Tuesday, October 21, 2014

Tracking the performance of the 1 hour Xero model / Lance Wiggs' optimistic case going forward for Xero

(Lance Wiggs is an independent investment and business advisor providing investment readiness consultancy through Better by Capital and Return on Science investment committees, direct investments through LWCM and Punakaiki Fund and advice and directorships through LWCM and Lance Wiggs Consulting.  I write here and have a Q&A column in Idealog).

Last year I built a very quick and dirty spreadsheet to analyse Xero, and wrote Valuing Xero – in one hour. The article was cross-posted to the NBR, where it attracted far more comments. More on those comments below.
I used Xero’s September 013 earnings release (and only that earnings release) to feed the spreadsheet and to try to keep things simple. It was not meant to be a valuation – just a chance to show how simple it is to create a model from very little information.
With the recent release of Xero’s September 2014 results, it’s time to revisit.

I’m not an official financial advisor, and you should make your own counsel and seek advice before investing. I do urge you do do your own numbers, regardless of any external advice that you get. Also understand the difference between placing short term bets against market movements by traders and long term plays based on intrinsic business fundamentals. I, for example, generally buy and hold investments, whether public or private, as that allows the investment value to reflect long term results rather than actions of other market participants.

1: How did I do?

Lousy. I made a basic formula error in the spreadsheet, discovered by the ever-present Anonymous at NBR. Well done to him or her, and brickbats for me.
That formula error transformed the model dramatically – from showing that Xero’s value was $2-8 billion to showing that it was several times larger. Here’s what I said a bit later in the comments:
I agreed with the comment that Xero has a shot at being New Zealand’s biggest company ever by market capitalisation, and correcting the formula error did give me a lot more comfort that the model was working.
The error in the spreadsheet was at the final step, which I had clearly rushed in my haste to deliver the result within my own time limit. The summary table showing the customer numbers and the annual revenue and expense results had some incorrect references in the later years. These latter two were summed to calculate the annual EBIT, which was used to calculate the Net Present Value of Xero’s EBIT. One error (customer numbers) was a typo, and was just visual, but the other error meant that the profit in the last few years and hence the terminal value were well under-reported. Here’s what the error looked like:
The cells were each summing up 12 months worth of data, and I had simply not completed the line for revenue and expenses. The most embarrassing is the cell showing the sudden drop in customer numbers (2021 was going to be a bad year), as it looks so obvious.
In a real model I would generally have a large number of charts showing the trends, and when constructing models I often create then delete charts just to make sure the numbers are making sense. Here’s the chart that I should have created:
But I did not, and so the difference was embarrassingly large.
The first bottom line (Total value of Xero) showed total values of between $2.2 and $8.8 billion, depending on the discount rate. (I tend towards 12-15% but you can pick and choose).
Before fixing the error:
After fixing the error:
The amended version shows valuations from $13 to $67 billion with the same discount rates, and $5.5 billion at 25% – placed there for  Anon (comment 16 on NBR) who wrote that “This remains a venture capital play and I would suggest a WACc closer to 25% would be justified, especially for investors with limited exposure to high risk transactions.” What anon is saying is that he or she believes that there is considerable uncertainty in the future of Xero and that investors should demand higher returns.
The error undervalued Xero by a substantial margin.
However there were a number of other corrections suggested to the model, such as salary rates, checking the number of customers in the out years, key man risk for Rod Drury, validating versus value of incumbents that Xero is attacking, tax, inflation, capex and so on. Many of these would depress the value, but none would do so in a material way versus this simple error. At least the error was in the right direction, and it goes to show that sometimes it does pay to read the comments – even in the NBR.

2: Apart from the error, how did  the model hold up?

