At ~54 employees according to google search, they're lean, profitable, sustainable and the employees make a good living according to their abilities. They're in control of their growth and aren't beholden to filthy rich investors forcing them to grow like a cancer.
I wish more software companies were like Basecamp.
There are a lot of software companies that are mittelstand-ish. Honestly, the concept could probably do a lot of good for the us economy; especially its emphasis that not every business needs to be a unicorn
This new floor also means that the entire salary range at Basecamp is now around 5x.
So the highest paid employee at Basecamp is earning around $350k. I've seen several estimates that Basecamp's revenue is north of $100M, so even if every employee were paid $350k, their wage bill would be incredibly low compared to their revenues.
Forbes asks the company, and they guess if the company doesn't share. If the company does share, the numbers are not AFAIK audited. (This is to say that I would not expect the Forbes data to be especially accurate.)
Basecamp is claiming 200k more accounts since 2018. At 100% retention, that's $20mm per month of new revenue. Factor in whatever churn you want, a $25mm annual revenue estimate for Basecamp 2017 sounds ridiculously low. (They are claiming 700k new accounts between 2016 & 2018.)
Right, take the $20mm/mo in gross new business & apply your favorite convert rate to that. Then, apply your favorite churn rate to the existing business.
You have to pick really pessimistic numbers to get from 2.8mm signups of a $99/mo service to arrive at a $25mm annual revenue number. Specifically: ~.75% of their total claimed signups since 2004. Or ~2.5% of their claimed signups since 2016.
(Put another way: if they converted 10% of their signups since 2016, that's > $100mm run rate before accounting for churn.)
Basically, to assume they are doing only $25mm annually you have to assume either (as the parallel comment does) they are publicly lying about their number of signups or that they have pretty poor conversion/retention numbers. My guess is option #3: they are doing much more than $25mm annually.
I've also seen that figure thrown around quite a bit and I'm a bit skeptical. It also makes the question of profit redistribution particularly interesting given the tone DHH employs everywhere.
Are you implying that they should be paying much more just because the company can afford to? This doesn't seem like good business sense, especially when they're already paying above market rate (and based on the highest market rate in the world, at that).
My thoughts are that people like Sam and Jeremy have years of open source contributions to Rails that which make their way into Basecamp, are world class programmers and would easily be 500k+ engineers at a FANG company. And they should pay them as such.
At the end of the article, he says: Just remember to go at your speed. Basecamp wasn’t paying these top end salaries when we started. Or even after we’d been around for five years. We do it because it’s possible now. Not because we’re putting ourselves in a bind trying to keep up with Mr Venture and Mrs Capital.
The vast majority of those comp packages are due to stock appreciation, and in the cases where they are not, it's due to competition between FAANG companies - all of which require you to relocate to a super high COL area and go into an office and deal with a questionable corporate environment.
None of this applies to Basecamp, and as much as I'm a fan of Rails I've spent a lot of time in that source and am not of the mind that a top Rails hacker is doing work nearly as difficult as the more sr. staff at a FAANG.
That's a strange comparison to make, though - wage is determined by labour market and is unrelated with company's profitability. I worked at many companies that didn't have any profit (and some never made it), but I still got my market-level wages. It works both ways.
I'd expect the top decile number to be heavily driven by public companies, though. Especially with the recent IPOs, you're now looking at Google, Apple, Facebook, Lyft, Uber, etc all of which pay a huge portion of their comp in stock.
They're not worthless in the sense that employees put value on them and take less salary as a result. Or in other words, they could get a higher salary (+guaranteed RSU) from a larger company but chose not to.
So from an employee point of view not having them counted is disingenuous.
I’d be curious to know what portion of their employee base is Benefitting from this “minimum wage” - a couple of admins? I’d imagine all of the front office jobs and most of the back office jobs at an SF software company would command wages in excess of 70k?
The article makes mention of this, specifically customer support people are benefiting from this, which according to the article would have a 50k/year salary otherwise.
i think they said none of their employees live in SF and lots are remote. At least half are spread out across the globe. So $70k probably goes a long way in small towns.
