Guest Info
David Heinemeier Hansson, is a true innovator. He is the co-founder of Basecamp which has been used by over 20m people globally. He’s also the founder of Hey and the creator of the transformational Ruby on Rails, an open source web framework that was used to create Basecamp, Github, Shopify, Airbnb and more. He is also a frequent writer at Hey World, the New York Times bestselling author of four books, including Rework, and even an award winning racecar driver.
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Episode Info
Welcome back to another episode of The Elevate Podcast! This episode’s guest is David Heinemeier Hansson, the co-founder of 37 Signals and of Basecamp. In this episode, we delve into the intriguing story behind 37 Signals and the philosophy that has guided their success. From their lean operation and focus on profitability, to their skepticism of traditional management structures, David and his co-founder Jason Fried have taken an unconventional approach to every facet of entrepreneurship. His perspective is extremely illuminating for all leaders, especially entrepreneurs.
In addition, David shares his personal approach to work-life balance, the importance of using time effectively, and the value of Stoic philosophy in his life. He challenges conventional notions of productivity and delves into the idea of front-loading important tasks for maximum impact.
Furthermore, we explore David’s observations on the tech industry’s realignment and the current economic climate. We take a closer look at his take on Danish culture and how it differs from the work-obsessed American culture he encountered. Through his own experiences and reflections, David provides fascinating insights into the dynamics and success of his own company.
So, if you’re ready to be inspired and gain valuable perspectives on entrepreneurship, work-life balance, and the ever-changing landscape of business, this episode is a must-listen.
Learn More About David Heinemeier Hansson
David’s Company – 37 Signals (Creators of Hey and Basecamp)
David’s Website
David’s Writing on Hey
David’s NYT Bestselling Book – Rework
David’s Podcast – Rework
Follow David: Twitter | LinkedIn | Instagram
Full Episode Transcript
Robert Glazer: Welcome to the Elevate podcast. Our quote for today is from Theodore Levitt: “Creativity is thinking up new things. Innovation is doing new things.” My guest today, David Heinemeier Hansen, is a true innovator. He’s the co founder of Base Camp, which has been used by almost 20 million people globally. He’s also the founder of Hay and the creator of the transformational Ruby on Rails, an open source framework that was used to create basecamp, GitHub, shopify, airbnb, and more. He’s also a frequent writer at HayWorld, the New York Times bestselling author of four books, including Rework and an award winning race car driver. David, welcome to the Elevate podcast.
David Heinemeier Hansson: Thanks for having me.
Robert Glazer: All right, so you have quite an eclectic group of personal and work Hobies that always leads me back to sort of childhood. I know you grew up in Denmark. I seem it gave you a pretty different perspective than the American entrepreneurial community. What was different about growing up in that culture that helped set you up for success? You locked up for a SEC, but did that question come through?
David Heinemeier Hansson: Did not. Got to start over. I don’t think it was on my end. Do you have some you know what?
Robert Glazer: Hold on.
David Heinemeier Hansson: Now everything seems fine.
Robert Glazer: All right, let me just show it.
David Heinemeier Hansson: Was definitely just a freeze. You started just saying something about childhood and then the frame froze.
Robert Glazer: Yeah. Let me try making sure that all this stuff is turned off. Simple things that should work. All right, let me try it again. So I just think it’s interesting to start at the beginning. I know you grew up in Denmark, which I assume would gave you a different perspective than the American entrepreneurial community and culture. So what did you learn growing up in that culture that you think helped set you up for success?
David Heinemeier Hansson: Well, I think one of the things about Danish culture is that it is, for better or the worse, not obsessed about work in nearly the same way as the American culture is. Danes work far fewer hours and I don’t think have quite the same entrepreneurial role models, and they don’t take up as much airtime as they do in the US. I think there’s definitely downsides to that. I mean the US. Is just such a dynamic economy. It is such a dominant player in so many things. Denmark’s got a lot going for it, but it isn’t stories about entrepreneurs putting in 80 hours and killing it that dominate what we see here. So it did not dominate my upbringing. I didn’t know anyone whose parents worked more than not even 40 hours in Denmark. It is hilariously, almost precise. It’s 37 and a half hours a week because they account for little lunch break or something. So 37 and a half hour weeks is what everyone worked when I grew up. So when I moved to the US and just got sort of enmeshed in this culture where there was such a celebration of more is more that felt very foreign to me. And I think I definitely came out of Denmark with a very distinct cultural programming for having life be more than just one thing. That it was not a singular obsession just to kill it at the office or kill it at work or kill it at entrepreneurship. So I took that with me. It left a deep imprint that I knew lots of happy, fulfilled people who had work as one component out of many in their lives. And then they had family, they had hobbies, they had exercise, they had all sorts of other things. And I thought, you know what? This seems to me to be a better mix than a lot of the Americans I came to know. And I carried that forward all the way through. Never worked these mad entrepreneurial hero hours of 80 plus or whatever since the beginning. Jason and I have committed to working 40 hours a week or less and have been doing that together now for some 22 years, and it’s still working just fine. There’s room for all these other things. As you mentioned, when work doesn’t take up all of your time, you can also enjoy things like driving race cars.
Robert Glazer: There’s so many different like what? The chicken and egg arguments around that. Do you think it becomes a self fulfilling prophecy where people give up everything but work so they just singularly define success by, ironically, maybe the input of their work, not the output of their work?
David Heinemeier Hansson: Yes, absolutely. I think that shines through when you hear a lot of this discourse is that it is set up as a premise that cannot be violated. If you want success, you must sacrifice everything else. I mean, I’ve heard all these nonsense. Pick two out of threes all the time. You can either have work, family or health. Pick two. Like what? I got to be sort of a fat slob or I got to have no kids or work can’t go anywhere. Why do I have to choose between these things? This is one of the reasons that Jason and I, most of our writing has focused so much on the aspect and concept of time and how you use it well, how you use it better. This is one of the reasons why I’m such a big fan of Stoic philosophy that teaches us that we have plenty of time if you spend it well. Life is long enough. And I have tried very hard to embrace that ethos that life is long enough. 40 hours is more than plenty. I can’t be productive for more than four or 5 hours on a good day. So this idea that I need ten or twelve is just other nonsense. I’ve worked with people who sort of reflected that notion that they thought that they could work ten or 12 hours and have been shaking my head at the nonsense that would come out in the other end. I think it’s exactly as you say. People are obsessed with their inputs and then they think automatically that the outputs scale with that and they just don’t. The first 10 hours a week are far more productive, far more important than the next ten hour. And this was one of these things that got illustrated to me very clearly when Jason and I started working together on Base Camp, our main product at 37 Signals. We started working on that in 2003. And at the time, I had 10 hours per week to dedicate to this endeavor because it was a side project. It was something we were doing next to having clients. I was in school at the time. There just wasn’t 40 hours a week to work on it. So I worked 10 hours a week on this project and we wrapped it up in about six months. And that has gone on to create hundreds of millions of dollars in revenue and be this cornerstone of our business 20 plus years on. And it was all born out of 10 hours a week. So when I went from 10 hours a week to 40 hours a week, I thought like, jeez, what am I going to do with all this time? And even to this day, I find that those ten first hours, if I only work 10 hours in a week, I get whatever, 60%, 70% of the work I would get out of a 40 hours week done. Because if you front load it, it’s like a power law. Everything is like a power law, that the things you work on first should be the most important. And if they are, the value of those important things far outpays the value of the latter hours.