The good news:
The model (these numbers were the same in the corrected one) projected an annualised runrate as at the end of September 2014 of NZ$131.6 million. The actual reported number was almost exactly the same at $132.3 million (both round to $132 million). That’s very good.
The number of paying customers at the end of September was projected to be 383,000, but was delivered at 371,000, 3.2% under my forecast. I’m taking that as a win as it is within any reasonable margin of error, especially as the number had increased by 75.5% versus the year before.
The operating revenue for the six months was reported as $54.3 million, while the subscription revenue was $52 million, splitting these two out for the first time. The 2013 forecast showed $58.2 million, so the result ($54.3m) was 6.7% lower. But wait – Xero also reported that their subscription result in constant currency was $56.2 million, which is just 3.4% away from the actual. So I’ll take that as a win as well, however it’s clear that the model is now out of date and I need to adjust for the break out of subscription revenue.
It would also be nice to model the effect of currency on Xero’s results, but I’m probably not going to do that just yet. Over time the foreign-derived income will increase and provide a natural hedge for offshore costs.
The changes:
The material changes have been in the regional results – shown here by number of customers. The North America result was lower than expected, casting doubts in many people’s minds about whether or not Xero is going to win in the USA.
I’m not going to change my own position, which is that Xero will grab a substantial share of the US market, and that what we are seeing is standard for SAAS subscription companies. They seem so slow in the early years, but the effect of compound growth is that over time the numbers start getting huge. While the forecast numbers may seem a long way from a result, in reality the growth is so high that the forecast is usually just a month or two early or late. The overall number of customers, for example, was 13,000 over-forecast, but that represents just over half a month’s worth of net new customers. It’s similar to the classic lily in a pond that doubles in size each day – the lily covers just half the pond on the penultimate day.
However the US/Canada and rest of world total missed by a larger margin – 2.5 months or 17.4%. Most of that growth came from the  US market, which is now broken out showing growth from 10,000 to 22,000 in the 1 year from September 2013 to September 2014.
Xero did not report annualised revenue run rates by region, which is a pity. They did report total revenue by country for the six month periods to September 2013 and 2014 though. Here’s how the forecast (middle column) performed versus the result – only the NZ result was close, but given the adjustments above (currency, split out) it was probably a tad high while the Australia/UK growth were closer that shown.
The forecast was working hard here from the limited 2013 information, and it’s clear that some adjustments are required.

3: Summary

Here’s the file2013 spreadsheet with fixed formulae and comparisons. Please handle with care.
I’m very happy with how the model performed, but it’s also clear that it can be improved with the new information from Xero and by making some changes in assumptions in reaction to the comments. I’ve started doing this but am not sure whether I will continue – there is too much work to do. The model is ridiculously simple and still a long way from a proper financial model – so tread with absolute caution, and watch out for errors.

On Xero

I remain firmly of the opinion that Xero is destined to be a giant, and we should ask of Xero (and every recurring revenue company) not “Why will the growth continue?” but “What would make the exponential growth slow down or stop?
It’s clear that in New Zealand the growth is slowing – is this because Xero is hitting the end of the addressable market, or will we see slower adopters steadily coming across? What are the month to month additions and churn rates for the North American market, and when will we run out of customers in the Australian and UK markets? Xero addressed some of these questions in a recent release, and I intend (no promises as above) to adjust the model to take these into account.
Overall it’s a timing question – I remain confident that Xero will hit, say, $1 billion in revenue, but the question is when. The unadjusted model suggests that this particular benchmark would be close to happening in FY2018, but that will certainly slip a year or two once I make some reasonable adjustments. But does it really matter when $1 billion revenue occurs? Xero is clearly a monster in our midst.
Parting shot to another anon from last’s year’s NBR article – who was of course proven correct almost instantly.

Posted on 9:08 PM | Categories:

Xero moving on US listing & IPO / in talks with Morgan Stanley Credit Suisse - Bain Capital prepared its Australian accounting software business, MYOB, for sale.

Tom Pullar Strecker for Stuff.co.nz writes: Xero is declining to comment on a report that planning for its United States listing has progressed to the stage where it is now in discussions with investment banks.

