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Rod Drury on speed, capital raising, marketing complexity
Posted on 17-May-2015 16:30 by Bill Bennett. | Tags Filed under: News.

First a correction[1] to the quote in Speed, cost behind Xero move to PaaS, AWS:

Next a few interesting ideas were left in my notebook after I interviewed Xero CEO Rod Drury for a magazine article. These were too good to waste and provide insight into a fast growing technology company[2]:

On marketing Xero:
“Xero is a product for small businesses. They need all the complexity found in enterprise software. Yet because of its nature we have to sell it like a consumer product. You can’t go one-on-one with every customer. It’s intensive. There are a lot of up front costs.”

Drury went on to say the Xero business model is partly about spending a lot up front to get small annuity revenues.

On being profitable now:
“You can’t fake this stuff. We have more than a quarter of a billion customers in the bank, that’s a big moat to protect us.

“There are plenty of opportunities swim to the side”. [3]

“We’re executing well and growing faster than our competitors. We can’t keep hiring new people at the rate we currently are. Eventually our numbers will cross over”. [4]

  1. My own lazy fault for not checking the remember quote against the notes I took at AWS while writing it up. That’s exactly the kind of mistake I tell young journalists not to make.  ?
  2. If you’re an editor or publisher and can use this material or similar please get in touch. I’ve notebooks full of gems.  ?
  3. This is a great metaphor, in essence he’s saying Xero could stop spending on growth tomorrow and those monthly subscription fees would deliver a respectable profit. However, Drury and Xero have big ambitions and a war chest full of cash to help pursue them.  ?
  4. Xero is burning through cash as it builds a organsiation large enough to deal with its long-term ambition. That means putting feet on the ground; developers and sales people. They all have to be hired now before the revenue stream is big enough to pay their wages. He’s saying here that the point where the revenue is greater than the wage bill is in sight.  ?

Filed under: Cloud Tagged: entrepreneur, marketing, Xero

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