Jan 6, 2023 · 53m · news
Basecamp CEO Jason Fried: We Banned Talking Politics and 1/3 of our Team Quit | 20VC #963 · 20VC with Harry Stebbings
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this deep-dive interview, Basecamp CEO and founder Jason Fried shares his unconventional philosophies on building a self-funded, profitable software company, navigating intense public controversies, and cultivating a sustainable long-term partnership without the pressures of venture capital.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 17% of the talking time here. How this is scored →
Harry as informed peer 1.8 Guest teaching 3.2 Guest disagreement 1.1 Harry pushing back 1.9
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 8:32 Rejection of the Atlassian comparison premise
Jason forcefully pushes back on a user question asking how Basecamp lost its head start to Atlassian, calling out flawed entrepreneur comparison mindsets.
Hardest push from Harry ▶ 8:06 Harry asks spicy submitted question on losing to AtlassianHarry refuses to soft-pedal public criticism, directly confronting Jason with a submitted audience question regarding market dominance.
Biggest teaching moment ▶ 10:24 Deconstructing unprofitable venture scalingJason dismantles prevailing venture-capital scaling paradigms, pointing out the basic absurdity of growing headcount while losing money on every customer.
Harry holds his own ▶ 16:50 Harry categorizes management via inputs vs outputsHarry demonstrates management expertise by reframing Jason's review philosophy into an actionable inputs versus outputs business framework.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Motivations, Milestones, and Planning Sabbaticals | 1 | 1 | 1 | 1 | Harry asks reflective psychological questions about what Jason is running from and towards. Jason shares his personal desire for entrepreneurial independence and eventual detachment from the business. | |
| The Pitfalls of Venture Funding and Prioritizing Profitability | 3 | 5 | 3 | 4 | Harry asks a aggressive audience question regarding how Basecamp lost its head start to Atlassian. Jason rejects the premise, reframing market share comparison as a trap and emphasizing long-term unit profitability over customer volume. | |
| Redefining Scaling and Success in SaaS | 3 | 5 | 2 | 2 | Harry brings up SaaS playbook conventions like scaling enterprise ACVs and Dharmesh Shah's viewpoints. Jason educates on why scaling without profitability is absurd basic economics. | |
| Performance Management, Culture, and the Hiring "Test" | 3 | 3 | 1 | 2 | Harry probes how performance evaluation works without formal goals, synthesizing Jason's explanation using the inputs versus outputs framework. Jason details Basecamp's implicit one-year re-hire test. | |
| Delivering Specific and Constructive Negative Feedback | 0 | 4 | 0 | 0 | Harry openly admits being a people-pleaser and asks Jason for practical advice on delivering hard negative feedback. Jason provides concrete guidance on referencing real work examples rather than abstract critiques. | |
| Banning Politics, the Public Backlash, and the Aftermath | 2 | 2 | 1 | 3 | Harry questions Jason on the backlash following Basecamp's policy banning political discussions at work. Jason candidly reflects on losing long-time friends and a third of staff while standing by the decision. | |
| Developing Resiliency Against Public Backlash and Decision-Making Frameworks | 2 | 3 | 0 | 1 | Harry shares his own experience receiving death threats after a public incident and seeks perspective. Jason shares a Stoic framework centered on controlling internal reactions rather than external outrage. | |
| Avoiding Manufactured Problems and Resolving Partner Disagreements | 2 | 3 | 1 | 3 | Harry presses Jason for concrete examples of decisions and major co-founder conflicts. Jason explains avoiding manufactured problems in software and breaking deadlocks with David via disagree-and-commit. | |
| The Dynamics of a 21-Year Business Partnership | 1 | 3 | 1 | 2 | Harry asks about maintaining a 21-year partnership and whether the founders are close friends. Jason dispels the myth that founders must socialize outside work, noting physical distance helps sustain longevity. | |
| Personal Wisdom: Marriage, Space, and Conscious Parenting | 0 | 2 | 0 | 1 | Harry asks for personal wisdom regarding marriage and parenting. Jason offers advice on giving spouses space and treating parenting as the art of the individual. | |
| Quickfire: Psychedelics, Mind Expansion, and Reshaping the Startup Narrative | 2 | 3 | 1 | 2 | Harry leads a quickfire section, prompting Jason on psychedelics and startup narrative shifts. Jason explains how high-dose mushrooms un-filter perception and advocates for self-funded company models. | |
| Financial De-Risking, Injecting Risk, and the Future | 3 | 4 | 2 | 2 | Harry asks about secondary stock sales and future plans. Jason defends secondary de-risking citing his 2006 deal with Jeff Bezos and notes that a founder's primary job is injecting risk back into the company. |
Statements from this episode (21)
Basecamp surpassed 37signals' agency revenue within a year of launch
“Put some prices on it, put it out in the market in February of 2004. And about a year later or so, it was doing more, generating more revenue for us than our website design business.”
