Technology entrepreneur, CEO of Xero – online accounting software for small businesses.
Why did you start Xero?
As a serial entrepreneur, business owner, and technologist, the massive potential in the small-business market became very clear to me. The quality of desktop software was poor and there was an opportunity to develop a much better experience. Xero was a product that I had always really wanted for myself and I thought, well if I want it other people probably do as well.
How does Xero help business owners?
The big thing Xero gives business owners is freedom and a clear picture of their business. Before Xero, business owners were tied to their desktop and working weekends when they wanted to go to the beach. Now they can do their bank reconciliation in the morning on their mobile phones, know exactly where they are at, and enjoy their day.
All of Xero’s staff are passionate about the product. We receive such wonderful feedback about how much Xero has changed customers’ lives. I was in Denver recently and someone came up to me and said, “I can now move back to my home state because location doesn’t matter.” That was very cool.
You have built and sold a number of businesses, but Xero is the biggest by far. What have you done differently with Xero that explains its success compared to previously owned companies?
If you are a serial entrepreneur, you gain more experience with every business you develop, your networks increase and you have more capital to do things properly.
Xero’s success came down to my previous experience and an opportunity at the right time.
We created and sold Aftermail to build capital for Xero. This is a long-term business that we are not planning to sell. It's a business that is challenging and fun and there is so much more to achieve and enjoy. We have only really just started on the journey and although we now have half a million customers, we like to think about what Xero would look like with 20 million customers. Xero is a significant business from New Zealand and is one of the top performing ‘software as a service’ companies globally. It is really exciting to see what will happen over the next 10 years.
What were some of the difficulties you faced when you started Xero?
I think the hardest thing – or the scariest thing – when starting a business is always raising money.
When we started Xero, people doubted us, claiming that there was already a lot of business-accounting software around. Taking a company public from the very beginning was a bold thing to do and we took a lot of criticism for that. Being a start-up, in the public eye, meant we just couldn’t screw up, so fortunately there have only been a very small number of things we’ve got wrong.
Xero’s high-speed success has attracted a lot of criticism, but we have just had to put our heads down and be thick-skinned and sometime over the next few years we will be an overnight success.
What are some of the common mistakes you’ve seen people make when investing in their own business?
The key thing about building a business is to remember that the business is a separate entity and you want it to be able to stand on its own. So as the founder of a business you want to be working on the business not in the business. You need to be continually hiring people so that the business can work without you.
When Xero began and we were raising money, we needed to have the operating team run the business. One of the secrets of our success is that I’m always working on strategy and building the business rather than on operational activities. We have a great team working for Xero and you often find certain people are able to manage things better than the entrepreneur! As an entrepreneur, having the money to implement strategy and not be constrained is one of the ‘cooler’ things.
Do you think encouraging enterprise and export in New Zealand schools and communities is a good thing? Why?
Well yes. This is a really special time in New Zealand. We are a country that is furthest away from everybody else, and technology has shrunk that distance.
When people understand business, are passionate about it and earn a certain amount of money, then we will see the benefits to our economy. They will want to go overseas and export – there is nothing better than sending an invoice overseas and getting paid! If New Zealanders don’t have an attitude of thinking global and getting into those value streams, then the country will miss those opportunities.
That is how we flip around the issues of increased class sizes, longer waiting times for an operation and poorly kept roads. So, yes, I think getting our youth and communities passionate about earning offshore is absolutely vital and is such an opportunity for New Zealand.