DHH: How to Build a Profitable Company Without Losing Control

25:33But remote work is everywhere now. They don't understand. You guys published a book called Remote in 2013, if I'm correct? Yes, that's right. Yeah. Well, before anyone did it. Now, what's funny is, I mean, I've seen the full cycle, right? So during COVID, everyone goes like, actually, remote work's amazing and we get just as much done. And then as soon as that was over, where we're like, oh, I guess we still have that 10-year lease. We better get people back into the office. Now, that's a bit of a cynical view. I totally get that there are individuals who thrive when they're around others. And actually, I think the common form of leaders and entrepreneurs is actually people who do like to be around others a lot, who do like to be interrupted.

26:09That's the mode they exist in. That's not my mode. I'm in, Paul Graham has this builder versus manager mode, or schedule. and the schedule is all about if you're a builder and you get interrupted just a handful of times in a single day, that day is a waste because you will never get into the flow. You will never get into this long stretch of uninterrupted time. And therefore you will not feel in the, not just mood, but moment to solve the deep problems you've got to deal with. And that, to me, that was really the breakthrough for my career, certainly on programming, that I just, I can't use a 45 minute chunk of time.

26:48An hour and a half even, I don't know. That's not going to turn out to something. If I have four hours, okay, now we're talking. I can actually attack a problem and feel I can get all the way into it. And part of that is I hate repeating myself. This is one of the reasons when in the early days of 37 Sales, we did these workshops called building a base camp. Eight hours, we just go through everything that we learned building software products and let's share. So we build those up. I could stomach three. And by the third time I was saying exactly the same thing, according to a script, I was like, I'm going to blow my brains out.

27:22I just, that does not have any stimuli for me. I can't do it. So therefore I needed to not repeat myself. I needed to get into that novelty of it. And the ability to have these long stretches of uninterrupted time to do that, that's where I find it, right? Like that open space. The funny thing too is it's not just people I can't have around to work. I can't even have a mess. This is why I posted some pictures of my office here in Malibu on Instagram. It still goes viral every few months. It does. It actually just got picked up in sort of some content mill that keeps putting it out because it creates so much engagement.

27:59But one of the key moments or points of feedback I would get on that is that's not a real office because there's not a mess. Like it doesn't look like the desk is used. And I'm like, dude, you don't understand. If I have shit all over my desk, I'm not creating work because my mind will just go to the shit. And it's a bit of like that Marie Kondo where you go through simplifying your home and throwing out all this stuff. And it actually creates free mental space. It does for me. And therefore I need this pure cocoon. It's actually a form of procrastination. And I need to run out of obvious things to procrastinate on before I'll start the real work.

28:43This is also one of the reasons why I got so into building software tools, Ruby on Rails, everything else. Many of these tools are functions of procrastination. I have a thing I need to do. For whatever reason, I can't get started on it. But I can do all this other stuff around. Oh, we need this wrench. I should just build the wrench. Like, yeah, yeah, let's wait with the table for a bit. I mean, I really need the table. But first I'm going to design a wrench from scratch so that I can put that damn table together. And that can be a very productive form of procrastination. But it's also just a reality of how I'm able to produce work.

29:17And I've just come to terms with that, at peace with that, very early on in my career realizing I cannot work for eight hours a day sitting next to other humans. So this reminds me of what I want to get to. So you're close friends with Toby Luque. We've had amazing people so far on the show. I've enjoyed every single conversation. But that conversation with Toby is the one that I don't think more than a week goes by without me thinking of it. It's probably when people are like, oh, what should I start with? I'm like, just go there. I was on the phone with the founder who was asking for advice.

29:45I was like, man, I need more context of what's going on. I go, but basically on what you said, I go, just go watch this Toby Luque episode, then call me and we can talk. He texts me. He's like, within three minutes, Toby's already dropping like gems. And the reason Toby's interesting to me, and I want to get to like your relationship with him and then his influence on your adaptation of adoption of AI is because, one, he's like your favorite founder's favorite founder. And so there's a lot of other founders that I admire. And like my friend Kareem, who's the founder of Ramp, which is like my biggest partner.

30:13Kareem, he's very similar to you, very similar to a lot of great entrepreneurs, like divinely discontent. He like makes something, and he's just great. He's like, it could be better. And he's just never satisfied. Therefore, he doesn't like a lot of other founders, doesn't like a lot of other products. But he speaks very highly of Toby and likes the way he thinks. and then when you realize about Toby it's like everybody says oh like you know I'm an independent thinker but Toby actually thinks through every single thing for himself so therefore he has all these ideas and beliefs that are not correlated with one another so when I ask him a question I have no idea that's the hallmark of a great debating partner you don't know what they're going to say exactly and that's why the conversation was like incredible I was like oh this is phenomenal and if I didn't have to catch a flight we would have we were talking before and after.

30:59It was like, man, I have to have this conversation again. So you said earlier, what I also admire about you, and I've been following you for a long time, is like, you'll have an idea, an opinion. You're very fucking vocal about it. But then if you get new information, you'll immediately be as vocal as changing your mind. Correct. And you mentioned that Toby really influenced your thinking about using AI. Can you go into that? Yes. So I was as excited, I think, in the abstract as anyone, by the advent of AI, we get to see chat GPT and all of that early three plus year ago enthusiasm for the general distribution of AI.

31:38Incredible. We can make computers do that? Wow, I love it. But I had a far greater skepticism of how soon and how much it's actually going to have a material impact on how I write code, for example. And that was informed by what was present at the time At the early stages of this AI revolution, we were getting autocomplete. You were sitting in visual code or studio or whatever, and you were trying to write something. And the AI would be like this pestilent coworker who was like, let me drive. Let me write it for you. I'm like, can I just think for a second? Everything we just talked about, like that isolation, I want to be able to sit and I want to be able to think and not get constantly interrupted.

32:19It was that on steroids. It was the open office on steroids. It was everyone walking by like, hey, can I write on your keyboard? But no, you can't. Get your grumpy fingers off. I want to type this shit myself. So I didn't like that at all. And I therefore locked in on thinking, this is what AI is going to be. And Toby clearly saw much further ahead. His eyes were much further up. It's funny. Now I'm racing with Toby. And one of the things we talk about all the time is where are your eyes? The difference between a great racer and a mediocre racer is very often, where do they look? If you're looking at the turn in, where you're supposed to turn, not at the apex, you're not going to hit it.

33:02It's like the old adage. You go where you look. So this is why don't look at the tree. You'll steer right into it. And training your eyes to look ahead, further ahead than what you think is actually quite difficult in racing. And I think it's quite difficult in business and life in general. and he had an eye that was just looking further ahead than I was. And he was going, yeah, but it's not going to be like this forever. Intuitively had this understanding of the evolution. And I'm still not entirely sure, like, what did he see? Like, why didn't I see it? And I'm actually a little frustrated on my own behalf that I did not have the same conviction as Topi did as early as he did towards seeing, yeah, you don't like it right now, but just imagine two more years of this.

33:47And he wrote a memo to the company internally, I think in 23 or early 24, way before agents doing the work on their own going, I've seen it. This is the big switch. This is what we've been waiting for. This is why I'm here as a CEO to identify those kind of discontinuations in the trend line. And we need to be a very different company to be able to position ourselves for that and take advantage of that. And now I get a first row seat to the fruits of that, being on the board of Shopify. I see just how far ahead they are in these. Half the time, when I'm getting the presentation on the Shopify board of internal systems that Toby has, it's like, this is better than anything commercial.

34:33How do you have these incredible tools? They have a tool, for example, called Scout that analyzes the customer feedback they get, just that their product managers are very well informed about what are people asking for, that just sucking out from all these channels where they can ask it anything. think, oh, what do people think about this feature or this feature? And then they get an answer. And I go like, damn it, I want to buy this. Can you please commercialize this? And he's like, no, just kind of build it for ourselves. Or River, the current system that they have for you, employing agents to do work and open PRs and everything.

