Tag: business

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.


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.”


How the European Super League Fell Apart 

The NYT’s Tariq Panja and Rory Smith give a behind-the-scenes rundown of what exactly happened with the Super League — both how the plan came together, and how it spectacularly collapsed.

The whole scheme had serious “can’t we just have whiskey for dinner?” vibes — big money people taking the biggest-money parts of a big-money game for themselves to make more big money, without consideration for whether doing so would ruin the very relationships with fans (not to mention governments and international associations like UEFA and FIFA) that made elite football so lucrative.


On “authority”

Some thoughts about a long-standing cliche about product leadership.

One of the long-standing cliches about product leadership — and all leadership, really — is that PMs must exercise “influence without authority”. That is: we are expected to guide teams toward successful outcomes, but are almost never empowered to make those outcomes happen using the tools and kinds of authority invested in managers, e.g. “do this or you’re fired” or “do this and you’ll get promoted.”

And that’s true to an extent. A product manager almost never has the operational authority to enforce decisions via those kind of carrot-and-stick methods, especially if the people they need to influence report to different managers. On some teams the person wearing the PM hat may be a product design lead, or a business analyst, and it would be silly for the design lead to be able to fire an engineer who doesn’t report to them.

But what I find flawed about this statement is that effective PMs should have authority, it’s just not authority to hire and fire. Rather, strong product-led organizations invest decision-making authority into PMs (or PM-like roles like Design), which is backed up and reinforced by the bosses who do have that other kind of authority.

For me, product authority on a team boils down to this: when someone is looking to start work on something, do they wait for someone else’s opinion, and if so, whose?

The strongest kind of PM role — not to say the best, but the one where PMs have the most authority — is one where folks on the team wait to start work on a proposed project or task until it’s been reviewed and approved by the PM.

Of course, the other extreme is that no one waits for PMs before they dive into something. On very engineer-led teams, individual engineers or tech leads reserve the authority to spin up projects, maybe in consultation with their engineering leadership or maybe on their own initiative, and other functions like UX or UXR have to ride that current.

It is totally possible for a company or team to have gone to the trouble of hiring product managers — maybe even a lot of product managers — but end up with them having no real authority.

I’ve never encountered a team that hired PMs intending for them to have no authority; on the contrary, these teams will often hire PMs because they feel like they lack “strategy” (whatever that is for them) and want to bring in a strategy specialist to get the team onto more solid footing. But in those cases success or failure totally depends on:

  1. Whether or not the individual(s) who currently wear the PM-like hat acknowledge that they are wearing it. This is often the most senior manager, or a lead from the closest PM-like function like UX or program management
  2. Whether or not those individuals are willing to share or cede that authority to incoming PMs
  3. Whether or not they’re willing to declare publicly — from day one and as often as needed — that PMs are wearing the PM hat and have that authority
  4. Whether or not that message is heard and absorbed by the team

Years ago an engineering colleague said what he looked for when a new product leader joined a team and rolled out a strategy is whether his team’s UX director (who, in his mind, had the decision-making authority I’m talking about) “put his arm around the PM at the all-hands and said, ‘this is the guy’.”

Absent that kind of clear, visible endorsement and torch-passing, his team would still ultimately look to the UX director as their source of decision-making truth.

In fairness, this dynamic can be OK if the UX director and PM are in regular contact, aligned on things, and speaking with one voice. But it can be a recipe for heartbreak if a PM has been told they’re the decider, only to find people regularly routing around them and asking the UX director’s opinion on everything. And if the UX director doesn’t mind being asked to weigh in, this is unlikely to create enough friction to prompt a clarification. 

All of which begs the question: why even hire a PM? Honestly, I think some teams hire us because they think we have some kind of secret sauce or magic bullet. A pattern I’ve seen a couple of times is an engineering- or design-led team that’s been following the same playbook for a few years, feels like it’s not having the same impact that it used to, and attributing that to lacking “strategy.”

In those cases, though, sometimes the truth is that the old playbook is still the right one — it’s just that they’ve achieved what I call ‘cruising altitude’, where they can basically keep doing what they’re doing and produce an expected degree of impact or business value indefinitely, and there’s not an alternative strategy that’s likely to improve on that without introducing a lot of risk or a major culture or process shock.


In my first job at Google, almost 2 years ago, I was hired to bring some “product thinking” and “strategy” to the process of delivering computer/phone hardware, software, and services to Googlers. None of the teams I worked with were waiting on me to make any major decisions — in fact, they were SRE or operations teams who had been doing things a certain way for over a decade, and had no experience working with PMs (and only a little bit of experience working with UX or research). I wasn’t paired with an eng or UX lead. It was just me, parachuted into a problem space to find this elusive “strategy.”

What I found was that, actually, everything was working just fine. These SRE teams were well managed by strong tech leads and program managers who had clear roadmaps and lots of opportunity for community engagement. Most of the areas where folks on these teams felt they lacked “strategy” were not gaps so much as potential optimizations, where the cost of change was likely way higher than the ROI.

And because I didn’t have any functional authority — because no one was including me in planning, or waiting on me as a decision-maker — I felt (and, honestly, was) less like a conventional PM and more like a management consultant, except unlike a McKinseyan my eventual report suggested changing almost nothing.


