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Jason Fried & Scott Heiferman: Building Businesses That Last

About this talk

There’s a ton of focus on growing quickly and scaling, but there’s beauty in the long, slow, sustained effort. Scott Heiferman has been running Meetup since 2002 and Jason Fried has been at the helm of Basecamp since 1999. In this 99U Interview, the two accomplished founders discuss the long haul: how do we build businesses that become our life’s work?   

“Not every business has to be a place where everything is chaotic and everyone’s sweating. Rapid growth and getting big create a lot of tension and turbulence. We’re in this for the slow, long term.” says Fried.  

Jason Fried, Founder & CEO, Basecamp

Jason Fried is the Founder and CEO of Basecamp, a privately-held Chicago-based company committed to building the best web-based tools possible with the least number of features necessary.

Prior to shifting its focus solely to Basecamp, the company was known as 37Signals and was responsible for launching a range of products including Highrise, Backpack, and Campfire. 37Signals also developed and open-sourced the Ruby on Rails programming framework. The company’s weblog, Signal vs. Noise, is read by over 100,000 people every day.

Jason believes there’s real value and beauty in the basics. Elegance, respect for people’s desire to simply get stuff done, and honest ease of use are the hallmarks of Basecamp’s products.


Scott Heiferman, Co-Founder & CEO, Meetup

Scott Heiferman is Co-Founder & CEO of Meetup. Each week, 50,000 Meetups are self-organized by millions of people “using the internet to get off the internet.” The company is pursuing a long-range goal of a “Meetup Everywhere about Most Everything” — so that everyone has access to local community about what’s important to them.

Scott lives in NYC and graduated from The University of Iowa. He was named the 2004 MIT Tech Review “Innovator of the year” and is focused for the long-haul on Meetup revolutionizing local community everywhere.

Full Transcript

Hey everybody. This is like my dream job. Well, my dream job is the job I have, but my second dream job would be to be Charlie Rose. So this is it. I get to pretend I’m Charlie Rose here. So this is a blast, Jason. We’re friends, but I’m also just a big, big fan. And so let’s kick it off with this question. And we didn’t prepare– he doesn’t know things I’m going to ask.

This conference is about the 99% perspiration. Do people think it’s weird that you’re doing something for a long time?

