Invoicing service FreshBooks is part of the software canon for freelancers and entrepreneurs. It's shown up in Lifehacker recommendations from 2009 to 2018, and it's still one of the best ways to stay sane when billing multiple clients. Two years ago, the company rolled out an entirely new version that it had secretly developed under the name Bill Spring. We talked to FreshBooks co-founder and CEO Mike McDerment about building his own company's biggest competitor.
Location: Toronto, Canada Current Gig: Co-founder and CEO, FreshBooks One word that best describes how you work: Hands-on Current mobile device: iPhone X Current computer: MacBook Pro
First of all, tell us a little about your background and how you got to where you are today.
I grew up in Toronto as the youngest of four kids. My mum was a nurse who developed the first program in the country for helping kids cope with stress. It started out as a little program in one school board and then spread across North America, and today it's still going strong. I think I get my entrepreneurial streak from her.
I studied commerce at university, but after school, I couldn't really see myself putting on a suit and tie and riding an elevator to the 37th floor of a corporate tower every morning. It wasn't clear in my mind yet that I was hardwired for entrepreneurship, but what I did know was that I enjoyed solving problems and building things for people. I started up my own marketing and design agency, and after a couple years, there were four of us taking on client work.
When it came to billing for our work, we were using Microsoft Word and Excel because accounting software was far too complicated for what we needed. I hit my breaking point one day when I accidentally saved over an important client invoice — I just kinda snapped. I knew there had to be a better way, so I spent the next two weeks coding what would become the foundation of what is now FreshBooks.
The first few years trying to get FreshBooks off the ground were tough. My co-founders Joe, Levi and I moved into my parents' basement, and we spent the next 3.5 years there. For the first two years, we had only a handful of customers paying us $US10 ($13) a month. I was close to calling it quits a couple times. I understand now what I didn't then: sometimes new ideas take a while to catch, and entrepreneurs aren't always the most patient people. But FreshBooks did catch and a decade later, we've helped more than 10 million people in 160 countries.
Take us through a recent workday.
No two days are the same for me. I spend time with the teams that will most benefit from having me in the room that day. Sometimes that means back-to-back 1:1 sessions with leaders who are looking for decision making support or planning a few months down the road. Other times I'm sleeves rolled up and in the trenches with the team, moving rocks, getting the work done.
You recently oversaw an extensive rebuilding of FreshBooks' software. Tell us about that process.
The original FreshBooks platform was born in the basement and built by three co-founders with zero experience building production web applications. As the business grew, we slowly brought on experienced engineers, but by that time the damage was done and we were stuck building on top of about a million lines of what some might call "spaghetti code." This was one of the main reasons for the rebuild.
The other reason was much bigger than "spaghetti code." We started the company more than a decade ago; the world has changed and we've learned a lot about building products and serving people who work for themselves. While self-employed professionals and their teams are a massive and growing part of the labour force — over 53 million in the USA alone and on track for 70 million in 2020, twice the size of the Fortune 500 — the world is not yet designed for them. Things that should be simple are far too complicated. For FreshBooks to be able to keep pace and to serve that group well in five years' time, we knew we needed to act.
Once we had that conviction, we put together a small team and gave them space to begin the re-imagining of FreshBooks. They followed a lean design process focused on a speedy feedback cycle from real users. What came out the other side of the process was beautiful and exciting, but also very scary. Here was a new platform that was going to replace the classic product used by millions of people around the world for over a decade.
There was a lot of uncertainty and sleepless nights for the team. Would the new platform flop? Would it introduce bugs that would erode customer trust and happiness? Would it fail to meet our expectations? There are many examples in our industry of companies that have tried to re-platform and failed. Not only did we not want to follow in the footsteps of past failures, we wanted the new platform to give FreshBooks a competitive advantage for years to come.
What we came up with was a true business hack: we decided to launch the new platform in market so we could actually test drive its performance. We started up a secret, but very real company called Bill Spring to compete in the wild with FreshBooks. We set up a holding company in Delaware to incorporate Bill Spring so it couldn't be traced back to FreshBooks. Bill Spring was a free product with its own website, logo and branding, and eventually, its own customers. The idea was to enable our product team to test and learn with real customers in real time without compromising the FreshBooks brand. With the freedom of Bill Spring, the team was unencumbered and began to build and test new features and designs at a pace never seen before in our company.
