# Basecamp Founder David Heinemeier Hansson on Why It Is The Biggest BS To Chase Being A Unicorn

His Relationship to Wealth and Status and Why Now More Than Ever It Is A Myth Entrepreneurs Have To Raise VC

20VC · Apr 14, 2020 · 49 min · 10,413 words
Speakers: Harry Stebbings, David Heinemeier Hansson
Source: https://www.996.fm/episodes/20vc--ep-918efb51/

## Cold open

**Harry Stebbings** [0:00]:

Welcome back to the twenty minute VC with me, Stebbings. And if you'd like to see more from me behind the scenes, you can on Instagram at h Stebbings nineteen ninety six with two b's, and I always love to see you there. Now I'm gonna put myself out there with this one and say this is the best found episode we have ever done. It's honest. It's really quite raw. And both the guest and I open up emotionally a lot more than definitely as usual for me and as usual for the show.

## Intro

**Harry Stebbings** [0:22]:

And so with that, I'm thrilled to welcome David Heinemeier Hansson. For those that do not know, David wears three incredible hats. He's the creator of Ruby on Rails. He's also the founder and CTO at Basecamp, the all in one toolkit for remote companies, formerly named 37signals, and he's also the best selling coauthor of Rework and Remote Office Not Required. Finally, if that was not enough, fun fact, David went from not having a driver's license at 25 to winning at 34, the twenty four hour of Le Mans race, one of the most prestigious automobile races in the world. But before we move into the show today,

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## Conversation

**Harry Stebbings** [2:10]:

David, my word. It is such a pleasure to have you on the show today. I've been an admirer of yours for a long time from afar on Twitter, so thank you so much for joining me. Sure. It's my pleasure to be here. I would then love to kick off today, David, with a little bit on you. So tell me, how did you make your way into the world of tech and startups? And and what was that founding moment for you and Jason with Basecamp?

**David Heinemeier Hansson** [2:27]:

Sure. So in the mid to late nineties, I was doing gaming journalism online, learning about the Internet. And in 2001, I had learned just enough PHP, HTML and whatever else to be dangerous or overconfident enough to write Jason when he posted a blog posting on the company website Signal V Noise in 2001 asking for some help. I was just me, David, sitting in Copenhagen, Denmark, seven time zones away, a fan of the company. And I wrote him an email explaining how to do something in PHP. He decided it was actually easier just to hire me than it was to learn PHP, and we started working together. And then we worked for a couple of years on client projects together. We built one SaaS app before we got going on Basecamp. But in 2003, we started working on Basecamp together. In 2004, we released it. 2005, I released the extraction Ruby on Rails, the toolkit from Basecamp. And I've pretty much been working on both of those projects ever since.

**Harry Stebbings** [3:26]:

And, I mean, what an incredible journey it has been ever since. And you've really become a thought leader in the world of kind of remote work specifically. And I do wanna start on that because, obviously, it's come to prominence more than ever over the last few weeks with COVID, and we've seen the world and the world's largest company shift to work from home overnight. Can I ask, given your kind of insight into it for so many years kind of being ahead of the curve, is it what you expected it to be in terms of the world shifting to it, and what have been some of your core observations as people move to remote?

**David Heinemeier Hansson** [3:54]:

Sure. So we wrote a book, Jason and I, called Remote Office Not Required back in 2013. And when we wrote that book, I thought I was already stating the obvious. Jason and I had been working together at that point for a good twelve, thirteen years remotely together and had just taken it for granted that all companies would have gotten the obvious advantages of having a remote workforce, allowing people to work from home or wherever they were most productive. But in a series of conversations in sort of around twenty ten, eleven, twelve, I kept just having the same conversation over and over again with other entrepreneurs. And the conversation would go something like, oh, you guys are working remotely. Oh, well, that's interesting. That would never work for us. Because, hey, how would you replicate the magic around the whiteboard? How would you know whether people are working? All these sort of trite excuses for why remote wasn't going to work from them. I just came hearing the same one over and over again. And they were always shallow. They weren't very well thought out. And I thought, do you know what? Rather than having the same conversation a billion times repeated, let's just write it down. Let's write down the arguments for why remote work is actually a great idea. And then once we've made the argument for why your company should allow remote work, then let's teach you how to do it. Because even though it's not rocket science, there's still a method to it. There's some habits. There's some techniques practices you can adopt just that you do it better. And that's what we wrote down in 2013. And one of the phrases we had in that book was, seems like an historic inevitability that remote work is going to take off and going to be the dominant force of how we work when we do creative work that can be done in front of a computer from anywhere. Now, we didn't exactly know that this was what it was going to take. I wish this hadn't been the instigating factor. But now that it's here, we might as well all take advantage of it. That during this crisis, we can learn something new. We can learn how to be productive and happy working somewhere else than the office. Obviously now it's not so much an argument since it's imperative. So that part of our advocacy is sort of receded a little bit into the background that we don't really have to make the argument anymore. Now people are interested in how to do it well because they have to do it. And perhaps the number one thing I've seen, people make the mistake of thinking remote work is just like the office but from home. So they take all the same principles or approaches that they would do in an office and they try to replicate those remotely. The number one perhaps being meetings. Lots of companies have lots of meetings and they think once they start working remotely that that just means we should have a lot of virtual meetings. Right? We should install some video conferencing software and we should pack in our day just the same way we would do at the office such that it's end to end video conferencing calls and then at the end of the day, wow, that was a great day's work. No. That's a terrible way of working. Think I it's a terrible way of working even if you're in the office. But at least if you're in the office, that terrible way of working puts you in a room with a bunch of people and maybe that's what you enjoy and and blessed be with that to some extent. You don't get that from remote work. So now is really a good time to have some introspection, look at how you do things, and perhaps consider that you could do things differently. And if the one thing you get out of this is the realization that all those meetings you had didn't translate very well to virtual because everyone just gets completely zoomed out of their mind after a long day of end to end to end video calls, and you replace those with something else. You replace all of those meetings or the bulk of them at least with writing instead. We will have taken a huge step forward for remote work. And I think we will have realized that remote work is not just about location. It's also about a mindset. It's about an approach to how to collaborate, how to work together, to be productive. And that the insights and conclusions from that are much deeper than just, oh, video conferencing calls have gotten pretty good now.

