Episode 60: Did It Have to Get Crazy at Basecamp?

Episode 60: Did It Have to Get Crazy at Basecamp?

Introduction:

This week, we talk about Jason Fried, the embattled CEO of the Chicago-based software company Basecamp. It just so happens Fried, along with every participant in this episode, has a connection to Bo Burlingham’s book Small Giants, which spawned both a business community and an annual list of companies that care more about being great than being big. Basecamp was one of those companies, and at the Small Giants Summit in 2019, Fried gave a keynote based largely on a book he’d co-authored called It Doesn’t Have to Be Crazy at Work. All of which made it somewhat disorienting last week when things did indeed get crazy at Basecamp. It started when Fried published a blog post decreeing there would be no further discussion of political issues at the company, but it soon became clear that this was not just about coworkers arguing Trump versus Biden. By Friday, a third of the company’s 57 employees had resigned. We didn’t know about Friday’s resignations when we taped the episode on Thursday, but we had plenty to chew on as we went searching for lessons.

— Loren Feldman

Guests:

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

Dana White is founder and CEO of Paralee Boyd hair salons.

William Vanderbloemen is founder and CEO of Vanderbloemen Search Group.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome Jay, William, and Dana. I want to do something a little different this week, which is talk about a company in the news—and not really for good reason. Let me recap quickly for listeners who might, for some reason, not have been reading their Morning Reports this week. Basecamp is a relatively small company, especially for a tech business, but one with a big reputation. One of its co-founders, Jason Fried, writes a column for Inc. magazine. They’re well-known for being kind of anti-Silicon Valley, anti-venture capital, anti-growth for growth’s sake. And they’re known for a lot of progressive management policies. For example, they’ve been working remotely for, I think, more than a decade. And several years ago, when I worked at Forbes, I was largely responsible for putting Basecamp on our annual list of Forbes Small Giants—companies that are focused more on being great than on being big.

And then this week, one of the co-founders, Jason Fried, kind of dropped a bomb in a blog post. He announced a number of things. I’ll list them quickly: “No more societal and political discussions at Basecamp. No more paternalistic benefits, such as a fitness program, a wellness program. No more committees. No more lingering or dwelling on past decisions. No more 360 reviews. No forgetting what we do here: We make project management, team communication and email software. We are not a social impact company.”

Since that bomb dropped, there’s been a lot written, a lot of discussion. A couple of things have come out since then. One was this: what seems to have triggered this is the existence of a file in the company’s own Basecamp communication system, a file in which employees were keeping a list of quote-unquote funny names of some of their customers. And these names were non-Eurocentric names, ethnic names. None of them have been disclosed, but I think you get the idea… That’s one thing that’s come out since then. And the other thing is Basecamp, in light of all this, has told employees that they can get a severance package of as much as six months if they now want to leave the company—no questions asked.

I would also point out that there have been a number of business owners who’ve been quoted in the press who’ve looked at this and congratulated Basecamp on the courage they’ve shown for doing and saying what had to be done and said. I’m curious what you guys think. How about you, William. How do you look at this?

William Vanderbloemen:
After reading the full letter that Jason sent out to his company, I thought it was courageous leadership. I don’t know the circumstance of what’s going on over there. Letters like this and decisions like this, if you’re in my world, they don’t happen without a whole lot of build up. And a whole lot of things getting a little out of control. I guess not out of control. You start off five degrees off north, and then it’s 10 degrees off north, and then it’s just 11 or 12. And you look up, and you’re like, “Wow, now we have committees. Now, we’re worried about politics. Now, we’re taking up causes. I didn’t sign up to run a farmers’ market. We need to get back to the basics.” And unfortunately, if the senior leader doesn’t do that, it doesn’t happen.

And it’s just great to see, in my mind—and I might be wrong—a founder willing to make the call that really only the founder can make—or the CEO, maybe, if you’re not the founder—and just say, “Hey, this is what we’re doing.” On a much, much, much, much smaller scale, we dealt with this just two weeks ago in the “when are we going to come back to work” question of COVID. I listened to all the people, and I listened to their ideas. And they’re good, smart people, and I love them, and I’m glad we work together. And at the end of the day, I just really disagreed with them. And I said, “Hey guys, I don’t do this often, but I have listened to your opinions. I have heard what you have to say. I think you’re smart. I’m so glad you think you can give those opinions. And now I’m making my decision. You need to just trust me on it and live with it.”

