SEASON 2 - EPISODE 0109 - MAY 15, 2024

A Matter of Ambition — Part 2

In this episode of REWORK, Jason Fried and David Heinemeier Hansson, co-founders of 37signals, continue their discussion on ambition, focusing on generating ideas and the process of deciding which projects to pursue. They talk about the importance of experimentation, and how they decide which products to maintain or discontinue.

Watch the full video episode on YouTube

Key Takeaways

00:38 - Experimenting to see what works in the market.
03:07 - The more you build, the more ideas you generate.
09:00 - Determining when a product is commercially viable.
13:18 - The downfalls of overanalyzing a product before it’s built.
17:31 - Balancing ambition with realistic timelines.

Links & Resources

Transcript

Kimberly (00:00): Welcome to REWORK, a podcast by 37signals about the better way to work and run your business. I’m your host Kimberly Rhodes, and I’m joined by Jason Fried and David Heinemeier Hansson, co-founders of 37signals. Last week we started a great conversation all about ambition and we’re continuing that conversation today. Here it goes. I am curious because obviously you guys have made a lot of products over the years. We’re making a lot of products right now. I think there are some people who are listening who are like, I just want one good idea. Do you have any advice, how these ideas keep getting generated?

Jason (00:34): Well, I’m not going to suggest that all the ideas we’ve ever had are good. So I’m not generating good ideas, I’m generating ideas. And then we make them and we find out if they’re any good. I mean, you find out if they’re good for you and then you have to find out if they’re good for the market. So this is about placing bets. Essentially, we’re placing more bets. There’s a probably better chance of winning the more bets you place to some degree at some point. Of course it regresses to the mean, and that’s why Vegas has huge hotels and glittery stuff everywhere is because the more people bet, the more they lose ultimately when the odds work in the house’s favor. But of course we’re not talking about it that way. We say we’ve got a couple big hits, Basecamp’s, a huge hit. HEY is a big hit.

(01:18): Not huge. Basecamp’s huge. Basecamp’s also been around for 20 years. HEY’s been around for three-ish, so let see where it goes over time. Highrise was a pretty big hit, I would say a mega big hit, but not a huge hit. And then we did Backpack, which wasn’t really a hit and Campfire at the time, wasn’t really a hit. And we’ve built a bunch of other things that were not really hits. So were they good ideas? I don’t know. I mean, maybe we just executed them poorly. Maybe the market wasn’t ready. Maybe we didn’t market them well. Maybe they were just not well made. I don’t know. Maybe the alternatives were better. Who knows? I saw a great post on Twitter yesterday. It was actually an old post that Des Traynor trainer from Intercom reposted, which was this sort of tongue in cheek essay.

(01:58): It’s like Don’t Forget to Ship was sort of the essay. And it was all about how that’s a step people seem to forget is actually shipping. There’s a lot of building and talking about and building more and talking about and building more and showing and it’s like, oh, they forgot to ship though. So the way to figure out if an idea is any good for the market is to make it and ship it, and then you’ll find out. I mean, that’s it. So yeah, it’s not like I have any advice for coming up with great ideas. The one thing I would say though is that you’ll have a better chance at judging the idea if you make something you’re going to use yourself. It’s quite a bit harder I think to build something on behalf of somebody else and know if it’s really any good. It might be good technically in some ways, but if you don’t really have the problem and you can’t really feel around the problem, you’re sort of solving problems by proxy and it just becomes harder. So I think you can stack the odds in your favor by making something that you need.

David (03:00): I think the other way to stack the odds is just simply to build more. Creativity is a regenerative force. It’s like a muscle. The more you use it, the more you’ll get out of it. So the more we’re building, the more we’re building new products, the more ideas for more products we get. And I think that’s the misconception some people sit with is that they kind of have to conserve this creative energy. Oh, I got to make sure that I have just the right idea at just the right time before I start building. Nonsense. Just start building. And you know what? Maybe this idea isn’t the right one, but in the process of building, your neurons will be firing at a greater frequency and that will make it more likely that you will come up with that great idea. Again, as Jason says, we build a lot of things over the years.

(03:47): A few of them have been huge hits. A bunch of them have been base hits and a bunch of them have kind of not resonated with the market too. But some of the quote-unquote failures that we did, we did a email thing, email listing called Breeze. That was probably the shortest lived product we’ve ever done. And I think the only product we’ve ever shut down because so few users ended up using it, we kind of bought them all out. We gave them something else or whatever. I think it only lasted nine months. But the lessons from building Breeze was a bunch of it flow right into HEY several years later that we had the expertise of having dug into email. It had given us greater confidence to work with email as a platform at that kind of level. And it helped bridge the gap to HEY.

