Latest / Disengaged / 37signals with Andrea LaRowe

Transcript

37signals with Andrea LaRowe · Disengaged

• James Seechurn: Hello, welcome to another episode of the As Discussed podcast. Today I am joined by Andrea LaRowe Once again, thank you very much for listening to this episode. If you enjoyed this, as a reminder, please like or rate this episode on the platform that you use to listen to your podcasts, and please share it with a friend. goes a long way to letting people find out about this show. If you find these concepts interesting, my goal is to share stories of companies and thinkers and writers that think differently about the role of people in the workplace. Andrea joined 37signals in two thousand and ten a relatively early hire. My belief is that companies rely far too heavily on extrinsic forms of control. It's a model that we've inherited from the world of factory production lines, but it doesn't apply well to the modern knowledge worker. And if you find these ideas interesting, my book, What Pay Costs, looks into the issues that we tend to create when we rely on extrinsic motivation to drive performance in the workplace. Thanks very much for listening and I'll see you again on the next episode. Now 37signals in case you haven't come across them, is the company behind the project management software Basecamp and Hay. And they're just about to launch the next iteration of that Basecamp software. I've been looking forward to speaking with Andrea for some time because I've known about 37signals for some time. 37signals is a real world example for a company that operates with high trust and low control over its workforce. So at 37signals, they don't have the annual merit cycle, they don't have equity awards, they don't have an annual bonus, they just have a profit share. They also run a very organization and it while it's not quite as flat as it used to be, they have a minimal number of levels with very clear ⁓ criteria for advancement between those. If you're interested in learning more about 37signals, and it is a very interesting company to look into, you can find their employee handbook on their website. There are also several books written by the founders. One that I've read is called Rework and is a very short, practical, useful guide to running a company built on trust rather than control. and they also have a podcast, ⁓ also called Rework, which I recommend checking out as well. So in this discussion, I took the opportunity to ask, practically speaking, how a high trust company works in the real world, what problems they encounter. If you don't use pay, how do you drive performance? And how do you drive accountability? What replaces these traditional mechanisms that we've leaned on for so long to drive performance? ⁓ Andrea LaRowe thank you much for joining me. are doing? Andrea LaRowe: I'm doing great. How are you? James Seechurn: I'm doing very well, thank you. And we also talked about the limits of a high trust environment. How far can you trust people to do their work? And at what point does leadership need to step in to address any issues in the workplace? I really this conversation. I hope you do as well. As always, if you do enjoy it, please like it, please rate it on whatever platform you've ⁓ come across this, ⁓ and please it with a friend as well. That's the best way to share these stories. 37signals, so I've been really looking forward to this discussion because 37signals is a company that does things differently, and I like speaking to companies that do things differently to hear about how they do that. So I've got a ton of questions. I'll be surprised if we run out of time because there's a lot I'd like to dig into with you. But just to start off with, I'd love to hear, has you been there 16 years now? that right? So without further ado, I give you Andrea LaRowe of 37signals Andrea LaRowe: Mm-hmm. Yes. James Seechurn: So I'd love to hear in your own words what makes 37signals different. How does it distinguish itself from the regular companies? Andrea LaRowe: Sure, yeah, I have been there ⁓ over 15 years now. ⁓ first, my name is Andrea. I'm the head of People Operations at 37signals, director of people operations at 37signals. ⁓ we a software development company. We make our flagship product as Basecamp, which is project management software, and we make Hey which is email software, and then we have a kind of a handful of other ancillary products as well. ⁓ 37signals started as a product design firm. ⁓ our our CEO Jason was a product designer ⁓ visual designer so we started ⁓ a little company with some friends and ⁓ as were working they discovered a need for project management software so the Basecamp came out of a need ⁓ that had as as product designers so ⁓ eventually overtook the design work that they were doing ⁓ and they found that other people needed project management software like Basecamp and ⁓ So that ⁓ eventually became what th what they worked on full time. ⁓ so, you know, they hired programmers, they hired David, who's our CTO slash founder now. ⁓ but they hired him as a I don't know, 17, 18 year old kid to do some some coding. ⁓ and so then Basecamp grew out of there and now we're a sixty one person company. ⁓ still working on Basecamp, still working on some other products. and I loved it ever since I started ⁓ fifteen, sixteen years ago. What makes us different is ⁓ I think the opinions that we hold as a company and ⁓ that translates to how we work on our software, that translates to the code that we produce, and that translates to how we run the business and manage the people in it. it's an opinionated company. ⁓ A lot of times we we just we don't really pay attention to industry trends, industry norms. in fact a lot of times we're just a a few years ahead of that. So ⁓ I think that just kind of reverberates throughout the company, like I said, through the software, through the code, through the people, through the management, through the structure and the policies and all the things that happen on on that end. James Seechurn: Yeah, and I want to dig into some of that as well because is it fair to say that you're fairly decentralized in the way that you do things Andrea LaRowe: Very much. Yeah. ⁓ so like I said, Jason and David are are at the top there are founders, CEO, CTO. ⁓ So, you know, that that's probably the top of the structure. But then from there it's pretty flat. We have our teams who are all have ⁓ their working order. So ⁓ programmers, you know, work on on engineering, designers work on product design, our ops team, our SREs work on the technical architecture, we have kind of programming teams that work on different areas. There's there's web product and mobile product and ⁓ security and infrastructure and performance focused on that ⁓ customer support so all of our teams kind of have their marching orders and then they are very much responsible for what they work on the direction that they set the way the individuals work within those teams ⁓ so there's a ton ⁓ of oversight from the top into what's going on at the or that or definitely not at the individual level James Seechurn: So I going to ask about pay I think I'd actually like to dig into ⁓ that kind structure. It's my understanding that it's fairly simple in its structure, that you don't have too many roles and levels. So before we talk about pay, which I really want to get some of your thoughts on that, how granular or ungranular are your jobs and how many levels do you have throughout your 60 odd people? Andrea LaRowe: Mm-hmm. Yeah, not many. ⁓ so I kind of mentioned the team structure. and so we have the individuals of course that work within those teams. And in and within the teams we have five levels. It starts at the junior level, which is we call level one, goes all the way up through level five. So really there's only five p points that you can hit on the on the seniority level within any given job. ⁓ and within a team, there's usually one job. So for example, our ops team Those are our SREs. ⁓ you would not necessarily start a level one, but the the lowest level that you could start at would be a level one or junior SRE, and then you would level up to level five. ⁓ and that's really it. There's no other track, there's no management track. ⁓ you don't split off and join like a senior technical team, anything like that. It's just, it's really just five levels within one team. ⁓ and then, you know, we have a team lead at the top of that. James Seechurn: Yeah, yeah. So and if I remember correctly from reading the book, ⁓ which is called rework, that's that's name of the book, right? Yeah, so have this manager of one philosophy. ⁓ Right. Yeah. So let's come back. Let's come back to that later. Actually, I want to talk about how how pay relates is first, Andrea LaRowe: Mm-hmm. James Seechurn: So you do things a bit differently with pay, as I understand it. You keep it simpler for most companies. So most companies have this sort of annual merit cycle. You have bands within the roles. And every year you figure out who gets what and you sort of rate people what kind of thing. But you do things differently. So how do things work at 37signals with pay? Andrea LaRowe: Mm-hmm. It's very straightforward. ⁓ we benchmark our salaries with a company called Radford, a survey company called Radford. I think you're familiar with them. so annually around November, December, James Seechurn: Yeah. Andrea LaRowe: we survey data from them every year with information, salary data, salary information, job information. So we tie the jobs that we have at 37signals to the jobs that are represented in their database. and then every year we just kind of do the comparison. So we look at, for example, a senior programmer, level three senior programmer, we tie that to the same level, seniority level ⁓ job title that's represented in ⁓ Radford data. And then we just make sure that our salary that we're paying is ⁓ of where we want it to be on the Radford scale. And where we want it to be is in the ⁓ 10% ⁓ what a senior programmer would be paid in the San Francisco tech market. And then we do that across the board. So it's, you know, we tie our our programmer to the Radford programmer role, we tie our product designers to the product designer role, and we we try to hit that target of that top 10%, the 90th percentile of the Radford salary data in San Francisco. ⁓ and then we just go through and we make sure that that all of our salaries are where we want them to be. ⁓ in we just go level by level, job by job, ⁓ if what we're paying is below that target. then we bump our salary up to meet it. And if it's if it's at or above the target in Radford, then we just keep it where it is. We don't like lower it to meet it. We just keep it where it is. We just keep it static until the next year. And then we review it again. ⁓ there's no negotiations. There's no conversations that go into this. The managers in fact have like no part in this process. It's all HR and all leadership who are kind of reviewing the files, reviewing the data. James Seechurn: Yeah. Andrea LaRowe: making the decisions, if there's any like kind of conversations that need to be had at all, then we're having those conversations and then just conveying the information to the managers and the teams for a January one adjustment. James Seechurn: Yes, so no mirror cycle then. So do you have performance ratings? Andrea LaRowe: No. We do. We do that. We do performance reviews annually on everyone's anniversary. So they're staggered throughout the year for managers. but pay is not tied to performance whatsoever. The only reason pay would be tied to performance is if someone gets a level promotion and then therefore of course you get a a salary pump. James Seechurn: That's not tight. Right. Yeah, yeah. So a lot of people, I would imagine, like the idea of this, the idea of the merits, abandoning the merit cycle, because it takes up everyone's so much time, creates a lot of stress, becomes very political. Have you worked in companies that do, have you seen both sides of this now? And I assume that you have a preference. Yeah. Andrea LaRowe: Yeah. ⁓ yeah. Of course. Yeah. I I it it's it's kind of freeing to not pay performance, So it's like it like you said, it's kind of political where everything you do ⁓ at work you can think of ⁓ as adding fuel to the for your your next bonus or next performance review. ⁓ performance reviews for us are kind of freeing to not pay performance, So it's like it like you said, it's kind of political where everything you do ⁓ at work you can think of ⁓ as adding like fuel to fire for your your next bonus your next performance review. ⁓ performance reviews for us are a nice check-in with your manager. Make sure that