An Open Letter From FreshBooks Founder Mike McDerment
July 23, 2014
A big step today. FreshBooks, the business I co-founded 10 years ago in my parentsā basement, has secured its first round of institutional fundingā$30M USD from some of the worldās best investors. This capital will give us the ability to do more faster, and thatās very exciting for youāFreshBooks customers.
As a founder, raising growth capital is a personal choice, and I have wrestled with it for years. Will outsiders force us to compromise on our dedication to quality and our excellence in customer service? Will the influence of investors threaten our culture, a culture which last year earned FreshBooks the distinction of the top employer in Torontoānow the fourth-largest city in North America after Mexico City, LA and New York?
But thatās not the only struggle Iāve hadāgrowing from founder to CEO has been a challenge. For years the role of CEO was incomprehensible to me, yet it was my role. Since then Iāve come to understand itās about three things: setting the vision, building a world class team, and ensuring your bank account aligns with your ambition.
Vision
There are 60 million small businesses in the English speaking world and only about 17% of them use accounting software. The rest mostly use Word and Excel. Consider the implications. We know using FreshBooks helps owners save an average of 16 hours a month. Using back of the envelope math, Word and Excel use is costing the World almost 10 billion hours annually. Thatās human potential squandered, and these are not your average hoursāthese are the hours of our most productive and dedicated members of societyāsmall business owners.
Going forward, FreshBooksā success should be measured by the increase in adoption of accounting softwareā growing adoption from 17% to 25% and then to 50% and beyond. Good news though; we are watching a whole new generation of entrepreneurs emerge. People who have grown up with the Internet, the kind of people who will never use Word and Excel to run their businesses because they know someoneās built something better and itās waiting for them in the cloud or their mobile AppStore.
Now, 60 million businesses is a lot to serve. We donāt believe you can be the best at anything if you try to serve everyone, so FreshBooks is designed exclusively for client service business ownersāpeople who send invoices and get paid for their time and expertise. No retail. No manufacturing. No restaurants. We believe this difference matters, and we are the only accounting software company in the world solely focused on serving this market.
Vision? Check.
Team
Back at headquarters, weāve been busy building out our team. Over the last 18 months weāve created a world-class executive teamārecruiting top talent from Toronto, Ottawa and Silicon Valley. This team now leads over 150 FreshBookers determined to build a global leader headquartered in our hometown, Toronto. Having these people on-board has transformed FreshBooks, and on a personal note, changed my work-life balance, setting myself and our whole company up for our next phase of growth.
Team? Check.
Bank Account
Which brings us to capitalāthe third part of the CEO role. When we started in the basement, I built a tool for myself. It suited my purposes and my clients liked it. Since then FreshBooksā vision and ambitions have grown. Realizing our vision and feeding our ambition requires capital. Soāweāve raised it.
The path to raising this capital began years ago. Over the years, I have spoken with hundreds of investors with no immediate intent to take on capital, but to prepare for the moment when FreshBooks might. That effort has proved fruitful and I am proud to be adding new members to the FreshBooks teamāthree of the most successful funds in the business, with track records of aligning with founders to grow great, long-lasting companies. We welcome our new partners: Oak Investment Partners, Atlas Venture, and Georgian Partners.
Bank account topped up? Check.
We raised this capital so we can continue delivering the best product for you.
We raised this capital to further one of the worldās greatest customer service culturesāa culture that wonĀ 6 Stevie AwardsĀ last year and in doing so is recognized as the best in the world by the best in the world.
We raised this capital because we believe that client service small business owners deserve cloud-based accounting software designed just for themānot designed for everyone.
Summing Up
While raising capital has ultimately been a personal journey for me as a CEO, securing this capital is a direct reflection of FreshBookersā commitment to you and to the products we have built over the last ten years. This capital will help propel us forward, faster. FreshBooks can accomplish more for you with this capital, and we will. Thank you for entrusting us with your business and please call usāFreshBookers love executing extraordinary experiences for you everyday.
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