Dec 17, 2023 · 1h 49m · lennys-podcast
Jason Fried challenges your thinking on fundraising, goals, growth, and more
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In this in-depth conversation, 37signals co-founder and CEO Jason Fried challenges conventional tech industry dogmas by advocating for bootstrapping, small autonomous teams, intuition-led product development, and sustainable long-term profitability over venture-backed hyper-growth.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Lenny holds 18.3% of the talking time here. How this is scored →
Lenny as informed peer 3.6 Guest teaching 3.7 Guest disagreement 2.5 Lenny pushing back 1.4
speaking balance: gold is Lenny, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 41:40 Deconstructing and rejecting the tech sprint metaphor
Jason forcefully pushes back on the industry-standard concept of sprints, citing his physical track experience to argue that back-to-back sprints lead directly to organizational burnout and vomiting.
Hardest push from Lenny ▶ 1:06:43 Lenny challenges Jason on product expectationsLenny explicitly refuses Jason's detached framing that 37signals operates without expectations, pushing back that any creator launching a major new email client inherently harbors hopes of widespread market adoption.
Biggest teaching moment ▶ 1:17:30 The guitar analogy for practicing profitabilityJason methodically educates Lenny and the audience on why VC funding erodes financial discipline, using a vivid guitar-playing analogy to demonstrate that businesses cannot abruptly turn on profits without years of practicing cash generation.
Lenny holds their own ▶ 1:35:30 Lenny calls out Jason's violated delivery promiseLenny expertly catches Jason violating the exact anti-promising rule he had articulated earlier in the interview regarding year-end software release deadlines.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Lenny as informed peer | Guest teaching | Guest disagreement | Lenny pushing back | Why |
|---|---|---|---|---|---|---|
| Unpacking 37signals' Numbers: Profit Over Vanity Metrics | 4 | 5 | 4 | 2 | Lenny opens by framing Jason's model as a deliberate alternative to default venture dogma and mentions his own essay on venture scale. Jason dismisses Silicon Valley's revenue obsession and acronym metrics, asserting that software economics have been inverted by VC bloat. | |
| Small Teams, Fixed Constraints, and Avoiding Bloat | 5 | 4 | 3 | 2 | Lenny cites competitor headcounts from memory to highlight 37signals' disproportionate leverage. Jason explains their structural discipline, building features strictly with two-person teams and refusing enterprise bloat. | |
| Redefining Success: Enjoyment and Holistic Profitability | 4 | 4 | 3 | 1 | Lenny quotes Jason's aphorisms back to him regarding staying small and underdoing the competition. Jason rejects OKRs, KPIs, and individual product P&Ls in favor of holistic company health and repeatable personal enjoyment. | |
| Playing Infinite Games and Entrepreneurship as a Career Continuum | 5 | 3 | 2 | 1 | Lenny connects Jason's career to Carse's concept of infinite games and the 'stay up' mentality. Jason validates the concept, tracing his career continuum from teenage hardware retailing to running an independent software business. | |
| Navigating Energy Cycles and Imagining Alternative Leadership | 3 | 2 | 1 | 1 | Lenny asks how Jason manages burnout over a quarter-century of leadership. Jason candidly reflects on past energy drains and conducts a thought experiment on what a conventional growth-oriented CEO would do if they took over. | |
| Mainstream Reality vs. Silicon Valley Outliers | 3 | 4 | 3 | 1 | Lenny probes whether bootstrapping is universally applicable or personality-dependent. Jason reframes the debate by pointing out that bootstrap businesses represent the boring global majority, while VC unicorns are rare statistical anomalies. | |
| Physical Scale vs. Digital Ubiquity | 4 | 4 | 2 | 1 | Lenny asks what structural requirements demand VC financing. Jason distinguishes physical network-effect businesses like Uber and Airbnb from pure software tools that can be globally distributed on day one with zero capital intensity. | |
| The Shape Up Methodology: Six-Week Cycles and Fixed Appetites | 3 | 5 | 2 | 1 | Lenny invites Jason to unpack Shape Up. Jason explains the fundamental distinction between variable time estimates and fixed appetites, emphasizing that projects must be killed if they cannot be solved within six weeks. | |
| The Peril of Roadmaps and Phased Process Adoption | 4 | 4 | 3 | 2 | Lenny brings up the trade-off of not being able to make roadmap commitments to sales and marketing. Jason fiercely attacks long-term promises as the downfall of businesses and explains how to trial Shape Up on non-critical projects. | |