And when I saw what Jason did, which was much more bold, and probably will cost him a lot of employees, I thought, “That’s a guy who has not just gone into coast mode. He’s still making the hard decisions.” I have a client who runs a very large church, and he’s a wonderful guy. He’s very well-known nationally. And I was with him not too long ago, and he said, “You know, William, I think I preach for free.” And I said, “What do you mean?” “They don’t pay me to preach. I like preaching. I do that. It’s great. I guess I’m pretty good at it. It seems to be working. But here’s where I think I earned my salary.” He said, “I think I earn every penny of my salary making about two or three decisions a year that no one else wants to make.”

And that’s what I was reminded of when I read this thing from Jason. I’m just applauding him. I want to write him. I’m a very early client of his. 13 years ago, when I couldn’t afford anything, I used Highrise as a Band-Aid CRM. We’ve been very familiar with them and followed them for a long, long time.

Loren Feldman:
This is exactly why I wanted to talk about this. What’s so interesting about this situation is that it seems to come out of a lot of impulses that many business owners would share and be able to relate to. I mean, who wants employees fighting over politics around the water cooler or through email or in Basecamp? But is that what this is really about, and are there other ramifications? Dana, what do you think?

Dana White:
First of all, go back and listen to the “I’m Stressed” episode. That applies to race, that applies to any of the challenges you’re having in your business. It came across to me as: “You know what? It’s getting a little hot in the kitchen. Things are bubbling up. We’re opening ourselves up to liability. There’s a lot of stuff going on, so let me just cut it. Let me just, ‘Okay, no more this, no more that. No more this, no more that.’” As opposed to remembering: Heavy is the crown. Get to work.

I think it was a hard decision to make. Yeah, okay, but there are a lot of business decisions that we make in leadership that are hard decisions to make. But I think his is in reaction to what he either is not going to do or what he’s not capable of doing. Instead of getting in the work, getting in the weeds, and effecting change within his culture…

If you’re seeing, for example, you’ve got a culture where your customer service reps are making fun of names that don’t sound like Amy, Brad, Paul, and John, well, then that’s something you need to change. That’s something you need to work on. And saying, “Well, nope, we’re not doing A, B, C, and D,” taking away paternalistic programs. Don’t take them away. Just reward people differently who don’t want to participate in them. So if I don’t want to participate in the workout discount, okay, so then here’s some other things you might want to do. But to me, get into it. Don’t just cut it off.

We really don’t know why. What are the details? And I think it’s very interesting that he’s going to make these broad sweeps and not really go into why he’s doing it. But to say, “We’re just not going to talk about politics”—instead of, “Why aren’t we talking about politics like this?” Take a stand.

Loren Feldman:
One of the committees that he eliminated, Dana, was a committee on diversity, equity, and inclusion that employees had created in response to the revelation of the existence of that file making fun of customer names. You referred to the conversation that we had back a year ago in the George Floyd aftermath. One of the things you did for us there was to kind of open our eyes to how this would look to an employee of color showing up at work in the morning and thinking about the values of the business where they worked. What would you imagine an employee at Basecamp thinking, reading this?

Dana White:
If I was an employee there, I’d be like, “Oh, he just isn’t going to try anymore.” And in this day and age, corporate culture needs to understand you’re no longer the place where you can’t deal with it anymore. You’re either going to deal with it or not. What did I say in “I’m Stressed”? You’re either over here, or you’re over there. I’m saying he’s copping out. Really? That’s what you’re going to do as a leader? Heavy is the crown, so you’re just going to take it off? No! No! That’s how I feel, like he just kind of said, “Well, I’m not gonna deal with this anymore, because I’m either ill-equipped or I don’t feel like it.”

Loren Feldman:
Jay, what do you think?

Jay Goltz:
I’m just taken aback. William, I have to ask you: Did you read his original email or blog [post], the entire thing, word for word? Did you actually see the original document?

William Vanderbloemen:
Jay, what helps me is every morning to read the 21 Hats email that I get. It’s like food for my brain, right? And in there, there was a really helpful link to his original document, and that’s what I read. So you know, assuming that’s right, that’s what I read.

Loren Feldman:
Let me jump in here. You should know the background. Jason sent this blog post out through a Basecamp product called Hey, a new form of email. It looks like an email, it behaves like a blog post, whatever. I quoted from the original version that he sent out that way, but they archive it on a website and they edited that subsequently. So if you clicked the link in the Morning Report, you went to the archived version, which was slightly different. So for example, instead of saying, “no more societal or political discussion at Basecamp,” it now said, “No more societal or political discussion on Basecamp’s main communication platform.”

