I’m FreshBooks Co-Founder Mike McDerment and This Is How I Work
Service billing accounts FreshBooks is a part of the canon software for freelancers and entrepreneurs. This is shown in Lifehacker guidelines from 2009 to 2018 and is still one of the best ways to stay sane when billing multiple clients. Two years ago, the company released a completely new version that it secretly developed under the name Bill Spring. We spoke with FreshBooks co-founder and CEO Mike McDerment about creating his own company’s biggest competitor.
Location: Toronto, Canada Current job: Co-founder and CEO of FreshBooks One word that best describes how you work: Practice Current mobile device: iPhone X Current computer: MacBook Pro
First of all, tell us a little about your past and how you got where you are now.
I grew up in Toronto as the youngest of four children. My mom was a nurse who developed the country’s first stress management program for children. It started as a small school board program, then spread throughout North America, and continues to grow today. I think I inherited my entrepreneurial spirit from her.
I studied commerce at university, but after high school I couldn’t imagine putting on a suit and tie and taking the elevator every morning to the 37th floor of the corporate tower. It wasn’t clear to me yet that I was programmed to be entrepreneurship, but I knew that I enjoyed solving problems and creating things for people. I started my own marketing and design agency, and after a couple of years, the four of us took over the client work.
When it came to billing for our work, we used Microsoft Word and Excel because the accounting software was too complex for what we needed. One day I hit my limit when I accidentally saved on an important customer account – I just kind of snapped back. I knew there had to be a better way, so I spent the next two weeks programming what would become the basis of what is now called FreshBooks.
The first few years of trying to get FreshBooks off the ground were not easy. My co-founders Joe, Levy and I moved to my parents’ basement and we spent the next 3.5 years there. For the first two years, we only had a few clients who paid us $ 10 a month. A couple of times I came close to stopping it. Now I understand what I did not do then: sometimes new ideas take time to learn, and entrepreneurs are not always the most patient people. But FreshBooks took off, and ten years later, we’ve helped over 10 million people in 160 countries.
Tell us about a recent work day.
For me, no two days are alike. I spend time with the teams that will benefit the most from my presence in the room that day. Sometimes this means having one-by-one 1: 1 sessions with leaders seeking support in decision making or planning a few months from now. Sometimes I, with my sleeves rolled up and in the trenches, together with the team, move stones, do the work.
You recently led a massive overhaul of FreshBooks’ software. Tell us about this process.
The original FreshBooks platform originated in the basement and was built by three co-founders with no experience building production web applications. As the business grew, we gradually brought in experienced engineers, but by then the damage was done and we were stuck building about a million lines of what some might call “spaghetti code.” This was one of the main reasons for the restructuring.
The other reason was much broader than spaghetti code. We founded the company over ten years ago; the world has changed and we have learned a lot about creating products and serving people who work for themselves. While self-employed professionals and their teams make up a huge and growing portion of the workforce – over 53 million in the US alone and on track to 70 million in 2020, double the Fortune 500 – the world is not yet for them. Things that have to be simple are too complex. We knew that for FreshBooks to keep up with the times and serve this group well five years from now, we needed to take action.
With this confirmed, we put together a small team and gave them the opportunity to start reimagining FreshBooks. They followed a Lean design process focused on a fast feedback loop from real users. What happened on the other side of the process was beautiful and exciting, but at the same time very frightening. It was a new platform to replace the classic product that millions of people around the world have been using for over a decade.
The team had a lot of insecurity and sleepless nights. Wouldn’t the new platform fail? Will it introduce bugs that undermine customer trust and happiness? Will it meet our expectations? There are many examples of companies in our industry that have tried over-platforming and have failed. Not only did we not want to follow in the footsteps of past failures, but we also wanted the new platform to give FreshBooks a competitive edge for years to come.
