TL;DR: Thanks to the community of Startups Co today I got a chance to learn and ask a few questions to the very impressive and direct David Heinemeier Hansson, founder of Basecamp and creator of #RubyonRails. In short, he is a huge believer of the un-learning mentality, getting rid of the shit in your life, in your startup and hates it when people follow the crowd. Only dead fish go with the flow when it comes to building unicorn startups and sustainable companies (regardless of size!).
I have been extra blessed these past few weeks getting the opportunity to talk with some great entrepreneurs and global community leaders. This week, thanks to the kind people behind Startups.co I was able to ask some questions and get jabs thrown directly at me by the very direct and forward-thinking entrepreneur behind Basecamp and the creator of one of our favorite programming languages, Ruby on Rails. Here I will share some cool takeaways from the group conversation with David Heinemeier Hansson.
David Heinemeier Hansson (DHH), co-founder at Basecamp and creator of Ruby on Rails, is just badass. Instead of ‘living the dream’ and building a ‘unicorn’ company, he did something smarter: he self-funded a product that people want, grew his company organically to 100K+ customers, and committed to a vision that he could actually make happen. The best part? DHH isn’t a magician or crazy-lucky dude. He just made some really good decisions. We interviewed him to figure out what some of those decisions were: how he chose the right market opportunity, grew his company organically, and outsmarted the unicorns along the way. This is an interview you’ll want to read end-to-end: skim the intro if you want, but read the Q&A (you’ll be glad you did).
One of the topics that DHH started off with this morning was on how, you as an entrepreneur, need to constantly fight against the wind and be resilient about it. When you are launching an idea or selling you must live it, walk it, be it.
You have to be willing to say the same thing over and over and over again. And not just say it. But live it, walk it. Then, hopefully in time, you’ll get people to notice that message, and if there’s room in their brain, you might just well impact them. — DHH
My first question to him was not about his upcoming The Calm Company book. It wasn’t about Basecamp, I wanted to learn more about their history when launching 37 Signals. To me, this is good, because as a ‘norma’ marketing agency, they were able to grow a culture and brand themselves better than most silicon valley companies while not being in silicon valley. They took the industry by storm as far as I am concerned. I asked:
When you started 37 Signals, what was the one factor that made you stand out from the crowd?
DHH- I think partly the fact that we geographically stood out. We were having opinions about design, programming, and startups from a vantage point outside of Silicon Valley. And we weren’t afraid to share it because we weren’t afraid of what investors/press/that echo chamber at large might think.
I’ve heard that the very first 37signals product was an eBook, even before Basecamp. Do you think that’s still a valuable way to gain recognition before releasing a product?
DHH- I don’t remember the order, but maybe Defensive Design was before Basecamp? Don’t think it made much of a difference, though. What did make a difference was building an audience in general though. Our blog Signal v Noise is 18 years old today. Jason and I were blogging and talking from before Basecamp.
DHH- I think lots of people mistakenly think there’s something heroic in being able to weather THE CRAZY. As though there’s some medal given for suffering. There isn’t.
Completely agree, it does take a certain type of person to weather the crap we do but its nothing to brag about. I think those that don’t live it think the grass is greener …
DHH- @humbertovee I think that’s only halfway there. The vast majority of “crap” that startups have to deal with is entirely self-inflicted.
Most new things fail, but they don’t fail with the same odds. The odds of making it all the way through the angel-VC gauntlet are vanishingly small compared to the odds of creating a smaller, sustainable, bootstrapped business. Wasting time trying to raise money. Trying to attract press. Trying to create too much software. Trying to grow too fast. [Crap]
The role models everyone sees and hears are the unicorns. That paradigm has perverted the hopes and dreams of a generation of startup founders. It’s tragic.
DHH suggest to not go for funding when you’re a startup or new business. He begs for entrepreneurs to side hustlers until their company grows enough to sustain full time and sustain its own growth. Don’t go for funding. He says, tries consulting while raising capital for your company.
DHH- You don’t have to consult 100% of your time to make the business float. If you do, then you’re not charging enough! Carve out time WHILE working on something else. Treat the startup like a side project. The “first I’ll build a huge nest” is a pipe-dream. Never gonna happen.
Build an audience. Out-teach the competition. Make a good product. Don’t expect users to flag to your service overnight. Align your business model such that it can succeed on hundreds of customers, not tens or hundreds of thousands.
Did you guys shift from service to product back in the day? If so, any best practices on how you navigated these different business models?
DHH- Yes, we started Basecamp while running a design consultancy on the side. Doing so allowed us to self-fund the development of Basecamp. We treated it as a 3rd or 4th client. Then once Basecamp was doing enough business to pay our (very modest) bills, we switched to it full time. But that took more than a year post launch.
At what point did you guys knew you had something worth pursuing definitely with no outside funding?
DHH- When it was paying our bills and we could be profitable without the consulting business on the side.
Where is your message (stop the madness) getting the most traction right now? If Silicon Valley is your villain, who is your Mighty Marvel Team Up Ally?
DHH — All the people who were feeling inadequate because they couldn’t go the big money route AND all the people who did go the big money route and hated it.
