N.B This is the unedited transcript of the interview.
Can you introduce yourself?
Sure. I'm Jason Fried. I live in Chicago, Illinois. That's in the U.S. for those who don't know. I run a company called 37signals and our most popular product is called Basecamp which is what we're mostly known for. It's a project management tool. It's been out for almost 10 years now. One of the first sort of software service tools really to exist in modern times I guess.
You recently published a book with David Heinemeier Hansson called ‘Remote'.
Yes, we just came out with that book, and our second major book. We've done a few others, but this is our second major book and a major publisher.
How did you guys collaborate on this project. How did you do it remotely?
We used Basecamp. Basecamp is how we did the whole book. We didn't spend a single second together writing this book. Everything was remote. David worked on his essays, his chapters. I worked on mine and then we put them up in Basecamp and looked at each others and read each others and edited each others. It all came together in one Basecamp project. David did the majority of the writing on this particular book. The last book we did, ‘Remote’ was a little bit more 50-50. David did more on this because I was working on some other stuff at the time.
Is that Know Your Company?
Yeah, mostly Know Your Company and a few other things that were taking a little more of my time. David had led this book and it came out really great I think.
I think you guys are great communicators, great writers, but also great communicators because you can have great writers, but the message can sort of get lost. You remember everything that you said. I've read the book and the points you made I still remember them clearly and that's very rare.
I want to talk about that as well.
Sure. We also have a great editor. Our editor Rick Horgan who works at our publishers is great. He helps makes the books really good. We deliver drafts and he has extensive detailed feedback for us which helps quite a bit and then we go back and refine and refine and refine, and then we finally come out with something that we're all happy with and that's what people can buy in the stores.
What are you guys trying to say about the importance of working remotely and what it’s important?
You have to address it from two angles. I'll keep it short one sentence per side. From the employers point of view you can hire the best people in the world because it doesn't matter where they are and it's very unlikely that the best people in the world are within 20 miles of your office, so that's great for them. For employees it's great because it allows them to get jobs they normally couldn't get, live places they normally couldn't live, and do work they normally wouldn't be allowed to do. That's an amazing thing and it impacts their life way outside of work as well.
Here's my thing. I've had a couple of guests on the show. Geoff Teehan, Cameron Moll, Patrick Collison, and we've all talked about remote. Here's an interesting dilemma, when the product or the solution is undefined can remote still work when you're in that exploration stage?
Why couldn't it?
I don't know.
Of course they can. I mean anything can happen anywhere. It just comes down to communicating well, being able to share your work, being able to show the work, whatever you need to do. You don't have to sit in a room with people to come up with ideas. You don't have to sit in a room with people to review ideas. You don't have to sit in a room with people to brainstorm. All these things are completely possible anywhere.
That said, there's certain things that being in a room together is slightly better at in certain situations, but the amount of times when those situations are actually required are very slim. Absolutely, things can come together no matter where people are and they do all the time. The world runs on open source in many ways and this is stuff that's been written by hundreds of people, sometimes thousands of people committed to these things, but even if it's just a dozen or five. They rarely see each other. They rarely know who each other are and these incredible things happen.
I don't think that location has a whole lot to do with great ideas and great execution. It comes down to people who want to build something great, who can communicate well together, who know how to communicate, who know how to critique, who know how to think creativity and constructively and that can happen anywhere.
Don't you think that's a lot in terms of asking a lot from people? I can understand you guys can do that well because you guys are very skilled at what you do. I can imagine if somebody joins 37signals the standard of their expectation is so obvious that they could be anywhere and they'll still perform. How does someone that does not have that standard still work remote? Do you know what I'm getting at?
Yeah I do. We shouldn't sell people that far short. If you're not a good communicator, if you're not a good critical thinker, if you're not a creative mind you can sit in a room all day long and you're still not going to be able to build something great. You need to be able to do those things anyway regardless of where you are. You're probably not suggesting this, but in general to suggest that only exceptional people can build great things remotely, but if you happen to get a few people together who can't communicate well, who don't have good ideas, who don't know how to execute, but they happen to be in a room together that they'll get it done just because they're in a room together.
The room doesn't do any work. The room doesn't contribute to the work. It's still the people doing the work, so you still have to be good at what you do in order to produce something good. The room doesn't come up with design ideas, and the room doesn't think like a customer. It's a space, but I don't think space is as required as people might think it is.
In the early stages of doing a product there's a lot of uncertainty in terms of which direction should we go, which features should we include. I'm trying to understand when there's a need to be together or are you saying you can do this over Skype, Google Hangouts, Google Docs, and you can still collectively come to the right decision of the product.
I think you can get really close if not completely there. I do think that being in a room together occasionally is valuable because other things happen and new ideas might pop up, but the idea that the only way to do this is to always be in that situation is what I'm pushing back against. When we were building Basecamp we weren't all in the same room. We were hardly ever in the same room. David was over in Copenhagen still finishing school. We rarely saw each other, but we saw each other occasionally. He would come to Chicago or whatever, and it was nice.
It's nice to get together occasionally like that, but I don't believe it's a requirement at all especially when it comes to building software which is about looking at things, looking at interfaces, and looking at code, and thinking things through, and using things and trying things. All of that stuff happens though a screen anyway, so if the medium is the screen and the screen can be shared anywhere, and the technology has gotten even better where the latency is close to zero. You can be pretty close to being in the same room with somebody even when you're not. It's really quite close.
I think it's all possible. I don't think the missing ingredient is ever a room. If you have the best idea, and the best design, and the best tech, and the best business mind, and all this stuff and it doesn't work it's not because you weren't in a room together. I don't think the room is that missing ingredient.
Again, it comes back to the people.
It always does in everything. Again, I want to make sure that I'm clear about this though. I do think it's valuable to get together occasionally. I just don't think it's a requirement to build something great. I think it's nice, it's useful in some cases, but to say that you can't do it without the room I think is not true.
How can you screen people and I know that you guys are big advocates of, “It's the work. The work says it all.” What's your process when you need a developer? What do you do? What's the next thing you do?
I can talk more about design since that's more my forte.
