Why Long Hours and an Obsession With Efficiency Might Be Hurting Your Business

What if working long hours, living on Slack, and growing as fast as possible isn't the best way to run a business? The founders of Basecamp are pretty sure they have the answer.
Why Long Hours and an Obsession With Efficiency Might Be Hurting Your Business
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12 min read

This story appears in the June 2019 issue of Entrepreneur. Subscribe »

On March 7 at 4:30 a.m. Greenwich mean time, a tech company’s worst nightmare began. For eight and a half hours, a catastrophic network failure disabled Basecamp’s popular project management software. Instead of boosting productivity for its three million accounts around the world, Basecamp stopped people from getting their work done. “We’re incredibly sorry…especially for our European customers,” wrote cofounder and CTO David Heinemeier Hansson on the company blog. He explained that the problem originated with their cloud provider, took full responsibility, and promised they would work diligently to make sure it never happened again.  

Related: My Career in Silicon Valley Taught Me the Futility of 80-Hour Work Weeks

But it did -- just six days later. This time, Heinemeier Hansson couldn’t apologize enough. “I’m sorry. I’m really sorry (and ashamed),” he told customers. “It’s also been a mighty fall…From riches of reliance to rags of shambles. To say this is humbling is an epic understatement.”

Such a fiasco would cause a crisis in most companies. But for Basecamp, it actually proved a point. Internally, there was no freaking out, no worry about losing jobs. Everybody just hunkered down and focused on fixing the problem; if anyone worked overtime, they came in late the next day, no sleep lost and no questions asked. Heinemeier Hansson and his cofounder, Jason Fried, are two of the loudest critics of the modern Silicon Valley–fueled workaholic insanity, and to that end have purposefully curated a culture of calm in their company. They wrote the book on the subject. Several, in fact. And they’ve done it all exactly for moments like this.

Have we reached the point where a job offered with 9-to-5 sanity is a company perk? Has round-the-clock work culture become that pervasive? 

If you look at people in jobs across the country, which the Bureau of Labor Statistics does, the 40-hour workweek is officially dead. The average full-time employee now puts in nine hours a day. In addition, the typical worker takes only about half of their paid vacation, according to 2017 data collected by Glassdoor. (And when they do take vacation, two-thirds end up working during that time.) What’s causing this? Many people blame communication tools. Email already enabled colleagues to dash off messages late into the night, but Slack and other chat tools amped it up -- creating, it is often said, a culture of instantaneous response, where employees are on alert 24-7 for any ping, ding, buzz, or ring. “They’re leaving the office, going home, and staying connected to their devices, being interrupted by the vibration of their phone in the middle of the night,” says Bruce Daisley, host of Eat Sleep Work Repeat, a podcast on business culture. It’s only slightly ironic that his day job is European VP of Twitter.

As people work harder and faster, science has been turning up the downsides. A nine-year study published in 2012 in Administrative Science Quarterly highlighted the sleep, addiction, and anger issues of overworked bankers, and a 2016 report by the American Bar Association and the Hazelton Clinic found high levels of depression, anxiety, and substance abuse among lawyers. In some fields, there’s “almost a sense that if you get eight hours of sleep a night, you should be ashamed,” says Daisley. “There’s starting to be a lot more science and evidence that working longer and harder isn’t the way to be effective in our jobs.”

Related: Be More Efficient: A Can't-Miss Deal for Learning 'Six Sigma' and 'Lean'

In a strange way, though, this all creates an opportunity for a certain set of entrepreneurs. If overworking is becoming the norm, then normal working -- the old promise of clocking in and clocking out -- starts to become a competitive advantage. “My feeling is we’ll see a bifurcation of companies that get it and don’t get it,” Daisley says. “Over time, the companies that don’t get it will lose the better talent or lose their way.”

That’s certainly how Basecamp’s Fried and Heinemeier Hansson see it. They’ve been promoting the work benefits of sleep since 2010, and it’s been transformational for their company. Because if you’re going to offer your workers a normal work life, you have to really think through the question: How does it happen?

Basecamp’s roots go back to 1999, when Fried cofounded a web design firm called 37Signals in Chicago. At the time, the neighborhood still smelled like pig carcasses from the nearby meat markets. “The internet was just starting to get big. They had this sort of punk rock view, a do-it-yourself philosophy that attracted me,” says lead Android designer Jamie Dihiansan, who came on as employee number 12 in 2008. “They were like, ‘Screw this business-speak and this conventional wisdom that all these consultants are spouting.’” 

As 37Signals grew, it struggled to keep track of its various projects. Fried looked for a tool to manage everything, and when he couldn’t find one, he decided to build his own. To do this, in 2001 he brought in programmer Heinemeier Hansson, now 39 and later known for creating Ruby on Rails, the web development framework. He and Fried called their new product Basecamp, and once 37Signals started using it, their clients wanted to, too. 

The tool was a runaway hit, and Fried pivoted the company from doing web design to building multiple work-based applications. Over the next few years, Fried and Heinemeier Hansson would think a lot about how to counter the workaholism in their industry. Two books were written as a result: In Rework (2010) they advocated for cutting back on meetings and big staffs; in Remote (2013) they argued the advantages of an out-of-office workforce. 

But they still had a lot of work to do on their own company. By 2014, they concluded that they were unnecessarily stretching themselves; they were making multiple apps, but the original, Basecamp, was the clear favorite. It had 1.5 million accounts by that time. So they simplified -- selling off or spinning off the other apps, renaming the company Basecamp, and focusing on their one core product.

