After heading to AICPA Engage 2019 last week, I made my way straight over to San Diego to catch what’s going on during one of the most forward-thinking accounting conferences you can find: Xerocon.

Over and above the general sessions taking place, this year I was part of the media group where I was lucky enough to receive access to some exclusive interviews with some of the top Xero execs to ask questions about the future of the product and the industry as a whole.

This wrap up post will focus on the top things that I took away from the conference between the sessions I attended and the interviews I had with Tony Ward, Xero’s new President of the Americas and Jamie McDonald, co-founder of Hubdoc and newly appointed Executive GM Product, Accounting and Global Services at Xero. Of particular interest is one of the questions I asked Jamie about his views on Uberizing the profession following the release Quickbooks Live, where H&R Block was briefly mentioned. Hmmmm… interesting.

Let’s dive in.

The theme of change & transformation remains strong

Last week at AICPA Engage I provided a wrap up of key takeaways from one of the largest accounting conferences in the world, where I noted that the central theme of the event was about the change that the profession is currently going through and how transformation of firm models needs to take place to ensure relevance in the marketplace.

This was also very much a central thought on the mind of Steve Vamos, CEO of Xero, during his opening keynote where he said that “success for all of us is based on being obsessed with change.” We live in a very fast moving world and not adapting to change comes with risks, therefore becoming not only comfortable with change, but obsessed with it, will be important for those in the space that want to make a mark.

He went on to say that “technology doesn’t innovate, people do. Technology doesn’t disrupt, people do.” Therefore a change mindset is required and part of that is about being willing to try new things and being willing to fail.

Shawn Kanungo followed Xero’s CEO with a spectacularly entertaining talk. Shawn is a disruption strategist who worked for Deloitte for 12 years and talked about some of the changes occurring in the world. He’s a CPA where his family pushed him into the profession since it was always considered safe, though his belief is that that’s no longer the case.

He showed that if you go to www.willrobotstakemyjob.com, the website claims that accountants have a 94% chance of being automated compared to a much lower percentage in other professions.

Here’s how the crowd reacted to it:

Another comment that I found interesting was that he said that the best companies in the world are the ones that are the most vulnerable to disruption, even though they have the best people. One reason is because they get really nostalgic of their model and get caught up in it. These are like the Blockbuster’s and Sears’ of the world, which reminded me that these companies did not evolve fast enough to avoid extinction, something that could certainly happen to many traditional firms out there.

The best way to avoid this according to him? Experimentation. Take small steps & small sprints with small teams. This helps build a culture of innovation and is a gateway to transformation.

There’s still a huge opportunity in cloud

A quick, but interesting comment here. Steve Vamos commented that global cloud adoption is only at around 20% which represents a massive opportunity to help clients digitize their business still. Interestingly, Australia is at around 50%. Look to Australia for the trends. They are 3-5 years ahead of us when it comes to innovation in accounting.

Tony Ward, the new President of the Americas at Xero, also commented on stage during a fireside chat with Steve that Xero only has about 3% of the addressable market with 90% of businesses in the Americas not on cloud accounting. Clearly they see a big opportunity to move more business to the platform.

Deeper integrations with Stripe

The deeper Stripe & Xero partnership was one of the bigger product announcements of the conference for sure. Notably, there were 3 new features that were announced:

1 – Autopay functionality: Recurring invoices in Xero can now be set for autopay via Stripe where automatically emailed out invoices will also be automatically charged by credit card via Stripe as they go out. Pretty neat, especially since the subscription economy is heating up. This is shipping out in July in the US and a bit later rest of world.

2 – Direct Stripe feeds: Having trouble reconciling your Stripe batch deposits? Good news, come August, that won’t be the case. All your individual Stripe transactions and corresponding fees will be fed into Xero automatically just like your bank feeds. This will make reconciling things way easier.

3 – Card present payments will also be available shortly in the US (a bit later rest of world) where if you accept payments in person, you’ll be able to tap your credit card on a small Stripe device and accept payments instantly, all synced to Xero.

