In this week’s Taking Stock I have a wide-ranging chat with Gary Turner, co-founder and MD of Xero UK – one of the leading cloud-based accountancy platforms for small businesses. Under Gary’s watch the company has scaled from 0 to over 600,000 customers in the UK, and close to £100 million in annual revenues.
Gary was one of the first movers in the UK fintech scene. After meeting the Kiwi founders of the recently founded Xero, he left a big corporate job and took a bet their vision would become a reality. I met Gary early on in my entrepreneurial journey with MarketFinance and he’s been a great mentor and given me some useful advice along the way. Some of which we touch on in this episode.
We cover a lot of ground in our 45 mins conversation, including:
- How leaders should be responding to the brutal death of George Floyd in the USA and through this turbulent time of protest
- How that other crisis (Covid-19) is affecting Xero customers and the company itself.
- Unique data insights that Xero has access to about how small businesses are navigating this tough time
- Gary’s personal journey in building Xero and some of his core principals about effective leadership
- A look to the future and the long-term vision for Xero
I hope you enjoy it as much as I did.
Or listen to this interview on Spotify:
TRANSCRIPT OF INTERVIEW
Hello everyone, and welcome to another episode of Taking Stock. I’m Anil Stocker, I founded MarketFinance back in 2011, and one of the highlights of my job is meeting with entrepreneurs, meeting with interesting partners and people along the way and hearing their stories.
And today I am very happy to be talking to Gary Turner who is the co-founder and managing director of Xero here in the UK. Xero is the now well-known accountancy software for small businesses here in the UK, and I met Gary early on in my journey when I started the company.
He’s been a great mentor and he’s given great words of advice and encouragement along the way, I see him at least once a year at the Xerocon event, the big show that Xero puts on for accountants across the country. And a big highlight for me was back in 2018 when I got onto the main stage and spoke in front of 3,000 people.
I think it was the biggest audience I’ve ever spoken at and it was a little bit terrifying, but pretty exhilarating at the same time. So Gary, really, really happy to have you here and thanks for taking time to be on the show.
Thank you very much for the invitation. I’ve loved watching you guys growing. I mean it must be about eight, nine years now since you first got going? We’ve all been growing, Back in 2011, 2012 we were all relatively very early on, and so it’s great bouncing ideas off each other and supporting each other mutually. So I love working with you and your team, and thank you for the invitation today.
Excellent. A stat that really resonates is when you join Xero back in 2009, your revenue was £50,000 a year and now it’s something like 90 million. So if there’s ever a good person to talk about scaling and building a company and the issues facing small businesses, we’ve got the man today on the show. So before we get into that, I have to start a little bit with stepping back and thinking we’re living through pretty crazy times.
COVID lockdown, I think we’ve been at home for over two and a half months now, coming up to three months, and in the last week obviously a lot of fellow entrepreneurs and I know lost of companies are spending a lot of time talking about issues like inequality and diversity and zero tolerance to racism in whatever form.
So Gary, how are you handling the events of the last few weeks internally at Xero? You’re a big team now in the UK and must be very diverse, so what’s happening internally and what have you said and what’s happening in the company on this?
So it’s unavoidable as an issue. I mean I think it affects everybody despite the fact it’s happening in North America and it’s like an ocean away, it’s really close to home, because we all are affected by that. And we all recognize that wherever you go diversity either unspoken or explicit racism or prejudice or the lack of recognition of how important that is, as we’re all building our societies and building our businesses.
And so I think it’s incredibly important to talk about it. We’ve been talking about it internally, we use Slack and a number of other mechanisms to kind of bring our people together, and particularly in a lockdown context, these are really important. I’m doing an AMA, an Ask Me Anything with my team next week and that’s going to be one of the areas that I know that we’ve been getting lots of questions. So what are we doing? Where do we sit on that spectrum of opinion, and what are we doing about it?
We already took our responsibilities, our own diversity and inclusion, seriously. We have a diversity inclusion team, we have activities, we have policies, we’re trying to not only reflect the best kind of behaviors when it comes to diversity and respecting the difference in the makeup of our people and our workforce, our management team and our board, and we report on that as a public company also.
