Basecamp: How To Build Product People Love (And Love Paying For) – with Jason Fried

Do you want to build products that people love? Jason Fried of 37signals did it multiple times, most recently with the relaunch of Basecamp, the project management web app. So I invited him to teach how he did it.

And since he’s known for urging entrepreneurs to charge for their products, I hit him up for some answers to questions that many of you in the audience told me you’re wrestling with.

Jason’s a repeat Mixergy guest who always brings the goods, so do yourself a favor and hit the play button now.

Watch the FULL program

Jason Fried, 37signals

Jason Fried is the co-founder of 37signals, a company that builds web-based productivity tools. Their simple but powerful products include Basecamp, the project management and collaboration tool.

 

Raw transcript

Mixergy's audio transcription is done by Speechpad

Andrew: Coming up, do you want to build products that people love? Today’s

guest did it. I’m going to ask him to tell us his process so that you can

do it, too. Also, are you charging your users? Well, I have a stack of

questions for Mixergy fans who want to know how to improve their sales

process. Today’s guest agreed to answer them. We’ll go through them so that

you and I can both learn. Finally, a Mixergy Premium member says that I

gave him money that he didn’t want. I’ll talk about that towards the end of

the program. All that and so much more coming up.

First, three messages. Who’s the lawyer that founders in the Mixergy

audience trust? Scott Edward Walker of Walker Corporate Law. Have you seen

what Chris Pritchard [SP], posted on my Facebook page? His new company’s

incorporation pages that Scott Edward Walker helped him get. Scott Edward

Walker is the lawyer that publications like Forbes trust. Go to

walkercorporatelaw.com.

Next, when my friend had to close her company’s office but still wanted to

give callers the impression that all her employees work well under one roof

together, what service did she use? Grasshopper. With Grasshopper, everyone

who works for you could have an extension. They can pick up calls on their

extensions no matter where they are or what phones they use and they can

transfer calls to each other back and forth with ease. Get those features

and tons more at grasshopper.com. Finally, when Dave Jackson and Dave

Petrillo invented a product that keeps coffee at the perfect temperature,

what platform did they use to create their online store? Shopify.com. Look

at how beautiful their store looks. It’s because it’s built on Shopify.

They did hundreds of thousands of dollars in sales. Shopify stores are

designed to help you sell. Patrick Buckley invented an iPad case and used

Shopify as his online store. Within months he sold over a million dollars

in cases. Get your beautiful online store at shopify.com. Here’s the

program.

Hey everyone, my name is Andrew Warner. I’m the founder of Mixergy.com,

home of the ambitious upstart. We’re going to talk about product

development. That’s why that was on my mind today. Specifically, what

happened to me was I was at a dinner with Mixergy fans and a bunch of them

were talking about how much they loved the new Basecamp. They’re tech

entrepreneurs and they don’t generally talk about how much they love stuff.

We like to complain about what’s missing and what should be done

differently but these guys loved it. I was wondering to myself, “How? How

did the guys behind the company know that when they redid their product

they wouldn’t lose their customers, but instead get them to love the

product even more?” Basecamp, as you probably know, is project management.

It’s an online web app and it’s run by 37signals. I’ve got the founder of

the company, Jason Fried, on to talk about it. Hey, Jason. Welcome [??].

Jason: [??] again.

Andrew: What’s the problem here, as you’d see it, as an entrepreneur in

changing from version to version the way that you did?

Jason: The original Basecamp, which we now call Basecamp Classic and, which

is still around, by the way, we can talk about how we kept it around, has

been around since 2004. Quite a long time, about eight years now. Over

eight years. We decided last year that we wanted to make a whole new

version because there are a lot of things that we wanted to do that we

couldn’t do with the existing code, but even more so, not just the

technical limitations but the expectations that had been built up. Over

years people get used to things. When you want to build something brand new

and you have new ideas, you can often get sucked because you can’t change

something. You can’t change something out from under people.

We talked a lot about this, but decided to build something brand new, a

brand new version of Basecamp with new ideas and new interface, new tech, a

new feature set with different emphasis on different things even though it

solves the same kind of problems. People talk about how people don’t like

change. I don’t actually believe that that’s true. I think people don’t

like forced change. They don’t mind changing themselves, but they don’t

like someone to force change upon them and that was a big part of why we

kept the original version around and also have a new version.

Andrew: In researching you for this interview, I found a page on 37signals

full of updates to Basecamp and it seemed to me like it was a minute by

minute, for every day of the month there was a different change to Basecamp

and it went back for three months, and my guess is the same thing happened

for months before that. My point is, you have a web app, you seem to update

it on a regular basis. Why do you even need to redo the whole thing from

scratch? Why not just keep making these smaller improvements?

Jason: If you look at the improvements, and this is at

basecamp.com/changes, you’ll see that a lot of the changes are incremental,

and that’s fine, but over eight years you [??] a lot of incremental changes

which prevent you from making bigger changes. They are quick fixes or band

aids or little small improvements, which are all valuable, but if you just

keep doing that forever, you’re probably not going to get where you want to

go.

Andrew: Can you give me an example? I’m having a hard time wrapping my head

around this, the trouble with just slowly updating and then getting to

something bigger.

Jason: For example, speed. Speed is one of the key new features in the all

new Basecamp. It’s wicked fast, probably one of the fastest web apps you’ve

ever used. To get there, we couldn’t make incremental changes. We had to

make fundamental infrastructure changes. We had to make changes to the way

we cache information. We had to make changes to the way we use the

database, not use the data base. We had to make changes to the interface.

These aren’t incremental things, this requires a rethinking of every screen

and every concept in the app, all the way down to how permissions work and

all sorts of things like that. That’s one example of something that is

fundamentally different about the new Basecamp versus the old Basecamp. As

far as individual features go, certainly we can continue to iterate on the

core features and get pretty far, but if we want to take big leaps, make

fundamental significant improvements, sometimes you need to start over.

That’s what we found we had to do with the new Basecamp to achieve things

like massive speed increases. Also, the way we handle people. Invitations.

The previous version of Basecamp was really mostly about, if you want to

add someone to a project, first you had to create a company. Then you had

to add someone to the company and then you had to add that company to a

project and that’s just not fast enough. We wanted you to just be able to

add someone by just typing their email address, which today is the way most

apps work, but Basecamp started in 2004 when that wasn’t the way most apps

worked. Fundamental things like that involve so much rewiring and new

plumbing that retrofitting them can take just as long and you don’t get all

the other gains that you’d get from starting something over.

Andrew: My vision for this interview is to breakdown the process that

helped you understand that you needed to improve speed. That you needed to

work on the way that you added invitations and that you decided to stay

away from other changes that other people might have wanted to go through.

First, let’s understand the danger here. This isn’t an easy process, even

though to the outside it seems like it. “If these guys at 37signals would

just throw some code together and everything will change and be beautiful.”

What’s the danger that people are missing from the outside when they look

at the world that way?

Jason: There’s loads of danger and pitfalls along the way. We had some

pretty heated debates about what to call this. Was this actually Basecamp

or should Basecamp stay Basecamp and then we should launch this new product

with a whole new [??]? We went back and forth dozens of times and had some

pretty heated debates internally about this. That’s just one small example,

but that’s actually a huge example and we thought about, ‘OK. It basically

is Basecamp,’ as if we were competing against Basecamp. How would we beat

our own version of Basecamp? But it still does the same things as Basecamp,

so if we had two products that did the exact same thing, but had different

names, that actually’d be more confusing potentially. There are things

around naming. There are things around feature sets, what do people need

and what don’t people need? What things couldn’t we do in the new one that

we could do in the old one? What new things could we do in the new one that

we couldn’t do in the old one? Also, just simply expectations again. Coming

down to how clear would this be? This is actually an interesting thing.

One of the lessons we found out, after launching this, was that you don’t

want to make everything easy and that was a revelation to us because we’re

usually focused on making everything easy, but what we actually did was we

made it way too easy for people to move from the old Basecamp to the new

Basecamp, which seems like something that should be easy. The problem is

that moves like that, really easy moves, to move from one thing to another,

actually create a lot of anxiety for people because it’s like going to your

house and the furniture’s in a totally different place. You still have the

same furniture, but it’s totally rearranged and you’re like, ‘What

happened? I don’t know who this is anymore. Even though it’s there, I don’t

know how to find it. I don’t know how things work anymore.’ While we made

it easy for people to move, we made it easy for people to feel anxious and

feel nervous and people were in the middle of projects and we let them move

over to this whole new work flow and that was probably something we did

wrong, even though we spent months and months making it easy, we should

have made it harder. You don’t want to move to the new Basecamp until

you’re done with your existing projects. Don’t move it over in the middle

because that’s just going to increase anxiety and scare people. That was a

big risk, as well. How do you present the new product to old customers? Do

you want old customers to move over? Do you not? It was a variety of things

like that and then the other main thing is that it’s really easy to take

what you’ve done before and not question everything.

