This is the first in a new monthly series we’re going to be doing on the FreshBooks Blog. It’s called Ripe Data and it is an assortment and analysis of various metrics we track here at FreshBooks. Please note, Ripe Data will not include the valuable industry benchmarks active FreshBooks users will have access to in 2007. With that said, enjoy.

For companies who accept online payment
- In October, 14.5% of payments were accepted online
- November, 17.5%

Analysis
I’m not exactly sure what to make of this 20.7% month over month spike. We fully expect that over time the percentage of online payments collected will increase relative to offline payment collections as internet users become more comfortable paying online and more businesses accept online payment. That said I don’t expect such a significant increase every month.

Payment Methods
- Visa: 16.4% in October, 17.3% in November
- MasterCard: 7.3% in October, 7.3% in November
- Amex: 4.0% in October, 4.0% in November
- PayPal: 6.0% in October, 5.3% in November
- Other (including check, cash, credit, etc.): 66.3% in October, 66.1% in November

Analysis
It looks like in November PayPal gave up a little market share compared to traditional - non-PayPal - payment gateways (like VeriSign, Authorize.net, LinkPoint, etc.). Over time it’s hard to say how this will play out. In our experience, as businesses mature and become more brand conscious they tend to move away from collecting business payments with PayPal. That said, PayPal is a powerful solution on account of its quick set-up and few barriers to entry, and we expect the number of businesses using it to continue to grow.

For companies that send invoices by both email and by ground mail
- In October, 97.0% of invoices were sent by email and 3.0% were sent by ground mail.
- In November, 96.0% of invoices were sent by email and 4.0% were sent by ground mail.

Analysis
At first blush you might say that it is counter-intuitive to see an increase of 25% in the number of invoices sent by ground mail versus email. The truth is we have many users who create invoices with FreshBooks but do not send them by email. The reason for the increase here is the increasing adoption of our new ground mail service. Released in August we expect significant growth in ground mail sending over the next year or so - until an equilibrium is reached. Then, gradually over the following 5-10 or so years we expect to see a decline as businesses make a concerted effort to transition their processes online. Eventually a new equilibrium will be reached as some invoices will always need to be sent by the post to a fraction of the population who do not accept email invoices.

Browser Usage
- Internet Explorer 7 - October 5.02%, November 9.68%
- IE 6 - October 37.64%, November 36.77%
- Firefox 2.0 - October 6.61%, November 24.51%
- Firefox 1.5 - October 44.26%, November 22.07%

Analysis
Both IE and Firefox have new versions out. Clearly the Firefox community is quicker to switch to new versions. Remarkably quick in fact.

Operating System Usage
-Windows - October 86.84%, November 85.87%
-Macintosh - October 10.32%, November 11.41%
-Linux - October 2.13%, November 1.92%
-Unix - October 0.11%, November 0.06%

Analysis
Mac appears to be gaining market share. I think Mac users have been discovering FreshBooks for some time - and telling one another about FreshBooks. We are delighted to have been Mac compliant since August 2004.

Conclusion
That’s all for this month. We are currently ripening more data for picking in January.

Software as a Service (SaaS) is nothing new and has been the “next big thing” for about 15 years now.  However, the more services that are released, the more it makes perfectly good sense. 

Here is just one reason out of probably too many to count why software as a service is making packaged software providers very nervous.  This article in the LA Times talks about ReadyReturn, a software service that puts the calculation and submission of your taxes in the hands of the true expert, the taxman himself.  It only makes sense that if you have relatively simple tax returns, that you do only once per year, why not outsource it to someone who does literally everyone’s return in the country.  If the tax laws change every year, and the Government is already paid to do your taxes and stay abreast of all the changes, it only makes sense to use their service.  Why buy a downloadable package that has to be updated every year when you could just do it online?  I am not sure what the cost was, but I can’t imagine it being much more that a piece of software or even a service hosted by another software company.  I have never tried it (and probably never will unless I move to the USA), but here is a site with a lot of positive feedback on the product.

I’ve had a few posts praising PayPal for its simplicity and incredibly short setup time.  I understand it has a lot of enemies (as you can tell from some of the comments here), but for a very small business just getting started, it really can’t be beat.