The Australian Financial Review reported Xero was working with Morgan Stanley and was in talks with Credit Suisse over its proposed US initial public offering (IPO), which it expected would be worth between $500 million and $1b. The report did not specify the currency or whether that might represent new capital, the sale of shares by Xero's existing investors, or a combination.
Xero spokeswoman Janna Wilkinson said Xero would make no further comment on the report other than that it would "consider listing in the US when the time is deemed right".
Xero chief executive Rod Drury is travelling to New York this week. He signalled at the company's annual meeting in July that Xero was likely to float in the US next year.
He told shareholders the company needed to surpass US$100m in annualised monthly revenues before it undertook the IPO, a milestone it has since achieved.
Xero shares were up 1.3 per cent at $16.10 in morning trading on the NZX. The company's market value dipped below $2 billion for the first time 16 months yesterday, when its shares touched an intraday low of $15.
The speculation over Xero's listing plans came as Bain Capital prepared its Australian accounting software business, MYOB, for sale.
Bain is taking sale pitches from investment bankers this week, for a deal which could happen in the first half of the 2015 calendar year.
It is understood Bain has asked Deutsche Bank, Morgan Stanley, Macquarie Capital, Citi, Goldman Sachs, UBS and Bank of America Merrill Lynch to pitch. 
Posted on 4:54 PM | Categories:

How to Get the Best Tax Results from Capital Gains and Losses

Ken Berry for CPA Practice Advisor writes:  The end of the year often turns into “harvest time” for tax-savvy investors. By harvesting either capital gains or capital losses from securities transactions, depending on their situation, they can reap tax rewards when they file their returns. However, recent changes in the tax landscape may affect year-end decisions.
Here’s the lay of the land: All other things being equal, you can use capital gains and losses realized at year-end to cancel each other out, either eliminating or reducing tax liability. Traditionally, investors have looked to harvest losses to offset prior gains in the year. As a bonus, a loss in excess of gains offsets up to $3,000 of ordinary income, which is currently taxed at rates up to 39.6%, before being carried over to the next year.
But now there’s a greater emphasis on harvesting long-term capital gains. Short-term gains from transactions involving securities held a year or less are taxed at ordinary income rates. Conversely, long-term gains from sales of securities held longer than one year are taxed at a maximum rate of only 15% for most investors, and 20% for investors in the top ordinary income tax bracket.
Even better: Long-term gains are taxed at a 0% rate to the extent that income falls in the lowest two ordinary income tax brackets of 10% and 15%. This opens up more planning opportunities for low-bracket investors or those who are showing a smaller-than-usual income this year due to circumstances like a large business loss.[snip] - the article continues @ CPA Practice Advisor - click here to continue reading....
Posted on 2:04 PM | Categories:

Sleeter Group's Take: Intuit Introduces the New QuickBooks Online Accountant

Charlie Russell for The Sleeter Group writes: Today Intuit introduced a major overhaul of QuickBooks Online Accountant, the tool that accounting professionals and QuickBooks ProAdvisors use to work with their QuickBooks Online clients, as well as to manage their own practice. I haven’t had my hands on this yet, so the information provided here is based on demonstrations that I’ve seen, as well as material provided by Intuit. I will be digging into the details in the future when I get my hands on this.

Intuit plans on rolling this out to the public in December 2014 on a limited basis, with a full “global rollout” sometime in 2015. Note also that some of the features that we talk about here might not be available in until later in 2015.

Out with the Old, In with the New QuickBooks Online Accountant

Intuit says that this is a new product “built from the ground up” rather than just an enhancement to the existing QuickBooks Online Accountant product. However, a lot of this will be familiar as it builds on the “Harmony” platform that we’ve been working with for awhile now. [snip].  The article continues @ The Sleeter Group, click here to continue reading....

Posted on 10:29 AM | Categories:

New Quickbooks Online Accountant, Click to view the video.

New Quickbooks Online Accountant, Click to view the video.

NEW! Client Dashboard

See exactly what you need to do today. Complete tasks with just a few clicks. The customizable Client Dashboard is the core of your new QuickBooks Online Accountant, helping you plan your day, shrink your to-do list, and stay on top of bookkeeping and payroll.

