7 ways I’ve almost killed FreshBooks
I’ve often said, “were it not for Joe and Levi, I would have run this company into the ground long ago”. The fact is, truer words were seldom spoken.
Here’s a list of ways that I’ve almost killed FreshBooks over the years:
1. Thinking we had to move faster than we did
I remember back in 2005 feeling that if we did not blow our lights out and spend every penny we had on marketing “right now!” someone would obliterate us. I had this impending sense of doom for *years* based on our speed. Turns out I was wrong, and I owe Joe and Levi a world of thanks for repeatedly pulling me back from the ledge.
2. Placing my faith in a spreadsheet
Rocking a spreadsheet is important in my books – it gets you thinking about your business. But trust me, whatever numbers come out of your Excel jockeying, they’re wrong. If you saw our business plan from 5 years ago you’d see what I mean…
It’s really easy to stare at a spreadsheet and say, “that’s it! I totally get this business…I understand how it all works and look at that year 5 revenue!”, when the reality is it will take 10 years to get there, cost you twice as much as you thought, and you’ll probably be running a totally different business by the time you get there. All of that is okay in my books, just so long as you don’t actually delude yourself into believing what the spreadsheet tells you.
3. Thinking we had to spend more than we did
There is something about the act of spending money that breeds confidence – don’t ask me why. Just because you are spending money does not mean things will work out like you modeled them, or that you are learning a lot or being efficient – and all of these things are crucial when you are building your business. We like to try things and look for “signs of life” with our marketing before we increase our spend in any medium. It’s always the right approach because there is no silver bullets, so don’t kid yourself into thinking there are.
4. Placing my faith in consultants
Nobody cares about your business as much as you do, and frankly people who are smart – consultant/MBA smart – don’t know your business as well as you do despite the fancy words and references to past success. You are in business because of the way you see your opportunity. Try as you may to change this fact, no one will ever possess your unique perspective so don’t kid yourself into thinking a consultant knows your business better than you. At the same time, stay open to their advice and take it into consideration as you make decisions, just don’t bet the farm on what they think you should do.
5. Underestimating word of mouth
This one is sort of tied to number one. It takes *years* to generate word of mouth – it’s a slow build, but slow burning fires burn the hottest. So be patient and do your best to take care of your customers/users even if you can’t find a way to measure the ROI.
6. Believing we could not get this far without doing “x”
I remember talking with people back in 2004. Many believed we could not get anywhere without signing a “deal” with a “partner” or taking “VC money” or “whatever”. Here’s my advice: sign the right deals with the right partners at the right time for the right reasons. You can build a business without being forced to work with the wrong people at the wrong time for the wrong reasons. The choice is yours – don’t forget it. Opportunities will present themselves if you keep your feet moving and you string together a series of small successes. You need to decide what the right deals are for your business and when they are right for your business. I’ve learned to spend 80% of my time thinking about what not to do, instead of all of my time thinking about what we can do.
7. Doubting ourselves too much
Over the years I’ve met a lot of smart people and I’ve invited them to tell me what they think. For years people did not “see it” and that exacted a toll on my confidence. Doubt is born out of fatigue and loneliness, and there is a lot of both when you are running a start up. Hang in there and keep your feet moving – there’s still a lot of time for you to change the world.
Now please don’t get me wrong – there’s still plenty of time for me to kill FreshBooks. This is a list of what I’ve learned so far and if you ask me, we’re still just getting started. That said, thinking about catastrophes I’ve *almost* made got me laughing and inspired this post – hopefully there is something in here for you.
Copyright © 2000-2009
12:09 pm
lol.
I think with all businesses, there’s always the feeling of…”What if?” or…”What would happen if we…”…
I think one of our lessons learned was…never giving up…and pushing forward. We also think that what you put out, is what you get back… (very karma like)…
PS. Please don’t KILL freshbooks…I’m just starting to get the hang of it. I’m importing into Quickbooks next week. Wait til after..
12:12 pm
I loved this post. Thanks for being honest about the places you’ve stumbled. I especially loved this “Doubt is born out of fatigue and loneliness, and there is a lot of both when you are running a start up. ” Truer words have not been spoken.
12:26 pm
This is great, thanks so much for offering some information from the inside of a successful startup. The lack of confidence born out of people who don’t “get it” has probably killed far too many great ideas before they got off the ground, great point.
12:26 pm
Great post Mike! It’s good to see I’m not the only one who gets caught up in thinking that spending money is going to make things alright. Keeping smart people who care around you is very important!
12:37 pm
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12:41 pm
I love the “silver bullet” advice. Too many people think that a successful business hinges on one big thing to happen when, in fact, it’s lots and lots of little things (and probably some luck along the way!)
Mark
12:46 pm
McDerment, you’re my hero this week.
12:58 pm
Great post!
As someone who’s involved in a startup it’s great to read encouraging posts like this one.
For me, Freshbooks is neck ‘n’ neck with the other successful SaaS tools like Basecamp, Springloops, and Campaign Monitor, so hearing what they found difficult during their startup years really helps and encourages me.