William Vanderbloemen:
Gotcha.

Jay Goltz:
That’s very, very, very different. He’s saying, “Don’t use our software that is meant to take care of business to have these discussions. Please have it somewhere else.” That is a very different message than what his original thing is. I have to quote from this before I give you my opinion: “As [Aldous] Huxley offers in The Doors of Perception, we live together. We act on and react to one another, but always and in all circumstances, we are by ourselves. The martyrs go hand-in-hand into the arena. They are crucified alone. Embraced, the lovers desperately try to fuse their insulated ecstasies into a single self-transcendence; in vain. By its very nature, every embodied spirit is doomed to suffer and enjoy in solitude.” And his comment to that is, “Heavy, yes, but insightful. Absolutely. A relevant reminder. We make individual choices.”

What the hell does that mean? What an uplifting, inspiring thing about teamwork and working together. I was cringing through this entire thing. I don’t know the guy. I’ve read his stuff. I’ve always been proud that he’s a Chicagoan, and he runs this wonderful company that was a Small Giant. And I don’t know how you can read this without saying, “No, not really Small Giants. Giant asshole.” I’m shocked that anyone can read this and not think, “Oh my God. Have you lost your shit?” He’s basically saying, “No social responsibility.” Like he said in here, “It saps our energy and redirects our dialogue towards dark places.” You mean like watching TV every night in Chicago and seeing another kid’s been shot? You mean those kinds of dark places? We should avoid those conversations?

Or the it’s-my-company tirade. “It’s my company. I’m going to do whatever I want.” How disheartening for his employees that have put their heart and soul into this team or company. If you read any of the responses from the employees—this isn’t my opinion. What matter does that make? I don’t work for him. His employees, some of them, are completely heartbroken that this wonderful Small Giants company of support and love and working together for a common goal is now, “It’s my company. I’m going to do whatever I want. If you don’t like it, I’ll pay you six months. You can leave.”

I’m taken aback, and I don’t know the guy. I don’t think he meant that to be the message. I think the message was, “Hey, this is really getting hot at work.” William, I have to tell you, the fact you call it “courageous leadership”? My mouth’s been hanging open. Courageous leadership to me is calling the five people into the office who were ripping on each other, to put them in the room and go, “Guys, do you think this is productive? I mean, the bravado of being behind your keypad, I understand, is a problem. And I know we’ve all been locked in our houses, but can you see where this is really getting disruptive to trying to take care of business?” And calming people down and saying to them, “If you really have the need to rip on each other like this, please don’t do it on our software.” That, to me, is leadership—not throwing out the baby with the bathwater and having a temper tantrum, saying, “I don’t want to be involved with any of this stuff.”

I’m hoping he had a bad day. I’m hoping that he—like me and like many others—is worn out from the last year, and his nerves are shot. But I don’t know. I don’t know what to think. The whole thing’s really disheartening and sad to me. But the last thing on Earth I would call this would be “courageous leadership.” I would call it “losing your shit.” That’s what I would call it. That’s all I got to say.

William Vanderbloemen:
So do you agree or disagree with me?

Jay Goltz:
I’m not sure. Let me get back to you. Let me send you a note. No, like I said, to be fair to you, I don’t know that you read the whole thing from the beginning to end and had the original copy. But there were so many lines in here that are just… ”It’s none of our business what you do outside of work.” Okay, to a degree, that’s true. But I don’t necessarily want someone working here that’s in the Ku Klux Klan. Sorry, that’s just an individual choice of mine. “We make individual choices.” What does that all mean? “A return to personal responsibility.” What does that all mean? We should just pretend like it’s 1960?

Loren Feldman:
I think we know where you stand, Jay. William, do you have a response to that?

William Vanderbloemen:
No, I want to hear what you think, Loren.

Loren Feldman:
I’m really saddened by this. I think this is a train wreck. The notion of doing something, taking an action, that forces you to tell your employees, “Look, if you don’t want to be here, not only is it okay for you to leave, but we’ll pay you to leave.” That’s….

Dana White:
After creating a situation that would make them want to leave. It’s not like everything’s status quo, and you’re paying them to leave. You’ve communicated something to them that would make them no longer want to work for you. And you go, “Fine.” Instead of hearing them out, “Here’s six months’ salary, you can go.”

