As I wrote that last article on making sure your life isn’t too busy, a nagging thought kept coming up in my mind. It went something like this:
“Sure, Mustache – you’ve found great value in simplifying your own life. But you’re kind of known for being the Anti-Commitment guy. You get uneasy if somebody tries to plan activities for the coming weekend before lunch on Friday. Also, plenty of people you’ve met have their financial and family lives together AND still get a lot more done than you.”
You’ve got entrepreneurs like Pat Flynn of Smart Passive Income fame, or Ryan Carson who runs the online learning company called Treehouse. Both of them younger than me, raising more children, managing employees, staying in good shape, writing interesting blog posts and occasionally zipping off to deliver an entertaining keynote speech to a thousand people here or there. Then there are smart economists like the Freakonomics guys or Ezra Klein who not only break down the complexities of our world with meaningful analysis, but go on to build insanely popular media empires like Vox, built on educating the populace rather than pandering to it with consumerism and fear.
But for me, the ultimate role model of simultaneous you-are-too-lazy guilt and inspiration is Jesse Mecham, the founder and CEO of a software company called You Need a Budget (YNAB for short).
A dedicated husband and father to not just one or two, but six inquisitive and charming children, not just in shape but genuinely pumped up due to a rigorous Crossfit training regime that he blasts through with an equally impressive wife. Not just an entrepreneur but a benevolent leader of a software company that seems to treat its employees and customers like gold.
In his spare time, he has casually dashed off more than one small self-published book, then a big-publishing-contract major book (not yet released), while the rest of us were thinking of how to begin our Table of Contents. All while being a genuine and honest person who actually cares about the world, constantly challenges his own assumptions (the family of 8 lives in a normal suburban house but is just about to close on another place that is a bit smaller), and maintains life-of-the-party wit while never drinking anything as mood-altering as even an earl grey tea, ever.
Now, all of us have different desires and goals in our life. You may not want your life to look exactly like the life of either Mr. Money Mustache or Jesse Mecham. And indeed, if you are happy with the life results you are getting right now, you should continue to do exactly what you’ve been doing. But I’m still a big fan of the cheat sheet approach to life optimization: if you want things to change, it helps to look at somebody who is getting the results that you want, and see how they are doing it.
The alternatives of blaming the system, citing luck or privilege or tragic events in our past, striking out at others to prove that their success is invalid and other favorites may well be justified and politically correct and sympathetically documented with great intellectual rigor in reputable East Coast publications. But around here, we just call it complainypants.
The reason I think it’s useful to study other people, and take a few notes on exactly how they run their lives, is because of the surprising effects of daily habits. You may be a completely different person with a different history, but life doesn’t care about that stuff. Because overall, the vast majority of your life’s results comes not from birthright or large external events, but from small behaviors, repeated thousands of times over the decades. Sure, habits are notoriously hard to change and some of us are compulsively self-destructive. But knowing is much more powerful than not knowing, and with all that in mind let’s begin our little interview.
An Interview with The Uncommonly Effective Entrepreneur
MMM: So Jesse, I think I first heard of you through your customers – the oddly dedicated fans of You Need a Budget. It seems there is a big overlap between YNAB budgeters and MMM readers – both groups are often diving into the somewhat dizzy life alterations that come when you start to get serious about improving your finances.
As a result, you somehow heard of me as well, and then in 2013 you showed up as one of the 24 attendees on our first Ecuador Chautauqua, which seemed like a wacky idea at the time. What possessed you to sign up for this excursion?
Jesse: I’m not much of a blog reader, but our lead mobile developer at the time had mentioned something about a mustache and a blogger that had done crazy things to retire extremely early. I did what most folks do, and binge-read your site for a day or two. It was simultaneously a breath of fresh air and very uncomfortable. I loved it!
At some point later you mentioned the Ecuador trip and I signed up right away. I was pretty sure it would attract some interesting folks with you headlining. Plus, you know, Ecuador.
MMM: Let’s cover a Brief History of the Budget. As I recall from your stories, you originally created a budget spreadsheet while working as a newly-minted accountant, then started trying to sell it. Soon the product became more sophisticated and morphed into a desktop application, which then sprouted a fancy phone app, and now everything is integrated into the cloud. How long has all this taken to occur, and how many people are working in the company today?
