Don’t believe the hype, people – or should we? Rebecca Stevenson reports from a slightly cultish Xerocon in Melbourne, and finds accountants (and bookkeepers) just wanna have fun.
It starts before we’ve left New Zealand. I’m guessing, but I reckon most of the people who boarded this plane for Melbourne with me are heading to worship at the Kiwi altar of cloud accounting. They could have been accountants. Or maybe they were bookkeepers. Whichever, they were fizzing to get to Xerocon, the New Zealand cloud accounting firm’s annual get together that has now grown to three locations; Melbourne, London and Las Vegas, baby.
“Don’t drink too early at Xerocon,” one advises as we wait at the gate. “Last time I went too hard on the first night.”
“Is everyone ready to have fun?” another asks, before quickly correcting themselves, “I mean to learn and be educated.”
When Xero launched in 2006, founder Rod Drury says, the company had about 100 subscribers and “most people had the surname Drury”. In March of this year it announced it had signed up 1 million subscribers. Xero now dominates the Australasian online accounting space, and it has aggressively moved into the UK and US.
There, however, it faces vigorous competition from Intuit and its QuickBooks accounting software. QuickBooks has felt the pressure from the Kiwi upstart and revamped its interface; Drury claims to love the competition and that Xero has provoked a reaction from the big boys. Xero is David and Intuit is Goliath, he says. Being David is way more fun.
While it has made strides in the US and UK, it’s not all smooth sailing. The US states’ complex regulatory regimes make it like dealing with more than 50 different countries, Drury says. And it has yet to take its payroll product to all states, a common gripe from US users about Xero. This has to happen to get the “ticket to the game”, Drury acknowledges. But he says Xero’s stats are much better than Intuit’s, across any measure. Intuit’s customers are “low value” compared to Xero’s, he says, and they’ve had to discount deeply to get them — he cites a 10 for $10 deal being offered.
“Low value customers don’t move the needle.”
Outside the US, Xero is twice QuickBook’s size, and has 4-5 times the revenue, Drury says. For the year ended March 2017 the company booked more than $295 million in operating revenue; Intuit’s revenue is in the billions. It also has more than 2.2 million subscribers worldwide, but Drury remains bullish.
“We are not just slightly ahead. We are killing it.”
In the UK Xero has been signing up users quickly, but there is some discontent. Some new users are not impressed with Xero’s email-based customer service, but Drury is adamant it’s not changing that, and says it wins awards for its service. Xero has been “really courageous” in its decision to stick with email, and Drury dismisses the criticism as “a lot of noise”. Who wants to be stuck on the phone for hours, he asks? He claims the company’s automated responses mostly get it right the first time, and if needed Xero will call you for more complex problems; but these excuses don’t wash with some Xero customers.
“Please tell me Customer Support is planning on adding a more robust, perhaps even live tech support for this platform in the near future. This twelve plus hours for each reply to a simple conversation is really untenable. I want to love Xero. Please help,” one posted on Xero’s community board.
Others are less hopeful.
“I know how you feel I have been waiting for going on a week for just for feedback… You may get a million subscribers, but this is not how you keep them.”
The Melbourne Convention and Exhibition Centre has been overrun this year by about 3000 auditors, and developers, who ply their trade inside Xero’s ecosystem. They are primed to drink in new announcements from Xero’s CEO, Drury, and just drink. It’s a huge venue. And Xerocon Asia-Pacific has swallowed most of it.
The walk from my hotel to the Yarra River venue in downtown Melbourne seems shorter than the walk inside to reach Xero’s cavernous main stage, where the keynote presentations will be held. There’s a large exhibition space with numerous stages for “breakout sessions” including on artificial intelligence, against a trendy graffiti backdrop. Also in here are the more traditional conference stands for Xero’s product partners like New Zealand’s Timely appointment booking app. There are hangout zones, play areas and a lot of coffee spots where baristas will whip you up a flat white.
