#80: David Heinemeier Hansson, Co-Owner of 37signals— Creating with first principles, acting with...

The most sort of structural incentive-based permission that we got was that we did not commit the original sin of almost all tech startups that kind of get traction. We did not take other people's money. We did not owe other people a huge part of the company. So we never had these commercial ties that made growth the number one priority above all else. We were able to set our leveling on what we want to achieve.

Welcome back. This is From Startup to Grownup. My name is Alisa Cohn, and today I'm thrilled to welcome David Heinemeier Hansson to the podcast. David is the co-founder of 37signals, which used to be called Basecamp after their most well-known product. In addition to bootstrapping 37signals for over 20 years, David and his co-founder Jason Fried have written multiple bestselling books about the experience of work. That's why I called David a kind of a business philosopher in our discussion. David is passionate, opinionated, unconventional, and quite funny. He'll make you think about your own practices with a more mindful approach. So without further ado, please enjoy this great conversation with David Heinemeier Hansson. Welcome to the show, David. I'm so excited to have you here.

Thanks for having me.

And I wanted to start because, um, You know, I, I've done a lot of research. I've gone down the DHH rabbit hole and I get the impression from how you talk, we talked a little about your counterintuitive ideas and I get the impression you're like not a fan of traditional conventional management practices and it's like you don't even necessarily, you don't love running a company as much as you love doing the work. And yet I feel like you've emerged as quite a business philosopher about how to run a company. So first of all, How do you like square those two thoughts together?

Well, I don't necessarily know if it's that I don't like how things are traditionally done. I just don't wanna take any assumptions for granted. I wanna start from first principles on basically every topic. Part of that is because before I started running my own company with Jason, my business partner, I worked for other people and I had a lot of disagreements with how they ran their company and how they treated their employees and how we planned what products to build and, and all of this stuff that goes into that. So I thought, Do you know what? If I'm gonna get the chance one day to set my own agenda, we're gonna start from first principles. We're not gonna start from like, oh, I know that they do this thing over here, or I've done this in the past. Let's just start from the beginning and then see what we find. Because a lot of what I've found in 20+ years is that context really is everything. And I say that, and then I also have this little voice in my head that says, that sounds like bullshit because what people will normally say, it depends, but then they don't say what it depends on. Then you're not saying anything at all. So I also don't have much patience for that, but I do have patience for the idea that we're gonna try to find out what fits really well in this context that we have. And we're not gonna just like read the best practices. We're not gonna just see what works for Facebook and then try to adopt that. We're going to come up with something that works for us. And what I found in that journey is that so much of what is a best practices or works for Facebook is literally 180% the opposite of what I should be doing. Add 40, 60 people, or for what anyone starting a new company should be doing. There is just such a dissonance between what does an early company need and what does a company of 500 or 5,000 or 50,000 need. And it's so fascinating that it's not, it's not slight variations. It's not a little bit here, a little bit there. No, it's like literally the opposite. In so many of the cases. And that goes for how you set up the business, how you organize the business, but it also goes for the technology. It also goes for the marketing. It also goes for the customer service. So I've just really enjoyed that all of these domains that come together with running a business, you can do that. You can do the first principles work on all of it, on customer service, on marketing, on technology, on business organization, on longevity, on, fundraising, on, um, managing your expenses. And I have a little bit of an, of a squirrel brain in that regard that I, I can't, I can't just stay on one thing forever. I can't just do customer service for 2 years. I can do it very, very intently for like 2 months and try to figure out like where, where should we be, what's not right, what can we fix, and then let's get on with it and, and go to the next thing. So I think that's why running a company is such an enjoyable experience for someone like me is because there's always a million shiny objects you can run towards. There's always a million new challenges you could choose to pick up. A lot of the entrepreneurs, they talk about like all these things that get forced upon you. Eh, and a little bit of that, but a lot is just like you go where your interest takes you. And running a company, there's just so many things that you can, you can dive into. And I love that. I love diving into those things. I love diagnosing it. I love treating a company like it was a product. It has bugs, it has features. We can fix a lot of the bugs. We can rewrite the organization and make it work better. And then we can test whether we like the change we did better or not. We don't have to be bound up into some policy that we made 5 years ago and that might not be relevant anymore. We can just, we can change things. At least that's how I look about it, or look at it. Yeah. I will say that when you have that mindset, sometimes you do get into a little bit of trouble. Like, can employees, for example, they don't always love the idea that everything is up for renegotiation essentially all the time. So when you change policies, even have, you have good reasons for it, maybe that sometimes creates a little bit of unease, but I think that has to be the journey if you wanna stick with it. I mean, Jason and I have worked together now on 37signals for over 20 years together. And to stay interested, it has to be that. It has to be that we're not bound eternally by some decisions we made 10 years ago with the knowledge we had 10 years ago. I wanna make decisions based on what I know now. I have 20 years of experience doing this stuff, and if I'm not using all of that, it's gonna feel like a waste. And I'm not gonna wanna keep doing it.

Yeah. Oh my gosh. We could literally spend the entire rest of the podcast just on what you just said and unpacking it. So let's take that a little bit step by step because the first thing you said was the thing that works, you actually said startup, but I don't think that you guys are a startup, but you are small. Small by choice. And we'll get into that. Yes. But the thing that works for a large company doesn't necessarily work for a small company. And sometimes it's not a little bit, it's a lot. Can you just give a couple of examples so people can really understand what you mean by that?

