CMO of FreshBooks Talks About the Biggest Problem with Scaling Startups

Stuart MacDonald is a digital business guy who loves making customers happy and building great teams. A mentor, investor, consultant and frequent speaker on things digital and entrepreneurial, Stuart is the veteran of several startups including starting Expedia.ca in Toronto. Stuart went on from there to become CMO and SVP Packages of Expedia.com in Seattle. He also co-founded mesh, Canada’s web conference discussing how the Internet is impacting how we live and work, and meshmarketing, Canada’s one day digital marketing power conference. Most recently, Stuart joined FreshBooks as the CMO, responsible for marketing, sales, support and revenue.

Q: You founded Expedia.ca and changed the way Canadians book travel. How were you able to change the perception of consumers away from the norm?

It’s hard to imagine, but when I was writing the business plan for Expedia.ca in my house, hardly anybody even knew what online travel was. I would go to the stereotypical cocktail parties and when I said that I was working on an online travel thing they’d say “what’s that? Is it something to do with maps? Or selling books about travel?” I’d go on to say no, you will find your flight, hotel and car rental online and book it, put in your credit card etc. They looked at me like I had two heads. I know it sounds ridiculous now, when more than 60% of leisure travel in the US and 40% in Canada is bought online, but it’s true.

For me, it was all about fixing the way travelers were being treated. In my view, the industry was set up in a way that put itself first and them last and they deserved better than that. The fact that it was an online model was beside the point; it just made sense to do it that way, but it was always about improving things for travelers.

Q: What was the most important advice you received when starting up your own business, Tripharbor.com? Who gave it to you?

As an entrepreneur you learn by experience – your own and others’. With Tripharbor, the biggest factor was an experience no one had ever had before: the financial meltdown of 2008. As a cruise vacation site, the typical customer has a higher income and was spending a fair amount – and doing so on credit. In fact to this day, almost all leisure travel is bought with credit. So, when the financial crisis hit, the cruise market took it especially hard. When business slowed down we were between a rock and a hard place and the lack of confidence at the time meant no one knew what would be next. I wish I had someone to get advice from then but I didn’t. No one did, really. That was really tough.

Q: When you joined FreshBooks.com as the CMO what did you see as the biggest challenge to this role? And how did you overcome it?

The FreshBooks service is excellent and they really care about their customers, so the challenge wasn’t on the product or customer empathy side. It was mostly about turning those users into buyers. We ran a lot of tests against a bunch of hypotheses and got better over time. But I’m going to leave it there – the rest of the details of that Secret Sauce shall remain secret!

Q: You are the guy they bring in to make good businesses better. Many startups have grown to substantial lengths and are looking to continue that growth. How does a business begin to tackle the problem of increasing user growth?

The biggest problems I see with tech startups scaling usually come down to a lack of customer empathy and/or founder-itis. With the first, the issue is that the company is really in love with their product and don’t keep the user and their problems at the forefront of everything they do. The result is they just build something that they find interesting or cool and try to push it out there. They think they have a sales problem, but what they really have is a marketing problem. They’ve lost sight of who they’re for and the problem they are trying to solve. The result is that everything is harder.

With founder-itis, you have a founder who is often incredibly smart and passionate—you have to be to make something from nothing!—but it can end up being a blocker to their own success. They find it difficult or impossible to trust others to do things, perhaps even despite having a stated objective that that’s what they want to do. It takes a lot of self awareness and bravery to step back and allow others to play a bigger role in “your baby.” Many of them think that they are The Next Steve Jobs, who can grow with the company and still do it all. But the reality is that most of us don’t have that ability.

Deal with both of those and you’re well on your way to having a solid foundation for a great future.