But I think what’s happened in the last week is really just shone a light on how much ground there still is to travel there. I guess there’s a viewpoint that should companies be getting into expressing opinions about what’s happening in the U.S. right now and there might be a lobby that says that they shouldn’t, but I strenuously believe that we should be.
I think if to nobody else, to our own people. Our own people are looking for comfort and looking for guidance and looking for reassurance that we are embodying the right culture and the right behaviors there. But yeah, it’s tough. 2020 is a year I think we’ll be glad to see the back of in many ways. Every week there seems to be something else that’s challenging.
But yeah, the events of the last week with George Floyd and the resulting kind of uproar around that is something that’s hard to not comment on and hard not to reflect on. I know you guys have been talking about it also.
Really interesting, it’s very nuanced and it’s very difficult sometimes to show that you care, but you also want to create a safe environment that people don’t feel pressurized in some way. But I agree with you, I think that for me it’s very important for me personally to say what I feel, but also what the company feels. I think restating our commitment to diversity and zero tolerance, to discrimination, and highlighting the inequalities that still exist globally, it’s not just in the U.S., globally, in this country as well.
I feel it’s our duty to do that. I have chosen not to stay silent and I think as a company we will continue to do that. But the point on diversity, I think we all have to work harder at it. I think we’re not exactly where we want to be. I think that’s been a criticism of tech companies that there are big discrepancies, and ratios are not what you would like them to be.
And just if you look at gender as a simple one, even at our company. I know that you have some personal things that you do to help with that. One of the things at Xerocon, this event that you put on, is you’re trying to get 50/50 panelists of male/female panelists. Maybe do you want to touch on that a little bit?
Yeah, I mean talking about what’s happening is important, but ultimately it’s just words and we’re measured by our actions more. I mean it’s what we do, not what we see. And as a measure of the conversation we have in Xero with our people of our diversity, and recognition that there’s a long way to go, right?
I mean we’re still not the most diverse business and certainly we don’t represent a diversity that we aspire to, and everybody’s on a journey, but there’s a real conviction and dedication to getting there. And so we can articulate that in a number of ways. We want to respect both ethnic and gender diversity as fairly as possible, on our public events and so a lot of our media assets that we’re creating, but particularly as you were talking about with Xerocon.
10 years ago I would have been invited to go and speak on a panel and I wouldn’t have batted an eyelid if I was one of five men on a panel. But now today and the kind of awakening for me on that, is that’s completely unacceptable, and we shouldn’t be surprised that if the technology industry or any industry doesn’t change and doesn’t embrace diversity, if we keep underwriting the old conventions and the old kind of unconscious bias and the unconscious prejudices that we sometimes have.
And so we strive to have fair representation across all ethnic and gender minorities on Xerocon. If I’m invited to speak to somebody else’s event, I get fed up going to dinners in the evening talking about IA, talking about machine learning and then I get there and I’m looking at a roomful of men, and often white men, you know what I mean?
I’m thinking, “I’ve done it again. I’m sustaining this dysfunctional world that we’re in.” And so now when I get invited to things, I ask, “What is the diversity agenda for this? What is your representation?” I decline when somebody invited me, I think it was late last year somebody invited me to be on a panel. And I looked at who the other panelist were, and there wasn’t enough diversity, and so I declined it and I explained to the person that was inviting me that I won’t go, but you should find a woman. Fortunately they found a woman to replace me.
That’s maybe kind of a bit bleeding hard of me to that stuff, but I think it starts with me. If I’ve got any influence as the leader in our business, as well as somebody who’s in the world of business, then I think that I had a huge tailwind being male, being Caucasian, in an environment where that was an inherent advantage and inherent tailwind.
And if I’ve benefited from that in my career, then the least I should be doing is trying to create a platform and trying to help other minorities level up. But we’ve still got a long way to go, but I think the events of the last week have just shown a light on how important that is.
