David Heinemeier Hansson, Co-Founder & CTO, Basecamp
Eighteen years ago, David Heinemeier Hansson was a college student sitting in his little apartment in Copenhagen when he stumbled across a blog post by 37signals (which would later become Basecamp), a Chicago-based design company he had long admired.
In the post, co-founder Jason Fried posted a question on some aspect of programming. Hansson knew the answer, so he contacted Fried. Several emails later, Fried was asking Hansson to work with him.
“Jason decided it was easier just to hire me than to learn how to program,” Hansson says, “and that’s how we started working together.”
That was the beginning of a now-legendary tech startup team, and an illustrious career for Hansson. In Hansson’s early days at Basecamp, he famously created Ruby on Rails, an open-source web development framework once used by Twitter, and still in use by GitHub, Shopify, and many more.
We were excited to talk shop with Hansson (often known as DHH) because, in an industry dominated by breakneck Silicon Valley culture, Basecamp stands out in many ways: It’s been profitable every year since its inception in 1999, it doesn’t chase growth, and it doesn’t even set numerical goals.
With their latest book, It Doesn’t Have to Be Crazy at Work, Hansson and Fried are hoping to challenge the prevailing narrative about chaotic work culture by sharing the unique way they run their company.
This is Part 2 of our Basecamp co-founder interviews. To hear Part 1, check out our podcast interview with Basecamp co-founder Jason Fried.
- The blog post 18 years ago that brought Hansson together with co-founder Jason Fried, and what compelled Fried to hire him
- How Hansson invented revolutionary web development framework Ruby on Rails
- Why it’s never too late to learn how to program
- The story behind how Jeff Bezos bought a minority, no-control stake in Basecamp in 2006—and how Hansson feels about it today
- Basecamp’s philosophy on growth
- His latest book, It Doesn’t Have to Be Crazy at Work, and why he hopes to challenge the prevailing narrative about entrepreneurship and growth
- How Basecamp defines success, even though it doesn’t set goals
- The disadvantages of large companies
- How to maintain a strong company culture when your team is remote
Full Transcript of Podcast with David Heinemeier Hansson
Nathan: The first question that I ask everyone that comes on is how did you get your job?
David: Funny story. I was in Copenhagen Denmark. I was in school at the time. I just started my Copenhagen business school degree in computer science and business administration. I was a big fan of this small design company based on Chicago called 37 Signals. 37 Signals was started in 1999 and they had a blog right from the get go called Signals Versus Noise. On that blog in about 2001, Jason Fried, one of the original founders of the company posted a question about some PHP stuff, how to learn some aspect of programming.
Here I was sitting in my little apartment in Copenhagen Denmark thinking like, “Hey, I know the answer to this.” I’ve been following these guys for years. I really respect and like and I’m inspired by the work that they’re doing. Now I have a chance to get something back. I wrote Jason back, just sent him this called e-mail. He didn’t know me. I didn’t know him beyond just reading the blog. I started just explaining his question. Jeff’s well, he said good.
We started trading e-mails, bounced a few back and forth. After I think maybe 10 e-mails back and forth, Jason decided it was easier just to hire me than to learn how to programme. That’s how we started working together. This is about 18 years ago.
Nathan: Yeah, wow. You’re quite prolific especially in the development circles just because you created Rails. How did that come about?
David: Yeah, so Ruby and Rails was a continuation of meeting Jason and starting to work with him. A couple of years into our partnership, I’ve been working with PHP at design. We had the opportunity to create something new together. We weren’t working for a client that dictated what the technical platform have to be. In 2003, we started work on what became Basecamp. Since this was an internal project and I had basically freedom of choice to pick the tool that I wanted to use, I had been learning about this small little programme or language out of Japan called Ruby that a number of influential western developers were talking about but weren’t really using.
When I had this freedom of choice to pick, I was like, “Let’s get this Ruby thing a try.” There’s a lot of influential people who seemed to think it’s pretty great but they just don’t have the opportunity to use it in a commercial fashion. I started using Ruby and starting to even learn Ruby as part of the creation of Basecamp. After a couple of weeks, I was just completely sowed. Ruby was just a revelation for me.
It was really the turning point where I went from programming, being just something I did to create software to being a calling in a sense, a vocation that I could see myself doing the rest of my life. I had this epiphany with Ruby. I started working with it. At the time, Ruby was not popular at all with the rest. There were a very few programmers working with it commercially, so I had to build a lot of the stuff that I needed to build a web application in Ruby by myself.
That’s what I did. I started building block by block until I had enough of a toolbox that we could create Basecamp in it. After we had created Basecamp and I thought, “Ruby is so great,” that I just had this revelation discovering this wonderful programming language that was focused on creating programmers who love their work, happiness, all these things that people weren’t really talking about at the time.
