SEASON 2 - EPISODE 0078 - OCT 11, 2023

You Don't Create a Culture

Company culture is more than just a buzzword or a section in your employee handbook.

It’s not something you can just write down and expect to manifest. It creates itself organically, through the attitudes and actions of your team that define how you work and more importantly how you work together.

Today, Jason Fried and David Heinemeier Hansson, the Co-founders of 37signals, sit down with host Kimberly Rhodes to share their perspective on the pivotal distinction between ‘wanting’ the right culture and actively ‘doing the work’ to foster a positive culture that truly reflects your values.

Listen in as they share what they look for in character and contributions when hiring new members for the team and how they assess whether a person will enhance or detract from the company’s culture and operations.

And for those facing the tough question of whether their company culture ‘sucks’, they provide valuable insights into the hard choices, and uncomfortable conversations that drive meaningful culture change.

Check out the full video episode on YouTube.

Show Notes

00:00 - Kimberly kicks off the show, and a discussion focused on culture from the book REWORK.
00:37 - Your organization’s culture creates itself. Jason shares what culture really represents, how it’s arrived at, and how to change it.
02:10 - It’s easy to write down what you “want” your culture to be. David shares why that might be a mistake and why it’s harder to “do the work” to create a positive culture.
04:28 - Kimberly shares her experience reading the company handbook when she began her career with 37signals and the impression it left.
05:01 - The goal is not perfection but consistently doing the right things to maintain a fair and representative culture. David shares why aligning your words and actions is crucial to shaping your organization’s culture over time.
06:37 - Culture is show, it’s not tell. It’s the actual temperature of the organization, not the forecast.
07:11 - David asks if your culture passes the “smell test.”
07:36 - Kimberly shares a story about her husband’s experience in tech. She then asks how the team at 37signals has managed to create something so different from the industry standard.
08:09 - Standing against Silicon Valley’s cultural norms for a more realistic approach to work hours and productivity. David recounts Basecamp’s humble beginnings with limited time and resources that prompted 37signals to prioritize efficient time utilization over long hours.
11:43 - The human factor in culture. Kimberly asks whether the team considers how a new hire will align with the existing company culture.
12:05 - Jason shares what they look for in character and contributions when hiring new members for the team. Plus, he shares how they assess whether a person will enhance or detract from the company’s culture and operations.
14:30 - Don’t be quick to judge. David shares a more accurate way to evaluate the contributions of your team members.
16:41 - Does your company culture suck? Kimberly asks for tips on how an organization can improve its culture when it’s not aligned with the founder’s vision.
17:12 - The only way to bring about change is to change (hint: it starts at the top).
18:41 - Culture change often requires hard choices and uncomfortable conversations—but the results are worthwhile.
20:41 - REWORK is a production of 37signals. You can find show notes and transcripts on our website. Full video episodes are available on YouTube and Twitter (also known as X). If you have a question for Jason or David about a better way to work and run your business, leave us a voicemail at 708-628-7850 or email, and we might answer it on a future episode.

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 your host Kimberly Rhodes, and today we’re diving into a chapter of the book REWORK by authors Jason Fried and David Heinemeier Hansson who are here with me today. We’re talking about a chapter called You Don’t Create a Culture. Obviously we’re talking about company culture and what’s so interesting guys to me is that I feel like every entrepreneur, anyone who starts a business company culture and creating that culture is so important and anyone who’s looking for a job is looking for the perfect company culture. But in this essay you guys are saying you actually don’t create it. Tell me a little bit more about this.

Jason (00:37): It creates itself. It is sort of the idea, it just is. Culture is consistent behavior. It’s the last, I like to call it the last 50 days, like a moving average. Basically it’s what you do and how you act and how you act towards each other and towards customers and are you truthful in your advertising and marketing and product development and whatever. If you keep shipping crappy stuff, that’s the culture. If you are mean to each other, that’s the culture. It is. It’s an emergent property and you can do something about it in terms of you can change behavior, but writing something down doesn’t do that. Behavior is behavior, action is action. So a culture just is that, it is what people are doing inside of a company and I think whenever I say this like, well 50 days, why 50 days, why not 60 days, why not whatever, pick a number, I don’t care.

