Unpleasant people with Asperger's syndrome
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Unpleasant people with Asperger's syndrome
Possibly with lacklustre results? As noted, your techno rant bares little relevance to the strategic ability of the company to capture sales. Open Source zealot who doesn't play well with others perchance?Quote:
I HAVE SPENT THIRTY YEAR IN ACCOUNTING SOFTWARE MODEL R&D
.Quote:
Actually it is not new at all. It is simply an old idea given a new name...
Excellent post and summary. The real disruptor in this market will be the commodification, or even disappearance of the accountancy profession via the combination of cheap labour markets, automation and AI as can be seen in other white collar professions (e.g. the natural language algos currently replacing lawyers for contract settlement of uncontested divorces, property titles and the like).
Hmm. Just tuned into this thread to get an idea of what people think of the plunging share price and also get an idea of what people think will happen when some of the initial investors are able to sell their shares.
There's 5 minutes of my life I'm not getting back.
Crazy to think this company is growing by roughly 476 clients a day, is that right?
How the hell do they organises that sort of carnage.
They dont have to do anything! - it is done all online and they just have to ensure they pay the bill to Rackspace who host the server. Very cheap and very scalable.
The tough/expensive part is ensuring there is a constant flow of companies that hit the sign-up page. The network of accountants is very important for this - there is no better recommendation for accounting software than from your accountant.
Someone is selling down to 1750
Could be worse?
Looks like you can reply to yourself. Great. There is not too much going on in this article either.
http://www.stuff.co.nz/business/indu...-once-cap-goes
Nice work Goldstein.
Hey NG thanks for your post the other day and I'm putting my hand up to being one having very little business acumen when it comes to Xero just a stubborn belief that they can achieve what they set out to do plus I was told I would never achieve certain things in life which I did against substantial odds so I'm behind Rod all the way.
Just watching the pre close wrestling match. Fascinating.
Perhaps the end of the escrow period couldn't have come at a better time? I mean if the SP was in the high 30's still then we may have seen a decent sell off in anticipation of current events unfolding further - maybe we would be sitting on $12 now instead? In our current situation Thiel has to really assess whether he still believes the story - and if he does that is a huge vote of confidence IMO. If not, and he sells - he breaks even (roughly) - which is still a likely scenario i guess.
Im personally waiting to see the bottom and load up as I see the US coming into fruition over the next two years, while the serious uptake occurs in AUS and ENG. On the current customer trend (again roughly - my style!) we can expect 1 million customers in 2016 (FY2017), or earlier if the US gains some momentum which it may well do as the product matures to include each states tax models.
I personally havent used Xero but have a couple of friends who do - I asked one (she's a resteraunt owner) to show me how it all worked. I was very impressed with the ease of the system (press: ok ok ok ok ok ok - done!), but i was impressed even more so with the enthusiasm and passion she had towards Xero's product when talking about it. I have since met others here in Aussie who use it and they all say the same thing - how their lives (and business') have become so much more enjoyable with the removal of stress from their daily business/accounting practices. My point here is that Xero have stated the adoption curve is still in its infancy, being mostly early adopters at this point. So add in word of mouth/organic growth of these passionate users (which i don't seem to see from intuit users) along with the current growth curve and we could see the perfect storm starting to take shape with plenty of blue sky on the other end. Just like Rod said - tuck these shares away in the bottom draw for 5 years. I had actually been hoping for a decent correction/top up opportunity - and here it is! Well almost.
Kick ass Xero - I believe in you!
On another note - does anyone know if Xero are still offering free migration from intuit in the US? I thought that was a pretty sharp weapon (considering no other company had managed that previously).
Mate I tried my best to give you a reality check when I was down your way at the SUM ASM on 30 April when they were $31.
What I learned a long time ago in my profession is you can lead a horse to water but you can't make it drink so there's no point losing sleep when it doesn't.
I feel sad for you and others that are sitting on ever increasing and in some cases really massive losses in the mistaken belief that this guy is a messiah of all solutions to accounting software and given enough time you'll eradicate those losses and make massive profits instead. Its just software mate, one of many different types out there. There's nothing magical about it, the code contained therein doesn't eradicate cancer or Ebola.
