cause I would evangelize them so hard and demonstrate them and do all the things that a super fan would do.

`3:45:03`

And I continued that work over many years. Jason or I actually in I think 2004, 2005, did an ad for Apple that they posted on the developer side where we were all about like Apple is so integral to everything that we do and we look up to them and we are inspired by them. And that love relationship actually continued for a very long time. I basically just became a Mac person for 20 years. I didn't even care about looking at PCs. It seemed irrelevant to me, whatever Microsoft was doing, which felt like such a relief. Because in the '90s, I felt like I couldn't escape Microsoft and suddenly I had found my escape. And now I was with Apple and it was glorious and they shared so many of my sensibilities and my aesthetics and they kept pushing the envelope, and there was so much to be proud of, so much to look up to. And then that sort of started to change with the iPhone, which is weird because the iPhone is what made modern Apple. It's what I lined up in 2007 together with Jason for five hours to stand in the line

`3:46:07`

to buy a first generation product where Apple staff would clap at you when you walked out the store. I don't know if you remember that. It was a whole ceremony and it was part of that myth and mystique and awe of Apple. So I wasn't in the market for other computers. I wasn't in the market for other computer ideas. I thought perhaps I'd be with the Mac until the end of days. But as Apple discovered the gold mine, it is to operate a toll booth where you don't have to innovate, where you don't actually even have to make anything, where you can just take 30% of other people's business. There was a rot that crept into the foundation of Apple and that started all the way back from the initial launch of the app store. But I don't think we saw at the time, I didn't see at the time just how critical the mobile phone would become to computing in general. I thought when the iPhone came out that like, oh, it's like a mobile phone. I've had a mobile phone since the early '90s.

`3:47:08`

Well, it wasn't a mobile phone. It was a mobile computer. And even more than that, it was the most important computer or it would become the most important computer for most people around the world. Which meant that if you liked to make software and wanted to sell it to people, you had to go through that computer. And if going through that computer meant going through Apple's toll booth and not just having to ask them permission, which in and of itself was just an dignity. When you're used to the internet where you don't have to ask anyone permission about anything, you buy a domain and you launch a business and if customers show up, boom, you're success. And if they don't, well you're a failure. Now suddenly before you could even launch, you'd have to ask Apple for permission. That always sat wrong with me. But it wasn't until we launched HEY in 2001 that I saw the full extent of the rot that has snug into Apple's apple. — For people who don't know and we'll talk about it, HEY is this amazing email

`3:48:09`

sort of attempt to solve the email problem. — Yes, I like to pitch it as what Gmail would've been with 20 years of lessons applied in a way where they could actually ship. Gmail was incredible when it launched in 2004. And it still is a great product but it's also trapped in its initial success. You can't redesign Gmail today, it just has way too many users. So if you want fresh thinking on email, I wanted fresh thinking on email. I needed to build my own email system. And not just my own email client. That's what a lot of people have done over the years. They build a client for Gmail, but you're severely constrained if you don't control the email server as well. If you really wanna move the ball forward with email, you have to control both the server and the client. And that was the audacious mission we set out to do with HEY. And that was what's funny, I thought our main obstacle here would be Gmail. It's the 800 pound gorilla in the email space. Something like 70% of all email in the US

`3:49:11`

is sent through Gmail. I think their world rates are probably in that neighborhood as well. They're just absolutely huge and trying to attack an enormous established competitor like that who's so actually still loved by plenty of people. And is free seems like a suicide mission. And it was only a mission we signed up for because we had grown ambitious enough after making Basecamp for 20 years that we thought we could tackle that problem. So I thought, hey, this is dumb. I would not advise anyone to go head to head with Gmail. That seems like a suicide mission. We're gonna try anyway, because you know what? If we fail it's gonna be fine. We're just gonna build a better email experience for me and Jason and the people at the company and our cat, and that'll be okay 'cause we're gonna afford to do so. But when we got ready to launch, after spending two years building this product, millions of dollars in investment to it. We obviously needed mobile apps.