We're looking at hiring a designer right now. I've decided that this time around I'm interested in someone a little bit more junior because I think it's a good challenge for us to figure out if we're able to teach. Most of the people we've hired at 37signals are already very experienced. They've been doing this stuff for a long time. It's a lot easier to bring someone in like that, but I'm more interested in the challenge of making sure that we're able to teach and we can help bring someone along and bring someone up.
What I've learned is that it's a lot different to hire someone junior than it is to hire someone experienced. When you hire somebody experienced you might want to look at work they've done recently. You might want to talk abouttheir experience and where they worked and talk to references, and whatever, all the things you might do. When you want to hire someone new who doesn't have a lot of experience yet I find that, and I'm still learning how to do this that you want to look more at their potential, and try and imagine them who are they going to be, what are they capable of, not what they can do today because you're probably not hiring them for their immediate plug-in skills today, but you want to know where they can go.
One way to do that is to see how they think, to see how open they are to suggestions, to criticism, to critique, to see how interested they are in learning, what their interests are, why do they even do this sort of work, why do they want to do this sort of work. I think this is one of those really weird ones, but you want to look at someone's taste level if you can to see if it jives with yours. Does this person seem to like the things we like and does this person seem to appreciate little details that we think are important and you can do that by asking them questions about your work or about their work or about things that they like or things that they own that they like and why they bought them, and all that kind of stuff.
Then there's also some simple things like I'm more interested in, when I look at someone's design who's a little bit more junior I'm less interested in all the reasons why they did things because in a lot of cases they don't know yet, they're still learning, but one thing I'm always on the lookout for is a good sense of proportion. When you're looking at a design even if the design is wrong in some ways if the proportions are right. If people know how to lay things out and put things in the right place for the right reasons and whatever that's something that I think is a core fundamental thing you need to know if you're going to be a good designer. If they have that potential, if their thought process is clear, if they're good at taking feedback and criticism. I think if they have a lot of potential I'd take a shot on them as long as of course they have a baseline level of skill.
I find it's very different from hiring someone great. When you hire someone who you know is flat out awesome it's a lot easier. You just got to find the number that makes them happy and pitch them on the work that they want to do. It's a much simpler process and explain why this is great work and show them what they can do here and why they can do the best work of their lives here. Those sorts of things. You don't have questions about their skills at that point. You just have questions about their motivation and what kind of work they want to do and why they want to do it and that sort of thing, so very different things. I've been meaning to write a blog post about this and maybe I'll do it after this talk because it's kind of coming out of me now.
Have you started doing this now? Have you started speaking to junior designers now?
Yeah I am right now.
Then what happens? You're Skyping and chatting or they are coming over or ... ?
All Skype so far. Nobody is local that we're talking to currently, so all Skype. I've been doing some Skype. One of the things we do is if someone's close, I don't mean close physically, but I mean close to being a good fit we'll hire them to do a one week project for us and we pay everybody $1,500 to do that project. It's a one week redesign of a particular screen in one of our apps, or our site or whatever.
The person gets to choose and they decide what they want to do and so they have a week to do it and they have to do it on their own. That's a nice way to get a sense of the work that they can do under a slight amount of pressure with not that many constraints and seeing what they produce and then we talk about their work. I look at their work and they're looking at their work and we do it all over the screen. If that all looks good we might do another small project and then we might possibly fly them in and meet them in person, but we don't have to. It all depends on the situation.
Why is it so important for you to find junior designers?
A couple of things. I think it's important because first of all it's more interesting to me personally to work with someone who's really eager to learn and improve I just like that sense of somebody. I like the freshness and open eyes and open mind that comes with someone who's new to something. I think there's a lot of value in that. I think there's also a lot of opportunity for us to be influenced by them. Sometimes in this industry there's a lot of people who move from company to company to company and everything ends up starting to look the same.
I like the idea of new fresh eyes on things and someone who's not so steeped in the industry, but instead is fresh. I think that's interesting and then also I think it's ultimately a more sustainable way of building a company over the long term because if the only thing you can do is hire the best because you're unable to teach people who aren't quite the best there's a small number of people who are technically the best and it becomes harder and harder to hire them over time. I like the idea of being able to take anybody with basic skill and some fundamental interests and perspectives on things and help them become great at what they do. I like that. That's a personal interest of mine. Hopefully we'll be able to do that.
Jason before we started recording I expressed the interest of me wanting to do a product and I want to do it remotely working with somebody on it remotely. Are you suggesting that I should test them for a week with a project?
It's challenging because I don't know what your financial situation is. We're a company. We have money coming in the door. We can afford to spend $1,500 on a few different people to see who's really good. I don't know if you're able to do that. If you're not able to do that you got to figure out if you’re launching a company, or are you doing something on the side, is it a hobby, what are you doing? If you have a company and you want to hire somebody you need to hire them just like you'd probably hire anybody else.
You need to evaluate their skills and see if they would mesh with you and see what their vision is and what their feeling is about the work and what's important to them. It's no different than hiring anybody else, but if you're just trying to do something on the side and it's not really a hiring situation, it's more like I just need to find someone to collaborate with and work on something together and who knows what's going to happen and they can go off and do their other stuff too and I'll do my other stuff too and we won't be totally committed to this.
It's that approach, it's that one.
It's that one. It's more like on the side sort of approach.
You're going to have to find someone that you know who has free time, also, who's willing just to put in some free time because it doesn't sound like you'll be able to pay them if it's just a side project, like a full salary. I don't know what your situation is there, but I think if there's somebody you admire, if it's someone who you've seen do good work, who is sort of younger and eager and wants to try something out and wants to hook up with you to work on some stuff I would just start asking around and seeing who you can find. It's going to be hard to find. You're not going to be able to pull someone away from a full-time job probably, so you're going to have to find someone who's freelancing.
I'd pay attention to where people hang out and freelance. You might want to look at something like Dribbble for designers or other places where people are hanging out and there's some Behance stuff, some forums. See who's doing interesting work and call them up and see if they're interested in doing something with you, but if I was you I would have the idea pretty well formed before you go talk to somebody. Otherwise, it's going to be hard to sell them on what you're doing. If it's just like “Hey I like what you're doing. Are you up for doing something with me? I don't know what yet,” it's a lot less interesting to the other person to join that cause. Is that helpful at all?
