Operation ‘Hire a VC’

A year ago today I started full time at FreshBooks, completing my transition out of VC. People often ask me if I miss it. The short answer is ‘no’. It’s been a great move for me on every dimension.

I was so positive my transition that a few months back I rescued another VC, hiring Russell Samuels away from Mantella Partners to come join our biz dev and corp dev team.  This has also gone really well. Russell is a happy camper and is kicking ass!

On the strength of these two moves, I realized that we need more of this. We need to rescue VCs and bring them back from the dark side. So, today, I am pleased to announce Operation Hire a VC. It’s a simple program really. Starting today, FreshBooks will give preference in all its current and future job openings to any applicants that have a VC background. The more experienced the better. We think General Partners bring a wealth of smarts and connections that can be applied to almost any role.

If you’re a VC and need rescuing, check out our careers page. And if you’re an employer and agree with me that VCs would make great team members then come join the cause and implement Operation Hire a VC at your company!

Conviction

Conviction: This is a word we use a lot at FreshBooks. Why? Well, not because we like to hire ex-convicts, but because we are building a company for the long term and want to be a long term leader in our market.

When you look at the World through that lens it clarifies things.  You realize first of all how difficult it is to build an enduring market-leading technology company. CB Insights published some stats last week telling us that 2 out of 3 tech exits last year were startups selling at Series A or earlier. That’s just the companies that even get to exit. If you lump in outright failures on top then what you realize is very few companies get past series A and become true growth stage companies. Even fewer become profitable, stand alone market leaders.

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Two keys to building a massive SMB startup

Late last year, I wrote about SMB being the “third market” for VCs. Lots of VCs fund consumer startups. Lots fund enterprise startups. Very few truly target startups serving the small business market. Why?

The challenge and opportunity for startups targeting SMB is customer acquisition: there are 30 million small businesses in the US alone; 60M in the English-speaking World. Moreover, SMB is an evergreen market – more and more businesses start each year, more than replacing those that die. So, lots of customers, but historically they have been hard and costly to reach.

As such, VCs tend to be skeptical about a startup’s ability to acquire customers profitably. This concern has two vectors: customer acquisition cost & customer lifetime value. This last point is related to churn – the rate at which your customers cancel their accounts. Enterprise startups keep their customers for many years. And each customer is worth a lot. SMB startups keep customers for a much shorter period of time. And each customer is worth relatively little.

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Stripe’s funding: Go big or go home!

I was just reading about Stripe‘s $ 80M investment today (full disclosure: Stripe is a partner of FreshBooks where I work. And we love them…). They raised $ 80M at a $ 1.75B pre-money valuation. So, what am I thinking about this?

  • YCombinator has yet another company in the $B club
  • Payments is super hot right now. Braintree was recently bought for $ 800M. The business of moving money around has never been hotter.
  • Stripe has no choice now but to go for a unicorn size outcome. More on this point:

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