Biggest load of BS hype I can ever recall in my 30 years plus investing on the NZX.
http://www.youtube.com/watch?v=plZRe1kPWZw
Best Wishes
Paper Tiger
Hahaha magic. So the thread has finally evolved to the point of Monty Python clips! :D
While it may never again be worth $45, I think that saying that it is "the biggest load of BS" you've seen in 30 years is over egging it slightly. This is a company that has 371,000 customers. It has been growing at 80% for several years. They have more income from outside NZ than inside NZ.
Sure the $11 million per month in revenue and non-existent profit need work but there is definitely something more than BS going on at Xero.
Remember 1987? Remember Equiticorp? There was a lot of BS and a lot of hype there.
Remember TranzRail? Remember the BNZ collapse? Remember the Air NZ fiasco with Ansett? Remember Feltex? Similar story.
The Xero bubble of 2014 might have got a fair way ahead of itself, but there does seem to be a real business under all the hype, there doesn't seem to be anything illegal going on and the product seems to be pretty decent.
I've been saying all along that Xero is very hard to value. It all depends on how many users they can attract in the next few years. Will the 80% growth stop this year, or in 5 years. That makes a huge difference.
$45 was pricing in more than 4 years of 80% growth. Current price is still factoring in about 2½ years of growth. They've still got a big job to do to justify the current SP but they are getting closer by the day.
Hype is pretty important for growing a business at this scale. It's a bit of free marketing for them. But there is actually a real product behind the hype.
How do you define success?
An interesting fact I saw the other day - Intuit may have 80% market share but 80% of SME dont use accounting software. I assume they either use pen, excel or their accountant. That is why Xero has targeted accountants and H&R Block ( the company that does tax returns for 80% of American companies).
NOte: As with all statistics, they may or may not be made up.
MickeybycrickeyYeah I remember all that crap, fair comment that there's nothing illegal going on. Time will tell but there's not even the slightest hint that losses are slowing as the company grows.
The way the guy has won business awards before the company even turns a single cent positive EPS to me is somewhat disingenuous.
Aren't awards normally handed out to business's that actually make money and have proven they are successful...just a thought.
Goldstein - How so ? Apple are a hugely successful highly profitable strongly growing company trading on a very realistic PE multiple of real earnings.
I was referring to your quote "Its just software mate, one of many different types out there. There's nothing magical about it, the code contained therein doesn't eradicate cancer or Ebola. Biggest load of BS hype I can ever recall in my 30 years plus investing on the NZX."
Likewise, the iPhone is just a smart phone, one of many different types out there. There's nothing magical about it, the code contained therein doesn't eradicate cancer or Ebola...
Apple have made an appealing product. Question is, have Xero? From what I've heard they have, and that's what Thiel and co were betting on.
Disc: Not a Xero holder
Yeah the fact that Samsung is kicking arse is old news but I took Goldsteins comment to infer that Apple is a load of BS hype like XRO.
I should have brought some a few years ago at $200 but my broker at the time talked me out of it, that's Forsyth Barr for you. ($100 bucks now after the seven for 1 share split)
PS Okay I see what you're getting at Goldstein.
In all fairness, Xero has achieved a lot with a lot less compared to competitors. They have also forced Intuit, MYOB, etc to rethink and develop an open API, which has created business opportunities for others like Vend. They deserve recognition for that. An award isn't being beyond reproach though.
They could get an award for cash burn, opps, sorry, that's naughty but I couldn't resist :D
:)
What are they supposed to do with the money? Pay a dividend? Spending makes sense but you can't have it both ways. It was always justified with the need to grab market share quickly but now it's about winning a marathon. I'm surprised that they didn't use some of the funds for a small acquisition.
They have acquired Paycycle, Spotlight Workpapers and Workflowmax. http://en.wikipedia.org/wiki/Xero_(software)#Acquisitions
Going by some of the comments on here and NBR regarding the Xero implosion this is the kind of world we will be living in soon:
"In the world I see - you are stalking elk through the damp canyon forests around the ruins of Rockefeller Center. You'll wear leather clothes that will last you the rest of your life. You'll climb the wrist-thick kudzu vines that wrap the Sears Tower. And when you look down, you'll see tiny figures pounding corn, laying strips of venison on the empty car pool lane of some abandoned superhighway."