Knowing that even the best have found it hard means that the little bit of doubt I feel from time to time is normal, and all part of the game.
By the way, I use Freshbooks and I love it!
1:10 pm
Enjoyed that Mike, thanks for the openness. We struggle with these everyday. I would add to the list, “Staying focused on your core business”. This is the one that consistently eats up our time while we flail around looking at every other internet company and how we could add XYZ feature as well. Very similar to your concentrating on what not to do.
2:48 pm
great post Mike. we’re going through almost all the same things but i especially liked #3. i’m trying to hire a Batman as i hear that fixes all the possible mistakes.
6:35 pm
Very informative and enlightening post. Thanks for sharing and I doubt you’ll run FreshBooks into the ground.
9:25 pm
Great post, Mike — some terrific lessons in there. Congrats for having the guts to come out and say them.
9:40 pm
Wow, this should be required reading for all start-ups! It is not too often CEO’s share the darker side, the mistakes … but this is what helps everyone else the most. A very generous post.
9:45 pm
Great post.
Especially the point of confidence.
I am year one and half of our start up and have had every compulsions you listed here.
To all of us hanging it out to create a dream, good luck.
Thanks for sharing.
11:32 pm
Great post!
I can definitely relate to many of these points. It really just takes perseverance and a *ton* of work.
12:18 am
Mike –
Great post! I agree with all of it, especially point 6. Be it VC or Angel money, you HAVE to make sure it is right for your business. I’ve seen $ from both sources kill companies. Thankfully, I’ve seen it have the opposite effect as well.
Bryan
12:22 am
As a 25 yr vc I agree with your points. Take $ from people you want to work with.
Thanks for the post !
12:41 am
[...] August 27, 2008 · No Comments Mike McDermant, CEO if Freshbooks, wrote a great blog post today, 7 ways I’ve almost killed FreshBooks. [...]
3:08 am
Well, you’ve made Hacker News with this one, and for good reason. Great advice, all of it. I’m a Canadian over in England, just quit my 10-year job in aerospace to go freelance and simultaneously bootstrap a startup. Gonna bookmark this post. Much obliged.
3:40 am
You rock! Don’t underestimate the power of these words to those struggling to get things going but who have a dream. It can be a lonely world out there, no matter how many forums and networks you join. The dark side of self doubt is never far from your mind! Knowing that other successful people have felt the same as you along the way makes you get back on the horse and keep on rolling!
Nice one… thank you.
4:53 am
Brilliant post Mike. Humility is a great trait in a human being, beautifully expressed in this post.
6:33 am
Mike,
Really great post. Thanks for sharing this with everyone.
As I read it, I contrasted doing what I do every day (building VC-backed shoot for the stars companies) with what you do – building a “real”, self-funded business.
Many of the mistakes you avoided are unavoidable when you take on VC$. You have to spend ahead of revenue, think big and somehow buy instantaneous word of mouth.
As we do these things that set us up for either a big return or failure, I know there is another way. You’ve laid it out here.
Good stuff….
Mark
6:59 am
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10:28 am
Some thoughts:
5 Year Plan != Prophecy written in stone. Don’t let anyone tell you (if you’re reading this and starting a new business) that you NEED a business plan. My business started accidentally. I think it’s doing pretty well for that!
Everyone doesn’t always know everything about your problem, plan, etc. as they seem to. It’s like getting advice on your newborn. People LOVE to “help”, even with the best intentions their solutions aren’t always right for your company.
Everyone doubts themselves. I’m glad you guys grew out of that. You provide such a valuable service to many, many people and small businesses.
As far as WOM, I’ll keep talking about you guys until you get tired of it….or hire me.
Oh, and I think I’d really not recover if you killed Freshbooks.
11:11 am
Great post Mike.
12:25 pm
Interesting post, thanks for sharing.
1:07 pm
When I was self-employed a few years back, I partnered with a guy who (the plan was) would do the sales and marketing end of a web site development business — I’d take care of the back end, with a virtual group made up of a Perl, database and hosting guy (me) and two other guys for HTML and Flash development.
The truth was, I was desperate for business, and that overrode my gut feeling that I really didn’t trust this guy. But he had paying customers and could do the sales thing in his sleep — and sales was my weakness.
In the end, he stiffed me for a few thousand on our first project together. Luckily, I was able to get payment directly from the customer, who had already paid this guy up front.
Your rules really reinforce the lessons of my bad experience — thanks.
4:14 pm
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5:01 pm
I never hesitate to listen to advice from those who have been more successful than I. This is great soul searching from a company that has bootstrapped, and is getting the recognition they deserve. Thanks, Mike.
5:03 pm
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10:01 pm
[...] 7 ways I’ve almost killed FreshBooks "Here’s a list of ways that I’ve almost killed FreshBooks over the years" [...]
3:32 am
[...] came across this nice post by Mike McDerment about building and running a business. It’s short concise and insightful. I enjoyed it [...]