Yeah, I think they do. We’ve been in business now for 15 years. So it’s been a long time for our industry, obviously a short time for many, many businesses that were around for many, many years. But people always ask me, like what’s your next business going to be? Like what are going to do next? That’s a question I get all the time. Me too. And I’m sure– you’ve been at it for 12 years or something, right? So I think that obviously, that signals that people think it’s very unusual that I would want to keep doing the same thing for a long period of time. But I like it. I like doing the same thing for a long period of time. I think it’s a great opportunity to make things better and to refine, and to learn more about the problem that you’re trying to solve. And to find out all the things you did wrong and try and correct them over time. And it’s fun. You know, if all these people show up for a conference, the 99% perspiration implies that it takes a while. That the impossible takes a while. So why is it so countercultural, Why is it so countercultural? Well, I think when people think about entrepreneurship, they usually think about the start of something. That’s what entrepreneurship is. Entrepreneurs start businesses. They don’t usually keep going. Entrepreneurship is always about the new thing, the startup, the new founder. It’s always new, new, new. And so I think that’s what people expect when you to talk to entrepreneurs. But I’m inspired by the people who figure out how not to go out of business. In my opinion, it’s actually really– I mean it’s not– OK. It’s hard to do any of this stuff. But let’s say for a moment that it’s actually easier to start a business than it is to keep a business going. I think that’s true, because I think anyone can just start something. You can just start running, and eventually you’re going to run out of energy. You’re going to have to stop running. I like the people who can keep running, that’s what’s interesting to me. Because that’s I think, ultimately, what’s really hard to do. And obviously it’s sexy, it’s interesting to start new things. And that gets people fired up. But maintaining something to me is actually the harder thing and actually ultimately, the more interesting thing. And that’s what I aspire to be able to do for hopefully 30 years, if I can. Especially if there’s an exciting roadmap around that thing, or especially if the thing that you’re doing, you know, Basecamp certainly just needs people to use it. Yeah. Well, the problem that we’re trying to solve is not going away. People work together. More people work together remotely than ever before. People have projects. They need to get things done. Like all this stuff, this is not something that’s been solved or will ever be solved. There will always be new ways to figure out how to make people more effective together and more efficient together, and share stuff together and get stuff done together. So I’m excited, because that problem has not been solved yet. We haven’t solved it, no one else has solved it. We’re all like solving small tiny pieces of it, but there’s always more to explore. And it’s not tired, it’s not done. (scott heiferman) You said something I think, that’s really important. It’s essentially, to get to work on something. Hopefully, most people in the room, or a lot of them, are working on something that taps into some universal human need that is timeless, that kind of provides a foundation by which you can work for a long time on something important. You know, I like the idea of working on something important. But not everything has to be so important, either. (scott heiferman) Like lawn care. Like lawn care, is that what you said? Yeah, there was a blog post– If you don’t read the 37signals, or whatever you call it now– Signal Versus Noise, yeah. There’s a great post about this guy who says you know, screw the fact that I’m working in an unsexy industry called you know, the uberfication of lawn care, but like hey, people should have people that have easier access to lawn care. Yeah. Not everything has to be this monumental serious problem. Sometimes you can just make things better that need to be better, and they can be small tiny things. And if you really enjoy making those things better, that’s great. Like I love walking into a store like a dry cleaners that’s been there for 70 years or 60 years. That’s an amazing thing, to go into a place like that, not an important problem really. I mean you want to be clean, but it’s not like an important problem in the world. Yet they’ve figured out how to stay in business for 70 years, 60 years, whatever it might be. That to me completely blows me away. When I walk into a place like that I’m awestruck, far more so than I am when I walk into a new startup that’s been around for 18 months and it still isn’t making money, and still has no idea how they’re going to make money and has really fancy stuff. But they probably won’t be around in three years. Like that doesn’t inspire me like a 60-year-old business inspires me. And the point is that while the startup could be solving a really important huge world problem, this other guy in the corner is just cleaning clothes, but he does it really well, he treats his customers well, and he has the basics nailed. And that to me is just a beautiful, beautiful thing and should be celebrated. I mean, I love the phrase, to be of use. Did you just coin that? I’ve never– No, it’s just the simplicity of just– Being useful. Yeah. I mean the world needs dry cleaners and the world needs teachers and nurses and good food markets and everything. Absolutely. So