(01:30): The point is it’s like it’s relatively short term and that it can change pretty rapidly, which is good and bad. It’s bad because it can get worse quickly and it’s good it can get better quickly, but it does represent how things actually are right now roughly, and of course there’s longer moving averages too. You could look at the 200 day moving average. If we’re going to use the financial markets, it’s usually a 50 day and a 200, but I think 50 is probably more accurate for how things actually really are. So if you want to improve the culture, improve the culture by acting in a better way, it’s not by writing down better rules or having a new meeting about it or anything like that.

David (02:10): And I think it’s especially that conceit that you can write down the culture, that you can codify this somehow in a mission statement or values or do you know what? There may be something to that to give people a pointer in which direction to look, but it’s so subservient to the actions. And even worse than that, if you are writing down a bullshit description of a culture that does not actually exist, it is not actually validated by your actions at the company, you are detracting from the culture itself. It is circular in that way because you set yourself up to essentially be a liar. I think there’s nothing worse than having employees come into a company, read the culture statements, read the mission statements, read all of that, and then observe with their own damn eyes that is just not how reality spins at this because it breeds just such a level of distrust right off the bat, which is one of the reasons I think both Jason and I have been quite reluctant to write too much specifically to new employees about what is the culture here at 37signals and to try to distill it down to five points to 10 points.

(03:17): We’ve actually tried that exercise a couple of times. Can we distill it down to that? And no, it has to spread through the osmosis of the actions that we take, the role modeling we set up. Lemme give you one example. So a lot of companies talk about it, oh, it’s really important to have a good vacations, have good rest time. Some companies even say, we have unlimited vacation time. You can take as much as you want, just be reasonable. And then you see that none of the executives take any vacation whatsoever. Never ever. And a wise employee will look at what’s written down. Oh, we don’t count vacation days, days time off is really important and go, that’s not as important as the fact that the people who run this company don’t take anything at all. That’s probably the role model I should be following. So that goes exactly to Jason’s point, that this is the moving average of the actions we actually take these things we actually do. The problem with that is of course it’s much harder to change. It’s easy to rewrite a paragraph in a mission statement to sound all flowery and inviting and inclusive or whatever you want to put in there. It’s much harder to actually do the stuff that that entails.

Kimberly (04:28): Well, and David, to your point, I think it does really start at the top and I remember as a new employee reading the company handbook and that in and of itself, just the way it’s written, not only the style but the things that it says kind of sets the tone for how you want the company to work. I remember one of the things it says in the very beginning it’s like, congratulations, it’s your first day, work hard, but then at the end of the day, close your computer and go pet your dog. We’ll all be better for it. I think that’s a direct quote. I remember feeling like, okay, this is the environment that they’re trying to create.

Jason (04:59): That we hope to create.

David (05:01): Yeah, but then imagine you’d read that quote exactly right, and then you just saw people not doing it. It would’ve been so much worse than if we haven’t said anything at all. I think this is one of the reasons, at least when I look at our handbook and anything else we write about, be just as mindful about the stuff that you don’t try to write down. Don’t try to pretend something. It always becomes so much worse when you try to pretend something that can’t be carried out in reality, much better not to say anything at all about that topic for that specific topic like close your damn laptop. I think we do have the sort of capacity and the examples at the company that people do that and yet still even on that point, you will occasionally see people who didn’t close their laptop or who did work a few extra hours and so forth, and that’s also the part of that moving average, right?

(05:48): You look at the line and it’s a line that’s an average of all these little dots. It’s not about culture is one incident. I mean if it’s egregious enough, maybe it’s, but a lot of the little dots, someone not closing their laptop exactly at 5:00 PM but maybe for a week it was really stressful. There’s a bunch of dots above the line. It’ll slowly start moving the average up, but then hopefully there’s also a bunch of dots below the line. It’ll slowly move the average down. This is the reason to think of it as an average and not as these singular individual events because you can’t be perfect in that. And that’s not the goal either. It’s not the goal to have the perfect culture where everyone just does exactly what we intend to all the time. It is to do mostly the right things most of the time so that people can reasonably look in that and go like, yeah, that’s fair. That’s actually who they are.

