Here’s the thing about hourly billing: it doesn’t scale. There are 24 hours in a day and you need to sleep for a chunk of them. Also, clients don’t want time, they want results or value. So, there’s a disconnect between how you bill and the value you provide.

That’s definitely something we recognize at FreshBooks. We have a ton of customers who use us to track and invoice time. To help them go beyond time-based billing our co-founder Mike & Donald from our team have written a new book, Breaking the Time Barrier.

If you have ever struggled with how to earn more revenue from your consulting or service-based business, then this book is for you. It’s a quick read but you will walk away with actionable insights for your business. You can get it here.

The post Breaking the time barrier appeared first on StartupCFO : Mark MacLeod.

For my second installment of the Founder to CEO series, I’m very pleased to share my conversations with Tobi from Shopify.

I have had the pleasure of working with Tobi and the Shopify team in the past. They are building a truly special, market-leading company. Tobi comes to Canada from Germany. Before co-founding Shopify, Tobi was active in many open source projects. The best known of which is the Ruby on Rails framework where Tobi served as a core team member.

As you will learn from this post, Tobi is probably the most brilliant high school dropout you will ever meet.

Entrepreneurial Origins

Like many of us, Tobi learns by trying. He had “trouble” in school but computers fascinated him early. He learned arbitrage in order to earn money to buy computers. He was still in Germany at the time and was able to do co-op work terms instead of spending time in the classroom. His interest in retail was sparked at one of those early co-op terms.

Never set out to build a business

Tobi likes programming for “artistic purposes”. Just for the sake of it. He and his partners started an online snowboard store that became Shopify “just to create a good job for myself”.

A reluctant leader

Tobi was not the first CEO at Shopify.  By his own admission he had paid no attention to the business side of things before his original co-founder left. Even after he left, Tobi’s first reaction was to find a replacement CEO. But, even in those early days Tobi knew he wanted to build a product and tech-centric company. In addition, he knew that ‘the person who runs the product should run the business’.

On being CEO

Ignorance is bliss: According to Tobi: “Ignorance is the single biggest driver of entrepreneurship. It was two years before it ever occurred to me that this might not work”.

Self-awareness and introspection are key: Tobi has always had this. “I perceive my days as if there is a camera behind me. I can replay my day and learn from it”. “Introspection is all you’ve got. You’re not going to get a lot of feedback as CEO”.

If, like most startup entrepreneurs you’re mind is always going, Tobi recommends meditation to help train your mind for introspection. (I completely agree with him!).

As CEO of a growing market leader Tobi lives in the future. He always has to be thinking years ahead. If he talks to his team about what he’s thinking about he can defocus them. It is a great discipline and insight to realize this. Human nature will make us want to work on what the CEO is thinking about.  This does not mean Tobi doesn’t share his future plans, but it does mean he is careful about not defocusing the team from short term execution.

It takes a village:  There is a strong ecosystem around Tobi:  An early angel investor continues to play a strong mentorship role. Benchmark’s Peter Fenton helped him put together his 1st investor deck (great when you consider that Tobi never took money from him).

Tobi thinks everyone that is serious about their performance should have a coach. He and most of his exec team have one.

“When you are the CEO, you never get to blame anyone ever again”. Everything that goes wrong is your fault.

Tobi likes Oscar Wilde’s approach: “Be yourself. Every other personality is taken”. Design the CEO role around your strengths and passions.  “Companies are manifestations of their founders. “Shopify is good at all the things I am good at and bad at all the things I am bad at”. Don’t try and be someone else. Be yourself.

Advice to CEOs: Build for a problem that you have. “This allows you to do high bandwidth customer development with yourself giving you an unfair advantage”.

Tips & Tricks

30 day trial: Tobi frames all new things as a trial makes it easy to try and fail. If it’s a formal initiative there is more pressure for it to work. This removes the risk. That way you don’t look flimsy if something you introduced goes away.

Weekly accountability: Tobi gets a list of key accomplishments and planned objectives every Monday from his team members.  This makes it easy for him to know what to talk to his team about.

