The REWORK podcast

A podcast about a better way to work and run your business. We bring you stories and unconventional wisdom from Basecamp’s co-founders and other business owners.

BONUS EPISODE

DHH on The Heartbeat Podcast

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In our last episode, we talked to Claire Lew, the CEO of Know Your Team. She has her own show called The Heartbeat Podcast, where she talks to founders and leaders about management. This is her interview with Basecamp co-founder and CTO David Heinemeier Hansson. To listen to more of The Heartbeat Podcast, visit https://knowyourteam.com/blog/podcast/ or look for the show wherever you listen to podcasts.


The Full Transcript:

Shaun: [00:00:00] Welcome to Rework the podcast by Basecamp about the better way to work and run your business. I’m Shaun Hildner.

Wailin: [00:00:06] And I’m Wailin Wong. Last week we had Claire Lew on the show. She is the CEO of Know Your Team, a software company that is trying to solve the problem of terrible bosses. And she has a lot of resources about management and leadership in the workplace. And one thing that she has is a podcast called the Heartbeat Podcast.

Shaun: [00:00:28] So today we’re going to bring you an episode of the Heartbeat Podcast that Claire did with our very own David Heinemeier Hansson. Enjoy.

[00:00:38] Heartbeat Podcast theme music plays.

Claire: [00:00:46] Hi everyone. I’m Claire Lew and I’m the CEO of Know Your Company. And today, I’ve got a super special guest with me, I’ve got David Heinemeier Hansson who is the cofounder of Basecamp along with the founder of Ruby on Rails. Which I feel like half the Internet is built on including Know Your Company. And I’m lucky because David actually sits on our board. So we’ve gotten to work pretty closely over the past few years. And I know I’ve personally benefitted as a CEO from, you know, a lot of your insights. And so, I’m excited to have you here and ask you this one question about leadership.

David: [00:01:20] Awesome, I can’t wait to be surprised.

Claire: [00:01:23] Hopefully it’s, yeah, hopefully it’s a question that you’re ready for. So, my question for you, David, is: what’s something you wish you would’ve learned earlier as a leader?

David: [00:01:33] Yeah. Wow, that’s a good question. There’s definitely, there’s tons of things. I think what I got exposed to early on from leadership training was kind of like the negative end of it. I got to see a lot of really poor leadership. I got to see a lot of poor management and I learned a lot from that, but there weren’t so many positive examples from that to draw upon. I mean, it’s great to learn what not to do, but it’s also sometimes good to have some idea of what works.

[00:01:58] One of the early principles I took from that was just like, oh, I experienced all these bad leadership moments where I’m… at least I’m not going to do that. Like, so let me just try to be more authentic in the way that I’m acting as leader, which means how would I like to be treated, right?

[00:02:15] So that was where a lot of it got driven for and I kind of just got it going in that group and thinking like, well at least if I’m acting in ways where if I was on the other side of the table, I would feel good about it. Like that’s good. Right? And I think that goes a long way. That goes, I don’t know, half the way, maybe. Right?

Claire: [00:02:34] Yeah.

David: [00:02:34] And then the other half of the way is to then realize that not everyone’s like you. Not everyone would react the same way as you would in a certain situation. So you can feel like what we’re putting forward or what we’re talking about. Like I’m being fair, I’m being, on top of it or whatever, because I’m putting myself on the other side, but I’m putting myself on the other side. I’m not putting the person necessarily that I’m talking to on the other side.

Claire: [00:02:56] Yup.

David: [00:02:55] And I think that that was probably one of the things that I have to just learn to see that there were different reactions, that I could propose things to talk to people in a certain way or try to inspire people in certain way that I knew I would have reacted well to just through the experiences that I’ve had. But then it didn’t work for whatever reason, right? Because the person on the other end of this was not me. It was someone else, and they had different sensibilities and they had different things that they responded well to. And, I think sometimes early on at least, that led to some frustration. Like, why can’t you just get it.

Claire: [00:03:31] Like, this should work.