**Harry Stebbings** [7:35]:

Can I ask David, how do you determine between the meetings to take versus the meetings not to? I must admit, I I suffer victim to this where I take all of them because I never know which serendipitous good thing could come out of them. So I always take everything, and then I spend my time zoomed out of my mind. So how do you determine it, and what advice would you give me?

**David Heinemeier Hansson** [7:51]:

Great question. I think there's a good set of tactical rules you can adopt. The first one being that what are meetings good for? In my opinion, meetings are great when you have two or three or four, that's probably the limit. If you get into five, it's already starting to be problematic. But let's just say four people who are very well informed about specific set of issues and they're not on the same page. They share all the same information, they've read all the facts, and they're at opposite ends of it. And they need to come to a conclusion, if not a understanding, shared understanding, shared acceptance of where we're gonna go, and they have to hash that out. I think meetings are great for vigorous debate. Now, people use meetings for a thousand other things. They use meetings to announce things. They use meetings for status calls. They use meetings for just general introductions, they use meetings for pitches, they use meetings for all these things that are really about one person delivering information to another person. I think meetings suck for that purpose. And I think we're much better off when we use anything from email to Basecamp to other ways of asynchronous communication where someone can write something up, be considered in their thought using full sentences, forming paragraphs, comprising entire ideas, convey those in writing, and then afterwards, if we aren't on the same page and we aren't just uniformly agreeing on the direction to take, then we can have a meeting. But already just that filter will cut off at least 80% of all the meetings that most people have.

**Harry Stebbings** [9:20]:

Can I ask? Because I I I love that as a framework. My my question to you is, you know, this is, you know, respond to a rise that no one else is you know, a lot of people haven't seen or experienced before. A big question for me and I think a lot of leaders would be, how do you combat the mental health, the loneliness and the isolation maybe for a generation that haven't experienced it and what would you advise in that perspective? It's

**David Heinemeier Hansson** [9:39]:

really tough and it's real and the first thing you have to accept that this is real and this is something people do struggle with. Different people struggle with it in different proportions but you have to deal with it head on. So the way we deal with it at Basecamp is that instead of mixing it together with the work, we say our social connections, our human connections are really important. They need to be replenished frequently often, and let's just do that explicitly. One example of that we just instituted recently is Fridays at 10AM, we have an hour of game time. It's a open video conferencing call where anyone who's interested can jump on during work hours to simply hang out with their coworkers and play games. It has no work purpose. It's not like the games are about the work that we do. They're simply there for the social connection. Another example of this that we've done for many years now is something we call five by 12, where in normal times, once a month, five people plus Jason and I will get on a call, again during work hours for an hour, to talk about everything else except work. What's going on in our lives, what's going on in the world, All that kind of stuff. And using those opportunities to sort of top off on the social connections. We do the same thing in asynchronous form using Basecamp. We have these automatic recurring questions in Basecamp that ask once a week, what did you do this weekend? People will very often, they'll do a small write up with pictures about, oh, I went hiking or I did this with my kids or or something else, which again really helps create that human connection where you realize something about coworkers you might not have known, and very often it leads to follow-up conversations and follow-up connections. We do similar questions once a month. We have, what have you been reading? Where we share internally books that we've been reading. We have the same thing about movies, and and right now, we actually we have a Basecamp project called All Pandemics, gathering all the discussions about the pandemic that's going on, such that those discussions don't leak into every other discussion in in the company, which was what was happening before we started that All Pandemics Basecamp that simply every single chat room and message turned into a pandemic talk. Anyway, in that basecamp, we have another question. Once a week, ask, how are you doing? And people share sort of the stresses that they're dealing with, the anxieties that they're dealing with, and they come together with coworkers around those things. So there are all these techniques you can use that work very well remotely, and in fact in many cases work even better. We've had several employees join Basecamp who said after they've been here for a while, they know their coworkers at Basecamp much better than they knew their coworkers at their past job, where they were working together in an office. Because in an office, a lot of it is based around proximity and whatever click you end up hanging with and the people you go to lunch with, and those are the people you know something about, and those are the people you form a social bond with. But then the rest of the company, maybe not so much. I think what a lot of people who joined Basecamp have been surprised about is just how cross team, how cross functional those bonds are being formed. And support hangs out with with operations, with design, with whatever because we're exposing more of the human to more of the people, and that creates those bonds across departments and teams.