Don’t do “top down” process. “Only the people who use a process are allowed to come up with a process”.  It should not be imposed from above.

Perspective: “I truly care about macro and micro things but nothing in between. I can zoom in on tiny details and zoom out to big vision.”   Tobi is a lot like Mark Zuckerberg in this respect. All great CEOs must be able to context shift in this way.

Weekends / offsites are better for working ON the business (because you’re not IN it).

Be special: Admittedly it takes resources to do some of the things that Shopify does but from their office to their perks that include free housekeeping they are focused on creating a special experience for their team members.

“Speaking to VCs was one of the best ways to learn about my business”.

As an introvert Tobi has learned to “act extrovert”. “Learning to act is a tremendously useful skill but it takes its toll. I have to unplug to recharge myself”.

Culture

It will come as no surprise that Tobi and his team have thought a lot about culture. It’s so important that one of the founders, Daniel, has assumed the role of Chief Culture Officer.

So, what is culture mean at Shopify?

- Design, product & technology hold supreme importance

- Elite individual performance expectations

- They don’t equate long hours with high performance

- No one “owns” something internally. “We all own everything that everyone else made”. Everyone is empowered to fix something that is broken. Does not matter who made it.

- Retraining: “1st 6 weeks are designed to get people to accept that there is a completely alternative way here”

- Complete transparency: Tobi’s the first to admit if he does not understand something.

Delivering Results

Begin with the end in mind: Tobi’s approach is to always have the best tools for the job in order to make the job simple. The Shopify team took a year to change Rails to make it “perfect for Shopify.” “Make the right thing easy. This is a metaphor for building businesses that work well” This approach to building his company comes right from the rails framework.

Performance is not about winning. “There are only two kinds of teams: ones that get better every day and ones that get worse”.  “We have to get better on average every day. If we do this every day eventually we will be unstoppable.” This thinking leads you to get a coach. “You’d be crazy to go without one”.

Final thoughts from Tobi:

“Don’t read too much. Ignorance is so important”.

“Lets build a company we won’t be embarrassed about 50 years from now”

The post Founder to CEO: Tobias Lutke, Shopify appeared first on StartupCFO : Mark MacLeod.

Having been deeply involved in FounderFuel, one of Canada’s leading accelerator programs, I’ve got some thoughts on this.

First, it’s important to understand the role of accelerators, especially in geographic markets outside of places like Silicon Valley. In my view, these programs are not meant to help investors discover the next giant. They are there to help investors and mentors identify, nurture and develop talent. In smaller markets like Canada’s, we are sorely lacking in proven, been there, got the t-shirt talent. This is why historically many of our more successful startups have moved to the US – making the talent shortage a self-fulfilling and perpetual issue.

In that context, accelerators are performing well. We have had 30 companies and well over 100 entrepreneurs cycle through FounderFuel since inception. Regardless of whether the companies / projects that they came in with are still running every single one of those people has a better appreciation of what it takes to build and ship great products and what it takes to get funded. And every one of them is more fundable as a result.

What we are lacking here in Canada is density. We need more founders, companies, big companies, investors, exits, the list goes on. Accelerators are not the cure all for these shortcomings, but they help fill the top of the startup ecosystem funnel. They help get more founders in a place where they can build more and better companies.

Even the mother of all Accelerators, YCombinator, is not a producer of tech giants. They have funded over 400 companies, and by Paul Grahams’s own admission, two of them – Airbnb and Dropbox – account for 75% of the portfolio value.  According to Graham, the entire portfolio was worth $ 10B last year. If you remove the two giants, then the average portfolio company was worth just under $ 6M.

The other thing to remember is that good (and by that I mean BIG) things take time. Our company FreshBooks is 10 years old and is just getting started. Hootsuite and Shopify have also been around far longer than any of our accelerators.

The whole notion that in 3 months you can figure out your path towards building a market leader is crazy. And anyone who thinks that will only be disappointed. Acceleration is great, but there’s no substitute for being in the market day in day out trying to find and delight customers.

