Tag: Basecamp

The Full Coinbase

A step-by-step guide to making any workplace crisis about you.

One is an incident, two is a coincidence, but three makes a pattern. Following on Basecamp’s heel turn this week, now Patreon CEO Jack Conte has posted a YouTube video announcing the layoff of 36 people from the company, despite things going well financially.

Protocol reports that:

Patreon is offering laid-off employees a severance package including three months of full pay, five months of mental health benefits, and health insurance through September, Conte said. The company also removed some stock option restrictions to ensure they get “the full amount of stock compensation,” Conte said. 

The layoffs come just weeks after Patreon raised a $155 million funding round at a $4 billion valuation. Patreon is doing better than it’s ever done before, Conte said in the video.

The video is uncomfortable to watch, and not just because Conte talks in that first-person confessional “YouTuber style” that I always find awkward and a little bit threatening, like someone has you in their headlights and will not look away.

In a 6.5 minute video, Conte spends the first third talking about how weighty a decision it is, how much he owns the decision, how the company is doing fine financially and the fired individuals are all wonderful, great people. This reminds me of the saying that if someone says something nice followed by “but,” everything before the “but” was bullshit.

I don’t have solid numbers on how many employees Patreon has. Last year, when the company laid off 30 people in response to the (short-lived) economic downturn caused by the onset of the Covid pandemic, The Verge reported that was 13% of their workforce, which would add up to about 230 people. Assuming their headcount either remained flat or only grew a little, today’s layoffs would be roughly 15% of the company.

Why? Conte attributes the change to a shift in product strategy, proposed by the company’s recently-hired chief product officer, saying that the people being let go didn’t have the skill sets or experience needed for this new vision.

What he of course did not say is whether these individuals — who were all designers, engineers, and other tech/product specialists — were given an opportunity to adapt to the new way of working and stick around, or if they plan a big round of hiring to fill their roles. His words seem to say that these people were wrong for the company, but could just as easily mean that they were redundant, making this that other kind of layoff that companies do when they want to improve their financial outlook or shareholder value.

A difference between this video and the blog posts from Coinbase CEO Brian Armstrong and Basecamp founders Jason Fried and David Heinemeier Hansson is that Conte doesn’t bring up politics or culture once — he keeps the focus on, well, himself first and foremost (which is no different from those other dudes), but then on the vaguely-stated notion that the company needs to operate differently in order to be “the best product for creators,” and that those changes necessitate separating 36 people from their livelihoods.

Conte also, I guess to his credit, didn’t announce a big change to how the company works and then passive-aggressively offer an exit package to anyone who dissents — rather, he just fired the people who he wanted to fire, with similarly generous severance and other benefits such as full vesting of their stock grants.

Even so, I would still say that with this video and the changes it discusses, Jack Conte and Patreon have done the thing I have termed The Full Coinbase:

First, start by building your company’s brand on populist or anti-establishment values. Coinbase is a cryptocurrency platform (which not everyone agrees is pro-people, but many crypto proponents certainly do); Basecamp makes software for distributed work and publishes books and podcasts about “better” ways of working. Patreon is one of the leading platforms for independent creators to monetize their work, enabling those creators (or at least the most popular ones) to monetize and thereby focus more on their art.

Second, keep all power at the company centralized in one (or few) people, and even make them synonymous with the brand. As I noted yesterday when linking to the Rework podcast’s 90-second reaction to their bosses’ policy changes, the podcast website doesn’t even list the hosts’ names, but does mention the two Basecamp partners. Jack Conte is not “the Patreon guy” so much as Patreon is “Jack Conte’s startup” — he was a creator before he was a startup founder, and in the video he’s speaking to creators directly as one of them even as he speaks about his employees in the abstract. He owns this decision because (for all intents and purposes) he owns the company and its brand as fully as Jason and David own Basecamp.

Third, having given these leaders both old-timey-tycoon-like power over a company and its operations and a big social media megaphone, announce a highly controversial policy or operating change affecting dozens of people in a way that centers the leaders more than any of the affected employees. This is of course the key one, but to have the forceful stink that makes it a Full Coinbase, you need the first two.

