Save Time by Managing Less, Says DHH

David Heinemeier Hansson is the creator of the Ruby on Rails software framework, the co-founder of Basecamp, an investor in multiple tech startups, a race car driver, and a family man. He’s a modern-day polymath.

Yet his workday calendar is not full of appointments. He abhors managing employees and attending meetings. His is a maker’s schedule, he says, with much uninterrupted time dedicated to solving problems he cares about.

In our recent conversation, his second in 16 years, Heinemeier Hansson addressed the rise of Rails, Basecamp, and, yes, time management.

The entire audio of our discussion is embedded below. The transcript is edited for clarity and length.

Eric Bandholz: Give us your pitch.

David Heinemeier Hansson: I am a co-owner of 37signals. We make software products. Our original tool is Basecamp, a project management tool we’ve been running for over 20 years. Hey.com is the email service we launched a few years ago and an alternative to Gmail. I also write a lot with my business partner, Jason Fried.

We’ve written four books on starting a business, running a business, and thinking about business. We published “Rework” in 2010, which sold a million copies worldwide. We also wrote “Remote: Office Not Required,” “It Doesn’t Have to be Crazy at Work,” and “Getting Real: The smarter, faster, easier way to build a successful web application.”

As part of building Basecamp in 2003, I created Ruby on Rails, the web framework behind Shopify, GitHub, and Airbnb. It was the original Twitter platform and about a million other prominent websites and applications worldwide.

I still work on that. We’re just putting the final touches on Rails 8, a big upgrade for a framework that’s also been around for 20 years and is powering 10% of worldwide ecommerce. That is what Shopify is responsible for. If you add on whatever else in the ecommerce world runs on Rails, it’s probably a higher number. Shopify is the largest Rails application. It’s 5 million lines of code and a huge portion of all ecommerce worldwide.

In my free time, I like racing cars. I’ve been driving race cars for about 15 years, mainly endurance events. The 24 Hours of Le Mans is my pivotal moment.

Bandholz: How do you prioritize your day?

Heinemeier Hansson: From the outset, Jason and I were on the same page about setting good habits early. We had seen so many entrepreneurs try to do the mode switch and fail. They’ll work 80, 100 hours a week in the early days and get accustomed, if not outright addicted, to that style of working.

We designed the business from the get-go so that we would work 40 hours a week, eight hours a day. That’s plenty. Negative things often happen when you push beyond that when you are so focused on work that you miss other things. You don’t have the right perspective on stuff. And you also think it’s all about input, which it’s not. It’s all about output.

After dropping my three kids off at school in the morning, I have a block of time and make it count. I’ve found and seen repeatedly from entrepreneurs who take pride in bragging about how much they work. It usually means sitting in front of a computer for maybe many hours, but what’s the output of those hours?

The way I make them count is through long stretches of uninterrupted time. I try to be on a maker’s schedule most days of most weeks. That’s not a luxury I can do every day or every week, but it is surprisingly easy to structure your business so that you don’t have a day full of meetings.

When I look at my schedule, very often it’s empty. It’s full of one long, beautiful block of uninterrupted time that I can dedicate to solving the problems I care deeply about, and that requires me to think for more than 20 minutes here or 40 minutes there or whatever crumbs are left over. We’ve designed 37signals not to need that level of constant minding and intervention.

We don’t have status update meetings where we sit around in a circle and tell each other what we’ve done. We use Basecamp’s automated questions. It’ll ask every employee on Monday morning, “What will you work on this week?” They will record it for the whole company to know, not just to their manager, not just to me, not just to Jason, but to everyone.

So the entire staff is in the loop on what’s happening in the business. At the end of every day, the system asks, what have you worked on today? That clock frequency allows me to check in on the business, to develop trust that the people we’ve hired are doing the work we intend for them to do and that they’re going in the right direction without me constantly supervising them.

It is incredible how much time you have in a 40-hour week when no one is constantly bothering you. Forty hours is a luxurious amount of time to make progress, but most people don’t see it that way because they squander it. They cut it into little bits, and then they end up Friday afternoon going, “Oh, man, I was so busy this week. What did I get done?”

Because we don’t work like that, we have room for kids, racing, hobbies, vacations, and time off while still progressing on Basecamp and Hey. We’re working on two new products simultaneously. I’m working on Rails 8, and I write a bunch. I can clear the decks and get stuff done.

Bandholz: How much insight are you looking to get from your team on those daily updates?