I wanted to help promote that and get that out to a wider audience. I took my own little toolbox and I called it the Rails and then I shared it for free. I turned it into Open Source, started distributing it in 2004. It didn’t take too long before there were tonne of other programmers who saw the light, bright, shining Ruby that I had discovered too through Rails. They started working with it as well. Today, Twitter was started on Ruby and Rails.
We have everything from Github to Shopify running on Ruby and Rails today. It’s just been a magical ride. Then I’m still at it. I’ve been working on Ruby and Rails for I think about 16 years now. We’re just coming up on our 6.0 release after 16 years. I continue to use Ruby almost every day. I continue to create everything we do at Basecamp in Ruby and Rails.
Nathan: Yeah, amazing. I’m not a developer by trade but yeah, I tried. I tried doing Ruby and Rails course like I couldn’t quite get there but-
David: Don’t let that knock you down. I needed to do several tries before I learned how to programme. I think I tried to learn programming at least three times before it finally clicked. When it clicked, I was I think almost 20 years old. This was not something of a child prodigy process. I think there’s often the stereotype that to become a good programmer, you have to start in eight years old which is complete and utter bullshit.
There are people like me who learned how to programme when they’re 20. There are other people learned to programme when they’re 30. There’s people who learned to programme when in their 40’s. It’s absolutely not something that’s going to hold you back. You can accelerate your learning with programme incredibly quickly and many people have. I get it. It’s still tough. I still remember some of the logical and technical challenges. I would wrestle with them and which forced me to give up. Once it finally clicks, it’s like magic unlike just about anything else.
Nathan: Yeah, look. It’s an incredible thing you guys have created and everything you guys are doing. I’m curious. I have to ask you. I read your latest blog post around Jeff Bezos and the fact that he think that that the things are not going to work for him. Would you like to comment on that?
David: Yeah. Our relationship with Jeff Bezos goes back to 2006. Two years after we had launched the Basecamp and created a number of other products, Jeff Bezos’s team and his investment group reached out to us. Our first instinct was to tell we have to do the same thing we told all the other 30 venture capitalist and other forms of investors and acquisitions sniffers, “Thanks, but no thanks.”
We weren’t looking for a capital to raise for our company. It was growing just fine based on revenues alone but there was something at the time that made us think, “Let’s at least hear the man out. Let’s see what Jeff’s interest is in our business and why he’s interested in it.” That eventually led to Jeff purchasing a minority stake in Basecamp from Jason and I personally, not to put money into the company but to put money into the pockets of Jason and I, and giving us that ballast and security to go to distance with the business without handing it over to a group of venture capitalist that would put the whole thing on a timeline and attach a time bomb where we either have to go IPO or sell the business in some amount of time.
We ended up with a pretty unique deal I’d say with Jeff in part because at least as I took it, this was a hobby. The purchase he made from Jason and I was jumped change to Bezos’s even though to Jason and I, it was a very material change between doing fine to all of a sudden becoming millionaires overnight. That deal really helped us just to pursue that long term vision. That now that there was just that little bit of ballast on our personal bank accounts, the appeal of selling the company to I don’t know, Google or whoever or taking venture capitalist to really blow it up really subsided and disappeared back and allowed us to just pursue this vision of building a wonderful company that we would want to work in for the long term that could do all these weird things we’re doing like saying no to continued growth or doing a hiring freeze the year we reach our highest revenues or any of all this weird stuff that we have been doing over the past 15 years or so.
Also at the time, I’d say the appeal of Jeff’s involvement was in part that he was different than us that he had gone a very different path obviously with Amazon. Yet, I think perhaps at the time it was in a little bit more of an innocent nascent phase. Even though Amazon at that time obviously was already huge and they had been around for a decade, it wasn’t what it is now. I think unfortunately, the actions that Amazon have taken over the last few years, not as flattering.
This rosy picture that we had of Jeff back in 2006, it just looks as little different. It’s a little more nuance than greedy and perhaps not as appealing to us. Now knowing what we know which is the same as everyone else, we don’t have any special access … In the early years, we used to talk to Jeff about once a year but we haven’t talked to him I think probably like seven or eight year personally which is I mean, of course we’re this tiny little fish.
He’s the richest man in the world. I can’t tell that we’re not exactly at the top of his list of priorities which is also totally fine. We both got I think out of the deal when we wanted it, we got that security on a personal level to go a distance. He got to have fun and be involved with the project, plus a very nice return. We paid Jeff back I think five or six times over. He still owns his thick company. It clearly was a good bet on his side as well just on the economical terms.
