A conversation with the co-founder of 37signals.

Question: Why has Silicon Valley drifted so far from the fundamental tenets of business?

Jason Fried: I don’t know how it happens, but I think fundamentally, it’s all about venture capital. The more money that’s available and the more the culture is about going out and raising money, and the more it just happens and it just feeds on itself. If the venture capitalists weren’t there, there would be a lot of empty companies that wouldn’t be there. And that probably would be better. Not in every case, but in most cases. I think it’s better when you are forced as an entrepreneur to bootstrap. And here’s the fundamental reason why. You have two companies, one that’s bootstrapped, one that is self-funded, and one that’s got venture capital money in the bank. The primary difference is this, on day one, a bootstrap company has to make money. On day one, a funded company has to spend money. They have money in the bank to spend. That’s their first task is to spend. To hire, to get a great beautiful office, to do all that stuff. That’s what they have to do, they have to spend money.

Unlike a bootstrap company that doesn’t have money to spend, they have to make money first. And I think that’s the right instinct for an entrepreneur to start out with is the idea that, “I’ve got to make money.” That’s the right thing. And I think what happens is, especially in Silicon Valley where there’s a lot of spare money around, people are handing it out essentially, that you don’t have the instinct. The instinct isn’t built to make money; the instinct is built to spend money. And then that kind of just perpetuates itself, and people don’t have to make money because other people are paying for things. Until the money runs out and then you’re kind of screwed and then it’s too late because you don’t have the skills to make money. So, that I think is the problem with Silicon Valley.

Question: What distinguishes well-funded start-ups from “bootstrapped companies?

Jason Fried: Well, I think the thing is, is that not having money, or having to make your own forces you to make really smart decisions and good decisions and makes you think about stuff. For example, if you win the lottery, you’re probably not going to make good decisions about how to spend your money. You’ve got a lot of it, so yeah, I’ll buy a house, I’ll buy a boat, I’ll buy this stuff. You’re not actually making decisions, you’re just spending money. But when you have very limited resources, you’re forced into making decisions that make sense. Does it make sense for us to spend this money on marketing? We have it, should we just blow it. Or, are we not going to get a return on it. And you start to think about these things and you start to find yourself wondering, does it make sense to hire 20 people, or should we hire two. We can afford to hire two, so let’s hire two really good people, that’s all we can do. And when you’re forced into those constraints, you just make better decisions.

I always look at, this is probably a weird analogy, but I tend to look at prisoners in jail, how they make these weapons where they’ll take like a pen and a piece of tape and a comb and they make, they can like break out of prison with that. But if someone had all the money in the world to break out of prison and they would buy a jackhammer and they would buy chisels and stuff, they’d make too much noise, they’d attract too much attention and it wouldn’t work. They’d have all the resources, but they’d spend them and wouldn’t spend them wisely. But the person who has no resources has to make something that’s very, very simple and that is just as effective. And that’s sort of the mentality I think that you see in bootstrap companies. We don’t have the resources, we’ve got to make something that makes sense and we only have one shot at it. So, we’re going to do a good job. And just do exactly what we need and not all the things that we could do.

Question: What mistakes might you have made had you been better funded?

Jason Fried: Yeah. I think we would have probably hired a lot of people if we had a lot of money. That’s just something you tended to do in the late ‘90’s. I heard of so many companies say, we’re going to staff up. And it’s the stupidest, fucking thing to say. Staff up? We’re going to staff – well how about we’re going to hire somebody that we need? What’s this idea of staffing up?

There was this thing going on in the ‘90’s. I remember people saying we’re going to staff up to 100. Where people are saying, “Our company is this big,” when they’re talking about “this big” they’re talking about employees. And it is very easy to get carried away with that. And thinking that you’re inferior unless you have a lot of employees. So, I think that’s something we probably would have done. We probably wouldn’t have put money into marketing that would have been a waste of money, we probably wouldn’t have put a ton of money into PR; it would have been a waste of money. And it wouldn’t have forced us to be creative about how to get the word out, which is something that we’ve learned how to do over the past ten years without having to spend money.

So, maybe done some things, but I think the real thing is we would have missed learning the important lessons. That’s what I think we would have suffered most over.

Question: Can any company grow in the way 37signals has?

