Question & Answer with Jason Fried, Co-Founder, Basecamp – MicroConf Growth 2019

0:00[Music] [Music] so February 2004 these camp launches Basecamp hq.com is that right yes it was correct and you I believe you had 45 signups 45 accounts in 2004 sounds about right about right and then by the time you got to 2006 you had a hundred thousand accounts yes that was very fast growth and a big surprise it was yes and what and today I'll just add 2019 as of as of whatever you're about page is updated yeah 3 million total accounts created yes in 15 years do you have any idea how that happened no I mean truthfully luck timing are the number or one and two I did a good job

1:00too but really it is luck and timing a lot of the stuff I think you know we didn't think about it at the time but Basecamp is a very collaborative tool obviously which means that multiple people have to use it together which was good for us because you invite your clients and use it with you you've got seven employees they've got 14 before you know it that's what 21 people using it and now some people over time they leave their job and they go to a new place and they go I use this thing called Basecamp we should check it out and it kind of spreads that way so it

1:35was sort of a lucky thing that it turned out that you know you don't use Basecamp by yourself so there's always two people and that spreads so it's all been word of mouth and organic growth we've tried some advertising here and there but for the most part it's all just kind of happened so you almost had virality built into it without realizing it yeah I mean now it's called that but but we just called it selling and making a product that we liked and people talked about it word of mouth I mean just old-school word of mouth that was always yeah we always have to put names on things now yeah just word

2:07of mouth in it but it took a while to I know I mean we had that first initial big ramp because timing there was nothing else out there like it at the time excuse me at the time and you know we had a a bit of a reputation at the time for being outspoken so people are paying attention to us and a lot of people were struggling with the same things we were which is like how do you keep people on the same page how do you know when things are due how do you know who's responsible for what how do you get feedback on the record so your client

2:36when they say yes and or when they say yes and then you do something and they say we never said that you can go well yes you did here's a link to when you said that everyone was struggling with these things and people still do today and so the timing was right the market was clear and it kind of took off did you have any idea when you built it that it would take off like that no we had an idea that we said if we could make something like five thousand bucks a month after the first year then we feel like that would be 60 grand a year and

3:08that would be like another client like we'd have like another client so we were client services firm we were doing web design work at the time so like if we could have another client automatically every year paying a 60 grand a year and we're gonna use this tool for ourselves not bad it turned out like in a in a couple months or whatever it was doing or six weeks or something I was doing five thousand a month and by the end of the years doing a lot more than that and by about a year and a half it was paying for more or generating more revenue than

3:34our consulting business was so we stopped doing consulting we said [ __ ] that no more that not interested in that anymore and we've been doing software ever since and I know you don't talk about revenue today but is it fair to say that you are doing more than sixty thousand dollars a year today yeah we talk about revenue in general since we generate tens of millions of dollars in annual profits so we don't talk about revenue because I don't care about revenue you can go broke generating a lot of revenue so we generate tens of millions of dollars in annual profits and been profitable every year for

4:07twenty years so we've been a business speaking of profits you and I were talking before we got up here and you mentioned that you had instituted a profit sharing plan and last couple years how did that go it was a dud let me explain so we've never offered equity I'm not a big believer in it [Music] if you're the kind of company like ours we're not looking to sell we're not looking to go public there's not much liquidity there and I feel like if you use it to replace salary it's a little bit disingenuous it's kind of how I see it just my point of view so we want to make

4:45sure we pay people really really well and take great care of them in every possible way we can but I'd rather just give them more money essentially that they can use today to pay for their mortgage and whatever versus like the lottery ticket system which is what equity is for the most part for the most part but so we've been doing this for a long time and every once in a while employees like hey what about profit sharing hey what about proper sharing it's totally fair question it's it was tricky for us because we've been very profitable for a long time so like being profitable it this comes off the wrong

5:15way but it's not hard for us given our margins and given our size so right now we're gonna automatically be profitable we'd have to really mess up in a bad way so we tried to figure out how could we institute something that wasn't an automatic bonus because for a while we had automatic bonuses and those don't work I don't think and link bonuses are a good idea because if for whatever reason they go down one year people are upset even though it's free money so like we and we tried that and that happened and people were upset about that and they started think about their bonuses too much and we just kind of