Well, one thing we've recently dug into is engineering management. So at most large companies, you have engineering managers and they're full-time and they have a number of reports and they have this whole protocol of how they run those reports. They run 'em maybe with weekly one-on-ones or biweekly one-on-ones, and they have these check-in cycles and they have these standup meetings and they have all of this ceremony that if you look at a company like Facebook who might run this, or let's not even, pulling any specific name, any large company that runs with this, you look, that's what software engineering is. That's what we should do. So we should just have the miniature version of that. Maybe we don't have 5 of these managers, but we certainly need 1 or 2. And they need to do all these things. They need to do the weekly one-on-ones and they need to do, and first of all, for a very long time, we didn't do any of that. Absolutely none of it. For the first, almost 10 years, I think. If I did a biyearly, that is every 6 months, one-on-one with direct reports, that was probably the high water mark. And sometimes it was even less than that. And then we were told like, oh, you're doing it wrong. Like you gotta do this on a more regular basis and you gotta do the career progression and tutoring and all this stuff. And it's like, oh, okay, maybe. And maybe we also need the engineering manager. So we tried that as an experiment quite late into our phase. About a couple of years ago. I was like, you know what? As we just started talking about, I don't wanna be bound by even the quirky stuff that we've always done that seems like it works. Sometimes I wanna fish in the most traditional pool of like, how does everyone else do anything? And just like, do you know what? Maybe everyone else does it this way because it works, because it's simply better, because the best practice actually is the best practice. That is entirely possible. And to give another example of that in just a second, But so we tried that and we found out, no, no, it doesn't work. It did not make us more productive. We made the company substantially larger. We had more programmers, more designers, and they were running this traditional fashion. And we somehow felt like we're getting less traction on the main modes of progress that we're interested in. We're not shipping more, it's not of higher quality. Even the job satisfaction of the folks that are involved with this, it doesn't seem to be working. So, In that example, the whole traditional engineering management role didn't work for, I wanna say us, that's the, that's the easy way out, right? Then you, then you're not saying anything declarative, then you're not saying anything general, but I actually wanna go a step further and say I don't think that mode works for small companies. If you have small engineering teams, you should not look at running a miniature version of what the big dogs are doing on software engineering. But then I'll give a, a positive example. For quite a few years, we ran a policy called cocktail titles, which was essentially this idea that we believed titles were stupid and you're senior this or you're VP that or you're principal this, this is dumb. Why does it even matter? We're just all doing the work. You can be a chief ninja if that's what you want. You can be a strategic lizard wrangler. I don't care, you pick whatever you want. And the mode was you pick what you wanna tell other people at a cocktail party. And we ran on that for several years and then we realized, you know what, the problem with being chief lizard wrangler is that if that person wants to leave and go work at another company, it doesn't mean anything, right? It's actually something that makes it harder for them to progress in their career versus if they could say, I was a senior software engineer at Thirdsem Signals, that means something. People are gonna take that and go like, oh, okay, you're, so you're not junior and you're also not a principal. Like you can slot in here. So that was an example of, you know what, I think titles exist for good reason and we don't need to reinvent every single dish. We should start by challenging it. I don't wanna just jump into it and just do it because everyone is doing it. But we came to the realization, do you know what, it was just a bad idea to be different here. I'll give one last example, which is on, um, HR policy essentially. So for a while we ran another policy that I still think some companies are running, which is unlimited vacation. And you have to use the quotation mark because I don't think anyone has ever uttered those words and not kind of been bullshitting because unlimited never means unlimited, right? Like there's no such thing that like, oh, unlimited, great, I'm gonna take 12 weeks off. I'll see you next year. Hasta la vista. No, that's not what it means. It just means like you have to kind of guess what your manager and your team thinks is appropriate. And then you probably have to shoot under a little bit because you don't wanna be the one who takes the most. So now you end up doing like what, 5 days a year? Yeah. Gee, that's not very unlimited, is it? And it was one of those policies where I can see kind of, we started from that principle, right? Like Jason and I as founders of the company, that's kind of how we treated it. We weren't counting our vacation days. We took vacation, but like whatever as it fit in. But then I also saw the reason that policy can perhaps gain traction more broadly was that then it meant you weren't owed anything if you were laid off, right? Like unlimited just means we're not counting. And if we're not counting, then I don't owe you anything if I fire you. And I thought like, eh, you know what? That's not a positive reason I wanna do it for. And I also did see exactly the same syndrome even at our company that people were getting like, what even is it then? Then we're trying to guess, why do you have to guess how much vacation you have? Why do you have to sort of have anxiety about making sure you're not the one who takes the most? So we changed that actually after running it for quite a number of years and now it's just a fixed number. It's just, it's this. And of course you can go over, go under, whatever. There's, slack around it, but there's just so much more clarity when someone, especially a new individual, joins the organization and go like, all right, cool. If I wanna take 2 weeks off in summer, that's what I can do. No problem. So yeah, I think it's more about just having a skeptical eye towards all of these things and going like, eh, I don't know, but also it could be. It's not like we're just gonna be contrarian for the sheer sake of contrarianism. I think you end up with a very, dysfunctional organization when you think everyone else is wrong about everything all of the time? Eh, probably not. Then they probably all would've gone outta business. Maybe they're wrong about some of the things some of the times. That sounds very reasonable and we should find out what those things are. And if we can identify them, we can have a huge advantage. This was why for the longest time, for example, remote work was such an enormous advantage for us and now it's become one again. It, it's, curious, there was this short phase where it seemed like, all right, everyone's gonna do remote work, so that's no longer an advantage for us to advertise. And then now it seems like we're rewinding the clock on that and now it's back to being an advantage if you are a kind of person who've decided that remote work fits your lifestyle. I've seen people basically be single issue on this. Like, I'm simply not gonna take a job that requires me to move back to Seattle and commute every morning. That's just not what I'm going to do anymore. I'm willing to take a pay cut. I'm willing to take a title cut. I'm willing to take out all sorts of cuts. And then we can sit here going like, hey, we don't do that at all. We haven't done it for 20 years. You can work wherever you want and we will actually pay you the same rate. We will pay you top 10% of San Francisco base rates anywhere in the world. So now it's an advantage again, and it's kind of fun to see those things move around.

Oh my God, totally. We're definitely going to get back to remote work, that's for sure. But just going back to the first thing you're talking about, because You're saying not only do we question everything, go to first principles, which is very interesting. And again, to you, it's deep, right? It's philosophical, it's deep. And then you try things and then things might work for a time, or you might get better ideas or whatever, and then you have to change policies. And there's more to say about founders, but for sure, founders are more comfortable with change. Also, you are the owner, you're running the change. Employees do not love change and they can be the most enlightened employees in the world, but your workforce doesn't love change. How do you handle that when you do make changes and what's your communication protocol around that? What's, what's all around change?

It is the fundamental difference. And I think actually therefore it is the fundamental responsibility of the founder to inject not only these changes that may not be sort of welcome in the moment, but also risk in general. We have to take chances sometimes on the little stuff and some of the policies that we have, sometimes on the big stuff, on big directional changes. And I think it's exactly as you say, there are much, far fewer professional managers who are willing to rock that apple cart because they have more stakeholders. They just have more people that constantly they have to triangulate their sensibilities and the popularity. Between that stuff. Jason and I kind of both sometimes to our deficit, but quite often also to our profit, we don't have that. One of the things Jason and I often sort of say to each other is, oh, how wonderful it is that we don't have to ask anyone for permission. Like we can simply run this from more or less sheer conviction of what's right or what's wrong. Sometimes we'll get it wrong, right? Like our conviction will be strong, but it'll be faulty. And we will hear from employees or from customers or from the general internet when that's the case.

Or from Twitter.

Yeah. You can't have that be sort of the a priori way of guiding your decision-making. You have to, in my opinion, guide your decision-making from those first principles and from a conviction of what's wrong or what's right. And then I also am a huge believer in, I think I first heard this on the, uh, Tim Ferriss podcast, um, Hard choices, easy life. Easy choices, hard life. This is a lesson I've had to learn repeatedly over my career, that the easy choices, the popular choices, the in-the-moment convenient choices very often lead to very hard life, very hard working circumstances. You kick the can down the road. Let's not deal with this right now. It's a sensitive moment. Let's just, let's just get by. No, no, I'm not just gonna get by. I'm going to run this company the best way I know how. That is literally the only way I can stay motivated. Now, again, that does have the potential for blowback. Sometimes that blowback is a little bit like, is like slight disgruntling feedback that you get, and sometimes it's also more severe. And we've had some episodes that were very severe. And I look back upon all of them and I go like, Not that I knew everything up front, not that I was always right, but I am proudest of the moments when we followed our convictions, when we didn't kind of buckle under the pressure. If we were gonna buckle on anything, it was because we came to realize that we were simply wrong. Not that the pressure itself became too much. And I mean, we have had instances where it was quite a lot and it was not easy to stick to those virtues and to stick to those principles., but we did it anyway. And every single time I've looked back upon it and went, oh man, I would've hated it if we would've buckled. I would've hated it. I would've hated working here. I would've been resentful. Like the only way I can authentically run this operation and continue to be excited about running it is that we, again, we run it congruently. When we think something is right, then we do the right thing. When we think something is wrong, We stop the wrong thing and it really has to boil down to something as simple as that. Now what I have learned over the years though is that when we announce something new, I always try to read it as though I'm the employee. Let's say we announce a new policy inside, 'cause for whatever reason, I only spend a handful of years professionally employed in the software industry before running my own company. But those years are seared into my brain. Like they are literally front and center even if it's 22 years ago. Some incident happened, I just remember it and it comes smack back to me whenever we are announcing a change. And I go like, how would I have taken this? I, I'm working here, maybe I've been working here for a couple years and like now something changes and maybe I perceive that change to be negative for me or it changes the time horizons of some benefits or something else like that. What's my reaction to it? So that's gotta be always sort of filter number one. But I've also learned that the way I process things, even as I would've processed them 22 years ago, is not how everyone processes things. So it is actually quite helpful when something major is about to drop that we preview it to a few people and get a little bit of feedback on it. Again, not to change our minds necessarily about the fundamentals, or at least not to change it from pressure, but to realize sometimes you wanna announce something and you can say that in a trillion different ways. And if you say it one way, it's gonna be received a certain way. And like, I like to be spoken to in this specific way, so that's my default. And I've learned that there was all these other ways you could speak to people and they can respond much better if they get it just right for them. Now you gotta be careful with that because the more wordsmithing you do on sort of a congruent statement, the easier it is for you to try to cover all bases and to make it as inoffensive as possible and actually bury the legitimate message you're trying to come across because you're trying to make it so soft and cottony. Sometimes the right answer is a little bit of a jolt, is a little bit of a shock, is actually if we're changing something material, it should feel material too. So I operate in that space where in a past life I would just have gone the hardcore line and just set things how I wanted to have set them. And now I live in a life where I don't want to get over in the Aerodyne, fully cotton PR executive language bullshit. That's so much of corporate communication is these days, but like there's gotta be a space in between those two things that it's actually legitimate, honest, fair, but also clear.

