When Xero first opened its Australian headquarters in Melbourne three years ago, the company had seven staff servicing just under 5000 customers. The cloud accounting software company now has over 80 staff in Australia (56 in Melbourne alone), servicing over 50,000 customers in the market.
This massive growth has forced Xero to look for new digs and open a brand new HQ late last year, albeit only a stones throw away from its first Melbourne office in the suburb of Hawthorn. Managing director of Xero's Australian operations Chris Ridd says the company is looking to establish its own Google-esque "campus" just outside of the Melbourne CBD to help support a market that's quickly becoming Xero's largest.
I speak to Ridd about Xero's growth in Australia, how Xero's success across the ditch affects the relationship with the mothership in Wellington and the emerging importance of Xero Australia.
For more from the inside of New Zealand technology exporters, sign up to the Idealog Tech newsletter
(Chris Ridd, managing director of Xero Australia)
Why set up Xero Australia in Melbourne over Sydney?
In part because I'm a Melbournite ... Wayne Schmidt [ex-MYOB] who's a part of our senior leadership team got the ball rolling here in 2009 and he's here too.
We also get a lot of support from the Victorian government. They've been supportive along the way, really seeing us as this explosive growth company they wanted in their state.
Looking at Xero's latest annual results, it's clear that Australia will quickly overtake New Zealand as the company's largest market [raking in $13.9 million in the last year].
We've already overtaken New Zealand. In terms of monthly committed revenue, Australia is now our largest geography.
(Xero's new office in the Melbourne suburb of Hawthorn)
As Xero Australia becomes more important for the company's bottom line, do you think development and core teams will move across to Australia?
It's already happening ... If you go back just two years ago, Xero was quite New Zealand-centric. That's where a lot of the growth was and where Xero started. We're now looking at the global footprint ... The New Zealand guys are now thinking we're a global company and we've got to think and act globally.
That's one of the big shifts for the company where previously everything had to be developed out of Wellington, suddenly you've got got core features being developed in Australia. One of those is payroll, we're building that here and then exporting it to our other markets.
(Xero Australia has around 86 staff, more than two thirds in Melbourne)
Could you give me a breakdown of the roles undertaken by Australian staff?
We've hired almost 30 people in Australia alone this year. This is a whole range from sales and support, to development and a lot of new roles such as payroll and tax developers – we've got almost eight decades of tax experience in that team.
How many Kiwis?
Too many. No, I'm just kidding. We do have a lot of New Zealanders working here, but not many – maybe one – that moved here from Xero in New Zealand to work in Xero Australia. What we're finding are a lot of Kiwis working in the technology and accounting space that know of Xero from back home who're knocking on our doors.
(Xero Australia staff are given professional barista training to improve meeting-time coffees)
Is it difficult to hire people for a New Zealand-based company operating in Australia? It seems to usually be the other way around, especially in the finance world.
We haven't had too many challenges in hiring people. Many have moved on from some of our incumbents [he later mention MYOB, which is based in Melbourne, as one of those incumbents]. We couldn't have done this two years ago, that's for sure. We didn't have that presence and brand power then.
(One of several webinar studios for partner education)
How are you marketing Xero in the Australian arena?
A lot of social media and face-to-face activity, it's been a real mainstay of of getting the brand out there.
We're still on the early adoption curve in Australia, now we're moving into the growth phase which we're supporting with events like Xerocon for the last two years ... We also regularly conduct webinars for partners from the offices here.
What's the biggest risk you're tracking at the moment?
Our competitors like Intuit are attacking the Australian market guns blazing. It's an important segment to capture for all of us. We need to keep an eye on what our competitors are doing. MYOB [has its back] against a wall and will do whatever it takes to respond to that. We're not going to take anything for granted.
And the opportunities?
We're just going to continue doing what we're doing. Less than 10 percent of [Australian] accounting firms deploy Xero. We're still at five percent market share, there's plenty of opportunities for us to grow further.
(It's not official without a plaque)
Idealog has been covering the most interesting people, businesses and issues from the fields of innovation, design, technology and urban development for over 12 years. And we're asking for your support so we can keep telling those stories, inspire more entrepreneurs to start their own businesses and keep pushing New Zealand forward. Give over $5 a month and you will not only be supporting New Zealand innovation, but you’ll also receive a print subscription and a copy of the new book by David Downs and Dr. Michelle Dickinson, No. 8 Recharged (while stocks last).
Idealog is part of ICG. We work with clients like Woolworths New Zealand, All Good, Huffer, Liquorland, Resene, Citta Design, TVNZ, Spark and FCB on their event activations, in-store, in-office or out-of-home signage, content creation and vehicle wraps.