SEASON 2 - EPISODE 131 - NOVEMBER 13, 2024

What are You Replacing?

When it comes to business, it’s important to consider not only what customers would gain by using your product or service, but also what they’re giving up. In this episode of The REWORK Podcast, Jason Fried and David Heinemeier Hansson, co-founders of 37signals, chat about understanding your customer’s needs and motivations. They highlight that your competition isn’t always who you think it is, and they discuss ways to position your product to address the customer’s actual challenges.

Watch the full video episode on YouTube

Key Takeaways

00:40 - The habit of the present. What people are already doing?
02:19 - A customer’s alternative isn’t always your direct competitor
05:06 - 37signals competition now vs. when the company started
06:29 - Being open to something new often requires breaking a habit
12:13 - Considering what people are replacing when developing 37signals newest products
14:00 - How dogfooding your product helps you figure out what it needs
17:33 - Using free trials, 1:1 demos, and group classes to give potential customers experience with your product

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 as always by the co-founders of 37signals, Jason Fried and David Heinemeier Hansson. This week I thought we’d talk a little bit about product development, specifically about a tweet Jason recently wrote where he’s discussing how product development is more about what people are going to have to give up as opposed to what they’re gaining from your product. Jason, I’m just going to start with you. You had a great tweet. I loved it. In fact, there’s one line that I particularly was drawn to, which is “When you’re thinking about your product, think about what it replaces, not just what it offers.”

Jason (00:39): Yeah. This is based on the Jobs To Be Done theory. I mean, I guess it’s not really based on that, but jobs to be done incorporates this thinking, which is there’s this idea of the present or the habit of the present, which is like, what are people already doing? We often think we’re making something new and you might be making something new. And sometimes, I mean sometimes there is something radically new that is new, new, new that people weren’t doing before at all, but in most cases, people are already doing something. They’re solving this problem some way that they have, they’re dealing with it one way or the other. For example, we launched Basecamp, people were using email. They weren’t using other product management tools or project management tools. They were using email, meetings, phone calls, whatever, and they had to give up that habit of the present, what they were used to doing already before they would move to something like Basecamp.

(01:27): So it’s just important to know and to recognize right upfront that you’re not, very rarely are you picking up someone who’s not doing anything, so they have to put something else down essentially before they can pick up your thing. They might use both simultaneously for a while until they figure out which one works best for them, but they’re already solving this problem one way and your solution has to be typically so much better or open up new opportunities they didn’t know they needed or new situations they didn’t know they had or whatever it might be for them to break free of the habit of the present and to have something new, pull them into a new way of doing things. That’s what the tweet was about. What’s always has to be on your mind as a builder, as a maker, and that’s what you’re always up against. Rarely are you really up against a competing product that’s so obviously a competing product, you’re often up against whatever people are doing and it’s often a series of different things.

David (02:19): For Basecamp, the way we’ve often thought about this is that the number one competitor, the thing we are replacing is email. That email is the baseline for people who do any kind of project work together, and that most projects, even if people do have other tools, they start with email. And I think what’s so useful about knowing that, knowing that you’re replacing email more often, that you’re replacing a competitor or some other tool that’s similar to Basecamp is that you have to compete against the on-ramp of email, which is essentially flat, which is essentially zero. There are no barriers of entry to get a project going on email, all the trouble with email comes in when you’re trying to add a third person or a fourth person or someone two weeks or two months into the project or when you have to find something later.

(03:10): All of that is kind of back loaded, but email is actually really good. It’s really good for that initial definition of what are we doing, kicking something off. You’re just typing people in there. And I think it’s been one of those competitors that we have, I don’t know, struggled with, I’d say appreciated in terms of Basecamp’s design, in terms of the onboarding flow, in terms of how do you get someone who’s not on Basecamp already involved with one of those projects into the loop. And I think what’s so powerful about this lens that you’re always replacing something and that replacement is often not a competitor, is that it forces you to look at all these other tools and ways of doing things that aren’t necessarily obvious, but that’s the competition that the customer is looking at. And I think what’s also remarkable with that is someone using email does not necessarily think of what they’re doing as project management.

