tag:blogger.com,1999:blog-4815867514277794362.post6444133623117737143..comments2024-03-08T06:18:28.125+11:00Comments on Bronte Capital: XeroJohn Hemptonhttp://www.blogger.com/profile/03766274392122783128noreply@blogger.comBlogger25125tag:blogger.com,1999:blog-4815867514277794362.post-36606926674597617152021-07-03T15:03:06.206+10:002021-07-03T15:03:06.206+10:00How do you think about sizing a position that is o...How do you think about sizing a position that is on the path to global dominance?MARhttps://www.blogger.com/profile/10797952371650839903noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-33413552795945219752019-10-19T20:22:12.452+11:002019-10-19T20:22:12.452+11:00Nice blog, very interesting to read
I have bookmar...Nice blog, very interesting to read<br />I have bookmarked this article page as i received good information from this.<br /><b><a href="https://techclouderp.com/accounting-software/" rel="nofollow">Best Accounting Software in Hyderabad</a></b><br /><b><a href="https://techclouderp.com" rel="nofollow">Best ERP Software in India</a></b><br /><b><a href="https://techclouderp.com/" rel="nofollow">ERP Software Companies in Hyderabad</a></b><br />Sruthi Jhttps://www.blogger.com/profile/12900522490347198872noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-2116160862647970372019-10-04T21:38:12.665+10:002019-10-04T21:38:12.665+10:00This is a fantastic post which I keep re-reading a...This is a fantastic post which I keep re-reading and have seen repeatedly quoted by others on the Web (sometimes without attribution).<br /><br />Pointing out how Xero has mistakenly "wakened the only credible long-term competitor" in Intuit is proving ever more prescient.<br /><br />Based on figures from Intuit's investor day yesterday, QuickBooks Online has now caught up with Xero in UK, its 2nd largest market. QBO had 545k customers at Jul-19, up 78% year-on-year (up 84% in prior year), whereas Xero only had 463k at Mar-19, up 48% year-on-year. (On this growth rates it's unlikely Xero would have caught up in 4 months.)<br /><br />Sage is looking more and more doomed.Blue Skyhttps://www.blogger.com/profile/13782721144266998958noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-19208265476744730222018-12-02T15:31:07.084+11:002018-12-02T15:31:07.084+11:00Great post!Great post!Katehttps://www.blogger.com/profile/02545066475143875152noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-37022529421424494832018-10-28T14:22:38.219+11:002018-10-28T14:22:38.219+11:00I have been a follower of this blog for a long tim...I have been a follower of this blog for a long time and have a lot of respect for Bronte. But having the benefit of hindsight for three months, it occurs to me that the time when Bronte first "promoted" a growth tech stock, was the time when the stock peaked (for near term at least)life is a mysterynoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-44796754476648534732018-09-26T13:21:24.598+10:002018-09-26T13:21:24.598+10:00Does Square's launch of their payroll app chan...<br />Does Square's launch of their payroll app change the outlook for all the incumbents in the SME payroll space ? <br />https://squareup.com/payrollemthreehttps://www.blogger.com/profile/05023354125854534950noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-27836516596855113862018-09-07T05:51:21.541+10:002018-09-07T05:51:21.541+10:00More interesting news from the UK - worth reading ...More interesting <a href="https://www.accountingweb.co.uk/tech/accounting-software/ceos-head-for-exit-at-top-accounts-software-houses?utm_medium=email&utm_campaign=AWUKITP060918&utm_content=AWUKITP060918+CID_68ca48ea11cd9dc08cd2d831ba3a4ffb&utm_source=internal_cm&utm_term=CEOs%20head%20for%20exit%20at%20top%20accounts%20software%20houses" rel="nofollow">news</a> from the UK - worth reading the comments about Xero after the article<br />Going locohttps://www.blogger.com/profile/17939424767357092025noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-17727841815091526212018-08-27T03:07:02.153+10:002018-08-27T03:07:02.153+10:00Thanks for sharing your thoughts on the company. W...Thanks for sharing your thoughts on the company. Why is 7x sales the right multiple? Current trading multiples can't be sufficient reason considering hot air in the sector. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-36018650072785824812018-08-16T20:29:13.757+10:002018-08-16T20:29:13.757+10:00John, great post, in this space you should check o...John, great post, in this space you should check out Blackline, BL US. Working on strong new features for the US market. Very interesting space.DHnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-68386981280589452042018-08-11T06:41:52.946+10:002018-08-11T06:41:52.946+10:00I wonder whether this business will fall into the ...I wonder whether this business will fall into the mental model of "Scale Economics Shared" Nick Sleep has discussed (https://microcapclub.com/2018/02/new-mental-model-investing/) when referring to the Costco and Amazon model... i.e. as you gain scale and efficiency you lower prices to create a wider moat. Here in the US we've been using Quickbooks for a long time and they have created more packages based on complexity that has allowed many businesses like ours to lower the price we pay per month rather than increase it.