My final thought is that there are far too many accelerators out there. So, I’m in full agreement with the Post on this point. Entrepreneurs should only choose to work with the top few if they hope to go on to raise venture capital. Being part of the lower tiers is a negative signal.

It’s a stereotypical Canadian reaction to question and doubt what we are doing. Let’s not pass judgment on Canada’s accelerators yet. It’s way too early! And let’s remember why they exist and measure them accordingly.

The post The role of Canada’s Startup Accelerators appeared first on StartupCFO : Mark MacLeod.

Mike & FreshBooks don’t need much of an introduction – especially here in Canada. FreshBooks is the leading cloud accounting specialist for small business owners and one of Canada’s premier startups.

Each interview I did followed the same high level, open-ended questions (below). But as you can imagine, each founder took the discussion somewhere special and personal. So, what follows is not an interview transcript, but my notes on key elements, learnings and insights. Enjoy.

The Questions

Let’s start with your story: Can you tell us about yourself? A quick synopsis of life before starting your company. (particularly interested in your early exposures and influences that led you to this path).

Can you talk through when you first realized you might be onto something? When did it move from a project, to product, to company?

What did you do personally to prepare yourself for each stage in your company’s growth?

Were you prepared to be “CEO”? Why? Why not?

What were the main hurdles you faced as a first time CEO (Internal and external)?

When did you feel you came into your own as a CEO? Why?

The post Founder to CEO: Mike McDerment appeared first on StartupCFO : Mark MacLeod.

Some VCs, such as Foundry Group are theme-driven. Union Square also focuses more or less on a singular theme – large networks of engaged users. Other VCs look at markets more broadly and try and predict where they’re headed. Others still look at underlying technologies and invest in those waiting for a market use case to emerge.

There is no one path to success as an investor. As in all great outcomes, luck & timing play a huge role. It’s not just about having a great strategy or knowing the right people.

From my vantage point as a seed stage investor, I had one core belief – all we were backing were teams. Everything else was subject to change. The product changes. Market focus. Positioning. You name it. Everything except the founders.

Now, I know what you’re saying – founders get replaced all the time! That’s why VCs are so evil, right? But here’s what I see: if you look at all the big breakout successes. The companies valued in the billions or on there way to that, they all have one thing in common: they have been founder-led from the start.

So, my investment thesis was pretty simple: back founders with the talent, vision and ambition to become World-class CEOs. And then support them, coach them, give them whatever they needed to help them succeed. Act as a service provider to them. Not a boss. Great entrepreneurs don’t want bosses.

In support of that thesis, I began interviewing great founding CEOs. Over time I spoke with:

Mike McDerment, FreshBooks

Tobias Lutke, Shopify

Yona Schtern, Beyond The Rack

Ryan Holmes, Hootsuite

Razor Suleman, Achievers

Reid Hoffman, Linkedin

Jeff Lawson, Twilio

Ranjith Kumaran, Yousendit

Matt Blumberg, Return Path

Isaac Saldana, Sendgrid

I also spoke with several VCs with a great track record of backing exceptional CEOs. Brad Feld was particularly generous with his time.

Anyway, I learned a lot from these discussions. The intention had been to take all that learning and write a book. But, now that I’m operating again, that’s just crazy talk. So, over the next few posts I will be sharing some of those learnings with you.

If you get nothing else from the posts that follow hopefully you will get how important it is get seasoned founders like these guys as mentors. It’s the biggest thing you can do for yourself.

The post From Founder to CEO appeared first on StartupCFO : Mark MacLeod.

Enter FreshBooks. We are the # 1 cloud accounting specialist in North America. Since 2003, we have been helping entrepreneurs make it easy to get paid and manage their business finances. To date over five million people have used our service.

The Opportunity

We are looking for a paid intern to join our Business and Corporate Development team. This position will be for up to four months with the possibility of full time employment after. You will be working directly for our Chief Corporate Development Officer in order to help accelerate FreshBooks’ partnering efforts.

