Trouble at Basecamp

A cautionary leadership tale

“In leading, one has to communicate with subtlety, taking into account the particularities of the constituents, their networks of support, and the harshness of the news.” — Ronald Heifetz

“When you treat people like children, you get children’s work.”― Jason Fried


Recently, the leaders of Basecamp tried to quash societal and political discussions at their workplace. Their manner was so inflammatory that it resulted in 30% of the workforce promptly resigning, including several heads of departments and longstanding employees. Organisational Psychologist, Bob Sutton, who has studied organisational behaviour for decades, was moved to tweet:

Yikes..I have never seen the "psychological contract" between employees and a company unravel so fast in my life. Nor have I ever seen a company go from being cool and admired, to stained and stigmatized, so fast. A cautionary tale.

The debacle provides a valuable case study.

Background

Basecamp is (was) a tech industry darling. With a small tight-knit team of 57 (before the mass exodus) they compete against giants like Asana in the project collaboration space. Basecamp’s CEO Jason Fried and co-founder David Heinemeier Hansson are highly outspoken and command a massive following on social media. Ironically, they have written several books on work culture, including ReWork: Change the Way You Work Forever, a New York Times bestseller.

Like many organisations, Basecamp sought to improve diversity, equity and inclusion (DEI) in the workplace. Employees self-organised a committee to discuss DEI issues and work towards improvements. About a third of Basecamp’s employees joined it.

During discussions, an old scandal was exhumed. Around 2009, some employees had created a list of funny customer names. The list had been removed long ago but the topic was revisited for reflection and learning.

Hansson entered the discussion and took an adversarial position to one of the points. This was fine as his position just provoked deeper debate. But then he resorted to a tactic that many found highly distasteful. According to reports, he dug through old chat logs to find a time when a certain employee participated in a discussion about a customer with a funny-sounding name. Hansson then posted the old message to a company-wide message board as a way of dismissing the employee’s argument. His public chastisement of the employee was so upsetting that two other employees lodged official complaints.

Two weeks later, on April 26, 2021, Fried published his now infamous memo entitled Changes at Basecamp. It announced several policy changes about political discussions, employee benefits, decision making, committees, and reviews. Its language was highly authoritarian: “No more societal and political discussions on our company Basecamp account”, “No more committees”, “No more lingering or dwelling on past decisions”, “No forgetting what we do here”, etcetera.

Appended to this memo was another from Hansson entitled Basecamp's new etiquette regarding societal politics at work, which ranted further about abolishing political discussion.

The employees were apoplectic. They did not want to be silenced. As one put it:

“We’ve hired opinionated people, we’ve created opinionated software, and now basically the company has said, ‘well, your opinions don’t really matter — unless it’s directly related to business’, a lot of people are gonna have a tough time living with that.”1

Destruction of the holding environment

From a leadership perspective, what Fried and Hansson did was destroy the ‘holding environment’.

A ‘holding environment’ refers to a supportive environment that a psychotherapist creates for a client. The concept was introduced by Donald Winnicott. It is similar to the highly focussed attention and concern that parents demonstrate during a child’s development, helping them through the various challenges and stresses of growing up.

Ronald Heifetz recruited the term for leadership and defined it as: any relationship in which one party has the power to hold the attention of another party and facilitate adaptive work.2

When we listen to a friend’s painful story with empathy, we create a holding environment. When we encourage team members to speak up with safety, we create a holding environment. By containing and regulating stresses within a holding environment we allow learning (adaptive work) to occur.

The art of maintaining a healthy holding environment is about regulating social tension. Too little stress, and complacency sets in. Too much, and the situation becomes volatile.

In Basecamp’s case, there was no danger of complacency. The employees were engaging in healthy, if somewhat painful, dialogue. The leader’s job was simply to contain it, to let it run its course. If things got too hot, they could try to cool it down by directing employee’s attention to higher principles, saying something like “let’s remember to be civil”, for example.

But that’s the opposite of what they did. By publicly shaming an employee, Hansson inflamed tensions. Then, instead of trying to repair the damage, the two leaders went about destroying the holding environment by banning societal and political discussions from company servers, disbanding the DEI committee, and railing against all such discussions:

It's become too much. It's a major distraction. It saps our energy, and redirects our dialog towards dark places. It's not healthy, it hasn't served us well. — Fried

We also like to tell ourselves that having these discussions with the whole company is "healthy". I used to think that too, but I no longer do. I think it's become ever more stressful, unnerving, and counterproductive. — Hansson

They effectively tried to eliminate dialogue.

Abandonment

Abrupt psychotherapy terminations can cause horrific trauma in patients due to a shattered sense of safety. All sorts of childhood developmental problems arise from parental abandonment. When holding environments collapse, it is usually messy.

It is no surprise that Basecamp’s employees felt rejected and abandoned. Trust and respect for the two leaders evaporated once the holding environment was gone. As one employee reported:

“It was actually a positive thing we were doing, we had identified the problem, how it happened, and vowed not to do it again. It was a company doing exactly what it should do. The founders refused to lead, and so the company was doing it itself … they don't want to deal with people, which is something you have to do as a manager … Jason and David just threw us away.”

Fried’s and Hansson’s actions provide a clear cautionary tale: fail to maintain healthy holding environments at your peril.

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For more on Adaptive Leadership, see:

Leadership Without Easy Answers, by Ronald A. Heifetz

The Practice of Adaptive Leadership: Tools and Tactics for Changing Your Organization and the World by Ronald A. Heifetz, Alexander Grashow, Marty Linsky

Leadership on the Line: Staying Alive Through the Dangers of Leading by Ronald A. Heifetz, Martin Linsky

For more about the Basecamp debacle, see

Breaking Camp, by Casey Newton

Basecamp implodes as employees flee company, including senior staff ,by Kim Lyons

How Basecamp Blew Up, by Casey Newton

No Opting Out — the realities of politics in the workplace, podcast by Bruce Daisley

Image Credits

Snow via Simon

1

See Breaking Camp by Casey Newton

2

Heifetz, Ronald A. 1994. Leadership without easy answers. Cambridge, Mass: Belknap Press of Harvard University Press. p 104