The Cashflow King: “Here’s How I Do It”, Negotiating w/ Jeff Bezos, Elon’s Cracked Rocket - Jason Fried

24:23And his whole story and the whole thing, obviously. I mean, Bezos, Amazon, amazing thing, right? So eventually we worked out some deal, which was ridiculous. It was a ridiculous, ridiculous deal. And I can't go into the specifics, but we barely had any revenue at the time. The valuation was stupid. He knew it was stupid. He's like, put together something. I need, or like, we don't know. He's like, put together something. I need something. So we put together something, we share it with him and we all had a laugh about it because it was ridiculous. But like, it had to be something where we could make something happen.

24:53And we're like, look, we don't want you to have any control. We don't want a board of directors. They had one provision which said something like in five or seven years, they had some right to do something like encourage us to do something that we might not have wanted to do, like sell or go public or something. But they didn't have the power to, I think, push it through. Anyway, it was just a suggestions clause. Maybe that's what they call it. I don't know. It was very weak. That was a weak. He didn't want like he's like, I want you guys to do what you want to do. He's like, I like long term thinkers.

25:24I'm like, we're in this forever. We're not in this to sell the business, the whole thing. He liked that. So what's he like? You go there to Seattle, take us into the meeting where none of us will ever get to do that, right? Especially Bezos back then. By the way, have you guys heard this story really quick? It was the founder of Root. It's W-O-O-T. There's this famous article, Sean. Oh, woo, yes. Where they go out to eat. Jeff Bezos wants to buy this guy's company. And they go out to eat. And Jeff Bezos is sitting there. They go to breakfast. And Jeff Bezos orders potatoes with bacon and octopus.

25:54octopus and he and the guy's like why'd you order that that's like a weird breakfast order and he goes you're the octopus that i'm having for breakfast bezos said when i look at the menu you're the thing i don't understand the thing i've never had and i must have breakfast occupus and it was like the article tries to paint him as a weirdo but it doesn't exactly give full context and so at least now we have someone here who's also been in that in that situation that That seems very Jeff. Jeff is probably the most optimistic person I've ever met. And that was very clear from the start. And I'd never been around someone who had that much optimism.

26:34That was, I mean, clearly intelligent, very intelligent, but so, but that made it with optimism is really powerful. Optimism about what? About you, about the world, about his company? What was he optimistic? what do you remember comes in it's it's an aura of like can do this just positivity you know you've seen him he smiles a lot he laughs big you know he's just he has a he has an enthusiasm about him that is um i would say like formed into an optimism that is unshakable and unbreakable is it like a like why not like for example i've met people i think what you're describing and went around them, they like explain their new idea and they're like, it's going to be this, this and this.

27:17And a lot of people default to like, well, you can't do that. But these people default to, well, why not? This all makes sense. Like I'm going to do this. And then I think this will happen in this. Why won't that happen? I think if you post something really unusual to Jeff, he would just start laughing in a way like, wow, that is interesting. Like it's all interesting to him. That was my take. And I remember we were showing him Campfire, which is our first chat group chat tool. This is way, way back before Slack. And there wasn't really something out there like this. There was IRC, but there was nothing really simple.

27:48And we put it up on the screen and I started talking to him about it because it wasn't out yet. And like 15 seconds in, he just got the whole damn thing. He just got it. He got it in a way where he got it more than we got it. And people are always curious, like, well, okay, well, you're not going to sell the business. How does he make any money on the investment? Well, we're an LLC. So he's a member, he has units and every year he gets distributions and he's made his money back many times over and he still owns his shares and we haven't had to sell the business. It's been a great investment for him.

28:16Not like a massive exit, but like it pays for a lot of things. I'm sure it's real cash. Jeff, good news. Your net worth has gone up by 0.0001 % this year. You can thank us for that. What's cool is like, we don't matter, but when you talk to him, it's not that way. Yeah, of course. He is genuinely curious and interested in what you have to say. And I've always respected that about him. I love that description. And by the way, I've heard almost the same verbatim thing because Amazon bought Twitch and I've asked Emin, the CEO of Twitch. I was like, what's Jeff? Because that was his for a while. It was Andy Jassy.

28:48And then it was, he would go meet with Jeff once a year when they would present the plan. And he said the same things. He was like, when you're in the room with him, it's like, there's nothing else that exists in the world. Like he's fully engaged, fully paying attention, fully present. And he's like, he's having a good time. He's not like super, super serious about everything. He's laughing and he's curious and he asks questions and he mostly listens. But then when he asks a question, he almost always like has struck the heart of the issue. And you're like, how did you? He's like, dude, I've worked on, I run this business.

