Tag Archives: Company
Pinterest is betting big on ads and e-commerce as it heads to the public market, breaking away from its hobbyist beginnings as it aims to show investors it can eventually turn a profit.
The online bulletin board plans to grow by making it easier for users, or pinners, as Pinterest calls them, to buy products. That would include making ads more relevant, expanding internationally, and using technologies like Lens, its visual recognition tool, to recommend more products.
“We plan to improve the utility of our service by making it easier for Pinners to go from inspiration to action,” the company said in its first public filing on Friday with regulators ahead of its planned initial public offering. “In particular, we want to make Pinterest more shoppable.”
Pinterest is the second in a crop of high-profile, highly-valued tech companies that are expected to hold IPOs this year. Lyft has already filed publicly, while Uber, Airbnb, and Slack are expected to do so.
Pinterest posted $ 755.9 million in revenue in 2018, up from $ 472.9 million the previous year—a 60% increase. By 2021, Pinterest’s ad revenue will grow to $ 1.7 billion, says research firm eMarketer.
Pinterest will have help from its new head of engineering, Jeremy King, who formerly served as chief technology officer for Walmart. King, touted by Pinterest as an “expert in e-commerce development” in announcing his hire yesterday, is expected to help the company with improving Lens.
Regardless, Pinterest is still hemorrhaging money. The company lost $ 63 million in 2018, but that was far less than in 2017, when it lost $ 130 million. And though it has a growth plan, Pinterest admitted in its filing that it still has a long way to go to reach profitability.
“We are in the early stages of our monetization efforts, and there is no assurance we will be able to scale our business for future growth,” the company said.
Most of Pinterests’ user growth is abroad, while most of its revenue is from U.S. users. That means the company must either figure out how to jump start growth in its U.S. user base or better leverage its overseas users for revenue.
The number of Pinterest’s international monthly active users has tripled since the first quarter of 2016. Yet during the same time period, U.S. users only grew 20%.
Pinterest, founded in 2010, didn’t start seriously selling ads until 2014 in the U.S. Now, it’s focused on expanding international ad sales, of which there’s plenty of room for growth.
Pinterest’s collected $ 3.16 in revenue from each of its 82 million active U.S. users. But the company’s 184 million users overseas accounted for only nine cents of revenue each.
Pinterest’s plans for making money recall those of rising competitor Instagram, which is also trying to help consumers shop—and make some money in the process. But unlike Instagram, Pinterest believes it captures attention of consumers when they’re looking for inspiration for their wardrobe or still mapping out an idea for specific DIY home project.
And that, according to Pinterest, is what gives the company a competitive advantage.
Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek.
They hope, though, that you don’t notice when those promises become, well, a little diluted over time.
It’s the thought that counts, after all.
One thought offered by Google when it committed itself to your health was that Deep Mind, its profound subsidiary that uses AI to help solve health problems, was that its “data will never be connected to Google accounts or services.”
Cut to not very long at all and Deep Mind was last week rolled into, oh, Google.
In an odd coincidence, this move also necessitated that an independent review board, there to check on Deep Mind’s work with healthcare professionals, was disappeared.
This caused those who keep a careful eye on Google — such as NYU research fellow Julia Powles — to gently point out the company’s sleight of mouth.
This is TOTALLY unacceptable. DeepMind repeatedly, unconditionally promised to *never* connect people’s intimate, identifiable health data to Google. Now it’s announced…exactly that. This isn’t transparency, it’s trust demolition.
This is, though, the problem with tech companies.
We looked at them as if they were run by wizards doing things we could never understand.
Any time we became even slightly suspicious, the tech companies murmured that we should trust them. Because, well, we really didn’t understand what sort of world they were building.
Now, we’re living in it. A world where everything is tradable and hackable and nothing is sacred.
A world where the most common headlines about the company seem to begin: Google fined..
I asked Google whether it understood the reaction to its latest Oh, you caught us, yes, we’re going to do things differently now move.
The company referred me to a blog post it wrote explaining its actions.
In it, Google uses phrases like major milestone and words like excited.