Robert Glazer: And you mentioned this, but you’re part of what I think is a rarity in business, an entrepreneurial partnership that’s now lasted two decades. So how did you meet Jason Fried, who we had on episode number 86, and what prompted you two to get into business together?
David Heinemeier Hansson: Yeah, it’s a funny story. In the early 2000s, around the year 2000, I started following 37 Signals, a design company at the time, a very curious design company. A design company whose website was just text. I had been working in the Danish.com Internet industry for a couple of years, and I thought that was just such a novel concept that you’d have a design company that would promote itself on its writing rather than its graphics. When I was coming up through, the design companies were all about Flash. They were all about graphics, technology, animation. Exactly, yes. The technology. Flash now long gone, and here’s a website that just have 37 points of view. Wow, cure is weird interesting. And then also just a design approach that was very focused on the writing, as Jason has been fond of saying for two decades plus, that copywriting is design. And perhaps in many cases, the most important part of design. So I was just a fan sitting in Copenhagen. And then in 2001, Jason made a post to the company WeBlock Signal Versus Noise, with a question about PHP. And I was like, I know the answer to that one because I had been doing PHP for a couple of years. I sent Jason an email, we started corresponding, and it didn’t take long because before Jason realized that it was just easier to hire me than it was to learn how to program. And we started working together fully remotely, again sitting in Copenhagen. He was in Chicago, seven time zones apart. For the first six months, I think we communicated entirely via IAM and email, and we didn’t meet each other until after a year. But then we simply started working together on client projects for a couple of years until we had the idea for Base Camp. And that was really the big inflection point where the trajectory of the business changed. It went from being a consultancy to being a software company. And that was when I came on.
Robert Glazer: Board full time and in base camp. You formed a software company that was effectively the antithesis of the VC backed hyper growth kind of formula, I’d say that’s dominated the last 20 years and is having an interesting run at it right now. What made you take that course? Was it sort of some of the philosophy we talked about, or did you think you would go down that road and then you kind of changed it and then just I’ll throw more questions in here. Over the last ten years, does it feel like that was the hard choice when people with one 10th of the idea were getting $5 billion valuations? It’s always hard when you’re sort of feels like you’re totally swimming against the tide.
David Heinemeier Hansson: Yeah. So it’s funny, it never felt hard. It really didn’t. Jason and I were both blessed with the experience of going through the.com boom and bust, and it was incredibly fresh in our minds. We had both worked for VC backed Internet companies in the we’d seen the exorcist that came from that. We’ve seen the waste, we’ve seen the squandered promise and the squandered capital. And of course, it all blew up in 2001. Spectacularly so. Right. You had all these billion dollar valuation companies suddenly being sold for, I was going to say pennies on the dollar, but you need something smaller than a penny, I think most kind of like the last year. Yeah, exactly. Yes. In some ways, yes. And I think we just didn’t have any appetite for that. Not only didn’t we have any appetite for it on the business side, this just seemed like a poor gambler’s way of running a business. Not that you could not win big, clearly many entrepreneurs and some VCs did, but that the ODS of that just seemed distant and remote. And neither Jason nor I are big gamblers. Neither of us like big risk taking. So I think we both knew that that was not a path for us. And then second of all, we’re both keen on efficiencies. We’re both keen on making things ourselves. And when we started Base Camp, it was just the four of us, jason and I and Ryan Singer and Matt Linderman that got started with the software part of the business. We launched this Base Camp product in 2004. It takes off beyond our wildest.
Robert Glazer: It was no marketing. It took off because it was good and people shared it and they brought in other people, right?
David Heinemeier Hansson: It took off because it was good and it took off also because we had an audience. When I started following 37 signals in 2000, the company was one year old. By the time we launched Base Camp, the company was five years old and had been blogging and sharing opinions and insights in those five years. So when we launched Base Camp I remember we had 5000 people subscribing to our RSS feed. Maybe double that, let’s say, in readers who didn’t read it through RSS. So maybe 10,000 folks in the audience that we could launch this product into. And that was enough. That was enough of a seating that we could get it out there and have some traction off the bat. I mean, hopefully also because they actually enjoyed the product. But there are good products all the time that get launched into the void and they go nowhere. We launched it into sort of a fertile ground of an audience that we had spent five years building. Not a very big audience by modern standards, but an audience nonetheless that could propel this forward. But even so, we spent more than a year before we went full time. And by the time we went full time, that just meant that these four people who were there when we were building Base Cam starting getting paid 100% off the product, not lavish salaries like all four of us would have salaries less than a single Silicon Valley tech worker today, right? But that was enough to get going and we were thrilled with that. We did not have this sense of impatience that I think a lot of entrepreneurs through the.com days and onwards into the venture capital era just had all the time because of the money, because of the time bomb that would get started as soon as they signed that funding round. We didn’t have the time bomb on our back. We simply had an intention to create great software, to have fun along the way, to be creative and get the most out of what we had. So it took several years. I think by 2007, Basecam had that point been out for three years. It was doing really well. It was a million dollar business, easily. By that time, I think we were seven people. Seven people. I mean, I know startups with more than seven people just on the basis of some idea they have on a whiteboard right without a product, let alone customers.
Robert Glazer: How many are you today?
David Heinemeier Hansson: We are the largest we’ve ever been. Just under 80 people. But for very long time served as.
Robert Glazer: Many customers as we talked about historically.
David Heinemeier Hansson: Yes, in many ways, that’s a very recent phenomenon. For the longest duration, from about 20, 13, 14 until about a year ago or two years ago, we were 40 people or their routes. So we’ve run a very lean, small, efficient company for a very long time because we were spending, in part, our own money. The company has been profitable since day one. For now. What is that? 24 years and counting? It was always our own money. So we had a very different philosophy approaching the nature of the business. It was not about growing it as large as it could be on some top line, because the top line, in many ways, didn’t mean anything. The only thing that meant something in an economic sense to Jason or I was. The bottom line doesn’t pay the bill. No, it doesn’t. And the bottom line can be affected by spending less. So that’s what we I mean, it also just flowed well with our personalities. I think both Jason and I were allergic to large layers of middle management. Still have an incredible skepticism when it comes to full time management in general. I’d say, if we’re generous, we can count about three full time managers at our company. Now, out of a staff of 80 or thereabouts, I would not count neither Jason nor me as a full time manager. We do a lot of sort of the work itself. Most of the time, both Jason and I would refer to our CEO and CTO hats as just that. Hats. Temporary positions that are needed a few hours a week, most of the time. And then that leaves us with the bulk of our time spent on actually making the product with our own hands. So that just ends up producing a very different company, especially in an industry like Tech that, as you say, is dominated by the fact that there are so many venture capital backed startups and they get the lion’s share of the attention and they have, as you say, sometimes literally billions of dollars to waste for a very long time. Basecamp did not have a lot of direct competition. These days. It totally does. And all of the direct competition falls in exactly this camp, as you prescribe. They are companies who might spend $300 million a year turn 100 million. And that was a great strategy right up until about twelve months ago. We just went through the longest bull run the startup market has ever had. I mean, if you remember the.com boom.