Loren Feldman:
Now, let me say this. I think the part that you’re responding to, William, is a part that a lot of people share your opinion on, and I referred to this earlier. If this were just a discussion of, “Do we really want to have political conversation taking up time at the office?,” a lot of people are going to say, “No.” And in fact, we’ve talked, we don’t want to have political conversation on this podcast. But once he drops the word “societal” in there, I think that changes it dramatically. And then there’s the way he did it.

Jay Goltz:
And I totally agree with that. I understand his frustration of, “Can we stop with this?” I totally understand that. I just don’t think he communicated properly. I think he could have had some conversations with the people who were out of control there—if that’s what the case is, though. I don’t even know if that’s the case anymore. I think this isn’t management. This isn’t leadership. This is a temper tantrum.

William Vanderbloemen:
I’d love to know more about the situation, because I’d say everybody can fly off the handle and blow a fuse, right?

Jay Goltz:
Absolutely.

William Vanderbloemen:
And if ever you’re going to fly off the handle and blow a fuse, arguably, the end of 2020 and the beginning of ‘21 would be the time. But man, watching his work for 21 straight years—and not acting alone. The part that I liked in this was, “If you’re asking who made these decisions, David and I did.” So A), not acting alone, and B), “If you want to complain about it, complain to me because I am going to own this decision.” It’s not too different from—it’s sad to say—after George Floyd was murdered, and we had that really great podcast [episode] where Dana was so awesome, I took a pretty strong stand and sent out a letter about where I am, which means where our company is, on this: It’s ridiculous. It’s murder—before it was convicted murder. And we took a little bit of a beating from some people over that.

Loren Feldman:
You called it a lynching on the podcast.

William Vanderbloemen:
I did, and I’d call it that again. I took a little bit of a beating for that. That is the kind of leadership where it’s like, “No, if I really believe in this, and I own the company, and the company has gotten off course from what I believe it should be, I don’t need a committee to tell me whether it gets back on course.” There are times, not many.

But back to my friend, “Two or three times a year, I think I get paid all of my salary to make decisions no one else wants to make.” It’s not all the time. All the time would be a fascist, micromanaging, insensitive way of leading, but there are times—I’m discovering—when if I don’t make the hard call, things will continue to spiral in a direction that will take us way off mission. And so I would love to know more about the details of what went on, because I’ve got a hard time believing Jason just went Dr. Jekyll, Mr. Hyde on us. I don’t think so.

Jay Goltz:
I agree. I’ve been wondering myself. I don’t know the guy. I’m hoping he just had a really bad day. But from what it seems like, they keep backing it up with more. His partner went on there, and at the end of his whole thing, he said, “Well, this too shall pass.” Really?

Loren Feldman:
Let me read the part of the original email that William’s referring to. Towards the end, Jason wrote, “Who’s responsible for these changes? David and I are. Who made the changes? Dave and I did. These are our calls. And the outcomes and impacts land at our doorstep. Input came from many sources. Disagreements were heard. Deliberations were had. In the end, we feel like this is the long-term, healthy way forward for Basecamp as a whole, the company and our products.” I don’t know, I think there are different ways to read this. William, I think you’re reading it one way. I think others might read it as, “Hey, it’s my company. This is what I’m going to do, and if you don’t like it, that’s your problem.”

Jay Goltz:
He absolutely has the right to do that.

Dana White:
Yeah, he does. But I mean, I’m listening to it, and I’m listening to you, and I’m remembering what I read. And I’m like, “Yeah, because you don’t know what to do. So that’s why you’ve done what you’ve done.” And it’s hard, but it’s not as hard as fixing what’s in it. I mean, if you get a cut on your arm, you don’t cut off your arm. “Oh my God, he was so courageous. He cut his arm off.” No, he didn’t have to, but stitching himself up may have been harder.

Jay Goltz:
How about they’re making fun of people’s names, and they’re actually documenting it and keeping a file? How about instead of having a committee—back to your point, William—making sure you stay on track, going, “Yeah, this isn’t a good idea. This was a bad idea. We need to stop doing that. Will you make sure you get rid of that list? Next.” How about that? We don’t need committees to figure that out. It’s what Dana just said: How about instead of just, “Cut your arm off so we don’t have to have this conversation,” I really think it’s throwing out the baby with the bathwater. There’s absolute validity to try and keep a civil place and get the work done and everything, but to go ahead and make an edict that there will be no more…

And Loren, you’re right on the money. The second you put the word “societal” in there… You have to read the responses from the employees to really get this whole thing. And one of them just said, “Yeah, when you’re the white boy going home, it’s much easier. When you’re the black guy, you’ve got to worry about whether you’re going to get killed by the police on the way home.” I mean, we’re in difficult times.