However, there comes a time for every business when it grows up.  For some business owners this may mean a proper phone system, an email service service (exchange or an equivalent), incorporation, or an accounts receivable system.  For service based businesses, getting paid quickly is a huge priority for success.  There are a number of ways to get paid and a lot of considerations when planning this out for your business. 

The vast majority of payments (66% of payments made by FreshBooks users in November) are made by traditional means, ie. a cheque in the mail.  However, more and more companies are choosing online payment and many are starting out with PayPal.  A significant number, however, are applying for an online merchant account and a payment gateway and accepting credit card payments directly or using a service like FreshBooks or Shopify.  The burning question for a lot of businesses is why bother?  If PayPal is so easy to use and quick to get setup, as well as competitively priced, why not just continue using PayPal.  When businesses ask us this, we usually tell them that a merchant account and payment gateway is perfectly seamless for your customers and more reliable.  This may seem like a fairly minor reason to justify the cost and time required to setup a merchant account and payment gateway, but when you consider the implications, it can be worth it.  If just one of your customers pays you faster or is impressed with your sophistication, the costs can be worth it.  Not only do you have the cash in your bank immediately, but your customer may be impressed and end up referring you to a friend.  Back in the 90’s, I would have called this a “win-win”

Here is an example of how UN-seamless, the PayPal experience can be. To demonstrate this, I will walk through a typical client’s point of view when they receive an invoice:

1. If you are using FreshBooks, and you click “Send” on your invoice, the invoice will be sent as a link in an email.

2. The customer receives the email and clicks the link, the internet browser pops up with the invoice, here is an image of the top of the invoice your customer sees: 

3. The customer sees the pay link and thinks, “I would love to get this off of my plate, so I’ll just try and pay this right away”, and the PayPal pay screen appears as shown:

4. The customer clicks the PayPal logo and is redirected to the PayPal server which typically displays a screen that looks like this:

Now put yourself in the customer’s shoes, chances are you have no idea what PayPal is (or you have used it 2 years ago when you bought those designer jeans using EBay).  At this point, unless the customer is very familiar and comfortable with PayPal, they have to find the link to pay with their credit card.  After scanning the screen, they find it in the bottom corner.

5. They are now able to enter in their credit card information to pay for the invoice. Now this screen is extraordinarily long and complicated and just the opposite of what you want your customer to see when paying you money.  Security is very very important, but so is getting paid.  The kicker for me is the area to enter in the security code.  Note that the word actually looks like it has a space in it, but in fact it doesn’t and your customer could become very perturbed by little annoyances like this. 

6. After filling out the long form and clicking continue.  The customer is given yet another screen where they confirm the amount and click Pay.

7. Finally, the transaction is complete and the customer is shown the following screen:

Here is where some issues can occur.  At this point, the transaction has been processed, so the good news is that you have already received your funds.  However, if the customer does not click the small link in the bottom left “Return to Merchant”, then your FreshBooks account will not be updated and you will have to manually update their account information.  An oddity of this screen is that the bottom right, where normally someone would look to complete a purchase, is actually a login button, which makes no sense at this stage of the process.

8. If you are lucky enough to have your customer click the return to merchant link, you are displayed with the happy green FreshBooks success screen.

And voila, the process is complete, you have been paid, and if you are lucky, your records are all up to date.

Now compare steps 3. through 8. above, to the following steps if you are equipped with a merchant account and a payment gateway such as VeriSign or Authorize.net:

3. The customer clicks the pay link and is presented with a simple payment form where they confirm their billing address and enter their credit card information.  Everything is secure and safe since by default all FreshBooks accounts use an SSL certificate just like all other e-commerce sites.  The form looks like this:

4. After clicking pay, voila! the process is complete:

Two easy steps versus four complicated steps makes getting paid that much better with a merchant account and payment gateway over PayPal.  Some other benefits of using a merchant account with a payment gateway over PayPal are:

