SEASON 2 - EPISODE 0084 - NOV 22, 2023

What are you REALLY buying?

Every time you make a purchase, whether it’s a tangible product or a service, you’re casting a vote with your dollars for the type of company you want to support and the choices they make.

So, what are you REALLY buying?

Join host Kimberly Rhodes as she sits down with Jason Fried and David Heinemeier Hansson to explore the concept of “buying the company” as they dive into the diverse considerations that shape our purchasing choices.

From supporting forward-thinking initiatives to valuing customer service and longevity, Jason and David illuminate what customers are truly investing in when opting for a smaller, bootstrap business like 37signals. Plus, a look at the ever-evolving nature of consumer preferences.

Tune in for a thought-provoking exploration of the layers beneath purchasing decisions and valuable insights into crafting a brand that authentically mirrors your company’s values.

Check out the full video episode on YouTube.

Key Takeaways

How you’re voting with your dollars when making purchasing decisions, and expressing support for a company’s innovation, ease of use, company values, or a specific ethos.
Companies that challenge the status quo and push boundaries can attract consumers who want to support forward-thinking and innovation.
Consumers don’t have to apply the same criteria to every purchase, allowing for flexibility in decision-making based on individual values and needs.
A strong brand reputation can lead people to choose a product because they trust the company.
Embracing the fluidity in consumer choices—people can change their minds based on evolving perspectives AND company actions.
How you engage with your customers leaves a lasting impression and contributes to your company’s reputation. Whether it’s exceptional customer service, longevity, or a commitment to transparency, companies should actively promote the values that set them apart.

REWORK is a production of 37signals. You can find show notes and transcripts on our website. Full video episodes are available on YouTube and X (formerly known as Twitter).

If you have a question for Jason or David about a better way to work and run your business, leave us a voicemail at 708-628-7850 or email, and we might answer it on a future episode.

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 this week we’re diving into a topic that came up organically a few podcasts ago, which is when you’re buying any sort of product or service, you’re not just buying that one thing. You’re also buying some additional perks and maybe some downfalls that go along with it. So joining me to talk about this are the founders of 37signals, Jason Fried and David Heinemeier Hansson. Guys, I think we started talking about this when it came to electric cars. I think that’s how that discussion came up. What are you really buying? You’re not just buying the car. Who wants to take that?

Jason (00:39): I’ll start with something separate from buying. I think of when I spend my money, I feel like I’m voting actually more so. And so, what am I voting for? And it could be I’m voting for innovation. It could be I’m voting for ease of use. It could be I’m voting for taste or flavor, whatever it is. It also could be I’m voting for the type of company I want to support and what they’re into, the choices they make. I don’t know. There’s a bunch of different things. It’s not simply, at least when I buy, it’s not simply like what is the product? Because truthfully, pretty much everything today is good enough. Most things are quite good in fact. So it’s all the little small things that sort of get me excited about the kind of companies that I’d like to support.

David (01:21): And I think Tesla here, as we talked about last time, is a great example of voting for someone to rethink things from scratch. That someone has to go first and someone has to push the boundaries and even if the end result isn’t the perfect car, in the example of Tesla, there’s just something really endearing to going, do you know what? This whole industry, this whole shift of electric cars would not have been happening on this timeline we’re currently on unless this company had been doing what they’ve been doing. That is worth something material that you’re voting for a kind of forward thinkingness and a kind of innovation. And I think what’s interesting here is to do so as part of a trade-off. For example, for a while I didn’t have this perspective on Tesla. I saw a bunch of the negative things. Oh, I don’t like how they’re rolling out autopilot.

(02:12): I don’t feel like that’s the right name for it or any other niggle I might pick at and go like, do you know what? That’s not quite the thing. And where I changed my mind on Teslas in particular, well first of all I drove some of the later cars and I realized, do you know what, even something like a car, especially something like a Tesla I think, you got to update your priors quite frequently. You might have looked at something two years ago, three years ago, four years ago, but if the company is really firing on old cylinders at once, that product might be very different, but let’s just take it at face value and say there’s some trade-offs involved. There’s some things you don’t like. That to me is where it really comes up that I’m putting a vote for something that matters more than some surface level polish, for example, in one case.

(02:57): But I think the other thing that’s interesting here is you don’t have to be uniform in all your buying decisions. There can be sometimes you go like, do you know what, in this instant on this topic, I really care about supporting this and also I’m not going to dive into, I don’t know, the full ethical accounting of how my burger is made. Do you know what? Right now I’m just on a freaking road trip. I need a burger. Here’s a stop. It looks fine. Good enough. You can’t always do the full accounting on every little bit of it, but when you do and you choose to do so, it’s just an interesting exercise. It just makes the whole marketplace more fun when you can evaluate it on more things than just like the size of a panel gap, for example.