David: [00:03:32] Exactly. This should have worked. I’m not.. I don’t feel like I’m being unreasonable. I feel like, because again, I’m putting myself on the other side rather than… I’m trying to be empathetic to my own mirror image, which is not actually a very good definition of empathy. Like you’re trying to—you should get into the other person’s shoes, right? Like I’m trying to get into my old role somewhere else, which is one good influence, but it’s certainly not the only one.

Claire: [00:03:57] Right.

David: [00:03:58] So having just… picking up more on who’s on the other side and picking up on, it’s not just that like someone is not me, it’s that that person is different from another person is different from another person. So, the way you talk to people, the way you try to motivate them, the way you try to inspire them, they’re going to be different. Even within the large group of people that are not me, there’s all these individuals.

[00:04:24] It sounds so obvious, but I think it’s harder to summarize in just a sort of an essay or a single thing and just like, oh, you should do things this way. And, for then some number of people who respond well to that avenue, that’s going to be totally the right thing. Then there’s the people who don’t. And in some cases it’s like the exact opposite that works for one group of people and doesn’t work for another group of people.

Claire: [00:04:49] Totally. I think it’s so interesting because to your point of it sounding obvious, oh, treat people the way you would like to be treated.

David: [00:04:56] Yes.

Claire: [00:04:57] Oh, duh. So obvious and yet it’s absolutely not because your point is, you know, it takes some nuance and awareness to realize that, okay, every person isn’t like me. They don’t have the same experiences, tendencies, personality. And I think, I mean, personally, when I’m thinking about running Know Your Company, it can be hard to feel that way because I mean, you’re kind of in your own bubble of things. I mean for you personally, was there, you know, a moment that happened in you know the past, 10 to 15 years as you’re running Basecamp where, it kind of stared you in the face and you’re like, oh wow. Like, I think I’m putting myself on the other side and not actually thinking about…

David: [00:05:38] I’m trying to think of specific scenarios.

Claire: [00:05:40] Yeah. If you can.

David: [00:05:40] I can certainly think of specific characteristics. So I have a high sense of urgency. So one of the things that sort of helped in this is to get a vocabulary to talk about personality differences in traits and leanings. And we did, at Basecamp a while back, we did a… I don’t know what it was called. They never call it personality tests or whatever, right? That’s kind of not what it… it’s a, well, assessment.

Claire: [00:06:04] The StrengthsFinder thing?

David: [00:06:06] The StrengthsFinder.

Claire: [00:06:07] [crosstalk]

David: [00:06:07] StrengthsFinder’s one of them, and we’ve done another… we used to have like an assessment we did with new hires.

Claire: [00:06:14] Cool.

David: [00:06:13] That was even more in depth than StrengthsFinder as well. Let’s just take StrengthsFinder for example.

Claire: [00:06:19] Yeah, so, StrengthsFinder.

David: [00:06:19] Yeah, so StrengthsFinder. I have a high level of urgency. I then have a lower score on thoroughness and those things are frequently in conflict.

[00:06:27] And there are other people in the company that have relatively low levels of urgency and very high levels of thoroughness. So they really want to make sure that all the i’s are dotted and t’s striped or whatever that’s called, or something. So, sometimes there’s a tension there, right? Like I go, I look at a problem or I look at a project and go like, we could ship this in two weeks. And they’d go like, uh, what are you talking about?

Claire: [00:06:49] No, no, no. No way.

David: [00:06:49] No. And it’s not because we’re looking at things differently in the sense of how much hourly input there needs to be. When I think we could ship this in two weeks, I’m not thinking, oh, we could ship this in two weeks if we’re worked 120 hours and working weekends and whatever. I’m thinking we could ship this in two weeks because I will cut this corner, that corner and this corner and I’ll end up with a smaller problem that I’m solving two weeks and I can solve that in 40 hours a week.

[00:07:10] Versus there are other people in the company who have a much higher level of thoroughness that we will think through like all of these other, well, what about this edge case? What about that edge case? What about this extra, right? Those edge cases are totally valid. It’s just in, in many cases I’m just willing to trade off. That like, eh, let’s just launch it and see what happens. Because what we launched might not be worth it at all. And then we’re going to solve all sorts of edge cases for something that just is a dud and doesn’t go anywhere.

