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Basecamp Co-Founder David Heinemeier Hansson On: The Founding of Ethical SaaS (saasmag.com)
85 points by mpweiher 69 days ago | hide | past | web | favorite | 9 comments

I happened across the Bezos investment announcement from 2006 yesterday while cleaning up emails:


Hey there-

BEZOS INVESTS IN 37SIGNALS Today we have a very special announcement to make: Bezos Expeditions, a personal investment company of Jeff Bezos, has made a minority private equity investment in 37signals.

BACKGROUND ON THE DECISION Over the past two and a half years we've accomplished a lot on our own. We've released 5 products (Basecamp, Backpack, Campfire, Tadalist, and Writeboard) which over 500,000 people have signed up for so far, wrote Getting Real which has sold nearly 20,000 copies in less than six months, changed the web development world by writing and open sourcing the Ruby on Rails framework, presented at conferences around the world, and more. We're proud of what we've been able to do without outside help. But we think we can do even better with the right kind of help. And we're picky.

Since we launched Basecamp we've been contacted by nearly 30 different VC firms. We've never been interested in the typical traditional VC deal. With a few exceptions, all the VCs could offer us was cash and connections. We're fine on both of those fronts. We don't need their money to run the business and our little black book is full. We're looking for something else.

What we've been looking for is the wisdom of a very special entrepreneur who's been through what we're going through. Someone who sees things a little differently and makes us feel right at home. Someone with a long term outlook, not a build-to-flip mentality. We found a perfect match in Jeff. Jeff is our kinda guy.

It will be great learning from Jeff as we build 37signals into one the great companies of the next 20 years. Daniel Burnham, the great visionary architect of Chicago, said, "Make no little plans; they have no magic to stir men's blood and probably will themselves not be realized." We agree. We hope this boost of ambition, and Jeff's personal vote of confidence, will help us achieve our big plans.

So here we go.

-Jason Fried, 37signals

dhh had a recent response to someone about this:

https://twitter.com/dhh/status/1195013398280331264 "I think you need to read up on what “venture capital” means. It’s the force of capital that pushes you towards growth above all, as it seeks the maximum return through a liquidity event. Our deal had none of that, didn’t fund the business. Did you even read the piece?"


I wonder if that decision in 2006 and the experience that followed is what motivates this point of view.

People make mistakes and can learn from them.

this is 100% speculation, but guessing this came at a time when Rails was on the rise and Bezos saw the potential of it. The terms of the deal are super-favorable to 37signals, so why not?

"... nothing, it sounds harsh, but nothing important should happen in chat. Anything that’s really important that requires serious deliberations and major decisions and major point of information should be in a format where someone can catch up on their own time."

The discussing of ethics is at the very end, summarized by the influence of investors:

> The investors are optimizing for growth rates because that’s how you get the big multiple and that’s how you get the biggest bang for an IPO. I’m not a big fan of these methods, because most of the time, the large valuations are based on the premise and promise that these companies will dominate the market that they’re in, capture a monopoly and then one day, once they have eradicated every competitor and become the top dog that dominates everyone, they can raise prices because customers will have nowhere to go and that’s when they make money. Is that an aspirational place for us to be, that we should be cheering on monopolists who are cornering markets and then when we have eradicated all competitors, they raise rents? That’s not a very appealing prospect to me. I’d much rather see healthy marketplaces where there’s lots of different providers.

If you want to be ethical, don't take money from those who care about nothing but getting more money.

Greed is not good.

Basecamp is not a non profit. Of course they also care about making more money. If I recall correctly, everyone’s compensation there is based partially on profit sharing. They are feeding starving children in Africa.

And that’s not meant to be a value judgement. I think a company that has a business model of getting $x amount money from customers and spending $y where $x > $y is much better aligned with customers than a company where $y > $x, they are subsidized by VCs, and the company’s ultimate goal is to be acquired or pawn their money losing business off onto the public markets.

The key is to care about more than just money.

Of course I meant that they are not feeding starving children in Africa.

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