Bonus Episode: Jason Fried Didn’t Mean to Blow Up Basecamp. But He’d Do It Again

Introduction:

This week, in a special bonus episode, Jason Fried talks about why things got crazy at software maker Basecamp and what it has meant for the business. As you may recall, in the spring of 2021, Fried, co-owner and CEO, issued a blog post edict eliminating a slew of benefits, shutting down a committee that had been attempting to address diversity issues, and barring discussion of all social or political issues on work forums. The email produced a backlash that culminated in a third of the company’s 60-some employees choosing to leave. The rupture was especially stunning coming at Basecamp, which has since re-branded by returning to its original name, 37signals, and which has long had a reputation for treating employees well, including offering remote work long before it was commonplace. When the story broke, some business owners applauded Fried for taking a stand. Others wondered how any policy that resulted in the departure of a third of a company’s employees could be worthy of praise.

— Loren Feldman

Guests:

Jason Fried is co-founder and CEO of 37signals, previously known as Basecamp.

Show notes:

Here’s the blog post Jason Fried sent out announcing the policy changes.

Here’s a story that recounted the backlash as it was happening. 

Jason Fried is author or co-author of several books, including, It Doesn’t Have to Be Crazy at Work.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome, Jason. Thanks so much for doing this. It’s really great to talk to you.

Jason Fried:
Great to be here, Loren. Thanks for having me.

Loren Feldman:
So I just want to start by asking you: It has been more than a year now and the dust has settled. How are you doing? How is the business doing?

Jason Fried:
I’m doing great. The business is doing great. It was definitely a rough few weeks back in April of 2021. I’m sure you’ll get into this, but we decided to make some changes internally, specifically around discussing politics at work. Things had been sort of ramping in a direction that felt like we weren’t making the kind of progress we wanted to make. There was a lot of tension internally, a lot of people distrusting one another. It represented a lot of what’s going on in America, which is just everything became very divisive. Everything was seen through certain lenses. It got in the way in a way that was not just a distraction, but actually a real negative energy.

And as a business owner, I decided: That’s not why I started this business. I didn’t get into this business for this reason. I got into this business to build things, to make things with people who wanted to make things, which is software specifically. And we wanted to get back to just focusing on the work that we’re here to do. And so we made some decisions to say, “We’re not going to be talking politics at work.” And we knew that would be controversial, but we certainly didn’t anticipate what was going to happen, which is that about a third of the company decided to leave over this decision. And so we can go into all the details, whatever you want to talk about that’s public, but suffice it to say, it was a difficult time emotionally.

The business didn’t suffer at all, which is really interesting. But definitely, we were all over the news, all over the media, all over social media. There was a lot of discontent. And losing a third of the third of your employees in one fell swoop is difficult. But we’ve recovered. We’ve since hired 45 new people. We’re actually bigger than we’ve ever been, bigger than we were prior to people leaving. And it’s actually kind of reignited a new ambition in us, which is one of the wonderful things that can happen in a crisis. You just have a chance to reevaluate. And that’s what we did. And that’s where we’re headed now.

Loren Feldman:
What do you mean?

Jason Fried:
So historically, we’ve always tried to keep the company as small as possible. We don’t want to do that anymore, but we also don’t want to grow beyond our means. So we’re not taking money or anything like that. We’ve just decided to grow a bit, and not say no to growth, essentially. Prior to April of last year, we had about 60-some-odd employees. Now we have close to 80, after hiring a bunch of new people. And if we need 85, we’ll get 85. If we need 92, we’ll hire 92. Before it was like, “60 is sort of our limit.” We had this sort of self-imposed limit to keep the company small.

But we’ve just decided, “Let’s just see what we’re capable of”—still doing it our own way, still doing 100-percent self-funded through customer revenues. So all the principles remain. But we’ve sort of taken the governor off. And with that, we’re going to build some more products, too.

So we have Basecamp today, we have Hey—h-e-y dot com—which is a new email service we built, and we’re going to build another product soon. We’re going to start on that next, and then after that, we have another product idea we’ll probably do. So we’re going to kind of get back to the way we used to be in the early days, which is that we were a multi-product company, building things every few years, new ideas that we just couldn’t sort of ignore. And we’re going to head back in that direction now with more people so we can do more things at once.

Loren Feldman:
Have your revenues grown since last year as well?

Jason Fried:
Our revenues are kind of flat right now, but we anticipate them growing. We had to invest a bunch of time—last year was a major distraction, of course, as you can imagine—so there was a lot of feature work and product work we weren’t able to do. And we’ve sort of picked that up now, so we’re anticipating growth moving forward. But the last year was kind of flat.

