The digital disruptor

For those worried about digital disruption, Xero is a nuisance. The cloud-based accounting software provider has already played a huge role in the revolution hitting SME accounting and has just declared that financial services is next.

As a company, Xero has been so successful because of its willingness to embrace this role of the irritant; and speaking to Xero’s CEO Rod Drury, it’s clear where this culture comes from. He’s not afraid to step on anyone’s toes.

Time and time again he has made it abundantly clear that anyone not adding value in the SME accounting space will be pushed out by technology – by Xero’s increasing automation.

“If it’s not us, it’s someone else,” he calmly states. “We are getting rid of wasted compliance work – anything that can be automated will be automated … I have a clear vision of where this can go and we can already measure the difference we have made.”

A very successful businessman, Mr Drury exudes a certain confidence, and when asked if there have ever been times when he feared that Xero might fail, he is blunt in his reply: “No”.

“People say to me ‘Did you expect Xero to be like this?’ and the answer is yes … We knew that it would be great.”

Rather than hide his confidence, he says his most important job is to transfer this self-assurance, along with his entrepreneurial spirit, to all his employees.

“It’s everything, it’s my number one job,” he says. “We have great people who do the work and make things happen – my job is to ensure we don’t become the incumbent that we are competing against.

“We keep it pretty real, we have a clear vision and purpose, we celebrate success and drive ownership right through the business,” he says.

According to Mr Drury, this idea of ‘ownership’ is one that is vital for any agile, fast-paced business like Xero. He says helping employees to feel a sense of ownership over achievements is a great way to encourage them to continually push the boundaries.

“We are very clear with our strategy internally and we celebrate the milestones; and when we celebrate those milestones we put them in context,” he says.

“We’ve got now 1,200 people really aligned on the one mission. We have such a great group of people operating in a pretty nimble meritocracy where if people want to take ownership and do things, they can just get it done.”

In the beginning

Mr Drury started his career as an auditor in New Zealand in 1987 at Arthur Young, which would two years later merge with Ernst and Whinney to form Ernst and Young (EY). However, it wasn’t long before the structured and well-defined nature of auditing bored him and he soon moved into the firm’s IT consulting group. There, he was involved in financial software implementation before starting a software development team within EY.

“Then I realised that long term we weren’t really going to build a software business,” he says. It’s a seemingly innocuous comment, but that realisation would eventually lead Mr Drury to become a fully-fledged software entrepreneur and start a software development company of his own.

The company, which he called Glazier Systems, was a big success and before selling out in 1999, Mr Drury had built the business to a point where it employed 60 people.

After that he “did a few startups”, as he puts it, including an email archiving software vendor which won best exchange product at Microsoft’s TechEd awards. His last role, before founding Xero, was on the board of TradeMe, which he casually says was sold to Fairfax for around $600 million.

It was around this time that Mr Drury says he saw an opportunity to target the small business market and jumped at it, creating what is now known as Xero.

“The big brains in accounting software – SAP, Oracle, PeopleSoft, JD Edwards – none of them had ever managed to scale down to small business because it was too fragmented, too expensive, but the cloud suddenly opened up that fragmented market … We saw the opportunity and took it.”

Looking back, Mr Drury says the drive to disrupt has always been there and that the drive to improve things through technology has been a big motivator.

“I’m definitely a software entrepreneur,” he concludes.

In the end

While the drive to disrupt has always been there, Mr Drury says it isn’t really the end goal. “I think the ultimate for any entrepreneur is to be a philanthropist,” he says.

This, according to Mr Drury, is at the heart of his ambition. However, it becomes clear philanthropy to him isn’t just handing out money; it’s also about working for a greater good, creating a business that has a purpose.

“If your business has purpose it doesn’t need to be a charity, you can do a full-profit business which generates a whole lot of good,” insists Mr Drury.

Doing things this way can create a very sustainable model and it makes it very easy to build culture if you’re doing something that is fundamentally good, he says.

“I have no interest in doing businesses that aren’t good and if you’ve got the opportunity why wouldn’t you build a purposeful business that creates a whole lot of other benefits outside of the financial ones.”

According to Mr Drury, this end goal really is what drives Xero forward. “We believe in what we are doing,” he says, and while great for personal satisfaction, this sense of purpose is also great for commercial success too."

“If you’re doing things that are fundamentally good, good things happen and everything lines up and I think you just build a much better business,” he insists.

He says this same principle applies to all organisations but highlights accounting practices by saying they and Xero share the same goals; to help small and medium-sized business prosper, to help them employ more staff and to drive forward the overall economy. He says with goals like these motivation isn’t hard to find.

“It’s fun. If you’re doing purposeful work, it’s fun and it’s satisfying and you want to do more. You get this positive feedback cycle and you say ‘This actually made a difference, let’s do this more’.”