This is also to say: PMs lacking this sort of authority — being a person who the team looks to for direction and decision-making — is not necessarily a sign that people are doing it wrong, though it may be a sign that PMs weren’t needed, or were hired too early or too late. Teams can operate in all kinds of ways, and PMs can fill many kinds of roles.

My experience from Google’s IT org wasn’t consistent with the “PM as product CEO” model, but in hindsight it did align with a model where PMs might gather the same kinds of research data as one would on a consumer-facing team — it just was less about supporting the teams directly, and more about supplying senior leaders and executives with insights, so they could exercise the product authority. This wasn’t exactly intentional or made explicit, but it worked out.

But if the intent when hiring a PM is for them to, sooner or later, own the decision-making authority for a team or org, that authority won’t be invested in the new PM unless/until whoever possesses that authority clearly passes it on. Not doing that can create a lot of pain, and also prolong whatever situation led the powers that be to hire a PM to begin with.


People over work product

It may seem like the work is more important than people, but it’s just a side effect of bringing together a team.

Years ago, during one of my first big presentations to execs, my director interrupted my presentation multiple times, and eventually just took over the presentation entirely, grabbing my laptop in front of a room of 20 people.

We’d spent multiple hours preparing for this presentation and I’d flown to SF from NYC to give it. Others who were there confirmed my presentation was going fine and was what we’d prepared. The boss just called an audible and decided the team should speak with one voice—his.

Prior to this, the same director had also made a bunch of edits to my deck without talking to anyone. But I didn’t say anything. At this point, we all knew better than to try to argue that he shouldn’t do that, so we tried to negotiate toward a version of the deck we were all happy with.

After the incident at the meeting there wasn’t any follow up. My manager didn’t want to get into it with the director, and I wasn’t comfortable raising it w/ the director or his manager (our VP) if I didn’t at least have my manager’s backing. So I dropped it. My new job search started that week.

Autonomy, Mastery, Purpose

It’s about to be performance review season at certain very large companies, and so there’s a bit of conversation on Twitter about whether performance reviews “work” or not, and in general what behaviors from managers and leaders actually help folks learn and grow in their careers.

This thread by Bryan Cantrill is very good and on point:

An an engineer in a large corporate environment, I had found that performance management never actually improved my own performance.

The things that resulted in my own high performance were the basics: being motivated by the problem; being drawn to the mission; being a part of an incredible team.

Daniel Pink summarizes these motivators concisely: people are motivated by autonomy, mastery, and purpose.

The role of management is in constructing that environment, not micromanaging it. If engineering performance is suffering, it’s (likely) a management problem: wrong problem, wrong mission, or wrong team — or all three.

This other blog post by Dan Abramov is about programming, but is true for all kinds of work:

If someone tells us that abstraction is a virtue, we’ll eat it. And we’ll start judging other people for not worshipping “cleanliness”.

I see now that my “refactoring” was a disaster in two ways:

Firstly, I didn’t talk to the person who wrote it. I rewrote the code and checked it in without their input. Even if it was an improvement (which I don’t believe anymore), this is a terrible way to go about it. A healthy engineering team is constantly building trust. Rewriting your teammate’s code without a discussion is a huge blow to your ability to effectively collaborate on a codebase together.

Secondly, nothing is free. My code traded the ability to change requirements for reduced duplication, and it was not a good trade. For example, we later needed many special cases and behaviors for different handles on different shapes. My abstraction would have to become several times more convoluted to afford that, whereas with the original “messy” version such changes stayed easy as cake.

The director who grabbed my laptop prioritized the work product over the health of the team, in the short term by damaging our working relationship, and long term by signaling that individuals’ hard work and opportunities are unimportant.

Trust and communication are so much more important than optimizing the work product, and redoing someone else’s work for them, not with them, robs both of you of a learning opportunity.

You can always optimize/fix work product. If someone on your team thinks you don’t see them, that breakage is far more damaging and harder to fix.

Regardless of where you are in an org chart, your org is made of people. It’s a society. It may seem like the work is more important than people, and anything you do to improve the work is justified.

But in my opinion that’s totally wrong. The work is a side effect of bringing together a team.

Some of the world’s great businesses were built by great teams writing shitty code that worked. Instagram’s first logo was the word “Instagram” set in a free font. Most business PowerPoints are horrifying. Facebook and Slack use PHP for heavens sake. A great team with great working relationships and a willingness to ship, learn, and adapt can achieve almost anything, no matter how ugly any given thing they ship may be.

But a team that can’t hold onto people — because a director steps on people in meetings, or the CEO is abusive on Slack, or because there’s nonstop crunch with no recognition or reward — is not going to succeed in the long run.


Show and Sell: The Secret to Apple’s Magic 

Joel Johnson:

Outwardly Apple's showmanship is competent, workmanlike. Jobs-as-performer wears an understated uniform that does not distract from the act. His humor, when it exists, is subtle. The closest an Apple keynote gets to pomp are pie charts that look like wooden logs.

Yet when Jobs reveals the company's next product, there's a critical difference: It exists. When possible, it is available for retail purchase the same day. There are few maybes or eventuallys tempering the presentation: "Here is the tiny miracle we've created. We want to sell it to you today."

I've always wondered when someone would finally figure this out.