Good old days with Xero, My worst mistake

Filed in Accounting, Business, Xero by on January 3, 2018

Rod Drury, Xero CEO, once wrote me saying he wanted a free exchange of ideas. I was featured at two Xero Roadshows, while Rod repeatedly linked to my QuickBooks-Blog and posted the above Tweet with our pictures.

Meanwhile, QuickBooks Online quickly copied most of what was good in Xero and passed it in many areas. Intuit (QuickBooks) CEO Brad Smith also shocked me by saying me he was putting 75% of Intuit development into online products. That caused QuickBooks Online subscribers to grow more than 55% a year for the last two years, to 2.6 million. It also led to $2.6 billion of annual small business sales, with a combined profit of $1.4 billion.

Xero has little more than a million subscribers, growing rather slowly, with about $300 million in sales and a deficit of $69 million. However, I never heard a CPA or investment analyst mention what I feel is the most important difference between these companies. Intuit recently got around $634 in sales per employee, while Xero managed only US$122 (NZ$171) in sales per employee. It also seems that Intuit may make more from supplies that Xero makes in total. I actually hope this is wrong, as Xero had $371 million (NZ$522) in capital (stockholder equity) and only had $159 million (NZ$224) left, having lost $48 million (NZ$68) in its most recent year and $61 million (NZ$86) in the prior year.

I always felt that Xero’s biggest value was that its early fast growth was critical in getting Intuit to rush new QuickBooks features, so I do not want to see it fail. In any event, Rod recently decided he no longer liked my ideas. He banned me from the Xero forums, where I had been one of his more prolific writers (though not recently). In case Rod wants to retract this Tweet, I have an extra stand-alone copy of our 9/4/13 picture on this blog page:
To preserve the accompanying text, it is, “Stoked to finally meet our angriest fan @MikeBlockCPA who often SENDS ME EMAILS IN CAPS.Hi Mike – Rod Drury (@roddrury).

Funny, I use CAPS much less now than I did when trying to help Xero.

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