5:46rolled that in to salary and stop doing bonuses anyway so we came up with this idea to institute a profit sharing plan that was based on profit growth so not just profit cuz that was gonna happen but profit growth and we had we established a high-water mark which is our most profitable year and we said if we beat that whatever Delta so I'm just gonna make up a fake number so let's say we generate a million dollars in profit was our highest profit year ever if we do 1.1 this year we'll take that hundred thousand dollar difference cut it in half fifty fifty thousand or fifty

6:18thousand dollars and then split that amongst employees based on seniority the problem was it so it sounded great the problem was is that our cost continued to go up and that we hired some more people and we made some investments in the cloud and some other things and it like that ate into our profit margins even though we're really profitable so for the last two years since we've instituted the profit sharing plan our profit hasn't beaten the high-water mark even though we're still wildly profitable so it was kind of this exciting thing that we kind of let people down on and I kind of regret doing it in the first place to be honest

6:49because you start people start to think about things differently when that's in place and I don't like those thoughts I'd much rather people just focus on doing the best work they can and and in that sort of thing so are you are you gonna revamp that and launch another one or for now do you think you just you kind of make it up with higher salaries is that what you're saying yeah what we called in an experiment we said we're gonna try this for three years which is something we almost always do when we announce something new internally is is say like we're gonna try this for X

7:20number of years because it gives us an out to talk about it at three years down the road and go like this just hasn't worked although maybe it'll work this year I don't know but so this is our last year of our experiment we'll see we'll have to see what happens I think if it doesn't pan out again we will probably not do that we've just upped our salaries across the board again and I just feel like we take really really good care of people and that's enough it's kind it sounds kind of harsh when I say it but I I don't think it really is I think it's pretty

7:50fair it makes sense one question you know we had a call for questions before the Q&A and folks submitted through a Google Form and one that came through multiple times and if I don't ask it now someone's gonna ask it so the the I've heard you get this question in the past it's how how would you build a SAS today given what you know if you were just starting out well what I would do I do the same fundamental thing which is I would start as small as I possibly could and stay as small as I possibly could for as long as I possibly could and only hire people

8:24when I could afford to this is the same advice I'd give to any business to me this isn't about SAS it could be a pizza shop in the corner or dry cleaner or whatever it is although those companies I mean it's funny because like they're at a disadvantage because pizza shops and dry cleaners they have capital expenses they have to build but by machines and whatever we're all lucky that we make software we don't really to buy anything except laptops perhaps and that's it so I would try to figure out what I could do on my own for and get as far as I possibly could and I

8:58would probably do some consulting on the side and then I would probably just try and raise some money that way through myself and then hire some money only when I could afford to and just grow as slowly as I possibly could the growth fomo that that chris spoke about isn't only something that happens as you get going but it's right from the beginning you feel like if I'm only one person or two people that I'm doing it wrong or I'm not growing fast enough and it's like why what do you mean why are you growing what does this growth was this fast growth thing or that come from

9:27so I just go as slow as I could and if it worked it worked if it didn't it didn't I mean it's harder today I think than it's ever been even though it's cheaper and easier than it's ever been but it's harder because there's more people doing it got it yeah it's I'm talking this afternoon and part of my talk is about how it is harder today and I have some some slides and stuff is it can actually add one more thing to that launching something has never been easier running something has never been harder I think and I think especially people are building new businesses I

9:58know most people who already have something that's going so this isn't necessarily as relevant but people think that the build and the launch is a hard part that's the easy part because anyone can launch something and build something it's it'll not anyone but most most people who are into this can the hard part is then maintaining it and you've got customers now and you've got expenses and you have to hire somebody and you've got demands and you've got requirements on your time and all these things are - then you have your own insecurities and you have your own doubts and you have the competitive pressures and you have maybe financial

10:28pressures and that's the hard part so staying in business is hard starting a businesses is not yeah I've often talked about launching the product not as the finish line but as the 50-yard line you still have a hole and maybe even even it's your 20-yard line yeah so I mean if you're doing it for 15 years yeah I think there's also in the funded space people look at raising their first round as like a finish line of sorts but as we know that's not that's not the case yeah they're yeah they're short-sighted there because so they've money in the banking so what they're gonna have to spend it all

10:59that's what they're that's what they have before then they're gonna run out of it they're going to get more and then they're gonna build on the stress and the stress and the stress and the stress is going to build raising money is not something to celebrate I don't think it's just now a tool and now there's expectations attached to it and there's someone else's expectations and celebrating other people's expectations is usually a pretty dangerous road to go down I think yeah I mean you know you've obviously been a I would focal opponent of VC or just an advocate for not necessarily taking BC and going down their you know