Absolutely. Absolutely. It’s really interesting and refreshing to see that approach. I think I haven’t come across many people who turned down invites based on that. So absolutely, you’re starting from yourself and trying to lead by example on that, which is great.
Let’s turn to the other big thing happening in 2020, COVID-19, the lockdown. Now you basic business, and I’m simplifying this of course, is you’re selling software to small businesses and that helps them run their business. You sort out all their accountants fee, all that they need to do their books and file their accounts, and more now.
So what’s happened over the last few months? I mean has there been any impact on your business? I mean on some level people still need to do their books, right? No matter what the numbers are, if the numbers are going up or down. But how are you seeing that for your customers first, and then will come to how you’re dealing it with your company?
Yeah, I can’t imagine any business that hasn’t been affected by COVID in some way, and clearly some industries way more. I mean something like hospitality and retail, massively more impacted than maybe professional services companies where there’s more flexibility in where you work.
I mean COVID came along, we went into lockdown about a week, week and a half before the government mandated the lockdown. We were already predisposed to working flexibly anyway. So we’re a cloud generation business, and we don’t have file servers, we don’t have data and hard desks inside of buildings that we need to be close to and can use.
And so we are already working flexibly, even our customer experience, customer support teams where you’d think you’d need to be kind of anchored to a desk or to some customer experience center. I mean our customer service and even our inside sales teams have been able to work from home, pre-COVID. So, our priority to begin with was clearly managing the transition of our people, making sure that our people were okay and they were safe, and we were accommodating them.
But very quickly it then turned to, “What do we need to do for our customers?” And so we did a number of things, we reprioritize their development efforts, and so there were some things that we were working on we’re going to be landing later in the year or next year, that we’ve brought forward. So we launched a new kind of simple 30 day cash flow view.
We’ve created this new kind of business snapshot which gives you a dashboard of a whole bunch of other matrix and important data points and health factors about how your business is doing, that we think is particularly helpful in a COVID environment. We also we had to move quickly to support the government business interruption loan scheme and furlough schemes, and so we’ve been working with some banks to help fast track CBILS applications.
So if you’re on Xero and you work with one of the banks that we were dealing with, then the bank can process your data more quickly and the kind of things that we were doing with MarketFinance for years become even more important in a COVID environment. And then the furlough scheme, so we had a lot of work in product and product innovation. We then also built, as everybody’s done, a kind of hub or help center for our customers where we’ve been putting up either guides and instructional kind of content and also live webcast.
So we’ve been servicing thousands and thousands of customers just on education, because there has been a whole lot of help that’s come from the government, but it’s like where do you start? And so helping our customers navigate that, and so a lot of online education, a lot of reprioritization of what we’ve been building in the product. And we’ve had some good feedback that some of that stuff is really helpful and is landing, and in continuing to think about how best do we support our customers in terms of software innovation as well as the support in services.
I’d like to think that most of our customers would see Xero not as a discretionary line item in their business, and Xero, I mean it’s like £24 a month. It’s not exactly a massive cost either, but an essential aspect of how you run and manage your finances in business. But it has been incredibly tough for so many sectors as well, we’ve seen that.
Yeah, and you recently improved your data science and your data warehousing, so you must be able to see quite a lot of interesting things in real time? For the furlough scheme, you must be able to see, people have to account for that in their books.
Yeah. Some are things that we were already doing. So we’re already publishing high level business health metrics. So we look at a whole lot of anonymized platform data, so number of invoices in a day and the average payment terms of those invoices and how many of our customers and any one point in time in the month are cashflow positive.
And we’ve been publishing that data in a limited way for a couple of years, and we’re recutting some of that and we’re going to be releasing some of that in the next couple of weeks, just about the measure of impact and which segments have been laying people off, and which segments have been most affected by COVID from a financial impact, and obviously things like payments and settlement terms.
And coincidentally, we reduced our own payment terms to 10 days, so we’re paying all of our supplier’s invoices in 10 days as our a bit to try and help with that whole cash flow thing. And so I think in a couple of weeks, I think by the midpoint of June, we’ll have added to the data that we’ve got, the May data. So we’ll be able to look at the first three months of COVID and what that impact has been and then how’s that shaking out, and then looking at the impacts and trends and we will be sharing that with the wider public.