Jesse: I actually built and started selling the spreadsheet while I still had two years of school left, back in 2004. I’m pretty dense when it comes to opportunity, so all of this took quite a while. Spreadsheet to software was two years. Then we released new iterations on the software every two to three years. This last push to get it all cloud-based took a little over three years.
Today we have 42 team members or so. About 41 more than I’m comfortable with.
MMM: One of the most striking things about YNAB is your acceptance of remote workers. You have embraced it fully even while some tech companies still insist on having everyone commute into a central office. What percentage of people are remote? How many countries and states are represented? What do you see as the upsides and downsides, and by what multiple or percentage would you say the upsides are winning?
Jesse: 100 percent of our team is remote, but Chance (COO), Caitlin (Exec Assistant) and I all choose to work out of an anonymous building in Lehi, Utah. I do this mainly because Julie kicked me out of the house during work hours.
Seriously though, shortly after I’d stopped working from home (because Julie kicked me out, to be clear), a neighbor stopped by to see me and one of my ~butlers~ kids answered the door. My neighbor says, “Can I talk with your dad?” My kid responds: “He’s moved out.” Word gets around fast.
The team is spread across six (seven, soon) countries and 21 states.
The upsides to remote work are pretty obvious:
– No life-sucking car commute.
– A flexible schedule.
– No office overhead.
– No drop-in distractions.
– No awkward birthday situations (for introverts).
– No geographical restrictions when hiring top talent.
The downsides are less obvious, but also pretty fierce:
– No life-giving bike commute.
– Face-to-face is gone, and video chats are still a far cry from a replacement.
– No awkward birthday situations (for extroverts).
– Timezone lag.
– Loss of over-the-shoulder collaboration.
– Loss of visual cues in body language and other communication nuance.
As we become _better_ at working remotely as an organization, I’m liking it more and more. For us, major improvements have been to:
– Battle timezone lag and promote communication accuracy by going quickly to synchronous communication (video chat vs. email).
– Get together in person as often as is affordable. This means semi-annually as a small, function-focused team (product, customer, execs, etc.) where we work like crazy, and then annually as an entire team where we just mess around for several days.
– Document earlier and more frequently when it comes to objectives, features, projects, initiatives, etc.
Remote work is not an end-all be all for the employee or the employer. If you’re going to do it as an employee or business, you have to do it intentionally or it won’t work.
MMM: Those of us who are parents of small families are probably wondering how it is possible to raise six young-ish kids at once. How have you and your wife made this model scalable? Are six kids really 300% of the work of two kids? Do your older kids help with some of the work? What kind of interesting strategies have you all come up with to make it work?
Jesse: Some things scale really nicely. The house, for instance. Don’t believe that garbage about scaling on anything else though. Two kids, twice the work. Three kids, three times the work. Our roughest transition was four to five. Then we waited four years for this last one (my favorite) to come along. What a dream. It’s like being brand new parents but this time you know what you’re doing.
The first kid is definitely the hardest relatively, because you’re whole life just flips upside down (and the midnight panic attacks). With each new arrival though, you do get better at knowing what to care about. That might actually be where you can “scale” a little bit. You start to sniff out what matters and (because of universal physical laws) only focus on that stuff.
I grew up with five siblings, and now have all sorts of forgiveness and awe in my heart that just spills over when I think of that time my mom just drove away because she was so mad at us (she came back). What a saintly woman.
As far as tactics go, don’t put the food out on the kitchen table during meals. Leave it in the kitchen. There’s no way I’m going to have my four-year old passing food around the table. We plate everyone’s food like at an upscale restaurant (go for height and it looks fancier!). I always make sure the plates are organized in age-order, left-to-right, top to bottom. If we have guests, it all still applies. My mother-in-law hates being in the bottom-right position when plating but hey, that’s life.
One thing that doesn’t scale is one-on-one time. I set up a lunch date with one of the kids every Friday, so they each go out to lunch with me once every six weeks. They get to pick the restaurant, with the exception of the Chuckarama Buffet, which I banned. We get some rare one-on-one chat time and I can keep the lines of communication open. That’s the goal.
My job is to teach the kids morals, honesty, and hard work. The rest is up to them. I suppose that scales pretty nicely.
MMM: On our recent Tesla Roadtrip, we got into your daily and weekly schedule a bit. It struck me as amazing because of its regimented nature. Could you step us through a typical weekday, versus a Saturday for you?
