Jason Fried of 37Signals, a Chicago-based web app development company probably best known for inventing Ruby on Rails, just penned a satire on the Valley tech press and venture-funded company valuations. It's a hilarious read...this is good enough to be in The Onion!
CHICAGOâÂÂSeptember 24, 2009âÂÂ37signals is now a $100 billion dollar company, according to a group of investors who have agreed to purchase 0.000000001% of the company in exchange for $1.
Founder Jason Fried informed his employees about the new deal at a recent company-wide meeting. The financing round was led by Yardstick Capital and Institutionalized Venture Partners.
In order to increase the value of the company, 37signals has decided to stop generating revenues. âÂÂWhen it comes to valuation, making money is a real obstacle. Our profitability has been a real drag on our valuation,â said Mr. Fried. âÂÂOnce you have profits, itâÂÂs impossible to just make stuff up. ThatâÂÂs why weâÂÂre switching to a âÂÂfreeconomicsâ model. WeâÂÂll give away everything for free and let the market speculate about how much money we could make if we wanted to make money. That way, the skyâÂÂs the limit!âÂÂ
Read the full article here on the 37Signals "Signal vs. Noise" blog.
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