One of the biggest take aways I had from this conversation was this:
David HH recommends that entrepreneurs strip away from the jargon, the fluff, the unnecessary crap in our world (starting with Facebook!) Go back to the ‘drawing board’ to your books to the things you see work and improve on them. Go back and learn the fundamentals of business!! He says.
Now I don’t know if he has an MBA, but I do. And let me tell you that I agree with him when he says that according to him, about 96.7% of school’s time and projects = wasted time. I agree. What I learned at the MBA program was very useful but only for certain situations, it’s all theory! Nothing there thought me anything that I could directly apply in the real world. You don’t need school to start a business, just get going with it. You don’t need funding to start a company just be creative with your current resources.
What are the fundamentals of business?
DHH- Making more money than you spend. Growing at a sustainable pace. Taking profits along the way. On a higher level, this book by Benjamin Graham is an awesome intro to fundamentals:
You’ve accomplished more before 40 than most people do in their entire lives. As you look to the next 30+ years, what does leveling up look like for you? Your baseline is pretty high.
DHH- Rarely look to “level up”. I’d be happy just doing what I’m doing and getting better at that for the rest of my career. There’s way too much chasing THE NEXT BIG THING in our industry. And I don’t think most people live happier lives for it.
Often times, myself included, people blindly pursue leveling up their lifestyle. House, car, status, etc. It’s almost like picking the wrong map on a video game. You waste a ton of hit points with and gain very few experience or happiness points when you finally clear the map. It seems like you have conceded the “lifestyle” map a bit (or cleared it). With that, what other pursuits have given you a high ROI? I realize it changes with age and life stage a bit.
DHH- @elliot Couldn’t agree more. Covered that in some detail in this article https://m.signalvnoise.com/the-day-i-became-a-millionaire-55d7dc4d8293
I think [Unthink] is growing at a good pace, sometimes feels slow but we do reject seemingly difficult clients.
DHH- When you grow bigger, you’ll quickly realize that the best of days were the early ones. I’m no happier running Basecamp at 52 people than at 7. In fact, in some ways it’s worse.
For getting readership (maybe more relevant years back ) you said you’ve been blogging and creating communities to chat with others. Do you ever check content for things like SEO and Readability or you just write and published? and how did you get people to see your content?
DHH- It’s never been easier to get a message that resonates to do the rounds these days. Infinitely easier than the early days. Posting on Medium, Twitter, getting traction on aggregators. If you have something interesting to say that people want to hear, you’ll climb quickly. The hard part is finding a voice that people want to tune into.
Content is important for anyone that wants to be noticed whether is videos, presentations, articles, open source… conversations… etc. content is a way of marketing and educational leverage.
How big of a dent has Basecamp made so far? How much bigger you think it can be?
DHH- Basecamp has made all the dent it needs to be. Getting bigger is not that interesting to me because it would mean growing the company. If we can just have modest, steady, sustainable growth, I’m totally fine with just keeping up with inflation
On the topic of raising funds, DHH drives it home again: There’s no middle ground once you take funding. That train never just stops at the next station to let you out. Once you’re on, you’re on. Don’t be in such a hurry. Find ways to cut costs. Take longer. There’s really that perceived rush
When it comes to having 0% growth and being ok with it, I said that to a certain extent it’s ok, because technically if you aren’t growing your dying…(if anything this a driving forced lecture in all business schools!) You need to have some sort of growth whether it’s branding, reach, development, anything… but you have to have some sort of growth.
DHH- @humberto Not growing = dying is the worst meme to ever infect the entrepreneurship. Is Harvard going to shit because they’re not opening universities all over the world? No.
OUCH. [but I don’t agree with him on this 100%]
DHH — Money is the worst tally for the worth of a good life ever devised. Money as a measuring stick for life worth will kill you faster.
The main take away from this conversation with David is that as a business owner you need take responsibility for your failures and successes. You need to bootstrap until your gums bleed and you make money. He teaches us that fluff free releases of good products is key and will always be key and that if we eliminate the crap from our life by not trying to level up our lives as a measurement of success we will have a much better outcome. A business can be successful by any measure regardless of its size! We need to simply know our worth, do the hard work and go after clients. This kind of reminds me a client company of ours. One of the owner/founders bootstrapped his way into having a large global development company. But even as a software company, they didn’t have even a website for the first year of being in business. Not because they couldn’t afford one or they couldn’t just do it themselves, but because at BetaBulls, they were so focused on getting clients that they just did through pure outreach, emailing, LinkedIn, and offering things like free trial periods, extremely flexible low fees, etc. Until they got to where they are now. A truly global software development company.
Heck! It reminds me of me and Unthink. I started consulting (costs me $0 on products), I got some business cards and networked with startups around the Phoenix area. Started writing on Clarity when it was first launched, answered on Quora, you know getting my name ‘placed’ on various places online and in person so that little by little I left a mark… To date, Unthink still gets clients from people that find my responses, my conversations, abandoned blog posts, where I showcase my experience, my insight and creativity and that is why they decide to hire Unthink as a team. Because I bootstrapped creatively and fought against a traditionally older-white dominant industry.
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