20VC Basecamp CEO Jason Fried on His Relationship To Risk, Money, Vulnerability and SelfDoubt, Fantasising About Being Fired, How To Optimise DecisionMaking and Minimising Regret

Abstract

Abstract

In a candid conversation on 20VC, Harry Stebbings explores the journey and philosophies of Jason Fried, co-founder and CEO of Basecamp. Fried shares the origin story of Basecamp, transitioning from a web design firm to a successful project management tool, and the evolution to a multi-product company with the launch of email client HEY. He delves into his personal relationship with money, pricing early projects to fulfill immediate wants rather than accumulating wealth, and his conservative investment strategy focused on supporting others rather than expecting returns. Fried also reflects on the challenges of leading a growing team, the importance of work-life balance, and the transformative impact of parenthood on his perspective. He expresses a desire for simplicity and the freedom to pursue new experiences, while also embracing the uncertainty and intrinsic motivation that drive his product development decisions.

Summary Notes

Introduction to Jason Fried and Basecamp

  • Jason Fried is the co-founder and CEO of Basecamp, a project management and team communication tool.
  • Basecamp has scaled to over 3.5 million accounts over a 22-year journey.
  • In 2020, Basecamp expanded to become a multi-product company with the launch of the email client and service, HEY.
  • Jason Fried is also an author and angel investor, with investments in companies like Intercom, Gumroad, and Hodinkee.

"Now, you might have noticed that the last few months of shows have been a little bit more personal. They've been focused on the traits and mindsets of great leaders, and the best of these shows always go off script. Now there is no greater example of this going off script totally than today's episode with the one and only Jason Fried."

This quote introduces Jason Fried as a guest who exemplifies the traits of great leaders, setting the stage for a conversation that will explore his personal insights and experiences.

Founding of Basecamp

  • Basecamp was originally a web design firm named 37signals.
  • Jason Fried started as a freelance web designer and decided to partner with Ernest Kim and Carlos Segura to start a company.
  • They each invested $10,000 and began their venture without formal incorporation, aiming to land business and grow from there.

"So we each put $10,000 in so we had something to go. We all worked in Carlos's office around the same desk because he already had a space. And we just sat there and said, we have a company now."

Jason Fried describes the informal and grassroots beginning of Basecamp, highlighting the collaborative and entrepreneurial spirit that led to the company's creation.

Relationship to Money

  • Jason Fried's approach to money has always been to have enough to buy what he wants, pricing his services based on his desires rather than a set hourly rate.
  • Over time, as he made more money than he needed, his perspective shifted to sharing wealth both within the company and externally.
  • Fried's investments are primarily to support others, with little expectation of a financial return.

"I've always wanted to have what I needed to buy what I wanted."

Jason Fried summarizes his practical and goal-oriented approach to money, which is rooted in the desire to achieve specific personal goals rather than amassing wealth for its own sake.

Happiness and Material Objects

  • Jason Fried acknowledges that happiness does not come from material objects, which only provide a temporary boost.
  • His early desires for items like cars or car stereos were about the experience and satisfaction of enjoying those things, not long-term happiness.
  • He emphasizes that money can facilitate experiences but is not the source of lasting happiness.

"You don't really get happiness from objects. Certainly not. You get a temporary boost."

This quote reflects Jason Fried's understanding that material possessions do not equate to genuine happiness, a realization that has influenced his relationship with money.

Personal Investing Philosophy

  • Fried is conservative with investing, keeping most of his risk tied to his own business, Basecamp.
  • His personal investments are often given as gifts or support to friends and their businesses, without the expectation of financial return.
  • For his personal trading portfolio, he prefers boring index funds and a few blue-chip stocks, with his business being the primary source of income.

"All my risk is tied up in my own business, and my own business is the machine that makes me the money."

Jason Fried explains his conservative investment strategy, which focuses on supporting his own business and others personally rather than seeking high-risk financial returns.

