Dotcom has another go at Xero

August 16th, 2014 at 5:53 am by David Farrar

Chris Keall reports:

Not content with trolling over the Hager book, Kim Dotcom decided to pick another fight with business icon Rod Drury, baiting him over Xero’s share price.

Get off the grass, Kim.

The political party Dotcom founded is campaigning for cheaper and better broadband connectivity, domestically and internationally. Drury has pushed hard on both those issues. So you’d think he’d be someone Dotcom would respect. …

Dotcom is claiming credit for Xero’s share price dropping 20%, as if this is a proud achievement.

Xero has 330,000 small businesses as customers, and has created 900 jobs – mainly in New Zealand.  They are our our most successful Internet based company. Rod personally has also been a huge champion for Internet issues.

Yet the founder of the Internet Party denigrates him, for he won’t worship at the Dotcom altar. So again do we think Doctom put $4 million into the Internet Party because he is passionate about Internet issues, or because he wants utu?

Dotcom attacks Drury and Xero

July 28th, 2014 at 12:00 pm by David Farrar

One News reports:

A war of words has erupted between Kim Dotcom and the founder of online accounting software firm Xero.

Speaking on TVNZ’s Q+A programme, Rod Drury said Internet Party leader Laila Harre knows nothing about technology and he wished Mr Dotcom would go away.

“At the beginning it was really cool to see someone like that come through but his manipulation of the media, so he’s very media savvy, understands that it’s a good story, that journalism’s cheap, I think it’s a big sideshow,” said Mr Drury.

Kim Dotcom then hit back with a string of tweets, claiming Xero was over-valued and pointing out how many more users his own company has.

“CEO of totally overvalued NZ cloud ‘accounting’ company Xero (300k users) says: ‘I represent the Internet Generation. Kim Dotcom doesn’t’,” tweeted Kim Dotcom.

One of the tweets is below:

Not such a nice guy is he when you dare to criticise him.

I would point out that Xero’s 300,000 users all pay for Xero. From $500 a year upwards. The vast vast majority of Mega users (and I am one) have a free account – because it is, well, free.  I understand well under 1% of Mega’s customers are paying customers.

I want both companies to succeed. I use both. Mega is very different company to Megaupload. But it is not a good look to have the self proclaimed mentor of the Internet Party trash talking and denigrating NZ’s most successful Internet company. But that just confirms the Internet Party is about Kim Dotcom, not about the Internet.

Drury on ICT and Internet Party

July 26th, 2014 at 9:00 am by David Farrar

IT Brief reports:

As the political heavyweights debated the future ICT roadmap for New Zealand last night, Rod Drury sat shaking his head in the crowd.

Taking the stage amidst the backdrop of Auckland’s evening sky, key political figures debated long into the night about the future of New Zealand’s ICT sector.

Chaired by the New Zealand Technology Industry Association, CEO Candace Kinser orchestrated discussion with technology representatives from National, Labour, the Green Party and the Internet MANA parties.

But as the opinions flowed and policies were outlined, Xero’s charismatic CEO reawakened a conversation which, in the eyes of the entrepreneur, drifted widely off the overriding issue.

“I find this really depressing but I’ll try to be positive about it,” he said, in his typically outspoken manner.

Addressing Internet Party leader Laila Harre first, Drury told the recently elected head of the Kim Dotcom funded political party: “We’ve been in the industry for 20 years and you don’t speak for us, Kim Dotcom should go away and it’s kind of insulting to hear what you speak about because it doesn’t take into account the hard work we’ve done for the last 20 years.”

Rod is never shy about saying what he thinks. His view on this issue, is widely shared I must say.

According to Drury, panelists Harre, Amy Adams, Clare Curran and Gareth Hughes spoke about “incremental stuff which everybody else is already doing”, branding the discussion “boring.”

National had the big bold vision in 2008 of fibre to the homes of 75% of New Zealanders. I’m pretty comfortable with keeping the focus for now on the implementation of that. But we move towards the completion of that, we do need to get some thought leadership and vision on how we use it.

Drury says NZ needs a CTO

July 2nd, 2014 at 2:00 pm by David Farrar

Stuff reports:

Barack Obama has one. So do many large companies. The chief technology officer’s role, for the US at least, is to apply technology to help create jobs, reduce the cost of health care, help keep the nation secure and increase access to broadband.

