We Choose Profit at 37signals(37signals.com) |
We Choose Profit at 37signals(37signals.com) |
How do you compete against YouTube, Big Banks, Twitter if you generate $1 in "FU money" profit? A VC approach may make sense if that's your goal.
But if you'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?
Context matters.
the whole thing was an ego trip.
the profits pay to host the page.
this is far from the first braggadocios piece out of there.
clearly much protection is needed.
FTFY
erm, not sure how a company which doesn't reinvest it's profit is less risky than one that does....
If you take the money out of the company, that money can never be impacted by anything that happens to the company in the future, so the total amount "at risk" in the company is decreased.
This is, IMO, an overly simplistic take and I'm not endorsing it by explaining!
How many people on here still use Basecamp? I suspect a lot less than ten years ago. I'm at a startup, and we had to select project management software. Basecamp wasn't even in the discussion.
You can talk about future growth all you want. I'll pay you Friday for a sandwich today, and all that.
They're saying just do the thing. Actually make the money. Don't spend a lot of time faking white papers that say how you're going to make money 20 years from now.
In the ZIRP era, it was much more profitable for founders to fake white papers about being profitable, than actually being profitable.
I think it still is, but not to the same degree.
The "risk" is to the investors getting profit, not "risk" to me as a user.
- First you have DHH who is one of the creators of Ruby on Rails. He has a large cult-like following
- You have relatively simple projects that are profitable from day 1
- They have a series of “self-help” style books for running a business that are popular. Rework was their most popular by far.
- 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.
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.
https://medium.com/signal-v-noise/the-deal-jeff-bezos-got-on...
There are plenty of other small, profitable, SAAS businesses out there, but you don't hear about them because they don't operate on the same scale (and they're not as outspoken).
tldr : "profits = good, investments = bad"
Lewis Carroll's "Through the Looking-Glass" 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.
So, back to the original post, what they actually do want to say is, perhaps : "once we invest our money in things, we use what's left as profit". Which is obvious and a useless things to do.
Or perhaps the post argues against "invest everything and never take 1€ of profit" ? Or "only do invest with the money you earned" ? What a mess.
Basecamp is hardly talked about anymore. I don't know anyone who still uses it. They sunsetted a bunch of their other products.
Yes, you don't need to take VC money, but this post talks about keeping the profits instead of reinvesting them in the business.
I'm sure Fried and DHH are doing great taking profits every year out for themselves, but is 37Signals really a healthy and meaningful company?
Who gives a flying fuck what others think, as long as you have confidence that you are doing the right thing, after having put in the thought and effort?
Basically they don't have confidence in themselves, and hence look for external validation from others, which is a trap. Today they like you, tomorrow they don't. Whatcha gonna do about that? Cry?
what you gonna do with your life now that I'm leaving - Santana.
Google lyrics of that song, and check the first two sentences.
You don't need investors to care about the long-term health of your company.
First of all plenty of companies do invest money into equities, bonds, real estate, etc. That’s completely standard and in no way absurd.
I have no problems with companies taking profit, I have a company and I take profit. I would just find it incredibly embarrassing to attempt to convince my customers that me taking profit is for their benefit, and somehow the optimal way for me to increase my reliability as supplier, against the alternative of investing in product improvement.
It’s not that they’re taking profit, it’s that they’re advertising it as if it’s some kind of noble deed they’re performing on behalf of their customers. It absolutely does not remove risk from the company, that’s complete nonsense. The whole post is just strange.
Do you not understand why one starts a business?]
It ain't to work 90 hours a week until you drop dead from a coronary at 48 with nothing to show for but an obituary that says you created lots of shareholder value.
When did the West Coast tech scene utterly lose the plot?
What ever happened to starting a good company that makes a good product that fills a need, and provides a stable and comfortable life for the employees?
We need more public benefit corporations and way less VC bullshit.
After having worked in Silicon Valley for nearly a decade, the area to me isn’t about building future Hewlett-Packards or In-n-Outs or Costcos, as wonderful as this would be for our society since we definitely need companies that are rooted in serving their customers and society. It’s about building future Apples, Microsofts, Googles, Facebooks, etc., where they went for the gold and ended up with tons of it as a result of their success.
If you're losing customers but only at a rate that looks like you'll be out of business in 150 years, is this actually a problem for the company of people?
Parents provide for their children. When they can't or won't do that anymore, then the child should go get a job. But why should they go get two jobs? Or three? Makes no sense. It might be okay (if miserable) for a while but they're going to burn out.
When you need to switch tactics (for internal or external reasons), go for it, but if you're winning the game you are looking to win and there's no existential threat looming? Who cares about market share? You don't need to win the market in order to win a satisfied life for you and your company of people.
The goal stopped being about building a company and started being about building an acquisition target. Actually producing a product or innovating is secondary, if even considered.
Intuitively, all effort spent on a software has harsh diminishing returns.
Getting to 50% is easy. 80% isn't too bad. 90% is starting to feel like work. 95% is damn hard. 99% is a mammoth achievement. 100% is unattainable.
Increased functionality has value to a point, but it's fairly finite. By continually reinvesting in the same product, you are essentially betting on being at least a 99% product, if not 100%. Most products aren't that. Obviously you want to make a good product, but a lot of times trying to that by just throwing time and money at it just gets you Duke Nukem Forever'ed into irrelevance.
That's ok.
Most projects end in irrelevance.
Wouldn't you rather have a happy life and make a decent buck while on the path there? Many scientifically minded people mock the lottery as "a tax on people who don't understand math", but is extreme VC culture (and I'd paint most of the SF scene with that brush) anything but a lottery? It certainly isn't a meritocracy.
As a customer of 37signals, I'd prefer they didn't increase the risk on the business by decreasing the risk that their investors wouldn't make money.