Yeah. Do you also get like sort of key peers and influencers around the company to sort of like pre-brief it with them and get their input and have them help you sell it? Like, do you think about that kind of thing? Does that feel like politics for you?

That is a lesson I've also had to learn several times. Especially when we've not done that and we've seen the consequences from it. One of the things we've really learned is if it is something major and consequential, it can't be a surprise to everyone. If it is a surprise to everyone and everyone is caught sort of flat-footed and someone asks their mentor or someone else in their group, like, did you know about this? And the answer is just, no, I don't know, it just dropped. Then that's not super productive. So we have absolutely improved that way of rolling things out over the years. And trying to preview more to it. Now again, that cuts straight against the natural instincts that both Jason and I have that like, we just go like, all right, we wanna make a decision. We think through it, we think through it. Decision is made, let's get it outta here. Right? Like I have a very short patience for sitting on something. The same thing goes with employment decisions. Some of the worst moments I've ever had is if we've decided to let someone go, but for whatever reason we can't do it right away. And then you gotta do the dance. And I just, I don't wanna do the dance. I don't wanna do the dance. I just wanna, all right, this is what we are doing. We made the decision. It's final. It's not up for renegotiation. Let's get on with it. Let's pull off the bandage. Let's make the hard choice and live the easy life. But when it comes to consequential communication, I think it's occasionally bitten us that we have that little patience. And I particularly want to I sort of point out Andrea, who's our head of people, that she's very good at getting that preview and going like, yeah, okay, I, I know where you're coming from, but let me tell you how it could be read. And you go like, oh yeah, okay, fine. Let's sit on it for another day. Let's sleep on it for the weekend.

Got it. Well, one thing you talked about is blowback, and I wanna talk, bring you back to April 2021 where you got a lot of blowback because you and Jason announced that you would, you would ban societal and political discussions at work. And there was a lot of hate on Twitter and 30% of your company left. So like we've talked about a little bit, I wanna sort of hear all that unfold, but just in that moment, just in that moment, if I were a fly on the wall when you and Jason made that decision, what would I have seen?

You've seen a couple of founders who were just sick of the trajectory of the company, who did not like where things were going and who were seriously having conversations about, you know what, maybe we should just sell the damn thing. Because we had ended up in a situation where certain aspects of the company culture had gotten to a point where we barely recognized it and certainly didn't enjoy it. And one of the benefits slash curses of having run a profitable software company for 20 years is like, I don't need to do this. I have to want to do this because if I don't want to do it, I don't have to, and then we could just stop, or I could just stop. Right. And it had gotten to that point, which was kind of crazy because Jason and I own this company and we can basically, as I just said, we can make any policy change that we want, but we had slept on this for too long. We had tried to live, or we had tried the easy choices. We tried like, ah, can we just accommodate? Can we just like, maybe it's not such a big deal. Can we just downplay? Can we just move around? Can we do all of this stuff?. And then it came to the point where like, all right, enough, enough. We're gonna make the hard choice. This moment in time, we're not alone here. We, this is not happening in some 30-something Signals or Basecamp as we were called at the time, eco bubble. It's happening broadly, but it's spilling into where I spend 8 hours of my working day and it's kind of making me miserable and it does not have to. We can make changes. That was at least our belief. And Dan changes this. That really just rewrites the rules of how we engage at work, what we engage around, when we engage. And that was essentially it. Now, we made several of the mistakes that we just talked about when we rolled this out. One was we barely previewed it with people. There was a handful of people, but we did not give them, those individuals enough time to really think through it. And to give them or give us the unfiltered feedback on where the communication might have fallen short. We also dropped it in a way that caught way too many people in the company as a shock. There's another mistake. Um, but the fundamentals, the idea that we should not be talking divisive politics in the middle of the workday in our work channels where we also organize our to-do lists and our milestones and all the other stuff that goes into it. Was a kernel of truth that I think I was actually embarrassed that it took us that long to get there. Mm-hmm. Because there were too many incidents along the way where we should have tried to nip this in the butt. And maybe that was also the other issue here. We probably picked the peak worst time, sort of societally speaking, um, to introduce this. 2021 was sort of like almost at the tip of the iceberg for all of these, um, tectonic plates that were moving around in societal politics, specifically in the US. But I don't know if we would've lasted another year. It would've been infinitely easier to do this in 2022. Infinitely easier, not sort of trivial. I think at this point it's totally trivial. I think it's actually halfway taken for granted in most organizations that this idea that we should be discussing, I don't know, Israel-Palestine in there, like that, that makes any sense at all, that the election that's just about to go down, that like, that's a thing that we should be discussing at, in these work channels. Like, I think that now does kind of seem crazy to a lot of people. For a hot moment, it didn't, or didn't appear to. I think this is also, there's this whole thing, preference, um, falsification and all these other things where it appears that like everyone is in on the fact that regardless of whether you make like project management systems like we do, like you have an obligation to address, I don't know, abortion laws or something in states you aren't even operating in. That, in hindsight, a lot of the stuff that went down at that time just seems wild. Like this could have been 30 years ago and we are looking back upon it. What crazy humans lived at that time? Oh shit, it was actually only 3 years ago. Anyway, all of this sort of went down and then it was the high point of pushback. In terms of public feedback. That's a very euphemism word to use for the kind of responses we got from this. But I think what helped both Jason and I was, first of all, it wasn't our first rodeo. It was by far the craziest rodeo, the toughest rodeo, but it wasn't the first time we had gotten public pushback. I mean, both Jason and I have been writing for the public, sharing our lessons, building 37signals for for 20 years, and I have had plenty of takes over that time where people thought I was the biggest idiot on the internet, at least for about 5 minutes. That's about how long these things usually last. This one didn't last 5 minutes. This one lasted 2 weeks. And those 2 weeks were—

and also, David, I don't wanna interrupt you, but like, and also you lost a whole bunch of employees.

Yes.

So like there has to have been, obviously you and Jason had some moments of like gulp, what is going on? So sort of take us into that too.

Yeah, I think that was the hardest part of was, was not to lose the true believers because that was partly the point. The point was we're gonna make a policy change here. And if you're a true believer in the sense that advancing your societal politics at work is just core to who you are, what you wanna do, you need to be in an organization that kind of allows that. This is the point where we're telling like we should part ways. Like, That sentiment is not compatible with what we are trying to do here. That was a minority of the folks who ended up leaving. The majority of the folks who ended up leaving ended up leaving, in my analysis, from the pressure, and most of it the public pressure. And here, Twitter at the time had a certain slant. You can perhaps argue that now it has a different slant, just in the other direction. But the slant that it had at the time was so geared up and so wired to take an issue like this and just torching everything.