<br /><br />While they likely will have pricing power with current customers, is it a better long-term move to raise prices or lower prices as they scale? shoobitynoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-507293335590567072018-08-10T15:19:37.581+10:002018-08-10T15:19:37.581+10:00The market is in fact bigger. This Blog does not ...The market is in fact bigger. This Blog does not recognise the practice management market that Xero also targets:<br /><br />Will the cloud finish off the accounting software practice suite? Market players are reinvesting to fight entrants. <br /><br />https://www.acuitymag.com/technology/new-accounting-software-heads-to-the-cloud<br />Anonymoushttps://www.blogger.com/profile/02040778498198326530noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-8705540209231686772018-08-10T05:27:49.588+10:002018-08-10T05:27:49.588+10:00Re. your question about market size and potential ...Re. your question about market size and potential small business relative to the goal of 25 million accounts, slide 31 from Xero’s 2015 Annual Meeting deck says there are 200 million small businesses worldwide:<br />https://www.xero.com/media/8122054/ceos-presentation-2015-annual-meeting.pdfjcmhttps://www.blogger.com/profile/16945426256379991869noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-26756385758421563812018-08-05T08:59:07.849+10:002018-08-05T08:59:07.849+10:00I second the comment about sales tax and the USA. ...I second the comment about sales tax and the USA. The court decision leaves open the possibility that every small town , county, state levies their own obtuse ( and usually politically self serving) tax structures. The smaller US govt entities are so deeply underwater with pension plan debt they have no choice. <br />Xero should pick a few states with a high Amazon volume ( NY, CA, CT etc) and get them coded up as a proof of concept. Then do a road show to the taxing authorities, outline the various sales tax models and and have them do the work to set up the static data. Add in the links to pay the state directly with whatever audit trail is needed and away you go. <br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-44261515396651859872018-08-03T04:13:57.004+10:002018-08-03T04:13:57.004+10:00RE: Nicfu, AI doesnt replace entire headcount, cer...RE: Nicfu, AI doesnt replace entire headcount, certainly not for most jobs. What it does is streamline the workflow, save you time and effort for simple things etc. Take driving a car, first you had power steering, then ABS, now autonomous driving (powered by AI). But if the car is just a solution to get you from point A to point B, autonomous driving doesnt erase that need, it just makes it easier to achieve. <br /><br />For accounting software, it will save users time and effort. <br /><br />Oracle/SAP and all enterprise software start at hundreds of thousands of dollars and require big integrations. Plus most ppl using them hate it but once you have it entrenched its almost impossible to leave. <br /><br />AI is just about using data in a smart way. Most of it is open source. Its how you use AI that gives you the advantage. Build a culture around data, etc. Check out andrew ng is you are interested to learn moreabee crombiehttps://www.blogger.com/profile/13320039155613443039noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-10151228851127065162018-08-03T00:30:23.090+10:002018-08-03T00:30:23.090+10:00John, I think you focus too much on the number of ...John, I think you focus too much on the number of endpoints and not enough on increasing the value of the endpoints. If the AI advantage is as significant as you predict you're describing a situation where certain small businesses can potentially replace an entire headcount (or more depending on size) with the platform. In fact businesses on the larger side of SB (like in the states) benefit the most from this type of product and presumably would be willing to pay more for it. What is the cost of the Oracle solution you alluded to? Nicfunoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-91755352980515379642018-08-02T22:56:00.094+10:002018-08-02T22:56:00.094+10:00Wow Bronte posting about a tech stock, and a reven...Wow Bronte posting about a tech stock, and a revenue growth story to boot. Who would have thought. But jokes aside, I do like the thesis and was actually just thinking how crazy is it that INTU is trading at 40x (though proabbly more like 25x CF). MS recently came out with a report on Xero too, for US investors. <br /><br />For all the value investors (myself included) you missed the recent tech bull market bc using backward looking valuation models is simply inappropriate for game changing technology. A cheery picked example I know, but look at AAPL. In the early 2000's it was expensive, not it is cheap. Same with FB. Why are ppl buying today at 170 when they could have bought last year or 2 years ago much lower? bc they didnt realize the earnings power these software companies have once they get rolling. Xro, from what I see is like SHOP, trying to build a platform. If successful the financials can eventually back up the valuation<br /><br />Regarding AI and the earlier comment, yes lots of AI uses vast amounts of training data (especially deep learning) which can be problematic if there are step changes in the data/rules etc. But having AI as an integral component of your software/organization is not just about the results, its about the processes, ppl in place to make it. Like all software its constantly being updated etc. Plus you have lots of advances in NLP which may be able to bypass some of the learning from data sets and go straight to rule creation. abee crombiehttps://www.blogger.com/profile/13320039155613443039noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-55870364352965418642018-08-02T21:09:29.326+10:002018-08-02T21:09:29.326+10:00I'm in a small business using Xero.