Jason Fried: Yeah, well my feeling is like, stuff that I like to talk about is really about my business, my industry. So, my ideas don’t necessarily make sense for a restaurant, or for bowling, for example. But their ideas don’t make sense for me either. So, they shouldn’t be giving me advice and I shouldn’t be giving them advice.

What I think though, in the software business, which is the business we’re in, or a service business, which a business a lot of people are in outside of the technology world where you don’t have to have a factory, you don’t have to have raw materials, you don’t have to have machinery, you don’t have all these upfront costs which would typically require you to raise capital. You don’t have those costs, they you shouldn’t get the money that you might need to spend to buy those things. In the software business, you need a computer and an internet connection. It’s like, a couple of grand to get started.

But if I’m building a factory and I’m making widgets, I might need to raise hundreds of thousands, or a few million bucks to make that big capital expenditure. So, I think if you don’t have the raw capital expenditure requirements, then you should not be raising money up front.

Question: What is wrong with free content?

Jason Fried: You know, you walk into a bakery and get a free sample because they want to sell you a muffin. That makes sense. But you go online and use a website for free and there’s nothing to sell you, that doesn’t make sense. So, I think free is a great model as long as you have something to sell also. Free should be an incentive. We like to say that you could be emulating drug dealers, basically. You know, drug dealers give you a little sprinkle or a little taste and get you hooked, and then you buy from them. They don’t just give you more free drugs all day, you buy something from them. So, we’re a big fan of emulating drug dealers, basically, or bakeries. That might be a better way to put it.

But anyway, that model works. But the open source world, that’s kind of a different thing. There are some companies that opens source software and then sell support on top of it, so that’s one way to make money off of open source. For us, we think that the opens source thing works for us because, first of all, the product is better and we get to use Rails, and so if other people are improving it, that’s good for us, we can use that in our pay products. Secondly, whenever people mention Rails, they mention 37signals, they mention Basecamp or High Rise, or us in some way. And that indirectly benefits us as well. So, that’s kind of the guiding principle for us. So, some stuff is free, most stuff is pay.

Question: What is your outlook on the ad model?

Jason Fried: Well ads do make sense in some cases, but people look at Google and they go, “Well, Google is making billions on ads, they’re putting ads next to search results, like we should put ads next to everything too because it worked for Google.” Well it works for Google because, if you think about it, if you’re going to Google to search for something, you want to find something, then advertisers are pitching their wares that are relevant, it makes sense because I’m looking to find something and they have something for me that I could find and use. That makes sense. But throwing ads up along side content that doesn’t – I’m not going in there to find and search to buy something. I’m just going in there to read an article, that doesn’t work at all. So, you see a lot of companies in software like – if I’m using software to do something, I’m not using software to do something to find an ad, I’m using software to do something to do something. So, it works for Google’s model because that’s what I’m going in there to do, to discover, to learn, to purchase something.

But in most cases, if that’s not the case I don’t think ads work all that well unless you have a tremendous amount of traffic and that’s really, really hard. There’s also a problem with a disconnect between ads and users. My belief is that you can build a better business if the people that use your product are the same people who pay for your product. In the ad supported model, the people who pay for your product are not people who use it. People paid for the advertisers, and the people who use it are the users, so there’s a disconnect. So, who are you building it for? Who do you really have to make happy.

In many cases, it ends up being the advertisers which is why you see in a lot of news sites especially, there are ads everywhere. And that’s a pretty crappy experience, I think. So, I’m not a big fan of that model. I think that some people could make it work, but I’m not a big fan of it and I think the default idea of, we’ll just put ads on it. That’s what will support it, we’ll just put ads on it is a terrible idea. And it’s much, much, much easier to get people to pay for your product or your content, or whatever than it is to throw ads up.

And the last thing I will say about this is putting a price on something forces you to make it good, and that is like, those are the constraints you need on you; a force that forces you to make something good. Because if something is free and ad supported, it doesn’t have to be that good, it’s free. I’ll use it, it’s free. I don’t care. But the moment I start paying you for it, that’s the moment it forces you to be good and give me a service that’s worth paying for and that to me is the right pressure to have on a company.

Question: What companies are now deriving value in interesting ways?