Image Credit: wragg | Getty Images

Then they looked at their own team. They had about 30 employees, most of them remote, and Fried sensed he’d lost touch with them. “It seemed like something changed,” he says. “I didn’t know how people felt about things. I realized that if I wanted to get answers, I had to ask questions. People don’t bring stuff to you. ‘My door is always open’: That’s such a cop-out.” 

So he hired consultant Claire Lew to do an audit. Surveying employees about what they were working on, how they felt about work, and their lives outside of work yielded specific ideas for new policies, like an employee-suggested charity match. But generally, it inspired Fried and Heinemeier Hansson to be more deliberate and articulate about company ideals.

They began to develop a more robust system to protect employee time and create a sense of calm. It’s still in place today. Most of the company’s staff work free of managers and are expected to establish their own goals. Working late is strongly discouraged -- there has to be a true emergency to justify it. To promote focus, Fried and Heinemeier Hansson encourage their staff to go without checking email for blocks of time (say, a morning or an afternoon). The company also ditched the common practice of making employees’ calendars available for all colleagues to see, with anyone able to add a meeting to anyone else’s agenda. That, Fried concluded, is like stealing someone’s time. At Basecamp, calendars are private; employees post “office hours” when they’re available for meetings.

To make all this happen, Basecamp had to change the work itself as much as the workplace. Projects are now ruthlessly narrowed to fight off scope creep. No teams are larger than three people. “You can do big things with small teams, but it’s a whole hell of a lot harder to do small things with big teams,” says Fried. “And small things are often all that’s necessary.” Fried and Heinemeier Hansson also stopped chasing higher and higher growth metrics and promising faster customer-response times. (On average, their global customer service team gets back to customers in six minutes.) Their stance: If a client expects them to be on call 24-7, perhaps that’s the wrong client. They also enacted a hiring freeze at 54 employees and got rid of sales goals, revenue goals, and even long-term plans.

“As we started talking more with other people, it seemed time to codify this in a book,” Fried says. So they wrote It Doesn’t Have to Be Crazy at Work, which they hoped would serve as a counternarrative to what so many tech companies offer. “Never before has there been this focus on growth and domination,” says Fried. “You see it in big tech: Facebook, Uber, Airbnb. These companies have been damaging to cities, to industries. The desire for endless growth, the opportunity for endless interruption -- those things combined are creating a really crazy workplace.” 

Basecamp is based a few blocks from its original headquarters, and the neighborhood looks quite different now. The meatpacking spaces have been replaced by barre studios and Google offices. Before I arrive at the office, Fried issues me a warning: There isn’t much to see here, he says. There generally aren’t even many employees around.

This is true. As we hang out in Basecamp’s brushed-metal kitchen, there really isn’t much to see, aside from the eclectic assortment of quinoa-based snacks and Girl Scout cookies. But the absence of activity is -- much like the novelty of a normal workday -- noticeable all by itself. Employees don’t seem to come and go; they linger. Instead of an awkward wave hello and a hasty “Gotta get back to work” retreat, they debate takeout orders for that night’s after-work round of Dungeons & Dragons. One shows off a patterned scarf she made at a textile-dyeing class paid for by work. I’m shown a video of a company outing at an ax-throwing place. (Aside from offering Silicon Valley–based compensation, Basecamp has perks like paid-for classes, one-month paid sabbaticals every three years, subscriptions to a fresh-produce box, and the charity match program.) 

Related: 6 Ways to Achieve Perfect Work-Life Balance

This calm lifestyle is meant to attract top employees, though sometimes it takes a while for them to acclimate. When Basecamp hired a systems administrator from UPS, he had culture shock, says Fried: “He was going to err on the side of being extremely conservative because he was afraid of [getting] in trouble the way he would at UPS if he did anything wrong.” A programmer from Capital One was too used to receiving specific directions from a manager to adapt to the Basecamp mentality of “It’s on you to figure out how to get it done.” But for their newest hire, Jane Yang, a data analyst, that was the draw. “It’s exciting to realize that I could pursue a question I was interested in,” she says. 

Jeremy Daer, a programmer who has been there since 2007, says the calm groundwork really paid off during the March network failure. “It was rough,” he recalls, but the company culture made the stressful situation “much easier to deal with. I didn’t feel like I’m going to lose my job.” 

Outside the walls of Basecamp, Fried and Heinemeier Hansson’s message doesn’t always land. After all, what they’re arguing isn’t just about treatment of workers -- it’s about the ambitions of a company more broadly. “Where Jason and I differ is that we are trying to grow a company and serve a lot of people,” says Wade Foster, founder of the web app service Zapier, which is also known for its remote workforce and flexible, egalitarian company culture. “If we have a week that’s exceptionally busy because we have to serve our customers, we’ll do that.”

Fried acknowledges the challenges, to a point. But he’s not asking other companies to adopt everything Basecamp does, he says. Instead, he suggests starting with just one change. “Set aside one day a month, or an afternoon, where a team cannot talk to each other. You should be able to sacrifice one afternoon,” he says. Small victories can snowball and are good for morale. 

He also admits that Basecamp isn’t perfect. Not every moment is calm; not every day is short and sweet. “You can’t enact everything wholesale and go, ‘It’s all or nothing.’ It’s the small steps you can take.” And in fact, Basecamp is in the process of breaking one of its own rules: It’s developing a new product -- the first since it offloaded its other apps in 2014. “Like every other thing we’ve built, it’s something we need ourselves,” Fried says. He knows it could be a flop. He knows that could be stressful. He knows this new idea is risky. Even so, he seems calm about it.

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