(04:07): They don’t think of email as a project management tool. They just think like, oh, I need to tell these three people that we need to have this done next week. And part of the challenge of competing against something like that is to convince people that they have the kind of problem that a more sophisticated solution could solve. And some of that comes from just listening to the language. This is what I’ve really enjoyed with the framework of jobs to be done over the years is searching for the terms the customer use and some of the ones that stand out for me with Basecamp has been things falling through the cracks. That was one of those ideas that came out of our jobs to be done research that that was how people would speak about email, why email wasn’t good enough in a bunch of cases because things would fall through the cracks. So I think the lens really just guides you towards the kind of marketing that works and also the kind of product positioning that works when you realize it’s not just about other tools that are like your own.

Kimberly (05:06): Okay, so on that marketing chain, let’s pull at that a little bit because I think it’s interesting, when Basecamp launched, what, 20 years ago, there wasn’t other project management tools mainly. A lot of people were just using email or using nothing at all. Now I would think 20 years later there is that getting people off of other systems. So how are you guys thinking about that in terms of marketing the product 20 years ago versus today?

Jason (05:34): I’m going to take issue with your perspective or assessment, a fun jab of course, and that people were using tools. People use tools. So the tool might’ve been a phone call, the tool might’ve been a meeting, the tool might’ve been visiting the client’s site. The tool might’ve been a whiteboard, the tool might have been, there’s a lot of things that tool could have been mail literally. So this is the thing with software is people think when you’re in the realm of software that you’re always competing against software, but sometimes you’re just competing against communication and there’s a lot of different ways for people to communicate. People have been communicating in all sorts of ways for all sorts of years. So I do take your point, and it is slightly different today than it was back then, but you’re always getting someone to shift behavior. That’s really the more, I think the deeper piece here, shifting maybe even not even behavior but habit.

(06:29): Again, I’m going to come back to this word habit. People had to manage projects for decades. For a hundred years, projects have been managed, right? Some way. And so that’s what we’re always fighting against. Now of course there are more obvious options today than there were 20 years ago. Back then in the software realm, it was kind of like email, Microsoft Project, Microsoft Word, spreadsheets of some sort Excel, or whatever else was around back then. And those things still exist today, but now there’s of course a lot of other name brand options that do other things that are really closer to what Basecamp does. Our point of view is still not to really talk too much about the competitors, it’s more about again, relating to people’s situations, relating to people’s struggles, understanding what they’re going through, what they’re dealing with, things slipping through the cracks, like David said.

(07:15): That’s as true today as it was back then. In fact, in some ways it’s even worse today because a lot of people are using four or five multiple software products or packages. So data has to move between these packages and that’s where things can get lost. So you can actually play to that, this idea of scatter, which is a word we use often, which is like stuff is scattered all over the place. And when you say that, people go, yep, yep, I got that problem, and it doesn’t matter which tool. They could be using Trello or Asana or Jira or Monday or Notion or whatever or Slack and it doesn’t even matter. It doesn’t matter what they have. You don’t have to talk about the products, you talk about the situation they’re in, stuff is scattered. I don’t know where to look for things. People are putting it over here when it should be over there. How was I supposed to know? All that kind of stuff is just as relevant today and you don’t have to go after the names themselves.

David (08:09): What I really like about that is you get to invest in a kind of positioning that is timeless. When we were competing more against Excel spreadsheets or Microsoft Project or in-person meetings or even damn fax machines, I mean this was 2004, there were still some of those around too. The figuring out how to precision the product in a way that resonates with people because that’s the moment they’re motivated to switch. I think this is another thing I picked up from the jobs to be done idea is that you have to be present with the right shape of your solution in a moment when it feels like whatever they’re using already is not good enough. Something did fall through the cracks, someone did drop the ball, the client is mad, leadership is breathing down my neck. We can’t continue like this. We have outgrown whatever system we had, whether that was the fax machine and the in-person meetings or it’s the cludge that is the Asana, the Dropbox, the everything all over the place idea.

