Mike McDerment, the founder and longtime CEO of accounting software company FreshBooks, has stepped down from his role and is being replaced by board member and executive director Don Epperson.
“The next two years are on track to be FreshBooks’ best, in large part thanks to Don.”
The switch-up was announced Thursday, with Epperson officially taking on the CEO role “effective immediately.” McDerment is set to continue on with FreshBooks as chair of the board and “an active member” of the executive team. The company stated that he will continue to “be highly involved with FreshBooks’ long-term vision, supporting Epperson and team with strategic product direction, and culture, customer and community advocacy.”
In a statement on LinkedIn, McDerment noted he will continue to work with FreshBooks on a day-to-day basis, helping to shape the company’s overall vision, with corporate development activities, and customer-facing and cultural activities.
A spokesperson for FreshBooks told BetaKit the decision to bring on Epperson as CEO was made by McDerment, with approval by the company’s board of directors. With plans for FreshBooks’ “next big push” to be focused on global expansion, McDerment told BetaKit he felt Epperson was better suited to help achieve that goal.
The transition began in November when McDerment asked Epperson if he as interested in taking on the role; details of the switch were finalized in December.
Regarding his decision, McDerment said in a statement to BetaKit, “I don’t feel like I am stepping down so much as sideways. I am going to stay full time and focus on the things I love, and hope to follow in the footsteps of other notable Executive Chairpeople.”
“But the next 5 years at FreshBooks will be focused on scaling globally,” he added. “In my opinion, Don’s strengths are better suited to leading this next phase in FreshBooks’ development. To me it is a natural progression.”
McDerment founded FreshBooks in 2004 and has served as CEO since its launch. The company currently boasts close to 500 employees, with offices in five countries. Over the past couple of years, FreshBooks opened new offices in the Netherlands, North Carolina, and a development hub in Croatia. The company also expanded its product offerings to the United Kingdom and Ireland. FreshBooks claims more than 30 million people have used its invoicing, time-tracking, expense management, and online payments features, since it launched. Last year, FreshBooks made its first acquisition, purchasing Facturama, a Mexico-based company that offers electronic invoice management for small businesses and startups.
Epperson joined FreshBooks in January 2019 as both board member and executive director. Since then, Epperson has reportedly worked closely with McDerment on “strengthening” FreshBook’s day-to-day operations. Epperson is an entrepreneur and longtime principal at DigitalTrek, an investment company that co-founds, invests in, and operates startups, venture funds and real estate ventures.
McDerment claimed that since working with Epperson, FreshBooks “really hit a stride,” noting “it makes perfect sense” to bring him in full-time to lead the next phase of FreshBooks’ journey.
“Over the last 24 months, Don and I have built an incredible partnership,” said McDerment. “The next two years are on track to be FreshBooks’ best, in large part thanks to Don. I cannot imagine a better way to set FreshBooks up for continued success than appointing Don to Chief Executive Officer.”
Epperson brings to FreshBooks more than 20 years of experience as a CEO or executive chairperson, having co-founded companies, including HookMedia, Simpli.fi, Enervee, and Annise where he also serves as chairman of the board according to his LinkedIn.
In his LinkedIn statement, McDerment noted that he will continue to partner with Epperson, while also focusing on his other entrepreneurial endeavours, including Toronto insurance-as-a-service startup Briza, which he reportedly helped found five years ago and where he currently serves as board chair.
Last year, Toronto-based FreshBooks was affected by the COVID-19 pandemic, laying off 38 staff members, nine percent of its workforce. At the time, McDerment attributed the reductions to the “COVID-induced reality.” He told BetaKit that while FreshBooks was not as affected by the pandemic as many companies, it decided to readjust in order to ensure long-term success.
FreshBooks entered 2020 after raising capital from JPMorgan Chase & Co. The investment amount was not disclosed at the time, but a representative of FreshBooks told BetaKit the round represented “the most significant investment so far” for the company. FreshBooks’ prior investment rounds totalled around $97 million CAD.
McDerment told BetaKit in April the company had been planning to raise additional capital before the COVID-19 crisis hit. He noted that FreshBooks’ new goal for the year was to focus on putting itself in a position where it was not “beholden to capital markets” and required no outside capital going forward. He did note, however, that when markets reopened, FreshBooks planned to consider taking on new investments.
“FreshBooks has a tremendous opportunity in front of us, and I couldn’t be more excited to be taking on the Chief Executive Officer role at this time,” said Epperson.
In addition to a focus on increasing its international presence, McDerment told BetaKit, “the team is gearing up to unveil new product features, launch in new markets, and partner with some incredible companies in pursuit of our mission. The next 24 months will be fast paced and exciting.”
UPDATE 14/01/2021: This article has been updated with comments from Mike McDerment.