(04:34): And I think there’s constant examples of that in the industry where a product is launched, it’s not the right fit for the market. The timing isn’t quite right, but it’s those ideas that once you shift the light a little bit, boom, there it is. But you had never arrived at the real idea, the big idea, unless you’ve done the other thing first. And I usually look at all the things we do in the sense of I want this to be a compelling enough adventure that I’m willing to go on it even if no one uses the result. That was how I looked at ONCE. I went, do you know what? This is just really interesting. What going back to distributing software, that sounds kind of kooky, that sounds to some extent, I don’t know, high risk when you’re trying to teach the market the opposite of what the market has been taught for 20 years.

(05:23): Oh, well, software should be SaaS, blah, blah, blah. If it works, if it’s a huge success, wonderful, that sounds great. If it doesn’t, also great. What an adventure. I look back upon the high energy phase that I put into Campfire and go like that was some of the most fun I’ve had in quite a while, maybe since the launch of HEY, whatever, three years ago. The high intensity last part of the building of ONCE in Campfire was really interesting, novel problems, novel business model, novel everything. Lots of unknowns, lots of uncertainty, lots of potential for failure. That’s the recipe for great adventure. A great tale if nothing else, a great learning. And now we can take all those ideas and now we’re rolling some of it forward, some of it directly forward. We’re making a new ONCE product now. And we’re also taking some of those ideas and we’re also rolling them forward in a slightly different direction that isn’t just a continuation of ONCE, thereby making the whole thing worth it.

(06:20): And I think this is, if you zoom out, I’ve always loved this about Apple. They don’t break down individual products as a business line. They don’t have divisions. They have Apple. And they have Apple making all different products. And some of them contribute directly to the bottom line immensely like the iPhone is, I mean what, 80% or something? I forget the exact number of Apple’s revenue. And then they have all these other weird quirky thing like they built this 6k XDR monitor that’s so ludicrously over spec’d for what it is. It comes with a stand that’s one piece of solid aluminum that’s literally a thousand dollars. That was the joke of the industry for however long. Then they made this Mac computer that had wheels, these rolling wheels, the wheel pack was a thousand dollars. How many people bought that shit? Like five, maybe a thousand, maybe 10,000, whatever it was.

(07:18): It was 0.000001% of whatever influence it could have on Apple’s overall picture. And they went like, no, we’re still going to fucking do it. That’s who we are. We built that kind of stuff. We built those kind of peak experiences. I think the Vision Pro right now perhaps falls into that category. I look at that product and go like, that is super duper novel. I love that they pour 10 billion into it. Oh, I also think they’re never going to see a return on it. I think most people are just not going to buy this. Maybe that technology will trickle down, maybe it won’t. I think Apple is better off still for having built it. I think the world is better off because Apple built it. And I think this is the luxury you get when you run a company well enough that it has spare capacity, that it has Slack for you to chase adventures that simply sound interesting.

(08:06): Now, you can also go too far off in the weeds in that. I think Google is the counter example. You have this spigot of ad sales. It just gushes money out to the point that it literally doesn’t matter whatever the else the fuck they do, they can start and kill 400 products in a row, which they’ve basically done look at graveyardbygoogle.com I think it’s called. You can see this stuff where it’s like, oh, okay, maybe that’s also a little too much. But somewhere in between there is a space where you get to chase new novel ideas that are interesting and provide an adventure and you don’t have to look, oh my God, the company’s going to go bankrupt if this one last idea doesn’t hit. And at the same time, it also matters. Somehow we’re invested in it. That’s the sweet spot. That’s the place to be.

Kimberly (08:52): Okay. I’m curious because David, you mentioned Breeze as the one product that is not still maintained. We’ve also talked about Jason, I think you’ve said in a previous podcast episode that the ONCE product that the team is currently working on may or may not be commercially viable. So my question to you is, with all this ambition, all these new products, how do you decide when something is working? Like, let’s keep plugging away at it. HEY is not as big as Basecamp, but it’s still going. Is there a decision factor that happens on, yeah, it was fun to make, but it’s not worth continuing to maintain?

Jason (09:29): Yeah, it’s another good question and David sort of hit on this to some degree in his bit just a second ago, which is that this is a luxury. It’s a luxury to be able to build something that may not be commercially viable. If this is your first product and it’s not commercially viable, you may not have a chance to do a second product. So what we’re talking about of course, is being in a position of having a hit and some other smaller hits but hits that contribute significantly to the bottom line in a way that we can take these risks and try some new things. So this other ONCE product that we’re making right now, we started out knowing it wasn’t probably going to be a big commercial hit just because of the subject matter. It’s sort of a niche thing, and I guess I can announce it here that we’re actually going to give away for free.

Kimberly (10:16): What?!

