Photo: Wiki Commons
AUCKLAND, NEW ZEALAND – Rod Drury is a serial entreprenuer from down here. He sold his first tech company a dozen years ago. He’s founded and sold few since.His latest company, Xero, is an accounting software-as-a-service company. It’s a “cloud” company.
Despite that, it’s actually very interesting.
Here’s why: In age when $60 billion companies like Facebook are still waiting to float, Drury took Xero public extremely early in its history – basically on day one.
He sold 20% of the company for $35 million on the New Zealand Stock Exchange.
We sat with Rod here at the Ice Ideas conference a few moments ago, and he explained to us how Xero has used its public status to its advantage.
- The “fat” funding gave Xero a huge resources lead that helped it develop software faster than competitors could.
- Being a public company burnished Xero’s reputation with potential partners.
- Because he only floated 20% of the company, Drury was able to tell potential customers that Xero was less likely to be acquired “in the next 2 minutes.” The software cycle in accounting firms is about 8 years, so it was helpful for him to be able to point out that some of Xero’s venture-backed competitors would probably be owned by different people in the long term.
- Liquid stock made several small acquisitions much easier to complete.