Kimberly (03:37): Okay, so let’s talk about your business and 37signals because obviously we’re making software, but what are the other things people are buying and secondary question, did you guys think about those secondary things as you were building the business or did they just naturally come about?

Jason (03:53): Well, I think it depends who you are. So if you’re a small business owner and you’re a bootstrapped small business owner, you might want to support us because we’re a smaller business and we’re a bootstrap business, and so each person’s going to find their own vector for the things that are important to them. I think for us, a couple of things that are important to us, we want to really take care of our customers, so we provide really, really, really good customer service including on things like email, which is our primary, the biggest, I mean they’re not even a competitor. They dominate us. Gmail, good luck in ever getting a reply from Google if you have a question about your mail or you have an issue with your email or whatever. We want to make sure we take care of customers no matter what product they use, no matter what they’re paying for basically.

(04:37): So that’s something that’s important to us, and if that’s important to you, then you might weigh that more than, well, this other product is free and you charge money for yours. So you might go, I’m willing to pay for that or maybe I’m willing not to pay for that. It sort of depends where you’re coming from. I think also longevity, the idea that especially in this world and this SaaS world specifically where all your data, I mean whenever you buy a SaaS product, you put so much trust in the vendor. The primary thing you’re trusting is they’re going to be around the most fundamental thing that this company will be around in a year because if they’re not, my data’s not, my stuff is gone, my tools are gone. All the training I put my staff and maybe my customers through is gone. So longevity and stability is a really important thing and I think some people buy that from us because we’ve been around for 25 years, almost 25 years, and they’ve seen that we’ve been through this and been through that and been through this E and been through that flow and the whole thing. We’re still around, so some people really feel like that is important to them. So I don’t think there’s a certain set of criteria that are equal for everybody. It just depends on what you’re coming from and what’s important to you.

David (05:45): Another example here is we have a lot of customers who perhaps use some of our open source projects or have otherwise benefited from some of these side projects that we’re doing. Maybe they’ve adopted ShapeUp, maybe they’ve done something else and you’re going, do you know what? I’m not paying for these things. I’m not paying for the open source. I’m not paying for the ShapeUp methodology, I’m not paying for any of the byproducts at all. Maybe I don’t care that much whether I’m using Basecamp or some other tool, but I will pick Basecamp on account of the fact that they are involved in the type of activities that I benefit from in other ways, and that’s a way to give back and support it. Of course, plenty of our customers were like, I’m picking Basecamp because I did a thorough head-to-head analysis compared to the other tools and this just one out and awesome, that’s wonderful.

(06:30): But Jason says, oftentimes people will simply just latch onto some vector of evaluation and go like, do you know what, in this domain, I don’t care that much. I think a great example for us here is what we’re using to distribute this podcast. There are a bunch of different podcast distribution platforms out there, and as Jason also said, the vast majority of them are great. They’re good. This is to some extent a solved problem to the degree that the baseline is quite high. You’re not going to pick, in most cases, at least not that I’ve heard of, you’re not going to pick a host so bad that it’s just terrible, never delivers your podcast. Everything’s just broken all the time. They would go out of business in about five seconds because the space is competitive. And when that’s the case, when we look at something like podcast hosting, we’re not going to be super swayed on this feature versus that feature.

(07:20): We don’t actually use that much of it, so it’s other things that matter. And we’ve just switched to Buzzsprout in part because of those other things. The team behind Buzzsprout has been really active in the Rails community. They use Ruby and Rails to build their product. They were very present at Rails World. I got a wonderful opportunity to talk to one of the co-founders, Tom Rossi, who we’ve corresponded with many times over the years and they just go like, do you know what I really like Tom. I really like the team. I like the ethos they’re going into. They’re also bootstrapped. They’re also self-funded. I like where they’re going. Do you know what? We should just use them. It doesn’t matter that much and the other criteria is which one we use, but I want to support Tom. I want to support Tom’s team.

(08:00): I think the way he’s putting back in at Rails World, the conference for example, they paid to have this booth where a bunch of podcasters could just show up at the conference and tape their podcast. And we got a bunch of great podcasts out of it, supporting the community. You got, this is correct, this is the kind of company I’d like to do business with. That feeling, this is the kind of company I’d like to do business with, really counts for a lot and it counts for even more when the product is not so unique that no one else has it. When that’s the case, you know what people can complain and moan about, let’s say the iPhone. I have all sorts of complaints about it. There aren’t 12 alternatives here. There’s one other major platform, there’s the Google platform and I have my own complaints about Google and you’re kind of stuck picking between one of these two things.