In 2019, when reports of a toxic work environment at Away led to Steph Korey’s downfall as CEO, there were a series of public posts from Korey, first taking responsibility and stepping down, then denying responsibility and coming back. But this was far from a Full Coinbase (or even a partial Coinbase) because:

  • No one expected Away to behave as if it were a social-impact company — even though their luggage is marketed in an aspirational, Millennial-friendly way, it’s still a consumer product, not a new approach to finance or work
  • Reports of toxicity at Away came before any staffing or policy changes were announced publicly, and the dictatorial changes that were eventually made public (such as denying PTO requests from the customer support team) were originally kept private.
  • Obviously, while Korey and co-founder Jen Rubio (who has recently, finally, taken over as the new CEO) enjoyed tremendous power and ownership, someone (e.g. on the board) was in a position to eventually hold the CEO accountable. At the Full Coinbase companies, either all of the senior leaders and board members are on the same page, or no one who disagrees is empowered to do anything about it.

Lastly, to really land a Full Coinbase, you need to never bluff, and never, ever fold — either stand pat or double down. Brian Armstrong stood firm; he did some business-press interviews in the first week or so after announcing an end to “politics” at Coinbase, mostly sticking to the story he’d put out in the blog post. Fried and Hansson have doubled or even tripled down — they didn’t originally offer an “agree or leave” severance package to their employees, but they added one after the initial backlash, and subsequently, they’ve given interviews and posted tweets denouncing their critics.

It’s unclear whether Jack Conte will face a similar backlash, and if so how he’ll respond. But if the video is any indication, just as Armstrong, Fried, and Hansson responded to critics by complaining about them to friendly audiences, we may see follow-on videos where Conte talks to “creators” about how he’s doing all of this for them, regardless of who it hurts.

Three is a pattern, but why this, and why now?

Marco Rogers speculates that these founders know something we don’t — maybe it’s concern about workers organizing (as someone suggested in his replies), or they’re aware of some coming shift in the market and want to get ahead of it, or they want to rehire at lower salaries/benefits to try to reset comp expectations for tech workers.

Those are all plausible, but my guess is that it’s even simpler than that. There are two big forces I see here.

First, like all of us these days, these CEOs all live in their own self-reinforcing idea bubbles — but they differ from the rest of us in that their bubbles not only reinforce a set of beliefs but also give them power and money to make reality conform to their beliefs.

These white dudes (and they are all white dudes) are part of a growing backlash against the last century of worker-friendly policies in both the public and private sectors — they’ve now aligned themselves with the libertarian notion that businesses need not exhibit any loyalty to anything but themselves, and nobody is owed anything by anyone. When companies say politics is a distraction, or that individuals aren’t a good fit for a new way of working, the common thread is that the needs of business trump any obligation to individuals who helped build those businesses, and/or that those obligations can be bought out (via severance) like the remaining months on a lease.

In other words, it’s not that these CEOs have some inside scoop about the future that’s forcing them to act preemptively. It’s more like they’ve been clued into the use of severance packages as a Get Out Of Uncomfortable Conversations Free card, and who wouldn’t play that card if they had it and knew they could use it?

Another factor here — and the reason why this is playing out publicly — is that these CEOs are leveraging public opinion, possibly to make themselves feel better about hard choices, but also to kickstart controversy to make unambiguously dickish moves seem, well, more ambiguous. In Conte’s case, he’s getting love from his deeply loyal YouTube fan community:

In the other cases, it’s a mix of pro-business fellow travelers and longtime allies — Daring Fireball’s John Gruber, who’s known Jason Fried for a long time and been a 37signals/Basecamp proponent almost since the beginning, has posted multiple links that (vaguely, like subtweets) show support for Fried and dismiss the haters.

But, lastly, I think it’s easy to imagine all of this is happening as a result of Covid, and lockdowns.

It’s impossible to overstate the ability of in-person offices, and the communities that form there, to paper over problems in company culture and working conditions. For one thing, when micro- (or macro-) aggressions happen in person, there’s no chat history to screenshot, and people can go complain around the coffee machine rather than stewing on problems in their spare bedrooms between Zoom calls.