OK, this is my big important question. Are you texting right now? (scott heiferman) No, I’m not texting right now. You haunted me for months with an email you sent me this past November. And we haven’t talked about it since. You probably don’t even remember this. I don’t. But I sent something around to some meet up shareholders. And by the way, people who don’t know this, a bit of trivia. Jason, before Basecamp , before all this stuff, he designed Meetup Because I was just in love with the work that you were doing that no one had seen much of yet. And it was great. Anyway, you sent me this email, oh shit, where’d it go? OK, so I sent the thing around saying, a quote from Marc Andreessen, the founder of the web browser, the venture capitalist who said, every new company goes through tremendous challenges. Ask any entrepreneur in the valley how their company’s going, oh it’s going great, everything’s fine. But internally, they’re always about to throw up. Because there’s always something going wrong, some key employee is about to quit, or some new competitor has popped up, or some product has slipped, or some customer is suing you, or some crazy thing has happened. There’s nothing easy about being in a business but it gets built over 10 or 15 or 20 years, with a founder, committed, all that stuff. And you wrote, you said, love the long term commitment comment, but I don’t like quote, “everything’s always chaotic and fucked up everywhere else, too. That chaos is man made,” this is Jason’s words. “That chaos is man made which means it can be man-prevented too.” So that haunted me because I mean, I lived the chaos of building a company. And I’ve sort of swallowed the fact like, OK, It’s hard. But am I doing it wrong? No, no. It is hard and there are moments where things are especially hard, but I do think a lot of that stress and anxiety is man made. And it comes from paranoia, which is healthy to have some of that, absolutely. But it comes to paying too much attention to things that you can’t control, like competition. Like you can’t control what your competition is going to do, yet people are often obsessed by it and they are afraid of it, and then they feel inadequate because they’re not doing everyone else is doing. And all these things start to bubble up and create an environment where it breeds more of this chaos and anxiety. And that’s not to say that we don’t have some of that at Basecamp , but I hope that we have a calm environment as much as possible. And I’m trying to be very conscious of not creating– and sometimes I do– but not creating drama and creating things that man made false scenarios that cause people trouble. There are some times when I need to make people uncomfortable because I feel like we’re being complacent or something like that. That happens from time to time. But I don’t feel like every business has to be this place where you go in and it’s chaotic and everyone sweating. I just don’t feel like that has to be the way it is. And hopefully, ours isn’t that way and I know others that aren’t that way. So it’s certainly possible. I think part of it too might have to do with the environment where you create your business. So we’re based in Chicago, which is a quieter, slightly slower place than New York and the Valley. And valley-based businesses and New York based businesses in many cases, especially ones that are venture backed, are chaotic because it’s all about rapid growth. We need to get big, we need to get big fast. And that creates a lot of tension and turbulence, just because the goal is to get big fast. And so that means a lot of shaking up and a lot of crazy stuff going on. We’re in this for the slow long term. So the slow long term allows you I think, to be a little bit more calm as you walk instead of trying to sprint everywhere. It’s just like if you’re sprinting everywhere, you’re breathing really heavy and your heart’s pounding, you’re sweating. If you’re walking, it’s calm. And that’s the way I like to think of the business is we’re on a long walk, rather than a sprint. That was a long answer, I hope I got there. No, it’s good. Good answer, good answer. Do you want to talk actually a little bit about– then maybe switch gears– a bit about you are– are you talking about this new project? Yeah we’re launching this thing next week. This is all related. So next week, we’re launching this thing called The Distance, And it’s kind of a pet project. It’s a new online magazine which we’re going to do, which is going to launch with one article a month starting May 6 is the first one. And it’s all about businesses that have been around for 25 years or more. Privately owned, small mom and pop shops, family owned businesses that have been around for a long time. Some of them much longer than 25, but the minimum is 25. And the idea is that to me, these are the real heroes of business. The people who figure out how not to go out of business, like I mentioned earlier. And I think that they have really important lessons to teach. We can all learn a ton from them. And these stories typically aren’t being told, because the news cycle is driven by new. I’m really interested in old. Like there’s nowhere to go to read about old. There’s a lot of places to go to read about new, the newest this, the newest that, that’s all over the news. But a lot of these businesses don’t have anything new that’s coming out, so there’s no news written about them. And their stories aren’t being told. And I want to tell those stories because these people are amazing. (scott heiferman) So you’re talking a lot about from the perspective of the leaders and