It also offered me these words from Dr. Dominic King a former UK National Health Service surgeon and researcher who will be leading the Deep Mind Streams team:
The public is rightly concerned about what happens with patient data. I want to be totally clear. This data is not DeepMind’s or Google’s – it belongs to our partners, whether the NHS or internationally. We process it according to their instructions – nothing more.
At this stage our contracts have not moved across to Google and will not without our partners’ consent. The same applies to the data that we process under these contracts.
At this stage.
Oh, but you know how creepily the online world works.
You know, for example, that advertising keeps popping up at the strangest times and for the strangest things.
Within minutes, certain apps on my phone were full of ads for Google’s new Pixel 3 phone. Which I could buy most easily, said the ads, at a Verizon store.
Who would be surprised, then, if personal health data began to be linked with other Google services, such as advertising?
Too many tech companies know only one way to do business — to grow and wrap their tentacles around every last aspect of human life.
The likes of Google operate on a basis of a FOMO paranoia that even teens and millennials might envy.
They need to know everything about you, in case they miss out on an advertising opportunity.
You are not a number. You are a lot of numbers.
And your numbers help Google make even bigger numbers.
Will that ever change? Probably not.
Content marketing has become pretty mainstream in the toolbox of every marketer. By now, we all understand the power of good content and its strength in achieving thought leadership and authority in your space.
However, once I begin to produce that content, the obvious question arises, how do I traffic more traffic to that content. Here are two fast and easy tricks that will drive high quality traffic to your site almost instantly.
Do Interviews, Do Many Interviews
Interviews are by far the most underrated form of content. As you build out your blog, you should aim to do consistent interviews with big names in your space. How consistent? That is up to you and your resources, but if you can do them once a week, you will see results almost right away.
Here is how it all goes down. You make yourself a wish list of people you want to interview. Set your goals high. I, for example, had Wozniak, Guy Kawasaki, Alyssa Milano, Marc Andreessen, and many others on my list.
So why interviews? Well, think about it. First of all, people like to be on stage. So you reach out to a big name, ask them to do a short interview by email, you will find that nine out of ten people will agree. By offering that person a stage without selling them anything, you established the beginning of a relationship. You are now on their radar.
You send the five or ten questions by email, they send answered, and you copy, paste, then publish. What is the first thing the person you interviewed is going to do? That’s right, share it. With their extensive audience. And there you have it, instant targeted traffic.
Let’s not forget the last thing that happens when you interview legends, validation. Everyone around you sees that interview and is immediately impressed that you managed to interview that person. Your name, your company, realize it or not, is associated with that person. Win.
Lists, Like Them or Not, They Work
Now take the list concept to the next level. You know all those lists you see in your Facebook feed that make you roll your eyes? “Top 50 this” and “Top 50 that”. Well, you missed the point.
Whether you read those lists or not, that is not the point. Imagine this. You write a post on your brand new finance blog, “Top 50 smartest people in Fintech”, and for each person, you include a picture and a one liner. On top of the post, you include a collage of each of the 50 faces.
You publish that article and in 30 minutes or even if it takes you three hours to write, you just got your new blog on the radar of the top 50 most influential people in your industry. And you didn’t even have to sell anything or even worse, spam anyone.
Not only are you now on their radar, but each one of those 50 influencers, presumably each with a large following will now share that piece across their networks, because, well, you promoted them so why wouldn’t they share it?
Think about that for a second, you just got all those mega names to share your post from your blog that was just one day ago, totally anonymous.
Interviews and lists, both easy to implement and both yield instant results while requiring minimal effort on your part.
The most important part of all of this is the reason that these two tactics work, and that is, because you are not focused on taking, but rather, you are giving, in this case, you are giving someone else a stage. Turns out that when you facilitate success for others, everyone wins.
SAN FRANCISCO (Reuters) – Apple is on the verge of becoming the first $ 1 trillion publicly listed U.S. company, but even if it gets there, it could soon be overtaken as Amazon.com surges from behind.