In a media briefing that followed with Stripe & Xero reps, I asked what other kinds of deeper functionality would be available down the road, and while no specifics were provided, we can expect more announcements around easier, faster payments at the upcoming Xerocons in London and Australia.

Insights from Xero’s President of the Americas

I had a chance to catch up with Tony Ward at the conference, who’s the new President of the Americas at Xero. Tony has close to 20 years of experience in the software space with leadership roles at Linkedin, Surveymoney and Microsoft before joining Xero. I wanted to get his perspective on trends in the market that he’s monitoring, differences between the US & Canadian markets and some of the new Xero partnerships.

I included a few interesting quotes below as well as the full audio interview. One exchange that I found particularly interesting was the following (shortened for brevity):

Ryan: Are there any new initiatives that you would like to deploy in the US under your leadership?

Tony: What I can say is that partnerships are going to be key for us. There is no way you can get to scale in a direct model in the Americas. So Stripe is a good example. PwC is a good example. We’re talking to a bunch of other pretty large tech companies.

Ryan: So we can expect more of those larger partnerships?

Tony: Yeah, and I think PwC is a global partnership right? And when you listen to what they’re saying, they sound like a software company, not an accounting company.

Ryan: What’s different about PwC partnership?

Abby Hempfling (Head of Product & Partner Communications): It’s a global alliance agreement that can be rolled out where previously a huge chunk of their customer base didn’t have access to Xero. Then on top of that, PwC wants to build on the API’s and more innovations on top of Xero.

Ryan: I find it interesting that PwC is speaking more like a software company in your opinion. What kind of triggers that comment?

Tony: They know that if they want to get into that space that they have to get into software. Some of the big firms know that they have to find a way to differentiate themselves because there’s only so much revenue that I can get out of Fortune 500 companies. Everyone can see this massive install base of small businesses but you have to figure out how to serve it at scale.

 

The above exchange highlights the fact that Xero is looking to go big and team up with other big players to help push innovation. Hubdoc was acquired recently, there is a new deeper partnership with Stripe and also a global agreement with PwC. Straight from Tony’s mouth is that we can expect more of these kinds of things to happen. I also found it interesting that PwC was starting to speak like a software. Perhaps this is a growing trend as we see tech startups pouring into the accounting & bookkeeping space.

We also spoke about some of the differences between the Canadian and US markets (starting at minute 17 of the audio clip below), following that we talked about some global trends that Tony is following that impacts Xero and the cloud accounting space ending with whether Tony thinks robots will take our jobs, namely that, “low value, repetitive work, is where it’s dangerous. Where humans come in with value is interpreting and giving advice.”

Want to hear the raw uncut audio from the interview? Here ya go!

 

Insights from Jamie McDonald – Executive GM Product, Accounting and Global Services at Xero

Jamie McDonald is known as one of the co-founders of Hubdoc, which was recently acquired by Xero. Just a few days ago he was named as Xero’s Executive GM Product, Accounting & Global Services. I sat down with him to talk a bit about his new role, where the product is heading in the upcoming year, how we views data automation within Xero & his views on how blockchain may be applicable in the accounting space. Near the end I asked him about his views on the Uberization of the profession with the launch of Quickbooks Live and in the same breath, H&R Block’s acquisition of Wave Accounting was mentioned. While there is no confirmation whatsoever by H&R Block or anyone else that they are getting into the Uber-type bookkeeping space, it may certainly make sense and perhaps Xero is monitoring this closely.

Here’s part of the interview. Some parts have been shortened for brevity.

Ryan: What is your focus in this new role at the moment?

Jamie: How do we make Xero’s core functionality way better? The 12-18 month mandate is incremental craftsman-like improvements. And then the more exciting part of it is what’s the future of accounting, what does it become and what do we want it to become?

Ryan: What do you want it to become?