How thought out should the product be?
You should know why you're building it. What I'm hearing from you still is this idea like I want to make a product. A product doesn't exist. There's no product. What do you want to solve? What job do you want this thing to do? That's what you need to think of first and the product is the thing that provides the solution or the opportunity to solve that problem or do that job, but I think to be obsessed with the idea of making a product is a wrong angle on this. I think you're going to be constantly obsessed with something that you can't achieve because it's like if you're just thinking about you're doing this to make a product that doesn't mean anything. I would think for you that you should think about what do you want to do. What do you need?
What problems do I want to solve?
Yeah, we can use that language. What problems do you want to solve or what's your problem, not even what problems do you want to solve for others, but what are you missing. What do you think you could contribute to yourself that would make whatever you do easier and better and then are there other people who do that as well or who need that as well.
You're working on something new, Know Your Company.
Paul Graham has this saying to do things that are not scalable. Is this an example of that?
On the sales side it absolutely is.
Because you're actually meeting people and actually taking calls with people.
Yeah. I wrote all about this. This is actually a little bit before I read Paul Graham’s article and I was really happy to read what Paul Graham had to say about it too. I have been really inspired by doing things that are impossible to do unless you do them in person, not only in person like sitting down with somebody, but actually having a phone call.
For example, most of the customers for Know Your Company don't live anywhere near Chicago, but I will not sell them the product until I talk to them on the phone and the reason for that is that I want to get to know them. It's not that I want to sell them something. I can sell them stuff, but I want to get to know them too, and I want to make sure they're the right fit for the product. I want to make sure that the product we're selling can solve the problems that they have or give them insight that they don't have that they know they need.
It's not enough for me to put a sign up for them up on the web to sign up for this thing and have a marketing site and have a video and all that stuff. You actually have to get in touch with me first and I have to give you a demo or Dan who's the other guy that's working on this with me has to give you a demo and we have to hear your story and understand why. One of the first things we ask is, “If you're a manager what are you struggling with? If you're an owner what are you struggling with? Why do you feel like you need this?” and if people can't give us a good answer the products not a good fit for them. They're not ready for it yet so we won't sell it to them.
It's been a really interesting process. It's very labour intensive, but it's been amazing. A great learning experience. The product is doing really well and I'm really happy with how it's turned out. I've learned a lot by using it myself at our company. It's been very interesting and the premise for those who are curious about what this is it's kind of a mysterious product. Basically, the story is that when we had about 30 people in our company I realized I didn't know what was on people's minds as much as I used to. When we 8, 10, 15, 20, I worked with everybody more on a one to one basis more frequently. I just had a sense of what people were thinking and what was going on and what was bothering them and what was good, but when you get to a certain size it becomes very difficult for the owner of the company to have those kind of interactions with people frequently enough to understand what's on their mind.
There's this saying in business where people say, “My door is always open if you have anything you want to share come and talk to me.” It's such a cop out though because people don't come and talk to you and it's not because they don't have something to say it's because they don't know if you want to hear it and they're uncomfortable bringing it up. It's risky for them to bring it up.
The thing is that the employees have things on their mind. They always have an opinion about everything that you're doing and how the business is going and stuff, but they typically hold this in. They're not willing to volunteer it. Most people don't volunteer information, but they will give it back to you if you ask it in the form of a question. How do you feel about this? What do you think about that? Then the answers will come pouring out.
The point is that if you want answers you have to ask questions. If you don't ask the question you're not going to get an answer. People are not going to tell you what's on their mind until things are usually too late and so we built this product on a weekly basis. Ask different questions of our employees, a different question every single week about a different part of the business strategy, competition, quality, leadership, benefits, all these different things that go on in business and we learn something new every week and it's been really interesting.
So far we have about 93 other companies that are using it now. It's generated $360,000 in revenue in five months so it's doing quite well. It has a very different business model from our other stuff so it was a cool experiment, but it's also a great business doing things differently. We've never done things like this before. It's been really great.
What was the process from idea to conceptualizing the product? How did you know what it was going to look like? How did you get there?
I didn't know what it was going to look like. I knew what I wanted to know. It started with the fundamental premise which is that if I don't ask questions I will not get answers. Otherwise, I'd have answers all day long. People would be telling me stuff constantly and that's not how it works. I know people have things in their head and I want those answers. I want to know what's in their head so I have to ask them questions. That's how it started. It was that realization that that's the way you find something out is you ask a question that means basic stuff, but you still have to come to that realization.
Once you start there then I start thinking about what's a great way to get answers. I could go walk around and talk to people one on one constantly every single week trying to talk to 40 people and that doesn't work. That doesn't scale in fact in a way that not even doesn't scale long-term, it doesn't even scale in the short-term. It's impossible to do that. That wasn't an option, so I thought about how could I automate this process in a way that didn't feel mechanical and wasn't boring and was different all the time so people didn't want to ask the same exact question every week because that's boring and no one's going to do that.
I started thinking about what the questions might be. I didn't think about how I would deliver them yet. I didn't think about the technology so much. I just thought how can I automate this. What are the questions. I came up with a list of questions and I started thinking about those questions and started asking a few people those questions and I started to see that there's good stuff here. Then I started thinking more about the software side how could I automate this and then email came to mind. Let's have a question on email every single week, but I don't want people to have to log into answer because logging into answer something sucks. People aren't going to want to do it and I'm not going to get the answers back.
We set it up in a way that people don't ever have to log into anything. All of the responses come directly through email. The system is totally automated and I don't have to go and pick the questions. The question is already pre-chosen for me. I've written them in advance that are randomized in a way and sent out every week to different people. I get answers back via email and I start to learn stuff. It started there and then expanded a little bit. We did a few different variations on it, but fundamentally it's a very simple product, but it's simple because we worked hard to make it that way.