you're working on what you want to be working on. You're working on what your team thinks is important to be working on. your skill level is where it needs to be, your engagement level is where it needs to be. a nice check-in with your manager. Make sure that you're working on what you want to be working on. You're working on what your team thinks is important to be working on. your skill level is where it needs to be, your engagement level is where it needs to be. James Seechurn: Yeah. Andrea LaRowe: ⁓ all of that's a really nice it's just nice ⁓ also on your anniversary. It's just a nice kind of like symbolic ⁓ check-in point to be like, yeah, things are going well or, you know, I kind of am bored of focusing on this thing. I'd rather kind of start focusing on this now. Like let's kind of have this big ⁓ big picture check-in. James Seechurn: Yeah. Andrea LaRowe: so ⁓ a lot of pressure ⁓ off of that process when there's there's no pay tied to it. It it's really it's really just about ⁓ the work and the motivation ⁓ how you're showing up to work. as I said, as ⁓ other companies, I know I have friends obviously who work at companies that that do merit pay, ⁓ and incentive pay. ⁓ And James Seechurn: Mm-hmm. Andrea LaRowe: it's just a constant it's almost like a a tally card or a score card. You're just constantly keeping score and adding it up, ⁓ instead of focusing on what really matters, the intrinsic motivation. James Seechurn: Yeah, and of course, because it's not tied to an annual cycle, it means you can do it on the anniversary date, which spreads that workload out, I imagine, for anyone doing it, rather than that sort of annual, OK, drop everything, we need to do performance reviews type thing for the next two weeks. It's just a drip feed of, yeah. Yeah. Andrea LaRowe: Mm-hmm. Hugely helpful. Yeah. Yeah, yeah, the team leads appreciate just having it kind of staggered throughout the year. James Seechurn: Okay, so you don't have merit cycle. everything up to that point is fairly similar. So you've got your levels, five levels, probably fewer than a lot of organizations now. I feel like many organizations want to have distinguished and principles fellow ones and fellow twos. And you almost end up with like nine grades for some companies, which I think is excessive because at that point it sort of loses meaning. But you've got fewer grades. But then you do benchmark. And you benchmark to the 90th percentile So it's a healthy level of pay as well, is probably important to note. That's about, what, 22%, 23 % higher than most companies that target the 50th percentile. And it's the Bay Area. And it's Radford So it's top of the top of the top. Yeah, yeah. So that, in a way, gets rid of the problem to some degree that you know that you've got confidence. then, Andrea LaRowe: It's high. Yeah. Yeah. Yeah. It does. It is. It's objectively high pay, right? Like it's we can kinda lean on that a little bit where, you know, when if we're we're we we don't have equity, we don't do incentive pay. So like we we have to kind of compensate for that by paying really well. And so like that's why we tie to the to the point that we do in Radford, because if people don't see a raise year over year, that's hard that's a hard message to convey, you know, like just on a human level, people wanna see their salary go up and up and up year over year. And if it's not James Seechurn: Mm-hmm. Right. Andrea LaRowe: have to be able to be certain that you're paying well, right? Like you it it's like, well, we still know that we're paying better than ninety percentile of the company. If you were to go out and try to find the same job elsewhere, ⁓ paying better than ninety percentile of the places or eighty nine percentile of the places that that you would be looking. James Seechurn: Yeah, that makes sense. so because of so because of that lack of merit cycle, you don't have that political negotiation process, because what happens in a lot of companies is the only way to get more money is to advocate for yourself as an individual because you know you're de facto in competition with your colleagues that merit budget. So that goes away. But I'm curious as to whether any of that ⁓ mentality gets replaced by a promotional cycle, because now you're kind of saying, well, no, you can't get more money by behaving any differently in a merit But obviously you do have ⁓ and people might then look to those promotions as their opportunity to get more Do you find any of that political Andrea LaRowe: Mm-hmm. James Seechurn: sort of awkwardness re-emerges in the promotional cycle or is that sufficiently decoupled to avoid those issues? Andrea LaRowe: because we have so few levels and we're very clear that being promoted, especially past the level of senior, which is our level three, is very hard and takes a long time. there is an expectation that if you join the company as a ⁓ level one or two that you will move up within a couple of years. That's we we kind of level three is the baseline expectation for someone who's going to stay at the company for a long time. So you have to be contributing at what we determine as to be a senior level at any role in any role ⁓ to remain on the team. it's just ⁓ distribution of work, we find that that needs to be the base level for the work to be distributed in a in a fair and even way. ⁓ So after that though, like once you reach level three, there is no expectation that you'll go up to a four or a five. In fact, it's that you won't level up to a Five is really reserved, that's what we call principle, and that's reserved for people who are contributing at a level ⁓ that's exceptional. It's kind of driving the industry forward in some ways and like technical ways. So they're making technical contributions that are that are not only moving our products forward and our company forward, but the industry forward. And ⁓ so there's zero expectation that, you know, any hire is going to make it through all the way to l it also takes years. It takes perhaps decades for people to reach that level. So ⁓ I think we're really clear about that. I think the people that sit at those levels, when people join, they see the kind of work that they're doing and And it's it just observing that it's kind of it becomes clear to you over time that, okay, that's not I'm not gonna get there. So level three, or I won't get there for some time. ⁓ level three is attainable and expected. but there's a timeline on that. We do also put a timeline on that. So the timeline alone kind of removes the political nature or the the kind of lobbying for yourself. Because we're up front that we do expect you to eventually over the course of two or two to four years contribute at that senior level. ⁓ James Seechurn: Hmm. That makes sense. in a weird way, what you're describing is the way things used to be with the engineering track. like, yeah, in most careers, you expect to move fairly quickly for the first few levels, you start to learn your trade. ⁓ principle did used to be reserved for most companies for someone that was really an industry changer, Increasingly, been sort of it's kind of dropped down in the organization to just an ⁓ almost expected title you at a certain time. But it sounds like the way you're treating it is like, there needs Andrea LaRowe: Yeah. Mm-hmm. James Seechurn: to be demonstrably different here. And I think what's happened to a lot of leveling charts, particularly when we've got so many levels now, is the differences, those words are massively subjective. They don't really mean anything. You can interpret them all kinds of different ways. And the research shows that the more ambiguous the wording, the more it says about the rater rather than the ratee as well. But what you're saying is that there is a clear demonstrable difference between the three and the four in your case. And I imagine that the way Andrea LaRowe: Yes. Yes. James Seechurn: we mentioned something at the beginning as well. The organization needs to need that as well. You can't just have everyone jumping up to a four because they want to. You can only have so many industry experts before it becomes kind of pointless, right? And before, get they just get in each other's way. Andrea LaRowe: Right. Yes. Yes. And there are other qualities, right? So is a huge piece we it so skill is of the utmost importance to role that we have at 37signals. you cannot progress past a level one, a junior if if you don't have the core technical skills that are required of the job that we hired you for. even ⁓ like level two, level three, there's we have a high on that front. But then beyond that, we have these other qualities that we expect of everyone. things like judgment and like decision-making skills, so things that really inform this manager of one concept that you've brought up earlier. people who very self-driven and ⁓ and competent in their decision making in their in their judgment. And those are the things that emerge when they get to the higher levels that are unusual. So someone has unusually good judgment or unusually good decision making skills. When you get to the lead level, the level four, level five levels, like those are the things that kind of distinguish people. It's the skills, of course, first, but then these other kind of qualities that come out that really distinguish between the three and the four and then the five. James Seechurn: and I'll come back to that one in a second, actually, as well. to finish up on pay then, ⁓ I think you don't have a bonus, is that right? Andrea LaRowe: We don't have a bonus, we have profit share. We do a profit sharing program. Mm-hmm. James Seechurn: You do profit share OK. So yeah, so is that evenly to everyone, or is there a level-based sort of allocation on them? OK. Andrea LaRowe: That's based on tenure. So ⁓ every year at the end of the year, we close the books tally up the profits made by the company and then we take the and we take ten percent of the profits and we distribute it amongst the employees. ⁓ lot it the ⁓ the benefit kicks in at two years. So once you've worked here for two years, you start accumulating shares, one share a month, starting on your second anniversary. ⁓ And then it caps out at, I wanna say six years. I should know this, but we just changed the benefit not too long ago. So I think it's six years it it you kind of top out. and then once you hit your ten year, you get like a bonus, you get some bonus shares. so it is it it is by ten years. So the longer you've been with the company, the more shares that you get every year, and then that grows ⁓ year for six years. ⁓ so you know, it's not a bonus, it's a it's kind of a ⁓ like a ⁓ James Seechurn: old fashioned profit share Yeah. Andrea LaRowe: profit share and it's ⁓ I mean it's a retention s strategy as well. James Seechurn: Yeah. Yeah, so so so far, so it's clear that you're avoiding individual negotiations. So with your base salary, you don't have that that room for negotiation with the profit share equal. You don't have that room for negotiation. So it's so ingrained in corporate America, the idea of individual pay for individual performance, everyone needs to get fair share. It's a very American mentality to think that way. And when you talk to companies about taking that away, Andrea LaRowe: Yes. James Seechurn: the reaction is often, well that's not fair. What about our high performers? What about our low performers? What are we going end up, what about those free riders? Are we going to start paying them even though they're not doing any work? ⁓ And about our top performers that's going to leave if they don't get more than the people that they know they're better than that? If we can't differentiate individuals then everyone's just going to be up in arms about that. Andrea LaRowe: Mm. James Seechurn: But evidently that doesn't happen at 37signals. ⁓ So ⁓ not really a question there. ⁓ talk me through ⁓ So do you see any of that? Do you see any requests for individual differentiation? Do you see it as a problem that you aren't able to differentiate? Andrea LaRowe: No, in fact, ⁓ I've only ever heard positive feedback, not only from our ⁓ current employees, but when we're recruiting. ⁓ because it comes up a lot, as you might imagine, in recruiting people trying to negotiate their salary or a signing bonus or something, you know, something new. And it's very r I think refreshing to people for me and for me to be able to say like kind of just no, like a blanket, no, we don't do that. Like I'm sorry if that's a barrier for you, then you know, good luck to you. But ⁓ it's it's ⁓ it's usually refreshing to people because it is so arbitrary. Like before we used Radford, before we did the benchmarking, we did raises, I think a l a way