The Small, Bootstrapped Multi-billion Dollar Company

This week, a project management software company Basecamp (formerly 37Signals) tweeted out that they opened 4 million projects in 2014. In their blog, books, and twitter, Basecamp has been a vocal advocate (some say too obsessed) of their culture of remote work, sane work life balance, and not taking venture capital. Many startups enthusiasts brush off Basecamp as this small company working on a simple to-do list tool. They think that while the Basecamp’s advice are good, they are not for a billion dollar company that’s “disrupting” an industry.

Let’s see if they are really that small by looking at their business metrics. Basecamp’s homepage touts they have around 350,000 customers. If Basecamp’s average monthly plan price per customer is $40 (their plans range from $20 — $150/mon), that would give them a estimated yearly revenue of $168 million. For a company of only 40 employees this is extremely impressive. With such low operating costs, it is clear that they are an extremely profitable business. Compared this with another great business software company, Atlassian, which last reported $177 million yearly revenue with 1,148 employee. Atlassian was last valued at $3.3billion dollars. One can make a pretty good guess on how Basecamp would be valued at in the private equity market.

Is Basecamp a “disruptive” game changer? PM software is a competitive sector filled with well funded startups like Asana and Trello. Although it is a crowded sector, every serious business needs a good PM software. Basecamp was an early “cloud based”, saas solution that replaced complex software like Microsoft Project. For my shrewd business, we tried everything we could to not pay Basecamp $50/mon. To save $600 for the year, my company actively used other PM software that had generous free tiers. Call it old habits or for reasons that are too long to write here, we gave up and fork over the money to old trusty Basecamp.

Personally, I don’t completely agree with everything that Basecamp teaches. While I see the benefit in increased focus of having remote work for part of the year, I’m not convinced that every software company should be remote. VC funded startups have been and continues to make tremendous impact in the modern era. Nevertheless, if Basecamp offers us new advice, I will be all ears.