Luckily, Tyler Durden slept in this week.
Take it easy everyone, the world isn't ending (yet)
Lucky we don't have red cards anymore, I suspect there would be a few flying at the moment...
I appreciate your opinion NG. I understand the difficulty in valuing saas but may I ask what you value Xero at? What do you see the fair value SP as presently?
I also believe that incumbents software are rapidly catching up and yes it is a worry, however as has been mentioned before, the world is still waking up to saas and many businesses dont use accounting software at all - I believe cloud accounting (with all of its future implications) will pull many new users into accounting software, and when the hoards come - Xero will be ready to soak up the goodness. 1% is all they need to be huuuuuge. One thing i do wonder however is why attack Intuit in the US so early, when they could have entered many countries in europe instead, with much more simple tax systems... I do see a bit of ego from Rod with this david and goliath type behaviour. Anyway I dont know F-all, im sure they have discussed this in detail and had their reasons - so Im just happy sitting back and taking a punt.
When their newly recruited american representative walked out of his position after only a few months saying xro would not make it in the USA as it didn't understand the local competition and how rapidly they have reacted/adapted... things have gone pear shaped.
Its a complex mix of having a company with a high burn rate but no real substance, its product is intangible and they can loose favour very quickly. If it doesn't achieve dominance it will eventually end up being sidelined.
Just look at the failure of microsoft based cell phones.. Apple and Android have the market wrapped up.
NFLX shares down 19% on the day. Was down over 25% in pre-market trading, so gained a little ground through the day.
Market expectation was +3.7 million new subscribers in Q3
Actual result was +3.0 million new subscribers
NFLX attributing slower growth to having raised prices by US$1 per month in may (from US$7.99/month to US$8.99/month)
“slightly higher prices result in slightly less growth”
So an interesting insight into price elasticity for TV programs
Concern potentially for XRO?
Wts funny that you say that NG. Forest and I had a good chat about XRO back on 30 April when we were flying down to the SUM ASM. We both thought the value is somewhere around $5-6 based on gut instinct but didn't mention it on here at that time as it was $31 back then. Honestly it might be a good product but as losses grow with turnover I can't see the point where it gets to break even so how low will it go is frankly anyone's guess. I guess people either have faith or they don't. I don't.
If they do not ever make a profit or break even..., regardless of the turnover and customer numbers... well they will be worth $0.
(based on an investor purchasing an investment for a series of future positive cashflows. If those cashflows will never eventuate then the investment is worth nothing)
When then CEO says we need to "reassesses its US growth plans" when the sales guy departs isn't that corporate speak for we seemed to have stuffed up because didn't understand the local competition and how rapidly they have reacted/adapted...and things have gone pear shaped like arc has said
Listen carefully .... the things that are not said are the important things
Like arc I don't think I specifically read the unsaid things in any one particular media piece etc but I am sure that is what it means
Clare Capital has a valuation about this amount under one of their growth scenarios
You remember Baycorp Roger -- reaching stupid valuations but luckily some foolish Australians came and bought them out so NZ shareholders managed to capture the value ..... somebody taking Xero out at a ridiculous price seems the best outcome now .... isn't that how the greater fool theory works
Sorry folks but I cant post it as it was not a web article, it was a discussion {second hand}.
I personally hope they can make a comeback and give the other players a run for their money... no pun intended.
Accountants and sharebrokers definitely agree on that one mate.
What I find perhaps even more amazing than how the SP ran away with itself is how influential people in the business world are treating a said individual like royalty and showering him with business awards LONG BEFORE he's even proven his business model actually works. Every time there's an announcement that customers and losses have grown contemporaneously I shake my head and wonder where this all ends... I would have thought it rudimentary that if we are ever to get to a break even losses must start diminishing if customers numbers keep growing.
Did they put Phar Lap on a pedestal before he even won a single race at the trials...