35:01Everyone is working towards that. Shopify is already there. And the reason they're already there is that Tobi saw it just so much earlier than the rest of us. Now, there were other people who saw it, but most of them already worked in AI. Toby was running this enormous company at the time. And it's actually quite difficult, I think, at least it looked difficult to me to be able to be as focused as he is on that main business. I mean, Shopify has a million things going on. And then also having your gaze that high up, looking that forward towards the next apex, what's coming, and then acting on it.

35:33And it was his incessant, oh, look at this, look at this, look at this, that got me from, yeah, I like AI, but it's sort of abstract too. Okay, fine, I'll install Pi. I'll install this. I'll install that. I'll give it a try. And then realizing, oh, actually, yes, this is going to change everything. And that nudge, having someone just constantly nerd snipe you, as in like, hey, I know a little bit more, or not even a little bit, a lot a bit more, about this specific thing. And I'm like, that can't stand. I cannot be the person in this relationship who's not up to date on this shit. So Toby nerd sniped me into just leveling up and diving deeper and setting things up and giving it an extra try.

36:18And so much of the ability to move your opinion comes from not these abstract ideas, but from touching things, from actually setting up open claw or whatever and getting some experience with it. And then having this instinctual feeling of where things are going to go that you're not going to get from just reading someone else do it. You can read a write-up of anyone else using something else, but it's kind of like trying to learn how to drive a race car by reading a book about it. You could pick up some pointers, but until you get behind the wheel, it's not going to internalize. It's not going to be something you can actually perform.

36:53So I credit Toby heavily with that, just being a guiding star. And what's so incredible too is he's not running a startup. Well, he is. He would probably say that he is in some sense, like abstractly, right? Like day one kind of thinking, but it's a company of 7 ,000 people. Most companies, even technology companies that get to that stage and has that level of both history, Shopify has been around for 20 years, is that large 15 % of world GDP on e-commerce is occupied with the problems they have at hand. So to be able to be further ahead than like I felt like I should have been running a much smaller company was a great way to sort of almost shame me into getting up to speed.

37:36So thanks, Toby. The best businesses I've studied all figured out the same thing early. Your team is only as good as the information they're working from. And today, that team includes people and agents. But most generic agents only have limited information and don't know the most important aspects of your business, like your actual customer conversations, your sales history, what worked last quarter and what didn't. This is what HubSpot fixes. It connects AI to your real customer data. So when you ask AI to write an email, it knows this customer asked about pricing three weeks ago. It knows what campaign brought them in.

38:10And it knows that customer already contacted support twice this month. And that changes everything for a startup. When you're hiring, new team members can see how you actually sell. When you're fundraising, your data is clean and ready. And when you're scaling, you're building on something designed to grow with you, not rebuilding from scratch. It's the same platform that more than 300 startups who have grown to over a billion dollars in valuation grew their businesses on. And now HubSpot for Startups offers this service at up to a 90 % discount exclusively for eligible startups. Visit hubspot.com for such startups to learn more.

38:43That is HubSpot.com forward slash startups. Have you had a chance to nerd snipe him back since then? Yes, on Linux. So I switched to Linux about two and a half years ago. And first I had this soft on-ramp, as most people switch to Linux. I used Ubuntu. That's the most popular Linux distribution. It's fine. I mean, actually, it's great in many ways because Linux has all these different distributions. They have Ubuntu and Fedora and Red Hat and whatever, but it's all the Linux kernel. Like the magic of Linux is the Linux kernel and then the ecosystem of all these tools that are around it. And whether you package them in this one way or package them in this other way is not the make or break of it.

39:25So just getting into Linux for me was a huge thing. I'd been on the Mac for well over 20 years. I was completely a Mac head, as in thinking this is a Mac is a computer. Like I don't want to use another computer. Windows certainly is not for me. I don't know, Linux is for people who like pocket protectors and just the kind of nerd that I can relate to. I can respect, but it was not a me thing. Then finally, Apple pissed me off enough that I thought I cannot in good conscience continue to spend money on their products if I have such deep disagreements with how they run the company. So fine, I'm going to try something else.

40:02And as I said, I gave Windows two weeks and I realized, man, shit, I can't do it. I'm going to come crawling back to the Mac if there's not something else. But thankfully, there was Linux. So I discovered Linux, spent like five minutes realizing, okay, maybe I can do this. After two weeks, I'm like, okay, fine, I can. I'm committing to it. I'm going to burn the boats off with the Mac computers, committing to Linux. And then, of course, just getting completely sucked in. Oh, my God, I can do everything on this thing. But didn't you say you discovered like a subreddit or something like that? Yes.

40:31That really was like the turning point in this, correct? Yes. One of the reasons I've loved Apple as a company and their stewardship of the industry was their design, was their taste. They make beautiful products, mostly. They certainly make still beautiful hardware. And for a very long time, they were also the leading bar for software quality. Just sweating the details and making sure everything was aesthetically pleasing, which to me is an incredible part of why I like computers in the first place. I like all the little subtlety. I like just the right font, just the right border curvature. I like things to look nice and behave nice.

41:13And Apple, for the longest time, was the undisputed leader in that, especially when you compared it to Windows, which was the epitome of having no taste, of having no sensibilities about how things should look, and having no cohesive vision for what a computer should be. It was all these disjointed parts. And then I find Linux and I look, man, this is like even a Timo version of Windows. It looks like a cheap copy of something Redmond would have made. And that was already crap. Why would I want that? Well, on Reddit, there's this amazing subreddit called r-unix porn. And it's basically a showcase for these nerds who spend, in many cases, hundreds of hours personalizing their Linux distribution and setup.

42:03To the point that it doesn't look like anything else you've ever seen. To the point where it looks like it was made for a movie. Like a hacker movie where you see all the Matrix characters scrolling down the screen. It just looks cool. Now, sometimes it just looks cool and it doesn't actually work that great. But when I discovered that, I went, if these nerds individually able to make Linux look this cool, if I just take it back 20%, not as over the top as what they're trying to do, and bake it all into Linux, we can make something that's competitive with the Mac. Hold on, you said something interesting.

42:39I'm going to interrupt you real quick. That they were like kids. You told me this story about some like 22-year-old Polish kid that like smoked Apple. Yes. So this is one of the other things I love about this ecosystem. Everyone goes by a handle. It's like the early days of when I got into computers. The reason I actually got into computers was for video games and I didn't have enough money to buy the video games. So I got into pirated video games, which meant I got into the where's scene. It's with a Z at the end. Everyone had a handle because it was kind of like illegal. You were trading copyrighted goods.

43:10My handle, by the way, Webster. I don't know why that was or whatever. It was Webster. And everyone else in that scene had a handle. And I hadn't really thought about handles in a long time. The demo scene at the time had the same thing. But then I discovered this Unix porn and this subculture of people who work on this and they all had handles. And this one Polish kid who goes by the handle of VaxFree had built the tool that three quarters of everyone on this Unix porn subreddit was using to build their rice. That's what it's called, the rice. They rice out the Linux distribution. It's called Hyperland.

43:50And it's just this one, I mean, I call him a kid. He's, I don't know, 22. But when he first made the first version, I think he was 19, 18. one kid out of Poland comes up with this window manager, which in its essence is not a new concept. There have been these tiling window managers on Linux for a long time where you basically don't move windows around with your mouse. They tile. So you open a new window and they reposition and all the windows are already available. But they all look, again, like they were made by people who did the Timo version of Windows. Like just not aesthetically pleasing, maybe highly functional, maybe fast and maybe productive for certain people, but I need the aesthetics to live.

44:30I need it to be beautiful. And Apple never did this the way you find it. And Apple never did this. Apple has been stuck, as has Windows largely, although they're sort of trying to ape some of these things, in the original Xerox pattern. Like, here are Windows, you have a mouse, you drag a window around, and a lot of the interaction with the operating system is the mouse. And the mouse is an incredible tool for learnability. Anyone who has just a rough conception of like how I move this thing around, they can use almost any app because everything is sort of explained. But if you're interested in productivity, it's a terrible tool.