29:18And it's like, I founded this business for 15 years ago. I run it every single day. You think about this for like one hour a year. But in that hour, you kind of put your finger on the right thing that fast. That is impressive. Sean, I want to ask him, you have on here about this, this Elon quote. So you talked about reading Bezos books, Bezos book, you actually had an interesting take on reading Elon's biography that I thought was intriguing. I just think it's, I admire you, Jason. So it's cool to see like who you admire and what your opinions is on different people who I may or may not admire.

29:51And by the way, I think it's not like this person, but maybe an aspect of that person or a one way that that person does something, not like this person is good and other people are bad and all things they do are good or whatever, We're all a lot of different things. We are all a lot of different things. Can I read you the quote? You had tweeted this out. I thought this was pretty fascinating. You said, I'm inspired by the business side of Elon's biography. There is one word that's overused and I think inaccurate in the book, reckless. What seems like risky actually to me strikes me as risk reduction.

30:20And then he said the following. He said, compared to traditional corporate America, corporate America takes the riskier route. It's fear, marginal decision-making complexity. And I love this line. You go, mediocrity slathered in marketing. And then he said, mistakes come in all shapes and sizes, but the ones that come from slow decisions, committees that dilute responsibility, sloppy cost controls, and requiring pseudo certainty before making a move, those are the worst ones. And Elon doesn't make those, but his critics often do. His mistakes are real and they have consequences, but they're rooted in forward motion.

30:52I'm glad there's someone who is out there unafraid of making those kinds of mistakes and showing us all what is possible when you pierce the membrane that holds most things back. that's that's pretty good uh what made you feel that way i would say reading the book made me made me feel that way now of course it's a story well it's you know a biography but like it's a story there's a perspective on it point of view um a lot of the examples in the book are about simplifying are about cutting out waste getting to the root of things figuring out like what really matters um not getting caught up in what other people think it should be uh and also not being caught up in things you can't do.

31:30And it was that impression. And there's a multitude of examples. There's one of my favorite examples. I might be misquoting this slightly, but there's this example of there's a rocket, a SpaceX rocket ready to go launch. And they find like a crack in the skirt that surrounds one of the engines. And I think, again, I'm going to get some of the details wrong, But like if NASA had found that, there's like a three month launch is scrapped, multi-month delay, rebuild the whole engine, kind of that sort of thing. So there's a crack in the skirt and Elon hears about it. They stop the launch or something and Elon hears about it.

32:11And he goes, what's the problem? He goes, there's a crack in the skirt. He goes, let's get rid of the crack. Can we get rid of the crack? And they go, well, if you get rid of the crack, you're going to lose some propulsion. He goes, OK, how much propulsion are we going to lose? lose they're like this much because we can lose that there's enough margin here so let's cut the crack out and go and that's what they did and the launch was successful and it's like the kind of question that nobody else would even think to ask like well what is the problem it's a crack it's not the engine it's a crack let's get rid of the crack can we get rid of the crack yes but how this way well, that's going to do this.

32:46Okay. Well, what does that mean? Okay, sure. Let's do it. So that might seem reckless. And I think it was positioned or pitched almost as reckless in the book. To me, that's like common sense, fundamental, smart problem solving. And you think about all the other risks it saves and all the other things it prevents and the time that goes by and all the other things that can happen during that time that can go wrong. I just see that as brilliance, not as recklessness. So that's my take on it. So I know that you guys are on your website. You have a landing page for this product that I believe you described.

33:24I forget how you described it, but it's something like it's a non-recurring software product because it's like you want to take back. Users need to take back control of their wallets and not pay a company every single month. They just could pay one time. So that seems like that excites you. And I want to hear more about that. And you also alluded to you have like a few more products you want to launch. What ideas and businesses are exciting to you at the moment? Sure. So what you're talking about is this thing called Once, which is more of an umbrella brand. So once.com, O-N-C-E.com. And it's a one pager and people can read it.

33:56The fundamental idea behind Once is that we think that people should be able to buy products again. Right now, pretty much all software is a service. It's a rental. You're renting service, you're renting software in perpetuity. and if you stop paying, you lose it all. Like, okay, some services make sense that are services, but they're also, I think, a large collection of products, old school products. So you'd buy and you'd own and it's yours and you don't have to keep paying for it. We want to bring that back. That's how it used to be. We think there's some real advantages to that in certain areas, in certain product categories.

