In a time when many companies are disregarding profitability and spending recklessly, Jason Fried and David Heinemeier Hansson have taken a different approach at 37signals. They believe that caring about costs is a timely concern and a fundamental principle for running a successful small business.In this episode of the “Rework” podcast, they sit down with Kimberly Rhodes to discuss the critical importance of cost management in today's business landscape.From reevaluating software subscriptions to establishing fixed pricing models, listen in as Jason and David share their proactive approach to cost management. They discuss strategies for navigating the dangers of unchecked expenses and eliminating unnecessary expenditures and their detrimental effects on a company’s long-term viability. Tune in as Jason and David share their practical insights and hard-won wisdom for building a sustainable AND profitable business in any economic climate. Show Notes:  [00:00] - Kimberly introduces the episode and opens today's discussion on the importance of caring about costs in business.[00:49] - As the availability of money is decreasing, companies are starting to realize the importance of profitability.[02:22] - Jason discusses the difficulty of shifting into a cost-conscious mindset and the common first steps of cutting costs.[03:39] - How to ensure profitability. [04:41] - David shares their experience during the dot-com boom and bust, which influenced their mindset of never wanting to be financially vulnerable. [06:24] - Why smaller bootstrap businesses must cultivate cost-conscious habits early on.[07:16] - Money buys independence (options, time, and flexibility). [08:07] - Redefining what makes financial sense and prioritizing cost-effectiveness—even if it's not your money.[08:50] - Companies are facing the harsh reality of survival. It’s time to focus on maintainable practices before it all comes crashing down. [09:40] - An opportunity to rein in wasteful spending for a more sustainable future.[10:37] - Without occasional controlled burns, the forest of technology becomes a ticking time bomb. [11:21] - A startup in Denmark is facing the end of their runway in just nine months—how they could extend their runway twofold.[12:19] - Kimberly shares about the caution-to-carelessness cycle that happens as small businesses begin to thrive. [12:43] - Jason shares how hard it is to break free from the spend-centric growth-chasing culture, especially when fueled by other people’s money. [14:13] - The "spend it all" mentality that creates a Monopoly-style illusion masking financial responsibility.[14:48] - The habit of spending is easily acquired, but making more than you spend is the real challenge, and in the next 18 months, companies lacking a profitable formula will face the music.[15:44] -Categorizing and Value Assessment: monitoring expenses depends on the stage of your business. [16:30] - David shares that if you evaluate costs beyond the immediate month or year, numbers that seem small become meaningful.[18:46] - Some costs can evoke disgust when examined closely—like our $3 million annual cloud bill—revealing their true magnitude[19:34] - A company should be a well-run, efficient system like a perfectly prepared hotdog.[20:42] - Kimberly shares that staffing and subscriptions are crucial to evaluate. Subscriptions, in particular, can accumulate and should be assessed for their value.[21:47] - David shares how 37signals prices their products and how overlooking unnecessary subscriptions can significantly impact your bottom line.[22:30] - Would you pay for multiple tools when one comprehensive so

Host Kimberly Rhodes interviews Jason Fried and David Heinemeier Hansson, co-founders of 37signals, as they share insights on their unconventional hiring process for a COO and the challenges of adding a third person to their team. They also discuss the benefits of starting projects with six-week cycles and the importance of shorter cycles and gut-based decisions in business development.

There's a lot of talk in the tech world about getting bigger, growing as fast as you can, and getting investor money so you can scale quickly.  But that's not the only path. And recently, we've seen that being bigger only sometimes works well for companies.  Jason Fried and David Heinemeier Hansson, the Co-founders of 37signals, discuss the bigger is better culture in tech and why the human connection inherently built into small businesses can actually be an advantage. Plus, their invitation to small businesses to think differently through their open letter called, Come small, come all.  Show Notes:  [00:44] - Jason shares why it's important to note that Basecamp is interested in helping the Fortune 5 million and the small shop down the street. [01:49] - David shares why it's important to him to be honest about the company's target audience. [03:29] - The key to finding the right dance partner that's your bread and butter. [05:30] - David shares the funny anecdote about when Twitter was a customer of Campfire and how they tried to "scare them away." [08:50] - "We found our space. Can we just stay here?"[09:59] - Jason shares why leaning into the space you are uniquely suited for and being closer to the work is an advantage. [12:08] - Why it's essential to cultivate confidence in the human connection built into small businesses.[13:36] - The unsustainable quest for a big market share.  [15:10] - How starting out during the original .com boom and bust cycle taught Jason and David to make sure the company has margin times three.[18:28] - How to look like both an idiot and an oracle without changing a thing about the way you do business. [21:10] - Where business breakthroughs come from. [23:45] - How large companies devour innovation.[24:16] - A special offer to help make Basecamp affordable for new customers that sign up by December 31st.  Links and Resources:Basecamp Open Letter to Small BusinessesOn Company SizeSign Up for 30-day FREE trial at Basecamp.com37signals on YouTubeThe REWORK podcastThe 37signals Dev Blog@reworkpodcast on Twitter@37signals on Twitter