After their first year of operation, Freshbooks had a grand total of 6 customers.
Less than a decade later, they’re servicing over 4.5 million happy customers.
Want to know how they did it?
So did I. That’s why I reached out to Saul Colt, their “Head of Magic” (that’s his real title!).
Over the course of 25 minutes, Saul explained to me how the Freshbooks team created a game of -Marketing Risk- that they’ve used to take over the globe.
Want to learn how to play the game? And use it to increase market share?
Then listen to the interview… 😉
Here are the highlights of the interview (and a transcript):
- Q: What does it mean to be Had of Magic? (00:20)
- Q: When Freshbooks started, who was already in the market? (01:35)
- Q: When you talk about market share and market size, what are you really talking about? (03:00)
- Q: So can you tell our readers how to increase market share? What did you do? (03:55)
- Q: How do differences in scale affect how you try to gain market share? (08:20)
- Q: What would you recommend to someone in an early-stage business? (10:30)
- Q: What did you guys do specifically to grow your market share with Freshbooks? (13:30)
- Q: Can you share a couple of examples, like what kind of stunts and spectacles did you guys put on? (17:32)
- Q: If our readers cleared three hours of their afternoon to take action on some of the things you’ve been saying, what should they do in those three hours? (22:00)
Topics and Resources Mentioned…
- Online Invoicing: Freshbooks.com
- Book: Crossing the Chasm by Geoffrey Moore
- The Lean Startup Movement
- The Freemium business model
- South by South West (SXSW)
Distilled Wisdom from Saul Colt…
- Tip #1: Never believe anything anyone tells you – always run it through your own filter.
- Tip #2: Put extraordinary effort into amazing and delighting your customers.
- Tip #3: Get feedback from your customers – spend time talking to them.
- Tip #4: Just because a customer isn’t ready to buy from you now doesn’t mean they won’t ever be. You need to make sure you stick around for when that time comes.
- Tip #5: Ask yourself if you would do something great for your customers even if no one ever knew about it.
- Tip #6: Your brand is the only thing that your competitors can’t steal.
- Tip #7: Always make sure to keep making product and shipping it out the door.
Danny: Hi everyone, welcome to 4 Questions of Marketing Month at Mirasee. I’m very excited to have Saul Colt from Freshbooks on the line to talk about growing market share. Saul, thanks for being with us here today.
Saul: I’m very excited to be here, thank you for the opportunity.
Danny: Sure, so, you know, you’re the, the “Head of Magic” at Freshbooks, that’s a pretty cool title, can you start by just explaining, you know, what you do, what Freshbooks is all about. What does it mean to be the -Head of Magic-?
Saul: Sure, well I’ll start with Freshbooks to get that out of the way. We’re an online invoicing service, we’ve been around for several years now, we’re in fact the absolute easiest way to send invoices, track time and track your expenses and we’re currently trusted by over 4.5 million users. As for me, and my title, so I’ve been with the company for a very long time, I was in the first dozen or so hires for well over a hundred employees now, so I’ve seen sort of every aspect of the company. At the time when we were much smaller, my role sort of touched a lot of departments and a lot of responsibilities and you know when we were small we had very little budget to do really interesting things, so my job was to make something out of thing, in sort of the marketing realm, and to do that you needed magic, so the, the title seemed absolutely fit.
Danny: Fantastic. So when Freshbooks came onto the scene, there were other services already doing what you guys are doing. It’s not like you guys created a market space, right?
Danny: So who was already in the market? I mean, not to speak ill of the, ah, -in the process of being defeated- competitors, but who were the 800 pound gorillas that you were going up against?
Saul: Well the obvious answer would be to say QuickBooks, but we never actually saw QuickBooks as a competitor of ours, in fact we don’t see really anyone as a competitor of ours. If anything our sort of 800 pound gorilla was people who are using Word and Excel, people who are actually, you know, using the common tools to send invoices that weren’t on a platform like ours and weren’t using something that would actually make their lives easier. So instead of trying to take customers from other people, we were actually trying to you know, convert people. I know that’s probably more grow your market then market share, but by bringing people in, it’s the same thing. We’re you know, we’ve always taken the approach that we want to build an industry and actually build a vertical as opposed to, you know, stealing other people’s customers.
Danny: No, I absolutely see that as growing market share, I mean I think… we tell this to our students all the time, you know, your biggest competitor is whatever your target customers other option is, you know? For a lot of carpenters, your all competitors is not other carpenters, it’s IKEA.
Saul: Really interesting way of looking at it.
Danny: But so in that context, you know, how, maybe you could actually just start by giving our audience a bit of a perspective, you know, you say -market share- and -market size- – what are we talking about?