There's a few other tools that exist out there that are complicated that require a lot of work on the employees part to provide answers and therefore people don't use it. We hear from these companies all the time who are interested in our product. They say we've tried these other things, sounded great, but no one uses it, and so I want to focus on making sure that it was usable and the best way to do that is to make it the fewest requirements possible to actually use it and that's simply just responding to an email which is something everyone knows how to do and doesn't require hardly any effort other than sharing your thoughts.
Why is it so hard to build something simple?
That's a great question. It seems like the natural tendency is to feel like this can't be all it needs to be. It needs to do more than that. If I'm going to charge money it needs to do more. I need to justify it's existence by adding more stuff and it's a natural feeling, I understand it. It's also cool to build stuff. If you're a builder and you like to build things it's nice to build more stuff, and so you're like well it could do this, but wouldn't it be cool if it could that and then you start building more things.
It takes a real discipline to be able to pull back and say what does this thing truly need to do and focus on that at least initially and then, of course, down the road you can add more things if you need to, but things are never simple as they are on day one. It always gets more complicated down the road. I think it's such an important thing to try and get to as clear and simple as you can initially. You can prove your theory that this is a good idea and then figure out what the fundamentals are and then after that you can add more stuff down the road if it's going to help.
How did you choose your team? Are they guys from 37signals?
I went back to basically 2004 which is when we launched Basecamp and we launched Basecamp with a very small team. There was just four of us technically. We basically had four people. If we built a new product normally we would have a much bigger team, but I wanted to go back to the beginning, back to basics, four people. There was me, another designer, a programmer, and another guy who was sort of helping out on all the above which is basically what we did with the initial Basecamp.
I picked people who were available and who were interested in doing the project and it came out really well. I think we spent about four months on it which is about how long we spent on the initial version of Basecamp and we built some stuff which we ended up pulling out of it. We overbuilt it initially and before we launched it we removed some things to simplify it even more and focus it even more and really pleased with how it turned out.
Why is it closed? Why can't I see what the product looks like?
Because you don't need to unless the letter that I wrote spoke to you. If the letter that I wrote spoke to you, then I know you're a good potential customer and then at that point I want to talk to you and see if you are a good fit and you have the problems that you need help with. I think that the idea of putting up a picture of something doesn't really do much. It's fine like we do that with our other products, but I wanted to experiment with not doing that here and just using words and saying if you're motivated enough to read this and to have it resonate with you and to get in touch with me then you're probably a really good potential customer.
Since we're doing this manually, since we're talking to everybody I couldn't handle a thousand inquiries of people who are just purely curious like I saw a picture of that, that looks cool, let me sign up. I couldn't do it. It's just not possible so by putting up these barriers which is like you got to read this, then you got to email me, you got to answer some questions first, you go to do all these things, you got to show me that you're motivated we reduce our potential customer pool, but what we do is we end up with people who are highly motivated and good fits and so that's what we wanted.
Is that something you would recommend or was it something that you needed in your context of just being busy?
It's actually a really good idea for launching something new.
You're going to see a lot of copyrights now.
Good it's fine. The funny thing it's not a new idea, it's sort of new in software because you know you open a restaurant, you might open it a few weeks early for people who are in the know and they might come in and test out the food and try it, if you don't have a sign up yet so people don't know if they can walk in, but the people are really motivated or have heard about it will walk in. You have that sort of thing. It's not a totally new idea. It's new for us and I think it's great.
The other thing is that you learn a ton. You learn so much more. If I had 10 thousand people who signed up for this thing and I didn't have to talk to them it would be a lot easier. I would have more money, but I would know virtually nothing about how well it's working for them, what their actual struggles are, if they even need this thing at all and I'd have much higher cancellation rates, much higher attrition rate, the product would not work as well for people. The motivation for me was to have a high success rate, not to have a huge number of customers to start. Down the road maybe we'll have more customers, but right now our success rate is extremely high and that's what I'm excited about.
Do you think that can happen by focusing on fewer numbers and actually just focusing on your relationship with them?
I think so. I think if you get the solid fundamental core of great customers who are really good fits for what you're doing you'll understand them better and you'll have this great foundation of what you can build upon and you're going to have a bunch of really solid fans. I think that's important. I think it's very important to start that way. I would suggest that as an option.
With you're a new company, Know Your Company, you're trying to avoid automation and it seems like the focus for you right now is learning. The school of thought is that once you've found something that is successful you should repeat that so you apply what you've learned from doing Basecamp, but you're trying to move away from that. Why?
We're trying to avoid automation initially so we can find out if there's something new to learn that we don't know. I think that's what it's about. It's not about throwing away things that have worked, it's about verifying those things ultimately, but first trying to see if there's something that we missed or a better way of doing something or learning something new because I think if you get really stuck on the things that you've done before and the way you've always done them you close yourself off to other ways and there are dozens and hundreds of ways to do different things. I think it's important for us to celebrate the things that have worked well for us and do more of those things, but also to try new things so we don't get stuck thinking that there's only one way to do something.
What do you think you missed with Basecamp and the other products you launched?
I don't know if we did, that's the point. I'm not sure if we missed anything. Basecamp has been wildly successful, other products have been successful. What we did worked. Could we do something better is the question and so that's something I'm trying to find out. One thing that I've sort of realized lately and I wrote a piece in Inc. magazine about this was that tech companies specifically think that they know their customers. Everyone is about big data. We have hundreds of points of data on every customer and you know their IP address, and you know the device they're using, and you know the OS they're using, and you know the browser they're using, and you know the time they're logging in, and you know all these things about them, but if they walked down the street and you pass them on the street you probably wouldn't recognize them.
You wouldn't actually know that that's your customer even though you have 100 pieces of data on them and to me it creates a big crack in the whole idea of really knowing your customer through data if you wouldn't even recognize their face or you wouldn't recognize their voice. I'm sort of very curious these days about what it's like to really get to know a customer, to really hear their voice, to really talk to them, to really know what they look like, and to be able to recognize them on the street if possible. Obviously this won't scale to thousands or tens of thousands or hundreds of thousands of customers, but I don't care about that right now. I'm curious to find out if knowing them, if seeing them, if hearing their voices, if communicating with them directly more often leads to new insights that I couldn't gain through just data about them, so that's what I'm trying to figure out.