Started in the garage of co-founder Steve Jobs in 1976, the iPhone maker’s annual revenue has ballooned to $ 229 billion, greater than the gross domestic product of countries including Portugal and New Zealand.
(Big Tech Rev vs Countries’ GDP: reut.rs/2ry9qr6)
Apple’s market capitalization on Thursday topped a record $ 934 billion, following its unveiling last week of a $ 100 billion buyback budget and news that Warren Buffett’s Berkshire Hathaway dramatically increased its stake in the company.
Thanks to a 12 percent rally since its quarterly report last Tuesday, the Cupertino, California company is just 8 percent short of hitting the $ 1 trillion valuation mark.
Pointing to Apple’s recent 31 percent jump in service revenue, including music streaming and online storage, CFRA analyst Angelo Zino on Wednesday upped his target price for the stock from $ 195 to $ 210, which would put Apple’s market capitalization at $ 1.03 trillion. Zino joins at least 12 other analysts with price targets putting Apple’s stock market value at 13 digits.
But Apple is in danger of being beaten to the $ 1 trillion mark – or passed soon after – by Amazon.com, the second largest listed U.S. company by market value, at $ 780 billion.
Saudi Arabian authorities, meanwhile, have said they expect a planned international initial public offering of Saudi Aramco that would value the national oil producer at about $ 2 trillion.
While $ 148 billion smaller than Apple on Friday, Amazon of late has expanded its stock price, and its sales, much more quickly than Apple. Amazon’s stock is red hot, trading recently at over 100 times expected earnings, compared to more-profitable – but slower growing – Apple’s valuation of 15 times earnings.
(Big Tech PEs:reut.rs/2wsd0YU )
Apple’s stock has risen 24 percent over the past year, fueled by optimism about the iPhone X, the company’s latest smartphone. But demand for the $ 1,000 device has underwhelmed investors, and bulls are now focused on Apple’s plan to return more cash to shareholders.
By comparison, Amazon’s stock has surged 70 percent over the past 12 months, bolstered by 31 percent revenue growth as more shopping moves online and businesses shift their IT departments to the cloud, where Amazon Web Services leads the market.
Amazon is also competing more with Apple and Google owner Alphabet as it sells music and video content, its Fire TV device and its Alexa smart home gadget.
(Big Tech Revenue: reut.rs/2wyZaE4 )
At $ 765 billion, Alphabet has the third largest market capitalization on Wall Street, with Microsoft close behind at $ 749 billion. Amazon breezed past both them both in February.
(Long-Term Market Cap:reut.rs/2rzCGxD )
Including Facebook, the five largest listed U.S. companies now account for 15 percent of the S&P 500’s $ 24 trillion market capitalization.
(Big Tech’s Outsized Weight in S&P 500: reut.rs/2rwBTOc)
To be sure, past stock gains are not a reliable predictor of future performance, and the surge in Apple’s and Amazon’s shares in recent years has been exceptional by most standards.
But if Apple’s stock were to keep growing at the pace seen over the past year, the company’s market capitalization would hit $ 1 trillion in September. Amazon would reach $ 1 trillion around October if its stock price continued to rise at the same rate as the past year, and overtake Apple soon after.
Extending forward their own one-year performances, Microsoft would not reach $ 1 trillion until early 2019, and Alphabet would take until 2020.
(Race to $ 1 Trillion Market Cap:reut.rs/2rz4WAJ )
Most Wall Street analysts are less optimistic. The mean analyst price target puts Apple’s stock 6 percent above current levels at $ 200 within the next 12 months, which would elevate its market capitalization to $ 983 billion, according to Thomson Reuters data.
The mean price target of analysts covering Amazon is $ 1,850, a 15 percent premium over its current price, which would give it a market value of $ 898 billion. Analysts target Microsoft to rise 12 percent to reach $ 845 billion, and for Alphabet’s market value to increase 16 percent to $ 884 billion.