Jason (10:17): So we decided not to charge for it at all. As we’re building this thing, we kind of realized it’s more of a love letter to a certain thing on the web and we’d rather just give it away. And as part of that, we were initially saying there was probably two cycles of work left, but since we’re going to give it away, we’re going to compress that into a single cycle. We’re not going to pour more time into this thing that we’re going to end up giving it away. We’ve given enough time to it and we’re going to draw that line and say whatever we want to do with it, we need to figure out how to do it in six more weeks, which is basically what we’re about to start at the final cycle for the product. And then we’re going to put it out there.

(10:52): I’m not going to say what it is yet, but it’s going to be free. And that was an audible, we called an audible in the middle. You know what? Let’s just not even set up the expectation that this could not be commercially viable. It probably will not be. So let’s not even play the game and let’s actually make it easier. We don’t need to sell it. When you don’t sell it, there’s a whole bunch of other things you don’t need to do because of it. And in fact, what it might do by giving it away for free is introduce more people to this ONCE style product thing where you can actually install software yourself. So it’s actually a way to practice for people to realize go, this isn’t so hard, actually. Wow, this is actually, this is no big deal. I was really afraid of this.

(11:30): I wasn’t going to spend a few hundred bucks to figure out how bad I was at installing software actually for free I found out I was pretty damn good at it. So in some ways it might be a really good way to boost other businesses —present and future or not. So I dunno, there’s a swirl of possibilities for anything. And this includes pricing. When we come up with a new product, we think about pricing, we throw out some numbers initially, internally, we play with them, we go back and forth, we mess around, and then you finally just settle in on something and you go with it and then you see where it goes. So I would say it wouldn’t make sense for us to make 20 things in a row that are not commercially viable. But also we’ve done this for years with open source.

(12:10): I mean David can talk to this. The amount of open source software that we contribute at a company of our size is extraordinary. There’s probably no one else on the planet like it, I would argue. And this is all done essentially for free. We’re building it for ourselves that we’re using it of course, but then we’re putting out in the world so others can use it too. And we don’t look at that as a waste of time in any way. So I’m sort of going all over the place. It is sort of all over the place. You feel it out as you go. Some things are going to these two new things we’re going to build, they’re, they have the potential to be very commercially viable products as we thought HEY would be, and as we thought Basecamp would be. Whether or not they’ll be as big or bigger or not, we don’t know. But the demand is there and there’s a clear path to charging for these things in a different way than this other ONCE product had. So anyway, that’s that.

David (13:06): I think what’s so interesting about this whole discussion is the degree to which very smart people can convince themselves that if they do a really rigorous analysis on some opportunity, they map out the total addressable market and they do all their little positioning and they do all the rational things, they try to look at all the signals that they can quantify and they put them into their little model that that degree of rigor has some correspondence with reality that’s better than the rigor, if you will, that we’re putting into a fundamental truth. You know what, if we put good stuff into the universe, it’s going to pan out. Do I know exactly how? No, I don’t. Can I quantify exactly the value of open sourcing Ruby on Rails to the business of Basecamp? No, I can’t. I can believe that these have a connection, that we have a trust as a standing, as a company, in part because we don’t try to reduce everything to a cost benefit analysis.

(14:11): And that the overall picture has to be a healthy company that can meet its payroll and then some, have plenty of slack. But then all the subdivisions below that are actually liberated from this idea that everything has to be broken down by some sort of specific analysis because that kind of analysis feels very intellectual. It feels very rigorous, it feels very businessy, but it’s very narrow. It can only deal with the things we know, the things we can quantify. And so much of success in business relies on the opposite of that. Everything that can’t be quantified, how users are going to buy the thing that they don’t even know exists. I don’t fucking know. No one knows. You have to put it into the market. You have to see how they react to it. And I think this is one of those lessons where you kind of have to let go.

(15:04): And that’s very difficult for I think smart, rigorous people sometime. But they should look at the history of business and go like, how did most things start? What was it before? Did it have this whole plan? Did Nike whatever, Phil Knight selling sneakers out of the back of his van, did he have the vision, the roadmap, the plan already for this mega corporation? No, he didn’t. Did the Jobs and the Wozniak have it when they were putting together their little phreaker sets? No. Most of the things that turn out to be huge… another example, I love it, the Airbnb one. I mean literally the pitch to Y companies like, Hey, what if you want someone to sleep on an inflatable mattress in your living room? And a bunch of investors looked at that and said like, yeah, no, no, I don’t think anyone wants that.