(08:47): Then the decision doesn’t come down, oh, which one do I like better? I like neither of them all that much. I’m picking on other things here, but when it comes to something where you do have the choice, when the marketplace is actually truly competitive, then it’s so much easier to go, I want to support that kind of company and then feel good about your vote, right? You’re not voting between the lesser of two evils. I think anyone casting an actual vote in the political domain will know that feeling very well. You’re casting a vote between a lesser two evils, in a truly competitive space, you often do get the choice to put your vote for someone you really believe in, and that’s just this magic feeling.

Jason (09:24): Yeah. Another way to think about this is that this is not the primary case, but I think it’s pretty common that you actually buy the company moreso than the product. And this is true about brand of course at the highest scale, people are fans of a brand and will buy anything that they make. They’re not even really evaluating the product. They just assume it’s going to be good. And even if it’s not, they kind of don’t care because they like the brand. But at a small scale that’s true too. Like David was saying about Tom and Buzzsprout, the idea that we want to support this company. We want to support the people behind the company and we know their product’s going to be, it’s probably great, but at the very least it’s totally adequate. But they are what we’re buying and I think that this is something that we’ve been trying to impart on people as well.

(10:09): So when you support us, you’re supporting a bootstrap company, you’re supporting a company that’s not here to go out of business. We’re not here to exit. We’re here to stick around for a long time. We’re here to put our money where our mouth is. We don’t kick people off old versions of our products. We support our stuff until the end of the internet, as we say, or the end of our business, which whatever comes first, but we’re here. We’re here. And so people who are like, I want a company that’s going to be around for me, they might choose us even if let’s say our product is only an 80% fit for what they want, it’s better at 80% if they know it’s going to be here in five years than 94%, it’s going to be gone in a year and a half because the company they’d be buying from would go out of business or it be sold and the product would be killed.

(10:47): So everyone’s got a different degree of variables that they play here, but I think buying the company, there’s actually an old adage in like I’m into vintage watches. When you buy a vintage watch from a dealer, they say you’re buying the seller because you have to trust. You have to trust. This old object has probably been touched by 150 people over the last 30 years. The vintage watch world is a minefield of scams and ripoffs and fakes and the whole thing. So you got to buy the seller is what they say. You buy the seller, you buy from somebody who you trust and you trust them to produce something for you that is correct because you’re not going to be able to check every little less detail. So I think in many cases, buying the seller is what I’m talking about here. You’re buying the company, not always just the product.

David (11:35): That’s the essence of having good reputation. That is the essence of commerce throughout history that having a good reputation actually truly matters, and I think what’s so endearing about reputation is it’s the kind of competitive advantage where you can go toe to toe with the biggest companies in the business. We often go against, if you will, Google on all sorts of different domains. Google has kind of a tarnished reputation amongst a certain set of technology buyers in part because they keep killing products that people love and don’t give them an opportunity to continue to use it, so that opens the door for us to express a difference in how we go to market. That’s not how we go to market. When we launch something, we stand behind it and even to a fault, even to make a point, I mean we’ve talked about Tada List quite a few times, but that is exactly why that product still exists.

(12:27): It is a sort of stake in our reputation. It’s not about the specifics of the products. It’s proving a point that even a free to-do list manager that we launched back in 2005 is important enough to us and to the customers who still, well, I shouldn’t even call the customers in this case. It’s actually correct to call users. They’re not paying us anything for this thing to keep it running is a testament to the fact that we’re proving the point that we will be sticking around. And every single time Google kills a new beloved service by some sunset of their consumers, it is an opportunity for us to highlight that difference to show, do you know what? There are different ways of running a business. And I’m not saying that Google is doing it the wrong way. Even if I have a different opinion, I am saying that there are people who will place a value in the reputation, for example, on this point that we have for keeping our stuff around for the long term, that if you bought Basecamp in 2008 and you just love that first version of Basecamp, even after we stopped adding new features to it back in 2010, you still get to run it and use it, and some of our biggest fans are fans of that, right?