Who we are looking for

If this describes you, then we want to hear from you:

Smarts: Whether it’s a crazy high GPA or answering every question on “Jeopardy” you know stuff.

Communicator: You’re smooth as silk in both written and verbal communications.

Doer: You get things done. Period.

Creative: You are able to think of things in new ways and come up with new possibilities.

Detail-oriented: When it comes to deals, the devil is in the details. You get this and sweat every last one.

Love technology: You don’t have to love accounting (yet) but you love technology and fast-paced tech companies.

Stamina: You can handle lots of opportunities and help the team whittle those down to the best ones.

What you will be doing

FreshBooks has many opportunities for partnerships and strategic relationships. You will be helping the partnering team identify, research and prioritize those opportunities. In addition, you will have the opportunity to participate in partnering discussions and learn how great deals get done.

What we offer

The potential to gain incredible experience in a short amount of time and perhaps win a full time position in the future

An incredible growth opportunity both in terms of what you’ll learn, who you’ll learn from, and the size of opportunities you’ll work on. Direct, daily access to the senior leadership team

Filter partnerships that will impact millions of people around the world

Join a great team that enjoys company-sponsored wintertime shinny games, yearly trips to Muskoka, Raps tickets, weekly free lunch, an open-concept/collaborative workspace and unpretentious co-workers.

So?

If you believe you can deliver what we’re looking for, we want to hear from you.  Send your resume and a direct link to your LinkedIn profile to careers@freshbooks.com and include a note about why you’re interested in working specifically at FreshBooks.

The post I’m looking for a Dealmaker Intern appeared first on StartupCFO : Mark MacLeod.

I am pleased to announce a joint venture with Kiltr called Kiltr Ventures. KV is a new, specialized venture fund that exclusively backs Scottish entrepreneurs. The Scots are a hardy bunch. They have toiled under English persecution for centuries. They are virtually unemployable, which makes them great founders. And many of them have fled the crap weather in Scotland giving KV a global base of potential founders to choose from.

If you or your parents were born in Scotland and you are a founder of a startup, I want to hear from you. Strong preference will be given to anyone whose surname begins with “Mac”.

The post Announcing Kiltr Ventures appeared first on StartupCFO : Mark MacLeod.

This is a shame and a waste of a precious opportunity. The right board can have a huge impact on a startup’s performance by offering an expert perspective on the issues facing the management team, exposing their network of relationships, and helping the CEO develop and grow as a leader.

So, if you’re not getting the impact you should from your board then read on.

People First

In Jim Collin’s seminal book “From Good to Great” his first step for making companies great is to get the right people on the bus. Even before figuring out what a company should do, get the right people around the table. The same is true for your board.

Now, it’s true, you don’t often have a choice – or so it seems. If you have raised angel or VC capital, then you will have investor reps on your board. The choice you have is to make sure you are raising money from people that will make excellent, engaged board members. Not just gunning for the best term sheet.

Do your homework. Reference check people thoroughly. Entrepreneurs will always be completely honest with fellow entrepreneurs. There’s no excuse for not knowing who you’re going to be working with on the investor side.

The ideal early stage investor-centric board for me would be:

Seed Stage – 3 person board: Founding CEO, co-founder, engaged angel who will act as a mentor and champion to the founding CEO.

Series A and up – 5 person board: The above + one VC + an industry expert that *you* nominate.

Some folks advocate a three person board at Series A. As a rule, smaller boards are better, but if it means giving up your co-founder or your angel mentor then that might be a high price.

Mindset Matters

With the right board assembled, you need to approach them with the right mindset. While it’s true that management is accountable to the board, it’s your company. I have seen far too many founders reporting to the board as if they are looking for permission or acceptance of what’s going on. That’s entirely the wrong attitude. The board should be there to give you leverage and guidance and to push you to be better as a CEO. They are not an approval layer. Yes, sometimes a board needs to put the reigns on some things, like slowing down hiring. But that’s just good governance.

Your mindset as a founder should be to push as hard as you can to achieve your vision and make the board work hard to make it easier for you to achieve that vision.