Dana White:
Wait, wait. Let’s add this to it, Jay. And when you go home, and you go to work, and you come to work, we really don’t want to deal with your “political” issue.

Jay Goltz:
Right.

Dana White:
See, that’s the issue I have. How are you defining “political”? I get it that having the Trump-Biden conversation at work, especially on the company platform, is inappropriate. But you’d be surprised at how many people, because they’re uncomfortable, will classify a human rights issue as a political issue. And it sounds like that’s what he’s doing.

Jay Goltz:
But we don’t know. That’s the point. To your point, Dana, if he would have told us the story, give us a little narrative of something… Now it looks like he’s just mad because people are mad they got rid of the funny-name list or something.

Dana White:
But there’s a reason why he didn’t. There’s a reason why he didn’t say anything, and I said that before.

Loren Feldman:
Well, I think the reason he didn’t is because nobody wants to talk about a situation like somebody keeping a list of funny customer names. There’s no positive side to that.

Dana White:
There is. Yes, there is. It depends on how you stand up. I’ve said it before: “This is what we’ve done. Own what we’ve done. And this is what we’re going to do in this company to fix it, because this is not who we are.” That’s not what he’s doing. He’s saying, “You know, I don’t agree with it, but you know, I really don’t want to make anybody upset.” You know, “Hey, if you want to make fun of names here, just don’t do it on our platform. And we’re going to take out anything that we think that may have encouraged you to do it,” but he’s still not addressing it.

Loren Feldman:
I want to ask William a question. You said before that you thought it was a courageous decision, but one that would cost him a lot of employees. These are people who are likely to be highly sought-after, and they’re being offered six months pay to go find a job somewhere else. How do you square those two things?

William Vanderbloemen:
You know the search firm Russell Reynolds? I thought for the longest time it was Mr. Russell and Mr. Reynolds, and 200 years ago, they formed a partnership. Well, actually, Russ is a guy—Russ Reynolds. He’s a wonderful guy. He’s been around a while, but he’s become a good friend. And the friendship started when his church called asking us to find a pastor for them, which I thought was totally hilarious. We met in Russ Reynolds’ office, and they’re hiring us. And I’m like, “Don’t you have somebody at your company who can do this for you? Why are you paying me?”

But anyway, long story short, I said, “Look, you’ve been around a long time. I’m new with this. What do you wish you had known when you were new at this?” And his answer was real quick. He said that every single search is unique. I said, “What do you mean?” He said, “Well, every client is unique. And then every search within every client is totally unique.” So I think it would be really negligent for me to speculate on what is happening with Jason and his company without knowing more.

I don’t know why you’d do a blog post for a memo that’s supposed to go to employees. It wasn’t a press release. That’s an entirely different thing. This to me is, somehow we got part of the internal communication that, because of the way they’re set up, runs externally as well. Now maybe I’m reading it wrong. A blog post would tick me off. I mean, then I do need to know: “What do you mean when you say ‘societal impact’?” Because I mean, hey, we’re living in a really hyper-charged era where you do need to have some stand on what you believe about basic human rights and inequality. But this wasn’t a press release. How I read it, which may be incorrect, was this went to employees.

How do I square up the six month’s pay? I think he knows he’s going to lose people. Now maybe—this is so speculative, I hate to even say it—but if I’m sitting here saying, “I’m going to lose half my people, I might as well let the world know that if you get at odds with me, I’m gonna pay you for six months while you look for something new.” I see it as a recruiting tool.

Dana White:
No, no, no. It’s like, “I’m gonna stab you, but I’ll smile at you when I’m doing it!”

Jay Goltz:
“I’ll get you a cup of coffee then, too.”

William Vanderbloemen:
So you think he’s hurting them by offering them six months severance?

Jay Goltz:
No, I think he’s actually trying to be decent to people that have been there for years. I don’t blame him for that.

Dana White:
Like most people, he’s well-meaning. You mean well, but you sound like an idiot!

Jay Goltz:
One of his employees went on, with his name—give him credit—he said, “I’ve worked at this company for years, and I’ve always felt good about our mission and who we work with, and now I’m just very sad.” It’s heartbreaking to watch. Was that his intent—to make people who work for him feel complete disillusioned as to who they work for and what they’re about? I’m giving him the benefit of the doubt.