34:29And we think companies should have the option to spend money once and not a lot, a few hundred bucks and own the thing. and not only own the thing, but get the code too. So you can modify it and screw around with it as much as you want. This is not something that has been happening for many, many, many, many years. We think it's time to bring it back. So we launched the first product, which is Campfire, bringing back our old chat tool that sort of died on the vine to some degree, although there's still some customers using the original version, but we don't sell it anymore. And Campfire is installable software.

34:59We built a whole new tech stack around this to allow people to, you buy it on the Shopify store. It's$299. You buy it. We send you an email with a single line that you paste into a terminal of a server. So there's a little bit of technical knowledge required, but barely any. I'm not technical. I can do it. I've done it on DigitalOcean. I bought a shared server and ran this one command. And now you have a chat server running that you own. It's$299 once, unlimited users. And it's basically 90 % of what Slack would do. It's the core stuff, chatting. dms ad mentions sharing files it doesn't have threads it doesn't have video chat doesn't help it but it has the fundamentals of what this nugget of this idea is and the principle around this is that in any industry um generics eventually come in for example there's a lot of chat tools that exist in software today in in in the industry so they're basically commodities but they're still priced like luxuries.

36:03Companies are spending tens of thousands of dollars a month on Slack. It's our teams. It's obscene. Absolutely. I spend that. It's obscene. Okay. You get it, right? It's a lot of money. It's a lot of money for basically chatting with your coworkers for the most part, right? And it's just like, there should be a generic option, essentially. This is what happens in all industries. When there's a commodity or when there's a lot of product, commodities, something becomes a commodity that becomes a generic at a much lower price. We're doing something at a high quality and a low price and changing the model around.

36:39So anyway, Campfire is the first one. We're working on a second one right now, which I can't talk about yet, but it's related to writing. And maybe we'll do another one or two and then see how the model looks in a year from now. Like, are we early? How's it working? So far, it's been working really, really well with Campfire. We've sold hundreds of thousands of dollars worth of Campfire in a few months. So we're very happy with the start, but we have to see if it sustains and how it goes. And we're going to add some more products to that category and see how that goes. Can we talk about this strategy you have where before you launch something, you put up a page, a big blue page with a founder letter?

37:13Yes. And the founder letter is basically saying kind of what you just did, which is things used to be a certain way. They've changed. It's kind of obscene. I get why they changed, but now it's gotten a little ridiculous, don't you think? We're going to change that. We're going to bring it back. We think life should be this way. Common sense logic, don't you agree? And yeah, we're going to do it. If you want to be a part of that, do this. And actually this morning I saw something on Twitter that was kind of interesting. Some guy announced his venture round. It was like, we raised$16 million. I'm like, oh, that's interesting.

37:47What is this? And it's something called Quilt. And I go click this thing, Quilt, and I'm like, go to the website and it says some like blah, blah, blah, AI jargon with a sign-up form. No, don't tell me what it is. Don't tell me why I should want it. Don't tell me what it could do for me. Don't tell me why you built this and what was your motivation. Just, we raised a bunch of money. Give us your email and you're on the list and we need to grow this list basically. And I thought, I can't believe more people don't copy what you do. That's how this podcast came to be, Sean, by the way. We were talking about copywriting and we're like, man, Jason's the best at this.

38:25Yeah. And you did this for Hay. And I used to teach this thing called power writing. And I would teach them, I would say, one of the landing page variants that nobody's doing is founder letter. There's actually a company called Runway that did an amazing job of this. I don't know if you ever saw Runway.com, but this guy Seiki, who's a serial founder, was like, the landing page was a long scrolling thing, but it was basically just a dialogue. And he's like, being a CEO is hard for a bunch of different reasons. But one of the annoying reasons that feels like it shouldn't have been hard was that I kind of had no grasp of the numbers of my business.

38:55And I felt stupid and I felt insecure about that. And it was important, but I just frankly didn't know how to do it. I didn't know how to use these tools. I wasn't really ever taught it. Why don't I know how many weeks of runway I have left? Why don't I know this? Why don't I know that? And so I decided like I'm going to build a tool. That's a finance tool, but it's for founders. And he did it as a letter and it was awesome. And he got a bunch of people to sign up for it. I think more people should be using this tactic. And the reason why I think they don't, to be honest, is because there is no reason to be building their product.