Jason (06:37): Another way to put it is that culture is its show, it’s not tell. And I think a number of companies will tell a lot about the culture and they’ll have meetings about culture and town halls about culture and I would just be like, it is what it is. I don’t care what you say it is, it is what it’s, it’s just like I don’t care if you tell me it’s 50 degrees outside, it’s 70, you can tell me it’s 50 all day long. It’s 70 out. That’s what it actually is. That’s what culture is. It’s the actual temperature of the organization and not the forecast.

David (07:11): What I’ve found with that is that the more companies are eager to talk about culture, culture, culture all the time and talk, talk, talk about it, the more suspicious I am that there’s actually a bunch of bullshit hidden under the carpet. So I think there’s also a little bit of smell in that if you are obsessed with talking about culture, writing it down, it’s probably because you’re trying to cover something up.

Kimberly (07:36): My husband works in tech and one of his companies that he worked at had a whole culture committee, a whole committee of people just dedicated to make sure everyone was happy and it was good culture. So it’s funny when you think about that. So my question, David, especially in tech, I think a lot of tech companies are known for a culture of working crazy hours, sleeping at the office. That obviously is not the kind of company that you and Jason have created. How do you create something completely different from what is standard in the industry?

David (08:09): I think it helped that we started that way. When Jason and I started working together on Basecamp, I had a limited amount of time to dedicate to it, 10 hours a week. Jason and Ryan and the rest of the team were treating it as a third or a fourth client. So we were born under constraints that meant we didn’t have even 40 hours a week to dedicate to it. And in that limited amount of time, we built the foundation for the whole company in what, six months, calendar months or something like that? We released Basecamp in February of 2004 and that continues to this day, 20 years later almost to be the foundation of everything. So if we could create something so valuable on such little time, it’d be the height of hubris to think that you know what if we just throw in more hours, we can exponentially increase the value.

(08:56): No, it is exponential, but in the opposite direction. The more hours you spent, the less marginal value of those hours and at some point the marginal value goes negative. I mean early on in my career I had fun doing all-nighters. And I say fun because it felt like it was sort of camaraderie, hardship and it sucked. We didn’t do anything good if I had gone through a sprint of an actual all-nighter, it took several days to recover. So again, if you take that moving average, you can also do a moving average of productivity. I was terrible. I might’ve gotten slight marginal utility out of pulling that all-nighter and then the next three days would be shot. How much insane productivity would’ve had to extract from that one hero day to make up for the fact that three days afterwards I was completely shot. So I think we just looked at that, the realism of how did we create the company?

(09:47): How are we sustaining the company, how are we building it out and go, you know what? I don’t know why everyone else seems to think you need 80 or a hundred hours. That seems pretty much bullshit to me and to us, not because we hadn’t been around people who worked like that, not because we hadn’t tried it, but because we’d seen often the lack of results and we’d seen the comparisons. What are we able to do with a small team? We talk about the four people we were in the beginning, but when we were seven or eight people, we were launching a new product every year. Again, not because we were working 80 or a hundred hours, but we were worrying about how that time was being spent, not how to get more and more and more and more of it. And I think that flip in perspective, how are we spending our time?

(10:27): How are we getting most of the initial value out of it really just cemented the idea that we were able to get results with very different tactics and techniques than the rest of the industry. I think it also just helped that we were in opposition to Silicon Valley and basically every other major cultural value point. We didn’t believe in raising tons of money. We didn’t believe in growth above everything else, so we had a very healthy skepticism towards everything Silicon Valley. Not that there aren’t good things to take away from it, not that there aren’t moments where someone can sprint and not that there aren’t people, I mean we’ve talked about Elon Musk in the past, famously can’t seem to get out of working 80 or a hundred hours all the time, although how much of that is tweeting versus actually being on the factory floor is I think perhaps up in the air, fine, great, let’s have some people like that who put in the 80 or a hundred hours, but let’s not treat it as like that is the golden standard that everyone else have to measure up to otherwise they are less. What crock is that, especially when so many of the people aping that kind of work are not Elon Musk, they’re not fucking flying people to Mars. They’re not revolutionizing cars. They’re building what another piece of accounting software for B to B SaaS. Be real please.