And possibly I’m sure people in government might be interested to know that if the furlough scheme has had any impact, what does that look like? And of course modeling, what does that mean if that rules off in October? Are we delaying an impact, or are we bridging to recovery? And if we can add any insight to that with the data that we can provide for the greater good, then obviously we will do that.
And what does your gut feel, how bad is this going to be for small businesses? I mean those are your customer base.
So listen, I think it’s difficult to be really specific about it, but the quantum is going to be significant, and if you look at some of the government estimates around GDP, you’re hearing numbers of like minus 20%, 30% contraction in the economy in a quarter, which is uncharted territory.
I don’t think anybody knows what that means, and when you’re in a world where even the smartest economists in the planet would never have modeled that as an outcome, then all of sudden nobody’s an expert and everybody’s an expert. So I’m now a self-appointed expert on the economy, and my gut feel and from the anecdotes and from the conversations we’re having with our customers and from others, is I believe we will see a pretty big bounce soon, because the retail is opening up shortly.
There’s a lot of money sitting in bank accounts that nobody’s been spending, and there’s a lot of stock in stores that needs to get moved, and cash needs to get into the economy. So I think we’ll see relative to the first quarter, a more buoyant second quarter. And from speaking with analysts and from speaking with people in the business more broadly, there must be some medium term infrastructure impact on the economy as well.
And it isn’t just going to go back to normal in six months time, because there will be, there already have been significant job cuts and redundancies across the economy, and then the second and third level knock-on effects of that. So if Rolls-Royce starts making lots and lots of people redundant, then the supply chain that feeds Rolls-Royce is also going to have an impact and so on and so forth. And so I think we will see a short-term bounce over the summer, or at least it won’t be quite so grim as it was in the first quarter of the impact.
But I think it feels like we’re up for some longer term impact in the economy that will be more like a traditional recession, but hoping that it’s not like minus 30% for the next couple of years. But by the way, even if it goes from minus 30% contraction to minus 10% contraction, that’s a 20% improvement in a quarter, and so nobody’s ever experienced what it’s like to having the economy expand by 10 or 20%. So I think the short-term is probably going to be a bit of a bonanza, and people will feel good about being out and in retail again and in restaurants again. But I think that there must be at least a year or two years of longer-term impact.
Absolutely. It will be really interesting to see. If you look back, it’s been slow growth for many years, right? GDP growth in the UK one, two percent, very consistent. But these massive swings and the impact that has on supply chains and cashflow and how companies deal with those swings, it’s a very… Someone was saying you’ll always remember if you were a CEO during this time, or founder of a business, or trying to start a business, this is rough waters for sure.
And in terms of the Xero team, are there behaviors, ways of working, a lot of people talking about future of the work place, can you already see permanent changes to your business?
I think so. So I’m not commuting anymore, nobody’s commuting. So literally we fall out of bed, grab a shirt, get the coffee on and then you’re at work, right? And so either that means we’re having a longer lie in, or we’re starting work earlier. And so I’m in meetings all day long and we must be doing more work collectively. And so I think we must be more productive than we believed we could be in a working from home environment.
A couple of caveats there, everybody’s working from home, and it’s different when the entire economy or an entire professional services industries are working from home versus you are working for home for a couple of days and all of your peers are in the office. But I think there’s a definite revaluation up the way of the merits of flexible working and working from home, and we’re not going to lose that.
And we were already reasonably flexible, but for as long as I’ve been around, working from home is usually the cynically comically, “I’m working from home.” There was always those that have had the faint quiff you’re not really going to be that productive working from home. And I think if anything, the last three or four months has completely annihilated that viewpoint, is that today’s technology, video conferencing, collaborative tools, mean that the workplace can be incredibly effective when it’s digital, and I think we’re just going to accelerate down that route.
