One of the ideas Benjamin Franklin had in setting up the original Mutual Improvement club, was sitting down with friends and learning from each other's experience in matters of business and life.
Over the last 5 years, I've come to know Jason Fried, the CEO of 37 Signals as a friend, teacher, political debate partner, and as a guide on matters of entrepreneurship. Jason has a lot to say about defining your own success, how a business grows through relationships, and a whole philosophy (and book) about "getting real" and he covers those topics on his blog at Signal vs. Noise.
In the style of Franklin's junto, I pinned Jason down to answer my own 14 questions, in which we learn not only some wise words about money and happiness, but also about the best thing Jason ever bought, as well as secrets about his Las Vegas craps habit and his commitment to love.
Josh: Alright man! I want to talk about money and happiness. Tell me about how you learned about money. When you were growing up, how did you think about money?
Jason: My parents put me to work the day I could start working. That was 13 where I lived. I went down to the village hall, got a workers permit, then I was taken to the local grocery store and put to work as a bagger. I think I remember someone telling me "a bagger is always better than a beggar."
That's where it all began. And I've worked since then.
I like what Ben Franklin said about the value of money. "If you ever want to know the value of money go try to borrow some."
Josh: I take it there wasn't a lot of "Money is the root of all evil" in your house. What were the money lessons you learned when you were young?
Jason: No, none of that. Money isn't evil, but it's not holy either. Money is just a tool. It lets you do things, build things, make things, enjoy things, etc.
Money lessons I learned... Debt is generally a bad idea. You are better off earning it than borrowing it. And $1 is $1. Be frugal and spend wisely.
Josh: What was your major at university?
Jason: Finance
Josh: Right. People associate you with design and development, but what led you to pick finance as a major?
Jason: My dad is an investor. He worked for someone else when he got out of school, but eventually realized he was built to work on his own. So he started trading and hasn't stopped. I discovered finance and design at the same time. My dad used to bring home glossy annual reports. I used to page through them. I was fascinated with the design, the charts, the numbers, the tables. That's when I discovered information design. And the information was financial information. So it all came together for me there.
Josh: Do you think you learned any concepts in economics or finance classes that influenced your approach to product development?
Jason: Not really. I didn't pay much attention in school. I basically feel like school got in the way of my education. I've always been a learn by experience kinda guy. But...
My economics teachers were fantastic and I did learn a lot from them. I like economics more than finance, but I went with finance as my major because I think it was easier. I just wanted to finish school and get out there. I had already been working my own small biz on the side since freshman year. School was getting in my way.
I do like the concept of sunk cost and satisficing though. Those were powerful lessons. I learned about scarcity in Economics and maybe that rubbed off onto my ideas about software.
Josh: Tell me your take on "satisficing" - what is it and how does it influence your products?
Jason: Well, at 37signals we abhor "science projects" mainly because they are time sucks and you can often come up with a much simpler solution that works well enough.
Satisficing is about factoring in the costs of perfection and often realizing that a sub-optimal solution is often the better one when all things are considered.
So when we're looking at a feature or an idea we always look for the simplest solution first. How can we spend 1 hour on this instead of 10. The 10 hour solution may technically be better, but is the marginal benefit worth the cost? And it's usually not. This isn't the same as cutting corners, but it's close. It's educated cutting corners.
Josh: To me, your approach to software is very economics driven. First of all, you are in business to make a profit. Lots of developers aren't that clear on what they are doing. Marginal Utility also strikes me as a key concept in your approach. While a lot of engineers will add and add features, you seem to get that it matters where you are on the utility curve.
Jason: Yes, marginal cost and marginal utility is very important to us. Especially with a self-imposed small team. We have to make sure what we're doing is worth it since we can't do a lot at once.
And since we're small we can incur significant opportunity costs if we focus on the wrong thing for too long. That's why we're always on the lookout for the simplest possible good solution.
Josh: So let me get a bit more personal. What do you think is the relationship between money and happiness?
Jason: I think money can help you with happiness if your happiness requires expensive things, vacations, plastic surgery, etc, but it doesn't buy you happiness. I think you have to be a happy person to be happy.
One thing I've found is that having a little more money than you need helps me not worry about things as much. When you don't have to worry about things you can focus more of your time on being productive with whatever you are doing.
It's a lot like early man... Before we could farm, we had to focus all our time on finding and hunting food. That didn't allow us any time to learn. But once we nailed farming it freed us up to do other things. Expand our minds. Experiment. Become more intelligent. I see having more money as a similar opportunity.
But I've never been one to life above my means anyway. If I don't have it I don't spend it.
Josh: Do you have any money problems?
Jason: Such as?
Josh: You tell me. I spend too much money on coffee, and I give my kids whatever they want.
Jason: No, I don't have any money problems. But I'm not married and don't have kids, so money problems may be in my future
Josh: I'm also an emotional investor, I learned that I really don't like losing money.
Jason: I don't like losing period. Money, sports, ideas, etc.
I'm generally conservative with money. I don't need to make 15% a year and try to jump on that hot stock.
One thing my Dad always taught me... No one ever went broke taking a profit. And Buffet said "I got rich by selling too soon." Those are the same things. And I'm a big believer in both of those quotes.
But, shit, I love playing craps when I'm in Vegas.
Josh: What do you think is the cause of most people's money problems?
Jason: Debt. They spend more than they have. That's where the real problems begin.
I don't think you have money problems until your problems are someone else's benefits. When someone is making money off your money problems you're in trouble.
I'm not talking about a mortgage, I'm talking about credit card debt or personal loans with no payoff in sight.
Josh: You're making me think of my broker!
Jason: Sorry!
Josh: what is the best thing you've ever bought with money?
Jason: Probably a house (since it should ultimately make me more money) and a car (because I love cars). But I've bought a lot of things just to have them around me. I like to buy things I find beautiful and inspiring. I've found that when you surround yourself with things of great craft it rubs off on you. I just want to be inspired. So money has allowed me to experience some of the greatest things man can make. And I find that to be a huge asset.
Another thing money can buy you are experiences which are very formative and valuable.
The ability to see things and be places you couldn't be otherwise. That's real value.
Josh: What is the best thing in your life that money can't buy?
Jason: Aren't there songs about that question? Money can't ultimately buy you health, love, and happiness. It can help with these things, but money is the background singer in that band.
Ya know...
Josh: I'm not letting you wiggle away from my mushy question. Which of those things that money can't buy is the most important for Jason Fried? Happiness, Health, Love?
Jason: Love.
Josh: I always knew you were a lover! Thanks for the interview.
Jason: Thanks for asking.
I really wish people would stop mangling this quote: It isn't "Money is the root of all evil", it is "The love of money is the root of all evil".
Posted by: Dan Miller | Sep 27, 2006 at 12:59 PM
Very insightful conversation. I believe it’s not possible to make a general statement on whether money makes people more or less happy. Money comes with a whole set of new elements that may have good or bad impact on our happiness, and depending on how susceptible we are to every one of them, the conclusion will go one way or the other (i.e. different from person to person). I recently made an effort to provide a more comprehensive picture of what these ad- and disadvantages are. I invite you to have a look at
www.spreadinghappiness.org/2009/08/money- how-much-should-we-strive-for-it-to-become-happy
and tell me what you think!
Thank you, Nick
Posted by: Nick1254367 | Dec 03, 2009 at 07:23 AM