Robert Glazer: And bust, that was about five year I lived it. Yeah.
David Heinemeier Hansson: That was a five year bull run, right? Like it started in 95 and it blew up in 2001.
Robert Glazer: Right.
David Heinemeier Hansson: The current bull run we were just in basically started in 2008, 2009, and ran unobstructed all the way through to 2022.
Robert Glazer: Right. So the problem is, if you’re under 32 years old, let’s say just let’s index ten years from average college graduate.
David Heinemeier Hansson: Never known anything, but you think this.
Robert Glazer: Is the aberration, right? Maybe right now, right? Yes.
David Heinemeier Hansson: And I think that’s just really fascinating. And I think it’s catching a lot of people off guard in ways that are not so surprising to those of us who are a little older, who’ve been both through the Great Recession, but even more importantly for the tech industry through the.com boom and bust, because even the Great Recession, as terrible as it was for a lot of people, it largely left the tech industry unscathed. Or at least the impact was not nearly as large as it was in other sectors of the economy. But this one right now is the tech industry in particular that’s taking the.
Robert Glazer: Brunt the Patagonia Vest recession. That’s what I’ve heard people call yes.
David Heinemeier Hansson: That’S a funny term, right. Valuations in our part of the industry. For example, many of our competitors have taken like -80%, or I saw -90%, at one point from the peak of where they were to where they are now, and what do you even do after that? I also saw the people that work.
Robert Glazer: There also don’t realize sorry, the people that work there, when these companies have raised at these valuations, they don’t realize that no one will make any money, maybe except for the founder, because they don’t understand preferences. So all that equity, is effectively worthless.
David Heinemeier Hansson: And even the founder equity at this stage, once you’ve taken a -80%, you are washed out, you will not recoup. So now you got to reset and reschedule. And I think it’s a big mess. And I pity the people who have to deal with the fact that they have to go back to invest and say, oh, co. So that thing we raised 18 months ago, that valuation, like poof, it’s gone. Now we’re at a fifth of that or less. But I think that’s sort of just a realignment that’s happening. And what’s unique about this right now is that it’s happening in tech. You look at other parts of the economy and you could almost say, weirdly, doing well, right? Like unemployment is at all time lows and so forth. Yet you have in the tech industry, something like 400,000 people have been laid off just in the last twelve months or so. A lot of them from the big tech companies. And a lot of that, of course, because those tech companies hired like mad during the pandemic, and now they’re realizing for all sorts of reasons that, oh, actually we don’t need all those people. Our businesses were actually not just growing as wildly as we could predict if we simply took the data points from the pandemic and drew a marker through it that was not a realistic growth curve. So what do we do now? We have to scale back. We have to figure something else out. And here we are running the same kind of business that we’ve always been running, going like, oh yeah, that sucks for you, it must really suck for you. Not really so relevant to what we do or how we do it. Again, not that macroeconomic themes don’t have any impact whatsoever on our business. It’s just completely different when you have been inside your skis, so to speak, never sort of overbuilt for the purpose of empire or domination, which has never been in our flavor. And it’ll be very interesting to see what all comes of this. Are we headed now to a 2001 style crash when you’ll just have these mass number of bankruptcies as happened at that point once the runways run out? I mean, that was what was interesting too about document.
Robert Glazer: Unless you’re an AI.
David Heinemeier Hansson: Yeah, unless you’re an AI, but I mean, people would probably said unless you’re in Crypto about like twelve months ago.
Robert Glazer: Right at this moment, this second. But I saw something that said up until two years ago, or that 70% of the companies that were in AI either were doing nothing with AI or only machine learning even before Chat GPT came out, the term was used liberally, let’s just say.
David Heinemeier Hansson: Yeah, although I will take also that as sort of some humility here. Up until literally a year ago, I thought the vast majority of all AI, AI was not just overstated, but other bullshit. Most of the AI was just a bunch of decision trees, a bunch of if elses, all the way down. And I thought that up until basically, what, nine months ago, when we see Chat GDP and we see Mid Journey and these other things come out and like, oh wow, actually we’re also calling this AI, like that earlier thing, we called it AI and now we’re calling this new thing AI. But those two things don’t have anything it seems to do with each other. One represents a really fundamental breakthrough and the other was just snake oil. But even so, I think it is also possible, as excited as I also am for AI, that we are overstating the case right now, as it usually happens. Yes, almost certainly right. In many of the same ways that you look back at self driving cars, like what, 2016? 2017, where there was these wild projections from major industry figures that basically went like, yeah, in twelve months no one’s going to own a car because there’s just going to be robot fleets, there.
Robert Glazer: Was going to be no paper. My article this week is on the Maximalists. And every time one of these revolutions comes up, you have the Maximalist. There’ll be no paper, there’ll be no catalogs, there’ll be no stores. By the way, selling online is harder than ever right now. And if you follow the Maximalist now, there’ll be no other jobs. And the problem is, and you know this and we’ll get into this, that there’s a difference between a cool technology and a product and a business model. When you give it off away for free and people love it, it can be very hard to then get to a business model. Again, people forget product technology versus business model 100%.
David Heinemeier Hansson: This is one of those echoes again from the.com boom bust. I remember there was this thing called Blue Mountain which was giving away, what was it, sort of cards, like holiday cards or something. And they were like, look, we have so many eyeballs when we give everything away for free. And then at some point, like a few months later, they were like, oh, yes. But actually just giving things away for free is not a business model. Now it turned into be actually a business model. This is also what’s so interesting. Sometimes the things that look so folly at the time just needs another ten years, right? Like Facebook is making, what is it? $207 per living person in the US. Out of their ad machinery, their surveillance capitalism. And you go like that was basically the Blue Mountain thingamaging. It just didn’t have the Dystopian targeted ads machinery to make it happen. So sometimes things can be early and look silly, and then the same thing, like ten years later, just with a slight Tweak, is actually the things that ends up dominating. And this brings me back to my favorite conclusion to everything, which is that nobody knows anything, particularly economists, even when it comes to AI right? Like, you see these interviews with people who are now at the forefront of this, talking about what they thought it was going to be in 2013, and they were like, oh, yeah, we’re going to get rid of all the factory workers. We’re going to turn everyone into a robot and whatever. And it turns out, no, it’s actually the freaking lawyers and the doctors and the animators and the artists.
Robert Glazer: Factory workers are doing really well now.
David Heinemeier Hansson: Feeling the sweat, right? Exactly. Factory workers have been doing very well. And if you are a plumber today, you probably have greater job security than almost any white collar worker in employment.
