SEASON 2 - EPISODE 139 - JANUARY 15, 2025

Hire When It Hurts

Wondering when it’s the right time to grow your team? In this episode of The REWORK Podcast, 37signals’ co-founders Jason Fried and David Heinemeier Hansson chat about their “hire when it hurts” approach as described in their book REWORK. They cover why you shouldn’t rush into bringing someone on board, how to know when there’s a critical business need, and how to seize the moment when the right people show up.

Watch the full video episode on YouTube

Key Takeaways

00:38 - Try tackling projects with the team you already have before hiring
02:43 - Some roles don’t call for a full-time position
07:33 - Knowing the difference between an actual staffing shortage vs. just being busy
09:48 - A workload spike doesn’t always mean it’s time to expand
12:33 - Snagging available talent early if you’re already planning to hire soon
15:35 - One open position can become multiple hires when the talent pool is just right

Links & Resources

Transcript

Kimberly (00:00): Welcome to Rework, a podcast by 37signals about the better way to work and run your business. I’m Kimberly Rhodes, joined by Jason Fried and David Heinemeier Hansson, co-founders of 37signals. The company’s hiring philosophy is to hire when it hurts. That means not bringing on extra people until the company’s feeling some sort of pain or pressure to do so. So I thought we would talk about that a little bit today. It is a chapter of the book REWORK, Hire When It Hurts, but I also want to talk a little bit about when we go outside of that. So let’s start first with the whole philosophy. The company has grown gradually, slowly over time. Jason, tell me a little bit about your thoughts behind that.

Jason (00:38): This has always pretty much been our philosophy, which is try to do the job first with who you have or yourself and when you realize that it really hurts, either you’re overworked or you just can’t get to the things you really truly need to, not all the things you could because that’s not what you should necessarily be doing, but the things you really truly need to get to and you can’t get to those, then maybe it’s time to think about hiring. So we don’t hire in anticipation of pain. We hire when we feel the pain. This is historically what we’ve always done and I would say 98% of our hires are that way. It was actually interesting timing. I just got an email from this professor who did a case study on us and I got these questions from this one student who thinks that our hire when it hurts idea is a bad idea because they’re like, well, you’re going to miss opportunities.

(01:23): There’s great people all over that you’re constantly passing over. And I’m like, yeah, exactly. That’s what it is. There’s too many good people out there. I mean, if you’re just going to pick ‘em all up and hire ‘em all, you’re going to have hundreds of people before you know it and not enough work to do with them. You have to make decisions about what matters, what doesn’t, who matters, who doesn’t, and when. And for us it’s, let’s wait until we really absolutely need somebody. I think it’s served us well. I’m sure we’ve missed opportunities, but that’s part of it. And to say that had we hired these other people, it would’ve been worth it. That’s a counterfactual you can’t prove. And I think actually what ends up happening is one of the worst things you can do is to hire people who you don’t need and give them work that doesn’t matter, that doesn’t need to be done or not keep them busy on things that are important and that is actually a crime against humanity almost in many ways.

(02:12): I mean obviously it’s giving someone a job, but the people who are that good don’t need charity job essentially, which is ultimately what it kind of is. And there’s companies, especially bigger companies who will just hire someone because oh my god, this person’s available, let’s get them before someone else does. It’s like this defensive move, which I don’t think is a particularly healthy thing, but at a big company you can go hide in the corner and do that sort of thing, but when you’re small, especially like us, there’s no room for people who are just sitting around waiting for something to happen. That’s been our philosophy the whole time and we’re sticking to it.

David (02:44): It’s so demoralizing when you have someone not just for that person but for everyone around them who’s really good at what they do. They have these peak skills and there’s just not the opportunity to put that to use. That is a recipe as Jason says, for existential dread. And I’d say the closest we’ve gotten to that is when we tried a number of positions that we weren’t sure about. Is this what a company our size is supposed to have? For example, we hired an in-house council, a woman we was very good, had a great resume, had all the skills you needed to be a great general counsel, and we thought, you know what? We’re getting slightly bigger. We have some work that falls into the legal category. We hired the person a little bit in anticipation that there was going to be more of that work, there was going to be more legal thingamajigs machines that we needed to deal with and there just wasn’t.