Loren Feldman:
How has the new email product, Hey, done? It seems like a very ambitious task to try to introduce a new email platform at this stage in our internet life. Have you been able to build it the way you hoped to?

Jason Fried:
Yeah, I mean, Hey is a very interesting thing, because on paper, it’s a terrible idea, right? We’re basically entering the arena where Google, Apple, Yahoo, Microsoft, I think Verizon—these are the top five email providers in the world. They’re all free, basically. Outlook’s not free on the business side. Neither is Gmail on the business side. But essentially, mass market, they’re free. And we decided to build a paid email service. So we don’t have a free version. It’s paid, 100 bucks a year. But we felt like there were so many problems with email. And email is actually a wonderful thing, but it’s just sort of died on the vine and been ignored and sort of been neglected.

And we had a variety of new ideas to bring to email that we felt would radically improve the experience. And the big bet was: Would anyone pay for it? And we have over 40,000 paying customers who are paying for email with us, which is wonderful. And we have a lot of ideas for the product over time. And we’re going to do a lot more stuff. And we’re going to probably build a calendar soon for it and some other things.

So we’re going to keep investing in it and keep going this direction with this new thing. But the thing is, everything about it has to be novel. So if we just kind of slide back towards, “Well, let’s just make another Gmail, and let’s just charge money for it,” it’s not going to work. What people found in it were new workflows, new ideas, a rekindling of energy, saving people tons of time, and helping people manage email in a way that they couldn’t before. Before, email was a major chore, and now it’s more of a joy for a lot of people. So, so far, so good.

Loren Feldman:
Can you give us an example? How do you rekindle energy and save time with an email program?

Jason Fried:
Well, for one, one of the things that sucks about email is that you get emails from people you don’t want to hear from. This is sort of the number one issue with email, really. You love email when you get an email from someone you care about. But it’s all the other emails you don’t. So of course there’s a spam filter, like all things, but spam is not really the problem anymore. You end up getting emails from people who you don’t want to hear from, services you don’t want to hear from, things you somehow got subscribed to. And so the number one thing when you start using Hey is that you get to screen people in or out. You get to decide if you want to hear from them. You get to decide if you want emails from them. If someone sends you an email, and you don’t want to hear from them, you just hit “No,” and you’ll never hear from them again. So it’s a way to protect your attention and your time.

Number two, there are a bunch of hacks. Email has built up all these hacks. So for example, if you use Gmail, and you read an email, and you want to get back to someone later, but you don’t have time right now, you typically would mark that email as “unread.” And that’s sort of an indication to you that you need to deal with it again later, which is such a hack, because “unread” does not mean, “I need to get back to them later.”

And so with, Hey, we built in all these workflows. One example is, if you read an email and you want to get back to someone later, you hit this button on it, it says “Reply Later,” it puts it into a nice, neat little pile. And throughout the day, every email you mark as Reply Later piles up in a small little pile. Then you click the pile later on in the day—let’s say four o’clock, near the end of the day—and it opens up all those emails stacked one on top of the other. And you can reply to them all at once from one screen without ever having to go back to your inbox, without ever having to see any other emails—just the nine emails you need to get back to people later on. You can do that on your own time in a really streamlined interface.

So we have all these workflows that people have hacked to work before, but now they work out of the box in a really intelligent, thoughtful way. And so it’s a combination of these kinds of things that makes Hey a radically different email platform. And we’re really proud of it, and customers are loving it, and we’re fired up.

Loren Feldman:
All right, so with that snapshot of where you guys are today, I would like to go back and think about what happened and how you look at it with some distance and perspective now. You talked about it growing out of the decision to eliminate the discussion of politics at work. I think that’s something that a lot of business owners can relate to. I mean, nobody wants their employees spending all day debating politics, the issues of the day.

But I think at the heart of this question—and again, I should emphasize, I wasn’t there, but I did read the reports at the time—I think there was some sense that this wasn’t just about not talking about politics. It was about not dealing with issues within your company that some of your employees felt needed to be dealt with. Is that not how you saw it?

Jason Fried:
Well, I think that’s one lens that you can look at it through. The thing specifically around political discussions at work, is that you can’t put them in a little wrapper and just have political discussions at work. Because what ends up happening is, especially in this day and age, people then create sort of profiles of each other and assumptions about each other and where people stand on certain things. And some people can’t work with people who believe this or believe that. And the thing is, at work, we need to work together. So it was beginning to color all sorts of other interactions. And there was distrust, and if you can’t trust one another at work, it’s busted. It’s just flat-out busted. So that was the primary thing.