37signals operates without a board of directors or outside funding
“Not taking money, so I'm not beholden to anybody. We don't have a board of directors.”
Unprofitable SaaS companies face deep cuts as venture funding dries up
“If a company can't make its own money, they require outside money. Outside money dries up. Things have to change. I mean, there's gonna have to be late. There already is. It's not like this is news, but layoffs, deep cuts, some austerity measures. You know, th…”
Founders make a mistake by comparing customer counts with competitors
“This is, I think something entrepreneurs get wrong all the time. They compare themselves to someone else and they go, how many customers do they have? How many customers do they have? All that matters is do we have enough customers to make our own business wor…”
37signals has been profitable every single year for 23 years
“We've been profitable for 23 years, every year.”
Basecamp will not pursue growth at the expense of profitability
“I don't want to be bigger and have much lower margins. I don't want to be bigger and lose money per customer. I don't want to be bigger and have to take a bunch of money to support that growth.”
37signals operates without financial goals or growth targets beyond remaining profitable
“We don't have financial targets. We don't have financial goals besides being profitable. I'm not aiming for a certain percentage of growth on a given year.”
Managers should evaluate first-year employees by asking if they would rehire them
“One of the things we do is the first year is kind of a real big, I would say, I mean, people are hired, but it's kind of a test. The main question we ask at the end of the first year is would I hire this person again?”
Basecamp evaluates candidates with paid, one-week contract projects before full-time hiring
“When we hire people, we actually hire them first for a week, ah, on a contract basis, one week, not in every position, but in some, to actually do a project for us.”
Jason Fried ignores resumes, work history, and college education when hiring
“I don't really care about resumes. I don't really care about a lot of that people's history. I don't care where they went to school. If they went to school, I don't care about any of those things. Let's look at the work itself.”
One-third of Basecamp employees quit within two weeks of political talk ban
“Ultimately about a third of the company quit in a matter of is it a week or two.”
Jason Fried would ban workplace political discussions again despite the employee backlash
“If I had to make it again today, I would make the same decision.”
Basecamp is in a significantly better place following its political discussion ban
“I can tell you the company's in a significantly better place.”
Basecamp grew to its largest headcount ever following the 2021 staff walkout
“We, we've actually grown significantly bigger than we've ever been. So we rehired a bunch of people and then have hired more since. At the time that happened, we were about 60, now we're about 80, biggest we've ever been.”
Most companies waste significant time solving problems they do not actually have
“And I think a lot of companies spend a lot of time solving problems they don't have. And then they solve them, they don't have them, and they think they did good work because they don't have the problem, but they wouldn't have had the problem in the first plac…”
Successful co-founders need shared core values but distinct functional skills
“So you need to have something core that's shared and in common. And I think the actual work itself, you need to have separate skills on. I think that's very important.”
Basecamp co-founders Jason Fried and DHH rarely socialize outside of work
“We're friends, but I don't think like, you know, we don't hang out as friends. Like we don't, you know, we'll, we'll occasionally grab a dinner or something, you know, with their families or whatever. Very rarely.”
Jason Fried believes everyone should try a high-dose psychedelic experience once
“I feel like everybody should do this once in their life is kind of how I felt after I came away from those experiences.”
Jeff Bezos bought Basecamp shares directly from founders, not as primary capital
“So Jeff Bezos bought a small piece of my shares and David shares. None of his money went into the business. The money went into my bank account and David's bank account.”
Shorts cut from this episode
▶ So many startups make this SAME MISTAKE 🤦♂️ #shorts · 20V (@10:52)
▶ POV: Jeff Bezos invests in your company 💰 #shorts · 20VC wi (@46:21)
▶ #1 HIRING TIP that you have never heard 😲 #shorts · 20VC wi (@20:05)
▶ How we almost blew up a $100B company - Basecamp CEO Jason F (@47:22)
▶ Why Most SaaS Companies are F*** 🧐 #shorts · 20VC with Harr (@6:27)
▶ #1 Performance Review Tip 🥇 #shorts · 20VC with Harry Stebb (@17:28)