Pick A Fight

Show Notes

If you follow Jason Fried and David Heinemeier Hansson, the co-founders of 37signals, anywhere online, you know they aren’t afraid to speak their minds and stand up for what they believe in. 

 

Today, Jason and David sit down to discuss how embracing their viewpoint has led them to go toe-to-toe with some of the industry's biggest behemoths.

They’ll walk us through some of their biggest battles and what it took to stand their ground while positively impacting the world. They’ll also share tips for when, and how, picking a fight with a competitor can work to your advantage. Plus, more insight from the chapter called "Pick A Fight" in their book, Rework.

Show Notes: 

 

[00:41] - Jason shares the reasoning behind their tendency to take a stand online.

[01:27] - Broken business models: the awkwardness of companies who statistically lose money trying to sell business software. 

[02:49] - David describes how having strong principles and standing firmly behind them puts you in direct competition with companies that run on polar opposite business principles.

[04:01] - Using the underdog advantage in your marketing = highlighting the things that resonate with the target audience you are trying to reach (and make you look good). 

[05:43] - Don't be afraid of picking on goliath-sized competitors, but be sure you are punching up. 

[07:02] - Be careful of coming off as crass. If you're the market leader, ensure you act like it. 

[08:13] - The story of the industry heavyweight that considered taking a run at squashing Basecamp.   

[09:21] - The big conflict with Apple and the resulting “rocket to the moon” free marketing 

[12:03] - Jason explains the difference between ignoring your competition and picking a fight with them. 

[12:43] - Be aware (but not too aware) so you don't compete in a field you'll never win in as a small business. 

[13:28] - David explains why having confidence in your unique and creative ideas can give small companies a significant strategic advantage.

[15:07] - It’s important to remember a company's public image is just a sliver of its reality; follow accordingly and stick with being original. 

[17:42] - Why you need to keep your "pick a fight" campaigns organic, and NOT strategic, to keep them from appearing contrived. 

[21:25] - How knowing who you are and what you stand for as a company helps you handle the detractors. 

[23:15] - Picking a fight needs courage and humanity; injecting your principles into your marketing isn’t for the faint of heart. 

[25:31] - Do you have a question for Jason and David? Leave us a voicemail at 708-628-7850, and we might answer your question on an upcoming show. 

 

Links and Resources:

Do you have a question for Jason and David? Leave us a voicemail at 708-628-7850
Rework
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Creators & Guests

Host

Kimberly Rhodes

Customer Success Champion at 37signals

Guest

David Heinemeier Hansson

Creator of Ruby on Rails, Co-owner & CTO of 37signals (Basecamp & HEY), NYT best-selling author, and Le Mans 24h class-winner. No DMs, email: [e-mail]

Guest

Jason Fried

Founder & CEO at 37signals (makers of Basecamp and HEY). Non-serial entrepreneur, serial author. No DMs, email me at [e-mail].

What is Rework?

A podcast by 37signals about the better way to work and run your business. Hosted by Kimberly Rhodes, the Rework podcast features the co-founders of 37signals (the makers of Basecamp and Hey), Jason Fried and David Heinemeier Hansson sharing their unique perspective on business and entrepreneurship.

Kimberly (00:00):
Welcome to Rework, a podcast by 37signals about the better way to work and run your business. I'm your host, Kimberly Rhodes. If you follow Jason Fried or David Heinermeier Hansson anywhere online, you probably know that they're not afraid to speak their minds, and some might say that they're not even afraid to pick a fight sometimes. The two co-founders of 37signals have gone toe to toe with the likes of Apple, have publicly declared their plans to leave the cloud. And in the chapter of their book Rework, called Pick a Fight, they write, if you think a competitor sucks, say so. As always, I'm joined by Jason and David to talk more about this. Guys in this essay from the Rework book, you're encouraging businesses to pick a fight, but think we're really talking about highlighting your competitive advantage, right?

