CP2: Invoicing for Small Businesses with Chris Strode from Invoice2Go
Martin: Hi, have you ever started a company and thought for yourself “Hmmm, I have found the first customers but really invoice management is a pain?” Today I am talking to Chris. Hi, Chris, who are you and what do you do?
Chris: Hi, Martin. My name is Chris Strode and I am the founder of Invoice2Go. Invoice2Go is an app which you can install on your phone or on your tablet, it also has got a desktop version. It allows small businesses to send invoices straight after they’ve done job. So instead of having to do your invoicing when you get home or do it on the weekend comparing to Invoice2Go is when you finish a job you have got your mobile invoice solution and you can send your invoice right there and then.
So I started this business back in 2002 which is a long time ago when there were just desktop applications as we all know. And being from a family of small business owners where I have got three brothers and two sisters who are also in business and I was also myself a freelance software developer I knew firsthand the pain of having to do invoicing on regular basis to when I first set out in my business I said, “What other applications are out there that solve this problem?” Pretty much all I could find were complex accounting software which was very difficult to use and was almost like you needed to do an accounting course just to get the hang of it. There was a lot of accounting jargon and technical terms.
But all I wanted to do and all the small businesses that I was familiar with, they just needed a really easy to use invoicing software. So after looking out on the market there was no other application that within in two minutes you can download and be up and running sending an invoice. As all sort of things it was out of necessity and I felt like “I would like to build an application where within two minutes you can download, set it up and send your first invoice”. That is where the idea for Invoice2Go was born and that is what the company is still about. Just being the easiest way to invoice for small and marker businesses.
Martin: Great! So, Chris, basically this would mean that you are trying to solve the pain point which is the following: if you don’t have an accounting knowledge and you want to set up your invoice management very, very fast and you want to save time between doing the service and invoicing so you get your cash potentially faster than you want to use your application, right?
Chris: Yes, that is correct. That was one of the insights that we found sort of later on, especially when it came to mobile was that the sooner the small business sends the invoice, the sooner they get paid. It is just like if you are a customer to a small business and they have just finished the job if you send the invoice right then and then chances are you are going to get paid a lot quicker because the persons remember that you have done the work and they are at their most willing to pay I guess while that is on top of their mind in their memory. So that is just an added benefit to the mobile side of invoicing.
Martin: So this would mean that timing is not the major pain point that you are trying to solve but more simplicity?
Chris: Yes. Simplicity was the first thing we wanted to solve. To make it so easy to set up not just a standard invoice but an invoice which reflected your business. So what we were building to the software is just a lot of heavy customization. After being in the software industry for five or six years before I started Invoice2Go I was very familiar with the fact that no two businesses ever work the same way. It is just a fact. They could almost be carbon copies of each other but they still have differences. And so that is also reflected in Invoice2Go.
We made sure that the invoice can very easily be customized and branded just to that particular businesses needs and there is a lot of work in building an application which allows small businesses to customize the actual needs for their business without actually having to think about it. They just do it without realizing.
Martin: Chris, how did you start? What was the first MVP so to speak, of Invoice2Go look like? How long did it take you to develop? What type of product you try to ship? And did you find some first customers yet and try to bootstrap?
Chris: The company has been active for over twelve years and I bootstrapped for the first almost nine years myself. So the MVP was all about being able to download the app, install it, choose an invoice style, set up your company and send your invoice within two or three minutes. We have to put every piece of functionality in there that would enable you to do that. And I was working part time so I was working in a large investment bank part time while I was working full time and I was doing this part time but insane doing this part time it still was 40 or 50 hours on top of my normal job per week. My every waking hour was pretty much spent for over eighteen months just to get the MVP out. So the MVP took 18 months and on day one after uploading it on to the internet I think I got maybe 200 installs and I got a couple of people who purchased it and that was on day one and ever since then I know that we managed to close the loop on our purchase on day one then you definitely have a good sign.
BUSINESS MODEL OF INVOICE2GO
Martin: Chris, let’s talk about the business model of Invoice2Go. So basically, how are you making money?
Chris: Invoice2Go is a SaaS type product where you can download the app and you can try it free and then if you like it you can subscribe to the application.