Robert Glazer: Yeah, that’s feeling. Have you read Naseem Talib’s work? You seem like someone who would like his writing The Black Swan. He talks about the economist and every year when they say the market’s going to whatever, he’s like, can you list me what you predicted the last ten years and what the actual outcomes? People always forget that part of the question before the so he puts everyone’s kind of scorecard up there, but I could list a whole bunch of things that are kind of the anti SaaS or software playbook, right? No focus on the exit, no meetings we can get into remote. These were all before anyone did it. Four day work week, summers, profitability. But there was also another one. I mean, as you mentioned, it used to be called 37 signals. I remember using it. And then you had backpack and a bunch of these other things. And then you all said, actually, you know what, this is actually the core product. We’re undoing all of the other products, and we’re actually so focusing on base camp that we’re going to rename the company base Camp. Again, no one does this. So walk us through the epiphany moment there.
David Heinemeier Hansson: Yeah, so that was really interesting, and it was driven by this fact that Jason and I, by the year 2014, had been in business together for, what is that going to be 13 years. We had sold secondaries to Jeff Bezos back in 2005, I think it was. We’d made all the money we needed to make by 2014. The reason we were still going to work was because we enjoyed and do enjoy profit. And we made it off of profits.
Robert Glazer: Right. There was no liquidity, there was no exit.
David Heinemeier Hansson: Yeah. No, there was a small secondary. Got it secondaries in 2015. But that was really compared to what came after a modest amount. The vast majority of the fortunes that Jason and I build up running this company over those years came out of running a profitable software company for a long period of time. And by 2014, we were faced with this interesting choice that we had four active products that we were selling. We had basecamp, the project management tool that we continue to sell to this day, the original application that started our journey as a software company. We had backpack, as you said, which was sort of this personal note management notion style app, actually quite close to notion, again, like, whatever, 1015 years before that, we had Campfire, which was essentially Slack, about ten years before Slack. And then we had High Rise, which was a CRM system that has still not really been replicated in any convincing form. And we had a company, about 40 people, and four growing products with 40 people, even with a lean company like ours that were very efficient with everything, was just too much. It was way too much. And what we realized at the time was if we were going to do all four products real justice, we would have to probably double the size of the company. And at the time, we didn’t want to do that. I looked at that effort, doubling the size of a company, and I just saw horror. I saw layers of middle management. I saw all this indirection. I saw the worst experiences I had had working for other people. And I said, why do we have to do this? Do we have to do this? Is it a sort of moral obligation that if you have a growing company, you must. Grow with it in all terms, including headcount. And we came to the realization that, no, we could do whatever the hell we want, and we could also just say no. And that’s what we did. We said no. We said we don’t want to be more than 40 people. So what’s the alternative? We’re not going to run twice as fast. We’re not going to ask those 40 people to work 80 hours weeks. We want to work in a calm, sustainable company. So let’s just double down on the best thing out of the 480 2020 rules.
Robert Glazer: Can’t ever escape it. Exactly.
David Heinemeier Hansson: It kicked in, and Base Camp was it. So we took the other three products and we essentially stopped selling them. Now, the funny thing is, we actually still service them to this day. There are still customers on back.
Robert Glazer: People didn’t stop buying them.
David Heinemeier Hansson: Well, we stopped selling them in terms of selling them to new customers. But this is SaaS software, so people continue to pay us on a monthly basis if they continue to find value in it, and tons of people still do. But all our efforts went into Basecamp, and then we ran with that for about six, seven years. And then we had a new idea, and we’re like, all right, now we’ve done that for a long time. We’re bored is the right word. We have ambitions we cannot sort of hold inside us. And that became, hey.com, our new email service. And we launched that in 2020. And we basically then reversed the decision we made in 14. The decision we made in 14. We called that internally Becoming Base Camp, which meant turning the entire company into just Base Camp, as you said. We even changed the name of the company from 37 Signals to Base Camp. And then actually, what was it? Last year, we changed our name back. So we went back.
Robert Glazer: Oh, I missed it. Changed back, okay.
David Heinemeier Hansson: Because now we have two products again. Now we have base camp and we have hay. And at that point, we just made a different decision. Now, as I said earlier, we ended up with 80 people. We managed to do it in a way where we avoided many of the things I was dreading and Jason was dreading at the time of the original Becoming Base Camp decision. And we also just like, you know what? We’ve been in business together for 22 years. We got to try some different things just to keep things interesting. We had a similar take on this this year for the first what is that going to be? 22 years of the business together. Jason and I spend way less than a million dollars on marketing, partly because we thought a lot of it was just waste, partly because we were good at creating awareness around our products and our company in different ways. But then just this year, we were like, fuck it, let’s try something. So we set aside $5 million to just try on a bunch of different marketing. We produced TV commercials, we did outdoor advertisement. We’ve done a bunch of things, and some of that simply came from that. If you live long enough, you’re going to have to shake it up if you still want to stay interested in the thing you do. And you can also just do that when you sit comfortably in the glorious chair of Profitability and you’ve been sitting on that chair for 20 plus years, you’re like, do you know what? It doesn’t even matter. If it works, that’s great. If it doesn’t work, that’s also fine. Then we tried a thing and we learned something. And more importantly, we had fun and entertained ourselves.
Robert Glazer: So one of the favorite things I’ve ever seen you produce content, otherwise is your startup school speech, which definitely went viral back in the days of whatever. We probably not viral by today’s standards. Viral? That was more than ten years ago at this point, right? I think far 15.
David Heinemeier Hansson: Almost 15, yeah.
Robert Glazer: So I suggest everyone checks that out. We’ll put it in the show notes, but you put it pretty simply in that speech. There are a bunch of things. For hundreds of years, businesses made money by getting customers to pay you for your product and making a profit at Result. You talked about these three P’s and the missing P. It’s product profit. You need an actual price. How did we get away from charging customers for things? And how does that and I think we’re seeing that now how does it distort learning about product market fit when you’re relying on advertisers to support your product and not figuring out what customers will actually value? Because one of the examples I give is, like, we might all love delivery of food to ourselves at a 10% overhead in which the company loses a billion dollars a year, but at a 40% overhead in which the company could make a reasonable profit. None of us are interested into it. So it’s not the idea, right? There’s a price that makes the idea viable or not viable and gets the product market fit.
David Heinemeier Hansson: Yes. So that was this funny story where Paul Graham invited me to speak at startup school. I think mostly probably, because at that time, the vast majority of all the startups coming out of Y Combinator were using Ruby and Rails. And I think he invited me thinking I was going to talk about technology.
Robert Glazer: He did not know what you’re oh, no.
David Heinemeier Hansson: Absolutely not. He did not know that stage and basically denounced the entire venture capital business model, which was exactly what I did.
Robert Glazer: Right.
David Heinemeier Hansson: Like, I went up on that state and said, it feels awfully lonely being up here, being seemingly the only person who cares about profit. And of course, the reason I was so lonely up there caring about profit is that venture capitalists do not make their money off profits. They make their money off growth. And growth in terms of top line, that that is the entire exercise and has been for quite a long time. And it’s gotten even more so. I mean, some of those early IPOs, google, I think, even, was it true of Facebook, I forget. But some of those early IPOs, the companies were actually profitable by the time they went to market. That’s not been true for a very long time. That the only thing that mattered in terms of having a home run. VC slam dunk success was to show fantastical growth rates regardless of how much money was being lost. Because VCs were very adept at selling the vision that every single portfolio company they had was actually Amazon in the hiding that they too could go 20 years without profits and then suddenly turn off on the profit spigot and it would just simply spew out cash. Now, as we know, the last year.
