# Basecamp's Profit-Sharing Model - **Episode:** [170](https://agents.truthliesandwork.com/episodes/170.md) (2025-02-11) - **Type:** news-roundup - **Tags:** basecamp, profit-sharing, business-model - **Time:** 5:39–11:03 (start 339s) - **Listen:** [https://truthliesandwork.com/170?t=339](https://truthliesandwork.com/170?t=339) --- [5:39] Al Elliott: As you know, I occasionally go on X or Twitter or Twix, as I call it, Um, and, uh, there's one of the guys I follow on there called Jason Fried. Um, he's the guy who runs Basecamp, formerly 37signals. Um, and he's just got so much, so many good things to say, and I really like the guy. He just seems like a really decent guy. His co-founder, David Heinemann Hansson, a bit more opinionated, perhaps, perhaps can be a bit more polarizing, but Jason just seems to be like, yeah, cool, everything's cool, and he does really cool things. Now, as I explained, Basecamp used to be called 37signals. They also created a couple of amazing books like Remote, which is, I think it's called The Remote: Office Not Required, way back in January 2013. So they were so ahead of the curve. And Rework, another great book. I can't remember if it came before or after, but both of them basically essential reading for anyone who wants to build a different kind of organization like 37signals is. So talking of doing things differently, both of them— this is David Heinemann Hansen, one founder, and Jason Fried, the other founder— they don't offer equity to employees and never have. Now, just for context, They used to be around about 35 employees. Now they, they're about 70, I think, 7-0. So, um, they're, they're like, you know, not a huge company, but they're a significant company. They've been going for about 25 years. They do many millions in revenue and many millions in profit. So instead of offering equity, they offer cold hard cash. And this week Jason opened up on X on how the profit sharing actually works. The link is in the show notes as always. What I love about this is it's proper money, not like Silicon Valley fairy dust they call equity that may never actually materialize. Remember WeWork? There were lots of people who worked there who got plenty of equity on paper, had made, you know, loads of money, but actually got sweet fa. This is real money and they share it with their team and they've been doing it for about 25 years. Here's the bit that made me sit up and notice. This year they gave 6-figure profit shares to 20 employees. That's not 20 employees sharing a 6-figure. That is each of the 20 employees getting 6 figures as a bonus. That's over a third of their staff. And we're not just talking about the techies here. This includes, 'cause Basecamp, just in case you don't know, Basecamp is a SaaS, a software as a service. It's project management and it is all online. This actually includes customer service, HR, everyone who's across the entire organization. Even the newer staff got 4 or 5-figure sums when, when they worked out the profit share. But here's what I really love about this. It's not some sort of maybe one day when we IPO promise. It's not shares that might be worth something if Elon Musk decides to buy Basecamp, which by the way, he never could because Basecamp have always said we want to stay private and never will sell. It's actual cash that people can spend on actual things like houses, holidays, or whatever people want to buy with a 6-figure bonus. Basecamp this year has added— well, last year has had an amazing year. Revenue is up. Costs are down thanks to D-A-H-H-S— sorry, DHH, David Heinemann Hansen. I should have just said David Heinemann Hansen, it's easy for me to say. Because he's managed to reduce the server cost significantly. If you're a nerd, go and surf him and you'll see like he's talking about bare metal stuff. So, but instead of stuffing it all in the bank or splashing out on a fancy office with a ball pit, they're actually giving it back to the people who made it happen. Oh, and the bonus, this is the clever bit. The bonus is based on the tenure of the employee. So someone who's been there for longer gets more regardless of their seniority or their job title, meaning that someone in support, for example, could get a bigger bonus than someone who's a manager of the tech department who actually maybe arguably might have more impact on the actual production, but, and has been there longer, but obviously it's based on tenure. I think it's a great way to reward employees. Well, Leah, here's a question for you. Do you think that a bonus is better than equity? Is there some kind of like psychological thing behind it? [9:30] Leanne Elliott: It's a tricky one really, because it all comes down to the intrinsic motivation of the individual, and some will be more motivated by ownership and others by financial gain. I'd imagine the key is going to be consultation. It's going to be transparency around the process, and it's going to be following through on what you— doing what you say you're going to do. So making sure that that psychological contract doesn't get broken. We've all been in situations where we've been promised once you hit this, you'll get X amount of money and it doesn't happen. So I think the key is really, regardless of whatever way you do it, is making sure you follow through. But I think given the times, given the current climate, cost of living crisis, all the uncertainty, I'd imagine that majority of people would be much more motivated by having that financial, um, that financial reward, that money back in their pockets sooner rather than later [10:18] Al Elliott: That makes perfect sense. So if you are— if you're interested in this kind of thing, then We'll put a link in the show notes, but there was a guy we interviewed maybe about November time, um, who's such an interesting guy. Jeff Roberts, his name was, and he basically does the same thing. You can go in there and you can tweak whether you get more money, get more equity, et cetera, et cetera. Another really innovative way of putting things together. So, um, we'll put a link in the show notes, but definitely go and check that out if you're interested in, um, in that kind of thing. Oh, just a quick note. Also go back to Sir Cary Cooper. Um, Sir Cary Cooper, sorry. Sorry, Sir Cooper. Um, if you— I think he talked about incentives and how he was brought in to work out an incentive scheme, and actually it turned out that nobody actually wanted it. Like Leanne says, it's all about consultation and finding what people actually want. Anyway, talking of Leanne, Lee, anything else you've seen this week?