Ed Molyneux is CEO and co-founder of FreeAgent. FreeAgent lets you send invoices, track time and expenses, analyse bank statements and build real-time accounts.
In my interview with Ed, we talk about his entrepreneurial journey so far and and his advices for other entrepreneurs just starting out.
Below is the full interview.
Could you quickly give us some background information about yourself?
I’m the CEO and co-founder of FreeAgent - an award-winning online accounting system for freelancers and small businesses.
I have an academic computer science background, but when I left university I joined the RAF and spent a decade as a pilot flying military fast-jets. It was an incredible experience but not really the best environment for creativity or strategic control unless you are at the top, so I left in 2002 to follow the slightly less exhilarating path of being a freelancer and technology consultant.
How did you get involved in entrepreneurship? Were you exposed to entrepreneurship as a child?
My mum ran a succession of pharmacy businesses when I was younger, which gave me a bit of insight. But to be honest, I never considered business to be interesting - it seemed so prosaic in comparison with flying. Once I left the RAF though, I rapidly got my head round the amazing leverage technology businesses can have - how much your work can positively impact the lives of thousands of customers.
So tell me about FreeAgent and how the idea came about?
When I was freelancing, I met my FreeAgent co-founders Olly Headey and Roan Lavery, who were also both working as freelancers. We all agreed that although we really enjoyed working for ourselves, the experience of sorting out accounts was painful. We hated using rigid spreadsheets for our accounts and we were frustrated that there was no software available specifically for freelancers so they could do their bookkeeping themselves - so we decided to develop one ourselves.
All three of us dived into 6 months of rapid development, prototyping the service and developing the business model. FreeAgent eventually went live in 2007 and we’ve been growing ever since.
What is FreeAgent and how does it work?
FreeAgent is an online accounting system that is specifically designed to make it easier for freelancers and small businesses to manage their accounts. We think of it as “democratising accounting” - essentially allowing small business owners and freelancers to do all of the basic number-crunching themselves.
FreeAgent lets you send invoices, track time and expenses, analyse bank statements and build real-time accounts - all done simply with no confusing jargon. It even helps you forecast tax bills and helps you make sure you don’t miss HMRC’s deadlines. We’ve been told that FreeAgent makes people feel smart, not stupid, about their company accounts - and that’s exactly what we wanted to achieve.
What is your business model?
It’s ‘Software as a Service’ (we built a ‘Cloud’ service long before Apple and Microsoft jumped on the bandwagon!)
So rather than having to buy an expensive box with a CD inside it, our users access FreeAgent over the internet and pay a monthly subscription. Because it’s all online, the software can be continually improved and updated without having to be manually upgraded by the user (very important for an accounting and tax product) and all support is also included.
How did you initially attract users to FreeAgent, and how do you do it now?
We knew a lot of other freelancers, so we gave free ‘beta-tester’ accounts to all of these people to help us make sure we were on the right track. Many of those initial testers later became our early customers
We now have a very successful referral system in place where, if you’re a FreeAgent user and you refer someone to us, we’ll give you a 10% discount off their monthly bill - and we also give the new subscriber a 10% discount too. Unlike other referral models, these discounts are for the duration of your subscription - not just for the first couple of months - and they keep accumulating, so if you refer 10 people to us, you effectively get your FreeAgent subscription for free.
If you refer more than 10 people, we actually start paying you - and there are a number of evangelists who we are paying money to every month as a result of the number of people they’ve brought to us. It’s been a great way of attracting new business, and it means that we now have many customers actively promoting FreeAgent online and through social media.
What makes FreeAgent different from any service out there? What problem does it solve?
FreeAgent is unique because it’s an online accounting system that’s designed specifically for freelancers and small businesses. Essentially it’s a system for anyone wanting to manage their own accounts, track the time they spend on projects, stay on top of their expenses and do all their invoices. And, judging by the feedback we receive, it’s clear that our users absolutely love it.
What are the most crucial things you have done to grow your business?
Introducing the referral system and securing the investment of high profile business names including Robin Klein, founder of the Accelerator Group, were both big milestones in helping to grow the business. Robin was named No 2 in Business XL magazine’s ‘Power Top 50 2011’ and No 22 in the Telegraph’s ‘100 Most Influential Tech Investors in Europe’, so having his backing was a very important endorsement for FreeAgent.
Another big step was forging a partnership with IRIS - who FreeAgent powers the IRIS Openbooks system for. This has opened up new avenues of business for us, as they have relationships with many accountants - and FreeAgent is a really useful tool that they can offer their clients. We’ve seen thousands of new customers come to us on the back of our work with IRIS.
What was the most challenging part of starting the business?
When we first started creating the FreeAgent system, Olly, Roan and I were still working as freelancers so we were really doing FreeAgent in our spare time. I suppose the biggest challenge was the moment when we actually started treating FreeAgent as our full-time job. We knew it was a great product, but we were still stepping out into the unknown. If no-one subscribed to the system when it went live, we wouldn’t have been able to continue.
Would you say the business has changed from the first initial idea?
The FreeAgent system is constantly evolving - and we’re always looking to introduce new features to make it even better for our users - but the core dynamic of the business has remained the same. We wanted FreeAgent to be there to help small businesses and freelancers be in control of their accounts - and that’s exactly what it does.
Who are your competitors?
Most of our customers are not traditional purchasers of conventional accounting software - it’s usually too complex and clunky for them. They’re using a cobbled-together system based on Word and Excel. So it’s really those products that we need to attract people over from.
What were you doing before you founded FreeAgent?
Working for myself as a freelance technology consultant and being frustrated with my accounts. Before then, I was flying jets for the RAF - so running FreeAgent is a very different challenge!
How have you been able to fund the business?
In total, we’ve secured £3 million of external funding - including investment from influential business figures such as Robin Klein. This has enabled us to map out an ambitious vision for the future, which we hope will spread FreeAgent’s influence throughout the UK and beyond.
What can we be expecting from your company in 2012?
We have some exciting developments to the FreeAgent product that we’ll be unveiling in 2012, which will make it even easier for our customers to understand how well their business is performing. We’ll also be looking to attract new investment, expand into international markets and grow our staff numbers - so it’s going to be a big year for us.
What three pieces of advice would you offer entrepreneurs starting out today?
Remember that, regardless of how much as you might want to, you simply cannot do everything with your business yourself. You have to learn to be able to trust others to do it for you, so you can focus on the most important issues.
Also, it’s unlikely that you’ll change the world overnight - so try to do something positive every day to move you in the right direction and build momentum towards your goals.
Finally, don’t be rigid and unwilling to change from your original idea. In order to succeed, you have to be open-minded about tweaking your initial idea and listening to what the market wants.