Jason Fried Talks Basecamp Strategy, Hey.com & Beyond
We talked with Jason Fried, founder of Basecamp and Hey, in advance of his session at Business of Software USA Online to get some of the important but unnecessary stuff out of the way in advance. We don’t think hearing him talk about the background story is going to be as interesting as digging into some questions and conversations about the really interesting stuff for the entrepreneurs and software people who are taking part. A fascinating conversation covering topics including strategy at Basecamp, launching their new email service Hey, thinking about products, remote work, online conferences as platforms and lots of other interesting things.
We’re sharing some of the conversation here, split into three sections for ease – we cover a lot (or you can read it all in one go below):
- The Background – Jason Fried, the evolution of Basecamp, the origin, launch and craziness of Hey.com
- Strategy, optionality and managing two products at Basecamp
- How Covid changes work and industries, designing for platforms
Of course, there is plenty more to talk about and we’re looking forward to spending time with Jason Fried and David Heinemeier Hansson, neither of whom are short of opinions, to delve deeper at Business of Software Conference Online 21-23 September.
You should be in the (Zoom) room where it happens.
1. The Background – Basecamp & Hey
Who is Jason Fried?
Jason: “Who am I? I’m Jason Fried. I run a company called Basecamp and I’ve been doing so for almost 21 years now although it used to be called 37 Signals.”
Tell us about Basecamp
Jason: “We currently make two products: Basecamp and Hey, which is our new email thing.
“We’ve always run our business a little bit differently than many people in our industry. We’re bootstrapped – we’re a self-funded company. We’ve been in business for a long time. Twenty one years and we’re a relatively small company – 56 people – large by our standards but in the industries we’re in we’re quite small. We’ve done that intentionally.
“We’ve written a number of books about how we work and why we work and the ideas behind the choices that we make in our latest plans called Shape Up – a free book. You don’t even need to give us your email address – it’s free. Literally free. It’s all about our how we work in these six week cycles and why we do that, how we make decisions about that, and how we don’t plan long term.
“We just try to do the right thing. We don’t always get it right. But we’re really interested in building great products, taking really good care of our employees, taking really good care of our customers, and sort of leaving the hype and the trends behind just not interested in doing what everyone else is doing. We’re pretty intentional about that and just kind of doing what makes sense for us.”
Yawn Yawn – what do you get asked that is boring? 🥱🥱🥱
Jason: “I’m not interested in talking about features. We could. Who cares? I want to talk about the mindset you have to put yourself into and the battles you have to fight against yourself to allow yourself to do something that you know is going to bring a lot of heat in the market. That kind of stuff is, I think, really the essence of what’s fun about creating things.”
From multi-product company to a single product one. 🔍🔍
Mark: “So you mentioned you started as 37 Signals. 37 Signals made loads of products – it was almost as if every time you went back to the website there was another product. Then you stopped. You just focused on one and you even changed the name of the company. What was the thinking behind that?”
Jason: “I went off and got married and I took some time off. When I got back I looked at the company and realized – you have to get perspective – you’ve got to leave for a little bit and come back to see something, you can’t stare at it all day and see it. So I came back and realized we’ve got, depending on how you count, maybe six products. In those days, but the same applies now, you can’t just have a product. You have to have a web version, you have to have an IoS version, an Android version… So having six things is really like having 18 things to manage and we want to keep our company small. We had, I don’t know, 20-30 people at the time, something like that. We can’t do a great job on all of these things with our company size to our own standards. That’s just not possible anymore. The world changed from when we first built these things. We have web and mobile versions now.
“So to think about what to do about that – there’s three options.
- We could hire a lot more people which is antithetical to the way we want to approach our business. We don’t want to be a big business in terms of people.
- We could just keep doing what we’re doing which wasn’t really working.
- We could divest ourself from certain things and focus on certain other things.