Jamie: It’s still too early to tell. We often talk about Xero moving from a platform where you go to do your work to one that helps you run your business. We want to work on crisply articulating what we want the 10 year vision for the product to be.

Ryan: Are there any precise features or ideas that you have that are upcoming that you can comment on?

Jamie: I can’t comment precisely on roadmaps, but you’ll see us invest in data automation. I think that the type of feature like “find & recode” is the type of feature that I want to build because it’s simple, it works and it saves a ton of time.

Ryan: I saw a recent presentation that you did on Youtube where one of the slides in your presentation said that “the future of accounting is invisible.” What’s your thoughts on that?

Jamie: I guess what thinking on that might have evolved a bit. I mean, people still need to run payroll, people still need to pay bills, people need to send invoices. There are always going to be things that aren’t invisible. I view automation of accounting like a pie chart where like 1% of the pie chart is automated now. It’s my job to help expand that pie chart. Will more of what’s not invisible move to mobile? I hope so. Can you imagine voice being a driver? Yeah. A big driver? Probably not. But there are still some things we need that aren’t invisible.

Ryan: I want to talk about your views on attempts to Uberize the profession where some in the space are creating a marketplace where they’re connecting bookkeepers and accountants with small businesses. What’s your view on this? Do you think that it’s possible? Do you think that it provides value to the client? What’s your views on attempts to Uberize the accounting & bookkeeping space?

Jamie: I think it depends is the answer. If I’m a business below a business below $50,000 in turnover with no payroll, can any bookkeeper show up and sit in the chair and do the work on that file? Maybe. I think if you add any kind of complexity, you want some continuity. I think there’s an unlimited demand for a service at $1000/month which gives you real-time reconciliation of your books, taxes at the end of the year and whatever quarterly reporting is required. That’s $12,000 per year which is more than what most here at Xerocon are charging. But what are your alternatives as a business? Hiring somebody? A bookkeeper is $40/hour and they turn over quickly and it’s hard to find one. Hiring a CFO or Director of Finance, that’s like $40,000 minimum just to get an entry level person. So I think there’s tons of juice left for the accounting & bookkeeping profession to drive value. I’m not selling that service short. What H&R Block is doing with Wave Accounting, or may do, and with what Intuit’s doing with QuickBooks Live, you think, that’s either the future or it’s a way to alienate your biggest advocates. Don’t know which. We’re certainly taking the position of embracing the community. Can I say that we’re never going to launch bookkeeping services? I can say that we’re not working on this now.

For the raw uncut interview with Jamie, see below:

 

 

Xero has lots of data to play with

Artificial intelligence and machine learning are keywords on the tip of everyone’s tongue these days. What makes these kinds of technologies more effective is by having a lot of data at your fingertips. And Xero has a lot of data to play with. Last year alone, 2.8 trillion dollars worth of transactions were processed through Xero. Wow. That’s a lot of 0’s. I’m interested to see how they use all of this data to their benefit as AI & ML pushes forward.

Personal highlight – Presenting on personal branding

Perhaps a personal highlight of mine was being able to present on the topic of why personal branding is important for accountants & bookkeepers and how you can get started building a personal brand online. The content was based on this blog post I did for Xero (here). Notice everyone wearing earbuds? That’s because some of the presentations at Xerocon were done silent disco style where the presenter would speak into a mic and the audience would hear it in their earbuds. Pretty neat and those sessions seemed to go over well!

And that’s a wrap!

Xerocon San Diego was a blast. It was a great vibe and was fun to see so many familiar faces. I’m certainly looking forward to the next one!


Ryan Lazanis

I’m Ryan Lazanis. I’m a CPA by trade but definitely don’t consider myself a normal accountant. I identify more with being an entrepreneur and I love disruptive technologies and business models. My aim is to help modernize the old, traditional accounting profession by giving firms the tools they need to modernize. Each week I send off a curated newsletter recapping the top 5 things on the internet affecting your modern firm. Click here to subscribe to my Future Firm Top 5 Weekly newsletter today!