39:23There is no intrinsic why. There is no strong point of view that would get people behind it. Their product is either derivative or sort of mediocre or it's just trend following. And so if they tried to write the letter, there wouldn't be much to say. It's not the writing that's the hard part. It's the having a point of view that resonates with people. That's the hard part. It's the point of view. So this is my favorite thing to do in the business period. And unfortunately, I don't get to do it that often because we don't launch new things, but I love writing a brief letter. And I sweat every word and I just love it.

39:55This is my like Bezos moment where I just smile and laugh while I'm doing this thing. I just love finding the right rhythm and the right rhyme and the right pattern and the right message and the right way to say it. It's super fun. I don't know why more people don't do it, but to your point, I think there is something about like, you have to have a point of view, first of all. And the thing is, that you can do with any product like any a novel product a commodity product you just have to like understand the angle that you're taking although i don't even i don't like the term angles because it seems like it's almost manipulative but what stick you need a stick yeah yeah you don't like that i don't know you need some flavor what do you want to call it you're not gonna like i understand i appreciate you're right like that's the category stick also has these like negative connotations like it's sort of like this game and manipulative thing you're maybe you don't mean it that way and you probably don't just like a flavor you just need style i like some style i like flavor i like style about it i like i like the point of view i to me it cuts it it has a it has an edge that's the kind of thing and i think first of all it's very hard to do this not i'm not giving myself like credit like i could do a hard thing but it is hard to do this well i've always been inspired by people like Buffett and Bezos who write these amazing shareholder letters who are able to communicate very clearly and can do it in long form writing.

41:17Now, this isn't that long form. It's a page. But I want to get excited about that. I want to read something and I want to be pulled through it and by the end feel like it wasn't too long and just it said exactly what I needed to say. And I'm left with some mystery. So one of the things I like to do is you'll see the first sentence on once is something like, something happened to business software. Now, that is planting a question in people's heads, but it's not a question. I'm not asking a question. I'm making a statement and now they're like, well, what do you mean? And now they're bought in because they asked themselves the question.

41:52Like, oh yeah, what do you mean something happened? Now they want to find out what happened. And then I kind of go through it and all the way I'm thinking about how do I find resonance? Like, how are they nodding their heads when I'm nodding my head when I'm writing this thing? Like, how do we get to that place? We're like, yeah, yeah, yeah. And you build up this. Yeah, of course. Yeah. You're yeah. Uh-huh. Yeah. And you're like, yeah, why am I spending this fucking much money on this thing? Like, I should own this by now. I think there's a line like you should own this shit by now. Like, Sam, you've spent I don't know how much you've spent on like you should own it by now.

42:24Come on. Right. And it's, you know, nothing against you, right? It's like everyone who does this, it's like, wow, I mean, how much money have I spent on this thing? And I'm still spending. The metaphor that the SaaS companies used initially was like, just pay a couple bucks a month. No big deal, right? Pay as you go, only pay for what you need. But the problem is it's the renter and you reframed it as renter, right? Oh, yes, but you can get evicted. Yes, but you don't even own this thing. Yes, but they can hike up the rents anytime they want, right? And so reframing it as, cool, yeah, but you're a renter and they're the landlord and all your data is owned by them, not you.

43:02Right. He calls it the church of recurring revenue. Church of recurring revenue. So it's done very well for a lot of followers and people who attend the church of recurring revenue. But the thing is, some things make sense like this, like a magazine or newspaper. This is kind of old school, right? But you pay subscription, but you'd get something new literally every week, day, month, whatever it was, software. I know it's improving, but it's improving around the marginal edges. You already have 90 % of it on day one when you bought the damn thing. And so you're paying over and over and over and over for essentially the same thing.

43:37And at some point, if you're paying a lot, you should be like, wow, I should own this by now. This is crazy. Tony, I want to kind of make that point and get people excited and leave people with some mystery. So it's not like the stealth thing where there's like, we're doing an AI thing. You enter your email. It's like, here's a story. It's all legit, but I'm still not going to tell you exactly what it is. And then we kind of eventually deliver the product. The simple test, by the way, is let's say you did buy Slack or whatever, insert what your favorite product for one year. And then they did all these over the air updates and they, they added this, they added that, they tweaked this, they fixed this bug.

