How FreshBooks Revolutionized Small Business Accounting: The Journey of Founders Mike McDerment and Joe Sawada.
Company profile
Company business details
Motivation to build the product
The founders were motivated by the challenges they faced in managing their own small business finances. They recognized that many small business owners struggle with invoicing and expense tracking, which inspired them to create a solution that simplifies these processes.Problem that their product solves
FreshBooks solves the problem of poor cash flow and inefficient billing processes for small business owners and freelancers. By streamlining invoicing and expense management, it allows users to save time and collect payments more efficiently, which is crucial for their financial health and business growth.Their unfair advantage
FreshBooks' unfair advantage lies in its user-friendly interface and strong focus on customer feedback, which has led to continuous improvements and a loyal customer base.Strategies
Pre-Launch (Product Development & MVP)
Customer Engagement and Feedback Loop
In the early days of FreshBooks, Mike McDermott and his co-founders focused heavily on engaging with their customers. They made themselves easily reachable and actively sought feedback from users, which helped them understand what improvements were needed. Despite having only 10 customers initially, they used this feedback to iterate on their product, ensuring that it met the needs of their users. This close relationship with customers not only motivated the team but also guided the development of the software, leading to a more user-centric product.
User-Centric Development
Mike McDermott, co-founder of FreshBooks, identified a gap in the market while working on his events business. He was using Word and Excel to create invoices for his clients and found it frustrating. This led him to the realization that there had to be a better way to handle invoicing. Instead of just thinking about the problem, he took action by developing a simple invoicing software that catered specifically to freelancers and small business owners. This user-centric approach allowed him to scratch his own itch while also addressing a common pain point for many others.
Identifying Pain Points
Mike McDerment, while running a small design firm, experienced significant frustration with the billing process for his clients. This personal pain point led him to create FreshBooks, a solution designed to simplify invoicing and accounting for self-employed professionals. By addressing a common issue faced by many in his position, he was able to develop a product that resonated with a large audience, ultimately leading to the success of FreshBooks.
Launch Stage
Blind Dates for Employee Engagement
As FreshBooks grew, one of the team members initiated a program called 'blind dates' to foster connections among employees. This involved arranging coffee meetings between employees from different departments who might not normally interact. The goal was to build a sense of community and improve collaboration within the company. This initiative helped employees get to know each other better, share insights, and strengthen the company's culture, which was particularly important as the team expanded.
Iterative Improvement
After launching FreshBooks, Mike and his team faced challenges with user conversion rates. They had thousands of sign-ups each month but very few were turning into paying customers. Instead of giving up, they focused on iterative improvement. They analyzed their pricing and packaging strategies, realizing they were not aligned with customer expectations. By continuously refining their approach and not adhering to external timelines for success, they were able to gradually increase their paying customer base and improve their service.
Learn more about FreshBooks
From Basement to Unicorn: The Story of How FreshBooks was Built w/Co-founder Mike McDerment Ep.122
Billion Dollar Business! The Freshbooks Story - with the founder, Mike McDerment