Jason (00:41):
Yeah, I think for us it's mostly about picking a fight with an idea, and that's kind of how we've been over the years. You know, we'll pick fights with direct competitors perhaps, b ut it's usually not like a product specific fight. It's not like this feature versus our feature or something like that. It's typically an idea. So way back in the day when we first launched Basecamp, the fight was with, uh, pro, uh, Microsoft project, which is basically like the way people were managing projects back then. But again, it wasn't so much about that. It was more about Gantt charts and statistics and whatnot, which is what project was all about versus our take, which is, which was that project management is about communication. And so it was a sort of a, a fight of ideas. Um, but of course, you know, it's nice to have something to punch at.

(01:27):
So we were punching sort of at Microsoft being the sort of standard bearer for Gantt charts, that sort of thing, right? And then, um, you know, we, we've done this of course with different policies over the year, fighting with Apple, which David could talk a bit about. And now we're sort of taking some swipes at, um, just broken business models. The idea that there's a lot of competitors in our, in our industry and in in the tech space in general right now who have been losing tons and tons and tons of money for years, hundreds, not just like hundreds of millions of dollars for years, and they're trying to sell other companies business software. So it's kind of awkward that companies that can't run their own business properly are selling other companies business software. So we're kind of punching hard at that and, and our, our sort of defense there is that, you know, we've been profitable.

(02:10):
We've run a profitable business for 23 years, and we think that's an important thing and we think it's sustainability is an important thing and we think staying small is really valuable. And so we're coming back to some of our core tenets around small, profitable, powerful, simple, those kinds of things because the, the sort of, the, the conditions out there are, are pretty favorable for that argument once again. Um, so I think, you know, these are, these are, this is sort of a common theme and we, we've taken it in different directions in different ways, but it's usually tied to something bigger than sort of a cheap shot against a competitor's specific product execution or something like that.

David (02:49):
I think it's also just a consequence of standing for something, as we've talked about quite a lot in terms of having some principles and having some values and expressing those in writing or expressing those on a podcast or any other medium. If you have strong opinions about things, it usually creates an opposition. It just does. And illustrating those principles and those points by pointing out the opposition that it illuminates is a really simple way to demonstrate what you're talking about. As Jason said, we've been preaching, running a profitable business, not getting over your skis, um, staying within your means for 20 plus years. So when we end up being in competition with a bunch of companies who run on radically different polar opposite principles of business, that is a great way to highlight how different companies operate differently and you get different outcomes. And I think that's something for especially many of the, the small businesses who listen to us can really resonate with, are you buying from someone who's sort of like you?

(04:01):
Or are you buying from someone who's totally not like you? I would venture that virtually all our customers cannot relate in any way, shape or form to losing a hundred or 150 million a year that just exists in a completely different galaxy of business. So when they're trying to buy a business software that's in part about buying some workflows about buying some ideas about how to run their business better, you know what? It just doesn't resonate. So of course that benefits us as well. You should highlight the things that make you look good. I mean, that is really what marketing is point to the things that are true that resonate with the target audience that you're trying to reach and that are good. So the fact that we can go into the market and say, listen, we run a business just like you run a business, like we don't exist in magic fairy land of hundred million dollar losses.

(04:54):
We exist in the reality of making sort of more money than we spend. Do you have that problem too? Do you also have to make more money than you spend? If so, do you know what, we're probably on the same wavelength here and you're not on that wavelength. So that's one key aspects of it, just like highlighting the things that are true and make you stand out. And I think that that's one of those other wonderful advantages that you can have when you are the underdog. When you are this huge company with thousand plus employees losing a hundred million a year, can you really use that to your advantage in your marketing? No, you can't. I mean, I'd love to see it, but I doubt we'll see it. Versus if you're a small company and you're competing against someone like that, use your underdog advantage.