Jason Fried: I like some of the more interesting. Like, one of the things I like today is, there is a company called Twilio, I think that’s how it is pronounced. T-W-I-L-I-O. And they are basically a new type of company that’s selling, I don’t want to get technical, but selling API access. Basically what they let you do is they let you create conference calls and/or voice mail systems, or phone trees with really simple programming language. And what they do is they sit in between you. So, if I’m a company who wants to make a conference calling system, I might use their technology, and then I might pay per minute for their technology instead of subscribing to them on a monthly basis, or whatever, I pay as I go. And I think that model is pretty interesting. It’s similar to the way Amazon is doing with the Amazon Web Services, where I can rent a server by the minute, instead of having to buy a server or pay upfront. So, I like this like pay per true use thing. I like that model a lot. So, I think that’s kind of a cool innovation that’s coming up right now and I think that those are interesting companies to watch.

Question: What is your take on the typical workplace?

Jason Fried: Yeah, my feeling is that the modern workplace is structured completely wrong. It’s really optimized for interruptions. And interruptions are the enemy of work. They are the enemy of productivity, they are the enemy of creativity, they are the enemy of everything. But that’s what the modern workplace is all about, it’s interruptions. Everyone’s calling meetings all the time, everyone’s screaming people’s names across the thing, there’s phones ringing all the time. People are walking around. It’s all about interruptions. And people go to work today, and then they end up doing most of their real work after work, or on the weekends. So, people are working longer hours, people are tired – I’m working 50-60 hours this week. It’s not that there’s 50 or 60 hours worth of work to do, it’s because you don’t work at work anymore. You go to work to get interrupted.

What happens is, is that you show up at work and you sit down and you don’t just immediately begin working, like you have to roll into work. You have to sort of get into a zone, just like you don’t just go to sleep, like you lay down and you go to sleep. You go to work too. But then you know, 45 minutes in, there’s a meeting. And so, now you don’t have a work day anymore, you have like this work moment that was only 45 minutes. And it’s not really 45 minutes, it’s more like 20 minutes, because it takes some time to get into it and then you’ve got to get out of it and you’ve got to go to a meeting.

Then when the meeting’s over, you’re probably pissed off anyway because it was a waste of time and then the meeting’s over and you don’t just go right back to work again, you got to kind of slowly get back into work. And then there’s a conference call, and then someone calls your name, “Hey, come a check this out. Come over here.” And like before you know it, it’s 4:00 and you’ve got nothing done today. And this is what’s happening all over corporate America right now. Everybody I know, I don’t care what business they’re in. Like when I talk to them about this, it’s like “Yeah, that’s my life.” Like, that is my life, and it’s wrong.

And so I think that has to change. If people want to get things done, they’ve got to get rid of interruptions. And so I think that’s something we’re focused on, is trying to remove every possible interruption from people’s day. So they have longer and longer periods of uninterrupted time to actually get work done. And so, our whole workplace, whatever the word you want to use, the office, workplace, although we’re kind of virtual anyways; it’s structured around removing interruptions. And one of the best ways you can do this is to shift your collaboration between people to more passive things. Using our products or someone else’s products. Things that you can put aside when I’m busy. So, if I’m busy, I don’t have to look at Base Camp, I don’t have to check email, I don’t have to check IM. I can put those things aside and do my work. And then when I’m done with my work and I need a break, I can go check these things out.

But if someone’s calling my name, or tapping on my shoulder, or knocking on my door, I can’t ignore those things. I can quit a program, but I can’t quit someone knocking on my door. I can’t quit someone calling my name, or someone ringing me on the phone. So, we try and, even though we might be sitting right across from each other, we don’t talk to each other, hardly at all during the day. Even though we’re right there, we’ll use instant messaging, or email, and if someone doesn’t respond, it means they’re busy. And they probably put that window away. Instead of calling, “Hey Jason, Jason, Jason” until they respond, that’s interrupting somebody; that doesn’t work and that’s how most workplaces are.

And managers are the biggest problem because their whole world is built around interruption. That’s what they do. Management means interrupting. Hey, what’s going on? How’s this going? Let me call a meeting because that’s what I do all day, I call meetings. And so, managers are the real problems here and that’s got to change too. So, as managers of our company, we don’t really manage people, but we prefer people to be managers of one. Let them just figure things out on their own, and if they need our help, they can ask us for it instead of us always constantly asking them if they need help and getting in their way. So, we’re all about getting rid of interruptions. And I think that if companies were more focused on getting rid of interruptions, they would get a whole lot more work done.