11:32their path traditional VC big money yeah especially early when you have nothing yeah I'm kind of not really there's a really good recoat Dakota interview with you recently I think err it was a curse for sure yeah yeah you dug into that a lot now you did take this was also another listener not listener question I'm not on a podcast it's a attendee question that was asking about you know you took some money from Jeff Bezos in 2006 yes six have you ever been public about that amount no okay micro comp exclusive an ounce perfume iliyan bucks and he's a minority investor got it yeah do you ever have

12:15you had regrets of doing that I realize that's a broad question but is that something you wish you could undo has it been beneficial yeah I'm not a look back regrets kind of guy today I wish it was David and I were in the I mean it is David Knight running the business but I wish that we owned 100% of it not because Jeff has any control of I even talked to Jeff in a few years his he's the easiest investor in the world to work with he has no control over us sees no board seats like nothing like we send our numbers over to his office once a

12:51year and they're thrilled and like that's kind of the the the can the extent of it which is why at this point I don't feel like there's any value that we're really giving them and they're really giving us so at this point today yeah I'd rather own a hundred percent of our business but in 2006 absolutely was the right decision because we didn't know if what we were doing was gonna be a fad we didn't know if it was gonna last and we had this great little business going and you know why not take some money off the table if by the way the money the table is for David and I to business

13:23owners so none of that money was ever used to fund the business at all the money went directly into my personal checking account and David's personal checking account so it was money it was founder shares that we sold him to take a little bit of risk off the table so he just could breathe a bit easier in case us all went to [ __ ] we would still like have something to show for it which is something I think is very very important because a lot of companies will keep pouring their money into the company keep pouring it you hear this all the time I keep reinvesting and reinvesting

13:50and reinvesting well like every company dies at some point and yours might die sooner than later and it would kind of suck to put all this work in and keep reinvesting only to see that money be gone forever so I'm a big believer in putting some money in your pocket as you go and that was the quickest way we could figure out to reduce some risk to feel good about things if it all crashed and burned we'd still be like that was a good move so so do I regret it then no do I regret today and not regret but I would I'd prefer to be a different situation and we've been

14:20thinking about how to how to do that but we don't have any plans to do anything about it yet yeah I feel like it's it's easy for folks to to project it's and and to imagine that now the business is doing what it's doing tens of millions in net profit a year but in 2006 you just you just didn't know if it went I went under it's like what what do you do right yeah I think I think we were doing about a million bucks a year in 2006 or something like that right so you're like well we hit that million dollar mark this is amazing but I don't know this

14:51thing could seriously fall apart like I don't remember in 2006 specifically but in 2004 we launched Basecamp it was like on one server in a you know like a shared server hosting company in Chicago were paying like 30 bucks a month like we could have we could have it's not like competition I mean they could have some competitor could have beat us to you but it's more like we could have just [ __ ] it up completely by kicking a server over and losing every all the data or like who knows what would have happened so there was so much risk early on of things going away that I think it

15:26makes a lot of sense it takes some money off the table I would really encourage people to do that and it's like wait it's like when you're in Vegas right you bring you bring 100 bucks you win 100 bucks you're like now you have 200 bucks put that hundred bucks back in your pocket and go home or keep playing but at least you don't lose that 100 but this idea that now I have 200 and if I lose it all well house money that no it's not it was your money you had it all so I just think it's really important to keep it's good that we're

15:55here I've used that analogy before and here we are but I'd put some money back in your pocket and keep adding that to that to that you know amount and and don't dig back into it SAS just like we're that so I'm interested to hear how how you actually roulette has better odds unfortunately so I started a number of SAS companies I sold one in 2016 and that was a way of me taking money off the table because I parlayed one into the next into the next so well it wasn't a continuous flow of one company you know it was do you how do you feel like

16:35you have opinions about founders who sell like are you against you know doing something like that cuz you've never you know you've never sold right and there has to be something inside your head that keeps you doing that well we've sold some businesses that we've start like some products we have spun off a few things I think whatever people work you know whatever works for them they should do so I don't have any positive or negative opinions about what anyone else does like everyone has their own situation their own context and they're gonna do what they're gonna do for me I am very happy being a one-hit wonder

