If Wufoo stays private indefinitely, doesn't this clash with YC's business model?

This probably stems from my naivete, but how do investors make money if a company has no intention of going public or being acquired?

Investors can make money the same way founders can: Dividends. But yeah, that's a slow, boring way of earning a return in the eyes of some. It's not nearly as spectacular as a 10-100x return from a sale.

The reason venture investors want a return of capital rather than dividends is not so much that it's faster, but that it's harder to spoof. Investors will accept dividends from a large, public company, because they're so highly regulated. But in a small private company it would be too easy for the guys running it to divert (what would have been) profits to their own uses.

This is why medieval venture investors were willing to back sea voyages but not factories. In a sea voyage everyone got liquid at the end of each trip, and it was very clear what was on each ship.

I'm not suggesting of course that 37 Signals would take advantage of investors. I'm just explaining why, structurally, venture investors are not interested in dividends.

Which is a great argument for why we turned down the 30+ venture capitalists who came knocking on our door. We weren't interested in those kind of setups. And I wish more people who think through exactly those implications: Getting a traditional VC involved means aiming for an exit. Whether that be M&A (more likely) or IPO (less likely).

For people who are just interested in building a business, not searching for an exit, the traditional VC is just not a relevant option. 37signals is amongst those people.

37 Signals will probably eventually be acquired. Bezos bet on that by investing in them, and he is pretty smart.

Not really, actually. This is in part why we turned down 30 VCs, but were interested in getting involved with Bezos. He's as interested as we are in making this a company that'll be around for 20 years. (And should that turn out not to be the case, Bezos is a minority investor and will have no power to force a sale).

37signals is not for sale now and probably never will be. We like what we're doing too much and are more than comfortable with just the simple financial success of a profitable business making dividends.

Again, doesn't mean that our way is the only way. I'm just trying to do mine to encourage others to see it as a viable alternative to the funding -> sell out route.