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Steli Efti: Hey everybody, this is Steli Efti.

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Hiten Shah: And this is Hiten Shah.

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Steli Efti: And today on The Startup Chat we’re going to talk about something that we usually never do, which is a recent product launch, HEY, and maybe the concept of beef as marketing. I don’t know. We’ll see. But during the last couple of weeks, there’ve not been many really impactful business product launches, I think, or at least if there were any-

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Hiten Shah: I mean we don’t really talk about news on here. That’s really what you’re going after, right?

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Steli Efti: We never do that. Yes.

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Hiten Shah: We don’t do that, but we’re going to talk about news today.

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Steli Efti: Yeah, we are, because it’s sort of fun. To me, at least, it’s been fun to observe the Basecamp folks launched a new email product. It’s called HEY. They teased it for a long time, they had a waiting list, and then they launched it. And even before they launched it, actually, they spent a good amount of time, critiquing privacy in email, which was kind of curious, interesting. They always like to fight battles, especially when they have products in the battle in some way, but they always want to stand for some bigger idea, go after some big evil thing that needs killing, and make it a cause. And so at the beginning I thought it would be privacy. They would just shoot at all these email providers that don’t respect your privacy. I thought that would be the big battle, but it turns out the big battle’s with Apple, which is even more fun.

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Hiten Shah: So here’s what’s interesting. So these folks at Basecamp launched hey.com, and part of their marketing campaign prelaunch was privacy. Post-launch, it’s not even that it’s a battle with Apple, because I really don’t think they expected it, frankly speaking. I think a lot of people think they’re that smart or strategic, but they’ve even come out and said, “We didn’t expect this.” I think one thing about this company that people don’t realize is they’re very straightforward, and not as strategic as you might think, because they just have principles that have worked for them for 20 plus years, and they follow those principles, and they’ve written all those principles. In their Getting Real book, they have a section called pick a fight or choose an enemy. I mean back in the day their enemy was Gantt charts. I don’t know if you recall at all, but with Basecamp, original Basecamp, it was Gantt charts. And they’re like, “The enemy’s Gantt charts.” I mean now, with HEY, here’s what I’m thinking. They don’t need to make privacy the enemy when they launch because it is identified in their product. Every time you get an email that has an open tracker or a click tracker, I think it’s specifically around open, if I’m not mistaken, which is a lot of email you get, basically all the marketing email you get has open tracking, they let you know. Dude, Steli, they don’t need to talk about it. Just use the product and you know. You just know who’s tracking you, and they call it out, and they don’t need to do anything else. They don’t need to talk about it anymore. I think prelaunch it was the one thing they could get everyone riled up about, and get some momentum in their direction after forever and a day of not launching anything. It’s been years, many years, before they got excited about something. I mean they get excited about their new base camps, but not in this way. They didn’t have anything to launch. We’re back to campaign based launches. This was a campaign, and privacy was just the best hook early on. And I’m sure they tested it with tweets. If you go back in history with some of their tweets, they tested it before they even threw down. They made a big deal out of it. They said, “Hey, that’s bad,” but they never really said, “Hey, we’re building something against it,” yet. In the early, early days, I don’t recall them actually going after it in a way where I was like, “Oh, they’re building an email tool,” until they really quickly came out with it. And I’m sure they tested … Seems to have tested different positioning before launch. So now post-launch, I think honestly they’re doing what they do best, which is they’re adapting to the narrative that gets shaped as time goes on. And they’re ones that are happy to stand up for themselves when they believe somebody is doing them wrong. And we’re just seeing that. And they believe that Apple was treating them unfairly, and they made a big, big, big, big, big, big, I can’t even say big enough on this one, deal out of it by basically saying, “Hey Apple, that’s not cool.”

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Steli Efti: We have, but it’s not just that. I think maybe the other interesting angle around this is that because of the position that they have and the reputation … And it’s not two founders that are launching their first thing. They have a big successful business, and they’re wealthy, and they have a big reputation, and a very, very big following. And so they didn’t just take whatever unfair treatment they perceive to have gotten from Apple and were behind the scenes trying to move it, they made it kind of front page news and started a very public battle with a company that … Who starts battles with Apple?

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Hiten Shah: Nobody.

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Steli Efti: Nobody. Everybody’s terrified of Apple. If Apple doesn’t like you, that’s a problem in today’s world. It’s a big problem. And I think that they’re kind of in this unique position of A, they like fights. This is not everybody’s thing in culture, especially DHH is somebody that loves to argue publicly with people, who’s good at it. Just likes to have fights. Just, I think, enjoys it to a certain degree. And so they’re good at this. Then they love the David versus Goliath kind of with a small one that is treated unfairly by this massive organization. We’re going to fight for what’s right in the world. Think they love that position, and they’re really good at it, and it’s part of their ethos and their principles. And then they’re in this unique position where, although they’re so small, they’re so independent, they’re so wealthy, they’re so successful with some other stuff that they’re doing that they can make this big bed and start this really big public battle with a company that nobody wants to battle with because they’re all terrified of them. So it’s a very unique position to be in. And I’m very curious. Typically, Apple doesn’t care. That would be what I would assume. It’s just Apple will shoulder shrug, no matter how many tweets are out there, and just go, “We don’t care.” And that might work, because it has always worked for them, and what are people going to do? Is anybody really going to boycott Apple because of this HEY, because Basecamp’s HEY product didn’t get what they want. No, but you see more and more people that came out and shared their stories of unfair treatment. Kind of gotten encouraged by that. So it’s going to be interesting if this is going to build momentum and kind of become a bigger thing, or if it’s going to kind of run out.