45:03This is why all the cracked programmers, they're all about their keyboards, right? And they're all about hotkeys and shortkeys. And they require a lot of investment to learn. But if you're learning, you can fly. It's just like putting on a goddamn wingsuit and you go 200 miles an hour and there's cliffs all around and it's not explained how everything works. You have to learn, you have to internalize it. And I was like, I've been using a computer for, I don't know, 40 years. I've always used a keyboard, yes, but I've not been driving my computer through the keyboard. I've always had that little mouse.

45:36And here is an operating system, Linux plus Hyperland, where I can drive it all through the keyboard. And it can A, be super fast into use because everything's just a keyboard command. It can look amazing. and the core engine to make that work, the tiling window manager, Hyperland, is made by this crack kit from Poland that goes by a handle and has an anime avatar. I love it. I mean, it's just such a throwback to what computers used to be when they were more about fun and this artsy expression. Like the funny thing about the original wear scene, the pirated software scene, was it was kind of overlapping with the demo scene.

46:19And the demo scene was all about how do we use these wildly underpowered by today's standards computers to make incredible computer graphics. So they put out these demos. And these two scenes would meet. The demo scene would produce the intros to the cracked game. So you'd see this really cool video before the game loaded up that basically, this game was cracked by Evil Head 24. Right? And I just, wow, it looks so cool. This is a resurgence of that. that computers can be fun in that way, and they can be a bit whimsy, and they can be made by pseudo-anonymous individuals. And the combined sum of it can be better than the top five most valuable company in the world, a trillion-dollar organization that has 40 years of history caring about this and unlimited resources, unlimited people, and still the crack kid from Poland can beat him.

47:16Absolutely amazing. So then once all those pieces started falling together, I was not just sold. I was, I flipped. As you said, I used to have a perception of Linux that this is a server tool. I use it, all the servers we've ever run, Linux. But running it on the desktop, that sounds like something for people who like to update the firmware on their printer. Not fucking me, man. I don't want to update the firmware on my printer. I just want the things to work. And I realized, you know what? that's not all Linux could be. Linux just has all the Lego pieces. Someone could put those pieces together for you and you could get the Millennium Falcon or the Taj Mahal or something incredible that looks great and is ready to play with.

48:01And I went like, well, okay, if no one else is gonna do that, I will. I'll take half of Unix porn, I'll take Baxri's cracked Hyperland and I'll slap it on top of Arch Linux and we're gonna make Omachi. and that's what I've spent like a shocking number of hours over the last year. Thousands. Thousands. Yes, that's probably fair at this point that it became an obsession and it became an obsession in the same way we were talking about where it's not because I had a grand roadmap. Oh, I need to do this. I just picked up the thing and went, here's 75 things that are wrong. This thing is slightly misaligned.

48:41This is not right. The colors are not correct. It's not all integrated. The themes aren't coherent and so on. And then I fixed five of them, put it back down. It's like, oh, that's better. It's more pleasurable to you. Picked it up again. Fixed another five things. Picked it up, picked it up, picked it up. Until I finally had something that felt like, this is good. And not only is it good, it's goddamn better than whatever else is available commercially, certain than what Apple has to do. And again, better is this, it's better for me. But what I always realized is that every single piece of product that I've built started there.

49:17I got to make something that's better for me. And if I can get beyond that point, that I would rather use this than that. I know I'm not alone. I know I'm not that special. I know that there's going to be tens of thousands, maybe hundreds of thousands, potentially even millions of other programmers or just computer users who like computers, who can be like me. who's going to appreciate the same aesthetics, who's going to appreciate having an operating system they actually own, that can migrate, especially now with agents that can make bespoke on their own, but they just don't want to put in 2 ,000 hours up front to get access to that kingdom.

49:54So if I give it all to them in a prepackaged, omakase, ready-to-use, chef choice edition, then they can get invited to it. And I did exactly the same thing with Ruby back in the day. There's great parallels between these things. When I first picked up Ruby back in the early 2000s, it was an obscure programming language out of Japan that only a handful of people in the West were using. And it didn't have a killer app. It looked really good, and people were using it for small things here and there. And then I went, this is incredible. This guy has the right vision for what a programming language should be.

50:28If I take it and apply it to the thing I want to build, web applications, I want to build Basecamp, and then I built the tooling around it, I can get other people to realize the magic of what's here. And it's exactly the same thing with Amachi. Linux is incredible. It's one of the seven wonders of the software world. It is the largest open source code base in the world. It's like 40 million lines of code. Like literally millions of man hours have been poured into that collective process in a way that was not always obvious it was going to work. We talked about Microsoft a bit. The famous quote from Steve Ballmer back in the early 2000 was that Linux was a cancer.

51:07that was going to eat everything. It was going to be very disruptive and very negative for the software industry. And it turned out exactly the opposite. Today, Linux runs on billions of devices. Basically, anything embedded is Linux. Anything server is Linux. The one final thing it hasn't cracked is the desktop. And I just go, why? Why shouldn't it? We can just make it so good that at least technically minded people will realize that this is just a better option. And they'll pick it. Of course, they'll pick it. Because if I show them something that's better, of course you'll realize. I mean, that's a pretty naive instinct to it, but that's my driving principle.

51:43If I make something better, people are going to realize it's better and they're going to use it. Okay. But this is actually really important because last night I kept going back. You know, basically I have these conversations selfishly. I just like there's shit in this person's head that is valuable to me. I can pick out, you might give me 50 ideas. I might grab two and use them in my life. And my life is a better, as a result of that. And so I'm intensely interested in that. So last night I kept asking a question. I wasn't getting the right answer. I was just trying to figure out what actually drives you, right?

52:08You mentioned earlier, you know, I thought this was absolutely ridiculous where people forever would describe you and Jason and the business you build as like a lifestyle business. It's like, I don't know. The guy started out making$15 an hour. Now he's a$15 million car. What kind of lifestyle is that to you? You live in a one bedroom apartment and have to kiss this VC's ass so that you can make payroll next month. Like, which lifestyle do you want? I don't know what you're talking about here. I thought that critique was, you know, pretty weak if you actually analyze what's going on. But what I realized, like, it's not money.

52:38Obviously, you grew up without money. I grew up without money. Once you get money, you realize, yeah, it's valuable, but it's like the return on it diminishes really, really rapidly, right? So you're definitely not driven by money. I was like, okay, well, this guy's just, like, introverted and just loves making things. You're definitely driven by making things. Yes. But then you have this other element that maybe, in my opinion, tell me if I'm wrong, you have this, like, fierce desire are almost in need for control and independence and freedom, right? And so we started talking about Amachi, am I saying correctly, last night.

53:11And then you realize to the point where you're like, yeah, if anything happened with Basecamp, like I wouldn't start another business because I wouldn't want customers. So like me and Rob, my partner Rob, he was over here this morning. We were laughing about what you said last night. So I want to get to that where you're just like, yeah, it's like you have like, fuck you money and you have financial independence. But then there's another thing that you transcend. You don't even have any customers. And your whole thing is just like the love of making something for yourself. Yes. And then putting it out to the world, making something great.

53:38And the reason I bring this up is because, explain why you named it omachi. So omachi is three words to put together. It's omakase, which is chef's choice in Japanese. And it's usually applied to restaurants. Like you go to a sushi restaurant and they just start serving you great food because they know better. They've been making this goddamn sushi for a very long time, and the chef who gets to be the one who picks it has probably been making it for decades. What do you know? You don't know shit. You don't know what's good. You don't know what order should come in. You should just sit down and hand over your sovereignty for this meal to this person who's more competent than you, and then open your trap and eat it.