New Zealand is the farthest country from its trading partners in the world. As a small, sub-scale, island nation we have the most of any country to gain by technology.

Our Government has done a great job with fiscal management and has achieved some useful incremental tweaks, but we haven’t as a country played a bold move with technology. We lack a technology plan.

In the last term, we went through the traumatic restructure of our telecommunications industry, and during the past three years the focus has been the implementation of the domestic ultrafast broadband network – a key part of improving the internet.

Over this timeframe, technology has seen entire industries disrupted, and new organisations like Xero, Vend and others become world-leading cloud companies, all from our small set of rocks in the South Pacific.

But as a country, we’ve been far too passive about using technology to redefine our place in the world. …

I believe the answer is to appoint a chief technology officer of New Zealand. Similar to the chief science officer, Peter Gluckman, but in the technology arena. A respected senior, international, technology leader at a point in their career where they want to give back.

That person can identify and determine the big issues of the day, own a New Zealand technology strategy and be the interface between the private sector and the Government.

They would be able to co-ordinate and encourage the investments that global technology companies will make in New Zealand.

Like Gluckman, a chief technology officer would have the ear of the Prime Minister and report regularly to the Cabinet. They would provide the interface point for industry to connect to the Government and provide the opportunity for a bold vision to be determined and implemented. 

Not a bad idea I must say.

Rod also has a radical idea for the IRD:

Inland Revenue has responded guardedly to a call from Xero founder Rod Drury for it to use a “public-private partnership” to replace its computer systems.

Spokeswoman Lorna Milton said considerations included taxpayers’ privacy and the “integrity of the tax system”.

The department warned in 2012 that it might cost up to $1.5 billion to replace its ageing mainframe-based First computer system.

Drury said Inland Revenue could save “hundreds of millions” if it just published the tax rules, maintained a computer that could collect tax payments, and left the rest to private-sector businesses such as Xero.

That would not mean everyone would need to pay to use Xero’s cloud-based service, or those of its rivals, he said.

Instead, Xero and other software companies could offer a free service that would let taxpayers key in any information needed for tax returns into online forms and would process that for no charge as part of a broader, non-exclusive partnership, he said.

“The private sector could do the ‘heavy lifting’. Inland Revenue doesn’t really need to build all the complex rules any more; all they need to do is be a transaction system that receives money and publishes the rules and the private sector is more than happy to invest in building the online returns.”

IRD has some issues with the idea:

Milton said Inland Revenue saw opportunities to integrate Inland Revenue’s systems with third-party software applications “to allow tax agents and software providers to carry out some services that Inland Revenue currently provides”.

But she said there were several factors to consider, “particularly taxpayers’ privacy and security, the accuracy of information, maintaining the integrity of the tax system and how our core systems interact with third parties”.

I hope it is given serious consideration.


Drury vs Greens

June 13th, 2013 at 1:00 pm by David Farrar

Adam Bennett at NZ Herald reports:

Green Party co-leader Russel Norman has accused Prime Minister John Key of conspiring to establish a surveillance state in New Zealand by encouraging American data-mining company Palantir to set up shop here.

Well that is an 11 on a 0 to 10 hysteria scale.

The comments prompted a savage response from Rod Drury, a business associate of Palantir co-founder Peter Thiel, with Mr Drury labelling the attack another example of economic vandalism.

The Greens – working to destroy jobs since 1999. Now actively campaigning against high tech companies being in New Zealand.

Dr Norman later tweeted: “When crony govt meets surveillance state – John Key appoints Peter Thiel’s Palantir to spy on NZers”.

That drew an angry response from Mr Drury who tweeted: “Don’t be w***ers”, and followed that up with “Hey Greens. Cheating NZ out of $200m on Mighty River Power now spinning this rubbish. Please put NZ ahead of yourselves.”

He said the Greens were “ruining relationships and/by insinuating cronyism is vandalism. Politics in NZ is getting nasty. Lift the game.”

Basically just another Muldoonist attack from Nasty Norman.

Suggesting Peter Thiel has ill-will against NZ, and is part of an operation to spy on us is churlish to say the least. He personally donated $1 million to the Christchurch earthquake appeal fund and has a long history of philanthropy – including the Committee to Protect Journalists which promotes the right of journalists to report news without fear of reprisal.