(05:43):
We talk about how small is not actually bad, how small is something to be embraced. This is an example of that. You get to talk about what you truly stand for in an authentic way, and you can contrast that with your competitors in ways that's actually credible. So embrace that. Don't be afraid of picking on a larger competitor. I'd say, if anything, you can't do the reverse, right? And we, and we have had that sometimes where we can't pick a fight with some startup of three people. Like that's just not on the menu. That is not a reasonable thing to do. No one is gonna look kindly upon that kind of marketing. So you have to be careful about it, that you're, you're punching up and you're reaching and pointing these things about bigger competitors and you're picking a fight with bigger competitors. Don't pick a fight with, don't even pick a fight with your peers on whatever you're comparing yourself on, cuz that comes off as petty so damn easy. And then if you pick a fight with someone who's smaller than you, that doesn't just come off petty, it comes off completely misaligned. Like, what are you doing here? No one wants to listen to that.

Kimberly (06:54):
Yeah, and it also kind of seems like, are you threatened that you're picking on someone so much smaller than you? It's like a, you know, bully on the playground.

David (07:02):
There's actually a, a good example of that. When Microsoft first entered Slack's world, they came out with this bundling of teams with a chat tool and Slack felt very threatened. Now, Microsoft was a much larger corporation than, than than Slack at that point, obviously the whole time it's been a much larger corporation. So you think, oh, they get to, they get to punch at that, but it didn't work. They took out this ad and I think Wall Street Journal in New York Times, they be, oh, welcome, uh, Microsoft to the, and you're like, what are you doing? You're the, you're the market leader here. You've already captured the majority of the enterprises. It looked really funny. You would think that this approach would be permissible because Microsoft is larger, but it actually wasn't because Slack was the, was the big gorilla in that space. So you really have to tone it and align it in such a way that doesn't come off crass. And the easiest way to do that is simply to realize, hey, are you're a small company? Are you competing against someone who's distinctly larger than you? Fair game punch as hard as you can if you're not in that environment. Um, think twice.

Kimberly (08:13):
Okay. Do you guys ever worry about like pissing off the wrong person or the wrong company by being so outspoken?

David (08:20):
Well, I think in, in a short answer, no. And one of the reasons why that answer is no is we've done it through our entire existence as a company. As Jason said, we started out picking a fight with Microsoft at a time where Microsoft was actually a bit of a, a scary behemoth. These days, a lot of people, for a lot of people, Microsoft is this sort of fuzzy teddy bear that they don't actually have to be afraid of. There are some industries where people still have to be afraid of Microsoft, but for a lot of people, including us, Microsoft is not someone to be afraid of. In 2004, that was not true. Microsoft was just coming out of its peak power. So when we choose to pick on, um, on Microsoft project, I mean we were going up against something where I remember I was getting a ton of feedback like, hey, whoa, whoa, whoa, maybe you wanna tone it down a notch because if Microsoft decides to clone Basecamp, they can just squash you, put you outta business in no time at all.

(09:21):
In fact, it's really funny. Um, we were interviewing a candidate for a job who had worked at Microsoft who relayed to us that back in 2004 and 2005, Microsoft was actually considering or watching Basecamp in all the ways. How could they squash us? How could they perhaps, uh, en encroach in that? So maybe it would've happened and, and we were just left with this delusion like, oh, we're totally safe. But it could have turned out a different way. But I think that early experience basically just taught us perhaps to some extent that when you are the underdog and when you're punching up, um, it is rare for the, what is the opposite of an underdog, the overdog to, uh, to punch back down. And we used that, um, against Google over the years and then most famously against Apple. We went so hard against Apple when they threatened to kick us out of the app store at the launch of Hey.

(10:13):
That I think, um, well, I don't think, again, got direct feedback from people going like, Hey, hey, hey, take it easy here. I'd like to see your company around next year. I mean, are you crazy? Apple is a $3 trillion company. What, what are you doing? Picking not just a public fight, but a fight where you're swinging this hard, risking to piss 'em off this much when you have a product that could get annihilated if they pushed the red button, but what else were we gonna do that was congruent with who we are? Were we gonna just like, okay, yeah, apple, you can get 30% of our revenues. Like it just wasn't gonna be us. And perhaps that's a, a moment of, of the privilege of the 20 years we've been building the company, we could afford to lose it. But I would say as a standard piece of advice, you are better off hitting hard, going out strong against someone larger and then being agile, fighting against it if, if they come back at you.