| Cycles, Replenishment, and the Fallacy of 'Sprints' | 3 | 5 | 4 | 2 | Lenny jokingly defends sprints as feeling good after completion. Jason rejects the sprint terminology based on high school track experience, advocating instead for sustainable cyclical work with dedicated cooldown periods. | |
| Cultivating an Intuitive and Emotion-Led Product Culture | 4 | 4 | 3 | 2 | Lenny questions how an instinct-driven organization avoids poor decisions. Jason argues that all business choices are fundamentally subjective judgment calls and explains how he normalizes asking team members how things feel rather than demanding metric proof. | |
| Hiring for Taste, Gut Instinct, and Creative Play | 4 | 4 | 2 | 2 | Lenny references Brian Chesky's product leadership and challenges how to ensure employees have refined taste. Jason outlines his project-based hiring test and clarifies that raw idea generation is useless without tight execution and playful improvisation. | |
| Sponsor Message: Wix Studio | 2 | 4 | 2 | 0 | Following the sponsor break, Lenny relays an audience question from Matt Mullenweg regarding spectacular failures of adopting Jason's advice. Jason answers that trying to force overnight organizational transformation inevitably fails. | |
| Audience Question: Changing Minds from Single-Product Focus to HEY and ONCE | 3 | 3 | 3 | 1 | Lenny introduces Leo Polovets's question about changing one's mind. Jason reflects on reversing his earlier decision to focus exclusively on Basecamp, while pushing back against the idea of sticking rigidly to past plans. | |
| Radical Independence and Providing Distinct Alternatives | 4 | 4 | 3 | 4 | Lenny directly challenges Jason's claim that he holds no expectations, suggesting he surely hopes products succeed. Jason reframes his outlook around creative pride and positioning software as an opinionated alternative rather than direct competition. | |
| Work Isn't War: Dismantling Destructive Metaphors | 3 | 3 | 3 | 0 | Lenny asks about the 37signals principle 'work isn't war'. Jason deconstructs aggressive corporate militaristic terminology, arguing that destructive metaphors degrade workplace psychological well-being. | |
| Tactical Bootstrapping Principles and Stoic Negative Visualization | 3 | 3 | 2 | 1 | Lenny asks for pragmatic guidance for low-capital founders. Jason offers tactical bootstrapping rules (controlling expenses, solo endurance) and details how practicing Stoic negative visualization prevents catastrophic anxiety. | |
| Venture Capital Inefficiencies and the Discipline of Making Money | 4 | 5 | 4 | 2 | Lenny brings up Linear as an example of a VC-backed team sharing similar aesthetic principles. Jason asserts that excess capital inevitably breeds operational sloppiness and deprives founders of the repetitive practice required to generate actual profits. | |
| The Scrappy Advantage of Constraints | 4 | 4 | 3 | 1 | Lenny synthesizes Jason's focus on discipline and investor alignment, sharing a favorite quote on 37signals' core strategy. Jason shares Peter Rahal's RXBAR anecdote to illustrate how tight constraints foster indispensable hustle. | |
| Announcing ONCE: Addressing SaaS Subscription Fatigue | 3 | 4 | 2 | 1 | Lenny introduces the announcement of ONCE. Jason outlines the thesis behind fighting subscription fatigue by selling self-hosted, buy-once generic software commodities with zero ongoing marginal hosting overhead. | |
| ONCE Campfire: Architecture, Code Ownership, and Air-Gapped Security | 4 | 3 | 2 | 2 | Lenny asks about update mechanics and pricing. Jason reveals the revival of Campfire, full code ownership for purchasers, and edge-case applications like air-gapped secure enterprise communications. | |
| Core Takeaways: Simplicity, Small Teams, and Avoiding Unnecessary Complexity | 3 | 3 | 2 | 2 | Lenny playfully calls out Jason for breaking his own rule against promising 'end of year' delivery dates. Jason laughs it off and summarizes his core thesis that added money and complexity introduce restrictive strings. | |
| Lightning Round: Media and Candidate Interview Techniques | 3 | 2 | 1 | 0 | Lenny initiates the lightning round with book recommendations and interview techniques. Jason highlights several books on writing and folk craft, using a manual transmission car as a metaphor for unmediated, direct business operations. | |
| Lightning Round: Life Mottos, Charlie Munger, and Intuition | 4 | 3 | 2 | 1 | Lenny references Charlie Munger's mental models when Jason mentions his upcoming book on intuition. Jason recounts a personal Zoom meeting with Munger where Munger validated the power of unencumbered instinct in creative problem solving. |
Statements from this episode (41)
Fried: High revenue is meaningless if a company still goes bankrupt
“Revenues don't really matter because you can go broke generating a lot of money.”