You can’t separate “politics” or “operating conditions” from the state of the world when everything is on fire, and it’s unreasonable to ask people to leave the world at the door when work has been an unwelcome guest in all of our homes for more than a year. Conversations that might have played out in micro-kitchens and break rooms are happening on group chat and comment threads. Informal groups of underrepresented or marginalized employees are becoming more formalized, because when 100% of the office is virtual, everything has to be more organized and visible than it was. One might imagine that it’s not that teams are engaging in more “political and societal” discussions — it’s that managers and owners have to see and know about it now.

Giving Conte the benefit of the doubt, and taking him at face value that Patreon’s layoffs were about product and not politics, I can easily imagine that WFH was a factor there too. Remote work puts more onus on individual workers to organize their days and their working conditions. You can’t simply tell everyone to show up at the office by 9 and be in a conference room by 11 — your needs have to balance against their lives, and everyone has to do more administrative work to keep it all flowing.

At a minimum, this all makes organizations less nimble (or seem less nimble) because there’s just more discussion involved in making any of it work. CEOs are used to a world where they say “get this done by Monday,” and the next thing they know it’s Monday and it’s done. They aren’t equipped to be on Slack seeing how the sausage is made — how teams coordinate with each other, complain to one another, how hard it is to get anything done. What to employees is just a normal day at work can look to executives like inefficiency, or worse, like dysfunction.

FWIW, a lot of my job as a middle-tier leader at a big company is carefully managing what my execs hear about and how, because the wrong thing surfaced the wrong way can prompt “concern” or, worse, “help” that ends up causing disruption and stress. This isn’t to say I mislead my bosses — never, ever do that — but I do try to package information with an eye to their POVs and attention spans, because busy leaders are constantly inundated with stuff without context and expect their teams to do this for them. This is why there’s such a thing as an “executive summary.”

That’s all to say, in summary, my guess is that CEOs going Full Coinbase is a function of the following:

  • Seeing far more of what’s going on in the day to day operations of their companies than they are used to
  • People’s lives being on fire, because the world is on fire
  • CEOs feeling personally implicated, even attacked, by all of this, and in these cases being a little too empowered to react to it
  • Those same CEOs closing ranks and seeking validation when their reactions make them main characters on Twitter

The bad news for those of us who like to see companies be nice to their employees is that, as a tactic, this seems to be working. Basecamp will probably lose some of its squeakiest wheels, and no matter what the future workforce will be smaller, cheaper, and less squeaky. Similarly, Patreon has established that they can simply solve skill or temperament misalignment with cash, and that’s a hard bell to un-ring once it’s been rung.

They’re the latest to go Full Coinbase, but they won’t be the last.

The ‘Rework’ Podcast Goes Dark 

Sorry, one more Basecamp link: Jason Fried and DHH (and other 37signals/Basecamp folks, allegedly) wrote a book called Rework about “the better way to work and run your business,” which has a spinoff podcast covering a mix of Basecamp behind-the-scenes and overall thought leadership, hosted by Wailin Wong and Shaun Hildner. It’s basically a nice business podcast that folks from Basecamp occasionally take over to talk about how great they are.

Or, rather, Rework did have a spinoff podcast. Wong and Hildner posted a 90 second “quick update” saying they are taking a hiatus in response to the company’s changes. And it’s a pretty intense clip: Hildner couldn’t even finish the show’s standard intro, and Wong admitted it would be weird to carry on as normal.

And one side note, from the “shoulda seen this coming” department: despite Wong and Hildner serving as regular, weekly hosts for this podcast, their names are nowhere to be found on the show website. But you can probably guess whose names are prominently mentioned:

Rework is a podcast by the makers of Basecamp about a better way to work and run your business. While the prevailing narrative around successful entrepreneurship tells you to scale fast and raise money, we think there’s a better way. We’ll take you behind the scenes at Basecamp with co-founders Jason Fried and David Heinemeier Hansson and bring you stories from business owners who have embraced bootstrapping, staying small, and growing slow.

There’s also this line:

REWORK is proudly hosted by Transistor Podcasting Company

They credit their hosting platform, but not their hosts.

What really happened at Basecamp 

In response to the Basecamp partners’ “full Coinbase” heel turn that I wrote about yesterday, Casey Newton spoke with Jason Fried, DHH, and numerous employees and reported on what’s been going on behind the scenes:

The controversy that embroiled enterprise software maker Basecamp this week began more than a decade ago, with a simple list of customers.