(Big Tech Analyst Price Targets:reut.rs/2wv224H )
Reporting by Noel Randewich, Editing by Rosalba O’Brien
I was in the first 24 months of my first startup, a B2B services business. My team and I had been pursuing a contract at one of the highest-profile early stage companies in the United States, and to our amazement we actually won the deal.
Our revenues tripled overnight, and it put our company on the map. As excited as we were to win the business, had I known then what I was about to experience I would have managed things very, very differently.
Winning this deal nearly became a death sentence for my business. Here’s why:
Servicing the account consumed all of our resources.
Winning this deal was akin to the dog catching the car: we latched on to the bumper and quickly realized that we had zero control over what would happen next.
I knew that this account would require us to marshal most of our resources – cash, time and people – to deliver on our promises. Quickly we realized just how understaffed we were in order to meet expectations, and pulled nearly everyone into the mix; we more than doubled the company’s headcount within 60 days of the program going live.
Our cash funded the headcount growth, our new hires consumed all of our management time, and our inability to do anything but service this customer prevented us from developing the systems and processes that would have made the model replicable. Our lack of bandwidth also prevented us from winning any new business, which became problematic down the road.
This customer knew they were our biggest account by far, and they took full advantage of that dynamic. Every meeting request, every late night phone call, every weekend email barrage — we couldn’t say no.
Customer concentration put our balance sheet under immense stress.
I didn’t have the bandwidth to service new business, and I didn’t have the cash flow to expand the sales team to add more business. In fact, the last thing I wanted at the time was another account to service. This was flawed thinking, as I came to find out soon enough.
Our customer’s business was growing exponentially, and our relationship with them grew in lockstep. It was exhilarating, but it was during this time that I learned a priceless lesson about hyper-growth: it’s a cash furnace.
Our billings with the customer doubled, we doubled our headcount, and our payroll would also double. The payroll debits hit every two weeks, but our customer’s checks came every 60 days. Before I knew it, I was tapped out on a $ 1 million line of credit (personally guaranteed, of course) just to float our customer’s growing receivables. They weren’t aging more than 60 days, but they were growing so rapidly that my credit line couldn’t keep up. I nearly grew myself out of business.
Losing the business was catastrophic.
I received the call two years into the relationship at the contract renewal: this company was bringing these operations in-house. There was no hint that this result was going to happen. Over forty percent of my revenue evaporated overnight.
We hadn’t done the work to diversify the business (we were cash poor, after all) so I had nowhere to put all of these now-idled people. In one of the toughest days of my entrepreneurial career, I had to send 20 amazing individuals packing on little notice. It was one of those soul-crushing moments that hardens you as an entrepreneur.
About those receivables: the customer’s interest in paying us in a timely fashion for services already billed dropped precipitously after the cancellation. I spent the next six months fighting off the bank while I worked to get this now former customer to pay their outstanding invoices. On more than one occasion, I tapped personal savings (including a 401(k) loan) to make payroll. It was a decidedly not-fun experience.
Looking back on this entire episode, the mistakes that I made are glaringly obvious. Seeing only massive revenue gains, I failed to anticipate the negative impact on our operations. We didn’t add new customers, because we didn’t have the cash flow or bandwidth. I was naive about setting a customer credit policy.
Sometimes, landing the whale can be the worst thing possible for your business. In this case, the worst thing for my last company became the best hard-knock education as an entrepreneur that I’ve ever received.
WASHINGTON (Reuters) – Facebook Inc Chief Executive Mark Zuckerberg told Congress on Monday that the social media network should have done more to prevent itself and its members’ data being misused and offered a broad apology to lawmakers.
His conciliatory tone precedes two days of Congressional hearings where Zuckerberg is set to answer questions about Facebook user data being improperly appropriated by a political consultancy and the role the network played in the U.S. 2016 election.
“We didn’t take a broad enough view of our responsibility, and that was a big mistake,” he said in remarks released by the U.S. House Energy and Commerce Committee on Monday. “It was my mistake, and I’m sorry. I started Facebook, I run it, and I’m responsible for what happens here.”
