17 December 2023

Jason Fried challenges your thinking on fundraising, goals, growth, and more

7Frameworks

15Insights

Episode overview

Jason Fried explains how 37signals has remained independent, profitable, and comparatively small by prioritizing constraints, simplicity, and sustainable economics over aggressive growth. He describes Shape Up’s six-week appetites, two-person teams, cooldown periods, and willingness to stop unfinished work rather than let projects drag on. The conversation also explores intuition-led decisions, avoiding distant plans and rigid goals, practical bootstrapping, and 37signals’ Once product line for self-hosted software.

Key ideas

Bootstrapping gives founders repeated practice at the essential business skill of making money, while abundant outside capital can encourage overspending and organizational sloppiness.
A sustainable independent company offers more possible successful outcomes than the narrow venture-backed path toward a huge exit.
37signals uses Shape Up: work is shaped in advance, assigned to a designer-programmer pair, and constrained by an appetite of no more than six weeks.
Two-week cooldowns between development cycles create space for maintenance, exploration, and preparation without imposing back-to-back sprints.
Fried treats judgment, experience, intuition, and how a product feels as legitimate decision inputs rather than relying exclusively on metrics.
Long-range promises and plans can create harmful future obligations; 37signals instead repeatedly decides what to do next in short cycles.
Bootstrappers should stay small, control costs, do as much work themselves as possible, and become comfortable with the downside if an experiment fails.
Once is 37signals’ attempt to offer high-quality, self-hosted business software that customers purchase once instead of renting through recurring SaaS subscriptions.

Transcript available · source text is retained privately and is not published

Frameworks in this episode

Productivity6 steps

Appetite-Driven Product Cycles (Shape Up)

Fix the time budget, not the scope: six-week appetites, two-person teams, and work that dies on time

Read →

Mindset6 steps

Give Your Gut Credit: Judgment-First Decision Making

Every decision a human makes is a judgment call — so ask 'what do you think?' not 'what do you know?'

Read →

Leadership5 steps

Low-Criticality Pilot for Changing How You Work

Never test a new way of working on something that matters — you get one shot at first impressions

Read →

Entrepreneurship6 steps

The Bootstrapper's Constraint Discipline

Costs are the only thing you control — so stay small, do it yourself, and practice making money

Read →

Strategy6 steps

The Commodity Generic Play (ONCE)

Find commodity software still charging luxury subscription prices, then sell a beautiful generic once

Read →

Leadership5 steps

The Riff Test: Hiring for Gut Instinct

Pay finalists to build something, then critique it and ask what they'd do with two more days

Read →

Entrepreneurship6 steps

The Stay-Up Scorecard

One number (profit) and one question (would I do it again) instead of OKRs, KPIs and a five-year plan

Read →

People & resources mentioned

Attributed to the moment in the episode. Timestamps are approximate.

People · 10

Jason FriedMentionstoday my guest is Jason freed Jason is the co-founder and CEO of 37 signals
“today my guest is Jason freed Jason is the co-founder and CEO of 37 signals”
▶ Watch at ~0:30approx.
Lenny RachitskyMentionstoday we've got another very special compilation episode something I've been pulling on more and more with the podcast and the newsletter
“thanks Lenny it's good to be here”
▶ Watch at ~5:00approx.
Brian CheskyMentionsBrian chesky at Airbnb there was a whole article where we unpacked this moment in their product development cycle
“Brian's probably one of the greatest CEOs around today”
▶ Watch at ~50:30approx.
David Heinemeier HanssonMentionsDavid hires programmers and different people in the company hire different people
“David hires programmers and different people in the company hire different people”
▶ Watch at ~51:00approx.
Matt MullenwegMentionsDiscussed the power of compounding after twenty years building WordPress and Automattic.
“one is from Matt Mullen how cool is that”
▶ Watch at ~56:00approx.
Leo PolovetsMentionsa second question comes from Leo poit one of my favorite VCS he works at Seuss adventures
“a second question comes from Leo poit one of my favorite VCS he works at Seuss adventures”
▶ Watch at ~1:00:00approx.
Verlyn KlinkenborgMentionsI can never pronounce his last name but ver clink lorg I believe is his name
“I can never pronounce his last name but ver clink lorg I believe is his name”
▶ Watch at ~1:37:30approx.
Derek SiversRecommendsthe other one is pretty much anything by Derek sers but specifically hell yeah or no
“the other one is pretty much anything by Derek sers but specifically hell yeah or no”
▶ Watch at ~1:38:00approx.
Tom PettyMentionsthere's a great Tom Petty lyric
“there's a great Tom Petty lyric”
▶ Watch at ~1:44:00approx.
Charlie MungerMentionsHis words and documents were assembled into Poor Charlie's Almanack.
“I had one opportunity to meet with Charlie Munger”
▶ Watch at ~1:47:00approx.