Around 2009, Basecamp customer service representatives began keeping a list of names that they found funny. More than a decade later, current employees were so mortified by the practice that none of them would give me a single example of a name on the list. … Many of the names were of American or European origin. But others were Asian, or African, and eventually the list — titled “Best Names Ever” — began to make people uncomfortable.

The series of events that led to yesterday’s policy change — which Newton confirms was not fully discussed internally before it was dropped like a bomb via the founders’ personal blogs — began with things like this, but grew to include a broader question of how the company is handling diversity and inclusion. Between the lines of it all, it sure seems like the “committees” Fried railed against refers to an employee-led DEI Council, as does the new ban against “societal and political discussions” on company forums.

As I called out yesterday, unlike most tech companies with enough of a public profile to trigger this much discussion, Basecamp is an LLC under the near-total control of its two managing partners. That in itself is not that unusual; with the rise of “founder friendly” equity structures in the last decade, there are plenty of VC-backed businesses that also have dictatorial leaders and toxic work environments. The main difference is that unlike (say) Coinbase’s CEO Brian Armstrong (who tweeted a high five at Basecamp yesterday), the Basecamp partners aren’t accountable to investors or a board of directors — the buck really does stop with them.

“There’s always been this kind of unwritten rule at Basecamp that the company basically exists for David and Jason’s enjoyment,” one employee told me. “At the end of the day, they are not interested in seeing things in their work timeline that make them uncomfortable, or distracts them from what they’re interested in. And this is the culmination of that.”

Back to Basic at Basecamp

The company that wrote “It Doesn’t Have To Be Crazy At Work” responds to craziness at work

Basecamp (née 37signals) founder/CEO Jason Fried, posting on his personal HEY World blog/newsletter yesterday, announced some big internal changes for the company. Here’s a summary of his post, lightly edited for brevity:

Recently, we’ve made some internal company changes, which, taken in total, collectively feel like a full version change. It deserves an announcement.

As 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.”

Heavy, yes, but insightful, absolutely. A relevant reminder. We make individual choices. We all want different somethings. Companies, however, must settle the collective difference, pick a point, and navigate towards somewhere, lest they get stuck circling nowhere.

With that, we wanted to put these directional changes on the public record.

1. No more societal and political discussions on our company Basecamp account. Today’s social and political waters are especially choppy. Sensitivities are at 11, and every discussion remotely related to politics, advocacy, or society at large quickly spins away from pleasant. You shouldn’t have to wonder if staying out of it means you’re complicit, or wading into it means you’re a target. It’s not healthy, it hasn’t served us well. And we’re done with it on our company Basecamp account where the work happens. Update: David has shared some more details and more of the internal announcement on his HEY World blog.

Quick side note: this paragraph originally stated “No more societal and political discussions at Basecamp.” As edited, this is still a hugely divisive statement worthy of criticism. And at this moment, when all work is virtual (and at a company that’s been majority remote for ages), banning social discussions on the company account is the same as banning them at the company.

This has, predictably, been the graf that’s sparked massive outrage from the internet, more about which in a bit.

Jason continues:

2. No more paternalistic benefits. For years we’ve offered a fitness benefit, a wellness allowance, a farmer’s market share, and continuing education allowances. They felt good at the time, but we’ve had a change of heart. It’s none of our business what you do outside of work, and it’s not Basecamp’s place to encourage certain behaviors — regardless of good intention.

3. No more committees. For nearly all of our 21 year existence, we were proudly committee-free. But recently, a few sprung up. No longer. We’re turning things back over to the person (or people) who were distinctly hired to make those decisions. The responsibility for DEI work returns to Andrea, our head of People Ops. The responsibility for negotiating use restrictions and moral quandaries returns to me and David. A long-standing group of managers called “Small Council” will disband. Back to basics, back to individual responsibility, back to work.

4. No more lingering or dwelling on past decisions. We’ve become a bit too precious with decision making over the last few years. It’s time to get back to making calls, explaining why once, and moving on.

5. No more 360 reviews. Employee performance reviews used to be straightforward. Then a few years ago … we introduced 360s, which required peers to provide feedback on peers. The problem is, peer feedback is often positive and reassuring, which is fun to read but not very useful. … So we’re done with 360s, too.