Risk Mitigation Mindset

  • Fried's conservative mindset comes from his upbringing, where he was taught to work for what he wanted and to appreciate the value of money.
  • He distinguishes between taking a risk and putting oneself at risk, avoiding any bets that could jeopardize his company or personal well-being.
  • The money he earns is allocated to a "don't lose it" pile, reflecting his cautious approach to financial management.

"I like taking risks, but I've never been one to put myself at risk."

This quote encapsulates Jason Fried's philosophy on risk, which allows for calculated risks within the boundaries of personal and business safety.

Financial Philosophy and Asset Management

  • Jason Fried prefers to preserve his wealth rather than take risks to double it.
  • He believes in liquidity and optionality, keeping most of his money in cash.
  • Jason is okay with losing a small percentage to inflation rather than risking significant losses in volatile investments.
  • He values the ability to share his wealth with family and friends.

"And frankly, most of my money is sitting in cash, which most people would go, that's the stupidest thing in the world. But for me, liquidity optionality, yeah, I'll technically lose a little bit on inflation or whatever, but I'm, again, okay with that versus going into the latest trend or going into something and losing 20%."

Jason explains his conservative approach to managing his finances, emphasizing the importance of having liquid assets and the ability to share his wealth with loved ones. He accepts the trade-off of losing a bit to inflation over the risks associated with trend-driven investments.

The CEO Experience

  • Jason Fried observes that being a high-profile CEO is extremely stressful and not always worth the challenges.
  • CEOs face scrutiny, are often misunderstood, and have few peers.
  • Jason questions the value of being a CEO when the role often removes them from product creation and involves constant conflict and problem-solving.
  • He tweeted about the CEO experience as a reflection on others and his own feelings.

"It must be incredibly stressful to run a public company. It's one of the hardest jobs to do because you're scrutinized over pretty much everything."

Jason discusses the intense pressure and scrutiny faced by CEOs of public companies, highlighting the stress associated with the role.

Dealing with Self-Doubt

  • Jason Fried believes that everyone, including himself, has moments of self-doubt and uncertainty about their decisions.
  • He emphasizes the importance of accepting uncertainty and making decisions based on gut feelings rather than metrics.
  • Jason advises that decisions don't have to be right forever, and it's okay to make choices based on what feels right at the moment.

"We're the same, and I think everybody is actually, which is nobody has any idea what they're doing. Some of us just sound like we do."

Jason acknowledges that self-doubt is common and suggests that even those who appear confident may not always know what they're doing. He encourages embracing uncertainty in decision-making.

Transparency in Leadership

  • Jason Fried believes in honesty and transparency when leading a team rather than presenting illusions of certainty.
  • He suggests explaining the thought process behind decisions so the team can understand the reasoning, even if the outcome is uncertain.
  • Jason emphasizes the importance of showing the work behind decisions and being open about potential failures.

"I don't think it's a good idea to present illusions. I think it's just good to be honest."

Jason advises against creating false impressions of certainty and instead advocates for honesty and transparency in leadership.

Reflective Decision-Making

  • Jason Fried focuses on how decisions will feel in the future rather than the immediate moment.
  • He uses reflection to minimize regrets and avoid knee-jerk reactions to temporary situations.
  • Jason gives an example of releasing a new feature and waiting for feedback to settle before making changes, relating this patience to decision-making.

"What I think about is when I make especially a tough decision, I don't think about how it's going to feel right now. I think about how it's going to feel later."

Jason explains that he prioritizes the long-term emotional impact of decisions over the immediate feelings, aiming to reduce future regrets.

Prioritization and Engagement

  • Jason Fried bases his engagement and prioritization on what feels exciting and important.
  • He acknowledges that sometimes issues must be addressed due to their persistence or importance to others.
  • Jason prefers working on projects that generate excitement and intrinsic motivation, as this leads to better outcomes.

"It comes down to a couple of things. Feel again, what excites us, what's exciting."

Jason describes how excitement and a sense of importance guide his decisions on where to focus his time and energy in business.

Innovation and Customer Feedback

  • When introducing new features, Jason Fried prefers to wait and see how customers adapt over time rather than reacting immediately to negative feedback.
  • He believes that initial resistance to change can turn into acceptance and even preference after a period of adjustment.
  • Jason connects this approach to his broader decision-making philosophy, which involves considering the long-term implications of choices.