One of the things I wanted to make sure we did at every step was to

question almost everything we were doing. It’s really easy to say, “We need

to do lists, let’s just pull over a few lists from Basecamp Classic because

they worked really well.” Maybe that’s not the best thing to do. It might

be the easiest thing to do, but is it the best thing to do? Questioning

every step of the way. That leads you down a lot of different paths that

can be internally a bit tumultuous when people are fighting for different

things. There’s a ton of risks. Lastly, I’ll just say, what if the new

version didn’t work? Obviously, it’ll take time to figure out if that’s

true. So far, all signs point to it’s working quite well, but what if it

didn’t work? We damaged the Basecamp brand, something we spent eight years

building? Something a lot of people trust. There’s tons of risk involved

with something like this.

Andrew: Let’s go back and see how you pulled this off. You had the idea and

then is the next step to say, “What goes into this new product?”

Jason: The first step was actually, we made a kill list. What were we going

to kill?

Andrew: Not, “What are we going to build, but what we’re going to kill,”

first?

Jason: What we aren’t going to include. Kill’s probably the wrong word,

that’s what we used. We weren’t killing anything because Basecamp Classic

stayed the same. We didn’t touch Basecamp Classic, but what were we not

going to build into this new version that existed in the previous version?

That was the first thing we made because if you’re just rebuilding what you

already have, it’s not worth doing a rewrite. In fact, it’s a really bad

idea, but if you’re going to build new things with new ideas and new takes

and new [??] features, then it makes sense. First we had to say what

weren’t we going to build.

Andrew: How do you know what not to build? What to kill?

Jason: There’s a variety of different ways. You can look at data. We looked

at some data, like how many people used a particular feature. We’ve had

eight years of customer feedback about what was confusing and what wasn’t.

For example, file versioning, which is something we had in Basecamp Classic

where you could upload a new version of a file, replace the previous

version. It just was complicated and people didn’t quite get it and it was

really confusing. We could have solved that and said, “We’re going to make

a better version of that.” We just said, “No versioning for the first new

version of Basecamp.” You just upload files and if you want to upload a new

file, you just upload a new file. You don’t have to replace the previous

form. That’s a little bit techy. We had a lot of years of confusion that we

had heard of from customers.

Andrew: How do you, I’m sorry. Go ahead and I’ll ask the follow-up question

afterwards. What else did you want to kill?

Jason: That was one thing. We also wanted to drastically simplify a few

things. In the previous version of Basecamp, we launched with Milestones,

which were like these things you can put on a calendar, but we didn’t have

a calendar when we first launched Basecamp. Years later we added dates to

To Do. Originally Basecamp didn’t have data To Dos, it just had To Dos. Now

we have a calendar, we have Milestones that have dates, which are not

necessarily calendar items and then we have data To Do. So we had all these

different ways to date things in Classic and that just was a little crufty

and it was hard to decide what to do, when. We decided with the new

Basecamp that we were going to basically say, ‘In projects, you can have

calendar events, things that you open a calendar, like a meeting.’ For

example, this interview is on my Basecamp calendar, or you can date To Do.

You can say this To Do is due on this date.

Instead of having three ways to date something, there’s just two ways. That

was one simplification. There’s a variety of other things as well, but we

just looked at each thing and said, “Who’s using it? What’s been causing

confusion over the years?” For example, inviting people is a big spot or a

big point of confusion in Classic. Like I said earlier, you had to first

add a company, then add people to a company, and add the company to the

project. You couldn’t just add a person to a project. We wanted to make

sure we did away with that completely. It’s reevaluating, looking at what

people are confused, looking at data and making some decisions.

Andrew: I remember in your book, “Getting Real,” you said, “You’re going to

get a lot of feedback and a lot of requests. Just feel free to,” I think

you even said, “Throw them out.” What I’m wondering is, how did you keep

track of all this feedback that was coming in without being so overwhelmed

by it throughout the years that you had the change? How did you know that

you got a lot of confusion over versioning, for example?

Jason: Let me ask you this. How did you remember that one passage [??]?

Andrew: It was so shocking that it just stuck in my head.

Jason: You didn’t have to necessarily write it down. There’s certain things

that you hear over and over and over that just stick with you. Those tend

to be the important things. The things that, whenever you make a long list,

in over eight years we’d have a list with probably well over 100,000

requests, or something like that. You can’t tackle anything of that scale.

You can’t even tackle things with 1000, or 100, or even 50 items on a list

is often too long, so when I say we throw the requests out, we don’t throw

them out of our minds, we just don’t write them down. Then when people

continue to ask for them, or 100 different people over ten years continue

to ask for them, those are the ones that stick in your mind. Those are the

things that we know everyday, day in and day out people write about because

they’re confused, and those things you remember.

Andrew: That’s the first thing you do. You sit down, you say, “Guys, what

are we going to get rid of, or moved over to this new version?” You make

this list of stuff that keeps coming up over and over again, and tough

choice, you decide that you’re going to get rid of some of them. What’s the

next step?

Jason: The next step for us was, “What are we going to add? What do we feel

like we’ve been missing? What do we feel like we could be significantly

better?” On that list, for things like speed, again, coming back to speed.

This thing needs to be super, super fast. We had a whole new interface, so

Basecamp Classic, which the interface for Classic has been copied over and

over and over, but really it was a very basic interface with tabs and what

not, and you had to move around sections by clicking tabs. We wanted to do

away with that completely so I came up with this new idea, this page

stacking interface concept. That was part of something we wanted to add. We

wanted projects to be free agents.

In Classic, a project had to have a company attached to it first. When you

create a project and said, “Who’s the project for?” Is it for a company?

Then you had to pick a company. We wanted you just to be able to create a

project. A project should just be able to stand on their own. You can add

any one you want to those projects. That wasn’t a new feature necessarily,

it was just a completely different approach to an existing feature. We

wanted to have a way to catch up, and this has been a really popular

feature, a way to catch up on things that you missed when you were out.

Maybe you’re out sick for a day, or you’ve been in a meeting for a day, or

you’ve been on vacation for a couple of weeks, you need to catch up on what

you missed. We didn’t know how that feature would look, but we knew we

wanted a way to be able to page back, day by day, and find out what

happened on a specific day that you missed.

The other thing, there’s dozens, but the other thing that was really

different about the new Basecamp is that people played a much bigger role.

You can go to a person’s page in the new Basecamp and see all the projects

they’ve been working on, all their outstanding To Dos, all the files

they’ve shared, the discussions they’ve been part of, what they’ve

completed. Before, you couldn’t do that with Basecamp. Basecamp used to be

very project centric and now it’s people and project centric. You can look

at a view looking at the people you’re working with, or you can look at a

view with the projects. That was a fundamental difference as well.

Andrew: How do you know that the people want a people centric experience on

Basecamp? That doesn’t seem like a request that people send in, “Hey, give

me nicer photos. Make them in circles and let me see more about the,” how

do you know?

Jason: Part of it is instinct because you’re looking for things and you’re

like, “Man. Look. I know that Ryan uploaded this file. I don’t know what

project it’s in,” so I want to be able to go and see Ryan. I want to go to

Ryan’s page and see what Ryan’s been doing, because that’s when I’ll find

that file. When you’re very project centric, you have to know exactly where

everything is. When you’re people centric, or both, but when you have a

people centric option or view, you can think more about the people you’ve

been working with, which is actually a more common way to think about

things.

That was part of it, but also people would ask for things like, “How do I

find out what one of my co-workers has been up to?” A manager might say,

“How do I keep tabs on everyone and see what they’ve been doing today? What

they’ve completed recently, or what their outstanding things are?” We had

ways to do that, but it wasn’t readily apparent. You had to go to the

dashboard and click on his To Dos link and then click on Filter with

someone’s name, instead of saying, ‘Just go to John Smith’s page.’ That’s a

much simpler way of thinking about how to find out what someone’s up to, is

actually go to them instead of going to a feature of somewhere else that’s

part of something else. We had those requests over the years piling up too

and, like you said, they weren’t direct requests for this particular thing.

It was like, “I have this job I need to do, which is I need to find out

what someone’s been working on or what’s outstanding or what’s on their

plate. How I do that with Basecamp?” We never had a good answer for that.

That was one of the reasons why we built this new people feature.

Andrew: Let’s stick with this point for a bit because I want to understand

it because it’s so different from what I’m hearing in other interviews.

Most people would hear from a client, I want to know what my people are

doing. And what today’s movement, the Lean Startup Movement, might say to

do is create a design on paper or on a computer, show it to the client and

say, “Is this what you’re looking for?” Or try to interact with it. And if

they say yes, and if they are interacting fine. Then, you build it a little

bit further, and then show it to more people and so on. Did you do any of

that? It doesn’t like it.

