In February Fellowship Technologies was acquired by ActiveNetwork. Rather than just speculate on what this means for FellowshipOne, I asked Jeff Hook, CEO & Founder of Fellowship Technologies, if he would be willing to answer questions about this significant development in the church management software market. He graciously agreed.
I broke my questions into three areas, and limited it to four questions per area. I asked a few friends of mine in the ChMS community what they would like to ask as well, and some of their questions are integrated into the twelve below. Introductions aside, let's get to Jeff's answers!
The first category was for general questions about the acquisition.
(1) What brought about this development?
Active contacted me first in September of 2007 saying they wanted to get into the church space and I told them I was not interested in selling. I finally entertained their request and went to San Diego to visit their corporate headquarters. They were very impressive but I again reiterated that I was not interested in selling at that time. Every so often, they would call and we'd engage in each others' vision. As we saw common ground, it became clear that we were either going to be a big part of their strategy or we'd have to compete. After a lot of prayer and petitioning to the Lord, it became clear this was what we were supposed to do. We conducted the due diligence on each other and closed the deal on February 1st of this year.
(2) How did F1 become aware of ActiveNetwork or vice versa?
They conducted market research and came to the conclusion that we were the market thought leaders in the industry. They were also convinced that we could become the market leaders based on our people, process and technology approach to business, if we just had more capital to grow faster. We were already growing at a good pace organically, but they knew with more resources, we could ignite development, increase the number of leads and add churches faster.
(3) What do you see as the strongest aspect of ActiveNetwork?
Active is made up of quality professionals who strive to provide value to their customers and are truly dedicated to helping make them (the customer's) successful in fulfilling their vision. In each area of the solutions they provide to the market, they want to be the best - either be the best or do not play; provide innovation or do not play; add the most value or do not play.
(4) What was most attractive about FellowshipOne to ActiveNetwork?
According to a document I saw after the acquisition, the primary things Active liked about Fellowship Technologies is the quality of our people and our approach to business and innovation; the secondary reasons for buying us was the technology and Active's motivation to get into the faith market.
My second area of questioning was more structural. How would Fellowship Technologies operate after the acquisition?
(1) What kind of changes has the integration made to FellowshipOne as an organization?
Since the primary reason for buying Fellowship Technologies was our people, Active has not changed the structure much at all at this time. The only change so far is that our HR department now reports up through the corporate office and will support additional business units as well as our own. Over time, we will begin to transition into the matrix organization to ensure that we are conducting certain aspects of the business using a common approach, but with me, the general manager of the business unit, directing the priorities required to address the needs of the market. All of the executives are incented to stay the course to help fulfill our vision of providing better systems to churches to effectively care for people, efficiently manage resources and to enable growth (spiritually and numerically).
(2) What short term benefits should FellowshipOne customers expect from this integration?
Of course, the answer to this depends on how you define short-term. As you know, very few things happen in technology in the short term. Over time we will be able to apply more resources to the business and share some functionality that are in other Active solutions. We will also be able to attract employees who live outside of Texas to expand the reach of resources available (It is hard for a smaller company to manage the regulatory requirements of adding employees in more than one state). We will also be able to provide better support to our customers who depend on Active for solutions outside of Fellowship One.
(3) What long term benefits do you see for FellowshipOne customers as a result of this transition?
These are too numerous to layout here. Let me suffice it to say that I believe, in less than five years, the marketplace will agree that this acquisition was ingenious and will bring bring more to the church market than any other ChMS ever imagined. That includes the "previous" Fellowship Technologies before I started to expand my vision of how churches could be served; and, as you know, my vision has always been pretty big!
(4) You've provided excellent leadership at FellowshipOne for a long time. How long are you committed to staying at the head of FellowshipOne?
Thank you. Of course, I cannot foresee the future. I assume I will continue to be here for quite some time. I am making no plans to leave. Let me just say I continue to be committed to helping make God's vision for Fellowship One that He laid out for me that very first day that I was approached about this software a reality. Maybe I will leave after I have run out of good ideas for how to apply technologies and processes to help the Church serve God's people better. I don't know if I have one of the best jobs in the world, but I do know I have one of the best jobs for me.
