Basecamp was done almost entirely without risk. It was completely self-funded. We treated it as a side-product and a side-project until it could pay the bills. And only then did we make it the main focus of the company.
I absolutely hate risk. I think it’s a misnomer that entrepreneurs somehow are in love with risk and making big gambles and taking big bets. I think that’s probably true for some. It’s certainly not true for me. And I think it’s certainly not true for a large constituency of other successful entrepreneurs.
I think the act of putting yourself in a position where you’re not forced to take on all this risk and bet everything is the hallmark of running things well.
—
David on “The 8BIT Podcast.” He talks business philosophy, 37signals, and REWORK (interview starts at six minutes in).
David on “The 8BIT Podcast.” He talks business philosophy, 37signals, and REWORK (interview starts at six minutes in).
@DHH
on 13 Apr 11What happens if you work for a company that doesn’t (legally) allow you to work for projects of your own on the side?
Michael
on 13 Apr 11@ ”@DHH”, this is an easy one.
1. Try to amend your employer agreement to list exceptions. 2. Research whether your employer agreement is likely to be enforced. 3. Approach your company about becoming an investor. 4. “Talent launder.” Have your spouse own the company or set up shop in another state. 5. Quit. 6. Build it anyway and take the risk. You’ll lose your time but not your money—same as would have been for Jason and David if Basecamp was a total flop.
Michael
on 13 Apr 11Hey, how about making autoline breaks work consistently? Here and at Hacker News, I can’t post a numbered list without getting that weird formatting.
Dave R
on 13 Apr 11@ ”@DHH”
I am pretty sure California (and probably other states) have laws that assure you are allowed to work on your own projects on your own time. I think it only gets tricky if the product you are working is related to or competes with your employer’s product.
David
on 13 Apr 11Great interview as always, love the find and focus on what works, instead of the ” fail faster ” – cause there are lot of things you can waste your time failing at…
Chris Ames
on 14 Apr 11Love. This.
Ted Pearlman
on 14 Apr 11I’m not as risk-averse as DHH, but I basically agree with his bootstrapping philosophy. I like building things that can survive without outside help or interference. Plus, I’m an empiricist by nature.
Nevertheless, saying “I think the act of putting yourself in a position where you’re not forced to take on all this risk and bet everything is the hallmark of running things well” implies that high-risk ventures, by their very nature, are a hallmark of not running things well. That’s simply false.
Sometimes there are things you want to do or make that simply cannot be done or made without considerable risk. If you come up with an idea for a web app (or trapeze act or micro-lending institution or alternative energy system), about which you are extremely passionate, and for which there is no obvious monetization strategy, that doesn’t mean it’s a dumb idea to build it. It just means that your passion for the idea outweighs your risk-aversion.
I’m not strapping myself to a missile, but sometimes the World needs Chuck Yeager. Period.
Victor
on 14 Apr 11I absolutely hate risk This coming from a Gentleman Racer? I’m astounded
Mark
on 14 Apr 1137signals loves to beat this theme to death… it’s part of their marketing image. Thats fine but lets not forget that they had the luxury, and I emphasize luxury, of bootstrapping a business with another business that was already up and running and in operation. They never talk about how that one got going in the first place. I bet lots of risk was involved there. Theres always risk in starting something new and at some point someone had to take the plunge and bet everything on it. There was risk in dropping the consulting business for the product even if it was bringing in money and again a point came where they had to take the plunge and bet everything on it not taking a nosedive. Every forward motion involves risk. Managing it is smart but avoiding it just brings stagnation. Im not even sure what to call ‘pretending to avoid it’.
37signals preaches. A lot. I just think they are doing it for the attention. Like I said, its their marketing schtick. Just like the dont take outside money spiel. If everyone had that luxury, of course they wouldnt take outside investors that might meddle in their business. Where is the 37signals Bootstrapping Grant program? Would be nice to see them put their money where their mouth is and help young businesses stay ‘out of the clutches’ of the evil investors.