NEW! Accountant Toolbox

The moment you need it, there it is. The Accountant Toolbox gives you one-click access to seven of your most-used tools. Even when you're switching between clients' books, your tools are always in the same location—saving you time and keeping you focused.

Built-in! QuickBooks ProAdvisor Program

The best accounting program is now integrated directly into QuickBooks Online Accountant—and it's free! Access in-depth training, grow your expertise with certification, increase your exposure with an online listing, and more—all in one place!

ENHANCED! Wholesale pricing

Not only can you help clients save 50% on their QuickBooks Online subscription, but you can also bundle that subscription with Payroll to save them even more. Plus, you'll receive one consolidated bill each month, making it easier to invoice clients and get on with your day.

NEW! Firm roles and permissions

Efficiently manage your employees' workload by controlling which firms and clients' books they can work on. With three access levels to choose from, you can be sure employees have the access they need, helping them deliver faster client service.

NEW! Free Payroll for Your Firm

Your QuickBooks Online Accountant subscription comes with a free subscription to QuickBooks Online Plus for your own firm. And soon, that subscription will include free Payroll to manage your firm's books and pay employees.
Posted on 10:07 AM | Categories:

Vend Launches Update to QuickBooks Online Integration / These new features include the ability to automatically sync additional sales information from Vend to QBO, including daily register totals by product type as well as cost of goods sold.

Vend, a global cloud-based point-of-sale (POS) software provider, today announced at the QuickBooks Connect Small Business Conference several critical feature updates to Vend’s integration with QuickBooks Online (QBO). These new features include the ability to automatically sync additional sales information from Vend to QBO, including daily register totals by product type as well as cost of goods sold. With this additional data, accountants and retailers get a clear picture of their businesses and can then identify opportunities to grow.
“The updates to our integration with QuickBooks Online will be great for Vend and QBO customers who want an immediate overview of their store’s profitability and sales on a daily basis,” said Vaughan Rowsell, CEO of Vend. “This is one more example of how Vend is helping business owners gather valuable data via the cloud.”
Accountants and retailers using Vend and QBO can now enjoy the following benefits:
  • Vend product types synchronize with QBO products and services to break down each QBO sales invoice by product category;
  • QBO products and services map to one or more Vend product types;
  • Journal entries with cost of goods sold data automatically post with each register closure;
  • Profit / loss reporting is immediately available in QBO based on sales and COGS information.
“I love that Vend integrates with QuickBooks Online - and what an integration it is! This is what ProAdvisors have been waiting for. Vend is packed with robust features for great retail management,” said Jo King, QuickBooks ProAdvisor.
“Using Vend with QBO saves me a lot of time because I don’t have to worry about number crunching,” said Cristian Farfan of Wireless Tech Shop. “We used to do everything manually, but with the new QBO integration, major parts of our accounting have become nearly automatic.”
In June 2014 at Scaling New Heights in San Antonio, TX, Vend announced that it became the first point-of-sale provider to integrate with QuickBooks Online through Apps.com, one of the largest and most diverse small business apps marketplaces.
The updates to Vend’s integration with QBO are available immediately to retailers in the United States.
About Vend
Vend provides cloud-based point-of-sale and retail management software that powers omni-channel commerce for SMB retailers. Vend’s software includes inventory management, customer loyalty, and analytics. Vend also integrates with payments, accounting, and other business applications. Vend is trusted by retailers in over 140 countries and is used in more than 12,000 stores worldwide. Founded in 2010, Vend has offices in Auckland, Melbourne, San Francisco, Toronto, London and Berlin, and has raised more than $30 million from top-tier investors. For more information, please visit: http://www.vendhq.com.
Posted on 9:41 AM | Categories:

When I Work, Inc. Introduces New Payroll Integration With QuickBooks

Employee scheduling software company When I Work, Inc. is introducing a new partnership with QuickBooks that makes tracking time and attendance for payroll processing easier than ever.

On Tuesday October 21, When I Work, Inc. will officially launch a new integration with QuickBooks. With the new integration in place, customers using When I Work will now be able to seamlessly sync the total amount of hours tracked using the app for a particular pay period with their QuickBooks account for faster payroll processing.

