At the latest FinTechTO, Mike McDerment, CEO and co-founder of FreshBooks, discussed the challenges teams face when re-platforming within a software company. He also offered tips on how entrepreneurs can successfully execute a redesign.
McDerment kicked off his presentation by giving an overview of how he co-founded FreshBooks, a cloud-based accounting platform that allows users to send invoices, track time, manage receipts, expenses, and accept credit cards.
McDerment said after raising a $30 million funding round back in July 2014, he began to think about how the company would keep up with technological changes over next decade.
“What we actually decided instead was that we needed to re-platform the company, like the whole product, go build a whole new thing.”
“In the back of my mind, I was like, are we really set up for the next 10 years?” said McDerment. “Since we started the company, all the technology had changed…it’s a very different world than, say, 2013, from a technology standpoint.”
At this point, McDerment said he was thinking of ways to transform or improve FreshBooks so that it’d be “set up to win in five or 10 years.” While he could have gone the route of “keep doing what you’re doing,” McDerment decided to take a different path.
“What we actually decided instead was that we needed to re-platform the company, like the whole product, go build a whole new thing,” said McDerment, adding that this was “a stupid move” for a couple of reasons.
“Reasons why you don’t want to re-platform include competition…may catch up while you’re doing it,” said McDerment. “I promise you, it’s going to take longer than you think…you could go through all the trouble and you don’t necessarily end up with a better product in the end.”
Along with these reasons, McDerment stressed that re-platforming means that companies often run the risk of undermining their customers’ trust, which in turn, makes it harder for engineering teams to take the risk of entirely re-building a product.
Speaking about his own experience, McDerment said when FreshBooks’ team decided to redesign, he had to find a way to do this and “not lose out competitively, [and] get the team to a place where they could take some of these really big risks.”
“Believe that there is a way you can do this. It may not be obvious, it may not be logical, but there is a path.”
In the end, FreshBooks created a new company with a new name, URL, and product, and have it compete with FreshBooks’ existing products. McDerment said competing with themselves via a separate company allowed FreshBooks to not only keep their customers’ trust, but also test out a new platform, collect data, and determine whether they had created something better or not.
For entrepreneurs who may be struggling to build their companies, McDerment ended his presentation with a few words of advice.
“Building your own competitor is a novel way to solve a hard business problem,” said McDerment. “I’d just encourage you to believe that there is a way you can do this. It may not be obvious, it may not be logical, but there is a path.”
This month, FreshBooks raised a $57 million funding round led by existing investor Georgian Partners, with participation from Accomplice and Oak Investment Partners.
Watch the full presentation below:
The next FinTechTO takes place on August 23. Get your tickets now!