the founders of businesses. I’ve been in a situation recently where, just in general, where there are some amazing people that meet up who have been like– I think about a guy like Keith Corwin who’s one of our lead engineers, and a whole bunch of people that meet up who’ve been at the company for like seven, eight, nine, 10, 11 years. And they’re like the most marketable, they have like insane skills. And people like sort of ask them, they’re like, what’s wrong with you? What’s wrong with you working at this same company? And I actually kind of like– there’s something fucking awesome about the boldness of– I mean, there’s a lot of people in this room who are like 28, 29, 30. They’re not thinking about 25 years necessarily. But I guess the question is so there’s the perspective of like the leadership and the owner or the you know, founder of something. How can it be more commonplace for people that feel that they have a job that they love and they’re doing important work, and it’s like a great situation for them, how can it be more normal for them to say, hey it’s OK to stick around? (jason fried) Yeah. Well, I think those people don’t have to explain themselves to anyone really, because they’ve figured it out. And if they found a great job that they like in a company they admire or whatever. And they think they’re doing important work, then they should continue to do that and don’t worry about what everyone else tells them or asks them if they’re crazy or whatever. So I think that they’ve figured that out. But I want to also see if we can highlight some of those people too. So there’s a restaurant in Chicago where some of the waitstaff has been around for 40 years, you know. And they’ve made a career out of that. And that to me it’s an amazing thing again. And so I want to focus on not only business owners and businesses who’ve been around for that long, but also people who’ve done the same kind of job or moved up from the bottom up to the top, or from the bottom to the middle where they’re very happy. Wherever it is, I think longevity is something that needs to be celebrated more. We celebrate it in a lot of other ways. We celebrate it in nature. You look at a beautiful, beautiful old oak tree and you recognize that that is an amazing thing. You don’t look at the seedling and go, that’s amazing because it hasn’t gotten there yet, you know? So we look at we look at beautiful old oak trees and you look at beautiful architecture. And obviously, there’s beautiful modern architecture, but some of the most beautiful buildings in the world are old buildings. And you look at those buildings and they’re covered with moss, and they’re a little bit you know, worn, and that’s what makes them great. That’s longevity. We admire a building that But in our culture today, it seems like we don’t admire businesses necessarily that have been around for a long time. We think that they’re out of touch or whatever, or they’re unable to innovate. Another thing is– this might cause some problems, but I think innovation in general is a bit overrated. I mean, when you see innovative stuff, it’s amazing. I love seeing great new ideas. (scott heiferman) You love Uber. (jason fried) I love Uber, as I’ve mentioned, right? But I love great new ideas, but not every idea has to be brand new and like change the world. And so we don’t all have to go out and try and do that. So a lot of business that have been around for a long time aren’t innovative anymore in the sense that they’re not releasing new stuff that’s changing the world all the time, but they’re performing. They’re doing a great job, doing great work, employing people over the long term, creating steady income for people, creating steady lives for people. That’s an amazing thing, too. That’s a product as well. Every company is a product in itself. So we make Basecamp. Our company is also Basecamp. You’re Meetup. Your company’s Meetup, but even if you had multiple products, your company is a product too. And your company puts things out in the world. It puts people out there in the world. It creates salaries for people which create stability in families. And that’s an amazing thing, to be able to contribute. And I feel like companies that are only around for 18 months or two years, they never get a chance to contribute that back to the world, which is really valuable. And in my opinion, way more valuable in many cases, than just trying to be brand new and do brand new things. Well, we’ll switch gears to another topic. I hope that this topic is an interesting one. I have no idea whether you guys are all bored out of your mind about this topic of The Distance and long term sustainable stuff. I hope it really becomes a trend. And actually, there’s an interesting parallel. You were just hanging out with my one-week-old baby. Not really hanging out. And you really really think about it, like this baby is a start up. And I’m not going to just go on to the next one if this one fails. This is a responsibility, a commitment. And the beauty of it grows. You know, like I mean, I’ve got a slightly older kid too so you see– but anyway, swtiching gears. Actually, is a terrible segue to the next topic, which is the theme of killing things. You have recently had that the discipline to kill off things in a reframing of 37signals to focus on Basecamp. And what have you learned and how can you inspire people to make those tough decisions? So just to be clear, we didn’t kill anything yet. What we decided Keeping my baby far away. (jason fried) What we decided to do recently was we have a series of products over the years. We made Basecamp