Now as far as other things, I’m not sure specifically which issues you’re referring to, but a lot of the stuff pointed back to these discussions and these distractions and the inability for people to trust each other. And people just stopped giving each other the benefit of the doubt. We also eliminated some benefits at the same time. So part of the learning here is that we did a lot of things at once, which I still feel really good about all the decisions we made. I think they were the right decisions for our company. But when you pile on a bunch of change at once—typically you would say it’s probably a good idea to do it all at once. But it’s also a hard moment to do it all at once, because it feels a bit punitive. And that’s one of the things I learned through this process, is that some people felt like they were being punished. It felt that way. And that’s not something I wanted anyone to feel. But clearly, that was one of the ways people felt.

But as far as some of the benefits, we did change some things where we felt like some of our benefits were a bit paternalistic, like essentially trying to encourage people to live a certain way outside of work. And that just felt wrong. It just felt wrong to us. It was a change. For example, we would pay for people’s fresh fruits and vegetables at home, because we thought that was a good thing to do. We would pay for people’s continuing education—and not just around work topics, but any topic. So if you wanted to learn how to be a cook, or you wanted to learn how to speak Spanish, or whatever, we’d pay for that. We also had this massage benefit. If you wanted to get a massage, we’d pay for that kind of stuff.

And at some point, we started asking ourselves, “Why are we involved in people’s lives outside of work? We don’t want people to talk about politics at work. We also shouldn’t be encouraging people to behave in certain ways outside of work, or beyond the actual work itself.” So we pulled some of those things back. At the same time, we also introduced a new profit-sharing plan, which gave people more cash in their pocket, which they could spend on whatever they wanted, versus us telling them that, “We’ll pay for your massage,” or, “We’ll pay for you to learn Spanish.” Like, you do what you want with your own money. That was sort of another change that we made. And so some people took issue with some of those things. But again, I still feel like it was the right decision. I would make all the same decisions again, if we had the chance.

Loren Feldman:
One thing that I do recall people referring to was what came to be known, I guess, as the “list of funny customer names” that kind of made fun of non-Eurocentric customer names. And the sense was that this was sending a message—potentially to customers, certainly to employees who saw it—that diversity wasn’t necessarily welcome at this company. And there was a committee set up to deal with it. And that’s one of the things that I think ended at the same time you were referring to. From the reporting, anyway, there was a sense that people felt they were making progress, and then the rug was pulled out from under them. Is that how you see it, looking back at it?

Jason Fried:
Well, I can address the things that were public. So of course, in any story like this, there are all sorts of things that are not public, that can’t be discussed. But the list of names was a list of names that people on the support team had been collecting over the years. It was a terrible thing that we were doing. Shouldn’t have done that. And some people knew about it. I had known about it early. I didn’t know it still existed. I thought we’d put an end to it. But we didn’t, apparently. Some stuff came out about it internally, and some people had real problems with it, as did I. I don’t like the fact that we were doing that at all. And my opinion was, at that point, you can choose, “How do you want to deal with this?” So you can say, “We made a major mistake. That was a bad idea. Let’s make sure we don’t do things like that again, and move forward.”

The problem was that this became a very political issue, because it became an issue around like, “Well, what does this mean about us?” And this is all public, so I’m comfortable talking about this. There was a line of argument that, “We are just a few steps away from committing genocide if we’re talking about names like this.” That, to me, is a significant stretch too far—that all of a sudden, we’re like, literally, a few steps away from genocide. That was the understanding some people had internally, and that if we didn’t come to terms with the fact that we were nearly genocidal, then we needed to revamp the whole company. And we needed to come to terms with this.

And I felt like, that’s just not what this is at all. You can make mistakes. You can own the mistakes. And you can move on without having to pull that particular mistake to the most extreme possible thing. Genocide is the most destructive, horrible thing human beings can do to one another. That’s not what this was at all—nowhere near it, nowhere close to it—and we weren’t headed in that direction. I feel like, at some level, you’ve gotta go, “Okay, no. We’re not talking about genocide at work. We’re not genocidal. None of us here are like that. Can we just move on?” And so that was something that just felt like it was way too far. And that sort of line of thought was not something we were going to accept here internally. So that was that.

Now, as far as this committee that was set up, we’re not a committee-based company. We’ve never been a committee-based company. We don’t make decisions based on committees. We don’t investigate things based on committees. We have people who are here to do certain jobs, and those people have the responsibility to do those jobs. And so a committee had been formed. And there were, I think, 18 people on the committee, and months had gone by, and there’d been no recommendations specifically. And it was just like, “Well, look, we’re not doing committees here. It’s someone’s job to take whatever XYZ seriously, and they will do that job. And we’re gonna move on and get back to the fact that we have work to do here. And there are individuals with responsibilities, and that’s how we’re going to be.”