(13:35): That they’re fans of the company, they’re fans of a product even if it isn’t our latest stuff. I think, Jason, you bring up vintage watches. I think another great example is we’ve talked about in the past is vintage cars. There’s a huge fan group of people who adore a certain generation of cars. The Porsche nine 11 air cooled era for example, just has its fanatics, which is they don’t want a water cooled car, they don’t care that it’s better or whatever. Their love affair with the Porsche brand is very much predicated on the fact that Porsche takes care of its legacy and values that legacy. Now, all that being said, I think you also got to recognize that the sword cuts the other way. That there are people who will never buy anything from us because they think I’m an idiot or they think Jason is an idiot, or they read something that we wrote one time that they vividly disagreed with, and you know what?

(14:27): That is part of what’s good. That’s how we bring order in the universe, that there are some people who really enjoy going all in on a company and being even dare we say, fans of a company and has to also create that there’s going to be a group of people who really dislike it. Tesla is another great example. I mean, they’re led by a CEO who’s a highly polarizing figure and some people will buy their cars because of that polarization. Some people will never even consider the car no matter how good it is, no matter how well it fits into their lives because of that now, I think we used to be more on that and I’ve kind of tried to take two or three or five steps back from that level of investment into saying, I can’t buy something that I like, the burger example, because I hadn’t done a full ethical accounting of all the steps in it. I think you know what, sometimes you’re also just got to pick five things. I’m going to do a full accounting on five things I buy. I’m going to do accounting on my project management tool, my car and my vintage watch. That’s where I’m going to buy the seller, and then I’m also going to live my freaking life the rest of the time out of the 1000 purchase decisions I make over the course of a month, I’m not going to review every one of them into the finest detail.

Kimberly (15:42): Okay. David, I have a question because you brought up that some people might not be buying for whatever reason. Do you think there’s a way to come back? Meaning if someone’s like, Nope, totally turned off by one thing I read, is there a way to get a second chance. Or do you just move on and don’t worry about it?

David (15:57): I think that’s a great question because I mean now we’ve really warned this example almost to its threats, but Tesla, I used to be in camp no f’in way Tesla. I don’t care. I don’t want that. I don’t actually fully appreciate the product, and then partly they just kept improving and I started seeing some things from different angles and it ended up where I flipped. I just bought a new Tesla here recently and I just drove my kids to school in it this morning and I was like, you know what? That’s so funny. If I think back three or four years, I would’ve gone like, you’re never going to catch me dead in a Tesla. You’re just not. I don’t like how it looks. I don’t like the autopilot thing. I don’t like a bunch of things around it, and you know what? Having the intellectual and even emotional honesty to revisit your conclusions, I try to treat that as a feature, that I’m not set in stone, that I’ve formed one image or perception of a company, of a person to the point that there’s nothing that they can say or do or I can realize that they’ve said in the past that turns out to be different and then I can change my position.

(17:02): I think having that level of fluidity, the capacity to revisit your priors to go, you know what? On this one issue, I was wrong. I was wrong for myself. I was cutting myself off. For example, again, that Tesla or something else, that’s good. That’s a feature, and I’ve seen that with our stuff, right? We’ve been in business for 25 years. We’ve been involved in all sorts of projects that have rubbed people either exactly the right way or exactly the wrong way, and I’ve had plenty of conversations with people who once upon a time, when, do you know what? I didn’t care that much for your stuff. Then my context changed. My circumstances changed. You launched a new version, Basecamp 3, for example, when that launched, I talked to a bunch of customers who went like, you know what? I didn’t really care for the old version of Basecamp.

(17:51): It didn’t click for me. Then you guys put this out, and it was exactly it. I went from being like, I don’t care that much for Basecamp to I love what you guys are doing, and of course it also goes in the other direction and you have to accept that the tides flow. You can’t control all of it, and you actually drive yourself crazy if you try. You drive yourself crazy if you try to hold on to every single customer you’ve ever earned for your dear life that you can never let them go, you become possessive and maniacal in your way of trying to keep them in that’s not flattering. It’s not good. It doesn’t serve the rest of the product. And on the same token on the other end, being open to letting people you might’ve had disagreements with in the past reconsider your stuff and then being thankful that perhaps they changed their mind and not holding a grudge, not being like, you know what? There was this one time you tweeted this one thing, whatever. Let’s just look forward. Let’s look at the capacity of humans to change their mind as a fundamentally good thing and embrace it in all these forms.

Kimberly (18:56): Okay, last question for you guys before we wrap up. If we’re saying that a lot of people are making buying decisions based on the company and these secondary byproducts, for someone who’s listening an entrepreneur or maybe building a business, do you guys have any tips for how they can make those byproducts, those other things really a competitive advantage? How do they get that out into the world? You’re not just buying the product, you’re also buying these other things. Maybe this is a marketing question, but how can people let that be known?