(03:42): And it ended up being a position where there was legitimately maybe five hours a week of this needs to get done, otherwise we might be in serious trouble, if even that, which meant that it left 35 hours to come up with all sorts of things that maybe potentially could be an issue somehow someday, somewhere. And especially when you’re talking about legal, what that usually means is ways to make things complicated, ways to make policies longer, to make contracts more ironclad, which also means longer, which means making everything more complicated. For what? For using the skills of someone who can do that work and could do it really well, but that the company doesn’t need? Who’s that helping? Is the company better off because we are bolstering this up? You could say that. You could say, well, maybe you didn’t need, need it, but what harm is there? Oh, there’s actually a lot of harm.

(04:46): There’s a lot of harm to doing work that does not need to be done, especially in areas like legal or management or other areas that inevitably put strains on others to carry things out or to act in a different way. You really don’t want someone with too much time on their hands in those roles. And I think we got just a taste of what that’s like and through numerous anecdotes I’ve heard what the experience when that is the norm is like and is absolutely atrocious. And it’s one of the reasons why people sometimes look at our organizations, the number of projects we’re involved with, the number of products that we launched, the amount of open source we share, what we’re doing here and everywhere they go, how do you get all this stuff done? Well, we don’t have a bunch of underemployed people doing work that doesn’t need to be done weighing everyone else down.

(05:42): That is top three reasons for why we can move at the pace we’re moving. And the magic here is that when you don’t have someone, when you don’t have, for example, a general counsel, do you know what? You’re a little less hesitant to get into legal trouble. You’re a little less hesitant thinking, do you know what, we should sue these people. Yeah, okay. Maybe you have a point. Maybe you have a case. Jason and I have talked this over many times over the years. Someone is maybe vaguely infringing or even grossly infringing on our trademarks and you go like, ah, could we make a case here? This feels like it’s a ripoff, but they’re in fucking Thailand. Well, what does an international case look like? I’m sure general counsel could help you figure that out. In fact, we did have someone help figure out how to register trademarks in every country on the globe.

(06:34): And we woke up at one point looking at an inventory of expenses and went like, what’s that $125K we’ve spent on legal advice for trademarks? Oh, well that was China, that was Australia, that was Canada, that was like… That was what? Why are we doing that? Why are we doing all… Well, because I mean we want to protect our trademarks. Yeah, but not to the tune of $125K in jurisdictions where we’re barely even grossing that on a yearly basis. That doesn’t add up. And that’s the kind of stuff you get when you have folks whose job it is to do more of that versus when you have generalists, either Jason or I or Andrea or other in the organization who can play multiple positions, they’ll only take that position and they’ll only play that ball when it absolutely needs to be played. And that’s how you end up, not spending, wasting $125K on needless trademark registrations around the world.

Kimberly (07:33): Okay, let me ask you this. We are talking about hiring when it hurts, when it’s painful. What for you guys, how do you judge between something just being like it’s a little uncomfortable, discomfort because there’s a lot to do versus this is actually a hole that we need to fill.

Jason (07:49): Typically, you can get a sense. Like we’re currently working on two new products right now. We’ve got Basecamp, we’ve got HEY, we’ve got the ONCE stuff. We have a lot going on right now, and if we had two fewer people, we would really feel that. Like we would be like, you know what? We can’t get to these other things we really definitely want to do, or this is suffering. There’s a real sense of heat and pain here. You do feel it. And that’s the answer. How do you know? When it hurts. You actually viscerally feel like, why is our quality slipping? Why aren’t we able to do these things that we used to be able to do? It’s like, well, we have too many things going on now. Part of the answer could be you should cut some of these things out. Maybe you’re doing too many things, which is also a consideration to make.

(08:29): It’s not always, you just don’t hire people to eliminate a problem. You might actually get rid of the problem in the first place, which might be doing too many things or whatever it might be, but really literally there’s this feeling of frustration, but you’ve got to separate it out from the standard frustration because every company wants to do more than it can, no matter how many people it has. I guarantee you Apple and Facebook and Amazon and you name it, and Nvidia, they’ve got massive staffs. I think Amazon is a million people. I mean with all the factory and delivery, but tens of thousands, let’s say in many of these companies, hundreds of thousands, there’s things they can’t do. So there’s always going to be things you can’t do, but when it’s fundamental basic things that push your company forward that you can’t do, and it really hurts not to be able to do those things either financially or spiritually in the company or whatever it might be or quality is suffering, then you know. I’m sure we’ll get to this, but sometimes you might take a flyer on a position that you’re not sure you feel like there’s some pain there, you’re not sure and you got to play it out.