This was—

I mean, we were trending on Twitter for, I think, 48 hours. I got somewhere between 20,000 and 30,000 tweets telling me I was literally the worst person on the earth because like we had made this, which to me, I mean, again, looking back on it, we didn't say you got to show up and wear a, I don't know, MAGA hat or something that people assumed in their head at the time that that was what this was, that you needed a certain set of political principles instilled into it. It was actually the opposite. It was like, can we keep that out? You can do whatever you want on the weekend, go to the marches, do the whatever volunteering you want to do, great. We weren't even saying you can't talk politics during work hours. Just don't do it while we're doing the work itself. You want to start a WhatsApp channel with some colleagues and go hog wild there, great. Have fun. Um, and yet it pivoted to, you guys are sort of essentially the worst people on Earth. And I think that's very difficult for someone who have not been exposed to that level of mob culture to even compute, like, what the hell is going on? I mean, I, I commended Andrea earlier in, in the segment here. She got phone calls because somehow, somehow people found her phone number and they just started sort of cursing her out. Like, how could she work at a place like this? Like, you gotta be the worst kind of human to, and you just see that. And then you see all this feedback that especially employees we had that had a public profile on Twitter, people would just find them and start like tweeting at them. Like, why are you working for these white supremacists, fascists, whatever? And, and I can totally recognize that the first time you get exposed to that, you go like, What? Like, what? Like, just— because even for Jason or I, who've been through rodeos before, this was like major stuff. So if you had no exposure to that, I mean, in some ways I'm surprised that it wasn't more people who buckled under the kind of pressure of that and said like, all right, I'm out. I don't even necessarily care one which way or the other, but I can't deal with this, whatever this is. I'm out. What else? I mean, we made it easy for folks. Not only was 2021, I think, the peak hiring year when you look at like the number of openings, it was the easiest time in the history of the tech world, probably ever, probably the high watermark of most open tech positions in the history of our industry. So very, very easy to find a new job. And we said like, hey, would you also like 6 months pay along the way? I mean, The deal was pretty good. And do you know what? In hindsight, I'm glad the deal was that good. I'm glad that we cut so far in and around that there was literally nothing left. And what we had to go through afterwards was a difficult period of time where we lost 20, 18, 20, um, employees and suddenly had to do with, uh, whatever were we at the time, 40 instead of 60 or something like that. That's a fair strain on a small company. So you gotta figure out like, how do you deal with that? And then you gotta get back on your feet and then you gotta hire a bunch of new people and you kinda have to kind of reset. And like, that took a while, several months indeed. But already after about 9, 12 months, I look back upon it and I go like, you know what? I would've paid double. I mean, I would've paid double. This is the most consequential decision we have ever made in the history of this company. When it comes to saving its, or not even saving, improving its culture. It was in such an infected state and we, we took the chemo and the chemo sucked and we lost our hair for a bit, but we got out on the other side and we beat that cancer. Like, you know what? Yeah, I, I, I wouldn't have wanted it to be any other way. And especially now, I mean, this is how memory also works. It compresses all the very uncomfortable parts of it and it highlights all the sort of satisfaction you get out of doing hard things over the long run. But I look back upon that and go like, do you know what? That's in top 5 of career highlights for me. And I wouldn't want it any way. I want to have some difficulty where you stand up for things that you believe and you go, and even if you take that aside, like that analysis, like we are in a tremendously better place. And I think that was, not given at the time. It was not at all given in that moment that we were gonna get to a better place. In fact, Jason and I went like, do you know what? This might be the end. We might just have put a big enough hole in this ship that it's gonna sink. Or it's never gonna be able to get back on even keel. And okay, well, it was a good run. Thanks, mate. High five. 20 years. We had a good run. We went down fighting for what we believed. And okay, that's that, that can happen. And I think that degree of acceptance, which Jason and I actually had, we had no idea it was going to be this bananas, but we did look each other in the eye and go like, you know what? There is a risk here. I think it's a remote risk, but there's a risk here that this could go tremendously wrong and this could be the end. And we're like, well, that would kind of suck, but also it's been a good run. And also what's the alternative? Well, the alternative is we have to continue to live with this infected culture. I don't wanna do that. I, I want less to do that. I'd rather the whole thing end than to continue to live like this.

That's very powerful. And I think it's so important as part of decision making, just knowing, okay, here's the downside, the potential downside. Am I willing to kind of accept, to use your word, and I would almost say surrender to that possibility before you do something this drastic.

This is where that founder, I was about to say, call it founder mode. Maybe that's even trademarked now. I don't know. And also, I don't know. I think it, it means everything to everyone right now in both negative and positive connotations. And let's not even use that word. But this both founder instinct and privilege to take that kind of decisions. That was not what I saw being taken from most professional managers who were professional CEOs. They were like, you know what? I'm not gonna die on this hill. I might be on the, on the, on the spike tomorrow if I pick that, like I'm gonna get thrown under the bus by my board or whatever activists, whatnot. So I also felt like, do you know what, if Jason and I in this capacity as basically owning the business outright, just having a, a couple of small minority co-owners who don't have any power on, if we are unable to say like, do you know what, this is, this is nonsense. This is. It's not just silly, it's actually bad and we don't want it. Who the hell else can do anything? So I kind of put like a little bit of weight on that, that this idea that we don't have to ask anyone for permission, you also have to use it when it counts. Otherwise, mm, I wouldn't feel good about myself afterwards.

There's so much in there that, you know, I always sort of think about this, like actually to use your point that we talked about, hard choices, easy life, right? Easy choices, hard life. I think that is so true when you're making the hard choices. And I guess I'm just so curious, like you as a founder, or you will go back to first principles, you make these hard choices and there's a history of that. I guess I'm just curious, like who gave you permission to, to really go through all that? I mean, a lot of founders come and say, yeah, first principles. Yeah. But very quickly get co-opted co-opted by the best practice movement, very quickly get co-opted by like even society at large. Who gave you permission and why did you think like we can run this company for, you keep saying 20 years, but I think it's actually a little longer actually.

It's been 20 years for a long time. 1999.

Yeah. So coming up on 20, yeah, it's like 25 years now.

Is this like I'll remain 40 for like the next few decades?

I think, let's say, there's gonna be a moment that's phenomenal. It's gonna turn, you're gonna turn. But what, how do you think about your ability to give yourself permission really to think differently?