I'm not worried about customer acquisition right now but the numbers of employees just keep on getting higher and higher. Hopefully those are sale folks because if they were mostly on IT, do we really need that number to really develop this so called ecosystem. They're don't really need to rewrite the whole of internet, do they?
discl: son works for Xero
Your right NewGuy, XRO will always be programming each state is different and changes are going on permanently, I wonder how much liability risk they have if they ever find that a great number of tax returns are incorrectly calculated.
In comparison I perceive DIL to be a far simpler program without the constant need to update to stand still. And DIL makes a profit.
Somebody posted a few months ago a break down of the staff numbers into sales & marketing / development / customer support
Anybody know the split now - like what do a 1000 people do
We just need to remind ourselves of the Xero business model
Red Dot about where we are now (maybe should be to the left a bit now) on the blue line of course. No point in following the other 2 lines, they are for losers
So deeper and deeper losses still to come but the deeper they are the bigger the prize at the end of the journey
All is going to plan - no need to panic
Graphic - Xero presentation, red dot mine
That's true. However, I would hope that the Xero developers have built a software platform that can be configured easily by a non-developer before release. If every tax change required a coding change they would be in trouble, but surely it must have been designed with this in mind.
The real test here will be if Xero needs another caputal injection. It's done great over the past 5 years bull run. But how will it perform if funds are needed in a bear market? I don't think Thiel & co would let themselves be diluted down or reduce their stake. Interesting times ahead...
They keep saying the fall has been on light volume, hardly - often several hundred thousand daily, hardly light given its still one of the higher priced stocks on the market?
This is the sort of detail I'm short on with this stock. If as you say NG, it is essentially an ongoing development effort, then I wonder what sort of market share they would need to make the company profitable and sustainable going forward.
They've got a very good product, but it isn't a disruptive technology - there are alternatives out there.
I've just noticed something interesting. If you look at Intuit's share price from April to September it rose about 18% while XRO fell by 29% over the same period. The relative difference in performance is rather large. I can't quite understand why Inuit's share price did so well during the year with XRO entering the market. What am I missing?
so now .com wasn't kidding
Attachment 6370
It's a good point. I'm assuming he, and the others, did some pretty hefty due diligence. And I reckon they're in for the long term (I wouldn't be too worried about those guys dumping shares over the next few months). And given they have skin in the game, I reckon people like Theil will be using their connections to push this thing along in the US especially.
Comments like the $5 one above, and the share price action over the past 12 months I think show that in NZ we have no idea how to value this sort of company. It has definitely been overvalued ($45) and I would say $5 is somewhat undervalued. I'm wondering if it has been oversold based on global fears and very reasonable concerns about the U.S. strategy. If you can get out of our quite small NZ mindset, a global SaaS company growing at 80% a year and that has executed largely to plan valued at US$2b could even be regarded as cheap (bearing in mind growth and potential far outweigh dividends and profit in terms of the market valuing this sort of business). Depends if you see the doubt as a risk or a buying opportunity... I'd still wait, personally, though looking at the volumes the last few days there is plenty of money piling in (it'd be great to see how much of that is from offshore- my guess, and I may be wrong, is that right now NZers are selling out of fear, and the shares are being snapped up by overseas interests).
Basic question, in the XRO presentation what does ACMR stand for?
Not clutching at anything NG, i believe Thiel&co are in it for the long haul and are not that fickle to believe Xero would have cracked the states after a year, given there standing they will know what it means to ride out the tough times and will understand the culture in the States far better than any of us. If i didnt believe the story i would have sold out a while back or could any day i wanted to, its not as if im not used to taking a loss after my big CNU one and a few smaller ones as well along the way, only time will tell with this story:cool:
Have you heard of "brand". They have a good one.
They're also the biggest and fastest growing at what they do (SaaS) in three of their four target markets, so I would say that their competitors have bigger barriers of entry than Xero, particularly because their brand is so strong.
I just can't understand why 80% a year growth isn't enough for you. Go ahead and do not buy the shares, stick to utilities or whatever it is you prefer, but give them some credit for growing from nothing to 371000 customers at a fast clip. Oops, that's probably 400000 now.
