Basecamp doesn’t employ anyone in San Francisco, but now we pay everyone as though all did

If you want to be amongst the best paid people in software, you have to move to San Francisco. Or do you?

The roots of Basecamp are in Chicago. It’s where the business started, it’s where our only office is located, it’s where we do all our meet-ups. But more than just a geographical connection, there’s a spiritual one too: Chicago is the city that works.

So it made sense when we decided to get serious about setting pay in a fair, transparent, and systematic way to use the Chicago rates as a base. They were already higher than just about any other location we employed people from. And as a remote company, we employ people from all over the place.

Yet when we were doing our pay studies this year, we started to question that decision. If we’re already paying people from Tampa or Chattanooga the much higher Chicago rates, why is the rate based on Chicago at all?

It started to increasingly seem like an arbitrary choice, and if we were going to make one such, why not go for the best and the top?

That’s what we did. Starting 2018, Basecamp is paying everyone as though they live in San Francisco and work for a software company that pays in the top 10% of that market (compared to base pay + bonus, but not options).

We don’t actually have anyone who lives in San Francisco, but now everyone is being paid as though they did. Whatever an employee pockets in the difference in cost of living between where they are and the sky-high prices in San Francisco is theirs to keep.

This is not how companies normally do their thing. I’ve been listening to Adam Smith’s 1776 classic on the Wealth of Nations, and just passed through the chapter on how the market is set by masters trying to get away with paying the least possible, and workers trying to press for the maximum possible. An antagonistic struggle, surely.

It doesn’t need to be like that. Especially in software, which is a profitable business when run with restraint and sold to businesses.

Jason and I surely could get away with paying people in Chattanooga the rates of that market. Or people in Tampa that. Or those in Portland that. It’s how most companies do it.

But in what other part of the business do we look at what we can merely get away with? Are we trying to make the bare minimum of a product we can get away selling to customers? Are we looking to do the bare minimum of a job marketing our business? No.

Do better than what you can get away with. Do more than the bare minimum. Don’t wait for the pressure to build. Don’t wait for the requests to mount. The best time to take a step forward is right now.

(And before you ask, sorry, we’re actually not hiring. That’s part of the restraint bit. We have a team of fifty five of the most kind, wonderful, and capable people I’ve ever had the pleasure of working with. That’s all we need at the moment to do what we want to do.)

The reason we can take such good care of our employees at Basecamp, and why they tend to stay so long as a result, is because of all our wonderful customers. We have thousands of new customers who sign up every week. If you’d like to support a perspective on business like this, consider giving Basecamp a try in the new year.