**Harry Stebbings** [12:45]:

I totally agree with you in terms of building that kind of deeper connection being more intentional in terms of sharing it. You mentioned the kind of the teamwork and the kind of colleagues there. I think the really striking thing for me when when I look at Basecamp is actually the headcount and, you know, for the impact that you have as a company. The team is still remarkably small, and you've said before the complexity curve is not linear when adding new people. Can I ask, what did you mean by this? I was listening when I was on my run, as I said. What did you mean by this, and and how do you think about necessary versus luxury additions to the team?

**David Heinemeier Hansson** [13:15]:

Well, first, in terms of the complexity, it's I forget. What is it? Conway's law or something about the number of connections between people or is an exponential function. Maybe I'm getting this wrong. But just the difference between, an organization of five people and an organization of 10 people or one between ten and twenty, it's not twice as hard. It's far more than twice as hard. And the amount of coordination overhead that it requires when you double your headcount is again not double. It is far more than that. So for a very long time, since inception, we've tried to keep Basecamp as absolutely as small as possible. Because one of the things that both Jason and I enjoy working at Basecamp is doing the work ourselves. So we're the two executives at the company, and perhaps most other companies at the size of 56, the executives aren't as hands into the work as we like to be. I love programming. I try to make as much as my week about programming, which means that I have to make room of my on my plate for for that. Right? I we work forty hour weeks, eight hours, five days a week. Right? So there isn't just this time where I can smash in programming on top of a full forty hour work week doing executive functions. So I have to fit it in on that plate. And one the key ways we do that is to keep the organizational complexity low. Less coordination that requires sort of syncing up of a bunch of meetings, people sort of aligning their calendars, playing calendar Tetris. We don't do any of that. We have quite few regular, meetings on any given week. I'd be surprised if I have more than three, maybe four, and and in some weeks I have zero face to face or video to video conversations with people. The vast majority of the coordination work that we do, the executive functions that we do, the delegation that we do happens asynchronously through Basecamp. Either it's through discussions on to do items that are assigned to people or it's messages being written up or it's occasionally direct messaging or or so forth. And that allows me to have room for doing more of the stuff that I enjoy the most. And I get to do a large amount of programming, and I really enjoy that. And I know that Jason really enjoys writing. He really enjoys design, and he gets to do a lot of that as well. We And only get to do that because we keep the rest of the organization relatively simple. And that's not just about headcount, although it is an important factor. I don't think we could do the things that we could do if we were 300 people or a thousand people, which is actually one of the main reasons we try not to to get to that. Right? Like, I don't wanna work at a place that has 300 people or a thousand people that I am responsible for and that I have to follow-up with through however many layers of management that is is going to require to do that, that's not a job I want. So Jason and I have designed Basecamp as an organization for the jobs that we want. And I think that that's something a lot of entrepreneurs, perhaps they don't have that luxury. They can't say stop. They can't say, oh, 56? That's a great number. Let's just stay here. No. They're on this treadmill where they have to grow, and growth in lot of people's minds mean bigger headcount, sort of doing more stuff. And we just said, like, you know what? That's interested in. That's not what we're going to do. We already make more than well enough with what we have, and it's a great place. So let's just hang out here.

**Harry Stebbings** [16:36]:

I mean, I absolutely love that as a mindset. There's a couple of things I I have to unpick now, and it's you mentioned kind of about how granular you are and maybe being more so than for a company that this kind of got as big an impact as you do with Basecamp. But then I correlate on something you said about parenting before I I heard you say, and it was the big challenge of parenting is not to get kids to do as you'd like, but to resist the temptation to make them. Them. I guess, how do you balance the being much more hands on and in the weeds and maybe a lot more executives would be with resisting the temptation to make them in the micromanagement? How do you balance the two?

**David Heinemeier Hansson** [17:07]:

I think the easiest balance is I try to do the work myself. I mean, I'm on a team and and we're all moving forward, but I have enough just doing my own stuff such that I don't have to worry so much of the time telling other people what to do. Because one of the big principles we have at Basecamp is this notion of managers of one, that everyone at Basecamp should strive towards being a manager of one, that they get sort of an overall pointer in which direction to go, but they gotta figure out how to get there. And they shouldn't need someone to check-in on them every day or every other day. If that's happening, that's either because they're junior and they're on an on ramp and that on ramp is eventually going to end and they're gonna graduate out of that junior status or because something is wrong. The majority of the people who've been here at Basecamp for a very long time, my involvement in their work is profoundly optional. I try to think of my presence in the company as a bonus. The entire operation should be able to run whether I'm here or not, and then when I am here, I'm contributing and doing my slice of the work, and I am perhaps chiming in and and doing some editing on other people's work. But if we take that away, no one's blocked, No one sort of looks up and have no idea what they need to do. Everyone just continues on doing the work. So that sort of comes back to a whole principle of management of which I think the book, turned the ship around is one of the greatest examples where you give people the power and ability to set their own course, and then they simply communicate that course. And if you are sort of of a different opinion of which direction we can go, you can chime in. You you can help set a different course, but you will just assume that everyone who works for you are creative, diligent, caring people who if set in just a rough direction, will figure out the best way to get there, and you don't need to constantly interfere with that. Now, that also happens to be directly correlated with sort of employee and human happiness. If you look at what motivates people at work, it's things like autonomy, mastery and purpose. Now, these three factors are exactly correlated and connected to this idea of letting people set their own direction, figure things out on their own. And you nudge them, you help set broad directions, but you don't try to interfere too much in their nitty gritty work. And the best antidote for interfering in all that nitty gritty work is to have your own goddamn nitty gritty work to do. So so you don't have too much time on your hand. I think one of the key problems in a lot of companies is that executives simply have too much time, and they need to spend that time on something. And often, that time is spent interfering with the people who actually do the work.

