Opinion: Why Kiwis’ homegrown success runs from rugby to cloud apps

Is it something in the water?

Countries around the world are regularly humiliated by New Zealand’s All Blacks. This despite the fact that the Kiwis draws on a reserve bench of just 4.5 million people, a fifth the size of Australia and a twelfth of the UK.

Whatever talents the little country has in producing rugby teams appears to be replicated in cloud applications. Paycycle (payroll), Vend (point of sale), Unleashed Software (inventory), Spotlight Reporting group (tools for accountants), Workflow Max (job management), GeoOp (field management), Xero (accounting) – the number of small-business-focused cloud programs that have gained traction, venture capital backing and in some cases acquisition is impressive given the customer base is so tiny.

What’s the secret behind the success?

A supportive community seems to be one of the key factors. During the early days Vend, Workflow Max, Unleashed and Xero demonstrated their systems at joint partner and client events and had regular catch-ups at a local pub where they exchanged stories and qualified leads and gave updates on where they were up to in developing their businesses.

“This helped immensely as we would exchange learnings of what was and wasn’t working, technical stuff too and even strategy sharing to some degree,” says Unleashed CEO Gareth Berry.

Berry admits that much of their success has come from riding in the wake of Xero which paved the way to economies of scale for the clutch of programs it calls “add-ons”. However, this meant following Xero’s business formula which places growth above profitability or even breaking even.

Xero turned to wealthy individuals and the share market to raise money while Vend and Unleashed found venture capitalists (Point 9 and Sir David Levene, respectively) to back them.

“If Vend and Unleashed did not raise capital, we wouldn’t be able to grow as we are,” Berry says.

Ongoing development work for government agencies has created a deep pool of talent in Wellington which helps foster entrepreneurial activity.

“In Wellington, being a government town, a lot of us work for consulting firms,” says Xero CEO Rod Drury. “You get to know your craft. People here have built tens or hundreds of line-of-business applications using the same technology stacks as for SaaS products.”

Attitude is another factor. New Zealand companies must think globally from the outset because the local population is too small to support them. In business jargon it’s a “sub-scale” country.

Drury also notes the number of successful tech entrepreneurs who have reinvested in more startups. Drury made his money in the $750 million sale of TradeMe and other winners such as Sam Morgan and Rowan Simpson have also backed cloud startups.

Drury has several other theories; bad weather is one of them. “Networks get accelerated in a small town with bad weather,” Drury says, pointing to Melbourne, Redmond (home of Microsoft) and San Francisco (home to Silicon Valley). “You get that indoor high culture, it suits software companies,” he says.

In fact Wellington gives the impression it is better at spawning successful cloud startups than Sydney, whose population is bigger than the whole of New Zealand. “The only thing I can put it down to is the Sydney weather is too good,” Drury says.

But once you remove Xero from New Zealand’s cloud pack the revenue drops off markedly. Marc Lehmann, CEO of Australian cloud accounting company Saasu, says Australia still outperforms New Zealand in dollars, even including Xero’s stellar performance.

Atlassian makes about eight times Xero’s revenue, for example.

“On actual revenue numbers adjusted for population I doubt there is much difference. When you add in CampaignMonitor, Business Catalyst, Spreets, Retailmenot, BrandsExclusive and a bunch of other Aussie successes I think you will find it could even be the opposite of your theory,” Lehmann says.

“Personally, (I think) they have some great tech people. They do great tech work not just rugby over the ditch,” he adds. An opinion which Saasu’s latest hire – a Kiwi – would no doubt share.

Comments
21 Responses to “Opinion: Why Kiwis’ homegrown success runs from rugby to cloud apps”
  1. Mike Smith says:

    It was written “Countries around the world are regularly humiliated by New Zealand’s All Blacks.” That list must stretch to all of two or three…. who plays the game ‘globally’?????

    • Gilbert says:

      Do you mean which nations have been playing rugby at international level for decades, over a century in some cases? Let’s see .. England, France, Scotland, Ireland, South Africa, Australia, Wales, Italy, Argentina, etc etc. Or do you mean those nations eligible for the 20 final places at the 2015 Rugby World Cup? .. in which case about 96 countries have participated in qualifying matches.

    • Mandy Jane says:

      117 countries. Not including England.

      Whose presence is debatable anyway.

    • Grant Davis says:

      I’m a fit, strong, successful Kiwi male. It’s pathetic how rugby-centric this country is. Anyone who has travelled or read a little realises only 2 or 3 countries are actually competitive at the top tier of rugby. The vast majority of nations don’t know or don’t care about the game yet kiwis base most of their global identity and self esteem on rugby performance. Gilbert listed several countries who “have been playing rugby at international level for decades…”. Most of his list have never beaten the All Blacks because the game is minor there, and good athletes go & play something else e.g. football/soccer. Coupled with the Maori haka the kiwi rugby team has created an economic/marketing niche. The problem is, kiwis think rugby performance matters to the rest of the world. It doesn’t. Pathetic.