I think it’s unfortunate that given where Amazon is now and given where Jeff is personally that there isn’t more of a sense of what can we and I do for society on a positive level. I think it’s a little sad what’s been going on with the HQ2 process with the collapsing of markets in all domains with the predatory behaviour that Amazon is exhibiting. It’s a bit of a shame. I hope that if we get a chance to talk to Jeff at some point in the future, we can dive into that and ask him some questions of why he chose to go that path.
Because, it just doesn’t align with our values at Basecamp or just even the personal values that Jason and I or how we try to run our business. That’s where we are at the moment, a bit disappointed.
Nathan: Yeah, it was an interesting blog post. I guess what’s also interesting is if you look at the way that Jeff looks at a business, he’s very, very aggressive on growths. It’s like his famous, “Your margin is my leverage,” and he’s very, very aggressive on growth. You guys and I love your philosophies, and I’d love to talk to you about your I guess you and Jason’s thoughts and experiences on growth and on boot strapping and on scale and in your latest book, It Doesn’t Have to be Crazy at Work, it is quite different to how Jeff approach his business in many ways, right?
David: Yes. On the topic of growth, I think it’s about 180 degrees different. We’re very much about running a sound sustainable profitable business. We’ve been profitable every single year since the inception of the company back in 1999. On that topic, we probably couldn’t disagree more. Perhaps even more importantly on the topic of growth, I think that this ferocious appetite for growth that Amazon has, has reached the point where it’s actively harmful to not only society at large but I think even Amazon on the long term.
I don’t think that any company is well served over the long term if they actually end up capturing a market to the point where they have a full and dominant monopoly like Amazon has in several areas of its business. I think that’s where this automatic approach to growth that more growth is always better and having more market share is always better really hits a point where it breaks down. It’s not necessarily a bad aspiration to have when you’re an upstart and we’re just trying to make something work and we have goals in the Cloud.
The problem is that we actually end up reaching those goals like Amazon has and other companies have, right? I think we’re in an era right now of big tech strangling markets in all shapes and forms in ways that are reminiscent to me of the very unfortunate chokehold that Microsoft had on several markets back in the mid to late ’90s. I think society is just not served with that. If society isn’t served with that, I don’t think the individual company is served by that.
That’s definitely a point where we disagree. I find that there’s a lot of other particularly tactical approaches to things that Jeff has that I really admire and respect and we continue to use. In fact, we quote one of his ideas in the new book that’s called, “Disagree and Commit,” which is his concept of avoiding that everything boils down to consensus. When you’re trying to make a decision at a business and you might have five, six people around the table, if the only way out of that conference room is a consensus, you’re going to end up in this nasty fight of endurance and you’re going to end up with lots of resentment that people perhaps at the end will just conceive even though they don’t really mean it.
If you’re just upfront about the fact that one person is going to make this decision and then everyone else can disagree but once the decision is made, they’re going to commit to the decision and carry it out, and we’re going to make the best of it, I think you end with a far healthier organisation. That was one of the tactical ideas that we took from Jeff. Another one that always stands out in my mind is investing things that don’t change.
That was a really powerful statement that we got from Jeff in the early days, this idea that Amazon as a business, he was using his example, can build up these advantages by investing into the basic like Fast Shipping for example. Any customer going to wake up tomorrow and think, “I’d like my purchases to arrive later,” it’d be great if it took five days instead of two days, no. Every investment that they make into Fast Shipping is an investment that’s going to be relevant 10 years later.
We’ve taken that to heart as web business around a multitude of areas, for example, performance. There’s never going to be a time where someone wakes up and think, “I wish Basecamp was slower,” so all of the investments we make into things like performance whether it’s on the back end or whether it’s on the front end or in our design or what have you, those are investments that’s going to payoff for the long term.
Nathan: Yeah, yeah, I know. I’ve been reading that. That’s really interesting. Talk to me about the latest book, It Doesn’t Have to be Crazy at Work.” It’s a good title. It scares me a little bit to be honest because I love your guys’ philosophies at Basecamp and I believe in some of the things that you guys say and then practising it like, “We’re 100% boot strapped and we’re not looking for investors. We’re profitable. We got a great business that is good at making money but at the same time we do have aggressive goals. We want to grow in a sustainable way but at the same time don’t necessarily want to take the market but at the same time it is crazy at work sometimes.”
David: I think the reason we wrote It Doesn’t Have to be Crazy at Work was in part to set out a beacon, an alternative beacon because almost all entrepreneurial literature and role models are all about the crazy. They’re all about work as many hours as you can, grow as fast as you can sort of jump all these hoops, cut all these corners, and run fast and break things. That’s been the predominant narrative for quite a long time.