Question: How does your company avoid these distractions?

Jason Fried: So, this isn’t really a plug, but we use our product called Camp Fire, which is a real time chat tool. That is our office. Camp fire is our office, and that’s a web based chat tool where there’s a persistent chat room open all the time. Anyone who has a question for anyone else in the company posts it there and in real time, everyone else can see it if they’re looking at it. But if they’re busy, they just don’t pay attention. And then if non one responds, then that means someone is busy. Not like, I’m going to keep calling their name until they turn around. That’s what it’s like in most offices. Or you ring someone and they’re not there and so you call their name, and they’re not there, so you go to their office and you bang on their door. If someone doesn’t respond in Camp Fire, it means they’re busy. And unless it’s a true emergency, where you really need an answer right now, then you just let them be and they’ll get back to you in three hours. And the truth of the matter is, there are almost no true emergencies in business. Everything can wait a few hours. Everything can wait a day. It’s not a big deal if you get back to me later in the day for me to know right now.

And the other thing about interruptions and calling people’s names, and ringing them on the phone and stuff, it’s actually really an arrogant sort of move because you’re saying that whatever I have to ask you is more important than what you’re doing. Because I’m going to stop you from doing what you are doing for me to ask you this questions that probably doesn’t matter anyway. So, we’re very cognizant of this and we make sure that we only ping people, that’s what we call it, digitally and in ways that will not really get in their way if they’re really busy.

And that’s not always the case, but that’s really what we try to do. And use Camp Fire and use Base Camp and use High Rise and all our products. Other people’s products this well as well, but we just use our own because we built them for ourselves and we use them and they’re free for us.

Question: Does your office have a hierarchy?

Jason Fried: Yeah. So, we don’t really have hierarchy, technically. I mean, ultimately the buck stops with me, but like it doesn’t get to that. We really let people make their own decisions and we give them feedback on those decisions and help them learn and make better decisions. And we have some small teams. People work in teams of three, but there are really no true leader in those teams necessarily. It’s like, the leader is the product. Like the product is what leads you. It’s got to be good. Quality is the leader and everyone has to understand that that’s what this is all about. We’re making good products here. We’re not making your idea, or my idea, we’re making a product that useful for our customers. So, that’s kind of what guides everything. And it’s surprisingly works pretty well.

We have like, big visions for things, and we all share common points of view on like what’s important, but ultimately it’s quality, it’s the product, it’s usefulness, it’s clarity. Those are the things that lead us on the right direction.

Question: What is your take on some of your competitors, like Google Wave?

Jason Fried: Well, so I’ve used Wave a little bit. I don’t know a whole lot about it. I found it initially, very confusing. But to me, Wave is not really the execution of this first version, it’s the technology behind it and I think the technology is fantastic. And I like that Google has opened it up for other people. Like we could use Wave stuff in our products, someone else could use Wave stuff in their products. But really, what it is, is it’s all about real time, and real time is kind of here and now, and that’s kind of what’s going on right now. And that’s interesting.

But we’re not like jumping into the real time thing because I want to see how it shakes out a little bit because I think it might be a little bit overblown. So, I’ll be curious to see how all that shakes out.

But yeah, Google is a real competitor as are hundreds of other companies. I’m a lot more afraid of the small guy in the garage who is going to come out of nowhere with something that beats us then the big guys. But you know what? We don’t worry about the competition because what can I do about them? I can’t – If Google’s going to do something, what am I gonna do? Like beat Google at their game? No, you have to beat Google at our game, which is delivering a product that’s really, really good for a certain niche that we really know a lot about and we can focus on, and we can find customers that agree with us.

In order for Google to successful, they have to have billions of people who agree with them. We only have to have 10,000, 20,000, 30,000, 50,000. So, we – I’m not afraid of any one company because of that. There’s a lot of small groups of 10, 20, 50,000 people who we could attract. And that’s all that really matters to me. Our level, our qualifiers for success is much different than Google’s. But a small guy in the garage, like he could probably hurt us. So, I’m kind of, I’m not paying attention to them and I can’t do anything about them either, but it’s interesting to keep an eye on them.

