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
"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?"
People make mistakes and can learn from them.
> 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.
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.