Easy to leave

0:00David Heinemeier Hansson:Welcome to Rework, a podcast by 37signals about the better way to work and run your business. I'm Kimberly Rhodes from the 37signals team, joined by the co-founders Jason Fried and David Heinemeier Hansson. A couple weeks ago, Jason and David gave me the homework to read Getting Real, which I did. And I thought we would talk about a couple of sections of that, which is about making your software easy to cancel and not locking people into long-term things. So I'm when you guys have built these software, like there's always a trial. You don't have to put in your credit card. But let's talk about the cancellation policy.

0:35David Heinemeier Hansson:Tell us how you've started to think about that or not even started, how you've always thought about that. It's kind of the golden rule, do unto others, you know, rule basically. Like I don't like to be stuck in software. I don't like to be stuck in contracts. I don't like to be stuck in anything that there's no real reason to be stuck in. I mean, there are some things I'm sure where there's massive capital expenditures that need to be put in place in order for you to have something and And canceling that would be a big deal for everyone involved. But let's be honest, if you sign up for a piece of software and it's hard to cancel, that's a deliberate choice by the company who makes the software to make it hard on you to leave.

1:10David Heinemeier Hansson:There's nothing hard about closing your account technically. So it's a deliberate choice. And it's not the kind of choice I want to be involved with. And I would not want to put that on our customers. We've always made it very, very easy to cancel. No questions asked. You don't have to talk to anybody. Nothing like that. You can just do it yourself. We've had a few different variations of like how to get your data out, which is another part of this because cancellation is one thing. But if you have data in a system, like what do you do with it? And it's actually, it's an interesting question because it's kind of hard to deal with your data when it's in a system that's a proprietary system.

1:42David Heinemeier Hansson:Like you get your data out in some format. We actually in Basecamp, we have a really nicely formatted HTML, like almost like a mini website that you get. We want to try to make the data useful for humans. Right. So you get the data out and you can like browse it. versus just giving you a big like comma separated values file or some other kind of data dump that's going to be hard to bring into something else. So just hard to look at and use yourself. So we kind of settled on this idea of a relatively straightforward format for humans to look at, but it may not be the best way to do it. It's just kind of the way we've decided to do it.

2:15David Heinemeier Hansson:We've also allowed you to export data in other ways in the past. And depending on the product you're using, hey, it's different than Basecamp. Email is a bit more portable in some ways than and contacts are more portable than like projects in a proprietary system. So bottom line is, it should be easy to get out. You shouldn't have to talk to anybody. You shouldn't be talked off a ledge. You shouldn't have to talk to a retention specialist. You shouldn't have to talk to another department. You should be like, I'm done for whatever reason. And I'm out and like click, maybe a confirmation because it's kind of a big move too.

2:44David Heinemeier Hansson:And then you're done. That's how we've always done it and how we feel like it should be done. Have you ever tried to cancel a gym membership? It is like the most impossible thing to do ever. For sure. But also like, I'm about to cancel Frontier, which is our cable data provider or whatever, internet provider, because I'm just going to switch to Starlink because it's more reliable. It's a little bit slower, but it works. And I'm just actually dreading. I've tried to cancel already, but there's a phone tree you can't talk to. And when you finally talk to someone, there's a long wait. They maybe call you back.

3:13David Heinemeier Hansson:It's someone who doesn't really speak English very well. They don't really understand. They transfer you. So it's unbelievably hard and incredibly frustrating. And it just makes me want to double down on making easy on, easy off for everybody. I also, on that note, have canceled software before where you click cancel and then you get a discount. Are you sure? Because now we can give you a discount if you don't leave, which then is also this bad taste of like, well, then I've been overpaying this whole time. You only are going to give me a discount because I'm going to leave? That seems shady too.

3:42David Heinemeier Hansson:Yeah. Well, we've done that. We're shady. I don't know if we currently do that, but we did it on a previous version of Basecamp. I remember offering people, I don't remember the exact details, a half off or another free month or whatever it might be. But the other thing we have done, which is offer people the option to pause, which is a slightly different option than canceling because we do a cancellation survey. People can fill out an optional survey. And one of the things we often see is like, I love Basecamp. It's fantastic. But like, we don't have any projects right now. We will probably later, but we don't have any right now.