6. No forgetting what we do here. We make project management, team communication, and email software. We are not a social impact company.

Who’s responsible for these changes? David and I are. Who made the changes? David 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.

Basecamp (a company I’ve written about a lot over the years) is unusual among tech companies in several ways. They’re not only privately held, but very closely held by the two managing partners (Jason Fried and David Heinemeier Hansson), and with the notable exception of the one time they took venture money from Jeff Bezos, of all people, have been independent and self-funding since the 1990s. They’re based in Chicago, but have been majority remote (and, in fact, really fierce advocates for distributed work) for most of their history. They’ve invested a lot of time and resources into developing subscription-based services, but have also open-sourced a lot of their underlying technology, starting with the Ruby on Rails framework which DHH created and still oversees.

In short, the Basecamp founders and team made their name on being iconoclasts. They’ve written and published books about their “heretical” philosophies and working principles: Getting Real, Rework, Remote, It Doesn’t Have To Be Crazy At Work, and most recently Shape Up.

Given that, the thing that stands out first for me about this announcement from Jason — which, to be clear, I think was a bad, tone-deaf, and upsetting statement from a company I’ve admired — is how basic it is. All of these “changes” move Basecamp further away from its small company roots toward something more like business as usual.

Having worked in big companies for almost a decade, I’m all too familiar with managers seeing a little more churn and chaos in decision-making, and deciding the answer is that roles and responsibilities need clarifying, or that some hot topic needs a single responsible decision-maker.

Because I work for a company known for its generous perks and respect for individuals’ freedom to be themselves at work, I’m less personally familiar with companies paring back benefits or curtailing speech, but all of that too seems like an embrace of the kind of impersonal “corporate minimalism” that I associate more with a place like GE or IBM than a 50-person company that publishes books about making work better.

Basecamp has never been an explicitly mission-driven company — it’s a fair statement by Jason that “we’re a project management software company, not a social impact company” — but one could argue their brand was built on an implicit mission of making work a kinder, simpler, more humane place. Their products don’t simply make work more efficient, but help make information more comprehensible and usable by the human beings doing that work.

(Their newest product, the HEY email service, continues that tradition and broadens it into the consumer world, as if to say it doesn’t have to be crazy in your inbox.)

Their design-forward, user-centered approach to what is frankly enterprise software predated companies like Slack and Dropbox by almost a decade, and has inspired a generation of designers and developers.

I embraced Ruby on Rails and Getting Real for those humane qualities; 37signals’ work kickstarted my career. I wouldn’t be where I am if not for them.

So even if it’s not that surprising to see Jason and DHH pivot their company toward a hard-bitten, head-in-sand, back-to-basics focus on work, it is surprising to me to see them do it in a way that is so unkind.

And regarding Jason’s statement that “input came from many sources, disagreements were heard, deliberations were had,” I have to question whether that’s true given that at least one longtime employee tweeted their surprise and disappointment at the news.

Leaving aside the obvious problems with trying to keep “politics” out of work at a moment when social change and turmoil consumes our lives outside of work, every one of these changes is aimed at disempowering all the individuals who work at Basecamp, apart from the two partners, whose power and role has increased. Before yesterday, one could believe that Basecamp was an employees’ paradise, where people had a voice and would be heard.

The clear statement from the founders yesterday was: you have no voice, and we do not want to hear you. It’s possible that all of this is being taken out of context — years ago someone who works with both Jason and DHH told me their blunt writing style masks much friendlier personalities and nuanced viewpoints — but if so this was a massive, avoidable communications failure. And I question why, exactly, it needed to be public, except to signal (as Coinbase did months ago) that people who are concerned about “politics” or who want their employer to care about them as people should find employment elsewhere.

Historically, Jason and David have tended to dismiss internet criticism as “haters” and “dunk tweets,” and I have to wonder if they’ve started to look at their team’s feedback through that lens as well. If so, that’s a dangerous place to be. I’ve also worked on teams where it was obvious no one had a voice besides the person in charge and a few loyal cronies, and it sucks.

That said, I hope they listen to some of the pushback, and soften or walk back some of what they’ve said. It would be a shame for the Basecamp legacy to end this way.