(09:27): But oftentimes you definitely know. Like for example, if we were down one designer, our product would suffer. If we were down a programmer or two, our products would suffer and that means that we’re in the right spot, but maybe even a bit too thin in some cases and there can be some pain there as well. But right now we’re able to handle everything that we want to do, but we would know if we weren’t.

David (09:48): I think key to this is also to realize that this is a moving average. Don’t act on a week’s worth of frustration. Don’t even act on a month’s worth of frustration. This frustration needs to be lingering for long enough that you know it’s terminal, that you know it’s not a fluke. It’s not just because we suddenly got an influx of, for example, legal cases. We used that example just before. We have had moments where you could totally fill a week’s worth of a general counsel’s time and expertise. Yeah, but that’s not who you’re hiring. You are hiring 50 weeks or whatever, 42 weeks out of a year. Do you have 42 weeks of gainful employment for that person? And do you foresee that that’s going to be the case going forward? You really need to look at the moving average of hurt. It’s not just when you get that spike. Most of the times you’ll walk it off.

(10:43): You’ll just… two days from now, it’s not even going to be a thing. It’s not going to be on your radar. You were just frustrated in a hot second. That’s not the time to make those hiring decisions. Now, at the same time, I think where we have evolved our thinking over the years since we wrote REWORK was our margin for body fat. We used to run not just lean, but to the bone. Literally, you take one individual out of that puzzle and suddenly it’s a crisis. We need to fill this role right now, otherwise things are literally kind of going to come apart. And we ran like that for quite a few years. And I actually would say I took almost some perverse joy in running that lean because it was almost like I could see the ratio, how lean can we run this? And then I would compare it to all these bloated organizations.

(11:39): I would keep talking to people who worked in those and thinking, do you know what? I want to be the 180% opposite of that. I don’t want to have any leanness at all. Do you know what that has a price of its own. And it has a price in sense of when suddenly then it does hurt, it’s a terminal hurt. It’s not just like a three out of 10, it’s an eight out 10. And I think we’ve evolved our perception on what hurts. What is hurt? Does it need to be an eight out of 10? Does it need to be a nine out of 10 before it qualifies to hurt? Well, I think these days we’re more like, do you know what a five out of 10 over long enough period of time that justifies someone additionally. And having some margin, having some slack is healthy. Don’t want to be obese, but having a little extra, you could do a couple of days without gorging on food and you’d be fine. That’s not actually a failure state.

Kimberly (12:32): Okay. So we’ve talked a little bit about not hiring people just so someone else won’t, not hoarding people that don’t have work to do. But I’m assuming there’s sometimes where you want to seize an opportunity, either multiple people are applying for a job or someone becomes available. Kind of tell me your process about that or when you think about doing things like that.

Jason (12:53): I think for us it’s mostly an accelerant. So for example, we just hired a new person to head up marketing. We had someone running marketing last year earlier this year as well. And then that person’s no longer here and we weren’t in a rush to fill that position. We weren’t sure what we were going to do, but at some point we’re like, we’re not done taking swings at this marketing thing. And then someone came available who I’ve known for the decade and followed, and they became available out of nowhere essentially. And we have not officially announced this person, so I won’t say anything about who they are yet necessarily. But it was an accelerant like, you know what? If we’re going to look for someone in the next few months, let’s say, but this person’s here now, let’s speed up our process on them. Not necessarily let’s open a search to everybody, but let’s vet them pretty quickly, maybe, because maybe there’s a good chance here that this is going to work out.

(13:45): And so we did that and we actually in turn hired this person. It’s not something we do very often, but sometimes we do it. If we might need a designer down the road and someone comes up like, why say no now if we know in three months we are probably going to hire somebody if that person’s really good right now, we’re not going to say yes right now if we’re going to think about hiring someone five years from now. But if it’s close, we can accelerate things and speed it up and kind of skip over some gaps. I think. So we have done that a few times. And marketing hire is one that comes to mind.

