Creative Business Valuation

37Signals posts a press release stating that 37SIGNALS VALUATION TOPS $100 BILLION AFTER BOLD VC INVESTMENT. The press release starts like this:

37signals 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 describes one way – quite commonly used by startups – to increase the value of a company:

In order to increase the value of the company, 37signals has decided to stop generating revenues. “When it comes to valuation, making money is a real obstacle. Our profitability has been a real drag on our valuation,” said Mr. Fried. “Once you have profits, it’s impossible to just make stuff up. That’s why we’re switching to a ‘freeconomics’ model. We’ll 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 sky’s the limit!”

I love this post, creative and inspiring. First comment says ‘shoulda waited to post this on April 1st’ but the impact is higher now.

To see what 37Signals really stand for, go to Simple small business software, collaboration, CRM: 37signals. They have interesting software solutions that I intend to look at.

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