“We decided to focus all in on Basecamp which is our biggest product – the one most people knew us for anyway. When I would tell people where I work and I said “this place called 37 Signals”, people would ask what we do. I’d say, “well we make this thing called Basecamp”. “Oh Basecamp! I know Basecamp!”. So we decided to sell off, spin off, or ingest all the other products. So example Campfire, our chat tool, got converted into Basecamp. We spun off a couple of things and converted a few things, kept a few things around that we don’t update anymore. It basically said we’re going to go all in on one thing. We’re going to rename the company Basecamp and do that. We did that about five-ish years ago. So it just made the most sense at the time.
“You look at it now and you go – that was kind of a really crazy decision. It was actually the only decision, it was not really crazy, it was the normal decision. We were admitting we simply can’t do everything we wanted to do the way we want to do it. So therefore we have to do fewer things. Or you could change but we weren’t comfortable with the change part so we want to do a few things and so that’s all that happened.”
Mark: “Right. So that you would say worked very well.”
Jason: “Yeah. Very comfortable with how that turned out. Although we just changed our mind.”
So a single product company was great, then it wasn’t. What happened?
Jason: “So for five years we’ve been doing this. And then a couple of years ago we start exploring something new which was going to originally be a new version of High Rise (Our CRM tool which still exists – we just don’t sell it anymore but it’s available to existing customers). As we start building and exploring that, we started focusing on a lot of email stuff around it. I’m like, “I want this for my email”. I don’t want this just for CRM contacts – vendors and accountants and lawyers – I want this for every email every interaction. So for the past couple of years – I’m skipping over a bunch of decisions – we’ve been focused on building this new product called Hey.
“It’s an entirely new email service. It brings an entirely new philosophy to email and is unlike any other email thing that exists on a variety of different levels.”
And it’s an email service?
Jason: “And it’s an email service.”
Why a service not a client?
Jason: “So it’s not just a client that sits on top of Gmail or outlook because you can’t really innovate that much if you’re sitting in some else’s platform. You can kind of tweak around the edges but you don’t have any control – they can pull the rug out from under you any time, you can’t really really change it. You’ve got to kind of vertically integrate. So Hey is an email service meaning if you sign up you get an @hey.com email address. We’re your email provider – you can jettison Gmail or outlook or whatever you use and just run on Hey.”
The craziness of launching Hey
Jason: “The launch was quite dramatic. We didn’t expect. We didn’t expect it to be like that. We knew we had a good product. We’re very pleased with it. We knew it was going to be well received, we didn’t know that Apple was gonna tell us to… f*** off.
“So that was a thing that happened. That was a very difficult two weeks – but exhilarating and exciting. Now it’s finally calmed down and we’re kind of seeing what baseline looks like again which is nice.”
Product Development and saying, ‘No’ 🙅♂️⛔️
Jason: “We said no to so many things that people are used to – and there’s philosophical underpinnings behind every feature that we’ve built in our products. Building from that perspective versus looking around and trying to achieve feature parity first and then building on and adding new things – we don’t approach things that way. We look at like what do we want this thing to be. I don’t care what everything else is. And we want to differentiate as much as we possibly can. I think the most important thing you can do for new products is to differentiate as possible.
“We’re fighting back against our own urges – ‘Well this is how they do it so we should do it that way. That’s what people can expect so we should do it that way’ – before you know it, you can convince yourself you’re just building the same thing everyone already has. So why do it at all? It’s kind of keeping your own pressures at bay to give yourself a wide enough berth to do something new. It’s hard. And we didn’t get it right perfectly but we put a lot of effort into it.
“I think it’d be fun to dig into the product development at BoS.”
Controversy
Jason: “One of the most controversial things with Hey is that you can’t archive email. This is not really a controversial thing but Google has drilled it into people’s heads that every time you look at an email you need to decide what you want to do with it afterwards. Do you delete it? Do you archive it? Do you leave it there? Hey doesn’t have any archive. We don’t want to give you that choice because we don’t believe that every email should come with an obligation.
“Some stuff you just read and just let it go. And this idea of, we’re calling it, ‘let it flow’. It’s been super controversial. I knew it would be somewhat controversial, we wanted it to be, but I didn’t realize it would be so controversial. We wanted to have a different point of view and that’s part of the product. It’s naturally poking people’s behaviors and habits and asking people to try something different. Try something new and that freshness is a virtue here. And we’re trying to push that in a bunch of different angles too.”