Resources · 33

SlackMentionssoftware · Slack Technologies
“including a competitor to Slack”
▶ Watch at ~0:30approx.
37signalsMentionscompany · Jason Fried and co-founders
“Jason is the co-founder and CEO of 37 signals which makes base camp and hay”
▶ Watch at ~0:30approx.link ↗
CodaUsessoftware · Coda
“I use Kota every day to Wrangle my newsletter content calendar my interview notes for podcast and to coordinate my sponsors”
▶ Watch at ~2:30approx.
CodaRecommendssoftware · Coda
“sign up today a coda.io Lenny and get $1,000 startup credit on your first statement”
▶ Watch at ~3:00approx.
SidebarRecommendscompany · Sidebar
“with sidebar senior leaders are matched with highly vetted private supportive peer groups”
▶ Watch at ~4:00approx.
AsanaMentionssoftware · Asana, Inc.
“Asa has 1600 employees clickup has a th000 employees slack has 2500 employees”
▶ Watch at ~10:00approx.
SmartsheetMentionssoftware
“smart sheet has 3,000 employees Monday has 1500 employees”
▶ Watch at ~10:00approx.
ClickUpMentionssoftware · ClickUp
“Asa has 1600 employees clickup has a th000 employees slack has 2500 employees”
▶ Watch at ~10:00approx.
BasecampMentionssoftware · 37signals
“we don't have uh 15 different versions of base camp”
▶ Watch at ~10:30approx.
FigmaMentionssoftware · Figma
“build like a massively scaled everyone's using kind of product like figma”
▶ Watch at ~14:00approx.
Finite and Infinite GamesRecommendsbook · James P. Carse
“there's this book I don't know if you've read this book called finite and infinite games”
▶ Watch at ~17:00approx.
Ingram MicroUsescompany
“there they still exists company called Ingram Micro which was a which had this huge thick catalog of like Electronics equipment”
▶ Watch at ~18:00approx.
monday.comMentionssoftware · monday.com
“let's just take Monday for example right it's not Bas camp and Monday are quite a bit different but they live in the same world”
▶ Watch at ~30:30approx.
AirbnbMentionscompany · Brian Chesky, Joe Gebbia, and Nathan Blecharczyk
“Airbnb is a great example that like that has to have a certain degree of scale”
▶ Watch at ~32:00approx.
UberMentionscompany · Uber
“same thing with Uber Uber is another example”
▶ Watch at ~32:00approx.
Shape UpCoinedbook · Ryan Singer
“we have a a framework development framework we invented called shapeup and if you go to basecamp.com shapeup you can read the book”
▶ Watch at ~33:30approx.link ↗
Wix StudioRecommendssoftware · Wix
“let me tell you about Wix Studio the new platform that lets agencies deliver exceptional client sites with maximum efficiency”
▶ Watch at ~55:00approx.
Susa VenturesMentionscompany
“he works at Seuss adventures”
▶ Watch at ~1:00:00approx.
HEYCoinedsoftware · 37signals
“a few years ago we built this new thing called Hey hey.com email service”
▶ Watch at ~1:00:30approx.link ↗
37signalsMentionscompany · Jason Fried and co-founders
“if you go to 37 signals.com there's 37 ideas”
▶ Watch at ~1:05:00approx.link ↗
MacBook AirRecommendsproduct · Apple
“you can get a really nice MacBook Air or whatever”
▶ Watch at ~1:13:00approx.
SquarespaceRecommendssoftware
“use Squarespace to set up your site for 15 bucks a month or whatever like don't go hire a web designer”
▶ Watch at ~1:13:30approx.
LinearMentionssoftware · Linear
“I want to touch on linear one it's interesting that you guys have a lot of similar philosophies”
▶ Watch at ~1:15:30approx.
OnceCoinedproduct · 37signals
“we're going to launch this thing called once which is essentially a brand an umbrella a line a product line of nons SAS products”
▶ Watch at ~1:24:30approx.link ↗
CampfireCoinedsoftware · 37signals
“years and years and years ago 2006 we launched a product called campfire which was a group chat tool”
▶ Watch at ~1:26:30approx.
OnceMentionsproduct · 37signals
“also the domain is awesome once.com right”
▶ Watch at ~1:31:00approx.link ↗
The White HouseMentionsplace
“there was a time way back in the day where the White House got in touch with us”
▶ Watch at ~1:34:00approx.
Several Short Sentences About WritingRecommendsbook · Verlyn Klinkenborg
“when anyone ever asks me like what book do you recommend on writing it's this one several short sentences about writing”
▶ Watch at ~1:37:30approx.
Hell Yeah or NoRecommendsbook · Derek Sivers
“specifically hell yeah or no this book is something I I I recommend this book to everybody”
▶ Watch at ~1:38:00approx.
Home-Made: Contemporary Russian Folk ArtifactsRecommendsbook
“it's called homemade contemporary Russian folk artifacts”
▶ Watch at ~1:38:30approx.
OppenheimerRecommendsfilm · Christopher Nolan
“I really thoroughly enjoyed Oppenheimer though”
▶ Watch at ~1:40:00approx.
WildflowersMentionsother · Tom Petty
“I think it's on wild flowers on the album”
▶ Watch at ~1:44:00approx.
Poor Charlie's AlmanackUsesbook · Charlie Munger
“I'm reading Charlie munger's Charli poor Charlie Almanac right now”
▶ Watch at ~1:46:30approx.