The time to unveil the new product to our customers came when Bill Spring began to perform at the level equivalent to our classic product. The tricky thing was that this product had been available to new customers for over a year, but none of our existing customers had had a chance to try it. Figuring out how to migrate our customers to the new platform was an incredibly complex project and it required almost the entire company's help. We put forth a very challenging mission: every one of our customers would be given the opportunity to migrate with the click of a button, and be able to reverse migrate back without losing any information. The whole company rallied behind this vision and we set about to make it happen.
Overall, re-platforming and building that migration path was not something we had planned on five years ago, but it was truly the most impressive feat we have accomplished in our 14-year history. I'm really proud of everyone involved.
What apps, gadgets, or tools can't you live without?
I use a computer every day, but when I need to think and when I read, I rely on a good, old-fashioned ballpoint pen and a Moleskine notebook.
What's your workspace setup like?
FreshBooks' headquarters is an 80,000 square foot floor plate, and all 300 of us work on the same floor. I don't have an office in the traditional sense. Instead, I move around during the day working with different teams solving different problems. When I need to meet with someone one-on-one or do some work solo, I usually camp out in a glass meeting room by the main staircase and company washrooms, so I see people and they see me. Visibility and accessibility are important when you're the CEO, so it's by no accident that I choose a room with see-through walls in the most trafficked area to spend my time in. If someone heads to the toilet or grabs a coffee, odds are we'll see each other. That helps me stay connected, and helps create more fruitful hallway conversations.
What's your best time-saving shortcut or life hack?
When someone asks a question, make sure you understand why they're asking it. Seek to understand the full context whenever you can, so you can give the best possible response, not just a surface answer. Not enough people do this, and it's a powerful way to get to the root.
What everyday thing are you better at than everyone else? What's your secret?
Asking questions. I always want to understand why someone has landed on a decision or why they have chosen to approach something in a specific way. I like to peel the layers back and get to the fundamental assumptions being made.
The best mentors I've had are people who ask great questions, and it's a behaviour I try to model every day for my team. As a leader, there are only a handful of things that scare me. A meeting without questions, that terrifies me.
How do you keep track of what you have to do?
I've got a little notebook I carry around with me and I write everything down.
How do you recharge? What do you do when you want to forget about work?
I spend time outdoors when I need a break. A long canoe trip, ideally to a place where my devices won't work, or doing something with my hands, like chopping firewood or cutting the grass, is restorative for me. I have two kids under two years old, and already, they have spent a lot of time outdoors. A love for the outdoors and an appetite for adventure is something I hope to pass on to them.
What's your favourite side project?
Helping other entrepreneurs solve all the problems that go with building a business. I dedicate one evening every week to helping another company builder who is earlier in the process, and trying to find their way. It's a small way for me to pay it forward, and it's fun — I love creating things.
What are you currently reading, or what's something you'd recommend?
An oldie but goodie is Built to Last: Successful Habits of Visionary Companies by Jim Collins. This book had a big influence on my thinking when my co-founders and I launched FreshBooks from my parents' basement over a decade ago. It pushed me to think long-term, to get clear on our vision: something that could be big, bold and daring, something others looking at our business through the lens of a spreadsheet could never see. Having this vision helped us persevere through the rough patches.
Fill in the blank: I'd love to see _______ answer these same questions.
Jayson Gaignard, founder of Mastermind Talks and Community Made.
What's the best advice you've ever received?
"Focus is a four-letter word." I got that advice from an early mentor, my best friend's dad. If you don't focus, you can't execute, and it's all about execution. If you don't execute, you'll be stepping in a lot of four-letter words. So yes, focus is a four-letter word.
Is there anything else you'd like to add that might be interesting to readers and fans?
I've got an appetite for adventure that most don't. I simply love not knowing what comes next, or how to get from where you are to where you want to be. Said another way, I love going on the adventure and not packing the map. Figuring things out as you go is the fun in life, and if you're open to it, the world comes to you. Road trips, wrong turns and running companies are things I love because you never know what's next.