Bezos' $6M Investment Terms

Jason Fried shares the story of how Jeff Bezos invested in 37signals (now Basecamp) in 2006.

"Jeff found us because a couple of his companies that he was invested in had used Basecamp. He saw me speak at a conference in San Diego in 2005 called ETech. He was speaking, I was speaking, and I think he liked what I had to say.

We went to Seattle to meet him. I knew this was like an investment opportunity because he wouldn't just say 'come out and say hello.' After a couple meetings, we really liked him - he's very likable and we had admiration for what he built.

Eventually we worked out a deal which was ridiculous - we barely had any revenue at the time and the valuation was stupid. He knew it was stupid. He's like 'put together something, I need something.' We put together something and we all had a laugh about it because it was ridiculous.

We told him we don't want you to have any control, we don't want a board of directors. They had one provision which said something like in 5 or 7 years they had some right to encourage us to do something like sell or go public, but they didn't have the power to push it through. He's like 'I want you guys to do what you want to do, I like long-term thinkers.'

We're an LLC so he's a member, he has units, and every year he gets distributions. He's made his money back many times over and still owns his shares. We haven't had to sell the business - it's been a great investment for him, not like a massive exit but it pays for a lot of things."