The opportunity is leveraging the traction in NZ into the much larger markets we are operating in. I think people are seeing we are executing well, communicating openly and they are starting to understand the size of the opportunity. SI - Is Xero capable of footing it with the big boys, especially as the company gains some sort of scale in terms of customer base and revenue size? SI - What are your biggest challenges as the company expands? So we are very often the first accounting system. It is still very early days in the SaaS accounting space. RD - I would certainly like Xero to pay dividends eventually but we are still in an investment phase. Less than the death rate of businesses (which we hope means that businesses that at on Xero are better!). We’re designing Stock now and hope to get it released this coming year. Reader Question - Will the American version of Xero be launched this year? The incumbants haven’t launched a competitive product yet (and we’re 3 years in). RD - Not in the short term, we haven’t conquered the English speaking markets yet, but we have designed the platform for other languages in the future.
RD - We haven’t put out any projections. I think the financial crisis may have helped as people put a focus on daily cashflow. They think long term and put in place building blocks that lead to long term value though I think their emerging culture of secrecy and aggrogance is wrong. Doing quick release cycles reinforces a culture of innovation and execution but it is something we think about a lot. I believe there is a significant opportunity here, but that there is still a lot to do to maintain Xero’s position as a leading SME accounting solution. I am concerned about maintaining focus on building the best online accounting system for the SME market. SI -Are your customers new to accounting software or do they come from competitors products? RD - Actually I think at 17,000 customers and many more users we have much more than a small band or loyal users. SI - Are there any particular books or periodicals that you have read that you would recommend to Share Investor readers in your business sector or business/investing in general?
There are some important strategic reasons for doing Personal which I don’t want to go into publicly. We want to get the UK and Australia countries to a certain point before we open another front. I didn’t want to do that again. I’d expect them to do acquistions over the next few years but it’s hard to see who they would buy. RD - The founders, directors and staff have a big stake in the company as you can see in our annual report. We have always had a culture of good cost control. RD - Xero is fairly distributed as our sales teams operate out of several areas on many time zones so we build culture online. If so can you give a time frame when this feature will be implemented? SI - Will your company pay a dividend from sustainable future profits or reinvest in the business? SI - Was the intention of yourself and the Xero board to build the company up as a brand with the express purpose of selling, along the lines of say 42 Below?
It seems to be good for building brand but is very expensive. RD - Atlassian out of Australia have cracked a good business model in the Enterprise space and love their customers. SI - In my investing experience I have found the level of business leadership in New Zealand wanting - with a few very notable exceptions - when it comes to making good long-term decisions based on sound business skills, the basic understanding of running a business and accountability when it comes to making mistakes and this is often reflected in businesses hiring from an overseas talent pool. RD - I’ve done a few angel investments and do have other shares in private companies. The US does have a big influence on the rest of the world so we would also get additional benefits globally. RD - I would still like to be running Xero, the global leader in small business software and one of the most admired software companies in the world. SI - Your competitors take an interest in copy done on Xero -I know this because they all read what I have to write about your company - with this in mind how have you responded to your competition and have you found the MYOBs, Quickens, Sages and SAPs of this world are taking you seriously as a competitor?
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