17:09perhaps I think it's very rare to be hit anything and so if I have that chance like I don't want to lose it this is this is my lack of self confidence in my ability to redo what I've done I don't believe I could do again what I already did once so given that I am holding on to this as tightly as I can and putting all my energy into making sure I can do this for the next 20 or 30 more years I just think that that lightning rarely strikes and and I've talked to so many founders who've sold their businesses and been felt like they could never get

17:41back to that place where they were originally and they're always pining for the old days the good old days they remember when the team was small they had this thing and I I don't want to lose the good old days and and I don't know if I could ever do this again and I also don't think I have the energy frankly to do it again so why not like stick with your dream job I mean really in many ways like the business is built around the kind of company that I'd want to go work for I haven't found a better one so I might as well keep this job now

18:13that's not to say that like I I don't love the product of course I love the products and I and we have some great ideas we're actually working on a new product which we said we would never do but now we're doing that so so that you go in waves but I've always seen frankly as like my business journey from when I was 13 up until now I'm 44 like as the same business I used to sell the stereo equipment and computer equipment to my friends you know back when I was 14 or 15 you know I would I would go and get some stuff used and sells results my

18:43friends I wouldn't and I would made I made software this software to organize my music collection back in the late 90s or mid 90s actually and I did that and then I just parlayed that into doing web design because I learn web design then I parlayed that into doing software again it's all been one continuous thing for me so this is more like about I'd be technically these are all different businesses but they're not I think it's all the same thing which is making something that I love that I want for myself and that I can sell to other people for a profit and and now I get to

19:13do it with other people which is kind of in terms of you know having employees and everything so yeah that's me but I know some people are serial entrepreneurs I'm a nun serial entrepreneur you said you're you're a one-hit wonder that's a hell of a hit man well okay I'm happy with that I mean yeah anyway I think we've made we've made other products that have been hits but Basecamp is our biggest hit by far so we're kind of sticking with that maybe one more question before I head out into the audience and I'll call Mike up you have recently invested in tiny seed which is a fund I started with with

19:52ANR and earnest capital and indeed on VC yeah and you've kind of you know put money into funds that are that are going towards this this ecosystem yeah I guess two-part question a have you ever invested in other startups that you can you know talk about and be what made you decide to to put money into this this ecosystem that's essentially helping you know helping bootstrappers but it's helping revenue first companies are a profit first companies yeah I've personally put money into you like two or three companies run by friends I'm not an investor though in that sense so I don't I don't look for investments

20:28I'm not doing that this is just to support some people I know and some things I like as a company Basecamp we've invested in one other thing in the past something called starter League which was a school based in Chicago that taught rails and so he put some money into that but that was the only thing Basecamp has ever invested in and I've only put a few money into a few things and as you know I'm generally a pretty outspoken about anti VC and nutritional sense so why why you guys and a few others I think you know basically what you guys are offering is what we did for ourselves

21:03and that we had a consulting business on the side and that funded our little fledgling software thing which was a side business for us and I think had we not had that consulting business on the side initially in that sort of free revenue or free cash flow and and and sort of a good a good amount to take a risk we would have been looking for something like what you guys are offering tiny seed and the others but like back then that wasn't that didn't exist and I'd originally heard from a few investors originally and they want you know 40% your business is ridiculous numbers and and and too much money and

21:38it just didn't make sense so so now that we're seeing this new crop of funding options for small business owners who have something going who perhaps need to do it full-time because it's only part-time and they can't really give it a full go unless they have a full time salary for a year or so I'm a big supporter of that concept I think that's wonderful I think we're gonna see a lot of great companies come from it and maybe some of them are in this room already so I think that's an ecosystem that's worth supporting and for Basecamp as sort of one of the first early ones to do it sort of this

22:11way to get behind that is why we're putting money into a few different ones and we're going champion that because I think the model is fantastic awesome thank you we're gonna transition around with laws for Mike Taber ladies and gentlemen [Applause] here's was a tough questions yeah this is good cop bad cop so Rob's face I'm gonna ask them you mean questions does that mean so um earlier a little bit earlier you talked about going into profit sharing and some of the mistakes you'd made with that but you've got this three-year cycle that you do different experiments with are there any of those things that you've done in the business