My question is the PORTION who are benefitting - is this 2 employees? 20? If it’s 20 this is a serious commitment, if it’s 2 it’s more of a PR stunt...
Richard Wolff would be proud. A company that actually values all its employees. However, he would advocate the company to be OWNED by its employees, in which case this would be a likely outcome already, not surprising. It's only surprising under capitalism.
The post does say that this is the minimum regardless of position, not just developer salary. Of course the cleaners could be (and more often than not are) outside contractors.
Step 1) outsource low paying positions to temp/service companies. Step 2) pay all employees at least $70k.
This is a tough problem to solve but nice they are trying. Paying a receptionist or cleaning person $70k doesn’t make much sense because it’s way above market rate. But outsourcing to a company paying $11/hour doesn’t fit into the “everybody makes a good amount” message.
I would think that most small companies don’t own their own office and are renting space in a building where the building owners contract out cleaning for all of the tenants.
While it is probably nigh impossible to find a facilities company that would pay the staff that much, I don't think simply saying it's another company and therefore out of their hands is a valid argument. You could've said the same about Nike in relation to the factories that used to supply them and use child labour.
I think people are paid based on supply and demand. I don’t think it’s accurate to say this is the person’s worth as it’s easily confused with other factors.
I upvoted you because I think your link was actually interesting, but I suspect that if you use bit.ly links all the time, I think you're more likely to be voted down by others as people like to see where they're headed to when they see links in HN comments :-)
Knowing a bit about how Basecamp works after reading all of Jason Fried and DHH's books and blog, I can't really see how there could be a gender gap over there. No one has to negotiate. The salary for a role is dictated by the market average for that role rather than the person doing it. No one has to negotiate a raise. Everyone gets the same raise to keep inline with the Bay Area market rate. Given those two things it'd be very hard to pay one person less than another if they're doing the same job regardless of any demographic differences between them.
Basing the salary on the role rather than person doing it seems like a really good idea to me.
It could create a black market where people underperform after seeing their peers underperform(wether on purpose or not). Different people have different performances when they perform the same trade...
Actually it’s extremely common but better known as performance related pay. This is framed as paying staff a bonus based on how well they have contributed but is often used to distribute the same pool of money, avoiding giving staff salary increases and effectively giving poor performers a pay cut.
It could, but I'm sure they still have performance reviews. They might get paid the same regardless of effort, but at review time they might also get fired for not putting in enough effort.
What I have found is that top talent will leave due to the lack of a pay differential between average and high performing talent. We all want our work to be recognized and paying everyone the same is a great way to get rid of the ambitious. If they pay in the top say 5% nationally that's less of a problem but if you are paying whatever glass door says the average is expect churn among high performers as they move to where that behavior is actively rewarded. Similarly such a policy probably encourages low performers to apply. This strikes me a managerial laziness, they aren't going to bother to put the effort in to decide who on their team should be rewarded.
It also avoids hard conversations. Now they do not have to tell Joe that he makes less than Suzy because Suzy is a better performer.
But, maybe that's a good thing. Since we all lie to ourselves and think we are better than we are, Joe probably thinks he's killing it. And, since many people lose whatever maturity they have when talking about their performance vs. someone else particularly when there is money involved, that whole conversation can be skipped.
The problem as you say though is what happens to Suzy. She will not be happy making the same as Joe since she will also think (and be correct) that she is a better performer. So either they only hire the same level performers (which is possible in a small company), or they start inventing job title/levels.
At the end, it's trading one set of problems for another. I applaud them for trying out new ways to structure company wide compensation though.
What I have found is that top talent will leave due to the lack of a pay differential between average and high performing talent.
I'm going to start coming across as a weird Basecamp fanboy/stalker soon, but on this particular point people don't seem to ever leave Basecamp. It's very rare for they to be hiring, which wouldn't be the case if they had a high level of staff turnover. What you've found is not applicable to them for some reason.