(15:51): Yet that’s what became this huge thing. Most good ideas that end up blowing up, they cannot actually be analyzed rationally upfront because if they could, someone already would’ve, you would’ve gotten the rational market hypothesis already working its way through the obviously good ideas. So some of the ambition is to make this leap of faith. The faith being don’t know. And we’re going to try things that feel right, which is such a hippie dippy, new agey thing to say, yet it’s also true. And yet you can also embrace that while still being a hard-nosed business person who wants the whatever bottom line to exceed the top line and all these other things. They’re tools. You should have them and you should run a good business. And then you also have to find a way to bridge that paradox that most of the time, most of the things that end up panning out and becoming huge, they don’t comply to that. They don’t comply to that analysis. And if you say, like therefore we should not pursue, therefore we should not go, you’re going to end up with the same kind of private equity MBA driven bean counter bullshit that has destroyed more companies than any fly of the pants idea person ever has.

Kimberly (17:11): Okay, last question before we wrap it up. I want to hear about ambition as it relates to timeframes. Obviously we’re not saying when these new products are going to launch, but I would imagine being as ambitious as you are right now, it’s like let’s get things out. Where do you kind of balance those two?

Jason (17:29): I think it’s less about ambition and more about appetite at that point, which is, yeah, we want to make new things, but we’re not waiting two years to make those things. There’s no way. Partially because we know the scope of these products, we’re trying to keep the surface area tight. One of the things we learned with ONCE is that you can, it just a good reminder, ONCE has been a good reminder for us that you can do a lot with a little and that you don’t need to have a lot of surface area in a product to make it useful, meaning you don’t need to have a lot of features. If you would imagine the products as physical objects, they wouldn’t need to be huge with all these creases and crevices and buttons and openings and just a simpler or smaller surface area can be very effective.

(18:13): And so I think with these products in mind, we just have a sense, we’ve been doing this for 25 years, we have a sense of how long we’d be willing to spend on this and how long it should probably take within reason. And I’ll just tell you, less than a year. I’m not going to be more specific than that, but each one of these should take less than a year to build. And I would hope far less, but let’s just say less than a year. And we know that just because we’ve done it before. And also I wouldn’t want to spend two years on 'em. That prevents us from doing two more things or four more things if we spent two years on these. I’d rather place more bets over the next two years than just two bets. So that’s how I look at this.

David (18:56): To me, a way of seeing it is through urgency as some sort of hydraulic pressure that just sort of expands. I get this sense sometimes when I look at things that we work on, is this proportionate? Should this be taking this long? Sometimes it’s a small subset, it’s a little feature of it and sometimes it’s the whole product. And I just get this sense that kind of swells inside. This is taking too long. This is not proportionate to the problem space. It’s not proportionate to solution. We got to come up with something else. We got to cut a heel, we got to cut a toe. We got to find a way to make this fit and get it out there before we overinvest in it, before we over embellish. And that sense of urgency is very much gut driven because as Jason says, you’ve seen whatever, 25 years of things, but it’s not just about experience.

(19:48): I think there’s also, urgency is a character trait, at least that I’ve seen in most successful entrepreneurs. They’re in a hurry, they’re impatient. They’re not just going to sit back and let things take however long they take. And the few who tried to do that, a great example of that was in the gaming industry for a while there was this mantra that everyone was in love with. It’ll take as long as it’ll take or we keep building until it’s done. And the classic assemble of that is Duke Nukem, which was this game from the nineties. There was a really big success and I think they made it in 12 months. And then they were so economically successful that they literally got to spend the next, I think eight years, maybe even nine years building its successor because they were just building it until it was done.

(20:31): And what came out of it in the end, shit. The follow up was total shit, total forgettable, whatever, bullshit. You have to I think, marry this sense of quality with a sense of urgency, with a sense of proportionality. And successful entrepreneurs are able to sort of straddle all of those three things at the same time. And I also think, again, Apple is the favorite example of many. I mean, and it’s so cliche, Jobs would not have let that fucking car go on for 12 years, however long they’ve been building on it before they flushed it. There would’ve been a sense of urgency. And we were like, no real artists ship. As Jason said, that echo like remember to ship, remember to ship. It’s got to be made real. And you have to power that through an internal sense of urgency and hydraulic pressure that’s expanding and then questioning everything. Because oftentimes when you look at urgency, it’s not because people aren’t working. Everyone I’ve worked with at 37signals, they’ve all been diligent people who put in all the effort into making it happen. No, no, it’s what we’re working on and what we’re signing a proportion in weight to. Sometimes you just put too much weight on the wrong foot and you’re like, no, actually, if you stand a little different, you’ll have much more leverage then you’ll be able to do it much easier.

Kimberly (21:54): Okay, well this has been a lot of information and I know we’ll be hearing about those new ambitious projects in the future. Until then, REWORK is a production of 37signals. You can find show notes and transcripts on our website at 37signals.com/podcast. Full video episodes are on YouTube and Twitter. And if you have a question for Jason or David about a better way to work and run your business, leave us a voicemail at 7 0 8 6 2 8 7 8 5 0. You can also text that number. We just might answer your question on an upcoming episode.