FreshBooks Archive

Editor’s note: The following post is from Mike McDerment, the co-founder and CEO of online invoicing app FreshBooks. Since launching in May 2004 FreshBooks has touched over 900,000 lives.

I meet lots of web entrepreneurs who tell me they want to raise venture capital. Most of these people are first time entrepreneurs and they just assume that once they’ve got an idea, the next thing to do is raise venture capital. That’s naive. I always ask myself is, “is this person/company ready to raise money?” and 99 times out of 100 the answer is “no”. I’m writing this post in an effort to explain what goes through my head at those times and when it is right to raise institutional capital.

So, when is the time to raise Venture capital?

When: you don’t need the money

This may seem counter-intuitive on a whole bunch of levels, but the time to raise money is when you don’t need it. What I mean by “don’t need it” is you can carry on without it, or you have alternatives (like other people who want to invest, or a house you will mortgage). Many entrepreneurs don’t understand the value of finding their way without VC money, or they think they need the money more than they actually do, or they think they need it sooner than they do, or all of the above! (READ: the 7 ways I’ve almost killed FreshBooks) The result is they spend a lot of time too early in their businesses lifecycle focused on serving VCs instead of serving their customers. Raising money is a negotiation. You need options when you are sitting at the bargaining table – you need a path without capital, a legitimate path.
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FreshBooks takes Day 5 in the CenterNetworks Holiday Gifts. Check out all of our FreshBooks coverage. Here’s a brief overview of FreshBooks from the company:

Stop invoicing in Word! FreshBooks is an online billing service for webprofessionals. Track your time, create invoices, collect payments online,and give your clients peace of mind with organized records they can access at any time.

FreshBooks is offering CN readers $20 off any new paid subscription. The code below is valid through to Dec 31, 2008. Enter code:  FRESHCLAUS08 during the registration process.

Toronto-based online invoicing service FreshBooks has announced the launch of an industry benchmarking service to help freelancers and small businesses make better decisions about their business. The service seems very similar to what PubMatic offers with their AdPrice Index. Basically FreshBooks takes anonymous data, aggregates the data and provides it back to site visitors so they can compare their actual numbers with the reported data.

The data will be updated quarterly and can be broken down into segments. FreshBooks explains how they get the data, "the data you see above is only collected from FreshBooks accounts that collect in US Dollars. We have removed the top ten 10% and the bottom 10% of the populations to eliminate outliers that might undermine the accuracy of the group as a whole. Also, we only include businesses we deem to be credible FreshBooks accounts."

Anyone can access the basic industry benchmark data and FreshBooks customers can request a "Report Card" which is tailored to their specific business.

This new program is smart on several levels. It helps everyone understand where they stand. It helps FreshBooks potentially gain a new service subscriber base. It also helps establish FreshBooks as a data service which can help drive new subscribers as the data is shared across the Web.

If you live in NYC and ride the subway, you’ve seen the advertisements for the Freelancers Union. Their tagline is, "A federation of the unaffiliated." and they define the service as, "a nonprofit organization that represents the needs of America’s independent workforce though advocacy, information, and service." The Freelancers Union claims that over 30% of the entire U.S. workforce are indie workers. Most of the services the Freelancers Union provides are available nationwide.

There are no fees to be a Freelancers Union member and frankly anyone who works for themselves (blogger, web developer, designer, writer, etc.) should be a member. The benefits the group offers are just awesome. Health insurance is the number one benefit in my opinion.

When I lived in Atlanta my health insurance for a good plan ran about $140/month. The same plan in NYC was 10x more or $1,400/month (no I am not kidding). An even better plan (also with Blue Cross) with the Freelancers Union runs around $210/month. Please note that these are single rates. There’s also a dental savings plan that normally is $7.50/month but with FU it’s $3/month.

Another awesome benefit is for Zipcar rentals. In NYC the normal Zipcar rates for an average car are $10.50-12.50/hour Mon-Thurs and $12.50-$14.50 Friday. When you join the Freelancers Union, that rate drops to $8.00 on all weekdays. This has already saved me a good bit of money and you get a wider selection of cars. From my testing this morning, discounts in other cities that Zipcar serves are similar.

There are a ton of other discounts including Web services Harvest (our coverage) and FreshBooks (our coverage). The Staples corporate pricing is pretty sweet.

There are also a variety of networking events/meetups, educational courses and a job/gig board.

To become a member you need to demonstrate income over $10,000 within the past six months. Seriously, even if you just use it for the Zipcar discounts, the Freelancers Union membership is very much worth the cost (which is free).

As online invoicing tools including FreshBooks continue to rise, are they putting pressure on Intuit’s (INTU) product lineup including Quickbooks and Quicken?

Quickbooks began offering "Quickbooks Simple Start" about three years ago and their 2008 version has just been released. Amazon sells the product for $79 which includes a plus pack (the plus is some stationary). Over the past couple of weeks, Intuit has begun to offer the product completely free as a download on the Web site. The Simple Start version is crippled compared to the $179 regular Quickbooks version but it’s enough for the small business owner to use for invoicing and basic record keeping.

The downloadable version matches identically what you can purchase and there are no ads or any notices to upgrade. If this is the case, why did Intuit offer it for free? It’s not a trial version either!

So please share your thoughts, could it be because of the growth of online invoicing and financial management tools?

Many of the startups I’ve dealt with since starting CN have one strategy on their marketing plan: hit Digg frontpage as many times as possible. Today I found an interesting blog post by the fine folks over at Canadian-based FreshBooks. FreshBooks is an invoicing tool and you can check out my interview with CEO Mike McDerment.

FreshBooks is going to rent a RV and hit the road from Miami to Austin this March. They will leave from Miami and the Future of Web Apps and head west to Austin for SXSW. Here are their goals:

• Meet as many users as we can, introduce the “south” to FreshBooks and what we offer
• eat a Texas-sized donut
• eat a country fried steak
• get interviewed on a small town “morning show” (I am looking at you WPMI in Mobile, Alabama)
• pick up a hitchhiker
• and of course, we want to be elected POTUS.

I think it’s an interesting idea and should help to get FreshBooks "noticed" outside of their comfort-zone - that is the Web community. While I think most people think of FreshBooks as a tool for indy web people, there’s a whole other world out there with people who need to invoice their clients. This type of marketing could help FreshBooks gain more mainstream acceptance - something critical for growth and success.

I am sharing this with you so  you can think about out-of-the-box marketing tactics for your product or service.

Canadian online invoicing service FreshBooks is announcing a new partnership with Authorize.net today. Over 185,000 merchants use the Authorize.Net Payment Gateway to accept payments and this will put FreshBooks service in front of them in the Authorize.net Merchant Toolbox.

Distribution is king folks.

Check out our interview with FreshBooks CEO Mike McDerment to learn more about the company and their service.

If you decide to sign up for FreshBooks, check out the holiday gift they provided to CN readers before registering — 30% off for the life of the account!