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Freshbooks Workshop


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Freshbooks Workshop

  1. 1. How to web app business from A-Z @MikeMcDerment – Co-Founder and CEO December, 2011 –#freshbooksWS
  2. 2. Mike McDerment Co-founder, CEO
  3. 3. What you need to know to get a successful web app business off the ground.
  4. 4. What we’ll cover! <ul><li>Building </li></ul><ul><li>Marketing </li></ul><ul><li>Product Managing </li></ul><ul><li>Metrics </li></ul><ul><li>Financing </li></ul><ul><li>Culture </li></ul><ul><li>Questions </li></ul>
  5. 5. Who is this punk, and where does he get off talking to us?!!
  6. 6. I followed my nose… Dropped out Events Design Conversion Fateful day To the basement ~80 and counting No institutional capital
  7. 7. FreshBooks is… …leader in online billing and bookkeeping
  8. 8. Manage your clients
  9. 9. Create & Send Estimates
  10. 10. Track Time
  11. 11. Track Expenses
  12. 12. Invoicing
  13. 13. Estimates Time tracking Expenses Invoicing ____________________________They way professionals invoice their clients and each other
  14. 14. Now for Web Apps! <ul><li>Recurring billing managed inside your app </li></ul><ul><li>Accept credit cards inside your own app </li></ul><ul><li>Real-Time payment notifications ( WEBHOOKS! ) </li></ul><ul><li> </li></ul>
  15. 15. Borrrrrring
  16. 16. You say: “Why should I care?!” I say: “Because…”
  17. 17. Over 3,500,000 Users Since May 2004 Month Users
  18. 18. Thank you for having me Thank yourselves for being here Quick poll
  19. 19. Ready?!
  20. 20. Legend Story = [s] Costs = ($$$) Book = {b} Ask questions as you see fit.
  21. 21. Part I: Building Launch ready product Founding Team Company ($$$)
  22. 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. 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. 24. Building: The Company Lawyers ($$$) Docs and dark clouds Hosting ($) Office [s] Advisors [s] Board Business plan
  25. 25. Part II: Marketing Categories Choosing a name Domain names Knowing your story Building your website Spending wisely ($$)
  26. 26. Marketing: Categories “ Don’t underestimate the power of categories” - Mike McDerment Are you creating a new category? Can you? Read “Positioning” [b]
  27. 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. 28. Over 3,5 00,000 Users Since May 2004 Month Users
  29. 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. 30. Marketing: Domain names Get the .com…it’s just another constraint [s]
  31. 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. 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. 33. Marketing: Building a website (con’t) Go to FreshBooks website
  34. 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. 35. Part II: Product management Do support Usability tests Telephone interviews Decisions = Dope
  36. 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. 37. Product mgnt: Support (con’t) SCREEN SHOT OF THE BIG LIST
  38. 38. Product mgnt: Usability tests Give them Watch them No talking Have team watch [s]
  39. 39. Product mgnt: Telephone interviews ***These are a must *** Prepare a survey Benefits open ended Before and after Listen = energizing [s]
  40. 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. 41. Part IV: Metrics Marketing Revenue Expenses … oh yeah, tracking!
  42. 42. Metrics: Marketing Cost per acquisition (CPA) $ spent/# new customers = $ Conversion rate (trial, paying) # trials/# visitors = % # paying/# trials = %
  43. 43. Metrics: Revenue Average revenue per user (ARPU) monthly revenue/# paying customers Churn # monthly cancels/ total customer base = %
  44. 44. Metrics: Revenue (con’t) Monthly recurring revenue (MRR) ARPU * # customers = MRR Lifetime value ARPU * (100/% churn) = LTV
  45. 45. Metrics: Expense You don’t have any, so no big deal Guidelines: Hosting : ~10% revenue Acquisition: CPA < 10 * ARPU
  46. 46. Metrics: Expense (con’t) Burn rate monthly exp – monthly rev = Burn Run rate monthly revenue * 12 = Run rate
  47. 47. Metrics: Other % of email that is glowing % of people who refer you Job satisfaction Days you did not want to work ?
  48. 48. Metrics: Extra - Tracking Track from the start Event logging Google is not enough Marketing/cookies Ref site, land URL, KWP
  49. 49. Part IV: Funding When to raise Where $’s come from What to look for in investors Dilution thoughts
  50. 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. 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. 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. 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. 54. Quiz Guess how many customers we had at the end of 2004? (we launched May 2004)
  55. 55. What you need to know to get a successful web app business off the ground.
  56. 56. Questions?!! Bring em’!
  57. 57. Building Culture: Hiring <ul><li>Hire for two things </li></ul><ul><li>Check for values </li></ul><ul><li>Open ended questions </li></ul><ul><li>Key words </li></ul><ul><li>Trust your gut </li></ul><ul><li>Why FB? </li></ul>
  58. 58. Building Culture: Values <ul><li>Values don’t change; founders [b] </li></ul><ul><li>Uncover your values [s] </li></ul><ul><li>You define the words </li></ul><ul><li>Haze them [s] </li></ul><ul><li>Reward on values [s] </li></ul>
  59. 59. Building Culture: CEO does? <ul><li>Set the vision </li></ul><ul><li>Foster trust; live the values </li></ul><ul><li>Get the resources </li></ul><ul><li>Keep sharing the vision </li></ul><ul><li>Step forward; give credit </li></ul><ul><li>Recruit the best </li></ul><ul><li>Align. Align. Align. </li></ul>