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


 

About Jason Fried

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.