Xero Founder Rod Drury Back with New Start-Up Business, Innovation, News

Established in 1991, the Australian company was dominant in the small business accounting software market by the time Drury started Xero. Drury made his initial fortune through Glazier Systems, a New Zealand software development and consulting company, which was sold in 1999. He subsequently established Context Connect and an email technology company called Aftermail. He is a former director of Trade Me,[1] and was involved in the now-defunct Pacific Fibre project. Husband-and-wife team Steven Sashen and Lena Phoenix initially asked for a $400,000 investment in exchange for an 8% stake in Xero Shoes.

Announcing the 2024 winners of the Xero Beautiful Business Fund

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. It was these questions that led to Xero’s “beautiful accounting software.” And the software changed everything. Drury saw that once these bank transactions automatically loaded into the accounting cloud, it completely transformed how a small business owner works.

Deloitte Top 200 Visionary Leader

“Xero was a high-profile IPO offered by leading financial institutions to retail investors — there were risks but these were clearly articulated.” Mark Clare remembers the 2007 IPO well, including the criticisms that it exposed unsophisticated investors to a risky venture that hadn’t yet even had a product to sell. “At the northern end of xero founder Cuba Street you will find the head offices of two ‘unicorns’ — technology companies with values over a billion dollars. Both of the companies were founded in Wellington in the last 20 years. TradeMe in 1999 and Xero in 2006.” The actual table where he wrote the first code to turn Drury’s vision into a working product is the centrepiece.

Business model of Xero

Even business ideas that don’t receive funding from one of the Sharks can still benefit from the Shark Tank Effect. 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.

• More recently, Xero Shoes ranked number 2,817 on the 2024 list of Inc’s 5,000 “Fastest-Growing Private Companies in America.” Companies on that list are ranked according to percentage revenue growth over the last three years.
• Originally a food truck, it now serves an average of 900 meals per night with a team of 23 staff members.
• Xero was the brainchild of Rod Drury and his personal accountant, both of whom felt that the existing traditional desktop accounting software was not sufficient to fulfil the needs of contemporary accountants.
• In 2007 Xero filed an initial public offering and became listed on the New Zealand Stock Exchange (NZE).
• So, the horror of small business was just before, say, a VAT return was due, basically reprocessing all of your data.

Wellington, New Zealand

Xero Day will be an annual calendar event when we celebrate and acknowledge the people, customers, partners and communities who have played an important role in our success. A self-described software nerd, Drury locked himself in his office at home for a few weeks and wrote an early online relational bit of accounting software. It was 2009, three years since the apartment 404 period and two years since the IPO. The company now had a small local customer base and the promise of success seemed far more realistic than ever before. But the original three-year plan that Drury had in mind at the IPO was starting to run out.

For Walker, having an understanding of diversity at Xero is essential to walking in the shoes of their customers – small businesses. Even in expansion offices like in the USA, this holds true, says Xero USA vice president of products and partnerships Herman Man. Those winter days of Rod Drury and Craig Walker yelling at each other in apartment 404 has now grown to a corporate culture in Xero now known internally as “diversity of thought”. Classifieds site TradeMe was worth $NZ2.1 billion and Xero $NZ3.7 billion by market capitalisation at the time of writing.

Australian general manager of product development, Laura Cardinal, joined the company in 2014 but says she still feels the cultural legacy from those early days. “We had a sales person very early, we had quality assurance people pretty early. We had accounting. Experts in their field. We had help writing, and a product manager as well as the designers and engineers — it cost us really a fair bit,” Walker says. Craig Walker remembers that even as a struggling startup building the first prototype, a variety of people with distinct skill sets were deliberately hired to provide this diversity. “Our only option really was to tell a big story, and explode early from day one. And [the IPO] allowed us to raise $NZ15 million at a $NZ55 million evaluation. So we still had plenty of equity in the business, but we had enough capital to be successful.” Clare said that while New Zealand has produced many technology companies that have been around for decades – such as Datacom, Fisher & Paykel, Gallagher and Jade — the sale of TradeMe 11 years ago is considered a landmark event in the local tech industry.

Officially, the company was incorporated in the year 2006, with its headquarters in Wellingdon, New Zealand. But he also understood that starting up an accounting software company required a huge investment—something he didn’t have. So he put the idea on hold and started an e-mail archiving company called AfterMail. After two years, he sold it to Quest Software, giving Drury and Edwards the war chest to do Xero properly. Even in today’s terms, that’s a lot of money for a company not generating any revenue. In 2006 it was even more difficult to find that much in a tiny country with not many more than 4 million people and a practically non-existent tech venture capital pool.

Access Xero features for 30 days, then decide which plan best suits your business. The 28 country winners each receive NZ$20,000 (or local currency equivalent) and four global winners receive an additional NZ$50,000 (or local currency equivalent). After Steven Sashen and Lena Phoenix made their “Shark Tank” pitch, four of the five Sharks declined to invest at all. However, Kevin O’Leary, who’s made some bad deals on the show before, was willing to risk $400,000 for a whopping 50% ownership in the company. Ultimately, the couple turned down O’Leary’s offer, which, to be fair, could be considered somewhat greedy.

Right from its inception in 2006, Xero Limited has done good business. The Company went public on the New Zealand Stock Exchange on June 5, 2007, through a US$15 million IPO. For the first five years of its operations, Rod Drury, its founder, decided to cater to the local markets and avoid taking funds from Silicon Valley investors. This was done, to avoid a hostile buyout of his company by a larger competitor.

As we’ve written before, innovators ask provocative questions that challenge the status quo. Rod Drury asked why small businesses couldn’t access their financial statement right when they wanted them. He asked how he could make the lives of small business owners easier. He and Peter Karpas encourage this same line of questioning in their employees. And it’s why Xero is likely to keep growing and keep innovating. As a business operating in New Zealand and Australia, the biggest rival for Xero was – and still is — the desktop software package named MYOB.