(09:15): These are timeless problems and the positioning can be equally timeless to some degree. And I think you can see a red thread, even though we’ve tried different ways of speaking about Basecamp over the years, there’s so many of the fundamentals of what it is that Basecamp does and when it does it that have stayed constant. This idea for example, that when people predominantly were coming from email, when were we relevant? We were relevant when you couldn’t find the latest version, when you were adding someone to the project and they didn’t have all the emails, the three months that went before it or you forgot to CC the right person. All these problems are archetypes that still exist even with all this additional technology we’ve added to it ever since. And then I also think we are facing something new, which is essentially the overconsumption of technology.

(10:12): This idea for example, that if we adopt Slack, we will have solved all our communication problems that maybe in mid 2010s was a idea you could sell to people. Like, oh, you just need the chat thing. And then people adopted and they realized we’re using technology more than ever. We’re now in Slack all the time and somehow we’re getting less done. We’re actually better off halfway back to the fax machine than we are with the modern tooling. There’s something very curious and peculiar with that, and I think you can see those in global trends, introduction of information technology is not sort of just like a productivity enhancer by itself. It doesn’t do it automatically. You can absolutely add technology to a mix and end up worse off. So I think some of our positioning now has to address that too. It’s not just that you didn’t have any tools at all or you were just using email for everything and that was not enough.

(11:07): Now we’re also dealing with way too much, and I think what’s funny is that kind of positioning things falling through the cracks, you dropping the ball, you looking bad to clients, you’re not getting enough done. You’re not knowing where are we with this project? Are we close to done or are we far away from done is a problem that is present on both sides of it and we are trying to sort of swim right in that middle golden lane of just enough, not too much. Now the problem with that positioning is it’s easy for that just to be words, and as long as something is just words, anyone can say it. Anyone can say “We’re not too little, we’re not too much, we’re just right.” That’s something you could slab on any products page. Our challenge is to actually prove it, is to actually show it, is to demonstrate, hey, here’s a collection of five tools that you thought you needed. You thought you needed Slack plus Dropbox plus Asana, plus maybe a Jira plus, plus plus. And here’s how all these problems are solved with one tool.

Kimberly (12:13): Okay, so let’s talk about our new products that we’re working on. I know we’re not talking about what they are yet, but I’m curious about this kind of mindset of what do people have to give up if that has gone into the development of these new products?

Jason (12:26): It is and it will, but these products aren’t done yet. Soon we’ll be beginning to use them ourselves and then we will realize what we are going to stop doing and stop looking to somewhere else to solve. And that’ll help us, I think understand more specifically what is different about these things. We have ideas for what’s different about them, but we have to see if our behavior is going to change. So pretty soon, and this is always a challenge because we run our entire business basically on Basecamp and it becomes so used to Basecamp and love that it’s one tool versus many, many tools. It has many tools in it, but it’s one product. The interface is universal. Everyone knows how to use all the different tools in the product. You don’t have to go somewhere else and log in somewhere else and deal with some other thing.

(13:09): Once we begin to try to peel people off of Basecamp internally to use something else, it’s always a little bit of a challenge and it’s a good reminder that we’re not the only ones who are going to have that problem. Other people are going to have that problem. They might not be moving from our stuff to some other thing that we make. They might be moving from some other tool to something we make or other tools or other behaviors or rituals or traditions inside their company. These are all on the table when you put something else on the table and go, do we clear the old table off and try this new thing? Or can we mix these together or do they not? Is it like oil and water? We can’t use ‘em all together. We don’t really know, but we have to see and we have to use it ourselves first to figure that out. I mean, we’ve already gotten a couple of them stood up to some degree, but we’re probably a good six weeks away from having enough there to be able to begin to really use it seriously or use them seriously and then we’ll have a much better picture.