I think the most instrumental part of it, some of it is personality and we'll talk about that in a second, but the most sort of structural incentive-based permission that we got was we did not commit the original sin of almost all tech startups that kind of get traction. We did not take other people's money. We did not owe other people a huge part of the company. So we never had these commercial ties that made growth the number one priority above all else. We were able to set our leveling on what we want to achieve. Like growth had to be some of it. Like if, if you never get it off the ground, there's not gonna be anything. You're not gonna be able to hire anyone. It's not, that's not important. It's just not, it's not the only important important thing. There are other things that are important. And we were able, because of that incentive that we did not owe other people like millions of dollars and have to just race toward unicornhood. And then if you even make it to unicornhood, it's not like you're set free. Now you're a public company. I mean, talk about pressure, right? And we didn't have any of that. Like the majority, uh, co-owners we had didn't have a say on it. Jason and I, We're accountable to some degree to our employees, but not to the point that they get to tell us what to do. I mean, I think that is the number one privilege of ownership is you kind of get to do with it what you want. You should be a good steward of that. You should take that responsibility very seriously and you shouldn't just act in some mad king way, but it does give you that license. It does give you that permission to do what you think is right. Now, the other thing is, I think both Jason and I have a personality type that is high on disagreeability. We are just, we are highly disagreeable individuals and to a point of almost a sport, at least for me. Yeah. I like debating. I like arguing. I like turning over the issues and try to find holes in it. And sometimes that's seen by people, not without any evidence, as combative. And do you know what? I think some of that is, is true. Like we presented a form of making these kinds of companies, SaaS companies, from first principles and without a lot of the incentives that others went with, which painted us sort of automatically into this weird corner. First of all, company was founded in Chicago when everyone else was in Silicon Valley. I was in Copenhagen at the time when we got going. We were doing remote work from the get-go. We just had a lot of quirks in our construction that meant we were already the outsider. We were already the weird one out. And I think it just becomes easier to resist the pressure, to resist the temptation to ask sort of broad consensus permission from even society on what you're allowed to do when you have come up through that. That you don't feel like, well, the path to success is to do what everyone else does because we've actually found success doing something quite different on a large number of topics. And therefore I have a, a healthy skepticism for all these best practices, for all this consensus. Again, as we talked about, it's not that it's always wrong, but like you should, well, we chose to be skeptical about it and we chose to also look at some of those things and go like, do you know what? Everyone else is wrong. Like that's not a statement I have problems saying. I, I believe that in certain branches of technology choices that we made where we, we use these kind of minority tools and we build a lot of them themselves. It's not part of the mainstream. And that requires some conviction of being able to say everyone else is wrong and I'm right. Sometimes there's a satisfaction that that's just like a timeframe issue. Like we started, when we started with SaaS in like, We started building Basecamp 2003. First of all, we could barely convince our bank to give us a merchant account because they were like, well, what if you guys are gonna go outta business in 3 months and we're gonna be on the hook for all these credit card charges? And then we have to convince customers, no, no, you, you can put in your credit card, it's safe. We won't sell it to, I don't know, Russian hackers or something. So we were kind of founded in being early on a lot of things. Remote work, another example of that. I mean, we wrote the book on it in 2013, Remote Office Not Required, and we were at that point 10 years into our own remote experiment. I mean, I don't think it's an experiment. I think it's a settled thesis at this point, but we put that out thinking like we're really late and like 13, we were really early. Very few companies actually cared about that. And it took until the pandemic for the broad masses to realize, oh, actually remote work is really great for a lot of circumstances, not all of them, but for a lot of them. And there are certain people, again, where this becomes their number one issue. So we just had all this training of being early, of being controversial, of being counterintuitive, of being contrarian, and enough of it panned out that we got that faith in ourselves that like, you know what, we can make good bets. They're not all going to pan out. If you're going to be contrarian, we're going to say everyone else is wrong. Sometimes you're gonna realize, oh no, they're all right and you're wrong. But some of the times, enough of the times we've realized, no, do you know what? We got this one right.

And then you build the muscle memory around that. That first of all, you're often right. But second of all, you can withstand it when you're wrong and then you can make those changes that we talked about earlier.

That's right.

Yeah.

And I think this is, this is, um, so one of those minority partners we have is Jeff Bezos who bought secondaries from Jason and I back in 2000, '05, I wanna say '06, '05, something like that. Well, he bought a small stake at the company, not, didn't put any money into the company itself, but Jason and I took some money off the table. And one of my favorite sort of ideas that Bezos has, and he talked about early on, was this idea of the two-way or two types of doors. There's some doors that open in both directions. You can open the door, you can go through it, you make a decision, then you realize, oh, do you know what? That decision was wrong. Let's go back out. Like the door is still open, I can still go back out. I can redo it. And this is something we've really taken to heart is that most decisions, most of the time are reversible if you learn you're wrong. And the most productive way of learning that you're wrong is to make the decision quickly, move through, let reality be the judge, not you sitting fantasizing, theorizing, estimating, guessing. What the outcome is gonna be because you can just let reality be the judge. And then occasionally there's a small handful of decisions that are really consequential. They're one-way doors. That's when you spend all the time upfront on all the analysis because you know there's no going back. But it is such a vanishingly small number of business decisions that fall into that second category of the one-way door, as Bezos would say, that you should train yourself We will make decisions. We will make them quickly. We will occasionally be wrong. When we are wrong, we will correct, go back out the door, make another decision. And once you get into that loop, you realize you can move so much quicker than anyone else who consider every decision to be a one-way door that has to be overanalyzed to death. And then also they're not wrong or right any more of the time. All that analysis so often just goes chuck out the window. And just doesn't reflect reality because reality is really complicated. And even the smartest people with the most degrees in statistics and PhDs and this, that, and the other thing, they can't tell the future. Literally only interacting with reality will tell you what works or what doesn't, which is one of the reasons, for example, when we make products, we don't do focus groups. We don't ask folks like, how much would you pay for this? The way we figure out whether something's gonna work or not is we push it into the market and we charge a price. And the market's gonna tell us, oh, was that a good deal? Did, did it resonate? Did the message resonate? Was the marketing right? Was the pricing right? You can't guess those things because first of all, people lie all the time, even to your face. Most of all, the people you like, like you, you're gonna ask your friends, so what do you think of this? They're gonna, oh man. Yeah, that's great. That's, oh wow. I really like how you did this thing. And you could like, oh great, I have a good product. And then you launch it into the market to strangers who don't owe you anything, least of all courtesy. And they will just tell you, what the hell is this? This sucks. It doesn't do A, it doesn't do B, it doesn't do C. I wouldn't spend $5 on this and you're charging $25. This is a ripoff. You cannot get that unvarnished feedback, which is the only kind of feedback that actually kind of truly matters unless you interact with strangers. And the way to do that is through commerce.

Yes. And contact with reality, as you just said. And I talk a lot with my clients about you, the Jeff Bezos, the two-way door and the one-way door. The thing is they often think that two-way doors look and feel to them like one-way doors. Yeah. But I think it's really important to assume that most things are actually two, most things are actually two-way doors. What are some things, just like one or two examples of things which are one-way doors to you?

I think this example we just gave about making new policy about politics at work. We knew that was a one-way door. Like if we had gone back out through that afterwards, we would've gotten the worst of all worlds. We would've still alienated everyone who was pissed off about it. And we would also have alienated everyone who thought it was a good idea. And this is one of the hard things sometimes about doing controversial things. You don't realize, or you think it's a two-way door, but it's not. Like you try to ask forgiveness or whatever, and you realize the people you're offering that to, they don't want it. They just want your head and they're gonna chop it off with twice the bigger if you get down on your knees. It is so much easier for them to— afterwards.

Yeah.

