Brainstorming new business models for small software companies:

"While this post has Basecamp-related content, it's not really about Basecamp. It's about considering alternate business models for small software companies looking to capitalize on a success without imploding or losing the spirit of what made them able to produce the success in the first place. I believe that as more small teams start producing the killer Web 2.0 apps this is an issue they are going to run into. So let's be proactive about it. Here goes...

I've been spending a lot of time thinking about how to open up new markets for Basecamp, and I wanted to share a few things and also ask for some feedback. I believe there's an interesting discussion to be had here.

We've had a fair number of requests for an installed version of Basecamp (Basecamp is currently only available in an ASP-model hosted environment). A version that people can run on their own servers, behind their own firewall. Some people just aren't comfortable with hosted software. We can appreciate that.

Now, there's a lot of money to be made selling installable enterprise-ish software like Basecamp. Similar products like Socialtext or eProject can sell for thousands of dollars a year once you buy a license for just a few employees, and over ten thousand a year for medium sized companies. The problem for us is that even though the revenue is there, we don't have the manpower to service a wide and varying installed base. And -- even more fundamentally -- we don't want to. I'm afraid that a large installed base will divert our focus away from progress and more towards management. We want to create and build, not manage. We're trying to avoid unproductive human scaling at all costs."

(Via SIGNAL VS. NOISE.)