David (14:00): And that’s what I really like about dogfooding as a general tactic. When we insert something new into our own process, that kind of has to work because it’s a tool that the employees we have have to use to get their job done. I find that they’re a very critical audience when we inject and tell say, the programming team, do you know what, Writebook, for example, we’ve talked about this example in the past, that’s now where we’re going to store our runbooks and our maintenance manuals and so on. They’re very critical about whether that’s good enough to replace what we did in the past. Specifically with Writebook, we were using GitHub before as essentially a manual repository. That’s not what GitHub is made for at all. But it turned out that it had some properties that the people doing this kind of work really responded to.

(14:50): Well, it has Markdown for example. Oh, okay. That was one of the inspirations that Writebooks should probably use Markdown. And then it has other tracking features that, again, were not designed for this, but the team have learned to cope with the limitations, which is an interesting point in and of itself because oftentimes when you’re trying to convince someone to use something new, the hardest part is not teaching them to use your new system. It is teaching them to unlearn all these quirks and bandages and sideways that they were using the thing they had before. The thing they had before was not ideal for their situation perhaps, but they became used to it. They became used to all the ways. It was a little quirk and a little funky, but now that’s the devil we know. And you’re trying to persuade them to give that up, give up the known of an existing solution, come over here, solve it better.

(15:43): But you know what, whenever you adopt a new tool, there’s always going to be the dip, right? There’s going to be the dip where you don’t know the tool fully yet, you aren’t quite sure how you want to use it. And while you’re going through that dip, it is very tempting and human to just go like, no, no, no. Let’s just go back to the old thing. We see that with our customers too all the time. People come to Basecamp and for whatever reason decide this is not right for them. Then they go on this path as Jason has referred to many times. Now, they try this thing, they try that thing, and then they come back to Basecamp with a new appreciation of not just why they didn’t like those other tools, but actually what is their problem? What are they really trying to solve?

(16:24): Where’s the actual hurt? What’s painkillers? What’s vitamins? What would they pay for to have taken away? I think that education of even understanding your own problem, it’s not that straightforward. It’s not that straightforward, and we see it internally. We see it externally from customers outside that until they really appreciate what the hard part of the problem is, it’s not easy to sell them. So part of this education has always been for us, the out teaching. We’re not just going to give you some software tools. We’re also trying to educate you a bit about how to understand project management. How can you do it better? This is what we talk about on this podcast. This is what we write books about because so much of the value that both is in Basecamp and what we offer is helping you understand your own problems.

Kimberly (17:16): And I would imagine some of this getting past the dip of trying something new also comes back to the free trial. I know it’s like use it, practice it, try it out so that you can see how it can work in your own life. I imagine that’s kind of just a standard for everybody these days.

Jason (17:33): Yeah, it is. It’s hard though. It’s really hard I think to commit really to changing everything in 30, 60, whatever days, but it definitely helps. We played with this idea, was it last year or gosh, yeah, something like that about this idea of extending the free trial for a year. And it was very interesting because then there’s no ceiling over you that’s constantly going to knock you over or this thing that’s pressing down on you when as you’re like, oh God, we have one more week to decide if we’re going to change everything. So there are other ways to relieve that pressure. And there’s also moments where you do want to have someone make a call, so kind of trying to find the right place to decide are you in? Are you out? Are you willing to make a change, are you not? Even if you use something for a year, there’s going to be this point where it’s like, okay, are we switching or not?

(18:24): And so sometimes you want to accelerate that. Sometimes you want to give people some more room. So yeah, there’s lots of techniques there, but ultimately at some point someone has to go, you know what? This just feels better. This is better. We’re going to think what we’re making is better and someone else is going to think what they’re making is better, but better is not always the criteria. A lot of times it’s like how does it feel? Is this intuitive to us? Does this make sense? Are other people using it? Yeah, it has more features, it’s better on paper, but I can’t get anyone to use it with me. It’s not better. So actual usage, actual progress, that’s ultimately what the measurement of better is, not the on paper version of better. And to your point, Kimberly, the only way to figure that out is to actually use something.