Jason: Well, we use paper for quick sketches, real quick sketches. I wish I

had one in front of me. I would hold it up. I’ll go find one later.

Andrew: And you’ve shown it on your blog.

Jason: Yes, but really rough. I mean like a Sharpie marker on a big piece

of paper with a few boxes and a few circles and a few squiggly lines.

That’s like all we do for paper. Then we start building the thing. And then

we start using it ourselves. So we don’t show customers what we’re working

on. We work on the things ourselves. And then we’ll often beta test them

with a private group of people who have access to the beta version of

Basecamp and they can use that.

But for the most part we’re constantly using it and editing it and tweaking

it based on our own usage and our understanding of what people have been

telling us. Actually not what they’ve been asking for, but what they’ve

been telling us. And then we have to interpret what they mean by that.

Andrew: So, you first internalize it and use it, and then you show it to

the beta group. How far along does the product get before you take it out

to the beta group?

Jason: Well when I say product most of the time it’s on individual

features.

Andrew: Right, that’s what I should’ve said. Excuse me.

Jason: Sure. It really depends. We are actually trying to get it pretty far

along. Because what we found is that people typically don’t have a lot of

time to give you feedback. And if you’re showing them something that isn’t

quite real enough yet, you’re not necessarily going to get the most useful

feedback. And then if you go back to them and ask them for their feedback

again it’s less likely you’re going to get it the second time. The more you

ask the less likely you’re going to get it I think.

Andrew: Also I imagine that they’re going to get familiar with your thought

process by then. And they won’t see it as foreign to them, and they’ll

understand it. It’s almost like being taught step-by-step how to use your

system.

Jason: Yes.

Andrew: Instead of hearing their initial instinct which is I don’t get how

to use it.

Jason: Totally. And that’s a good insight. If you keep showing them

incremental versions of something they start to understand where you’re

going with it. And then they sort of anticipate what you want to hear from

them.

So, we are really tough critics. We much prefer to get it along pretty far

internally before opening it up to our beta testers, so they can see pretty

much what we think is the release. So we’re actually like this is what we

would release to everybody. That’s a better way to explain this. We feel

this is good enough to release to everybody. We release to our beta

testers. And then we find out that well maybe they didn’t get it. Maybe we

weren’t scratching the itch quite right. Then we’ll go back and tweak it.

But it’s usually release ready at that point. Instead of just releasing it

to everyone we release it to a small group first.

Andrew: This is a part of your process that seems like magic to me. So let

me spend a little time on this just to understand it. The Lean Startup

process I understand. You get a problem from a customer. You give them a

small version of the solution. They give you feedback. You improve it. You

get more feedback. You improve it. You at some point pivot towards

something else, and eventually you find your way to it. And the problem

that they face and the problem that this solves I understand too. Which is

if you do it all internally you’re going to have your own mindsets, you’re

going to bring your own prejudices, your own understandings to the product.

And your customers don’t have that.

So, how do you get around all that and still come up with the product with

the product that I sat down with and immediately I knew what to do with the

new version. How do you get me to that place?

Jason: Well, first of all we have been getting feedback from customers for

a long period of time, for eight years.

Andrew: That’s true actually. That is something that I didn’t understand

how you did, and now I’m getting in this interview.

Jason: Here’s the thing though. It wasn’t specifically about this new

version like you said because it didn’t exist. It was deeper insight. It’s

not about how do you feel about this feature that we built. It’s what’s the

job? There’s a lot of talk about the jobs to be done. Christian Claytonson

[SP] is sort of spearheading this whole idea of jobs to be done. That you

hire a product to do a job for you instead of solve a problem more so. And

so we’ve been listening to people over the years and finding out what it is

that they’re basically hiring Basecamp to do. It’s a deeper understanding

hopefully of what it is they need to do, and why they need to do it. More

so than how does this feature feel? Or how does this individual think? So

we’re looking at it as more of a big picture tool perspective than we are

individual features one at a time.

And I think that that’s how we’re able to hopefully consider a lot of

different things at the same time, and build a product that people

understand quickly. Because I think if you’re only looking at individual

features, you’re looking at things too much in a silo, and you don’t

necessarily understand how they relate to one another and how they can work

together.

That’s why the [??] to have a much bigger picture view of the product and I

think spending eight years with customers, caring for them really helps us

do that the second time around.

Andrew: So, now I understand how you take what they need and you turn it

into a feature that gets a job that they have that needs to get done.

The part that’s still feeling like magic to me is how do you know it will

be easy for them and it seems like you do have a few tactics for this. For

example, I remember you blogged about that blank page that people see.

When people stare at a blank page, you don’t know what to do so anticipate

that they’re going to be confused and I think the first time I hit the

calendar in a new version of Basecamp there was a little note that said

This is what’s going on here. So, that seems like one way that you make it

easy for me. Teach me a few other tactics like that that keep the product

simple and also easy to understand and use.

Jason: We constantly are asking ourselves, “Does this make sense?”. And you

have to be able to somehow separate what you already know from what you can

imagine someone else knows and that’s just something it takes practice and

so there’s no, I can’t give you an exact answer to that. But we don’t

really ask questions like “Is this usable?”. We don’t ask questions like,

mostly that one. We don’t determine whether or not something’s good based

on how usable it is.

We say “Does it make sense?” Because something can be usable if it doesn’t

make sense then it doesn’t matter how usable it is. So we’re always like

Does this make sense? Would this make sense to someone who knows nothing

about this card? Would this make sense to you as a new user? Would this

make sense to you if you’re invited to this project with this thing called

Basecamp that you’ve never heard of? Does this email make sense to you?

So, we’re always asking, “Does it make sense?” And part of it is just

intuition, instinct and a lot of it is experience. We’ve been doing this

for a long time. But I think it’s really important to keep asking yourself

the question, “Does this make sense? Would I know what this means if I

didn’t know what I already know?” And it’s hard to come at it without that

prejudice but you have to just work hard at that. Another thing you can do

is show it to other people in the company. One thing that actually became

very helpful for us that we’ve never done before is really involve the

customer support that we have….

Andrew: Sorry. We just lost the connection for a second.

Jason: I’m sorry. Do you hear me now? OK, is really involve the customer

support team in not just evaluating what people are asking for but actually

evaluating the product that we’re building. So they were involved in the

product building process a lot more than we’ve ever done before. So we

would often show them what we’ve working on and see if they understood it,

if they can make sense of it because they know what customer’s mindsets

typically are better than we do, in fact, because they’re dealing with them

everyday and we’re not.

It’s really a matter of asking why, asking does this make sense. How can it

make more sense? How can it be clearer?

Andrew: Do you have an example of something the customer service saw, the

customer service team, excuse me, saw that you wouldn’t have seen because

they have a different perspective from talking to customers day in and day

out?

Jason: Yes. So some think that we missed, actually. That we hope to add to

the product later is we assumed that, the Basecamp Classic used to have

categories so when you posted a message or you uploaded a file you could

put it into a category.

And we just sort of assumed that that was just busy work. That it was like

organization for organization’s sake, like it didn’t really help anybody.

And I remember showing that to the support team and one of the first

questions was “How do you categorize your files or put them in folders or

something.” We’re like “We’re not going to need that, come on.” And we were

wrong about that. A lot of people have been asking for that.

So that was something that we should have listened to them about but we

didn’t and I think we’ll have to build something like that down the road

but we want to think a little bit more about it than just doing what we did

before, which was have categories. Maybe there’s a better way to organize

things today.

But that was something that they instantly knew people would want. People

are often asking for categorization and a way to organize things better and

we thought it was just like more of a chore than it was helpful but it

turns out to be really helpful for people. So we should have listened to

them more.

Andrew: You mentioned practice a moment ago and I wrote it down because I

remember you wrote in an Ink Magazine article about practicing to make

money so look, you don’t know how to make money online, practice it and you

went through the whole process and practice is such an easy concept to

understand. I learned it in kindergarten but somehow reading that post,

that article made me think “Hey, you know what? I don’t know yet what to

charge my audience. I’ll practice. It’s OK to fail in public.” And I did

and I got a little bit better and I got a little bit better and I think I’m

fairly good now and I still have to get even better.

I’ve been doing the same thing with every other part of Mixergy. I didn’t

know how to pitch Mixergy Premium in my interviews. I said practice doing

it better. Write it down and stop beating yourself up on it. Practice it.

Then, I realized I should go back and watch it. Watch it before I write the

next day’s thing and do a post mortem and then improve it. Then I thought,

“That’s OK. But maybe I should post online just the clips of me doing ads,

just for people who may care and say, What do you think? Am I mumbling

through this? Am I embarrassed? Am I not catching the fact that people

don’t know how to spell Mixergy? What’s going on?” There’s certain ways to

practice charging. Certain ways to practice delivering a pitch. How do you

practice creating something that’s easy? What’s your feedback mechanism?

