Open Source Roots
ActiveCollab was started in 2005 and continued until 2006. It started as a side project to solve organizational problems. Basecamp, which was founded in 2004, was a popular tool, but it was costly and there were no other viable alternatives. ActiveCollab was therefore developed under a GPL license, and the open-source community accepted it. It was featured on major news sites such as Digg, Sitepoint and Alexa. The story was loved by the media because it featured a small open-source project against a large player. It was too much. A decision had to be made: abandon the project, get a job, or create a commercial product and support it.
Ilijaand Goran, the founders, invested $20,000 in v1.0 and spent six months developing it from scratch. It was released in the summer 2007. They were able to recoup their investment within 4 days. The product has been profitable since then. This was before angel investors, venture capital, and accelerators were common. It was just a handful of guys with computers and 56k dial-up connections. There was also a lot of fast food. The open source version was a huge success. They were willing to pay for a great solution, provided it included good support and software. We were happy if 50 of 1000 users converted. Others were only in it for the free ride and it was hard to isolate all the noise when it came to project management tools. Instead of having to use many different tools, our vision was to offer everything you need in one program. This path is not feasible now due to all the competition and the initial costs of building a startup. What made us stand out was self-hosting. A one-time fee was paid and you received good software and support. The fee was very low due to the income gap between the developing countries where we work and the developed ones where our clients are from.
As the internet matured, cloud computing and smartphones gained huge traction around 2010. Many business models emerged as bandwidth and hardware became cheaper. You don’t need to own the software, have it hosted yourself, buy expensive machines or be tied to one device to access your files. Accessing the software from any device with an internet connection was possible. This was a huge opportunity for ActiveCollab. It opened up a new market to those who didn’t have the budget or technical expertise to host their own solution. This includes freelancers, small businesses, and reluctant users who are unable to make an investment. ActiveCollab v4.0 was launched in July 2013. You could choose between the self-hosted version (the difference that made us different) or the cloud (the new market that opened up). It is difficult to get into the SaaS industry. It requires significant investment in both people and machines. Because overhead costs are constant, you need to have an existing user pool. Although we had some experience with servers, running a number of machines was something new. We had a way to collect feedback, track churn rate and see why they were occurring. We had never heard from a client who purchased the self-hosted software. They were only able to answer occasional support questions. We could ask questions and get feedback with the cloud.