I think that that narrative just zips in. It zips in. It zips into your assumptions and your defaults to a point where you don’t even question it, don’t even question whether it’s good or bad. We really want to question that because at Basecamp, it isn’t crazy at work most at the time. Ironically enough, it’s actually been a little bit of a crazy week last week. In particular, we had an outage that was as bad as anything we’ve had in about 10 years.
We’ve had some other issues. Occasionally, it is crazy at work but that should be the exception. That should not be the norm and it certainly should not be the aspiration. When you say for example that you have aggressive goals, it’s one of those thing we tackle in the book. At Basecamp, we basically don’t have any goals. We have some very vague top level goals of we want to make a good product, we want to be a great place to work. We want to treat our customers with dignity, honesty and kindness.
These aren’t things that in most cases can be successfully measured. That leads me to one of those things, there’s a famous saying, “If you can’t measure it, you can’t manage it,” which is utter bullshit. Most of the key important aspects of a business like the things that I just mentioned, the primary operating principles are extremely hard to measure. If you try, you often end up making things worse.
What we try to do is explicitly as we say in the book, “Our goal is no goals.” We don’t try to chase these particularly monetary milestones because they never end. When you start getting into a habit of setting aggressive goals, what happens when you meet your first aggressive goals? Do you then just declare a victory and pat yourself in the back and then go back to a calm lifestyle? No, you don’t. You set yourself another aggressive goal.
That goes on and on until you’re simply exhausted on this treadmill of goals. For what, why are you doing that? Having some broader perspective that’s not just about reaching or breaching certain metrics I find it’s just a more of wholesome healthy way to live and work. You can still do really well. Basecamp as a business, we have over a hundred thousand being customers. We’re generating tens of millions in profits every year.
Things are good. Things are great. We did not need financial milestones and gold post to get there. We simply followed these underlying principles of making good product that we would want to buy. Then thinking there’s probably going to be other people like us and let’s build an audience around those people who are like us are at least like our message, let’s be fair and generous to our employees, and let’s treat our customers well.
It really doesn’t have to be that complicated. I find that a lot of entrepreneurs end up making things harder upon themselves than they need to be and putting straightjackets on particularly around growth, and particularly around growth based goals when they end just making themselves and everyone around them miserable and for no good reason at all. This is all imaginary. If you have a goal of say a million dollars, that goal could just as well be $800,000 or it could be $1.5 million.
People often forget that goals are just pigments of your imagination. You’re making that shit up and you might as well make up some different shit. Why would you feel bad about just the shit that you’ve made up?
Nathan: Yeah, I love it, man. One question I wrote down to myself that I’d have to ask you then is if you guys don’t have any goals, how do people in the Basecamp team know or individuals know what success looks like?
David: That’s a great point as well. I think when you define success in terms of these binary ideals of a monetary goal that’s either reach and not reach, you’re really shooting yourself in the foot. For me, success is doing the best job that I can. That best job is most of the time powered by an internal parameter of intrinsic motivation. Most of our designers, not mots, all of our designers know and feel in themselves when they’ve done a good job, when they’ve made a design that feels cohesive.
Sometimes you get calibrated and sometimes the stuff that you think is good, the market place will then reject. That happens as well but as a primary driver of what success looks like, I find that these goals are not helpful. They’re actually quite hurtful in that regard and you end up feeling bad about yourself when you shouldn’t and feeling good about yourself when you shouldn’t. When these goals are just these as I said imaginary peaks, you should feel bad about only growing let’s say 50% year over year if your goal was 70% or 2% year over year if you’re already in a great place and your goal was 5%.
Or you should feel wonderful because you have grown 12% when your goal was 10%. This is so arbitrary. I don’t think that it’s healthy to tie your sense of self-worth and success to these arbitrary goals which in many cases, you actually have a somewhat limited influence on. There’s all these other factors that are outside of your control, dictates whether you’re going to meet those goals or not. It’s just delusional, I find that people think, “I can do it all by myself.”
Even if you could do it all by yourself, maybe you’re doing it in unhealthy ways where you’re forming harmful habits and patterns that are going to come back to harm you. Even if you’re going to meet this one goal and you get your pair of success and pop a champagne bottle, what’s going to happen next quarter and the quarter after that? Once you’re stuck on this treadmill with a carrot dangling in front of you as your parameter for success and contentment, it’s very hard to get off.
Nathan: Yeah. Look, something that you said just before did resonate with me a lot was around the fact that when you tie these numerical goals because they’re easy to measure and if you don’t hit them, that actually like you feel really down and you shouldn’t. You shouldn’t let like the progress let’s just say of your work affect how you’re feeling like you should be able to detach from that. I think a lot of people listening would definitely feel that.