And I think that was a one-way decision and we knew that. That was why we went, I mean, we didn't know to the extent, like we didn't know the stakes, like how high they actually were. We miscalculated, I think the odds of sort of the tail risk of that, but we did know it was a one-way door. What are other one-way doors? Um, not a lot comes to mind. And that's the point I keep making over and over again to people is that it is just a vanishingly small number. I mean, literally perhaps changing your business model from, I don't know, I suppose actually not even true. I was gonna say when we launched Basecamp, we were a consultancy at the time. We're doing web design and, and web development for clients. And then we launched a product. And you could say like, well, that's a big pivot, but it wasn't really. We, we made something that for other companies might have been a one-way door where they go like, all right, we wanna make products, let's fire all our clients tomorrow. We go all in, burn the boats, right? Like that's the euphemism that folks often use, burn the boats because they wanted to be a one-way door. They don't want to give themselves the opportunity to go backwards. I mean, I can vaguely see some sort of heroic spirit from that that maybe works in some situations. I don't know if you're literally going into life or death combat, maybe that's the kind of motivation that you need. We make business software. It's just not that consequential. So when we started with Basecamp, we treated it like a two-way door. So we started a product on the side, did not dedicate all our waking hours to it, treated it like a third 4th client, build it up slowly, and then by the time it could comfortably pay all our expenses, then we told the clients, you know what, um, we're gonna do something else now, not tomorrow. Here's an off-ramp and here's some recommendations. And therefore, if Basecamp had failed, which actually an earlier product that Jason and I worked on, something called Single File, manage your book collection, Basecamp did fail, if you wanna say that word, in relation to the fact that we could not go full-time. We launched a SaaS product and we charged the price for it. And I think we got like, I don't know, 2,000 customers who were gonna pay for it, but it just wasn't enough. It couldn't fund the whole business. Basecamp got to the point of being able to fund the whole business quite quickly. And even then we sat and go like, eh, maybe it's a fad, maybe it's a fluke. Let's give another 3 months, let's give another 6 months to be so comfortably in the margin that even if things dip, like literally right after we fire all clients, we're not gonna go like, what, that was a mistake. And now we gotta back out on this. So we've tried to follow that principle through almost everything that we do. How can we turn all those decisions that look like one-way doors into two-way doors? And a lot of it is just to ensure that you have enough margin, enough safety margin. Like we're working on two products right now and we're spending a large portion of our productive capacity at 36V Solutions to build these two new products. They could both fail. And if they fail, do you know what? We could try again. And if that fails, we could try again for about 10 times or 20 times before we are out of tries because we've just sort of hoarded opportunity. We've hoarded the margin. We run a profitable company. We've run it for a long time. We're not stretched out over our skis. We've not hired too many folks. So we live in this space where there's so much room for us to make decisions that could be wrong. I mean, we get to be wrong so many times in a row before it gets to like, all right, you're out of tries, you're outta quarters. The machine will not give you another life. I mean, we've worked up about 100 lives in this business. Again, may all end, right? Like sometimes you just, you're on a cold streak, but to give yourself enough opportunity of that, I think is very conducive to living a calm life. And this is one of the things that I've found, that it's so much easier to stick to your principles and your virtues and your highest ideals if you're not like this. If you're not like right on the ragged edge of, do you know what? If we don't nail this right now, I'm gonna be out of a job in 3 months. I'm gonna have to lay off the entire company. We're gonna, we're gonna be done. I can totally see how people kind of can't live up to the courage they wish they had if they are in those shoes. Lose if everything is on the ragged edge and they feel like they owe all these people, they have all these stakeholders, everything has to just go quite right. They have to produce these fantastical growth charts. This is how you grow dependent people who are afraid of doing what they know is right. Yes. I love that.

One of my big themes is live below your means. And that means like as a philosophy, right? Because that gives you, a lot of margin. Another way, David, that you've created a two-way door, which I think some companies would find very surprising, is you have a two-way door with managers. You had managers, you don't have managers, you're like pendulum swinging on that. Talk about your philosophy with managers and how it shifted over the years.

Yes. So first I'll say, if you're gonna stay in business for more than 20 years, you're going to run into this phenomenon called the half-life of facts. And it is not just facts, but it's also opinions and principles and heuristics that the things that worked earlier, they may stop working, or you might just have gotten it wrong. You might have conflated two things. This happens so often when something is working in a company, particularly the operation of creating revenue. It looks like you're doing everything right. You get this halo effect. Oh man, we're amazing at management and marketing, customer service. Because customers are coming in the door, we're making a lot of money. It looks like everything is a, is incredible. There's actually a great book called The Halo Effect that goes through this phenomenon where you can see companies doing very well. They get just rated to the max on every parameter, even though there might literally be the worst company in the industry about, I don't know, customer service. It looks like they're amazing because it's not hurting them in that moment. And I've been very conscious of that fact that we could have commingled those things. And we could have believed that the reason we've had so much success over 20 years is because we started out not having managers. And then I went like, do you know what? That's an interesting hypothesis. We should test that. I don't have that level of conviction in almost anything that I do that real data from reality can't persuade me otherwise. I am very interested in being wrong because being wrong, accepting that you're wrong means, do you know what? We could just, Be right then. Like if, if I literally do something and it's not the right thing and I learn it's not the right thing, I get to change to do the right thing. I wanna collect as many of those experiences as I possibly could. So we tried that with management because we had famously for many, many years essentially had no managers, no full-time managers, I should say. Management has to happen. It's not like that function disappears, but there is very much a difference between whether you have full-time managers whose job literally 5 days a week, 40 hours of that time, they spent thinking on that. They spent doing the motions and the ceremonies of management. And the example I referred to earlier was this idea of, of especially on engineering management, like, you know what, could we just have been wrong if we started doing the one-on-ones way more frequently? Would people be happier? Would they advance quicker? Would they do all these things? So we started this big experiment, which was in in part, or not even in part, primarily influenced by the ideas that we wanted a slightly bigger company. We wanted a slightly more capable company, so we were gonna hire more people. And I just thought like, you know what, what worked at 40 may break at 60 or at 80. I mean, that's not even may, I think that is an iron rule actually, as we started out talking about what the principles that are great for small companies, 40 or less, they can run into an awkward phase between 40, 80, 100, and then suddenly you actually have to adopt a completely new stance. And we thought, you know what, maybe we should. So we tried it and we tried it in pursuit of having a larger company. And then we got the engineering manager. And I think the first thing that really, after we gave it a while, the easiest thing when you wanna try an experiment like this is to give it about 5 minutes and say, well, that didn't work. Yeah, well, duh. I mean, you've been doing it one way for 20 years and now you try to do it another way. Of course it's not gonna work in 5 minutes. You gotta have a little bit of patience. You gotta actually give it a fair shake and a real try. So we did that over the course of about 2 years and we came to the end of that with a substantially larger company that was getting less done and people were less satisfied. It's like, you know what? This is not completely controlled variables. There's a bunch of other things that could be, Oh, you know what? This is about as slam dunk as this is gonna be for us, for the kind of experiments that we run, that this isn't better. We were better off being a slightly smaller company right before we entered that awkward phase and getting away from those managers. And a big part of that idea is this concept that a lot of folks, certainly the ones we've hired, they are literally happier when just left to do the job. Because they like the job. That's why they got into design. That's why they got into programming. That's why they do the things that they do and are good at it. They wanna do that the vast majority of time. And in a lot of organizations, you end up in a situation when you have a little too much management and that management has a little too much time, that the way they feel productive is by taking other people's time, is by putting their needs on other people's calendars. And now you have people who work on maker time suddenly have a calendar that has a meeting at 10 and another at, uh, 1:30. And then you get to Friday and you feel like I've been working so hard, but what did I do? What did we accomplish? What did we move forward? The only way I know to make large leaps forward is through long stretches of uninterrupted time. So the greatest gift that I believe we can give to the majority of employees that we have is to leave them the hell alone for the majority of the time. Not all of the time. We all have social needs and we need to connect and we need to align and we need to do all these things, but we don't need to do it like every day. We don't need to do it like 12 times a week. So this philosophy is just not super compatible with the idea of full-time managers because a manager has that same feeling too. They wanna feel productive, they wanna feel like their input matters, and the— they can't do things by themselves. That's the definition of a manager, right? You're not sitting there doing the work themselves. You're working through others. You're removing obstacles, you're helping people grow. And I'm not saying that that stuff isn't valuable. I'm just saying for us, it's not a full-time position. And we were much better off when we took that management burden and we distributed amongst people who mildly kind of didn't wanna do it. So they only did just what was sufficient and actually necessary. And that includes myself that, um, I actually do find some parts of management interesting, or at least the leadership parts of, of the management that's in there. You know what? That's interesting and I wanna do it some of the time. I don't wanna do it all the time. So if it's on my doc as a set of responsibilities that I have, I'm gonna do what I find is sufficient and then I'm just not gonna do it. I may not do any management at all for like 2 weeks. You can't— if, if a full-time manager sits on their hands for literally 2 weeks straight and go like, you know what? There is zero hours this week for me to productively inject management into this organization. But you know what? You're not gonna get zero hours. You're still gonna get 40. That's just how it works.

