#45 - The Golden Egg with David Heinemeier Hansson

David Heinemeier Hansson - creator of Ruby on Rails, founder and CTO at Basecamp, and best selling author is joining us today on the Being Boss podcast to talk about finding the "golden egg" in your business and improving your odds to build something successful.

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Kathleen Shannon: 0:05

Get your business together, get yourself into what you do and see it through

Emily Thompson: 0:10

being bosses hard. Lending work and life is messy. Making a dream job of your own isn't easy,

Kathleen Shannon: 0:17

but getting paid for it, becoming known for it. And finding purpose in it is so doable

Emily Thompson: 0:23

if you do the work.

Kathleen Shannon: 0:26

Being boss is a podcast for creative entrepreneurs. Brought to you by Emily Thompson and Kathleen Shannon.

Emily Thompson: 0:32

Hi, I'm Emily and I on indie typography, where I help passionate entrepreneurs establish and grow their business online. By helping them build brands that attract and websites that sell. I help my clients launch their business so they can do more of what they love, and make money doing it.

Kathleen Shannon: 0:50

And I'm Kathleen, I'm the CO owner of brave creative where I specialize in branding and business visioning for creative entrepreneurs who want to blend who they are with what they do narrow in on their core genius and shape their content so they can position themselves as experts to attract more dream clients.

Emily Thompson: 1:09

And being bosses a podcast where we're talking shop, giving you a peek behind the scenes of what it takes to build a business, interviewing other working creatives and figuring it out as we go right there with you.

Kathleen Shannon: 1:21

Check out our archives at loving boss calm.

Emily Thompson: 1:24

Welcome to episode number 45. This episode is brought to you by fresh books cloud accounting. Today, Kathleen and I get to talk to David Heinemeier Hansson who was one of the writers of rework, and one of the creators of Basecamp, which is a super popular project management system. Mike Kathleen and I are kind of crushing it really hard about all the great things that we get to talk to David about.

Kathleen Shannon: 1:49

So stay tuned. All right, one of the things that we talk about all the time here on being boss is having good systems so that you can work smarter and not harder. I think that freshbooks is one of those systems that is imperative for your business. It has a ton of features for capturing expenses and invoicing your clients in ways that don't feel awkward. But one of the other things I want to talk about is freshbooks allows you to do things like getting payroll in every state. freshbooks even works with a lot of other software that we actually use, including zenpayroll and acuity who is also another one of our being boss sponsors right now. freshbooks also integrates with Google Apps, Zendesk, MailChimp, PayPal, stripe, formstack, wufu, and more. So it's not something that you have to use alone. It's something that you can use with some of the other systems that you're already using. It's so easy to collaborate with contractors and your staff to work on different projects. There's just so much functionality integrated into it. It is so awesome. Also, I want to remind you guys that your data is safe, secure, and always backed up to the cloud, which is across multiple data centers. And it's not something I worry about often but whenever it comes to my money, you better believe I'm worried about it. All right, try fresh books for free today. Go to freshbooks comm slash being boss and select being boss in the How did you hear about us section? David, Emily and I are so excited to have you on being boss. today. We are both obsessed with your book rework. But I'm also really curious and excited about your story in working for yourself, and then launching Basecamp. So if you don't mind, just give us a little bit of background on your creative entrepreneurial journey.

David Heinemeier Hansson: 3:50

Sure. So things sort of started on the path to Basecamp. Back in 99. When 37 signals was launched as a company back then I was not involved at all, Jason freed my current business partner and a couple of other people started the company in 99, in Chicago, and it was a web design company doing client work for hire. But it was a little more than that to it was also a company with a point of view. And that point of view was shared both in the design is static, which was the opposite of what was going on at the time, very simple, very clear, much more focused on writing, then flashy graphics. And I became a fan really quickly. So I started following the company through the weblog signal versus noise. And, and I think about 2001 Jason wrote a post about learning PHP. He was trying to make his own piece of software and was using PHP to do it. And he had a problem. So he just asked the lazy web and I replied from Copenhagen, Denmark, I'd never spoken to him before. I just sent him an email based off that initial post and we started talking back and forth and I taught him a couple of things. About how to do things in PHP. And he eventually realized that it would be easier just to hire me then to learn how to program. So that's what he did. And we started working together first on a project called single file, which was a web app that you could use to track your book collection, titles you have would you lend out and so on, because Jason in the mid 90s, have worked on a number of FileMaker Pro apps, actually, that's how he got started in software. And this was a part of that. Anyway, he sort of had a nice little following, but never really took off. So it wasn't like we didn't have to work for a living too. And, and so we did with client work, Jason, and the gang would do the design work, and I do the programming work. And then in 2003, we realized that all this client work was kind of a mess. Like we weren't doing a really good job at keeping clients up to date with what was going on, and things that were outstanding, and the communication was all over the place. And hey, who have that email, and you have the latest version of the file and all the standard problems that people run into when they're trying to coordinate projects together, over email with a bunch of different people. So we thought, Hey, we make software, we can solve this. And we started working on a project to do that for ourselves. First, that was just an internal thing meant as a in house app for us to keep track of all these clients and all this communication on these projects. But about halfway through, we thought it is actually pretty decent. We're having a lot better of a time managing projects through this. Maybe other people in the industry would think so too. So we showed it to a couple of colleagues. And they thought, absolutely, we're putting the credit card. So that put us well on the path to creating the first version of Basecamp, which launched in 2004. Still, our tiny little crew, for people working on the project all in and not a full time thing, either. This was absolutely a side project. It started as a fourth client,

Kathleen Shannon: 7:09

were you guys still taking on clients at this point? Or?