A kind of pay gap can still sneak in by having roles that are typically favoured by women being less well paid. Also via women being penalised for taking time off to have children (in the US, probably quite a significant thing given the paucity of holidays). And another pay gap that's still quite insidious is when women are passed over for promotion to the next level that has a higher pay grade.
This is not quite as bad as two people doing the exact same job being paid differently, but it can still lead to a pay gap, and some of those factors are worth being conscious of and addressing.
I'm a startup founder and I'd like to understand this:
Let's say we have a pay scale that pays you ~15% raise yoy + years of experience.
We have 2 people for this example - one male and one female.
Both join in at 5 yrs of experience and make 100k (example numbers) as intermediate engineers.
A year later both are making 115k.
Now the female engineer goes on maternity leave for 16 months - she get paid at the rate of 115k/yr for that period.
The male on the other hand - makes a little over 130k. On top of that he's at 7 years of experience so he's now a senior engineer - that promotion beings his salary to 150k.
The female engineer is at 115k with 6 yrs of real experience while her colleague is making 150k.
On the face this looks super unfair, but is it really?
She's getting paid based on years of working experience and those 16 months can't count towards it of course
If the job hasn't changed and each of the two people can still do what's required of them equally well, why should one earn less than the other? The man shouldn't be earning more because he's got more years at the job. He should have been promoted in to a higher paying and more responsible role. That's what experience should count towards. If he hasn't been promoted and he's still doing the same work then there's no reason for him to be earning more than the woman.
People should be paid for doing a particular job, not for being more experienced, or older, or 'better'. Promote the people who are better and more experienced.
This is the beauty of the Basecamp pay model. What the job pays increases even when someone isn't doing it, so when they come back to work they'll be on the higher salary because the market values that job more.
"She's getting paid based on years of working experience and those 16 months can't count towards it of course."
This is basically an arbitrary choice, you're still paying their salary so why not continue everything else? Similarly a male engineer might want to take 16 months paternity leave.
Allowing 16 month long full-paid leave for new parents would be an amazing policy though. This also seems like an issue with this example as IME there are very, very few companies this generous.
Well you don't have to, it's a perk just as you don't have to pay their salary. Which is why the distinction is pretty arbitrary. And experience isn't the only reason to keep up pay level for example you want to remain competitive with the local market and inflation. Presumably you also value this engineer and want them to come back to the company rather than find a new one with better pay if they feel they are falling behind whilst on leave.
You could also make an argument about the gain in experience due to motherhood and being able to take an extended break from work. I believe I'm a stronger developer for having two children for example.
I didn't recheck your calculation (assuming it's correct).
The problem often arises because it makes more sense for the mother of a baby to take a longer leave than the father (e.g. breast feeding).
Therefore, that time shouldn't count as missed work experience (although it factually is).
One can discuss if 16 months is the right time frame (or maybe say for 6 months it doesn't count as missed work experience, anything above that does). That's a different discussion.
As the father of 5 I can say that many things would have been easier if I had been able to take a long paternity leave when the kids were born. The first year is an exhausting one and having two of you around to share the work and be moral support would have made it all much easier.
It would be better in all kinds of ways, more equitable, better for the mother and child, better for the company, if the father got just as much time off as the mother.
> that time shouldn't count as missed work experience
Assuming (big assumption) that they started at exactly equal skill, and learn at the same pace...well, practice makes perfect. One will be better than the other.
Ive taken sabbaticals in the past, and it sure as hell affected by skills vs someone who didn't.
I don't think we should compare voluntary time off to raising a family. I don't have kids, and I know it's voluntary to have kids, so one could make the argument we should equate both.
But the reality is that when raising a family almost always the female takes more time off work than the male. So, governments and companies should incentivize that both take equal time off and that it has the same effect on their respective future careers.
It definitely is not equal. Having a kid likely means much less time for side projects and continuous learning and has a huge impact on sleep quality. It will most definitely have a negative impact on skill and productivity unless one makes up for it with more grit and harder work.
Totally agree that the only viable solution is for men and women to share the burden more equally and that starts with near equal leave, as you said.