**Harry Stebbings** [19:45]:

So I absolutely love that in terms of the manager of one and the autonomy. I guess my question to you is, is it difficult balancing the accountability but also letting them know that it's okay to fail. I think a lot would suddenly feel with the accountability on their shoulders, almost this massive fear of failure and the repercussions. How do you think about creating that culture of it's okay to fail and try and not be scared of the accountability?

**David Heinemeier Hansson** [20:07]:

By not being an asshole, that's a good start. By not sort of cutting people's heads off when they do make mistakes. I think you can say everything that you want. That's not how culture is created. That's not how sort of a safe working environment is created. No. Those things are created through actions. What you do and what you don't do. So when you reprimand people in public or otherwise, when they make mistakes or when you fire people after they have a single mishap, you're creating the culture that that is actually there. The culture that's there is not the one you write up in your damn mission statement or your memos to the company. No. People are smarter than that, and they look at actions and heavily, heavily discount your words. So we try to have good actions. And some of those actions are that, there's a framework for steering this. There's a clock frequency essentially at Basecamp, and that clock frequency runs on six week cycles. Every six weeks, we stop for a week or two and take stock of what we've done in the past six weeks and what we're going to do next. And again, it runs on the same principle that everyone or all teams are responsible for essentially reporting what they worked on and then telling the rest of the company what they plan to work on next. And that mechanism alone requiring people to account for what they've done and what they intend to do, and then squaring those two things up against each other is an incredibly supervising function in and of itself. It doesn't actually require a manager to swing any whips. Most people are actually self critical enough. That doesn't mean they don't perhaps have blind spots or they can't be taught things or whatever. But in terms of the clock frequency of figuring out, hey, did I do good work? Did I make progress? Having to write up what you've done and what you intend to do is a remarkable self enforcing tool to to get on that. And really, it hasn't been a big problem. I don't think well, you shouldn't ask me. Right? Like, first of all, the executive is the last to know. So you shouldn't ask me perhaps whether that works. You can look at perhaps some of the stats, like how many, years that people spend at Basecamp and and so forth, and you could talk to them directly. But I would think that if you ask most people at Basecamp whether they are afraid to fail, they would say no. And they would also say no if you ask them whether there are these whether there are the draconian consequences of this. I think the problem with the word accountability is that it's often total bullshit. Accountability is only meaningful in my opinion when it's tied to an individual's own declaration of work. You can't have meaningful accountability if you're also telling them how much work to do and in which time to do it. Then you're just a slave driver. And I mean, okay, maybe that's what you want, then don't use the word accountability. Like, you're the one who should be accountable for your actions, and now you set the direction of the company. If you're not giving people the autonomy and the scope to make their own direction and their own assessment of what the shape of the work should be, you can't also claim that you're some insightful organization that runs on accountable or accountability.

**Harry Stebbings** [23:03]:

You you mentioned the mission statement in that piece. And, listen, I I've sat here, David, and I probably shouldn't say this, but you you've been very open and honest, and so I will be too. I've sat here in this chair, interviewing amazing founders, and they say, ah, but we hire the best people in the world because of our mission, and then they proceed to tell me probably the most bland and boring mission that is applicable to every single company and really everyone would just want anyway. You've said before when it comes to mission statement, if you're not constraining the world, what are you trying to do? And so I guess how do you think about that principle setting, and what makes the best in your mind and what separates the good and the great?

**David Heinemeier Hansson** [23:37]:

Yeah. Man, this is just a topic that continuously riles me up. Before we hit record, we were talking briefly about Zoom, and I just fell over this yesterday, and I think the Zoom mission statement is deliver happiness or some bland shit like that. And you go, like, this is exactly what I'm talking about. Any organization that has us their mission statement to deliver happiness, that is, I don't know, fucking clowns at kids birthday parties, it's just vapid. Right? Like, there's nothing there. There's no content. The mission statement, if it is to have any effect at all, is a way of weighing trade offs between two things that you want both, and then deciding which of the two you want more. If it's not providing that function, if it's not putting a hand on the scale in those weighings, it's useless. And who is going to deliver what? Sadness? Is any organization going to be, we're here because we're trying to deliver sadness. If there's no opposition to your term, it's useless. So we don't even try. I think we have some general principles we've written up in our handbook, but I can't even remember them off the top of my head. And and the ones that are there will be extractions, where we look back upon the actual actions that we took and try to provide a narrative around that. We don't try to invent sort of some fantasy about, like, what kind of company we are, want to be, and where we're going because that shit always ends up being complete bullshit. So just don't do that. Focus on sort of more fundamental basics of virtues and ethics here. Focus on telling things straight up both to your, employees and to your customers. Focus on doing what you say you will do. Focus on being kind and being fair. I mean, there's not a lot of complexity in that. It's it's not this sort of quest where we're uncovering some truly unique beacons for Basecamp that, like, oh, wow. We're gonna be so unique because this is this is what we do do. Right? This idea of being kind and and fair and and doing what you say you're going to do. Like, there's nothing novel there. That doesn't mean it's not hard. It is actually hard as hell to do any of those things well as a company because you have all sorts of commercial pressures pulling you towards the opposite.

