Keith Newman chats with Rod Drury about his hi-tech townhouse, Xero’s billion dollar vision and Hawke’s Bay as kids’ capital and a haven for top executives.
Software supremo Rod Drury has visions of turning Xero, his financial software company, into a multibillion dollar global enterprise run from his fibre connected hi-tech Havelock North townhouse.
Xero, developed by Drury and his software team over a number of years, is a back-office financial accounting software, designed to take the dreariness out of business administration, allegedly even making number crunching ‘fun’.
Hawke’s Bay’s unofficial hi-tech ambassador doubled his customer base from 50,000 to 100,000 in the ten months to September, making his short-to-medium term goal of a million look plausible.
Xero has offices in San Francisco, Austin (Texas), London, Sydney, Melbourne, Auckland and Wellington employing 280 staff — 100 added this year alone. “We’re building a multibillion dollar business that is important globally and already have market capital of half a billion so we’re well on the way.”
Drury who grew up in Hawke’s Bay pined for the life of surf, sand, barbeques and long hot summers when he left to go to university and later grew a succession of hi-tech businesses in Wellington. He returned four years ago and finally in mid-2012, he and his wife Anna and their young family moved into their purpose built townhouse on the lower approaches to Te Mata Peak.
Fast forward, play
From his new home he’s a virtual CEO of his global empire, a video conference away from the action, and linked directly to the Ultrafast broadband fibre network because he fast forwarded Unison’s roll-out plans.
Rather than waiting for another two years, he paid the company to pull cable to his door to accommodate his ‘fibre lifestyle’ and along the way sponsored a connection to neighbouring Hereworth School. Now Unison are continuing the roll out along Te Mata Rd where other schools and businesses can take advantage of the light speed capabilities.
“Connecting to the fibre was fundamental to allow me to work from here. There was a business case and I was happy to pay for it … that’s what entrepreneurs do,” says Drury. Complementing the cable is a broadband wireless (NOW) connection.
With trusted senior executives as the face of Xero in the US and UK, Drury is freed up for big picture thinking. “It’s always a sprint, but being in the Bay and being fibre-connected makes this more sustainable.” He just makes sure he blocks out time for a mountain bike ride up Te Mata Peak, taking the kids to school, a trip to the beach or simply for kicking a ball around.
To most of us, however, Drury’s life would still be considered manic, even though he’s increased the number of at-home days from two or three to around four a week. It’s a 27 x 7 business constantly checking emails, working late at night and early in the morning, something Drury has done for 20-something years.
The globetrotting fibre evangelist takes his iPhone and iPad with him wherever he goes and uses a MacBook Pro Retina in his office along with HD video conferencing, Skype, and Go2 teleconferencing tools. He’s just an extension number away from his colleagues and says Yammer, the private social network for corporates is his most important tool for building a global Xero culture.
“Over summer I might be doing a conference call to New York and just flip around and I’m already in my board shorts and ready to head down to the beach with the kids to make a sandcastle. It’s awesome.”
For home entertainment his three children, one pre-school and two pre-teens, have their own tablet computers and there’s a big ultra-thin TV hooked up to Apple TV with a US iTunes account so they can watch US TV shows direct.
“Apple TV over fibre is fantastic. You can watch movies in high-definition, although it’s not quite the experience it is in the US. You have to wait for on-demand movies to buffer before you start watching. It’s like having cable TV.”
While the family has Sky TV, it’s used less frequently these days, which segues into the ongoing controversy around how that network appears to be holding the country to ransom over access to content.
Drury says the Government’s Ultrafast Broadband (UFB) network, which plans to bring fibre optic cable to the door of most New Zealanders over the next five or so years, is a complex integrated system which hasn’t been properly thought through.
“That’s why the uptake of UFB so far has been pathetic. There’s no reason to have it; there has to be some alternative content.” He says people are not going to spend $60-$70 a month on Sky and the same amount again on broadband – they will want to pay $99 for the lot
“Either we’ll have to regulate Sky and provide that content over broadband or find new content pools like Apple TV, Netflix or Amazon Prime so people at home can see some value.”
