Freshbooks Workshop

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  • 1. How to web app business from A-Z @MikeMcDerment – Co-Founder and CEO December, 2011 –#freshbooksWS
  • 2. Mike McDerment Co-founder, CEO
  • 3. What you need to know to get a successful web app business off the ground.
  • 4. What we’ll cover!
    • Building
    • Marketing
    • Product Managing
    • Metrics
    • Financing
    • Culture
    • Questions
  • 5. Who is this punk, and where does he get off talking to us?!!
  • 6. I followed my nose… Dropped out Events Design Conversion Fateful day To the basement ~80 and counting No institutional capital
  • 7. FreshBooks is… …leader in online billing and bookkeeping
  • 8. Manage your clients
  • 9. Create & Send Estimates
  • 10. Track Time
  • 11. Track Expenses
  • 12. Invoicing
  • 13. Estimates Time tracking Expenses Invoicing ____________________________They way professionals invoice their clients and each other
  • 14. Now for Web Apps!
    • Recurring billing managed inside your app
    • Accept credit cards inside your own app
    • Real-Time payment notifications ( WEBHOOKS! )
  • 15. Borrrrrring
  • 16. You say: “Why should I care?!” I say: “Because…”
  • 17. Over 3,500,000 Users Since May 2004 Month Users
  • 18. Thank you for having me Thank yourselves for being here Quick poll
  • 19. Ready?!
  • 20. Legend Story = [s] Costs = ($$$) Book = {b} Ask questions as you see fit.
  • 21. Part I: Building Launch ready product Founding Team Company ($$$)
  • 22. Building: Launch ready product You get paid for two things Build the least…you are in a vacuum Don’t build billing Set a deadline for launch What is “ready?” Exactly. Embrace constraints and focus [s]
  • 23. Building: The founding team Two kinds of entrepreneurs Equity = ownership = bigger pie Human qualities: PASSION Trust, honesty, loyalty, openness Not in it for the money [s] Where to find [s] Entrepreneur, manager, technician {b} Roles: design, dev, ops, S$M 3 am test
  • 24. Building: The Company Lawyers ($$$) Docs and dark clouds Hosting ($) Office [s] Advisors [s] Board Business plan
  • 25. Part II: Marketing Categories Choosing a name Domain names Knowing your story Building your website Spending wisely ($$)
  • 26. Marketing: Categories “ Don’t underestimate the power of categories” - Mike McDerment Are you creating a new category? Can you? Read “Positioning” [b]
  • 27. Marketing: Choosing your name Easy to remember Easy to spell without explanation Describes the category Describes the benefit Describes the d ifference BONUS: Fun. Harsh. Consonants. [s]
  • 28. Over 3,5 00,000 Users Since May 2004 Month Users
  • 29. Marketing: Choosing your name (con’t) Google:“How to name your company” It’s a process. It takes discipline. It’s about constraints. It will take 20+ hours. No shit.
  • 30. Marketing: Domain names Get the .com…it’s just another constraint [s]
  • 31. Marketing: Knowing your story There is an art to telling stories It gives your history It will be remembered Different versions for different people Elevator pitch Stories evolve My story…
  • 32. Marketing: Building a website Three pages Home page must explain: What it is? Who it’s for? Why it matters? Let’s look at a site…
  • 33. Marketing: Building a website (con’t) Go to FreshBooks website
  • 34. Marketing: Spending wisely Out spend or out teach Banners in your community ($) Google PPC (outsource if you can) ($) Conferences, community ($) Community emails ($) PR is the best so… Blog your adventure…without delay
  • 35. Part II: Product management Do support Usability tests Telephone interviews Decisions = Dope
  • 36. Product management: Support Everyone does support [s] Post your phone number [s] Use a forum Hit Twitter Be everywhere It’s all fuel for the Big List…
  • 37. Product mgnt: Support (con’t) SCREEN SHOT OF THE BIG LIST
  • 38. Product mgnt: Usability tests Give them Watch them No talking Have team watch [s]
  • 39. Product mgnt: Telephone interviews ***These are a must *** Prepare a survey Benefits open ended Before and after Listen = energizing [s]
  • 40. Product mgnt: Decisions = dope Decisions are part art, part science You are editor/curator Can’t please all people all the time If you do support, you’ll know Wait, wait, wait Remove the pain, stay true to vision [s]
  • 41. Part IV: Metrics Marketing Revenue Expenses … oh yeah, tracking!
  • 42. Metrics: Marketing Cost per acquisition (CPA) $ spent/# new customers = $ Conversion rate (trial, paying) # trials/# visitors = % # paying/# trials = %
  • 43. Metrics: Revenue Average revenue per user (ARPU) monthly revenue/# paying customers Churn # monthly cancels/ total customer base = %
  • 44. Metrics: Revenue (con’t) Monthly recurring revenue (MRR) ARPU * # customers = MRR Lifetime value ARPU * (100/% churn) = LTV
  • 45. Metrics: Expense You don’t have any, so no big deal Guidelines: Hosting : ~10% revenue Acquisition: CPA < 10 * ARPU
  • 46. Metrics: Expense (con’t) Burn rate monthly exp – monthly rev = Burn Run rate monthly revenue * 12 = Run rate
  • 47. Metrics: Other % of email that is glowing % of people who refer you Job satisfaction Days you did not want to work ?
  • 48. Metrics: Extra - Tracking Track from the start Event logging Google is not enough Marketing/cookies Ref site, land URL, KWP
  • 49. Part IV: Funding When to raise Where $’s come from What to look for in investors Dilution thoughts
  • 50. Funding: When to raise When you don’t have to [s] Know your users better than anyone When you have a formula for the $’s When you’ve got traction When you know your market size
  • 51. Funding: Where $’s come from? Consulting business & savings Love money Angels and advisors (27-1) Your mortgage … the bank? VCs/PE Capital markets (going public)
  • 52. Funding: What to look for in investors Shared values [s] Conviction [s] Trust, honesty Operational experience Domain expertise 3 am test … it’s a marriage
  • 53. Funding: Dilution thoughts Small piece of a big pie Smart investors want you incented You take one round, you’ll take three Barry Diller: “Hang on” Q: can you increase share price by more than dilution? [s]
  • 54. Quiz Guess how many customers we had at the end of 2004? (we launched May 2004)
  • 55. What you need to know to get a successful web app business off the ground.
  • 56. Questions?!! Bring em’!
  • 57. Building Culture: Hiring
    • Hire for two things
    • Check for values
    • Open ended questions
    • Key words
    • Trust your gut
    • Why FB?
  • 58. Building Culture: Values
    • Values don’t change; founders [b]
    • Uncover your values [s]
    • You define the words
    • Haze them [s]
    • Reward on values [s]
  • 59. Building Culture: CEO does?
    • Set the vision
    • Foster trust; live the values
    • Get the resources
    • Keep sharing the vision
    • Step forward; give credit
    • Recruit the best
    • Align. Align. Align.