NZ Herald business editor at large

Liam Dann: Drury world-class business talent

A number of wealthy international investors have picked up on Xero and its cloud-based accounting software.

Rod Drury is an anchoring force for the tech firm. Photo / Mark Mitchell
Rod Drury is an anchoring force for the tech firm. Photo / Mark Mitchell

It is only just three weeks since Kiwi IT company Xero made headlines for cracking $1 billion in market capitalisation ... without having turned a profit.

But its stellar stock market run hasn't abated and, in the short period since, the company has added a further $316 million in market value, with its share price closing at $11.23 on Friday.

Clearly a number of wealthy international investors have picked up on the impressive story of the little tech stock from Hobbit-land making waves in the world with its cloud-based accounting software.

Last week there were a couple of days when the price was soaring faster than you could compose a tweet about it. There was something a little bit too heady to it. Even founder Rod Drury would probably agree. Drury told the market last Monday that the company's surging share price was likely due to increased profile internationally after the appointment of an ex-Google executive, US media interest and recent road shows in Australia attended by more than 3700 accountants.

Yep that would do it. That, and a well-placed article on the Forbes website - penned by former Fonterra boss Andrew Ferrier - probably didn't hurt either.

Brian Gaynor pointed out, on one of the days that the share price went really bonkers, there were three wealthy international buyers understood to be buying in the market at the same time.

Hopefully the madness settles for a bit because there is a danger in too much market hype for even the best of companies.

The market capitalisation of companies can get driven far beyond what can be justified by short and medium term returns, effectively putting them in bubble territory. And bubbles can burst.

And it would be a great shame for anything to derail the progress of Xero which is doing all it has ever promised to do and is hitting its highly ambitious customer targets every six months.

Through all the madness founder and chief executive Drury remains its anchoring force.

A lot of nice things have been written about Drury. He was the Herald's pick for Business Leader of the Year in 2012.

As our profile at the time noted, Drury lives something of a double life.

He is a multi-millionaire entrepreneur trotting the globe to promote his fast-growing company.

But he is also a Hawkes Bay-based father of three, a keen surfer and unashamed tech geek.

It has been fun to read Rod Drury's twitter feed over the past few days.

He remains cool and unaffected despite the huge surge in his own personal wealth.

His Twitter is a steady stream of gadget and software related quips and comments that might otherwise belong to a small-time IT blogger.

There's the occasional plug or retweet of a glowing review for Xero software - but no more than you might expect from anyone who shares both professional and personal aspects of themselves in the online space.

He maintains the sort of social media mix that keeps you on the inside of the commercial-shy online world. Drury remains one of the cool kids online. He is intuitively comfortable online.

His social media presence is a reminder that Xero is not an accounting company scrambling to fit into the online world, it is an online company that has made accounting systems its core business.

It has a Silicon Valley outlook - and now it has a Silicon Valley share price.

Drury is, whether he likes it or not, a big part of the value of Xero. He is a world-class business talent - a rare mix of leader, manager and entrepreneur and, importantly, a top marketer and salesman.

Drury's leadership role may not be so crucial as the company hits maturity. If the Xero product, which I've never used, is as good as the company believes it is then it shouldn't need to be.

But for now his commitment and drive must have a lot to do with the value that those wealthy investors are putting on it.

A strong figurehead goes with the territory in the world. For examples of how important relationships between the founders and their tech companies are you don't have to look far - Microsoft, Apple, Facebook.

Of course, you'd be hard pressed to find many who would say Xero's market value isn't running far ahead of schedule right now.

But what is amazing is that there is every reason to take Xero seriously as a company which could - if everything goes right - one day justify its current worth.

Drury made headlines one more time last week.

He - as well as Ian McCrae, chief executive of another Kiwi growth story, Orion Health - made the bold claim that their companies would most likely be hiring some of the workers who will lose their jobs in the Telecom restructuring due over the next 12 months.

The statements looked brash in newspaper headlines, but really the pair were just stating the obvious.

There will be opportunities for some of the skilled IT workers that Telecom sheds - not just with Xero and Orion but within the rest of the local tech sector which remains consistently upbeat and forward-looking.

And there will be opportunity not just for the computer programmers and systems guys - but for the marketers and sales people and other white collar workers that these companies will need to support their New Zealand-based offices as they grow.

The challenges facing Xero and other IT companies as the foreign buyers start to take an interest and buy in are well documented.

We won't keep all these companies resolutely New Zealand-owned for ever but whatever happens to them it all adds to a culture of IT success in this country.

It is exciting to watch.

Food, tourism and cloud-based creativity in IT, design and media - that's an economic formula to keep New Zealand in the First World through the 21st century.

That's why New Zealanders should be backing companies like Xero, even if for most of us, its price and risk profile don't make it an obvious investment option.

It is a job-creator. And more than that, it is one of a number of exciting young companies that is creating the kind of jobs our children will stick around to do.

- NZ Herald

Get the news delivered straight to your inbox

Receive the day’s news, sport and entertainment in our daily email newsletter

NZ Herald business editor at large

Liam Dann is business editor at large at the New Zealand Herald. He has been a journalist for 20 years, covering business for the last 14 of them. He has also worked in the banking sector in London and travelled extensively. His passion is for Markets and Economics, because they are the engine of the New Zealand economy. He hosts The Economy Hub video show every Thursday.

Read more by Liam Dann

Have your say

1200 characters left

By and large our readers' comments are respectful and courteous. We're sure you'll fit in well.
View commenting guidelines.

Sort by
  • Oldest

© Copyright 2017, NZME. Publishing Limited

Assembled by: (static) on production apcf05 at 24 May 2017 00:17:07 Processing Time: 1184ms