“I was the poster child for the anti-venture capitalist movement.”
At FreshBooks’ Toronto HQ today, CEO Mike McDerment shared how he cultivated business courage by sticking to the company’s mission: reshape the world for small businesses and self-employed professionals. McDerment spoke about gaining courage as part of the company’s #imakealiving series.
When McDerment first started FreshBooks he was living and working out of his parents’ basement. He spent three and a half years there building what is now one of the most popular cloud accounting and invoicing platforms.
In the early days when FreshBooks only had a thousand customers, McDerment got a phone call from Wells Fargo–one of the largest financial institutions in the world. They told him they liked FreshBooks’ online invoicing and asked him to pitch the product in San Francisco.
“They wanted to use us. You’d think this was a great moment. We weren’t even making ends meet. And here’s this opportunity to break that cycle of grinding it out,” he shared. “It’s exciting but it’s also terrifying.”
The tech entrepreneur said he didn’t know what to do because the revenue from Wells Fargo would make all their other customers pale in comparison.
“I decided not to decide. I said, ‘If you pay us ten times the amount, we’ll do it.’ They turned it down and they pushed us on a path. As soon as we said no, we were back on the grind, on that very scary path,” he said.
That was McDerment’s first act of what he now recognizes as business courage. He tested that courage in 2015 when FreshBooks set out to rewrite their software, breaking what he called a “golden rule.”
“I asked myself, ‘Do I feel like with the product we have today, will we be winning in 5 years?’ And the answer was no,”- McDerment
Concerned with undermining customer trust, FreshBooks built their new software under the guise of a competitor company called BillSpring. The risk paid off as the move resulted in a superior service. They reintroduced the software as the new–and reinvented–FreshBooks in 2016.
This past Tuesday, FreshBooks secured $57 million in new venture capital funding, something McDerment said would have surprised himself five years ago.
“I was the poster child for the anti-venture capitalist movement,” he said.
The CEO said he was “deeply afraid” of external investors and the thought of showing up to a board meeting, learning they were outsourcing their platform, and losing the customer service he worked so hard to build.
“Have the courage to change your mind. Getting to the next step required me to change mine. And it was really scary … But I grew as an individual as a result.”
Today, over 10 million people have used FreshBooks, and McDerment is still proud that providing quality customer service is at the core of what they do.