Saul: Well I always think market share is just the percentage of market accounted for by specific entities. The number of people who could use your product who are using something similar, where your share of the pie would be how many are using yours as opposed to using yours as opposed to how many are using the others. Market size would be how many people could you actually bring into the pie and make that pie bigger, doesn’t necessarily change that little piece of it, but you know, the pie grows, and market share would be how much of that pie do you get to eat.
Danny: And so what did you do to grow that market share? I mean in large cases here, you know, you’re right a lot of, I would imagine your target market was doing things in Word and in Excel, I’d probably fall into that category, actually. So how did you grab that market share? What did you do?
Saul: We did something very, very interesting and, and I believe it’s unique, I’m sure there’s other people that have done similar but, um, you know, you’re the one who’s asking the question, I’m the one answering, and I’m going to take all the credit in the world for it and say it was our invention, but… if you guys are familiar with the, the board game Risk, and you have, you know the world on the board and you’re trying to dominate the world, well, you know, people who are really good at Risk, they know that you know, you can’t defend China and you can’t defend, you know, big vast parts of the game because it’s just too hard, so what you do is you own a territory, and you make little jumps. So you, it’d be like owning Australia and then you’d make a little jump to the other islands and you try to sort of dominate the world that way. When we were thinking of how we were going to sort of grow the business and from a marketing standpoint we did something we called -Marketing Risk-. So we built a world map and the world map were all the professions and the verticals and channels and things that could use our product and we put them out on a board and we picked a small territory that we thought we could own. So it wasn’t that we ignored everything else, we certainly did cater to tons and tons of industries and we still do today, amazed that we have people who are dog walkers and we have people who are pool cleaners and we have all the people that you wouldn’t necessarily think would use an online invoicing service, but our main focus was: we decided to go after creative professionals. This was a few years ago, this was just a little earlier in the internet, so we decided that we were going to focus all of our energy on people who lived on computers. We didn’t have to have the conversation of, you know, security, and we didn’t have to have to conversation of late adoption and things like that so, we focused all our energy in Australia, using Australia as a metaphor, not literally, we focused all our energy on one little country, and when we had what we felt was, you know, a fair bit of draw in the country, in that profession of say, let’s call it graphic designers, so we focused all our energy on graphic designers and then once we were comfortable there that we had a certain amount of market share and a certain amount of saturation, like you would do in Risk, we made a small jump. So we were covering graphic designers, well why don’t we make a little jump to web developers. Then we focused on two things and then we made another small jump so web developers, maybe to go into IT professions, or you got to web designers or you go to graphic artists. So we never really tried to do a, we never tried to take over the world at once. We tried to take over, you know, cities and states and provinces and communities and things like that and we took a very, very deep approach in breadth, but very narrow in scope, if that makes any sense. Cause it was really like, playing Risk, and we’re going to make little jumps and little jumps and as we grow and as we grow. And the groups that we targeted were very social groups, so they helped spread the word and they helped grow the business, but we were catering to very, very small groups at the beginning, because that’s the people that supported us and we wanted to support them as well.
Danny: That’s very much along the lines of Geoffrey Moore’s kind of Market Entry Ideas and Crossing the Chasm right where you establish that kind of beachhead market and focus all your energies and get into it and then you kind of expand bit by bit, and that’s, you know, it makes a lot of sense. As market entry goes. So once you’ve kind of, you’ve got that first chunk of market share, I mean, I forget the number you said it was four and a half million users now?
Danny: So I mean, that’s a huge number. I would imagine that-
Saul: Sorry to cut you off. At the same time 4.5 million sounds amazing and magical and huge, but we had six customers after the first full year we were in business, so we’ve seen both sides of the spectrum. Freshbooks is an enormous success now. It’s not a 24 hour success the way some companies strive to be or desire to be.
Danny: Well I think the overnight success thing is impossible other then you know, just kind of randomly getting lucky, but banking like that is like banking on a lottery card.
Danny: But like, really kind of growing out of that point that you kind of made, is that you didn’t start at 4.5 million users, you started growing to 6 and 20 and to 200 and to 500 and I would guess that gaining market share when you’ve got a few hundred or a few thousand users or a few tens of thousands, is very different from growing market share when you’ve got millions of users. So can you talk about how the differences in scale affect the way you look at this?