David Heinemeier Hansson: 7:13

Yep. Wow. Through the whole development phase, we were working on client projects as well. So we were treating Basecamp literally as a as a third or fourth client, next to all the other paying clients that we have. And even after we launched it, and it launched to a good success, at least what we thought was a good success. Three weeks in, we were making about 4000 bucks a month. And we thought, Wow, this is amazing. We thought if we could have done that, after a year, it would have been good. We're doing that after three weeks. But of course 4000 bucks a month is not going to pay and feed a company or for pay for any of the other expenses that are involved. But we thought they were still an amazing success. But it still took a whole year and even a little more than a year before we were making enough from Basecamp to be able to say, okay, we don't need to do client client work anymore. And we can focus 100% on Basecamp. So absolutely launched as a side gig as a side project. And the reason I really liked that is the risk factor. If we had decided in middle of 2003. Okay, let's just fire all our clients, let's take all our money and plow it into this unknown base camp thing. And if it fails, then what do we do? I don't know, we eat ramen noodles for a long time. It just didn't seem like a good plan didn't seem like a good trade. And it was hopefully unnecessary. And I think that that's one of those things in the entrepreneurial lore today that is just so ingrained that people can't see past that this notion that you have to risk everything that you have to give 100% to be able to make something good. Absolutely not, we did not do Basecamp 100%, we gave Basecamp 25%. And that turned out to be sort of a way to hedge our beds, until we knew that there was something there there. And then once you found that out, once you know that there's a market once you note that their customers were willing to pay for your product, okay, fine, then then go all in on it. But the fact is, the vast majority of projects like the one we had started a couple years earlier single file, they just don't turn out, they don't turn out to be something that can be your full time sole thing to do. That doesn't mean that they're bad doesn't mean you can't run them. It just means that it's probably not prudent to pour in all your chips on one marker, and then spin the roulette and hope it comes up it. And what I really don't like about it is the whole lore about how that is is so brave. Right? Like you're not a real entrepreneur unless you're one step away from being on the street. I think she's such an unnecessary and exclusionary myth. But there's a lot of people who think, Oh, I can't do that. Like, I'm not going to risk everything and end up possibly on the street. Like I have a family you're like I have a lifestyle or I have all these other things going on that I'm not willing to risk just to start a new business, so they get deterred from doing new. So just because they believe in that myth. So that's one of the things that just want to it's one of my big pet peeves is just pushing back at that wherever it is. This notion that you have to pour it all in, and you have to take maximum risk. And by telling our story and sharing the fact that we did none of those things, and it turned out great, not only great turned out better than great turned out awesome. We're very happy with that progression. Just because we had a tiny bit of patience, right? I think there's a lot of entrepreneurs today who are looking at things and they just don't have any patience. They just like, Oh, I want to have the fancy office, I want to have the big crew, I want to have like the most comfy chairs, I want to have everything right now. Which means that either I have to put in all my money, or I have to take money from someone else, or I have to do any of these things, growing things from seed planning that and being just a little bit of patience, it opens up a whole lot of other doors down the road and gives you a far more options. So big fan of that.

Emily Thompson: 11:04

I love that when we talk talked a couple of times recently about how like my my favorite show in Shark Tank, I watch it all the time. And I always learn the most from the people who go into Shark Tank, who have great products and services, and great businesses and great business models, but they don't get the venture capital funding. Like it's the people who have to leave with you simply have to be patient and continue like on your path that I find the most inspiring like and you know, with that whole like line of thought altogether, we all tend to think that entrepreneurship is this like, all in or nothing big scary, go bigger go home sort of thing. And I find myself caught up in that all the time that you can learn so much from just doing what you can, being patient, taking your time and seeing what happens because there are a lot of kinks to work out along the way.

David Heinemeier Hansson: 12:05

And there are a lot of false starts off. And I think that if you pour it all in, you get one shot. Most people don't need one shot, they need two or three, four. They need a lot of shots to figure out that this is how they hit the target. So if you pour it only in and you only give yourself one shot, you just take on poor odds. That's the part I really don't like. I mean, there's this whole mythology around pouring it all in is about taking those long shots. And we celebrate those long shots. I hate long shots. I never take long shots, something that has like a one in 100 chance of success. Absolutely not for me, I want something with a 2030 4050 or greater chance of success. Otherwise, why am I wasting my time? I mean, I'm I don't believe in, in luck shining favorably on me, I think I'm gonna have exactly the same chances of hitting my odds as anyone else in the universe, right? Yeah. So to put myself in a position where I just have a poor chance and then believe Oh, I'm just going to be luckier than everyone else. It just, it just does not like stats, like statistics is a good grounding course in life force, I think to guide yourself by and just don't believe that you this unique, beautiful snowflake that can beat odds that nobody else is beating. I just I don't align yourself with better odds, it's a much better way much higher chance of success.