4:14David Heinemeier Hansson:And so for them to cancel and lose all their projects and all their data, essentially, and they can take it with them, but not really in a functional way. If they had the option to like, I'll pause, I'll pay like David, maybe you remember, it's like five bucks a month or something like that for up to a year or something like a significantly reduced fee. All your data is there. When you come back, all your people are there. Your data is there. Your projects are there. You can come back. We'll keep it around. Keep it warm for you. Basically, we have done that as well. So that's, you know, you can look at it in a bunch of different ways, but we will look at it in terms of people who are like, I love this thing, but we don't have any work right now.

4:48David Heinemeier Hansson:So cancellation is actually very punitive in that case, because they can't come back later when they do have work and pick up where they left off. So this is sort of our other option to do that. I think the hard thing with all of these programs, whether you try to retain someone with an offer or whether you just try to make it exceptionally painful to leave, is grounded in the scourge of A-B testing, where someone is in charge of squeezing out the last couple of percent on a given flow. and in isolation you can convince yourself that this is free money that if we can discourage someone from canceling in sort of uncouth ways what does it matter we got a little more dollars and isn't that what it's all about which really does not factor in the fact that people talk they recommend they ferment furious anger that will be burning in some case for decades If you need an example of that in the software world, Adobe does it better slash worse than anyone else in the business.

5:54I have never seen a company turn users into such advocate sort of hell raisers. Then what happens when someone goes to cancel their subscription and they're met not with a offer to stay at a discounted price, but with a ransom? If you want to cancel right now, you are due$172. Why? Oh, you happen to sign up for a yearly plan built per month and you owe the balance. What? Are you fucking kidding me? That is the most perverted payment scheme I've ever heard about in my life. And the amount of hate that sole program has generated is unprecedented in any of these schemes I've ever seen in software.

6:41And yet I believe it remains. Someone at Adobe looked at the 50 ,000 reports of people just burning with rage and said, that's worth 1.74 % in uplift on non-cancellation. And I think this is one of the things where you're really selling out your company for this short-term next quarter kind of bump, or maybe in some cases even next year bump, at the expense of the long-term running reputation. and it just feels almost more infuriating than anything else. Like people can be mad about software if it doesn't work or God forbid it deletes their file, but this sense that you're being held ransom, that you want to cancel, and as Jason mentioned, you know it's not a big deal.

7:30You know it's a flag in a database. You know there's no labor involved, yet they make you jump through hoops. Not just feels hostile, it feels demeaning in a way that I think in genders is kind of just furious rage that just keeps burning. Another example I had of this was the lovely newspapers. I made the grave misfortune of subscribing to, I think it was the Financial Times in the UK. And of course, very easy to sign up online. There was a nice easy offer. Then at some point I realized I just don't read the Financial Times, so it got canceled. And you realize, no, I got to call some UK number between the hours of X and Z, like either get up really early in the morning or stay really late at night.

8:13And I just went like, wait, what do you mean? I signed up for this thing online. What do you mean you can't cancel it online? What do you mean I got to call someone? And in Jason's case with Frontier, I totally would also get incensed. But there was something even more infuriating about the fact that a seller of a newspaper in a different country was also happy to take me as a customer from the US. but then treated me like I was just living next door. Like I could just pop down to the store and talk to the man about getting cancellation. When like, this is like seven years ago. I don't remember a lot of newspapers or subscriptions signed up for.

8:50I remember that one. And I remember thinking, never ever will I be a patron of this establishment again. And I think that that's kind of the calculation that has never factored into this sort of stuff. and one we would do very well to avoid. And even that reminder that we had that experiment with like, can we offer you a cheaper deal? I do think it belongs in the same box. Maybe not at the lowest shell as making it physically impossible to sign up, but I don't love it. It's such a pivotal moment for that relationship. Are you going to turn this customer into a fan who would recommend you, even if they're not using you anymore, to their friends?