22:49that you've not recovered from like you did it for a little while or maybe two or three years something like that and it just not only did not work out but you haven't been able to fix it I would say no because I think like these things that we're doing you know put you this way there's taking a risk and that is putting yourself at risk we don't put ourselves at risk so whatever we're doing whatever risks were taking they're no big deal essentially like if they don't work out we're gonna be okay these aren't we're not making these existential bets necessarily or things that if we just

23:27pick the wrong lane or we're screwed bad so we don't we don't do those kinds of things there have been other mistakes that we've made like there was this one thing we did where we thought it would be awesome to give everyone a month off of work and let them sort of experiment on whatever they wanted to and then come back and present that to the company like here's what I've been working on here's some cool ideas and it turned out there were too many cool ideas and we couldn't really do hardly any of them and it turned out to be disappointment because a lot of people put a lot of

23:55time into stuff and they thought it was gonna be great and they showed it and it was great and everyone was cheering for it was fantastic and we had to say no to like almost all of them and so you think sometimes that you're getting into this doing this good thing and then you realize like that actually hurt morale it hurt morale to give people a month off to experiment on what they wanted to do because of the way we framed it which was like then you're gonna come up and present what you did and maybe we'll do some of these things and like we have to

24:18be careful with those things cuz we know we can't absorb for 30 projects at once I think that's an example of just like that was it definitely a morale dent for a while and so there's been some of those things which take longer to recover from but nothing that we did like would have sunk us if we did wrong did you take a look at some of those things and like try to revamp it or did you just kind of draw a line in the sand say no we're not gonna go in this direction at all because I'm curious about the thought process behind doing some of those experiments and if it

24:46doesn't work out do you try to iterate on it versus just walking away from the whole thing because I it seems like with people involved people have feelings and emotions about stuff yeah be really hard like so for in that that particular case you could say well instead of doing it with the whole company we're gonna do with a subset and then you're picking certain people to go first and it gets messy yeah the way I ended up seeing it was was a library of ideas and inspiration so some of those ideas made it into other things two years down the road you know we didn't know that was

25:14gonna happen we didn't we didn't revisit those things but sometimes an idea gets planted in your head and then you go you know what that was a clever idea now we're in this position where we're working on this other feature that kind of is similar to that that was a clever way and then you kind of pull some things in so I think all those things colored everything else we were doing at some level but we didn't we don't typically just don't implement a raw idea anyway we like here's an idea and then we kind of get into it and start to figure it out and kind of dig deeper but

25:43I think that that fragments of those things it can be found in our products now so when you were and I realized this was probably a while ago at this point but when you were it you know one or two million dollars arr what were some of the key things you did that you feel like propels you from 2 to 10 million for example and even beyond that and things that you did well and then things that in retrospect you look at it and say we just made some really poor decisions we could have done that very differently and improved on it and I'm just curious look what what some of

26:14those things are because it seems like there are plateaus but different levels where you do certain things for your business and then but they're not of and they're not viable until you get to you know much further along yeah um I think I'll start with the sort of the mistake first I guess we we immediately so from 2004 we launched Basecamp 2005 we Lodge backpack 2006 we launched campfire 2007 we launched high rise so we built four separate products in four years and while I don't think that was a take it definitely took our eye off the ball a little bit although during those times we were growing healthy growth for

26:49base camp but still it took our eye off the ball and I think that that it's hard to necessarily measure the impact of that it's more about the the mindset it begins to to instill in people which is that we're gonna be building new things all the time and you kind of can't build new things all the time right a lot of work is mundane maintenance subtle improvements and we enjoy that but it's not the most exciting thing in the world and so I think we set ourselves up early on to not be able to deliver on that kind of cadence long term so I think

27:24there was a little bit of that which was sort of something that didn't quite work secondly with backpack which is our second product which was a consumer product base camp was a business we sold it for five bucks a month which is a terrible idea I implore you all not to sell anything for five bucks a month it's very very very hard to make a business out of that price tear and and customer consumer customers are typically very very price sensitive and anyway we kind of did that that was not our most successful product we actually also built right board and we built Ted Ollis we pulled a bunch of other things

27:59anyway I took her out of the ball try to get in the consumer thing which was the wrong call and and and at some point we let Basecamp sit a little bit because of that was we were focused elsewhere we weren't working on for continuing continuous products at the same time we would shift our entire focus onto something else for a while and ship their entire focus and move back to base camp for a while on the ship their entire focus that's all we could do commit like eight people or something on that which is that what I would actually still recommend people do if they're

