Asset management is certainly not the sexiest topic. Often considered the purview of accountants and bookkeepers rather than executives. Asset Guru founder and chief executive, Chris Petersen, believes it forms a much bigger part of the whole business picture. He sat down with Chris Player to discuss the past, present and future of the Australian start-up.
Tell us a little bit about Asset Guru. What drove you to start the company?
Asset management is a pretty interesting space. Enterprise asset management is a billion dollar industry that’s been around for decades. At the top end of town what it tries to do is provide an all seeing, all dancing understanding and management of things that you own.
It’s the ownership, financial depreciation, maintenance and vendor management. It’s really complex on purpose, and with good reason. The amount of angles and facets to this one topic is massive.
Having worked at IBM for ten years, I had always questioned why these things needed to be so complex. There was also the question of what SMBs do?
SMBs don’t use asset management, they use Excel. I think the market is ripe to see a move away from software in what has traditionally been seen as a much more rudimentary topic, asset management as a whole.
We distill the essence of what the big guys do and put it in the hands of anybody. At its heart it is a way to automatically depreciate your stuff, but in essence it’s more of a business and finance tool.
At its essence, I think it’s a really cool little tool that unlocks a lot of potential without the overhead. At its heart that’s what Salesforce does, it does this very well and, on purpose, ignores a lot of the complexity. With the exponential increase in investment beyond what the 60 to 80 per cent of what people need, there is a decrease in efficiency and return on that investment.
If you’re going to invest a million or two million if you need it, absolutely. If a company comes to us that is at that level of complexity, we will gladly introduce them to IBM or SAP, but that’s not our target market.
Our target market is the SMBs of the world, the 2.1 million small businesses in Australia, the 9 million in the UK and the 28 million in the US. These businesses really have this as a rudimentary problem.
Asset management lends itself quite well to accounting. You’re integrating with Xero. There are other platforms out there, any plans to integrate with them?
We will. It’s on our roadmap. We haven’t booked in a time, but it is definitely part of our strategy.
So why Xero first?
Simplicity. Our aim as an organisation is to make things simple. What we mean by that is not to dumb things down, quite the opposite, it is just to get the nuggets of what’s going on and focus on that.
The biggest thing we want to avoid in sales conversations is asking, why do you do X, Y and Z? We want to say, OK if we just did these first three things, wouldn’t that way be better? Wouldn’t that increase your efficiency by 50 per cent? Isn’t a 50 per cent gain pretty good?
Xero is focussed on how to empower a business user just as much as a finance or accounting user. That’s why it has grown so much in Australia especially.
As a startup we have to start somewhere. We would love to integrate with absolutely every player and it’s on our road map to do as many as we possibly can.
Our next play will be to integrate with Quickbooks. The reason being is that it hits our four target markets New Zealand, Australia, Britain and the US. Each has very different needs, the latter two in particular. Quickbooks online is another good fit for us because they try to simplify accounting and accounting practices. It’s a no-brainer for us to go after them next.
What’s the hardest thing about deploying in multiple markets?
For us it’s a mindset change with the accountants and bookkeepers of the world. It’s not that they don’t understand the space, they do, but it’s a chance to challenge them and say, why do it manually when it can be automated?
In a good way, we are challenging them to move up the food chain of investment in this particular area. When they then go and have a conversation with their counterparts on the business side of that company, they can demonstrate the value they add beyond just doing a BAS in Australia or finishing off the financial year in the UK.
From my perspective, there will always be some level of resistance to change, but the people we speak to get it again and again. It’s really those business minded accountants and bookkeepers that really focus on both sides, not just getting the books up to date.
Most of the SMBs you are targeting are going to use an external accountant. Is that your way in?
So far, our in has been through the internal finance department in the more medium sized businesses. Mainly because they just get it straight away. They see it as part of a holistic picture of their business. As a startup, our hope is that that replicates across the industry both internally and externally.
However, the smaller the size of a business, the more external consultants there are. So the focus on that part of the business is often farmed out to someone externally. Our next round will be out to that external accountant, book keeping community.
Are accountants now a new type of reseller for the SMB community?
They are certainly trusted advisors. I know as a small business advisor myself, we move at such a rapid pace that you just don’t have time to focus on every possible angle, and you have to respond and rely on external consultants to fill the gap.
Is it going to happen as a reseller market and as a channel? Absolutely. Will it take time? Absolutely.
The question really is that as a set of startup, fin-tech-focused companies of which we are one, would you bet your entire business on the accountants and bookkeepers of the world totally getting it and reselling out of the kindness of their heart? No, they have their own businesses to run and we respect that. So we need a dual strategy.
I think that in the Australian market, book keepers and accountants see their hourly rate as less important to their subscription. I think that’s really pertinent.
As soon as they start to see their own business change to a subscription model, doing whatever needs to be done in a month for a set price, then solutions like ours come to the forefront very quickly.
They will be thinking about the holistic business, how to value add and how to differentiate themselves much more so that asking how many hours they can bill in a month.
The net return will be greater as a result of that subscription style thought process.
Where do you see Asset Guru in the short to medium term?
In twelve months we definitely want to be in the UK market. We are starting to do some small campaigns there for the start of their financial year.
Beyond that, within five years we plan to be in the US market. Our goals are really to help leverage the Australian experience. So many products have been launched in Australia to test the market worldwide by American companies, we are just doing it the other way.
The number of times I have heard in the startup community, Rod Drury [Xero chief executive] has said this as well, that the US must be treated like several separate markets. Los Angeles is different to San Francisco which is different to Utah and so on.
Australia is very much like that with its disparate markets that have different thought processes and different things that they value. Every vendor needs to be able to fulfill the needs of the local community in those markets.
Have you approached different markets in Australia differently?
The Queensland and New South Wales approaches have been different. The reason being is that they tend to think more big business in Queensland. The mining community, the idea of construction and big infrastructure projects brings a nice mix.
When we recently did the Xero roadshow on the eastern seaboard, the conversations we had in Brisbane where at a much higher strategic level. They wanted to know what the value add was to the business and not just how we could make their bookkeeping faster, which was the case in other cities. It was more like pitching to the C-suite.
I really enjoyed the conversations I had in Brisbane, and the Gold Coast for that matter, because it was just that next step up in terms of the style of business that they deal with.
There might be fewer customers in a market like Queensland, but the size of the customer is bigger, that is really interesting to us.
So what’s your go-to-market strategy?
We definitely have a three way play. The first is via our website, so self service in other words. Second is the channel, we will continue to invest in our message marketing, skilling up others to the accounting and book keeping practices and financial advice practices. The third is direct. With our play there needs to be that tension between the three approaches to start the thing moving.
In channel terms, I very much saw it as a case of that you can train everybody, but unless a company has thought about Asset Guru, there won’t be that pull. We can push out as much as we like, but that doesn't make a market. You need to create a pull mechanism.
What do your channel partners offer you in those terms?
They add business value, they add the complete picture. We specialise wholeheartedly in one particular angle, but they bring the complete, holistic customer picture into play and enable us to bridge the gap between the complete customer need and how our solution fits within that.
Our direct interactions with customers are definitely having immediate yield and that’s because there’s a story. My experience in dealing with any channel over a number of years is that, unfortunately, you are one step away from the customer.
There is a lot of relevance in bringing the actual customer story to play. That’s not to say that the channel defuses that, but direct interaction helps us much more with that channel play rather than against it because we bring those stories to bare.
When a channel partner wants to know how they can get a return, we can show them how a direct customer does that. Interestingly, the biggest thing we are getting from the channel is more of a platform play.