that a lot of companies do when it like, ⁓ you had a great year, like how about another ten grand? Like, does that how does that sound to you? So that's not a very rewarding system. You know, James Seechurn: All Andrea LaRowe: It's arbitrary, like I said, and it's kind of biased. It's really ba it was based on recency, like what have you done for me lately kind of thing. And so once if you if you haven't, then you you get a lower rate. It does it was kind of all over the place. So ⁓ having room for negotiation on any ⁓ aspect compensation has been ⁓ like I said, it's been all positive that I've heard from everybody. James Seechurn: but yeah, why do stay? if you've got a high performer and they're not getting 5 % rather than 3%, for example, ⁓ is that sufficient for them to stay and keep enjoying their work? Andrea LaRowe: Yeah. I mean it's it it's I think it's a lot of that comes down to the fact that we just have high expectations for performance in general. People don't like we don't have low performers that kind of slip under the radar. So when people are comparing themselves to their peers, first of all I don't have too many. A team our teams are very small. So there's not too many, say, senior programmers or senior designers on on a team and and if there are, they are very much peers. Like that's that cut that goes into our promotion conversations, right? Like if you're comparing programmer A's performance to programmer B at the same level, like does that kind of just kind of make sense or does it seem like they should be up level? ⁓ so we do a little bit of that informally. we have high expectations for performance across the board. our teams are small, they can't low performers can't fly under the radar. It's very ⁓ obvious. All of our work is visible. ⁓ so if someone is not contributing at the same level as their peers, that becomes pretty obvious pretty quickly. We ⁓ we have, you know James Seechurn: Yeah. And what happens in those scenarios then? So if it does happen that you do get a low performer, what's the process for handling them? Andrea LaRowe: Sure. Yeah, I mean probably depends. If it's it sometimes we between low performance being a skill level and an engagement issue. ⁓ a skill a skill issue or an engagement issue. So if it's ⁓ unfortunately if someone's just ⁓ not at skill level that they need to be, we'll give it time for their trajectory to correct if they are kind of more of a new employee. But if we see their trajectory is not where it needs to be, ⁓ that's a conversation. ⁓ ⁓ on the other hand, if it's an engagement thing, like maybe they're not working on the right projects or maybe something's going on personally, or you know, there's any number of reasons that people aren't showing up to work the way that they should be. ⁓ but that's definitely a coaching conversation and things that's when we have a manager or myself or somebody step in and try to help correct ⁓ whatever's gone wrong. at the end of the day, we we have a high bar for everybody. We're a small company, we have small teams, we have high expectations for the volume of the amount of work that people are putting in. It's ⁓ there's lot to be done and we so everyone needs to kind of pull their weight. So we do ⁓ have conversations about terminations ⁓ when seems like there's ⁓ someone of not performing where they need to be. James Seechurn: Yeah, yeah. Yeah, but it sounds like you exhaust other possibilities first though, to your point, you try and have a conversation around why it's not working and, you know, could it be the wrong team or the wrong fit before you and do you use pips by performance improvement plans Andrea LaRowe: Sure. Not really. I we do we we have, ⁓ and it's just a lot of times those seem like I don't know, I don't wanna say a waste of time, but it's it's kinda James Seechurn: I think everyone's got the same view on pips. It's not one of these running jokes. It's like, if you're on a pip, it's basically like we're trying to find reasons to get rid of you legitimately at that point. It's like a documentation process. Yeah. Andrea LaRowe: Yeah. just like document it. And it's so like I find it much more useful to just like identi w once you've identified the problem, right? Like you gotta tell the person what's gone wrong and ⁓ have a conversation with them. Let them know. Be clear about it. Be clear about what the the consequences are gonna be. So we these are conversations that I have with our our team leads and our managers quite often, which is like James Seechurn: Yeah. Andrea LaRowe: You know, you gotta say the words, you have to t you know, you have to tell them that their job's on the line and you know, here's what's gone wrong and here's how you need to correct and here's the time frame that you have. And I mean that's really a pip is like how much time do I have? What's wrong and like what's gonna happen if I don't do it? So we do that we do that, but like I don't we don't do like a formal document that we've put in their personnel file. ⁓ yeah. James Seechurn: All Yeah, yeah, exactly. So it should be anyway. Yeah. So that's not, and again, that's one of the fears of this not having this merit performance management cycle is the free rider. Well, we're giving dollars to our low performers where we could be giving them to our high performers. That's always been the sales piece of pay for performance. So to which my response is that's surely the least of your problems if you've got a low performance, like you're going to give them 2 % instead of 3%. It's not going to... Andrea LaRowe: Mm-hmm. For sure. James Seechurn: fix that, is it? So your solution is, well, let's figure out, because of the visibility, I think the visibility is key. When you've got a small team, you know, and you can't hide away, that transparency is the first key part of it. And then it's honesty after that, it's having a real conversation with them about how and why, and then if there's a better solution to it, and if not, well, you need to go because this isn't working out well for anyone. But in no part of that process does pay help. So if you're paying them Andrea LaRowe: Yes. No. James Seechurn: But anyway, it just doesn't make a difference. It's not going to solve for that problem. Andrea LaRowe: Yeah, compensation is like the last thing on my mind when I'm thinking about performance. Like it's it's you know, it because the worst thing that happens when someone's a low performer is is the impact on the rest of the team. James Seechurn: Right. Yeah. Mm-hmm. Andrea LaRowe: That's the I mean that's the worst thing that we see is it drags the team down, it drags the morale down, it drags their productivity down. So that is more that that needs handling more than like, ⁓ do it, you know, their their bonus might not be where they want it to be this year. Like that's no, that shouldn't that's not the question in my mind. The question is, how do we get them ⁓ performant as the rest of their team? James Seechurn: friend. And at the other end, we sort of touched on it, but the high performers then. So a lot of people and a lot of companies have been sold this idea that the merit cycle is your opportunity to get more for you as an individual. And there's a fear that if you take away that system while my high performers, if they don't get their 5 % instead of 3%, they're going to be disappointed. And I think we kind of touched on this, but presumably your high anchoring in the first place and the transparency means, well, let me ask, does that ever come up? Does anyone say, hey, I've had a great year, I should get more? Does that conversation ever happen? Andrea LaRowe: No, it hasn't that I that I'm aware of. like you said, the high salary point helps. ⁓ 'cause we have that. We also have the profit share, which acts kind of as a bonus because the longer you've been with the company, the higher your your profit share is going to be. ⁓ but really I think strategically we've gotten away from tying ⁓ tying pay to performance ⁓ James Seechurn: Mm-hmm. Andrea LaRowe: Tying pay to motivation. ⁓ people that work and perform well, the high performers at 37signals, which is when I say that, I mean like nearly everyone. You know, that's when I say high performers, I mean I mean most of the people that work at this company. of course they're working for pay. Everyone works for pay, but the pay is not what's driving their performance. it's the environment that we've set up, it's the culture that we've James Seechurn: Mm-hmm. Andrea LaRowe: cultivated that's driving their performance and their work ethic so they ⁓ we for people who are very self-driven, ⁓ people who ⁓ thrive like learning. They're curious. They want to be set up with like the resources that they need, a great team around them, you know, brilliant, brilliant people around them. they wanna be left alone. They wanna be able to do the job that they were hired to do and, grow within that role. They don't want to take on people management jobs. You know, we have people ⁓ who were like managers, managers, directors of engineering coming to 37signals because they just wanna code. Like they don't wanna think about anything else, they don't wanna think about people, they just wanna hone their craft, get better at what they love, ⁓ and be left alone while they do it. James Seechurn: Sounds so simple. Andrea LaRowe: ⁓ and then be compensated and rewarded. Yeah, it is. And I mean it's great. And it's ⁓ and and like I said, it's this intrinsic motivation that that compels them to keep showing up and and improving at their craft and and pursuing excellence in their craft. So strategically we don't tie pay to performance and I think that that kind of translates in that the people that work here don't tie pay to their own performance, to their motivation. James Seechurn: So you're speaking, and I do this quite a lot these days, I use self-determination theory as my framework for thinking about how well a company is going to get performance from its people. Andrea LaRowe: Mm. James Seechurn: And it's these three pillars, autonomy, competence, and relativeness. So as you're speaking about your philosophy, I'm mentally checking off these three things. You just let people get them. That's autonomy. It's this, you're not working with the assumption that people need to be managed to get their work done. You're working with the assumption that they want to get their work done because the work's interesting, if you allow it to be interesting. And then you let them figure out. how to do that. So that's the autonomy piece. And then to your point, use the words hone your craft. Again, that's competence. Just let people get better at the thing they want to be better at. Whereas I think in the traditional organization, you're basically, as soon as you have this kind of org charm and these career ladders, you're telling people what they need to do to progress their career rather than allowing them to do what they want to do to progress their own career. Again, with the assumption that we know better than you. And that's the thing that drives me nuts I know how your career should look. Well, you ⁓ ⁓ And they probably know how they want to progress and make things better. And if they're allowed to figure that out themselves, they might figure out a whole set of skills you never even thought about that could be useful to you. And then the relatedness piece as well. And the final thing, yeah, let people work with great teams. He said, I think he used the word great teams. Yeah, just let people find a group of people that they enjoy working with, a healthy, non-toxic environment with intellectual honesty. And it's amazing how powerful. So as you're talking, you're just basically delivering on those three pillars. Andrea LaRowe: Yes. That happens frequently. James Seechurn: So it's no great surprise to me that you've got a healthy work environment because you're doing those things. Which brings one to a question about the manager of one, which I was really annoyed to read because it kind of summed up the philosophy that I've had in the back of my mind for years now, which is then we don't need to have managers and non-managers. That's just, that's a factory supervisor model that we've inherited. The idea of someone that needs to watch to make sure everyone's doing the things that they're supposed to do, which drives me nuts because Andrea LaRowe: Mm-hmm. James Seechurn: People are not children. They are very capable of figuring things out. Just leave them to get on with it. But you have this idea of the manager one. So a few years ago, I kind of came up with this concept. Well, let's just assume everyone's a manager and then they can use those managerial skills whenever and wherever they feel