(19:09): So sometimes people will say, how does your product compare to this or that? I can’t tell you. You should try them both. Try them both and you’ll know because whatever I’m going to say’s, like we have this feature and they have that feature, and they’re going to say, we have this and I don’t have that and whatever. It’s like none of that matters. What matters is use them both, feel them out, see how they feel to you and to your team, and then you’ll know. You’re the only one who can actually make that decision, not us.

Kimberly (19:34): It’s interesting because I feel like we get a lot of people who write in from day one, not even having signed up for a trial who are like, can I get a demo of your product? Just yes you can, but why don’t you just try it because it is so straightforward. It is built that you can kind of figure it out yourself. But I think the natural tendency is like, I need a demo. I need to sit down with a customer experience professional to show me how this works. And we’ve kind of gone the opposite. Yeah, we can give you a demo, but also just sign up for a trial. You might like it.

Jason (20:05): Yeah, that’s true. That said, if we could, I’d love to offer a demo to every single customer who comes in the front door because Basecamp sells itself when you get to see how it’s used or how it can be used. Unfortunately, it’s because we have so many people signing up thousands and thousands a week, we just don’t have the people to do that. But I agree that you have to try it for yourself, but sometimes people aren’t really sure where to start or they can’t quite imagine all the things it could do or how you could use something. So you might have a feature like the Card Table, which is our take on Kanban, and they might not quite get why they should use that versus to-dos. But we could say you can try them both, and they might try them both, and they still might say, I’m not really sure which one to use when someone asks to be happy to give them a guided walkthrough so they can kind of go, oh, oh, yeah, yeah, okay, now I see. And then they can try it on their own.

David (20:56): I also think there’s a matter of trust that you can really only establish when you’re dealing with another human. We can sell it in the best possible way. There are just certain people who just, do you know what? I need to look someone in the eye? Is this the real thing? Is this what I’m going to invest my time in actually discovering? And I think you see that in commerce of all kind. Did you have the sort of like, well, you just go look through the rags yourself, and then you walk into another store and you’re like, all right, here’s the salesperson who’s knowledgeable and gives you a lot of trust that you’re going to pick the right thing together. And what’s difficult both in that world and in our world is that usually comes at different pricing tiers. So if you walk into a full service high-end store where a clerk is going to spend 20 minutes with you picking stuff out, it’s not going to cost the same as if you go to amazon.com and click it.

(21:54): That seems to be easier to understand in the physical realm, that it is in the digital realm, and we have to straddle both of it. Our stuff is quite cheap, and yet still you have that impulse that some people just want to look someone in the eye. So I think one of the ways we’ve tried to solve this, which I think is actually quite nice, is the idea that you can sign up for essentially a demo seminar and we can speak to a group of 20 or 30 people at the same time, and that is somewhere in between in the middle. But what I also think is interesting is this idea that when you’re evaluating something, you don’t really know what your problem is. You can’t truly evaluate whether you’re solving it. And I think a wonderful illustration of this is what happened in the TV business.

(22:41): If you go into a big box store and you look at a bunch of different TVs, the TV manufacturers have figured out that the only way a customer potential customer will decide is they’ll pick whatever’s brightest. So they crank up the nits, the brightness on these TVs to levels that just blow out the color, blow out what the director of the movie intended and actually really ruins it, really ruins the core material that this TV is supposed to convey. But that’s how customers pick, right? They pick on the brightest thing and then every single reviewer, if you’ll watch any of the TV reviews on YouTube and so on. The first thing they say is, you have to turn off all that junk. It is just junk that’s there to convince a buyer who’s looking at a Samsung versus a Sony in a store and they don’t know anything.