Spot an error or want something removed? Request a correction or removal.

Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Hot Take· 8

Hot Take00:00

Almost Nobody Actually Makes It The Venture Way

Jason Fried pushes back on the industry default of 'go big or go home, raise a bunch of money, get to unicorn status.' He argues that path succeeds for almost nobody, and that once you throw out that outlier, there's enormous room to build a successful business by landing somewhere in the vast space between small shop and mega-unicorn.

The 'raise money and get huge' path works for almost nobody
Bootstrapping is presented as a legitimate alternative, not a prescription for everyone
There's far more room to succeed if you stop chasing the single outlier outcome

“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…”
Jason Fried · 00:00

“it's an alternative to what you're often Hearing in our industry which is like go big or go home raise a bunch of money and…”
Jason Fried · 00:00

#bootstrapping#venture-capital#startups#contrarian

Hot Take07:00

Your Startup Is Probably Not Venture Scale

Fried argues most software businesses simply don't need outside capital: you need a couple of laptops and a couple of people, and the margins should be close to 80–90%. Real capital needs come from physical requirements like factories, ovens, or hardware. He contends that taking venture money when you don't need it actually hurts you by forcing a single 'go huge' outcome.

Software is cheap to start and should carry 80-90% margins
Capital is genuinely needed only for physical requirements (factories, restaurants, hardware)
Silicon Valley turned the most profitable business model into the least profitable one
Venture backing collapses your options down to one outcome: go huge or wither

“your startup is probably not Venture scale just trying to convince people like you may have a really good idea but it doesn't mean it's…”
Jason Fried · 07:00

“what's interesting is that Silicon Valley has found a way to make the most profitable style of business the least profitable”
Jason Fried · 08:00

#venture-capital#software-margins#bootstrapping#fundraising

Hot Take10:00

Why A Small Team Beats Competitors With Thousands

Comparing 37signals' ~75 people to competitors with 1,500–3,000 employees at similar customer counts, Fried explains the difference is focus on efficiency over growth. One product, one codebase, a hard price cap (nobody pays more than $299 for Basecamp), and no sales team keep support costs and organizational complexity low. He argues constraints and simplicity, not headcount, are where great work comes from.