Robert Glazer: Has disproven that hypothesis.
David Heinemeier Hansson: It’s vastly disproving it. But look at how long it was, quote, unquote true for now. This is one of these whips that I am getting a little bored with. But this was a zero interest rate phenomenon in terms of its longevity and scale. When we look back.
Robert Glazer: Free money. Yeah, exactly.
David Heinemeier Hansson: Free money. And not just free money, but impatient, desperate money trying to find yield anywhere, anyhow. And that money, first of all, that whole thesis powered the Great Recession money, just desperately trying to find these mortgages. And when you have demand for something, you will conjure up supply and boom, there you have subprime. When you have demand for yield out of venture capital, boom, you will conjure up supply and VCs will try to supply you. With all these unicorn candidates, probably still the same low number of winners amongst them, but they’ll just produce more and more bets on it. And those bets can go on for an awfully long time in a zero interest rate environment before realizing, as you say, that the underlying business model was never going to work. Never going to work. You mentioned food delivery, I think is a great example.
Robert Glazer: Not that sexy. It’s so funny. All this stuff has gotten a lot of it’s not a sexy business, right? Like food delivery or grocery delivery.
David Heinemeier Hansson: Yeah, it’s a grind. It’s a single digit grind. Even more so. This is what’s so interesting about this Amazon case, right? So much of the venture capital world is built on the Amazon case as the savior that you can go decades with no profits and boom, suddenly you’re profitable. But if you look@amazon.com the business that actually sells stuff, the Amazon that most people know, the prime thing, it’s a single digit business model, right? You just don’t make that much money selling groceries or widgets or boxes or whatever. Where is Amazon making all their money?
Robert Glazer: Cloud.
David Heinemeier Hansson: AWS. Yeah, exactly. Cloud. Which was just a sort of side effect that came out of the whole thing. So even this thesis, the cornerstone of the thesis, I think, is actually, I mean, fraudulent is a big word, but misdirecting that Amazon.com is actually not the great business. It’s not the thing that can fuel all these things. It was the fact that they ended up incubating AWS, that AWS actually was a wonderful idea. We can perhaps get into that.
Robert Glazer: And they were solving their own problem, right? Very similar to how products get solved.
David Heinemeier Hansson: Yeah, they were. But if you then look at it today and you look at Uber or you look at Lyft or any of these other things, as you say, the fact that they were able to create the appearance of a market as long as they subsidized the product by like, 40, 50, 60%, does not at all prove that there’s a market there at all. And I think you found that in everything from scooter rental to food delivery to these kind of Uber like services that so many of these companies were valued at billions of dollars about 5 seconds ago. And then poof, it all comes tumbling down. Because do you know what? There’s actually not a great business here. We say it’s a software business, we call it a unicorn. But it’s like transportation. It’s grocery stores. This is not sexy, innovative stuff, high margin stuff.
Robert Glazer: There’s a guy who’s been posting on LinkedIn, I forget his name, but he’s had some great data behind this. And one of the things he said is like, again, to this decade, it’s been a decade, he thinks that there is and he puts these brands, D to C brands that are all down 98% stock price and still losing money in 2023. And he said, look, there is this misperception that you can just flip a switch to profitability. And he said, I don’t think these leaders of the last decade have the DNA or know what it is or know how to do it. I think they’ve been trained in scaling for so long that no one even knows how to do this. And I thought that was a pretty interesting take on it.
David Heinemeier Hansson: I think that’s spot on. And the case for me that illustrates it more than anything was Groupon. Remember Groupon? Yeah, Groupon sort of just what 2008, I think, or 2009 becomes 2007, probably before the Great Recession becomes the fastest growing company in history or something. The fastest company to reach a billion dollars. Yeah.
Robert Glazer: By the way, when you hire 10,000 people in twelve months, things are going to go wrong with that, or whatever that number was.
David Heinemeier Hansson: But even more telling was that sort of the financial prospects when they were about to go public was it was all based on the premise that they didn’t actually have to count marketing expenses as expenses, because any expense on marketing that resulted in a customer should be viewed in the light that that customer was forever. It was a one time cost. So it was like a one time write off. Oh, we spent some money acquiring a customer, but I mean, that customer is forever, so we never have to do that again. And if you extrapolate on that, hey, here’s a customer we have forever and forever. We can sell them a weekly deal for some shit massage or what have you. Yeah, it looks pretty good. And then back on Earth, a place where customers churn, the business model never made any damn sense whatsoever. Yet that kind of became sort of the ethos. If we just do math, if we do accounting, and we just subtract all the expenses we don’t like yeah, we’re profitable. Right. Which is just such not the Gap.
Robert Glazer: Version of EBITDA expenses that we don’t like.
David Heinemeier Hansson: Exactly. Such a wild universe to exist in that we never existed in. Right. And when you exist in the universe of actual profitability that is making more money than you spend, you become good at that. You become good at making money. In fact, you develop the skills, as you say, to even do so. There are so many companies right now who do not have the skills or.
Robert Glazer: Figure out what customers will buy, which may not be what you thought they valued in their product. Like price is a pretty good proxy for what is your customer value.
David Heinemeier Hansson: Yes. And this is one of the things that I often see in our business. All of our competitors are going up market, and they go up market on the same playbook. They use small and medium sized businesses to bootstrap and show traction. And then as soon as they have traction, they raise a series A and B round or whatever. Then they hire a huge enterprise sales team. And then somehow there is a magic machine where you put a $5 bill into an enterprise sales machine and you will get one dollars of revenue out. Now, that’s a totally shitty trade, but if all you care about is to get to $100 million in revenue, which used to be the bar for going public, who cares if you have to spend $5 million?
Robert Glazer: That is the new Alchemy, having been self funded for over a decade and saying, look, we constantly had to make $0.10 into a dollar. I think it is so funny how we celebrate turning $100 into ten. I actually think the concept of celebrating raising money is kind of interesting when if you think about how is that different? If you said debt and equity, do you see anyone celebrate taking out a credit line or a ton of debt? Let’s actually go have a party and waste the money and celebrate that. We just can you imagine someone borrowing money for the bank and then spending a lot of money throwing an expensive party, celebrating that they borrowed money from the bank? It’s due back at some point, right?
David Heinemeier Hansson: Yes. I remember at one point I got in a bit of hot water when I said instead of congratulating people, we should offer them our condolences. Because the fact that you raised money puts about a 90% chance that you’re going to die quickly or treat it.
Robert Glazer: As a scarce resource like you would a bank loan. Right?
David Heinemeier Hansson: Yes. But it is more insidious than that because it’s not just debt, right? Debt is just something you pay back what you owe and then you’re square. That doesn’t exist with venture capital. If you take a series, a round of capital, you have signed up for showing 100 times growth, 1000 times growth, because that’s what you need to do to validate the model. The model is we make ten investments, eight of them are going to go bust, one of them is going to be like a meh and one of them is going to pay for the other nine.
