Xero is 'blasting past the moon and heading towards Mars', says Rod Drury. Picture / Jason Oxenham
Xero is 'blasting past the moon and heading towards Mars', says Rod Drury. Picture / Jason Oxenham
At a conference at the Copthorne Hotel in Waitangi in mid-2007, just weeks after Xero had floated its $1 shares on the NZX, the accountancy software company's founder Rod Drury outlined a vision for 2017 that neatly illustrates the impermanence of the technology sector.
"This is a 10-year play. I plan to work until I'm at least 50," Drury told the tech-heavy, invite-only crowd of venture capitalists at Morgo.
Of his lofty goals for Xero, Drury drew inspiration from a Finnish mobile phone maker. "I really hope it's the Nokia of New Zealand."
Nokia has since stumbled and been swallowed by Microsoft after the mobile phone market was turned upside down by Apple. And Drury, into his ninth year of Xero (whose shares now sit at $19) and with his half century approaching, says he'll have to extend his initial commitment.
"I used to think 10 years was a long time. But now it's still a huge amount of fun," he says.
After an earlier career flipping software companies within a few years of founding (most of his capital for Xero came from the 2006 sale of his AfterMail to Quest), Drury says his eyes weren't then open to the possibilities of growing as - rather than selling to - a public company.
And he neatly flips queries that the decline of Nokia suggests a need to be aware of changing fashions, to evangelism about the obsolescence of Xero's competitors.
"The brands we've been competing against have come and gone as well," he says.
Drury is not shy in using any opportunity to hammer home his key messages. In the space of 15 minutes he proclaims not once, not twice, but three times why he thinks Xero has an edge over a US rival in attracting small business customers over the past year.
This repetition is understandable, given the US market is both the biggest and most contested prize on offer. Drury says the space is not quite all-or-nothing for Xero - the market may well mature into an oligopoly, he says, "but we are absolutely one of the major global players" - but it is clearly the focus of future growth.
Xero's new home
Xero CEO Rod Drury at his Auckland office in Parnell. Photo / Jason Oxenham
And signs of that growth are visible in Xero's relatively new Parnell digs, which import a touch of Silicon Valley eccentricity.
There's a lack of landlines, with employees running mobiles and VOIP. And there's also the nearly-cliched pool tables for staff, a cafeteria fridge loaded with Danish Somersby cider, and meeting rooms named after 80s video games (Defender, Pong) or Kiwi creatives (Mahy, McLaren, Hackett).
This office is one of five satellite facilities in Wellington and Auckland, part of a mushrooming that has seen the company more than double in size from 600 to 1300 staff over the past year.
That growth - Xero has announced it expects revenue to rise 70 per cent to more than $200 million - is what both excites and terrifies investors on the NZX who are willing to overlook the current lack of profitability with an eye on future earnings.
The hopes and fears of where earnings equilibrium will be found has seen Xero's share price gyrate wildly over the past few years.
Now ensconced in the top flight of the NZX, for a short while the upstart software company had been the country's fourth-biggest by market capitalisation.
For his part, Drury tries his best to talk about the upside of substantial movements downward in the share price, claiming such developments make offering equity slices to potential new hires more attractive.
In many ways growth businesses such as Xero are rocket science - they consume enormous energy and risk when taking off, but face an arguably more complex and difficult phase in achieving re-entry by trimming costs to return safely to ground and ongoing profitability.
Even the most spectacular launch or IPO will be remembered only as a meteor trail or equity crater if it flames out before solving the second part of the equation.
Drury says he is not yet concerned with returning to Earth and is still looking out to the stars.
"We're just at the beginning of the journey. We're blasting past the moon and heading towards Mars. We've figured we can fly the rocket and want to see how far it can take us." An orbit of Earth is not the plan. "We could swim for the safety of the side of the pool, but that's not going to create the most valuable company."
The big risks accompanying launch are behind the good ship Xero, he says. A recent capital-raising - seeing $200 million stashed in the bank for future growth - eased many nerves.
"With that amount of cash we're now largely independent of the market. So after that was probably the best night's sleep I'd ever had."
Drury assesses that the most substantive risk remaining is that posed by hackers. The information security disasters this year at Sony and Ashley Madison show both established and unconventional firms are vulnerable.
"What can go wrong? The only thing is we could lose people's data, and we spend a lot of money not to do that."
A new managing director
Xero New Zealand managing director Victoria Crone announces she will stand for Auckland Mayor. Photo / Jason Oxenham
Earlier, Drury had traipsed - along with a couple of dozen journalists and camera operators and an equal number of friends and family of Xero's soon-to-be-ex managing director Victoria Crone - to after-school tech club Mindscape.
After attracting the attention of the crowd with a wolf-whistle, Crone announces her resignation from Xero in order to run for mayor of Auckland. Her first order of business - before acknowledging her family or friends or a deity whose support would likely be needed to defeat front-runner Phil Goff - is to thank her boss.
Drury, part-way through tweeting a picture of the press conference, is caught on-the-hop by this gesture. He sheepishly holds his hands to his sides as Crone leads a gentle round of applause for his support.
Later, Drury defends suggestions Crone had barely warmed her seat before electing to exit and take her long-shot bid for political office. "She was here for almost two years - which is a long time in our world. Things move pretty quickly," he says.
Within days - an unusually brief vacancy, even in the apparently fast-moving world of tech startups - Drury announces Crone's cleared desk would be resettled by former Spark digital general manger Anna Curzon.
He concedes he doesn't understand wanting to jump from managing director to local body contender. "For her, not being here for the next few years, she was starting a great career. That's a big call, right? We were surprised when Vic said that.
"If she wants to go and do God's work, we have to let her. It's a tough thing. I wouldn't do it."
Drury manages to do God's work in his own time, using his energetic presence on Twitter to lobby for improvements in technological infrastructure and for the Government to appoint a chief technology officer.
He says he'll wait until he's 60 before doing such a job himself.
"I've still got a day job. I think someone like [Sir] Ralph Norris or someone like that, who's made their money, seen as an elder statesman, who operates globally. Someone of that ilk. Hey, I'll do it in 10 years."
Until then, Drury still has the word to spread and cheques to cash. In November, he offloaded some of his still-substantial holding of Xero shares, netting himself $20 million. He says the sale helped take a "bit of the stress off". But, given he still retains 15.2 per cent of the company, he goes on to paint the transaction as a tech-boosting homily.
"But what we're seeing now is, for the first time in New Zealand, is that you don't have to sell your whole business to look after your family and your parents. I thought it is actually an important lesson. One of the benefits of being a public company is you can ... take a little bit off the table and still drive the business forward."
