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EP 152: Reinventing Your Product–Twice–with Freshbooks Co-Founder Mike McDerment

The Nitty Gritty

  • How Mike transitioned from growing his design and marketing firm to creating FreshBooks, an invoicing software tool for small business owners
  • How a strong value of honesty seeps through the company and results in an open and transparent team that makes the product better
  • Why Mike created a pretend competitor to test new product features, how they tracked that project’s milestones, and when they knew that their new version would be a success

If you’re a small business owner, no doubt that you’ve heard of FreshBooks. In fact, you might even use the software to bill your clients. But what you might not have heard is how FreshBooks came to be and how it’s improved over time.

Mike McDerment, FreshBook’s cofounder and CEO, joins the podcast today to talk about how he structured his design agency to create more time to work on FreshBooks, why they used a secret company to test new features before launching them to the FreshBooks customers, and how important strong values are to create a strong company culture.

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Creating time to develop your business’ side project

“I built my firm in such a way that I got a lot of time back. I helped curate the work of my team members and push them to do as much of the client engagement work as I can. That’s the one thing that I felt that I was still involved with and should be — but I wanted to just show up to meetings and grooming work.” — Mike McDerment

For the first two years, FreshBooks made only $100 a month in revenue. That meant Mike and his team needed to get creative. Mike started by pivoting about 80% of his time from the firm to FreshBooks, which at the time was an unnamed side project. The rest of it was financed by agency staff who, when they had extra time, put that into FreshBooks. “That’s how we financed it without being explicit about it,” Mike explains. “We would have that company running and we were paying those employees, but more and more of their downtime was working towards the side project.”

Soon enough, FreshBooks started to take off — a founder bought in and so did his mom: she wrote him a $10,000 check to invest in FreshBooks. At that point, Mike knew it was time to start firing clients from the design firm to work on FreshBooks full-time.

Testing and changing your product by pretending to be a competitor

“How are we going to figure out if this is a better experience for people and know that conclusively from a business results standpoint? We had a variety of other considerations but it basically led us to: how do we test it before it’s live? But, I was also thinking: we’re doing this to build something that’s a step change for us in a our business that helps us move faster and get ahead of the competition. If they’re able to watch us work along at this, that’s not very helpful or very stealthy — and we don’t get the benefit of being ahead.” — Mike McDerment

Creating a secret competitor — a company they called Bill Spring — isn’t the average way to test new features or products. But that’s exactly what Mike and the team at FreshBooks did. “We used that as a petri dish,” Mike says. “That was a very important thing and I’ve learned a lot about innovation.” Particularly, he adds, how larger companies sometimes lack the ability to innovate because it’s too big of a risk.

But they wanted to take huge risks. To get around that, they created a logo, website, and articles of incorporation for Bill Spring — but there were no legal ties to FreshBooks. That way, the team could experiment and test out their ideas to see if they worked. And it did. They knew it once they got the first email from a FreshBooks user requesting to close their account. They were moving to Bill Spring.

Culture based on strong value set, including honesty

“We’ve built a strong culture on a value set called CORETRUST. That’s an acronym for our nine values. Among those are things like honesty which is not so much the word that matters, it’s how you define it which is: we’re straight forward and we communicate directly. Inside the building, we value people speaking their minds. It doesn’t need to have a lot of drama associated with it — it’s just: what are you thinking?” — Mike McDerment

At the end of the day, FreshBooks wouldn’t be what it is without a strong culture and value set. With honesty at the forefront of their company values, it encourages staff to be open and direct about their thoughts — and it’s encouraged — because that’s what results in a better product. And no doubt, as Mike mentions in this episode, has contributed to making FreshBooks better over the years — with the best up ahead.

Listen to this episode to hear more from Mike McDerment, FreshBook’s cofounder and CEO, about why he started the company, how he structured his agency to create more time for side projects, and much more.

Podcast | Product Development

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EP 299: How To Design Your Own Sales System

EP 299: How To Design Your Own Sales System

This week, I’ve got 4 more stories to share with you from small business owners who have intentionally done things their own way when it comes to sales and selling. They’ve found what truly works for them–even if it bucks the prevailing wisdom or would make a bro marketing expert role his or her eyes.

These stories come from business coach Ashley Gartland, marketing expert Amy Lippmann, designer Mel Richards, and work reinvention coach Lydia Lee.

Listen for how they incorporated these same considerations into finding their own unique sales systems. They designed their systems with personal values, strong relationships, reduced anxiety, and agency in mind.

EP 298: Creating A Less Harmful Sales System with Wanderwell Founder Kate Strathmann

EP 298: Creating A Less Harmful Sales System with Wanderwell Founder Kate Strathmann

This show is called What Works for a reason.

Sometimes it’s a declaration: this is what worked for this small business. And often, it’s a question, “What works?”

Today’s episode is very much a question, many questions, really:

What works when it comes to selling when you want to avoid manipulative or exploitative practices?

What works when your values conflict with many of the best practices of selling online but you still want people to buy your stuff?

What works when it comes to sales in a business that is actively anti-racist and anti-capitalist?

And even more bluntly: Can you even sell things without causing harm or perpetuating harmful systems?

My friend Kate Strathmann is the founder of Wanderwell, a bookkeeping and consulting firm that grows thriving businesses while investigating new models for being in business.

Recently, Kate took a bit of a detour from how she’s used to building her business, which is 90% referral based and fueled by deep relationship- and community-building. She decided to offer a small group program called the Equitable Business Incubator as a way of exploring anti-capitalist business practices and how they apply to the small businesses we’re building.

To fill the program, Kate need to sell differently.

Which led her to asking the question: Can you even sell things as a anti-capitalist?

While that might not be your specific question, I have a feeling that you too have wondering how you can effectively sell your offers without causing harm, perpetuating harmful systems, or damaging relationships. And that’s why I knew Kate and I needed to explore this topic on the show.

This is a conversation about what a kinder, less harmful sales process could look like—and it probably contains more questions than answers. But I’m confident those questions can help you find the answers that are right for you and the sales system that you want to build to make your business stronger.

We start out by defining what we’re really talking about when we talk about capitalism and anti-capitalism. Then, Kate shares how the Equitable Business Incubator came to be and how she ended up selling it. And then we dig into what makes many of the sales formulas and best practices being taught today problematic—and how to think differently to create your own alternative practices.

Now, let’s take a look at what works for creating less harmful sales systems!

EP 297: Selling A New Program With Proof To Product Founder Katie Hunt

EP 297: Selling A New Program With Proof To Product Founder Katie Hunt

Today’s guest is Katie Hunt—who is a member of the former group and serves the latter group.

Katie is the founder of Proof To Product, which helps creative entrepreneurs run and grow thriving product-based businesses. She works with designers, illustrators, and artists to help them develop in-demand product lines and get them sold in stores all over the world.

Not long after the pandemic threw her business and the industry she serves for a major loop, Katie and her team launched Proof To Product Labs to provide a completely digital, ongoing support opportunity for business owners when they needed it most.

And that launch was a smash.

Katie and I get into all of the nuts and bolts of how she adjusted the offer to meet the moment and how she warmed up her audience before the campaign, as well as the exact mix of emails, podcast ads, and social media content she used to sell the offer when it went live. We also talk about how she sees the sales system evolving in the future and how the offer has been received now that people are using it!

What Works offers in-depth, well-researched content that strips away the hype of the 21st-century economy. Whether you love the podcast, the articles, or the Instagram content, we’d love your support.Â