Robert Glazer: As long as everyone playing the game understands that, then great. Right. That has always been the math. And anyone would tell you that that’s the math. Right?
David Heinemeier Hansson: Yes.
Robert Glazer: But no one ever believes they’re going.
David Heinemeier Hansson: To raise delusion that everyone thinks that they’re going to be a winner at the roulette table. Right. And I think it brings real distortions into the market in terms of proper allocation of capital. But that’s a larger sort of economic picture that was born and pushed out of this zero interest environment. Now we’re in a 5% interest environment and suddenly the appetite for these wild gambles is rapidly, massively reduced, as you can see in all the valuations of these companies that are getting crushed by -80% or as you say -98% in some extreme cases right. That maybe this was just an aberration. Now it’s entirely possible we go back to 0% interest rate environment and we relight the party once more. I hope not to some extent I hope that we get a better sort of view at allocation of capital. Not that we should not be taking risks. Right. Like it’s not either or it’s not that every single business has to be profitable from day one. There’s no business ever has to be profitable. There’s something there in the middle. But I think we were wildly out of balance for a very long time because of this zero interest rate environment.
Robert Glazer: So that’s the financial piece of it like the 90% I mean, understanding the math. The other piece and my favorite part from that speech was you essentially making fun of venture capital, making fun of lifestyle businesses and making them feel bad about it. I think you said there are too few people trying to just make a nice Italian restaurant in the web space. Can you explain a little more about how the lifestyle business became a sort of pejorative word? Last time I checked, we only get one life out there.
David Heinemeier Hansson: Yeah, that was really the point where I actually got pissed off. That the math, as we just talked about, where venture capitalists look at a basket of companies and they see ten shots at getting one mega hit, right? Everything else is expendable to get to that unicorn, the entrepreneur’s life, their sanity, everything is expendable. In order to service that, someone is going to have to show that 10,000% return to pay for the whole thing. So, of course, it aligns then with the fact that they’re going to want to build up a system of values that highly praises anyone who is single mindedly sacrificing everything to create that grand return. And I went like, do you know what? I think that’s a bad deal for the people who are in that basket as an individual entrepreneur, sort of signing up for five, seven, perhaps ten years of your life, grinding it out 8100 or 120 hours a week in service of a what, a 10% chance of becoming this unicorn that makes it all back. And then once you make it all back, what do you make back? Do you get your decade of life back? No, you don’t. You might get a nice check. That is entirely possible, but I have found more than a few disillusioned entrepreneurs who’ve suddenly might have lost your family. Exactly. And that’s the thing that I find so remarkable here, is that venture capitalists, at least a lot of them, are quite explicit about this fact, hey, you are signing up for a singular mission. You should not expect that there’s room for a family on board that train. You should not expect that there’s room for your health on board of that train. You should certainly not expect that you have room for any intellectual pursuits or Hobies outside of work. This is it, right? And I just went like, who wants to live like that? I remember this interview with Marissa Mayer. She’d just taken off over Yahoo.
Robert Glazer: I used her as a case study on my book about her, a negative case study about her. It’s funny. I was going to mention her bragging about 130 hours work weeks at Google, 100 hours work.
David Heinemeier Hansson: That was exactly the case I was going to bring up. Right?
Robert Glazer: Yeah.
David Heinemeier Hansson: You have here you have one of the richest, most successful people in the history of the human race. Right. She’d made, at that point already, hundreds of millions of dollars as an executive at Google who’d signed up to be a CEO at Yahoo, who were then bragging about 130 hours a week. Like, just do that math.
Robert Glazer: I’ve done it seven days a week and there’s only 6 hours to sleep.
David Heinemeier Hansson: Exactly. Right. And she was even doubling down on this saying, like, yeah, it’s difficult, but you just got to be strategic with your bathroom breaks. Strategic with your bathroom.
Robert Glazer: I break that line or I would have included that.
David Heinemeier Hansson: That line is just, to me is just gold because it illustrates this idea that we somehow placed on a pedestal a life worse than what slaves in ancient Egypt. Like, you’re building the pyramids and you have less hours dedicated to slaving away in the day. You’re supposed to be the winner here in this capitalist system. You are at the top. You are the king of the queen of the pile here, and yet you’re putting in 130 hours. And I mean, even if that’s the most pathological extreme and actually probably a lie, like, no freaking way he was working that amount, right?
Robert Glazer: But that’s what she wanted.
David Heinemeier Hansson: That’s what she wanted to project. That was the value system, right? Like, you were the top dog if you could claim that you worked the most hours out of anyone. It’s just a bizarre gold system to have. I went like, you know what? I made a fair bit of money making software. I would like to enjoy that. I would like to have friends. I would like to work out. I would like to have some hobbies. I like to drive race cars. I like to have time off on the weekends. I like to do other things. Because if I do those other things next to my creative pursuits, do you know what? I might actually enjoy life. Heaven forbid that I enjoy my twenty s or my thirty s or now I’m into my 40s, right? Heaven forbid I might be able to go distance. I’ve been working now with Jason for 22 years. We’ve been working sustainably and calmly the vast, vast, vast majority of that time. Of course, there’s always the one week or two weeks that are difficult. But the vast majority of the times, we’ve just been working 40 hours a week, making money, doing so, leaving time and resources left over to other pursuits in life to such a degree that I look at the moniker of the lifestyle business as sort of the highest form of praise. A kind of business that is compatible with having a life. Like, how is that not our goal? How is that not the goal of anyone? Now, I say all that, and then I’ll carve out a little caveat for the kinds of people like Elon Musk that somehow managed to run five major companies at the same time, sending rockets literally into space and reforming the entire transportation system of the world with electric cars. And I go like, okay, do you know what? I’m actually also glad that those people exist in this world. There should be some of them.
Robert Glazer: They are the exceptions. Genetic, I think the genetic exception, too.
David Heinemeier Hansson: Yes. And we should also celebrate that. It can totally tip over the other side if you are not careful where you go. Like, no one should be allowed to be manically obsessed with something and they’re like, no, the world is absolutely 100% better off because Elon Musk is in it and he is this crazy dude doing what he does. But the vast majority of entrepreneurs and what the rest of the world need. Like, could you imagine if the world had 10,000 Elon Musks in it? Holy shit, what a crazy, chaos place that would be. No, thank you. Let’s have a handful and then the vast majority of people, can they just settle into making the sort of fax machine work? That’d be great.
Robert Glazer: So look, you obviously have a lot of thoughts about business software. Some of your writing outside the space around, particularly, I think, with your perspective of having not grown up in the US. Kind of what’s going on here now. There are a couple of things I saw you read recently. I’d love to get your take on sort of the doom oriented coverage of life in America and how we need a little more perspective. You also wrote a really interesting piece called Standing up to Golems, I think was based on Tim Urban’s recent book what’s our problem? And a lot of people are trying to figure out how do we get in this place? Tim’s going to come back on and talk about that. So I’d love to hear you talk one either. Both. You could pick the order on that.
