DHH and co made a mistake: they thought that by treating employees well, and building a good working environment, they'd get some loyalty back.

But at the first chance of them proving otherwise, money (the buyout) and the faux-hero points ("principled" exit), won for many.

Notice how for ~20 years we haven't heard any pain stories or exposes from there, until this BS story of the "name list" (which is an inside joke blown out of proportion), and the "intolerable" pain of employees told not to discuss politics at work...

Oh, the humanity...

There's no doubt that it's causing significant harm now, but I think you're not seeing this from a longer term perspective: if they think continuing to allow political discussion is likely to create more workplace problems in the future, then that could outweigh any problems they cause now in their hiring pipeline. Two possible points in favor of this trade-off:

1. I've heard vague hearsay that it's hard to get a job there and they don't hire that often, they're not a big company with a big revolving door. Hiring new employees may be a less frequent and less consequential problem than avoiding workplace issues that affect existing employees.

2. This has apparently enhanced the company's image amongst some people, just read over this HN thread. It's not clear that this will damage their hiring appeal and overall ability to competently fill positions.

There is no long term if you can’t keep the lights on

I find it quite a stretch to consider this an existential threat to 37signal. They're famous for having no VC/shareholder obligations or debt while continuing to be very financially successful for a very long time. Their products are well-liked and admired. Their founders are fairly wealthy.

Sure it can, if the situation has gotten so bad that you need drastic measures, it makes sense. It's not ideal, but that's a totally different thing that "making sense". People have to make hard decisions with temporarily uncomfortable and problematic consequences all the time at the executive level. Getting rid of a big chunk of the workforce is hardly uncommon in terms of drastic measures, no matter how it's done.

And to many people, this is going to make Basecamp appear more attractive not less. They won't have a hard time filling seats.