What Makes FreshBooks Unique
FreshBooks was created with a clear vision: allowing small business owners to focus on growing their business rather than getting bogged down with accounting tasks. The platform serves professionals like lawyers, landscapers, and agencies (referred to as "Owners") who benefit from intuitive features that handle complex accounting processes behind the scenes.
These users can simply snap photos of receipts and create invoices without worrying about accounting intricacies. The goal has always been to remove the burden of accounting from non-accountants' shoulders through features like invoicing, expense tracking, and simplified reporting.
Building such a user-friendly product requires hundreds of small decisions along the way. Some decisions might seem minor at first but can have far-reaching implications down the road.
One such seemingly mundane decision regarding how to handle dates for journal entries proved to have significant consequences for our users and taught us valuable lessons about product management.
Journal Entries Date Decision Challenge
Journal entries represent a translation of FreshBooks' internal data into the universal language of accounting. This feature became critical because many Owners relied on external accountants who primarily used QuickBooks Desktop (QBD).
However, integrating these two systems presented challenges due to incompatible data models. During development, our team faced two distinct options for choosing the date associated with each journal entry:
- Use the date that the Owner manually inputs on the expense, invoice, or transaction
- Use the actual date when the transaction is recorded in the app
Dates play a crucial role in accounting as they determine when expenses or income are recognized, affecting tax calculations and ultimately business cash flow. After extensive validation with both Owners and accountants, our team leaned toward option 2, believing it would simplify the process for users.
We assumed Owners would record transactions promptly, making the app's creation date naturally reflect the actual tax period. This assumption seemed reasonable at the time and guided our decision-making process.
Why Our Product Decision Failed
Reality quickly revealed the flaws in our thinking. Many Owners procrastinate and defer entering transactions until after the tax period ends. For example, if an Owner begins entering 2016 transactions in early 2017, the journal entry export would be blank when they expected to see data from 2016.
During our beta launch, only about 25% of users—those diligent enough to keep up-to-date with their transactions—benefited from the feature. For the majority, it resulted in missed or delayed data that made sharing accurate journal entries with their accountants nearly impossible.
The feedback loop for this error wasn't immediate; it took months before we started hearing complaints. Meanwhile, our team celebrated what appeared to be early wins while a significant portion of users struggled with a broken experience.
Another team eventually fixed the issue by switching back to using the manually inputted date—despite the risk of double claiming expenses. Looking back, our decision to favor convenience without fully modeling customer behavior created a significant setback that taught us valuable lessons.
Key Lessons From Our Mistake
Product management involves continuous learning, especially from mistakes. Our journal entry date decision taught us several critical lessons that have shaped our approach to product development at FreshBooks.
First, validating assumptions against real-world behavior proves essential. Our assumption that Owners record transactions as they occur was fundamentally flawed. Future designs should include additional user prompts or automated behavior analysis to verify transaction periods rather than relying solely on input dates or creation timestamps.
Early and frequent engagement with end users makes a tremendous difference. While we validated the user interface and accounting principles with both Owners and accountants, our validation failed to capture the procrastination behavior that skewed our data. Seeking feedback on how users interact with your product throughout the entire business cycle provides crucial insights.
Quick iteration and adaptation remain vital to success. After hundreds of small decisions, one seemingly insignificant choice had a cascading impact. Once we received feedback, another team stepped in to revise the system, demonstrating the importance of agility in product management.
Balancing Simplicity With Accuracy
Finding the right balance between user experience simplicity and data accuracy presents an ongoing challenge for product teams. Hiding complex accounting details benefits users but must not compromise accuracy.
The manual date input presented more risk of human error but proved more useful when paired with clear instructions or built-in validation checks. This balance requires careful consideration of both technical requirements and user behavior patterns.
Adopting a "fail fast" mindset—where you quickly identify, learn, and adjust to errors—can lead to significant improvements over time. Rather than trying to cover every possibility with extensive research, this approach allows teams to learn from real-world usage and make necessary adjustments.