54:24And it'll be delicious. Like, this is actually the best way to experience all sorts of things. That there are people in this world who have spent more time than you getting really good at figuring out what quality is, and they hand you that quality so you can just enjoy it. What I found is a lot of people have a very difficult time articulating what they want, but they can appreciate quality instantly. They can just know, oh, this is good, yummy, this is some great sushi, right? They don't know what to ask for, how to season it or whatever. Funny anecdotes. One of the things that always tripped me up when I came to the U.S.

55:02originally that cracked Jason up is the notion of the construction kit burger. So my mind was blown when I came to the U.S. from Denmark and I would order a burger and I would just be handed the parts. Like, here's the bun. Here's some lettuce. Here's some pickles. Here's the meat. And I'm like, what is this, a construction kit? Am I supposed to put it together myself? You can't even assemble my food for me. And I'm like, there's something deeply American about this. Like, no, I know best. No, you don't know shit. You are ignorant as fuck. Let a chef prepare the food for you. God damn it. Why would you want to get your hands dirty like this?

55:39So I had that reaction right from the get-go that I love delegating my limited sovereignty when I don't know something or I don't know more than the other person about a given thing, right? I want the best people in the world to prepare the services and products and food that I then get to enjoy. Because it's like leveling up cheating almost. And I thought, you know what? I really like that principle. And I will also apply it in reverse on my own accord that if I know something about programming, about using Ruby or about using Linux, I can pour all of that competency into a package that you just have to sit and enjoy.

56:20So that's what I'm a classic. is. Then the other part is Arch. We talked about that. That's the Linux distribution run by a gang of volunteers for the past 20 plus years. It doesn't have an organization. It doesn't have a lot of fundraising. It doesn't have a commercial structure around. It's just a bunch of nerds who share the burden of distributing Linux. Amazing. And then the last bit is Hyperland. So that's Bellzomachi, and it turns into being this sort of constellation where I take, there's a trillion tools in Linux land. There's a million ways you can configure your system. You can have all these themes and apply them.

56:59I will pick them for you. I will not give you a construction kit burger. I will give you an omakase sushi meal, and you may do substitutions. You may realize, I don't like that. Fine, fine, fine. But you're going to start from a base that works. You're going to install this system, by the way, in four minutes. This was one of the things I got obsessed with really early on. I would get a new Mac computer. I actually just got a new one for some testing I needed to do. And I would set it up. And I think the last one took 42 minutes to set up because it needed a software update and needed some things.

57:31I'm like, this is unreasonable. These computers are about a trillion times faster than what put us on the fucking moon. And you're telling me it takes 42 minutes for a new computer to be ready to use? This is preposterous. So I just got obsessed with this. How quickly can we install a system that's fully ready to go and use? And we got it down to about two minutes. You insert that USB key with a matchy on it. You fill out, well, this is my username and my password. And then two minutes later, you're ready to rock. All of it is there, right? And I just thought, so many of these things we just take for granted.

58:03Oh, yeah, getting a new computer. There's hours of work setting it up and getting it ready for real work. Like, no, it's not. Someone could just do that for you. And collectively, we could save trillions of man hours every year. This is part of why I love actually sharing these things, because I get this indignation about world productivity. Like when we're subjecting humans everywhere, millions of them, maybe even billions of them to shitty tools, shitty setup processes, we're robbing the world of progress. You could have taken that trillion hours that people have spent 42 minutes setting up a new computer and apply them towards productive outcomes.

58:42And I don't know, we'd have flying cars by now. And I just feel like, you know what, if I can assist in that process somewhat and take some of that drudgery out of the world gears, I've done my little part. I've added a little bit of oil so that everything glides a little more seamlessly. and especially if we do it in a way that's aesthetically pleasing, I've actually contributed to the light and lightness in the world. We should all be surrounded by beautiful things, including beautiful computers that just work out of the box and are ready to use. So that became sort of that dual mission. A, I wanted the very best computer for me.

59:19Suddenly I had found all these building blocks where everything I was ever annoyed about with how the computer worked, I realized I could change it. All the code was there. Everything could be rewritten and reconfigured so I couldn't get exactly what I wanted. And that just became an obsession. I have this affliction where when I see something that's not quite right and I have the power to fix it, nothing else matters until it's perfect. I will polish that thing until every single quarter millimeter is perfectly round. And just, I cannot do anything else. And in fact, it's not always great, I will say, as a person who has other obligations in life than rising Linux.

59:59There were moments of that journey where I essentially just went on a hermit trip and just went, I will learn everything there is about this. It's just that I can make the perfect computer. And it becomes a bit of an obsession. And thankfully it doesn't last because at some point, like the ball literally is a perfect sphere and it's beautiful and it has just the right texture and light and color. And then I go, okay, now I've made this beautiful thing and I enjoy it more than anything else. This is the best computer I've ever used in my life. So if it's so good for me, it should be good for other people.

1:00:29I should share it. And so I did with Amachi. And what's funny was I actually made a version before Amachi called Omacube, where I took that Ubuntu thing we talked about, like that thing everyone who starts on Linux uses, and I tweaked it a little bit and made it look more a little bit like a Windows or a Mac. It felt familiar. And the misconception that I had, and I think a lot of people in the Linux world have had, If we just make it as close to Windows or Mac as possible, then they'll come. But no, they won't. Why would you want, again, the Timo version of Mac or of Windows? I don't need a cheaper version.

1:01:08Then you have to appeal to these high-minded ideas. Well, it's free software as in speech, not as in beer. Yeah, okay, there's 0.001 % of the population who gives a fuck about that. Most people just want the best thing. And. Your job is to give them that if you want to win them over. So I just went like, no, let's make something that's radically different. Like this computer will not work like anything you've used before. In fact, you won't even be able to operate it right out of the box because it's all keyboard driven. And you'll have your little mouse and you're like, there's nothing on the screen.

1:01:38Where's the icons to click on? And I will go like, no, here, let me show you a cheat sheet. You've got to learn these 15 key bindings. Before you can do anything on this computer, here's your syllabus. Sit down and study, boy. And by the time you have learned the first lesson, you are ready to use this computer. And we've already forked the timeline, right? I've already said, like, every other computer in the world is very focused on, like, oh, let's make it as approachable and as learnable as problem. And I go, like, no, fuck that. That option is covered. It's great, but let's get something else.

1:02:12Let's build something else. And then it took off. And I found that that's very often true about products. You enter some domain and you think like, oh, I can just, if I, who's the best? Can I just copy them and then I'll do a slight tweak? That's not going to work. That's not going to unseat anything, right? All the best ideas that actually turn out to have an impact on something, they sound stupid at first. They're not intuitive because that's where all the value has been locked up. It's been locked up in this misconception about what people actually want because most people don't know what they want.

1:02:44You actually have to give it to them in a form that's beautiful and approachable and quirky and a little bit weird and maybe a little bit off-putting at first. I find that in all sorts of different domains. Some of my favorite car designs, when it first premiered, the McLaren 720S, it has these sunken in headlights that when I first saw it, I thought, this is the ugliest car I've ever seen at this level. Now it's one of my favorite car designs at all. So I think you've got to be able to work in that space where you have a high tolerance for people telling you what you're building is stupid. What you're building is ugly.

1:03:19What you're building is never going to work in the real world. When I get that feedback, I know I'm onto something. Now, you can't just get that feedback. There's also got to be a few people who like what you're doing. But Kathy Sierra, who is one of my all-time greatest writers on what animates users and good products and so forth. I'm going to interrupt you because this is the power of ideas. This is why I'm addicted to podcasting. Because I didn't know who the hell Kathy Sierra was until I learned about her through your and Jason's writing. Then I go consume her. And you're like, the best way to market is to out-teach your competition.