44:13If they had just charged you for it one year and then you could buy V2, you know, Slack 2.0 or the 2024 version, would you buy the upgrade? Like, you know, we used to buy Windows 95 and then you would hear, you're like, oh man, I heard whatever. The next one, Vista or whatever it is. It's got all this new stuff. Okay, maybe it's worth upgrading. But like the reality is almost none of us would buy those up by the next edition because the upgrades are so marginal, right? They're not, like game-changing, but you're charged for it as you go, as if those are such game-changing updates. Yeah. And look, again, some products, like we have a few products like this, Hayes, the SaaS tool, Basecamp's a SaaS tool.

44:51So we're in that world too. I totally get it. That said, we don't charge any of our customers more than$299 a month, period, flat. So with Basecamp, you can have 6 ,000 users at just$299 flat, unlimited users at that point. So we don't offer the same thing where people could be spending 50, 60 grand or 10 grand or five grand or three grand a month with us. You can only spend$2.99 a month max with Basecamp. So I don't feel as guilty, frankly, selling something like that compared to asking companies to spend tens of thousands. I get it's good for revenue. I get all that, but man, I wouldn't feel comfortable or confident.

45:30I would feel like I'm ripping people off, frankly. So how do you deal with the counter argument, which is you guys were first with Campfire before Slack. Slack comes out, kicks your butt, becomes a 20 something billion dollar company, exits and blah, blah, blah. Sure. How do you deal with that? Well, first off, Slack is it was an excellent product. It still is an excellent product, but at the time it was way better than Campfire. So we sort of let Campfire kind of wither. We, you know, kind of didn't pioneer the idea. IRC was before us and there chat thing, but like we kind of pioneered this version of it to some degree and we sort of let it sit and didn't really make it much better.

46:07Slack came around and made a much better version of that idea. So full credit to them for that. I think another problem we had was that we were really early with Campfire. I remember when we launched Campfire in 2006, I don't know when Slack launched. I think it was like six years later or something like that. I couldn't get anyone to buy Campfire. People were like, why in the fuck would you use a chat tool? Like what? Like, we're all in the same office. Like, just talk to people or whatever. Like, I don't even get it. Well, we used to use, like, Gmail chat. And then for a while, HipChat, which I hate.

46:39HipChat. Yeah, that was another one. Yep. Yeah, but for a while, it was just Gmail. You were on the edge, though, because a lot of people didn't even... Like, chat was... Like, now everyone can't imagine working without it. But, like, it was not a thing that companies used. Individuals used it a lot. But companies... It's just this persistent chat room was just not a thing. Hey, quick message here, because you know that feeling when you send a wire and it actually works? No friction? Well, I've used Mercury for years now, and let me tell you, it just works. And that's why I use it for not one, not two, but eight of my companies.

47:09From credit cards to invoices, I have everything in one place. There's no janky dashboard. I'm never told, please visit a local bank branch. None of that tomfoolery. And a few months ago, I landed a big client. And the first I did? I sent them a clean branded invoice. Boom, deal closed, cash in the door. That's the kind of banking experience I want. And that's why I use Mercury. So if you're running a startup and you want banking that feels like it's built in this century, well, go to Mercury.com and get started in minutes. Mercury is a financial technology company, not a bank. Bank, the services are provided through Choice Financial Group, column A, and Evolve Bank and Trust members, FDIC.

47:44So because we were early on it, we kind of didn't think there was a future in it because it was selling okay, but not that well. And so we just didn't pour more energy into it. Then along came Slack. I remember actually, it's interesting, Stuart Butterfield sent me an email before they launched Slack. We were friends and he said, Hey, just want to let you know we're launching this thing. It's competitive with Campfire to some degree. We're buddies. I just want to let you know. That's cool. I remember looking at it the first time and my stomach dropped. I'm like, Oh shit, we're dead. Or this thing is dead because it's fucking good.

48:17And the thing that impressed me the most about it was the onboarding experience. I think that, in my opinion, there's two things, of course. The bot integration stuff was really innovative. But the onboarding experience was so good where you basically talk to the chat and create your user account and stuff. Those, it just took, in my opinion, those two things. The chat itself isn't better or worse. Chat is chat essentially. Onboarding and bots were the thing. And we didn't have them. And they crushed us. So yeah, that's how I'd answer that question. Dude, you're cool to me because you're like it.

48:55All right. So for the listener, go to Basecamp.com, go to Hey.com and Once.com. Your landing pages, like we're internet dorks, all three of us. Like we're talking about like CRM shit. Like we're talking about like something that's not inherently like a punk rock thing. But you have like a punk rock vibe about you. Like if you look at your landing pages, they're all like kind of cool. And they're fun to read. and you make non-cool things kind of cool. It's, yeah, for me, there's a degree of like mining for novelty and recognizing like what's interesting and what isn't. How people can look at something and go, oh man, I never thought of that.