**Harry Stebbings** [25:51]:

I I'm so pleased you said about the commercial pressures there because, you know, you have this unique vantage point as we said from kind of the the couple of different contrarian stances that, you know, it's interesting you say they shouldn't be that strange or rocket science, but they are contrarian. And another one is when it comes to kind of the fundraising path. And really, you know, you never got on the Silicon Valley VC treadmill. And so I guess my question to you on that one is you mentioned the commercial pressures. What do you make of the immense surge in activity we've seen over the last five years in VC fundraising, the requirement that you have to raise VC money. And how do you think about that having had the perspective that you have?

**David Heinemeier Hansson** [26:24]:

Well, having had the perspective I've had, which goes all the way back to the first.com boom and bust, is that I don't think there's anything novel in the past five years. Maybe the valuations got higher, but these pressures have been in software for a very long time. And I don't think they're they're anymore widespread. In in fact, if anything, I think the opposite is true. It's never been easier to start a new software company than it is today without raising money. It's never been easier to build a nest age working for someone else for a short period of time, making copious amounts of gold doing that, and then taking that gold and starting off on your own path. This idea that you need venture capital, you need outside money is is complete bunk and bust. And this goes back to to a lot of things as we talked about remote work. The fact that you don't have to live in Silicon Valley or New York or Seattle or any other high priced metropolitan area to collaborate, to launch something new. You can live wherever and it's going to be fine. And it also goes to the example that we've been trying to set at Basecamp is you just you don't need a thousand people. In fact, when we started Basecamp, we were four people working part time on this side project that was Basecamp. And it took us about a year before that side project was making enough money to pay our salaries, and it wasn't until then plus some margin that we decided to go full time. That avenue was available in 2004. That avenue has only gotten so much easier sixteen years later. Back then, servers and connectivity and and whatever actually cost a fair bit more than it does today. All software is virtually free. Even cloud operations are virtually free when you have no users. And as soon as you have users, if you are selling a product, you're gonna be you're gonna be fine. You're gonna be profitable. Right? Now I think the distortion that has happened is this idea that like, well, if I wanna be a unicorn, if I wanna be a billion dollar company, yeah, there's probably a different path that for those terrible odds, however they are, that they are slightly better if you go that route where you raise a bunch of money. Our advocacy has been don't fucking chase being a unicorn. Being a unicorn is a shitty place to be for most people most of the time. And the kinds of companies that come out of that that are unicorns, half or more of them are totally morally deplorable. And you shouldn't be chasing that in the first place. Not from a personal perspective of sort of life, not from a perspective of doing well by your employees, and certainly not by the perspective of doing well by your customers either. This idea that technology is all about the unicorns. It's just bunk, and we're trying to debunk it from for a very long time. And I understand that this podcast is is for VC. So, of course, when your paycheck depends on you not understanding that, you're not going to understand that. Right? Like, you're gonna have the perspective that, oh, no. Actually, Uber and DoorDash and and whatever, these are doing amazing things for humanity because that is what you must think to be able to do what you do every day. Just note that there's a lot of people out there who who think the opposite, that these companies are not good for the world. In fact, that they're terrible for the world, and that we should try to have a look at the kind of pipelines that produce those kinds of companies and those moral quagmires and, a, dismantle them or reconfigure them or just blow them the fuck up.

**Harry Stebbings** [29:40]:

I mean, do not worry. I have my podcast hat on, and, so I that's totally fine for me to hear. Yeah. It is a podcast on VCs, so don't worry. It's it's totally cool. I I I do have to ask that you mentioned there about kind of, you know, working with Basecamp as a signed project for a year and then moving, you know, it's it's a big risk to move full time, I guess. My question to you is

**David Heinemeier Hansson** [30:03]:

No. No. No. No. That is exactly the point. By the time we moved full time, there was zero risk. Zero. Because we were already making more than well enough money to pay our own salaries and have a fair margin. And I think that this is one of these key points I keep attacking over and over again in this mythology of entrepreneurship. That entrepreneurship is all about risk. It's all about these brave men and women who defy all the odds and then they they grasp for for what the stars and then they land on the moon or whatever other trite bullshit people pull out of their pockets. No. It's not. There are all these other ways of starting a company, particularly a software company that has no grand capital needs on day one beyond just the labor of the people who who found the thing and and and put it in, where you can reduce the amount of risk that you're taking on to to very, very little. Now, it's not completely without risk and it's not completely without having some amount of privilege that either you have some nest age or you have a job that allows you to work part time or you're a consultant or any of these other enabling factors. But that these factors are so much more approachable and adoptable by a much larger percentage of people who could potentially be entrepreneurs than the tiny group of entrepreneurs who happen to be well connected enough to come into some accelerator or or seat person or get on the VC treadmill in general.