28:24moving between things we found that this idea of ticked we call it tic toc development this idea that you work on something for a while and you let it sit for a while and you move on to something else and you come back brings a new sense of perspective to the thing when you return to it I think it's a more healthier way of doing it anyway we're spread thin gotten the sort of the consumer thing as far as growing the thing how that happened I really don't know I would say that I think that because we're outspoken and opinionated and blogs are beginning to become a big

28:53thing back then we wrote a couple books and we did a lot of speaking we've shocked people with our ideas early on now some of these things are more mainstream but earlier on they were not that you know you just draw attention to yourself and and that who are these guys who's this guy well who's this idiot like whatever in the base camp HQ calm okay are 37signals at the time and you just draw attention I think that's what happened yeah so you'd mentioned you know the some of these other products that you built I it's funny you mentioned to that list because I actually came across that in my

29:23bookmarks the other day when I was cleaning the model still works yeah and it does still work but the what what happened with high rice because you built that and then you spun it off yeah and then I believe you brought it back in yes so high rise CRM tool we built in 2007 is our second most popular product in terms of revenue customer base everything great great business but back in uh was it 2012 I might beginning that dates wrong actually I don't know five years ago or something maybe we decided to go all in on base camp so we still had all four products and we decide that

30:00we're gonna rename the company to base camp from 37signals we're gonna focus on one thing we're gonna get back just kind of like Chris was talking about focus getting back to focusing on one thing and with that we decided to sell spin-off or combine products so camp fire real-time chat built that into base camp 3 okay so that product kind of went away and became part of base camp 3 the current version of base camp backpack it was a small product we just said we're just gonna let that we're just gonna sunset that it will always be available we're never going to improve it again high

30:31rise on the other hand it's a multi-million dollar business very profitable very very solid business and that business was too good to just like we didn't want to incorporate into basic we don't want to bring CRM into base camp that would dilute base camp it was a great business very profitable we saw we thought like we had to spin this offer sell it we tried to sell it but we didn't wind up any of our team to go with it because we want to keep our team so so even though there's a lot of people who want to buy it all the usual suspects they wouldn't buy anything

31:02without a team they didn't spend what the software I can't imagine why well I can't imagine why either now but at the time I'm like you're gonna get this great cash flow like it's just throwing off cash like just staff it up like big deal but anyway they didn't want to so then we decided to spin it off stole 100% owned by base camp found a CEO Nathan Conti who built up a team and he started running high rise for three years and then we decided we weren't quite seeing it didn't quite see the future we wanted to see with it over time so we end up bringing it back

31:33in-house and now we're running it again I'm in-house but we're not or so it's essentially sunset which means that like it will always be around just like backpack but we're not putting active development into it we'll keep it up in terms of security and that kind of stuff and bug fixes but we're not actively developing it but those customers who were on it never have to leave and this is one thing I'll say real quick about that I don't like about our industry especially the big guys like Google they kill products all the time and they leave customers out in the cold and that's uncool so we've just we've

32:05decided that we will always forever what we call until the end of the internet support every product we've ever built will always keep it around as long as there's at least one customer paying for it will always support the product even if we're not actively developing anymore can you answer how much money you guys were looking for in terms of being able to sell it I know I don't need like an exact number I'm looking for well not a multiple like a range was it like a million five million plus ten million plus and it could be way off I don't think it makes a difference I'm just

32:33saying I'll tell you and in the rear and the reason I'm asking a qualified us because we had a lot of questions to the podcast about you know oh I'm gonna hire some developers to work on this and I don't want them stealing my code and running off and building a business next to it yeah and what I think is fascinating about your answer is that it could be worth millions or tens of millions but without the team behind it nobody's willing to pay for it right so it's very interesting that yeah well I can tell you that at its high watermark and I will not tell you when that was or

33:04is I think high rise was doing something like 11 or 12 million a year yeah so eleven twelve million dollar a year business and people were not willing to buy it without the team and the node is worthless yes and let me put and not only not only that but like we basically had four people working on it so if you think about the margins they're 90 something percent and still people didn't want it I mean they would have paid a certain price but I wasn't gonna give it away either sure but we felt like our multiple was totally fair and and they still wouldn't buy it without the team so that's just a