Heinemeier Hansson: I’m expecting a story. It can focus on whatever you want to emphasize. This is one of the reasons why we collect this information in an open text field. It’s not derived from what to-dos you’ve checked off or the files you uploaded. It’s not automated. It is an opportunity to reflect on what you did today that was important and that you would like to convey to others. Sometimes, the answer is pretty mundane, “I worked on this same project. Here’s a quick anecdote about an issue I encountered and why it was hard, and why it sucked up a lot of my time.”

Often, those anecdotes become conversation starters in the comment thread for that update. Maybe I’ll chime in. “I hadn’t seen that problem or seen it elsewhere, and here’s how I solved it. Maybe you can do that too.” Or someone else from another part of the business goes, “Actually, we had a customer ask about that.” The updates in Basecamp are public to everyone in the company. If you work in an office and occasionally have that hallway or water cooler conversation, it’s usually contained to your team. When you do it on Basecamp, everyone gets to see everything. We’re 60 people, and it works excellent.

Bandholz: You’re not reading all 60, right?

Heinemeier Hansson: No, I scan. I usually scroll through most of these check-ins daily or weekly. Something will catch my eye, and I can scroll back up. I can consume the status updates of 60 people in about five minutes.

We have zero full-time managers. Out of the 60 people we have, everyone, including Jason and me, treats management as a second job to put on only when necessary.

Bandholz: Where can people follow you?

Heinemeier Hansson: Dhh.dk is my website. I’m also on X, @dhh.

Client Crash Bankrupts Entrepreneur

Resilience comes to mind when describing Hunter Durham. In eight years, he went from a college graduate to a Facebook employee to a company owner to bankruptcy.

Fortunately for us, he’s willing to share his experience. It’s a helpful case study on borrowing money, riding an ecommerce boom, and relying on a single client.

The entire audio of my conversation with Durham is embedded below. The transcript is edited for length and clarity.

Eric Bandholz: Tell us about your journey.

Hunter Durham: I filed for personal bankruptcy late last year. Since then I’ve helped a friend here in Puerto Rico launch a cocoa business. We raised a couple hundred thousand dollars in financing but ultimately decided the timing wasn’t right. So I’m now looking for my next role.

I’ve had multiple ecommerce and marketing positions. I was a college intern at Red Bull and then Dell in Austin. My first full-time job was at Microsoft during my senior year. I graduated in 2017 and landed at Facebook that year. I was on the advertising team managing ecommerce accounts.

It was a lot of fun. My clients included Johnsonville (sausages), Pacific Life (insurance), and roughly 50 other ecommerce brands. That was back when everything was pretty open on Facebook. I could see top-line revenue, how much they were spending on advertising, and their margins. I did that for about three years before joining one of my largest clients in 2019, a drop shipper out of Canada that has since gone out of business.

I stayed there for about seven months, then Covid hit, and ecommerce blew up. My experience came into heavy demand. I consulted with Sampars, the grocery wholesaler. That position became my agency, Impact Industry Marketing, which grew rapidly during the next few years.

During that time I bought three businesses in the furniture space. Two were shippers — we provided delivery services for furniture retailers. Then, last August, our largest customer ceased operations. They owed us in the high six figures in revenue. It forced me to file for bankruptcy late last year.

So I’m back to square one.

Bandholz: You lost your biggest customer.

Durham: The company was Mitchell Gold + Bob Williams — a giant high-end furniture manufacturer doing $180 million the year before they went out of business. They had been around for 25 years, with about 60 retail locations and an online presence.

When I bought the two shipping companies, Mitchell Gold represented 15% of our revenue, but by the time they shut down, it was 60%, or about $3 million a year. We serviced about 33% of their total shipping volume. When they shut down, our business died.

I had outstanding operating expenses, plus an SBA loan we had taken out to acquire the shipping companies. I couldn’t repay that loan, which I had personally guaranteed. That prompted the bankruptcy filing.

Bandholz: Could you elaborate on the bankruptcy process?

Durham: I had to learn a lot quickly. I had no clue. When we stopped getting paid, I started calling bankruptcy lawyers. It was a crash course.

Mitchell Gold started delaying payments in June 2023, and the company ceased operations in August. I spent the whole summer in crisis mode as it became apparent they would not pay us.

It was a matter of putting one foot in front of the other, letting employees go, and then engaging attorneys to start my bankruptcy.

Bankruptcy is an orderly process that unwinds many bad things. Chapter 11 bankruptcy is restructuring. It ironically costs a lot of money. For example, my bankruptcy attorney required a $250,000 retainer. Bankruptcy attorneys are the first to get paid.