Jesse: I wake up at 4:40AM, read for 20 minutes, plan my day, then head to the gym with Julie. We joined a Crossfit gym about four years ago and that’s kept me pretty entertained. We usually get back home around 6:45am and I plan my food for the day, eat some of that food, and get to work by 8:30.
My schedule at work is pretty all over the place. I spend a good bit of my day talking to people, and try to get home around 5:30PM. If I’m on my A-game, I remind myself that I’ve just completed Act One of the day, and when I walk through the door, it’s now Act Two. Nobody wants a lousy Act Two, so I try and be intentional about hugging each of the kids, looking at them as they tell me things, asking questions, and playing whiffle ball.
Saturdays, Julie basically runs the show. It mainly consists of yard work, chores, fixing stuff, and then Julie and I can usually go out for a long date. I try and get those dates started around 4PM because I’ll be honest, by 9PM we’re both pretty keen on getting some sleep.
We keep telling ourselves we’ll do something “fun” on Saturday with the kids but we’re pretty bad at that. I think the kids end up just trying to avoid us so I don’t rope them in to helping me shampoo the carpets or something.
MMM: When I think of “tech company CEO” I usually picture an indoorsy-looking scrawny person, or an expanding beer belly, or perhaps an awkward combination of both. But you seem to defy this stereotype to a more extreme degree every time I see you. What combination of stuff are you doing to gain fitness and strength? How many hours and sessions per week does this consume? What single change would you recommend to an office worker who wants to start being more physically fit? (in both the exercise and nutrition departments)
Jesse: I’ve outsourced my fitness to my Crossfit coach and I just do what he/she says. It’s broadened my horizons on movements I would have never entertained (stuff with rings, olympic lifts, prowler pushes, etc.) and has improved my mobility tremendously. I take it seriously while I’m there, and then I don’t think about it again until I show up the next morning. Four days per week, usually about an hour a piece and then cooldown.
Right now I’m on day 18 of measuring my food to a level of accuracy that is insane. I’m liking it. It means I have a digital scale out while I’m plating the kids’ food, but it works out all right. It’s cool to not be hand wavy about what I’m putting in my body, and seeing how it’s affecting my workouts, energy level, body fat percentage, etc.
For someone that’s pretty sedentary and wanting to get moving, just go for walks. Long walks. I’ve started walking during the middle of the day to clear my head and give my brain a chance to reset. It’s pretty stimulating. You don’t feel like taking a nap after a nice long walk. Also, for anyone doing anything for fitness, measure whatever you’re attempting. What’s measured is improved.
MMM: Although your family is almost three times the size of mine, you often mention the idea of scaling the concept of a Tiny House to meet your needs, or spending a year traveling in an RV, or living in an apartment in New York City. This is the opposite of what most CEOs seem to do when their company starts to see some success. What’s the motivation behind all this deviant and un-American behavior? :-)
Jesse: My motivation is two-fold:
1) Learn. Learn what it’s like to live in a Tiny House, or in NYC as a family of eight. I just want to do things that will provide me with a learning opportunity. It keeps things interesting.
2) Give my kids opportunities to learn. They lead pretty posh lives, where you’re forced to essentially manufacture difficulty on their behalf. If I can expose them to some “extremes” then maybe they’ll learn a thing or two, and experience a few things that provide some needed perspective.
MMM: If I understand correctly, YNAB had built up a huge base of loyal customers and was based on profitable sale of a downloadable desktop software app. Then you and the team recently flipped the whole model completely – discontinuing new sales of the old software permanently and moving to an all-new model based on online subscriptions. It was expensive and risky. Why? And how is this turning out so far?
Jesse: The switch was (still) expensive, but it would have been far more risky for us to maintain our pay-once-and-maybe-upgrade business model. It’s allowed us to ship software much faster, iterate far easier, and deliver more ongoing value. Our (fantastic) fans will let us know if we’re not delivering the value and we can adjust accordingly. So far, it’s going really well. We’ve been able to grow the team and have some cool stuff in store to make sure people can really be aware of what their money is doing, and if they like what they see.
MMM: Since you’re less consumption-oriented than many people, does this carry over into the way you run the company? Have you had any Mustachian Moments where you realized: “Aha – good thing I didn’t over-leverage myself earlier on X, because this lets me take advantage of bigger opportunities on Y?”