As far as IP goes, I'm not sure the code could be lifted. Regardless, they are simply doing what has been done before but in a modern way, using modern technology (data in the cloud available to many devices, etc)
As far as barriers to entry, Xero is trying to be best in breed. It has been written from the ground up with modern software engineering techniques. This should enable it to be flexible and easily modified/upgraded/tailored going forward. The other providers out there most likely have legacy code issues.
To my mind there isn't too much wrong with the product. It's the market penetration in the US that is the only concern to me.
QuickBooks Online Vs. Myth #1: QuickBooks Online Uses “Legacy Code” (Busted!)
The belief that the current version of QuickBooks Online employs so-called legacy code, potentially a decade or more old owes much to a Forbes article from January of 2014. In that article, Gene Marks writes:
“Many current QuickBooks customers (perhaps you?) who are frustrated with the software’s older architecture but have suffered with it because they/you did not feel the need (or were just too lazy) to change will now be forced to change in the next few years.”
The weasel words here are “older architecture.” The truth is QuickBooks Online was redesigned in July of 2013, addressing the need for scalability and real-time data in modern, cloud-based accounting applications. The redesign that occurred in mid-2013 was from-the-ground-up – meaning no old code, no legacy cruft. Literally: none.
http://www.business2community.com/brandviews/getapp/quickbooks-online-vs-internet-rumor-mill-01007437
Come on- you started it- I didn't think I had to be so explicit. Future competitors. Guys sitting around wondering whether to take them on. I wouldn't back another company in, say, Australia to start from scratch and win. Just as you say in your post: "prospective companies".
Their brand is not non-existent: Forbes named them the most innovative company. They're more than doubled customers in the last year. They just started in the US- you're being a bit unrealistic if you think they're going to overtake Intuit in their first year. Do you back them to grow their brand in the US? You, obviously not. Me- yes, given their success in other markets. Timeframe- same as Oz and UK- 4 or 5 years to lift off. Would be great if it were sooner.
Ummm, they already have. Myob and Sage (in the SaaS space, which is where the industry is heading). Why? Because, as you say, the product is amazing.
Yes but it's frustrating to read something unsubstantiated over and over again. Over 5000 posts in this thread alone, so much hype/media attention and we still get the most basic facts wrong.
The other one is that Xero was the first in the cloud. QBO was! The old QBO was very clunky and unpopular helping Xero's rise. Xero had second-mover advantage, which they must protect now. Intuit is very open about copying Xero:
“We followed the leaders of the product companies that we admired. Each one of us followed a CEO and watched how they made their decisions, how they engaged their teams, how much times they spent in products, and we changed the way we lead inside the company,” Smith said during Intuit’s annual investor briefing in late September. “The fruits of that labor showed up this year.”
http://fortune.com/2014/10/07/intuit-plan-cloud/
I wish Xero had more money from day 1. They could be a lot further down the track with a much better product. Unfortunately most investors are only driven by greed instead of vision.
Totally agree- and I wouldn't have bought at $45 (though I sort of wish I sold a few more in the 30s when I did offload a bit). It'll be a huge effort to get there in the US. I love competition- it makes all sort of wonderful things happen. As a shareholder, I'm comfortable with them foregoing profitability to take a shot at the U.S. Makes life interesting.
I'm not sure how modern Xero is but they started on a clean slate. It has certainly helped them come a long way. But there are other ingredients to their success. Empowering accountants, empowering third-party developers, empowering businesses and clever low-cost marketing just to name a few.
Makes you wonder what might be next. The CEO has dropped hints that when they finally round-out the accounting product they're going to turn to "banking 2.0", and I believe we're starting to see that in NZ with direct links from businesses to retailers (line Z energy). Where that might go, and how they monetize it, is something I really have no idea about, but I'm sure they've got a plan.
In in the meantime, I really want them to finish building the product. My biggest concern is that they will hit the mark in the US on brand and likeability, but miss on the product front with a few gaps they've been carrying for far too long, quite frankly (quotations being one, payroll rolled out across all States etc). Over-promising and under-delivering in any market is a bad idea, but really bad in the States.