Jason: It’s developing a very high set of standards for what should be

easy. That isn’t a really great answer because it doesn’t really help, but

you have to be eternally frustrated by things that aren’t easy enough.

Although I talked about, earlier, certain things you don’t want to make

incredibly easy because you can point people in a direction that they were

fine before. Now they’re scared. You have to constantly ask questions like,

“Why? Why does it work this way? Why are there three steps instead of two?

Why two steps instead of one? Do we need these other steps?”

Andrew: And you do this for everything in your life?

Jason: Not in my life, but in business I try to. I’m probably annoying to a

lot of people.

Andrew: Give me an example of what you say that’s annoying, but it’s

helpful for you to think about.

Jason: Someone might be working on something for a long time, for example,

we’re working on a new feature right now in Basecamp that is going to allow

people to upload logos and some color schemes to Basecamp. There’s a lot of

different ways to do that and one of our designers built an interface and

the color swatches showed up in one area that was far away from what they

were changing. I said, “Why are they there?” He said, “Here’s the reason.”

And I said, “Why do you think that’s important?” I keep asking why and at a

certain point that can get really annoying, but the other thing it can do

is it helps people understand if they can’t get past a few whys then maybe

they don’t know why they did what they did.

Maybe they should go back and think about it. Maybe what they did was

right, but they need to think about it more. We’re constantly trying to

think about, “Why is it this way?” or “Why does it have to be that way?

What if we did it this way? What if we did it that way?” Everything we do,

we’re trying to constantly ask ourselves those questions because then, if

we can’t answer them, we’ll often ask ourselves, “Would anyone else ever do

that? We’re doing [??], we’re building the product. We’re willing to make

this investment and take these steps to do this thing, but would anyone

else do that? Would anyone else know that?”

Questions like that constantly help to refine what it is that you’re doing

and help you. If you can’t keep defending your whys, then that’s a good

sign that it’s not simple enough, or easy enough, or obvious enough, or

clear enough. Once you start getting in the habit of doing that, you’ll

find out pretty quickly that if you can’t answer two whys in a row, then

you’re not really sure why you’re doing it.

Andrew: I heard your partner, David tell, Jason Calacanis, that his job is

mostly to tell everyone in the company, “Don’t do that.” Basically to stop

getting them to add it. I think about that as more people within Mixergy

are now interacting with guests, and if there’s ever a confusion, they add

more lines to the email to the guest. And if they’re adding too many lines,

they add a highlight and if the highlight still doesn’t catch it, they add

a bold to make sure that you know where to click. It’s just too much. I

want to do what David does and say, “Guys. Let’s do less. Let’s pare back.

There’s not more understanding when you throw more text in an email.

There’s not more understanding when you add more to a spreadsheet, there’s

less, and there’s more confusion. Strip it down.” I come across as a jerk.

How do you guys do it and still keep the respect of people who do it and

get them to buy in so that they do it even when you’re not looking?

Jason: Everyone at 37signals has a real appreciation for the craft of

making things useful and easy. If you don’t have people on your team like

that, then you can definitely come off as a bit of a jerk. I don’t know

your people so I’m not [??] that, but I’m just saying that, in general, you

have to build a culture that’s interested in finding the elegant solution

and not just settling for, “Yeah. Well, it works now, so let’s move on.”

Andrew: How do you do that? How do you get them to keep being interested in

that?

Jason: It’s an interesting challenge to have to pare things back and make

them clear and more clear and more clearer than that. The people that we

have are excited about that challenge because ultimately it means less

code. It means less design. It means next time around, if you get better at

this, you can make things better faster with less work, which I think is an

interesting direction. That helps. Everyone at 37signals is just really

interested in making things that are intuitive and elegant. The other thing

is that all of our programmers actually do support as well, so we rotate

people through these on-call schedules where they’re working with the

support team for a few weeks at a time.

They have to fix bugs and they have to hear from customers and they have to

know what it is they’re making, if it’s confusing people, or hard for

people, or easy. The simpler they make things and the clearer they make

things, in many ways, it improves their job too because they have fewer

bugs to fix and fewer questions to answer and fewer confusing moments to

try and smooth out. All those things come back to make everyone better.

Andrew: Don’t get me wrong. It’s not their fault. It’s my fault. I feel

like anything at a company is the fault of the person who’s running it. You

can’t keep blaming the world. You have to understand, I have to understand

it’s the way that I’m communicating it.

Jason: Here’s the other thing that I had about that. For example, your

example about the syntax, and people aren’t seeing something, so you bold

it or highlight it. The other direction that I would recommend you go is,

“What can you take away that’s not essential?” When there’s less text to

read, people are more likely to read that text. Bolding and highlighting is

actually a crutch, often, for calling something out that is important

against stuff that isn’t important. Well if you can get rid of the stuff

that isn’t important, sometimes you can’t get rid of all of it, but that’s

a much better challenge and ultimately down the road, it’s just simpler to

deal with. You have fewer things to worry about when you just say fewer

things.

That’s just something I think can be fun and challenging. I don’t know if

I’ve every mentioned this on the show, but there’s this class I’ve wanted

to teach for a long time. If I ever taught a class, like a writing class or

something, I would love to teach it this way. Every writing assignment

would involve multiple deliverables. You could pick any topic you want. I

don’t care what it is. There’d be a ten page version of that paper. There’d

be a five page version. There’d be a one page version. There’d be a three

paragraph version, a one paragraph version, a one sentence version and a

one word version. All on the same topic. You start with the ten page

version and then you keep trying to cut it back and cut it back and cut it

back until you can just get to the one word that represents the whole

thing, as best you can.

I think the one sentence or the one paragraph version of that is the most

interesting to me because that’s where you take this big idea and you

constantly pare it down and pare it down and see how close you can get to

saying the whole thing in one paragraph. That’s the kind of challenge I

think it’s really interesting when you’re working with products. It could

be on the design side, if you have a bunch of elements, how can you get it

down to fewer elements? If it’s on the [??] side, how can you break it down

into fewer sentences or fewer words, or even fewer ideas and just say one

thing at a time? Maybe bullet points make more sense than a paragraph. All

those things are [??] design problems and I think if you have people who

are really interested in solving those problems, then they’re really

excited to take on that challenge.

Andrew: First of all, I would take that class. I don’t know why you haven’t

started teaching it because then you’d have to read ten pages from 20-50

people, at least.

Jason: It’d be such a blast, though. I love editing, so for me it’d be a

real [??].

Andrew: You do?

Jason: I think editing is something that should be taught in school more.

To me, everything you do is about editing. I don’t know how many people you

want to interview but you’ve got to edit that down. What’s the process for

that? Whatever you write, you could write a really long email or a really

short email. What’s the process for that? If you’re designing something,

what do you want to include on the page? The process of reevaluating

everything as an individual element and as part of a whole is really a good

skill to have, no matter what it is that you do. I don’t remember ever

learning that in school. You would take writing classes, you would take

design class but you would never take editing classes. I think that’d be

really cool just to edit stuff, to make that more of the curriculum.

Andrew: I can see that. I can see, too, that my work gets better when I

edit it down, but I don’t put the effort into it because I forget how

important it is.

Jason: Everything that you see out there that’s good, was edited. The album

you buy with 12 tracks, started probably with 32 tracks. The movie you

watch that’s an hour and 45 minutes, 300 hours of footage was shot and then

it was narrowed down to 100 hours, then it was down to four hours, then

probably three hours, then probably two hours and that last 15 minutes they

had to cut was probably the most important 15 minutes. What made it and

what didn’t? Music, movies, books. Books start out way longer than they end

up. It’s all about editing. That’s what makes things great. I think the

more comfortable you get with the idea of the editing process, and the more

you realize how valuable it is, the more you’ll actually enjoy it.

Andrew: You mentioned Howard Stern last time you were on here and I heard

him dress down his two prank phone call guys saying that everything you

got, everything in life, he said, was editing, just like you did and then,

as he started talking I realized his prank calls are funny because they

edit out the parts that are slow and boring and they just keep it hit after

hit.

Jason: Yeah.

Andrew: All right. Let’s talk a little bit about design. When you said that

you wanted to change a design, the reason that I wrote down that you gave

was, ‘So many other people have copied the 37signals Design, the Basecamp

look’ and It’s true. I smile because I see it everywhere now. Beyond that,

was there another reason for it or did you just feel we needed it to look

and feel fresh?

Jason: Well, that wasn’t the main reason at all. That was one of the

reasons. The main reason was we had a better idea. Even now with a lot of

the iPad or iOS-style Apps that are coming out on the Web, people are sort

of taking the iOS, most of the IPad like sidebar of buttons or permanent

buttons on the screen and not having the screens that change very much, or

reload, we just kept thinking about why do we need all this navigation

around all the time. Why do we need to be able to get anywhere from

anywhere. This has been something that’s been a Web design for a long time.