So what’s the big deal about Xero? It’s basically accounting, but in the ether. No more paper spreadsheets, all the data lives inside Xero, and this data is being harnessed by the company to predict trends and tell us more about small business. Xero claims users are more productive and make more money. It’s taking the drudgery out of the numbers game, but also changing the game, the company says. Move from being someone who presents the past digits and become a futurist – add more value, it urges its users. Spend less time on spreadsheets and more time with the family. It’s a compelling message.
The effervescent Drury is the keynote speaker in the morning on Xerocon’s first day. But first there’s a hype man to get us in the mood to make noise in the vein of the best evangelists or rappers, and it is all very Jobsian and in the style of Apple’s vaunted launches. We are instructed to practise applause: give us a golf clap, now ramp it up to beauty pageant applause, and now let rip! None of this polite clapping at Xerocon, thanks.
The atmosphere is one of fun, but underpinning the party atmosphere is serious business. The numbers flash up on the screen. One million subscribers across the globe, 180 countries, trillions of dollars in transactions going through Xero, hundreds of Xero-friendly apps, $108 million in cash on hand, hundreds of banking partners.
Xero has completed moving its back end to servers owned by Amazon Web Services (AWS) so it can quickly ramp up new products and offerings. It’s moving from the back office – boring – to the front office, Xero says.
On day one there are a dizzying number of new products launched. Xero Projects will allow real time tracking of time spent on projects, Xero Discuss will let users communicate inside Xero, and Xero Expenses will let users take a photo of a receipt on their phone and automatically create an expense claim. In his typical rough and ready style, Drury says that as a Xero user, expenses were driving him “bat-shit crazy”.
Xero has also added a learning platform, so it can capture future users early. This enthuses the crowd, so many graduates are learning accounting and bookkeeping on old platforms and then hit the workforce and need training immediately. The market reacted well; Xero shares hit a three-year high, and analysts seem upbeat about the company.
“In my opinion, Xero is one of the most impressive companies in Australia and New Zealand,” investor website Motley Fool said earlier this year. More recently, it said Xero retains a robust growth outlook thanks to its global horizons, widening network effect, and market-leading product.
“Not to mention that the shift of small business accounting from traditional Excel formats to the cloud is only just beginning around most of the world.”
AWS is here as a sponsor, alongside Paypal. And there are a coterie of companies present at Xerocon who are codependent on Xero; integration with Xero is trumpeted. How many Kiwi companies have spawned adjunct businesses who rely on them to survive? Not many, if any.
But back to the Coachella for clerks. Thumping remixes of popular music including our Lorde are played by a long-haired female DJ in the plenary, and there is an obligatory blue-toned light display to ensure Drury’s arrival on stage is a moment. Drury walks on in his Xero uniform: black Xero tee, black jeans.
“Holy shit!” he exclaims.
He explains his excitement. When he first started talking about Xerocon he envisioned exactly this, Drury says. It will be international. It will be multi-day. He stands before us, claiming to be humbled by our presence, but the bookkeeper sitting next to me from Brissie says this is what she loves about Xero. There’s nothing dull or boring about it, and Drury has legions of followers, including a woman who makes a pilgrimage to Xerocon every year. Last year she made a Xero-themed dress with Xero dollars as the skirt and Xero logos over her nipples. This year she is sporting a t-shirt with Drury’s face on it. Drury gives her a shout out; she smiles and waves happily.
The bookkeeper agrees Xero is not perfect, and she’s really happy to see the expenses project and real-time project tracking introduced. But you have to understand where the industry has come from. It’s a massive improvement on using multiple Excel spreadsheets, she says.
The Consolid8 crew from Brisbane are 18-strong and wearing matching green hoodies with their ‘titles’ printed on the back. Only two of their team are male. “Chief People Person” Rebecca White says their founder, the “Chief Chaos Creator”, “jumped on the Xero bandwagon” in 2013. The next year the whole team came to Xerocon together. They now come every year and it’s a big effing deal. They get a Hummer to take them around, they stay in a nice hotel, they come to talk business and learn about Xero, but they are clearly having a hell of a fun time.
