This year’s Australian Xerocon conference in Sydney was also the venue for the global Xero developer conference, breaking another record for attendance with over 300 in the room. Add-on partners and developers from around the world are in town, many of them exhibiting at Xerocon on Thursday and Friday.
It is really humbling to see the amazing following the Xero ecosystem has – we announced over 18,000 developer registrations at the conference, but nothing brings home the vibrancy of the ecosystem more than meeting developers in person who have come from far and wide for developer day and Xerocon. We have attendees from various parts of the US & UK here in Sydney, but the prize for furthest traveller goes to Dublin based Transfermate, a distance of 17,203km!
Check out the video highlights from Xero Developer Day 2014 below:
Chris Ridd – Xero in Australia
Chris outlined Xero’s rapid growth in Australia – from 7 staff when he joined the company in 2011 to 161 today – but adds that the company is building sustainable growth. Xero in Australia has facilitated $54 billion in transactions, and processed $1 billion worth of payroll in July alone.
He told add-on partners & developers that Xero remains committed to having an open platform, and is forming great partnerships with developers and with accountants.
Cloud is still the most effective delivery model for software. The company is investing more in the cloud integrator channel – there are currently 27 cloud integrators – because a lot of accountants don’t have the skills to implement some of the Xero add-ons. Small businesses also need to be reassured about the safety and utility of the cloud.
Chris announced that an improved new add-ons directory will allow searching not only by function, but also by industry – news that was met with cheers from some of the developers in the room.
The company has 35 developers in Melbourne alone and has already released the first product developed there. That capability will only grow as Xero builds a facility for developers at the Melbourne head office and hires more developers.
Matt Barrie – building a world-class business
Matt Barrie, chairman and CEO of freelancer.com, outlined how he’d built his business and how he sees the landscape for developers.
Matt drew on his own experience to outline what’s needed to build a business that is world class:
- Scalable – a business that can add a lot of customers without adding costs and complexity, and software can help do this, whereas services and physical businesses can’t.
- Markets the size of Texas – along with getting an A-grade team this is the most important aspect of a world class business. “You want to be a big player in a large market,” he said.
- Solving problems – it’s really important to find problems and go and solve them. Matt said you want to be a pain killer, not a vitamin, so that customers will be prepared to pay for the services.
- Secrets – these are unconventional or uncomfortable truths, things that are taboo or forbidden. Matt said this was how he started freelancer.com. In 2008 the really “big uncomfortable secret” was that there were billions of people who lived on $10 a day – and these are the people who did much of the work that freelancer.com provided.
- Tech trends – try to think about where tech trends are heading and target them. Think about what might be available and possible in a few years from now as computing power grows. For instance, the founders of Youtube might have realised that the expansion of computer storage capacity meant it would be possible to store a huge number of videos online, Matt said.
- Demographic trends – Matt noted that there are twice as many people on the internet in China as the entire population of the US – and asked what sort of opportunities this might provide. “You want to think about where the trends are a few years from now,” he said.
- Making money – “The number of start-ups who can’t answer the question how do you make money is mind boggling,” Matt said. Making money means thinking about the business model and the value proposition to the customers, including the switching costs to move away from an existing product or service, whether the business is a subscription model or will need one-off sales, and the cost of getting each new customer.
- The best team – get the best team you can. Matt said venture capitalists will invest in an A-grade team with a B-grade idea, but not the other way round.
Ilya Frolov – don’t just take the money
llya Frolov, investment director at Oxygen Ventures, started with the sobering news that three out of four start ups failed – but fortunately he went on to explain how start-ups can be successful.
He outlined what Oxygen Ventures looks for in a start-up with the example of ECAL, a company founded by Patrick Barrett, which allows sports clubs to manage events online and send the information to their fans. Oxygen Ventures invested for three reasons.
- The problem – email wasn’t working for sports clubs, because people weren’t opening them and spam filters were blocking them, and ECAL was a solution that would bypass email completely.
- The team – Patrick Barrett has extensive sports marketing experience and an A-grade team of IT and e-commerce advisors, that helped counterbalance his weaknesses.
- Traction – ECAL already had an impressive list of 80 clients, including major sporting clubs and organisations.
Patrick was only thinking about sports marketing, but Oxygen Ventures also saw opportunities in education, training and billing. Instead of giving him the $700,000 he was seeking, Oxygen Ventures arranged $2 million for the company and ILL said it’s on its way to becoming a billion dollar company.