It has a ...I'm in a small business using Xero.<br /><br />It has a number of (lack of) features that drive me crazy. Simple thing's I'd expect in a business process. For example - when I receive a purchase order there are a bunch of thigns that flow from that (order on my supplier for example). THERE IS NO WAY TO LINK THESE UP. I use printed orders and hand-written notes in old fashioned (cardboard) folders.<br /><br />There are many other cases where I want to do something I think is obvious, and a search on the Xero community forums reveals that (1) all dates are removed so we can't see how long the complaints have been going on; and (2) Whilst they know, Xero are ignoring a huge number of requests. Don't even get me started on the INABILITY to generate a delivery note!!!! Something I think should be bleedin obvious.<br /><br />Now that all might be limited by cash flow but Xero seem to be putting a lot of effort into things that might be big one day, and not a lot into things that they get a lot of complaints about.<br /><br />Most of those complaints can be dealt with using exotic manual procedures, but it all lives in my head or I have to write a long "process instruction" in order to communicate the weird way we have to work around the lousy software package.<br /><br />Finally for all its wonderousness (gee I can see the accounts from anywhere... yes that is nice), its jolly annoying when bank feeds fail, or menus disappear so I cant generate an invoice that MUST be out today. And then cloudy delays where its all soooooo slow. Doing one invoice, slow is a big whoopy-do. But doing 20 bills / expense claims one after another becomes painfully painfully slow. Yeah its great I don't have to install this on a local server (but that's cheaper in the long run). The cost of watching the internet hourglass are not taken into account and are substantial.<br /><br />Yeah the world is going cloudy. Maybe Xero will be the winner that takes all. Is it really progress when there are things it can't do and seems no willingness to do? Is it really progress when its so damn slow, or the system is only partly functional for hours? It reminds me of the bad old days when the "mainframe" was down.Wallynoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-58166894315707948102018-08-02T20:02:35.063+10:002018-08-02T20:02:35.063+10:00I can see the long term growth prospect of Xero an...I can see the long term growth prospect of Xero and accept it is a good product, BUT it is today trading on a 100x PE of forecast 2020 EPS. 40c vs $43. So, is there a better way to invest that money before the earnings forecasts are verified? That's the real question IMO.Russell Eganhttps://www.blogger.com/profile/15705774670055096766noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-86513850600171620532018-08-02T16:36:49.588+10:002018-08-02T16:36:49.588+10:00Dear John,
I wondered how you come up with the av...Dear John,<br /><br />I wondered how you come up with the average revenue per client per year of 400 USD? According to the latest Annual the ARPU/m was 29,6NZD in ANZ and 28,2 NZD international - which is way below the 400 USD number. <br /><br />And why are the sole traders not relevant in the number of target businesses in the US? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-20888188763235943652018-08-02T06:36:17.263+10:002018-08-02T06:36:17.263+10:00A recent US court decision requires the collection...A recent US court decision requires the collection of state sales tax for out-of-state internet purchases. So, for example, an internet retailer in New York would have to pay California sales tax on an internet sale delivered to a CA address. While not a VAT, this creates a new administrative burden, particularly for small business. In fact, US analysts have opined that this is a big advantage for the likes of Amazon et al. If Xero solves this problem for small businesses, it may have a future in the US in less time than you think. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-24419212485972095842018-08-02T06:29:31.590+10:002018-08-02T06:29:31.590+10:00I am a software engineer. I'm 45. I'm pr...I am a software engineer. I'm 45. I'm pretty good - I've just finished six months work and now I'm taking three years off.<br /><br />I've done no work of my own with what's called "AI", but I know how it works (it is in fact simply a classification method, and the main problem with it is that you have no clue how it comes out with the answers it produces; you get an answer, but you do not get the reasoning, so it's not actually an expert system - they give both).<br /><br />I know almost nothing about accounting.<br /><br />AIs start when new being like babies - blank pages. You begin feeding them data, they begin to be able to classify, you can then feed them new data and say "please tell me what catagory this new data falls into".