Host Harry Stebings interviews Rod Drury, the founder of cloud-based accounting software company Zero, on the "20 minutes vc" podcast. Rod shares his journey from his early days at Arthur Young and the pivotal role Microsoft Access played in his career, to founding Zero, which has IPO'd from day one and attracted investment from notable names like Peter Thiel and firms such as Accel Partners. He discusses Zero's unique position as a founder-led company in a competitive market, emphasizing the importance of a diverse leadership team and the company's strategy of leveraging an accountant and bookkeeper network for growth. Rod also touches on Zero's global reach, competing with giants like Intuit in the US, and the effectiveness of their sales and marketing approach. He reflects on his experience with fundraising, the value of taking breaks between ventures, and the future of Zero in empowering small businesses and tackling social issues.
"I'm delighted to welcome Rod Drury, founder at zero, essentially really beautiful cloud-based accounting software."
"And they have an incredible story having IPO'd from day one and have then gone on to raise funding from some of the world's greats, including the likes of Peter Thiel, Excel Partners and Matrix Partners, just to name a few."
"Number of Entrepreneur New Zealand Entrepreneur of the Year award New Zealand High Tech hall of Fame the list goes on and on."
"I guess the magic moment with Zero was realizing all of the innovation that was happening on the consumer Internet."
"So we raised $15 million at a $55 million valuation, which some people thought was crazy."
"Well, the key thing was a track record of the team."
The quote highlights the importance of the team's previous successes in convincing investors to support Zero's IPO from the outset.## Market Dynamics and Opportunities in Tech
The tech industry has seen significant financial investments, with large sums of money flowing through it.
There was a noticeable hunger for tech investments during the time discussed.
Rod Drury had a solid business reputation and successful startup experience, providing credibility to his ventures.
He identified that the largest market after consumer spending is small business, which spends trillions of dollars.
There was a gap in the market for a cloud company focused on small businesses.
The concept was to centralize small business data, which has greater value when aggregated.
Accounting is considered a critical application for small businesses.
Centralizing data in the cloud can significantly improve small business productivity and operations.
"So we'd seen some really big money starting to flow through and people were starting to be hungry for tech."
This quote highlights the significant financial interest and excitement in the tech industry at the time.
"And the story was that if you look at market sizes, consumer is the biggest market. No one really likes to pay for anything. We've seen a lot of computing focus on the enterprise space, but the biggest market after consumer must be small business who spend trillions of dollars."
Rod Drury emphasizes the untapped potential in the small business market, which is substantial but less targeted than consumer or enterprise markets.
"But if you bring that into a centrally managed store, firstly, accounting is the killer app for small businesses."
He identifies accounting as a universal need for small businesses, making it an ideal entry point for centralizing their data.
"I think because we did an IPO early on, I was never working in the operating part of the business."
Rod Drury explains that his role was more strategic and outward-facing due to early public investment.
"And I think that's been the real secret of zero, is that I've always, and right from the start, have been working on the business, not so much in the business."
He credits the success of Zero to his focus on building the business and leadership team rather than getting involved in day-to-day operations.
"So there's a real shortage of founders with lots of experience."
Rod Drury points out the challenge of finding founders who have a breadth of experience.
"But what I know is that most people are fundamentally flawed in a few ways. So the magic is trying to get a complementary team that really works together."
He acknowledges that everyone has weaknesses and that building a strong, complementary team is crucial for success.
"Yeah, so we think the war is global. All businesses are global."
Rod Drury frames the business competition as a global challenge, emphasizing the need for an international strategy.## Globalization and Small Business Growth
When we started the business, it seemed kind of daunting going against these large companies. But we actually added more small business, small businesses globally to our brand than Intuit added to their brand last year.
This quote highlights the competitive landscape for small business platforms and Xero's successful expansion in comparison to traditional industry giants like Intuit.
We're the leader in the UK, and we've beaten Sage to the cloud. And now it's game on inside the US.
This quote emphasizes Xero's leadership position in various markets and its strategic focus on expanding into the US market despite expected challenges.
So each accounting partner has 300 customers, so you can afford to actually go and spend time with them.
This quote reveals the strategic advantage of Xero's channel-based sales approach, utilizing the existing networks of accountants to reach small businesses efficiently.
So we did everything, you know, because of the situation we described earlier, we did our IPO first, then we brought in the hedge funds... And then it's only really recently that we've actually brought proper VCs in.
This quote outlines Xero's unique funding journey, highlighting the sequence of their IPO, hedge fund investments, and subsequent VC involvement, which differs from traditional enterprise funding models.## Personal Productivity Tools
I've just moved to an iPad pro. I've got the new MacBook twelve. I got that when that came out. I haven't pulled it out of my briefcase since. I've had the iPad Pro, complete game changer, iPad Pro plus keyboard.
The quote highlights Rod Drury's transition to the iPad Pro as his primary device for work, emphasizing its effectiveness and the resulting disuse of his MacBook.
I think that a journey starts with the first step. So lots of people have ideas. You've got to make the ideas happen. Ideas are easy, they're free, they just arrive all the time. It's actually taking that step and driving it forward and making things happen.
This quote underscores the concept that the beginning of any successful venture is to take action, and that while ideas are plentiful, their execution is what truly matters.
But the blog I like, which sort of summarizes everything, is Techmeme. I find that's the one that you go to and you'll find all of the important tech stories.
Rod Drury points out Techmeme as a valuable resource for aggregating significant tech news, which contributes to his understanding of the tech industry and aids in forming business strategies.
In hindsight, what I should have done was actually taken three or four months off between them.
The quote reflects Rod Drury's realization that taking breaks between business ventures can be valuable, allowing time for reflection and rest before embarking on new projects.
So trying to have those people like I had this moment, I was at the rise conference in Hong Kong and I'm doing some business development. I'm talking to a whole bunch of people that are in their. I'm like, I see just want to go back and have a cup of tea. And yes, you need to sort of let that next generation come through and do that work.
Rod Drury expresses his intention to allow the next generation to take over operational roles, while the current leadership focuses on strategic planning, indicating a forward-thinking approach to talent management and business growth.
Brilliant. Thank you so much. Really appreciate the support.
Rod Drury concludes the interview with thanks, showing gratitude for the opportunity to share his experiences on the podcast.