The idea that you should be able to get anywhere from anywhere with like

two clicks. Why? What is it about that?

Well, the main reason why is because clicking used to be really slow. A

page loads and it loads slowly and you click a tab and a new page loads and

it loads really slowly and moving back and forth through a linear process

was slow before, but we had some idea on how to make it much faster. So, I

don’t mind additional clicks, as long as they’re really, really, really

fast. And so, we had this idea to eliminate a lot of global navigation

around the tasks that we’re doing, and think of it more like a piece of

paper. One piece of paper at a time. One focus at a time and if you want to

go back, you just actually physically click the thing behind what you were

looking at, to get back to the previous thing.

So, we had this new idea that we thought was just a way better way of

moving around, without having to think about exposing everything all the

time, and that was the main driver. But also, bring some new ideas to the

table and some new ways of thinking about interfaced design is something

we’ve always tried to do, and we hadn’t really played around with it for

quite a long time, so it was a good opportunity to throw out the old and

come up with the new again.

Andrew: It’s something that I’ve seen mentioned a lot on the site as a big

benefit. You and I talked about it. I circled it because you kept bring it

up, even before we talked in this interview. How do customers demand speed?

I went back to my previous experience with Basecamp and I thought it was

fast enough. I wouldn’t have said, ‘hey, make it faster.’ How did you know

that we wanted more speed? By the way, when I did get the more speed, I

liked it, I loved it. That’s the way I felt natural interacting.

Jason: Yes. I think it’s a natural thing. Google’s the master at this. They

care about every millisecond and it shows. I do searches on Google and I do

searches on Bing for the same thing. The results are pretty much the same

but Bing takes an extra half a second. That doesn’t affect my life but it

does affect my convenience and it does affect my trust in something and the

next time I go to something, if I can get something that’s faster, why

wouldn’t I go there, as long as it’s not worse. So, I just think everyone

likes speed.

One thing that’s interesting is in customer service, when we look at our

customer service ratings, people are generally happier the faster they get

responses. I think Google would say people are generally happier when they

get fast results. I don’t think that there’s any place where people are

happier when things take longer, unless it’s personal craft projects where

you want to really pay attention to something, but in terms of using a

service or using a tool, we found speed is the most important thing. It’s

probably the most important feature in the whole product. If things are

fast, people are going to stick with it. If things are slow, people get

frustrated really quickly.

Here’s the other thing. People live in our products all day long so

Basecamp is open for a lot of people, all day long. Eight hours a day or

more. So, that is really key because the slow spots really do add up

throughout the day and it might be different for something that you dive

into and dive out of once or twice a day but when you’re in it day after

day and you might be registering a hundred clicks a day, looking at

different things or different products or getting around, Speed really does

make a huge difference and so we knew that we wanted to make it super fast.

Andrew: No specific user feedback coming in saying, “We demand more speed?”

It’s just an understanding universally?

Jason: What they say is, they’ll say things like, “I want to get stuff

faster.” They’re not asking specifically for, “Can you make the page load

quicker?” It’s not that. It’s, “I want to get this stuff faster. I want to

jump around quicker. I want to get to things faster.” Things like that.

There’s some of that, but there’s also just, speed is, I don’t think people

have to ask for it. I think everyone wants it. We certainly wanted it and

so a huge amount of feedback we’ve gotten so far with the new Basecamp is

that it’s incredibly fast. “I can’t believe that it’s that fast.”

Sometimes, you just don’t even know what you want, but when you get it, and

you try to use other software, you’re like, “Man, I can’t use other stuff

anymore. Everything else is too slow.” I think that’s about like using

Google for the first time. It wasn’t necessarily that the results were so

much better, even though they were, but doing a search on Google ten years

ago compared to Lycos or Altvista, you just saw the value of speed. It was

just so instantly clear that things should be faster. Also, if you have a

computer and you get an SSD drive instead of a standard hard drive, the

speedup is just enormous and you didn’t necessarily know it was that slow

before until you see how much faster it could be. All those things make a

huge difference.

Andrew: I can never go back now. You can’t either. I think even on the

bottom of the new Basecamp pages, did I see that there was a little grayed

out speed indicator for time that it took to bring up, or was that just on

Chase’s in the video he showed?

Jason: That’s only on our account. So, Chase was using our account to look

at that, but we have it on our account so we can keep an eye on that. We

instrument [SP], speed everywhere in the app so we know when things are

slow, but we have that on our site. Google, I don’t know if they still have

it on the public side, but they used to have it on every [??].

Andrew: The upper right.

Jason: That was probably for them internally and they’re like, “Let’s just

keep it there,” because it emphasizes that speed is core to this site, to

this [??].

Andrew: I should say he didn’t specifically show it to me. You guys do

webinars online and you also have recordings of past ones and I watched it

as I was preparing for this interview. What else do I want to know about

the product? What am I missing here? What would the person listening to us

who wants to design like Jason and wants to design like 37signals, what do

they need to know before they revamp?

Jason: Here’s the big thing. Software as a service is interesting because

it’s been touted as a better way to write software because you can change

it rapidly. That’s true because traditionally software, you have to have

these big release cycles and send out a new CD or something like that, or a

new download, or push a new update to somebody. [??], we’re pushing out

updates roughly, right now, about 11 times a day, actually. Right now. And

some of those things aren’t logged in the changes thing, it’s more minor

things and updates.

We’re changing rapidly, but what happens is that over a long period of time

people just get very, very, very used to what they have and even if you

have a much better idea, people will often defend the worst idea because

they’re used to it. If you are thinking about redoing your product, we’ve

been doing this for eight years now and a lot of people have been doing it

for a lot less, but people are starting to come on like four or five years

and so it might be time to rethink some of this stuff.

You have to keep customer expectations in mind and I think that forcing

change on people is a terrible thing to do. Let people have the option to

switch on their own schedule. Show them what’s new. Teach them what’s new.

Say, “You don’t have to move if you don’t want.” Reinforce the fact that

the older one’s still going to be around, and you may have to support two

versions of the same product for quite a long time, but I think that that’s

definitely the way to do it when you’re thinking about making a major

change to a product that people pay for specifically.

Facebook makes changes all the time, drastic changes and people are in an

uproar all the time about their big changes, but people also don’t pay for

those products, pay for Facebook, so it’s a little bit different. I think

they have less of an excuse to complain when they don’t pay for something.

When you have customers that pay for things, they expect continuity, so you

got to really keep expectations in mind more so than you could ever

imagine. Even if what you’re building is better than the previous version,

people are still used to the previous version. Their whole workflow’s based

on what already exists and encouraging them to move to something brand new,

even if it’s better, is a really hard thing to do. So I’d be very careful

about that.

Andrew: I’ve got a few questions here from people who are charging, who

wanted me to ask you, do you have time for about three questions?

Jason: Yeah. Absolutely.

Andrew: First, let me just explain what I mentioned earlier. I got an email

from someone, a Mixergy customer, who was shocked that I gave him money.

Let me read his email. This is from Neeson Alias and he says, “Hello,

Andrew. I’d like to thank you for your quick response and for the refund

you sent me, even when I actually didn’t ask for it.” Here’s the story.

Then he goes on to explain that he wanted to buy a course from someone

online. He saw a course from that person on Mixergy, so he bought it on

Mixergy. And then he emailed us and said you know what? That’s not the

course I meant, and asked a few questions. And we instantly gave him a

refund, and he was shocked. He said, “To my surprise I received it within

24 hours through PayPal.”

The reason I wanted to bring it up is that life isn’t usually like that

guys in the audience. I’ll give you an example. I recently bought this from

Verizon. I wanted to make sure my Internet was strong, so I bought a backup

from Verizon. But it was the wrong one. Now the person who sold it to me

told me it was specifically the one I wanted. When I called back and said,

“Hey, can I get a refund? It’s clearly not.” They caught me in a

technicality. I can’t get a freaking refund. I’ve been so angry about it,

but I ate the loss.

Usually, that’s the way when you interact with companies that’s what

happens. If there’s a technicality and they can keep your money they do. So

I understand if you’re thinking of trying Mixergy Premium and are worried

that maybe you won’t like it, or what if there’s some technicality that

will keep you from getting your money back. What I want you to know is that

I’m not like Verizon. I know why you have this expectation.

Most people, thousands of people are customers of ours and are members and

are very happy. But if you happen to try MixergyPremium.com and you’re not

happen, well what you’ll find is that sometimes we jump the gun and send

you the money very quickly because it’s very important to me. I say this

over and over again. I’m not here to do this interview just today. I want

to get better and better so I can keep being there for you for the next 10

or maybe if I’m lucky I’ll get to do Mixergy for the next 50 years. And

I’ll get to be really good by then. And over those years it’s important for

me to maintain my relationship with every customer. And of course, if

you’re not happy you’ll get a refund.