Martin: And the subscription revenue goes 100% to you or are you also needing to cut a share for iOS or Android?
Chris: Yes, we cut a share for iOS and Android just depending on how they come through the funnel. If they are buying directly through our site, then obviously the profits are coming to us. We always thing there is value in making it super easy and I think we would probably want to leave this business to actually embed the SaaS model into the actual app itself through app store purchasing. And that gave us a lot of benefits. There is so much benefit to use this just being able to buy in-app rather than actually having to jump off the side. And jumping off the side just destroys the impulse and I think the impulse is really powerful so I think you have got to do a great job of designing for in-app and for out of app experiences when it comes to purchasing.
Martin: Chris, today you have ten thousands of customers of small businesses who are using your software. What type of competitive advantage do you pursue today that you have over other companies in the same market?
Chris: So I have got two types of competitors. We have got the incumbent competitors who are dealing with, who offer more accounting type solutions. And what we find there is that their solutions don’t go deep on invoicing though. They try to solve the problems of all small businesses both large and small, and they try to solve the entire business problem of balancing your books and all that sort of stuff whereas Invoice2Go is just going super deep on invoicing, super deep on customization and super deep on just being very, very simple to use and continually iterating on the product to make it easy to use and also make sure it is designed for each platform to give the best possible experience on Android, best on iOS. That is for that competitor.
We also see another big competitor just being the pen and paper and the word processor which are probably even more small businesses are using them and the biggest competitors. And for that we offer the competitive advantage that you create invoices a lot quicker in Invoice2Go, all your data is stored in the Cloud, all of the information is aggregated in reports. You can create statements much easier. You can manage a small business a lot easier than if you use pen and paper or word processor. So these are the competitive advantages.
Martin: Good. Chris, when you look at your product from the outside it seems very, very easy. Can you give us some kind of insights on why so many people are really working on that product although you say you want to stay very, very clean on the product?
Chris: I think although I’ve been working on invoicing software for over twelve years now I think that there is always room for improvement. Every twelve to eighteen months we would look at the application and we just think, “How can we do it better?” And normally within that time frame you have got technology, especially now with mobile, has pushed in further along and there are just always more revenues for creating a cleaner solution for taking things out of the app and not necessarily in and just making sure that the whole experience is super streamlined and simplified. It is a lot easier to add functionality to your app and bloat it than it is to look at things and go “Ok, what is the core and what is going to say the taps purpose”. And if you can say the small business owner two or three taps a day I think they are really going to appreciate that over time. We are always refining the software and just thinking how can we save taps for the benefit of the users.
Martin; So imagine I am a small company and I signed up with Invoice2Go. Now I am growing. Is there a point in time where I say, “Okay, let me migrate to another invoicing accounting provider because I am too grown up” or is it more that it is some kind of an ecosystem where you are one type of app that is trying to solve one specific problem and you have some APIs so I can connect to other accounting providers who then provide other services?
Chris: We are developing our APIs and now we are ready over the course of the next month or two. We have the APIs ready for exports but we put in direct connect APIs into some of the major accounting software packages. It has been surprising that we just haven’t had that much demand for that.
A lot of small businesses are service based businesses, so they are hairdressers, they are DJs, they are dog walkers they are carpenters, they are plumbers, electricians, they can be tow truck drivers and rock-and-roll bands. And what you find is that the majority of these businesses are service based so they are not always experiencing the same type of growth. A lot of the times they start as a one-man band and they might grow to two or three people over the course of time or they might stay a one-man band five or ten years. We just don’t get a lot of heavy demand for connectivity with accounting systems. But saying that at the same time we do get a lot of businesses who just like to use the simple to use invoicing package and now start using Invoice2Go and sort of bottom down type in building companies which we also experience too and they are hungry for the API. So yes, that is something we are working on.
Martin: And when you started, Chris, what have been some marketing initiatives that you did to acquire the first customers that were really extraordinary so nothing like the normal start like in-app marketing, SEO, but really some crazy stuff?
Chris: I wish I could say there was this really cool thing and we just did that and got a thousand subscribers overnight. We have over 200,000 small businesses now. But in our space it is slow and steady.