Fried: 37signals generated double-digit millions in annual profit for a decade
“We've been profitable every year for 24 years. But let's say over the last 10 years, we've been doing a double-digit million dollar profits on an annual basis”
Fried: 37signals has over 100,000 paying customers with about 75 employees
“We have about a 100,000 plus paying customers, so that's a rough number. And we have about currently like 75 or so employees.”
Fried: Silicon Valley turned high-margin software into an unprofitable business model
“What's interesting is that Silicon Valley has found a way to make the most profitable style of business the least profitable. Like, software has, there's like, No physical costs. It should, the margin should be close to 80 or 90%, and it turns out that they're…”
Fried: Venture backing destroys viable mid-sized software business opportunities
“There really is only kind of one outcome for venture backed companies, which is go huge. And if you think about all of the space between Kind of a small business and a massive, huge unicorn business. There's so much room there that you could normally find your…”
Fried: 37signals employs zero salespeople and ignores enterprise customers
“We don't have any salespeople. You know, we don't have 15 different versions of Basecamp. You know, we're not after enterprise.”
Fried: 37signals builds every feature with two people within six weeks
“We build products with two people at a time. So every feature we work on in Basecamp or Hay or whatever we're building is two people, one programmer, one designer, and they have a maximum of six weeks to deliver the feature that they're working on. Most of the…”
Fried: 37signals avoids tracking individual product P&Ls
“I don't have different P and L's for each product in a way where we're looking at them very carefully. It's like in total, collectively, are we making more money than we spend? And that's the only thing we ultimately look at.”
Fried: 37signals tracks no OKRs, KPIs, revenue, or customer growth targets
“We don't have financial goals. We don't have OKRs or KPIs. I don't have revenue targets. I don't have growth targets in terms of the number of customers we need to pick up this year versus last year. I don't look at any of those things.”
Fried: 37signals plans to launch three products under ONCE line in 2024
“Launching this new thing called Once. Which hopefully we're going to build three or so products next year under that category.”
Fried: Most businesses globally are bootstrapped, not venture-backed outliers
“The majority of companies on this planet run like ours. They're bootstrapped. They don't have any money. No one's willing to give them a penny. And they open up a shop somewhere, they do something, they put their shingle out, and they, you know, launch a websi…”
Fried: Almost nobody succeeds through venture-backed unicorn moonshots
“Basically almost nobody makes it that way. Like really almost nobody really makes it that way. And there's a lot more room to make it and to build a successful business if you throw out that outlier and look at all the other places you can land as a business.”
Fried: He would never trade Basecamp for Monday.com's venture-backed business
“I would not trade Basecamp for Monday's business any day of the week, because I love what we're doing. We're profitable. We're happy. We don't have to deal with the things they have to deal with.”
Fried: Basecamp has roughly the same customer count as Monday.com
“Look, hey, we have the same number of customers roughly than they do.”
Fried: Pure software products only need venture capital for marketing
“Airbnb is a physical product. Uber is a physical product. Basecamp, Monday, Asana, they're available everywhere instantly anyway. I don't know what you need the money for other than marketing.”
Fried: 37signals assigns no specs or tickets to product teams
“We don't have, like, a spec. We don't create to-dos or tasks or tickets for people. They create the work that needs to get done to fulfill the idea that we've written up and designed, essentially, and they figure out how to do it.”
Fried: Long-running, never-ending projects cause employees to quit
“This prevents long-running projects that never end, which, by the way, are the most demoralizing kinds of projects. Things that you're stuck on, that you don't want to do, that never end. Sucks. And if people get stuck on a couple of those, they want to leave …”
Fried: Making delivery promises is the downfall of businesses
“Promises are the downfall of every business. Like every time we've made a promise to get something out in a certain period of time, like, and we kind of inevitably seem to miss, miss it.”
Fried: 37signals operates by never promising delivery deadlines
“So I just, we've learned to not promise anything. We can share what we're working on. If we want to, we can tell people we're doing something.”
Fried: Testing new workflows on critical projects kills future adoption
“What ends up happening is, is that when people try to try something new on something really critical and it doesn't work, they will never try it again. They've just like, they've destroyed all future opportunities to try this again because everyone knows how b…”
Fried: Continuous back-to-back sprints do not work at work
“And that's why I don't like the word because you can't layer that back to back to back to back. You cannot sprint back to back to back to back in life. And you can't do it at work. I mean, people do it at work, but like, I don't think it actually works.”
