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`0:00:00`

The reason I think it's great for entrepreneurs to start bootstrapping is because they just have more practice making money, and they get better, and better, and better at the fundamental skill you need to have ultimately to run a successful business, which is to make money. Hopefully, I don't come off as encouraging everyone…

`0:00:47`

Today, my guest is Jason Fried. Jason is the Co-Founder and CEO of 37signals, which makes Basecamp and HEY, and soon a few more products including a competitor to Slack. 37signals is a very different type of company. They have no investors, no board. They have no plans to go public. They never want to sell…

`0:01:33`

But it's also important to know that there is a different option available, and it can be much more fulfilling and fun, and even much more lucrative, by bootstrapping your idea. In my conversation with Jason, we get into why constraints like small teams and less cash often lead to better outcomes. Why gut and instinct…

`0:02:20`

This episode is brought to you by Coda. You've heard me talk about how Coda is the doc that brings it all together, and how can help your team run smoother and be more efficient. I know this firsthand because Coda does that for me. I use Coda every day to wrangle my newsletter content calendar…

`0:03:10`

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`0:03:56`

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`0:04:41`

Why spend a decade finding your people when you can meet them at Sidebar today? Jump the growing waitlist of thousands of leaders from top tech companies by visiting Sidebar.com/Lenny to learn more. That's Sidebar.com/ Lenny. Jason, thank you so much for being here, and welcome to the podcast. Thanks, Lenny. It's…

`0:05:29`

I think people don't quite get the business you've built, and the scale you've built. So whatever you can share in terms of customers, profits, anything you are comfortable sharing, I'd love to give people... Especially things that might surprise people, just a sense of like, "Wow, this business is not what I…

`0:06:17`

base, big profits, and that's how we like to keep it, and that's something that we've always focused on, versus a lot of these other metrics that I hear a lot, and usually there's acronyms attached to them, and of don't even know what they are, and I don't really care…

`0:07:06`

So what's your advice to founders for when raising money makes sense? I actually wrote this article, one's called, Your Startup Is Probably Not Venture-Scale, just trying to convince people, you may have a really good idea, but it doesn't mean it's a venture-scale business. I feel like we're aligned…

`0:07:52`

of people in our industry are like us in that respect. They need a couple laptops and a couple people, and it's pretty cheap. It's really pretty cheap to get going, and the margins are incredibly healthy in software, or they should be. What's interesting is that Silicon Valley has found a way to…

`0:08:45`

something that doesn't cost much to make and then sell it for high prices. But everyone, the corner store, the pizza shop, they wish they could do this, and they can't because they have physical products that they have to sell, and they have to buy goods, and they have to get raw materials and…

`0:09:32`

If you think about all of the space between a small business and a massive, huge unicorn-y business, there's so much room there that you could normally find your own way, and slide into a slot or a place that makes sense for you. But if you're venture-backed, you just don't even…

`0:10:18`

You have, I think you said, 70 something employees? Yep. You have similar numbers of customers, about 100,000 to 150,000, and you make a lot of profit and they generally don't. How is this possible? We run a very different kind of business. We are focused on efficiency, we're not focused on growth…

`0:11:05`

infrastructure required to service customers like that, and customize this and customize that to keep a whale happy who's paying you $300,000 a year. We don't have any of those things. We have one price, basically. Well, we have two prices on Basecamp, one price on HEY. Actually, two prices on HEY. Two, basically…

`0:11:53`

points and different expectations. That's why these companies tend to get bigger and bigger and bigger. They also, frankly, build products just differently. We build products with two people at a time. So every feature we work on in Basecamp, or HEY, or whatever we're building is two people, one programmer, one designer, and they…

`0:12:43`

Valley's gotten quite good at, but we're quite bad at intentionally. I don't want to spend money on things we don't need. So we think that constraints, simplicity, small teams actually are where it's at, and keep us honest, and allow us to do great work for our customer base that we…

`0:13:28`

amount of complexity organizationally that they must have to... The latticework they have to build up to support all that weight, is just remarkable and it's foreign to us. Okay. I definitely want to talk about how you operate in your way of working, 'cause it's really interesting and there's a lot companies can…

`0:14:14`

Then there's one more. "You don't need to outdo the competition, it's expensive and defensive. Underdo your competition. We need more simplicity and clarity." I think a lot of these things point to, there's a few paths to success and goals for people. One is build a massively scaled, everyone's using a…

`0:15:00`

If the answer is, "Yeah, that was enjoyable. I enjoyed that. That was worthwhile. I'm glad I did that. I'd like to do that again," then it was successful. Now you could carve out some extremes there. I'm sure someone who's addicted to drugs might go, "That felt great, I should do that…