I read this years ago: “The speech you make in anger will be the greatest speech you ever regret.” Never forgot that. I wish he would have just read this over, maybe waited till the next day, maybe edited some words around. I get the point of it. There is a legitimate point in this. But the tone of it… and this is not just me speaking. This is a ton of people who went on there who were commenting. The tone of this is horrible… horrible.

Loren Feldman:
Let me just say one thing in response to what William said. It’s important to understand that this was intended to be like a press release. It’s not an internal email that was somehow leaked. In fact, in what Jason initially wrote, he had a paragraph that read, “Recently, we’ve made some internal company changes, which taken in total collectively feel like a full version change. It deserves an announcement.” So he was fully thinking this was a public document.

William Vanderbloemen:
Okay.

Jay Goltz:
No, he’s proud of this. He thinks that this is a noble thing. He thinks this is a noble thing.

Dana White:
You guys, I don’t know. I live in a different world. When edicts and statements are made, they know exactly what they’re doing. He didn’t stutter. He repeated himself a couple of times. He knew exactly what he was doing. Although it’s uncomfortable, he’s attracting exactly who he wants to come work at his company and his culture. Don’t get it twisted. And the people who believe differently are hurt, because they thought they were working for somebody else. Once you show me who you are, I believe you. If there are people who are working for him listening, or if he’s listening, you have shown them who you are. And we all believe you. Period.

Jay Goltz:
Dana, you could be right. I hope you’re wrong. I’m hoping that COVID played into this. I’m hoping the fact that people hadn’t been in the office for a year and a half… I’m hoping that he’s stressed out. I’m hoping you’re wrong. But maybe you’re… I don’t know.

Dana White:
Jay, how many conversations have we had on this very same subject matter, and I’ve been wrong?

Jay Goltz:
No, you haven’t been. And I have to tell you, half of what I’m saying is because I’ve learned from you the insights of what’s going on for the last year. I give you full credit for that. I was cringing. I’m sad for him. I’m sad for his company. I’m sad for his employees. This is a guy who’s been writing for Inc. magazine for years. He writes lovely articles. And he’s a Chicago guy. It was a lovely story. It was a Small Giants story.

Dana White:
I’m not surprised at all.

Loren Feldman:
Let me ask this question. My point in doing this—and I was nervous about this—was never to pile on. My point in having this conversation with you guys, was to say: Look, there are legitimate, obvious concerns that are part of this discussion. There’s an impulse here that you can imagine any business owner, anywhere, feeling at some point and wondering how to deal with it. With that in mind, William, do you see this as a problem that’s been created that needs to be addressed? Do you see them—as I do—as a company that is going to need to take some steps to try to fix this situation? And I’m curious whether you think it’s fixable.

William Vanderbloemen:
All I know is, I wish I knew more.

Loren Feldman:
Okay.

William Vanderbloemen:
Humans are possible of doing some really stupid things. I can attest to it firsthand. This is the voice of experience, right? But I can’t, for the life of me, figure out how a guy who, for 21 years, has talked about building a place for a good thing and not just for a profit. I mean, Loren, you studied his business. Probably all of us on the call know he could have rolled this thing up and sold it many times over, over the years. And he’s stuck to his guns.

Loren Feldman:
Absolutely.

William Vanderbloemen:
So why, all of a sudden, did he become a completely different person? I think there’s more here. He’s certainly not trying to create clickbait. I think there’s more going on at that company than we know.

Jay Goltz:
I’m with you. I agree.

Dana White:
I think that, but I also think some things happened. He and his people, although organic and Small Giants and well-meaning, were ill-equipped to choose either over here or over there. They did what they knew, period. That’s it. He didn’t know what to do, and so this is what he did.

William Vanderbloemen:
Sorry to interrupt. One of my favorite quotes in the original statement is, it didn’t sound like there were four or five people mouthing off and so I need to deal with them. Jay said, “Get those four or five people in the office.” [Jason] said in the statement, “You shouldn’t have to wonder if staying out of it means you’re complicit or stepping into it means you’re a target.” This sounds like there’s a whole lot more going on in the workplace, and if that is what’s going on, somebody’s got to be the grown up and call it and say, “Enough. We’re not doing this anymore. Let’s get back to work.”

Jay Goltz:
Agreed.