Didn't that guy (no not NewGuy) on the radio the other morning say that Xero would need to raise at least 1/2 billion (USD) to succeed in the US ... and then went on to say (I think) that needs an Nasdaq IPO ..... but falling shareprice wouldn't help that cause
Was dozing but I think that what he said - probably an Intuit plant anyway
The omissions could have been avoided if they had more manpower at the start. Ironically the people who made the most mistakes will be their most valuable assets now. This makes me wonder whether they have been secretly working on Xero 2.0 with all the developers they keep hiring.
I'm not sold on banking 2.0. They have the leverage here but I don't see UK/US banks coming on board. In fact, it may spook them and decide to fight Xero while they're still small and they can put a lid on them. Time will tell. I see one giant ace that Xero has up its sleeve. They could offer the starter pack or some entry level of Xero tailored to micro-businesses for free in the US. It's radical but you know what they say about desperate times...
Yes, I like that idea. Just go after market saturation.
I recall a number of years back when Centos were essentially producing a free version of Red Hat Linux. Initially Red Hat didn't like it, but then they embraced it because the number of users in the community sky-rocketed. A certain proportion of these decided they wanted the support Red Hat offered and decided to get the full licensed product from red Hat.
It would be a hoot if XRO decided to make their software open source. That would seriously shake up the market.
Rod posted this link on his Twitter account a little while ago
The comments after the article are interesting
http://m.accountingweb.co.uk/article...markets/565946
It's not without risk and they don't have to play that card now. But it's in essence what Intuit is already doing in Australia. The practice manager is completely free and QBO $5 per month. I feel there is a hint of anti-competitive behaviour here. Apart from that, I'm not sure if the market opportunity is as big as people think it is. Of course we will see millions of businesses in the cloud but probably not at today's margins. Maybe you need to put it out there just as a threat before it ends up as an all out internecine war.
Employee #1,000 on board
http://www.computerworld.co.nz/artic.../?fp=16&fpid=1
Wow - an excited Rod on the radio this morning
Even NewGuy will be rushing out to buy heaps .... maybe not heaps but at least a few
http://www.radiolive.co.nz/Rod-Drury...2/Default.aspx
Thanks for posting. Great interview. He seems a little weary of having to deal with NZ small-mindedness. I'd have to say, based on the numbers, I feel for him. What have they done wrong? Their growth rate is amazing. It's goning to be fascinating watching this play out over the next few years.
I think we get you point NG.
quoted"meaning no old code, no legacy code Literally: none."
OOPclass based code can run both locally and on a server and on thecloud - the cloud merely being a group of servers and VM'savailable across a network open to multiple connections across theinternet. There are also privates clouds and private virtualnetworks.
Clearlystructured OOP code can run across the internet and locally on adesktop or a laptop
youcan also take so called OLD code created in modules and place it in aseries of structures that allow it to function as if it were aseparate service allowing it to be reused everywhere at any time andto scale.
Theredesign for the GUI is the part of the software that has beenchanged and the in some cases if the GUI code and business code arenot separated and connected by a middle layer the whole design mayhave to be cut apart and reconnected or worse case replaced..
Thatis a code base can supply business rules for both type of userexperience. A native GUI experience and a browser HTML Javascript GUIif the classes are placed in special stacked modular designs. Theactual structures used are often intellectual property and in somecases not available for publication. .
Another confounding week for the bulls as XRO gapped open lower on Monday and found merciful support just under $16.75, then back-tested $18 and failed, found support at $16.75 again and closed the week at a miserable $17.05.
The big story all week was whether the 2013 Oct big buyers would fold some or all of their ex-escrow holdings. But nothing happened to suggest that one way or the other. In the background Rod gets plenty of media airtime and once again tells his shareholders to keep calm, everythings going great and it will all be just fine.
With a bounce in the NAS/DOW last Friday US time providing some modicum of direction, XRO will likely rally Monday looking to retest $18 possibly $19 during the week, esp if the US tech markets follow though with some upside. Alternatively there is little price support on the chart below here until $15.
Some will sense a growing anticipation of the opportunity to be buying this sustained price weakness. However there's nothing in the chart that would suggest this price is the bottom.