they need to. And people can figure out who should be that manager if there needs to be one or not bother having one if there doesn't need to be one. And then I read the words manager of one in that rework book. So talk me through what that means to be a manager of one and practically speaking how that plays out day to day. Andrea LaRowe: Mm-hmm. Yeah, it's probably evolved over the years since rework. ⁓ right now we do have team leads, we do have managers. When rework was written, that's a tongue twister. When when rework was written, ⁓ it 37signals is even more flat than is now. I think we probably had like twelve people and like everybody worked on the same thing at the same time and there were no managers. James Seechurn: when we want to. Mm-hmm. Andrea LaRowe: ⁓ so it was very much expected that you know you you figured out what you were gonna work on, you figured out what needed to be done, ⁓ you figured out a plan to to to get it done, and you kind of let everybody know you were working on it, and then you just went and did it. And that was it. And that was how we worked. And it still is to some degree. that instinct to seek out work. is really at the core of what a manager of one is. So you're not sitting around waiting for somebody to tell you what to do. You're not sitting around waiting for someone to tell you good job. You're s you you are seeking out problems and finding solutions to those and then implementing those solutions. And you're taking resources to do it. So if you're finding something that needs to be done and you need the help of a programmer, you're you're kind of working to get that to get that set up. So it's like It's it's very self driven. You're it's kinda like the you know, the saying don't ⁓ ask for permission, ask for forgiveness. That very much applies to the way that we work. where you're you're going forth and doing work and then saying, like, ⁓ I did this thing and y and then you move on to the next. So it's ⁓ it's also, you know, autonomy, it's ⁓ self motivation, it's good judgment, it's exercising judgment and and determining, you know, priorities of what what needs to be done. and it's trust to the people around you as well. So, you know, we work in a we work in a very high trust environment where I know that everybody that I work with is very good at what they do. They're very skilled and ⁓ I trust them not know what to work on, but the right way to work on it. And that applies to everybody. ⁓ so that that's really manager of one. ⁓ there's a little more, I guess, a structure to it now that we have like team leads and people who are monitoring the work being done, but it it's still inherently the way that we work and the way that we expect people to show up to work. James Seechurn: Yeah. Yeah, and those man that's really driven by that leveling guy. So you get to that sort of team lead level. Is there any sort of mechanism for feedback for those team leads? How do you know those team leaders are being good team leaders? Or is it displayed into the trust thing? Because a lot of people will know what it feels like to have a toxic manager. And all the research consistently tells us that the quality of the manager is the number one driver of your ability to be engaged with your work. So do you have mechanisms to make sure Andrea LaRowe: Mm-hmm. Sure. James Seechurn: those leaders are being good managers in that respect. Andrea LaRowe: We we don't. So it's funny that you bring this up. We just talked about this because I I had the same question. I was like, hey guys. and so we kind of figured out that there's there's two we have two team leads at this company. One is like a people manager. So I have ⁓ an HR generalist on my team. I do her reviews, I do, you know, I do her performance reviews, I I kind of approve big projects that she decides to work on. So like James Seechurn: Yeah. Andrea LaRowe: I manage her. If something were to go wrong, she would come to me. ⁓ but then there's like the team leads that are more responsible for like team operations or technical operations. So people who are making decisions about long term plans for the team and strategic plans for the team. ⁓ the people management piece we have no ⁓ like ⁓ We have no oversight or no kind of metrics for like what makes a good people manager. ⁓ that's kind of down to feedback, that I might get from from the the person's direct report, people or feedback that I might get from the manager himself. ⁓ but the technical leaders ⁓ that that we do ⁓ consider part of their ⁓ performance. So when we when we do a performance review for a team lead or for a director, there is a a section for for kind of leadership and and just general skill level ⁓ in in managing and strategic planning. James Seechurn: Yeah, and the people doing that, is that their managers or do you get feedback from also the people that they are managing, like up and down feedback? Andrea LaRowe: I mean, it's not as formal as someone at a lower level. So we are pretty strict about getting performance reviews done for like a level one through three, ⁓ junior through senior, just because they tend to be newer to the company. And so having those formal performance review check ins is is helpful to guide them through the first few years. ⁓ once people hit a level four or five or director level, ⁓ we don't don't James Seechurn: Mm. Hmm. Andrea LaRowe: typically do formal like written reviews like we do for the one through threes. ⁓ but we do have frameworks that we that I would refer to ⁓ or that leadership would refer to in if if we suspect probably is really the most accurate thing. If we suspect that someone is is underperforming at their team leadership duties, then we would refer to the framework ⁓ to try to suss out why that why that might be or what what where they're failing. James Seechurn: Yeah, it sounds like you got almost sufficient psychological safety that natural mechanisms would allow that to be uncovered. And part of the reason I was asking is that a lot of participative cultures that I've come across in case studies and those I've spoken to, they often end up in some form of upward feedback and upward selection. various companies like the logic is that if you've got a manager that's managing six to eight people, whatever that may be, the opinions of those six to eight is much more valuable than the opinions of Andrea LaRowe: Mm-hmm. James Seechurn: one manager. So I've seen various iterations of upward feedback for those managers and some companies like Semco, as I refer to a lot, they scored the manager and if your score drops below a certain point as rated by your managees, you then get put on review basically. And so you need to have a conversation with your team and fix whatever it is that they don't like about you. And the logic is then just because you're a manager, doesn't mean you have any more power. The power comes from those that are being managed and vote very much in a democratic kind of principle that you vote for the person. Andrea LaRowe: Mm-hmm. James Seechurn: that's going to manage you. So that's why I was going with that. And it might be your scale allows you to sort of get away without it. But I wonder if at some point, yeah. Andrea LaRowe: Well, we do ask. We do ask on like I said, we do those formal written reviews for ⁓ junior through senior contributors and we do ask on their reviews about their opinion of the manager. So we do do it so it would bubble up. and again, it's just such a small company and all the work that we do is so visible. It it's really it would be I don't want to say it would be obvious, but I think it between what we're learning from the contributor ⁓ feedback and just the visibility of the work. ⁓ and like the quality of the work. I I think like if the team is h is performing very well, that speaks to the job that the manager is doing. ⁓ so a combination of all of those factors, I think we get a pretty accurate picture. But no, I mean we don't we don't really formally assess managers or team leads. James Seechurn: Yeah. Okay. So this has come up a few times. want to dig into this. The quality of the work. Now, again, the philosophical start point for so many organizations is the work, and I use Dart Linsley's words here, is a negative good. Like, you turn up to work, why on earth would you want to do this? Therefore, we have to compensate you for that. We have to compensate for the fact you're doing something that you would otherwise not choose to do yourself. And that frustrates me immensely because most work is really inherently interesting. Andrea LaRowe: Mm. Mm. James Seechurn: point to dull computer games like Tetris or Angry Birds that are inherently just very basic, but people will spend hours doing those things. It's still work, but they enjoy it because they get to do it in the way they want to. So there's two philosophical extremes here for me. One is a vision of work where we define these jobs and there's a list of all your activities and you have to do those activities. And it's so dull that we have to pay you to do them and we're going to performance manage you and get you to do those things. Andrea LaRowe: Mm-hmm. James Seechurn: The other extreme is you hire smart people and you tell them what the problem is or you show them towards the problem and then you say, organize your work with your colleagues to figure out how to get that done. And now everything that you've said is suggesting that you're more towards that latter end of the spectrum. But I'm curious as to in practice, again, so there's a fear that if you move to that, which is broader job descriptions, like broader. spheres of responsibility, less direction, less measurements, less metrics about whether people are or are not doing their work. There's often this fear that, they just won't. Of course, why would they? They're lazy. They're just going to do as little as possible to get paid. Now, clearly, that doesn't happen at 37signals. So again, I'm struggling to ⁓ a question. ⁓ your of work in practice, ⁓ how that play out? Can you think of any good examples of ⁓ how work gets Andrea LaRowe: Mm-hmm. James Seechurn: in a way by the people doing it, such that they enjoy that work. Andrea LaRowe: I get it. And and I mean, yeah, it it it comes down to we that's what we hire for. So we hire people who love what they do. ⁓ and that sounds like very reductive, but it's true. ⁓ like I said earlier, we ⁓ we get can probably think of five examples off the top of my head really, of people who were at a very high level, like this fellow ⁓ whatever this you know, tenth level of whatever, ⁓ fellowship emeritus level of whatever at another Yeah. who are like, fuck it, I don't wanna like do all of this other stuff. I just wanna like come to work and do this. I just wanna program or I just wanna be a designer or I just wanna focus ⁓ and do this thing that I remember that I love to do. and those are the people that when we James Seechurn: Yeah, right. Just keep adding words, doesn't it, Andrea LaRowe: when I see those people come across my desk when we're hiring, I'm like, okay, they're gonna do really well here. or when you have a conversation with somebody when you're hiring and the way that they talk about how they approach their work or why they like their work, it just clicks in a way that has nothing to do with with projects, right? Or nothing to do with like finishing work or managing tasks or managing projects. it has everything to do with problem solving and learning and growing and and finding new things that are interesting to you. Because that's how people grow at 37signals. It's not there's no track for growth. Like I did I could never tell a programmer like, well you have to do X, Y, and Z and then you'll level up to level four. That is like so not how it works. It is like you need to like ⁓ experiment and like look into what's interesting to you and research and you know follow some some thread that no one's followed before, ⁓ that's useful and productive and and like, you know, and learn from what comes from that and then that's gonna contribute to your growth. ⁓ James Seechurn: everything you're talking about, even when you talk about growth, it's still about the work. It's about people finding work that stretches them and gives them opportunities to test their skills and progress in the face of challenge, but not insurmountable challenge and not political challenge and not autocratic challenges. It's just challenge about, ⁓ problem solving challenges is what it's, what is really you're selling in terms of career opportunity Andrea LaRowe: Yeah. James Seechurn: It's interesting, you remind me, there's a myth I like to roll out every so often. Have you heard the myth of Procrustes from Greek