9:32or are you going to plant the flag that they should be waving that no one should use this again? Very few movements of the numbers on that scale could convince me that it's going to be worth cementing this animosity, right? Especially in our kind of business, well, any kind of business. Every business is a referral business. Now, you may also be running some marketing schemes to sign people off, but Jason, this is one of the things I remember from early days, Bezos. Before even making the investment, The one thing Jeff wanted to know was, do you have a leaky bucket? Yes. When you pour in more water, you get more customers.

10:08Where are they going? Are they just disappearing? And are they disappearing in a, perhaps because you're a shitty business that people do not want to recommend to their friends and colleagues, you got to have a tight bucket, right? Like you can be pouring it as much as you want, but if it just evaporates or disappears, it's all for nothing. So the best way to keep that bucket is to just leave a really good impression. Whether they're staying or whether they're going, you're the kind of upstanding business that they would have no hesitation recommending to others. Jason, you choose that. There's a whole line about buying a car.

10:43And even on the way in, you can subject your customers to something where they may end up finishing the transaction, buying your product, but they're still almost out the door mentally. as in I would never shop from you again. Not a good way to run it.

10:59David Heinemeier Hansson:Speaking of that, I'm really trying to reflect on this car buying experience because we actually have agreed on a price at this point, and I still don't want to buy the car. What I don't want to do is buy the process. Will you tell people about what you're going through? I mean, I read it, what you had posted, but give us like a high level. Yeah, we're buying a car, and the last car we bought was a Tesla. And it's like, if you've ever bought a Tesla, you're like, oh my God, why can't all cars be sold this way? Like you basically like four models. Pick your options. On your app, you know, whatever you, there's no options that are cancel other options that like in a lot of cars, you like, I'll take this package.

11:33David Heinemeier Hansson:Well, then it's like, well, okay, then you don't get this and this. And so it's like, what wheel size do you want? What interior color, what exterior color? Basically that is it. And then there's like long range or whatever. Couple of very, very simple choices that you never feel like I don't know what to do or God, I'm making the wrong call. Anyway, long story short is even beyond that, you just like buy it all through the app. There's no human interaction required. And I'm not against human interaction, but like in the car world, I am for the most part. And you just buy the car and then they send you everything's digital.

12:01David Heinemeier Hansson:All the paperwork is digital. You just like hit a button, like agree, sign, whatever, done. And they like let you know when the car is ready in a few days or a week or whatever it is. Contrast that with like, we're looking at a Kia and it's like all the old games, car dealer games, like, can I, how much is this car out the door? And they like give you this thing. I'm like, I didn't want the paint protection in the interior. Take those off. Well, we can't. They come from the factory. I don't care. I'm not paying for them. Okay, let me talk to my manager. It's like the whole fucking dance, right?

12:30David Heinemeier Hansson:The whole dance. And you know at the end they're going to remove the charge because they want to sell the car. But like you have to go through the dance. Then there's like one fee on the invoice. It's like extra fees or something. It's like 500 bucks. I'm like, can you please itemize this? And they itemized it. And there's nothing in there that was like untowards. It was just like the taxes and registration. But like, why put it together in the line? to like break it out so I don't have to ask. And so I have to ask and they have to go back and forth. And he's got to go to the finance guy. It's like, why are there four or five back and forths to get to a simple thing, which is like, how much is this car going to cost me out the door?

13:00David Heinemeier Hansson:Very simple question. There's probably reasons for it. I don't know. Maybe there aren't. I don't know. I can imagine like the evil person, the best, like the more invested you are in this process, the less likely you are to walk away. Like, I don't know what the psychology is, but it feels like I'm in the stone age again. And then now that like we finally have like decided, and I didn't negotiate very hard at all. It's just like, I just wonder what the hell the car is going to cause without all this ridiculousness. Now it's like, I know I'm going to go there. It's going to be like a three-hour process of sitting there at the desk and the paperwork and the guy and the finance got to go over here.

13:30David Heinemeier Hansson:And then he's like, oh, great car. A little bit of color. Like all the Bull Street commentary. I don't want any of it. I just want the car. And so I'm just reluctant. I'm frankly at this point reluctant to even go through with it because I don't want to ruin half my Saturday. That's literally what it is. It's like ruining half a Saturday. It's like sitting in some stupid-ass office signing papers. and it's just really frustrating. And it's so clear before this, it was unclear that it could be any better in a sense. With buying a Tesla, you realize it can be better. And there's also some other reasons for this, but it can be better.

