From Xero to $15 billion

Tina Morrison at Stuff writes:

Frustrated with useless software that didn’t allow efficient sharing of financial data, two Kiwis revolutionalised accounting around the world by creating Xero, a Wellington startup now worth $15 billion.

Xero is not only the most successful new company in New Zealand, but possibly Australasia also.

With just 100 customers under their belt, many of them Edwards’ clients, and 27 staff, Xero succeeded in raising $15m selling shares at $1 each to smaller investors to fund their expansion for the next three years.

I was one of them, and it was the best financial decision I have made by a wide margin. Last year I sold some Xero shares for A$150 which cost me NZ$1.

I invested in the company on the basis of belief in Rod Drury. I knew his record, but I was also lucky that I knew Rod himself.

Otago University Associate Professor of Accountancy and Finance Helen Roberts says Xero has revolutionised financial accounting.

“It’s been one of those golden start-ups,” she says. “It’s brought financial accounting functionality into the operating space of all small and medium-sized businesses worldwide.”

She says the transformation in accounting is incredible. Small business owners who used to bundle up their bits of paper together and ship them off to the accountant every six to 12 months, and then wait four or five weeks for a set of financial statements to be prepared that they could discuss with their accountant now have real time access to their daily, weekly or monthly revenues at their fingertips.

“You don’t have this pressure to keep paper records any more,” she says. “It allows owners to have a better understanding of how their firm is doing and make good strategic management decisions because of that information being so readily available to them.

“It makes managing the business much more efficient when you don’t have all this stress on recording and reporting information.”

I am also a customer and fully endorse this. I used to hate the hours and hours I would have to spend on the monthly accounts. Now it takes just minutes.