11:09 am
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12:45 pm
Great post Mikey.
1:06 pm
Great Article Mike, its refreshing to see people admitting their past mistakes.
5:00 pm
thanks for your post, these are very valuable insights for me – i’m in the start-up phase of a software company, launching soon. especially your last lesson, this helped me with my confidence today!
thanks.
8:53 pm
and I seem to remember you folks working to find the right name and the right pricing… and isn’t it about time to have the right party (hint hint)
In all seriousness, thanks for helping and thanks for continuing to share, and it has helped me to know that others enjoy the ups and downs of being a web entrepreneur. I have lost count of our own near killer mistakes
Continued Success guys!
5:37 pm
[...] Some great learnings about running a web start up Posted August 30, 2008 Filed under: Quote, Web apps | Mike over at Freshbooks has been humble enough to admit that he’s made mistakes and kind enough to share his learning with the rest of us in his post “7 ways I’ve almost killed Freshbooks”. [...]
6:01 pm
[...] 7 ways I’ve almost killed FreshBooks Good tips from the founder of Freshbooks about what *not* to do (tags: startup entrepreneurship tips) [...]
2:09 pm
[...] This post by Mike gave me a bit of an insight into the person and the business. It’s a list of seven ways Mike almost kicked the chair out from under FreshBooks so far in their journey. It tells of his appreciation for the people he’s put around him, and gives some excellent lessons for new businesses. [...]
6:30 pm
We’re 4-5 years into our SaaS Project management software company ProWorkflow. I can say you’ve hit it on the head with this post. I really like points 1,3 5 & 7.
All the best guys! Perhaps we should get talking about integration with FreshBooks from ProWorkflow?
Julian Stone, CEO
http://www.ProWorkflow.com
4:16 am
I’ve liked the thoughts and I’d also like to outline the point you made at the very beginning of your post.
I’ve seen that Kelly Sims is the only who stressed it by saying «Keeping smart people who care around you is very important!». Thanks.
6:27 am
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2:26 pm
One quick questions: How did you come to your current pricing model?
I have heard from a few web entreprenuers that the other thing they wish they had tried earlier in their business is their pricing.
Any thoughts or suggestions?
8:30 am
[...] people’s learnings 7 ways I’ve almost killed FreshBooks, a great post about lessons learned. These are some parts of [...]
10:11 pm
Thank you. I needed to hear this.
11:04 pm
Hmmm… what happened to Aaron? All this talk about surrounding yourself with great people is nice, but you don’t even give them props when they leave. Not so nice when you’re a small company.
3:51 pm
Hi Gertrude, yes, Aaron has moved on to a new chapter in his life. We had a whole series of events to see him off and wish him well. Seeing people off is certainly not something we are used to here at FreshBooks. So far only Aaron, Kathy and Tom have moved on to other things. We have have been lucky to see Kathy and Tom at alumni events and we hope to see Aaron at similar outings in the future.
2:20 pm
This is an excellent real life case of decision making!
Thanks for sharing your insights…
12:46 am
I hardly ever read blogs, but a link to this one got my attention, what a great honest lit of things learned. I wish we could see more frankness like this in business. With leadership like this, I would bet on freshbooks everytime!
11:54 am
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2:46 pm
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12:50 pm
[...] about the process of starting and growing a company. This week, Mike has a great post entitled 7 ways I’ve almost killed FreshBooks, in which he debunks many popular startup myths regarding things like speed of growth, business [...]
3:03 pm
Truly an inspirational post..thank you so much. I have already printed this post so I can read it every so often to remind myself that there is hope. Take care.
4:31 pm
7 mistakes which almost killed FreshBooks. If you are a startup founder out there you must read his blog
7:21 pm
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12:42 pm
I’ve read that there are 3 dominant factors that will contribute towards the success of a new business:
1. Being in the right industry (at the right time)
2. Good management & hiring practices
3. Non controllable factors.
It’s said that up to 1/3 of a business’ success is determined by non-controllable factors. Perhaps this is the main reason why Excel-based spreadsheet projections rarely ever play out
3:45 pm
Love the ego-less reflection! Thanks for the great insight.
6:59 pm
Your words and journey must echo the experiences of many business pioneers. It certainly echoes mine. Today’s internet and the efforts of other pioneers like Freshbooks have made it possible for micro-business to develop new ideas in ways that simply have never before been possible. I never really understood the idea of ’software as a service’ until I started using Freshbooks. It is the first service , and the only one so far, where I have upgraded from a free to a paid web2.0 service. In fact we celebrated doing so as it demonstrated our business growing in income – not just expenditure.
6:30 pm
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11:33 pm
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7:31 pm
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9:13 am
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3:53 am
Humble and Honest. Thank you for sharing this.
2:14 am
I can relate to your post all too well. I often catch myself having a small panic attack because I think things aren’t moving along quickly enough, like riding a bike on the edge of a cliff and if you slow down too much you’ll lose your balance and teeter off. But often you’re not as close to the edge as you think as long as you stay focused and persevere!