      • Tally says:

        What a silly comment. You can identify with whatever you want, and if that’s determined by what’s popular in your neck of the woods, who cares. No one outside of the US cares about baseball or grid iron, doesn’t stop ‘some’ of the them being emotionally tied to the success of their team. They probable have other hobbies too, so don’t need to worry about trivial matters like this. I assume you identify with something others don’t – wow wee.

      • Zac says:

        Hey ‘fit strong kiwi male’ – talking about pathetic, that insecurity must be crippling. Good on All Blacks, NZ, Australia, the Manly second grade titans or whoever is enjoying some degree of success somewhere. I enjoyed the positive tone of the piece, it could be any country or anyone because you’re missing the point. Next time you care to comment, don’t identify yourself as a New Zealander, it’s embarrassing to the rest of us who, ok might not be as ‘fit, strong and successful’ as you in your opinion, but may have travelled and ‘read a bit’ – jeez.

  2. Laird Madison says:

    Bad weather in Palo Alto? Clearly has never been there. In fact the San Francisco Peninsula barely has weather – only unchanging climate

  3. Mandy Jane says:

    We have nothing to do but think and eat. And admire out scenery.

    Of course there is a downside to that. We can’t play Wendyball.

  4. Mandy Jane says:

    Kiwis are IT innovators. I recollect back in the day, I used an IT cabal to deal death and destruction to the criminal activities of government ministers and officials.

    Needless to say, I am now unemployable.

  5. Paul Holmes says:

    It’s because over 50% of the population receive fluoridated water

    • Grant Davis says:

      clearly your mother didn’t take folate when you were in utero and your brain hasn’t fully developed, nor ever will. the scientific evidence demonstrating the dental benefits of fluoridation at the appropriate concentration is overwhelming.

  6. Al says:

    I saw “Countries around the world are regularly humiliated by New Zealand’s All Blacks” and immediatly started laughing. NZ has a team that does well in, globally, a minority sport and many NZers claim that it has some global significance. It doesn’t!

    • HAC says:

      Outside of the Olympics and the Soccer World Cup, Rugbys World Cup is number 3 in global significance by number of people watching it. Rugby is not a minority sport as it is played by over 100 countries and growing each year

    • Terminator says:

      For the record, rugby is played in over two hundred Countries in the world, yes it’s true , only a few nations dominate the first tier teams within the code, but many more are developing the sport, the interest in the All Blacks , is huge because they are one if the most recognisable sports teams in the world, and the interest in rugby sevens has also helped promote the fifteen man code too.
      Finally the 2003, rugby World Cup had the third largest broadcast audience ever, for anything ever televised on the box.
      Now, do you think they would even bother broadcasting this it Countries other than the major Nations if there was no interest in it.
      Please get over your insecurity, stating that they aren’t’ globally recognised, the fact is they are, and if you ask ‘widen ‘ who are regarded as the sports authority, they’ll certainly tell you just how good they are.
      I side with facts and logic , rather than some couch-potato with an inferiority complex towards their neighbours across the ditch, and a general misunderstanding of rugby itself.
      Get over it, and grow a set!

    • Dee says:

      When do we claim that, we just know we win.

  7. Dean Christie says:

    “Kiwis draws on a reserve bench of just 4.5 million people”
    As a New Zealander, I can tell you that this overstates the situation by about 50%. Only about half of the population actually follow Rugby football, although we are all proud of our national team. I believe the team sport with the highest number of active players here is netball.

  8. Don HOLBOROW says:

    Perhaps you have seen this !!! … but regards anyway Cheers IAN.

    • Paul says:

      Thank God for the British giving the globe – world games!! Rule Britannia!! Case in point the Soccer World cup!!…LFC forever…!!

      • Paul says:

        Who ever said Rugby doesnt matter – agreed in USA…but you’ve obviously never been to Fuji where the youngsters are never seen playing without a Rugby…this is not so their parents came see them sign multi million dollar professional contracts but merely for the joy of playing a game…Its just a game and if people enjoy it that is all that counts – we don’t have to compete on who’s ads get the highest viewership – It is just a game!!

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  1. […] Macpherson, a Sydney business technology journalist, saying that New Zealand has real capability in cloud applications as well as being good at rugby (and sailing), and inquiring into why that might be. Spoiler: not […]



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