And so we made those decisions, too, that we’re not going to have any committees at the company. Make that formalized, just so everyone’s very clear about that. And that, of course, rubbed some people the wrong way, understandably. So I understand why they’d be rubbed the wrong way by it. But that’s the decision we made, and a company is a collection of decisions and leadership. And some things we just said we’re not comfortable doing anymore. And we’re moving on from that. And that was that.

And for some people, that was too far, and I understand that. We offered a really generous severance for anyone who felt like this was too far for them. So it wasn’t, “Here’s the door.” It was, “Here’s a number of months to help you find a new position somewhere else. And you can choose to take that or you can stay here, and it’s up to you.” Each individual person had to make their own decision at that point. It was a very tough call to make, but we felt like it’s still the right call.

Loren Feldman:
Jason, was it clear to you that, with the reference to genocide, the intent was to suggest that right there at Basecamp, folks were getting close to genocide? Or was it an attempt to suggest that the “othering” of people who may look or sound different is a step in the direction of genocide?

Jason Fried:
Well, it depends who you talk to. But the whole concept that we’re all of a sudden talking about genocide at work, and we’re involved in that discussion in any way, to me, is just off base for discussions at work. This is not genocide. We’re not talking about genocide here. That’s not what we’re doing here. We build software. A mistake was made. And what was really interesting was that the people who made the list were actually many of the people who complained about the list. So the whole thing was just so absurd in a lot of ways. But the bottom line is: We’re not talking about genocide here. Like, this is not coloring our discussions at work. This is not what we’re doing here.

So I understand why people are upset about the list. I was upset about the list. I feel terrible about the list. It’s a terrible thing to do. But you can also admit that and move on, versus sort of soaking yourself in the worst possible version of what that could be, and what that could say, or that we have to come to terms with some deep horrific outcome somewhere else that someone else could come to because of this sort of thing. It’s just not the kind of thing we want to spend our time on at work. And so we moved on from that.

Loren Feldman:
I think we should emphasize that, in talking about these conversations happening at work, we’re not talking about an office environment.

Jason Fried:
Right.

Loren Feldman:
You’ve been remote since the beginning or early on?

Jason Fried:
We’ve mostly been remote. We had an office, but the majority of our company has been remote, essentially, kind of forever. We’ve been around for 23 years. And what was very interesting about this whole thing, too, is we’ve been long-term advocates of remote work—still are. We are 100-percent remote. We’ll stay 100-percent remote. But in the past, we’d seen each other as a company at least twice a year. So we had flown everybody into Chicago, where our office was, and we’d hang out socially as a company twice a year. So even though we were remote, we got to see each other, be in the same space with each other, share meals, share laughs, see each other’s faces, see each other’s three dimensions. And during COVID, we hadn’t done this for close to two years. And I think what ended up happening was, there was a distancing of the humanity involved here.

It’s very interesting. First of all, people were, of course, cooped up. I’m not blaming this on COVID. I’m just saying, it was an interesting circumstance to not have seen each other for a while and then begin to look at each other in these interesting ways, these unusual ways, and sort of not have the in-person meal, smiles, hangouts as a reset to go, “Hey, we’re all just people here, trying to work this out and figure this stuff out.” We’ve since done a meetup. We did one in Miami earlier this year, and it was wonderful to see each other again. So I really do think it’s super important for people to see each other a couple times a year. But I absolutely advocate for remote work. I think it’s a wonderful way to work.

Loren Feldman:
Did it give you pause at all? I mean, at any point, did you think, “Maybe this wouldn’t have happened if we were working in an office. And maybe we should consider switching, going hybrid or trying something a little different”?

Jason Fried:
I don’t know, it’s possible. There are always the counterfactuals. You don’t really know. But I mean, in this current environment, in this country, over the last eight years or so, people who see each other all the time hate each other at the moment. I’m not sure it would have solved anything. But I do think, though, that you do need to reconnect as humans: Share the same air, be in the same space, have a meal. And I did see some disconnects forming between people who historically had been pretty close, pretty tight. So it was very interesting to see. So no, I don’t know. I don’t know. I think the undercurrents were there.

And I think pretty much every company is dealing with this. And some companies are going to try to toe the line, I think, which I think is a really tough line to toe. Others are going to make decisions, and others are going to make calls about what they think is appropriate at work and what they think isn’t. And what’s exciting to me, is that this is why I love small businesses. Every small business is an experiment. We’ve always treated our business as an experiment. We’ve done a lot of things most companies would never do. And we will continue to do that. And we’ll continue to see how it plays out over time. And I love that different companies can experiment in different ways, and we’ll see how it all pans out over time. Time is the only judge. You have to look back on these things to know how they ended up panning out, but we’re very comfortable with how things ultimately turned out—as difficult as it was in those weeks after the decision we made.

