Basecamp: From Bootstrapped To $25MM In Annual Profits

By KISSPlatform Team

The year was 1999. Everybody was excited about a new millennium and the dot-com bubble burst was around the corner. Back when nobody expected we’d have small computers inside of our pockets or that we’d have online followers reading our tweets.

But, regardless, there was excitement about the possibilities of the world wide web. A lot of people were thinking about how to make money using it and it was then that three creative twenty-year-olds decided to found a web design company named 37 signals.

Web design was only around 10 years old and businesses were just starting to see the potential in having professionally designed websites. Jason Fried, Carlos Segura, and Ernest Kim decided to leverage this trend with 37 signals.

These guys wanted to focus on making websites useful and easy to use. Mainly, they wanted to design websites for people and make their lives easier when using any web application. Remember this, because designing for humans will be a recurring topic in this story.

Their focus on the user helped them get new clients. In fact, a lot of new clients. And, like any other growing business, the team at 37 signals accepted new projects as they came. Business was good.

The challenges of a growing business

But there was a problem.

As good designers as they were, they weren’t good at managing projects.

All the internal project communications was done via mail which quickly became messy, causing a lot of problems and tension between the company and their clients.

They tried to keep track of what they needed to do, responsibilities, milestones… but they dropped the ball in key deliverables.

Something needed to be done.

The team, in desperation, started looking for project management tools that could help. They tried and tested what was available, but they couldn’t find anything close to what they needed to improve their project management.

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They couldn’t find a tool that was designed with humans in mind. The tools were too complicated. Too hard to use. They went back to emails. 

Of course, that didn’t go well. The problems came back!

They were very frustrated.

Instead of looking for more tools or using a system that was clearly not working, they decided to do something about it. They were, after all, designers. Surely they could come up with something. 

37 signals scratched their own itch. They decided to build their own project management tool.

They already knew the basic features they needed: to-do lists, message boards, and milestones. Today, we have tons of tools that can do that, but back then, there was nothing like that. Nothing that gave a human approach to project management.

For a few months, 37 signals worked on their internal tool and used it to manage their own projects.

Everybody noticed the change. The team was working better by using a tool designed specifically with their needs in mind. Their clients, who would also post comments and know what 37 signals was working on, noticed the projects were now running so much better!

The change was so positive and the tool so easy to use, that even some clients asked if they could use the tool to manage their own projects.

A new business is born

37 signals quickly realized they had built something special. They built a tool that could be used by others. In fact, they realized others needed this type of tool.

They took the tool seriously and named it Basecamp. Yes! The Basecamp we all know of. 

They officially launched it in 2004, five years after founding 37 signals.

Original Basecamp announcement

The original post where Basecamp was announced

According to Jason Fried, they decided that if they were able to generate $5,000 each month with the tool after a year, they’d keep working on it. 

They hit that milestone within six weeks!

With a new product under their belt, they kept working on web design projects to help it steadily grow.

After a year, Basecamp was making more money than 37 signals so they decided to shift their focus, drop the web-design, and concentrate 100% on Basecamp.

Basecamp is a great example of how bootstrapping gives you enough flexibility to build, test, and launch ideas to the market!

37 signals developed a product that they knew was needed but they asked for feedback and improved it over time. They focused on the user, like they’ve always done. 

They made Basecamp grow steadily until they were sure it would be worth investing their entire time and resources into it. It wasn’t a shot in the dark!

Today, more than 20 million people have worked on projects with Basecamp, all thanks to the power of bootstrapping!

A graph of Basecamp's growth... and what they're expecting in the future!

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