Until then, a lot of this advice is just a lot of hot air from someone who got lucky enough to be in a position that doesnt really apply to most other people. Internet entertainment I guess.
Scott
on 14 Apr 11I disagree with David. The path of creating a company in order to have a way to have a side-product which could eventually become the focus of the company does not makes any sense.
Without providing advice on how to start from scratch – not how to grow a product when you already have a company – this discussion of risk is not very useful.
Anonymous Coward
on 14 Apr 11Where is the 37signals Bootstrapping Grant program? Would be nice to see them put their money where their mouth is and help young businesses stay ‘out of the clutches’ of the evil investors.
It’s called Rails (which has created an entire economy and companies and careers) and all this open source software.
Plus there’s the workshops and REWORK and Getting Real and all the other things they share. To suggest 37signals isn’t generous to the small biz community is to not be paying attention.
Anonymous Coward
on 14 Apr 11People also seem to forget that Jeff Bezos (Amazon) invested into the business as well
D.A. "Dave" Thompson
on 14 Apr 11Thank you for keeping me from my own ineptness.
I was beginning to feel the Siren’s call of VC funding… instead I think I will choose to stay the course.
Besides, finding funding in the Tacoma/Seattle area for anything non-Microsoft is a bit like asking to plant cotton in a Kansas wheat field.
Mark
on 14 Apr 11Rails is nice. Doesn’t mean squat in the argument about whether to take on outside investment. Open source tools help keep costs down, but that expense is ridiculously negligible in comparison to what it takes to start a business. You’ll never hear someone say oh I dont need any money to start a business, I can get open source software.
All that other stuff, REWORK, workshops, etc. That puts money in 37signals pockets. Last time I checked, none of that was free. More marketing schtick and a lot of advice that just isnt practical to follow for most people. Not saying that 37signals isnt genius though because they are. Their brand goes far beyond their products at this point and thats genius right there. But it is what it is.
Is Neil Patrick Harris the biggest ladies man ever, or is he just really good at playing one on tv? 37signals is the Barney Stinson of small business.
Joe
on 14 Apr 11Regarding the Bezos investment, the way I understood it is Bezos Expeditions did not inject money into 37signals. My image of it is that Bezos bought a piece of the business from Jason and David, its owners. Said another way, the money Bezos spent to own a piece of 37signals went to the Jason and David (who are the only people who owned pieces of the company to sell) – not to the company.
Dan Jaffe
on 14 Apr 11There are many different kinds of risks, but seeing that requires putting aside a need to box and define. Just because you race cars does not mean that you, by nature, will make “bet the company” decisions based on guesses (plans). It’s a lot easier to take chances with OPM, and the burn rate and failure rate is, I’m sure, a lot higher if you start there.
If you examine creative processes that produced something useful that lasted longer than a typical trend, almost every one of them were done by placing a series of “Little Bets.” The process is described very well in a new book by Peter Sims, and I think that’s the kind of risk-aversion that DHH is talking about.
mercmobily
on 15 Apr 11Hi,
I couldn’t agree more with Dave. We are working on another SaaS (not to be named here), and we follow the exact same philosophy. Risk puts unnecessary stress and constraints in the game.
In my (humble) ooinion, with risk you spend more time worrying about the next round of investment or the next mortgage repayment, and less time developing something great while enjoying life.
Bye!
Merc.
x-Project Management
on 15 Apr 11Thank you for sharing. We are running business own-self without outside investment, too.
Keep moving foward!
merle
on 15 Apr 11Doing contract work as an independent is great training for starting your SaaS project. If you can’t hack independent contract work then you probably can’t hack developing a SaaS app from scratch. My advice if you are young, smart and ambitious… quit your safe job and start consulting. Oh the places you’ll go.
Hamid
on 19 Apr 11Great quote, I like it and I did same in running my company. Just bring knowledge, working time, and my PC on the table.
This discussion is closed.