David: Absolutely and I think that that’s when there’s so much of it. We go to work or at least in many cases eight hours a day. Some people unfortunately go to work much longer than that. That should be a pleasurable experience. If you are coming to work and you’re doing a good job, you’re doing the best job that you know how then that should feel good. The fact that someone else outside can referee over that because you’re meeting these goals, and often times these goals are extracted from looking at other people.
They become this death of enjoyment by comparison. You look at like, “There’s this other company that’s doing so and so well, we’re not doing quite as well. Let’s feel bad about ourselves,” what? For what? They might be a miserable company to work at even though they’re having “success.” I don’t think that this is as binary as many people like to believe. In fact at Basecamp, we’ve been very explicit about saying we want to limit growth and we want to have goals around sticking in this happy place where we are right now.
We’re just over 50 employees. We don’t want to be 150 employees. We don’t want to be 200 employees. That is success to us being able to set our own agenda and control our own destiny and have this sense of independence. If that means giving up on being a mega company or having a few more millions in our bank account, that seems like an incredibly worth it trade.
Nathan: That’s interesting that you guys would not want to hire more people because you could do more for your customers though, right?
David: Yes and no. I think in lot of cases, the companies that do worst by their customers are the biggest companies. Lots of companies absolutely turn to shit when they grow. The bigger they get, the more divorced they get from their customers, the less able they are to relate to them, the more layers of management and indirection that harms empathy and kindness, the whole way down the chain gets inserted.
I think usually if you talk to a customer and say, “Hey do you like dealing with let’s say a big telecom company or do you like dealing with a small shop around the corner?” most people would probably say, “I really like the small shop.” They’re not going, “I love this big telecom companies,” or, “I love these big mega corporations.” There’s no love for size. There’s plenty of love for a personal human connection.
I think that that’s often underestimated that what customers want in many cases is some sense of relationship and some sense of connection to the business that they are dealing with. We just had a very difficult week last week. On Thursday, Basecamp was stuck in this read only mode for about almost five hours where people could get to their data but they couldn’t write new data. Now that’s pretty bad.
Yet, because we approached the situation with humility, grace, and human connection, kept people in the loop, I was writing people directly. All of the team which is involved in making things right at a very personal level would came out of that with several customers, perhaps even the majority of people who at least interacted with this feeling better about the relationship they had with Basecamp.
Not worse, that’s not a common outcome I’d say of having trouble. I think that outcome is very much predicated on the fact that we were developing and nourishing those human connections. Those are just incredible that you can’t have a human connection with a company of 50,000 people. It just doesn’t work like that. I think we do better for not only our customers but for our whole industry when we are and remain a small company that can treat customers in the way that only a small company can do, make the exceptions that only a small company can do and not be bent on growth.
Besides, just doing more in itself is not a parameter to success. There’s plenty of companies who just push out tonnes of product. Who as that actually helping? If we’re making let’s say just one product, let’s say just Basecamp and making that really well, do you really want us to make a lot of other crap? Isn’t that enough? Isn’t it enough for a company to simply say, “Hey, this is our product, we’re making it really good but this is what it is”?
I find that actually a lot of products end up better when they’re made by small teams rather than deluded by big teams. In the beginning of Basecamp, we used to get asked all the time, “Aren’t you afraid that Microsoft or whoever is the big company boogieman was at the time was going to come in and steal your business because they could just throw so many more developers at it and designers at it?”
We were like, “Absolutely not.” Microsoft will make the software that takes 50,000 people to make. They won’t make the software that takes four people to make. They can’t make small software. They can only make big software. A lot of the times, what you need is small software. A lot of the time, the disadvantage of the big company is that they’re incapable of solving small problems. They can only solve these huge problems. Most problems in the world are small. We’re very happy to continue solving those small problems.
Nathan: That’s really interesting because one thing that I find and I’m sure many people listening can relate to this is only to share out this, it’s exciting to do new things. There’s something that’s called I think a shiny object syndrome that all of the founders have where it’s exciting to do something new. You guys been very, very focused for a very, very long time. How do you moderate that? Wouldn’t it be fun to create another product or like? You know where I’m going with this?
David: Absolutely. We have that same draw as those anyone else. In fact in the history of Basecamp, we have created quite a few products especially in the early days. We were launching a product about every year. We launched Basecamp in 2004 then I think we launched Backpack in 2005, and we launched Campfire in maybe also 2005 or 2006. We launched something called Highrise after that. We’ve launched a lot of products over the years.