33:40good thing to keep in mind right so one more question I think we'll go to rob F in the audience after that but you'd mentioned earlier that one of the things that you do not look at and Basecamp is the revenue because revenue can mean a lot of different things you really focus on profit are there other metrics that you use to measure how well both the business and the product are doing we don't look at metrics that often so first of all annual profit is kind of our number one thing we look at we do look at it's sort of do we have a leaky bucket or not like

34:15are we are we building more customers than we're losing that sort of thing we look at that we look at an active account growth you look at some of these things but we don't have targets or goals we don't have KPIs we don't have whatever the other acronyms are we just hard to do the best job we can and so we're aware of these things and if something seems like it's slipping a bit more than we're comfortable with we start thinking about what could we do to improve that versus setting up targets beginning of the year and trying to hit those we just don't find that we're

34:44motivated by that kind of guesswork I've never been a big believer in goals personally I don't have any I've never had any truly and our business doesn't have any I think goals are typically things that you stress about and you either if you don't hit them then you're upset if you hit them you just come up with a new one and you stress about that one like that seems like a bad thing to have in your life so I just try to do the best work I can period and that's because I have to set up a goal shouldn't I shouldn't be working harder because I set up a goal I

35:19should be working hard on something because I want to do that thing that's just how I've always been I know it's unusual but so you're really just looking at these metrics and watching them over time and if something seems like it's trending in the wrong direction or going in a below a certain point which you have you're basically you looking at historical measurements yes is this too low then you go back and start to address it but otherwise yeah so we don't look at things on a month-to-month basis for example we kind of look at things annually a couple times a year sometimes and like hey this this this curves a

35:47little bit flatter than we like or something like what can we do about that now part of that is because we're fortunate that we have a big cash cushion and we have very high margins and we're very profitable so you can afford to be a bit sloppy and I like like I like sloppiness I think it's a healthy thing to have some slop in there basically which basically means you don't have to it's a come back to stress like I don't think it's healthy to worry all the time I mean I don't sound that I don't think it it isn't healthy to worry all the time so in some ways you know we

36:21keep our company as small as we possibly can intentionally therefore we have higher margins and we can afford to be wrong more frequently we can afford to be sloppy because I just feel more comfortable that way rather than like being on this this razor thin edge where like you have to get it right and you have to be looking at your numbers every day or every week otherwise you're screwed now that said when you're starting a business it's a little bit different I think especially when you have like 30 grand left in the bank that's totally different different place but I'm just telling you about us today

36:51hey Jason you got most of the way there with the question that I was gonna ask but so you turned off siren signups for high-rise about a year ago you spun out no your team you turn off signups for all these products why start another one like where's that motivation coming from and why is this one going to be different yeah well so for us we only build things that we need and we want and things that scratch an itch and there's this thing that we do every single day that everybody here does every single day that is so full of hacks and workaround workflows and

37:30confusing messes that we all just completely put up with because we've become so numb to the reality of how bad it is that we were sick and tired of doing that every day I know I'm being very vague but it's it's it's probably the most ambitious thing we've done because the the category is extremely is dominated by the biggest players in the world and we just have a very different take on it and we're sick of using their stuff and we think we have solved some of the problems that people put up with it they don't even know they have but when they see they go

38:06[ __ ] yeah Quartet this sucks why do I have to do with this every day so that's why we just have a really really really itchy scratch or scratchy itchy or whatever that we want to do and we're gonna build it for ourselves and if no one buys it that's fine too just like base camp was not built for anybody else and it was built for us but we've decided that we want to do that secondly I'll say is another really quick point is that we think it's really valuable to do this tic toc development thing which we lost so since we've been working on

38:35base camp non-stop for four years what ends up happening is you get to a point in a product where you have your entire machinery of your entire company working on marginal improvements and at some point you realize that we could all be utilizing our skills better by putting that into something else for a while learning some new things trying some new things that you can't try with what you have because it's you just can't miss or mix it up too much and then be able to come back so we're gonna get back into this to product cycle where you can kind of go back and forth that's the least a

39:07theory question over here you know make these answers quicker I'm sorry there's only she's sort of sort of related we're a team of two we have two product we just launched a new product last summer and we've been at the first product for two years but I was curious about the tick-tock thing I'm assuming it's not it's not a fixed thing but I was curious about if you have some sort of structure any sort of structure around like how you decide to spend time on which things and for how long or have had that in the past there's no fixed number it's more like haha how's it feel so for example