Zuckerberg, surrounded by tight security and wearing a dark suit and a purple tie rather than his trademark hoodie, was meeting with lawmakers on Capitol Hill on Monday ahead of his scheduled appearance before two Congressional committees on Tuesday and Wednesday.
Zuckerberg did not respond to questions as he entered and left a meeting with Senator Bill Nelson, the top Democrat on the Senate Commerce Committee. He is expected to meet Senator John Thune, the Commerce Committee’s Republican chairman, later in the day, among others.
Top of the agenda in the forthcoming hearings will be Facebook’s admission that the personal information of up to 87 million users, mostly in the United States, may have been improperly shared with political consultancy Cambridge Analytica.
But lawmakers are also expected to press him on a range of issues, including the 2016 election.
“It’s clear now that we didn’t do enough to prevent these tools from being used for harm…” his testimony continued. “That goes for fake news, foreign interference in elections, and hate speech, as well as developers and data privacy.”
Facebook, which has 2.1 billion monthly active users worldwide, said on Sunday it plans to begin on Monday telling users whose data may have been shared with Cambridge Analytica. The company’s data practices are under investigation by the U.S. Federal Trade Commission.
London-based Cambridge Analytica, which counts U.S. President Donald Trump’s 2016 campaign among its past clients, has disputed Facebook’s estimate of the number of affected users.
Zuckerberg also said that Facebook’s major investments in security “will significantly impact our profitability going forward.” Facebook shares were up 2 percent in midday trading.
Read the full testimony tmsnrt.rs/2IDTHwF
ONLINE INFORMATION WARFARE
Facebook has about 15,000 people working on security and content review, rising to more than 20,000 by the end of 2018, Zuckerberg’s testimony said. “Protecting our community is more important than maximizing our profits,” he said.
As with other Silicon Valley companies, Facebook has been resistant to new laws governing its business, but on Friday it backed proposed legislation requiring social media sites to disclose the identities of buyers of online political campaign ads and introduced a new verification process for people buying “issue” ads, which do not endorse any candidate but have been used to exploit divisive subjects such as gun laws or police shootings.
The steps are designed to deter online information warfare and election meddling that U.S. authorities have accused Russia of pursuing, Zuckerberg said on Friday. Moscow has denied the allegations.
Zuckerberg’s testimony said the company was “too slow to spot and respond to Russian interference, and we’re working hard to get better.”
He vowed to make improvements, adding it would take time, but said he was “committed to getting it right.”
A Facebook official confirmed that the company had hired a team from the law firm WilmerHale and outside consultants to help prepare Zuckerberg for his testimony and how lawmakers may question him.
Reporting by David Shepardson and Dustin Volz; Editing by Bill Rigby
WASHINGTON (Reuters) – A Republican U.S. senator warned on Sunday that Facebook Inc may need to be regulated to address concerns about the company’s privacy and foreign propaganda scandals, saying they may be “too big” for the social media company to solve alone.
“My biggest worry with all this is that the privacy issue and what I call the propagandist issue are both too big for Facebook to fix, and that’s the frightening part,” Senator John Kennedy said on CBS’s Face the Nation.
Asked if lawmakers need to seek regulations on Facebook, Kennedy replied: “It may be the case.”
Facebook Chief Executive Mark Zuckerberg will appear before the U.S. Senate Commerce and Judiciary Committees Tuesday to address questions about how his company handles its users’ data.
While some Democrats have suggested laws may be required to police Facebook’s data privacy practices or limit foreign interference on its platform, Kennedy’s openness is significant because Republicans generally support free-market principles and are loath to regulate U.S. companies.
Kennedy, a member of the Senate Judiciary Committee, said he wanted to ask Zuckerberg on Tuesday if Facebook had the ability to know the identities of the hundreds of thousands of entities that purchase ads on its site.
“I don’t want to hurt Facebook. I don’t want to regulate them half to death,” Kennedy said. “But we have a problem. Our promised digital utopia has minefields in it.”
Facebook on Friday endorsed legislation known as the Honest Ads Act, which is aimed at countering concerns about foreign nationals using social media to influence American politics.