My final area of questioning was related to how this would affect the FellowshipOne product directly, as well as a few of Jeff's thoughts on open source solutions:
(1) Will this acquisition by ActiveNetwork provide more resources to FellowshipOne and speed up the development process?
Yes, that is part of the plan. We are working through how best to make that happen. Active has a large development organization that we can leverage in many different ways. Several of them have even come forward and confessed their faith and commented how they are so proud that Active has made serving the Church as part of its vision.
(2) Will this provide the ability for churches to develop their own apps and such for the FellowshipOne platform?
With our API strategy, that was already happening. We just released a giving API to help churches and third party vendors who wanted to post transactions to congregant's giving records. We are definitely committed not just to have an API across the platform, but to use it ourselves in our own development so that we know it works and works well.
(3) Do you have any thoughts on the ChMS market in general, and in particular the open source initiatives like bvcms and others.
Although people like yourself may disagree with my bias, I do not believe there are enough highly skilled programmers on church staffs to make an open source initiative work in this targeted vertical. To make an open source approach truly successful, there needs to be a vendor committed to allowing others to affect everything, including the kernal, as well as an outstanding, large group of individuals who can add value using the right set of standards and guidelines that everyone can agree with. I've looked at taking a more open source approach to church management and I think it is very hard to pull off. I prefer the API approach of a platform as a service using a strategy that allows a lot of flexibility but can insure the inner workings because of the control and QA the vendor is committed to providing. More of an Apple approach than a Google approach - both are good companies, both approaches can work, but the open source approach requires scale on a much larger level.
Almost every open source solution that has made it in the secular world has had a lot of capital behind it to get it off the ground or at least to get it to scale in a supported fashion. My question is are these solutions willing to raise the money to make these solutions viable in the long term, not just a flash on the continuum of time. The attractiveness of these solutions is the out-of-pocket price but we all know free is not really free. I equate it more to a DIY approach to systems and some churches are attracted to that. The overarching business question is does a church believe that building and supporting information systems is one of its core competencies? Most churches that have built systems build in some basic flexibility, but do not take the time to conduct Quality Assurance on the entire system because development is off to the next thing. Or the QA is conducted by the programmer him/herself and only tests for a subset of what the user really tries to enter into the system. As the applications then do not perform, the user is the one holding the bag. When you are a professionally run software company, you can specialize and have designers design, coders code and independent QA personnel test; I believe it makes for a better system.
In general, I believe the consolidation in this market will begin to accelerate. I also believe new vendors will always bring new solutions to market. However, at some point, the barrier to entry will force the smaller players to take a secondary role because the established vendors with robust solutions including digital content delivery, integrated data analyses, mobile everything and congregational self-service will be the table stakes. I have never believed that our customers should buy from Fellowship Technologies because we are good guys, I want our customers to buy from us because we provide the best software for the best value and help them achieve their mission. It's about helping the staff do their jobs better and helping congregations live more functional Christian lives.
(4) What is the one thing you'd like to say to any potential customer about this acquisition and the future of FellowshipOne?
I will paraphrase Austin Spooner's comment, "it's definitely worth watching over time!" We are authentically passionate about the Church. We believe the Church deserves the best systems out there and are committed to providing them. With the integration of Fellowship One to other Active solutions, coupled with the vision God has set out for us, we will be in the position to offer features and services that no one else in the industry is even thinking about. Can we pull it off? I'll let every person decide that on their own; however, we would definitely appreciate it if you look closely at where we are headed and the value we can provide.
So there you have it, right from the "horse's mouth" so to speak. Although HDC is not a FellowshipOne customer, we have always appreciated the professionalism of FellowshipOne and the energy, passion and innovation they bring to the church software market. Every church that uses church management software benefits from strong competition in the market, no matter what product you choose at the end of the day. Thanks to Jeff Hook for taking the time to speak with us today.