Is that happening now, that you're interacting with customers meeting them in person? Are you getting new insights? Like, “Wow we need to do this, I never thought about this, we need to completely change the product”
Not change the product so much, but I'm understanding them more. For example, when I talk to a new customer about Know Your Company I'm not talking just about our product. I'm first asking them about their struggles. What do you struggle with as an owner or as a manager? Why do you think you need this product? When was the last time you ran into a situation where you felt like you didn't know your company as well as you used to and just hearing them say these things helps either verify what we're doing or open up a new idea or remind me that there are a lot of people like these folks that need a lot more help.
It's just about putting together some things that I would never get. For example, if we just had a page where you could sign up for the product I would never have a chance to even ask these folks about their struggles. I could do it in a forum. Someone who's into technology could be like well you could make a survey or whatever, but it's not the same as asking someone straight up. I've learned a few scenarios that are interesting. For one, one market for the product that I never considered in the first place was new CEO's.
Know Your Company was originally built for me which is, I run a company of about 40 people and once we hit about 30 it became much harder to get to know everybody and know what was on their mind, so that was for me and that's who I was originally marketing it to, but I realized that by talking to people there were quite a few brand new CEOs who were brought into a company who were new at this company who obviously don't know the company at all because they're brand new and they needed a way to get up to speed quickly.
That insight would never have come if I just had a sign up for them. It only came from talking to people and detecting patterns and noticing patterns and I've heard that before and that's really interesting. Those are the kinds of insights that we're gathering. It's only been a few months, but there's a bunch of those things that have come up that wouldn't have come up any other way and I'm excited to see if we could do something similar for Basecamp. The problem we have with Basecamp is that Basecamp signs up six or seven thousand customers a week. How do you do that and we're working through some ideas on how to do that. It's been fun so far.
It’s not something a tech entrepreneur typically does, have you found the experience awkward?
It's not awkward. It's time consuming. It's not awkward though. I enjoy it to a point. I can't do this eight hours a day, everyday, I'm not built that way, but I could do a few of these everyday and learn a lot and I've been thinking about doing with Basecamp, too, trying to talk to let's say three customers a day for a month, for example, that would be about 90 customers. I think that would be an incredibly valuable month.
I would challenge any CEO to figure out a better way to use 30 days to improve their product then to talk to 90 customers. If you can do anything you want over the next 30 days to make your product better out of the things that you could possibly do I'm starting to feel like speaking with 100 customers over those 30 days would be the most valuable experience and the best way to spend your time. Now doing that every month for the year probably doesn't make sense, but doing it for one month, might be very valuable. I might do that next year.
Walk me through. I am a potential customer. “Hi Jason. I found your product.”What happens now?
With Know Your Company for example.
Yeah I'm a potential customer.
You sent me an email and say, "Hey I heard about your product. I'm interested. Let me know what's the next step," or something like that. This is usually what the email looks like. The first thing I would ask is I would always say, "Can you tell me about a recent experience that you had that made you think or made you feel that you didn't know your company as well as you used to?" That's what I would send you back as an email. I would not set up a demo. I would not tell you about the product. I would ask you that question and depending on the response I'd get back I would have a much better sense of whether or not you'd be a good customer for this product.
Some people say, "Everything is going pretty good. Things seem to be fine. I was just kind of curious." I wouldn't sell to those people because they're not motivated enough to want to buy it, but I get emails back from people saying, "Oh my God last week my number two guy left out of nowhere. How could I have not seen that coming What happened to me that I couldn't see that coming," or other people might leave the company, or someone might say, "This happens a lot." Someone would say, "You know I was walking through the hallway yesterday and I saw someone new who I didn't hire, I didn't know their name, I didn't know what they did. That scared the hell out of me."
When I hear things like that I go "Okay, I think I can help this person. I think this product can help this person," but if I hear things like, "Everything's pretty cool, nothing really, I was just curious," then I basically let them know that you're not right for it yet, or we're not right for you and if down the road you run into some real struggle ... first of all I congratulate them. I'm like "You're lucky that everything is going well. You should savor that." For those people who definitely have a problem and know they have a problem then I can help them. I'm very interested in helping motivated customers and not just trying to sell this to anybody who has money.
Then we meet up and you realize that I have a strong pain.
To clarify if you happen to be in Chicago you could swing by our office, but if you're not we do a demo over WebEx. It takes about a half hour. I walk you through the product. I show you exactly how we're using it at 37signals. There's no abstractions. Imagine yourself this. It's like here's exactly how we're using it. Here are the last 10 questions that we've asked our employees. Here are some of those responses. Here are some things that I personally have learned. Here are some things that totally surprised me that I thought I knew that I didn't know, stuff like that, or here's where people totally disagreed with me when I thought they would agree with me.
I show them some real examples and they get a sense of they can put themselves in my shoes and go, "Wow, there's got to be things in my company just like this. I would not know how to answer this question myself. I wouldn't know where people would come down on this question if you asked me," so by relying that and showing the product, but with real information in it they get a sense of what this thing can do and that's why so many people who I show it to buy it.
I think we're probably at about 50% close rate maybe 40% which is exceptionally high for a product that costs a minimum of $2,500 and some people are paying us eight or nine thousand for it. To have almost one in two people buy it when you show it to them says that this is a really well conceived product and it solves a problem that they have. It also says that we're selecting customers properly. We could get this ratio down to 3% which would be terrible if we were just demoing it to anybody who had a heartbeat, but that's not going to work for us or for them and it wouldn't be good use of our time.
For those that want to try this approach of really getting under their skin of potential customers what's the main thing that they need to pay attention to when they're doing this?
The thing is you have to make sure that there's a struggle on the other side. If you're just demoing products for people it's just like a demo. It's like you're showing a picture or a piece of art to somebody. If you're going to spend your time doing this and your time is valuable and you only have a few hours a day to be able to do this sort of thing you got to make sure that you're spending it wisely and that you're matched up properly with customers who are ready to buy because they have a pain right now. They have pain.