David Heinemeier Hansson: Yeah. So for me, the Pandemic, let’s say from 2020 forward until now, was a major turning point in how I see the world. Prior to that phase, I was way too enamored with the doom telling of America. And part of that was informed by growing up in Denmark, grew up in this small company or company small country of less than 6 million people that somehow seem to make most things freaking work. Like there is a healthcare system that’s quite good at taking care of everyone. There is an education system that even pays students to take an advanced degree. There’s high levels of trust there’s. Like, these are nice things. And I’d been living in the US for, at that point, 15 years and I thought, like, the US is so good at so many things, it is so prosperous. In fact, GDP per capita is about 20% larger than it is in Denmark. Why can’t we have nice things? Clearly the impediment must just be stupidity or unwillingness or greed or any of the boogeymen that frequently gets trotted out. And I think going through the Pandemic and seeing how a lot of the individuals I would have thought might deliver and I say that in almost the religious sense, america, to a Danish standard just turned out to be something entirely different than I thought they were going to be. And that’s mostly about a dissolution meant with the left on the political spectrum in the US. And seeing the way that they used and embraced the Pandemic terms like follow the science, turning into these religious enchantments and a whole host of things in that bucket that just seriously turned me off from that whole prospect. And then also realizing, ironically, through coming back to denmark. I’ve been living in Denmark for the majority of the time for the past three years, and seeing my native country again for the first time, having not seen it for 15 years and been in the US. And realizing why is it that Denmark works the way it does? Well, it is a highly homogeneous society that is very culturally narrow because it does not have to contain the multitudes of perspectives and backgrounds at whatever that the American project tries to do. The American project is a melting pot. It really is. And that just gives you a different premise and a different foundation. You cannot have the same things. You cannot get the same things that you would get in a high trust society like the Danish. And I think it really took sort of that seesaw of being a Dane, going to the US. Getting disillusioned why Americans can’t figure out how to get the Danish thing, then going back to Denmark right.
Robert Glazer: Where people literally don’t want the same thing. Right, exactly. And then you can’t.
David Heinemeier Hansson: Because why would they agree? Right. They’re coming from so many different perspectives. The amazement that I sort of now look at America with is like, how the hell does it work at all? How does it work at all? How does anything work? It is a true marvel. It is a true country of exceptionalism, which was a term I used to poo poo out the wazoo prior to this revelation, personal revelation that America really is a land of exceptionalism. To make it work with all the factors stacked against it is a major achievement. Now, you can say that, and then you can still recognize that there’s a lot of things that don’t work, and there actually also are a fair number of things that are getting worse. But I chose and have chosen to zoom out and bid and just go, like, you know what? I could be pissed about that all the time. The things that don’t work or are getting worse, or I can take two steps back and marvel, absolutely marvel at the things that do work and have a little bit of faith that the long run prospects of America are actually quite good. I think the US. Is 100% in a funk, and some of that funk is due to a million factors we could talk about. But I think the narrative itself, the narrative as it’s being perpetrated on social media in particular, is a huge part of it. The vibe, as we now say, about everything is a huge part of it. You look at some of these long run statistics on wealth inequality or on crime or these things, and you see, like, yeah, there’s some upticks here. There are some things that are not going great. But you know what? If you take homicides, for example, gun homicides, and you zoom back to the 90s, you’re like, oh, okay, the 90s were higher than this. Okay, interesting. You zoom back to, like, what is it? 74. Oh, okay. Also higher than now. Does it mean that now is good? No. Does it mean that now is worse than it was in the, whatever, mid two thousand s? Yeah, it is worse. There is an uptick, but it’s so myopic a lot of this discourse about the fact that America is doomed, in my perspective that when I look at it from the outside, I zoom out a little further, I go like, you know what? The US. Has been through some funks in the past. If you look at the stackflation of the murder rate, the crime rate, all sorts of things, and then you see what came after that. The flourishment in so many ways through the fact that the US. Built this marvel of the Internet, the things that I owe my entire career to, the fact that it continues to dominate in so many different areas. We just talked about AI for a second, right? The US. Is the undisputed leader in that realm, as it is in so many other realms. You go like, can we just not for a second talk about how everything is awful all of the time and recognize the fact that there are actually a ton of things that are fine, good, worth fighting for? And that comes to Tim’s book. What’s our problem? Where he tries to diagnose in part, how did we end up here? And he makes that diagnosis on a lot of it being the political environment, right? Like, that greater polarization. What’s that polarization coming from? It’s coming from social media in larger regards. It’s coming from the extremism that’s being built up. It’s coming from the illiberalism that’s so present in things like Wokeness and other sort of political philosophies and go like, you know what we can get out of that. We can get back to a higher place of discourse and of being, and we can solve our problems. And when I look back at okay.
Robert Glazer: Or disagree, right, doesn’t mean you can’t exist or I can’t exist. Right?
David Heinemeier Hansson: And this is why, to me, this last two to three years was such an eye opener, was because so many things I thought were true turned out not to be. And it was just such a humbling experience for me, personally to go like, I think A and then reality happens, and reality shows me that A is wrong. Oh, wow. What else am I wrong about? Once you’ve had that experience on some major topics for a little while, I think the normal human response, I’d hope, would be to have a bit more humility about the things you currently think to be true and the fact that the people you think hold sort of the divergent opinion on some things. Like, do you know what? Maybe they have something, maybe they’re right.
Robert Glazer: As long as you haven’t pledged yourself to a tribe, right, that makes you feel threatened if you’re going to get a bunch of hard parts coming out on tribalism. And look, I think to your point, and I’m very centrist, I’m going on everything. Look, there’s still some people who were very right earlier on, on the conservative side where people haven’t on what they said and about schools and about handling COVID, where no one has been willing to say that, and then the history books will show it, but no one’s been willing to say, oh, you know what? Actually, that was wrong. It’s funny. I just had a debate that was.
David Heinemeier Hansson: One of the major ones. Yeah, I had a debate one of the major ones for me yeah.
Robert Glazer: With someone on the podcast around peanuts on airplanes, kind of as sort of a metaphor of this, where I have a family member who’s deathly allergic to peanuts. So I’m very aware of this. But the notion that someone has a peanut allergy on the plane and that no one on the plane can have peanuts is actually just not backed by any evidence. And so I think it gets people disbelieving. And I went and found an article that said no one’s ever been sick, no one’s ever been killed. There’s never been a case of this in airlines again. But it’s an example where people don’t want to have this discussion, but maybe when we say things to this people that then they don’t listen to us. The next time around, we tell them something that doesn’t have a lot of fact around it. And I actually think that is interesting because I would have told you early on, while I disagreed with it was better to be safe than sorry, I don’t think we’ve acknowledged some of the viewpoints that were actually correct early on in the pandemic that have been proven to be correct.
