With the recent news of Xero raising more than $110 million came the announcement of the online accounting software provider hiring a new U.S. president, Russell Fujioka.
In taking over the responsibilities of Xero’s previous North America CEO Peter Karpas, who departed the company in September, Fujioka will be implementing a new direction in growing the company’s U.S. share. The U.S. has lagged behind Xero’s success in native New Zealand and Australia—according to the company’s fiscal year 2015 report, Xero had 119,000 paying customers in New Zealand, 158,000 in Australia and 22,000 in North America as of September 2014.
Xero’s stateside business strategy will be crucial as it moves toward an initial public offering that, while on the horizon, the company declines to assign a more specific timeline.
Instead, Fujioka said, his focus will be on a U.S.-tailored model for growth. Fujioka most recently worked as a consultant for Xero with global venture capital firm Bessemer Venture Partners, bringing with him four years of experience running Dell’s various global marketing operations and its entire go-to market for the business-to-business group that drove $52 billion in revenue. Despite this background and helping Xero hire its new vice president of marketing and VP of sales in his last nine months with the company, Fujioka said his relatively fresh eyes will be an asset to this role.
"I have the opportunity to come in and look at things from a non-historical bent as we go forward," Fujioka shared. "I’ve had the realization of a couple of things. The business Xero was able to grow, to thrive in New Zealand and Australia, is not a model that is going to work in the U.S. That was primarily through accountants, bookkeepers and CPAs. There is a different way to convert people under the Xero platform."
To "accelerate adoption," Xero will directly target small businesses. Because while its many accountant, CPA and bookkeeper customers overseas typically switch their entire customer base to the platform, their U.S. equivalents are less likely to make that recommendation. The nuances of 50 states and the U.S.'s lagging cloud adoption also factor into the market differentiation.
U.S. finance professionals will remain a vital part of the Xero ecosystem, Fujioka explained. The accounting channel, which is "going to be longer tail but still very much a priority," will continue to be driven by Jamie Sutherland, previously president of Xero U.S. and now general manager of U.S. products and solutions.
"The central mission of the company is to strive to create a platform that helps small businesses thrive," Fujioka said. "Accountants, CPAs and bookkeepers are a very important part of that. A financial platform like Xero, and particularly Xero, ties into the professional services of a CPA or accountant and the businesses have a higher predisposition to succeed."
Also giving these businesses a leg up, according to Fujioka, is the foundational community of more than 29 million fellow small businesses.
"Any archetype for the heart of small businesses, the U.S. is the fabric of it," he said, stressing the company mission "to help small businesses and be material, in the global view, to get the U.S. healthy on Xero and for small businesses."
The loftiness of that view is not inconsequential for Fujioka, who is drawn to working with visionaries, ranging from Michael Dell’s drive to democratize data to Rod Drury’s “change the world mentality.”
"Any percentage of small businesses you can make better business people and more financially literate, they fundamentally change the economy," Fujioka elaborated. "What brought me to Xero was the founder, the mission, and the founder built around the mission. I will help drive the parts we need to get him there."
As for the $110 million that accompanies his entrance, Fujioka said Xero’s fiscal year 2016 plans have not changed with more money in the bank. What the investments do provide is an assuredness to help Xero go to market organically and eye future acquisitions, he explained. And given the source of those funds in Accel Partners, "an incredible partner in the technology community with a lot of connections and experience dealing with high growth companies," and current shareholder Matrix Capital Management, Fujioka said he is looking forward to working with "smart money" and "smart guys."
Both those firms, as well as Xero’s board (which recently welcomed former Salesforce CFO Graham Smith), and Fujioka himself have "no lack of experience on filing, accelerating and understanding what it means to bring a company public in the U.S."
In the meantime, Fujioka is predicting big things.
“The U.S. market will be the biggest market for Xero over time.”
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