Jesse: I’m really glad Julie let me take our “house downpayment fund” back in 2006 and spend it to build the first real version of the software. I gave it all to this stranger I’d met on the internet named “Taylor” and he delivered. He turned out to be a real person, with real development skills, and now he’s my real CTO.
Honestly, my hat goes off to Julie, because it seems like all I do is tell her to “just wait until…” and then you can fill in the blank. There’s always something next on the horizon, some reason we need to keep reinvesting, some reason I need to keep pushing, and she takes it all in stride. She handled it so beautifully when I spent $65,000 on a software project in 2007 and then junked the whole thing. Even though we could have furnished our house (quite nicely, I would imagine). Instead, we lived in an empty house for several years.
People underestimate how many opportunities they miss because they’re maxing out their lifestyle. During that “spreadsheet” time from 2004 to 2006, I quintupled my meager student income. However, we lived in the same 600 square foot apartment (even though we added another kid, because we’re always adding a kid), drove the same single car (a ’98 Chevy Prizm, RIP), ate the same calorically-high cheap food, and cooked at home.
Basically, I was making a solid “adult” living and we still lived like poor married students. I’m so glad we did that, because when the opportunity came to reinvest in YNAB, we could make the attempt.
MMM: What possessed you to upgrade from an old 2002 Honda Civic to a 2015 Tesla Model S? And has hedonic adaptation now spoiled you so that you now think it is normal and boring that a 7-passenger car can silently accelerate from 0-60 in five seconds? Would you recommend the purchase to other people who can actually afford it?
(Aside: which I would define as being already financially independent with paid work now an optional activity, plus sitting on at least $80,000 you can’t think of anything else to do with. I think Jesse is currently just leasing his Model S for 3 years which is a slightly smaller and more tax-efficient commitment.)
Jesse: Honestly, I think it was a combination of stress and boredom. I’ve been watching Tesla for years, and figured eventually I’d get a Model S. My Civic (which now belongs to my niece) was still humming along just fine, but I wanted something to do. In 2015 I basically gave up all of my hobbies to focus solely on the business and family, so the Tesla has kind of become a stand-in hobby for me until I back off my focus again. It’s got to be the most expensive hobby I’ve ever had. Put another way, it’s a very expensive gadget. I told Julie I was seriously considering buying one and her response was so classic: “You should. I think you’d have fun.”
How am I so lucky?!
Is it making me soft? Absolutely. I yell at the car if she (it’s a she) doesn’t brake soon enough when I’m flying down the interstate and we get to some stopped traffic. I express my disappointment in her when I flip the turn signal up and she’s not aggressive enough in sidling into the next lane over. I’d like her to be more aggressive off the line… there are ways she could be a better (autopilot) driver and I complain about every one of them. Although, to her credit, the other day I had her pull into the garage on her own and she’s improved a lot with that. She now really does a nice job of squeezing into tight places (moving boxes are everywhere).
All that being said, if the Model 3 had been out last year, I would have bought that. What a good-looking car at half the price!
Is it an efficient use of capital? Absolutely. Does it bring me joy? Absolutely. Do I measure all of my purchases by a strange capital-efficiency ratio? No, I do not. Should some of your crazy readers buy one? If they can afford it, and really want one, sure. What else could I possibly say to that?!
MMM: To many of us, it would seem that you’ve “made it” – you’ve done so much yet you’re only 35. You could sell the company and retire right now if you wanted to, but so far you have chosen to keep working. What are you going to do with your remaining 70-80 healthy years of life?
Jesse: It’s all about learning. If I’m learning interesting things here at YNAB, then I’m going to keep doing it. It’s a pretty rewarding gig, helping people turn their financial lives around. The team we’ve put in place is made up of some of the nicest people on Earth. My only regret is that we don’t get to see each other more often.
It’s a nice merger of things I love: teaching, technology, and creativity. I’m a pretty blessed guy to be able to simultaneously check those boxes and feed all of the people that live at my house.
Honestly though, what does it mean to “make it?” I’m still trying to figure that out.
After we first met back in 2013, Jesse invited me to join him on the YNAB podcast. (audio here). We had a fun talk with no expectations, but the results surprised me: an incredible quantity of YNAB customers showed up after publication, and stuck around. This little software company brought in more new Mustachians than bigger-sounding events like that recent long story in the New Yorker. That’s a real hint at the compatibility of our goals.