first, then we made Backpack, then we made Campfire, then we made Highrise. We’ve done a few other things. And what we realized was that we’re 42 people now, 43 people actually, at the company. And we had to think about what we wanted to be. And if we have four products and we want to make more, how are we going to do that with a small team? We’re not going to be able to do things the way we want to do them. Like some of our other products have already sort of suffered, because we haven’t been putting the attention into them. And we realized at a certain point that the culture of the company, the size of the company, was what was most important to us, not growth. So we decided to focus in on Basecamp only, which is our number one product, which is our biggest winner, which is, I think our best idea. Which we’ve been doing for 10 years, which has millions of people around the world using it. Very popular product. And our other products are popular as well, but we just weren’t as excited about them anymore. And so what we decided to do was we decided to come up with three scenarios for each one of these products. One is either sell the product outright. One is to spin them off, to create new companies out of them, and then the third one was if we can’t sell it and we can’t spin it off, we do not want to leave any customer hanging. So we’ve committed to supporting those products forever, if we can’t find buyers for them or spin them off. So we won’t improve the products anymore, we’ll only maintain them. And this is again a long term thing. If you want to be in business for 30 years, or 40 years, or whatever you want to be in business for, screwing people over is not the way to do that. And killing products outright is not– You pay a lot for this conference for wise advice like that. Don’t screw over your customers. (jason fried) Yeah, don’t screw over your customers. You don’t want to kill things outright. And this is what happens also in our industry with a lot of these young companies. They’ll build something for two or three years, and then it’ll get acquired. That’s the end goal. And what ends up happening is the customers get screwed. People who love the product and believe in the product, who bought the product or used it or whatever. All of a sudden, like this team gets acquired, the product dies, and the founders get rich and the employees get new jobs, but all the customers are fucked. That sucks. What a terrible, terrible thing to put out in the world, is to screw people. Intentionally build something that you know is not going to last. I don’t like that idea. So we’re trying to figure out ways to make this last. And if we can’t figure out ways to make those other products last, we’ll continue to support them. That’s our problem, that’s not our customer’s problem that they have to go find something new. Yeah. So anyway, it was a decision that looking back on, is now obvious. Obviously it was a challenging decision at the time, but I think it was the right call. And then we changed the name of the company to reflect that, to prove that this is what we do. Yeah, that’s hard. That takes guts. I mean, also you were telling me this morning that I’ve been looking at like the Meetup logo like sort of identity recently, and thinking like, oh this is feeling kind of stale. And we’ve gone from like one designer up to six in the past year. And they’re all light coming at me sort of and saying that something’s not feeling right. One of them is in the audience, Mike Peretti. And you’re like, oh, no Scott you’re only seeing it as stale because you’ve been looking at a long time. I’m like, no actually, I feel like there’s an ability to– it’s a fresh look at it, and to see something as stale. And so I mean, it takes guts when you have so much invested in this name. (jason fried) Yeah. What do you do when people, they’re invested in something? Like the guy yesterday, the speaker who talked about being invested in a goal. To climb that mountain, and ultimately, you might die being too invested in the goal. Well, you mean like 37signals versus Basecamp as a name sort of thing? (scott heiferman) Yeah. Example? 37signals has been around for longer than Basecamp So we actually traded a longer term name for a shorter term name. But the truth is that whenever I go around and say that what I do, like, where do you work? I work a 37signals They’re like, what’s that? We make this thing called Basecamp Like, oh, Basecamp I know Basecamp, we use Basecamp for work. My wife uses it. Our church uses it. So more people around the world actually knew about Basecamp, where people in the designer community knew about 37signals. And I love 37signals, like I started the company. I love the name, but it’s just a name. That’s all these things are anyway. They’re just names. So we switched the focus and now we’re just this name, and just the name. We’re still the same company, we still have the same values, we still believe in the same things, we’re still the same people. We still approach work the same way. So the name is like, there’s some nostalgia around the name, but it’s just a name. And if you continue with the values and the same company in the same goals, the name doesn’t really matter so much. So if we have an extra minute or two, what do you think people are interested in hearing about? And anyone could bark something out, or just– what do you think this crowd cares about? Stock options. We don’t have options. We don’t have any equity. What we have is we have a simpler set up. OK this little rant of a minute, I don’t know. I don’t. But anyway, I’ll do it. I Real