1:03:51Bam. That's all I do. Bam. That's literally what I do. Bam. That fucking idea helped build the first podcast, which then helped in turn build this podcast. It was super valuable to me. It built all of 37 Singles. If you could buy that idea in my life, literally, it's worth tens of millions of dollars to me. Yes. And it's all down to Kathy Sierra and her writings on the internet in the mid-2000s. So outspent versus outteach, just to linger at that, because I think it applies to all of this. As you said, it applies to podcasting. It applied to Basecamp. It applies to every fucking thing. It applies to everything.

1:04:23Because when we launched Basecamp, we didn't have any money. We had a tiny team and Microsoft had all the money and all the whatever. They could swallow us up. What we then had to fight back with was not more banner ads, right? We're not going to outspend them on a marketing campaign. That was never going to happen. But we could outteach them. We could have better insights and we could share them. And people could resonate with that and then reciprocate by buying our products. At least some percentage of them, even if it's a small percentage. That has been our operating strategy for literally two decades.

1:04:52And it's exactly the same thing. I've got to interrupt you again. It's also better for the world. Yes. Because you guys are putting so much work. You're capturing a tiny percent of the value that you've created. You put out so much more value. Now, even a tiny percentage of a huge number gives you a$15 million car, which you won't have to keep hitting on, right? But like, the world is big. The internet is very big. But I told Jason this, who now I've become friends with and just like love spending time with. We just had lunch together and I went to go look at the construction project he's doing right now.

1:05:20And I was like, dude, I was by myself. Like, I didn't have any employees for 10 years. You make project management software. My project's in my fucking head. All I could do is buy your books, which I did. But I was like, I'm so glad. But I just, as soon as you did hay, I was like, oh, now I can give you money. You're hitting on something that's really important that why what Kathy says is valuable. And this is something that Charlie Munger would talk about, who's my hero. It's just like, if I can only learn from one person to be Charlie Munger. And he's like, there's a deep desire in human nature that is ever present and never changing.

1:05:51And it's a desire to reciprocate. I feel you have done something for me by writing those books, by going on those podcasts, by talking at a start of school. and as soon as you give me an opening yes to reciprocate i will do so i'm really tight with the spotify team right yes daniel gustav all the top people there alex everybody else roman and you know we i fucking fly to europe i've been there four times in like 14 months just to talk podcasting because i'm obsessed with this and the crazy thing is these common conversations there's like you know what a weird thing that we see in podcasting is they have like private feeds and you can do like, you know, this content's free.

1:06:28If you want to buy another podcast, it's X amount of dollars per month. Like most people never even listen to the content. They're just looking for an excuse because your podcast gave them so much value. Yes, yes. That will always work. It worked today. It worked a hundred years ago and it will work a hundred years from now. I choose to believe that. I don't actually know if it's true, but I think it is how we build a business up until this point. I will say that I'm starting to see some cracks in that reciprocal exchange. Tell me about that. It's not because the human part of the link is broken.

1:07:02It's because the algorithms have changed things. So for Jason and I, for the longest time, what we did was exactly that. We're just going to out-teach. We're going to put out so many observations, lessons, experiences, software, open source, whatever, into the world. And we're just going to hope that a small percentage of that trickles back. And it used to work, especially on Twitter, where you'd build up a following. And if someone followed you, they'd see all the stuff you shared. This is Gary Vee's jab, jab, left hook. Yeah. And you do all the jabbing. You do all the, here's free stuff. Here's free insights.

1:07:37Here's free observations. Here's free software. And in occasion, you'd go like, and now we have a new version of Basecamp. Check it out, right? What's broken now on the social platforms is that my followers don't see anything I post unless it goes medium viral because everyone is now in the algorithmic feed. So I follow someone, it's just like this little drop in the signal and it kind of breaks that reciprocal exchange, at least on those social platforms. This is one of the reasons why I love podcasting. There you have subscribers who actually get things straight into their feed. It's not algorithmic.

1:08:13And I love newsletters. I have newsletters as well and a bunch of my long form writing goes into that because then I'm assured that at least it shows up in the inbox. But both of those outlets are minority outlets compared to the behemoth that is social media. And I've seen some of it break down a little bit. I don't know what that means. I'm going to continue regardless of whether it works as well as it did in the past, it does in the future. And I'm still going to bet on the fact that someone who does get exposed to the ideas we have or the free software that we give away is going to feel some connection to what we have.

1:08:44And then if there is an opportunity, maybe not even for themselves, but they spotted in others, like, as you said, hey, I'm one person. I don't need Basecamp. But you hear someone who's complaining about setting up projects on complicated click-up or not working email, and you go like, you should check out Basecamp. We're starting to use it for the podcast. Oh, you are? Because we're vastly increasing the amount of episodes we're doing and the amount of people I have to talk, like stuffing the top of my funnel for interesting people I talk to. and me and Rob, who we had dinner with last night, we go back and forth and we're going over text message.

1:09:16And then the other day I was like, bro, what happened? Like, I think we're like losing the thing here. He's like, we should use Basecamp. You're the classical example. This is the point though. You guys have provided so much value to our lives. We're not like, oh, maybe we use Basecamp or we're gonna go look around. It's like, I don't even give shit. These are my guys. I'm just gonna use their thing. Deal is how the best founders turn the world into their talent pool. I've been studying how history's greatest founders operate for a decade. And one thing they all have in common is they understand that recruiting and hiring the very best talent is your most important priority.

1:09:46A players recognize other A players, which is why top companies like Ramp, Shopify, Eleven Labs, Uber, and DoorDash all use Deal. Many of the top founders I know have personally invested in Deal after using their product. And what they discovered is that Deal is the best company in the world at building infrastructure for global hiring. Deal will help your business hire, pay, and manage any worker anywhere in the world so you can retain the best talent anywhere and spend the rest of your time focusing on what you do best, delivering value to your customers. The founder of Eleven Labs has a great description of the value Deal can give your company.

1:10:18He said, we built Eleven Labs to break down language and communication barriers. With Deal enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories, and ideas to every corner of the world. Deal is trusted by over 40 ,000 businesses. Learn how they can help your business today by going to deal.com forward slash Senra. That is deal.com forward slash Senra. I want to go back to a fundamental understanding of you, though, because I love this transcendence of like you deeply desire independence and freedom and control. And so that's why you're anti-investors and you don't have a board of directors.

1:10:58It's just you and Jason making all the decisions, right? But then you introduce this other level of transcendence last night. It's like, oh, no investors. It's one level of freedom. How about no customers? is even higher. So your point is like, I'm going to put 2 ,000, 4 ,000 hours of my time into this. I'm going to craft it. I'm going to, you know, make sure everything's perfect. And I'm going to give it to you. But then you said something last night where you're just like, well, what if they have like feedback for you? Like, what was your response to that? I love feedback. If it's well grounded in solid observations that can give me new insights.

1:11:30But a lot of feedback you get on the internet does not fall into that category. It's just like, you looked at this for five minutes. I spent 4 ,000 hours and you have some knee jerk reaction and you want to tell me how to do it. You want to tell me what I should do and what I shouldn't do. Well, you can go fuck yourself. Right. And I actually get that indignation. I'm just standing up. I've been working on it, but just this sense of like, this is not a reciprocal exchange. I gave you something of tremendous value. Now you can choose to ignore it or say it's not right for you. That's completely fair, right?

1:12:04Like that's a good exchange. Like, okay, thanks for the gift, but no thanks. But if you take my gift of 4 ,000 hours and you go like, well, I'll give you five minutes and then I'll just dump shit on you. What? You didn't pay me anything. Like that's a privilege you have to pay for. If you want to tell me ill-considered feedback on anything I make, you got to pay me. And you can do that with Basecamp. And you can tell me. And then you're a customer. And then you're a customer. And then I know we have a different relationship now. I will actually say thank you, even though I think maybe knee-jerk reaction too on my part, that this is not the most well-considered piece of advice.

