Mike McDerment, co-founder and CEO of FreshBooks, shares his insights on product roadmapping, raising corporate venture capital, and long-term strategic planning.
In 2003, Mike McDerment accidentally saved over an invoice.
“I was using Word and Excel to manage my business and the punchline is it wasn’t working all that well. And that one day I saved over the invoice and said there's just got to be a better way to do this,” he says. “So I built a simple thing.”
What Mike built was FreshBooks, a venture-funded, cloud-based accounting software company for small businesses. Though Mike initially created FreshBooks to solve his prior company’s problems with invoicing, the product has evolved a great deal since then.
For the first several years, the FreshBooks team was only targeting web designers for their product. That changed as the company grew. “I had the advantage of knowing the customer, because I was one,” he says. “We always had a vision for where we wanted to go. But we used real-time customer feedback to refine and prioritize.” Mike notes that feedback and input will vary based on how you choose to interact with customers, but he found on-site and in-person visits to be invaluable as he’s grown the company.
Mike found an even more inventive way to solicit feedback and generate new ideas: He created a direct competitor.
Behind the scenes, Mike feared the company wouldn’t be able to innovate fast enough. “We ran FreshBooks for about 10 years, and we felt very limited because of our technology, unfortunately it was not a really clean architecture. We felt really constrained about how we could develop the user experience that we wanted to win long term,” he says. “That brought about a conversation to re-platform, which brings a whole bunch of other problems. As soon as you [re-platform], I feel like you lose something.”
His approach was much more radical.
“What we decided to do was create a competitor with its own website. We basically rebuilt our next version as a competitor that could not be tracked back to us, so we could test our user experience, see how the analytics of the funnel worked and if people liked it,” he says. “We started supporting that product with no-name support people that were using that information to channel back the feedback we were getting from the market. It was basically a secret company to solve a bunch of problems that come along with a new platform.”
But in the process, the team created a better FreshBooks.
In this episode, you’ll learn a lot about product roadmapping, raising capital, and long-term strategic planning.
Here are the highlights:
FreshBook’s product evolution (4:26)
Why and how the FreshBooks team created direct competition for their product (8:26)
Why Mike raised venture funding after self-funding FreshBooks for a decade (12:47)
Mike’s insights on long-term product roadmapping (16:59)