But fundamentally I think companies are far too focused on competition and not focused enough on your own products. And they’re always trying to follow everybody else, and you end up in this cold war. This is the problem with competition, you end up on this cold war where everyone is trying to outdo each other and this is what happens in the software world where one company has a feature, and then you’ve got to come out with a new feature because they have it. And then you come out with something, and then they have to have it. And everyone is trying to outdo each other. We try to under do everybody else. We try to make the simplest possible thing that we can do that solves a real problem. We’re always trying to be the simplest option on the market. And if we can always be the simplest option, I think we’re in a really, really, really good position. I think if you’re trying to be the most complicated option, you’re in deep trouble. So, as long as we can stay simpler than everybody else, I’m pretty happy.

Question: What issues have you confronted while developing your products?

Jason Fried: The product we built was Base Camp, and that was all about solving a real problem we had which was project management with – or project collaboration with clients. We had clients as a web design firm, and we found that most of the project management tools that existed at the time were all solving the wrong problems. They were solving the problems about control. And to us project management isn’t control, it’s about communication. And so we wanted to build a tool that allowed us to communicate with our clients; that where project go wrong is that people don’t communicate. It’s not that there aren’t enough charts and graphs and statistics and numbers, it’s that there isn’t a place to communicate centrally. So, we built a tool that lets you communicate with your clients online in a central location, so you don’t have to send emails back and forth and you have to keep all the discussions centralized. Everyone knows where everything’s going on. You can share files centrally, you can share to do lists centrally, and you can share a simple calendar. Basically a few simple tools that let you collaborate on projects. So, that was Base Camp. We had that problem, so we solved it.

The next major product we built was something called Backpack, which we found that Base Camp was actually – as simple as Base Camp was, it was too complicated for really simple things that didn’t require client collaboration, just like internal little mini projects and things like that and we built Backpack, which basically lets you take a whole project sort of, and put it on a single page. You can have a page of to do’s, a page of files, a page of communications and that sort of stuff. So we built Backpack. That was in 2005, I think.

The next major project was Campfire, which again we needed because we’re actually a virtual company. So, we have – although I hate that term, just we’re a company. We’re not virtual; we’re a company. Eight people in Chicago, eight people in the other cities around the world, at this time it was smaller. Maybe we had like 12 people or something total, but we’re spread out. And we needed a way to kind of talk to everybody all the time on a level playing field. We couldn’t have a really cool thing in Chicago because people would be left out who lived in Idaho, or North Carolina, or California, or New York who worked for us. So, we build Campfire which was this persistent chat room that was always open for a group where you can share files in real time, we can have discussions in real time, share computer code in real time, all the stuff. We have transcripts so we can jump back, who said what on Thursday, who said what three months ago. Search the transcripts for this link that we all shared and whatever. So, we built that to solve that problem.

And last, the last product we built is a product called High Rise which is a tool that we built, which is really taking off right now, which is sort of in the CRM world, which is Customer Relationship Management, which is too confusing to begin with, those products are way too complicated. Salesforce.com is sort of the big product in that area. We looked at those because we needed to start – we were talking to a lot of people in the press and we needed a way to keep track of them. Like, who we talked to, when we talked to them, what we said, when to follow-up next, what they said. And we looked at some of the CRM tools, and they were just so complicated and hard to use and like overblown. And so we built High Rise, which basically let’s you keep track of who you talked to, what they said, what you said, and what to do next.

So, I’d make a page for you, for example, and after this interview is done, I’ll go to this page, and this page has your contact information in it, and a bit text field and I can enter notes. Had this conversation, had this interview, we talked about this, that and the other thing. So, when you and I talk again in two weeks, or in two years, or 20 years, I can go back and review the previous conversations we had so I know, so I’m up-to-date and prepared to talk to you next time. What I was finding out was that I would go talk to somebody and I’d talked to them three weeks ago and I’d forgotten what I had said and what they said. So, I felt like I was starting over every time I talked to somebody, and that’s not way to do business. So, this is a great way to keep track of the history of conversations.

But the key point is we’re solving problems that we have, and what we’re finding is that, especially because of the internet today, we can reach so many people who have the same kind of problems. We couldn’t do this 20 years ago where software was sold on a shelf, and the shelf space was based on your market share, and if you didn’t have that, you’re over. Today, the internet is the biggest shelf there is. And you can reach anybody you need to reach and you can find so many like-minded companies and people that if you can find 20, or 30, or 40, or 50,000 people who will pay you $50 a month, do the math. Like that’s a really good revenue stream. And if you have multiple products like that, you’re making serious, serious cash. And you can be a small company doing this.