1:12:42I will take it in because we've had an exchange and there's a reciprocal nature there. But I actually appreciate more to transcend above that. And I don't have that obligation with you. I am sharing something with you. And I don't owe you anything. I mean, you technically don't owe me anything either if you don't accept the gift, but if you take the gift, you actually do owe me something. You do owe me just a modicum of respect to look at this more than five minutes before you just dump your shitty ideas onto me, or even worse, it's not so much about the ideas. It's when people try to tell me what to do.

1:13:17And this is the - Go straight back. This is what I hit on last night. Yes, that is it. That's the nerve, right? Yes. The nerve is, I have worked very hard in not just my life, but in business to have damn near close to total independence. So no one can tell me what to do. No one can tell me no. No one can tell me what to work on. No one can tell me what to do. And Jason and I have structured our entire business around that concept of pure independence. We don't have any investors who get to tell us what to do. We don't have a board to tell us what to do. We do have customers. And they get some claim, some of the time to sell at least in aggregate what to do.

1:14:00Because if no one wants to buy the things that we're putting out there, like the business is not going to continue. So they get some good influence there. I find that tolerable. That's a tolerable exchange. I put a product into the world, you pay me some money, I will listen to you. Fair. But I appreciate the transcendence to the next level. I don't even have a commercial relationship with you anymore. We can still have a great relationship. One of the reasons I enjoy open source software so much is because I get to collaborate with like-minded people about making things better, right? So if I give you the gift of 4 ,000 hours on Amachi and you then tweak a few things and you sell in a pull request back on GitHub and say like, here's something.

1:14:40I go like, awesome. Now we're in business. Now we have a little club. Let's make this amazing together. And that feels so pure. And not because I'm against capitalism at all. I'm a huge fan of capitalism. But I've also realized at some point when I retire, it will actually be a retirement from capitalism. It'll be a retirement from customers and the economic exchange. And 37 Signals is quite likely my last business. I've made the money I needed to make to live the life. Three times. Yes, that I would enjoy to live for the rest of my time, right? So at some point, either the business ends just because circumstances end or Jason or I just get tired of it.

1:15:24And then I will transcend to the next stage of not having any customers at all. And then continue to make things and continue to share things, but without any claim other people have on my time or my attention or where I want to go with it. Okay, so this leads us to another thing I want to talk to you about, which is that capitalism actually works, right? And what I like about you is like people in the tech industry act like they don't like money, right? And my point is like— They pretend act like they don't like money. Exactly. They all do. Yeah, exactly. And so my point is just like there is—how you make money actually matters.

1:16:00Yes. But to me, it's like the best definition of business I've ever heard actually came from Richard Branson. He says a business is just an idea that makes somebody else a slight better. That is why, and there's infinite ways to make somebody else's life better. So therefore there's always going to be infinite opportunities in the future. Yes. If you make a product that other people love and it makes somebody else's life better, that they decide to give you their hard-earned money in exchange for, like that is the system working. What I like about you is like, again, I think you guys had this counter narrative.

1:16:24We're just like, you know, we prized independence. We want to do things for decades. You know, we want to build the products for ourselves first and then just find the other like many people. But you're not shy about like, yeah, like here's my Pagani and here's this floating desk in Malibu that now goes viral all the time. And so we talked about this a little bit last night and you said a straight line. He goes, yeah, that's an example that capitalism works. It's not just like you're look at the shit that I have. That's not what you're doing. I actually think there's some obligation of people who've been able to make things work to show that it did work.

1:16:58That it is a carrot that you put out to others. I think it's completely legitimate to be motivated in part by wanting to have nice things, that you have a dream car that you aspire to. I certainly had that as a kid. I thought like, oh, look at all these cool cars. Like I didn't have any concept that I'd ever have an opportunity to reach that and afford it. But it was part of a driver. I think that's a good thing part of capitalism. We want to better our lot. And some of that is material. And there's no shame in that whatsoever. And not only that, I think there's a second order of capitalism. You have an obligation.

1:17:31If you sell a product or service and you make a lot of money on it, put that money back into the system. Send some of that money to the craftsmen of Italy to create you a beautiful Ferrari, right? Like there's someone who has to stitch that seat such that it's just right. There are engineers who are putting together that car such that it exists in the world. We would not have Ferraris to pine for if no one bought them. And who can buy them? The people who've been successful in other parts of the business. So therefore, it is your moral obligation to buy a Ferrari if you do really well. Or Lamborghini or Pagani or whatever floats your boat.

1:18:09But you should be sending this forward. This is how we get to have nice things. Not everything can just be boiled down to needs. Man needs more than just bread to live. We need beautiful Ferraris, even if we don't own them. This is one of the things I love so much about cars, is that they're actually a shared collective enjoyment. The number of times I've driven in a nice car next to especially kids, because kids have not yet internalized this filter that they're supposed to be cynical about wealth and nice things. They go like, whoa! And then you rev the damn thing and they go, yeah! Right? There's just an instinctual human attraction to beautiful things that make noise.

1:18:48Right? It's just joy. And why would you be ashamed of that? Why would you be reserved about that? Unless you feel like you're guilty about how you made your money. I mean, there are some people in the world who probably should be a little guilty about how they made their money. And maybe they don't buy the Ferraris. But for anyone else who's made legitimately good services to products and had success with them, they should be able to celebrate that. Now, is there a line where you turn over to a bore of a braggart that's nothing about this, I bought this, I bought that? Yes, there is. But you can settle that line.

1:19:20We don't have to be either or. You can both be passionate about the things that you're creating and validate why you've made your money in a reasonable way because you made something good that other people want to pay for. And then here are the fruits of that labor. And this is capitalism. And it's beautiful. It is absolutely beautiful. It's worth celebrating. It's worth exalting. It's worth making an example for. And in fact, in my personal case, I mean, a lot of this also could just be post-rationalization because I like nice things and I don't want to feel guilty about it. But let's just put that aside for a second and focus on the fact that we built 37 Signals in a kind of weird way for a software company.

1:20:00Most of our peers, they raised a bunch of money from VCs and they did all sorts of other things. We built a software company out of Chicago at a time where there was absolutely nothing fucking going on in Chicago inside of tech. and we build it on 40 hours a week. We build it on having a life next to work. We build it on going for the long term. We build it on taking profits out of the business rather than just chasing higher valuations. And therefore that is a counter narrative to how you can also build a business. And I want to validate that that is a reasonable thing to pick even if you also want a nice Ferrari.

1:20:35These things are not in our position. You mentioned the lifestyle business thing, right? I always love that because people are like, oh yeah, you're just running a lifestyle business. Yeah, I have a business and a lifestyle. What the fuck do you have? Right, you just have a business? Or why would you not want a lifestyle? And my lifestyle happens to include a fucking yellow Lamborghini. So it's not like I'm giving anything up in terms of the material fruits of capitalism, right? Like these are actually compatible notions. And therefore, if someone is looking at which way should I go? I'm starting a new business.

1:21:06Should I raise a bunch of money? Fine, that's one path. And if you need to invest a bunch of capital in, I don't know, factories or GPUs or whatever, you should probably raise a bunch of money. I don't have anything fundamentally against that. I have something against this notion that this is the only way to go. And I also do have a little bit against it when it comes to software, right? Like I always felt it was just a waste. Why are you raising all this money just to have a bunch of programmers to sit around, right? Like just build it yourself. You don't need as many as you think. That was our model.

1:21:32Tiny team, building great software, having good success, not taking any money. than producing profits. I know this is a bit of a foreign term in much of Silicon Valley. That's the money you get to keep when you've taken your revenues and minus your expenses, right? And when you get to keep that profit, you actually become interested in increasing it. And that increases your efficiency. And I think actually, this is part of my aesthetic appreciation of capitalism. And this is why I care about cost so much. Because that appreciation is what makes the entire system more efficient. If I'm hiring three times as many people as I actually need, I'm robbing the world of those people who could have gone to do other productive things rather than spin their wheels at my little business when I could have gone away with a third, right?