**Harry Stebbings** [31:20]:

Can I can I ask you a kind of personal question? But I am intrigued by it, and do so if it's too personal? How do you think about your relationship to money given the stance that you take?

**David Heinemeier Hansson** [31:29]:

I think I had a unique blessing growing up in a country like Denmark that has an incredibly well functioning democratic socialist state where the basics of human needs and flourishment are taken care of by a democratic welfare state. And those things for me growing up lower middle class, probably working class actually, was that a, I didn't really get to think much about class until I became much older because it just wasn't something that was holding me back. I wasn't deprived of things. I got a great education through the Danish education system. I got great healthcare when I needed it without ever having to think about, oh, what does it cost? So I had that blessing of growing up in a country like that that showed me how little money can mean. Doesn't mean it doesn't mean anything. And I have plenty of memories from us growing up where getting towards the end of the month, there was no more money and that was that. And then you sort of just found a way to to make do until it was the first of the month and the the paycheck would come in. And yet, money did not dominate my upbringing. Right? So when you get that exposure to an entire society that does not revolve around money to the extent that happens in The US, you just end up with a different perspective. So that perspective was then augmented by the reality of becoming a millionaire in my twenties and realizing that even having grown up in a country like Denmark where there was not this huge emphasis on money or success or whatever, you still end up sort of being under the sub subjugation of of California occasion and you think like, oh, man, once you're a millionaire, like, all all this magic is going to happen. And then I became a millionaire, and I realized, oh, shit. Where's the magic? It wasn't actually that magical. Right? And I realized just, again, privileged position growing up in in Denmark. Yeah. I shared that experience with another, what, 5,800,000 people live in Denmark right now. And then coming to The US under sort of very easy terms, joining a a company that was already doing well. So I wasn't exposed to the precarity that is the American situation, and perhaps I would have had a different perspective if I was under that precarity. But I I wasn't. So I got to have the perspective that, do know what? The money is nice and they buy a bunch of nice, fine things, but it is not the primary source of happiness for someone who's cleared a baseline bar. And I had already lived above that baseline bar. So I quickly realized that what I cared more about was how do I spend my time? And hey, do I get to do some of the things I enjoy the most in this world? Do I get to spend my time doing programming a lot? Yeah. If I get to do that, that's pretty great. I wouldn't trade a bigger pot of gold such that I could what? Sit in meetings all day and not do any programming? Fuck no. Not interested. So having that clear sense of how much money matters to your life and what revolves around it, I think is is pretty important. And and the sad reality, I think, is that in the American experiment, for a lot of people, it is the center. And, I mean, Jesus, what a bankrupt human experience that is.

**Harry Stebbings** [34:30]:

I have to admit, David. I don't think I've ever been this open and personal on a podcast before, but, you know, for a long time, I tied happiness and money together. And bluntly, the show's done very well for me now, I have more than I ever could've expected when I started this from my bedroom as an 18 year old. But, you know, my mother's MS doesn't go away, the loneliness doesn't go away, the vulnerability doesn't go away. And I remain hungrier than ever, ending up wanting just more and more and and not essentially being happy with what I have. How am I seeing this wrong? And how would you think about it?

**David Heinemeier Hansson** [34:58]:

Well, I can tell you. And and I will guarantee you that that path will continue to bind you in unhappiness. Because there is no point where you suddenly wake up once you're on that treadmill and think, oh, that was it. That extra million or that extra 10,000,000 or that extra billion, that's the tipping point where true bliss lies behind. No. It's not. You have to simply change your entire world view of what is important. And thankfully, we have a treasure trove of humans who've pondered this exact question for thousands of years. And if you dive into that treasure trove of wisdom, I think it is possible to change your worldview and change your angling and your ambition to be something more than just the chase of money. And I would recommend starting with a twentieth century author who's probably my one of my favorite authors of all time. His name is Eric Fromm. He wrote a great book called To Have or To Be that explores this exact topic of defining who you are in terms of what you have or in terms of who you are. It sounds simple as we talked about some of these simple things are not hard to explain, but incredibly hard to internalize and live. So Eric Frum is is great, and I recommend him these days more than than the stoics even though I'm also a fan of the stoics and I think you can get a lot out of stoic perspective. But also not all, you have to augment that somewhat and I would start by augmenting that with Eric Frum. And then I would look into existentialism. I think in existentialism is dealing with this exact question. I mean, all philosophy really is. But perhaps more intently and more practically, like, what's the purpose? Why are we getting up in the morning? Right? One of the great existentialist writers, Albert Camus, had this saying, like, there's only one great question in in life, which is whether or not to kill yourself, which sounds sort of dire. But I I think it it comes to this point, like, why are we doing it? Why are you on the chase? Why do you want more? And then once you work through some of this wisdom, I think it is possible to arrive at a place where you go, do know what? I I have enough. Like, the chase is no longer worth my entire human direction, and I can focus and flourish in other dimensions of my being, and that is more satisfying. It's more challenging. It's more interesting. It ultimately makes life worth more.