Question: Can you explain Ruby on Rails?

Jason Fried: So, Ruby on Rails, briefly. And I’m not a technical person, so I’m not – no one’s going to get confused by this because I can’t confuse myself here. Ruby is actually a program language. Just like something like PHP, or Java, people may have heard of these things. Rails is this thing that sits on top of Ruby and makes it really easy to write web based applications. And we built the Rails part. Ruby already existed. It’s actually a language out of Japan. So, Ruby on Rails is this thing that we built that sits on top of Ruby. Anyway, we built it by accident. Sort of like **** to early, or we didn’t set out the build Ruby on Rails, we set out to build Basecamp which was our first product, which is a product management tool. And we used the language Ruby to do that. But as we were building it, we realize there is probably things we would use over and over and over for building other products.

And so, we found out that after we built Basecamp, we could extract some of the stuff we built with Basecamp and reuse it again for another product, or something else. And so we extracted Ruby on Rails. We extracted this programming framework from something we already made and then we polished it up a little bit in Open Sources because we believe that infrastructure is something that should be open source, for the most part. That the real benefits of opens source makes sense in the infrastructure world because you have tons of people with lots of different problems that can solve these problems better than you can and can contribute code back and that whole thing.

So, we’re not an infrastructure company, so it doesn’t make sense for us to make money on infrastructure. We open sourced it and because of that, it’s way better, miles better than we could have ever made it ourselves. So, that definitely made sense for us.

Question: Do you see a successor to Rails on the horizon?

Jason Fried: Well, there’s a lot of really great frameworks out there and there’s a lot of really great languages. A lot of people like Jango, which is built on top of Python, and there’s some other Ruby frameworks and stuff, but – and Rails III is coming out soon. Rails III is a huge improvement from what I understand. I’m not a programmer myself, but my guys are. And they are really pumped about Rails III. So, Rails III improves performance and makes a lot of things easier that used to be sort of difficult. So, Rails if very alive and very kicking and right now it’s definitely the leader in its area. And I think it’s only going to get bigger and bigger, and bigger.

But that’s not the goal for Rails. The goal for Rails is not to be Enterprise and accepted around the world. We could give a shit who uses Rails. I don’t care. But if it works for you, use it. That’s what matters, and if it works for us, we’re going to use it. It’s not like a pissing match with another language, or who’s first or second, but we love it, and a lot of people love it, and that’s all that really matters.

Question: In what areas might 37signals expand into next?

Jason Fried: A couple of things that I see. I think customer service software, like to manage tickets and customer questions and stuff. There’s some pretty decent one out there, but I still feel like they are solving the wrong problems, so that’s an area we’d like to actually get into. So, that’s an area that I think is going to be growing. One other thing that is really, really hard to do is to hire people. To go through that process. If we put a job ad up, we say we’re looking for a new designer. We’ll literally get hundreds and hundreds of resumes. At that point, you’re screwed. I don’t know how to do through hundreds of resumes. I can’t collaborate on these resumes with other people in my company. I can’t have my designers look at these resumes and leave their feedback on them, so that’s a kind of really – there’s a few tools out there that sort of helps you through that process, but that’s kind of a mess too. So. That’s another area that I think can be better.

One of the things I’d love to reinvent and I have some ideas around it, but I don’t think we’ll ever do it is the spreadsheet. So, I see a lot of people doing spreadsheets today, but they’re like online versions of the offline thing. This whole grid thing is totally overkill for a very, very simple things. So, I have in my head this idea of reinventing the spreadsheet idea. But that’s I don’t know that’s probably not something we’ll do because it’s a little bit outside the realm of what we do. But I like the idea of improving customer service, interaction with people and I like the idea of making the hiring process simpler. And those sorts of things are areas that we would like to focus on.

Question: Are these ideas coming from personal experience, or are you accumulating feedback from the customer?

