Managers are key to building “Apple of accounting”, says Rod Drury
A Kiwi bloke who stuttered into his late 20s has become the poster boy for entrepreneurship in New Zealand. Portraits of Xero CEO Rod Drury have been leading every business column in the country this week after heavyweight investment bank Credit Suisse labelled Xero the “Apple of accounting”. The international press has not been shy either.
We sat down in our living room to talk shop with Rod over a Google Hangout. He sat in his Havelock North living room being interrupted by others who clearly didn’t realise how important this interview was to his career.
“I didn’t start as an entrepreneur,” Rod began. “I started as an intrapreneur.”
He chuckles as he tells the story.
“I talked my way into a job at Arthur Young, at the time the fifth largest accountancy firm, and then it merged with the fourth largest, Ernst and Whinney, becoming Ernst and Young.”
“My team at Ernst and Young was becoming heavily involved in information engineering when all the Microsoft development technology started happening. But it took time for the software to be considered for commercial use. For months we would go into the office on weekends to play with the new software and experiment with data models but we had no practical application for our new tools.”
“Everything changed when we sold our first job.”
Rod and his team were excited to be at the forefront of technological evolution and couldn’t wait to apply their new skills. They were certainly not expecting management to request they discontinue the project. A better way to solve the client’s problem had been discovered, but since the technology was so new, it was perceived as risky. The board had to be convinced.
“That’s how we got started,” Rod went on. “Our first job created the software team at Ernst and Young in Auckland and Wellington. And then we all peeled out and created Glazier Systems and did it for ourselves.”
This was in 1995. Four years later, Glazier was acquired and Rod was back at square one looking for business ideas. He went on to found Aftermail and Context Connect between stints as the director of TradeMe and the NZX. Then in 2006 Rod created Xero.
The status Rod holds in New Zealand’s startup scene is unparalleled, and nowhere is that more evident than in the Xero story.
When he needed $15 million to build the company, Rod listed Xero on the NZ Stock Market instead of going to Silicon Valley VCs so that he could retain control and fulfil his vision for the company. Listing a pre-revenue company on the market was a bold move, but it worked. In the seven years since it listed, Xero’s value has grown to over $2 billion and made many rich men. Rod Drury has seen his own net worth exceed $400 million.
Many entrepreneurs see the example set by Rod and other successful startup founders and give way to detrimental pressure to build the next big thing. But Rod says there’s no big hurry.
“I was 36 when I sold my first business,” he said. “It was a long time in before we made any real money, but it’s still fun now.”
According to Rod, your 20’s are about building your base foundation, your base skills, learning how to work, learning how to be professional — learning a whole lot of stuff. In your 30’s you become more senior and experienced and start making a bit of money. That’s when you start making your bigger career moves.
“I’m well into my 40s now and I’m still loving it,” Rod continued. “It’s just taking a series of baby steps and everything gets bigger as you get a bit more confidence. With each thing you do, you get more experience, more networks, more people, and more of your own money.”
While growing one of the biggest accounting software companies in the world, Rod hasn’t sacrificed on quality of life. He spends much of his time at his four-bedroom home at Havelock North which he purchased for a mere $210,000 in 2009. As much care and thought has been put into designing his life as Rod has put into Xero.
Andy Lark, a New Zealand business icon and good friend of Rod, says, “More than anyone else I’ve ever met, Rod is a guy who had a clear vision of what he wanted his life to be like and planned to make that happen.”
It was time to throw Rod a curveball.
“So if Xero is the Apple of accounting, does that make you the Steve Jobs of New Zealand?” I asked.
He laughed and said something to someone near him.
“I think there were some good things and some bad things about Steve. I love that he was passionate. He had a design focus and could really drive an organisation. But he had a whole lot of negative characteristics about the way that he managed, so while I think he was great while he was driving it, he didn’t take a long-term view and build up his team. They seem a little bit lost at the moment.”
“My management style — what I do is I’m very big picture, very evangelist, and put great managers in to actually do the work and the day to day operations,” Rod continued. “I’m learning that you want a diverse organisation. Then when I see things that are inconsistent with strategy — then I jump in them.”
That’s one of the reasons that, much like Apple, Xero is a highly sought-after workplace. Rod chose the right people to start the company, hiring 50 employees from the beginning with the money raised through the listing. To this day, Xero remains committed to attracting above average people. Leadership is strong, their culture is relaxed and embracing, and employees’ interests and capabilities shape the role they’re in. Everything is available to everyone and Rod is the biggest poster on their internal Yammer network, reinforcing the vision and strategy.
Managers who oversee day to day execution are key to the company’s success, and Rod finds great managers by letting them find him. He has a strong distaste for recruitment consultants, preferring prospective employees to approach Xero having done their research and chase the position themselves.
Xero wants intrapreneurs.
“We don’t want to manage anybody,” Rod explained. “We just want to show them the vision and get them understanding how we work, but then they can just race ahead and make things happen.”
So is Rod the Steve Jobs of New Zealand? The Drury is still out on that one; only time will tell. There will be leadership changes, mistakes made, and periods of intense growth and Rod looks forward to it all.
Despite the fame and the fortune, he’s keeping it real. Rod tells us he has to go. The wind has changed and the surf is just right, and so with that, we wrap up what has arguably been the most crucial interview Rod has done.Tags: Rod Drury, Tech, Wellington, Xero