Kathleen Shannon: 13:34

I completely agree. And one of the one of the myths, well, there are a couple of myths that I don't buy into. So whenever you're talking about kind of the starving artists that you have to be one step away from being on the street to be successful. I don't believe in that. I also don't believe in long shots, which is probably why your book rework is my business Bible. It is chock full of stuff that I cannot agree with more. And so I'm going to take a second and read one of my favorite chapters in it that relates to what you're saying right now. And it's this so every chapter has an illustration paired with it. And this one says make tiny decisions. And then kind of off to the side big is grayed out a little bit. So what it's saying is make tiny decisions instead of big decisions. And I'm just going to read an excerpt from the book. big decisions are hard to make and hard to change. And once you make one the tendency is to continue believing you made the right decision. Even if you didn't, you stop being objective. It goes on to say a little bit more but another one of my favorite parts of this chapter is making tiny decisions doesn't mean you can't make big plans or think big ideas. It just means you believe the best way to achieve those big things is one tiny decision at a time. And I love that because there is this aspect of course correction along the way. So if you guys have Started Basecamp. And it wasn't the booming success that it is even starting off a booming success for you guys at$4,000 a month of revenue. And you would be able to make these tiny budget decisions and adjust along the way, which I'm sure you did in the different iterations of Basecamp. So I'm curious. Well, I'm curious about a couple of things, once you just started working on Basecamp, then you started releasing other projects. So were those kind of side projects and they become kind of a part time gig to Basecamp. Tell me about the progression of your company to where it is now?

David Heinemeier Hansson: 15:37

Sure, I think it's absolutely right. This is the whole thing we're talking about is these small, low risk decisions, ways to test out theories and figure out which ones work. And then not until you proven that something work. Are you going to pour in everything you have to it? Or at least more of it? Right? So with Basecamp, when that was taken off enough to fund our operations, we were thinking, hey, that'd be prudent to continue that, like Basecamp, may very well not live forever. Most companies don't live forever, certainly not software companies, and certainly not software products. So we were thinking that some diversification would be a good idea. At least that was the theory of the time. And we can talk about how that sort of evolved over time, and especially the last couple years, when we then chose to actually go the other route. But in the beginning, we were thinking, yep, this base camp thing, it's going well right now, but it might stop. So we started thinking about other software products that would fit into the same sort of mold that would appeal to the same audience. Because I do think that that is, a lot of what we're trying to do in business is to build an audience, people who are willing to listen to what we have to say, and then hopefully, by extension, also willing to buy what we have to offer. So that is for for all the time that we've been in business, that's been our marketing and sales strategy is to build that audience. So building an audience is really hard work. So if you're gonna avoid building this sort of a lot of different office, audiences, you're much better off right. So we're building this one audience, mainly in the creative services industry. It's, it's since expanded from there, but that was sort of our route. So we were looking at other products within that. And we started working on on a chat tool called campfire, sort of like 10 years before slack became all the rage campfire was much of the same stuff. High Rise, which was an is a CRM management tool, we've we've since spun that out into an independent company. And then backpack, which is sort of a personal manager, kind of like an Evernote of sorts for sort of keeping track of all the loose ends in your life. And all of these individual projects were something that we were just sort of starting because we kind of needed it ourselves, we had a need with high rise when we started getting a lot of inbound calls from from journalists and from people who wanted to invest in the company or all these other people, and we're trying to keep track off. And I think the strategy at the time, I still look back favorably upon when something is just a small seed as Basecamp was at the time, it's still very fragile. Lots of things do not break out of sort of escape velocity, right? Like they grow to some moderate size, and then maybe they just stay there, they fall down. So we were thinking that the odds of that happening to Basecamp, were pretty good, because this happened to the majority of all software ever launched in the world. So exactly for reheating, those odds were trying to diversify in the beginning. And some of those things took off better than others, high rise turned into a phenomenal business. And when we really didn't do enough justice until recently, where we spun it out as a separate company. But they all helped us solidify a base where we felt like if any one of these things would hit a wall and not really grow, the company wouldn't be in danger. So that sort of strategy, I think for us worked very well until we got to a point where these individual products were getting quite big and got quite big in terms of the number of customers they were having and the amount of investment we had to put into upgrade them and maintain them and so forth. And then it was running into this other thing we were also trying to do, which was to stay small. So two years ago, we sat down for big sort of grand meeting JCI and a couple of other people at the company and thought like what are we going to do? Like we're we currently have a product portfolio about four products. We have I think at the time 35 people, it's not nearly enough. We can't do any of it justice. We're doing all of it sort of little bit poorly. Well once we started Looking at the numbers, it was pretty clear right away that there was one thing that was doing far better than all the other things. And that thing just happened to be the original thing. Basecamp had absolutely achieved escape velocity. It was this massive growing business. And we were kind of neglecting it. Because we kept with that diversification strategy that served us well in the beginning, but didn't serve as well, seven years into it basically had proven that this was a long term solid idea, doesn't mean it's going to be around forever. It just means that this was the golden egg, right. And when you find out that you do have this golden egg, like you better sit on that thing. Running around the henhouse and trying to find all these other golden eggs, because that's sort of that's the goal, right? Like in the early years, and the first 1234 years of basecamps lives. It wasn't a golden egg. Right? It wasn't this massive thing that's been used by 15 million people that it is today, right? Like, it was a much smaller thing, and the chances of it, not turning into a golden egg were good. So I think that that's also sort of one of the things you just won this your your business that strategies that make sense. In the early years. Sometimes it's the opposite strategy that makes sense in the later years, which is another pet peeve of mine that a lot of new entrepreneurs have a tendency to listen too much to people who've already found the golden egg. And they listened to the strategies that make sense for guarding that golden egg, when they don't have a golden egg. And the strategies for getting a golden egg and for keeping a golden egg. They're often in direct opposition. They're often the exact opposite things you need to do. And I think that that was just when we we hit that right, like I kind of I've been railing about that for a long time. But it wasn't really until we we hit that wall smack on and realize that, oh, we were really mistreating Basecamp we were not doing it justice. This was this massive thing that was keeping on growing. And we just had a skeleton crew on it, because we were chasing all these other diversification ideas.