Product managers must recognize that perfect solutions rarely exist. Most decisions involve trade-offs between competing priorities like simplicity, accuracy, and user autonomy. Acknowledging these trade-offs helps teams make more informed decisions.
Strategic Shifts From Our Experience
This painful experience resulted in critical strategic shifts at FreshBooks. Today, our product team employs a structured approach to decision making that incorporates several important changes to our processes.
We've implemented enhanced customer validation processes that incorporate longer-term studies of user behavior rather than short-term beta tests. By tracking how users engage with features throughout the year, we can better forecast potential problems before they affect large numbers of customers.
Clear communication channels with accountants have become a priority. Given that many Owners rely on external accountants who use systems like QuickBooks, we now maintain a tighter feedback loop with accounting professionals to ensure our product decisions align with accounting best practices.
Iterative rollouts and A/B testing have replaced large-scale launches. Features are first released to a small percentage of users, and the insights collected help us refine the product before a full rollout. This approach has reduced the incidence of widespread issues related to assumptions about user behavior.
Perhaps most importantly, we've cultivated a culture that embraces mistakes as learning opportunities. One of the biggest cultural changes driven by this experience is dismantling the myth that product managers must always be right. We encourage our teams to share failures openly, fostering an environment where mistakes lead to learning rather than shame.
Product Challenge Management Step-by-Step
Dealing with product challenges requires a systematic approach. The following process outlines how to handle product challenges effectively based on our experiences at FreshBooks.
Before diving into specific steps, remember that product challenges are inevitable. Having a structured approach helps transform these challenges into opportunities for growth and improvement. Each step builds upon the previous one, creating a comprehensive framework for addressing even the most complex product issues.
Clearly Define Your Problem
Start by articulating exactly what issue you're addressing. For our journal entry feature, the problem was a misalignment between transaction entry dates and tax reporting periods that affected data accuracy.
Gather input from multiple stakeholders to ensure you understand all dimensions of the problem. Customer support tickets, user interviews, and analytics data can provide valuable context about the nature and scope of the issue.
Document the problem statement clearly so everyone involved shares the same understanding. This documentation serves as a reference point throughout the solution development process.
Gather Data and Validate Assumptions
Use multiple data sources to verify your understanding of user behavior. Analytics, user interviews, and expert consultations help ensure your assumptions match reality rather than wishful thinking.
Look for patterns across different user segments to identify whether the issue affects all users or only specific groups. This segmentation helps prioritize solutions based on impact and reach.
Test your assumptions with small experiments before committing to major changes. These experiments might include prototype testing, beta features, or targeted surveys that directly address your hypotheses.
Involve Key Stakeholders
Engage both end-users and subject matter experts in your decision-making process. Their diverse perspectives often reveal blind spots in your initial understanding of the problem.
Create regular touchpoints for feedback throughout the development process. These might include weekly check-ins, prototype reviews, or advisory panels that provide ongoing guidance.
Document stakeholder input systematically so you can track how different perspectives influence your decision-making. This documentation proves valuable when explaining your rationale to others in the organization.
Design a Minimum Viable Feature
Focus on creating the simplest solution that addresses the core problem. For our journal entry issue, this meant providing flexibility in date selection while maintaining accounting integrity.
Release this simplified version to a small subset of users first. This controlled rollout lets you test your solution without risking widespread disruption if problems emerge.
Establish clear success metrics before launch so you can objectively evaluate performance. These metrics should directly connect to the problem you're trying to solve rather than vanity metrics that look good but don't address the core issue.
Monitor Performance and Iterate
Continuously track both quantitative metrics and qualitative feedback after launch. Set up dashboards that highlight key performance indicators and alert you to potential issues.
Be prepared to make adjustments quickly if data indicates problems. Having a predefined threshold for intervention helps teams know when to act rather than waiting too long to address emerging issues.
Document what you learn through each iteration to build institutional knowledge. These learnings inform not just the current feature but future product decisions across the organization.
