Toronto-based cloud-accounting software company FreshBooks has laid off 38 staff members, which represents nine percent of its workforce.
“The FreshBookers leaving are great people, and this change is no fault of their own.”
– Mike McDerment
FreshBooks CEO Mike McDerment announced the layoffs in a LinkedIn post on Tuesday, attributing the reductions to the “COVID-induced reality.”
McDerment confirmed the layoffs to BetaKit, noting they were made across departments. FreshBooks’ executive leadership team has also volunteered to forgo about one-third of their compensation during this time.
“We’re trying to be responsible and think long-term given the situation and the effects,” McDerment told BetaKit. “Many small businesses are impacted. Our business is not as impacted as many, but nonetheless, we just want to make sure our destiny is in our own hands.”
The CEO noted the company looked at costs across the business and decided to readjust to fit its priorities, but FreshBooks is still in a strong position relative to other businesses.
“We’re still very much in a growth mode and an expansion mode and are well positioned financially,” he said. “This is us just being long-term responsible.”
In October, FreshBooks opened its first international office in Amsterdam, with the goal of growing its presence in Europe. McDerment told BetaKit that FreshBooks still plans to make key hires and will continue to expand into the markets it is currently in, while continuing to invest in sales and build out its European office.
McDerment noted that FreshBooks’ leadership tried to take a “surgical,” “thoughtful” approach to these changes rather than quickly reacting to the impacts brought about by COVID-19.
FreshBooks entered 2020 after raising capital from JPMorgan Chase & Co. in August. 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 on Wednesday the company had been planning to raise additional capital before the COVID-19 crisis hit. Now, he said, FreshBooks’ focus is putting itself in a position where it is not “beholden to capital markets” and requires no outside capital going forward. He said when markets reopen, FreshBooks will consider taking on new investments.
The CEO said a handful of projects may experience delays due to the layoffs, but none are being cancelled and FreshBooks is continuing with its current roadmap.
Like many other CEOs who have made COVID-19-related layoffs, McDerment noted that current federal government emergency measures were not designed in a way that would benefit FreshBooks and allow it to keep all its employees.
“We’ve got a lot to do and we’re well set-up to do it.”
Commenting on Canada Emergency Wage Subsidy (CEWS), McDerment said FreshBooks’ revenues did not fall enough to “trip the wires.”
“Most of the things that are being designed by Ottawa [are] not designed with companies like ours in mind,” he said.
McDerment said FreshBooks would have qualified for roughly $100,000 of relief programs in the United States and Canada and confirmed that was not enough to keep the nine percent of employees, so the company did not take on that support.
Founded in 2002, FreshBooks’ software allows users to send invoices, track time, manage expenses and get paid online. Since its launch, it has added integrations including G Suite by Google Cloud, Slack, HubSpot, Salesforce, MailChimp, Trello, and Asana.
FreshBooks is currently offering several support services to businesses and freelancers also affected by COVID-19. McDerment is hosting weekly webinars to provide advice to small business owners on managing their businesses through COVID-19. The company has also curated a list of resources specifically for American and Canadian small business owners.
A grassroots initiative called “Roll Up Your Sleeves” was also recently launched by the company. This program encourages FreshBooks’ employees to assist customers with services like marketing guidance or software development. It will also hold a “Mental Health Day” this week to help staff cope with the recent company changes.
A recent survey from the Business Development Bank of Canada found that a startling 90 percent of Canadian entrepreneurs continue to feel the impact of the pandemic, as revenues have declined and cash has dried up for many of the country’s tech startups.
“The FreshBookers leaving are great people, and this change is no fault of their own,” McDerment wrote.
He noted to BetaKit that FreshBooks is working to help its former employees find their new career opportunities.
“For the FreshBookers continuing on, we’ll continue to live our mission and reshape the world to suit the needs of self-employed professionals and their teams, in an ever expanding set of markets,” McDerment wrote.
“We’ve got a lot to do and we’re well set-up to do it,” he told BetaKit.
With files from Meagan Simpson.
Image source Startup Canada.