Xero founder and chief executive Rod Drury said on Wednesday that the company needed every single cent of the more than $400 million of capital raised over the years.
He told the 3000-strong crowd at the Xerocon conference in Melbourne that internet-based tech companies must be global to survive and that Xero was no different.
“Uber’s globalised taxis, WhatsApp has globalised telcos, Netflix globalised TV, Amazon’s globalised retail and Alibaba is creating an Asian marketplace that everyone in the world can connect into,” he said.
This meant that even a startup coming out of the small nation of New Zealand could not afford to enter one market at a time, and had to “operate on multiple fronts”.
“That’s the nature of this database business — if you want to do well in the cloud, you don’t have time to take 20 years to build it out slowly,” he said.
Accounting software platform Xero reached the 1 million subscriber mark earlier this year in just 10 years. The company’s detractors have pointed out the phenomenal growth has been at the expense of profits, which it has never seen.
With no profits to reinvest, growth has been fuelled by raising “some serious capital”, according to Drury, totalling more than $400 million.
“We’ve now spent over $1 billion in building the Xero global platform and building our channel,” he said.
“So it’s a huge investment. And you can’t half do it — you gotta go really, really large.”
The entrepreneur made the point in order to encourage small businesses – the target sector for his software – to chase a global market.
“If we do want the world to be better, we’ve gotta get small businesses trading globally,” he said, echoing the sentiments of Alibaba founder Jack Ma earlier this year.
“[But] we used to think about exporting as jumping on a plane and doing all those hard sales calls. What we’re finding now is it’s about connecting to those global platforms. The marketplaces are there – they’re available through your browser.”
Drury recalled how daunting it was when Xero came to Australia a decade ago as “the small guys”, with the incumbent market leader MYOB such a dominant force in the country. But the work in going global early has paid off for the company.
“In 10 years, we’ve managed to disrupt it. We’re now twice the number of cloud customers and a lot more by revenue than anybody [in Australia]. This is an incredibly strong market.”
Xerocon runs until Thursday night in Melbourne.
The journalist travelled to Melbourne courtesy of Xero.