49:27But of course, like that's what I'm always looking for. I wrote this post recently about towel bars and hooks. I don't know if either of you saw it, but. Riveting. Riveting concept. You ready for this? Okay. I've not read it, but I'm sure it's great. What is it? So we're doing a bathroom renovation and the designer, the architect's like, do you guys want hooks in your bathroom or towel bars? And for me, the choice was like, it was so obvious. It was like hooks. Of course, hooks. I'm team hooks too in my house. Right? And it's like, why? Well, I'll give you a bunch of reasons. First of all, you can't screw up a hook.

50:02You can't mount it wrong, first of all. You can't use it wrong. You can put other things besides towels on it. It doesn't take up any space. If you need to add a second one, there's room for that. And sometimes it's nice to have like two hooks a few inches apart and you can kind of spread a towel so it dries a little bit better. There's just all these reasons. And for me, I'm always looking for the hooks in product design. Like what are the little things that just are so simple and straightforward and everyone knows how to use them and you can't get it wrong. You can't use them wrong. And actually, you can use them in a bunch of different ways that weren't intended.

50:39It still works compared to a towel bar. It's like the only thing you can use a towel bar for is to hang a towel or your nine-year-old will do a pull-up on it and tear it off the wall. That's the other thing you can do with the towel bar. And it takes a lot of space. And if you don't put the towel on just right, it slides off. You can use it wrong so easily. It's easier to use it wrong than it is to use it right. So that's why I like hooks. And so I'm always looking for these analogs in other areas. I don't look at other software. Software doesn't really inspire me. Like a hook will inspire me.

51:11a piece of architecture, a space, land, a tree, furniture design, print design, I don't know, objects. That's the kind of stuff that I look for motivation and inspiration in. I think there's a lot of really good ideas in there. So that's where this stuff comes from. And then I'm like, oh, this is a hook and this is a hook and this is a hook. And anyway, that's kind of how I think about it. One of my favorite things I did in the research for this, because I'm always looking for in the research, it's like, what are the big ideas? What are the important ideas, but they're not necessarily new to me.

51:41And then what are the new ideas? And one of the new ideas I thought you put out there was really great, super nerd, but that's where we are right now. We're in the nerd zone, which is really the place we should be all the time. But you said, when prototyping, always try the wackier, quirkier stuff first. The deeper you go into a project, the more conservative it tends to get. Stranger ideas are more at home earlier in the process. I love this. This is so true. I've never heard anybody say this. It's something that If you embrace it, you can actually, you know, Sam's old company, I think their only company culture thing was let your freak flag fly.

52:14It's like, that's what you want to do in product design. There's also kind of good life advice too, which is the weirder, quirkier things are actually, it's easier to get away with them and do them when you're in your early twenties versus when you're 37, right? Like you tend to get more conservative. It's product development. It's life advice. I thought that was brilliant. Thank you. I, we really take this to heart. And the reason why is like, for example, I'll take the calendar example again. if you're building a calendar and you think that there's all these table stakes features that you like you need to be on par first with google calendar like if you're like you want people are going to buy this like if they're going to use google calendar they're going to expect google calendar fidelity and functionality and then maybe we add a couple other things like no one's going to buy your thing because google calendar is google calendar like why just make that other thing with a couple other things so we always start with the novelties the things that don't exist anywhere else.

53:04That's what makes your product differentiated. That's what makes it worth considering. To say we made Google Calendar a little bit better, not worth it. But we made something totally different that is not just different because it's different, but we actually think there's some novelties here that matter, that make sense, that are radically different in good ways. That's what we pile on early. And to the other point of that quote is that if you just wait till the end to try to add those novelties, you'll never have enough time. You're always running out of time at the end and you're never going to try new things.

53:36You're not going to have the tolerance or the patience to wander. So then you end up leaving those things out and then you never get around to them because once you launch to the public, the public then demands even more normal stuff. The public doesn't demand unusual things. The public demands normal stuff. It's on you to find the unusual things, the things they didn't consider. But once they see, they go, of course, where's this been my whole life? That's the kind of stuff. Basecamp is packed with these things. And Hay is packed with these things. And Hay Calendar is packed with these things.

