On the TechTO stage ×3
He Bootstrapped for 10 Years and Said No to Every VC. Then He Changed His Mind.
Watch on YouTube ↗
Mike McDerment of Freshbooks presents Today
Watch on YouTube ↗
Mike McDerment of FreshBooks presents Undercover Innovation
Watch on YouTube ↗First seen on the TechTO stage in 2016. Every talk is searchable — ask the archive about Mike ↗
In their words
Whenever I raised, I would practice dolphin dives. I would always make sure I could get back to zero with whatever capital I had on the balance sheet, because what you do not want to be doing is raising when you need the capital.
Every problem is a people problem. Every solution is a people solution. That's true in your business, and it's also true with the people you bring onto your cap table.
You need to know your customer and your market better than anyone in the world before you go and raise capital from somebody else.
I saved over an invoice one day and the rest as they say is history.
If you really want to learn like go and try and figure out sales and marketing at that small company and fall on your face like 10 times you will learn so much more than going to that big company.
If you look at how it gets done is you need some companies to really scale that's the thing that actually accelerates it the fastest.
I don't believe you can iterate your way to Greatness in design.
I'm not trying to win next year I want to win in five years.
Any platform is going to last you about 10 years in technology and then you're kind of screwed.
Around the web ×4
Quick answers
Why did Mike McDerment say no to VCs for FreshBooks' first decade?
At heart it was control — he feared losing the soul of the company, especially the ability to shape how customers were served. He also knew the information arbitrage between VCs and founders was heavily one-sided back then.
What finally changed his mind about raising venture capital?
Everything else was derisked: customers loved the product, the market spanned tens of millions of businesses, and the metrics showed a repeatable acquisition model. After recruiting seven or eight executives, capital was the only thing still holding FreshBooks back. He told investors to expect 10 years and only accepted funds in their first year.
What are 'dolphin dives'?
His fundraising principle: whenever he raised, he made sure he could get back to zero with whatever capital was on the balance sheet, so he was never raising because he needed the money. If you don't need the capital, investors fight to give it to you; if you need it, you're screwed.