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Starting Fresh

In the early 2000s, Mike McDerment kept losing track of who had paid his web-design agency for their services and who hadn't. Tired of juggling Word and Excel documents, he decided to make his life easier by building a browser-based application to manage his own client list and invoicing. He gradually realized his app might appeal to other small businesses and solo professionals who'd rather be walking dogs or designing web pages or practicing law - or pretty much anything - than invoicing. Nobody starts their own business because they enjoy chasing down the money they're owed.

McDerment launched 2nd Site in 2004, an automated online invoicing and time-tracking service aimed at entrepreneurs struggling with the same problem. It was a classic online start-up, run out of his home, but with its grey-and-blue colour scheme and generic photos of people in suits, the site had the look and feel of a bank. The image evoked institutional accountability and high finance.

It was, McDerment admits now, all wrong.

2nd Site didn't reflect the service-oriented approach of his vision and it didn't reflect the fledgling company's key strength: a personable approach to a tedious task. They rebranded as FreshBooks in 2006 and have since grown into a global operation with 1.25-million users around the world, mostly through word of mouth. At relaunch they had five staff; today they have 38.

"We took out all the constructs that weren't true to ourselves," says McDerment, sitting in a meeting room at FreshBooks' Dufferin Street open-concept foosball-equipped offices. The stuffy generic stock photos on the website were replaced by photos of smiling staffers who often come up with their own quirky titles: Chief Cat Herder, Chief Handshaker, Support Rock Star, and the Queen of Hearts who aspires to "take every customer out to dinner." At their first trade show, FreshBooks hired a local artist to paint a mural in their booth over the course of the weekend. FreshBooks was not a tech company, it was a service company that recognized that solo professionals would be delighted to feel they're being heard and helped for as little as $19 a month (well, as little as "free" for those managing fewer than three clients).

"That was always our mindset behind the scenes but at first we didn't do a very good job of sharing that with the people who used our service," says McDerment. "We were afraid of what they would think."

Graphic designer Donna Vitan was mailing invoices and making repeated visits to her mailbox looking for cheques when she discovered FreshBooks just after the relaunch. She liked that she could eliminate paper invoicing altogether, but also appreciated the online forums, where she could swap advice with other like-minded freelancers and staff.

"I find the staff really friendly. It's almost like going to your coworkers with a question," says Vitan, who also works for Casco Design and Communications.

Several other factors have contributed to FreshBooks' rapid growth. For one, McDerment choose a niche service that, as it turns out, is highly exportable. Invoicing is one of the few financial practices that doesn't vary much from country to country; a good billing system looks the same nearly anywhere in the world (though Australia, for some reason, requires that invoices be called "tax invoices," says McDerment). Another factor is, since 2004, people have become increasingly comfortable with cloud computing - allowing their personal information to reside on computers located who-knows-where. "Because they're responsive, I trust them," says Vitan. Plus the explosion of iPhone and smart phone applications has helped put the service right in people's pockets.

"People don't seem to care where you're located so long as you're able to communicate to them effectively," says McDerment, who studied business at Queen's University before dropping out in his fourth year to start two businesses. "I never really thought about us as a Canadian company."

Despite his international mindset, McDerment is committed to building a strong digital business culture in Toronto. One of the five founders of the annual Mesh Conference that's devoted to next-generation thinking about the web, he wants Toronto to be as start-up minded as California's Silicone Valley.

"The biggest obstacle here is the lack of community," McDerment says. "It is rapidly emerging. If we continue to foster it for a period of 10 or 15 years, I think we'll see extraordinary things happen. In the meantime, there aren't that many successful companies that can nurture - from an advice and capital standpoint - emerging companies. We need more angels. More people who can say, 'Here's $50,000, show me what you can do in a year.'"

Paul Gallant is a Toronto-based freelance writer who lives in the emerging Brockton Triangle neighbourhood.

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