Xero boss focuses on growth

RICHARD MEADOWS
Last updated 05:00 06/07/2014
Victoria Crone
CHRIS SKELTON/Fairfax NZ
KEEN ATHLETE: Endurance training keeps Victoria Crone primed for tough days in the office.

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Xero New Zealand managing director Victoria Crone is experiencing culture shock - but in a good way.

After two-and-a-half months at the cloud accounting software firm, she reckons she's got her feet firmly under the desk.

"It's a really exciting place to work," says Crone. "People want to create really big things, and things that make a difference."

Crone has spent most of her career in the telco industry, clocking up 18 years at Telecom and sister company Chorus, most recently as general manager of marketing and sales.

Over the second half of that period, many telcos have seen revenues fall away, often eroded by disruptive online start-ups.

Moving from an arguably sunset industry to a growth company hungry to take on the world is a sudden shift in gears.

"The big [first impression] that strikes me is the energy levels of people," says Crone. "The second one is the boldness of the vision."

The lack of negativity is refreshing, too.

Telcos are magnets for bad press. Take Telecom's series of gaffes and controversial "Spark" rebranding, Chorus's challenging financial position, or the usual litany of service-related complaints.

Even the upbeat Gigatown competition, which Crone spearheaded at Chorus, managed to attract plenty of sniping from the sidelines.

By contrast, Xero is the undisputed darling of the local tech sector.

"In my travels around New Zealand talking to customers and partners, the feedback is overwhelmingly positive," says Crone.

Her diplomatic explanation of the difference between her former and current employers is that Xero is in a "different phase of its cycle".

"The big focus is growth. We're typically growing 80 per cent year-on-year."

Xero's full-year operating revenue to March was $70.1 million. The company has since calculated an annualised revenue figure of $100m, based on monthly subscription income for May.

Crone says that puts it in the same league as the big, global software-as-a-service companies.

The word passed down from founder and chief executive Rod Drury is that "the journey from $100m to $1 billion is well within our reach".

"There's a long way to go yet," says Crone. "We haven't maxed out, or even close to it."

While typically seen as bent on global domination, Xero still has plenty of room to grow in New Zealand.

Crone says there are about 105,000 local customers, which represents a 20-25 per cent market share.

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Of the total 780 Xero staff, roughly 300 are New Zealand-based.

Staff numbers across the business are expected to almost double over the next year or so, with as many as 10-20 new recruits coming on board every week.

It's a big challenge for the HR department, especially with a skills shortage of local developers.

"We're having to look into the UK," says Crone. "That'll take two, three, four years for that supply to come through."

Already Xero's modest Auckland offices in Parnell are groaning under the weight of a growing army of IT professionals.

Staff glued intently to the computers in the open-plan office are dressed casually in everything from cardigans to polo shirts, with many shades of skin on display, and a reasonable proportion of women.

"[There are] definitely a lot more younger people, which I think contributes to the level of energy around here - not to say that older people can't be energetic!" says Crone.

"But there's a certain ambition and energy that comes with people in their mid 20s and late 20s wanting to conquer the world."

Every two weeks Drury hosts a company-wide meeting to outline the latest news or big win.

"That's the way we keep everyone on the same page," says Crone. "There's a real trusting culture. He'll share board content - no one's leaked it yet."

Every employee has stock in the company, which means there's a vested interest in pulling together.

Company faithful will have enjoyed the share price's astronomical ascent from less than $5 this time in 2012, to peak at almost $45 earlier this year.

The elephant in the room is the stock's huge slump below $26 in recent weeks, which has dominated headlines.

But there's no giant ticker on the Parnell office wall, surrounded by grief-racked employees.

Crone says it's business as usual.

"We're a tech stock, so we are going to be volatile."

The constant attention on the share price has been useful for growing awareness of Xero as a company, she says.

But as might be expected from a former marketing executive, she wants to change the focus to the "great stuff" the company is achieving.

The main focus is always "continuing to build the most beautiful software in the market", says Crone, effortlessly reciting the company tagline.

There are several other projects under way. Some are customer-driven and some come from within, with staff frequently spit-balling ideas through business social network Yammer.

Small business's biggest problem is that they're time-poor, says Crone.

Most of the company's efforts are aimed at making a seamless marketplace for businesses to get billed and get paid as fast as possible.