Yeah.

You're still gonna get 40. And I think actually that's gotten worse. I think in an earlier era, managers kind of knew that they weren't necessary all the time and that the main thing they offered was the potential managerial bandwidth when it was necessary. And then they went golfing, they had 2-hour lunches, they took Friday off. And workers for a hot minute were like, that's really unfair. Why do they get to go off early? Little did they know that they would hate if that manager was actually on their case for 40 hours a week, right? You're like, we should actually all go like, yeah, go golfing. That sounds great. You should just like, you know what, just go golfing, have a long whatever, all the things. You don't want the managerial attention all the time. But somehow we've ended up in a culture where managers are seen more than anyone should work as much as possible. The example for me that really stands out with was the infamous Marissa Mayer interview when she was the CEO of Yahoo and she was bragging about working 120 hours a week. And the journalist was, how's that even possible? And part of the answer was, oh, I'm strategic with my bathroom breaks. I'm like, That sounds like something that would sound like a caricature in like, I don't know, the Gulag in Siberia. That like, oh, we run our workers so hard they have to be strategic with their bathroom breaks. And you're like, what? You're the CEO of a major tech company, you're worth hundreds of millions, and you work harder than a slave in Siberia? There's some priorities here that are messed up. And I also think it doesn't even work. I mean, outside perhaps corner cases of Elon, and I think he needs a category story all to himself where literally almost nothing of what he does transfers to the broader set of managers, even if he does it well and succeeds with it. You look at that and go like, you know what? I think Yahoo probably would've been better off if you just worked 20 hours a week. It certainly didn't pan out great. Here too, didn't make the difference. The ship still sunk even though you were working with strategic bathroom breaks. It's true.

I think there's a book in there, Strategic Password Remix. It feels like the title of a new book for someone. But I, so I'm bought in, I'm bought in. And the truth is that like the manager sort of rituals and ceremonies, there's a lot of like preparing for the meeting to prepare for the meeting to prepare for the meeting, all that stuff. I'm bought in. Nonetheless, two things, your junior people have to get taught in some way and people need to be encouraged, but also quote unquote held accountable in some way. And the people who are great at engineering are not always the best managers, you know, and just times, times everybody in the company. So how do you then give people what they need?

It is not easy, but I'll start from the back here. The people who are great at engineering are not good managers. I think that's to their credit most of the time, as we just talked about, like they don't actually wanna do the management. They wanna do the, to some extent, and this sounds negative, but I don't believe that it is. They wanna do the bare minimum to keep the cogs turning. What I do find is that the best engineers are almost invariably also the best mentors, that the people junior, let's just take engineering and programming, the people that junior programmers learn from the most is the people who are the best. That's just, that should not be a controversial statement. I kind of suspect it probably is in some quarters, But I don't think it should be this idea that if you're really good at something, you're gonna just see more things. You're gonna be able to offer more feedback. Now, maybe you don't have the best bedside manners when it comes to delivering that feedback, and I'm not discounting that that can be a problem. I think overall that's mostly a fixable problem. I also think it's one of those things where I think of Steve Jobs had this infamous interview he gave after, I think it was at Next, where he was talking about exactly this phenomenon. We thought we were gonna be a big serious business, and as soon as we did that, we hired a bunch of professional managers to do all this management. And in his words, I'm just quoting here, they were all bozos, right? And we got rid of all of them again. And it turns out that people prefer to be led by someone who's better than them at the job. Now that's not There's a bunch of asterisks behind that, but the core sense of it, and this connects to your first part of how did juniors get better? How did they level up? I think they level up by working with others who are really good. The apprenticeship model stood the test of literally a few millennia for good reason. This was how you learned how to make a good saddle. You went to the best damn saddle maker and you saw how he or she did that. Like, that's how you figured out how to make good— you didn't sit down and just read a bunch of books. I'm not saying there aren't aspects of work that you get good at by reading a bunch of books. I'm sure there is. But when it comes to programming, when it comes to design, when even it comes to copywriting, when it comes to most of the productive capacities that we have at our company, you get good by working with someone better. You don't get good by working with a manager. You just don't. I'm not saying again that it can't be psychologically comforting to have like the one-on-ones and all the other things. And I'm not saying that They can help identify things or set things on roadmaps and do all the other planning around, but it's not the essence. The essence of getting better is by working with someone better. So I think there's just a fundamental horse and carriage swap here. Like, what's the most important part? What could you do without? I think for juniors, for example, they could do without management. They may not like it as much and they may get a little bit too curt feedback sometimes, and there might be some grumblings, but if they work with someone who's truly better, they're gonna level up. You could work with the kindest, most facilitating, most soothing manager in the world. If that person does not know how to do the job better than you do, you're not gonna fucking learn anything. It's just that simple. Now, the best case scenario is when you get both. When you get both managerial support and it's effective and whatever, and you also get to work with someone who's better than you. And we try to straddle that, not always with total success because it's not possible, right? Like the unicorn, where it's supposed to be like this amazing manager who's also incredible at the work itself. I mean, there's about 10 of those in the world and we can't all have them. It just, they don't, they don't slice down. So we gotta accept some compromises here. And if you are going to compromise, compromise on the management. Don't compromise on the skill, on the betterment. And the way we try to then slice that is to realize that we do have a bunch of people who are very good at what they do and some aspects of the managerial function they would really rather not. And where I find that this is usually the case is it's dealing with poor performance. That's really where it falls down. I, I have actually yet to see someone who's really good at what they do who do not enjoy a young boy working with junior staff who is eager and bright and on an upward trajectory. That's the fun part. That's the one virtually every mentor I've ever talked to beam about, right? This was so fun and we worked and like they just got it and like I didn't have to say the same thing 3 times and like we were onto the next thing and like, look at where they are now. They started 2 years ago as a junior and now they're senior, that's amazing. Not all hiring journeys are that much of a fairy tale. Sometimes they're a little bumpy and you can correct. Sometimes you hit a patch or plateau and there's some things you can say, whatever. And other times, like, it's just not gonna pan out. And what I found is that a lot of mentors, they don't wanna deal with the, it's not panning out part of the equation because it doesn't. It doesn't go like that, right? First of all, you have to be fair. You have to figure out, like you said, actually not panning out, or is there some other blocker we could remove and then suddenly would pan out? And managing that whole process, that's probably where we lean most on people in our organizations like Andrea or myself or others who sort of step in to deal with that, that most of these folks would rather not.

Yeah. So that leads us right into remote work. Where again, like we do entire podcasts on remote work 'cause you guys are really the experts in this having done it for so long. But the apprenticeship model, I'm bought in, I love it. How do you affect that inside of remote work? And what other things do we sitting here in 2024 need to know about remote work that you discovered in 2013 or, or before that really?