Jason (19:25): Well, I think you can promote those things, so you make a product and the first thing you think about doing is just promoting the product, talking about what the product can do and how it works and all the things it does that the other things don’t do or whatever. And that you should do that, I’m sure, but there’s other things you should do too, which is build the brand. And I kind of don’t even like that statement, but it’s true. You’ve got to build your brand and you got to build, which is basically what do you stand for? What does your company mean? What are you all about and promote some of those things. So if it’s customer service, it’s really important you make sure people know about that. It’s not just like customer service comes with the product because most people’s experience, the customer service is quite bad, so if you have something different to say about that, say it.

(20:02): Don’t assume people will find out. Just say it. Make that part of what you’re out there promoting, so no one’s going to promote you. I mean, yeah, eventually you might have some fans that are going to spread the word, but especially in the early days, it’s on you to get the word out about the things that you think people should be paying attention to about you, and no one else is going to do that in the early days, so you got to figure out what’s different about you, what or not even different. It doesn’t have to be different because you can promote something that’s the same that no one else is promoting, and that’s then a point of difference because no one else is talking about it. Figure out the things that you stand for that are important to you, that you want to share and share those things, and I would also encourage people to teach as much as they can, so give things away that it doesn’t feel like marketing.

(20:44): It’s not like you’re asking for something in return, you’re not making a product or a service or whatever, and constantly promoting that only because at some point, no one’s going to listen to that. It’s just marketing dribble at some point, but if you can share things, you can share your story. You can show people how you’re doing what you’re doing or what you’ve done or the struggles you had or what happened last week in your business that was really hard for you. People start to pay attention to those things, and then you’ll set up again, another vector or another spiderweb, basically another ring rung in the whatever. I’m throwing out a million metaphors here, fly paper that someone can snap onto that they wouldn’t normally because they would only normally be looking at the product. You got to put the things out there. You got to put the sticky paper out there so people can get stuck to you essentially.

David (21:27): I think the other avenue of approaching this is the lens of retail politics. This idea that you have to engage with individuals on a one-on-one basis, even for a moment, even for a brief opportunity, is a way for you to build your reputation, to prove your reputation. I think this is one of the reasons why doing customer support is so important for founders in the early days. Don’t be so quick to hire that out. I mean, we’ll have to talk about the fact that Jason did all the customer support at 37signals when we launched Basecamp for I think two years, maybe even two and a half years, and therefore had an opportunity to influence literally 200 people a day to what does it feel like to do business with this company when you are doing business with the founder who has all the power in the world to change the direction of the company in a tiny way or in a big way on account of your interaction with that person and to set things right?

(22:27): This is one of the things, I always come back to this sentiment that if you go, for example on a holiday and nothing bad happens, everything is fine, you’re going to feel one way about it. You’re going to feel better about that holiday if you go on it and something is wrong, the AC is broken. Whatever something is busted the further comes up wrong, but they fix it to a surprising degree of competence that they fix it with extra care, with extra diligence, you actually go, I think fonder on that experience and fonder of those people for being exposed to a quote unquote failure state where they had an opportunity to correct it. So whenever those things pop up, oftentimes companies think of like, ah, the customer had a problem where you should actually think to some degree, at least as a frame of mind, wonderful, excellent, they had something that went wrong.

(23:22): Here’s an opportunity for me to put it right in a way that will actually, if not blow them away. Not everything can be that grand, but to really impart a sense of who are we, who are as a company? That’s the kind of stuff when I relate my experiences with other companies and other products and other services, those are often the stories. Those are the things that go viral. Let me tell you about what happened last week. I bought this pair of shoes from this company. They didn’t ship the right thing, but then they overnight, that’s the Zappos story. I just started the Zappos story. The whole idea that you can one-on-one create essentially a marketing effect by touching enough people with extraordinary care, an extraordinary expression of your reputation, I think goes hand in hand with, let’s talk about it to the broad masses. You’re not going to get an opportunity to shake everyone’s hand, but when you do get that opportunity, don’t let it go to waste.

Kimberly (24:17): I love that. Well, that is great advice. With that, we are going to wrap it up. REWORK is production 37signals. You can find show notes and transcripts on our website at 37signals.com/podcast. Full video episodes are available on YouTube and Twitter, and if you have a specific question for Jason or David about a better way to work and run your business, leave us a voicemail at 708-628-7850. You can also tweet that number. Yes? No text. You can text that number. I was like, that didn’t sound right. Tweet, leave us a voicemail at 708-628-7850. You can also text that number and we’ll get those questions there too. Also, as you can send us an email to rework@37signals.com.