Jason Fried: We get feedback all the time, but these problems, the problems I just told you are the ones that we have. And that’s why we’re probably going to – we need solutions anyway. And this is the thing, if you need a solution anyway and you can’t find something, you’re going to build it, you might a well turn it into a product because other people need it too. So, the cool thing about building products for yourself, is that is sort of like it’s free to do it because you’re going to turn it into a product and sell it to other people. But even if no one uses it, like you needed it anyway, so it’s totally worth doing. And that’s one of the great things, and that’s what’s tricky about trying to guess what other people need is that if no one buys it, you’re left with this code that you won’t even use and it was a total waste of time. If no one uses our products for whatever reason, we still need them anyway. So, we’re left with something that works, and that makes sense.

Question: What role do you see cloud computing playing in the future of computing?

Jason Fried: So, cloud computing means a bunch of different things, but basically it means that the software you use isn’t on your own personal computer. It’s somewhere else, it could be anywhere. But you pretty much use it through a web browser or a mobile phone, or something. So, it’s all sort of – your data is stored somewhere else, the software that runs the service that you use is stored somewhere else. That’s pretty much what cloud computing is. And anyone who uses Gmail, or yahoo mail, an online bank. Like you’re using Stuff in the Cloud. You’re online bank isn’t on your own computer, you’re email stuff isn’t probably on your own computer. It’s in the clouds, that’s kind of what that means.

So, it’s a technical terms for something that’s not really a huge deal, but it’s kind of a big shift and I think that more and more companies and more and more consumers and people, or whatever – I don’t like the word consumers, people. Companies and people even though it’s all people really will be using more cloud based things because it makes sense. Who wants to have to deal with software? Installing it, troubleshooting it, if you get a new computer – I remember eight years ago, or something, I’d get a new computer and I’d have to take a day off from work to move all my software over, reinstall everything. Now, literally, I got a new IMac recently and I was up and running in like 20 minutes because almost everything I use is somewhere else. I don’t have software on my computer very much anymore. I have like Photoshop and maybe a couple of things and a tech center, and that’s pretty much it. I use Base Camp, I use Gmail, and I use all these other things that are just out there. And so that’s a great thing because it removes the technology from things. People don’t have to worry about being a tech person or an IT person. And that’s great, especially for small companies who don’t have an IT staff and don’t want to have an IT staff. They just want to have someone else do the technical stuff and you can just use the service. So, I think it’s great.

But not everything makes sense on the cloud either. Like, would Photoshop – I know there’s a web based version of Photoshop, but I don’t know why, I don’t know what the real advantage is. But things that are collaborative in nature, where you want to have one version of something. And maybe Photoshop this would make sense if you were working on something collaboratively, but like project management, your contacts all that stuff makes sense to have it in one place so you can get to it from any device at any time. That makes sense.

Question: How do you evaluate the security risks associated with cloud computing?

Jason Fried: So, I think there’s a bit of misperception about security. I think security is this perception thing more so than a reality thing. That’s not to say that security is not important or anything like that, it is important, but the idea that if you have something locally, it’s safer than if you have something out in the cloud. Like, I don’t buy that for a second and most people don’t back their computers up. Most people don’t do software patches on their operating system every day. Most people don’t have like –

a lot of people still don’t have password protected WiFi. There’s so many things that people don’t have at home that would make it really easy for someone who is motivated to get into their own home network, or own home computer and take stuff right off their computer. But because they have it locally, they think it’s safer, it’s just not safer. You’re data is much safer probably on Google servers, or on our servers, or on any one of many companies servers who are reputable, who take security very seriously, who have servers behind biometrically locks and have like the latest patches on everything, have intense hardcore firewalls to keep malicious people out, who encrypts stuff. I mean, people at home don’t do this and a lot of small businesses don’t do this. They’re server is under the desk, and the cleaning guy comes in and he could probable take the computer home with him if they wanted. That’s not secure, but they think it is because it’s under their desk and they can kick it and feel it, but that’s not secure.

So, I think that the cloud based computing with the reputable companies is significantly more secure than traditional desktop based computing. But it’s going to take people time to get over this and get used to it. Like, people are afraid of buying things online at one point, people were afraid of using online banks. People are afraid of a lot of things. But I’ll tell you what, you give your credit card to a waiter in a restaurant and they go into a back room with it. Like, they could be running copies, but if you buy something at Amazon, it’s pretty damned safe. Way safer than giving your credit card to somebody who you don’t know and then them going away with it. I mean, think about what that’s all about. But we’re comfortable with that because we’re used to it, but it’s not safer than buying something online.