On Superhuman 🦹🏼♂️
Jason: “I think what they’ve done is fantastic – with the exception of their tracking stuff. So aside from that I think what they’ve done is great. I have some fundamental vision differences. To me the problem with email is not that it’s too slow. The problem with email is that you’re getting too many emails you don’t want, and we’re trying to solve that problem. Superhuman has clearly made a big impact in a lot of people and that’s hard, they’re expensive and people still want it. That is an amazing thing that they’ve built.”
Hey and Apple 👩🏻💻🍏
On launching Hey.com, Apple banned the app from the app store as it didn’t allow in-app purchases. This created an almighty headache and an almighty row. For some background – startup fights with Apple rarely reach the pages of national newspapers. We’ll be digging into this some more at Business of Software Conference USA Online this September with Jason and David…
2. Strategy, optionality and managing two products at Basecamp
How do you think about strategy and optionality at Basecamp?
Jason: “The way I try to do this is try to project backwards, a year, extending from now and think about how I will look back on the last year. What am I going to regret? Don’t do that. I don’t do the things I’m going to regret. Basically it’s how I try to think about strategy. It’s easy sometimes to make decisions in the moment and not think about them in a reflective way.
“I try to do that because I don’t want to show up at work every day to do things I don’t want to do most of the time. Of course there’s always days to do things you don’t want to do. Of course a lot of work is monotonous boring stuff, no matter what you’re doing. I want to make sure that strategically, at the high level, we don’t make decisions we’re going to regret a year from now.”
How do you consider risks?
Jason: “Part of this too is about is about measuring risk. Thinking about things in terms of tradeoffs and making bets. Placing and taking odds. We don’t think ‘strategically’, we’re never interested in trying to be certain of anything. Certainty is not interesting to me. It’s a false hope.
“Most of the time and the amount of effort it takes to be certain is almost never worth the the extra work compared to a really good guess where you feel pretty good about the decision. So certainty is not something we look at. We’re always looking at trade offs and bets. What are the odds? Does this feel like decent odds? OK we’ll take that super, super, long shot. Maybe not. We’re always trying to think about things that way and I’m not trying to ever be that perfectly certain about anything we do.
“People often ask, ‘How do you know if this is going to work?’. The answer – I don’t know if it’s going to work. I’ll never know if it’s going to work. The only way I’ll know is if I build it – then I’ll see if it’s going to work. There’s no other way to know. So mentally we’re just not looking for things to be perfect. We’re not looking for things to be certain. We’re just looking to feel like it’s worth taking a bet on, taking a chance on, and taking a risk without putting the company at risk.
“It’s sort of how we’re always trying to think about how much risk can we take without putting ourselves at risk. If something went wrong with Hey and I had to lay off 20 percent of the company, I never would have done Hey. I don’t want to be in a position where I have to lay people off because of a decision I made about a product I wanted to do. If we felt that would be the reality we wouldn’t have done it. So we’re just trying to find out the right amount of risk for us.”
Hey – The stupidest thing we have ever done!
Jason: “I think Hey is the stupidest thing we’ve ever done. It could have been a big risk. I mean that in the best possible way. How we approached Hey is different on every level we’ve tried to make make it very different from standard email.
“I think talking about what it’s like to take a big risk without putting your company at risk is the deeper more interesting thing. We’re able to do that because we’ve built up Basecamp and it gives us cover to take a risk without putting ourselves at risk. I think that’s important because when you talk about risk with entrepreneurs, they think it’s like you bet everything. You always bet the company. I don’t want to bet my company unless I have to. I don’t want to get that wrong. I would love to talk with people at BoS about that.”
Managing Two Products at Basecamp
Jason: “And now we have two products, Basecamp and Hey. This feels like the right number. Four or five was too many, but two is good – because we can spend six months on Hey exclusively, learn a lot, discover a lot, and then bring those ideas to Basecamp and work on that for a while, bring those ideas back to Hey and we kind of go back and forth. We’re calling it ‘Tick-Tock’ development – tick tock, back and forth. And I think that that’s gonna be a really good pattern for us.”