54:08And those who use those tools understand that. Those who don't, don't know. But they are packed with things you're like, oh my God, where has this been my whole life? That's amazing. But what do you do? You guys pull out profits of yours out of the LLC. I like that. You don't reinvest it. You basically get the benefit. Are you like a boring kind of like index funds and bonds guy? Sam is more on the conservative kind of side. I'm more like that 80-20 index bonds life, baby. Yeah. I'm like the two sexiest words in the English language are like exotic instrument. It's like, oh, we got an exotic instrument for you.

54:40I'm like, tell me more. And then I regret it later. What do you actually do? What's that? A sexy trombone? What the hell? What's an exotic? What's an exotic? It's the thing that you're going to lose money on. Your shitty wealth advisor gives you to lose money. It's called an exotic instrument. It's code. I mean, our exotic instrument is our own business. That's where most of our risk is tied up. So I'm more on Sam's tip here, which is to be very conservative with investments outside my business. So primarily index funds. I do invest in a few individual companies that I really know and really like and have liked for a long time.

55:15I might even know the CEO. I might have a good sense of who this company is and what they do. I'm not jumping on the meme stocks, that kind of thing, right? I have an advisor. I've done some like other kinds of investing around like some PE deals and some stuff like that. But primarily I'm pretty much straightforward index funds, like play the U.S. economy long term essentially and some maybe some other companies or countries economies, but primarily U.S. That's my main thing. I also like so I do that. And then I also like to spend money on things that I enjoy and that my family enjoys.

55:53But what I don't like to do is ever put myself at risk. I don't like to put my business at risk. I'll take risks, but I don't take risks that put me at risk. That is not an interesting risk for me. It seems like you value being able to sleep well at night. It's like, I just want to be able to sleep easy and not do anything that's going to jeopardize that. Right. Like people ask in business, what keeps you up at night? Right. And typically the answer for most people is like some, the competition, am I going to make payroll? For me, like what keeps me up at night when I am up at night because of work, it's excitement.

56:24Like I can't wait to start working tomorrow on this thing that we're working on. It's not like, because it's not like our margins are razor thin and might not be able to make payroll or I'm focusing the competition, hyper-focused. So like they launched something new and oh my God, what are we going to do? Like that one Slack moment I did have was one of those moments. That was years ago. I just want to sleep well. I stop work at five. I don't talk about work with my family at all. It's just not a thing. It's a separate thing that I do during the day. And I get excited about sometimes at night because I'm just excited about ideas.

57:00But it's also recognition David and I both practice this idea of negative visualization. Basically, look, we've been at this 25 years. We've done exceptionally well. We've been incredibly fortunate. If this thing all flames out in two years because of something we did wrong, a major market shift, competitive shift, wherever it is, you know what? That's okay too. It will be painful to some degree, but it's okay. If we have a 27-year run, geez, I mean, what more can you ask for? Now, people will lose their jobs and it would suck. I'm very certain almost everyone who works here can get another job somewhere else very quickly.

57:38We would help people, all those things. I mean, I don't want this to happen, but if it did, we'd be okay. This is not my identity. This is not my life. This is not something that needs to exist forever. I don't want to feel that level of obligation to it as much as I have a lot of responsibility and feel obligated to our customers and to our employees and to the ideas that we have. It's not the whole world. That's just an important thing for me. Sean and I are in similar positions where we have profitable businesses. and a question that I'm trying to figure out is what percentage of the profit profits to pull out versus reinvest?

58:14Do you have a framework for deciding like that percentage? Especially earlier on, right? Maybe in year 27, the answer is different than in year three or two. Yeah. So I can only tell you what we've done, which is again, a little bit unusual. We pull out everything at the end of the year. Now, first of all, we're an LLC. So we're taxed on everything at a personal level. So if I leave money in the business, I'm still paying personal income tax on that money, it doesn't really make sense to do that. So we have a recurring revenue model. We have very predictable revenue. So we basically have a little bit of overlap.

58:43We take some money out in quarterly distributions and there's some money left over in January and we wait till April to take it all out. So there's some overlap and there's enough operating cash. When I first started the business in 1999, we were an agency and our first client, it was four of us, three partners, one sort of employee. We each put 10 grand in. So we had 30 grand to start the business. And then our first customer was HP. HP was like giving everyone business way back then. HP was like the hot company to get a gig with because they paid a lot. And I think the gig was a few hundred grand to do some website design for them.