So if you’ve been considering a Mixergy Premium course go to Mixergy

Premium.com. Sign up and you’ll get all of the courses. And if you’re ever

unhappy just let me know, and you’ll get 100% of your money back. Mixergy

Premium.com.

Hey, how did I do with that? I know that when you and I first met my ads

were kind of aah. I think I’m working on them, but what can I do to

improve? You’re the only guy I can trust to be open with me.

Jason: I think just being honest with people is the most important thing.

Hearing from you about the refund thing…we used to be really stingy about

refunds because it was stupid for us to be stingy. But we were stingy

because we felt really principled about it. We felt as if we worked really

hard to make it as clear as possible that this wasn’t refundable and the

whole thing. And then we thought why are we being like that? Would we like

to be treated like that if we were a customer? And for the past few years

now we’ve been incredibly generous with refunds, because that’s what I

would want as a customer.

If I bought the wrong thing or I wasn’t sure or whatever, I’d want a

company to be there for me and be cool with me as if we were friends. And I

think that sort of stuff really pays off in the long term. That $50 you

would’ve kept is not going to make a difference. What’s going to make a

difference is treating somebody right.

I think the more you do that the better off you’re going to be. So as far

as advertising and charging customers and whatever, just be honest with

them, treat them fairly and I think things will work out.

The other thing though is being very clear about what it is that they’re

getting. I think that that’s another thing that everyone has to work on.

It’s really easy to sell something and assume that people know what they’re

getting with it. And this is something we’re still working on eight years

later. We’re trying to make sure it’s very clear. Like when you buy

Basecamp here’s what you get. And we still haven’t cracked that either.

It’s very hard because we’re so used to knowing how it works, and it’s just

hard to really have a blank slate in your mind about what it’s like to see

this product that you never heard of before.

So for you when you talk about Mixergy Premium what does that mean? What do

I get? What does Premium mean? Like for us when we call we have certain

names for our plans. We have to remember that that doesn’t mean anything.

What does it mean? Why am I paying $50? What am I getting that I couldn’t

get before? How is it going to benefit me? Why is it worth it for me? Why

is the value there? So you’ve got to keep thinking about that sort of stuff

and explain that to people.

Andrew: Yes, you’re right. I didn’t even say what Mixergy Premium is. I

just said here it is.

Jason: I still don’t know.

Andrew: I figured you know what? It’s an ongoing dialogue. But you’re

right. I should say Mixergy Premium is where proven entrepreneurs come on

and they each teach one thing that they’re especially good at. So if

they’re especially good at getting publicity I have them come on and spend

an hour, and walk me through the material they use to get publicity, how

they solicit, where they get the potential reporters who are going to write

about them, how they get that hit list, how they go after them, the whole

process. If it’s about how to get traffic, I get someone on to talk about

that. Not talk. To turn the computer on and teach step by step how to do

it.

Jason: Yes.

Andrew: You’re right.

Jason: You should talk with Patrick MacKenzie [SP], too. He’s really good

at helping people explain.

Andrew: He really is, isn’t he? Remember watching that one.

Jason: Yes, I did something too for Noah at AppSumo when he was getting

started with courses with Patrick where we got him on, and we had him talk

about how he automates his content creation.

Andrew: Yes. I saw you did an interview with him, so I

Jason: Another thing you could do is you could hook up for more than $50.

What do you charge for a premium again? $50?

Andrew: $25 a month right now.

Jason: What if you did a $1,000 session, maybe more, with an expert walking

through with a specific customer about how they can improve something that

they’re doing. So it’s not just about giving general tips but it would

actually be a one-on-one consulting project. This could be a one-hour

consulting gig which could be broadcast live or streamed live so other

people could watch. For example, I’d be a lot more interested in paying for

something if I know I’m going to get something directly out of it. Instead

of just see someone else get something out of it. So if you could hook me

up with Patrick MacKenzie for example we could do a consulting thing for an

hour. And then we could live stream that after it’s done. I’d get a direct

value, and then I think a lot of other people would be willing to watch

that later.

Andrew: And you’d pay $1,000 to talk to Patrick and see him do it live?

Everyone else gets it if they’re a Premium member.

Jason: Exactly. And then you’d get a cut because you’re hooking it up.

You’re sort of the facilitator. So that would be interesting to do. We’ve

long thought about doing these ideas of one-on-one one hour consulting

things. I don’t think you necessarily need a three-month consulting gig. I

think you can help people a lot in an hour if it’s one-on-one and very

direct. We thought a lot about doing that sort of thing. But it would be

cool to stream them or to record them and then play them later for people.

Andrew: Would you do it? I’ll give you the whole $1,000 as long as my

Premium members could watch.

Jason: Yes, sure. We’ll do something.

Andrew: What would you want to do? What topic?

Jason: I don’t know. Maybe someone who’s a Premium member has something

they want us to look at. Maybe it’s how can we improve this feature? How

can look at this homepage or rewrite this email or whatever it might be. Or

help explain our product better. I’d be totally happy to do that.

Andrew: All right.

Jason: So. We’ll work that out, somehow. I don’t know how the logistics

would work but I think it would be a value.

Andrew: I’ll find a way to make it as easy for you as doing this interview.

Jason: OK. Deal.

Andrew: Questions from the audience. The first one comes from Marcus Kuhn.

He runs Connects.IO which cleans and syncs your address books. His question

is, “We have a free trial instead of a premium model for various reasons.

But I’ve started to worry that this might be hindering growth. How would we

go about monetizing a business like ours?” Basically he’s asking should he

continue the free trial, or should he just ask people to pay?

Jason: Well the big thing I think people get wrong with free trials is that

they give away too much in the free trial. So I don’t know the details of

this guys business. But I’d take a good look at what he’s giving away for

free. And if you can’t get people to convert, there’s a couple reasons.

Maybe he’s not explaining the product well enough. Maybe the product isn’t

valuable enough. Or maybe the free version is more than adequate. So you

might want to do, maybe they already do this, but let’s say upload my

address book. I’m not sure how this works. But let’s just say I upload my

address book and it cleans up a bunch of duplicates and merges people or

whatever and cleans it up. Or pulls the most recent data from services or

whatever.

Why don’t you show me 50 of those results. Let’s say my address book was

640 people. Show me 50 of those results. Don’t give them to me for free,

but show them to me and say this is the type of work we can do for you. If

you want the other 590 contacts cleaned up it would cost you $65 or

whatever it would be. So the free part of that would be using their own

data to show someone what you can do for free. But they don’t get the data.

They just see the results of it. And then they either get the whole thing

or they don’t get any of it. So that might be a better model. I don’t know.

Maybe they already do that. But that might be an interesting approach.

Andrew: You know what? I’ve seen that done with other products that I’ve

bought, and it does make sense. You want to just see that it really works

before you buy it.

Jason: Totally. I mean wouldn’t you want to see if it worked, what it’s

going to do before you buy it? So I think people are naturally going to be

nervous about having someone clean up your contacts for free. Actually and

downloading the updates because it sort of feels like I don’t know if I can

trust this. And this is really important stuff to me. And if I’m giving

people my contacts for free what are they going to do with them? Or, if

they screw them up I have no way to do anything about it. So I think just

like uploading it to show you what can happen, and then pay for it when you

get the results would be a really nice model.

Andrew: Connie Hammond says, “Which of my target audiences, if not both,

should I be charging?” And Connie says, “I own resortworkers.com, and could

charge both the employers to pay to find the worker, or the workers who

post jobs”. So I’ve seen lots of questions come in like that. People say,

“I’ve got a marketplace- who do I charge, the person listing, the person

reading, both?”

Jason: You generally charge the person with more money, which is the

business, in that case. And we found this over and over again, that it’s

really easy . . . well, easier, not easy- whenever people part with their

money it’s not easy- but easier, to charge businesses for things. And in

that case if I’m a business, and I’m looking to hire somebody, I’d want the

greatest relevant supply of candidates. And if you require people to pay to

be listed, that’s going to shut down a lot of people. And so as the

employer, I’m not going to have a big supply to review. I would charge the

employer, for sure. I think they’re willing to pay for it. Because for

them, they have a job that needs to be done. And if it costs them 100 bucks

to find that person to do that job, it’s absolutely worth it. But it’s a

lot less worth it for the individual to spend a 100 bucks, or 50 bucks, or

10 bucks to put their ad up, and hope, maybe, that someone’s going to see

it. That’s asking a lot.

Andrew: And more broadly speaking, charge the person who has the most

money.

Jason: Yes.

Andrew: And that’s usually the company.

Jason: Yes. And there’s another tiny bit of psychology there. I mean, you

can go deep into the stuff. But, there’s probably a good chance that the

person who’s paying for it at the company isn’t using their own money. And

it’s always easier to spend other people’s money. So like, they’re probably

more willing to spend- I’m just picking a number- 50 bucks on something,

because it’s not theirs, than the person posting the ad, who is spending

their own money.