[00:07:32] I think even between Jason and I, we often have some of this tension because we have different sensibilities around things. Jason happens to also have a very high level of urgency. So, there we have sort of some common ground on things, but we have other sensibilities around like, experiments, how much to invest up front and experiment.

[00:07:51] I have a very relatively low tolerance. I want to put in the least amount I can to just get a trial balloon going. And Jason’s often more like, no, that won’t be a proper trial and you have to round it out more. You have to spend more time on it, otherwise you won’t get a viable result.

[00:08:05] So, there’s just all these inherent traits, I think. Like the thoroughness or urgency. Intention. And you can often come into these illusions of disagreement or tension or whatever because people coming through from different angles when I say like, oh we could ship this in two weeks. And someone goes like what the fuck are you talking about? Like that’s, no, no we couldn’t do that. We’re just not talking about the same thing, right? Like, you’re talking about a version of the project that is embellished in all sorts of ways to deal with all these edge cases and it’s completely reasonable to talk about that. And I’m talking about the version I have in my head that has like half of it cut off and like two-thirds of it’s just stuffed out to get something out there.

[00:08:45] So, this is just one example of something where you can get into conflict, or tension or miss each other because you’re coming at it from different angles and the way that I’m proposing things, I’m trying to talk to myself. Because that’s the first bar to clear. And I think most people don’t even clear that bar. Right? They’re not treating others like they would be wanting to be treated themselves. But if you clear that bar then the next level is, well, you have to treat others like they would want to be treated. Not just like how you would want to be treated, which requires all that additional level of empathy and insight into who are they? What are their strengths? What are their sensibilities? What do they respond to?

[00:09:22] And once you unlock that, everything becomes a lot easier. I mean it’s not even once you unlock that because you’ll never truly unlock that, but at least if you’re trying, you’re making an effort to kind of understand who the recipient is.

Claire: [00:09:35] Yeah, absolutely.

David: [00:09:37] Which… it’s funny because I frequently have just internal tension with that. Like, in my writing, some writers saying like, oh, think about your reader and like what would they… I never do that. The only way I can write in a productive manner is to think about myself on the other side of that, what would I want to read?

Claire: [00:09:52] Write for yourself.

David: [00:09:54] And again that just tops out at some level and I’m sure that’s restrictive in some levels and there are ways, perhaps, some of the messages that we have could reach broader if we were better and more capable of writing for other people, not just for ourselves. I accept that limitation in my writing. I try not to accept that limitation in leadership and management.

Claire: [00:10:13] Sure. Well and that’s… that was literally like the next question I wanted to ask when you brought this topic up. Because I completely agree that I think as a leader there’s almost sometimes this fine line between wanting to push the company forward and lead your team and inspire folks in a way where it’s, you know, catering very much to the individual tastes and preferences of every employee. But is there a line to where you shouldn’t do that or can’t do that or in a case of you can’t make everyone in the company happy, right? Or you can’t fulfill every person’s and, sort of, present something in a way where every person who, whether they’re more thorough or they have a greater sense of urgency, are going to feel good. Like how do you straddle that line?

David: [00:10:58] Yeah, I think it’s one of the things like, uh, the math between two points is relatively simple and then you add a third or fourth point and it’s completely ugly un-understandable. And I try not to, like, I haven’t even, I’ve not even solved the point-to-point part of the puzzle yet, so I don’t try to necessarily solve the 34-point part of the puzzle. So I mostly use this technique when I’m dealing with people in one-on-ones or in direct approach to like developing people. When it comes to sort of broader initiatives on the company level, what we’re doing or whatever. It’s there but not as prominent because then Jason and I have a tendency that we fall back to like, all right, well there’s two people on these there. There’s Jason, there’s me, and we have different sensibilities, even though there’s some overlap.

[00:11:43] If between the two of us we can just sort of have a general understanding and have somewhat of an idea of how would this otherwise be perceived. That’s kind of the that we’re at, which is why this is constantly [inaudible] like a curve. And I think that is also one of those things where it helps to have a somewhat stable company. A lot of the people at Basecamp, we’ve been working with for many, many years. We have several people who’ve worked here for more than decade. We have tons of people who worked here for five years or more. And you get to, you have a better shot at understanding people’s preferences and strengths and reactions. Sort of anticipate their reactions, once you’ve worked with them for a longer period of time. And I think that’s one of the ways that having a stable workforce really works in your favor.