Kimberly (11:43): Okay, so if culture at a company is this 50 day moving average, I would assume that people make a difference in this, meaning as you’re bringing people into your organization that can change how the company looks and operates. Are there things that you guys think about when you’re hiring of how someone fits into the current company culture?

Jason (12:05): Absolutely. It is all people driven as all problems are interpersonal essentially. It’s all that. So when we hire, I think we tend to think of how is this person going to be additive to a specific team or how’s this person going to change a particular team? What are the traits that matter in terms of how we work together? Are they managers of, one of the things with our culture is that we expect everyone to make significant progress on their own and that has played out with the people we hire and the way we work. So if you hire somebody who comes from an environment for example, where they’re constantly requiring their manager to tell them what to do, you’re going to have some issues there because that’s going to slow down the way we work. It’s going to cause some bottlenecks and that’s going to have a negative effect on the culture at large.

(12:54): You want to look at people’s characters as best you can. You want to hire people of high character. You want to hire people that you can get along with that you feel like are good fits that you enjoy working with all those little subtle nuances about people just like you’d pick friends. There’s not a criteria list, but you just get a sense I could be friends with them or no, I could hang out with them once a year, but any more than that and annoying not going to happen. You just got to find the right fit aside from all the skills and all the other things. Also the fact that we hire good writers is really important. Our culture is one where we tend to write most of the things that we talk about. We don’t tend to have a lot of in-person meetings, we don’t have many zoom meetings or anything like that.

(13:34): It’s mostly written. So you have to be able to write and communicate in that way in order I think to get along here and to make progress here. So all those things plus many other things go into that. And also I think being upfront about what you expect out of people is very important. This is one of the places I think, and hiring is sort of a key cultural component of most companies, but most companies don’t think of it that way. They think of it in terms of headcount like we need to grow, but they don’t think about the impact of the people they’re bringing on necessarily beyond can we just do more stuff? Well, what about the other things that you’re doing as an organization? I mean are those people going to fit in with that or not? So anyway, those are some of the considerations we make. They’re not really that specific because again it’s a lot of the stuff is feel intuition when you’re hiring, but you can get a sense of is this person going to be additive to the culture or subtractive or whatever the opposite to additive would be.

David (14:30): And I think actually looking at employees and their own evolution at your company as a moving average is a really good lens. This idea that you do one thing that’s really great and then you’re set, no. That’ll help drag up the average or the thing that you do one stupid mistake and that terminally damages you absolutely not, but the moving average will tell the truth over time. This is one of the reasons why we are so intent of treating the one year mark as the moment of truth for anyone we’ve hired. We have this notion of it has to be hell at the end of that, which is really just an assessment of the moving average. A year is long enough for someone to have collected a few mistakes and a few wins, and for us to draw a line through those dots and arrive at a moving average, we can go, yeah, this is great.

(15:21): I think this moving average is additive to the overall moving average of the entire company, both in terms of productivity and in terms of culture and all the other things that we value, but it’s not about the individual points and you do have to give it long enough, which is one of the reasons when people say hire slow, fire fast. I’m like sort of yes, but not so fast that you can’t tell the average. I mean unless it is truly egregious behavior, a lot of people will either be a little slow to get started or they’ll mix a couple of mistakes and yet still they can pan out just fine. So pick a reasonable moment to make your assessment rather than just go like, hey, this person shows up with no dots on the line. So the first dot will set the tone for everything.

(16:05): Either they do one good project right at the start in there or the star of the show or they’ll do one crappy project. Then like, eh, you already formed an opinion. Sit back and as Jason has written another as essay, give it five minutes. I’d say when it comes to employees, I mean give it five weeks perhaps before you make your first assessment and then give it five months if they’ve made that through that first assessment and you’re really giving it a second look at it and second go, but treat it as a moving average. Treat it not as individual data point. Resist the urge to take any individual data point and go like, oh my God, this is it. This is the truth.