"What happens is people want to put the fire out right there because there's a fire, but sometimes a fire will burn itself out."

Jason discusses his strategy for handling immediate feedback on new features, suggesting that patience can lead to better outcomes than hasty reversals.

Company Growth and Decision-Making

  • Companies may become overly systematic and rule-bound as they grow.
  • The speaker emphasizes the importance of maintaining the original spirit that has allowed the company to succeed.
  • Continuation of making decisions based on what feels right rather than introducing too many formal processes.

"What happens is sometimes companies, as they get bigger, they start to get serious, and they start to put in all these rules, and, well, now that we're bigger, we need to be more systematic about this."

This quote illustrates the speaker's belief that as companies grow, they often lose their initial essence by becoming too structured and rigid, which can be detrimental to the company's spirit that contributed to its success.

Regret Minimization Framework

  • The speaker acknowledges the influence of regret on decision-making but aims to minimize it.
  • They focus on how decisions will be viewed in retrospect, rather than in the present moment.
  • The speaker experiences more regret from saying "yes" too often, particularly to commitments made far in advance.
  • They admire Warren Buffett's approach to keeping a mostly open schedule for flexibility.

"I've also found that I regret far more things I say yes to than the things I say no to."

This quote highlights the speaker's personal experience with regret, suggesting that overcommitment and a lack of flexibility in their schedule are the primary sources of regretful decisions.

Identity and Company Ties

  • The speaker is contemplating taking a significant break from work for the first time.
  • They express a desire to see the company thrive in their absence, challenging the notion of indispensability.
  • The speaker reflects on the possibility of the company ceasing to exist and finds comfort in the achievements of the past 21 years.
  • They do not define themselves solely by their role as CEO but also as a father and individual with a life beyond work.

"I don't walk around every day feeling like I'm the CEO of this or that. I'm a father of two."

This quote conveys the speaker's multifaceted identity, indicating that while their work is important, it does not singularly define who they are.

The Appeal of Being Fired

  • The speaker fantasizes about being fired or quitting, intrigued by the idea of sudden freedom from responsibilities.
  • They express envy towards athletes who are forced to retire and start something new.
  • The speaker acknowledges that they could technically be replaced as CEO but is not yet ready to step away from the role they love.

"There's something about that that's extremely appealing to me. Forgetting the financial impact of getting fired and the social impact."

This quote reveals the speaker's desire for a moment of liberation from the pressures and responsibilities of their position, even though it is a hypothetical scenario not grounded in a desire for the actual consequences of being fired.

Potential Leadership Transition

  • The speaker admits to being envious of those who have transitioned from CEO to an executive chairman role, allowing someone else to run the company.
  • They recognize that someone else could technically run the company better but are not ready to make that change.
  • The speaker is contemplating the right time to take an extended break from work.

"There's something about, at this point in my career, there would be a lot of joy in seeing someone else run what I've built."

This quote reflects the speaker's curiosity about the possibility of transitioning to a different role within the company and witnessing its continued growth under new leadership.

Work-Life Balance and Personal Time

  • The speaker maintains a strict work schedule, allowing for personal time and family life.
  • They rarely discuss business at home, indicating a clear separation between work and personal life.
  • The speaker values having the freedom to decide what to do with their time, including learning new skills or simply doing nothing.

"I work eight hour day. I'm done at 5530 roughly."

This quote emphasizes the speaker's commitment to work-life balance, maintaining a consistent work schedule that does not encroach on personal time.

Parenthood and Learning

  • Having children has changed the speaker's perspective on time management and learning.
  • They are fascinated by the innate learning abilities of children and the reminder that adults can also learn by simply engaging in activities.
  • Parenthood has provided the speaker with a deeper appreciation for the process of discovery and personal growth.

"It's so special to see young brains learn without being taught."

This quote captures the speaker's admiration for the natural learning process observed in children, which has influenced their own approach to learning and problem-solving.

