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I nearly fell of my chair this morning when I read that 37Signals have taken on outside funding, but after reading a bit further I’ve come to the conclusion that they’re actually in a very, very sweet spot…

Team 37Signals are poster children of the web 2.0 revolution going on at the moment. They’ve created some amazing applications that are doing very well, and they’ve been able to do that entirely with a bootstrapped model. They’ve also given back to the internet with RubyonRails, and have not been shy about giving away their philosophy towards business (which has helped them to become more successful).

But, along the way they’ve talked about staying small, doing big things with small teams, and the importance of not losing sight of your customer and whether they’ll use their credit card to pay for your service (instead of getting a VC to fund your idea until it fizzles out). 

Speaking to CEO Jason Fried over lunch at SxSW in Austin this year, I was really impressed with his attitude – he lives these ideas, rather than just writing about them. So why take on an investor, even if it for a minority stake?

To answer the question, I’m going to consider my own situation. 

I run a business group, where we meet monthly to discuss business. We’re all business owners at various growth stages and with varying degrees of success, but we don’t pull any punches – we’re there to help each other and share experiences so that we can all grow. Sometimes we have an older, wiser business person join us, to impart their wisdom too. And to be honest, this is most often the most beneficial part of the meeting – somehow the wisdom from the older businessperson just seems to make more sense.

So, getting back to 37Signals, the only reason that I can see taking on investment for equity would be a good idea, is to get access to that older business person who can help you to avoid the mistakes that they’ve made or missed in their careers.

Jeff Bezos is one of those guys that will add tremendous value to any operation, so I can see why 37Signals have ended up taking on Bezos Expeditions as an investor.  Let’s hope they continue along the same trajectory and with the help of Bezos, create and scale more apps that add more value to their customers.

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Published 26 July, 2006 by Gareth Knight

27 more posts from this author

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