(11:11):
In fact, in many ways it's better when they do. The fact that Apple chose to strong arm us the way they did try to muscle us out of the business, try to, um, show up with the baseball bat and threaten us was actually what gave the story such long legs that we got two weeks of insane coverage on this issue because Apple was being the overdog and showing up in vindictive ways and doing all this other stuff to potentially put us out of business. That was where the rocket really took off and went to the moon.

Kimberly (11:49):
Question for you, I know you guys have written before in Rework about kind of ignoring your competition, but at the same time we're saying like, pick a fight kind of where, tell me where that line is. I know both can be true at the same time. Kind of talk me through that.

Jason (12:03):
Yeah, the ignore the competition angle is really about, um, not paying too close attention to, to product development choices that other companies are making. I think it's, it's very easy for companies and very common for companies to look at what everyone else is doing and feel like, well, they need, we need to do this. They, they, they just launched that we need to launch that. They've got these 12 things, we only have six of them. We need to have the other six to complete the set so we can compete directly with them. I think when you start doing that, you end up always behind because now your, your strategy is just to follow basically. And I think it really quickly shuts you off from original thinking. So that's what we mean when we say don't pay attention too much of the competition.

(12:43):
I mean, it's good to know who's out there. Of course you're gonna know who's out there because you're paying attention to the industry at large, at some, to some degree, customers are talking to you, they're using things, they're coming from other tools or they're leaving your tool and going to other tools. You're, you're aware, but this isn't about having this strategy session about like breaking down other people's products and what are they doing, and we need to do those things too. I I think that that's kind of this, it's kind of a dead end in my opinion. So that's what that's about. Be aware, don't follow. And the other thing that's hard by the way is when, when you are too aware, it is hard to have an original idea because there's always this inventory of things that you aren't doing that everyone else is, and, and that the pull is very strong there. There's a lot of gravity there that keeps you away from doing something original and new. So that's what we mean by that.

David (13:28):
And I think it's really important to look at that through the frame of small. If you are a small company and you're paying too much attention to the big competitors, you're competing on a field you'll never win. If you're trying to catch up and do as much as someone who has hundreds of people or thousands of people, millions of dollars or billions of dollars, and you are at a different order of magnitude when you're trying to do that competition, it it's not gonna work. You can't outdo them at what they already do. You have to, as Jason says, you have to be original. You have to do all the things that they are not thinking about, all the zigs in their zags. You have to do something novel and interesting and creative and you can cut yourself off from that creativity really easy by trying to catch up.

(14:15):
And you are never gonna catch up. You're never gonna outcompete them on their domain. This was one of the things that actually gave us such confidence when we were talking about the Microsoft situation back in the day, because we had this strong intuition that Microsoft was never going to create a Basecamp product. It was never gonna create a product that took four people to build. If they were gonna come at us, they were gonna come at us with like this serious 200 person product team and they were gonna put all their enterprise sales muscle behind and they would just end up with a very different product. So having faith that your creative ideas, especially as a small company that lives within the constraints of what's necessary to live within when you are a small company, is probably the strongest strategic leg up you can give yourself.

Jason (15:07):
The other thing I want to add is that there's this weird assumption that other companies have figured things out that you haven't. It's like, well, they've got these great new features and you just assume that those are working or they're they're doing this mark, they have this marketing approach that you assume is working, there's a really good chance that what everyone's doing isn't working. I mean, most things aren't gonna necessarily work as well as you expect them to work. Some do, some don't, but just the assumption that someone else is doing it does not mean that it's working. In fact, you might be following someone into, uh, the pit, you know, like you just, you don't know these things. So, but, but I think it's easy to assume that like, because people make a big splash about stuff, they make a big splash about a release or a new feature or whatever, that it's gotta pay off and oftentimes it doesn't. This is one of the other things about, you know, following is you don't have complete information. You have very incomplete information. You don't know almost all of it. All you know is what you see, but what you see is a tiny sliver of the whole thing. So don't bet, don't you know, let it all ride on that. Um, you know, when you're doing your own thing, you have a much better sense of whether or not something's working or not versus copying someone else.