1:22:17And then also, the more money I spend on expenses, the less I get to keep for your yellow Lamborghinis. So it's really quite simple. You have to think of the Italian crash. When you're going through your expenses and using Ramp, because they're my biggest supporter and the best expense venture software, Like, if you don't do this, if you're not running your business on a ramp, think of the poor Italian craftsman. So this is something that history-based entrepreneurs repeat over and over again. And, in fact, we were talking last night. I'm going to pull up the group chat that we're in with Jason because I dropped it in there while we were talking last night.

1:22:48Like, you kept hounding on the fact that you just get off on, like, clipping expenses and, like, finding it. And I think it's the same kind of refinement of your product design. And I showed you this quote. You're like, oh, shit, I didn't hear this. It's great. And so I'm going to read this. It used to be in every single ramp ad. It says, Carnegie, Andrew Carnegie, Carnegie would repeat his mantra time and again. He says, profits and prices are cyclical, subject to any number of transient forces on the marketplace. Costs, however, could be strictly controlled, and any savings achieved in the cost of goods were permanent.

1:23:16Yes. He said that 150, almost 200 years ago. It's remarkable how that goes directly to my kind of thinking on, because I know how hard it is actually to increase revenue. Like if you already have a going business and you want to grow massively, it's very difficult. It's very difficult to convince customers to part with their money. I try very hard to do so. As a business, try very hard to do it. Everyone tries to do that, right? And it's outside of your control to a large degree. What I can control is my inputs. I can put out the best damn software product I know how. I can talk about it. I can out-share the competition or out-teach the competition and therefore create this reciprocal relationship with potential customers.

1:23:53But ultimately, I don't get to choose whether they put in their credit card or not. They do. I do get to choose how much money we spend on servers. I do get to choose whether we squander that revenue on needless cloud services rather than just owning our own hardware, right? These are things within my control. And I love things that are within my control because I have this direct input on it. And I can immediately see the result of me taking an action. If I cut off a recurring, I mean, it's funny because at this point, I really shouldn't have to worry about, I don't know, a$2 ,000 a month recurring expense on something.

1:24:30But, oh my God, the satisfaction I get from striking that line. Replacing it either with something that's free or just slightly lower cost is a key part of the mechanics of the business I just really like. Because I also just have this aesthetic appreciation of an efficient business. It's like an efficient engine or an efficient computer that's not wasting cycles on things that doesn't propel it forward. Expenses are exactly that. It's taking out these inefficiencies. And very often what I find is when you take out expenses that shouldn't be there, it's not just about the extra money you get to keep.

1:25:05The whole thing gels better. When you have a smaller team with better people with higher competence, it's just more fun to work with a tight crew. I don't know many entrepreneurs who don't look back upon the early days with longing eyes, right? Like just this lost love. Remember when we were just 10 around the table. Now, you get other benefits. And I'm sure, I mean, Toby commands an army of 7 ,000 and can do very different things now and impact the world in very different things. But in terms of just that tight loop of working on something with a small team, it's incredible, right? And a lot of that comes from how do we make that small team, that small company, as efficient as possible?

1:25:47Because then we can reach further. Then we have more resources to do things and so forth. So I just, I love expense reports. I didn't know this about myself, by the way. This is some of these amazing things you discover as you just do it, right? As I told you last night, if you tell my 18-year-old self that you're going to love going through expense reports. You're going to love finding little lines that you can put a marker around and then go hout until it disappears. years, I would have said, that sounds like an accountant. That's not me. But it turns out it is. And I love it. All right. So you mentioned the yellow Lambo a couple of times.

1:26:19You bought the yellow Lambo after Bezos bought into a chunk. Yes. In the very early days when you basically, by your own admission, didn't have much of a business. Yes. So he gave you a bunch of money, whatever the millions of dollars. You're like, hey, I got a couple million. I got to give at least 200 grand to these Italian craftsmen. Yes. Right. So you buy the yellow Lambo. But more interesting than the yellow Lambo to me is what you said, where you said that what Bezos did, what Jeff Bezos did for you and Jason was gave you the confidence to go for it. Can you explain that? So in the early days of 37 Seals Head, we'd launched Basecamp.

1:26:52It was taking off quite well. And we got a lot of interest and outreach from VCs. We counted 40 some at the time. And this was 2005-ish. I still had very vivid memory of the dot-com boom and bust. I had seen what happened to some of these VC-funded companies and the internal mechanics of that, and I didn't like any of it. And I also had all these ideas about efficient businesses and what it takes to work. So we didn't actually want VCs. But going back to this point about trusting yourself, I didn't fully trust myself not to get tempted by a$20 million check, a$50 million check, whatever the number was at a time where my bank account said, I don't know,$8 ,000.

1:27:35Funny thing. my bank account did say highly, slightly higher than that. When I came to the US, I think I had like 50 grand that we'd worked up as we started Basecamp. And the first thing I did as soon as I landed was Jason took me to an Audi dealership and I bought an Audi S4, my first car, cash. And then there was basically all the money I had in my bank account. So I just blew it all on the car and I thought like, we're going to make it back. But this notion that we had something that was taking off, but this is all fleeting. I had great humility that like I'd seen many other businesses, oh, it's popping off and then it's leveling off and then it crashes, right?

1:28:15You can sell promise. That is one thing the VCs will buy any day of the week, right? A promise. There's a trajectory. There's traction. This is going places. It may be small now, but if we keep plotting the lines, it's going to go to the moon. I'm going to get in early. And you can make some money off that. We didn't want those people on board. Jeff showed up around the same time. And we thought it was the same pitch. But it turned out it wasn't, right? Like, he was not interested in the regular VC deals. That wasn't why he was doing it. I'm not actually 100 % sure why he was doing it. I think he just enjoyed getting involved with companies and people that he has an interest in.

1:28:52Anyway, he reaches out, and we basically flippantly tell him no. And then politely, his team reaches out again. Like, no, actually, Jeff would really like to meet. And you're like, okay, fine. I mean, anyone who's actually built something. This is one of my beefs at times with some quarters of the VC community. Like, you're just a money person, which it's actually weird why I consider that to be a derogatory, but I do. Like, if the only thing you do is money, I'm skeptical of you. If you've built things and you've made money, let's talk. But if it's just about the money and the allocation, I don't know.

1:29:25I'd rather talk to some builders. And Jeff is certainly a builder. Absolutely built something in a very, very different way than we had built our things, right? He went, let's just raise all the money in the world, and I don't care if we don't make anything for 20 years. It was polar opposites in a lot of ways of how we built our business. But that was also just interesting. Don't surround yourself with a bunch of people who think just like you, who will say all the same things that you think and will think all the same thoughts that you think. Jeff had very different thoughts, and it was very appealing.

1:29:51So anyway, long story short, we end up giving him a ridiculous term sheet. It was just like flippantly, I mean, almost offensively overvalued. Like there was not a lot here. There was a promise, but we then took that promise. And then we just drew the line to the moon and said, we want to be paid as though we were up here. And this is such a stupid number for the time. He's not going to take it. And then he took it. And it turned out to be an amazing investment for him. I mean, I actually wish I had some of the gumption that Jeff has to see that far into it. Like we've given him his money back many, many, many times over.

1:30:27And he still owns the plot. And every quarter or so, we send him another check. here's your dividends. And we keep on doing that. But that gave us the confidence to say no to everything else. It gave us the reassurance that if this wasn't going to pan out, we at least didn't have to go look for a job like the next Monday. And that was an incredible gift. And Jeff then followed up with that gift, not just with the money, but with the advice. And the advice was usually, we'd meet with Jeff once a year in the early years, and we'd have dinner. And Jason and I would share our trials and tribulations.

1:31:00And Jeff would go like, we'd ask Jeff, like, here's the situation. And Jeff would be like, what do you think? And we'd be like, well, I think we should do that. That's a good idea. You should do that. And it sounds so simple. It almost sounds like it doesn't have any value and it actually had all the value in the world. He could have replied with all, like, you should do this thing and given us a detailed plan. But just that confidence. Here's fucking Jeff Bezos, king of the goddamn world, in that sphere, telling us he believes in us. He thinks that our thoughts are valuable and good. And the funny thing is neither Jason or I, I think, generally has a deficit in self-confidence.