• More control over your funds - with a merchant account, all of your money is deposited automatically into your bank account and you have direct control over your money.  I have heard stories of PayPal witholding funds for various reasons, however this has never happened to us.
• Recurring billing - PayPal has subscription billing, but it is not supported in FreshBooks mainly because it is difficult to control and not designed to be used with an API.  PayPal does not allow recurring billing with its higher end product Website Payments Pro, which is the closest thing they have to a merchant account with a payment gateway.
• Better rates - PayPal has become more competitive with their rates, but if you have a stable business with very little risk, you should be able to get better discount rates with a merchant account

Last year I and four other Toronto web enthusiasts founded a conference - the mesh conference. The group consisted of Mathew Ingram (senior technology writer for the Globe and Mail), Mark Evans (senior technology writer for the National Post and now COO of B5media), Stuart McDonald (founder of Expedia Canada), Rob Hyndman (technology lawyer) and myself.

The goal of the conference was to answer the question, “What’s next online?” for people in four industries - media, marketing and PR, society and politics and venture and entrepreneurship. To that end, we were able to attract some of the internet’s best minds. Below is a list of our keynote presenters and podcasts of their keynotes:

Om Malik (media podcast)
- then a senior writer at Business 2.0, now a blog network entrepreneur

Dr. Michael Geist (society and politics podcast)
- author, law professor at the University of Ottawa Canada Research Chair in Internet and E-commerce Law.

Steve Rubel (marketing and PR keynote)
- Senior VP at Edelman

Dr. Paul Kedrosky (venture and entrepreneurship keynote)
- venture fellow with Ventures West

Tara Hunt (on Pinko Marketing)
- formerly of Riya, now a director at Citizen Agency

If you can make the time, give the podcasts a listen. I have been relistening myself recently and the content is first rate. In fact, the whole event wound up being a great success and so we are doing it again May 30 & 31, 2007. Like last year a limited number of student tickets will be available. I hope you can join us.

There it is…our office paper. Last year we went through two boxes like this one. 5000 sheets each. 50 lbs each in weight.

I am weighing our office paper because we are going to be offsetting our paper use as part of our green initiative. In a nutshell there are organizations like Zerofootprint that will help you calculate the environmental impact your paper use has on the environment: trees used, pollution created, water used. Then, for a small fee, they will plant trees to offset your impact.

I will follow up shortly with the details of FreshBooks’ 2006 offsetting (total paper, cost to offset and other considerations) so you can follow along at home. The first step is to record (in weight) your paper use…as you can see I’m doing that…and for those who are wondering, I did weigh the paper on the scale AND I weighed it as a differential between my weight while on the scale with the box in my arms, and my weight without the box. 50 lbs both ways.

About two years ago I downloaded an eBook. I don’t remember where I found it - it was an eBook that teaches you how to generate referrals.

About 8 months ago I called up the author of that eBook. I was received by a kind and friendly business man…someone who was intimate with small businesses and shared my interest in helping them succeed. We talked. I was intrigued…here was a like mind…though one with more wisdom and deeper experience.

John Jantsch wrote that eBook and now he has written a “traditional” hardcover book. I have pre-ordered my copy and I am hoping you will do the same because I know it will be money well spent. John has a knack for delivering stunningly practical advice in simple words. To me, that’s the appeal of all the things he does. John was the first guest in our “Build Your Business” Fall Teleseminar Series. As the series has continued I have found myself referring to John’s teleseminar again and again. I find myself telling local business owners and real estate agents how they should buy Referral Flood and listen to the podcast - it will be well worth their time and money.

So…it is with great pleasure that I announce that John’s book is scheduled to ship in January. I encourage your to pre-ordering yourself a copy and helping John as he tries to make the best sellers list. In return for your support, John has packaged the book (especially if you buy multiple copies) with hundreds of dollars of bonus goodies.  Happy reading.

I was inspired to write this post by something in this photo:

It’s not the word Billions. It’s the text “(Page 70)” written in tiny text in the very bottom left corner.

For years it has been a pet peeve of mine that magazines force you to flip through ads to “find” the table of contents so you can get to their cover stories. I think it’s supposed to help sell advertising by forcing readers to look at advertising as they try to “find” the table of contents.