Similarly, QuickBook users can now sign up and use When I Work for better time tracking and attendance, and faster, easier employee scheduling at their businesses.

“We couldn’t be more excited about the new integration we’ve built with QuickBooks,” said Chad Halvorson, Founder & CEO of When I Work. “We know that over 3 million small businesses use QuickBooks to process payroll—including many of our customers. Our goal as a company has always been to make things easier for the small business owner who’s constantly keeping all the plates spinning. I believe this new integration aligns perfectly with that goal.”

QuickBooks users can sign up to use When I Work for tracking time and attendance by going to wheniwork.com and registering using their QuickBook login credentials.

Users can also login by searching for When I Work on the Intuit App Marketplace, apps.com.
The new integration will officially go live and be available to users on Tuesday, October 21, 2014.
When I Work is the easiest way to schedule and communicate with your employees. Nearly half a million people in over 50 countries rely on When I Work for employee scheduling, time clock and communication. When I Work uses an innovative blend of collaborative communication technologies, including the web, mobile apps, text messaging, social media, and email, to make teams more efficient, more accountable, and better prepared. Most traditional workforce management software is clunky, cumbersome and difficult to install and maintain. When I Work is a simple, intuitive, mobile-first solution that owners and managers can implement and start using in five minutes, not five months—no IT required.

Posted on 9:28 AM | Categories:

Tax1099.com Launches in Intuit's App Center to Provide 1099-MISC E-File to QuickBooks Customers

Tax1099.com, Powered by TechAtlantis, Inc., Announced Its Availability on the Intuit Apps Center; Using Cloud-Based Software to Allow QuickBooks Users to Sync 1099-MISC Date for E-File Purposes, Tax1099.com Is the First 1099 Form Provider Not Owned by Intuit to Launch on the App Center

"Users have been able to integrate their 1099-MISC data from QuickBooks Online and QuickBooks Desktop for the past year as long as they began the process from our site," said Ed Pratt, Vice President of Business Development for TechAtlantis, Inc. "Now that we have completed the approval process for listing, our customers using Intuit's QuickBooks products can start the process from The App Center. Plus, they have the assurance of knowing that we've passed Intuit's stringent requirements for apps to be published."
Offering an easy user interface for small business filers and robust features for accountants and larger filers, Tax1099.com is a leader in information reporting. Among the many features available are TIN Matching, W-9 e-Solicitation, emailed recipient statements, multiple user logins, and two-factor authentication.
QuickBooks Online users and QuickBooks desktop users who sync to Intuit's Sync Manager can use the app directly from the App Center to integrate their data. QuickBooks for Windows users who do not utilize Sync Manager can take advantage of the power of integration by using the QuickBooks for Windows plugin, available on the Dashboard of Tax1099.com.
In addition to the integration with Intuit allowing users an easy method to create their 1099-MISC forms, Tax1099.com provides manual form entry, imports via Excel, and a variety of forms, including the 1098, 1099-INT, 1099-DIV, 1099-A, 1099-B, 1099-C, 1099-PATR, 1099-R, 1099-S, 1042-S, W-2, and W-2C.
Pricing varies based on form volume filed within the account, and can be as low as $0.55 per e-filed form. Included in the price are scheduled e-filing the form, emailing copies to recipients, and storage of pdf copies to access for four years. Mailing of any form is also available for an additional fee.
"We have an unmatched set of features in our market that appeal to all types of users, from mom-and-pop shops filing a few forms to enterprises filing thousands of forms to accountants handling multiple clients under one account," said Pratt. "Our approval for Intuit's App Center gives those customers one more tool to simplify their filing process."
Tax1099.com is currently available as an app. Users can connect the app and review the capabilities of Tax1099.com at no cost.
Posted on 9:14 AM | Categories:

Financial Statement Masters Presents Truly Unique Software at QB Connect

Financial Statement Masters (FSM) is introducing Excel FSM Version 2.2, a unique software solution for preparing customized financial statements, at QB Connect, being presented by Intuit. Excel FSM supports QuickBooks software, providing Excel with direct access to trial balance data from QuickBooks. Version 2.2 now supports QuickBooks Online Products, as well as Excel 64-bit.
Owner and creator of Excel FSM, Jacques Nault, will be on-site in the "Developers' Garage" area of the exhibitors' space, at Booth #315, to demonstrate and discuss Excel FSM with anyone and everyone who might be interested in streamlining the financial reporting process. After all, who among those attending doesn't use Excel? And/or QuickBooks?
About The Software
Excel FSM transforms Microsoft Excel into an automated financial statement generator for any accounting software by implementing the Financial Statement Module (US Patent 7139729), which describes "a unique and universal method to build financial reports with a computer for any type of business or organization ('The Method')." It also "provides the capacity to read, organize, and manipulate the accounting data of any accounting software ('Business Intelligence')." Excel FSM is an ideal solution for preparing customized financial statements, including: for NPOs, as well as cash flow, consolidated, periodic, budgeted and comparative financial statements.
The bottom line, according to Nault, is that "Building and updating customized financial statements with Microsoft Excel is now automated!" And, he adds, "Excel FSM is affordable and quickly pays dividends in terms of both time and cost savings."
About The Enterprise
The genesis of Financial Statement Masters began over 25 years ago, in 1989, in Quebec, Canada. Research and development was undertaken to create a universal tool, later called the Financial Statement Module, which would allow the extraction and manipulation of any type of accounting data to easily build customized financial statements. Patent applications followed, beginning in 1999. Today, the enterprise continues to develop products, such as Word FSM and The Audit Master, as well as to promote and market the first product, known as Excel FSM.
It is a stated goal of the enterprise, according to owner/inventor Jacques Nault, "to make the invention available to millions of users who generate financial statements each day, providing help to improve their work and thereby benefitting mankind."
Posted on 9:12 AM | Categories:

SalesPad releases new business analytics tool, MobileBoards, for QuickBooks Online.

SalesPad, LLC officially releases their newest software, MobileBoards, to help add technological efficiency within all-sized businesses. The application makes reporting anytime, anywhere, easier and more effective. A variety of business information and functions can be viewed in a matter of moments. Reviewing daily, monthly, and weekly deposits, top ten lists, accounts receivables, and top sales representatives are some of the many areas that MobileBoards can access. This product is free for a limited time on Google Play and the App Store.
Imagine the scenario where a traveling Sales Representative is about to walk into a meeting with a new client and has the most recent data in real time. This will enable them to pitch exactly what their company has going on right now. With MobileBoards, the latest data is always at the fingertips of the business. After a simple download, the easiest application on the market can give businesses everything they need in a consistent format. For a limited time only, SalesPad is offering MobileBoards as a free companion product to QuickBooks Online.
MobileBoards’ smooth, simple, and refreshing interface is not the only sleek part of the application. The app has an innovative way of taking a business’ raw data and providing the reports in summary and graphic summary (pie chart, bar graphs, etc.) formats. MobileBoards will detail information in a display board with a variety of different panels and/or collection of reports set up by the end user. Every business needs a way to view the different kinds of raw data they collect, and MobileBoards by SalesPad is helping eliminate inefficient and archaic ways of viewing data with the revolutionary app.
SalesPad representatives will be attending QB Connect where they will be showcasing MobileBoards as well as SalesPad’s complete product portfolio of business software. Conference attendees can come visit SalesPad at booth 309 to learn more about the products. In addition to showcasing SalesPad’s technology, a team of developers representing the company will be participating in a hackathon at QB Connect where participants have 30 hours to develop the best possible app to work with QuickBooks Online.
SalesPad LLC’s mission is to increase each client’s business productivity and decrease operating costs by providing software that helps eliminate areas of inefficiency throughout the business process. We specialize in developing software with the primary goal of providing a more advanced sales and customer service interface to ERP Solutions. SalesPad offers quick quote & order entry, complete inventory visibility, easy access to customer information, and a highly configurable work-flow to make your sales and customer service teams more efficient and effective. 
Posted on 5:58 AM | Categories:

Monday, October 20, 2014

Institutional Selling of XERO stock drops the price to a new 16 month low NZD $15.00 / US$11.90 - @ Market Open.