1:31:34But like, it's like there's self-confidence. And then there's Jeff telling you, no, you're right. Oh, my God, rocket boost. Let's strap in. Let's go. And then in some ways, I think he turbocharged sort of just that brashness, that indignation. They're like, hey, here's a different way of building things. And we're not shy about sharing that we build it in a very different way. And a lot of that came from Jeff. And, you know, I'm a tremendous gratitude. And I actually, when I look back upon the things I regret, I regret not being a little bit more grateful for that. Like in the long run, it was a really pivotal moment for not just the business.

1:32:10It could have gone a very different way. We could not have gotten just an offer. And six months later, some VC would have given us a massive check that sounded super impressive. And it would have destroyed the business. And we would have sold our independence. And we would have been fucking miserable pricks. And that didn't happen. And it's thanks to Jeff, so. That's beautiful. I got one more thing I want to talk to you about, which I thought was very interesting. Because again, I think this speaks to your idea of like, you're pretty fluid in your, you have strong opinions, sometimes weakly held.

1:32:39And even though you have been known as like a, you know, basically a VC critic, what you shared with me last night was that in the most difficult time of your business, that Marc Andreessen was the single most helpful person to you. Yes. Can you talk about what was a difficult time and what did Mark do for you? So in 2021, we had a huge blow up at the company. This was peak woke insanity era. This was everyone posting proclamations about political ideas on corporate pages that had nothing to do with each other. And it was an era where there was an activist group inside almost every tech company in the world pushing these companies to do all these, almost extorting them to do all of these things.

1:33:28And we kind of got boiled like a frog a little bit at 37 Singles, Jason and I, where we had probably seen good intentions in places where there weren't any and allowed things to kind of roll. I mean, it happened quite quickly. It wasn't like something that had been building for 20 years. Within, I don't know, from 18, I'd say, was where you started to see the first inklings of there's an activist core minority who suddenly have all these ideas of what the company should and shouldn't do and what's kosher and not and what's offensive and not. And pushing on things. And we're like, ah, we can manage.

1:34:05And then by 21, it became clear that if we didn't do something, this could eat the entire company. the soul of the company, the feel of the company. And we could end up with a business we didn't want to be in. This was our business. And I've had moments during that time where I've been like, you know what, maybe it's time to retire, which is fucking preposterous. I still like what I do. I liked the vast majority of people I worked with. I liked the business. I liked the technology. Why would I want to retire from that? Oh, it's because there's this miserable contingency that's poisoning everything.

1:34:38So we just went, okay, let's just put a hardcore, stop to it. And the stop was Jason and I deciding we're just going to end it tomorrow. No more discussing politics inside of our work channels. We're not going to settle, I don't know, Palestine question inside the same space where we're discussing features in base camp. That is not an appropriate venue for having these things. In fact, incredibly divisive to introduce that kind of political energy into a professional environment. And we did that and we made some other changes, but it was really that thing about politics that ticked people off because there was this core contingency inside of companies very ideologically wedded to the idea that our business was a vehicle for their political aspirations for all these topics.

1:35:27And then there was the larger context of the internet and especially Twitter at the time that was very engaged in all of these topics, right? So it just blew up. We put out a memo saying it's over. And we also knew it was going to be contentious. So after it proved to be contentious, we doubled down on it and said, do you know what? If you can't see yourself at a company where we're not going to discuss fucking Palestine during work hours with your random coworkers, we will pay you up to six months' salary to go somewhere else. And at the time, the job market in tech was just booming, right? Like everyone was getting offers left, right, and center.

1:36:06So this was an incredibly attractive offer. Here's a six-month salary, and you can get a new job on Monday. It was almost like a mega bonus for getting the fuck out of there. And it was the best money we've ever spent on anything related to culture, maybe anything at all. Of all the things that I bought, that peace of mind we bought with those payouts was just priceless. Because what it did was it didn't just cut out surgically just that bit of cancer. It cut out a thick ring around it. And what we ended up was a culture that was completely cured of all that insanity in one swoop. Now, the patient had a little bit of a rough going for a while.

1:36:44And it was that rough going where Entreism came in. Because we're a small company, 60 people or so at the time. 20 took the offer. 20 left. That's almost a third of the company that decided to leave in that moment. And we got to a point where we were thinking, not that many more have to leave before I'm starting to get worried about whether we can keep the lights on. And it was actually Toby who then put me in contact with Mark Andreessen because Mark had been exposed to these phenomenon at other of his portfolio companies. and just even getting that initial exposure. Hey, there are other people struggling with this, by the way, even though you're getting skewered right now on Twitter and being haunted by the mob.

1:37:33Like this is happening all over. You're not unique in this way. And that's some resistance. And by the way, here's a bunch of contacts. Do you need someone to come in and help do programming or operations or whatever? I know this, I know this, I know this. And I was floored by the generosity because I think, well, I don't think, Mark and I haven't always seen eye to eye on these things, right? Exactly. Especially in terms of venture capital. He's been one of the main faces of venture capital for decades. And I've been kind of critical at times. And there was just a realization that all those grievances we might have thought to be so big once upon a time were actually minuscule.

1:38:15We were fighting the White Walkers on the other side of the wall. and all our internal squabbles were going to be for nothing if those fuckers got inside the wall and destroyed everything, all of it. And that felt like a real threat at the time. That could have happened. They could very well have just ripped the whole thing apart. And Mark clearly saw that, that this was a collective, almost existential threat to the entire industry. If these activists were able to take over these institutions in the same way that they have taken over academia, we would be fucked. And not just for a little while, but potentially for decades, that couldn't stand.

1:38:56So clearly when Jason and I stood up and said, we're not doing it, right? There were a bunch of people who said like, great that they're going first. So they take a bit of the heat, but also let's help them. And Mark was incredibly helpful, not just in terms of these contacts and instructions that we ended up not needing, but it was very powerful. When you have literally 40 ,000 people on Twitter calling you all the worst things in the world. And even the strongest individual might go for a second like, holy shit, like the mob is coming for me and there's no one else there. And there are other people there.

1:39:27There were people there. Toby was there. Mark was there. And it was incredibly helpful to give us the fortitude to go like, no, do you know what? We're going to stick with it. We're not going to grovel. We're not going to apologize. We're not going to revert. And then what Mark also did was he gave me a syllabus for understanding the history of wokeness going all the way back to the 60s and beyond. that this didn't just come as lightning from a blue sky. This had an institutional grounding that was set in motion, particularly in the 60s, the long march through the institutions, Herbert Macusey and a lot of the Frankfurt School and all of these groups that had designs on how to reshape society and create the revolution they so dearly wanted, it, but with a timeline on a roadmap that was demarcated in decades, that it wasn't just like, well, we're going to put some together and then in two years something's going to happen.

1:40:23No, they were sitting in the fucking 60s fantasizing about how to overthrow everything in the 2000s, right? Actually incredible in like a Dr. Evil sense of it, but when you're in the receiving end of it, it seemed a little less incredible. And it was just difficult not knowing. Like, where's this coming from? Why is this happening all of a sudden? Well, it wasn't happening all of a sudden. There was this long history of it. And when you understood that history, it made a lot more sense. And it gave more of a purpose to the rejection of it, right? Like, we weren't just making a rejection for our little corner of the world.

1:40:55We were chipping in, in the great civilizational battle of where this country was going to go, of whether the White Walkers Beyond the Wall was going to win. And we were like, no, they're not going to fucking win. Get up on that fucking wall, take your goddamn spear, fired with maximum velocity. David, this is awesome. Anytime you're in town, text me and we'll run this back as much as you want. Thanks, man. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work.

1:41:31Most of the guests you hear on this show first found me through founders.