Creating a Culture of Learning
Product management thrives in environments where learning from mistakes is valued over perfection. Building this culture requires intentional effort from leadership and consistent practices across teams.
Psychological safety: Team members need to feel safe sharing both successes and failures without fear of punishment. Leaders can model this behavior by openly discussing their own mistakes and what they learned from them.
Structured reflection: Regular retrospectives provide opportunities to examine what went well and what could be improved. These sessions should focus on systems and processes rather than individual blame.
Knowledge sharing: Documenting and sharing lessons learned helps the entire organization benefit from each team's experiences. Consider creating a knowledge base of case studies that highlight both successes and instructive failures.
The most successful product teams view every launch as an opportunity to learn, regardless of outcome. This mindset shift transforms "failures" into valuable data points that inform future decisions.
Real-World Application Examples
Our journal entry feature experience demonstrates several key principles that apply across product management scenarios. After recognizing the initial failure, the product team implemented a compromise solution.
They added a secondary option allowing Owners to edit dates when necessary. Although this introduced a slight risk of double-claiming expenses, it proved better than leaving users with blank export files that rendered the feature useless for many customers.
This pragmatic adjustment illustrated several important points about effective product management:
- Flexibility matters more than rigid adherence to initial plans
- User empowerment often trumps strict automation
- Perfect solutions rarely exist; most decisions involve balancing competing priorities
Another example comes from our invoice customization feature. Initial designs offered unlimited customization options, overwhelming users with choices. After observing confusion in user testing, we pivoted to offering curated templates with limited customization points.
This change significantly improved user satisfaction while reducing support tickets. The lesson? Sometimes less functionality creates a better user experience when aligned with actual user needs and capabilities.
Product Manager's Perspective on Failure
Handling product challenges requires both technical skills and emotional intelligence. From a manager's perspective, several approaches have proven particularly valuable at FreshBooks.
Taking ownership of decisions builds credibility with both users and team members. When mistakes happen, acknowledge them openly rather than deflecting blame or making excuses.
Fostering a learning mindset throughout your team creates resilience in the face of setbacks. Regular retrospectives help surface insights from both successful and failed projects, preventing similar errors in future work.
Setting up robust feedback mechanisms ensures you hear about problems quickly. Beyond in-app metrics, maintain open lines with customer support teams and conduct proactive outreach to catch issues before they escalate.
Practical Strategies for Success
Product managers can apply several concrete strategies to improve their decision-making and reduce the risk of significant missteps. These approaches have proven effective across various product scenarios at FreshBooks.
The following numbered list outlines key strategies that can transform your approach to product management:
- Document your assumptions explicitly before making decisions so you can test them against real data.
- Create a "pre-mortem" by imagining potential failure modes before launch and developing contingency plans.
- Establish clear success metrics that connect directly to user problems rather than feature completion.
- Build feedback loops that capture both quantitative data and qualitative user experiences.
- Develop a systematic approach to prioritizing fixes when issues emerge after launch.
These strategies create a framework for thoughtful decision-making that reduces the risk of major product failures while accelerating learning when mistakes do occur.
Transform Your Product Management Today
The journey of product management never truly ends. Each challenge presents an opportunity to refine your approach and deliver better experiences for your users. Our experience with the journal entry feature at FreshBooks taught us valuable lessons that continue to shape our product development process.
Product challenges will always arise, regardless of how careful your planning or how thorough your research. What distinguishes great product teams isn't an absence of mistakes but rather how quickly they learn and adapt when things don't go as planned.
By embracing a culture of learning, validating assumptions with real data, and maintaining flexibility in your approach, you can transform product challenges from setbacks into stepping stones. Each lesson learned builds your team's collective wisdom and improves your ability to anticipate and address future issues.
We encourage you to apply these principles in your own product work, whether at FreshBooks or elsewhere. Share your experiences with colleagues, document what you learn, and approach each new challenge with both confidence and humility. The most valuable product insights often come from the features that didn't work quite as expected.