Hiring and Growth
Jason: “We see the 70 employee mark as something that you would be able to run both services with. It’s a terrifying number to be honest. I don’t look forward to it. I look forward to the new people and everything. I don’t look forward to running a company of that size but maybe I’ll get used to it.
“We’re about to hire between ten and twelve people next year which is a hiring spree we’ve only done once before. We need to now with with Hey taking off.
“But I think that’s what we’re going to really need because next year we’ll also launch the new version of Basecamp and this year we’re also going to launch Hey for work which is the business version of Hey for multi-user accounts for multiple people to use it together inside of a company. So there’s going to really be almost three products. We’re going to need a bigger team. Right now we sort of held off on Basecamp to go all in on Hey, but we can’t leave Hey to go back to Basecamp, and we don’t want to work on Basecamp and then leave Hey there and vice versa.
“So we’re going to actually build up a couple more product teams and that’s what the additional hiring will be. Plus, we need some other expertise that we don’t have in the company today. And so we’re going to do that and have to hire customer service people. So we’ve got tens of thousands of new customers all of a sudden and so we have to do this. This is the stage we’re at right now.”
What’s the thing that worries you most? 😟
Jason: “I try not to get worried about work. What worries me the most right now is, we’re in bug fix mode. We just launched Hey and like there’s a lot of stuff that bubbles up after you do. We’ve had almost 200,000 people signed up for this thing in six weeks. It’s a massive amount of eyeballs and the sudden usage mean things bubble up.
“My biggest worry right now in the short term is that we’re going to stay too focused on trying to solve all the small things and not get back to building the interesting things that we want to do that we didn’t make in version one. This is one of the things that happens with product development – version one you get to build in isolation. You launch into the world and at that moment you’ve got ten thousand, twenty thousand, a hundred thousand opinions descending on you. This is good but also it means you tend to be forced to backfill based on people’s existing expectations. They’re bringing with them 16-20 years of email experience. They want to do everything they love and know. What Hey does they love, but they also want to do everything it doesn’t do because that’s what they’re used to.
“So my worry, and I’m working hard on this internally to remind people, is we should not give in to backfill mode and just try to shore up the basics with what everyone else wants. We made these decisions for a reason and this is where you can, very easily, very quickly, lose track of what you’re trying to do. We have a very strong point of view on this but when one hundred thousand other people also have a point of view it’s difficult to maintain your own point of view still.
“So that’s my current worry and my job in some ways is to protect. We have to fix things but also protect the vision. This is when the vision can get shattered very quickly and then you can’t get it back. So that’s in the short term and I’m worried about getting it right.”
3. How Covid changes work and industries
On the ‘new’ remote working in the time of Covid
Mark: “<Sarcasm> How are you going to manage the change to your way of working now everyone’s gone remote? </Sarcasm>”
Jason: “You know we’ve always remote! Always. Yeah. Although what’s interesting is we’ve had an office for 10 years, our lease is up in nine days and we’re not renewing. So we’re literally not going to have an office, we’re finally going to be fully remote – truly fully remote – as of nine days from now. Then we’ll play it by ear we’ll see how it works out.”
Mark: “Do you get a sense of how other companies are approaching it? Certainly over here in the UK, in most of the software companies I know of, no one’s planning on being in their office till 2021.”
Jason: “Yeah, I think all the companies I know are also staying away. Basically the thinking is until there’s a vaccine we don’t go back to work. That’s our take. It seems to be everyone’s general take because working all day in an office with a mouse has gone away. Why not just be at home? What was the reason to be in an office and in that kind of environment in the first place?”
Covid’s effect on other industries
Jason: “I think commercial real estate is probably gonna get hammered pretty hard I would imagine. I’m not so sorry for those guys. The conference industry must be completely decimated – the people, hotels – crushed. I’m sure you don’t feel that bad for them but it’s also sad because there’s a lot of workers who rely on that business and concessions and catering and it’s brutal.”