Dana White:
No, I agree—but to an extent. I think they need to say, “Enough. This is who we are, and move on.” But that’s not what he’s saying. He’s saying, like Donald Trump said, when he first got elected, “There’s good people on both sides.” No! No! There is no, “If I’m not in it, I’m wrong. Well, if I get in it, I’m wrong.” No, “This is what it is here at Basecamp. And if you don’t like it, here’s six months’ pay for you to go.” Being in the middle, you don’t stand for something. That’s it. He’s not standing for anything.

Jay Goltz:
You can’t take the piece out of this that they haven’t been in the office in a year and a half, and everyone’s behind their computers all day long.

William Vanderbloemen:
Jay, they don’t have an office.

Jay Goltz:
Okay, okay.

Loren Feldman:
Jason’s co-founder referred to that. He said, “Of course, we’ve been working remotely for years and years, but it doesn’t help that we haven’t even seen each other in a year and a half, and haven’t reestablished that human connection.

Jay Goltz:
Yeah, there’s some of that.

Dana White:
All the more reason for him to get up and do what he has to do. I’m just over it. The agitation you’re hearing in my voice right now is I’m just really over everybody giving people who make the decisions they really aren’t qualified to make, “Well, maybe it was this. Well, maybe it was that. And we don’t do that for everybody.” I don’t care. I don’t care! He had a choice. He made it. He has shown us who he is. Believe him. Whether he’s at home in a closet, whether he’s on an island working by himself, whether he hasn’t seen his co-workers in two or three years, it doesn’t matter. He showed you who he is.

William Vanderbloemen:
Well, I think this is a fascinating conversation, because I respect all three of you and your business acumen. I think it’s probably the first podcast [episode] where we’ve actually pretty strongly disagreed with each other, which I think is really awesome.

Jay Goltz:
We can do that again!

William Vanderbloemen:
Who wants to listen to everybody agree with each other? That’s no fun. I think this debate is something that I’m hoping listeners will be able to get some sense of something out of—from both sides of the issue.

Loren Feldman:
Jay, I’m curious how you would you respond to the question I asked William, which is: Do you think this situation is fixable?

Jay Goltz:
I absolutely think that he could go out and say, “Listen, I sent out that blog post. It’s been extremely frustrating. People are at each other. We’re not getting the job done. I recognize that the tone of my letter was not what I was intending. I’m trying to say we need to take care of business first. And I’m rather horrified as to some of the responses. I didn’t recognize that the tone that I set out is, ‘Hey, it’s my company. I’m gonna do whatever I want, and we don’t need to be socially responsible anymore—all we have to do is make software.’”

That is absolutely the message. I don’t know how you can take any message other than that. Like, “We’re just here to do software. Whatever goes on in the rest of the world, not my concern. And whatever you do after work, not my concern.” People, I think, are understanding that we’re going through COVID. There’s been a lot of stress. I’m telling you, I don’t know if it’s like this everywhere in the country. Watching television in Chicago, every week for the last three weeks, there’s another kid getting shot by the police. It’s disheartening. It’s disturbing. It’s frustrating. And in the middle of all of this, he sends an email blast out telling everybody, “Hey, we’re just here to make software, and it’s my company”? I can’t think of worse timing. I can’t think of a worse tone.

Loren Feldman:
I’ve lost track, Jay. Are you arguing that it is fixable, or that it’s not fixable?

Jay Goltz:
Absolutely fixable. Absolutely fixable. But with that being said, I don’t know that he’s going to. I think he might just be—as Dana says—maybe this is who he really is.

Dana White:
Absolutely not fixable. It’s fixable to the people who he’s spoken to who agree with him. Sure. But from my angle, I’m good. It’s not fixable. You’ve shown me who you are. With all that’s going on in the world in the past year, year and a half, I see you. I don’t have to agree or silently disagree with the excuses that I hear other people making for you. I see who he is. I believe him. Leave him alone, and move on, and go to places where you are supported—not to places where you’re not supported, because he’s too uncomfortable to deal with it. He has that privilege.

Jay Goltz:
Listen, she could be right. I’m not arguing. I’ve gotta tell you, it sickens me. It just really makes me sad that this is where this ends up within one blog post. He takes this wonderful Small Giants company, and now it’s, “We’re just here to make software. None of this is our concern. Do whatever you want.”

Loren Feldman:
Do you guys think at all about whether this has an impact on the way people look at business owners?

Dana White:
Yes.

Jay Goltz:
Yes. I’m sorry to say that, too.

Dana White:
That’s why I’m so impassioned about it.

