Why we choose profit

What It Covers

37signals cofounders Jason Fried and David Heinemeier Hansson explain their 25-year strategy of maintaining profitability over growth, taking money off the table regularly, and how profit margins create business freedom and customer stability.

Key Questions Answered

• •Profit as freedom: Profitable companies operate without investor approval, allowing founders to follow hunches and experiment freely. Losses stay contained within the profit pool, enabling quick pivots without external justification or board consensus on strategic direction.
• •Take money off the table early: Entrepreneurs should extract profits regularly rather than reinvesting everything back into the business. Small companies face near-zero long-term survival odds, so shifting money into diversified investments like index funds reduces risk while the business operates.
• •10% profit share model: 37signals introduced a profit-sharing pool five years ago that distributes gains to all employees, creating company-wide discipline around spending decisions. This approach makes everyone conscious of cloud costs and equipment investments, reinforcing sustainable financial habits throughout the organization.
• •Reliability as product feature: Sustained profitability enables 37signals to promise customers their products will remain available indefinitely, even if development stops. This end-of-internet guarantee differentiates them in markets where venture-backed competitors may disappear when funding dries up or priorities shift.