The epic story of how Xero saved small business owners from accounting nightmares

Let me take you back in time and rewind by 20 years. It's the end of the month, and you're faced with a pile of receipts that you have to sort through. You spend hours poring over them, trying to remember what each one was for and whether it's deductible. And that's just the beginning. You still have to create invoices, track expenses, and reconcile your accounts. All the while, you're praying that you didn't make any mistakes that will come back to haunt you later. And if you're unlucky enough to get audited? Well, let's just say it's not a pleasant experience.

But even if you're lucky enough to have an accountant or bookkeeper, there are still plenty of headaches to deal with. You have to send them your financial documents, wait for them to sort through everything, and then hope that they don't make any mistakes. And if they do make a mistake? Well, you're the one who's on the hook for any penalties or fines.

Thankfully, Xero has changed all of that. With its cloud-based platform, you can access your financial data from anywhere, at any time. You can create and send invoices with just a few clicks, track your expenses with ease, and even connect directly with your bank accounts to reconcile your transactions.?

The story of Xero begins with two friends from New Zealand, Rod Drury and Hamish Edwards. Drury had already experienced success as the founder of AfterMail, a company that was acquired by Quest Software in 2006. Edwards, meanwhile, was an experienced accountant who had worked with a number of small businesses. Together, they recognized a problem that many small business owners faced: the difficulty of managing finances without access to the same tools and resources as larger companies. They set out to create a solution that would change the game for small businesses, and that solution was Xero.

From the beginning, the founders of Xero faced a number of challenges. One of the biggest was the dominance of established players like Intuit, which had a stranglehold on the accounting software market. It was difficult to convince potential investors and customers that there was room for a new player in the industry. Additionally, the founders had to overcome a number of technical hurdles, such as finding a way to make their software compatible with a wide range of accounting systems and navigating the complexities of international tax law.

Despite these challenges, the founders of Xero persevered, and their hard work paid off. The company's software was an instant hit with small business owners, who appreciated its user-friendly interface, real-time data syncing, and other innovative features. Today, Xero is a global leader in accounting software, with more than two million subscribers and a market capitalization of over $14 billion.

So, why did Drury and Edwards create Xero? Well, as they saw it, small business owners deserved better than the archaic accounting systems that were available to them. They wanted to create a platform that was easy to use, affordable, and could help small business owners stay on top of their finances without breaking the bank. And that's exactly what they did.

Of course, the success of Xero didn't happen overnight. The company went through several rounds of funding, with investors recognizing the potential of the software and the vision of its founders. Xero's first funding round in 2007 raised $5.4 million, followed by a second round in 2009 that raised $16.6 million. In 2010, Xero went public on the New Zealand Stock Exchange, raising $15 million in the process. Since then, the company has continued to attract investment, with its most recent funding round in 2021 raising $300 million.

One of the things that sets Xero apart from its competitors is its focus on innovation. The company is constantly pushing the envelope when it comes to new features and functionality, such as machine learning-powered insights and tools to help small businesses manage their cash flow. Xero is also committed to creating a global community of small business owners and advisors, with regular events and online resources designed to help its users succeed.

The story of Xero is a testament to the power of perseverance and innovation. Despite facing numerous challenges, the company's founders never lost sight of their vision for a better way to manage finances for small businesses. Today, Xero is a global leader in accounting software, helping millions of small business owners stay on top of their finances and achieve their goals. Who knows what the future holds for Xero, but one thing is certain: the company's commitment to innovation and customer success will continue to drive its success for years to come.