He’s hoping that Prime Minister John Key’s recent trip to the US to meet with the big Hollywood studios will have a positive impact not only in having more movies made here but freeing up access to their content.
The other mainstream use of UFB will be domestic video conferencing, but that’ll only increase as the economy is transformed. As far as business goes, he says, fibre is pivotal for Hawke’s Bay’s economic growth.
High fibre diet risk
While some may suggest the failure of the $400 million Pacific Fibre venture in which he was a leading shareholder was a major career glitch, Drury is unfazed and undeterred from the goal of achieving an alternative direct undersea fibre optic cable between Auckland, Sydney and Los Angeles.
The cable, in competition to Southern Cross, majority owned by Telecom, would have removed bandwidth bottlenecks, the need for data caps, reduced communications costs for Kiwi exporters and made more sense of the $1.35 billion UFB rollout.
Despite Pacific Fibre’s high profile partners it was unable to find the full funding. Drury personally dropped about a million dollars.
Some of the obstacles were political. The US resisted an offer of full funding from China and the New Zealand Government was “apathetic”, failing to engage or support the proposal when it could have saved the day.
He says it should now be clear to the Government that these kinds of projects cannot be achieved solely by the private sector; so he’s pulling together a public-private partnership to pick up the threads.
Head in the cloud
As Xero becomes more resourced and influential, he’s hopeful the next attempt may be taken more seriously. “Rather than going to the Government and saying ‘please sir can you help us’ it will be more of a win-win peer relationship … maybe we can pull the Government along with us.”
Xero continues to beef up its servers, storage capacity and high performance infrastructure and develop a range of high-level services to build relationships and add value to its client base.
Drury has considered relocating his Wellington head office to Hawke’s Bay, but there were few takers. “It would be unrealistic. There’s such a diversity of people and a concentration of those in their 20s and 30s who’re not interested in Hawke’s Bay at this stage of their life, although they may be once they’ve had a few kids.”
To achieve its projected growth curve Xero will need 1000 staff internationally, including around 300 in the call centre which may be a better fit for Hawke’s Bay. In fact, he says, many cloud-based companies like Xero now represent big opportunities for provincial areas that develop strategies to attract this kind of business.
Sadly, part of the reasoning is Kiwi workers cost less than 60% of their Australian counterparts; even then, skilled helpdesk or troubleshooting staff can earn relatively high wages.
These are the jobs of the future, paying up to $45,000-$90,000 for people who understand software, are good at product management or product assurance, and have some understanding of business.
These new call centres end up being the face of the company, reflecting customer satisfaction and sales, says Drury.
Forces of attraction
In his default role as Hawke’s Bay hi-tech ambassador, Drury believes great benefits can be realised by attracting senior executives from the country’s largest companies to relocate. Once they’re hooked they’ll spend their money here and actively promote the area to their own networks.
He has arranged conferences for the hi-tech sector at Black Barn and created events that help people build relationships with the Bay, which he believes can become “a really connected place”.
It’s often outsiders, or those who had been away, who bring fresh ideas. For example Drury has been engaging with a group over the past six months to re-imagine Marine Parade and re-brand Hawke’s Bay as a kids’ capital.
The old Marineland could be a ‘cable ski park’ with an artificial wave project with neighbouring developments including a BMX jump park, learners bike riding and water recreation. “We’ve already had approaches from private sector operators who’d love to invest.”
Drury reckons kids desiring “authentic action sports” will beg their parents to take them to Hawke’s Bay for a holiday like they used to in the original Marineland days.
It’s in his nature to get people to rethink things. “Sometimes you just need to do a reset from the politically correct, consultative, go-slow approach, put a vision forward and see if people come alive to it … As an entrepreneur it’s hard to sit back and watch things not happen.”