Q&A: Craig Hudson on Xero’s break into the SA market

Ventureburn recently spoke to Xero‘s regional director EMEA, Craig Hudson, about the cloud-based accounting software helping thousands of SMEs around the world.  

Xero, founded in 2006 in New Zealand, rapidly grew from a small startup to being recognised by Forbes as the number one innovative growth company for 2015.

Breaking into the SA market, Xero shared their plans and strategy to support the SA small enterprise economy

Ventureburn: What are your responsibilities within Xero?

Craig Hudson: I’m responsible for everything to do with Xero’s growth strategy and get great support from the global business and our (team) GM out of the UK.

VB: What was the inspiration behind Xero and why did you join them?

CH: I’ve been with Xero for two years and it’s 10 years old… this year. Rod Drury and a few others founded the product back in NZ for SMEs because they’ve come from businesses themselves and the frustrations where they weren’t able to get what they need (from accounting software).

So, they created a cloud-based version and we listed on the stock exchange with just 42 clients and we’ve gone from that to 717 000 but that number, remember we’re a listed company so that is our end of year, end of March (figure), so that number would probably be larger.

VB: What is Xero’s interest with SA?

CH: There were a few things that excited us about Africa; we already had thousands of clients here when we decided to come down and have a look in May. There’re a couple of reasons for that – we’ve seen a very similar mindset between NZ and SA we got a lot of relationship (sic) between the two.

Your jurisdiction tax-wise is very similar to the UK, you’re in the same time-zone as the UK and you’ve got a very well-educated finance employees in the country.

So if you were able to make a couple of slight changes to the product to make it localised and the companies are just running with it. The number of entrepreneurs that have adopted us is very early days. So,the first clients in SA were in about 2009 I think.

VB: What are some of the challenges you found when implementing Xero in the SA market and how did you overcome it?

CH: So we haven’t really come across too many roadblocks, one was product and we were able to change that to be able to add VAT within the system. Previous to that it was a generic solution in 180 countries, so we had to adapt, we kind of going from strength to strength. Other than that we’ve been trucking away, we’ve hit a target and we’re really positive about the future.

VB: What are some of the more pertinent SMEs are a part of your portfolio?

CH: There’s a few, in our entrepreneurial space, it’s kind of crazy because it’s quite a small network and they all seem to talk and it’s a market where things can spread like wildfire.

There are a few marque people on, one of the first ones, as seen in the video we launched down here in May, is Yuppie Chef.

We were able to release a video of one of the best coffee houses in the world, Truth Coffee, and also last week released a custom story about Giraffe, locally doing some amazing things. Those are just three that we were able to put into our case studies to add a local voice to it – there are many, many more.

VB: What initiatives is Xero implementing to drive help with SMEs?

CH: The big part of it is Xero for startups at the moment, that’s why we launched tonight.

Engaging the new companies and the smaller companies and getting help for them to grow and giving them the tools to be able to do that. Other than that we’re a digital company and we’re born in the cloud so for us to be able to have a really strong digital presence because that’s where people find us.

SA business are flocking to Xero digitally because we’re marketing ourselves and putting it out there.

VB: What are some of the key offerings for SMEs?

CH: You only pay by month, it’s a low monthly fee, there’s no contract. It’s US$30 a month for the standard version of Xero which gives you unlimited uses, unlimited transactions, it’s linked to your bank to be able to pull your transactions.

So there’s no manual input into that, you’re able to reconcile your bank every day to give you true insight into your cash flow. So what is that in Rands, you’re maybe looking at six coffees a month.

You can get Xero which increases your survival rates from 41 to 88% in five years. Is that an investment worth making?

VB: What other facilities do you have geared toward rural SMEs?

CH: Mobile wins right, and Xero is on mobile, there’s an iOS and Android app for Xero. So if you’re out in the rural community as long as you’ve got a connection on your smartphone you can be raising invoices out on the road and customers can be paying you instantly.

VB: What progress has Xero made since being in SA?

CH: We launched in May and we’re able to bring key stakeholders down to be able to show them because prior to that the business has been focusing on the main markets.

So I was able to bring them down for that to be able to show them the excitement and we had over 900 registrations the first two roadshows which is unheard of. The two events were incredibly successful.

The meetings we had around that just blew the team away at how ready this market was. The cool thing is from when we were down here in May to when I’m down here now just the growth that we’ve had from then to now has just been amazing.

VB: What are the company’s plans moving forward?

CH: We’ve got a full digital strategy, we’ve entered and broken into multiple new markets around the world and have been incredibly successful.

So we launched in Australia and are now the most popular accounting solution in Australia, we launched in the UK and are now the most popular accounting solution in the UK.

We’ve got a blueprint for success and we’re pretty confident we’re on track and we’re where we thought we’d be so that strategy is playing out like we’d hoped.

VB: We noticed a conversation between Marc and Evan from Tax Tim, and yourself. Is there some sort of collaboration in the pipeline?

CH: The beauty of Xero is that we have an API so we can connect with any cloud application and Tax Tim are interested in how they could potentially integrate with Xero.

VB: Does this mean there is a collaboration in the works?

CH: They seem very keen to integrate and I am quite intrigued with their solution and it’s got a really good name and Marc and Evan are top guys. I’m keen to see what we can do to definitely go to market.