mythology by any chance? So Procrustes was an innkeeper and travelers, weary travelers, would knock on his door and he'd give them food and wine and everything. And he had a bed and he said, can rest in this bed. Andrea LaRowe: Maybe. James Seechurn: But the catch was that if you were too tall, he would chop off your feet. And if you're too short, he would stretch you to fit the bed. And the idea was that he didn't see anything wrong with the bed. He saw everything wrong with the travelers. Like, no, we need to reshape. And when I think about careers, I often think about that myth. And I think most companies have this Procrustean bed, where it's like, you're going to fit into what we think. the career should be for everyone in for us to meet our objectives. And they have this headcount planning. We need that level. need X number of that level and Y number of this level, which means that we need people in these roles. in a few years, we need more of these people in these roles. And this is going to be our turnover. And it's all built around this assumption that we know what everyone's career should look and feel like. And for me, that sucks the joy out of what life is all about. Life is about the unknown. Andrea LaRowe: Mm-hmm. James Seechurn: and testing your skills in unfamiliar places and environments to figure things out. So the way you describe a career fits into that model of life that we enjoy, which is we need to be challenged. We can't sit in the same place where we're a terrible species at doing nothing, where we are not a lazy species. We'd literally go mad if we have nothing to do. That's why we have solitary confinement in prisons, because it's a torture to have nothing to do. So the idea that people want nothing to do, to me, is absolutely baffling. Of course they don't want nothing to do. What they are is afraid of the thing that you're offering them for some reason. So we need to look in the mirror when people are afraid Andrea LaRowe: Yeah. Mm-hmm. James Seechurn: of the work we want to give them. What is it that we're telling them to do that is so off putting? So now I'm going off on my tangent, but that's it. It feels like you've broken the Procrustean bed. You let people build their own bed. You let people out what they want to do with their lives. Andrea LaRowe: I mean it requir it It does. it requires a huge amount of trust, right? To to let people that you've hired like you don't know these people, you're you're hiring people who say that they love this work and demonstrate that they they are good at this work and you say, Okay, cool, like I trust you, you go do that now. so you're resting y the success of your business ⁓ on the that they'll follow through. So I understand why that's a tough ⁓ concept to ⁓ to g I understand why that's tough to agree to. ⁓ because it's it's you're letting go of a lot of control by letting every single person because it really truly is, every single person that works at 37signals is is given the free reign to do ⁓ the work that they can, ⁓ with the resources that we have, with a high degree of trust and autonomy. that's says a lot about our founders, I think, f for them to release the the control and to to to turn over so much power to the people and the teams who work here. James Seechurn: Yeah. And that's part of the challenge a lot of the time, particularly in VC back companies. Founder syndrome has its own Wikipedia page for a It's that once you create something like that you own and then you want to scale it, you have to relinquish power. And we're not very good at that in general. So was there anything, was there any key event or anything that prodded the founders down this path that encouraged them to give up their power? Andrea LaRowe: Mm-hmm. I sure James Seechurn: Or was that just a philosophical start point when they founded the company? Andrea LaRowe: Yeah. I just think that they couldn't work any other way, to be honest. They it ⁓ it's and I don't think I could either at this point. It it's to spend so much time and energy managing the tasks that people are working on every single day. Like I I can't imagine spending my life like that. Like as a manager, right? So if I'm a director of HR somewhere else and I spend 80% of my time making sure creating work for people, first of all. Creating work, assigning work. James Seechurn: Hmm. All right. Andrea LaRowe: Making sure the work is happening, following through because the work's definitely not happening, you know, and like making sure the work is happening the way exactly the way I want it to be happening. That is like so much time and energy that could be spent doing much more productive work. And I think that they realized that early on that they'd I think when you're weighing, you know, okay, the the discomfort of like relinquishing that control ⁓ versus spending so much time and energy just micromanaging people, the scale's gonna tip like way in the of just giving up a little bit of control and and letting people hiring good people who you trust to do the work, that's gonna win out every time. So I think that they just kinda realized that, ⁓ when they first started this company, ⁓ and thankfully haven't lost it along the way. James Seechurn: And again, when you say it like that, we're literally creating work with this performance management process. We are ⁓ creating version of work that's not the work that people want to do. So no one comes to a job to do a performance management process. No one looks forward to that. It's not fun work to do. So we're creating this work. And then the work itself inherently Andrea LaRowe: Mm-hmm. No. James Seechurn: is designed to find shortcomings in people. When you have a performance ratings, it assumes that there people in ones and twos, and it assumes there are people in fours and fives. So then you start, not you, but the proverbial you, start creating narratives to suit that system, which is designed to identify outliers. And then ⁓ the research shows us. Andrea LaRowe: Mm-hmm. James Seechurn: people administering those systems will find the fours and the fives, but they'll also find the ones and the twos, and they'll label them the ones and the twos. And because they're labeled ones and twos, start treating them like ones and twos. And because they treat them like ones and twos, those start acting like ones and twos. So it's this whole weird self-fulfilling cycle that justifies its own existence to the point that people then turn around and say, but then how do we know? We're going to have ones and twos. We're not going to know who they are if we have this cycle in place. Well, no, no, you created them in the first place by having the cycle. So I know you have performance ratings Andrea LaRowe: Mm-hmm. James Seechurn: But decoupling it from pay obviously de-emphasizes the role that plays. And to your point earlier, you're a company of high performers. And of course, why wouldn't you be as well if you're hiring in the first place those right people? Andrea LaRowe: Mm-hmm. James Seechurn: so the words trust and autonomy come up a lot, which is obviously great to hear from my perspective. And again, like what's so fascinating to me about 37signals is that you're already doing so many of the things that I advocate for when companies ask me, how should we do things? And it's always how do we redefine pay? know you just forget the pay piece. Like it's about the work. It's about making the work interesting. That's how you get this engagement, this retention attraction. ⁓ But there was a testing in your company's history that I wanted to ask you about. Andrea LaRowe: Mm-hmm. Yeah. James Seechurn: In 2021, when many companies were grappling with this, this idea of freedom and trust and discussion met with a barrier, and that was a political barrier. And in many companies, had this problem that people, politics, for a long, time... Andrea LaRowe: Yes. James Seechurn: was something that was not really a big part of natural discussion. And it took on a much more serious form in 2021, where political discussions started taking place in families as well as the office. And people started realizing that they had different political views, which started creating more, Negative sentiment shall we say then it had ever done at least in my career it seemed to just take a take a peek and and you had some issues over that and you and you drew a line over that well not you but your company drew a line over that So i'm curious as to how that played out internally because it did create some challenges and and it also tested your philosophy around autonomy and trust so I was wondering if you could talk me through how that happened and the decision that got made and Andrea LaRowe: ⁓ my god. Yeah. James Seechurn: and the outcome as well Andrea LaRowe: Yeah, yeah. It was a tough time. let's put it put it mildly. ⁓ basically it things were building for quite a while. So th I'm as I'm sure everybody remembers, that time just in general in the world was there's a lot going on. ⁓ in the US in particular. So the timing of having these conversations around ⁓ reframing how we expect people to show up to work was inconvenient, ⁓ to say the least, because there was so much noise going on outside that it was hard to to talk about keeping it quiet at work. So but beyond that, yes, it came down so the background is that we we kind of just got to a breaking point where we felt the need we had to draw a line between what was appropriate to bring to work and what wasn't. So that's what we did. really wasn't about politics. It was about the of focus that was being taken away from from the work. ⁓ so conversations and and just endlessly looping conversations at work amongst many, many people were happening on a very frequent basis, I would say daily basis. ⁓ and so focus was being taken away from what we're really here to do ⁓ in favor of of topics we weren't really being we weren't coming to work to discuss at the expense of like the other 50 people who were showing up and just saying like I just want to come to work and do my work and like what is all this other noise happening over here. So ⁓ like it happened at an inconvenient time but it had to happen. We d we we made a policy, I guess, or a statement that like There's gonna be a hard line of no we called it politics, but it really was just like a refocus on the work and a refocus on ⁓ almost like individu individualism. So the conversations that were being held were these endlessly looping conversations of if you know this thing is happening at work, let's we need to talk about it. This group of 20 people needs to talk about it. James Seechurn: Hmm. Andrea LaRowe: So we're 20 people are gonna take six hours to talk about this thing, and then we're gonna have all these like extensions of these conversations that are gonna take even more time. So it's like, okay, this thing is happening at work, ⁓ people are struggling, how can we address it? But how do we address it without harming the people who aren't struggling and supporting these people? And then how can we extrapolate this conversation to apply to this other group? And then, well, what if that other group is a fact? And it just like you can see how it just like goes out of control and takes hours and hours and hours. And so we just kind of put a stop to those kinds of conversations. It really had very little to do with politics and very much to do with a return to focus on work. I think because was such a tumultuous time in the world, people ⁓ reacted very badly to that statement. And so 20-ish people chose to leave over we gave them the choice. We said, you know, if you do if you don't want to abide by this policy, you can leave. And they chose to leave. overall it was a positive change for the company. We were going in a direction ⁓ was not sustainable. It was, like I said, the focus was scattered. The focus was not on the work to be done. The focus was on a million other things. so it was a return to that. It was a return to work. It was a kind of a statement like, you know, we appreciate that you have interests and that you have associations outside of work, but we're not paying you to bring those to work. We're not your family, we're not your friends, we're your employer and you're coming here to do a job. it was a hard you know, it was a it was a really, really traumatic time. But but necessary. James Seechurn: Yeah, did you get any boomerangs of that group to the left? Probably for the best. It is interesting. Go ahead. Andrea LaRowe: No, no. Yeah, I mean it was it was tough, man. Like it personally I lost friends. I you know, it was it was a really, really weird time. ⁓ people people reacted badly. Yes, yes. James Seechurn: Yeah, It was a tough time in