Competitors run 1,500-3,000 employees at similar customer counts
One price cap ($299) and one codebase avoid enterprise complexity and support costs
No salespeople, no tiered enterprise versions
Spending money just because you have it is a Silicon Valley habit to avoid

“so we think that constraints Simplicity small teams actually are where it's at and and keep us honest and allow us to do great work…”
Jason Fried · 12:30

“if you gave me a thousand people I wouldn't know what to do with them we would we would fall apart”
Jason Fried · 13:00

#small-teams#efficiency#constraints#pricing

Hot Take17:00

Build A 'Stayup', Not A Startup

Drawing on the book Finite and Infinite Games, Fried argues the most joy comes from games that never end — building relationships and a company you want to keep working at forever. He's tired of 'startup' dominating the culture, because starting a business is the easy part. Staying is far harder, so he's here to celebrate 'stayups.'

Infinite games (never-ending) produce more joy than finite goals like selling or IPO
Starting a business is easy; staying in it for years is the hard part
He reframes 'startup' as 'stayup' to celebrate endurance
Same dynamic applies to newsletters and podcasts — easy to start, hard to sustain

“like you get most joy out of things that neverend like building great relationships building a company you want to keep working at forever”
Jason Fried · 17:30

“staying is harder than starting and so I'm here to celebrate stayups”
Jason Fried · 20:30

#infinite-games#entrepreneurship#endurance#philosophy

Hot Take38:30

Promises Are The Downfall Of Every Business

Fried says the act of promising a delivery date seems to cause the miss — as if something would have shipped on time had they not committed to it. His worst offender is the 'by the end of the year' promise, because the further out the date, the easier it is to make and the more likely you're setting yourself up for disappointment.

Making a delivery promise seems to make the work miss its date
37signals learned to not promise anything, only share what they're working on
'By the end of the year' is the most dangerous promise to make
The further away the deadline, the easier and more tempting it is to over-promise

“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…”
Jason Fried · 38:30

“the worst promise and by the way we've we've made a couple of these recently we always regret them is like by the end of…”
Jason Fried · 39:00

#promises#deadlines#product-management#shipping

Hot Take44:00

Everything Is A Judgment Call — Give Your Gut Credit

Fried admits he's never known how to make decisions by the numbers and believes everyone is actually intuition-driven. Data can be one input among thousands, but any human decision is ultimately a judgment call informed by absorbed experience. It's why companies hire executives for judgment and experience, not spreadsheet-reading, and why his teams ask 'what do you think?' and 'how does this feel?' rather than 'what do you know?'

Every human decision is a judgment call; data is just one of thousands of inputs
Executives are hired for judgment and experience, not for reading charts
Teams ask 'what do you think / how does this feel' over 'what do you know'
Humans are primarily feeling creatures, even if they won't admit it

“I think everything's a judgment call”
Jason Fried · 44:30

“while we have a logical side to us and a rational side to us we're primarily feeling creatures”
Jason Fried · 48:00

#intuition#decision-making#gut#management

Hot Take1:03:00

Long-Term Planning Is A Fantasy

37signals has no multi-year, one-year, or even six-month plan — they rethink what they're doing every six weeks and make it up as they go. Fried argues the further out you plan, the less you know about the decisions you're making, so by the time you arrive you'll likely be wrong or want something else. Locking in future obligations, he believes, sends people down a path of doing things they no longer want to do.

No multi-year, one-year, or six-month plan; horizon is six weeks
The further out you plan, the less you know about that decision
Future obligations push people to do things they no longer want to do
'I don't plan long term because I want to do what I think, not what I thought'

“we don't have a multi-year plan I don't even a one- year plan I don't even have a six-month plan”
Jason Fried · 1:03:00

“the further out you plan the less you know about the decisions you're making and by the time you get there you're probably going to…”
Jason Fried · 1:04:30

#planning#strategy#long-term#contrarian

Hot Take1:09:30

Work Isn't War — Drop The Battle Metaphors

Fried finds the war vocabulary of business depressing: conquering markets, targeting customers, destroying the competition, making a killing. He argues the words you use establish how you think, and if your head is full of destruction language you'll end up in a dark place. He'd rather use additive words — just make something great — treating work as creation, not combat. (He also mocks the habit of looking to Navy SEALs to run a B2B software company.)