Andrew: You know, before I go to this next question, this does remind me of

Sortfolio, where the company is paying to be listed, and anyone can go and

watch for free. I saw that you’re selling Sortfolio on Flippa, and people

are commenting that you’re not responding to questions on Flippa.

Jason: Yeah.

Andrew: I know that it’s intentional. What do you think, what’s your

thoughts . . .

Jason: No, I’m responding to some questions. The ones that I think are

relevant and from serious inquiries, and not just people asking generic,

general questions. Because I have limited time and I’m just interested in

serious buyers. We have a few that we’re talking to right now, and pretty

close, hopefully, to closing a deal. So I’m also just less interested in

answering other questions right now because I’m talking to people who are

serious. So that’s mostly it. Also, the flip of things- interesting

experiment- you know, we listed Sortfolio on our web site about a year ago.

And then, we just ran out of time because we started working on the new

Basecamp, so we didn’t have any time to pursue that. And then we listed it

again, this time with an ultimatum. And I was just curious to see what else

is out there in terms of how to sell something. So we listed on Flippa, and

we’ve gotten some interesting inquiries from there. And I don’t know where

the final buyers are going to come from, necessarily. But I’m responding to

people who I think are serious buyers.

Andrew: It does kind of feel like this is people’s opportunity to either,

now take a jab, which they seem to do a lot. Or to say, “I’m so curious.

Now I can pretend to be a buyer, and he has to tell me everything”. Right?

Which is not . . .

Jason: A lot of people like to take jabs, it’s easier. We’re used to

getting those jabs. This is actually a really good point, because when I

put this up on Flippa, I didn’t know, necessarily, what I was getting into.

And this is just something for Flippa. Let me know what I can expect. Do

most people have to answer a dozen questions a day? Maybe if I knew that

all of these questions would be posted, perhaps, and they weren’t

necessarily from qualified buyers, that I might be less interested in doing

it. Or maybe I would be more interested in it, I don’t know. But at least

let me know what the expectation is. I think that’s a really important bit

of advice for anyone running a business, including us. We need to do better

with setting expectations up front, too.

Andrew: Their sister property, which is 99 Designs, does do that. When you

post a request, they do say, the more you answer people’s questions and the

faster you do it, the more likely you are to get more submissions, and so

on. By the way, you just said, “this is what they should do”. You gave

them, clearly, advice based on your opinion. And you said, “but we need to

do a better job of that, too”. And that reminds me, you don’t seem to be as

pugnacious as you used to be. Is this intentional? I mean, you did a blog

post once about how another generation of entrepreneurs are bending over in

response to [??]. And more recently, you did one that took another

direction. You said, “Sit on it for a few minutes”. Where you saying, don’t

fight so much, consider the ideas. Where is this coming from? Am I picking

up on something right?

Jason: I’m 38 now, so I’m getting older. I’ve made a conscious effort over

the past few years especially to give it five minutes, basically, which is

what my post was about. It’s not really exactly five minutes, but the idea

is think about where other people are coming from a bit more and recognize

that there’s a lot I can learn too and as a company, we’re not doing. I’ve

always felt this way, but I didn’t really act this way. We have a lot to

learn. There’s a lot we can learn. There’s a lot of really, really

incredibly smart people out there who are doing things that we can learn

from. They’re doing things better than we’re doing them and, while we’ve

always thought that way, we haven’t really spoken that way. For example, on

Twitter, I have a No Complaint policy. I don’t complain on Twitter. I try

not to write blog posts about things that I complain about anymore. I’ll

keep those to myself and I’ll try and be more positive with the things that

I say because I think there’s plenty of negativity out there to [??]. I

don’t need to contribute to that anymore.

Andrew: Is it because things have changed? That part of your philosophy

was, “Pick a fight.” It did remind me a little bit of Howard Stern and the

evolution does remind me a little bit of Howard Stern, who today will go

back to Kathie Lee and have a reconciliation with her. He’s Rosie

O’Donnell’s best friend, who used to call her pumpkin head when he needed

attention. You don’t need it anymore to get attention. The world knows you

and now you can really be the person you need to be, which is

understanding, considerate, etc.

Jason: Maybe. It’s not conscious at that level, it’s more just I’ve matured

as a person a bit more over the past few years. Also, we have a bigger

company now and that forces me to be a bit more mature too. Just because I

have more people to deal with and more perspectives and personalities and

things like that, which I think is a good thing. There’s no discussion at

the company level. This is purely, David still has quite an attitude and

I’m not sure he’s happy to admit that. This is more of a personal thing for

me. It’s not something at the company level we’ve decided to do. We’re all

individuals and we all do our own thing, but internally, personally I feel

like I’m much more interested in reading more insightful and possibly

positive insights and positive points of view, so I’d much rather

contribute more things like that.

Andrew: Ben, the guy who runs Site5, he’s got a few questions. I’ll take

the last one because others have asked something similar. You have to

balance where to put the upgrade buttons and, you know what? I’m going to

summarize his question. He doesn’t want to be obnoxious and say, “Upgrade.

Upgrade,” everywhere, but at the same time he doesn’t want to lose sales

from having people not understand that there is an upgrade and a better

deal if they pay a little bit. What’s the answer for that?

Jason: That’s a really tough one. We’re struggling with that, too. We’ve

changed our position on this a little bit. We used to be a little more

aggressive and we’ve been a little bit less aggressive with the new

Basecamp, but one thing I think we should be using more of is email. When

someone’s near a limit, for example, we show them a little note in Basecamp

saying, ‘Look. You’re almost out of projects.’ We used to be like, if you

were 50 percent away from your limit we would say something. Now we’re

like, if you’re only 10 percent away. We’re showing that notice less often,

but email’s a really nice way to do that and not clutter up the product and

actually make it more of a pitch, because you have more room.

You have an actual email in your inbox that you can write to someone

specifically instead of trying to have a little upgrade notice all over the

place, which doesn’t really give you a lot of room to explain why you think

it’s a good idea that someone should upgrade. I think sending more emails.

Again, you don’t want to blast people with emails, although some people

would say that you would. There’s a lot of successful email drip campaigns

that are sending emails everyday. That’s just not something we’re yet

comfortable with, but I think email’s a good direct opportunity to talk to

somebody when a certain trigger is met instead of talking to them within

the app itself because a lot of people are just trying to get something

done in your product and all of a sudden you’re hitting them up. You’re

stopping the workflow and saying, ‘Do this now,’ instead of letting them

finish the workflow and then sending an email that afternoon when they’re

done doing what they were doing and they might be more receptive to

actually upgrading at that point.

Andrew: I’ve asked a ton of questions.

Jason: I have one, because my battery’s almost out. So, I’ve got 18 percent

left on my Macbook Pro right now so, one or two more.

Andrew: Oh, you want to do one more? I was going to say that’s it.

Jason: I’ll do one more.

Andrew: Let’s do one more. Walter Heck of Tribley.com says, “How can I

figure out whether or not to offer a free version at all? I don’t want to

offer that version and then figure out that it’s not buyable and then close

it again. Or maybe I should do that,” he’s saying. Tribley is server

monitoring as a service and that’s his question. Several people have asked

that same thing.

Jason: We recently, with the new Basecamp, we stopped offering a free

version. We give you a 45-day trial, which is an unlimited trial. This is a

new thing we’re trying. Previously, for the past eight years, you got one

product for free, and then you could upgrade to a paid plan if you wanted

more projects. Now, we’re trying a new thing where you get 45 days free

unlimited. You can do anything, there’s no limits. And at the end of that,

or any time during that, you can upgrade to a paid plan, but at the end of

the trial, if you don’t upgrade, you don’t get a free account. We’re

running that, we’re not formally testing it, but it’s a thing we’re trying.

We’re only a couple months in now, launching the new Basecamp, so I’m

curious to see how that works in the long-term, too.

My thing is, if you’re going to offer something for free, you’ve got to

offer something that people can pay for, too, instead of just offering

something for free and then later finding out how to make money on it. If

you do want to offer a free version, make sure you’re offering a pay

version at the same time. That way you are giving people the opportunity to

pay you money, and not get used to the fact that it’s free forever.

Andrew: You offer something for free, which I think used to be one project

for free? Then you killed it, so you’re saying to Walter “It is possible to

kill it after you do it. Don’t think it’s a tattoo on your forehead that

will never go away.”

Jason: Exactly. If you give stuff away for free, then you’ve got to honor

the people you’ve given it away for free for, so you’ve got to grandfather

them in, and from then on, you can stop offering stuff for free. You can

maybe test it, see what your retention is, and see what your upgrade paths

are. That might take you six to nine months, depending on how much traffic

you get, and how many people you have taking the upgrade.