[00:12:29] And it’s one of those things, though, on the other hand that can throw you off when you then have someone new join the company. And you don’t fully understand what they respond well to. It’s pretty easy to misstep.

Claire: [00:12:39] Right.

David: [00:12:40] And that’s to some extent just what it is. Like the way you learn about another person is that you misstep and you sort of gauge reactions and you see how well the approach you thought was working doesn’t. And then you calibrate, and then you try again. But at least just being aware of that is a big step forward.

Claire: [00:12:58] Absolutely. So, as you try to keep this in mind and like you were saying, you clear this first bar of okay, I think I’m treating people how I would like to be treated. And then you approach that second bar. Okay, well how would they like to be treated. How do you, in your head, or in one-on-one interactions or as you and Jason think about how you also present information to the company. I mean, right now you’ve got the all company meet-up going on right now. How do you try to bake that into how you operate as a leader day to day?

David: [00:13:25] I find it hard to do too explicitly on a conscious level. That this calibration becomes sort of part of the gut reaction system. And I think, though, we’ve gotten better at that in the sense of, let’s say there’s some announcement we want to make to the company that first we read it for ourselves and clear that first bar of would I like to be spoken to in this manner. And then, like, okay, cool. Hey, let’s think about all the ways this could be interpreted different ways. Like people sometimes call it the devil’s advocate or whatever. I just try to misinterpret anything that we try to put out there and schemes that we put in place. So for example, one of the more, the bigger changes we made on the personnel side of things were a couple of years ago when we went to a new salary pay system.

[00:14:07] We used to have, or what a lot of companies do, is very individualized. Everyone negotiated, somewhat, their own salary and no two people in the company had the same salary. And we just found for us that that was not working well. And I felt like it wasn’t, I wasn’t treating the company in the way I would want to be treated because I said it felt like just a deep sense of unfairness about that. That, like, people joined at different times. They ended up with different salaries even though those different salaries didn’t always match their differences in skill or experiences. And I just felt like, hey, I thought through it and said, like so, if payroll was public, would I be embarrassed about that? And in a few instances we ended up feeling yes we would. And then we went through this whole process of thinking like, okay, what are we going to do about that? First thing was like, what is the market actually? We often say like, oh yeah, I think we’re paying at market, but we didn’t know.

[00:14:57] We just had this anecdotal information about like, someone said, like this person over at this company is being paid so much. This is not a very rigorous way of dealing with something so important as pay. So we went, well let’s hire a company. And we ended up using Radford, which is a service that surveys a bunch of different technology companies. And just thinking through the whole process of what do we want to pay people. We hadn’t even thought that. I mean it just sort of happened.

[00:15:24] And we went a lot more rigorous about it, which then meant that at some point we had to communicate that like, hey, we’re switching from a system… This ad hoc system that’s not very rigorous and may well be and was unfair in some instances and we’re switching to this new system where everyone is going to be paid the same if they have the same level of experience and skills and working at the same position.

[00:15:45] That’s a pretty big change.

Claire: [00:15:46] I mean, that’s sensitive.

David: [00:15:48] And it’s very sensitive, right?

Claire: [00:15:49] It’s sensitive. It’s about money.

David: [00:15:50] It’s… Thankfully in our instance we sort of had a way of doing it where like it wasn’t like… we didn’t have to decrease anyone’s pay. The only sort of factual change was that a bunch of people got a big raise.

Claire: [00:16:03] Nice.

David: [00:16:03] That’s what you say, right? Nice.That sounds nice. But there’s all sorts of things that are actually not so nice about it. One of the case studies we looked at was there was this guy in, I think, Seattle or something running a payment processing company who said like, we’re going to pay everyone $70,000. Like, that’s going to be the floor. He had read something about like, oh, at $70,000, money stopped being—like, happiness doesn’t increase.

Claire: [00:16:25] That’s the sort of the threshold.