59:23This is 99 where people are paying numbers like that. And from that point on, we were profitable because we only had a few people. We didn't take big salaries. And that was that. We were able to pull out all the money every year because actually we started out as a C-corp for like a couple of years and then we switched to an LLC. But regardless, we put out all the money at the end of the year, essentially. And because we had ongoing client work that would sort of span the gap of the calendar year. So we just always had money coming in and our costs were so low that we weren't ever starving. So it just was a situation where we always had high margins and that's how I've always run the business.

1:00:03So I know it's an unusual setup, but I do think it doesn't have to be quite as unusual. I think what ends up happening is companies hire too many people. Their payrolls are too many people on payroll. They spend too much money on customer acquisition and their costs are really high. So their margins are very low if there's margins at all. And then it's very hard. It just becomes a much harder business to run. Now, again, there's a lot of luck involved with this. we happen to find a way somehow to have very, very healthy margins over two decades. Part of that though is again, the cost side of it, which is just not considered enough.

1:00:39Do you run any paid ads? No, not right now. We have explored that. We've played with it. So here's the thing. Like last year, we're like, we're gonna spend 5 million bucks for the first time ever on like ads. We started getting into it in a few months. We spent a bunch of money and we're like, this is just, it's vanity money because like this isn't doing anything for us. Now, someone might say who's listening, go, you got to give it more than three months and six months and eight months. You got to do this for five years before you show returns and you got to try a bunch of campaigns. We just don't have the tolerance to spend that kind of money on something that isn't very clearly going to return for us.

1:01:12Also, our price points are so low. Our customer acquisition costs are tricky because a lot of our competitors, they're selling things for thousands and thousands a month. We're selling things for Basecamp is 15 bucks per user per month or$2.99 unlimited. Like there's not a lot of play here to really invest a lot and spend a lot to acquire a customer. So it just doesn't work for us. So we don't do anything, not even branded keywords. We occasionally do that. If someone's like using our brand, we kind of want to knock them out. But essentially, we just don't. It's all through our own channels that we've developed over the years.

1:01:47And there's no question in my mind that there is a formula that we don't know that we could figure out at some point, perhaps, to grow the company in a big way somehow through marketing, advertising, targeted whatevers. We just don't have the tolerance for it, frankly. I just don't think that we're interested enough in that kind of growth. And the answer is always like, why grow that much? If you're trying to sell the company at some point, growth rates really matter. But for us, sustainability matters, profits matter, margins matter. I don't want to eat into those for some future whatever, it doesn't really matter.

1:02:23Again, like if we were to sell the business in a couple of years and we got a 10X multiple or 5X multiple, but could have had a 15X, I don't still, it doesn't matter to me. It doesn't matter to me to spend all that money trying to search for that. I'd rather just take the money out and put it into investments that I can basically, not guarantee, but like have a really good sense of return on and just do our thing our own way. Dude, you're the man. I think that if I had to make like a Mount Rushmore, of this podcast. I think Sean opened it up by saying we love people who carve their own path. I don't care if that person is an entrepreneur or an artist or a mother.

1:03:00Just someone who says, this is the way I want the world to be and I'm going to live that way. I admire that greatly. The way that you write, the way that you think, you're on my Mount Rushmore. I really admire you. I know we both are incredibly thankful that you spent some time with us. You're the man. It's very kind. I love the show. by the way. I listened to it. It's great. And I really appreciate being here. Thanks for the time and the questions and happy to do it again. Anytime I could go for hours with you guys, if you ever want to. You have an open invitation whenever you want to. Whenever you want.

1:03:34Well, I'm not going to invite myself on. I did this time actually, kind of, sort of. So I will not do that again. If you ever want to talk again, I'm available. Let me know. Thanks for doing it, Jason. We appreciate you. That's the pod. Thank you. I feel like I can rule the world. I know I could be what I want to. I put my all in it like no days off. On the road, let's travel, never looking back.

1:04:00All right. This episode is brought to you by Mercury. They are the finance platform of choice for over 200 ,000 companies. Shouldn't be surprised because I use it myself for not one, not two, but I have eight different Mercury accounts. I have seven for different companies that I'm a part of. And then I have my own personal account because now they have personal banking, which is a really cool feature. I highly, highly recommend it. Like I said, I use it myself. and the reason why is because the way that Mercury works is beautiful. It's very intuitive and you could tell that it's actually made by a startup founder.

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1:04:52For more information, check out Mercury.com. Mercury is a financial technology company, not a bank. Check show notes for details.