So, it’s just a matter of being realistic about these fears. I think it’s a cultural shift that’s just going to take time

Question: What is your primary advice to entrepreneurs?

Jason Fried: The thing we always say is, half not half-assed. The idea is like, whatever you’re doing, cut it in half. If you’re thinking too big probably to start. Keep cutting things in half, otherwise it’s going to be half-assed. So, you’re going to do this big idea and you’re not going to do anything very well. You really ought to focus on really like, one thing and do it really, really, really well and focus on the basics. The basics are really where it’s at. You go to a hotel and they have fancy furniture everywhere and they’ve got a big screen TV in the room or whatever. But if the bed’s not comfortable, this hotel sucks. Right? If you fly in a plane and they’ve got the fancy WiFi in the plane or whatever, but the plane’s always two hours late, it sucks. Like you’ve got to get the basics right. You’ve got to get the bed right in the hotel, you’ve got to get the on time arrivals right in the airline business. You know, if the trains have to run on time, that sort of thing. Like if you’re in the interview business, you’ve got to do good interviews. Work on that first. That’s hard enough. The idea that you can solve that problem and solve 10 other problems at the same time is just a bad thing. So, I’m always telling people, cut, cut, cut. Get to the core, the real essence of what it is that you are doing and do a really good job at that. Focus on the basics. The basics are never going to go out of style. They’re not sexy, but they’re never going to go out of style.

Like you’ll be using a Post-It Note in 20 years. I promise you. But are you going to be using this new fangled note taker thing that – I don’t know, probably not. But you’ll be using Post-It Notes because they work and they’re essential and that sort of thing. So, you got to get your idea down to that simple essence. So that’s what I keep telling people.

Question: What prospects excite 37signals the most today?

Jason Fried: Well, you know, I’m not a big fan of looking out that far. So, like, why am I excited to get up tomorrow? Because I like the stuff I’m working on tomorrow. Not I like the stuff I’m working on in six months. But really, to me, it’s all about like what are you doing right now and tomorrow. And we’re still really pumped about the stuff we’re doing. We’ve got really cool ideas with our existing products to integrate them a little bit better to make them better. I’m really, really, really into polishing things these days. We talk about polish a lot of the business, so It’s easing the software world to keep adding new things. But I really like the idea of taking what we have and polishing it. Making it better. And that doesn’t mean making it shiny, like blingy, but like making it better and really optimizing and making things more efficient. I just love that process as well. So making something that took two minutes to do before and making it into a minute and 10 seconds is like really a satisfying thing for me. And there’s a lot of room for that.

So, I love that. I just love that small businesses don’t have to use crappy software anymore. So, I love being able to build software for them. And not take – like a lot of big companies, they take their big flagship product and like pull a bunch of shit out of it and then call it small business software, which is an insult to small businesses. So, I like to build stuff for them that they really need. And so I love that process and I get to meet them all the time and get to hear about how our products are changing their lives, which is really, really rewarding. So, I love that. And I love – the thing I’m really into right now is seeing my team grown. Not like grow in size, but everyone getting better. I love that. So, I love like the mentoring and the teaching side of it that I’m really into these days.

I’m doing a little bit less work on the products themselves personally and more mentoring and teaching and that sort of thing which is really, really rewarding as well. So, that’s the kind of stuff that’s really got me excited. And I’m really pumped about our new book, Rework, which will be out soon. Like that is something I cannot wait to get that book out because it’s got a lot of the ideas we talked about and a lot of other ideas – I don’t think they’re radical, but they’ll be seen as radical. And I love that. I love being able to shake things up. Not just for the shaking it up, but because I think these ideas are important and people should not take things so seriously and not make things so hard on themselves and that sort of thing. So I really want to get that message out there. There’s a lot of entrepreneurs that I meet are frustrated by how hard everything is, and I’m like, “What’s hard?” And they tell me what’s hard and I’m like, “you don’t have to do any of that stuff.” You don’t have to have these board meetings all the time. You don’t have to have meetings all the time. You don’t have to write plans all the time. You don’t have to think that far ahead all -- you don’t have to do that stuff.

So, I can’t wait to get that message out too; I’m really excited about that. So, those are the things that kind of keep me pumped up right now.

Recorded on: January 19, 2010