Tactical Tips

Finally, with the right team and mindset, here are some practices that I have seen work well.

Build relationships: Break bread with your board. Have dinner the night before.

Don’t read: The best way to put your board members to sleep is to present a deck they have already seen. Send the deck out in advance and make it clear you won’t be going through it. Therefore, board members should read it in advance and come prepared.

By the way, here is my recommended model board package.

Be selfish: Going back to my earlier point about mindset, the board should be there *for* you, not the other way around. The best board meetings go as follows:

CEO: OK, you’ve all read the board package. I’m happy to entertain any questions, but here’s what’s on my mind….”

If you kick a meeting of like this and immediately enlist your talented directors in helping you think through the biggest issues on your mind, then you will have a completely engaged board. They live for this kind of impact. Draw them in. Get them working for you. Give them homework.

Board meetings should be something you and your board look forward to. They should be high impact, high bandwidth discussions that significantly move the ball forward each and every time you meet.

The post Avoiding the “Bored” Meeting appeared first on StartupCFO : Mark MacLeod.

Have you ever seen a sports coach that is younger than the players? Me neither. And that’s the right analogy here. The best VCs act as trusted advisors, mentors and connectors. To do that you need to have been around a lot, seen a lot (of successes and failures) and know a LOT of people.

Also, no matter how brilliant or overachieving you might be (lord knows I have met many people who accomplished way more than me before they hit 30), there’s a certain perspective that comes with age. Perhaps its the humility that comes from changing diapers, or maybe it’s purely a function of time. All I know is that in my 20s, I thought I knew everything. I was wrong.

Finally, the World doesn’t need another VC. We are in dire need of people who know how to operate and are still young and driven enough to do that. That’s a separate point I suppose.

Anyway, maybe I’m just getting old, but I would not take money from a 28 year old VC. Would you?

The post Would you take money from a 28 year old? appeared first on StartupCFO : Mark MacLeod.

I’ve lived through the highs and lows of our startup scene in Montreal. I remember when Austin Hill was on US national television talking about internet privacy for Zero Knowledge. I lived through the dark days of 2002 – 2004 when almost nothing was getting funded. We were actually lucky here in Quebec. Our province has a longstanding commitment to funding innovation and so provincially funded VCs were still cutting some cheques.

I’ve enjoyed some exits along the way. Some good. Some not so good. I have watched the startup community really come together in the past few years since 2008. Attendance at community events has grown and grown. Events like Accelerate Montreal and the International Startup Festival beautifully highlight this great community.

Finally, I have had the privilege of meeting a huge portion of Montreal’s founder community during my time at Real Ventures. Real has funded more Montreal-based startups than anyone. So we have had a great vantage point to view the development of this community.

As I look at where the community stands today there are lots of things to be excited about:

- More funding than ever. Real remains active. iNovia, Celtic and Rho have all closed new funds recently. BDC, while a national fund, is headquartered in Montreal.

- More visibility than ever thanks to the growing pool of funded companies and events like Startup Festival

- Some truly amazing companies, particularly in e-commerce. Beyond The Rack has gone from idea to over 200 employees in a few short years. Frank & Oak looks like it’s targeting similar growth.

Despite all the good stuff, my one concern is that we are not building enough “big” companies here. Beyond The Rack is one of the few exceptions. If you look at leading startup hubs like Silicon Valley, Boston and NYC they are anchored by big, public tech companies. These companies acquire local startups, hire young engineering grads at a ferocious pace and contribute in many other ways to make those communities self-perpetuating. We lack that here in Montreal.

And from an investor perspective, as I have posted many times before: VC is about those rare extreme outcomes (like the 37x return on Radian 6) not averages. One homerun outcome can produce many years of follow on funds. We need successes like that (not just in Montreal) in order to ensure our community continues to have the capital it needs to grow.

So as I leave Montreal to join a company with huge, long-term ambitions, my challenge to the rest of the Montreal community is to build more big companies. Don’t sell early. Go big! We have the talent and the capital you need to make it happen.

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