Jay Goltz:
I’ve been coming this way for the last couple of years. I’m taking CEO off of everything. I’m just going to be founder/president. The CEO has gotten so maligned as to what you hear about CEOs. I don’t want to be called a CEO. I don’t want to be thought of as a CEO. I’m going to be founder/president.

It’s really unfortunate that this is what business owners are. “See, that’s how they are—all they care about is money.” It’s really unfair. It’s anti-Small Giants. It’s the opposite of what Small Giants is. And I was always proud to be in the book. I was always proud to be associated with the mentality behind it. And here’s someone that was in that group, and all of a sudden, “Oops, maybe not.”

Loren Feldman:
All right.

Jay Goltz:
I need a drink now.

Loren Feldman:
Well, I had some other things that I wanted to try to discuss here, but it doesn’t really seem appropriate to go back to business as usual after this conversation.

Jay Goltz:
Oh, go for it, Loren.

Dana White:
Oh, why not?

Jay Goltz:
Yeah, get us out of the mood. Let’s talk about puppies and flowers.

Loren Feldman:
Dana, last time you were on, a couple weeks ago, you dropped the surprise that you had decided to franchise your hair salons.

Dana White:
Yes.

Loren Feldman:
What’s going on?

Dana White:
Well, I drafted a letter to all my employees saying, “Listen, we’re never, ever going to talk about societal…” I’m kidding. I’m sorry. I had to slip that in there. [Laughter]

Dana White:
Anyway, I’m in. I started the franchise process, had the privilege of working with my first team member this week. It was one 12-hour day, eight to eight. The next day was a 10-hour day, I think. And it was… wow, you talk about downloading everything about your business that’s been in your head for years. It’s a lot of great energy, reengaged. It’s great.

Loren Feldman:
You’ve been meeting with your franchising consultant, right?

Dana White:
Yes, sir. Yes.

Loren Feldman:
Have you learned anything that’s either surprised you, or taken you aback, or made you even more excited?

Dana White:
The one thing that made me more excited is, again, this constant, “We get it, we get it, we get it.” And that keeps coming up throughout the process. That’s always been a hang-up for me, finding my tribe. Who really understands what I’m doing? And they really do. They’ve done their homework. One of the concerns I had was making sure that they understand that this is a Black business that’s going to serve Black people. We’re transitioning over 100 years of hair care tradition. A cookie-cutter model for franchising is not going to work here, and they’ve done a really good job of adapting and making sure that the franchise process that I’m going through really fits what the mission and vision is for Paralee Boyd.

Dana White:
Part of my selection process will be a personality test, and a lot of franchise companies have them. There’s a whole coffee-lunch-dinner, get-to-know-you process. So once a Paralee Boyd franchise is awarded, we know each other fairly well. They’ve talked to me about some things about Dana that makes that process an easier process to have, versus other franchise owners that they’ve worked with. Dana is an open book and wants to get to know people.

It’s not about the money for me. A lot of times that’s where franchises go wrong. They’re selecting people because you’re looking to develop an area—let’s say in Chicago—and you want to open five over the next five years. And, “Oh, I’m going to take you on because you have the money without really understanding who’s going to operate those businesses and what that relationship is between the money person and the operating person.” And is the operator the owner? It’s just a lot of different dynamics that I wish I had known. I would have done this sooner had I known.

Loren Feldman:
We’re just about out of time. Jay?

Jay Goltz:
Nothing.

Loren Feldman:
You’ve got some news. You’ve been telling us, I don’t know, since the beginning of the pandemic…

Jay Goltz:
A year and a half, before the pandemic.

Loren Feldman:
…that you’ve been trying to get a bank loan. Any news with that?

Jay Goltz:
Done.

Dana White:
What???!

Loren Feldman:
Congratulations.

Jay Goltz:
The sixth bank. I could have had two babies by now—it was 18 months—and now I hear the banks are loosening up a little bit. I really don’t need the money anymore. No, I really don’t. But that phrase, “Get money when you don’t need it,” is true. It’s not just a little quip.

Loren Feldman:
Is that the lesson of this situation?

Jay Goltz:
Absolutely, I’m going to take the money and just sit on it, because who knows what’s coming around the next corner. I want to be prepared, because if it turns out I need the money, the banks hide under the table whenever things get tight. And when I say “I’ve been through six banks,” I mean banks that their bread and butter is small business. I mean, this isn’t like I was going to banks that just do car loans in the neighborhood or something.

Loren Feldman:
All right. My thanks to Jay Goltz, William Vanderbloemen, and Dana White. As always, thanks for sharing, everybody.

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