You got to find that struggle. That's where the moments are in the struggle. If someone isn't struggling with their current situation they're not motivated to change. The only thing that's going to motivate you to change is a struggle because those are the moments where you start to reconsider what you're doing, where you're open to change, where things have gotten so bad that you know you need something to help you fix the problem. If someone is not struggling it's very hard to sell them something. The only way to really sell something is to find someone who has a struggling moment and then hopefully your product will help relieve that struggle or that pain.
Do you think it's bad to enter markets where the problem has been solved so this struggle is eradicated, but you have an idea, you have a product that's better. Gmail is okay, but it could be better. Do you know what I mean?
That was what Google did. You could say Yahoo mail is fine.
Gmail is still not perfect though.
First of all every problem has been solved. There are already solutions for everything you can already imagine. Any market you're entering there's likely competition. That's going to be the reality. For me what's interesting is trying to find a different angle on something and being a little bit more specific and selling it in a way where you're addressing a struggle and not a general use case.
We have to get better at that, too. I think we got really good at it with Know Your Company. With Basecamp we haven't got good at it. I'm sort of inspired to figure out how to get good at that with Basecamp. The problem with Basecamp in this context is that Basecamp is a more general tool unlike Know Your Company which is a very specific tool so it's more of a challenge, but we will have to figure out how to do it.
After you meet these customers what's your process for recording things? Are you looking for repeatable patterns and what people say or do you record every little thing? Do you have your notebook and you’re scribbling away?
I'm not good at taking notes. I never have been. I've always sort of been of the mind that if you hear something repeatedly it's important. If you don't hear it again, it's probably not worth writing down. I might miss some things that way, but if you talk to enough people you'll know what the patterns are if you're paying attention, so if I keep hearing from new CEOs, or I keep hearing from people who said, “My number two just left”, you don't forget those statements because those statements are emotionally charged.
The person who is telling you this is not just like my number two left no big deal. They're like “My number two left, like my right hand man! He or she just left the company. I didn't see this coming. I've been working with this person for seven years and they just got up and left." There's emotion behind that. There's energy behind that and those are things you don't forget. If you hear those things multiple times you detect patterns and you start paying attention to that, but small little tiny details I tend to just probably forget because they don't come up again and again so I don't think that they are as important to focus on.
How can somebody that doesn't have a large audience get customer feedback?
You just need one customer to get feedback. You don't need a lot of people. You need one, two, three, four, five. If you can talk to five customers of yours. The thing is you got to understand that talking to them, a big part of it is what's the subject of their discussion. If it's general riffing it's not going to go very deep. That's what's important to ask them. For example, let's take Basecamp. I'm not doing these interviews now, but let's say I was.
If you have an existing product, I think there's two moments that are important to talk to people or when you should talk to people. One is a few months after they've chosen your product and then also after they've left your product if they actually leave. I don't think it's that valuable to talk to somebody who's been using your product for four or five years and talk to them at year four when they're totally thrilled with it. I don't think there's a lot of value there.
The value is in what we call the switching moments when someone's switched to your product or someone's switched away from your product because that's when they had to make a decision and that decision is fresh in their mind. I like to talk to Basecamp customers who've been customers let's say for two or three months and ask them take me back to the moment when you just started thinking about what were you doing before Basecamp. How were you managing your problems before Basecamp? What were you doing?
Start to get into that story and start to reveal the reasons why they came to even think about looking for something else. People don't just wake up and go I'm going to buy Basecamp today. No one does that. Something has to happen. I want to get to what happened. Every buying decision has a what happened behind it, has an event behind it, everything. What was the event or what where the events that led up to the decision to actually consider something else. I want to understand that because that's the moment when people buy stuff. If I can understand that I can understand how to sell the product better and how to address the market better and those sorts of things, but talking to people about what features do you like and how to use to do lists that kind of stuff doesn't get you as deep or as far as understanding the moments where someone decided to make a decision because things were so bad that they decided to change because changing is hard.
Switching is hard. You're used to things. You have something that works even if it doesn't work very well you're used to it. To have enough energy to move away from that means that something serious had to happen. Maybe someone's client fired them because they were disorganized. That's a serious moment and they felt like, “Man I got to get organized not just because I want to get organized because I want to write a book about it, but because a client left me and I lost 30 grand. That is a big deal so that's when I started thinking about getting organized”, and then you can start questioning into that like, “Oh interesting. What were you doing before?”
“I was disorganized because I was using email and this and that and there was no place for a client to go see the project schedule and that kind of stuff”, and then you start digging into those reasons and that's how they came upon Basecamp, so I think that's important. Also, if a customer leaves you if you can manage to talk to them later about why they left you can again get into their situation. They left because of a situation. Everything is situational. What was the event that caused someone to leave? And then you can understand how to improve your project or your product on those dimensions and make it better. Those were the moments and you only need one or two or three customers to start talking to people like that. You don't need thousands or tens of thousands.
What kind of designer are you?
Gosh I don't even know what that means.
I go to KnowYourCompany.com. That's not something that would be on Dribbble.
Right. (laughs) It should be though. I'd love for there to be a Dribbble for paragraphs. I've been thinking about this for a long time. Great sentences. Great paragraphs. I've been meaning to do a post about this. I'll do this maybe next week now. Not launch something, but I'll write something about this.
We talked about it last time you was on the show, ‘Why copy is design’.
When approach design I don't think of it as writing or visuals. To me it's just communication. I need to get a message to somebody. I need to speak to them in a way that they can understand and they can resonate with and if that means in the case of Know Your Company it's a story. This is me. Is this you too? Words are a really good way to get that across. In other cases it's more visual and so I'll take a more visual approach, but I don't start from the perspective of visual design versus words. I start from what am I trying to communicate and then I figure out the best way to do that and sometimes it's one or the other. Sometimes it's a hybrid, usually a hybrid of some sort and take it from there. That's how I approach design. I don't think of it any other way.
Even using the Georgia font as well.
Yeah I mean it's a letter. That's a good example. I meant this to feel like a letter and it is a letter. It's a letter to anyone who is willing to read it who finds themselves in the situation that I'm in. I try to make it more letter like in that way, but it's a minor detail. I looked at it in a few different fonts and everything felt too fussy, too considered, you know what I mean. It felt too slick and I just wanted it to be a letter and so I tried to go back to a standard font that was as letter like as possible and that's what I did.