general though, wasn't it? Not just in work. It's almost just a reflection of how the world was going at that point. It was a bit of a pressure cooker situation because of COVID. So all of a sudden, all these conversations were happening that never really happened before. ⁓ what's interesting to me and the reason I wanted to ask about it is it tested a lot of your a lot of your trust and autonomy. So that was one of the few times that I could identify where you did have an autocratic decision, ⁓ was that this is a line we're going to draw. ⁓ I'm ⁓ as to whether there was, you know, was there any discussion like, well, should we do this at all or should we just let it play out or is this costing us too much? And it will be going down the road. I think you said already you were going down the wrong path. ⁓ Andrea LaRowe: Mm-hmm. Mm-hmm. It yeah. James Seechurn: woods. Andrea LaRowe: It was so it was a relief. It was a huge relief. It was kind of one of those things I remember having the conversations with Jason and David before we like made any announcements about new policies. ⁓ about how to roll like there was never a question that we were gonna roll out some policy. It was more of a question of how. ⁓ how to do it without like completely blowing up the company. ⁓ because it was such a it was ⁓ it's like hard to even describe now five years later, like how James Seechurn: Hmm. Andrea LaRowe: Like you said, pressure cooker, just everybody was on edge. And it was so hard to like manage that, you know? and like try to anticipate how people were gonna react. So it we got to those discussions, right, where you're like, ⁓ okay, how can we like soften the blow? And then we're like, Well, we can't. Like, we're just gonna have to rip the band aid off and ⁓ just say what we mean and this is what we mean this is what we need to do, this is what needs to be done. So we just need to say it. And so that's what happened and that's why people reacted so badly. ⁓ and I think looking back now, like yeah, we could have we could have done done better with the messaging. ⁓ maybe that would have changed how it was received. I don't know. maybe more people would have stayed, maybe some people would have come back. I don't know. but the time it felt like overdue. ⁓ Like s we should have said something James Seechurn: Hmm. Andrea LaRowe: six months ago kind of thing. and so that's how we just kind of said, okay, we can't we can't think about how to message how to how to do the messaging here. We just gotta say it. And so we did it. ⁓ and like I said, it was a relief. It was a relief to just say it and to have like our truth out there, right? Like this is why we're all here and guys, we all came here ⁓ to do the work that we do and like, you know, let's just let's just do it. And James Seechurn: I mean, I think it's a really good thing. Yeah. Andrea LaRowe: Yeah. Eventually it eventually it was fine. Eventually we all came back together and it's great now. James Seechurn: You know, it's very useful for my purpose as well, because it's an illustration that just because you've got this quite democratic, flat, participative work culture doesn't mean that leadership can't make decisions. That when the time is right, there are things that need to be done and the direction of the company still is paramount. So when it then again, like there's a misconception about this is not this is not kind of this is not a kumbaya environment when everyone does whatever they want all the time. There is still a strategy to be fulfilled as a company. Your job is to figure out how to organize your work. Andrea LaRowe: Mm-hmm. James Seechurn: in service of that strategy. So that's kind why I wanted to talk about it. That was a point at which that message was not being heard from what I understand. That strategy was not being done. The work was not being organized. Yeah, it got lost a little bit. And at that point, you do need some of that autocratic command to come back in to just get the train back on the tracks, which is why I think it's a really good test of that participatory culture and a good sign that you still have that leadership now. Andrea LaRowe: Yes. It got lost. Yeah. Yes. Yeah. And I I think and I think that ⁓ because that happens so infrequently, it's very meaningful when it does when it does happen. Mm-hmm. Something's really gone off the rails if we're gonna step in. ⁓ the only other thing that comes to mind is like we're ⁓ we work in the open, we work very visibly within Basecamp. That's just how we work. James Seechurn: Right, exactly. Yeah, you know, there's something really has something going on. Andrea LaRowe: ⁓ and there was some thread that went off the rails. I don't remember, I can't even tell you what it was, but there was a comment thread on a post that went off the rails and Jason turned off the comments on the thread. It's shocking, right? Like that that doesn't happen. And so like that, just like the action of it that action itself, just the fact that it happened at all, is very ⁓ like recentering. We're like, okay, we need to ⁓ if is the action that's been taken then we need to kind of, you know, we need to ⁓ hit here. And the same thing with the twenty twenty one thing. Like if because that I mean, that was a very dramatic version of that, but like it was the same same idea where ⁓ you know, if they feel the need to like step in and and ⁓ make new policies, then something truly has gone wrong and we all need to ⁓ to restart here. James Seechurn: I'd like to ask a bit about equity. Do you have an equity plan? So you don't have a typical stock option or RSU plan or anything like that. So how is 37Signals owned then? Is it just a privately owned founder owned company? ⁓ So ⁓ this is a topic that interests me. Andrea LaRowe: No, not done like that. Yeah, bootstrapped, bootstrapped and proud. James Seechurn: So most companies, start-up companies default to VC backing. Andrea LaRowe: Mm-hmm. James Seechurn: and they default to more VC backing and the VC to IPO route first of all is very, very low probability, like the odds of going public are extremely low. And second, going public is no guarantee of success as well. It's just another way of raising money. But the VC backed community is very much about growing fast, not making money, getting to evaluation, getting more VC money. But the trade off is that you relinquish power as a founder in particular. Andrea LaRowe: Mm-hmm. James Seechurn: And you relinquish that power, you're kind of beholden to the needs of your backers and your investors. And they ultimately want to cash out at some point for their investors and their dollars that they hold on behalf of other people. So 37signals has avoided that by remaining ⁓ private the time. But obviously, you can't really use equity then in the same way. so ⁓ on the hand it's given you that freedom, so a lot of the things that you do I imagine would be more difficult to do if you had VC funding because you would be more tasked with growth and to do that growth you have to hire aggressively and you but you get to do things in your own time on your own terms. Andrea LaRowe: Yes. James Seechurn: So the first thing I'll say is that demonstrates that you don't need to move fast and break things continuously to be successful. You've been around 25 years as a private company making money, paying people their salaries, their high salaries, and you haven't needed to take that hypergrowth pathway in order to achieve success. Success for you looks different to what a lot of private companies assume it needs to look like. Andrea LaRowe: Yes. James Seechurn: Well, let me just pause there for any reflections on that. Is that an accurate representation? But my next question was going to be around whether not being able to give out equity is a problem for you. But I'm just curious as to whether you've got any thoughts on what I just said. Andrea LaRowe: Mm. No, you're right about the ⁓ VC that that that's a very conscious decision by the founders that ⁓ if you are reporting to someone, you know, they they don't want to be beholden to someone else to for for the what happens with the company, what happens with the products, ⁓ or the people within it. So that that yes, very much a conscious decision. We've been profitable for twenty five years. ⁓ so it's not, you know, there and and there's no desire to to to grow. I think I mean I don't want to speak for them, but I think the point was never to like get to a point and sell. Like it's not this like, you know, grow, grow, grow, grow, grow at like exponentially and then what, sell. ⁓ The point was to like make cool stuff with cool people. And that's kinda it. Like that really is the goal. And like we happened to be profitable all those years and like thank goodness we were. But that vibe has never changed. It's always been like we're just here to make cool stuff and have like ⁓ be and learn new things and work with great people. That's it. And the equity piece certainly has come up. I I can't say it hasn't come up in you know, like so when we're doing salary adjustments every year, it's like, well, what about this thing that other people are getting? ⁓ but I think we compensate for that with ⁓ our base salary like where we ta like where we're targeted for our base salaries and the profit share the longer that you're with the company that you know, that it that grows too. come up in conversations before, but I don't think again that the pay ⁓ is the driving force people behind why people really ⁓ stay here. James Seechurn: Yeah, and it's interesting because equity obviously comes up a lot in San Francisco tech and US tech in general. Andrea LaRowe: Yeah. James Seechurn: But it comes up because it's an aspect of the, it's just, you just, you just do, you just raise it. That's part of the negotiation process, isn't it? You raise that. But I do think that, you know, the, the, the curtain's been drawn a little bit on, you know, VC backed equity in particular, because there were once these stories about, millionaires and there still are, of course, like if you joined Anthropic or something early on, you're gonna do pretty well by this point, by the time they're IPO. But there are also so many stories of people joining VC backed companies where the equity amounted to literally zero because a Andrea LaRowe: Right. James Seechurn: of the time it does and it's something like one in 20 companies go public so there's a 19 out of 20 chance that you're probably not going to get that big number that everyone's planning on. So I think people are asking for it but to anyone saying that to anyone thinking that equity is imperative Andrea LaRowe: Right. James Seechurn: Just because people ask for it doesn't make it imperative. People can go and buy whatever equity they feel like. So as long as you pay people a healthy amount of money that covers their needs, they can choose where and how to invest that money themselves. And most people, in listening to their financial advisors, will want a diversified portfolio, which you don't get by getting equity from one company, of course. And then you've got all the problems of exercising it and paying the taxes and things like that. And if it expires, you've got to do all that. So once again, evidently, you've got a proof in concept Andrea LaRowe: Mm-hmm. James Seechurn: You don't need equity to attract and retain good people. Andrea LaRowe: ⁓ like to your point, introduces almost like a complexity ⁓ to compensation that we just kind of reject. ⁓ it we try to keep it we try to keep about and ac and ⁓ pay and ⁓ you know, anything regarding employment as simple as possible. ⁓ and this this like variable ⁓ that may or may not James Seechurn: Right. Andrea LaRowe: impact you or, you know, it the it and it fluctuates and all these and it doesn't really mean anything. introduces this like l th this this piece that just, ⁓ you know, we try I understand exists. I understand that, you know, if that other people look for that when they're negotiating salaries and packages. ⁓ but I think that we compensate for it in other more straightforward ⁓ and more tangible ways. James Seechurn: And this ties into ⁓ ⁓ point I want come to actually made before we got into equity, which was about What is your company for? This is a big philosophical question and it impacts so much. And I don't think a lot of founders necessarily think about this enough. What is your company for? Now, if you're a VC backed company and you're going to IPO, then your company is there to make money for somebody else or your founders and the employees, but they're a relatively small proportion of that ownership model. That is what your company is for. Your company is to go public and therefore to make