Finding talent key challenge for Xero growth: Drury

Part one of Q and A with Xero and Pacific Fibre founder Rod Drury

When Rod Drury launched his online accountancy start-up Xero in 2007, he became a prominent advocate for the New Zealand ICT community. Drury has also set up the joint venture company Pacific Fibre, created with cofounders Stephen Tindall and Sam Morgan, to lay a second international telecommunications cable to this country.

Stephen Bell caught up with Drury shortly before his third trip to the US this year.

Computerworld: What’s top of the mind for you in your business, your area of the market and ICT in general?

Drury: Business is going really well. We’re doing a lot of work entering the US market; building relationships, looking for marketing partnerships, recruiting staff; all those things are going pretty well. It is really interesting now just how easy it is to connect globally. We’ve flown some Americans down; we’re doing conference calls every day with US companies; I am on my third trip this year – just about to head off in a week or so. It is a very exciting time as we build global businesses.

What has made it easier to connect globally?

I think as we have been around for a while, it is so easy for people to do a Google search and see what you’ve done. Having raised money from [early Facebook investor] Peter Thiel and having lots of happy customers; people find us and quickly realise we’re a pretty serious player. So we have had no trouble connecting to some of the largest organisation in the world and having really good discussions.

We are taking a measured approach to the US; not trying to do too much too quickly, but doing the easy stuff, around getting [early] customers and building on the base we have already.

Even things like LinkedIn mean you are able to connect quickly to key people inside organisations. Good flights to San Francisco make it pretty easy to get up there and do the business. All those things make it pretty straightforward to operate globally now.

What are the continuing challenges in your business?

Finding good talent and making good hires; the rest of it is pretty straightforward. The big things we see going on in New Zealand now are the fibre-to-the-home UFB thing, which is at a really interesting point. It is a really hard problem to solve, but it is going to be good for our industry.

Do you think the UFB strategy and negotiations there are going in the right direction?

I think international is much more important than the last mile. If you fix international it makes it easier to invest in the last mile. There is no doubt the UFB is going to pick some winners and some losers, because it is very interventionist in the last mile.

Fixing international opens the pipes up and makes the business case much easier. Getting the demand side right so New Zealanders can connect to new services and small businesses can connect to their customers overseas using Skype and other technologies; to me that is the bit that really makes the difference. That is why we have done Pacific Fibre.

Again, that is all progressing very nicely and I think we can make a big contribution.

It is definitely interesting watching what is going on in the [UFB] market; there is a lot of people spending a lot of time at this key point on their final bids.

Can you elaborate on “getting the demand side right”?

Unless you can connect to new services overseas cost-effectively, no-one’s going to spend the money on fibre to the home just to use their data cap 10 times faster. We have got to break international data caps and make it easier to get to new content.

We should be able to download programmes from AppleTV and Amazon. We should be able to do multi-party videoconferencing. Those are the sort of international bandwidth [uses] that are required for people to see the value in spending more money on their broadband connection.

If you just make the internal networks faster, you’ll just use up your data cap faster. Unless television comes through the IP network, there is no reason for people to spend any more money.

I think the government understands that now. We have seen a lot more activity happening on the demand side; and the demand side points to the international bottleneck straight away.

Do you think enough has been done to inform people and inspire creative thinking about ways to use broadband?

I’m not too worried about that; businesses will just show people what they can do. But we have been locked into a long process. Finally, there is a bit of light at the end of the tunnel. But there is much bigger strategic stuff to think about.

For example, what happens to Sky Television? Is it going to be mandated that it gets delivered over fibre so people will pay for the triple play?

What about content off the Apple store? We still can’t get television programmes you expect overseas. We still can’t do multi-party videoconferencing because of international bandwidth costs. You still can’t do viable Live Meeting demos across the world, because the bandwidth and quality of service are just not good enough.

Yes, we have been in a sub-optimal process [with UFB]; that is pretty well known. But we are almost through it and I think as this [stage] finishes, the debate needs to get away from who wins the contract to what’s the technology plan to make sure there are new services that will actually increase business. We clearly think that is international, which is why we are doing Pacific Fibre.

So how’s that going?

Mark Rushworth is really the spokesman, but it is going well. We are making good progress on our funding, on customer contracts and we have just released our Request to Tender to the main submarine cable suppliers.

Tomorrow, Rod Drury discusses what he considers to be the most important developments in ICT in New Zealand.

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