Margins As Aesthetics

Jason Fried shares his philosophy on running a profitable business, emphasizing high margins as an aesthetic choice rather than pursuing strict financial targets. His approach focuses on maintaining profitability while avoiding the stress of razor-thin margins and excessive growth pressure.

Key Points:

• Business Philosophy:

  • Only goal is to be profitable each year (profitable for 25 years straight)
  • Views high margins as an aesthetic rather than a strict financial target
  • Doesn't set specific goals or expectations beyond doing best work
  • Prefers to run business where they're not nervous about 1-2 percentage points

• Financial Structure:

  • Over 100,000 people pay monthly for various products
  • Keeps costs intentionally low
  • Maintains high revenue with diverse customer base
  • Allows for "good sloppy" decision making due to healthy margins

• Operational Approach:

  • Looks at the "big pile" at end of year - more money than spent?
  • Doesn't focus on individual product profitability
  • Avoids analyzing granular metrics or specific percentage points
  • Maintains comfort through high margins rather than precise tracking

• Growth Philosophy:

  • No paid advertising (tried $5M once, deemed it "vanity money")
  • Not interested in growth for growth's sake
  • Focuses on sustainability over rapid expansion
  • Prioritizes profits and margins over growth rates

• Revenue Model:

  • Flat pricing ($299/month max for Basecamp)
  • Uncomfortable charging high recurring fees like competitors
  • Pulls out all profits annually rather than reinvesting
  • Maintains overlap in cash flow for operational stability

• Risk Management:

  • Takes risks but never ones that put the company at risk
  • Keeps costs low to maintain flexibility
  • Values sleeping well at night over maximizing growth
  • Practices "negative visualization" - accepting potential failure after 25+ years would be okay