This worked for Mint. I am less confident it will work for Xero, even though many startups/small businesses (myself included) want an alternative to Quickbooks.
The article didn't mention this, but one of the most important selling points is not how it looks to SMBs, but whether or not banks and accountants will work with it. I remember reading somewhere that 90% of small business accountants integrate with Quickbook files or Quickbooks Online. Getting accountants to start using a new system will be a tough sell, especially if only a small number of early adopter clients are there to begin with.
While it may be possible to encourage SMBs to switch to Xero-based banks or accountants, that's a large step for some. I use a neighborhood bank for business banking services (augmented by Dwolla) and a local accountant team that is pretty sharp. Switching is not only a PITA, there's also the risk that a new bank and accountant may be lacking in other areas, even if they support Xero.
Xero figured it out - although it 2-3 years after they launched (they are now 7 years old). Their key to paid customer growth is not the UI (which is great) but that they focus on helping accountants improve the way they do business with their clients. Their marketing focuses on the accountants, and includes extensive training and so on, and they offer free practise management software. It changes the relationship accountants have with their clients and creates evangelists.
To help in the US Xero has just launched a Quickbooks --> Xero tool.
Of not for HN is the comprehensive and rapidly growing ecosystem of add-ons and complementary cloud products, many out of NZ, but many (more?) from offshore. It's a very fast growing area with a lot of opportunity.
I showed it to my accountant and we now regularly use it to cooperate on my accounting. I don't have to bring a MYOB file in to her, I just send her an email with a question and she can log in to look at my books.
She's now recommending it to her other clients.
(n=1)
To avoid taxes, most businesses fudge their accounts. Many maintain two sets of accounts - one for the tax officials and another one for the owners. Thus there is a premium on keeping data within premises and in silos.
"There is a daily limit of 1000 API calls that a provider can make against a particular Xero organisation in a rolling 24 hour period."
That is an absurdly low limit for anything but the simplest of businesses or businesses that aren't actually looking for tight integration, but rather just something to push accounting data to at the end of a day.
[0] http://developer.xero.com/documentation/getting-started/xero...
http://developer.xero.com/documentation/getting-started/xero...
I've meet him a few times when I lived in Auckland (New Zealand) and approached him for advice when I was fresh out of University. If New Zealand wasn't such a small place getting access would have been impossible but Rod was really approachable and I was lucky enough to meet him over breakfast and get some entrepreneurial advice (this was about 7 years ago).
Some of the most memorable things he said to me at that breakfast was that entrepreneurs are fundamentally unemployable. I inferred from that statement that being an entrepreneur was going to be the only compatible career path for me (at the time I was considering going into investment banking). At the time I didn't heed his advice (well I was an impetuous youth) and I went to work for a discretionary fund manager but with the benefit of hindsight he was quite right. I really didn't like working for others.
The other thing he said was that I was probably too young for entrepreneurial success and that there's a certain element of experience needed for entrepreneurial success. I'm now a bit older and a touch greyer and with the luxury of hindsight I can now understand what he means. Now in my early 30s, my approach to launching my start up is a lot different to what I was doing in my 20s.
Through the Xero partner program there are some perks, including software to manage their practice. http://www.xero.com/au/partners/
1) It syncs with HSBC bank (we chose HSBC as it syncs with Xero)
2) It syncs with PayPal (we chose PayPal as it syncs with Xero)
3) Our accountants ( http://ihorizon.co.uk/ ) use it heavily
4) It has an API
My goal in choosing an accounting tool is to have visibility and centralisation to ensure that the key people in the company have information instantly about cash flow, assets, the books, etc. And it does all of this really well.
The areas in which Xero is a PITA for anyone considering using it:
A) Expenses.
B) API limits.