So the first thing is direct human contact is irreplaceable. We can sit here and we can have the contact that we can have through a video link. It is not the same. It is not the same. And you have to accept that as table stakes. We do that at our company by meeting up the entire company twice a year for the sole purpose of recharging social batteries, of being eye to eye, of breaking bread, of doing all of these other things that remind us that we're working with humans, not avatars, not like 2D representations in Zoom. On Zoom, but actual flesh and blood individuals. That is irreplaceable. And I know this because we've been doing this since, I don't know, 2007. And then we didn't do it for 2.5 years during the pandemic. And the cost was— I was about to say imminent. It was not. But it became clear that it was extensive after about 1 year when we hadn't seen each other. The pandemic was special in other ways. There was a lot of other pressures and people were more on edge and all these other things. But even so, the fact that we were robbed the opportunity to recharge those social batteries really counted. Now, the insight we've had is you don't need it every day. You don't need it every week. You don't even need it every month. You don't need that human connection, that in-person connection all the time to get the majority of the benefits from it. Now, that's our company. We're a software company. May be different if you work with machines and do hardware or fabrics, or I could totally imagine that. May it also work different if you have a very different company culture. Totally buy into that. This is one of the reasons I sometimes befuddle people who are very fond of remote work by saying, do you know what? I can't get worked up about the fact that Apple won't do it. I cannot get worked up about the fact that there's some organizations who decide that's not what we wanna do. I don't think they're right in some sort of sense for me, but I also think, and I've seen even at our company, that we have had employees who were not compatible at that stage in their life with remote work. They didn't want it. They wanted to be in the office. They wanted to be around a bunch of people. And you know what? There should be options for them. A hot minute ago, folks who were a fan of remote work were really incensed that there were no options for them, that they couldn't go anywhere, or there were not enough choices for remote work. Try to remember a little of that humility when you kind of get on the march of wanting to have every single company, every single tech company be remote. I don't think that's actually fair or right or good. But I am unequivocally a huge fan of remote work. You are never, ever getting me back into an open office again. If I have worked in an open office for the last time in my life, 20-some years ago, you know what? I can die perfectly happy. I don't need that anymore. And I attribute a huge part of my career inflection to getting home, to being in my own space. That's where I found the long stretches of uninterrupted time. That's where I really unlock my creativity, so on and so forth. But to the point, the, where the human connection is important, you don't need it all the time. And there are other things that you can do on a weekly, daily basis that aren't even just substitutes from that, but that are as effective in creating good feedback, especially with juniors. This is one of the things that I'm really keen on. We do these things called code reviews with, uh, GitHub, the platform that we host our code on, they have this thing called pull requests, and you can give line-by-line edits. I do that religiously and on the most pedantically small trivial things because I want the person who's getting my review to get my standards. This is what I'm— I mean, that comma should be over here. Here's a line telling you to move it. Here's some red, uh, marker here. So what we found, what I found, is that the teaching of the skills is immensely doable online. There's actually, I'd actually say it's better. I say I have more fond memories of doing very detailed code reviews remotely than I have doing them in person. But you still need the human input. You still need that human element. So don't, like, it's not either or, it's just don't tell me you can't do it. This was the thing I actually did enjoy about the pandemic experiment. It settled the argument once and for all whether this was possible. Like prior to the pandemic, there were legitimately smart people who thought they could not run their company, that you could not make products, you could not do things remotely. And they were just sufficiently proven wrong because we ran the great, well, not the greatest, the largest experiment in remote work the world had ever seen. And we all ran it, controlled all the variables at once. And do you know what the entire economy did? Does not evaporate.

Far from it. Totally true. Truly true. David, just a few more questions. What do you wish you had known earlier on your journey?

Nothing. I want to see every problem for the first time without being handed a cheat sheet to the solution. I do not want to regurgitate things I already know. This is one of the things where we started the conversation where, what I like about business is I face novel problems I don't know how to solve. If I'm constantly just facing problems where I already have the answer, I'm bored out of my brains. I can't actually summon the intention or motivation to do something. And I don't want to be without all the mistakes. I think you'd become a very— maybe people would say I already am— I would become a more arrogant person if I literally just had all the answers. I was right all the time. And again, how boring a life that would be. I love the fact that faith is not just a straight line, but it's totally squiggly. And sometimes it goes backwards and it does loops. And in the moment you go, this is the worst thing ever. And then you give it 5 minutes and you think, actually, that was pretty great. I'm really happy that I didn't know that up front. If I hadn't had the opportunity to be wrong, I would have been robbed this opportunity to be a little more humble next time, or a little wiser next time, or be able to zoom out a little wider. I don't wanna know anything upfront. And I actually think this is one of the blessings that Jason and I had when we started our business. We did not have to, we could actually avoid it because we were not told by 400 social media channels 24/7 about what the best ways to do enterprise B2B SaaS sales were. Like, we're just constantly bombarded and loaded up with like what everyone thinks about everything all the time, and I go like, Jesus, could they just be quiet for one damn minute? Leave me some space to think through those first principles for just a little bit on some of the things, some of the times, so I can come up with a truly authentic solution that may actually be novel and interesting. I think the problem we have when we operate in these oversaturated media channels where everyone is telling us everything all the time, is it becomes a form of a language that dictates how we think. And if you're gonna come up with something novel, you have to think something different. You're not gonna come up with something novel if you think all the thoughts that everyone else is thinking all the time too. And that requires some degree of separation, some degree of isolation. And it was easier to have that isolation in the early days prior to social media. We still have blogs, we still had the internet, you were still go on there, but there was just not as much of it. And I actually find that, um, I wrestle with this all the time. I mean, because I'm one of these people, I'm one of the people telling you all the things all the time. I'm on podcasts all the time. We write books. I write on my own newsletter. And like, I'm also telling you, like, you know what, be careful how much you listen even to me and even to everyone else. You gotta like, you gotta dip in and like get something and then go back to your little cocoon and come up with some original thoughts. You can't just load up on all of it. And this is why I actually envy the young to some extent, the young that are not spoiled by everyone else's lessons on like day one when they start. And I think we need some of that. We also need some wise elders who've seen it all and who could tell you all the reasons for why it wouldn't work and, and so forth. But it's in that space that it, it happens. And if we blend it all together that everyone knows everything about all all the things like we're supposed to know, all the consensus, we're just going to get more of that slob, more of that like just put together blob. And I don't want that. I want something new. I want something novel. I want something interesting. I want a bunch of mistakes that turn out they're not mistakes at all. I mean, it's one of the books I read to my sons at night is, I think it's called like The Beautiful Mistake or something. Like, here's a stain and you can turn it into an elephant. And some of it is a little sappy and a little whatever, but also some of it is true. A lot of things that we ended up doing that panned out were mistakes. If you look at the history of inventions in general, half of the most consequential ones were mistakes. We weren't getting penicillin unless they had left that tray, whatever, with some mold in it by accident, right? So I think we can get more of that if we're a little less connected. I think we're overconnected and, um, I want to tell young entrepreneurs in particular, like, be careful how much you read. Like, there's not like the curriculum you need, you think you need to catch up on, but everyone knows about everything. Do you know what? Um, give it a second. There'll always be more of it. It's not like you're gonna miss out. No way. It's gonna pass you by and you can't jump on that train. You can always open Twitter or some other channel again and get just absolutely flooded with the top 10 tricks for doing B2B sales SaaS. Right, right.

Well, that is my last question, which is what advice do you have for other founders as they embark on their own journeys?

Disconnect. I think, I mean, straight off that disconnect, trust to some degree in your own intuition, not because it's flawless, but because it's yours and you need some of those flaws. That's what's gonna give the variation and you need variation. Because if you are a young founder and you're going up against established players who have more money than you, more time than you, more people than you, more brand recognition than you, you need what to them would look like a mistake. That's why basically all the great businesses that's been created at first are laughed at. I think that's one part the Paul Graham got just right. This idea that any great idea has to look silly. Like a toy, like a mistake at first, because otherwise it would already be swamped. It would already have been captured. The big guns and guys and corporations would already have taken that in. So you need to be the one who takes the risks, who does the mistakes, who follows through with it. And I think it's just easier to do that if you trust your own instincts a little more and, um, and disconnect.

David, I love it. You may be disagreeable, but you're super fun and I love especially your encouragement around follow your intuition. And you are a beacon of light following your intuition. So thank you so much for sharing your intuition and opinions and ideas with us today.

Thank you so much.

Thanks for listening to From Startup to Grownup. If you like what you heard, give it a review on Apple Podcasts so other people can find it. And if you know of a founder or someone else who is meant to be on this podcast, drop me a line through my website. AlisaCohn.com.