money. But to your point, by not going public, your company can be for whatever your founders and your employees say it's for. And when you ask people what do they want from work, the response is good work, more good work. it's like we don't want to just cash out and move on to somewhere else in this endless cycle of trying to find a happy place to sit down and get things done. ⁓ If have a place where people can get things done, Particularly if you're able to attract the people to your point, like when you said your ears break up when you hear those people, that have already tried and failed to just jump around and find these jobs and what they want to do is do good quality work. So if you have people that want to do good work, then your mission is to offer good work to your people while we deliver, and in order to do that, we need to deliver good products to our customers. And it's wonderfully simple. The more good quality work we give to our customers, the more good quality work we give to our people. But again, this is a long. Andrea LaRowe: Yes. Yes. James Seechurn: Dietaramb I'm going on now, but what's interesting is that if you take that VC backed model, you inherently eat away at that desire to deliver good quality work with good quality products. Now your desire is to be profitable and to grow your ARR. And no matter how well ⁓ intentioned a founder is, they're going to be distracted by that. And I feel a lot of VC backed companies get to a point where that tension becomes very visible at later stages. Andrea LaRowe: Mm-hmm. James Seechurn: where people joined for the work and they loved the work and they remember a time when the work was good and great and fun that they could do that. But then it shifts to a time where the work takes a backseat to the growth objectives of the company. again, I don't really have a question on this one, but it's interesting to me because what you said is that you've got founders that recognize what the purpose of that company is and it's not an exit event. that and taking that that goal away allows you to focus on Andrea LaRowe: No. James Seechurn: your customers and your employees and to exist indefinitely as that entity. Andrea LaRowe: Yes, that is true. And ⁓ I will say that I appreciate They're very open to changing what the company is for. Like we never have. I wouldn't say like we we haven't ever changed that, but it's like right now, in the moment, they I will say they don't like to make like long term proclamations of here's where the company's headed, which I love. Because it's like who the fuck knows where like what is gonna happen tomorrow? I don't nobody knows. James Seechurn: Yeah. Andrea LaRowe: And so it's great and it's refreshing and it's great and I love working under the understanding that we are all here to do great work together right now on this thing that we're working on. ⁓ usually it's product development, right? Usually it's basecamp development or some other product and and like even as someone who's not in a technical role, I feel that is my job. My job is to show up and support the people who are working on the new version of Basecamp or this new product. ⁓ And understanding that we're all here to do that, all here to do good work, all here working towards the same thing, trying to get better at what we do and trying to improve the way we work at all times and the culture that we work in. Like that's really all wh why we're here. And that's the way it is right now. That might change tomorrow. I some people might find that like hard to t to to like to work under, to not know like what you know what ⁓ James Seechurn: Mm. Andrea LaRowe: th that things might change at any time. I find it great and refreshing and James Seechurn: It's the truth, isn't it? Regardless of whether you think you have a strategy, we all know how long strategies stick around until things change. The idea that anyone knows what's going happen in five years is ludicrous. Andrea LaRowe: Totally. Yeah. Yeah. Right. And like nothing's ever changed. ⁓ this has been the philosophy that we've worked under as long as I've been with the company. But I I do appreciate that ⁓ you know, ⁓ that everything that that people admit that everything's always up in the air and like, who knows, maybe we'll start a new product tomorrow. Like and then that's what we're working on. Like it's just it's it's kind of ⁓ always in flux and it's great. ⁓ and the fact that we work under this philosophy that is so intellectually rewarding is great too. nothing ⁓ driving us as a company or as that's outside of my control. I can control the work that I do. Everyone can control the work that he or she does. I can control ⁓ how much better I get all of these things are within my control and very satisfying to show up and accomplish every day. I'm not chasing anything, ⁓ you know, that gets exhausting. So it it's great environment to work and I and I think that that's really why ⁓ people stick around as long as they do. James Seechurn: Yeah. Yeah, and we keep coming back to this theme. It's trust and autonomy in the work. It's all about the work. And in almost everything we talked about, it comes back to how can we make the work enjoyable and how can we let people shape the work into ways that they want to do it. And I don't know if you come across this term, but there's a number of people that I speak with, like Dart Linsley and Luca Omani. And I spoke with Meg Bernard-May recently, who have this phrase, work as a product. Andrea LaRowe: Mm. James Seechurn: And you kind of have that inherently, which is that you offer work. That's the product that you offer your people. And like any product, it needs to be interesting or it needs to be something that they want to do because they're going to choose whether or not they use that product. And what you've done is you've created a working environment that allows that product to be something that your employees want to buy. They like that product. It's a good product. So rather than assuming work is a static concept that's set from the top and trickled down and you either do it or you don't, Andrea LaRowe: Mm-hmm. James Seechurn: don't do it, you allow the people from the ground up to reshape that work. And something you mentioned reminded me of a really wonderful story when NASA was trying to put people on the moon in the 60s. It was a very aggressive timeline that John Kennedy set for that, And there was a wonderful case study ⁓ of what it was like work at NASA at the time. By all accounts, it was brilliant, because it had this really clear overall strategy, but huge autonomy in how to do that and the resources to do it. And someone interviewed one of the janitors that was cleaning. and said like you know you're doing a really really good job here and you're doing going above and beyond that why and why are you doing all this cleaning and he said I'm not I'm not a cleaner I'm working to put a man on the moon Andrea LaRowe: Mm-hmm. James Seechurn: And it's the same philosophy. It's like, we're all just trying to do the same thing here. We've got different things that we're trying to do, but we're all working towards the same mission. So to your point, even if you're in HR, if you have a truly mission-driven company, even HR, HR's a very rewarding place if it's done right. Even HR's immediately just downplaying it. But yeah, whatever function you're in, you're still working towards that same goal and your job to shape your work in a way that supports that mission. And if you're allowed to do that, it's quite amazing as to the different ways that people Andrea LaRowe: Totally. James Seechurn: shape their work for their own work to be fulfilling. Andrea LaRowe: Yeah. And I wouldn't even say is if you're allowed to do it, it's like as long as you're doing that, you will succeed here. As long as I show up with my primary focus being I'm here to support the work, you know, this is what we're all we're all working towards the same thing. As long as that as long as like that's kind of my guiding principle, I'll I'll do well, right? And I'm saying me, but like if I'm a ⁓ if I'm on the support team, if I'm on the ops team, as long as that's how I'm showing up to work with the understanding that I'm here to, you know. to support the the mission of the company to drive to drive what we're doing forward, you'll do well. You'll find the problems that need to be solved. You'll you'll you know, we know already know that these people are skilled when we hire them. We know that you're good at what you do. So as long as you show up with that mindset and with the problem solving mindset then that that's fine. You'll do well. And that's what we look for when we hire. James Seechurn: Right. Yeah. Yeah. we talked a bit about strategy and the lack of a long, long-term strategy. So you just launched a new product. How did that strategy come? That's clearly a big strategic decision. How did that decision get made and where did that come from? Andrea LaRowe: I mean, I don't wanna speak again for for the founders or the technical teams, but I I I will I think it came out of exactly kind of what I said before, which is like let's do more cool things. Like this product that so basically what we did is Basecamp 4 was the product that we had until recently. We did a complete overhaul of Basecamp 4 and now it's Basecamp 5. So it's ⁓ it's the same product, it's upgraded by a lot, like a lot a lot and a lot a lot of new features. ⁓ and it was born out of ⁓ we use Basecamp. The features that were in it were not working for us, so we we extrapolate from there that they're not working as well for our customers as they could be. So let's improve it and like let's continue to to to improve our bread and butter here at Basecamp. ⁓ so again, not born out of any sort of like market research or anything like that. It was just a mm, this isn't quite right. We need to fix it. ⁓ and continue to do cool things with cool people and and continually improve. so still in line, very much so with with the philosophy that goes way back. James Seechurn: Yeah. But it was a kind of collective decision, it sounds like. Was that? Yeah. Andrea LaRowe: Sure, yeah. I mean there was a roadmap and ⁓ you know, product strategy meetings and ⁓ w there we still do all of those things. But ⁓ and I d ⁓ you know, going back probably months to years, ⁓ at this point, but it so it was a collective effort driven by our product strategy team. James Seechurn: Yeah, yeah, yeah, of course. Yeah, and I guess like the reason I ask is because it is to differentiate from the point of frustration that so many people get in their jobs, which is the strategy gets decided by someone they barely barely met. And then that trickles down to your objectives for the year. And people look at that and go, well, one, no one talked to me about that. Like I didn't have any say in this, therefore I'm less bought into it immediately. Like even if you communicate that well, the fact that you didn't get a say in that strategy impacts your desire to work towards it. And second of all, you don't agree with it because like, because you're closer to the Andrea LaRowe: Mm. Yeah. James Seechurn: You know the work and to your point your team uses Basecamp as a product so they understand it. They're connected to it. So they're the best place to understand whether that strategy makes sense to go upgrade to Basecamp 5 or relaunch a new product. like, yeah. Andrea LaRowe: Yeah. Yeah, and everyone's very involved in that, right? Like it's a team of what like tw fifteen, twenty people that, you know, are on the front lines of product new product development. So I mean that they're very much involved in the ⁓ the planning, strategic planning of the new product the shaping and the scope like we would schedule out the work and so I mean, we still expect people to to to work on the projects as assigned to them as collectively decided by the kind of product strategy team, I guess you would call it. ⁓ but like there's buy-in from day one because we're all working on this to improve this product that we all use day to day ⁓ and is our our Flection product. James Seechurn: is one challenge that tends to come with decentralized companies. So ⁓ I think of the big decentralized companies of the world like Haier and Burzog and ⁓ in Sweden challenge of decentralization that ⁓ you can end up silos if you're not careful, ⁓ because everyone's doing their thing, then there's no ⁓ central decision process and don't want people working across purposes or trying to solve the same problem twice. ⁓ So ⁓ do you any mechanisms to ⁓ transfer knowledge around the or do you find that the group is tight enough for that to happen organically? Andrea LaRowe: Mm. A little bit of both. We