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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

Some takeaways:

1. To find happiness in your career and life, embrace the philosophy of playing infinite games, where the goal is to keep playing rather than reach an end goal.

2. By prioritizing profits over growth, you can stay in control and learn the skill of making money, and you are more likely to build a company that lasts.

3. You can build a business without venture capital. Basecamp makes a profit in the double-digit millions each year, entirely bootstrapped.

4. Less is more. Basecamp is proof that you might be better off with less planning, people, and product features.

5. There are different paths to success in the building of a startup, and it’s important to choose the one that aligns with your goals and values. Do you want to build the biggest business possible, or do you want to build a business you’re proud of and want to continue working at?

Listen now on Apple, Spotify, Overcast, and YouTube.

Find the transcript for this episode and all past episodes at: https://www.lennyspodcast.com/episodes/. Today’s transcript will be live by 8 a.m. PT.

Where to find Jason Fried:

• X: https://twitter.com/jasonfried

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

• Email: jason@hey.com

Where to find Lenny:

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

• X: https://twitter.com/lennysan

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

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 shit”

(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

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-shit-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

Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email podcast@lennyrachitsky.com.

Lenny may be an investor in the companies discussed.