14:01David Heinemeier Hansson:And once you've gone there, it's very hard to go back the old way. So that's what that's about. Okay. Well, I know for us, something that I think is different from a lot of software companies, I've done a lot of like trials for things where I have to put in my credit card and then it's like, okay, I have to remember on a certain date, if I don't like the software that I have to go in and cancel. Talk me through what we do and why we do it differently. Well, we did that at one point, too, way back in the day, I believe. I think part of it was like we almost had it. The bank required us to do that, David.

14:30David Heinemeier Hansson:I don't remember some of that stuff or not. I forget what it was. But we did do the thing where you had to put your credit card in up front and we wouldn't bill you, but you have to cancel. We did that for a while. I think that was like the only way we knew how to do it or something. I think that's more common, to be honest. It's like the way most people do it. I still hate it. If I'm remembering correctly, it was like the easier way for us to do that. It wasn't like the customer friendliest way to do it, but it was just like easier to do it that way than to have you use something, put your data in it.

14:57David Heinemeier Hansson:And then we had to build a system that would send you a link to pay. And if you didn't pay, then there's like a five day grace. It was like more complicated, I think. Anyway, we don't do that anymore. You sign up for free. We have done on this for 15, 18, 20 years. Like you sign up now, no charge, no credit card. If you like the product, you can put the card in. But in the beginning, we didn't. I just want to be clear about that. You know, I think at the end of the day, what you don't want, and this is kind of going back to something David was saying and something I was saying earlier about these special offers is that what you end up with is a reluctant customer.

15:27David Heinemeier Hansson:It's like someone's like, yeah, I mean, all right. I guess like if you're going to give me half off for two months, like I was going to leave, but and you just like, do you really want those customers? I mean, if they don't want you, really, they didn't really want you, they probably still don't want you. And yeah, maybe there's some retention specialist out there who's like, yeah, but if you do that, 15 % of them are going to forget to cancel again after the offer's over and you're back to getting them full price. Like, yeah, it's a trick. It's a game and it's ugly and I don't like it and I don't want to be part of it.

15:58David Heinemeier Hansson:Entry point, Kimberly, it's like, yeah, well, why am I paying more? If you can sell me this for less, why am I paying more? All these questions start to enter, which is another reason why we don't do coupon codes. We've had a few handful of them over the years, but we don't have any now. We don't do them. We don't offer that kind of thing. It always feels weird to me when you go like, look for, you get a coupon, like 20 % off something. If you do this, you do that. It was like, personally, I don't like, I know a lot of people like it. I don't like that way of buying things. Just like, how much is it going to cost?

16:23David Heinemeier Hansson:That's what I'm going to pay. Not like, is there some discount I can find somewhere if I scrounge the internet for it and ask whatever for it and sneak some code in there? It just doesn't, I know it's an incentive. I know it probably works, but again, works in what way? And I think we've never been ones to try to really optimize that whole process. Again, maybe we're leaving sales on the table or whatever you want to call it, but it just doesn't feel good to do it that way. I'd rather just have a fair price. Here's a fair price. We think this is a fair price for everybody. Here it is. We do offer like nonprofit discounts.

16:55David Heinemeier Hansson:We do offer free base camp to schools. That's published, but there's no special code you need. And that's not like a special secret backdoor kind of thing. Other than that though, the prices of the prices. One of the reasons I really dislike all that stuff is the doubt it leaves in the mind of someone who just goes to buy the thing. Am I my sucker? Should I have been scouring the internet for some stupid code so I could have saved a little bit? Are you taking advantage of me just because I want to buy the thing? I think that's part of the magic of Tesla's model where none of it is negotiable. There's the price of the car.

17:30We're all going to pay the same. And you might I could get some grumbling with people who are used to getting something off. I mean, the old regime, and I bought a lot of cars, expected you to negotiate, right? Like we were going to have this little dance with all the stupid games that Jason mentions. And it always felt to me like it was an import of actually a different culture. I remember going both to Turkey and Morocco. And like the stereotype of a very special price just for you, my friend, was just there. And you're like, holy shit. I mean, this is like the movies. Is this a thing we do?