Then you get a restructuring advisor paid for by the debtor (my company) but mandated by the bank. Chapter 7 is liquidation. It’s much cheaper than Chapter 11.

I had a couple of months of savings when I realized I had to file. Bankruptcy is a snapshot in time. It matters when you file and what you file. A bankruptcy lawyer figures that out.

Bandholz: All of that is now behind you. What’s next?

Durham: I’m still exploring. I may return to running an agency, perhaps focusing on clients’ creative and business strategies. Combining artificial intelligence with branded content seems promising.

Bandholz: We look forward to your next moves. Where can people follow you or reach out?

Durham: I’m on X, @Huntercdurham.

Beardbrand Perseveres Amid Challenges

I host “Ecommerce Conversations” while running Beardbrand, my direct-to-consumer provider of men’s grooming supplies. Periodically I’ll divert an episode to share the details of my business in the hope it helps others. I’ve done that three times in the last year, a challenging period for many ecommerce companies, including mine.

I’ve addressed our initial sales decline, plans for recovery, and, most recently, a year-end recap.

In this episode, I’ll discuss our recent changes at Beardbrand to persevere for better times.

The full audio of my dialog is embedded below. The transcript is edited for clarity and length.

Logistics

Since my last update, we’ve focused on lowering costs. One significant initiative was moving to a new 3PL to get closer to our new manufacturer. The goal was to shorten the time from the completion of manufacturing to shipping products to customers. We’ve been consolidating our manufacturing to one provider, which should help tighten the supply chain.

Our new manufacturer is in the U.S. Midwest. Our 3PL was in Dallas, Texas. We could have shifted fulfillment to the new manufacturer, which offers that service. Instead we opted for another 3PL, one that’s closer to the manufacturing facility.

The direct fulfillment cost would have been roughly the same for the manufacturer or the new 3PL. We chose the latter mainly because the initial setup would be quicker.

The transition from our previous to the new 3PL went pretty well. There were some hiccups, but I’ve got a good team member who managed the process well. We’ll wait to determine how much savings, if any, the new 3PL achieves.

ADA Lawsuit

Beardbrand has been dealing with an ADA lawsuit for allegedly having an inaccessible ecommerce site. Many industry colleagues recommended that we settle and move on. I couldn’t do that on principle. The plaintiff was suing 50 companies simultaneously and never reached out to us to respond to its complaints. The plaintiff falsely claimed we had no alt tags on images, for example. It was a money grab, and I didn’t want to reward that behavior.

Settling the lawsuit might save money, but it has downsides. If all entrepreneurs and operators fought bogus lawsuits and lawyers rather than settling, the problem would lessen. By settling, we encourage them to continue. If you have the means to fight the lawsuit, do it. We’re going to fight it.

Sales

Sales continue to be soft. We’re in our slow season — around September, it typically starts to improve. Meta has historically been our main customer acquisition channel, but our efforts there lately have been mostly unsuccessful.

Last week, we brought on X as a marketing platform. We’ll see how it performs.

We’re launching new products to counter the slowdown. We have a new, natural, aluminum-free deodorant in the works. Hopefully, it’ll be available by the end of the year. We’ll also be releasing new products on Amazon. I have a lot of ideas for new products, but we’re focusing on one of our core areas of expertise: small-batch fragrance development.

The raw materials costs for some of our products have gone through the roof. It’s forcing us to decide whether to raise prices to customers or reformulate the products. We’ve always developed products based purely on quality. I’m questioning that approach for the first time in 12 years, asking myself if an ingredient is worth the premium investment. My answer is no. We have to evolve. We’ll test, get prototypes to our customers, and see if they meet their expectations. If not, we will explore the higher price point.

YouTube

Traffic to Bearbrand’s videos on YouTube has declined. Since about 2019, we’ve seen a dramatic drop in organic views. We’ve devised new approaches. We now have two channels, and we’re tweaking how we film. Nothing seems to work. Our videos no longer seem to resonate with our audience or the algorithm. We’ve had several good hits on YouTube Shorts, Instagram, and TikTok, but they don’t build the same affinity with our audience as long-form versions.

We now plan to host regular livestreams to get back to the basics of connecting authentically with our audience. That sort of direct communication with customers is critical. I’m excited to get it going.

Moving Forward

Despite our challenges over the past two years, I am encouraged and optimistic about our changes. A business needs to be sustainable. It has to make money. Dealing with shrinking sales is no fun, but entrepreneurs do not get to choose their problems. We prioritize, align resources, and move forward. That’s how we succeed over the long term.