Assembled around the swing set in Xero’s exhibition space, they’re drinking champagne and being silly at the end of day one – and they’ve even brought a baby. Blake is here at Xerocon too, along with a few older kids as well. This is part of what Consolid8 stands for – back in Brisbane, the company has on-site childcare. There’s a lot of diversity around the rooms too. It really is all-comers: young, old, male, female, babies.
A man sitting next to me during another Xero presentation says it was only a three years ago that he was manually filling out spreadsheets. Xero has changed the way he works for the better.
“And they’re not trying to take my job,” he says, “they’re making my life easier.”
Xero is a software company for those who know about numbers and sensible spending. And yet at Xerocon one of the most popular stands is the Xero Store, where those software users are spending their hard-earned cash buying merch with Xero all over it. A woman pulls on a Xero puffer jacket. Her companion thinks it’s a good fit; sale done. At the end of the first day the previously groaning silver racks of Xero gear are sparse. People actually paid to buy this stuff. One of Xero’s public relations staffers points out the company always has an online store running. This is not abnormal behaviour for Xero users. The mission is to excite, and bring emotion to accounting software.
What is it about this company that engenders this level of loyalty and excitement? Imagine working in an industry that is a byword for boredom, and then out of the Xero-blue a company decides you are not all Poindexter types with pens in pockets; they see the assembled acolytes for who they really are. Sure, a lot of the men seem to be wearing blue shirts – striped, spotted or checked. But there are a lot of women here too.
Xero’s data would indicate they are more likely to be accountants. Former rugby sevens player and now Xero New Zealand boss Craig Hudson says 13% of Xero’s clients are bookkeepers — but they are a vocal bunch. Bookkeepers have traditionally tracked the numbers, while accountants interpret the data and provide advice too.
Our hype man asks all the accountants in the auditorium to give a shout out; it’s a bit muted. Not Xero-worthy whatsoever. The bookkeepers on the other hand are loud. They seem to love being part of Xero. It’s a bit bizarre but then you realise this is a home away from home. They can meet up, hang out, have fun and are not pigeonholed as dullards.
They are treated as individuals bound together by Xero’s self-proclaimed beautiful software. And they want to party too!
In the morning of day two people are swapping war stories from the night before; some in the hotel restaurant look a little rough around the edges. The big one is yet to come — a street party is set to be held on the last night. The only downer is the weather; it’s cold and wet. But that won’t dampen their spirits. Xerocon only happens once a year. Go hard or stay home.
There’s another conference going on at the same time as Xerocon and the contrast is striking. Xerocon has ambience, it’s colourful, everyone is well catered for, the food looks and tastes good, there’s a croquet set, play area and the typical bean bags and it all screams “we are not boring!” and you can’t help but smile at strangers and enjoy it.
The other conference seems tame – and a massive snoozefest, in fact – in comparison.
Is this truly an accounting revolution or just a good time that will only last a short time? Xero has been criticised plenty over its more than 10-year life, with people pointing out how much cash it’s spent, how much capital it has raised, and how it hasn’t made money.
But this is Drury’s point. You can’t do what Xero is doing, trying to be global, by giving money back to shareholders. It has to invest in its products. It is uber-ambitious, as is Drury. What we are doing is cool, he says, but exhausting — that’s why so few can do it.
No-one is being talked down to here. Its supportive, collaborative, and there’s nothing high-brow at the centre of this thing Drury has created.
of the Spinoff’s first book!Find Out More
So where to next for Xero? Well London Xerocon is around the corner. And the two other conferences are even bigger than this one. Next year the company is planning for about 5000 at the southern hemisphere event. Maybe they should charter a Xero plane from New Zealand, Hudson suggests.
It’s going to keep getting bigger, keep getting better, Drury says. And it’s a shitload of fun.
The Spinoff’s business content is brought to you by our friends at Kiwibank. Kiwibank backs small to medium businesses, social enterprises and Kiwis who innovate to make good things happen.
The Spinoff’s business section is enabled by our friends at Kiwibank. Kiwibank backs small to medium businesses, social enterprises and Kiwis who innovate to make good things happen.