Saul: Sure. So when we had much less customers, we were able to spend a lot of time with our customers. It was an amazing part of our growth, it was an amazing part of the Freshbooks story. Anytime anyone would travel we would take customers out for dinner. We still do all these things now, but it’s very different because, like you said, we can’t touch as many people. We’re probably touching the same number of people as we’ve always touched, but you know, the actual larger number has gotten so much bigger, that it’s probably not the same feeling. But when we were smaller we’d spend all our time with our customers, we got feedback we gave them feedback, it was a very personal experience they were part of a community and this was something that really was as much theirs as ours. So that feeling is still going on today, and that’s our goal still going on today but, you know, you’re also trying to, to grow the business and keep up the pace and things like that so, a lot of little ways we market the company are a little bit more, you know, mass-oriented instead of personalized, and, well actually, personalized isn’t the right word, it’s still personalized, because that’s our brand and that’s what we believe in, but we’re looking for a broader group of people now because we have the manpower and we’re equipped to actually handle larger amounts of customers.
Danny: So let’s say that you’re in a position to start something new or to get involved with a brand new business. You know with all the experience you’ve got from growing Freshbooks into something spectacular, you get involved with a brand new company that is you know, in a 0-10 employee range, kind of either just getting started and kind of finding their feet, or they’ve been around for a little while, but they’re still small and they still have room to grow in terms of figuring out how to get their marketing quite -down-. And I realize that this is quite vague, because you know, it could be any kind of business, it could be a product, it could be a service, it could be online, it could be offline. But if you were getting into that kind of early stage business, what recommendations would you make to, to the owner of that business? What would you say, you know: -I’m happy to get involved, but but here’s what we have to do for this to work.-
Saul: This is probably a little bit more broad than exactly what I would do assuming I’m not involved and I was just giving advice to somebody, the advice I tell people all the time is don’t believe anything anyone ever tells you and don’t think this is going to be easy, but it’s still worthwhile and you should still absolutely do it. So myself personally I read every book I can find on topics of business and marketing and all these sort of things, but I still run everything through my own filter. I think a lot of new businesses today, they get caught up in, you know maybe it’s the Lean Startup Movement or it’s this or it’s that and they still like got to remember at the end of the day, you still have to sell something, you still have to keep the lights on you’ve still got to you know, do things, you know, to really focus on shipping and selling. Build a product, make it great, treat your customers really great, but still make sure you’re pushing things out the door, cause all these philosophies and all this advice and all these things that people are giving you, you still have to pay your employees, pay yourself, keep the lights on and things like that so, the number one focus you should always worry about is, you know, making sure you’re actually bringing in, like, you’re shipping things out the door whether it’s a tangible item or a service or whatever, make sure someone is using your product and if people aren’t using your product, that’s a really indication that you might have to make some changes or correct some things. But talk to your customers and make sure that you’re taking advantage of, you know, and everyone things social media is sort of the be-all, end-all, you know and it may be and maybe it isn’t depending on who your target is. But one thing it does do very well is it gives you thousands and thousands of free focus group information. Take advantage of that stuff. But still run it through your own filter, because no one is going to care more about your company than you are. You’re the one that’s losing sleep at night, you’re the one who’s thinking about it 24 hours a day, trust your own instinct. So just always remember why you got into this thing in the first place.
Danny: I think that’s really good advice. It’s, it used to be that the problem was lack of access to good information. And now the problem is almost that there’s too much information available, you can drown in it, you know: -do I go this way, do I go that way, which expert do I listen to when a lot of the advice seems to be contradictory.-
Saul: My dad has a saying, he says he would never take advice from someone on how to make a million dollars unless they were actually a millionaire. The barrier to entry to write a book nowadays has actually become quite low, so, you know, you don’t even know if the advice you’re getting is worthwhile. You really, really, really have to run it through your own filter, and you know all of these things are wonderful and all of these things are great, but I think you learn way more about running a business; you know hands on, getting your hands dirty and use all the other information and things as guidelines. Don’t use them as facts; don’t use them as strict and unbending advice.
Danny: Saul, I’d like to share some specific tactical examples as well with, with our listeners. Can you speak a little bit to the specifics of what you guys did with Freshbooks in order to grow your market share?
