The REFRESH button
FOR STARTUP DARLING FRESHBOOKS, BEING GOOD WASN’T GOOD ENOUGH. SPENCE,
In every business’s life there comes a time when founders realize they have to shake things up. Customers are changing, technology is rushing ahead, and competitors are always plotting, so they have to turn their business upside down before someone else does.
For a decade, Freshbooks has been a darling among Canadian startups. It had everything going for it: a global niche as a cloud-based invoicing system for small service businesses; customers in 130 countries; and a 2014 investment of US$30 million from venture capitalists in Canada and the U. S. But in 2104, Michael McDerment, co-founder and CEO, realized there was a deep problem at the heart of Freshbooks.
The technology that has powered Freshbooks since 2003 was no longer good enough. To add more features, speed things up, and simplify the experience, Freshbooks needed a more advanced platform. That meant rebuilding the company’s single product from scratch.
The Post sat down with McDerment in Freshbooks’ west- end Toronto office to discuss how a company bounces back when its product is outdated and its future’s on the line.
Freshbooks began its relaunch two years ago, when its technology constraints were becoming clear. “Making changes to the old platform was hard,” McDerment said. “Those tiny decisions you made 10 years ago can really come back and bite you. It took a lot of time to do even the smallest things, and changing designs incrementally can only take you so far.” He thinks customers would have started noticing problems soon: “If I were a betting man, I’d say that we would have heard people commenting in 18 months.”
The US$ 30- million raise was intended to build out the team and fund sales and marketing. McDerment asked his board of directors for permission to redirect US$7 million into the new platform. Because these costs mainly related to hiring talent, it wasn’t a hard sell — it helped McDerment had carefully chosen his investors (and thus his board) in the first place. “Entrepreneurs should be very thoughtful about the capital partners they bring in,” he said. “We wanted people with a longterm mindset.”
Through the second half of 2015, Freshbooks hired 100 people, mostly designers and developers, to build the new platform.
Establishing a five-person, cross-functional team to lead the relaunch, McDerment had two key chores: set the project’s objectives, then determine his own role. The team agreed the new platform had to be simpler and more intuitive, it had to be able to handle a host of future upgrades, and it had to encourage collaboration by better connecting users to each other and complementary platforms, such as project- management software or communications tools.
Eschewing a hands- on role, McDerment was happy to play the visionary and develop standards. “If you’re going to build something truly excellent, almost the first thing you need are constraints,” he said. “It helps you be principled in your design and approach, knowing the things that you will do or won’t do.”
His constraints took the form of “design principles” for the team. For instance, McDerment urged them to keep things simple by imagining a screwdriver. It’s a basic tool, easily understood, and perfect for countless uses, such as opening paint cans. “I believe that if you build simple tools, they will get used for things you never intended or expected,” he said. “More complex tools are not as adaptable.”
McDerment met with the team once a week. “I provided the voice of the customer,” he said. “My influence was to ask dumb questions that people might not be thinking about.” He would “double down” on good decisions, he says, by pointing out, “Here’s why this matters,” constantly bringing it back to the customer and the vision. If he thought things were headed off the rail, McDerment would ask, “Have you thought about…” this or that, to encourage people to come back with better approaches. “Sometimes I had to get explicit,” he notes. “Sometimes I had to say, ‘I don’t think you get how important this is, so I’m just going to keep asking about it.’ ”
By June, Freshbooks had a working version of the new platform, and began a rollout. There were some complaints, but users seemed largely satisfied. Those who upgraded were given the option to return to Freshbooks Classic, the original platform, but 90 per cent chose to stay with the new. “More people are using features we’ve always had, at higher rates,” McDerment said. “We wanted collaboration to be easier, and we’re seeing it’s 250 per cent better.”
Best of all, Freshbooks can open up new revenue opportunities by offering more advanced features. As well, McDerment said the exercise has helped Freshbooks staff think bigger, and more creatively.
For weeks, staffers had been counting down to launch date Sept. 20, which was marked by a gala dinner and dance for all staff, but in reality, that deadline marked a beginning, not an end. “People think of the launch as a finish line, but it’s actually a starting gun,” McDerment said. “Now the hard work begins.”