That's deliberate right?
You’ve kept it unfancy, if that's a word.
It's all deliberate and by the way I am really getting sick of the fanciness out there. I think that things are about to turn. I think there's too many fancy things going on. I think so many of these websites look the same again. Big huge image across the top, parallax scrolling, a big picture with a little bit of a text to the left of it and then you scroll down then to the pictures to the left or to the right and there's text in the left. It's very formulaic and I think everything is getting so fancy again and even the words. The words are like everything is artisanal and everything is craftsmanship and everything is beautiful.
It's not right. It's fine, but I think people really resonate with real and raw a lot more then they resonate with slick and let's say fancy or something like that. Next year, we're redesigning Basecamp.com right now and I'm really focusing and trying to push everyone in the company towards thinking about real and raw a lot more than trying to be slick and fancy. I think people relate to it better and I think it's also a great differentiator when everything else is going in the super slick, super precious like everything is so beautiful and so carefully considered and everything is so carefully considered and it's like come on we wouldn't talk like that to a person. Why are we talking that way on a website? I just want to get back to talking to people like you would normally talk to people and I think people relate to that better. We're making a big push in that direction.
You don't think people will appreciate the effort. The impression is they spent so much time in the design they must be serious about their product.
I think people do appreciate that and I appreciate that, but I don't think you need to hit people over the head with it. I think you can communicate that in other ways. There's a product that just came out which I think is a great product. It really looks great. It's Pencil by Paper Fifty Three.
I've seen that.
I bought one. I ordered one. Love the idea. I use paper a lot. I use a different stylus right now. I love the idea you can flip it over and use an eraser and the whole thing. I love the way it works. It looks like a great product, but their site is so precious. It's like the pen is crafted from a single piece of sustainable walnut. “Because it's made of walnut it will take on unique character like no two pens are the same.” Of course, it's made of wood. Why do we need to get into this “Like it will age gracefully”. It's a piece of wood. Can't we just say it's made of walnut. Why do we need to go so overboard and explain what it means to be a piece of walnut and where the walnut came from.
All this stuff I get it, but reading that I feel like it's so overblown and overdone that while it might work for them that might be their brand and that might be fine I'm seeing this so often that these things are losing meaning and I find that just generally unfortunate. I don't think you need to try so hard. Just talk to people. Even with product demos I think everyone's videos are starting to look the same. They all have a similar music track behind them. They're all very sort of hipster styled up. It's like what if you're just at a desk showing someone how something works. Like, “Hey man we made this thing I'm really excited about it, let me show you how it works. This is what it looks like and this is how you use it and look what I can make with it”, as if you were sitting next to someone.
If you were sitting next to someone you would never tell this big ornate story. You would just show them the thing. Maybe you would tell a little bit of a story as you're using it, but I want to get back to what it's like to sit next to someone, a friend of yours or someone you want to show something to and not get technical, but just be real with them and show them the thing and show your excitement through that thing without having to go so overboard in design and language and all this crazy stuff that's going on. Anyway this is just my take on it, but we're going to try and push more in that direction that it's really easy to feel like you need to go up to this other bar that's been created which is like hipster, super slick, whatever, and I don't think a lot of people relate to that. I think a lot of people are basically trying to be Apple and Apple is really good at being Apple and you should be really good at what you are, not what Apple is. I think that's what it comes down to.
Finding your voice.
Yeah finding your voice and who you are and if you think you're the second coming of Apple or whatever then you act like Apple, but you don't have to be like Apple, but I feel like everyone feels like they have to be and I think that's unfortunate.
I think a lot of people will follow suit. Everybody seems to copy what you guys are doing. Does that annoy you?
No, I think that's less true then it used to be. I think it certainly used to be more true, but I think we're not so cool anymore which I like. I like that we're not the cool kids on the block anymore.
You think so.
I feel like we're less cool certainly yeah definitely because there's a lot of really cool stuff going on and it's great and I'm glad there is more cool stuff, but I like being a little bit more in the shadows and just focusing on what we do best and sort of having impact by delivering great stuff to customers rather than trying to be the spokespeople for a specific industry or whatever like we kind of used to be. A lot of people still contact us and look up to us and like our books and like our products and all that stuff, but I feel like there's other companies that people look at now and take the lead from which is fine.
Give me an example, which companies are you talking about?
I think Square is a good example and they do great work, but Square is also a derivative of Apple. It's very clearly influenced by Apple and their aesthetic and their ideas which is obviously if you're going to be inspired by someone Apple is a good place to be inspired by. I'm inspired by a lot of things Apple does, too, but I think a lot of people look to them. I think a lot of people look to whoever is doing interesting stuff on mobile these days. I don't feel like the web is as influential in terms of design as it used to be and we're certainly still more web focused although we're making some pretty big inroads on mobile too. I think more of the interest is on people who are doing the really interesting iOS apps and Android apps. People are talking about that as leading their design more-so then pointing to web apps as design leaders these days.
You guys had a web app, right, where you could sort of create groups?
Yeah Breeze it was called.
Breeze that's it.
We launched that and we killed it about three months later. We picked up a thousand customers. They paid us 10 bucks a month so it was 10 grand, but we found that we weren't as excited about the product as we thought we would be and we didn't have anywhere to take it and the pricing model didn't pan out.
It was solving a problem though?
It was, but what we realized was that we hadn't launched a new product in a while and we forgot that when you launch something new you've got to get behind it. You've got to be behind that thing. You've got to be doing nothing else but talking about that thing. You've got to be out there promoting that thing and referencing that thing and we sort of launched it and then moved on and because of that it wasn't something that we were talking much about and so it didn't get a lot of exposure.
It was going to grow, but incredibly slowly and we just decided that it was an experiment and it didn't really work and that's fine. We refunded everybody's money so we gave everybody their money back so there were no hard feelings and that was that. We exported everyone's data and gave it back to them. What was interesting about that is that that experiment led me to thinking about pricing which is what Know Your Company mostly is, but it's at a much larger scale. It's a minimum of $2,500 rather than $10. Absolutely it can work. I just think that we got carried away with the $10 one time price point and didn't think enough about what it was going to take to make that actually work.
