Why is being self-funded important to a sustainable business?

Being self-funded means a business operates with money it has earned rather than money it's been given. Jason Fried explains that this creates a natural constraint that prevents waste and encourages efficiency. When companies have limited resources, they're more careful with spending, similar to rationing water on a hike rather than wastefully consuming when resources appear unlimited. Self-funded companies tend to maintain leaner structures with fewer management layers, which allows them to move faster and make better decisions. This approach emphasizes profitability over metrics like user growth or revenue that might obscure financial reality. For 37signals, profitability has been the primary focus for 24 years, ensuring they can sustainably remain in business regardless of market conditions.