Mark: “As you said it’s always the people that do the work that suffer the most. The big organizations, big venue companies, the senior people in those companies have been taking plenty of money out of the company for the years for years and years and years. They’ll probably also still be taking money out as they navigate through getting rid of everybody too. It’s a terrible thing for the people that do the real work. The hourly workers are in a terrible position. Brutal.”
Conferences in the time of Covid
Mark: “From our perspective, our business was about hiring a room, shoving people in, shaking it up and seeing what happens. So we’ve certainly made some very significant changes to that. We have thought from the get-go however that it’s a long term, not short term thing. Our first Online Conference was March, BoS Europe. The difference from day 1 and day 2 was the government announced on the evening of day 1 that everyone had to stay at home. I remember some of the conversations. ‘How we going to get through the next two or three weeks?”…!”
Jason: “Shut up. This is going to be a 2 or 3 years thing potentially.”
Mark: “Yes!”
Designing for the medium
Mark: “And so right from then, right from the beginning of the year, we’ve been thinking about online. There’s some really super cool things that work online that just don’t work in real life at all. I think a standard traditional conference format doesn’t transition online in a great way at all. Have you seen Tiger King the Netflix show?”
Jason: “No, but just the name sounds mad.”
Mark: “Yeah it’s great! Like one of those sort of sofa binge-watching things you keep watching and watching. Each episode, it’s 28 minutes or something, then the next one starts and you get sucked in. All of a sudden you’ve been watching it for five hours. I watched it in the first week of lockdown post-BoS Europe. That’s exhausting – and it’s entertainment. It made me realise expecting people to watch a screen for one day, two days, three days, concentrating and absorbing knowledge is fanciful. There is only so much of the wisdom of CEOs or whatever it is that people can stomach in one go!”
Online events as a platform
Mark: “We’ve gone down a very different route to a lot of events which have just gone online to attend for free or virtually nothing and just tried to move a physical event online. Now everyone’s available to talk. So you just get an endless kind of series of talks and the networking is about pitching people services in a text Chatbox. Horror! We’ve really tried to get to know what people want by thinking about their Jobs-to-be-Done. We also know that quality is its own economy – a high density of quality people makes for conversations/interactions that are brilliant in many formats.
“It’s great to sit in a room talking about whatever it is and meet different people in a hotel bar or wherever. Interestingly the quality of the conversations you have online and in well-moderated groups can be an order of magnitude better. Everyone’s who’s been at a conference bar late at night will now you think you’ve solved the world’s problems, formed some incredible partnerships with people you just met…
“In a good online environment, the ‘noise’ is so different. There’s a different vibe to the bar room networking – one that I really like.”
Jason: “That’s an interesting point. I think over dinner and drinks there is a real exaggeration. And everyone knows it’s kind of bullshit like you’re not intentionally bullshitting but you just kind of do. It’s this frothiness which goes away online. It’s the day and we’re more serious at the time and we’re talking and that’s why we’re here.”
The Similarities between online events and remote work
Jason: “I think Online Conferences can be done really well – it’s similar to remote work. I’ve been talking to journalists who have been asking me for my take on remote working.
“You should think of remote work as a platform. What I mean by that is it never works to port one thing to another thing – porting Windows software to the Mac doesn’t end up with good software. You could tell it’s been ported back. When the internet first started the early designs were like CD ROM interfaces to the Web. Multimedia was all people knew, so they would port those designs.
“These different mediums and different platforms have their own pros and cons. Their own advantages and disadvantages. If you just port office work to online office work it doesn’t work either. Remote working is different than working locally.
“Remote conference are different to local conferences. If you just take your local conference and try to push it online it doesn’t work because all the magic is not just in the moments where people are talking, there’s more to it. You have got to think differently about it. So I think that events like BoS that really consider the differences, the advantages and disadvantages, are going to do well. I’ve seen a lot of conferences scrambling and just throwing their stuff online as if it’s the same as in person. They’re going to suffer because it’s hard to sit through. We can’t sit through eight hours of Zoom calls.”