The biggest marketing thing we have done is continually iterated in building a quality product. Just year after year. I know it is not terribly exciting. It is probably if you are in in the social space you can tap into the viral type wire as expanding your rich. But what I have found is just build a quality product, just keep helping people, bend in over backwards people and what has been our best marketing is just pure word of mouth. People rocking up onto websites, plumbers, tradesmen, carpenters are just saying “Oh, you know, I am using Invoice2Go. That is the reason I am getting paid quickly” and they will be sitting around lunch time and talking about it. It has been purely word of mouth which has been and still is the most effective marketing tool. But word of mouth isn’t the fastest thing, it takes time. That’s it.
Martin: How do you stay focused because the company is several years old now and many companies who are that old think, “Oh, maybe there is some new area I can explore” or “Let me build this other type of functionality into my product which might generate more revenue stream”. So how do you keep focused? Why are you pushing back other opportunities?
Chris: Yes, that is a good question. Well, there are over a hundred million small businesses worldwide and every one of those needs invoicing solution, invoicing is a pain point for every one of those. So until we think we have totally perfected invoicing we will continue to keep working on that problem. But as we go like new technologies coming out like Apple Watch for example, we were one of the first apps on apple watch and we were also showcased at WWDC for the design so we put invoicing onto the watch. There is always going to be more ways that we can make invoicing easier and can be technology which is driving the sort of a motivation to keep focused on this problem.
I thing that it is so tempting to go down the path with saying, “Okay, we have got this particular app. Let’s try and broaden creative suit.” But I think until you solve that one problem perfectly you are going to build a much better business just by having a solid focus. As soon as you have two apps you pretty much need a team that is twice as big. I think a lot of companies underestimate just how much goes into not just building but operations that are actually supporting an app with hundreds of thousands of small businesses or hundreds of thousands of users. Especially small businesses that rely on the software to get paid. So that is the reason that we stay focused and I think for startups these days, successful ones are the ones which have one focus even if there are tempting opportunities.
Martin: And over the years did you experience any problems scaling the company?
Chris: Yes, every day.
Martin: Like what in terms of infrastructure or in terms of organizational growth?
Chris: Yes, organizational growth not necessarily infrastructure.
I think we have been so lucky to be, come up startups being staying age where we have got the likes of Amazon and such great connectivity wherever you go. But I think Invoice2Go is in the same boat as everyone else and just competing for all the best people so it is just tight labor market and that definitely provides growth challenges.
ADVICE TO ENTREPRENEURS FROM CHRIS STRODE
Martin: Chris, over the years, what have been your major learnings that you can share with other first time entrepreneurs?
Chris: I can tell you what my lightest major learning is once you get funding you’re basically going to go into a hyper growth phase. And if your company is going through a hyper growth then you from a personal level also have to go through a hyper growth phase too otherwise your company is going to be moving a lot faster than you and you will get left behind. That is one of the personal things that I have found out which I guess you underestimate when you take funding on.
Martin: How did you manage that?
Chris: I think it is just true. Just making sure you take the time to read a lot of books and just figure out how to manage your stress level effectively. Stress becomes a big player and you are only going to be as good as how you are feeling and so you are going to make sure you manage stress.
Martin: What other learnings that you learned over the years, maybe even from your parental companies?
Chris: I think that it is important to not get caught up in the hype and not drink your cool-aid along the way. So I guess what I mean by that is we stay really focused, we didn’t get funding on until we had a product market fit. We had a lot of people, a lot of VCs who were coming to us and saying, “Oh, you know we want to chat you, we want to chat you.” We just said: ”No, we are not happy with where our product is.” And also, we weren’t based in a major metropolitan area at all. We were actually in a location which was an hour and a half away from Sidney, just a coastal town. And I think that just enabled us to put our heads down. We still have got access to all the greatest blogs and all the greatest technology from wherever you are as long as you have got good internet connection. And if you are getting too tied up in the tech scene and sped more of your time talking to other founders and not listening to your customers, then you could just be in it for the wrong reasons. You are in up because you like the scene not because you want to build a big company. So I think it is really important to just block out the distractions and just focus on solving the problem.
Martin: Cool. Chris, thank you so much for your time!
Chris: Thank you!
Martin: If you are running a small business and are looking for a cool accounting and invoicing software check out Invoice2Go. Thanks!
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