By almost any measure, Xero’s annual result last week was a huge boost to the company’s plans for global domination.
With positive cash flow looming, it would be the right time for many to take a little satisfaction in what has already been an enormous achievement. Xero founder Rod Drury, however, described that effort as “almost ten years of sitting on our hands having to build the mandatory accounting features.”
Drury is far more excited about reinventing how accounting is done and building new, data-driven products that “open the can”.
“Now the fun stuff starts to happen as we start to really connect the dots and use this data to help our small businesses to grow,” he said.
At the core is machine learning and a vast and fast-growing trove of business data. The mass of businesses on Xero opens an opportunity to drive internet economics at scale.
“Our people love data and what we are doing now is instrumenting the massive amount of data we have inside of Xero,” Drury said.
Drury said Xero is seeing phenomenal results from machine learning and AI.
“We aren’t going to win in the US by delivering a better mousetrap, we need to deliver a fundamentally different experience,” he said.
Accountants are already collaborating with their peers globally using Xero while small businesses customers want to export and grow using such global platforms to export and facilitate trade.
Specifically, Drury was revelling in the possibilities now open to Xero after its big shift from Rackspace to AWS.
The AWS migration allows Xero to do some exciting things, he said. Where data on business PCs was not terribly useful, bringing that into a managed store made it “incredibly interesting”.
Over the last year, Xero processed $1.4 trillion of transactions, he said. That is near real-time and mostly structured data the likes of which has not been seen before.
“With the commoditisation of compute into the three global platforms and the availability for machine learning and other types big data services sitting right alongside your own data, we think it’s compelling.
“Every other business software has to get on this platform.”
Drury said the change gives Xero a sustainable competitive advantage until competitors follow suit.
“We’re pretty urgent now about all the innovation we can do leveraging the features of AWS into what we’ve done already and the ability to add new applications to drive average revenue per user (ARPU) both on the accountant side and on the small business side.”
The effort to scale Xero’s systems are being mirrored in its internal structures and processes to build a global operating team that also scales, he said.