**Harry Stebbings** [37:20]:

Can I ask, is it wrong to have legacy as one of the reasons? And what I mean by that is, like, I've always said, wanna be 70 with grandchildren and have them running around me in an armchair and say, hey. Our family is part of building something special with this in terms of what I've built. Is it wrong to have, like, legacy as a core driver? I

**David Heinemeier Hansson** [37:36]:

don't know if it's wrong, but I I don't know if it's the thing that should be at the top of the list. And the number of 70 year old miserable fucks who don't have their grandchildren running around them, but have them alienated and estranged because they were always chasing more and they never had enough and they end up being these stereotypical misers who focused on that legend. Right? Like, it's a stereotype for a reason. The number of 70 year olds who end up on the other side sitting in the rocking chair looking back on a life well spent. You know what? Money is probably not the top thing on their list. In fact, it is assuredly not that. Howard had a longitudinal study called the I think it was called the human happiness project, that looked on upon Harvard graduates for a hundred years or something like that. The question they were trying to to answer was, like, what makes for for a good living? Like, what makes people happy? Do you know what? Money wasn't even on the list. Right? Like and again, maybe there's some privilege here. This is studying Harvard students, so they weren't probably in need of the basic necessities. But at the end, what was the conclusion? It was human connections. That was it. The people who had the greatest, strongest, most loving human connections were the happiest people. And there's were those were the ones with the least regret. And again, it it is so trite as to almost fit on a postcard that this is the truth. Yet, the vast majority of people who work in this sphere of money don't act as if that is true. And they act as if though if they just spend more time at the office, if they push it from eighty hours to a hundred hours, that's where happiness is going to be. Mistaken, and they're gonna wait up wake up on the final day, and they're gonna look back and say, shit. I blew it. And they're gonna go to their graves full of regret. And I think this is also one of those reasons actually that there's so many people in tech and and venture capital who seem obsessed with extending life. Oh, let's find this breakthrough where we we can live longer. Whereas I look upon life and I think, do you know what? If I can make it to whatever the average life expectancy is for someone at my socioeconomic level, I think it's maybe 86 or something. If I can make it to 86, that's enough. I don't need anymore. That that's fine. I will look back upon life hopefully at 86 and think, you know what? I spend it well. I didn't spend it all in the office. I didn't spend it all chasing more gold. I spend it on and with the people I love and I care about. I spend it with my kids when they were small. I spend it with my kids when they were older. I spend it enlarging my humanity. I spend it enlarging my perspectives, and that's going to be enough in the end.

**Harry Stebbings** [40:06]:

Yeah. No. Listen. I I I do I do, understand, but I don't think I quite have the mindset yet. I I will try.

**David Heinemeier Hansson** [40:13]:

I didn't either. I didn't either. I mean, this is part of the the human journey, I think, is that this is it's not intuitive. Did you have a snap

**Harry Stebbings** [40:21]:

moment, or was it a realization over several years?

**David Heinemeier Hansson** [40:24]:

Well, I think first, I had a good foundation again coming from a society like Denmark that kind of put a bunch of lessons into my brain that perhaps I didn't appreciate when I was 22, but they were there. And as I started unearthing more of sort of the long running human wisdom that is available to anyone who cares to read, those lessons were dug up and they were made accessible. And they were kind of being pieced together until I had more of the pieces of the puzzle. I'm I'm not sort of claiming I have any final solution here. In in fact, I'm just pointing to other people who helped me on a a direction of coming to these realizations as I've come to them. So, no, I don't think there was necessarily just like that one snap tipping point, but it was a slow boiling until to the point where you can recognize it over time. I look back of twenty years earlier, and I look back at my Copenhagen business school critiques of Danish social democratic society, and I just shake my head in disbelief of how naive and, well, frankly stupid they were. So I can see it over a long period of of time. I can't pinpoint like, oh, it was on that day everything changed. And I think that's also just unrealistic and it's not even helpful to think it's just a switch you have to flip. That's not what it is. This is a spectrum. This is a a marathon of insight.

**Harry Stebbings** [41:38]:

Listen, David. I've absolutely loved this show. This has been one of my favorite shows I've ever done, and I've done 2,000. I do wanna dive into my favorite, which is a quick fire round. So I say a short statement, and then you hit me with your immediate thoughts. Are you ready to dive in? Go. Okay. So what book you've mentioned some amazing books. What book would you most recommend to the audience?

**David Heinemeier Hansson** [41:55]:

Oh, man. So hard. To Have It To Be would probably be one of my favorites for this particular audience because it tackles head on so many of the questions we talked about the chase. I was otherwise going to say another book of Eric Fromm actually called Escape from Freedom, which explains a lot of what's going on with the political situation both in The US and much of the Western world right now. So perhaps if I I tweak the question and say, author would you recommend? I would recommend Eric Frum. I would start with To Have or To Be, and then I would work my way as I have actually through his very long history of books. I would take, Escape from Freedom as as number two, and then it would just keep on going. I don't think I have a superpower. I don't think there's anything supernatural about how we operate Basecamp or how I go to work. In fact, I think it's a misnomer when people think about it in that sense because then it puts them off as something that they could learn. I picked up a bunch of skills and habits of how to run a company, but perhaps more than a specific habit or skill, it's a centering of my worldview. I think of myself as working for someone else. Whatever decision that I make or help influence at Basecamp at the executive level, I always try to think of myself on the other side. Because I was on the other side. I've worked for plenty of terrible bosses, and each terrible decision that they made that influenced me, I cherish because it gave me this perspective that every single time I think about the decisions that I make that influence other people, I'm sitting on the other side too, trying to think it through. Weakness, I'm not very disciplined. I don't know if if that is a weakness or maybe it's a humble brag, but I fly all around all over the place. And and sometimes the things that need to be done at the business, and there are plenty of those, I'm not good at at getting to those. And I wish I was better. Because oftentimes, it would be way better if I could just say, hey. Here, I'm gonna spend three days on shit. I don't really wanna do it, but I'm just gonna do it rather than procrastinate it until the end of the month until it actually have all sorts of bad consequences. So I wish I was more disciplined. What would you most likely change about the world of tech and

**Harry Stebbings** [43:58]:

startups, David?