Drury on IRD computer system

May 3rd, 2013 at 9:00 am by David Farrar

Rod Drury writes at NBR:

The New Zealand Government has recently agreed to spend $1.5 billion to redo the New Zealand tax system.

To anyone in IT this is an obscene amount of money to spend on an software project.

From the outside it seems like a slow moving train crash reminiscent of earlier Big Bang projects that always blow out if they are ever delivered.

It reeks of global consulting firms winning the business and then rapidly hiring a bunch of grads and putting them up in hotels for years.

It’s just not smart.

I’m unconvinced that any computer system should cost that much. I’m hoping that the $1.5b price tag is a worst case budget provision so they can come up well below budget.

We’re a market of 4 million  people and 400,000 businesses, so it’s just not that big. Many SaaS [software as a service] companies are already a good portion of those transaction levels at a fraction of the cost by using commodity, high performance, technologies.

Xero has spent around only $80 million getting to where it is today. Even if IRD was 10x Xero (it’s not) why isn’t $800 million a reasonable number?

And costs are not proportional.

But rather than just criticise here’s some practical suggestions I’d offer to to see if we can save $500 million to $1 billion in spend.

1. Start from the customer and work in, replacing the edges. Identify the key external interactions and publish those as web services.  Get the messages into a commodity systems and then connect these systems to the core FIRST servers. That will take load off, allow quick wins and lots of options.  As the core engine is surrounded it can be gradually replaced. A GST Return WebService would be an ideal place to start.

2. Don’t build the retail tax front end. Just publish the rules and invest in just the very core system. Let the private sector invest in the layer customers interact with. Certify providers that they met the requirements.  Payroll software pretty much works like that now. That offloads the investment to the private sector who are happy to build.

3. Go out to the NZ service companies and get them to stand up a consortium and carve up the opportunity themselves and put in place the appropriate governance structure. Give them the challenge to save $500 million on a fixed-fee basis and transfer project risk to the private consortium.

4. Appoint an independent board of systems experts to review the project and provide ongoing governance over it.

I’d start with recommendation 4 and appoint Rod to chair it!

Rod Drury on NZ Digital Divide

April 1st, 2010 at 2:21 pm by David Farrar

A guest post from Rod Drury:

New Zealand’s Growing Digital Divide

David Skilling, the former head of the New Zealand Institute, used to say that New Zealand is running the risk of becoming “Fiji with snow”. Certainly from a technology perspective the digital divide between us and the rest of the world is becoming more apparent.

We used to be a first world technology country. Things happened and were available in New Zealand first, we Kiwi’s were always keen to try the new gadgets. But over the last couple of years this has changed. Being third class technology citizens, not only has an impact on productivity, but an impact on attitudes and innovation. Our daily technology world is less sophisticated than our digital counterparts in the US and now even Australia. The gap widens.

Take for example the Amazon Kindle eBook reader. It’s been available in the US for years and last year a global version was introduced that’s now available in Australia and Fiji, but not here in little old Godzone. In the US during a business meeting someone might say, did you read that book about …, While waiting to board your flight home you download the book on your Kindle, skim to the key points and for the meeting the next day you’re engaging with your customers on the latest social media marketing approaches. Slightly more interesting and relevant than last weekend’s Super 14 scores and the weather.

Vodafone has been hinting at Kindle being available in NZ for a year. Where is it? I’m past being angry, I now need to understand what is the hold up and can we help? We need New Zealand business owners to be armed with the same ease of access to knowledge that our global counterparts are.

Visual Voice Mail is another productivity tool that most people don’t know they need. Voicemail on my mobile is annoying. Unlike email, which I can choose when to process, with Voicemail I have no control. When you turn your phone on and have 15 messages it may take 5 to 10 minutes to get through and write those messages down. Often I’ll forget to call back. Visual Voice Mail was released with the iPhone several years ago and is also available on the BlackBerry. It’s to voicemail what the CD is to the 30-year-old cassette tape – VVM allows you to see all your messages and dive into the one you need. It puts you back in control. How much time would our hundreds of thousands of small business owners and company workers around New Zealand save by bringing such a simple thing as voice mail into the 21st century.