Business language is full of war metaphors: conquer, target, destroy, make a killing
Words shape how you think about your work
A destruction mindset leads to a dark place; creation is healthier
Reframe from 'beat them' to 'let's make something great'

“that's how people talk about business I I find that to be depressing it just feels depressing to me”
Jason Fried · 1:10:00

“let's make something great not like let's beat them let's conquer them let's make a killing”
Jason Fried · 1:11:00

#culture#language#work-philosophy#competition

Explainer· 1

Explainer1:23:30

Once: Betting On Pay-Once Software Over SaaS

Fried explains 'Once' — a product line of non-SaaS software you download, install on your own server, and pay for a single time with no recurring fees. The bet is that the SaaS-only pendulum will swing back amid subscription fatigue, since you keep paying the same monthly amount for software whose core hasn't changed in years. They target commodity categories still charging luxury prices, build each in ~three months with two people, and carry near-zero marginal cost since there's no hosting to maintain.

Download once, install on your own server, pay one time — no subscriptions
Thesis: subscription fatigue and a pendulum swing back from SaaS-only
Target commodity categories still charging luxury monthly prices
Built in ~3 months by two people with near-zero marginal cost (no hosting)

“you keep paying the same amount every month for the thing that you had last month”
Jason Fried · 1:24:00

“they'll pay for it once and there's no subscription fees no recurring fees”
Jason Fried · 1:24:30

#once#saas#pricing#product-strategy

Story· 3

Story05:30

37signals By The Numbers: 24 Years Profitable, No Investors

Fried lays out the scale of the business most people don't realize exists: profitable every year for 24 years, double-digit-million-dollar annual profits over the last decade, ~100,000+ paying customers, and only about 75 employees. There are no investors, no board, and no interest in the acronym metrics the rest of the industry obsesses over.

Profitable every single year for 24 years
Double-digit-million-dollar profits annually over the last ~10 years
100,000+ paying customers with only ~75 employees
Ignores standard SaaS metrics; only cares about making more than they spend

“we've been profitable every year for 24 years”
Jason Fried · 05:30

“it's like we just want to make more money than we spend have good healthy margins which allow us to sort of experiment and play…”
Jason Fried · 06:00

#37signals#profitability#metrics#business-model

Story51:30

How Fried Interviews For Gut Instinct In Designers

For designer and product hires, 37signals has finalists complete a paid, week-long project. Fried then critiques it with them — pushing back even when he loves it — and asks what they'd do with another couple of days. He's watching where their gut goes when they have to riff on the spot, looking for candidates whose instincts overflow with ideas rather than academically 'correct' product people.

Finalists do a paid, week-long real project as the final interview step
Fried critiques it live and pushes back even on work he loves
The key question: 'if you had another couple days, what would you do?'
He's testing for gut and instinct — people whose ideas overflow on the spot

“even if I love it I will push back in certain areas and one of the things I'll often ask is like if you had…”
Jason Fried · 51:30

“I'm still looking for people who who just their gut is filled with ideas”
Jason Fried · 52:30

#hiring#design#interviewing#instinct

Story1:19:30

The RXBAR Lesson: 'Go Sell A Thousand Bars'

Fried recounts the story of RXBAR founder Peter Rahal, whose father — when Rahal was mulling raising money — told him to go sell a thousand bars and come back. The point cuts through all the possibilities that open up when you have cash: you have a product, go sell it. Fried uses it to illustrate that scrappiness comes from constraint, not from a large bank balance.

