From Xero to $3 Billion In 7 Years / Why The Cloud Just Might Be The Most Disruptive Technology Ever

Greg Satell for Forbes wrote on "disruptive technology" and included a section on Xero that reads:   In 2004, Rod Drury was already a successful technology entrepreneur, having founded two successful companies and amassed a small fortune.  Yet, like many serial entrepreneurs, he found himself restless and was looking for a new opportunity. 

He found one when he looked at accounting software for small business. Unlike consumer technology, which was quickly moving to a web-based approach, business software was still sold in boxes.  That made it difficult to integrate with other software and almost impossible for the people who used it to collaborate effectively.

So he went to his friend and accountant, Hamish Edwards, and together they decided to build a software company that centered on the relationship between small businesses and their accountants. Rather than just transferring files every quarter or so, their product would allow accountants to act as real-time advisors.

In 2006, they launched Xero, which has been revolutionizing how small business operate ever since.  It goes far beyond just keeping the books, it seamlessly integrates with a wide array of add-on software tools, from point-of-sale to timesheets to invoicing and payroll.  Xero currently has a market capitalization of over $3 billion and is still growing fast.

Low-End Disruptions
To get an idea of why companies like Xero are so disruptive, think back to how software used to work. You would buy a package from a vendor and it would be installed on your company server or PC. Through partnerships and acquisitions, the software company would could then offer you additional products with expanded capability.

This was not only time consuming and expensive, but it limited you to the vision of your software provider.  If you had a restaurant and wanted to start selling take-out on the Web, you had to either get software that was compatible with your accounting software or basically run two sets of books.

In the best case, you were held hostage to the partnerships and acquisitions your vendor saw fit to make.  Most of the time though, your ability to was hampered by the strategies and vision of your software provider.  If it didn’t see why your point-of-sale system needed to be integrated with E-commerce, you were basically out of luck.

But cloud technology works differently.  Typically, an application programing interface (API) is set up so that any developer that wants to make its product compatible can do so on its own.  There’s even a company called Zapier.com that combines applications automatically in the cloud for you.  Power has shifted from software companies to everyday consumers.

(This concludes the section on Xero, Click here to read the entirety of Greg Satell's article for Forbes)