Kathleen Shannon: 22:15

That's fascinating. I'm curious too, about your creative process, then behind writing rework. Tell me a little bit about that, and what that was like?

David Heinemeier Hansson: 22:26

Sure. So as I was saying the number one strategy we've always had for creating attention around the company and our products has been to share what we know. Kathy Sierra has this great saying if you can either teach, or you can outspend and we weren't going to outspend anyone, as a small, bootstrapped, independent company, there's no way we're going to buy big advertisement campaign or hire hundreds of people or do any of the other things that companies would VC backing your deep pockets otherwise do right? So our secret weapon was simply we're going to out teach everyone else we were going to share more, we were going to share all the ideas we had about running the business, we were going to share all the software we were developing, that's how Ruby and Rails came to be, we were going to share all our design techniques, we're going to share our failures, we were going to share our wins, we're gonna share it all. So we've been doing that on the signal versus noise blog since the inception and even prior to of Basecamp, which means that by the time, we started sort of thinking about rework, we had a back catalogue of about 10 years, 10 years of thoughts, opinions, lessons that we could share. So the creative process for rework was really one of curation, to look through our back catalogue of great ideas to take 10 years of hundreds, if not 1000s, of blog posts and conferences and workshops and all the other material that we have put out there and distill it into the greatest hits, basically, which is funny, because that's also one of the early critiques of the book, one of the top voted reviews on amazon.com is this sort of skon basically just saying, Hey, this is just a rehash of signal versus noise. If you've read every single blog post over the last 10 years, there's nothing new here. Yeah, well, you're about the only person who did that, you and us, right? A lot of people who've read everything that you ever have to say. And that's what was our purpose were we weren't that. There's just tons of people we hadn't reached. And even if we reach someone today, they didn't know about all the stuff we've been saying for years. So rework became this journey to find all those great ideas, put them into one digestible package and basically condense 10 years of thinking into three hours of reading, if that means somebody can probably read in two and a half hours right.

Kathleen Shannon: 24:57

I recommend reading it every year. Like coming back and reading it every year. And because what you'll get from it is different in the different stages of your business. Every time I read it, I feel like I, I'm one of the chapters resonates with me more than it ever had before. And I know that Emily gives away a copy to basically everyone that comes into our house.

Emily Thompson: 25:21

I do, I was actually looking for my like my copy, and I can't find it, but I found two others.

Kathleen Shannon: 25:27

So I want to talk a little bit then about content marketing, because you guys did have the blog was that you and Jason mostly writing on the blog? or How did you kind of justify keeping up with that one of our philosophies for my company braid creative, but then also, Emily's company and Isha biography is really just to give it all away. And that's really what this podcast is about, too. We're really trying to share as much as we can. And so I'm curious how you guys maintained that as something that was important to you.

David Heinemeier Hansson: 26:00

I think it started out being that we simply can't shut up. That'll do it. That helps to get things started at least. And I think we just realize that, hey, we weren't doing anything else. Like, we weren't spending anything on marketing, we weren't spending anything. We weren't really even doing anything else. We weren't even doing great on sales. up to my six, we had this one thing with this one thing that we couldn't shut up about the things we were learning and the opinions we had about industry practices, and so on. So when you do have one thing that you kind of, almost can't help but not do, and it's the only thing you're doing that helps the business, I think we came to realization that it was just important. And after you come to that realization, that helps you sort of go through and push through some of the phases where you don't really want to write, I've certainly had plenty of phases. I've had long sabbaticals from the blog, where it just wouldn't write anything for months on end. And it's that sense that, hey, this is actually important. I, I'm not just using this as an outlet for me not being able to shut up, although it's an important outlet for that. It's also important for the business, and I should get back into it. I actually, we've done that recently, there's usually is a somewhat of a spike whenever we're getting ready to launch a new thing. And we're just about getting ready to launch a brand new version of Basecamp, Basecamp. Three, then we start getting into this mode again, that hey, we should we should start talking about this stuff. We've learned so much building this new version, it's important that we share it for our own sanity for our understanding of what we're doing and getting better at our craft and everything. And because it's good marketing. So I think it's just it's really important. Whenever anyone asks me, I often get emails about like, Hey, I have a new idea for business, how should I get it off the ground? Can I just build it, and then they're all just gonna come if it's good. And it's not that I love bursting bubbles, but I kind of do. Tell people that No, they're not gonna come, they're just not going to come. And you can build a great piece of software. But the odds again, it comes back to that thing about long lots are not so long odds are that if you just build a great piece of software, and you don't tell anyone about it, well, nobody's gonna know about it. Surprise, surprise. And it's not going to be a success. The odds of you being basically picked up by the American Idol of the business world and catapulted into the limelight just because you are so good to just vanishingly small. So you have to do the work yourself. And if you're going to do the work yourself, then you better get started now, because it's going to take a long time. And we often get this criticism. Yeah, well, that's easy for you to say like you have a big audience now and you have 140,000 followers on Twitter, you have so so many followers of your blog and think Yeah, how do you think I got that? Do you think I am somebody just came along and handed that you think that there's just like some vending machine, you'll be like, Oh, yeah, give me hanging on to your every word. I'm curious about what you have to say no, you get one listener, one reader at the time, when we launched the original version of Basecamp. We had about 4000 readers on signal versus noise. After running the blog for three years 4000 readers in today's in vironment, I mean their dogs on Instagram that have more? You just wouldn't it wasn't a big start. And it wasn't enough to create the company that we have today. But it was enough to start. Right. So that's what I keep telling people is that if you want to build an audience, and I think that that is the one path that is available to everyone, regardless of the funding that they have behind them, to some extent, even regardless of the time or the resources they otherwise have. That's the one path that that anyone can choose to to follow. doesn't mean they're going to be success. There's no guarantee of outcome here, but something that they can choose to do, but they have to do it. And I think that's just worth it. 90% just drop off. Like they just kind of Yeah, okay, don't really want to do to work, or they feel like they don't have anything to say. I think in the vast majority of cases, that's wrong, I think everyone has something to say. I think all domains are interesting if you spend enough time peeling the onion, and unpacking everything. One of the examples of, of this, I remember, first time I heard of, I think it was plenty of fish that did all those blog posts about the statistics of dating or something. And I just thought, like, Wow, what a great way to attract attention to your platform, like what a great way to sort of talk about this in Scituate. Like I had not heard of the site before. And I stumbled across these postings like, wow, this is exactly it. So that was kind of what we were trying to do. And I think that's available to anyone in any domain. Because if you try to sell something to someone, that's because they care about that thing, right? Like for Basecamp. It's often a lot of the buyers that we have a Basecamp, they run their own small business, or they're freelancers or something. So they care about kind of the same things that we care about, right? So we talk about that we have something in common, we're sharing something, they're hopefully learning something. And hopefully, they sign up for the product, and they tell a friend, and plenty of them won't. But enough of them hopefully, Well, it turns out that they there's at least an audience that's receptive to hear what you have to say, doesn't mean they're going to buy your stuff at all. We've launched things that the audience ended up not really buying. campfire, that original chat product was just, I think the self serving way to say that it was ahead of its time, like even though we had a good audience that we thought was a good fit for this, to timing and the packaging and the messaging, or all of the above was wrong. And even then we had a big audience, it didn't really take off in anywhere near close to the same ways as Basecamp did more or later products in the same category did. So again, nothing of this is about building guarantees. It's all just about improving your odds.

