SaaSBites: Mike McDerment of FreshBooks

A chat with Mike McDerment, CEO of FreshBooks, the cloud-based accounting solution that helps millions of users collect tens of billions of dollars every year.

I chatted with Mike about:

• The humble beginnings of FreshBooks (specifically, how he initially ran the company out of his parents’ basement.) Importantly, he touches on a pivotal customer interview that made him realize they had product market fit.

It’s certainly one of the hardest things to know when you’re getting started. When you consider we were trying to figure this out in 2003 and 2004, it was extra hard. I remember the moment we knew we had, let’s say, a huge opportunity ahead of us, because we had a product that fit.

• How he kept going through the company’s early days, when they were growing slowly

We were seeing great growth week on week, but it was on tiny numbers, but you know, we stuck it out until the numbers got bigger.

And a lot of people, I think, give up at those early days, and to me, that is a shame.

• The process of transitioning from his consulting business to FreshBooks full-time

I think there’s a series of milestones along the way. It started out where once we started this thing, I was just spending all my available time working on this side project because it really was exciting to me, and then the consulting business, I had I guess been wise enough to hire some great people and so they largely ran it.

• His view of pricing strategies for SaaS businesses

It’s very important to be methodical with your research and do some testing, because behaviour may be different than what people say.

• The process of courting and deciding upon the right investors

You’re going to be with these people for a long time, through the thick and the thin, and you want to know, on a dark day, how they behave.