Kimberly (16:41): Okay, last question before we wrap up, and I don’t know if you guys will have a solid answer for this, but if someone is listening who’s like, yeah, my company culture sucks, I’m the founder of this company and this is not the culture that I want for my company. Do you have any tips how they can change that 50 day average and maybe small incremental steps? Obviously it’s not just having a meeting about it or just writing about it. Any tips you guys can share?

Jason (17:04): Well, the old, what was it, the Gandhi quote, who knows who said these things? Like you must be the change you wish to see in the world essentially.

Kimberly (17:11): Gandhi.

Jason (17:12): Was it Gandhi? I mean that’s what I’ve heard. I don’t know who said it, but I’m sure he didn’t think when he said it, if he said it, it wasn’t like a business piece of advice. By the way, this is another aside, I’m so sick of business absorbing all these things from all these other places and treating 'em as if it’s a business is the highest order that we have to do another episode on this, or actually I’m going to do a post on this anyway, we’ll get to it later, but I think you have to change because it doesn’t really matter what you want. This is the thing, it doesn’t really matter what you want, who cares. Are you going to do? That’s what matters. What do you do? Not what you want, not even what you need, what do you do? So you want to make some changes and I would suggest starting from the top perhaps, but the thing is is that there’s also tiny little, so maybe a team might be a little bit different than the rest of the company, so maybe a four people on a team that place can get better.

(18:08): There’s a lot of these little atoms, atomic units basically in an organization. The molecule maybe is the organization and the atoms or whatever. I dunno, these small little places and you can improve little corners or little pockets of places. So that’s something else you can do. You don’t need to be at the top, you can just be on a team of three and give better feedback or be more patient when someone critiques your work or whatever it might be. And these changes can take effect locally as well. But organizationally, to your question, if you run the place, whatever, do. Do differently, that’s the only way to make change.

David (18:41): I’m going to appropriate another saying here that was probably not intended for business either, but I’ve loved this notion of easy choices, hard life, hard choices, easy life, and this is very often true when it comes to culture that the person, let’s imagine someone who runs the company or who does not like the culture that they’ve ended up with. They know what’s wrong. It’s usually not a complete mystery that you’re like, I don’t know how we ended up in this place. I don’t know what it is that we do. No, you know, just don’t want to do because doing is hard. You don’t want to change because changing is hard. You don’t want to have the uncomfortable conversation because that’s going to be difficult and you don’t want to make the big changes. I mean, we had our massive change several years back on the culture of should we talk about politics at work?

(19:29): That was totally one of those things where for quite a lead up to it, we went like, do you know what? Don’t like where this is going. Don’t like what the moving average is tracking, but it would be hard to do something about it because like, oh, it’s sensitive and so forth. And then by the time we did something about it, we made some hard choices that led to some difficult times that led to an easier life. And that’s the payoff. The payoff of doing is that it’s going to be difficult, hard, painful in the moment, otherwise it wouldn’t be hard, otherwise you’d already have done it, but you’re doing it in service of moving the moving average. You’re not going to get the payoff next week. You’re going to get the payoff over time as you continue to say, this is what we do here and then actually doing it. Don’t say it actually just start doing. Just start instituting the new principles and the new assessments and the new forms of feedback that you want and you know what it is. Don’t kid yourself, you know what it is. Just pull it out and start perhaps somewhere along the ladder and work up a tolerance for making difficult decisions. Just that you can enjoy the easy life that lies at the end of that road.

Kimberly (20:41): Well, that’s great advice. Well, with that we’re going to wrap. REWORK is Production 37signals. You can find your show notes and transcripts on our website at 37 signals.com/podcast. Full video episodes are available on Twitter and YouTube. And if you have a question for Jason or David about a better way to work and run your business, leave us a voicemail at 708-628-7850 rework@37signals.com and we just might answer it on an upcoming show.