Emily Thompson: 32:14

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Kathleen Shannon: 33:23

So I have a question, one of the things that you started talking about is you have to do the work. And that's definitely a theme of our podcast. So I'm really curious, you started off as a programmer who is literally responding to a blog post about PHP. So I'm curious as you've grown the business how you continue to do programming, or if that's a part of your role still, and how you balance kind of being boss with doing the work, programming, writing coming on podcasts, all of it. Tell us a little bit of maybe about your routines and boundaries and habits to kind of do it all. Sure.

David Heinemeier Hansson: 34:00

For me, and maybe I'm I don't think so even though I was gonna say maybe I'm unique in that fashion, but i don't think so i think most people who do start out with a passion for the craft that they're practicing, retain that passion. I certainly did. And I took great lengths to keep cultivating it. So for example, with this new version of Basecamp three, I've written a lion's share of the code for it. I simply love programming. I love working with Ruby. I love working with rails and I love creating new features and honing things and rewriting things. So it's kind of been almost I've been pushing off everything else, to some extent at some times when that was needed, right like the programming was was one of those sort of true loves of the work. for other people. It's a means to an end. That's how it started out for me Actually, when I first learned I learned programming, it certainly wasn't because I locked the code. It was just because I wanted stuff, I wanted a website. And to get a website online, the easiest way to do that was to learn how to program. It wasn't until years into the whole endeavor, until really finding Ruby, that I truly just fell in love with programming as a craft and found that something that I just wanted to work on until until the end of time, till as long as I could, I could still do it. So I dedicate a large percentage, probably the largest slice of all the work that I do is still programming work, which I don't need to do it. To some extent, I mean, we have we have 1213 programmers now at base camp. So I could step away from that and do other things. But I also a little bit have that reminder in my head that usually you say it about other people, like they get promoted into competence, I think you can promote yourself into incompetence, as a business owner very easily push yourself into various directions that maybe you could do the job. And I've certainly done many of the jobs that just need to be done over the years of Basecamp. But is that really what you want to spend your time on? I like to think of Basecamp is a lifestyle business. And usually people use that term as a derogatory term to say, Oh, that's just a nice, pretty long thing that can pay for your personal salary. And that's the end of it. That's not how I see it. I see in lifestyle business as a, as a business that allows me to live the lifestyle that I want. And a big part of that is that I want to lifestyle that includes programming. So I'm going to do that. And we're going to find people, we're going to build out Basecamp to such a way that the other aspects of the business that I had been doing myself, from the beginning, I mean, we started out for people, I was the sole technical person, I did everything, I set up the servers, I was dealing with the hosts, I was dealing with outages, I was dealing with domain registration, I was dealing with the statistics of the business, I was doing all the financial analysis, I was computing all that stuff. So it's funny because in some ways you think, like in the early days, like you have more time to just do programming. And as the company get larger, you have less time. To some extent. For me, it's been the opposite. In the early days, since I had to work almost all the hats, sharing some with Jason naturally, but I was wearing a ton of hats. And these days, I can afford to wear less hats, because we can hire some people who can take on some of those hats that I've been wearing, and in the past. So that doesn't mean that I just do anything you can do is programming, there's still plenty of stuff, just around running a business. We've only just hired a CEO. And I hope that Mercedes, who's coming on actually in just a few weeks at the company can take over some of these things. But up until this point, I've also been the main person who have dealt with accountants dealt with tax issues, legal issues dealt with all these other aspects of the business that I occasionally find interesting. Which is, which is a funny thing to say about taxes. There are actually aspects of it that are interesting, but they're just not as interesting as programming. And I'm certainly not as good at it as I am a programmer, right. So I'm trying to shrink my sphere of responsibilities into a smaller core of things that I just care more about. And the two things I care about the very most is a programming and be out teaching people teaching everything that I've learned building the business, continuing to build a business, all the considerations we have on the direction and division of the business. So that's why I love coming on podcast like this and just talking about all the stuff why we love writing the books reworked and going to conferences and writing blog posts is it's just enjoyable. I really find it just fun part of it is because I find talking about ideas fun and debating ideas and writing about ideas. And the other part of it is to some extent, I think both Jase and I are good at it. And I think there aren't that many people who are comfortable doing that kind of work. There's a lot of other work in the business that we could delegate out. We can't delegate the face of the business. We can't delegate the what we stand for. We can't outsource that you can't outsource your values. You can't outsource your practices and principles in that sense. So that feels like it's core work to what and who base camp is adjacent. I should be doing that work.