What happened was just that Basecamp kept growing. We kept getting bigger and bigger. We felt that of all the places we could put our attention, Basecamp felt like the one that was most deserving. It was the product that we use the most internally and it was the one that is really taking off. Even Basecamp, we’ve rewritten the product entirely two times. We’re on version three of Basecamp where every single version that we pushed out has been a complete rewrite from scratch where we took our basically our very best ideas and put them into a new version, a new spin on the same problem domain.
We still maintain all these versions of Basecamps. We have the original version of Basecamp that we sold from 2004 until 2012. That’s still a large share of a business, maybe even some 20 plus percent of our business. Even though it’s a product we haven’t sold in what’s that going to be? Over six years now, so we get to keep those things. Yet, we also get to put our best ideas into motion. In fact, we’re working on new product ideas right now that aren’t directly related to Basecamp.
Sometimes, they just end up being explorations that we then funnel back into Basecamp but sometimes they also end up being things like a spin off. A few, actually I think about four years back, we created a product called Know Your Company which is this survey product for talking to your employees and gaining the real scoop on what’s going on inside your company. We spun that off after having worked on it for nine months or about a year.
It’s today run by a small team of just two people and they’re running a great little business there. We got to explore a bunch of new product ideas which then fed into what became Basecamp 3. We’re doing the same now. Just because you’ve commit to a major ideas that’s a Basecamp, doesn’t mean that you stop working and it doesn’t mean that you stop chasing the best of your new ideas. Sometimes, those things then end up just being experiments. Sometimes, they end being small spin offs.
Sometimes they may end up being a new product that you run for a while and learn something from. Sometimes, they just end up being new ideas that we would use for say Basecamp 4 whenever that day comes.
Nathan: Yeah. Okay, that makes sense. Yeah, just trying to understand I guess how with your guys’ value set around calm is profitability, calm is 40 hours of work a week, calm is smaller, calm is a visible horizon like how you ordered that across some of the things that we all feel like it’s exciting to work on something new, it’s exciting to I guess see growth and it is exciting. It is quite contagious. There are a lot of people that are growth junkies. A lot of it is ego feud as well.
David: Absolutely. I think in that definition you’re getting to at the end, there’s also a tendency there of you know what, maybe the things that you’re addicted to, maybe being addicted isn’t that healthy. Maybe you can transition from being addicted to growth to being … If not addicted, I don’t think like the switching addictions is a healthy thing but you can be inspired by making things better and making things more efficient.
For example, the fact that we work 40 hours or less a week is a wonderful constraint and it’s a constraint you’d get to optimise within. I find, I derive a lot of my enjoyment in product design and then from changing around constraints, how can we make the best possible feature for example if we set a boundary of six weeks to do it? In many ways, I’m a lot less interested and impressed by what people can come up with if they have unlimited time and unlimited money.
That’s not really an interesting problem space for me. What I am interested in is what can two or three people if yet they have six weeks? That’s when creativity really kicks into high drive when you learn something new, when you’re forced to make tough and interesting decisions and when you’re forced to wave this trade-offs. That’s really what’s enjoyable about product development to me. That cycle never stops. You can keep being interested in and engaged in that process.
Nathan: That’s a good distinction to make. You guys still have deadlines.
David: Absolutely. If anything, we are more rigorous I think about those deadlines than a lot of other companies are. What we do though is we don’t base those deadlines on estimates. A lot of companies fall into the trap of thinking, “I have to make this whole thing in this amount of time.” How did I come up with the amount of time that I needed for it? This was an estimate. Then of course, humans are terrible estimators, right?
You end up at the end of the estimated, you go like, “Man, I’m out of time. Now I have to work weekends. Now I have to work at nights just because I made up this number in my head for how long this was going to take.” That’s a terrible way of working. How we work instead is we work with budgets. People likely are surprisingly good at spending budgets, most people at least and at least within a smaller margin of error than they have with estimates.
When you have a budget like let’s say six weeks to do a feature, you don’t just sit down in free will, “What’s the optimal version we could make of this feature?” No, you sit down and say, “I have six weeks so how should we trick that off? How should we spend that time?” You do some intervals through that and like, “By week two, we should probably be done with the main definition phase, we should be narrowing down, we should be saying no to all the other ideas that are coming up, and we should be honing another solution.”
You can get into a real rhythm of that where spending a budget is something fun. The constraints are actually fun. They’re forcing these interesting trades-offs and that’s a great way of working and it’s also a great way of keeping a cadence of rolling out new improvements to the product. You don’t just end up in this trap which I think unfortunately a lot of big companies end up with when they have unlimited time and they have unlimited money that they just go like, “We’ll ship it when it’s done,” right?
