On 5 March, cloud accounting software provider, Xero, revealed that founding CEO, Rod Drury, would step aside, leaving former Microsoft Australia and New Zealand (A/NZ) vice president, Steve Vamos, to lead the company going forward.
The New Zealand-born provider also revealed that Vamos had spent the past 18 months prior to the announcement working closely with the company’s executive team, developing is management capability and operating model.
Clearly, the leadership change has been coming for some time, even if the business has only just told shareholders of the succession plan.
For Drury, who started Xero in 2006 with just four employees and has since grown it into a to an international leader in its field with over 1.2 million subscribers, the move will let him get back to the business of technology innovation while Vamos runs the day-to-day operations of the organisation.
“For the first 10 years of our journey, we had to build all the complexity of SAP for small business; we had to build a global business platform and build a global business channel,” Drury said during a call with media on 5 March. “So that’s worked really, really well, and [I’m] super stoked to get to that point.
“Now we have a whole lot of options about new things we can provide over that platform… moving from the back office to the front office, doing more in the fintech space, those sorts of things.
“I was finding I was a little bit stretched. We’ve got so much innovation we can build, and then there’s just the day-to-day running of the business globally and working all of that out. That was one of the factors that really came into this."
Drury said that, far from taking his newfound wiggle room to go out and find other projects to sink his teeth into or other companies with which to become a board member, he wanted to take the time to build new products over the company’s platform.
“This allows me to get back to the bits that really turn me on about the business,” he said.
Going further, Drury said that in Xero's first 10 years, the provider took traditional desktop software that got to about 5-10 per cent of market penetration -- this has since been built out on the web, thanks to the cloud, now provided by Amazon Web Services (AWS).
In markets such as New Zealand, the company is seeing over a third of all businesses on the platform, in Australia it’s around about 20 per cent of all businesses, according to Drury.
“We think the next stage [for Xero] is using all of that amazing data – we processed something like $1.6 trillion of data last year – to expand the Xero platform so we can get to 70-80 per cent-plus market share, we think it’s going to be about transforming the experience,” he added.
“Now we can use the technology we’ve moved on the AWS platform and can build a whole lot of neat new products and services and rapidly expand our product out to the entire market.
“These are the reasons that I was really keen to focus on the next technology platform, as a technologist, being able to apply technology at the scale and the opportunity we have at Xero, it’s just so exciting."
Drury’s comments come over half a year after the founder used the company’s annual shareholder’s meeting mid-last year to talk up its burgeoning use of machine learning and AI.
This is a theme he returned to in a blog post about the CEO succession plan published on 5 March, in which he said that he is excited to continue to work on how machine learning will transform accounting and see the new initiatives we dreamed up – for example, the Xero Life Long Learning Platform – deliver their full potential.
“I’ve been super lucky to be able to focus on product for the last 11 years at Xero, while our leadership team has been operating the business,” Drury said. “ We have a clear innovation roadmap and Steve is ready is execute on the vision we’ve spent the last 18 months building.
“Xero is only just at the beginning with so much more to be achieved. We’ve done much of the hard work. We have a clear strategy, a strong leadership team and the business is performing strongly. So it’s the ideal time for me to hand things over."
Vamos, meanwhile, has worked to assure Xero shareholders that he understands the nuances of a founder-led business, and that Drury’s stamp will always be on Xero - that his DNA will always be a part of the company – and that it will continue to be as Vamos leads the business through its next phase.
“I’m incredibly excited about the opportunity continue to work with the Xero team, with Rod, the Xero board [and] our partners on the next chapter of Xero’s growth in my new role,” he said.
In February, Xero rolled all of its publicly-listed shares onto the Australian Securities Exchange (ASX), formally withdrawing from the New Zealand Stock Exchange (NZX).
The move came around three months after the New Zealand-founded cloud accounting provider confirmed it would delist from the NZX and consolidate its listing to the ASX.
With the move complete, the company reiterated its reasons behind the consolidation, saying a the time that the sole ASX listing provides the right platform for the “next phase of our growth”.
“Xero remains focused on its strategic priorities around product development and continuing to expand its geographic footprint and we are excited about the opportunities ahead,” the company said in a statement at the time.