"We're working with the likes of Vodafone and Fonterra to say, ‘do you want to invoice directly into the platform'," says Crone.

Ultimately even the likes of loan applications or tax returns could be automated based on the information stored on the platform, with a simple "click to submit".

"We're also well under way in terms of discussion with banks," says Crone.

Both ASB and TSB already support so-called "next-gen" banking, which makes direct feeds from Xero accessible through internet banking.

Kiwibank is also streamlining services for its business customers.

With more and more partners being plumbed directly into the platform, there's a veritable fire hose of payments data streaming in and out.

Crone says about $16.6b worth of invoices and almost $10b of bills go through each year.

While many companies would drool over such a treasure trove of valuable data, Crone claims there are no direct plans to monetise the database.

"This is about everybody winning, not just about Xero winning," she says.

Rather than charging for analytics or reports, they will be offered free as a way of adding value for customers.

Businesses will be able to benchmark themselves against others in similar industries, regions, or even countries.

The first insights report, which looked at the average time it took for small businesses to get paid, came out a couple of months ago.

"That's just the tip of the iceberg in terms of the info we can access on the health of small businesses," says Crone.

Xero has also launched Smartlists, a free tool for businesses which don't have dedicated customer relationship management software.

It turns the accounting platform into a search engine, allowing business owners to find and target existing customers.

"What this enables them to do is pick out, say, the customers who bought boots over $200, make a list, and then go and target them for this season's boots," Crone explains.

Little does the New Zealand business community know, Xero is using it as a giant petri dish.

New ideas are tested and proven locally before they're rolled out in other markets.

"It is much easier to do this sort of development in New Zealand because we are smaller, we are nimble," says Crone.

The key overseas markets - Australia, the UK and the US - are similar enough that most concepts translate, although not always perfectly.

Crone is also responsible for the "rest of world" portfolio, a hodge-podge of 178 countries with paying customers outside of the four main markets.

She says there's good year-on-year growth in sales, with the aim to get specific countries big enough to justify having their own presence.

"Canada, Singapore, Ireland and South Africa would be the next big four, and potentially Japan," says Crone.

While Drury remains the big cheese, Crone says she's been given "loads" of autonomy to do her thing.

The pair speak formally on a fortnightly basis, but are in touch every second day or so, regardless of where in the world the roving chief executive might be.

Crone says the use of cloud technology within the company enables her to be flexible around her own hectic lifestyle too.

"It doesn't matter where I am," she says.

"I was in Rotorua at an underwater hockey tournament for my daughter, and there were a couple of things I urgently needed to do - I [could] access everything and do it there."

Crone is a believer in work-life balance, and says her two daughters - aged nine and 14 - play an important role in her life.

"Particularly when I don't have my kids, I'll tend to work longer hours, and put in some harder yards then to get on top of things," she says.

"When I do have my kids I'll try and work more sensible hours and fit in with them."

Crone's partner, Telecom digital ventures boss Rod Snodgrass, has his own brood to look after.

The pressures of two high-powered executive lifestyles can be tough, says Crone, but at least they're able to talk about work more than they could when she was at Chorus.

Crone lives one minute across the road from the Parnell office.

However, she's got a weekend bolthole nestled among the native bush and black sand beaches of Muriwai, which is "good for the kids in terms of a bit of normal New Zealand".

She's also a keen multi-sport athlete, so some of her limited downtime will be spent training for several events in the year ahead.

A half-Ironman involves six gruelling hours of running, cycling and swimming, but Crone is thinking about taking on the full.

One of the toughest things she's ever done was the Abel Tasman Coastal Classic, a gruelling 36-kilometre trail run.

"I blistered about an hour into it. So I couldn't walk for a week after."

Conquering endurance events is as much about mind-games as physical strength, she says.

As Xero keeps pushing to take on the world, her hardcore hobby could prove to be good preparation for the trials and tribulations that surely lie ahead.

"I find the sports incredibly great for your mental toughness," says Crone. "Doing a half-Ironman - a day in the office is easy after that."

XERO BY THE NUMBERS

80 per cent year-on-year growth

$100 million in annualised subscription revenue

$35.5 million loss posted for the year to March

800 per cent increase in share price between July 2012 and March 2014

42 per cent slump in shares over the past three months

780 staff, expected to double over the next year

300,000 customers in 182 countries 

- Sunday Star Times

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