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Comment by adamhowell | Hacker News Reader

Not to be a stickler, but the series plainly says "'Profitable and proud' is a Signal vs. Noise series that profiles companies that have $1MM+ in revenues, didn’t take VC, and are profitable..."

And here, in just the second post of the series, a company states "taking this investment from John H. Phillips was probably the best decision we ever made. Apart from allowing us to meet payroll for the first year..."

That's not exactly "didn't take VC".

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This update was just posted to our blog:

This was originally posted as part of our “Profitable & Proud” series but commenters rightly pointed out that Shopify’s angel investor broke the “no funding” rule that is part of the series. We’ll leave the interview up but we’re removing it from the P&P series. We’re sorry about confusing our readers and Shopify (we are the ones who originally approached them about participating). Thanks to all who pointed out the error and stay tuned for another P&P profile that does fit the bill.

This is an odd decision. The Shopify story seems to be consistent with both the letter and spirit of the P&P series.

It's consistent with the literal interpretation of the rules because they state "didn't take VC" and not "didn't take funding".

*See my earlier post in this thread to see why I think it's also consistent with the spirit of the P&P series.

The key is that we want companies for this series that are bootstrapped. Companies that didn't take outside funding to run operations, but either put in their own money or didn't go full-time until they were profitable.

Shopify is still a great story and we're leaving it up. It just didn't fit the narrow criteria of the category we created.

The fact that you couldn't easily tell whether the company fits your criteria shows that your criteria are pretty much meaningless. Is there a reason for all this, besides to glorify your own company, which fits the criteria? "Ideology" is the word that comes to mind. You create arbitrary divisions, and then drum up emotions to make it seem like people on the other side of the imaginary fence are different and unworthy.

Beyond ideology, this series can help entrepreneurs in regions where VCs are highly conservative and bootstrapping is the only way you can even take risky business decisions.

John's investment was tiny compared to what VCs invest. 90% of his investment is time and advice. Mostly in the form of CEO coaching.

Another way of looking at it: Shopify only has common shares. There has not been any Series A or preferred share of any kind.

I was thinking the same. Technically, they didn't take VC, they took angel investment. They are different, but I completely agree on your point as I wrote in my comment on SVN blog.

I don't get how they can claim to be a bootstrapped company when they did indeed take angel investment. I would love for someone to shed some insight.

Here's some insight: It's hard to find successful startups that are truly 100% bootstrapped. 37 signals entire purpose for doing these posts will be undermined if they can't find a good number of companies that fit their theoretical profile.

It seems likely that 37 Signal's primary purpose for doing these posts is to raise brand awareness.

It's not hard to find. We've got over a dozen stories lined up so far and we're hearing from more businesses every day.

This one shouldn't have been posted as part of this series. We definitely want to keep this series clean and clear with no ambiguity.

So you guys wouldn't fit this criteria either, right, having taken money from Bezos?

No investment money was spent funding operations. That's the criteria we're using for this series.

It's not really an angel investment either. Just like a VC, an angel typically hopes to cash out at some point in the future via an acquisition or IPO.

In this case, the investor received common stock. Which means he hopes to generate a return on his investment from his share of the profits.

This is in keeping with 37signals' focus on profitable companies, as opposed to startups which are built to flip.

It is simple: he is an angel, not a VC. They are different enough that this matters for the series.

I understand they're different, but I don't think most "bootstrapped" companies could say:

"It took us 4 years from the incorporation of our Snowboard business to hit profitability. We had 13 employees at the time."

If bootstrapped means profitable (or at least not unprofitable) from day one then I don't think any company could be called bootstrapped.

Most "bootstrapped" companies rely on outside money, that money just happens to come from the founder's savings.

I usually refer to that distinction as "self-financed" vs. "bootstrapped", where "bootstrapped" implies an alternate revenue stream while building (usually a full-time job or consulting).

37signals, having evolved from a consultancy, is a more classically bootstrapped company.

However, in practice, the lines are often fuzzy with companies using a number of instruments to fuel growth.

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