Loren Feldman:
It’s easy to imagine in the aftermath of what you’ve just described that a storyline could take hold in your industry that there was an issue at Basecamp, that there was discussion and dispute, and that you kind of shut down the dissent. Now, I’ve heard what you had to say, and I know that’s not your view of it. And I’m not trying to make you repeat that. But you could imagine, given the facts that we just discussed, that that storyline could develop and that it could suggest that maybe Basecamp isn’t interested in having a diverse workforce. Has that been an issue for you?

Jason Fried:
We did shut down political discussions at work, on our work systems. We said in the announcement, “You’re free to talk to your fellow co-workers anywhere you want. You can set up a WhatsApp room. You can set up another Basecamp account. But when it comes to work, where we’re working,” because we use Basecamp to do all of our work, the product, “we cannot be mixing politics and work in that space.” So, yes, we did shut that part of it down. And I still think that was the right decision to make. If people were having religious debates at work, if people were actually in a physical office and someone put a pulpit in the middle of the office or a soapbox, got up, and started talking about what they believe in front of other people while people are trying to do work, people would go, “What are you doing? Like, I’m trying to work over here.”

This actually would be a lot clearer if this was a physical thing. People would go, “That’s sort of out of line, or not really what we should be doing here. It’d be sort of strange. So I’m very comfortable with that decision. I don’t think it’s been a problem for us. We just hired 45 people from all around the world. We have more people now outside of the U.S. than inside the U.S. I think diversity is an interesting topic. It’s not one- or two-dimensional. It’s many dimensions. We have people all over the world working for us now.

Also, by the way, we pay everybody the same exact amount, no matter where they live in the world. There are a lot of things we do that are really progressive, and really equity-based, and really fair that most companies don’t do. Lots of companies dock your pay if you move to a city, for example, that has a lower standard of living or live in a country with a lower standard of living. We don’t do that at all. So we’re trying to raise people up.

But no, I’m very comfortable with what’s happened here, and where we’re at, and what we believe. And I think we’re an incredibly fair company. I think our history shows that we are. This is a very divisive topic, and people can look at it through whatever lens they want. I think we’ve been exceptionally fair over the years and continue to be so, and lead in a number of different directions around really fair workplaces. I mean, another thing we do, for example, is we have a $70,000 minimum salary. Everybody who works at 37signals gets 70 grand, minimum, no matter what. This includes customer service roles and any roles that are typically paid considerably less. To me, that’s actually about equity. It’s about being really fair to people. It’s about basic standard of living costs. It’s about a fair living wage baseline salary.

Most companies don’t do that. Most companies use customer service, for example, as a place to basically try to get the cheapest people they can and treat them as poor as they possibly can because they know there’s an endless well of people who are willing to do that job. That’s not how we look at things. So you have to look at different lenses, and think about what these things are, and how a company overall treats its people, how it takes care of its people. And I would put our record up against anybody on that.

Loren Feldman:
Did you do anything deliberately to address the diversity issue, to try to make it clear that 37signals is a welcoming place for all types of people?

Jason Fried:
Well, I just think that we are. No, we didn’t do anything specifically different, no. I mean, we’ve been doing it the same way we’ve always been doing it for 23 years. So no, we did not make any deliberate changes to that. We’re willing to hire the best people we can find anywhere in the world, no matter where they live, no matter who they are, no matter what they believe, no matter where they come from, as long as they’re willing to focus on the work that we have to do here. And we have a statement in our job ads about this. It’s very clear that we are totally comfortable with whatever you believe, whatever you think, whatever you do in your personal life. But we as a company don’t take political positions, and we don’t discuss politics at work. And this includes social politics and all sorts of different varieties of politics. We are continuing to be the same company we’ve always been. And we’re going to hire the best people we can, and wherever they are, they’re going to be. So that’s how we’ve decided to continue to hire and run the business.

Loren Feldman:
The timing of this was kind of interesting. I mean, this all hit—you lost, as you said, about a third of your employees heading into what came to be known as The Great Resignation—at a time when you might have had trouble hiring, filling slots, in any case. Was it difficult to get fully staffed?

Jason Fried:
No. So whenever we put job ads out, we typically get between a few hundred to well over a thousand applications. People want to work here at this business. People want to work at a company that they care about. They want to work and do great work with employees they really respect. They want to work at a place that does not suck up all their time in meetings. They want to work at a place that allows people to be flexible and live wherever they want, work wherever they want. We do four-day work weeks in the summer, so 32-hour weeks. We don’t expect more than 40 hours a week out of anybody. People have a lot of freedom, a lot of agency here. They get to make a lot of decisions on their own. People want to work in that environment, and it shows.

We’ve had absolutely no problem whatsoever keeping people or hiring people, so that’s not an issue for us. And I think people who work in this industry understand what kind of business we are. They understand what kind of jobs we offer. They understand what kind of things they get to work on. And they understand our general philosophy of business, which is incredibly appealing to a large number of people.