39:44you're going to launch something we're kind of all in on launching this other thing which is if like a few months out let's say so we're all in on that so Basecamp can stay because camp is in the best position so ever been in it can stay on its own for a few months like that's totally fine this idea that you have to be improving things every day I don't know I don't buy that so it can it can sit for a while we'll go do this other thing we'll launch that for a few like a little bit after that we'll have to pay close attention of the

40:05then we'll come back to base camp and we'll kind of see how things go maybe we'll split the thing the team down the middle and half work here half work there but for now we want to we want to kind of go all in on one thing so it kind of just depends I would say but I know that there's a tendency after you launch something brand new your first product there's this tendency to get back in there and do the next one because like you want to remit to get back to that excitement because it's kind of mundane improving is something you've already launched is kind of

40:29mundane so you only get back to that excitement of launching something new I would just be careful not to lose your focus in the early days because that's really one like that's the foundational those are the foundational years and if you don't have the right things in place there it's hard to grow down the road next question over here could you clarify for me with those large profits that you talked about is there a specific percentage of those profit that you put back into the company or as most of that got paid get a check at some point in like okay that's our reward for not having sold

41:06this company in the past is that we get this very large check it's like you're putting it back here like it's reward sure well a little bit of both so some some things we just sort of you know we'll spend more money on during the year because we want to experiment with something so that's kind of that's the putting it back in but we don't like at the end of the year we don't put some aside we put a little bit aside to pay like January's bills you know and then we're in LLC so you know I pay personal income tax on the profits and David does

41:38and so does Bezos so we distribute the profits that are left over at the end of the year to the owners now your point is is great because some people will do the math and go that's a lot of money every year you know I would say it is but we could sell the business for whatever I don't know what the number would be but it'd be a large number and we're basically it's kind of like we've won the lottery in a sense and we're taking the distributions as we go versus taking the lump sum because there's benefit to me going as we go which is I get to have

42:12a great job and our employees could have a great job and get to improve the product over the time we get to make customers happy we get to change businesses trajectories and stuff like that's exciting too so that's a payoff that you don't get if you sell and then I'm left at 44 years old no not knowing what to do that's not interesting to me so that's kind of why we do it that way I've seen you blog about it or talk about a little bit in other places where you've essentially the way you framed it is really like Basecamp gives you a platform to do

42:37things that are interesting to you versus if you were to take a lump sum of money then you'd have to fund everything and it may or may not work out and you're you're kind of left paying the bill at that point versus with Basecamp it's like you've got a team there that does allows you to the flexibility to kind of make those experiments for sure and I believe base camps the best product in the world for what it does and I want to keep making it better and better and better and better and better and I want to keep introducing it to new people and so I'm totally motivated to

43:02make it better and everything and I can't do that if I sell it if I sell it have to go work somewhere else for two years and be completely miserable probably because I'm pretty much unemployable and so like that's never worth it to me so yeah so the answer is yes we could put take some also put some more in the business by doing some experiments and that sort of thing as well so we'll take one more question and then we're gonna break for lunch when did you first make an iPhone app for Basecamp and why did you wait until that point I don't remember the year but we

43:34made a big it was before 2008 because um I'm sorry as before 2012 because I think it's my 2009-2010 iPhone came out about 2007 or some other that it was we made one for Basecamp classic which is the first version of Basecamp which we've stopped working on in 2012 eight years after we launched it so it was around that time it was a web at 100% web app we just wanted one for us it was crappy and slow but it was totally fascinating projects we learned a lot about how to do it and then all the future versions have been been really good but the initial

44:11version was was slow but it was a few years in after the iPhone launch I think today of course you've got a launch with mobile support but back then was a totally different time and one more thing I'll say if I can just one quick one the other thing that we noticed is that back when we were getting started in 2004 through 2008 we made for products five products six products penny how you count we didn't have to have mobile versions we actually had four or five or six products but the moment the iPhone came out you basically to multiply everything by by two now you've gotta have two

44:40versions of everything desktop perhaps in mobile so now it does five or six products we have it's really 12 code bases to maintain then you then you then Android comes out now you've got like you know for millions of things to deal with it are all different code bases and is like way overwhelming and that was one of the reasons we decided to go back and scale back just to Basecamp because we did not want to manage literally dozens of code bases across multiple products and multiple platforms with our team size at about 4045 at the time now we're 55 but that's that sort of it so

45:10it was just impossible to deal with mobile and and and desktop with multiple products with a small team thank you very much thank you [Applause] you