Kimberly (16:16):
I think that's kind of a good lesson in life. Like what you see is not always what is happening behind the scenes. Like social media has created that for us that we think everybody has it figured out. Not true.

Jason (16:25):
Let's just take an example. Like you look at companies like Monday, uh, and ClickUp, which our competitors of ours, if you spend any time on the internet anywhere, you'll probably see their ads. They are plastering their ads everywhere, right? So the assumption is, wow, they must be kicking ass, actually they're getting their ass kicked by the economy. Um, they are losing tons of money. Well ClickUp's not public. So we don't know. But we can assume cuz they're following the same model as the others that are doing the same things, um, that are losing hundreds of millions of dollars, um, doing this. Now what they're doing is they're trying to grab market share and mindshare. So maybe it's a long term play. So if we're looking at it in the short term, we could say it's a bad idea. Maybe it is turns out to be a good idea down the road.

(17:09):
It's hard to say that we don't know, but so far they're losing tons and tons and tons and tons of money, money that as a small business you'd never even have permission to have. Um, and you could never even think about losing a 10th of that, a hundredth of that. So it's easy to, again, to to, to look at the marketing and think the marketing equals success, but the marketing just equals spend. And the the on the back end, it all has to pan out, but so far it hasn't. So be very careful about, uh, following, um, you know, who's in the spotlight. It's, it's often a, a, a negative outcome.

David (17:42):
And I think in all of this, when you're trying to figure out if you're gonna use it as sort of a tactic, which I would, would actually caution against this comes out most authentically when it's actually something you just encounter. Like for us, we've literally been preaching how to run a business for 20 plus years in a way of making money, not taking venture capital and so on. So this fact that a lot of the competitors in our space have picked the opposite model, serves it up as a pick a fight moment rather than if we were gonna go out, oh, do you know what we should run to marketing this season? Let's run a pick a fight campaign. Who should we pick a fight with? And over what? That comes off contrived very easily in ways that aren't actually authentic and resonating and it can fall worse than flat.

(18:32):
This is where that strategy here is, is delicate because it can come off as petty or it could come off as punching down or it can come off as all these other things that just aren't genuine. And do you know what, most people don't have time for that. They don't want to. Like of course a competitor's gonna slack another competitor. I mean they're in the same, like they're competing for the same customer that doesn't have sort of the gravitas of a, of a good campaign unless it's grounded in something real. When we went to war, I think is a fair time to use that word with Apple over, Hey, did we actually, it's funny I was about to say, assuming that of course that wasn't something we planned, but at the time, do you know what people accused us of planning it? This was some sort of a launch scheme that we had somehow put this out and we had put Apple up to, and we knew we were gonna get rejected and it was all part of a scheme and we were just like, what you think we're gonna invest millions of dollars, two years of development time on a launch campaign that if it fails we're dead?

(19:36):
Holy shit, I am not that good of a gambler or a poker face that we could put that strategy into the market and just go like, yeah, all right, I mean, we'll go up against them as a ploy here and if it doesn't work, we can't be in the app store and that's the end of the road. What? Doesn't make any fucking sense? Now, of course it wasn't planned, right, but that's what made it such an authentic moment. It was not planned. Our reaction was completely genuine the whole way through. Apple approved the Hey app for our launch and we went woohoo. And then on day one of us going out and saying like, we're live, they show up and say like, oh, actually we made a mistake. Uh, you've gotta pay us 30% of your revenues, otherwise you've gotta go. That was where we created all the energy.

(20:20):
If this was a campaign and we had all this creative ready because we had written the taglines and all the other bullshit, it would've come off completely phony, of course, because it would've been phony and it wouldn't have quote unquote worked. So I think in all of this, it really has to be something real. It has to be something you truly believe in, and it has to be a contrast that's not contrived and it has to be punching up. But these examples that we've talked about – us against Microsoft project, us against, um, unprofitable businesses like Asana and Monday and all the others, us against Apple – they're all grounded in core beliefs about our business. So I think that's where you can find it if you find anything, if you go looking for it, I would say is to like one of the things that you really hold true to yourself and in your business. Is there room here compared to the competition that we're in? Is there, is there some daylight between it? If so, all right, let's have a look. Let's see if there's something there we could, uh, push on and flatter yourself with.