C) Payroll
On expenses, the cycle is a long one and unfortunately expenses in Xero are such a mess that our accountants urge us to use an Excel based spreadsheet that we print and complete by hand, and then post to the accountant for processing. Then the accountant summarises the expenses and enters it into Xero. This sucks big time. One of our goals in choosing Xero is to ensure that we can see all of our costs clearly. We want to be able to answer questions like "How much are we spending on air travel?" and if expenses are summarised we lose that insight. Expenses in Xero are non-editable, which makes them very hard to fix when an employee enters in something wrong. We're not talking about fixing the payment amounts as payments would have been made already, but fixing categorisation, VAT (sales tax), etc.
On API limits one of the driving reasons to select Xero was to have the capability for a company dashboard in which revenue, recurring revenue, runway, etc is displayable on the single dashboard along with customer metrics, operations information, etc. We even want to eventually have monetary events in the company books charted "there was this spike of customers due to this Slashdotting, that led to this operations load which in turn did this to the revenue" (or not as is likely the case). The API limits are way too low to be useful, to the point that right now we've not actually built it into the dashboard. The limits are such that developing against the API isn't as trivial as calling it and fetching the numbers, now we'd have to build our own storage and design that schema, etc. It's gone from a quick extension to the dashboard to a more significant piece of work.
On payroll, Xero does not implement any real capability other than recording that payroll has happened. That our accountant still uses Sage ( http://www.sage.co.uk/sage-50-payroll ) to calculate payroll and generate payslips and payment instructions shows how useless Xero payroll is. It's not even fit for purpose, they built the first 80% (recording it and issuing payslips, etc) but not the ability to calculate it.
I don't know how the main UK competitor stacks up against Xero, but I've looked at Kashflow ( http://www.kashflow.com/ ) a few times and would probably try it out in parallel to Xero for a while if they'd complete the picture above and weren't using SOAP for the API.
Xero is a love/hate relationship, it's good but the limitations are awkward and inelegant. It feels half-baked in many ways, parts of Xero are nearly perfect, but other parts look like a first-stab that after 3 years of using it it has become clear that no-one is going to finish.
Anyone have any thoughts on features/prices of these?
They do great marketing, and the name being a play on Quickbooks is simply brilliant, but it's not at all an accounting system. No double entry, no general ledger...it's just invoices.
Granted, they are incredibly successful, so are doing something right, but I find it fairly annoying that their marketing positions themselves as a Quickbooks alternative ("cloud accounting") when they are not, IMO.
Perhaps I'm being pedantic.
So, Freshbooks aside, Xero is not Quickbooks, so I think that means it wins. :-)
Quickbooks Online is mainly for very small businesses. QuickBooks Windows can run a 20M a year business QuickBooks Mac has basically be abandoned.
XERO has a killer API, but I never run into businesses on the platform. We see more people on AccountEdge (MYOB usa).
Rod has said to me previously that no entrepreneur should have money before they're 30... which has rung true with me. At least from a NZ perspective, we have to suffer for our art, it takes time to earn your stripes.
The structural problems:
IMHO the biggest problem isn't distance to global markets but a lack of capital gains tax on real estate which soaks up capital that could otherwise go to new ventures. When I say that, I'm talking about the 3Fs... friends, fools and family. Please don't get me started on the New Zealand Venture Investment Fund (NZVIF), the Seed Co-investment Fund and Kiwi Saver because these are band-aid solutions to the tax problem. And forget about any solution to it. Any political party/coalition that tries to do away with the no capital gains tax on real estate will be committing Seppuku.
Also NZ suffers from a vicious venture capital (VC) Catch-22. With hardly any angel/VC industry there is no quality deal flow (I'm talking about deals where the VC actually has a chance at x1000 returns) which feedbacks to poor prospects for VCs to raise money for their funds from pension funds (they live and die by their returns). So without astronomical VC returns, pension funds just aren't interested in an allocation of their portfolio to VC because it just won't make a difference to their overall fund return. End result, there is no NZ VC.