Especially in the gaming industry, this is just a joke, you do knew them forever, any of these projects who got to run for six, seven, eight years because the company had been so misfortunate as to have a hit that allowed them to have no constraints. Then once all their constraints were lifted, they were simply incapable of coming up with a good creative solution again.
Nathan: When you talk about budget, do you mean cash or time?
David: Time. They’re similar in the sense that we all often say on featured development for Basecamp, this feature can take let’s say three people six weeks. That’s what we call a big batch. When we’re making a major new edition to Basecamp, usually it’s three people, one designer, two programmers for six weeks.
Nathan: One thing that’s interesting is in your culture it feels quite unique and it feels it’s in other words, calm or chill but at the same time you guys that you said that you guys are very, very … I wouldn’t say bullish is the correct word but you’re … How would you? You’re very big on deadlines, right? Wouldn’t that create pressure?
David: I think it could if you don’t approach the idea of the budget as a tool that’s there to help you. It’s there to help shape your decisions. It’s not there to beat anyone over the top of their head. It’s not there to play a blame game. It’s there to be a helpful constraint and guide for product development. Once you get into the swing of it, I think it actually takes a lot of the pressure out because a lot of product development boils down to, “How far should we go? How much should we build?”
You can settle a lot of those discussions really quickly when it comes down to, “That’s a great idea but we have three weeks left and that’s just not possible.” When you have unlimited time left then sky is the limit, then of course someone else can just waltz then and say, “I wish this also did that. Can’t we just add this on too?” I think actually budgets in that regard helps guard this sphere of calm because it’s so much easier to say no.
You’re not saying no because you don’t think your idea is good or not good. You’re saying not right now because this is the budget that we have. I find that a lot of people have an easier time accepting and respecting boundaries based on budgets rather than boundaries based on their femoral things of like, “I just don’t think that the products should have that right now.” I think for us, we’ve found that budgets and deadlines derived from budget actually assist in the sense of calm, it doesn’t attract from it.
Nathan: Yeah, I see. Look, we have to work towards wrapping up, Dave or David. Do you prefer Dave or David?
David: David is good.
Nathan: David, yeah. Talk to me around your culture. You guys have a very, very, I’d say a very, very strong culture at Basecamp and value set which you talked about at length in this book but you guys are in a remote team as well. How do you … I don’t know if “scale” is the correct word but how do you make sure that that really even especially for the remote like all of you guys are remote like how do you really make sure that that gets pushed through throughout the company?
David: That’s a great question and it’s probably one of the most common questions around remote work. How can you build a culture when you have remote work? Then based on a misconception of what culture actually is, our definition of culture is repeatable actions, what you actually do. That sets the tone. It’s not the foosball table. It’s not even the lunch table. It’s not all these other Kumbaya moments.
Although, those are also helpful and good to have but there’s plenty of companies that have all of those things that still have an absolute rotten and corrupt culture. The culture that we try to instil is through having some values and having some principles, and then letting our actions actually derive from those things and letting the people within Basecamp to see that there’s a congruence between our principles and our values and our actions that we live up to the things that we say we’re going to do and we do the things we’re saying that we said we’re going to do.
That is a reinforcing mechanism where someone within our culture can see let’s say when we have problems as we did last week then we step up, we take ownership, we accept responsibility, and we are holding ourselves accountable. That trickles down. Nothing I think transmits the cultural values of a company more than seeing those actions and especially at hard times and especially when things are a little tense.
Everyone within the company will internalise that and say, “This is the company that we are.” In fact, we use that as a measuring stick all the time. Is this the kind of company we are? Are we the kind of company that does x? Then we try to do better if we need to do better and we try to reinforce those things. The other thing is that we try to record our culture. A lot of cultures are very ephemeral or they’re only verbal especially if they have been constructed in an office where everyone is in the same place.
Then you have someone new coming into the culture and it’s all like just the big misery. What is the culture actually here? What do we actually do? At Basecamp, we like to write things down. We like to write in general and we’d write a lot about our culture. Someone who joins Basecamp tomorrow will find an incredibly deep set of writings about who we are and what we value. They’ll have an idea of which bearings that they should take when they join our company.
They can read a book like It Doesn’t Have to be Crazy at Work and then they can know that Basecamp is the company that does not value people putting in 80 hours a week. If you’re a new employee at Basecamp and you think that that’s how you’re going to endear yourself to your manager, you probably will know that that is in fact not the case and that’s not how you do it. You can take your cues from that.