<br /><br />Problem is, the character and nature of the input may change over time. If this happens, an "AI" trained on earlier data gives wrong or increasingly wrong answers. (I.e. new tax law is implemented.)<br /><br />So you then need to train up a new AI.<br /><br />The more you train an AI, the harder it becomes for it to learn new associations; the earlier associations tend to dominate.<br /><br />So you basically build up your data set, accumulating over time, then divide it up into the data you want to feed new AIs, which you're doing pretty constantly, feed it to them, and then if they seem to be doing a good job, you roll them out to end users.<br /><br />You need new incoming data to catch new transaction types - but I think the 80/20 rule rather applies. Once you have a reasonable amount of data, you're catching a really large proportion of transactions in the AI, just because power law.<br /><br />There is a diminishing return beyond that point of having more data or even *lots* more data - it just doesn't change things much for the end users. It might be a bit of a difference but I don't expect it to be much of a difference.<br /><br />(Thanks for the blog. Been reading for years. Hope to swing by Oz in the next six months or so, might knock on your door and say hi if there's form.)<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-47721143031982428342018-08-02T05:21:09.080+10:002018-08-02T05:21:09.080+10:00How do they get the market share you envision with...How do they get the market share you envision with the competition? Cloud accounting seems like a crowded marketplace (Intuit, Fresh books, QuickBooks, Wave), and others here are also taking the platform approach of hosting apps for flexibility.<br />Will be particularly tough for Xero especially with Intuit, or well funded private companies looking to gain market share at a loss.<br />Let me know your thoughtsAnonymoushttps://www.blogger.com/profile/18377163284086054199noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-53355311560992955712018-08-02T00:39:20.687+10:002018-08-02T00:39:20.687+10:00Very glad to see John firing on all cylinders afte...Very glad to see John firing on all cylinders after what seems like a long break.<br /><br />I regard the leading forum for accountants in the UK as being Accounting Web. Here are some relevant threads:<br />https://www.accountingweb.co.uk/any-answers/xero-am-i-missing-something<br />https://www.accountingweb.co.uk/any-answers/xero-vs-quickbooks<br />https://www.accountingweb.co.uk/any-answers/cloud-accounting-software-is-xero-the-one-to-go-with<br />https://www.accountingweb.co.uk/any-answers/thinking-about-xero-for-a-large-number-of-clients<br />https://www.accountingweb.co.uk/any-answers/alternatives-to-xero<br /><br />My only personal comment is that I have seen at first hand what a load of c**p Sage has become. I do not know if they can rescue it. Here is the argument that it can be rescued:<br />https://www.accountingweb.co.uk/tech/practice-software/sage-accountant-cloud-finally-hits-the-streets?utm_medium=email&utm_campaign=AWUKITP120718&utm_content=AWUKITP120718+CID_9184cffec587e47319418a7654fe04d1&utm_source=internal_cm&utm_term=Sage%20Accountant%20Cloud%20finally%20hits%20the%20streets<br />https://www.accountingweb.co.uk/tech/accounting-software/sage-swings-the-axe-as-profits-fall?utm_medium=email&utm_campaign=AWUKINS040518&utm_content=AWUKINS040518+Version+A+CID_88a848e99543a5e9cda6008b138e1cc2&utm_source=internal_cm&utm_term=Read%20more<br /><br />Going locohttps://www.blogger.com/profile/17939424767357092025noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-30755056286269800542018-08-01T18:59:29.909+10:002018-08-01T18:59:29.909+10:00Thanks for the post. Excellent timing from my pers...Thanks for the post. Excellent timing from my perspective since I was just debating the merits of Sage vs Xero for my ManCo. abshah101noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-29138949483160274332018-08-01T18:05:35.615+10:002018-08-01T18:05:35.615+10:00John
I have been a Xero acccounting convert. It is...John<br />I have been a Xero acccounting convert. It is the best by miles. Again it wins in (non us) high wage countries as eliminates the bookkeepers key punching. Haven’t bought as an investor as too expensive for my value tastes. I have had this so wrong over time with csl, cochlear, Amzn etc. this has cost me a lot of money. 2 further things ... the company it has bought reads emailed invoices (more key punching gone). 2nd it has an accountants product (replacing sage) that it is rolling out - that is awesome - tax compliance and financial reporting etc. They will have an ecosystem ... accountant / link to bank / read invoice / lodge with tax office / prove sales for bank finance ... plus your AI / tax tables / asset register etc. obviously execution but believe they are a massive buy ... sell MYOB. Tim Tim Lnoreply@blogger.com