There’s no harm in testing business models. There’s a book out by a guy

named Saul Kaplan, called The Business Model Innovation Factory. He talks

about how a lot of companies spend a lot of R&D time on product

development, but they don’t spend a lot of time on business model

development. His theory is that at any one time, if you went into a

company, you’d see a lot of R&D projects going on, but you should also see

a lot of R&D business model experiments going on, too. We’re actually

working on some ideas around that too, right now. You can test these

things. You can try these things for three months. You can do it for three

months one way, you can do it another way. Depending on your traffic, it

might take longer than that.

Test some things, see what happens. Try offering a free this, or free that,

or a different version of what free could be; a limited-time free, a

limited feature set free. There’s a million different ways to do it. See

what happens. In the long-term, you want to figure out, if you do offer

something for free, are you getting people to upgrade later on, or are they

just staying free forever? That might be a problem you want to solve. Just

test stuff out, give it a try, experiment. Whatever you did in the past,

you don’t have to do it tomorrow, you can change.

Andrew: Well, thank you for doing this interview, and for taking all those

questions. By the way, this was all an experiment, guys. I took a small

portion of the people who came to Mixergy, and I asked “If I let you ask a

question of an entrepreneur, would you do it? What kind of question would

you ask? These are the questions that they asked. I want to explain why not

everybody got an opportunity to ask a question. It’s Basecamp.com. Was it

always Basecamp.com?

Jason: It used to be BasecampHQ.com, and then, when we decided to do this

new version, we decided to go out and get Basecamp.com for too much money.

Andrew: How much.

Jason: I don’t know if I’m allowed to say. I don’t remember if we signed

something about that. I don’t remember. It was low six-figures. I can say

that. It was a lot of money, for a domain name. I wouldn’t recommend

anybody do that when they’re starting a company. It’s not worth that money

up-front. We used to use BasecampHQ, and we still have HighriseHQ,

Backpackit.com, and CantFireNow.com. That’s what I recommend you do, go get

a domain that costs you ten bucks and run with it. If things go well, eight

years later, treat yourself to the right domain when you can afford it.

That’s the path we took. Same thing for an office; we didn’t have an office

for a long time, and 12 years later, we do. We can afford it now. I think

those are the things that you want to wait to spend money on, not spend

money on those things up front.

Andrew: Well, congratulations on all the success. I’m going to urge people-

I know they’re going to go check Basecamp.com out- take those video tours,

the recordings that Chase did. He keeps it moving, and it’s interesting to

see how you guys think about the product, and what he does that’s

interesting is, he shows me your projects on Basecamp. It makes me feel

like I’m seeing something that I’m not supposed to, so it’s fun. I

recommend it.

Jason: That’s at Basecamp.com/classes, by the way, if anyone wants to look

at that.

Andrew: Yes, I was wondering how I got to that. Thank you so much, and

thank you all for watching.

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  • http://twitter.com/RandyCantrell Randy Cantrell

    Thanks, Andrew…and Jason. Another insightful conversation.

  • http://mattreport.com Matt Medeiros

    I loved the question about maturing. 

    I also appreciate Jason’s response to it – very open and honest. From my perspective, I could see Jason maturing over the last year or so. Especially as 37 Signals grew from a handful of Ninja’s to a more esteemed/refined company and culture. 

    It reminds me a lot of myself and how growth and experience start to change your perspective on work/life.

    Another great interview in the bag!

  • http://mixergy.com Andrew Warner

    Thanks. Jason is always a great guest.

  • http://mixergy.com Andrew Warner

    Why do you think it happened?

  • http://mattreport.com Matt Medeiros

    Here’s my story:

    Starting out two years ago bootstrapped and looking to pay the bills by doing your typical web design/development client service. Coming from absolutely nothing, it was time to beat the streets in the local market to generate revenue and slowly build a team organically. 
    I didn’t want to take on small jobs. I only wanted to craft the highest quality designs, most feature rich functions, and fully supported through our team of professionals. 

    “I was going to do it right and do it the best.”

    Going out to local business pitching $10-$20k web projects and just getting completely massacred. Not only by the clients, but from the local competition. We’re talking to people putting sites together for $500-$1500 and even that was a stretch for the small local business budget. Things had to change, I couldn’t wireframe every little detail or build a pure roadmap to success for each client – not for that price point, not if we wanted to scale. I think what happens to a lot of us – we go in with a mindset of what we think will happen and the market totally flips us on our head. The good thing is, the time isn’t totally wasted, it’s turned into learning experiences that hold even greater value. 

    I think with Jason and 37 Signals (a thought leader when I was starting my team and laying the first building blocks of my company culture) there was an expiration time on how long they could sustain being an elite group of ninja’s as their company scaled. 

    Products like Sortfolio was a bit of a greed move on their part. I’m glad you brought it up. I wrote about it on my blog once as well. They leveraged this cult following and made some serious cash off of it. Do I blame them? No. Do I feel they slighted their fans/customers a bit? Yes. 

    I also knew times were changing when the office was being built and their job posts were stating that some staff was now required to be in the Chicago area. 

    “Freedom” to work anywhere only lasts for so long. I juggle that myself leading a team of people at my startup.

    Like Jason said in the interview, there’s just a lot more people now. 

    And that’s the rub as business owners and entrepreneurs – not only are we faced with satisfying clients and growing revenue – but we also have our team to satisfy. 

    And keeping a balance of growth and innovation – you simply need more people. More people, more problems. Problems that even a product like Basecamp can’t solve ;)

    I think what we’re going to see from 37 Signals is the story of a group of guys that challenged the status quo early on as rock stars (in our eyes) to the well defined leaders of tech companies over the next 10 years or so. 

    I think you will eventually see them go public, before they are sold. You can see it in Jason’s eyes and hear it in his voice, he wants to accomplish more than just a SaaS company. And he can. And it will be a hell of a fight with a David. ;)

  • http://www.facebook.com/people/Matt-Sharper/100000807088310 Matt Sharper

    “Products like Sortfolio was a bit of a greed move on their part”.

    Not really…. 

  • http://mattreport.com Matt Medeiros

    Ok, it was a product they created in less than a weekend, grossed them probably around 400k, did little for clients who signed up or bought premium listings, and was pretty much left stagnant with no future investment from the team. 

    Greed is probably to harsh. Perhaps neglect?

    Note: I think 37 Signals is an underrated and fascinating company. I’m a fan/customer of their software and I’m a fan of listening to Jason speak. So I’m not trying to bash them.

  • http://collaborable.com/ Eric Ingram

    I like the way you describe it: “I was going to do it right and do it the best.”, and how the market massacred it. Of course I had the same experience early on.

    I really love the way markets work, there’s nothing more honest.

  • Jcroft41

    Man, I love this guy. So sharp and always great for new and evolving insights. Thanks to you both.

  • http://www.facebook.com/adam.clinckett Adam Clinckett

    Loved the idea about watching your interviewees do a recorded consultation with a Mixergy premium member.  Not sure how many people would pay $1000, but loved the idea :)

  • http://www.itcertificationmaster.com/ Mirek Burnejko

    Dream – Master-Class with Jason – From idea to product :)

  • http://mattreport.com Matt Medeiros

    so true my friend!

  • http://twitter.com/yagudaev Michael Yagudaev

    I really loved the questions from Mixergy members towards the end of the interview. I would love to see more of that in the future too.

    About the consulting suggestion Jason brought up, I really like the idea. Actually it reminds me of the way Creative Live (http://www.creativelive.com) does some of their videos. It is a website for creative professionals, mostly talks about photography and all the details of the business. They do actual photo shoots with professional photographers and stream them live, so you get to see how they work and deal with issues. They also have less experienced photographers do their thing and get criticize and advice from the pros. They have a lot of great stuff for photographers that would be great to have for us as entrepreneurs. Seeing how religiously my photographer friend watches those really made me realize the value of things like that.

  • http://www.constantclick.com/ Jean-Pierre Khoueiri

    Jason, great tips, THANKS!! I’ve been a long time user. =) I want to make cool educational videos and I need to know what systems your using for your screen capture please, it would be REALLY helpful to know how you make your /classes so nice. 

  • http://www.constantclick.com/ Jean-Pierre Khoueiri

    No need to answer Jason, I hedged my bet on getting a response and put in a question directly on 37signals support page and got a response in less than a 5 minutes, here it is for the rest of the readers here: 

    Hi Jean-Pierre!

    Thanks so much for using Basecamp Classic! We’re using ScreenFlow for the Mac to create the videos: http://www.telestream.net/screen-flow/ :) It’s pretty sharp and we like it a lot. 

    Have a Happy Monday!
    Joan Stewart
    37signals Customer Service(thanks for the amazing support Joan)

  • Ramu Tremblay

    Arguably one of the best interviews on Mixergy…Ever!  There is so much meat here.  Jason has a way of breaking things down in a way that’s so damn easy to understand.