Embracing Childlike Curiosity and the Value of Time

  • Jason Fried expresses admiration for the childlike lack of preconceived notions and the ability to learn by exploring and figuring things out.
  • He acknowledges the scarcity of time on both daily and life-long scales, emphasizing the importance of spending time on worthwhile endeavors.
  • Fried aims to embody a childlike approach to learning and curiosity in his own life.

"I've tried to stay as uninformed as possible about a lot of things, so I don't come in with preconceived notions. Kids don't have preconceived notions. They don't have any notions. That's a wonderful place to be."

This quote highlights the idea that approaching situations without preconceived notions, much like a child, can be beneficial for learning and understanding.

Parenting with Wealth and Instilling Values

  • Jason Fried frequently considers how to ensure his children appreciate money and maintain ambition despite being raised in wealth.
  • He believes in instilling values such as earning and respecting what one has, spending time wisely, and being curious.
  • Fried reflects on his upbringing and his parents' discretion regarding their financial status, aiming to emulate their humility and not flaunt wealth.

"I worry about that frequently. I think it's just about values...instilling the right values, that things are earned. You work for things that you have to respect, things that time is important to spend on, important things that are worth doing."

This quote underscores Fried's belief in teaching his children the value of earning and respecting what they have, as well as the importance of spending time wisely.

The Impact of Parental Support and Pride

  • Fried discusses the impact of his parents' support during his childhood, particularly in sports, and how even when he wasn't the star player, their presence was formative.
  • He emphasizes the importance of expressing love and pride to his children, despite his six-year-old's annoyance at the frequent affirmations.

"Every single thing I ever did where they could be supportive, and seeing them in the stands and knowing they were there meant everything."

This quote reflects on the significant emotional support Fried received from his parents, which he aims to provide to his own children.

Leadership and Management Challenges

  • Fried discusses the challenges of managing a growing team at Basecamp, highlighting difficulties in communication and clarity.
  • He differentiates between managing and leading, expressing a preference for helping his team grow rather than focusing solely on his own growth.

"Managing 60 people is just hard... It's harder to communicate. It's harder to be clear."

This quote reveals Fried's struggles with the complexities of leading a larger team and the increased effort required to communicate effectively.

Personal Preferences and Inspirations

  • Fried's favorite book is "In Praise of Shadows," which he appreciates for its exploration of light, shadow, and space.
  • He admires leaders who are straightforward and clear, such as Charlie Munger and Jeff Bezos, and values the ability to help others improve.

"I like leaders who are very straightforward... Anyone who can just, you hear what they're saying or you read it and go, I got it."

This quote highlights Fried's admiration for leaders who communicate clearly and effectively, which he finds inspiring.

Views on the Venture Capital Ecosystem

  • Fried expresses skepticism about the current venture capital ecosystem, particularly the high valuations of companies without clear business models.
  • Despite his fundamental principles, he admits an exception for Clubhouse, a company he is bullish on but has not invested in.

"Like companies that make money are, I think, great companies... I don't understand those kind of valuations, so it just doesn't make sense to me."

This quote conveys Fried's basic economic philosophy that companies should be profitable and his general confusion about high valuations for pre-revenue companies.

The Importance of Sleep and Future Planning

  • Fried predicts that sleep will become a significant topic over the next decade and recommends the book "Why We Sleep" by Matthew Walker.
  • He discusses his short-term planning philosophy, focusing on six-week intervals rather than long-term plans.

"Sleep is the most important thing you can do to improve your life and improve everything."

This quote emphasizes Fried's belief in the profound importance of sleep for overall well-being and life improvement.

Reflections on the Podcast Experience

  • Harry Stebbings expresses gratitude for the natural and unscripted conversation with Jason Fried.
  • Stebbings also shares his positive experiences with various platforms and services, such as AngelList, Digits, and Cooley.

"That was just one of my favorite shows to do, as you heard. Just such a natural conversation."

This quote from Harry Stebbings reflects on the enjoyable and authentic nature of the podcast conversation with Jason Fried.

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