David Heinemeier Hansson: Well, I’ve acknowledged those personally, and I think that is of all personally to myself, mostly here right now, you’re doing it publicly. I’ve also done that. I mean, I got in hot water over Canadian trucker protests and other things in this regard. But this was a great example at the start of the pandemic. I believed the powers that be that like, you know what? Just flatten the curve. Two weeks. All right, yeah, let’s get on it. All right, everyone line up. Let’s flatten the curve. Let’s do it. The whole thing, right? And then you go through that experience and you realize that the so called experts were so wrong about so much of it to a fraudulent degree, I’d say at this point is my personal conclusion. You go like, of course, that’s going to create a level of skepticism about all sorts of other things that, again, these almost sounds like these words where I would have rolled my eyes about four or five years ago, but I’m going to say it anyway. Like establishment, when the establishment is so wrong about so many things, you start distrusting the whole gamut of it. And that should not be foreign territory for the left, for progressives. I remember do you remember this is your brain on drugs?
Robert Glazer: Yes.
David Heinemeier Hansson: There was this campaign in whatever, late eighty s. Ninety s. This is your brain on drugs. And in that category was lumped everything from heroin to pot. And as soon as people realized that pot didn’t instantly fry your brain in the way it was being portrayed, people naturally went like, well, then this is a load of croc. This isn’t just not true right now, notwithstanding that pot can’t be bad for your brain, blah, blah, blah. It was just the case was vastly overstated, and you undermine your own level of authority if you’re just really wrong about something and you do not commit to that wrong. I had the same experience with much of the media, with the whole Russia gate thing, right? If you go four years screaming like the president is like a puppet of Russia and the whole thing falls apart and you barely retract even the most egregiously wrong articles on the point. You know what? I’m just going to look at the new stuff you put out with a different level of skepticism. I think a lot of people went through multiple experiences with that on multiple different topics where they went, yes, totally. But I think for whatever reason, hot water alert here, too. The left just had more misses over the last four or five years in my book, and that was one of the reasons I actually ended up being more interested in what some scholars on the right had to say about things. Thomas Sowell, for example, is a famous right leaning right wing I don’t know, can you say that without that sounding like a pejorative these days? I’m not even sure. But right wing person who’s been writing about sort of social topics for a very long time been a substantially controversial figure, someone I probably would never have thought to look into prior to this cold streak of bad policy calls on the left for such a long time. But I did and just realized, oh, do you know what? There’s a bunch of people on the right who actually have good ideas. Does that mean I subscribe to all of them? Absolutely not. Does it mean I disagree with a bunch of them? For sure I do. But does it also mean that there’s some real intellectual depth there that I could actually learn something from? And now that I’ve come more unmoored from sort of this tribal allegiance, it is easier to take those things in, right?
Robert Glazer: This is the point. I would say you go to the ala carte menu, not the you have to buy from one side or another. And I think when you look at these again, I might disagree with 90% of someone says, but the 5% or 10% of something they says makes me rethink my perspective on it.
David Heinemeier Hansson: Yes. And I think for me it was thinking in large parts that I would disagree with 95% and finding maybe I only disagreed with half. That is a really humbling experience when you go through that and in many ways like a wonderful experience. This is one of the things I love being wrong. There’s just such an intellectual rush in me. When I find out I was wrong, that means I was just corrected. That means I now got better information, I got better models. There’s nothing I love more. This is what I love about programming, this is what I love about business. Finding things out, finding things out. Sometimes they’re novel things and sometimes even in the best cases, I think in my opinion is a revision. Something you thought was true, turned out not to be. And you’ve got this glorious opportunity to update your models and have a better, more accurate perception and idea of the world. Wow, love it. Now clearly this is not a joy.
Robert Glazer: That is broadly shared said by 1% of people.
David Heinemeier Hansson: Yeah, to put it mildly. But it could be. I don’t know if I would have sort of on the political spectrum said that I was in this. I thought I was pretty well formed. I mean by the time you hit your forty s, at least for a lot of people, you’re in kind of a political groove. I believe the things I believe about the big topics and DA DA, it’s not that often you get a big change. But I think this was the blessing for some people. Certainly for me to take out of this awful period of the pandemic, it was a real shock to the system, shock to the intellectual system, shock to the allegiance systems, shock to the tribal system and I go like I am happy to be on the other side of that. Now, I would not have been without that but damn.
Robert Glazer: Well look, that’s very similar to something Derek said. Derek Sivers said brilliant thinker when our interview a couple years ago, he said my favorite thing in the world is having my mind changed. And I think if people were to honestly believe that we would be in a very different place or on our way to a different place. So I’ll connect to what you just said for the last question I usually ask. So this is multivariant. You could choose singular, repeated and personal or professional, but what’s a mistake that you’ve made that you’ve learned the most from.
David Heinemeier Hansson: I would probably connect it to what we just talked about, thinking that I was sort of politically settled or in a groove or, God forbid, I hate termed now with a passion on the quote unquote right side of history, snapping out of that, snapping out of whatever tribal attractions I might have had in the past, and taking two steps back from that as a long live social Democrat fan of the Danish system, whatever thinking that it was just stupidity, greed or ignorance that kept America from becoming a carbon copy of the Nordics, that was a real miss. And it took diving into some right leaning scholars, the likes of Thomas Powell and others, Glenn Lowry, to realize, you know what, that’s just bad thinking. If you cut yourself off from the intellectual products of the best thinkers on any side of any issue, you’re only seeing half the truth, half the picture. And again, it doesn’t mean you have to agree with people on anything, why.
Robert Glazer: They think that way, right? If you wanted to go against someone, you should at least deeply understand why they believe that. That would be a good debate strategy, at least.
David Heinemeier Hansson: Well, this was perhaps then the other thing. I used to love debating on the internet, like almost pathologically, so I would just be like, all night exactly on Twitter, just like arguing with strangers. And there was like a fairly long period, I would say, where you could do that and it wasn’t dangerous. And then around 2016 ish forward, it became dangerous that the act of debate became like about half an inch away from, quote unquote, harm that I thought was and still think. And this is one of the themes of Tim’s book, such a Bad Turn. Such a bad turn that the vibrancy of debate, even debate of uncouth ideas or wrong ideas or misconceptions or whatever, is such a crucial engine for us to develop better understanding, better understanding of each other and better understanding of the ideas that cutting ourselves off from that by making it radioactive to entertain the wrong ideas is absolutely an existential threat to sort of the whole enterprise. Here progress that we have going. And I think this is why, even though it is highly charged, this musk notion of the woke mind virus is something that resonates so well with so many people that regardless of the content that’s inside of that, this idea that the bait itself is now dangerous and actually better off forbidden. And the whole censorship industrial complex, the Twitter files, everything that goes into that box is just like I find that more dangerous for society than any of the particulars that we might be fighting about on a cultural war basis at any one point.
Robert Glazer: Well, very well said. David, thanks for joining us. As I said, I’m a longtime admirer of both your mindset and the things you and the team at 37 Signals have accomplished, so it’s great to have a chance to sit down and talk with you.
David Heinemeier Hansson: My pleasure. Thank you.
Robert Glazer: All right. To our listeners, thanks for tuning into the Elevate podcast. Today we’ll include links to David and his work on the detailed episode page at robertglazer.com. If you enjoyed today’s episode, I’d really appreciate if you could leave us a review to help new users discover the show and hear from amazing guests such as David, thanks again for your support. Until next time, keep elevating!