(23:36): They don’t have time to sit for an hour and a half movie and appreciate all the shadows, all the softness of a cinema image. They just look at this and in 10 seconds have to decide, yeah, that one looks better. And it is just the clearest example that I know of this in-store, good versus at home good, which is a saying Jason has used many times over the years. We all want to be at home good, I think. Even the engineers at Samsung, they don’t want to create these retina blasting, nit maximizing monstrosities that you see in the store room, but they just realize, ah, I got to do some of that. So I, I don’t know if we struggle with this. I think all companies have to weigh these things. How much are we going to invest in the at-store goodness, how many check boxes are we going to line up?

(24:29): That’s what a lot of the competition we face with often do, right? They take a hundred features and half of it’s just bullshit, and then they take half of ‘em say, see, we have more check boxes, therefore we’re better just like, see, we have a brighter image, therefore it’s a better tv. Yeah. Do you know what? That’s nonsense. And some of it, again, comes from our perspective of dealing with that through education. If I was going to sell you a TV and I was going to sell it to you because I wanted you to have a great TV to watch, wonderful movies, as the director’s intent, I would have to teach her a little bit. I’d have to teach her a little bit about white balance. I’d have to teach you a little bit about HDR how highlights work and why the brightest picture’s not always the best.

(25:12): You know what? Can’t do that in 10 seconds. You can do it in 20 years. We’ve been doing that in 20 years. 20 years worth of education, essentially trying to teach people how to see the problem that they’re facing, the communication problem, the organization problem, the productivity problem from a few more lenses than just who has the most green check boxes, because that’s just such a nonsense way of doing it. And you know what? Even with all that investment, we fail all the time. We fail all the time convincing someone that, you know what? We can teach you how to do this stuff better. And they go with the most check boxes, but then it is oh, so satisfying when they go with the most check boxes and they live with it for a little bit and they realize it doesn’t actually solve the problems they set out to solve, and now they actually know enough about the problem that they can evaluate something, and now we look way better.

(26:06): Now we look way better because you’ve developed your eye for white balance, so you’re not just going to take the brightest image if that totally blows it out and everything is magenta, right? That’s not going to appeal to you anymore because you know. So I think the investments in that kind of long-term marketing is my favorite kinds, where you plant these seeds and you bite your tongue and you realize, you know what? Maybe I could have won this customer by just fucking adding green check boxes after green check boxes comparison page after comparison page, right? Maybe. Okay. But I’d rather actually get the customer after they come back. Maybe it’s after the next competitor or the one after that, and then they really appreciate what we have to offer.

Jason (26:50): We just did the survey where we asked people how they got to Basecamp, and about 40% of the 1600 people who responded didn’t start with Basecamp, but had Basecamp earlier in their journey path, whatever you want to call it, went through all the usual suspects Notion, Asana, Monday, ClickUp, the whole thing, ended up back at Basecamp, 40% who left came back, which is really something we’re proud of. But another way to think about this briefly, even though David just nailed it, is that imagine you had two doors and you were looking to buy one of these doors and one door said more secure. That was a checkbox more secure. You’re like, yeah, I want a more secure door. But then you find out when you install that door, it has eight locks on it. To get in your fucking house, you got to unlock eight locks every time.

(27:32): It’s like, no. Yeah, it’s more secure, but I don’t want that. It’s a powerful way to market, which is check boxes, but customers should be savvier than that ultimately. And what’s behind this checkbox? What does it mean to be more secure? Well, if it’s way more inconvenient and a major pain in the ass, I don’t need that much security. One lock is, or two, a deadbolt and a whatever is good enough for me. Thank you very much. So that’s one of the things I think’s important to keep in mind when you’re looking at comparison tables and whatnot.

Kimberly (28:04): Okay, well, David gave a little bit of a plug. I’m going to make a shameless plug for our Basecamp classes. You can find information on those on basecamp.com/classes. Steven mentioned they are group sessions walking you through the Basecamp product, so we invite you to check that out. 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 or send us an email to rework@37signals.com.