quick. You don’t need lunch. I don’t believe in paying people with money they can’t buy something with. So a lot of companies will pay employees– they’ll have a reduced salary and pay with equity in the promise that maybe eventually that equity’s worth something. Which is OK, just not the way I like to do. What we did is we set aside a 5% pool that in the event the company is sold, which we have no intention to sell the company. So this also kind of makes this kind of new. But let’s say we did. We would take 5% of the earnings from that sale and distribute that across the employee based on seniority. So it’s not equity, it’s a share of a liquidity event if that happens. For example, we sold a product called Sortfolio. This was a couple years ago. We had a product called Sortfolio which And I give it all back to I just split it across the employees. And so that wasn’t something that we had talked about ahead of time. It wasn’t something that people had a piece of paper that said they’re entitled to this. I just decided that it was the right thing to do. And so I did it. You know what, that’s fine, that’s awesome, that’s a great way to do things. But I’m much more excited about the notion– so the idea of equity being something about when a company gets sold then the equity has value. The old school like really foundational notion of what equity is, is like it’s that people are owners. And you like the word owner. Owners have a part of the profits. You know, like what we’re building at Meetup is we want to be a company that also doesn’t sell and it doesn’t go public, but just is a sustainable, profitable, growing, more profitable company. And equity for us is about people who are shareholders in the company, employees and otherwise, get money over time because we generate money as a just operating enterprise. I mean, I want to live in a world where there is just simply better distribution of ownership and wealth. And that it’s not just sort of like playing into some Wall Street machine that if the thing is acquired you get some money, but that it’s just no, we have customers. The customers pay us money and we have profit and it works. Well, I totally admire that. We have a slightly different take on it in terms of what I try and do is we try to be extraordinarily generous with our employees. I think we pay everyone very, very well. We work four day weeks in the summers from May through October, we just work four day weeks. So that’s not shoving more hours in to less time, it’s actually less work every week. We take care of this, we send people on amazing vacations every year which we pay for. So it’s not just getting vacation time, but we’ll maybe send you to Morocco. Maybe send you to Iceland. Every single employee, no matter what the position, gets a great vacation from us every year. Are you hiring? We pay for people’s hobbies. So one of our ops guys, he wanted to learn how to fly a plane, so we paid for half of his flight school. I could a few months off Meetup. So I look at it as real stuff that can affect people’s lives today, rather than this notion that maybe one day somehow people get some cash back out of it. I totally understand both perspectives, though. It’s just that’s how we’ve chosen to do it. And I want to try and give back as much as I can while we’re all working together every year, rather than eventually maybe. One other thing I found is that things like vacations and helping people go to flight school, and helping people learn how to play banjo and these things are actually more valuable than the cash value behind the things. So if we were just to bonus compared to sending the trip is more valuable to people because they wouldn’t have gone They would have gone and done something else with it. So I’ve– got that wrong? Oh, Amen. Jason, has work ever made you cry? I’ve been emotionally overwhelmed in a positive sense. And it’s usually by– we get together as a company. We’re a remote company, so we have 40 some people and 13 of them are in Chicago. And the rest are spread out in 25 to 26 other cities. So we’re all over the place. And twice a year, we all get together for a week to meet up, to hang out. And during these weeks, there’s peer awards that are given out, so people nominate their coworkers for things like great achievements during that year, or during those last six months. And people stand up in front of the group and present them to their coworker who they think is doing a great job. And I kind of hide my tears a little bit, but like I actually get emotional about it because it means a lot to me that people are recognizing each other and seeing things that I don’t see every day. You know, like someone did something that I didn’t even know it was done or I didn’t realize that someone went the extra mile for. And that stuff, it really gets to me. I have to kind of hold it in.

(scott heiferman) Why does it get to you?

Because I’m proud. I’m proud of the people who work at my company. I’m proud of the things we do and I’m proud of the way people treat each other at our company. And that makes me well up inside. Like I don’t have any kids yet, so like my employees aren’t my children at all. But I have the same kind of pride for them like that I would imagine a father would for their kids. That’s great. Well, thank you Jason. Hope that didn’t sound weird. No, it’s good. [MUSIC PLAYING]

Comments (3)
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  • The Digital Age Blog

    What an inspiring talk! We wish more businesses would implement the work philosophy of Mr.Fried.

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