Some tech companies are worth billions of dollars. But the vast majority are not, and should stop raising money like they could be, says Basecamp CEO Jason Fried.
“Raising a bunch of money, and raising way more than you need, it ends up stunting people’s actual growth as businesses. It destroys businesses,” Fried said on the latest episode of Recode Decode. “It’s like, look, you know, you plant a seed, it needs some water, but if you just pour a whole fucking bucket of water on it’s going to kill it.”
Fried told Recode’s Kara Swisher that venture capital “kills more businesses than it helps” because the pressure to grow crazy-fast means companies keep raising money to keep their growth rate up. That, in turn, means they rarely have the opportunity to learn how to spend money in a disciplined, sustainable way.
“If you have a bunch of money in the bank, you’re encouraged to spend it because no one ever ... Well, I shouldn’t say no one, but hardly anyone ever goes for one round,” he said. “It’s round A, round B, it’s like, you’re going back to the drug dealer."