The legislation would expand existing election law covering television and radio outlets to apply to paid internet and digital advertisements.
The legislation, introduced last October but not yet passed, is aimed at countering concerns about foreign nationals using social media to influence American politics, which is part of the investigation into possible Russian meddling during the 2016 U.S. presidential campaign. Russia denies involvement.
Under the act, digital platforms with at least 50 million monthly views would need to maintain a public file of all electioneering communications purchased by anyone spending more than $ 500.
Reporting by Dustin Volz; Editing by James Dalgleish
LONDON/NEW YORK (Reuters) – Spotify Technology SA (SPOT.N) shares surged following the largest-ever direct listing on Tuesday, giving the world’s leading streaming music service a market value of nearly $ 30 billion.
Shares opened at $ 165.90, up nearly 26 percent from a reference price of $ 132 a share set by the on the New York Stock Exchange late on Monday.
Spotify’s unusual route to publicly trading its shares via a direct listing rather than a more usual initial public offering will likely be watched by other companies tempted to list without selling new shares, and by bankers that could lose out on millions of dollars in future underwriting fees.
Some 14 million shares had changed hands within an hour after trading began on Tuesday. Nearly 91 percent of Spotify’s 178 million shares were tradable, a much higher percentage than typical in a traditional IPO.
Some market-watchers cautioned investors not to read too much into the first-day pop, given the mixed performance of recent tech IPOs.
Spotify’s debut came on the heels of a steep U.S. equity selloff led by tech stocks, although the market had found firmer footing at midday on Tuesday.
“It’s a fair market price. It’s not manipulated or set by any puts and takes by banks or institutional investors,” said Chi-Hua Chien, an early investor in Spotify who is now at San Mateo, California-based Goodwater Capital.
Spotify shares were last at $ 160.32, up 21 percent.
The NYSE had set Spotify’s reference price late on Monday, giving an early estimate of the level at which supply and demand could be balanced.
That was in line with informal trading on Monday, with shares changing hands at about $ 132, which would value the company at more than $ 23 billion.
Since launching its streaming music service a decade ago, the Stockholm-founded company has overcome heavy resistance from big record labels and some major music artists to transform how the industry makes money.
Spotify offers access to vast libraries of music rather than making users pay for CDs or downloads of individual albums or tracks.
The company has structured the listing to allow existing investors to sell directly to the public while offering no new shares of its own.
Analysts had flagged concerns that forgoing hiring investment banks as underwriters or holding traditional promotional events with institutional investors could mean volatility in Spotify shares once formal trading kicked off.
Spotify’s opening public price was determined by buy and sell orders collected by the NYSE from broker-dealers.
Based on those orders, the price was set based on a designated market maker’s determination of where buy orders could be matched with sell orders.
While Chief Executive Daniel Ek skipped NYSE rituals such as opening bell-ringing and trading floor interviews to tout the stock, the front of the 115-year-old Greek Revival exchange building was draped in a vast green-and-black Spotify banner.
Additional reporting by Helena Soderpalm in Stockholm, Joshua Franklin in New York and Stephen Nellis and Salvador Rodriguez in San Francisco; Editing by Meredith Mazzilli and Bill Rigby
Washington, D.C., has issued a permit allowing Elon Musk’s Boring Company to do preparatory and excavation work in what is now a parking lot north of the National Mall. The company says the site could become a Hyperloop station.
The permit, reported Friday by the Washington Post, was issued way back on November 29th of 2017. The permit is part of an exploratory push by the city’s Department of Transportation, which according to a spokesperson is examining the feasibility of digging a Hyperloop network under the city. The Hyperloop is an as-yet theoretical proposal to use depressurized tubes and magnet-levitated pods to move passengers at very high speeds.
A Boring Company spokesperson told the Post that “a New York Avenue location, if constructed, could become a station” in an underground transportation network. The Boring Company last year showcased the possibility of moving cars underground on mag-lev sleds, though that concept wasn’t quite a version of the Hyperloop proper.