Kathleen Shannon: 39:38

Alright, I have a question. And it's been a few years since you've written rework. Are there any chapters or lessons learned since then that you would include in the book or is there anything now that you read in the books that you're like, ah, I would probably take that out.

David Heinemeier Hansson: 39:55

Good question. I think one of the things that reworked focused on mostly With the first shot, it didn't focus so much on. What happens if that shot works, right like rework was a lot about giving your plan and some guidance to finding that golden egg as we were talking about earlier, if you show you should be so lucky to find a golden egg. Well, what the hell do you do, then? I think that's what we've been trying to figure out for the past, not just couple years, but longer than that. And I think there's, there's a bit of a gap there and we work, it doesn't really teach you anything about that. So I think we have a fair amount of stuff to say on that topic, some of the things through happy things. And as we were talking about, oh, if you do find that golden egg, maybe there are ways that you can shrink your sphere of responsibilities into just that core that you're really good and, and is uniquely valuable to the company that you do. But there's also things that are not as pleasant. One of the things for example, is how do you say goodbye to employees? And we talked a lot about hiring in the book, how do you find the best people? Well, what do you do when those people leave? We didn't really talk about that, because, well, a at the time, we just hadn't happen, many people leave, we didn't have a back catalogue of examples to draw upon. Now that we're slightly bigger company, we're almost 50 people now. And we've been around for longer. It's been almost what 15 or 16 years now, we just have a bit more experience with that, because we've had more cases of it. So I would address some of those aspects of, of keeping the ship running, both keeping your motivation up and high. And dealing with just those natural blips and downs that are from from running a successful thing for a long period of time. In terms of taking things out, it's funny. When rework first launched, we put out a bunch of tweets, and we were sort of trying to gauge which tweets would get the most attention, right. So which would be the best hooks for the book. And one of the hooks was a line that Matt linderman wrote who's a guy that one of the original employees of 37 sequels actually the very first employee that Jason ever hired that worked for 37 students for I think about just about 10 years. And a lot of the work that he did actually was on helping us curate that book. And he also wrote some original stuff for it. And one of the the lines for that was like how something about seeing the waves and where they break and adjusting accordingly. And it's just I love Matt, I love his writing and rework is so much better for him being involved. But that was always one of those lines that I just ended up hating. And it's so funny that it was a very popular line in their office for very well. And for a lot of people, it spoke to them. I was just never sure what it said. So if we were speaking to people, I could never quite discern what it was saying and whether we're saying anything at all. So that was that has been one of the pet things I'm sure I can find the other things in the book that I wrote myself that I've got now. But that one had just sort of been irking me for a long time Exactly. Because it got to be so popular. It was definitely It was one of the top five or top three tweeted things that we got out. So it's one of those hooks that a lot of people have had underlined. And I always went like, but what does it mean? To watch the wave and accordingly, like, opposite of that,

Kathleen Shannon: 43:29

you need to do more surfing David.

David Heinemeier Hansson: 43:31

Yeah, maybe maybe that's, that's where I fell short on.

Kathleen Shannon: 43:35

Alright, I want to I want to talk a little bit more about finding that golden egg and kind of starting versus sustaining success. And so I think a lot of our audience listens to being boss is really wanting to find that golden egg and, and maybe leave their day job to commit to their side hustle. But Emily and I are both in a place in our businesses where we're kind of more on the sustaining success side. And one of the things that you said earlier is sometimes the startup phase is the opposite of what you should be doing to sustain success. So I'm just curious what some of your thoughts are on that. If you can add any more to that, like what would some of the chapters of the sustaining success book, be?

David Heinemeier Hansson: 44:19

Sure. Um, I think a lot of it about sustaining success if you're trying to sustain success with the same group of people who got you there in the first place. A real challenge is how do you keep motivation up? Once you've been doing something for 510 15 years? How do you stay interested? How do you stay challenged? How do you stay motivated to keep pushing at it? And it's hard. I think that's one of the reasons why we wind overdue on becoming Basecamp then we kept starting new projects and products and offshoots will be Because we just had that urge a lot of people who end up starting some successful they started in the first place because they had that urge to start something. Well, what I'm finding is that for most people, that urge does not go away. And it doesn't even matter how successful the thing you have is, if the urge is still there, and is not being satisfied by the current business, it's going to go elsewhere, it's going to go into all these offshoots, and in different directions, many of them that can actually be harmful to the business, which is sort of the paradox that you're taking the eyes off the ball.