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Hiten Shah: Well, they already acquiesced to some extent. So they basically are going to follow some rules that Apple set out, and then they’re going to have … Not to get in the weeds of it, because that’s not what we’re really talking about, but they are actually going to acquiesce to Apple’s demands to a great extent. And I think you’re basically dealing with two companies that are very principled. Apple’s super principal. That’s why they don’t acquiesce. That’s why they don’t do anything when they see these, they’re like, “This is what we believe. And we believe we know what’s right, and that’s the end of it. And there’s nothing you can say to change our minds,” but the Basecamp folks just kept pushing. And then, for lack of a better way to think about it, it felt like they came to their senses to some extent and said, “Well, we’re willing to do this. Apple, what do you think?” And they tweeted that, or something similar to that. And then Apple said, “Yeah, we’re willing to work with you if you do those things that you mentioned.” Now, what happened? That’s the big question. Because for me, that’s them acquiescing, that’s’ Basecamp acquiescing, especially after having such a strong point of view about it, they decided, “Okay, well we’ll follow your rules, but we’re not going to … We’re not going to get charged 30% though. But we’ll your rules.” So they found a middle ground. Well, here’s the thing. A lot of people that have found those middle ground, a bunch of people, have publicly said, “We deal with this quietly. These folks just dealt with it in a noisy way.” and that’s what’s interesting to me, which is they already found a solution to keep their stuff in the store, let their updates go through and Apple be relatively happy. So what was all the big stink for? Well, if you start looking at the numbers, they doubled their wait list between roughly when they launched and basically when this solution came about today, this morning actually. This is Monday morning right now when we’re recording this, and it’s [WDC] today as well. And I think both parties were somehow incentivized to solve this problem by today. And it got solved. And so in a way it’s almost like Apple did the smart PR move here, but Apple didn’t have to do anything except say, “Okay, we’re okay with your solution.” And that’s what a lot of developers do privately with Apple because it’s Apple’s platform, and I’m sure they have good reason to keep it the way it is. Regardless of what you think, they’re very reasoned and principled. So their principles are their principles. So what’s fascinating to me is you had them create all this noise, and there’s a possibility they doubled their whole wait list as a result of this, so when you look at it from a business standpoint, they did the right thing for their business, the folks at Basecamp did. And this whole idea of picking a fight, choosing an enemy, and the strategy that they use is quite an effective one if you can stomach it, because there will be people that hate you when you pick a fight, period. And Basecamp can stomach it. HEY is designed around this idea that we need to change the way email is done, and what people don’t appreciate, just for a quick second about it, is what these folks are trying to do is a freaking game changer, because let me point this out. You have alternative email clients, but you don’t have alternative full on power my whole email services. So there’s Google that does it. There’s Microsoft that does it. There’s Apple that does it. And then there’s literally nobody else except a bunch of small players that power your email fully. And now you have HEY. And if you just focus on business use cases, because that’s what HEY has already come out and said that’s what they’re all about. Think about it. 37signals is their base camp. They use their own stuff for version one, and that’s what they say. We build it for us. They’re using it for all of Basecamp’s emails right now, all their 50 people. So they already know how it works at a company, and they’re going to turn on work email. They already have a page and everything so you can apply for that wait list. So this is, one, brilliant, and two, extremely ambitious compared to Superhuman, or any of those little clients, because they’re not powering the full email stack. They’re on top of Gmail, or on top of Outlook, or whatever. So it’s underappreciated how serious and important this business is for the future of their business. This is a business that will likely be a lot bigger than Basecamp overtime.

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Steli Efti: Boom. There you go. And it took them a minute. It took them-

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Hiten Shah: A damn good minute.

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Steli Efti: … A good minute. They were doing all these fucking apps, and then they were like, “Fuck, all this. We’re only going to do Basecamp. We’re killing everything.” And then they were like, “Basecamp is the shit. We’re only going to focus on that.” And you knew this was probably not true. And then it took a couple years, and then boom. And you got to give it to them.

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Hiten Shah: Got to give it.

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Steli Efti: They’re going big. The idea’s big, the brand, everything, the launch. They’re attempting something truly big. And you can tell that they’re excited about it. You could tell it took something like this to get them excited again, to launch something [crosstalk 00:13:24]. So from the sight lines, I think both you and I are applauding and tipping our hat, and wishing Godspeed that this is going to work out and be a huge success.

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Hiten Shah: We need another email option, truthfully, from the ground up, not some client bullshit. We need a ground up option. That is the best way to reinvent email is start from the ground up, and they’re doing it. And I don’t see anyone else trying, frankly speaking. So that’s why, forget their marketing, forget all of that, they are doing it. I don’t see anyone else trying. That’s admirable. In softwareland, in SaaS, as a founder, that’s bold. And they’re doing something bold and they’re not venture backed. Sure, they have a bunch of capital they can throw at it, but they earned that. They’re not raising money for this. It has nothing to do with that. They get to do it their way. That’s also very, very different than what most of us look at when we think about how these big companies are invented.

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Steli Efti: There you have it, folks. The HEY launch. Very interesting, incredible product. Everybody who’s listened to this podcast knows the Basecamp folks, but they’re back. They’re back.

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Hiten Shah: They’re back, and it’s exciting. It’s nice to see.

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Steli Efti: It is exciting, yes. There you go. All right. That’s it from us for this episode. We’ll hear you very soon. Bye-bye.

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Hiten Shah: Take care.

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