NZ Entrepreneur writes: Great businesses are started every day when people act upon an opportunity. Rod Drury is one of New Zealand’s most successful and best known entrepreneurs, we talk to him about the story behind the Xero, the future, and what makes him tick.
1) You’ve built a number of businesses including Glazier Systems and Aftermail but you’re best known for your success with Xero. When you first founded Xero, was your vision for the company similar to how the business looks today or is it different to how you imagined it turning out in those early days?
It’s really exciting how the opportunity and strategy behind Xero is playing out as expected. We saw the small business transition to the cloud as a once in a lifetime opportunity and our team is executing the strategy very well.
As you progress through each business you gain more experience, networks and capital and your personal goals change. Glazier Systems was about creating a job to use the new programming tools we wanted to work with. AfterMail was designed as a trade sale from the start so we could make some money. After selling AfterMail to Quest I saw what doing a public company in software could look like and that seemed like a great challenge, and a lot of fun. So the goal was to build a long term, scalable and global business and see how far we could go.
I’m more excited about Xero now than when we started. We’ve eliminated a lot of the early risk and have built the core foundations, but we are still in the early stages of our journey. Our vision is to be a globally admired company that makes life easier for millions of people around the world. We get such a kick when people let us know they now find accounting fun.
2) Do you come from an entrepreneurial background?
Not at all. When I got a School Certificate (the former secondary school qualification for high school students in Year 11) I was the most educated Drury of all time. I was fascinated by software and the scale it gives. With software you solve hundreds of problems a day and you see cause and effect. I think software provides accelerated feedback cycles so you learn, reinforce and create confidence. That thinking is also a key skill when building businesses and teams.
3) What was the most painful lesson you’ve had to learn in business? Have you experienced any bad times?
Pacific Fibre was a good experience. It was financially painful but it was more the frustration and lost opportunities that rankle today. I’ve largely avoided real problems by treating what I do as a portfolio and by being aware of opportunity costs. When things aren’t working I try to quit them as soon as I can as my time and resources will be better spent elsewhere. So I think failing quick is a key skill for entrepreneurs.
The things that stick in my mind that were notably bad are mainly when people let you down.
Normally that comes from failure or a fear to communicate bad news. I think it’s so important to surface issues early so you have time to fix them.
4) What achievements are you most proud of during your career and is there anything that you still want to achieve but haven’t yet?
Hopefully this doesn’t sound too cheesy but when I see our team doing awesome work that was even better than I imagined (which happens a lot) I get a huge buzz. We have over 500 people in an awesome company.
It was only a few years ago there were just four or five of us crammed into a small apartment. Now I go to Melbourne and we have a building with our name on it. We are creating something, a really special company, and I have to pinch myself that we started this from scratch.
Listing on the stock exchange was a real highlight. Seeing your company on the NZX Main Board and then in the nightly news was crazy, but it is a double edged sword and we have to deliver to our shareholders.
We are going hard for growth, which means investing ahead of revenue to create a bigger long term business. That is very different from most businesses and it’s the right thing to do. But I am looking forward to when the lines cross over and we can also say we are a profitable company as well. I think when we hit that point I’ll feel like we made it. I’m looking forward to what Xero feels like after that. It will be a strange feeling after having our heads down for so long but one I really want to experience.
5) Xero listed on the NZX reasonably early compared to other companies who look into an Initial Public Offering (IPO). Do you think other businesses should consider this an option to raise early stage capital?
I think our playbook is now understood in the tech sector. So for the right type of company, and the right type of people, following what we did will make sense.
It’s not for all but I’m very proud that we have created a new option for entrepreneurs in New Zealand.
6) What are the most important business skills you would advise up and coming entrepreneurs to develop?
Being and effective communicator and networker. I’m always trying to create benefit for people in my networks and it tends to come back with a multiple. Having the ability to get the resources to build a great team to execute strategy is what needs to be done.
7) You could have picked anywhere in the world as a base location for Xero, why did you choose Wellington?
Wellington is a great place to build a software company. Already we are global with over 12 offices. So Wellington is a good place to start and be the head office but we are operating in four countries. Wellington, as a capital city with Government and bad weather means that it has always had a strong technology sector. So the skills are here.
Also, simply, it’s where I worked and built networks. I was here for the windsurfing but with kids that’s a bit more challenging and so I now live in Hawkes Bay and commute.
8) Why do you think you’ve been so successful? Is there a secret formula?
Software and software businesses give accelerated experience. I have a passion for the power and elegance of software and have been lucky enough to be around when software evolution has created business opportunities. Over time you can become more confidence and go bigger and bigger. I’ve learnt to see the possibilities and communicate a vision and then prove it.
So I think it’s learned behavior, affinity with myself personally and timing coming together. So far it’s taken over 25 years.
It’s been weird seeing the increased profile. That’s a byproduct of being successful I guess, but I find it a bit weird. I still spend most of my time thinking about software and strategy and getting our product out the door.
9) What do you think are the things New Zealand needs to improve upon when it comes to creating more successful businesses?
That there has never been a better opportunity to do things globally significant and still enjoy our fantastic lifestyle. No one is holding you back. We also need to feel responsibility to contribute to exporting. If we want better schools and hospitals we simply need to sell more stuff overseas. Working internationally is a great experience and can be a lot of fun. So we just need to go for it.
10) You’ve already achieved so much in terms of business success. What’s next for you?
It still feels very early for Xero. It’s the longest job I’ve had yet but I’m enjoying each phase.
Right now we’re in the massive expansion phase. We’ve added 200 people so far this year and it’s very stimulating to grow that fast but maintain our culture, but it’s working. We already have 60% of our revenue from offshore so we are in transition to being New Zealand centric. We have so many other phases and experiences to come so there is a lot to look forward to.