Kathleen Shannon: 45:35

It feels like an addiction, like this happened to me recently, where I felt like I just wanted to launch more things and become a portfolio entrepreneur. And I had the same thing where my braid method has been the bread and butter of my business, it's what makes me the most money, but I was neglecting it, because I wanted to just make something new and launch something new. And I think that Emily has that same urge, I feel like you know, so and so keeping motivation around, you know, it's kind of like being married for a while, and then you start to get a wandering eye a little bit like having your Seven Year Itch. So how have you guys kept your motivation up for Basecamp? How do you kind of really fall in love enough to launch Basecamp? Two and Basecamp? Three?

David Heinemeier Hansson: 46:22

I think, exactly. By actually doing that. It's almost in the question, that, for the first seven years, funnily enough of Basecamp, we were working on that original code base, that original design, and we were tweaking it and polishing it, and making it better. But it had a, it had sort of reached the end of its road, it had reached the end of the usefulness of us keeping to tweak and tinker with essentially the same plan, essentially the same direction. And what we realized then, was, in the past seven years, we had learned a lot, we had changed our minds and certain things, and we had gained a deeper understanding of what we were actually building. And all of that pent up, knowledge didn't have anywhere to go. Because we could change Basecamp that radically, when you have a successful product like Basecamp, there's a lot of people who want that to stay the way it is. Because that's what they've learned. That's what they used to. That's what works for them. So if you start rearranging the furniture, all the sudden, they're gonna go like, Hey, what's going on here, I'm paying for this product, please don't move the couch over there, like I like to just word was just leave it be? Well, that's the right thing for them. Right? I Basecamp is not the most important thing in the world, for two majority of our customers, right? It's the most important thing in the world for our work life. But you can't just predict that on your customers and think they're gonna love every radical change that you make. yet. That's what you want to do. That's what the urge is, you want to make a radical change after seven years, you're done tinkering, we were done tinkering. And that's why we weren't paying enough attention to Basecamp. So at year seven, or there abouts, we decided, actually, we are going to be radical, actually, we're going to rewrite the whole damn thing from scratch. And we're going to start over from almost a clean slate, almost a fresh page, and we're gonna fill it in again, with all we know now, and not be encumbered by all the stuff that we have. So that's going to be a brand new version, and it became Basecamp, to a version of the product that we want run concurrently with the original version of Basecamp, we have still tons of customers on the original version of Basecamp, happy customers who just want to keep paying from what they have. But of course, a that doesn't provide you an outlet for your creative urge to create something new, as I said, but be it's also not necessarily attractive to new customers, right? Like for the customer who signed up seven or six or five years ago, there have been with what they have at least a large proportion of them, they're happy to be paying for it. But a customer that comes to you today, they're not happy with your ideas of five or six years ago, they want you your best ideas of now, because those are the ideas that you have to compete with other people with, there was always new stuff launching. And whenever somebody is launching something new, they're launching with their best ideas. As of right now. I don't feel good about competing against those ideas with the best ideas I had seven years ago. So you're going to be in a bad position if you do that, which was, I think why it's a symbiotic relationship. And in that sense that both that urge to create something new means that you have something new presumably, right, like you have more ideas, they're not finding an outlet. So if you put them into into a package that's going to be more appealing to new users, the trick and the hard part, in my opinion, is how do you deal with that existing golden egg?

Kathleen Shannon: 49:54

Right, so base camp one?

Unknown: 49:56

Yes. Okay. So

Kathleen Shannon: 49:57

here's my question, then it's essentially like now you have And you're about to launch Basecamp. Three, did you do the same thing with Basecamp? Three? Did you start over from scratch again? Or? Yes. Okay. So now you have Basecamp, one, two, and three, and you're going to be running all of those, right? So it's not just creating new products, but maintaining the old ones.

David Heinemeier Hansson: 50:18

Yep. And that's not easy. It sounds worse than it is. I think, actually, one of the reason we got so encouraged and why we're building Basecamp. Three now is because things went better than we thought they would. With the first version, we thought it would be far more effort to maintain Basecamp classic than it turned out to be. Well, what happens, at least when you're running sort of online web businesses, as we were was that if you keep the same feature set, and you keep the same customers, and you do, sort of you don't let anyone new in the door, the amount of work involved with operating that is, at least for us was surprisingly, though, the amount of company resources we've had to dedicate to the classic version of Basecamp has not been very high, we've still had to do work to ensure that it's a fast and it's secure, and it's upgraded, and all those things, but it's been very manageable. And we've been able to invest the vast majority of the company resources in the new thing, while still keeping the existing customers happy. So I think it's partly because we were high off that success that we thought, hey, if it worked last time, maybe it'll work again, maybe we'll be disabused of at this time. And maybe three versions will be the breaking point. But I don't, I don't think so. It could be. But I think we're quite content with the strategy we found, which is a lot about just ensuring that you're not risking the golden egg, right? There's plenty of instances in history, were software products or services have just thrown out the existing model that actually worked, right and thrown out all the customers with them. And they, oh, we're gonna do this brand new version, everyone's gonna love it, including all the old customers. And we're quickly disabused of that idea. And surprise, when not everyone loves the new version of the software. And we just thought, we're not gonna fall into that trap,

Kathleen Shannon: 52:14

it sounds like what you're doing is kind of just making the golden egg a little bit bigger. Or maybe you're creating layers around that golden egg by launching these updated, or almost completely new versions of base camp, we have just a couple more minutes with you, I wanted to ask you about your value around staying small. So your company now has 50 people, which is probably quite a bit smaller than it could be, even though it's I'm sure to some people, it might sound huge. But tell me a little bit about your values around that, again, because a lot of our listeners, and even our own companies are very small. Sometimes I kind of question and this is a question that my sister who's my co owner of my business, we're always asking ourselves, are we building an agency? Are we building a brand? And I think we're kind of doing both at the same time. But we also value staying small. But sometimes I wonder, am I shooting myself in the foot by not just building an agency. So I would love to hear your thoughts on staying small.