David: [00:16:26] That’s sort of the threshold, so he wanted to pay everyone $70,000. Which, you’re goinig like—and he got an incredible amount of positive feedback. And some negative feedback from the outside.

[00:16:36] But, you’d think like within that company, isn’t that only a good?

Claire: [00:16:40] That’s what I’d think.

David: [00:16:40] And it turned out it wasn’t necessarily because there was, there was not just… what the floor meant was there was a bunch of people who are, I don’t know, making $30,000, $40,000, going, big raise! And there were people making $105,000 who got no raise, and they got to see all these people. They fell for whatever reason like that there… before there was a split. Maybe they felt like they were being paid $105,000 because they had a law degree or they have long experiences or something else that, that there was a relative fix between positions that felt reasonable and all of a sudden that relative fixed got erased, right?

[00:17:12] And a bunch of people apparently ended up leaving because they were not happy with that at all. And you do go like, holy shit, that’s fascinating.

Claire: [00:17:22] Yeah, I’m like, that’s fascinating.

David: [00:17:22] You’re doing a supposedly just universally good thing by raising the floor, but it has all these secondary effects. So, that story definitely left a mark. Not In the particular, it’s just in the fact that like clearly the guy who was CEO and wanting to raise everyone’s salary did not anticipate that.

Claire: [00:17:37] No, he had the best of intention, right?

David: [00:17:40] Yes. And, I think that’s really where this is important. Because I think most business leaders would think in most cases that they have the best intentions. You know what? Best intentions is just not good enough. Best intentions. Everyone says they have the best intentions. Best intentions is bullshit. What matters is outcomes, right? And whether you’re taking actual steps to anticipate those outcomes and mitigate those outcomes the best you can and just think through that whole thing, right?

[00:18:06] So when we went through this pay adjustment process, that was one of the big things like, okay, we’re going to… There were some people who got some very large raises and I felt like that’s great. Like we were clearly not, we wanted to set a target that we want to pay everyone at the top 5% or the 95th percentile of the industry based on Chicago or better rates. And just in some cases it’s like we were just off on that, right?

[00:18:32] So, we were catching up, but still. So these were some of the things we thought through and then we thought through like all the ways we wrote up the announcement and then we kind of just tried to poke holes in it. From like, oh wait, if I’m a person like this, who was sitting in this position where for example, I do not get a raise. Am I going to read this and go like, what is gyp? Like everyone else fucking got a sack of money and I didn’t get anything.

[00:18:55] So that’s one of those strategies we try to use to, to get broad perspectives. And again, you said like we’re role playing, so it’s a pretty inaccurate science, right? Like there’s so many.

Claire: [00:19:05] Of course. It’s not science.

David: [00:19:05] There’s a bunch of things… actually it’s not science. There’s a bunch of things through the reactions to all sorts of things where we went afterwards like, oh holy shit, I totally couldn’t. I don’t have a vivid enough imagination to imagine other people sufficiently different from me. And their reaction is different for me. But in almost all cases you can still back trace and then go like, all right, I actually understand where that’s coming from.

Claire: [00:19:27] Right. I think that is such an incredible insight and it’s such, I mean, personally I find that such an important reminder that yeah, you’re, your best intentions are not good enough. As an employer, as a leader, it’s not. It’s what you do, right?

David: [00:19:39] And it is what goes into that consideration. Most people’s best intentions just go from there. Like little heads spinning, right? Like maybe they clear the bar of how they want to be treated in stuff. I think oftentimes they don’t think clearly, some romanticized version of what they would have done themselves in that situation, which is just a pretty poor gauge of whether this is good or not good. Then your gauge is what is the reaction.

Claire: [00:20:02] Exactly. Yeah. The gauge is what is the reaction. Well, I’ll be definitely keeping that in mind. David. Thanks so much for your time. I know everyone who is watching this appreciates it. Cool, thanks so much.

David: [00:20:11] Yes, thanks for having me. It was fun. Excellent. Thanks.

[00:20:13] Heartbeat Podcast theme music plays.

Wailin: [00:20:16] If you liked what you heard, you can check out more of Claire’s podcast, The Heartbeat at KnowYourTeam.com/blog/podcast. You can also find The Heartbeat on your favorite podcast app.