Again, the good news is that there are a lot of places to work and a lot of different ways to work. If you want to work somewhere that doesn’t suck up your days in meetings, that’s not full of red tape, that’s not telling you every last single thing to do, but you actually have a lot of room, a lot of agency, to do the things that you want to do and to hone your craft, 37signals is a wonderful place to work. And people know that.

Loren Feldman:
I know that’s true, that 37signals has been considered a special place to work. I’m sure a lot of the people, the third of the employees that left, had felt that at one point, too. It must have been very painful to see that many people that you had worked closely with pick up and leave. How did you process that?

Jason Fried:
It was. It was really, really painful. First of all, I understood all their decisions. I understood why they would make that decision. And we helped them leave in a way where if they couldn’t be here anymore, they’d be well taken care of. I lost some people who I had worked with for 10, 12, 15 years. It was very personally difficult. I reached out to a number of them and never heard back. And that was personally difficult as well. But I also recognize that they have their own reasons. And it’s not up to me how they should feel. They’re gonna feel how they’re going to feel. And if they don’t want to talk to me, that’s totally fine, understandable.

You know, there were some really rough moments. I’m glad I spent a lot more time with my family. My wife and my kids really kind of recentered me and reminded me what’s important here. And that was incredibly helpful. I spoke with my therapist a number of times. It was a very challenging thing for us. Nothing like this had ever happened. And I think because we ran a relatively small business and worked with a number of people for a number of years, I mean, I think at that point—I’m trying to remember exactly, I might be off on this—but I think for about half of the company, the average tenure was about seven years. And in the tech industry, that is unheard of. And it should speak to the kind of company that we are, we were, and we remain, which is a place people want to work, a place people want to do great work.

Not everyone’s going to agree with some of the policies. But those who do can stay here for a long, long time, build a wonderful career. And to lose some of those relationships was painful and very difficult, but again, I understood it. I didn’t hold it against anybody. I still don’t today. I understand why they did it, and I wish everybody really well. And I hope they find something that’s better for them out there. And luckily, everyone who’s worked at our company can get a job anywhere else, no problem. This is one of the best places to have on your resume, and I think everyone landed a really wonderful job somewhere else, and I wish them all well.

Loren Feldman:
Did you have to raise what you pay people considerably? I mean, it seems likely that could have happened anyway, given the labor shortage and the competition for tech talent.

Jason Fried:
Well, like everything else we do, we do things a bit differently. So we peg our salaries to the 90th percentile, so the top 10 percent, based on San Francisco rates. So in our industry, San Francisco is the highest paid city. We use a service called Radford, which is a salary-surveying company that surveys thousands of companies, and you send them your data, and they send other companies who are part of this, who subscribe, send their data in, and you can figure out what your peers pay. And we match our salaries. We just peg them to the 90th percentile. I mean, essentially, there are always going to be a few companies that are gonna pay more, but we pay top of the industry rates. And so if salaries go up, we pay more. If salaries go down, we don’t drop your salary.

So we’ve always—not always, we’ve done it this way for the past, I think it’s been something close to 10 years or something like that—we didn’t change; we change with the industry. And of course, in our industry, salaries have been going up, up, up, up, and up. And so, our pay goes up, up, up, up, and up. And the reason we do this is because everyone gets paid the same, who’s in the exact same role, doing the exact same work. So this is another point about equity. I don’t care anything about you, other than the work that you can do, when it comes to salary. You don’t have to negotiate for yourself. You don’t have to deal with a manager who always has the upper hand. My feeling is that people should only have to be good at their job and be good to others. They shouldn’t also have to be an ace negotiator to get what they’re worth.

So we pay people the most they’re going to get anywhere, basically. This includes, we also do profit-sharing based on tenure. So the longer you’ve been here, the more you make, regardless of your salary, regardless of your position. Another thing about equity. So if you’re in customer service, which is a relatively lower-paying job here, compared to a principal programmer who makes much more, and you’ve been here for nine years, you will get the same exact profit share, no matter what your salary is. So there are a whole bunch of things we do, which are really fair for people, and people can take home a lot of money who work here, especially for a long period of time. So that’s how we do salaries. So we don’t renegotiate salaries, except when the rate changes based on the Radford data.

Loren Feldman:
So what is the upshot, given what’s happened to the marketplace? Given that most tech companies have gone remote and this competition has heated up, are you paying considerably more than you were based on the formula that you use?