I find that a remote culture in many ways is actually better situated to building a strong culture because the culture will be derived even more explicitly from the actions you actually take and from the shared writings that you commit about those actions. I think that certainly have been true for Basecamp. As you say, I don’t think a lot of people would look at a company like Basecamp and say, “They have a very weak or vague culture,” yet we’ve been a remote company from the start.
We’ve never been a collocated company. There’s been people who worked in the Chicago office with some time but there’s always been plenty of people who didn’t. I’ve always been remote. Clearly, this is not just possible but doable and I would argue even desirable.
Nathan: Would you say that you have a lot of turnover of staff?
David: Absolutely. If you look at our basecamp.com/team, you can actually see every team member at Basecamp and then how long they’ve been with the company. You’ll find a lot of team members have been with the company for quite a long time. Even in traditionally high turn positions such as customer support, there’s a lot of companies who have customer support departments for example where the average tenure perhaps is nine months or 12 months or whatever.
We have tonnes of people in that department and other department that’s been with the company for years. It doesn’t mean we have zero turnover and even if you have a great culture and a strong culture, you’re still going to have people who just want to do different things in their life or for example who just don’t click with remote work or whatever other factors you may have or through like we’ve made mistakes or we haven’t made them feel welcome.
That’s all possible but I think if you compare the average tenure at Basecamp to the industry average which I believe is 18 months, we would favour incredibly well compared to that stat.
Nathan: Do you have off sites? How often do you off sites?
David: We meet up the entire company twice a year. Since we have office in Chicago, we usually get everyone together in the office twice a year and then individual teams occasionally add another meet up in addition to that. For a lot of people, it’s three times a year for some or for everyone, it’s two times a year.
Nathan: I see. Do you do hackathons when you’re there, none of that or-
David: Not really. Hackathons, I’m not a big fan of say working 24 hours straight. I don’t think all-nighters is a good pattern and I don’t think it’s a good conduit for creativity. I’m not a big fan on those but we do spend time working together but since we do meet up so relatively rarely, we also spend that time simply connecting and recharging our social batteries with each other playing games together or going to events together or sometimes working on things together, and sometimes just sitting down and talking face to face together.
I think it’s very healthy to connect on a human level in person occasionally. We just don’t need to do it every day or every week or even every month. Having these recharge sessions a few times a year have proven to be enough for the vast majority of people at Basecamp.
Nathan: Yeah, that makes sense. Look, we have to work towards wrapping up, David. One last question, I’ve seen your office space, looks amazing, man. I have to ask, are you a minimalist?
David: I’m guessing that you’re referring to my own personal office.
David: Yes. I think that’s a fair characterization. I get more pleasure out of slimming down and having just a few things that I like lot rather than having a lot of stuff. I get an incredible sense of satisfaction from getting rid of things I’d say and slimming things down. That includes my office. I get that there’s this stereotype about having an office that’s covered in papers or whatever. That’s how you have a creative mind.
Yeah, I don’t buy that at all. I like having a completely clean office just with my computer and a bottle of water and that’s pretty much all I need, so yeah. I definitely enjoy the quite of less, slim down, minimalist setup in all aspect not just on my desk but our house and life in general.
Nathan: Yeah, awesome. Yeah. I’ve seen, yeah. Yeah, it looks amazing. All right and last question is where is the best place people can find out more about yourself, you guys’ new book, It Doesn’t Have to be Crazy at work?
David: Sure. My stock answer to this is just to recommend my social media channel. I’ll do that but I’ve been having ever grown reservations about what social media is doing to us and what it’s doing to me in particular. If you’re on it and you haven’t jumped off it yet, I’m still on Twitter @dsh and I’m also on Instagram although I don’t know for how much longer @dsh79. Then we have our wonderful blog which we will continue for as long as the company exists at signalvnoise.com.
That’s where you’ll find a lot of our updated writings and the ideas that we end turning into books. You can see an index of all our books at basecamp.com/books. We’ve written four books over the past 12 years or so. The latest one, it’s called It Doesn’t Have to be Crazy at work. It’s out now in all major shops. Yeah, if you like any of the things that you heard I’ve talked about there, there’s a lot more on all those topics in It Doesn’t Have to be Crazy at Work.
Nathan: Amazing, man. Look, thank you so much for your time and your contribution to the startup community. I really enjoy reading your work, everything that you and Jason put out inside. It’s really cool. It’s really interesting. It’s really refreshing as well. Yeah, look. I just want to say thank so much for your time and I appreciate everything you guys do.
David: Thank you so much and thank you for having me on the podcast. This was great.
Key Resources From Our Interview With David Heinemeier Hansson
- Follow Hansson on Twitter
- Check out his latest book, It Doesn’t Have to Be Crazy at Work
- Read the Basecamp blog