Saul: Sure. I told you about the -Marketing Risk- and that was something that we’ve really stuck to. The story of Freshbooks is really one about knowing our customers, and sort of living the life of our customers and advocating for our customers, so we participated in associations and things because we were focusing on, you know, very, very specific groups, we were able to actually spend time in their communities and help them and be a part of them and always be visible and because of that, you know, an interesting thing about our product, you know, we’re online invoicing, and we’re, in my belief we’re the best option out there. But at the same time, Freshbooks is not a product that everyone could use. Not everyone needs to send invoices. Not everyone is in a position where they could use our product. But everybody is in a position where they can talk about our product. So we always went out of our way to create, you know stunts and spectacles and things that people would repeat and talk and share and always stay top of mind, so, mindshare was something that was always really important to us, as much as market share, so going back to what I said about shipping product and keeping the lights on, you know. Obviously every company’s story about that, but we always wanted to be top of mind with people because if you couldn’t use our product, you’d still know people who could use our product. An example I use is, you know, going back to social media, there was a tweet probably six weeks ago, somebody said -I just signed up for Freshbooks after meeting them at South by South West last year- so it took eleven months to convert this person to a customer, and most people would see that as a colossal failure, and in my mind, and again I look at things a little differently. I actually think that’s really awesome, because 1) they became a customer and 2) for eleven months this person was walking around probably talking about us, probably communication to other people and they never forgot about us. So if you can imagine having an impact on somebody for eleven months and they’re not a customer, there’s – something must have clicked with them in some way that they’re going to communicate that story elsewhere and they’re going to tell that story, and you know, I hate to use the word -viral- because I think it’s a cliché, but you know, there is a certain share-ability about the things we do outside of products, you know, because we’re spending time with our customers. We’re offering them experiences that are very unusual, that a company like ours would do. So I did mention we take customers out for dinner, every time we travel we’ll gather 20 or 30 or 40 people to come out for dinner with us and if you think about it, you know, what other company would actually do something like that? And to sort of preface that statement like, we’re a Freemium business model. We’re even taking customers out for dinner that don’t give us money, so, they could imagine – imagine trying to sell that idea to a telco, or sell that idea to a you know a big company. But you know, these are the human touches, the human elements of things that we’ve always brought into what we do and this has really resonated with people. So our customers are really helping business grow and creating market share as probably equally as much as our initiatives.
Danny: I think you made a really important point when, you know, you were saying, it took eleven months for that customer to convert and you know some people say: -ohh, you know eleven months, that’s so long!- But the fact of the matter is you can’t sell everyone all the time, it doesn’t matter how good you are, it’s just that, you know online invoicing is important, and it’s an important thing for every business, but you know, who knows what else is going on in this person’s life for eleven months. In their business in their life, in their everything, you know. And quite possible they just weren’t in a place where that was the most important thing, and every business goes through that where you know, your customers entire life experience is not around the experience that you’re looking to provide, it’s just a small part of everything in their life.
Saul: But you want to be there when they are ready.
Danny: Exactly. Can you, can you share maybe a couple of examples, like what kind of -stunts and spectacles- did you guys put on? To just to get the wheels turning for some of our listeners.
Saul: Well, very, very top of mind right now is South by South West the festival, it’s next week and we’re gearing up to go there again so I’ll give you some South by South West stories because they’re all top of mind, my heads all kind of South by South West all the time right now, but five years ago, I was speaking at a conference in Miami Florida and then I was speaking at a conference in Austin Texas for the festival and they were a week apart. So instead of flying back to our office then flying to this second location, a couple people from the office we rented an RV and we drove from Florida to Texas and we had breakfast lunch and dinner with as many customers as we could along the way, we made 18 stops, and it was a way for us to actually get to know our customers solve problems, do matchmaking. That’s something we do a lot of because we have so many amazing customers and a lot of our customer base is freelancers a lot of our customer base is consultants and you know, one amazing way to create loyalty for you business is to provide more income and more work for somebody. So we meet all these wonderful people along the lines and over this trip we connect probably ten people for real paying work, so it’s like, you know, it’s like: -you need a Flash programmer, we just met one two cities over, you should all this person!- Or -you need a web developer!- or -you need a photographer!- We were doing that all day long. But beyond that we actually spent real time with our customers and that was something that left a real impression on people. Other things we do as far as from an accounting side, we’ we’re trying to work with accountants and a few things we’ve created ambassador programs and we’ve created all sorts of things, we’re high on education, we’re trying to actually give people the tools they need to create extra value outside of the product. That’s been really great for us. And one of the most important things that we do all these things not because we think it’s the right thing to do, or not because we think it’s going to get us more business, we do it because we actually care about our customers and we care that, you know, we want people to stay as long as they can because we’re actually providing something worthwhile for them. You know, we’re not, this isn’t just sort of going through the checklist in the MBA handbook or something like that. You know one of the things that sets us apart and one of the things I think you can really inject in your company from the beginning is actually caring, that, something that not everyone actually works into their marketing plan or works into their customer culture.
Danny: I love your examples, because, you know, when you say -spectacles and stunts- and all that kind of stuff, you know, people, their minds tend to go towards like, you know, crazy PR stuff, like, you know, Half.com got the city of Halfway to change their name to be Half.com for a year and life, you know, random stuff like that, you know, it’ll get a journalists attention, it will get you written about, but it’s really just a PR stunt.