Jason Fried:
Well, it resets every year. So there’s only been about a year or two. Most positions, I think, went up a little bit. It’ll be very interesting to see what happens this year with inflation. We also have an inflation adjustment. But it’ll be very interesting to see what happens now, because there’s some salary inflation happening, because companies are actually having a hard time finding people, so they have to raise salaries. And so those companies that raise salaries will of course send that data back to Radford, and our baseline will be adjusted. But we figure that stuff out in December. We do that once a year. So we’ll see what happens this year.

There are also been a significant number of layoffs. We don’t have any layoffs. We’re not going to lay anybody off. We’ve never laid anybody off. So we’ve been a very steady place to work that pays exceptionally well and has really wonderful benefits, and we’ll see what happens this year with the Radford survey data in December.

Loren Feldman:
You sound thoroughly engaged and excited. Were there moments when you thought about, “You know what? This has been good. I’ve done this for 20-plus years. I’ve kind of had enough. I don’t need to do this.”

Jason Fried:
Yes. For the first time ever. So, I’ve been running this company for 23 years now, and there were moments for the first time where I’d go, “I don’t know if I should be doing this anymore. I don’t know if I want the responsibility anymore. Maybe I’m not qualified anymore. Maybe I’m not engaged enough anymore. If my mood is wrong, how does that affect the company?” I had these thoughts. And I still have them from time to time. But I’m so excited about what we’re doing now, because this whole crisis was, again, a moment to reconsider.

We’ve decided to sort of go all in and see what we’re actually capable of, without putting any self-imposed limits on ourselves, within reason, of course. We still are a profitable company. We want to be profitable. We’ve been profitable every year for 23 years, we’re going to keep that streak alive. But now I want to see what we can do. I’ve got some new product ideas. We’re about to launch a brand new version of Basecamp, which is a really big deal. We’ve got a new ad campaign coming out soon, which we’ve never really done any advertising before—like, really advertising. So we’re doing that. That’s been a real thrill to work on.

And we hired some new wonderful people. We have a new COO. Her name is Elaine [Richards]. She’s incredible. We had a COO about five years ago for about a year, and we hadn’t had one previous or after. And it’s been a huge help to have someone else help run the day to day. So David [Hansson]—David’s my business partner—and I can focus on the vision stuff, on the bigger picture stuff. And I think what has happened was, without having a COO on board, David and I were sort of doing a lot of things that we weren’t particularly good at or actually interested in doing. And that distracted us. And at that point, you start to go, “What am I doing? I don’t really want to do this anymore.” But now I’m back doing the things I like to do, which is really energizing.

It’s very exciting to be here right now, and I’m newly energized. That said: How much longer do I want to do this? I don’t know. It’s a really good question. I mean, “How much longer do I deserve to do it?” is another way to think about it. And it’s like, 25 years could be a good number for me. Maybe I keep going after that. I’m not so sure. But right now, I’m definitely focused on the next couple years, because we’ve got a lot of stuff we want to get done. And then we’ll see what happens at that point.

In general, we’ve always been a company that’s made it up as we go. So we figure things out as we go. We don’t have long-long-term plans. This includes product design. This includes strategic decisions. This includes a whole bunch of things. And so I’m keeping to that, too. I’ve got some thoughts about where we’re headed, some thoughts about what I want to do, but I’ll constantly reconsider that as we go and see what makes sense.

Loren Feldman:
Going all in and seeing what might happen, are you thinking about, or have you actually taken, any outside investors?

Jason Fried:
No, not interested. I get emails like one or two emails a week from VC firms and PE firms and all sorts of different investors who want to put money in, and we’re just not interested in that. We’re not going to do that. We’ll never do that under my watch. We can do everything we want to do with the revenues we generate from our customers fair and square. So I don’t want outside money. I don’t want the pressures of outside money. I don’t want the obligations of outside money. I don’t want the timetable of outside money. I don’t want to work for someone else, which is essentially what happens when you take money. We’ve got everything we need to do everything we want to do. And if we can’t do something, we won’t do it—versus going out to figure out how to do it by raising more money. Not going to do it. So for disclosure, back in 2006, we sold a small piece of the business to Jeff Bezos.

Loren Feldman:
I was going to ask about that.

Jason Fried:
Yeah, so we sold a small piece of the business to Bezos. That money went to me and to David, so he bought some shares from us. None of his money was ever in the business, or will ever be in the business. And it wasn’t venture capital. It was founder shares off the table to take a little bit of risk off the table for the two of us back in 2006. Two years after we launched Basecamp, the product, where we didn’t know what was going to happen, we figured, “Let’s work really hard, let’s put a little bit of money in the bank.” In case this all goes to hell or something, at least we didn’t squander all of that. So that’s the only outside involvement we’ve ever had. But it wasn’t venture capital, and not a penny went into the business itself.

Loren Feldman:
So is he involved at all?