**David Heinemeier Hansson** [43:59]:

The narrative around money and the importance of big the importance of of the unicorn chase. I think that is probably one of the most damaging strains of mimetic viruses floating around. If we could liberate more entrepreneurs and founders to think less about what the excess is going to be and what the ultimate size is going to be and more about just like, hey, am I working in a place I wanna work with people I wanna work with, working on something that's good in in sort of a more basic sense than changing the world. I think far too many tech entrepreneurs are obsessed with disruption. You know what? A little less disruption and a little more fixing.

**Harry Stebbings** [44:36]:

Can I ask? We mentioned delivering happiness earlier. This isn't in the schedule, but I'm just in what's what's your core problem with Zoom? Sorry, David. I think that's really cool.

**David Heinemeier Hansson** [44:45]:

Think and, well, I think we need another perhaps, thirty minutes for that, but I'll make the short spiel. I don't like people who who lie when when the things came out about Zoom claiming to be end to end encrypted, for example, and they weren't, you just go like, why are you saying that? Why are you pretending that? All the shit that they've done that's kind of on the sly, whether it was last year when they installed this uninstallable web server just because they wanted to save a click. Right? And then Apple also had to release this emergency fix to to remove the huge security vulnerability that came of that. There's just so many things in what Zoom does that seems so shortsighted into sort of KPI level. I I can totally imagine that there's this Zoom product meeting where they go like, they count the number of clicks it'll take for someone to join a meeting. Right? And then they just they focus myopically on getting that number from, I don't know, whatever it is, four to three. And they think like, this is what matters. This is really the most important thing we could do is to reduce the number clicks it takes from four to three. Which rules do we have to bend? Which security things do we have to cheat to get there? And you just go like, oh, fuck. It is so unnecessary. You have great underlying video tech. You don't need this. And I think that this is so true in in so many other companies that make it well is that that same myopia that we at times celebrate on entrepreneurs. Right? They're laser focused. Like, this is one of the things you hear over and over again. Oh, man. It's just laser focused. Do you know what? A lot of times you don't need a fucking laser focus. You need a broad perspective. And if you can't change and switch between those two sort of at regular intervals, it's really a weakness. And and that laser focus is gonna end up biting you in the ass like it has with Zoom. Getting from, let's say, four to three clicks or whatever else they've gotten out of all these slide tricks they've pulled, do you think any of that is worth the shit storm they're dealing with right now? Of course, it's not. Yeah. Alright. That was the short spiel.

**Harry Stebbings** [46:30]:

I wanna finish, though, on the next five years for you and for Basecamp, what does that look like in your mind?

**David Heinemeier Hansson** [46:35]:

It's one of those questions I hate, and I don't mean that personally. I mean that in the sense of not living in the moment, not living in the moment, not living and dealing with the the problems you have right now and constantly living in tomorrow land. I try not to do that. So my best ex extrapolation of what is going on in five years is just to say I hope more of the same. I'm a quite content person even though it may not appear so on Twitter because Twitter is sort of my spleen, my outlet for sort of all the gall that otherwise would build up in the system. But in terms of a a life work balance, things are good. That's why I've been working on the same shit for fifteen years. Right? Things are good. I enjoy what I do. I enjoy writing Ruby code and making Rails and making Basecamp, and now we're making this new hey.com email service, and I'm excited about that. And I hope I still get to do that in five years. I hope I still get to do that in ten years. I hope I still get to do that in fifteen years. Do you know what's not at the top of my list of what to do? It's to have more money. So one of the things I'm I'm really happy to have arrived at is the sense that, you know what? I have enough. I I don't need more in that sense. I need to be.

**Harry Stebbings** [47:37]:

I mean, David, what can I say on this one? As we said before the show, I've done over 2,500 episodes. I probably shouldn't say this. This has probably been my favorite Founder episode by far. Honestly, I can't thank you enough for joining me today. And I've just so enjoyed the chat, I can't wait for a fantastic round two.

**David Heinemeier Hansson** [47:51]:

Well, it's been my pleasure. Thank you so much for having me.

**Harry Stebbings** [47:56]:

As I said, my favorite Founder episode that I've ever recorded. Rare to have someone be so, open and honest in the hot seat, shall we say. And if you'd like to see more from David, which is a must, you can find out from him on Twitter at DHH. Likewise, it'd be great to welcome you behind the scenes here. You can do so on at h Stebbings nineteen ninety six with two b's. However, before we leave you today,

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**Harry Stebbings** [48:15]:

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