Saul: It is well-
Danny: What you guys are doing, it’s all, it’s all… people talk about it because you’ve actually helped them.
Saul: I’ll be the first to admit, it wouldn’t be fair if I said that one of our hopes of this stuff wasn’t to get some PR attention, but it wasn’t the only goal. So we’re doing these things because it’s really important and we believe in what we’re doing, but the secondary hope and dream was that we hoped to get some attention because obviously we’re trying to build a brand and things like that, but the best way to do these things, and when you’re coming up with these sort of shiny ideas is like: -would you still be happy if you did it if nobody ever knew you did it?- And that’s one of the filters we run through, at least in my head, and it’s always like, -yeah, we’re doing this because yeah, there’s a real reason to do it-. We’re doing it because it’s cool and interesting and different. I truly, truly believe in business unusual. You know I’ve already sort of stated my bias on how I don’t really believe a whole lot I read and things like that, and maybe I’ just crazy but I truly believe like, you know, you sort of do the things unexpected, but you do them for the right reasons and you do them with a lot of heart and you know this isn’t like karma thing, I’m not going to burn incense and get all new-agey on you but I truly believe there’s value in doing all this stuff. It may not show up immediately a week later on your bottom line or things like that but long term these things, this is the stuff that people connect to companies about these are the things that build brands and brands are like, really the only thing a competitor can’t steal.
Danny: I think that’s beautiful, and my own experience absolutely validates everything you’re saying, I couldn’t agree more.
Saul: Thank you.
Danny: The last question that I always try to ask anyone I interview is, you know, we’ve got a bunch of listeners that are listening to this on the call and some people who are going to read the transcript, who are going through all this content and they’re really impressed, it really touches them, they see absolute incredible value in what you’re saying, and it touches them enough that they say: -You know what, I’ve got to do something about this. I’m clearing three hours this afternoon to start putting stuff into practice.- What should they do with those three hours?
Saul: I would say call customers. Ask them what they like about the company, why they even started, how did they hear about them. Your customers are the greatest wealth of information for you it’s one of the places most people think about last. I would spend three hours calling my customers, I would take all of that information I would absorb it, I would do it. One thing that I do say is, and it kind of contradicts what it said about being a wealth of information is that your customers are the best thing for your company and you should love your customers and treat them better then they expect to be treated but at the same time you’ve got to remember that this is your business and your customer doesn’t always know the whole roadmap and your customer doesn’t always know what you’re thinking or what you’re going through. Take every nugget of information and absorb it and run it through your processors and your brain and all those things that you don’t have to do everything your customers ask. Features and benefits, maybe they don’t line up to the long term goals of the company, maybe they don’t – it’s just impossible to do. Somebody says: -I want a hologram- or something like that, but you have to listen and you actually have to take things to heart and use that information whatever way you, you see fit, but you have to reach out and get that information because it’s way more valuable. A lot of times you’re living and breathing this thing and you’re way to close to the situation and you totally missing the obvious stuff, your customers will fill in those blanks.
Danny: I think that’s fantastic and you know, listeners you just heard it: don’t procrastinate, don’t over think. Just pick up the phone and make some calls this afternoon and talk to your customers.
Saul: I think the hamburger chain Wendy’s, their slogan from a couple of years ago kind of sums up my philosophy of living: -you should do what tastes right.- Always run that, ask yourself that, before you make any decisions.
Danny: I love it. Saul, before we wrap up, do you want to tell everyone a little bit about how Freshbooks might be able to help them in terms of their market share, in general in their business and what their next step should be if they want to learn more.
Saul: Yeah, if you’re interested please go to Freshbooks.com. You can try unlimited free for thirty days. One of the main benefits of Freshbooks is we actually lets you get back to doing what you love to do, so if you’re a graphic designer, web developer dog walker accountant, pool cleaner, doesn’t matter that you do, we’re going to take, you know, give you hours back in your month that you don’t have to spend doing billing and tracking time because our platform is the simplest, easiest way to do it, and that we’ll get you paid quicker, make you look more professional and make you a little bit more money.
Danny: Fantastic, Saul, thank you very much for being on the call with us today, I really appreciate it. I enjoyed it, I found it valuable and I know that our listeners are going to feel the same way. So thank you very much.
Saul: Very cool. And my goal was I wanted to make this the best interview you’ve ever done, so I hope that works out.
Danny: I think you’re right up there.
Saul: OK, well I appreciate it. Thank you for the opportunity.