It might sound like counterintuitive advice, but llya says founders need to build value – products, customers, revenue, the team, and patients – and delay seeking funding as long as possible. That means that when they do seek funding, to expand overseas for instance, that they’ll be on the front foot when negotiating the term sheet for some VC funding. “Building value as a founder is the most important thing you should be considering,” llya says. “Make sure that you take control of that term sheet tango dance.”
Often it’s about more than money. Start-ups should look for an investors which is going to partner with them and help them build their business. “If you have a compelling enough product and business they’ll be knocking on your door, so you get to choose.”
Developer Platform – Ronan, Oliver & Riley
The Xero Developer Day resumed after lunch, with a discussion about the Xero APIs & developer platform roadmap.
As product manager for the Xero developer platform I explained that developers and add-on partners are the ecosystem – it isn’t Xero’s, it is everyones. Just under 20 percent of Xero customers globally currently use an add-on, but that figure has increased by 40 per cent over the past year, so definitely heading in the right direction.
The main priorities for the platform continue to be stability and performance.
There are 350 add-on partners, but that doesn’t mean the market is too crowded. With Xero as a global platform, somebody building a niche product can for example, build it and validate it in Australia where there are 100,000 customers to validate the strategy before rolling it out to other markets. Xero has invested heavily in the platform development team, doubling its number to help add-on developers be successful.
We will be covering the roadmap and other key announcements from developer day (plus Xerocon news) in next week’s developer hangout.
Payroll API – Oliver Furniss
Vice president of Payroll for Xero, Oliver Furniss, took us through some of the key features the payroll team will be working on over the next few months and how that might affect the payroll APIs.
Olly covered the US Payroll API which launched last week – lots more to come.
Partner Program – Riley James
Riley James, developer relations manager in Australia, outlined the new Xero Add-on Marketplace. He said the old directory was starting to feel the growing pains from over 350 add-on partners, as it’s become a bit difficult to find industry solutions. Invoicing and Jobs is the most popular category in the Add-on Directory, but that’s because it captures so many add-ons, making it hard for customers to find what they want.
Watch out for new of the launch of the new Add-on marketplace over the next few days, and will also be covered in next week’s developer hangout.
Rod Drury – The vision
Rod emphasised that Xero believes in developing a healthy ecosystem. “We want to do what we do really, really well and then create great opportunities for you guys.”
Having invested $250 million in developing the Xero product, Xero is providing the platform developers can use. “Seeing you guys building great business off the back of what we’re doing is one of the things we at Xero are incredibly proud of,” Rod said.
Xero is aiming to commoditise the accounting functions of the business so that developers can build sustainable businesses on the platform. Developers should concentrate on vertical add-ons, which delve deep into a particular industry or business problem as this is where the potential lies, Rod said.
Having outlined his vision, Rod also took questions from the floor.
When will you open in another country?
Rod said Australia and the UK are in a good space and the US is really just getting going, so this will be the priority over the next three to six months. Canada and other major English-speaking countries will be the next target.
Should you outsource to developers overseas?
Rod said developing software is about passion, and that’s why it should be kept in house. He said companies which outsource development to cheaper offshore destinations also don’t get such good results.
Would you move Australian data to Australia?
Xero has spent many millions of dollars to establish multiple geo-redundant data centres. These will remain, but as Xero grows the marginal cost of moving data to Australia will reduce and it could become a point of difference for Xero.
What about add-on pricing?
Developers would have been glad to hear Rod say that he thinks a lot of add-ons are too cheap, particularly for niche verticals. Xero will educate customers that they should pay more for their business software, because add-on developers have different cost structure. Some add-ons can save customers several days work a month and customers need to recognise that and pay for it.
“This is going to be fun for the next 10 to 20 years, we’re really going to change the world,” he said as he finished his speech.
The final sessions of the afternoon, I won’t be covering in depth, but we will be sharing content from them with developers through our next partner and developer news emails.
A big thanks however to:
Jakub Krajcovic, Cloud Architect, Rackspace Australia
Topic: Scaling from bare metal to behemoth with Docker and vNext
Advances in technology around delivering, running and scaling applications in a secure and contained way to a multitude of platforms.
Riley James, Developer Relations, Xero
Topic: One to many: The block chain
Riley takes a non-technical tour of bitcoin and the technology that enables it, the block chain.
Tony Chadwick (Rype), Hannah McIntyre (CrunchBoards), Riley James (Xero), Greg Tuckwell (ZeroBooks) and Steph Hinds (Growthwise).
Topic: Xero ecosystem 360 panel
The Xero Add-on eco-system is growing rapidly so it’s a good time to explore who is participating and how.
And finally, a big thank you to sponsor of today’s developer conference, our own hosting partner, Rackspace.
Check back tomorrow where coverage of Xerocon continues!