Won't change the advantage that people with no kids will have, but they are giving up on "the most wonderful thing in the world" to get it, after all.
Raises, vacations (when I was at companies that gave them based on tenure), promotion considerations, you name it.
I recovered a bit since I was working on side projects during sabbatical and could talk for them in interviews, so switching companies helped a tad (though finding someone who would hire someone with a big hole on their resume wasn't easy).
There's also just stuff that you only learn on the job and can improve on indefinitely, like managing people, projects, etc that obviously was behind by the amount of time I was off work and meant I wasn't up to snuff for some opportunities.
I have worked with people who have as many years of experience as me but are at a very different seniority level, for example by learning less (or more) in their prior jobs than I did.
If you were to hire them and me for a role where that difference is relevant (as it often is), we shouldn't be in the same seniority of job and shouldn't receive the same salary.
Yeah, even in that model, number of years of experience correlates only loosely with performance and with seniority in how someone thinks, communicates, leads, and produces.
Are you advocating ignoring those factors in how to compensate or internally promote, considering them only in the decisions of whether to hire into / fire from a given role?
If so that's not very common in the software industry and didn't seem to be what you were saying (I might have misunderstood).
I did once work at a startup with formula-based comp. However the "level" they used in that formula was intended to consider all of the above factors and was not a strict mapping to length of career.
This is exactly the reason why there's talk of making paternity leave for fathers as long and mandatory as maternity leave. It has the added advantage of getting young fathers more involved with their kids, as well as being there for the mother after she's delivered a baby.
The downside is of course that mandatory leave sounds weird.
I'm not aware of any company or country that makes even maternity leave mandatory for the worker. And in every case where the kid isn't born directly from the mother's body, such as via surrogacy arrangements or via adoption, there's no inherent reason why one parent is biologically more likely to need time to recover than the other.
That said, it's absolutely a good thing to offer good paternity leave and encourage fathers to share the burden.
Social structures can help make this more possible than a small startup could otherwise afford.
For example, in Quebec where I currently live, there's a provincially run parental insurance plan which funds a benefit of partially paid parental leave by a payroll deduction, which employers sometimes augment further but the provincial part still goes a long way.
It's mandatory for employers and self-employed people to fund the system; use of benefits, and the choice between different benefit packages, is at the option of the new-parent worker.
Then i don't think there is a problem with your logic - at the end of the day i think the question is: are you treating people fairly? and if you can honestly say that [gender] is not playing a role in compensation then you are fine.
Basecamp's maternity/paternity policy is "Paid Parental Leave: When you welcome a new baby, Basecamp encourages you to take up to 16 weeks maternity leave and up to 6 weeks paternity leave, at 100% paid salary. Single fathers, or primary care givers, can also take up to 16 weeks." (correct as of 2016)
As I understand it that's amazing compared to most American companies. It's roughly equivalent to what you get in progressive European countries.
It's comparable to mainland Europe, and better than some: in Netherland, I believe paternity leave has just been expanded from 2 days to 2 weeks. 6 weeks is significantly better, but probably falls short of what Scandinavian parents get.
While I share most of DHH positions, I still dislike him/his tonality/too dogmatic view/his lame way of doing content marketing--which is the only thing he seems to be doing nowadays.
It is click-baity and doesn't add anything substantial or new to the discussion.
To me this sounds like a pointless article.
If you have a high margin/high profit company with minimum employees you can pay whatever money you want to pay.
Is DHH just saying they could pay less to earn more and they are just generous ?
Minimum wage especially with distributed teams is really a pointless metric.
The same way Google can pay top dollar and above average for all employees is not the same for most of the companies.
I am not saying the companies struggle.. I am saying companies are competitive entities fighting against other competitive entities like google.
Google extracts the vast majority of the wealth from the world that could have gone to small / medium sized businesses and so does any other highly profitable company.
At ~54 employees according to google search, they're lean, profitable, sustainable and the employees make a good living according to their abilities. They're in control of their growth and aren't beholden to filthy rich investors forcing them to grow like a cancer.
I wish more software companies were like Basecamp.