Fortune magazine is taking a different tack in this week’s edition and putting those page numbers on their front page:

I checked my last edition of Fortune and this appears to be a new development (though don’t hold me to that). Whether it’s actually new or not is beside the point – I hope they stick with it.

In magazines and most other kinds of product development, it is awfully hard to have a tight feedback loop and get the customer feedback you need. It is often harder to convince management to let users have what they want – especially if there is no quantifiable business case for it.

Fortune appears to on the right track with this change. Nice job Fortune. Heading into year four of my subscription and still looking forward to every issue before it arrives.

FreshBooks is a web app …some might call it Software As a Service (SAAS). SAAS is a great model for so many reasons (access from anywhere, automatic updates, outsourcing of security, uptime and backups…), but one reason I think it’s so much better than any form of software delivery before it is that the delivery model itself breeds better software.

Any software developer who does not get immediate and ongoing connections with her users is flying blind. Every barrier between the user and the developer is an obstacle in the path of success. User feedback that is immediate (“you have a bug here”) and insightful (“the wording of this link is ambiguous”) is what you need to make the minute decisions that differentiate good software from great software, and let’s you give your users what they want.

It’s all about giving your users what you want. If you do, they will take care of you and your company and your future…lest you get out of touch them and start to live too far “inside the bottle” as best selling authors the Jeffrey and Brian Eisenberg call it in “Waiting for Your Cat to Bark“. [Note: Jeffrey Eisenberg will be my guest for this week's free teleseminar. Please join us.]

At FreshBooks our entire team all receives every customer support email. We all read the forum. At FeedBurner, everyday their team takes turns managing customer support on a rotation. Why do these two companies force everyone to spend so much time on support? Because is keeps you close to your customer so you can serve them better. At FreshBooks it is also a question of values and what we believe will bring us long term success.

On that note, I send a heart felt thank you to all of our customers. We would not be here without you.

If you remember that catch phrase made famous by Schwarzenegger’s Terminator 2 movie, you’ll remember it translates to something close to “Sayonara, Baby”.  I hate to say it, but Windows Vista might be the end of the line for Microsoft.

Microsoft just released its newest operating system Windows Vista after a long five year drought and with two years worth of delays. That doesn’t bode well for a product that represents the largest chunk of Microsoft’s revenue.

“Much is at stake for Microsoft. Most of its revenue and almost all of its profit comes from Windows and Office, funding the company’s sexier ventures in video games and music players.” - CNN

Most businesses will find it a daunting task to upgrade from their stable WindowsXP work-stations to Microsoft’s latest OS.  For the most part, it’s going to take time.  A lot of time.  Early adopters are going to have to upgrade all their work stations, test all existing software and drivers for compatibility, train employees on how to operate some of the new interfaces, fix all the incompatibilities encountered and even deal with the costly possibility of reverting back to their previous stable operating system.

Furthermore, if the time = money equation doesn’t hold true, there’s a lot more money to loose when you find Windows Vista running a little slow and you are in need of a hardware upgrade.

“While Microsoft specifies 1 GB of main memory (RAM), Nigel Page of Microsoft has indicated that 2 GB is the ideal configuration for 64-bit Vista which processes data chunks that are double the size of those for 32-bit Vista, hence requiring double the memory.” - Wikipedia

I’m not sure about you, but I’m not ready to jump on the band wagon on Microsoft’s newest operating system; at least not just yet.

If you logged into your system yesterday, or got the email we sent last week, you know that the introductory prices for FreshBooks’ Ground Mail Service ended November 30th. We have decided to extend the deadline to 6 PM ET today (December the 1st) to account for timezones (we have clients all over the world), and to help out anyone who did not get their email or did not log into their account yesterday.

If you plan to use ground mail now or in the future (and darn it’s a pretty sweet service…ground mail invoices include a return envelope, they go anywhere in the world [British recipients are getting theirs in 3-4 days, Canadian in 2-4, American in 2-4 days]) we strongly recommend you take advantage of the introductory pricing before it goes away. Just login to you FreshBooks account and you will see where to go from there.

Update:  Sales is over.  Yesterday and today we record ground mail sales days.  Thanks for shopping.