The challenges of the event business model
Mark: “You’re right. I think that is there with some of the bigger events. They have momentum with multi-year sponsors and things and the business models are almost entirely driven by lead generation for sponsors. <Sarcasm> There’s a real importance in having a high volume of people and being able to give sponsor companies email addresses at the end so that they can follow up and tell the attendees how amazing they are… </Sarcasm>
“The big challenge in the longer term then becomes that the experience is not great for attendees, free passes attract low-value people so sponsors don’t end up converting leads and then what? In the longer term, the sponsors are unhappy, attendees have a sub-optimal experience, albeit at a lower cost, everyone is less inclined to take part in the future. This approach might have worked if this was a short term – 2-3 month problem. It is not. I think as an industry we’re going to run out of sponsor steam very quickly. Fortunately/unfortunately we’ve never been very kind of sponsor-driven – we’ve always been very kind of driven by the content and bringing entrepreneurs together and getting them to talk. I wouldn’t pretend it’s an easy market whatever route you choose though at the moment.
“Looking at our business in the second week of January, we were thinking we’re going to have our best year ever…”
Jason: “And conferences have got a lot of costs upfront as well…”
Mark: “That is very true!”
How BoS Conference is adapting
Mark: “Our aim is to make something work that will become a core part of the future business. We’ve always thought about online as an interesting ‘thing’, it’s just that ‘thing’ we haven’t quite focused on because it hasn’t been pressing enough. Now it’s pressing! There’s a few other things going on as well… Our aim is to change the way people think about events and online events. It has been brilliant working with some very smart and interesting people with creative ideas about what that looks like. It’s been great. Alex Osterwalder said, ‘Oh I don’t have to do a talk? That’s great, we can do something more interesting. How about…?’ Both he and Bob Moesta were so excited about the innovation and creativity of something different online for example.
“I think from that perspective it’s exciting. We can give people some core reading, watching, preparation in advance and then, on the day, because we’ve got smart engaged people, cool stuff happens. We can use some online collaboration tools, work through some problems in real life. I’ve seen Alex do that in a group of a couple of hundred people with Strategyzer and it is powerful. Those sorts of things I think are energizing.”
What is different for you about Business of Software Conference? You’ve said it is very different in the past.
Jason: “I love this conference. To me, your conferences, and a lot of other conference organizers aren’t gonna be happy I’m saying this perhaps, but it’s one of the few conferences that I would really like to go to. I don’t really go to conferences anymore. I haven’t because I’ve got kids – traveling is kind of tough for me right now. But if I had to pick three conferences to go to per year this would be one of them.
“Every time I’ve gone I’ve sat in the audience and listened to all the other talks that day. It’s rare that I that I feel like doing that.
“To be honest a lot of conferences don’t have the content – people are putting slides up that are B.S. The quality of the speakers at the show you put on, the audience, it’s such a wonderful honest conference. That’s the thing I love about it. No one told them to go there to give this presentation. These are people who want to be there and who want to really literally share insider stuff stuff that really matters to them like the real deal.
“That’s what I’ve always loved about Business of Software and I’ve watched a number of the talks online and and it’s an honor to be back again. I love it. Great, great, show.”
The BoS Magic
Mark: “We have a very intentional, keep it small, keep it focused, keep a high-quality audience approach that’s going to be important to maintain.”
Jason: “Yeah. Well you’ve proven to be to be able to to rise above. I mean how many… there’s thousands of conferences.”
Mark: “There are almost as many software conferences as there are project management SaaS companies…!”
Jason: “Ha! I mean everybody who speaks about Business of Software speaks about it in a different tone. It is a special conference. People want to speak there. People wanted to attend that you come away knowing something or knowing someone differently. It’s wonderful.
“So like if someone can pull it off I’m certain you guys can do it. So we’re all rooting for you to pull it off because of course conferences are at risk right now. There’s no question about it. Like I can’t. I can go to a conference sit in the audience for six hours and endure maybe a couple talks that aren’t really my thing but like OK but you can’t do that sitting in front of your laptop staring at a screen – you’re out! If things are interesting you’re going to be out because it’s just exhausting. It’s different.”
Join Jason Fried and David Heinemeier Hansson to delve deeper at Business of Software Conference Online 21-23 September. Be in the (Zoom) room where it happens…
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