Big news this morning from FreshBooks, the Canadian SaaS invoicing company that boasts over two million customers, are announcing the availability of their very own app store – yes, just when you thought there weren’t enough app stores in the world, FreshBooks gives us another one. But this is quite an interesting play so bear with me…
SMBs are a massive population, with a plethora of different requirements. Any company like FreshBooks that wants to be the central point of contact for a SMB needs to think about how it can answer that requirement for significant customization, while still maintaining a simple, intuitive and consistent UI for its main product – one way to do that is to identify core functionality, and see everything else as an add-on. I’ve long said that disparate applications with multiple billing and UI takes is a real barrier to entry for SMBs – they want one billing relationship, one entry point, a consistent data model and one central vendor who manages all of that. That’s the very rationale for the Google Apps Marketplace – a service I like, but that I feel is hampered by the limited common data it offers – beyond single sign on, calendar, docs and contacts – the Google marketplace is simply about billing. With this move, FreshBooks offers businesses a far richer and deeper common-data-model – core financial information.
Before I dive into a discussion about what this means, a brief word on how this will work. Partners in the FreshBooks Add-on Store are promoted directly inside the FreshBooks application. All the logistics (billing, subscription management etc) are handled by FreshBooks. The add-on store will support both free apps as well as monthly subscriptions with licenses able to be purchased for individual users and group accounts. Partners pay a 30% commission on the value of the sale.
FreshBooks bills customers on behalf of the partners, taking a 30% commission on the sale. The remainder goes directly to the software partner. The applications featured in the initial launch of the FreshBooks Add-on Store include: Peachtree Connector ($10/month/system), ReportAway! for BlackBerry ($2/month/user), Highrise Import (free), Constant Contact Export (free) and Late Payment Fees (free).
So… what does this mean in the broader sense? Clearly app stores (FreshBooks representative Sunir Shah stressed that this is an Add-on store, not an App-store however I see their intentions as broader than that) are massive and, arguably, outside of the consumer space the SMB marketplace is where app stores offer the most value. As Shah points out;
We are selling add-ons to FreshBooks. They are tied to extending the workflow in FreshBooks, and thus are contextually meaningful. It’s not a generic marketplace for general purpose computing. It’s about FreshBooks growing with you as you grow your business. We’re selling things that extend the FreshBooks workflow.
Arguably approaches like that taken by Google with it’s marketplace, miss the opportunity that a truly contextual application can bring. A proof point of this is the marked utility of the contextual gadgets that Google itself enables within Gmail. The great UI thing about this model is that users only need to add UI complexity where, and when, they need it – rather than building a bulky offering within the core FreshBooks application, edge functionality is offered as an add-on. I’d even envisage FreshBooks introducing offerings of their own within the add-on store. FreshBooks CEO Mike McDerment spoke to this point saying;
Everyone thinks ‘app stores’ are only about unlocking innovation, there is truth to that, but for companies like Apple and FreshBooks that focus on simplicity and usability, continuously building more features into their products inevitably undermines the integrity of their designs. Customers always demand more features, now they can purchase complexity through ‘app stores.’
For any business that spends a lot of time invoicing with FreshBooks, this is a great thing – expect those businesses to be offered far richer options that end up with their spending more time within the FreshBooks app and less time running integrations with third party applications.