David Heinemeier Hansson

February 24, 2021

We will monetize by charging money

People are rightfully skeptical about new apps and services on the internet. The industry has a terrible record of conning folks into using something new "for free", then either selling their data to advertisers, selling them in bulk to an acquirer, or just shutting down entirely when the hockey stick can't hit the moonshot into orbit (or their executives get bored, hello Google!).

For two decades, we've operated on a simpler model at Basecamp: Monetize by charging money. That's it. That's the business plan.

HEY is no different, but it's a bolder arena to play our regular game. Getting individual consumers to pay for services used to be damn near impossible. We tried that back in 2005 with a personal product called Backpack – an online note taking/organizing/calendaring tool that could "keep life’s loose ends together". We charged $5/month when that launched.

It was the hardest $5/month we've ever had to work for! Individual consumers would send almost as many support emails as entire organizations using Basecamp (as a percentage of the user base). And they'd be more.. errhm.. demanding in their tone and expectations.

One time a guy literally called me up at 2am in the morning because we had dared raise the price from $5/month to $7/month. I had to listen to how we were snakes, conmen, and worse. He also called a bunch of other people at the company. To this day, I still don't know how he got my phone number.

Safe to say my enthusiasm for running consumer services was dampened after that experience. Backpack turned out to be a decent business (making several million of dollars over its lifetime), but selling to companies was just so much easier that it didn't seem worth the trouble.

Fast forward to HEY. When Jason first suggested that we should start by selling it to consumers, I instantly thought about that 2am phone call. The grief. It didn't seem like his best idea.

But things change! Perceptions change! Circumstances change! And I always try to remind myself about the dangers of having been in business for two decades. You can easily convince yourself that what didn't work in 2005 won't work now or vice versa.

So I trusted in Jason, and in the half-life of truths. We launched HEY straight to consumers last summer. Charging what amounts to $8.25/month (or just $6 in 2005 money 😬). And guess what? IT WORKED.

The world is different today than it was in 2005! The honeymoon consumers afforded "the free internet" is over. Tons of them have realized that they'd rather pay for a product with cash money than with their privacy, their data, or their attention.

HEY has barely been out for more than half a year, and we've already signed up many tens of thousands of paying customers. Blowing through the original hopes and dreams we had during development. Easily becoming the fastest growing product we've ever launched.

Maybe that's just a one-off. HEY hit the market just as consumers were realizing that email in particular was worth paying for. Perhaps because they'd read about how Gmail snoops through their email receipts to track what they buy. Or because they had read about spy pixels.

Either way, I'm thrilled to have been wrong.

twitter thread about monetizing by charging money.jpeg

About David Heinemeier Hansson

Made Basecamp and HEY for the underdogs as co-owner and CTO of 37signals. Created Ruby on Rails. Wrote REWORK, It Doesn't Have to Be Crazy at Work, and REMOTE. Won at Le Mans as a racing driver. Fought the big tech monopolies as an antitrust advocate. Invested in Danish startups.