What we came up with was a real business hack: we decided to release a new platform to the market in order to really test its performance. We started a secret but real company called Bill Spring to compete in the wild with FreshBooks. We set up a holding company in Delaware to include Bill Spring so that it cannot be traced back to FreshBooks. Bill Spring was a free product with its own website, logo and brand, and eventually its 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 provided by Bill Spring, the team was free to create and test new features and projects at an unprecedented rate in our company.
It was time to introduce a new product to our customers when Bill Spring started to perform at a level equivalent to our classic product. The tricky part was that this product had been available to new customers for over a year, but none of our existing customers had the opportunity to try it. Figuring out how to migrate our clients to the new platform was an incredibly complex project that required the help of almost the entire company. We have set ourselves a very difficult mission: each of our clients will be given the opportunity to migrate at the touch of a button, and will also be able to migrate back without losing any information. The whole company supported this vision, and we took on its implementation.
Overall, re-platforming and building this migration path was not what we planned five years ago, but it was indeed the most impressive feat we have achieved in our 14-year history. I am really proud of all the participants.
What apps, gadgets or tools can’t you live without?
I use my computer every day, but when I need to think and when I read, I rely on a good old Moleskine ballpoint pen and notebook.
How is your workplace arranged?
FreshBooks is headquartered in 80,000 square feet and all 300 of us work on the same floor. I don’t have an office in the traditional sense. Instead, I move around throughout the day, working with different teams, solving different problems. When I need to meet someone one-on-one or work alone, I usually crash in the glass conference room by the main staircase and in the company toilets, so I see people and they see me. When you’re a CEO, visibility and accessibility are important, so it was no coincidence that I chose a transparent-walled room in the busiest place to spend my time. If anyone goes to the toilet or grabs coffee, chances are we’ll see you. It helps me stay connected and helps me have more fruitful conversations in the hallway.
What’s your best time-saving shortcut or life hack?
When someone asks a question, make sure you understand why they are asking it. Whenever possible, try to understand the entire context so that you can give the best possible answer, and not just a superficial answer. Few people do it, and it’s a powerful way to get to the root.
What are some of the things you do best in everyday life? What’s your secret?
To ask questions. I always want to understand why someone made a decision or why they decided to approach something in a certain way. I like to peel off layers and make basic assumptions.
The best mentors I’ve had are people who ask great questions, and I try to model this behavior for my team every day. There are only a few things that scare me as a leader. Meeting without question, it scares me.
How do you keep track of what you need to do?
I have a small notebook that I carry with me, and I write everything down.
How do you replenish? 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 where my devices don’t work, or doing something with my hands, like chopping wood or cutting grass, rejuvenates me. I have two children under the age of two, and they already spend a lot of time in nature. I hope to convey to them a love of nature and a passion for adventure.
What’s your favorite side project?
We help other entrepreneurs to solve all the problems associated with building a business. I devote one evening each week to helping another company builder who is earlier in the process and trying to find his way. It’s a small way for me to pay up front, and it’s fun – I love creating things.
What are you reading now or what do you recommend?
An old but good business built to last: the successful habits of Jim Collins’ forward-thinking companies . This book had a big impact on my thinking when my co-founders and I launched FreshBooks from my parents’ basement over a decade ago. This pushed me to think long-term, to clearly understand our vision: something big, bold and bold that others, looking at our business through the lens of a spreadsheet, will never see. This vision has helped us to endure difficult times.
Fill in the blank: I would like _______ to answer these same questions.
Jason Gaynar, founder of Mastermind Talks and Community Made.
What’s the best advice you’ve ever received?
“Focus is a four-letter word.” I got this advice from an early mentor, my best friend’s father. If you don’t focus, you cannot do it, and it’s all about doing. If you don’t, you will be using a lot of four letter words. So yeah, focus is a four letter word.
What else would you like to add that might be of interest to readers and fans?
I have an appetite for adventure that most people don’t. I just like not knowing what’s next, or how to get from where you are to where you want to be. In other words, I love to travel adventure rather than taking a map with me. Sorting out everything on the go is fun in life, and if you are open to it, the world will come to you. Road trips, wrong turns and startups are what I love because you never know what will happen next.