I think you've touched on something really important because I don't know if you've noticed, but there's this trend of web development agencies sort of trying to copy what you guys did which is move into products and I know you guys give the example that you only spent 10 hours a week on Basecamp or David only spent 10 hours a week or whatever, but you still had your clients.
Now you you've just said that it requires much more than that. It requires 110% of everything to make that product successful. It's not just something you can build on a Friday or a weekend and then hopefully it will get traction.
I don't think it's about necessarily 110%. I think what it is about is making a concerted effort to continue to improve and promote that product. With Breeze we sort of put it out there and let it be and then turned our back and did other things. That to me isn't the way to do it. What we did at Basecamp was we launched Basecamp and we got a little bit of traction and we had a whole list of things we wanted to do that we didn't launch with so we had a lot of extra work we knew we wanted to put into it and we were using it ourselves so we were constantly improving it for ourselves and that helped to gain traction because people saw that there was momentum behind it, that there was life behind it, that we were using it and we were talking about it.
Once we launched Breeze though we stopped talking about it and didn't put any more time in doing it and we weren't using it ourselves so I think that's the difference. It's not about 110%. It's about you got to stay behind it and you got to have momentum and you got to continue to improve it and continue to talk about it and continue to use it so you see where it's weak and so you know how to make it stronger. If you just launch something and leave it alone that's not going to work probably. You need to be more committed to it then that, but it doesn't need to be 100% of your time. It just needs to be an important thing.
Yeah continuous, exactly.
You know how we talked about this issue of everything looking the same so much so that there's no more character anymore. It's just one whitewash almost in the design community. Where can designers get inspiration because this morning I was trying to get inspiration and what you said just totally resonates with me that everything just looks the same.
I would say don't look at other software. I think that that's the wrong place to look for inspiration. The reason why so many things look alike is because other designers look to each other for inspiration and they don't look beyond that so for me if I'm stuck I go take a walk. I go take a walk in the woods or I go take a walk outside or I go look at a building or I go read a book that has nothing to do with my field or I go to a restaurant. I look at the interiors in a restaurant or I look at the menu and I order something new.
I just try and shake something up in me and be exposed to other things that are way outside of my area. I think that's where it's going to come from. I don't think it's going to come from looking at a product that's similar to yours or even that's in the same realm. I think it's looking at something completely differently.
Don't you think that's too abstract though?
It is abstract. But I can't tell you where to go. I can't be like go outside, take a right, and take 12 steps and you'll find inspiration. I can't do that obviously, but I do think that it's important to get a change of scenery and to look at other things. If you do want something specific and you want to build an interface what are the things that are interfaces. Cars are interfaces. You sit in a car. There's a dashboard. There's inputs, there's a wheel, there's knobs, there's buttons. Go test drive a car or go to a car site a website and look at pictures of interiors of cars or what else is an interface.
A building is an interface. You walk into a building and you have to find your way. How do they do that? What's the signage like. How do you know where to go. Things like that. You can stay within a very broad category like an interface, but if you're building an iPhone app don't look at other iPhone apps for inspiration because you're going to end up building what they've already built and that's not very inspiring ultimately, that's just like copying and you're not going to be original that way. For example like business plans. I don't know how to price this thing. What else is priced? How do people buy things outside of the software world and think about that a little bit. Just try and broaden your horizons a bit and be introduced to different industries doing things in different ways and you'll probably find something that you didn't expect.
Coming to a close now touching on this point of taking your time to really learn. What's the main thing that I need to take into account?
I think there's a lot of people already doing what they know and I think a lot of them might benefit from trying to do something they don't know and moving away from trying to remove the human side of everything and remove every human interaction and instead try to replace things with human interactions. I'll give you one more example something we're trying with Basecamp right now.
We're doing a few different experiments, but one thing we're doing is we're taking 500 random customers in a given day and introducing those 500 customers to somebody who works at 37signals and we're doing it through a slight bit of automation, but we're making the introduction part of the sign up process so when you sign up if you happen to be one of these people on the test and you sign up for Basecamp you don't just get Basecamp you actually get Basecamp and you get a person so you see someone's picture, you get to know a little about them, you see their name, you know where they live, you get their email address, maybe you get their phone number and you say, “Hey this is your guide for the next 60 days. If you have any questions just hit them up.”
It's not about like an account rep, it's not this thing that happens after the fact where you sign up and then you get this automated email three days later. It's actually introducing you to a person showing you the persons face, getting to know who they are, where they live, maybe showing a video of them so you get a sense that there are people behind this thing. What we're trying to do and one of the things that I'm curious about and we're running a test right now and we won't know the results for about 30 more days, but are the people who are being introduced to somebody are they more likely to ultimately buy the product than somebody who wasn't introduced to somebody even if they had no interaction with this person whatsoever just the act of seeing somebody and seeing a name and knowing there's a human being behind the software will that act alone change conversion rates.
We'll know in about 30 days because we started this 30 days ago and we have a 60 day free trial so we'll find out. My hunch is that absolutely yes. It might take another year of us tweaking the way the introduction is made and the things that we include in the introduction and how all that works, but I absolutely believe that showing the people behind the product as part of this product. I've been thinking a lot lately that when you buy something. Think about when you buy stuff sometimes, you decide where to buy something because of the people who sell it. There's a store down the street from me. I shop at the small grocery store down the street from me because I like the owner and I like the people behind the counter. I want to give them my business because I like the people. The product is identical to someone else's product and they're selling the same things that other people sell, but I like buying it from these people.
In software the people is so far removed from the product it's like it's not even there so I want to see what we can do by bringing the people into the product because I believe that people will want to buy things from people they respect or they admire or they like or they can relate to, it's not just about the product itself, it's also about the people behind the scene so we're trying that as an experiment so that to me is an example of getting back to your thing is that if you want to take that route you can do that and see what happens. I think it's an advantageous route and you can stop automating stuff and instead inject some humanity into things and see what happens.