`3:50:12`

You're not gonna be a serious contender with email if you're not on a mobile phone and you need to be there with a native client. So we had built a great native client for both iOS and for Android. And as we were getting ready to launch, we submitted both of them to the app stores, got both of them approved on I think Friday afternoon for the iOS app. And we then went live on Monday. And we were so excited. Hey world, we've been working on this new thing, I'd love for you to check it out. And of course as with anything, when you launch a new product, there are some bugs. So we quickly found a few in the iOS client and submitted a new build to Apple. Hey, here's our bug faces, can you please update? And that's when on help broke loose. Not only were they not gonna prove our update, they said, oh wait a minute, we gave you permission to be in the app store, but I'm sorry that was a mistake. We see that you're not using our in-app payment system, which means that we don't get 30% of your business. You will have to rectify that

`3:51:14`

or you can't be in the app store. And first I thought like, well it got approved already. We're running on the same model. We've run Basecamp on in the app store for a decade. If you're not signing up through the app and we're signing up our own customers on our own website and they're just going to the app store to download their companion app, we're gonna be fine. That was the truth, right? That was why I never got so fired up about the app store. Even as Apple started tightening the screws was like my business was okay. Now suddenly my business wasn't okay. Apple was willing to destroy HEY if we did not agree to give them 30% of all the signups that came through the iOS app. And it wasn't just about the 30%. It was also about splitting and not longer having a direct relationship with our customers. When you sell an app in the app store, you're not selling an app to a customer. You're selling an app to inventory at Apple, and then Apple sells an app to that customer. That customer has a purchasing relationship with Apple.

`3:52:16`

So if you wanna give discounts or refunds or whatever, it's complete hell. If you want to easily support multi-platform that's complete hell if someone signs up for HEY on their iPhone and they wanna switch to Android. But that billing relationship, it's tied to Apple, it's complete hell. For a million reasons, I did not want to hand my business over to Apple. I did not want to hand 30% of our revenue over to Apple. So we decided to do something that seemingly Apple had never heard before. We said no, we're not gonna add the in-app payment. I don't care if you're threatening us. this is not fair, this is not reasonable, please approve. And of course they didn't and it escalated. And after a couple of days we realized, you know what? This isn't a mistake. This isn't going away. We're gonna be dead if they go through with this. If we're not gonna yield and give them the 30%, they're gonna kick us off unless we make such a racket

`3:53:21`

such noise that they will regret it. And that's exactly what then happened. We were blessed by the fact that we launched HEY one week before the WWDC, their Worldwide Developer Conference. Where Apple loves to get up on stage and harp on how much they do for developers, how much they love them and why you should bill for their new devices and so on and so forth. And then we also just happened to have a platform on the internet, which is very convenient when you need to go to war with a $3 trillion company. So I started kicking and screaming — Oh boy. — And essentially turning it up to 11 in terms of the fight and going public with our or denial to be in the app store. And that turned into a prolonged two week battle with Apple that essentially ended in the best possible outcome we could have gotten as David fighting Goliath, which was a bit of a truce. We wouldn't hand 30% over to Apple. They do wouldn't kick us out of the app store,

`3:54:21`

but we had to build some bullshit dummy account such that the app did something when you downloaded it. That was a rule that Phil Schiller seemingly made up on the fly when pressed for the fifth time by the media about why we couldn't be in the app store when a million other companion apps could. But we just happened to be able to create so much pain and noise for Apple that it was easier for them to just let us be than to keep on fighting. — What do you think about Tim Sweeney's victory with Epic over Apple? — I think it is incredible and the entire developer ecosystem. Not just on iOS but on Android as well, owe Epic, Tim Sweeney and Mark Rein, an enormous debt of gratitude for taking on the only battle that has ever inflicted a series wound on Apple in this entire sorted campaign of monopoly enforcement. And that is Epic's fight versus them.