18:05We do that game. And then in those circumstances, it was even more egregious, right? Like the listed price was maybe 3x what the real price was. And then you had to do the dance. And you just realize that when someone at a systemic level like Tesla can say, like, none of these cars are bought this way, you lift this huge burden off the entire purchasing experience. And I saw in Jason's mentions on this point, a couple of dealers showed up like, oh, we don't do those games or like we're really fair. Does anyone really want to buy a car without negotiating a discount? Yeah, I think almost everyone would rather do that.

18:44What they don't want to do is be the sucker. They do not want to show up at dealership where it's known that you're supposed to do this game and you're supposed to know the magic number of what everyone else is paying. And you look that up on the Internet and then you play hardball or you trade them off between each other. And like, that's how you get the deal, because now you feel like an idiot if you pay sticker. Why are we doing it? It doesn't have to be that way. And Jason says there probably are historic reasons. I mean, dealerships in the U.S. are cell phone businesses. And there's all these rules and laws about how you're supposed to do things.

19:17And this was one of the reasons. Originally, Tesla couldn't sell in certain states because they had lobbied to ingrain those kind of archaic sales practices into law. and you're not allowed to do it any other way. But it's just so much more pleasant to be a customer and feel like I'm not being taken advantage of. And I do think that some of the Tesla loyalty does come from that because, I mean, not everyone loves the cars, but a lot of people who buy a Tesla convert to the, I will never buy another brand again category. That to me is a resonance of, I've not heard that a lot about like, I don't know, GM.

19:55I'm sure they exist. I haven't heard about them. I'm not like I'm never buying another thing except for GM because like the buying experience was so amazing. No, that's not a thing. So she's curious to me that there has not been more of an adoption of that style of purchasing. And it's frankly an inspiring example for us to consider that always. Like, you know what? It should be like that. No games, no tricks. This is just what it is. And everyone gets the same thing. Now, one interesting way we actually did implement that, although not off Tesla principles, was with hiring. So when we do job postings, it includes the salary.

20:36Because that used to be a hackling negotiation trip at most companies. They may have a range and then however well you negotiate, that's going to be your salary. We got rid of that bullshit, I don't know, 15 years ago or something like that. We convert it over to everyone at the same level. We just make the same amount of money. We will just publish the salary right in the opening. And if that's not to your liking, well, you can fly somewhere else and you'll know exactly what you get. So I think maybe that process is the closest we have to the Tesla model. And I cannot tell you how nice it is to cut that entire thing out of it.

21:15One of the things I used to hate about the yearly reviews we would do way back in the day, this is the 2000s, was that we would do the dance every year. We do the dance about compensation, about whether you're going to get a salary bump every year. I hated it. It was like, I'm in the fucking Turkish Bazaar here. And I'm like, we're going to do this game and you're going to ask for something. I'm going to counter with something. I'm like, I don't want to live like this. I don't want that to be my job. I don't want to give that job to anyone else. I just want to get rid of it. And I remember when we did it, it did feel like, are we breaking the law?

21:49Is this supposed to be legal? Can you just say like, this is your salary? And this is no, clearly you're not breaking the law if you pay everyone for the same level of work. In fact, I think if you ask most people who work here, taking that off the table that you've got to show up and be this tough negotiator is a net benefit. Of course, lying on the fact that the salary is fair and it feels objective and it's pecked to something and all the other things. But taking the haggling out of almost everything is just a win when you do it consistently and across the board.

22:21David Heinemeier Hansson:I think I was going to add just a few more quick things about cars and our prices. I think the reason why Tesla is so different here is because the whole process is different. In fact, even picking up the car is different. You show up and the car has your name on it and you just get in and your phone pairs to it and you drive away. That's a whole different thing. There's literally no dealership experience at all. I remember there used to be a US car brand called Saturn way back in the day. I forget. It was an offshoot of, I don't know who, maybe Ford or something like that, but they had a no haggle thing.