do have some formal mechanisms. So we ⁓ have we work in cycles, six week cycles. and that's how projects are planned. So we we plan works at the plan projects at the start of the six week cycle, the team works on them, and then we wrap it up at the end. and then this just runs throughout the year, six weeks, six weeks, six weeks. ⁓ and every team works that way. So ⁓ at the beginning of the cycle when we have planned the work for for that cycle we write what we call a kickoff and so we are we have decided it's like a it's like a document right where you this is you're sharing with the company what you plan to work on what your team plans to work on for the next six weeks ⁓ then you go you work on it and that's where the autonomy comes in so like if product plans something for their six week cycle you kind of just like hand the project over you're like you need to update this feature and then you kind of hand it over to the team and then they figure out how to do it. there's no like ⁓ roadmap for each project. It's just like a ⁓ a big ⁓ planning document. ⁓ So anyway, any team does that. We write our kickoffs, we post them. So the whole company is aware of what me and my team are going to be working on for the next six six weeks, what products can be working on. ⁓ We go, we do it, and then at the end of the six weeks we write what we call heartbeat. ⁓ which sums up what we have worked on for the past six weeks. Ideally it'll look a lot like the kickoff and you'll have like hit all the things that you planned to do. A lot of times that doesn't really happen. ⁓ or things change, you know, priorities shift throughout the six weeks. ⁓ so there is that formal mechanism for sharing what everyone's doing. We also have check-in questions in Basecamp that we're expected to answer, which of really. So it's kind of what will you be working on this week and what have you worked on today. ⁓ so we have those and then ⁓ and then yes, just organically, there's lot of cross pollination. James Seechurn: Okay. I assume those checking questions are more for organizational awareness rather than making sure people are getting their work. And it when you had hear checking questions, it's it's not the amount of you're trying to make. Yeah, okay, now that person's doing that. See me. Andrea LaRowe: ⁓ yes. Yeah, no no no no. I would never like I would never like go through and be like, hmm, like let me mark down what everyone's doing. No, no. It's a it's a visibility thing. It's a, you know, engagement thing. Like just making sure people are it it they actually just spark conversation more than anything, I think, where it's like, ⁓ cool, you're working on this, I'm working on that. So that does happen where there's some kind of cross pollination there where if someone on one team's working on something and it interests someone else, they kind of James Seechurn: Bye. Right. Andrea LaRowe: start talking. ⁓ and then yeah, organically ⁓ there's just a lot of overlap. Like I said, when we're all kind of working towards the same goal, then there's overlap on the work. So like ops, you know, yes, they're responsible for like our technical architecture and and keeping the lights on and all these things. But like of course what they're doing overlaps with what our our performance programming team is working on. So they they, you know James Seechurn: Yeah. Andrea LaRowe: And then that overlaps with what product is doing because product has a an issue with performance and so they need to talk over here and then so I mean it all really you know, without ⁓ like formal meetings or or anything like that, it does overlap and people talk and again the teams are so small that issues bubble up and and people talk and we are talking constantly in Basecamp and there's ⁓ you know, work being done in Basecamp and conversations happening there, ⁓ and so James Seechurn: Mm-hmm. Andrea LaRowe: things things things bubble up and teams talk about it. James Seechurn: Mm-hmm. It's fair to say that you have a fairly high degree of psychological safety, it sounds like, because for that to happen, for things to bubble up, people need to be willing to say, right? So in high trust environments, people generally are, because they know they're not going to get wrapped across the knuckles, because they're not worried whether they're doing it right or wrong or not. So it sounds like it when, yeah, people are willing to ask about it. Yeah, yeah, OK. Andrea LaRowe: Yeah. Yeah. No no. People ask for help. People ask for help constantly. ⁓ or people if the it's it is ⁓ it it one of the things I love about working at 37signals ⁓ people are ⁓ people are so smart that they know that they're not the smartest in the room. ⁓ so if they ⁓ they hit a point where they you know they need someone to help or they have a question or they don't know where something is, then they will ask. ⁓ James Seechurn: Yeah. Mm-hmm. Andrea LaRowe: And so there's a lot of that going on at all times. James Seechurn: And we come back to this when we go back all the way back to the start when we're talking more about pay, where if you attach pay to individual contribution, you are inherently telling people not to raise their hand and say, I'm not the smartest. If your pay is delivered based on your whatever subjective measures. Andrea LaRowe: Mm-hmm. Mm-hmm. James Seechurn: intelligence contribution, then to ask a question that says, don't know the answer to this, maybe someone else does, is inherently saying, you deserve more of the merit budget than I do. So I think as soon as you decouple pay from this, you allow those conversations to happen. I think those conversations do and can happen, can and do happen rather, in other companies, but in spite of those pay systems, which effectively discourage that kind of honesty that you're describing, So ⁓ last I wanted to ask then is, Andrea LaRowe: Mm. Yeah. James Seechurn: whenever I talk about these principles, which have worked very well at scale and you've ⁓ got a sized company, 60 people, ⁓ but These work at scale and many companies around the world, but there's a ⁓ general reluctance to accept that this could be a model of working built around trust and a lack of control, relinquishing power, relinquishing top down authority. ⁓ Do you have any A lot of the ⁓ that listen to this a lot Andrea LaRowe: Mm-hmm. Mm-hmm. James Seechurn: people on LinkedIn are working in companies that they're in this cycle, they're in this merit performance management individual. pay for performance cycle and it's difficult to see a world outside of that because they've jumped from company to company and the assumption is we just need to improve that. That's the version of pay and performance that we need. There must be a solution somewhere that makes that work and I would argue there isn't. There's no research to show that it will ever work effectively in collaborative environments. ⁓ do you have any advice for people that are in those companies as to how maybe they could break free, maybe they could offer something different or maybe they could create an alternative or maybe escape from that cycle. Andrea LaRowe: Hmm. Well, unfortunately it does have to come from the top down, right? Like it has to be just how a company operates for it to be for for for that to happen at at that level. But I think teams could ⁓ if they if they have some freedom to operate within a team, to kind of add add in some of those values that create that high trust. highly autonomous ⁓ way of working. So you know it you can't decouple pay from performance if that's just the way the company is set up, but I think that you can tr draw some of the values that are contained within that system that the the system that we work in and apply them to the way that individuals work or the way that teams work to benefit the way that the team works. ⁓ So creating that high trust environment, creating ⁓ giving people problems instead of tasks, letting people under the ⁓ kind of in the environment that they're most comfortable and letting them work with intelligent people, giving them all the resources that they need to to do the work that they need to do, not creating work for yourself and for the team. So it's again, like it's all these little things that you could add into a team or kind of shift the way the team works that might ⁓ make more like that. But I don't know how an individual or how a team would change ⁓ from the bottom up. James Seechurn: Yeah. It's true. ⁓ I think it can look almost impossible, but at the same time, I do think there are lot of managers that have been through it enough to know that it doesn't work, those traditional cycles, and they'll almost just de-emphasize it to the degree they're allowed to de-emphasize it. So they'll do the things you describe to the degree to which they can. And I had a manager once that asked me these questions about basically how I want to get my work done, and a few years later, and I answered it, and he did what he could Andrea LaRowe: Sure. James Seechurn: years later, like, well, I down that list, I can give you that, I give you that, I can't give you that, because that's the way we do things, but I can give you that. So his job was just to give as much as he could as a manager to me for the work to be engaging. managers, and there's a book inspired by Gallup research called First Break All the Rules, and as you can tell from the title, it's about good managers who break the rules. They just do things in the way that makes sense for the work. And I think HR's role is not to frown on those managers. Andrea LaRowe: Mm-hmm. Yes. James Seechurn: ⁓ So to allow managers and encourage managers to work with freedom to the extent they're able to, to be the manager that breaks all the rules, rather than necessarily always towing the line in terms of policy cycles ratings and paving differentiation. ⁓ I sometimes it can feel difficult as an HR professional to do that, Andrea LaRowe: And I think too, if if someone's able to do that, if someone's able to kind of work within the team to make some changes, I would examine ⁓ I would look towards the motivation, right? So if y if there's all these outside things that the company is saying should motivate people, like pay, ⁓ and you want to get away from that, then what can you offer in terms of motivation ⁓ not that? So, you know, how how how can you what's driving the people that work for you? Ask them what's what what what motivates you? If we're not talking about compensation, what else motivates you? And then how can you ⁓ change the system or improve the system to give them what is motivating to them, what's driving them? James Seechurn: Yeah, think main theme that keeps coming out of this is trust. Like, hire good people. Andrea LaRowe: Mm-hmm. James Seechurn: Let them find a way to get their work done, support them, and as long as they're in alignment with that strategic goal, then the work is for them to shape. And it sounds like you've found a way to do that. You've introduced some hierarchy. It doesn't mean a world without any hierarchy. You still have levels. You still have times where it requires some autocratic decisions to be made to make sure that people are allowed to work in alignment with that strategy. But evidently, this is a 25-year-old company that's worked with high trust and high autonomy successfully for a long time. So congratulations on that. So Andrea, so thank you so much for your time. It's been really, really fascinating to speak to you about this I've been looking forward to this for a long time to hear a bit more from you about how 37signals operates. It's been really interesting for me personally to hear about that. For anyone listening, I would suggest getting a copy of Rework as well. It's a very short, well-written, approachable, no-nonsense book to build a company in the mold of 37signals. So if anyone's listening and wants to learn more, recommend that. Andrea, are there any other resources that you would suggest? that people look for. Andrea LaRowe: Well, you can check out Basecamp ⁓ for some project management software. We have a new update out just last week. It's good. It's great. ⁓ there's a couple other books too that the founders have written. Rework is the is the best starter book. ⁓ there's also another book called It Doesn't Have to Be Crazy at Work, which is a really good one to check out as well. James Seechurn: Mm-hmm. Yep. I hear good things. Yes. Yes. OK, well, thanks again. ⁓ And enjoy life at 37Signals. I apologize for the deluge of applications you're about to get following this podcast. There are millions of listeners that are going to listen. All right. Take care, then. Speak soon. OK, bye. Andrea LaRowe: Great. Love to see her. Thank you.