RXBAR founder's dad said to go sell a thousand bars before anything else
The advice cuts through the distractions that money enables
Scrappiness is forged by constraints, not by having lots of cash
Constraints ('we can't make payroll') force you to figure things out

“hey go sell a thousand [ __ ] bars and come back and talk to me”
Jason Fried · 1:20:00

“you don't get scrappiness from having large s you just don't”
Jason Fried · 1:20:30

#scrappiness#bootstrapping#sales#constraints

Tool· 1

Tool1:37:00

Jason Fried's Most-Recommended Books

In the lightning round, Fried names the books he recommends most: 'Several Short Sentences About Writing' by Verlyn Klinkenborg, an extraordinary book all about the sentence; 'Hell Yeah or No' by Derek Sivers, whose title 37signals uses internally as a decision filter; and 'Homemade: Contemporary Russian Folk Artifacts,' a collection of scrappy handmade objects that embodies the ingenuity he admires.

'Several Short Sentences About Writing' by Verlyn Klinkenborg — on the sentence
'Hell Yeah or No' by Derek Sivers — used internally as a decision filter
'Homemade: Contemporary Russian Folk Artifacts' — celebrates scrappy ingenuity

“pretty much anything by Derek sers but specifically hell yeah or no”
Jason Fried · 1:38:00

#books#recommendations#writing#decision-making

Takeaway· 2

Takeaway14:30

Success Is Simply Wanting To Do It Again

For Fried, the root definition of success is whether he'd want to do it again — was it enjoyable and worthwhile. The business has no financial goals, no OKRs or KPIs, no revenue targets, and no customer-growth targets. The only number that matters is whether, collectively, they made more than they spent over the year.

Success = 'would I want to do this again?'
No OKRs, KPIs, revenue targets, or growth targets
No separate P&L per product; only total profit matters
Many worthwhile things (like saying thank you) can't and shouldn't be A/B tested

“in total collectively are we making more money than we spend”
Jason Fried · 15:30

“we don't have we don't have financial goals we don't have okrs or kpis I don't have Revenue targets I don't have uh growth Targets…”
Jason Fried · 16:30

#goals#metrics#success#management

Takeaway1:22:00

No One Ever Went Broke Making A Profit

Fried distills his entire business strategy: keep making great stuff, keep costs in check, charge appropriate prices, share as much as you can, and let the chips fall where they may. He credits the best business advice he ever got to his dad — 'no one ever went broke making a profit' — noting that plenty of companies go broke generating lots of revenue.

Strategy in a nutshell: make great work, control costs, price fairly, share generously
Enjoy it and build a great environment — it's baked into the strategy
Best advice from his dad: no one ever went broke making a profit
You can go broke generating revenue, but not by generating profit

“just keep making great [ __ ] keep your cost in check charge appropriate prices for your work share as much as you can and let the…”
Lenny Rachitsky · 1:22:00

“no one ever went broke making a profit”
Jason Fried · 1:23:00

#profit#strategy#advice#bootstrapping

Key ideas

Frameworks in this episode

Appetite-Driven Product Cycles (Shape Up)

Give Your Gut Credit: Judgment-First Decision Making

Low-Criticality Pilot for Changing How You Work

The Bootstrapper's Constraint Discipline

The Commodity Generic Play (ONCE)

The Riff Test: Hiring for Gut Instinct

The Stay-Up Scorecard

People & resources mentioned

People · 10

Resources · 33

Insights & moments

◆Hot Take· 8

Almost Nobody Actually Makes It The Venture Way

Your Startup Is Probably Not Venture Scale

Why A Small Team Beats Competitors With Thousands

Build A 'Stayup', Not A Startup

Promises Are The Downfall Of Every Business

Everything Is A Judgment Call — Give Your Gut Credit

Long-Term Planning Is A Fantasy

Work Isn't War — Drop The Battle Metaphors

✶Explainer· 1

Once: Betting On Pay-Once Software Over SaaS

❝Story· 3

37signals By The Numbers: 24 Years Profitable, No Investors

How Fried Interviews For Gut Instinct In Designers

The RXBAR Lesson: 'Go Sell A Thousand Bars'

✦Tool· 1

Jason Fried's Most-Recommended Books

▲Takeaway· 2

Success Is Simply Wanting To Do It Again

No One Ever Went Broke Making A Profit

Hot Take· 8

Explainer· 1

Story· 3

Tool· 1

Takeaway· 2