Richard Francis, CEO of Spotlight Reporting.
When and why did Spotlight enter the US market?
Our software has been available in the US from the start, but we didn't have a presence there until we'd built our base in the three Xero strongholds of New Zealand, Australia and the UK first. Last year we had the opportunity to hire someone who was ex-Xero and based in California - which is the hottest part of the US market for what we do - so it was good timing for us.
We've deliberately kept our presence there at one person, but we're slowly growing and have an expansion plan for his year. Although the US market is a hive of wonderful products and innovation, in the actual cloud advisory space in the use of Xero and QuickBooks Online it's actually quite weak - three to five years behind Australasia. So we're slowly and incrementally growing in the US. It's quite frustrating in a way because obviously it's such a big market, but it has been a bit of a graveyard for some Kiwi businesses.
So what's the current state of your business there?
The US market is our smallest at this point in time, but with the largest addressable market. Our office is in LA, and our customers at this stage are mainly leading accounting firms in the Xero and QuickBooks families. Spotlight Reporting is the tool of choice for three of the 'big four' firms and many of the cloud early adopters, but at this point US penetration is still at an early stage. Last year we grew 150 per cent there and we're looking to exceed that this year.
What's the market opportunity you see going forwards in the US?
The US has a huge number of CPAs [Certified Public Accountants] and millions of small and medium-sized businesses. So the numbers are compelling, but it's a huge, fragmented market with relatively weak cloud software penetration at our level.
Another target for us this year will be leading franchises, not-for-profits and medium-sized businesses - organisations like that who have an accountant or CPA in their ranks. Our growth expectations are to lift revenue by over 200 per cent and to have a team on the ground of four or five by financial year-end.
What's worked well for the company to make inroads into the US so far?
The main thing that's distinguishing the companies who make it in the US and the ones who aren't is investment. We did an investment round last year and we're doing another one right now to fast track our expansion, including into the US. If you're going to go there, you've got to do it seriously, and for investors - particularly in the SaaS [software as a service] world you have to have a US market play.
The second thing, and it's really simple, is hopping on a plane and following the big guys who have led the way. Fellow software companies like Vend, Deputy and of course Xero are at various stages of US market penetration, so we learn what we can from them.
And for us hiring locally has been important. Our director of sales, Leslie Riggs, is a Californian and already has great knowledge of different ecosystems in the US. Crucial to that working though, has also been supporting her and sharing our can-do, startup culture. We've flown Leslie down here a couple of times for strategic planning and leadership get togethers, and myself and other staff members fly up there for major events to support her.
What have been some of your key learnings so far from your time in the market?
The US is expensive for people and events, so I think the traditional 'hire and hope' approach is problematic. When you're a small, fast growth business hiring well is everything. But when you've got a small team, hiring world class talent is challenging and making mistakes can be hugely distracting.
We've learnt to not expect Antipodean turnaround times on deals. A 'yes' is usually more of a 'we'll think about it' in the US - and then you have to cut through all the noise that's created by competitors and the sheer scale of the market.
I also think the whole 'Kiwi' angle can be a double-edged sword. As Kiwis we can hop on a plane, show up and sometimes we just expect people to give a damn. But they don't. Sure people like doing business with us, but there's no free lunch over there. I think it's much better just to be excellent at what you do rather than distract people with where you're from.