The increasing prominence of Musk’s own Boring Company in pushing for Hyperloop construction is a notable reversal of the entrepreneur’s initial plans for the concept. When he unveiled a paper describing the idea in 2013, Musk said he wouldn’t be directly involved with building it. That led several independent startups, including Hyperloop One and Hyperloop Transportation Technologies, to take up the cause.
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But last summer, Musk started touting tentative Hyperloop partnerships between the Boring Company and governments in the Northeast U.S. A few weeks before the D.C. permit was issued, Maryland issued a permit for the Boring Company to build a 10.3-mile tunnel on a route between Baltimore and D.C.
The Hyperloop concept as a whole, though, has come under renewed scrutiny lately. It’s unclear how such a huge project would be paid for — selling Boring Company flamethrowers is unlikely to cover the bill. More fundamentally, urban planners have argued that the Hyperloop, which would use small pods to carry a few riders at a time, can’t scale sufficiently to really address urban transportation needs. Musk, in an unusual fit of pique, recently replied to one such criticism by calling its author an ‘idiot.’
Finding Space to Experiment.
In my recent interview with McDerment, he described a moment in the winter of 2013 when he had been feeling uneasy about the steady growth of his business. Freshbooks, which had long been the darling of the DIY bookkeeping industry, needed to keep innovating to remain competitive.
The reality, which McDerment recognized, is that software products, by their very nature, are malleable and constantly changing. In today’s business landscape, consumers expect products to be constantly improving.
But how do you make major changes in a way that does not disrupt existing users? Especially when their livelihood depends on your product?
How does a company allow for the exploration required for innovation without screwing up what it’s already getting right?
McDerment asked himself these questions. And he believes he’d found the answer by rolling out an updated product, but not under the FreshBooks brand.
And so, he started BillSpring.
Newcomer BillSpring could market its product as “in development,” thereby creating the space for experimentation and attracting new users with its updated design.
Sure, this strategy is logical, but it’s jarringly unconventional. However, McDerment says Freshbooks has sought to establish a culture of putting people at the center of every decision, so for him, it was an obvious move.
FreshBooks took the coveted first place spot in the highly competitive Great Places to Work survey. The secret sauce, according to McDerment, is the company’s ability to embody a human-centric approach to all facets of the business: from product development, to hiring and training.
Employees aren’t the only people who matter when it comes to making decisions at FreshBooks. Customers are in constant focus–a concept McDerment calls customer proximity.
To make sure that all team members understand customers, all newly hired employees spend a month in customer service. And this pitstop in customer service occurs without exception, not even for the new CFO, who had taken three companies public. Despite not having any customer-facing interactions, he too spent 30 days getting to know customers on the front lines of customer service.
As a result of this mentality, the company is hyper-sensitive to customer satisfaction. So in retrospect, the decision to create a completely separate brand is no surprise. In fact, it’s a considerate way of introducing change.
A Considerate Approach to Introducing Change.
Whether change is as simple as a minor feature update or something as significant as starting a whole new company to compete with, the consideration of the impact on all people involved should always remain at the forefront.
It’s not just what Freshbooks values, but as so many companies have proven, it’s just good business.
Eighteen months after the experiment, Billspring had shown improvements in business performance and customer satisfaction, exceeded those of Freshbooks. At this point, McDerment finally decided it was time to come out of hiding, dissolving the Billspring brand and merging the products back under Freshbooks.
“When we launched we didn’t want our users to worry. So if they said ‘you know what? It’s great but not right for me’ then they could return to Freshbooks classic,” McDerment says. “We did everything in our power to not destabilize our users’ business, and so the vast majority of people recognized that and chose the new version when they had the chance.”
The Takeaway: Create the Conditions for Innovation.
The extreme stealth-mode approach may not be the right answer for other companies looking to navigate change and growth, but creating the conditions for change and growth is–for the organization and, more importantly, the real people they serve.
Despite the radical time and cost investment, McDerment stands by his 18-month experiment to deliver positive outcomes for its employees and customers. Ultimately, affording the freedom of time and space is what has enabled the award-winning success that the company enjoys today.