David Heinemeier Hansson: 53:18

My preference shall not be hidden. I love small. And we fought very hard over the years to optimize base camp in such a way that we could stay as small as we possibly can. I have absolutely no illusion that if we had not done this base camp would easily had been hundreds of people today. I don't like companies have hundreds of people. I don't like companies of 1000s of people. And I mean that in the sense of like, I don't like the lifestyle businesses we were talking about. I don't want that to be my lifestyle. I don't want to work at a company of 300 people. I like knowing the majority of the people and even a 50 that's hard of all the people at your company at a at a personal level and interacting with the majority of them. So and the flip side too, is a lot of the people I've talked to who've gone through the tradition of having had a small company and other have a big company, all the most cherries, the stories that I hear from them, they're all about the early days. They're all about remember when we were just like 15 people and we were sitting in like this Shandy office somewhere and like we did this and we did that all those formation stories are the most cherished stories they have. And I often look at that and think, Wow, you're more successful, you have more people, you have a bigger company, but you're also less successful. You have less of the things you have less of the lifestyle you have left to work format that you actually truly enjoyed. And I think it ties back into the other conversation we had about that urge to create something. It is hard to turn a big ship. It's very hard to turn a big ship and the more People that you have, the bigger your company is, the more resilient it is to change. So, by keeping Basecamp as small as possible, I believe we have more of an incentive, just from the systemic setup of the whole organization that we can, we can do things like say, we're going to rewrite the whole damn thing, we're going to rewrite base game and put out a brand new version. And that's going to be that the bigger you become, the more departments that you have the taller your chain of reporting and silos and bla bla bla, harder all that stuff becomes. So I'd actually say, I mean, we're already pushing some boundaries. In my comfort level set at 50. I sort of, in the early days, I had this dream that maybe maybe we could just stay 20 people or something, and that would be the magic number. But sometimes, I mean, you'd run into just the sort of the physical realities of trying to serve hundreds of 1000s of people, as customers and thinking at the same time, well, I don't want them to have a bad experience either. So for example, right now, we have a customer support team of, I think it's 14 people. And they respond to everyone all over the globe. 24, seven, vast majority of the time within five minutes. Wow, that on the other hand, like it takes 14 people to do that. I'm very proud of that. So you have these competing forces. On the one hand, I'd love to have a small company. On the other hand, I love to have a customer support team that can be so incredibly responsive to customers, regardless of where they are, regardless of whether they're trying to get a project done on a Saturday night. Right? That feels good. So I don't know, my, my natural bias would be stay as small as you can for as long as you can. I don't think most people realize what they have until they lose it.

Kathleen Shannon: 56:56

I love it. Well tell us just a little bit more about where people can find you or Basecamp and the book rework. Where are you at?

David Heinemeier Hansson: 57:07

Yep, I'm at base camp calm. That's the main product site. I think we'll link to the books there. We certainly should. But if you if we don't, actually, let me look that up right now I hate just putting stuff out like that.

Unknown: 57:23

Right there.

Kathleen Shannon: 57:25

Links to everything in our show notes, love being boss calm as Basecamp

David Heinemeier Hansson: 57:30

comm slash books has the links to both rework and our newer book remote. And for me, personally, Twitter's the main outlet that I have. I'm at DHH. I will warn people in advance that it's a high volume stream. And you might think, Oh, yeah, that sounds interesting. On this podcast, I'm gonna follow that guy. And then I tweet like 20 times in the day and you go like, whoa, whoa. So, fair warning given?

Kathleen Shannon: 57:57

Well, fair warning to you, whenever we include the shownotes will probably include some quotables, from you linking to your Twitter account. So if you start to see bosses, and our listeners tweeting at you, that's what that is. Awesome. Yeah. Well, thanks again, so much for coming on our show and taking the time to talk to us I am really kind of design crushing out over here. I'm so impressed with what you've built in your philosophies. And really, I think that part of what has made rework so successful going back to the content marketing side of things is that I feel like you guys are just using your real voices, I can really feel that you're saying what you mean in it. And, and there's just this level of honesty there that is so refreshing and encouraging for creative entrepreneurs like ourselves. So thank you so much for the work that you put out. And thanks for coming on the show.

David Heinemeier Hansson: 58:52

Thank you so much. My pleasure. I love talking about stuff. And I love talking about it in the voice that I have. I think it's the easiest thing to do. I can't do the mask thing. I can't wear different masks in different contexts. So sometimes that hurts me and other times that helps. But yeah, so thank you so much for having me.

Kathleen Shannon: 59:14

Thank you for listening to being boss. Find Show Notes for this episode at love being boss calm. Listen to past episodes and subscribe to new episodes on our website on iTunes, SoundCloud or Stitcher.

Emily Thompson: 59:28

Did you like this episode? Head on over to our Facebook group by searching bean balls in Facebook to join in on the conversation of other bosses for sure with a friend. Do the work. Be boss. And we'll see you next week.

Kathleen Shannon: 59:58

Sorry, I was pausing for you Emily. Thank you If you had any,

Emily Thompson: 1:00:01

I'm just a little mind blowing.

Kathleen Shannon: 1:00:03

I know I was really, really loved that