I think we are already flexible, I think we’re going to be even more flexible. That doesn’t mean we’re just going to get rid of offices. I think we’ll get the best of both worlds. I think working from home has won many more fans as a viable alternative to being in an office, and I think people will question commuting, they’ll question the virtue of being in a meeting room with a whole bunch of people, and I think that’s good and I think that’s healthy.
Aaron Levie, who’s the CEO of Box, the online productivity and storage company, he tweeted… and this is one of these things that we always knew that it’s right, it’s a truism that’s been hiding in plain sight and it’s not rocket science or a revolutionary thought, but he tweeted something going into this, which I thought was incredibly profound. And it’s that pretty much if you look at most businesses, the business processes and their systems are traditionally, at the core, are quite traditional.
They’re people power, they’re traditional, they’re not digital, and many businesses would be traditional at the core and digital optionally around the edge. And so you might run a retail store and you’ve also got a Shopify front end, but actually it’s kind of a part-time thing and the main thing is your shop.
And Levie said that going forward, that’s going to flip. You’ll be digital first. The core of your business, of all your processes, will be digital and therefore much more resilient to changes in the kind of environment in a way that people aren’t. And traditional or analog on the edge, where it’s appropriate in your customer experience to have people, where it’s appropriate to have traditional interfaces with your business.
Those will move to the periphery where they’re still effective and valuable, but the core of your business will be incredibly more resilient. Now that isn’t a new idea or a new thought, but I think what COVID will do is bring that into sharp focus, and this digital first workplace or a digital first business model, everybody got that memo in March, and that’s not going to go away.
Yes. That’s absolutely right. I mean I went to visit a lot of businesses and sometimes you have, especially if it’s a business that’s been around for a while, they might have employed an intern, like she’s working on the website in her internship. It’s kind of like this side project, usually with a young person who’s very tech savvy just doing it.
And now it’s kind of like they’ve had to re-pivot the whole business, and you see it in restaurant. You used to sit in a restaurant and then a Deliveroo driver would come in every five minutes. And now the restaurant is just shipping that out and there’s nowhere for people to sit. So you can see that just walking down the High Street, the shuttered High Street how that change is happening.
Okay, no, that’s really good. Any other, I mean travel? Obviously you were going… the head offices in New Zealand and Australia, isn’t it? So you were traveling a lot. Business travel, is that gone for good?
Yeah, so I think I’ve got a little counter on my phone, and I think this is like day 81 or something of lockdown. I haven’t left, apart from going to supermarkets and things and then my daily regulation walk around the village, I haven’t been home continuously this long forever.
So this is a great social experiment that we’re all part of, like actually spending time with your family and your wife and your kids and things like that, and I’m not on a plane. I would be on a plane doing a long haul flight every six, eight weeks or something like that. And so I’m not missing that, and that possess its on challenges, because therefore in a global business we’re having to rely on digital ways of working and time zone challenges. I’ve been on a few board meeting calls at 5:00 a.m., which isn’t much fun at all.
I’ll be on a call until 1:00 a.m. this evening or tomorrow morning, but I’d much rather do that from home than get jet lag and fly halfway around the world. And so there’s definitely been a change to my travel. I’m hardly driving anywhere, not flying anywhere, and clearly nobody in Xero’s flying anywhere, and not spending money.
So, I think nobody’s doing expense returns, nobody’s late and filing their expense returns, nobody’s booking long-haul flights or hotels. And that will at some point come back on, but I’m not missing airport lounges.
Your carbon footprint is much reduced, but also your health is probably up from before.
Yeah, absolutely. I was speaking to somebody the other day and we had quite a long meeting, it was one of my colleagues, and she said she went out for a walk with her husband at 7:00 a.m. around Windsor Great Park and then commenced with the meeting. I thought, “Why shouldn’t I be doing that every day?” Instead of being on a train or on the underground, actually experiencing life and mixing it with business as well.
Crazy year, crazy year.
Crazy year. Now I wanted to turn a little bit towards obviously your story and joining Xero, which at the time was non-existent in the UK. You were at Microsoft and bigger software companies, and I guess talk us through a little bit what made you take the plunge to do this, and why did you agree to join something and effectively start a company from scratch here in the UK in the accounting space when there was a massive incumbent, right? There was a big incumbent in the form of Sage.