 Duncan Bridgeman for National Business Review writes: Shares in cloud-based accounting software firm Xero [NZX:XRO] have extended their recent decline – opening today at $15 before recovering some ground during the morning.

Xero’s share price has dropped more than 25% in the past month as investors question the company’s pace of growth in the US, where it is competing against incumbent Intuit.
This morning’s initial decline was based on some large trades indicating institutional selling before the market opened, says James Smalley, a director at Hamilton Hindin Greene.
But by midday Xero shares had bounced off that low to trade at $15.60, down 2.8% on yesterday’s close.
Of the 380,000 shares traded this morning, about 240,000 (63%) were institutional crosses before the market opened, Mr Smalley noted.
“It does tend to give one the indication that the majority of the selling is coming from the institutional side of things.
“And, as everyone knows, those shares came out of escrow from the capital raising over a year ago at $18.50.”
Xero has also been re-rated by analysts after its operating update a fortnight ago.
Several analysts downgraded their 12-month price targets, citing what they described as disappointing US figures.
Xero said it had added 4000 US customers since March for a total of 22,000. Analysts had wanted to see faster progress and there are now concerns about the company’s cash burn, which could lead to another capital raise.
At the height of its run-up, in March, Xero was worth more than $5 billion, making it the second most valuable company on the NZX behind Fletcher Building.
Today, Xero's market cap is $2 billion.
Xero chief executive Rod Dury says the company is still in the early days of its push into the key US market.
With $171 million in the bank, Xero has all the cash it needs for a sustained fight against North American incumbent Intuit, Mr Drury says.
The move to the cloud has provided a strategic opportunity to break Intuit's grip on the small business market and to woo the majority of small business customers who have never used any accounting software.
Xero wants a million customers worldwide and is targeting growth in the US market where so far it has some 22,000 of its total 371,000 customers.
Posted on 8:41 PM | Categories:

Why Taxes And Trading Costs Kill Investment Returns

  for Forbes writes: Underperformance, high fees and tight regulations are creating an environment ripe for disruption. I am constantly on the lookout for innovative technologies and business models that address the inherent problems of asset management.  I recently had a conversation with a former colleague from Bridgewater Associates, Maneesh Shanbhag who founded Greenline Partners, a progressive asset management firm aiming to help investors keep a higher percentage of their returns by managing not only for performance, but also for tax and operational efficiency. A self-described engineer with a passion for efficiency and elegant simplicity, Maneesh defies the stereotype of a typical hedge fund manager.  Maneesh left a promising career at Bridgewater Associates where he advised institutional investors on portfolio allocation to be an asset management entrepreneur.  

Maneesh shares that he did not get into this business to get rich quickly but to create a back to basics investment model that generates value for his clients at a lower cost. He and his partners at Greenline currently manage $100 million of assets under management (AUM) for private investors and foundations and have consistently outperformed their peers on a post-tax bases.

Katina Stefanova: The two most overused terms in the investment management industry are probably diversification and long-term investing. Some investors think of diversification as holding lots of different funds. But more often than not, these funds tend to have similar exposures (e.g. large cap and small cap are still all equities) or worse hold many identical positions, and hence are not diversifying to each other at all. Similarly, the way investment managers urge their clients to invest long-term is by subjecting them to the huge swings of markets and begging them not to sell after losses. The latter approach is disastrous to investors. The result is often unsatisfied clients who end up selling their investments at the worst possible time (after large losses) and frustrated advisors and portfolio managers.  In this scenario, everybody loses. Diversification and thinking long-term are the most important concepts in investing but investment managers can do a lot more with properly applying these concepts and just as importantly educating their clients about what they really mean. What is Greenline’s approach to addressing these issues? [snip].  The article continues @ Forbes, click here to continue reading...

Posted on 6:10 PM | Categories:

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