We Choose Profit at 37signals

There&#x27;s situations where it makes sense to raise $X million. And then there&#x27;s situations where it makes sense to take nothing, bootstrap and become self sufficient.<p>How do you compete against YouTube, Big Banks, Twitter if you generate $1 in &quot;FU money&quot; profit? A VC approach may make sense if that&#x27;s your goal.<p>But if you&#x27;re creating a REST API client, selling it B2B, why are you raising $250 million at a $5 billion valuation [1], when you can just start selling it through organic dev network effects and growth?<p>Context matters.<p>[1]: <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=39702610">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=39702610</a>

&gt; Profit protects you from your ego<p>the whole thing was an ego trip.<p>the profits pay to host the page.<p>this is far from the first braggadocios piece out of there.<p>clearly much protection is needed.

Imo a huge problem with the business culture in the bay was that it seemed like, for years, VCs were encouraging some very irresponsible business practices in the name of growth at all costs. The low cost of lending in this environment allowed these businesses to survive by raising money whenever they needed it, which I think had a really negative effect on the software market. When the unprofitable companies can out compete the profitable ones, you essentially move to a regime where VCs are subsidizing the end user, which is unsustainable. When interest rates rose, the car suddenly decelerated and some folks went splat. A lot of user good will got burned by a sudden pivot to profitability (see the discussion on enshittification), and a lot of people&#x27;s careers have been damaged. I can&#x27;t help but wonder if things might have been better if we had grown sustainably, or if the current hangover was worth it for the period of blitz scaling we got.

&gt; This means every year we take risk out of the company.<p>erm, not sure how a company which doesn&#x27;t reinvest it&#x27;s profit is less risky than one that does....

What the hell did I just read?

They’re such a unique company, but they’ve always fail to recognize just how unique their situation is and how most people can only dream of being so lucky.<p>- First you have DHH who is one of the creators of Ruby on Rails. He has a large cult-like following<p>- You have relatively simple projects that are profitable from day 1<p>- They have a series of “self-help” style books for running a business that are popular. Rework was their most popular by far.<p>- And when you do take on money you get an extremely unique business arrangement. Bezos invested in them early on and only became a member in a LLC. All the VCs I know make you reform as a Corp.<p>The only other places even remotely close to that might be Vercel and Netlify. And I only say that because of their widely popular open source projects.<p><a href="https:&#x2F;&#x2F;medium.com&#x2F;signal-v-noise&#x2F;the-deal-jeff-bezos-got-on-basecamp-b7a1cb39179e" rel="nofollow">https:&#x2F;&#x2F;medium.com&#x2F;signal-v-noise&#x2F;the-deal-jeff-bezos-got-on...</a>

Company chose profit. Bold.

Are they trying to gaslight people or are they really this stupid? If you don’t have any viable ways to reinvest then invest profits in bonds and index funds, that would truly be financially responsible and reduce risk for the company. The reality is they ARE reinvesting the money, in their personal accounts... What complete nonsense.

Seriously .. this is non-sense, right ?<p>tldr : &quot;profits = good, investments = bad&quot;<p>Lewis Carroll&#x27;s &quot;Through the Looking-Glass&quot; has a great way to show it things are done : you have to keep running to stay in the same position. If you stop investing (= stop working), then you fade behind, become less competitive, eventually die.<p>So, back to the original post, what they actually do want to say is, perhaps : &quot;once we invest our money in things, we use what&#x27;s left as profit&quot;. Which is obvious and a useless things to do.<p>Or perhaps the post argues against &quot;invest everything and never take 1€ of profit&quot; ? Or &quot;only do invest with the money you earned&quot; ? What a mess.

If 37Signals invested more money in their products, wouldn&#x27;t they be doing a lot better than they are?<p>Basecamp is hardly talked about anymore. I don&#x27;t know anyone who still uses it. They sunsetted a bunch of their other products.<p>Yes, you don&#x27;t need to take VC money, but this post talks about keeping the profits instead of reinvesting them in the business.<p>I&#x27;m sure Fried and DHH are doing great taking profits every year out for themselves, but is 37Signals really a healthy and meaningful company?