freshbooks workshop
DESCRIPTION
TRANSCRIPT
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How to web app business from A-Z
@MikeMcDerment – Co-Founder and CEODecember, 2011 –#freshbooksWS
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Mike McDermentCo-founder, CEO
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What you need to know to get a successful web app business off the ground.
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1. Building2. Marketing3. Product Managing4. Metrics5. Financing6. Culture7. Questions
What we’ll cover!
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Who is this punk, and where does
he get off talking to us?!!
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Dropped outEventsDesign
ConversionFateful day
To the basement~80 and counting
No institutional capital
I followed my nose…
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FreshBooks is…
…leader in online billing and bookkeeping
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Manage your clients
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Create & Send Estimates
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Track Time
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Track Expenses
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Invoicing
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Estimates Time tracking
ExpensesInvoicing
____________________________They way professionals invoice their clients and
each other
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Now for Web Apps!
Recurring billing managed inside your app
Accept credit cards inside your own appReal-Time payment notifications ( WEBHOOKS! )
http://developers.freshbooks.com/
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Borrrrrring
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You say:“Why should I care?!”
I say: “Because…”
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Over 3,500,000 Users Since May 2004
Month
Users
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Thank you for having me
Thank yourselves for being here
Quick poll
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Ready?!
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Story = [s]Costs = ($$$)Book = {b}
Ask questions as you see fit.
Legend
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Launch ready productFounding TeamCompany ($$$)
Part I: Building
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You get paid for two thingsBuild the least…you are in a
vacuumDon’t build billing
Set a deadline for launchWhat is “ready?” Exactly.
Embrace constraints and focus[s]
Building: Launch ready product
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Two kinds of entrepreneursEquity = ownership = bigger pie
Human qualities: PASSIONTrust, honesty, loyalty, openness
Not in it for the money [s]Where to find [s]
Entrepreneur, manager, technician {b}
Roles: design, dev, ops, S$M3 am test
Building: The founding team
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Lawyers ($$$)Docs and dark clouds
Hosting ($)Office [s]
Advisors [s]Board
Business plan
Building: The Company
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CategoriesChoosing a nameDomain names
Knowing your storyBuilding your websiteSpending wisely ($$)
Part II: Marketing
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“Don’t underestimate the power of categories”- Mike McDerment
Are you creating a new category?
Can you? Read “Positioning” [b]
Marketing: Categories
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Easy to rememberEasy to spell without
explanationDescribes the categoryDescribes the benefit
Describes the differenceBONUS: Fun. Harsh.
Consonants.[s]
Marketing: Choosing your name
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Over 3,5 00,000 Users Since May 2004
Month
Users
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Google:“How to name your company”
It’s a process.It takes discipline.
It’s about constraints.It will take 20+ hours. No shit.
Marketing: Choosing your name (con’t)
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Get the .com…it’s just another constraint
[s]
Marketing: Domain names
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There is an art to telling storiesIt gives your history
It will be rememberedDifferent versions for different
peopleElevator pitchStories evolve
My story…
Marketing: Knowing your story
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Three pagesHome page must explain:
What it is?Who it’s for?
Why it matters?
Let’s look at a site…
Marketing: Building a website
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Go to FreshBooks website
Marketing: Building a website (con’t)
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Out spend or out teachBanners in your community ($)Google PPC (outsource if you
can) ($)Conferences, community ($)
Community emails ($)PR is the best so…
Blog your adventure…without delay
Marketing: Spending wisely
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Do supportUsability tests
Telephone interviewsDecisions = Dope
Part II: Product management
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Everyone does support [s]Post your phone number [s]
Use a forumHit Twitter
Be everywhere
It’s all fuel for the Big List…
Product management: Support
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SCREEN SHOT OF THE BIG LIST
Product mgnt: Support (con’t)
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Give themWatch themNo talking
Have team watch[s]
Product mgnt: Usability tests
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***These are a must ***Prepare a survey
Benefits open endedBefore and after
Listen = energizing[s]
Product mgnt: Telephone interviews
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Decisions are part art, part science
You are editor/curatorCan’t please all people all the
timeIf you do support, you’ll know
Wait, wait, waitRemove the pain, stay true to
vision[s]
Product mgnt: Decisions = dope
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MarketingRevenueExpenses
…oh yeah, tracking!
Part IV: Metrics
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Cost per acquisition (CPA)$ spent/# new customers = $
Conversion rate (trial, paying)
# trials/# visitors = %# paying/# trials = %
Metrics: Marketing
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Average revenue per user (ARPU)
monthly revenue/# paying customers
Churn# monthly cancels/ total
customer base = %
Metrics: Revenue
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Monthly recurring revenue (MRR)
ARPU * # customers = MRR
Lifetime valueARPU * (100/% churn) = LTV
Metrics: Revenue (con’t)
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You don’t have any, so no big deal
Guidelines:Hosting : ~10% revenue
Acquisition: CPA < 10 * ARPU
Metrics: Expense
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Burn ratemonthly exp – monthly rev =
Burn
Run ratemonthly revenue * 12 =
Run rate
Metrics: Expense (con’t)
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% of email that is glowing% of people who refer you
Job satisfactionDays you did not want to work
?
Metrics: Other
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Track from the startEvent logging
Google is not enoughMarketing/cookies
Ref site, land URL, KWP
Metrics: Extra - Tracking
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When to raiseWhere $’s come from
What to look for in investorsDilution thoughts
Part IV: Funding
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When you don’t have to [s]Know your users better than
anyoneWhen you have a formula for
the $’sWhen you’ve got traction
When you know your market size
Funding: When to raise
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Consulting business & savingsLove money
Angels and advisors (27-1)Your mortgage
…the bank?
VCs/PECapital markets (going public)
Funding: Where $’s come from?
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Shared values [s]Conviction [s]Trust, honesty
Operational experienceDomain expertise
3 am test…it’s a marriage
Funding: What to look for in investors
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Small piece of a big pieSmart investors want you
incentedYou take one round, you’ll take
threeBarry Diller: “Hang on”
Q: can you increase share price by more than dilution?
[s]
Funding: Dilution thoughts
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Guess how many customers we had at the end of 2004?
(we launched May 2004)
Quiz
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What you need to know to get a successful web app business off the ground.
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Bring em’!
Questions?!!
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Building Culture: Hiring
Hire for two thingsCheck for values
Open ended questionsKey words
Trust your gutWhy FB?
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Building Culture: Values
Values don’t change; founders [b]
Uncover your values [s]You define the words
Haze them [s]Reward on values [s]
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Building Culture: CEO does?Set the vision
Foster trust; live the valuesGet the resources
Keep sharing the visionStep forward; give credit
Recruit the bestAlign. Align. Align.