Tag: business

Not selling Basecamp by the seat

Basecamp co-founder, David Heinemeir Hansson, had a thoughtful post about why they chose not to sell Basecamp by the seat.

The problem with per-seat pricing is that it makes your biggest customers your best customers. With money comes influence, power and pressure. By maintaining a per-company pricing (regardless of size), no one customer’s demands would automatically rise to the top. So, they didn’t have to displease many to please a couple of large customers.

Second, they didn’t want to deal with the mechanics of chasing big contracts. They wanted to keep their company small and nimble. And, finally, this enabled them to build Basecamp for businesses like themselves – the “Fortune 5,000,000.”

John Shattock, the CEO of Beam, once said – “Values aren’t values until the cost you money.” Wikipedia is a classic example of this idea. They could easily become one of the biggest ad businesses on the planet. But, they choose not to.

Similarly, by clearly trading off large amounts of money for freedom, the Basecamp co-founders continue to demonstrate the simple, counter intuitive, and provocative approach to running a tech company that they’re famous for.

The problem with per-seat pricing is that it by definition makes your biggest customers your best customers. With money comes influence, if not outright power. And from that flows decisions about what and who to spend time on. There’s no way to be immune from such pressure once the money is flowing. The only fix is to cap the spigot. – DHH

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Source and thanks to: Basecamp blog

(This story and quote is part of “The 200 words project.” I aim to synthesize a story from a book (and, occasionally a blog or article) I’ve read within 200 words consecutive Sundays for around 45 weeks of the year.)

Inflows and Outflows

Finance, both in business and our personal lives, can both be complex. Debt, equity, valuations, EBITDA, are just a small sample of the kinds of terms involved. However, things become much simpler when we think of finance in inflows and outflows.

In personal finance, if our earning (inflows) is greater than our spending (outflows), all is well. The bigger the difference between inflows and outflows, the better things are. The same applies with revenues and costs in business.

This extends to other contexts as well. For example, businesses succeed when customers acquisition is greater than customer churn. And, sports like soccer have goals scored (inflows) and goals conceded (outflows). However, soccer coaches can spend all their time optimizing for average distance run and average number of passes. Managing by complexity and proxy metrics is an easy trap to fall into.

So, every once a while, it is worth taking a few minutes to look at the big picture. For our finances, it could just be a few minutes every week to understand how we’re spending relative to how much we earn. As long as that difference is positive, things are good. Of course, we should then ask ourselves about how we can save and invest more.

But, the main thing in business and life is to keep focus on inflows and outflows. And, our job is to keep the main thing the main thing.

It is personal but don’t take it personally

Business decisions tend to be very personal. The “it’s not personal, it’s just business” adage is largely baloney. It is personal and anyone who tells you otherwise is generally lying.

There is, however, strong reason for you to not take things personally. Decisions are not a result of objective truth simply because there is no objective truth when people are involved. And, more importantly, decisions are functions of the specific situation. Situations, in turn, are functions of the context, the motives and character of all the actors. In a decision that involves you, you are just one actor out of the many that might be involved. You don’t control their motives and character and definitely don’t control the context. So, taking it personally is just a recipe to ensuring you feel hurt whenever a decision that involves you does’t go your way.

So, any business decision that involves you is personal. There’s no getting away from that.

But, for your sanity, don’t take them personally. Reflect on what you were meant to learn from the situation and move onto the next thing.

business, personal, personally