So I’ve been in business software, mostly in small business end of the world, for my entire career now, which I mean it’s like 30 years, so three decades. I entered the world of work in the early ’90s, and in those days that was like MS-DOS and Unix and Xenix and Novell and Windows NT.
And in ’95, the internet happened. So I remember the world of software before the internet was a thing. I remember being in the software business in 1995 and how pumped we felt about adding an update to our product where you could record your customers email address. It was like revolutionary thinking, you know what I mean?
We were internet enabled all of a sudden, and then from the mid ’90s, as we got further into this kind of first phase of the web and eCommerce and the whole dot-com bubble burst and everything else. My enthusiasm for technology, I started off as a software developer and then moved into commercial roles, but I my sense around 2000, 2001, just as we’d could come out of Y2K and the dot-com bubble had burst, and some of the hopes and some of the naive ambitions we had for the Internet in the late ’90s were not really that valid.
But there was something there, something fundamental about the internet applied in the right way would be completely transformational, not just for business, but for society. And so I started my own blog. So back in 2000/2001, I started blogging about what does the internet mean from business, how is it going to change? Spitballing and hypothesizing about how it will pan out.
And then by day I was in a traditional software business that was not really kind of embracing that. But I formed the view around the midpoint of the last decade, so 2005, that this internet thing was going to be huge, was going to be so fundamental that it would completely turn the software industry as we knew it inside out, it would turn technology as we knew it inside out.
And so I went off to join Microsoft to help them with that endeavor and their ERP and CRM world. I had Microsoft on my career bucket list from way back in the ’90s, and so I was incredibly flattered and very fortunate to join Microsoft and to try and help articulate what that next drive was going to be. But that was around the time of the global financial crisis, and so I got to Microsoft just as the kind of shutters on innovation began to come down, because nobody was spending any money and the GFC was huge.
And so it kind of didn’t really progress very quickly at Microsoft, but I knew it was going to happen somewhere and I knew that the cloud and I knew that building software that ran on the internet was going to be the future. And so I was kind of treading water, waiting for the kind of engine to fire back up at Microsoft, and got pinged, I think it was on LinkedIn, by Rod Drury and Hamish Edwards who were the two key founders of Xero back in New Zealand about 18 months., two years before.
Xero started 2006, IPO’d in the stock exchange in New Zealand in 2007, and then by 2009 it was really like we want to go globally now, and had raised a bunch more money and they were looking for their UK management team member. And when I had a look at Xero, and I spoke to Rod and spoke to Hamish, and then married that up with my expectation that the world was about to be completely turned inside out, it was the quickest easiest decision I could have ever made.
And so I quit Microsoft. I remember everyone at Microsoft thought I was insane leaving one of the largest software companies in the world for one that nobody have ever heard of from New Zealand, and with all due respect to Kiwis, I don’t think before Xero came along, I’d ever knowingly used software from New Zealand. Not exactly a hotbed of global software pioneer, although that’s changed now.
And I couldn’t get involved fast enough, and I felt when I hooked up with Rod and joined that crew, it felt like I’d won first prize in the job competition. I felt I was able to kind of marry up the vision, and so all the things I’ve been blogging about for the years before and all of the ideas I’d had, I’ll finally bring it to fruition. I had never done a start-up before, so I was 40 then. I’m 51 now, so it’s 11 years later.
So I’m going to have to do a startup, I’ve never done one of them before, and so it was the combination of a whole lot of things and 11 years later I still feel like I’ve won first prize in a job competition. I love the category we’re in, I love the opportunity to change and reimagine business with technology and every year that gets even bigger. So feeling very fortunate.
How have you done so well? What’s the secret then of your success, to go from nothing to close to £100 million in revenue, and I’ve lost track of the number of customers you have, over 500,000 I think, right?
