37signals' Remarkable Profitability and Unique Employee Profit Sharing Model

An innovative yet straightforward bonus scheme at a highly profitable software company specializing in Ruby on Rails apps.

I recently came across a LinkedIn update from Jason Fried, CEO of 37signals, where he shared insights into the company’s employee profile-sharing model—very interesting.

As a big fan of Ruby on Rails and the Rework book series by Jason Fried and DHH, I’ve been keeping an eye on news about 37signals. Sometime last year, during an interview, Jason Fried more or less acknowledged the rumour that 37signals generates high double-digit million-dollar profits.

This recent 37signals’ CEO’s post confirmed it.

Unique Employee Profit-Sharing Model

“For years we've had a profit share system in place where we take 10% of our annual profits and distribute them to our employees based on their tenure.”

"Real cash, every year, directly to our employees”.

“given that we've been profitable for 25 years, it's not a maybe-one-day-dream, it's been an annual reality.”
- CEO of 37signals

I like this scheme, simple, fair and transparent. However, it doesn't apply to my business because I'm a solopreneur (with no employees), and I'm quite comfortable with that.

Reverse engineer the annual profit of 37signals

Throughout the following sentences, Jason Fried indirectly revealed 37signals' profit figure for 2024. Let’s do a simple math exercise.