David (14:14): I think of it like a shortcut. We hired someone on the technical side recently as well who wasn’t part of an open search as Jason says. I think one of the things we’ve realized, especially over the last five, six years or something like that, doing an open search the way we do them where AI is not involved, we don’t have these artificial bars. We are manually, humanly looking through hundreds, in some cases, thousands of applications is a hell of a lot of work, and it’s actually a substantial distraction. Now we have people in the organization who can do that work, and that’s part of their job, but it never ends just with them. What they do is do the pre-vetting. We still have to get a bunch of programmers involved or a bunch of designers involved to narrow down the finalists. And you just know that that’s a multi-month process where the folks involved in that process, they’re going to be split brain. They’re not going to be able to dedicate fully on the work that they have going those cycles. So when that opportunity comes up where you like, you know what, we were probably going to do an open search as Jason says, and maybe a couple of months, but here’s the shortcut. Here’s a way we can not do that at all. I find those very tempting, and I think this is perhaps where we’re willing to take just a little more risk.

Kimberly (15:35): I think there’s times that we’ve also had one position open and have brought multiple people on. I mean, I’m an example of that.

Jason (15:43): Yes, rarely have we done this, but we have done it. And you are an example. So we were hiring for a visual storyteller, which was this position we were thinking about where we wanted someone to be able to talk about our products on video and tell a story about them and produce their own videos and whatnot.

Kimberly (15:58): I have a question about that. Was that a hire when it hurt situation or like a we see an opportunity situation?

Jason (16:04): That’s a good question. It wasn’t like there was this distinct pain necessarily, but it felt like there was a gaping hole. I just felt like we’ve got to figure out a way to be able to talk about our products visually with movement on video. Was it absolutely necessary? Not like we’re down a designer and screwed, but it did feel like there was a big gap and a hole and we wanted to try something. So sometimes we set out to experiment with something. It’s like it’s worth experimenting with because there is something that feels like it’s missing a little bit less than pain, but a longing in a sense.

David (16:38): I think it’s actually quite similar because I remember Jason, us having that conversation for literally a couple of years, you’d be like, oh, man, we need someone who’s good on video. We need someone who can do video. I have these ideas. That to me is the same thing actually as pain. It’s a creative pain.

Jason (16:55): Yeah.

David (16:56): That I have these ideas inside of my head and I can’t get them into the world. We need someone on this chair for me to be able to get these ideas into my, otherwise they’re just stuck bouncing around inside my skull, frustrating the hell out of me on a regular basis. And I think if anything, we waited too long. I mean, I think perhaps I was skeptical when you first post the idea, do we really have enough video work? But after we had had the conversation for the fourth time over two years, I was like, please just hire someone. Damn it.

Jason (17:29): Right? Yeah, good point. And it is a pain. It just manifests a little bit differently. So we ended up hiring you and Chad because as we got down to it and the finalists, and we really liked both of you, and then I think it was you, Kimberly, who kind of pitched a slightly different variation on the job, which is a little bit more educational. And I started to see that there’s actually two things, because I talked about this before. We didn’t have a library of onboarding videos. We didn’t have the stuff that felt like so fundamentally necessary actually to make a customer feel like there’s someone sitting next to them, walking them through the basics. We never had that, and we should, but that wasn’t actually the same thing as what I was thinking initially, which was being able to talk about new features in new ways and make these other kinds of videos and little commercials and stuff.

(18:17): So it turns out that we’re like, you know what? Let’s take a shot on both these people. I think they’re actually quite a bit different, even though they’re in the same realm. They produce videos, but they’re different jobs. But you actually convinced us, I think, to do that. And we also liked the fact that you were an entrepreneur and you’d used Basecamp for many, many years and you knew how to talk about Basecamp in a different way. And I actually think we ought to have more people working here who started businesses, who are entrepreneurs, who are closer to our customers. That was a unique situation where it was like, let’s take a shot on both of them. And you’re both still here, of course, doing different work, actually different work. And now you’re hosting the podcast, which we didn’t hire you for that either. This is great. But yeah, it’s not something we do that often. But you’ve got to be open too to break your own rules occasionally and not be too dogmatic about some things and give something a try. And sometimes you run into people, you’re like, I kind of believe in them. Let’s just try it. So the lesson here is of course, you’ve got to have some principles. You want to stick to some basic norms most of the time, but you can go outside your own lines. You drew the lines.

Kimberly (19:20): Okay, well we’ve wrapped it up by talking about me, so…

Jason (19:24): You got it. You win, you win, you win.

Kimberly (19:27): Well, there you go. Rework is a production of 37 Signals. You can find show notes and transcripts on our website at 37 signal.com/podcast. Full video episodes are on YouTube and Twitter. And if you have a question for Jason or David about a better way to work and run your business, leave us a voicemail, 7 0 8 6 2 8 7 8 5 0. You can also text that number or leave us an email at rework@37signals.com.