The cultural issues:
While entrepreneurial tall poppy syndrome was waning when I left NZ thanks to initiatives like the University of Auckland's Spark competition (I was a finalist one year and an eventual winner the next) there are much bigger cultural issues I think kiwi entrepreneurs face that no one seems to talk about. This would be the shame of failure and low aspiration that pervades kiwi entrepreneurs. The shame of venture failure is something I have personally experienced. It took me my 5th time trying to start a venture (between my teens and my early 20s) before I successfully built a company of 30 people. I then got bought out by a co-founder and I went to University. I'm sure that those 4 other failures taught me lessons (the 5th venture did too) but I just couldn't talk about my other failures to people. I always felt that it just wasn't culturally all right to do so and I've seen it cause problems when trying to raise seed/early stage money in NZ. I've found that people keep this silence and project a "I did it on my first go" fantasy. This becomes a feedback loop and the bottom line is that kiwi investors just don't want to invest in entrepreneurs that have 'failed' before. This isn't the case in other places where your venture failure, and ability to keep picking yourself up, is seen as important and needed experience. The low aspiration/horizon thing is also a big problem... I found that on average most entrepreneurs only aspire for the 3Bs... the beamer (BMW), the batch (holiday home) and the boat. Anything beyond the 3Bs and there's this perception that you're just being greedy. And you know what they say... birds of a feather. I remember pitching something (in NZ) to some some high net worths from Silicon Valley a venture idea and then being asked point blank why I want to do it. I was floored, thinking to myself, "isn't it obvious?" I replied, "I want to get rich." To which they replied, "that's the right answer." "We've been travelling across NZ looking for ventures to invest in and not one entrepreneur said that. They all see their business as a lifestyle vehicle whereas I'm interested in a good return on my risky investment." And while they weren't so interested in the opportunity I pitched them, they have become great mentors to me.
My advice to aspiring kiwi entrepreneurs, don't become an entrepreneur unless you are tough enough to handle it... but if you are, then shed a tear for Aotearoa (the Maori name for NZ) and just leave.
I know saying that will ruffle feathers and won't be right for everyone's situation. However after fighting these structural and cultural issues I let go and embraced that NZ has a location disadvantage for new tech ventures. This decision was hard, and the price I've paid has been high. Leaving my friends and family and starting from nothing in London... no friends, no money just my entrepreneurial dreams, has much harder than I ever imagined.
I am a much stronger person because of it. Also I know right down to my bones that moving here has been the best move for my future entrepreneurial prospects. If it doesn't work out then I'll do it all again and somehow, some way, move to Silicon Valley. It's been hard... and I expect it will get harder since I have a baby on the way, but IMHO you have got to stack as many things in your favour when you're trying to launch a new venture and location is part of the equation.
If the scales are tipped against you then you've got to do what it takes to even out the odds.
Best of luck to all kiwi entrepreneurs, you all have my heart felt condolences.
My theory is that Xero purposely crippled parts of their software so as not to offend or discourage the developer ecosystem. However, they missed the target with things like payroll, which is such a gigantic PITA for everyone and EVERYONE WANTS IT, that they instead responded by creating a solution that tried to appease third-party developers and their users. As you said, that solution ended up half-baked and pointless.
However, I have great faith in Xero. If they buckle down on things features we want, their developer ecosystem be damned, then we might get a truly killer product.
I'm glad you have faith. Lots of features in the pipeline.
i second that. i whish they would make a policy that everything that can be clicked can also be accomplished by using the API. we're currently working around quite a few things that the UI facilitates, but the API does not.
http://blog.xero.com/2013/07/purchase-orders-what-were-up-to...
We're going to be integrating internally with Xero in the next couple of months, so hopefully the API call limit doesn't become a pain.
Otherwise, keep up the good work.
I think there's an appropriate middle ground, and we'll find our footing over the next 5 years or so.
There are 2 or 3 different APIs, with verifying levels of support for various features. At times QB will push a release that breaks everything for all your clients and you're left to deal with it.
Not a fun time. edit(spelling)
I mean seriously, it's an accounting system!
Found a thread where people have been asking for it for more than a year and have been ignored by Xero