David Heinemeier Hansson at Startup School 08
Key ideas
Hansson argues founders should put a price on their product and aim for a modest profitable business, since those odds beat chasing a billion-dollar exit.
From a machine transcript of the audio. Quotes link to the moment they are said.
- 1
Having a price is the plan
Hansson says the missing step between a good application and profit is simply asking customers to pay. He lists monthly subscriptions, per-use charges and one-off software sales as different ways to do it, and warns that a price alone does not make a business succeed.
- 2
Take better odds at a smaller reward
Hansson guesses, while admitting he does not know, that a small business sustaining a few people has perhaps a 1 in 5 or 1 in 10 chance, far better than building the next Facebook. He argues that going from debt to a million dollars changes more than going from a million to a billion, and that widely told success stories distort how founders judge the odds.
- 3
Do the arithmetic on a small niche
By Hansson's sums, 2,000 customers at $40 a month comes to about a million dollars a year, and 400 customers to about $200,000. So he says a niche can be tiny and you only need to solve a problem a little better than others, like a neighbourhood Italian restaurant. He adds that solving your own problem is the easiest route, since others are likely to share it.
- 4
Sell to very small businesses
Hansson says consumers at $5 a month came and went, and that revenue from Backpack more than doubled within two months of aiming it at businesses instead. He calls his target the Fortune 5 million, meaning companies of a few people. He argues they judge a product on whether it solves their problem, and that many small accounts leave you beholden to no single customer.
- 5
Little time, no hurry, your own pace
Hansson had 10 hours a week to build Basecamp as a side project, and the team kept consulting for a year until it was big enough to stop. He argues that limited hours force focus, that habits set early will stick, and that 14-hour days are not productive in creative work. Once the money is fine, he says, setting your own pace and avoiding meetings matter far more.
In David’s words
“The difference between having say a million dollars and a billion dollars is a lot smaller than the difference between having negative $10,000 on your bank account and having a million dollars.”
David Heinemeier Hansson·David Heinemeier Hansson at Startup School 08·Watch at 9:45(opens the original in a new tab)“I think good innovation comes from just solving simple problems that you're intimately involved with.”
David Heinemeier Hansson·David Heinemeier Hansson at Startup School 08·Watch at 27:08(opens the original in a new tab)“When you have 10 hours per week, those really matter. You can't screw around with 10 hours.”
David Heinemeier Hansson·David Heinemeier Hansson at Startup School 08·Watch at 22:26(opens the original in a new tab)About this entry
- Published
- Nov 11, 2008
- Channel
- startupschool
- Type
- Video
- Length
- 31:56
- Language
- English
- Added
- Nov 2, 2026
- Source last checked
- Nov 2, 2026
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Draft. Written by us with AI from a machine transcript of the video’s audio (Whisper) and checked against it. Machine transcripts can mishear; each quote links to the moment so you can hear it. Not yet rights-reviewed.
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