Longevity as the Moat

`2:14:22`

you'd do it the same way. But there are 100 different ways to do that same thing. — I want to go back to what you just said, though, "Something can be hot, it can be a fad." The maxim I have for this is, "Time is the best filter." It's the only filter I trust for businesses- Mm-hmm. —...for ideas, for books. I usually read a lot of old books, but it works for people, too. Because a huge influence on my thinking is, like, Charlie Munger and his whole thing. It's like you need to build a seamless web of deserved trust with high-quality people. — Yeah. — And the only way you know if somebody's high quality is time. — Yep. — And him and Warren's case, they knew the same people for decade after decade after decade. -Right. — I'm rereading the book "The Snowball." — Uh-huh, oh. —...of Warren Buffett right now. It's the 700-page biography- And the amount of friends that he accumulates in his 20s, 30s, 40s, that are still around when they're in their 70s and 80s- — Yeah. —...is absolutely remarkable.

`2:15:10`

For a business, time carries most of the weight, as another maxim. I got that from Munger because, when you read "Poor Charlie's Almanack," his thing is that you should master... There's only a handful of big ideas in all these different disciplines, so, you know, biology, physics, economics. — Right. — He's like, "And if you just master the big ideas," he says, "those few handful of big ideas carry most of the freight." — Mm. — And reading that and thinking about his... He prioritized durability in a business. — Yes. — And I was like, "Oh, so time carries most of the weight. You just have to survive, which goes back to your blubber, having a margin of safety. — Blubber and small units. — Yeah. -That's a big part of it, too. This is a bit of an aside, but it's tied to it, and I think it's important to talk about, is pricing.

`2:15:56`

So, with Basecamp, for example- — Mm. —...nobody can pay us more than 299 dollars a month, okay? It doesn't matter how many users you have. So, you could be a big enterprise, and 299 dollars a month is the most you can possibly... Our prices go way low, but that's the most we allow you to pay us. Now, many of our competitors will be, "Hey, you want to pay us 50 grand a month? You got 2000 seats, we'll take it." I don't want their money, because what I want is a static group of customers. If you think about static, like an old TV, like the dots, they're all equal-sized. You should be able to pick out 10 random customers and lose... I don't want to lose customers, but if you could pick out 10 random customers and lose them, I think you have a good business. If you could pick out a 100 random customers and lose them and be okay, you have a good business. What you don't want are a bunch of outlier companies that you cannot afford to lose.

`2:16:42`

You don't want customers that you cannot afford to lose. And so, by equalizing our pricing and not letting anyone pay us more than anybody else, we create a bunch of small units, which are individual customers, and if you take one out, it's not like Jenga, where the whole thing's going to fall. It doesn't matter in a sense, because everyone's essentially equal, no matter how big you are. And then we can develop software for the customer base as a whole, and not for a handful of customers that pay us a lot more than everybody else. And that's the enterprise game, is getting as many seats as you can, and landing these whales, and I just don't find that interesting. I also don't find it durable. Durability is about a lot of small things. And if someone wants to chip away at some of those, it doesn't matter because there's a lot more left. That's kind of what we were aiming for with durability.