Over 600 as of the end of March, 600,000, and it’s over two million globally now. You’ve got to have a good product, you have a good idea, you’ve got to be able to execute. The core ingredients at the beginning have to be there. You have to have at least an opportunity that’s untapped, you have to have the vision and the ability to execute on that, you have to have the audacity and the ambition to go and raise lots and lots of money to make it happen, really go for it.
It’s like go hard or go home. And once you have those ingredients, which are quite rare to find, then actually the other 95% of it is people. I’m a bit of a jack of all trades and master of none, and I’m very aware of what my personal limitations are and what I’m good at and what I’m not so good at, and there’s many more things I’m not good at.
And if I’m good at anything it’s being able to support great people and we’ve got a great story and a great inspirational kind of vision and story that hopefully is attractive to great people to come in. And so if I’ll take any credit for the last few years, it’s been supporting great talent, convincing them to join, and then getting out their way.
And I’m very much operating as this concept of servant leadership or being humble as a leader. I think lots of people have this preconception that you have to have all the answers, you need to be the smartest guy in the room, and you’ve just got to like get people to follow you. I don’t think that’s true. Tom Peters tweeted something earlier in the week, great leadership isn’t about having all the answers, it’s hiring the best people you can hire and then asking great questions of those people.
And I think I identify a lot with that. I’m just curious, I’m just constantly, “How can we do better? How can we fix this? How can we elaborate? How can we extend?” I don’t know the answer to it and I don’t care whether I have the answer or whether the answer comes from anybody in the business, it’s just the pursuit of the best answer, the best outcome.
And I get a lot of pleasure from bringing smart people in, get them aligned, getting them motivated, and then just asking questions and asking the right questions and stepping back and letting them run. And I think that’s been a huge part of success, and that’s not just my team of the people that work with me in the leadership team, it’s the whole company and instilling that in your culture, instilling that in your values. It doesn’t matter whether the right answer or the best idea comes from somebody who joined yesterday and they’re front-of-house facilities team or our global head of strategy.
It doesn’t matter. If it’s the right answer, it’s the right strategy. That’s the one that wins. And so I get a lot of fun just playing with smart people.
That’s really hard, and what you’ve just said is actually very hard. It’s something that I’ve had to learn, it’s actually when I talk to other founders as well, being like a founder there on day one where you have to do everything and you have to come up with the best answer, and it’s very hard to change that, but you have to.
If you don’t change it, it doesn’t work. I’ve learned that the hard way myself, and trying to think of everything, trying to do everything, and not actually relying on the people around me. They come up with much better ideas and there’s many different ways to obtain and achieve your objective. There’s not just one way that you think. You might think of one way, but there’s not one way.
Yeah, I’m very happy being the dumbest guy in the room. I often say that. I don’t mind coming up with really dumb ideas. I firmly believe you have a hit rate, and for some people one in 10 ideas are good, or one in 100. I don’t care, you’ve got to get through the really bad ones to get to the good ones.
So just get them out and don’t be precious about that, and that’s a thing as a leader that you have to adapt to, because you’re right, when you do start, then you need to know everything. But just know when to get out the way, and there’s no point hiring great people and then telling them what to do. Why would you do that? It’s insane.
And actually, it’s too hard. There are too many ideas that we need to work on. No one person is good enough, and so I just love being surrounded by some of the smartest people in the country solving some of the biggest problems. And the kind of openness of that, the revenue growth and the customer growth are kind of like abstract secondary things.
They’re important and they kind of buy us the right to continue to do things, but the most pleasure I get and the reason I’m still… I mean I’m not artificially enthusiastic, I am legitimately enthusiastic about this, and I’ve been doing it for 11 years and I probably shouldn’t be, but its to do with just how much fun we have creating and building stuff that makes a difference, helps our customers, helps businesses, hundreds of thousands of them, and be surrounded by smart people every day.
And why wouldn’t you be enthusiastic about that? But it is a challenge. Not everybody makes that jump.
Yes. And final few questions really around this bit is, a lot of people start companies when they’re what look like big competitors or big institutions incumbent, has it been useful in some ways having a big legacy player in the market? Has that almost been an inspiring thing for your company to fight against?
