Efficiency and Simplicity in Business Strategy

Jason Fried is the co-founder and CEO of 37signals, the maker of Basecamp and HEY. 37signals is a very different kind of company. With fewer than 80 employees, they have over 100,000 customers, generate tens of millions of dollars in profit each year, and have no investors, board, or any plans to ever raise money or sell the company. In our conversation, we explore a path many tech founders never consider—bootstrapping. We discuss:

• Why he and his team prioritize profit above all else

• The unexpected challenges with raising venture capital

• The “Shape Up” framework for building products

• Why, and how, to foster a gut-driven culture

• Jason’s thoughts on why work should not feel like war

• Advice for starting a bootstrapped business

• The philosophy behind Once, 37signals’s new line of software products

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Find the full transcript at: https://www.lennysnewsletter.com/p/jason-fried-challenges-your-thinking

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Where to find Jason Fried:

• X: https://twitter.com/jasonfried

• LinkedIn: https://www.linkedin.com/in/jason-fried/

• Email: jason@hey.com

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Where to find Lenny:

• Newsletter: https://www.lennysnewsletter.com

• X: https://twitter.com/lennysan

• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/

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In this episode, we cover:

(00:00) Jason’s background

(03:49) The success of 37signals

(06:46) When raising money makes sense

(09:58) The power of small teams

(13:55) Defining success and goals

(17:08) Playing “infinite games” in life

(20:11) Starting a business vs. staying in business

(22:13) Lessons from 25 years in business

(27:28) Venture scale vs. bootstrapping

(30:30) Choosing the right path for your business

(33:19) The “Shape Up” framework

(37:59) The drawback of promises

(39:56) Adopting a new way of working

(41:36) The two-week cooldown

(43:53) Trusting intuition and gut

(46:41) Creating a gut-driven culture

(49:44) What Jason looks for in new hires

(56:19) Advice on making changes and adapting

(01:00:06) What Jason has changed his mind about

(01:02:33) Planning in 6-week stretches and figuring it out as you go

(01:06:43) Being proud of the work you do

(01:09:05) Jason’s thoughts on why work should not feel like war

(01:11:31) Advice for starting a bootstrapped business

(01:14:33) You must be at peace with the worst that can happen

(01:15:42) The benefits of bootstrapping

(01:19:11) The value of constraints in business

(01:22:00) Jason’s philosophy: “Just keep making great s**t”

(01:23:19) Once, 37signals’s new line of software products

(01:26:33) The philosophy behind Once

(01:35:47) Closing thoughts

(01:37:23) Lightning round

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Referenced:

• 37 Signals: https://www.smartsheet.com/

• Basecamp: https://basecamp.com/

• Finite and Infinite Games: https://www.amazon.com/Finite-Infinite-Games-James-Carse/dp/1476731713/

• Ingram Micro: https://www.ingrammicro.com/

• Once: https://once.com/

• Basecamp’s Shape Up framework: https://basecamp.com/shapeup

• Hill charts: https://basecamp.com/features/hill-charts

• Jason Fried’s quote about long-term business planning: https://medium.com/@farkhan569/unless-you-are-a-fortune-teller-long-term-business-planning-is-a-fantasy-jason-fried-quote-a69e8778e9c4

• Brian Chesky’s new playbook: https://www.lennyspodcast.com/brian-cheskys-new-playbook/

• Matt Mullenweg on X: https://twitter.com/photomatt

• Leo Polovets on X: https://twitter.com/lpolovets

• HEY: https://www.hey.com/

• Redefining success, money, and belonging | Paul Millerd (The Pathless Path): https://www.lennyspodcast.com/redefining-success-money-and-belonging-paul-millerd-the-pathless-path/

• It Doesn’t Have to Be Crazy at Work: https://www.amazon.com/Doesnt-Have-Be-Crazy-Work/dp/0062874780

• Squarespace: https://www.squarespace.com/

• Stoic negative visualization: https://dailystoic.com/premortem/

• Linear: https://linear.app/

• Peter Rahal on LinkedIn: https://www.linkedin.com/in/peter-rahal-037bba43/

• RXBAR: https://www.rxbar.com/en_US/home.html

• Jason’s LinkedIn post: https://www.linkedin.com/posts/jason-fried_just-keep-making-great-s**t-keep-your-costs-activity-7130978623523614720-VBGX/?trk=public_profile

• Several Short Sentences About Writing: https://www.amazon.com/Several-Short-Sentences-About-Writing/dp/0307279413

• Hell Yeah or No: What’s Worth Doing: https://www.amazon.com/Hell-Yeah-No-whats-worth/dp/1988575117/

• Home-Made: Contemporary Russian Folk Artifacts: https://www.amazon.com/Home-Made-Contemporary-Russian-Folk-Artifacts/dp/0955006139

• Oppenheimer: https://www.oppenheimermovie.com/

• Tom Petty’s “Crawling Back to You” on Spotify: https://open.spotify.com/track/1JenqZNMU6unIwVWmoP3J0

• Poor Charlie’s Almanack: The Essential Wit and Wisdom of Charles T. Munger: https://press.stripe.com/poor-charlies-almanack

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Lenny may be an investor in the companies discussed.

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