Jason Fried:
We used to talk to Jeff, like, once a year. We’d have dinner or something like that and hang out a bit. We spoke with him—I think it was last year we spoke with him. Before that it had been a few years. We talked last year about, “We should start talking again, like once a year or something like that,” but nothing’s on the calendar right now. So I think we’ll check in occasionally. We don’t have a board. So they have no say over what we do. They’re very minority investors—or owners, I should say—not investors, they’re owners. So we’re an LLC. So they get distributions every year from our profits. So that’s how they make money, because we’re not looking to sell the business or anything like that. So they get some of that. And they’re 100-percent hands off. We just send them some numbers every year, and we send them a check quarterly or wherever, whenever we make distributions. And that’s sort of the end of their involvement. But Jeff was really helpful early on when we had some fundamental questions about what mattered in a business and gave us some great advice. And then, again, we’ve called on him a couple times. But nothing else. He’s not involved in any other way.

Loren Feldman:
Did you talk to him at all after what happened last year?

Jason Fried:
We talked to him, yes, but not about that. We just caught up. I think this was last year. I think this was like this was right before he announced that he was stepping down from Amazon as CEO. So I’m not sure when that was, but it was like literally a week or so before that, which I think was after what we did. Pretty sure it was. Maybe we talked about it in passing. But it was mostly just catch-up time, and we talked about a whole bunch of topics.

But I think the best bit of advice he ever gave us, I’ll share with you—which I think he shared publicly elsewhere, too—which is: Most businesses are sort of obsessed with chasing trends, the latest latest latest. Now Amazon does a lot of that, too, in exploratory ways. But he said, “The great businesses focus on the things that won’t change.”

So he gave me some examples. He said, “I don’t think people are going to wake up in 10 years and say, ‘I wish Amazon’s selection was worse.’ People aren’t going to wake up in 10 years and say, ‘I wish Amazon’s shipping was slower.’ People aren’t gonna wake up in 10 years and say, ‘I wish Amazon’s prices were higher.’ Or, ‘I wish Amazon’s customer service was worse.’” He was going, “You’ve gotta find the things that people are going to wake up 10 years from now and want from your business the same way they want today, and invest in those things, continue to invest in those things. And they’re going to always pay off, because most companies are just focused on the new things. And they forget the basics that really matter to people. So figure out what those things are for your business and make sure you’re investing in those—not just chasing the shiny, new thing, even though you want to still explore new things. But get the fundamentals right first.”

Loren Feldman:
I think you have emphasized in the past that you really haven’t set goals for the business. Even on a year-to-year basis, there wasn’t, “We need to reach this level of profitability or revenues,” or whatever it might be. It was more, “We’re going to take on projects we want to do, we’re going to work really hard, and we’ll see where we are at the end of the year.” Do I have that right?

Jason Fried:
Yes. And that’s still the way we are.

Loren Feldman:
Even with the sense that you’re going all in and looking to see what limits you might surpass, you’re not really changing that approach?

Jason Fried:
No. For example, we’re doing some performance-marketing explorations, and you sort of want to track how they’re doing. But as a business, we’re not goal-driven. We’ve never been. Our feeling is, “We’re just gonna do the best work we can, period.” I’m not gonna do slightly better work because there’s some false number I made up or some fake number I made up that I have to strive for. People here are here to do the best work of their careers. They’re here to hone their craft, and I want people to be intrinsically motivated just to do great work. That’s why they’re here. And we let them do great work. As I said before, they can actually do their job here, which is unusual. In most companies, you don’t have time to do your job. You’re mired down in meetings and distractions and red tape and all sorts of stuff.

Every six weeks, we decide what we’re going to do over the next six weeks. When those six weeks are done, we’ve got a few weeks to figure out what we’re gonna do over the next six weeks. And that’s how we prod forward, six weeks at a time, roughly. We have some general directional ideas of where we want to head but we don’t really track metrics on a broad level.

We don’t have big-time KPIs or OKRs or growth targets or revenue targets or customer targets. We want to do better. We want to grow, because that’s a healthy thing to do in life and in work. But whether or not we grow 12 percent or 4 percent or 6 percent, or we’re flat for a year, like, it’s all good. It’s all good. It’s all kind of the same to us. And, you know, the long-term moving average needs to be sort of up and to the right. That’s sort of a general health indicator, which we’d like to see continue. But we’re not specific about exactly what that needs to look like.

Loren Feldman:
Listen, Jason, this has been great. I appreciate your taking the time. And I know this wasn’t all happy talk. I know we were talking about a painful period. You’ve answered all my questions and put no restrictions on this conversation, and I really appreciate that.

Jason Fried:
I appreciate you having me on and giving me the time and giving me the space to answer the questions and thank you for that.

Loren Feldman:
Absolutely.