Yeah, I think it has. You’ve always got this asymmetric kind of viewpoint on things, and every company has its day, but there are very few companies that are enduring in the same way for decades or centuries, you know what I mean?
And so nothing’s forever, and Xero’s not forever either, but hopefully we have a long run at this. But having an incumbent, having a prevailing way of working, having the old way of working and you have a completely new and novel approach to that, that is not only asymmetrically challenging, but transformational in terms of the benefit and the efficiencies.
It is great to have something to kind of push against, and so I think we’ve enjoyed that, creating that contrast in the market and challenging expectations. I mean this is accounting software, it shouldn’t be exciting. The stereotype, you go to a barbecue and people ask what you do, and I usually just say, “I’m in software,” and I hope they think it’s like rocket guidance for SpaceX or self-driving at Tesla.
And they go, “What kind of software?” And I say, “Accounting software.” And they quietly kind of move away to speak to someone else. And so accounting software doesn’t have a great rap in terms of like it’s not the most vibrant category, but it’s essential to all businesses. Managing your finances is kind of important, and it doesn’t take much imagination to rethink what that experience could be and how much better it could be.
And so coming in with a very fresh take on that in a pretty dowdy marketplace with low expectations has been great. It’s been great fun for us to be that new contrast, whether that’s like you see that with Netflix and Spotify and lots of our new kind of digital alternatives today are radically different from what came before. And so I think that has been important for us too.
Absolutely. And I guess the final question then for you is where do you see Xero going then? So what’s the next five years hold? And already I see there’s been some movement, of course our teams have spoken about how Xero is well placed to help businesses in a lot more than accounting. So what are some of the highlights that we can look forward to from Xero?
I think as successful as we have been, and we’ve been very fortunate that we’ve enjoyed a lot of success, I still have this really strong sense that it’s still quite early on in this journey, you know what I mean? I think that although I’ve been in technology for 30 years and we’re now at the current most recent iteration of where all that’s coming together and converging, I happen to believe that this is now just the beginning of the real revolution.
And the first 30 years or the first 50 years of mainframes, everything, was like the necessary preamble to the tickets to the game, which is now starting. And so I think that as much as we’ve been successful, I think there’s a lot more ahead of us. And then really broadening our horizons into what are the other ways that we can add value and help our customers?
Whether that’s giving them support through COVID and helping them navigate that, or helping them realize what their new digital kind of business model transformation opportunities are, and what part can we play in that? What part can we play in that partnering with MarketFinance, or partnering with our other partners there. And so I’d like to think that the next five years or the next 10 years of Xero’s life will be significantly bigger than the last 12, 13 years of the company’s existence.
And that’s not to diminish that at all, but I think it’s just beginning and I think there are countless areas that we can help customers streamline their operations, save money paying their bills, get paid more quickly, manage their cash flow, manage their employees, run their business, make the best decisions. And I think we’ve got both a moral obligation to do what we can to help, because I’m incredibly passionate about helping small businesses, we’re a small business economy and they’re not very well served.
And if we can help with that, then we will. But I’d love to think that we will grow, and the story of Xero in the next 10 years will be even more successful than the first decade or so. And that will manifest itself in a number of different ways, and so just really still kind of excited, still really ambitious about what the future holds, and the idea that I can now latch onto the beginning of my career, that technology, the magic of software, transforming and changing business realities is even more important today in a COVID environment that it’s ever been.
And so we felt we also have a duty there to help with that, and so we’re just going to hopefully just keep going.
Excellent. Well, thank you very much Gary for sharing some of those thoughts and insights, and we’re going to look out for that, you mentioned that data coming out soon.
It will be on the website, so we’ll look out for that and help kind of showcase it around our communities and our customers as well. In lots of ways, of course, I’m looking forward to collaborating as well in the future and this intersection of what you’re doing and what FinTech is doing is very exciting. So thank you again and thanks for coming on the show, and look forward to keeping in touch.
Thanks Anil. Take care.
Co-Founder of MarketFinance