Kimberly (21:25):
Okay, one question for you guys before we wrap up. What would you suggest for someone, a small business owner who maybe is the recipient of being picked on? Have you guys been picked on yourselves? I mean, I know you guys have picked on the bigger, have smaller companies tried to pick on you guys and you know, what tips do you have for handling that?

Jason (21:43):
Yeah, I mean I think we're, we're constantly picked on by, um, all sorts of companies and individuals for, you know, suggesting methods of business that don't work. I think we have a lot of enemies in the venture capital world and, and, and, and the moneyed world. Um, other methods of working. We, we follow certain method of working that, that, that runs an opposition to other methods of working. So people who are, who are, let's say scrum masters might look at us and go, what the hell are you guys talking about? You're idiots. Like, there's a lot of that going on, right? There's, that's been, that's been the case forever. When you say something, when you speak up, when you have a point of view, you're always gonna have detractors on the other side. If you don't, you don't actually have a point of view. Don't, you can't fake yourself into feeling and give a point of view if no one else says anything against it.

(22:23):
So the more you speak out, the, the more the more detractors and, and, and, and, and punchers you're gonna have. And that's, that's all par for the course and totally fine and comfortable. I think you have to grow a thick skin. It's, it's hard. Um, you know, it, it's hard when, when, when the attacks are, you know, when they get personal or all those things that can happen when you, when you speak out personally. Um, but you know, you just realize it's just the internet and you just kind of keep moving on, keep making your point and, and you're confident and comfortable in your point. Not that you can't change your mind, but like if you know where you're coming from, um, you know, uh, rebuttals don't hurt so much. Um, so I think it's, I think if you're insecure about what you're saying or you don't really believe it, but you're saying it just for purely for effect and people punch back, it can probably knock you over. But, uh, if you have a pretty, if you're well grounded and rooted in in the ideas and you believe in them and you have a point of view that's that's clear to your, to yourself, I think you're gonna be in a pretty good position.

David (23:15):
There's a great book that I like in general, but I particularly like the title and the title is The Courage to Be Disliked. You have to have that if you are putting yourself forward, if you're putting your business forward in a way where you're connected to it, which it also kind of has to be, this is the other part of this t picking a fight needs humanity, it needs a human contestant. Picking a fight purely behind a brand is quite difficult to do authentically because what is a brand allowed to say? Who is a brand allowed to fight with? What kind of principles can a brand have that I think is where a lot of people actually get kind of dismayed with the banter that it all just feels like it's a creative marketing session that produced this versus if there's an actual human behind it connected to it presenting these ideas and these values because they genuinely believe them.

(24:18):
I think that's where you come through and this is again where small has this unique advantage. If you are a small company, you are intrinsically linked to your product, to your company and you can represent it in an honest way where you're not just this revolving door CEO who's here for a three year stint and then on to the next thing. No, this is your, this is your blood to some extent and this is probably why you are so passionate about these things. This is why you end up picking a fight because these principles are actually personal. They're not just acquired through some scheme of what would resonate well with a focus group. So developing the courage to be disliked is a way to inject your principles and your values into your company, into your marketing and into the world and ultimately having an impact on the people you're trying to reach. Cuz that's the other thing, picking a fight is largely about presenting this vision of where you see the world and where it should go secondarily about picking up customers who can see themselves in that. And I think that order priority really is the key.

Kimberly (25:31):
Well, with that we're gonna wrap. I'm gonna make sure that we link to both of your Twitter accounts. I know you guys are very vocal there so people can find you. Rework is a production of 37signals. You can find show notes and transcripts on our website at 37signals.com/podcast. And as always, if you have a specific question for Jason or David about a better way to work and run your business, leave us a voicemail at 708-628-7850 and we just might answer your question on an upcoming show.