Fried: 37signals uses six-week cycles followed by two-week cool-downs
“So what we do is after our six week cycles, we typically take what we call a two week cool down. So we call these cycles, not sprints.”
Fried: Companies hire executives for amorphous judgment, not spreadsheet literacy
“When companies hire executives, What are they looking for in executive? They typically go, ah, judgment and experience. They're not like they can read an Excel spreadsheet. That's not the thing that matters. Like anyone can read that, or anyone can read a char…”
Fried: 37signals never asks employees to justify product decisions with data
“We almost never, sometimes we look at numbers to sort of Be an input, but it's never like, prove that. I'll never say like, justify that. That's just not terminology or lingo that we ever bring up.”
Fried: 37signals pays top five design finalists for one-week trial projects
“One of the things that we do during the interview process for designers specifically and product people, which is the same thing in my mind, is they do a project for us at the end. So the last, like, five finalists will do a project for them, for us. We'll pay…”
Fried: Analyzing past business failures is largely futile in complex work
“I don't like to look back on, on things. I'm not much of a fan of looking back on failures and trying to figure out what went wrong so we don't do it again, because I don't think we know what went wrong.”
Fried: Large companies adopt Shape Up via small experimental teams
“It's typically small teams inside larger companies that experiment with this. And sometimes it spreads and sometimes it doesn't.”
Fried: 37signals operates exclusively on six-week planning cycles without long-term plans
“Like we don't have a multi-year plan. I don't even have a one-year plan. I don't even have a six month plan or a court. Like we think about everything we're going to do every six weeks, we rethink what we're going to do next.”
Fried: Raising outside capital turns entrepreneurs into employees for others
“The moment you go out and take money, or have these big obligations, you end up working for someone else, and I don't really understand, I do understand why some companies do it, but I don't understand why a lot of people do it who probably shouldn't do it.”
Fried: Bootstrappers must stay small because costs are their only controllable variable
“Stay as small as you can for as long as you can. Like the only thing you can really control are your costs. You can't control the alternatives in the market, the competition. You can't control them. You can't determine the market itself. You can't control the …”
Fried: Founders should avoid hiring a second person as long as possible
“Figure out how to do as much as they can on their own before they bring on a second person. Like, Really work and struggle through something on your own. The moment you bring on someone else, you've got another mouth to feed. It's becomes expensive. You get an…”
Fried: Excess venture capital creates operational sloppiness in startups
“The thing with the VC route, so like the idea of like having too much money, it doesn't mean you can't work efficiently and thoughtfully, but it does create a degree of sloppiness because you don't have to when you don't have to, and when I'm saying have to, y…”
Fried: Bootstrapping forces founders to learn how to make money
“The value in bootstrapping is that it teaches entrepreneurs. It not even teaches, it forces them to have to figure out how to make money. And the more time under the curve they have making money and practicing making money, the better at it they're going to ge…”
Fried: Software industry will swing back from SaaS toward buy-once software
“The idea behind once is David and I kind of feel like, we're probably a bit early here, but we feel like there's going to be a bit of a turn back towards the way things were. Pendulums always swing.”
Fried: 37signals launches ONCE, a line of self-hosted, buy-once business software
“We were going to launch this thing called once, which is essentially a brand, an umbrella, a line, a product line of non-SaaS products, of products, not services. Things people will download, software, business software products, people will download, pay for …”
Fried: 37signals builds ONCE products in 3 months with 2 people
“We can build these in typically three months each with two people. And the maintenance cost is zero to us. Essentially it's, there's no marginal cost here because we make the software and we sell it and we don't have to maintain it in terms of hosting and the …”
Fried: ONCE software includes full source code for buyers to modify
“The other thing we're doing with once products is that you get the code... So you'll get all the code and you can look at it and you can modify it and you can play with it and you can tweak it. You can't resell it. There's a certain licensing, but it's yours.”
Fried: 37signals will price ONCE Campfire under $1,000
“It's going to be under a thousand bucks. I won't tell you exactly where, but we're trying to find a price point where it's kind of becomes a no brainer.”
Fried: Asking candidates whose work they admire reveals their taste and inspiration
“Whose work do you admire? So it's not so much about what you can do, but what are other people doing that you think is great? I find that that really illuminates kind of you know, what kind of pulse they have on the world and what they're looking at and what i…”
Fried: Lack of conventional knowledge sparks innovation by forcing gut reliance
“A lot of innovations happen because you don't know how other people do them, and all you have Is your gut. All you have is your intuition. All you have is how you feel about the thing. You know, like you don't have evidence. You don't have other examples to fo…”