Our UK business felt like it grew up a little this week after we opened our first physical office in the UK this Monday.
I imagine it will come as a surprise to most people to learn that in spite of the market presence we’ve managed to build in the UK since we incorporated Xero UK in 2008, we’ve gotten this far entirely as a virtual team, with everyone working from home.
Indeed, it’s an achievement we’re very proud of.
That we’ve been able to build a substantial brand and business in the UK with the physical infrastructure equivalent of half a pack of chewing gum and a broken roller skate, is testament to a great team, the strength of our product and the practical efficiencies of running a business in the cloud.
When we didn’t have two customers to rub together, it made perfect sense to cut our overheads cloth accordingly. Working in the cloud makes that super easy to achieve.
Running our UK accounts on Xero (obviously) meant we could easily in-source all our UK finance functions to our HQ finance team in New Zealand. Other core functions are driven out of our own in-house cloud based CRM, customer care and billing system. And the remaining operational gaps are easily filled with third party web tools like Skype, Yammer, GotoMeeting and Google Docs.
It hasn’t all been sweetness and light and some of the biggest challenges we’ve faced running virtually have involved people. We discovered that it’s not enough to throw cool technology at a problem if you don’t hire the right kind of people – and we learned – sometimes painfully – to hire individuals who are way above average in terms of being self-propelled with bags of initiative, and with a proven capability to walk and chew gum at the same time in their own field of expertise.
Growing a business from zero, eleven thousand miles and thirteen hours away on the other side of the world from the mothership is no job for rookies or the faint hearted. And working in that context virtually means there’s just zero practical scope for handholding people to enable them to learn on the job, and so we needed to hire people who could quickly get up to speed and who could also route around problems when things break. Which they often do in a growing business.
The quality of the people that we’ve hired over the last three years has been a huge factor in our success in the UK.
A market beginning to bloom
So, why go legit now?
The short answer is managing scale and market maturity.
Being now a seasoned veteran in the field of Extreme Virtual Teaming inside a virtual subsidiary business, I’m of the opinion that the benefits begin to diminish with scale and we’re now rolling up towards the mid-teens in UK headcount. We’ll definitely stick with all our web and cloud apps to continue to support our physical operations, but we now have departmental groups inside our UK business that have grown to a size whereby the benefits of co-locating teams outweigh the operational cost savings of running virtually.
And about six months ago I noted an marked organic inflection in our UK sales performance which signalled that the UK market for online accounting was beginning to bloom, and it was time to build out our sales operations from three people – yes only three! – to match up to bigger sales teams in some of our longer established UK competition. Comparatively speaking we’ve gotten this far without breaking all that much of a sweat in terms of sales headcount or marketing budget which might also surprise some.
Winning in your underpants
Our success in the UK combined with our recent funding round means we have total confidence in really gassing up what is now a substantial and established UK business in its own right, and to draw some real distance between Xero and the local cloud competition. Only from now on it’s probably no longer acceptable to do it wearing only our underpants.
I’m sufficiently pragmatic to accept that it might take at least a few more circuits of the sun for us to knock Sage off their perch over here (however encouraged I am that their own cloud offering, Sage One, is being outsold by cheese and tomato sandwiches in Sage’s staff cafe), but we think that being a chunky number two is a nice short to medium term goal, and so that’s where we’re headed.
You’d better get a shake on, Intuit!
And I’m pleased to report that barely four days into our new home, the atmosphere among the team here is electric with the sense of what we will now achieve in our augmented setup over the coming months and years. If you find yourselves around central Milton Keynes (honestly, it’s much cooler now we’re here), stop by and we’ll furnish you with a warm welcome and some quality coffee.