Telecom and Vodafone need to make it clear on when this first world productivity tool will be available to us. I hope Telecom will finally do their deal with Apple and competition will drive service innovation.

Finally, the iPad is the latest example of how far we have fallen. It’s out in the US this week and Australia later in the month – there is no time set for the iPad in New Zealand.

The iPad represents the next evolution in consumer computing. The first true NetBook for the masses, the iPad brings instant connectivity to all the resources of the Internet, bringing school text books and global discussions directly into your hand. The opportunities for software developers, for students, for grandma doing her email, are limitless. But in New Zealand we’re watching as the train leaves the station as people in other countries exploit the opportunities and feeling of wonderment as this new technology generation takes off.

We need to understand why the iPad is not in New Zealand in April. Is it copyright for eBooks? Is it the lack of a carrier deal. I don’t want to live in a country with no iPad!

We need to make sure there is a plan to get us back to where we should be as soon as possible. I don’t want my children to be left behind. I don’t want to be left behind.  Removing data caps in New Zealand is a good step but we need to ask the above questions of our service providers. We need to stop this divide.

Rod Drury is the CEO of Xero

Pacific Fibre

March 11th, 2010 at 2:10 pm by David Farrar

Absolutely thrilled to just get a press release from the newly formed Pacific Fibre:

Pacific Fibre, an early stage international fibre venture founded by a group including New Zealand businessmen Stephen Tindall, Sam Morgan and Rod Drury, announced its plans today, aiming to break the digital divide between New Zealand, Australia and the rest of the world.

Other founders include Mark Rushworth, former Vodafone Chief Marketing Officer, technology industry veteran John Humphrey, and strategy consultant and entrepreneur Lance Wiggs.

Pacific Fibre is engaging in early discussions with cornerstone investors and customers. The group is looking to secure funding and build a 5.12 Terabits/sec capacity fibre cable to be ready in 2013 connecting Australia, New Zealand and the USA – the initial proposal is a cable which will deliver five times the capacity of the existing Southern Cross system. …

The current proposed cable configuration would be 13,000 km long, and have two fibre pairs with 64 wavelengths (lambdas) each at 40 Gigabits/sec per lambda. The maximum lit capacity initially would be 5.12 Terabits/sec, but would be upgradeable to over 12 Terabits/sec as the emerging 100 Gbit/sec per lambda technology becomes reality. The newer cable and repeater technology that Pacific Fibre proposes to use will be substantially more easily upgradeable than that of existing cables.

Further competition and capacity on the international bandwidth front is much needed. Superb to see such a talented group of people come together to try and make it a reality.

I, for one, would invest in it. And look forward to the benefits another cable would bring.

Guest Post:Broadband is the silver bullet

September 15th, 2009 at 2:00 pm by David Farrar

A guest post from Internet entrepreneur Rod Drury.

Almost weekly I hear “… but that’s not a silver bullet”. Broadband and connecting New Zealand digitally to the rest of the planet IS the biggest silver bullet for turning New Zealand around that I’ve seen in my business career. Let me explain why.

New Zealand is the farthest country from anywhere in the world. Any business that wants to talk to a market size of more than four million needs to send the founder away on planes (often), learn to export, as well as have the funding and governance to be a sophisticated international entity. That’s a tall order. So in general we don’t do it. Instead we build great little businesses that allow us to fund the ‘three B’s’ lifestyle. We do services rather than manufacturing. We invest in property, not business.

Adding digital channels to business reduces international trade barriers. You can have a web site in many languages. You can show video of your product. You can do seminars to thousands of people all over the world from your home office. You can video conference local phone numbers in your markets.

International broadband levels the playing field for the 400,000 New Zealand small businesses, to get amongst it, with minimal upfront costs. Already thousands of New Zealanders are doing this from all over the country. They’ve worked out how to get around the technical obstacles and constraints and are building little export businesses. Ultrafast international broadband mainstreams this opportunity. Any one of our two million working people can participate. While there will be a few high profile businesses that will be successful, getting mainstream small businesses sending invoices every month to the US and beyond, is the productivity step-change that world class international broadband can create.

It’s not just about pushing New Zealand services out. It’s also about attracting investment in. If New Zealand is connected super fast to the US West Coast there are countless opportunities to attract very connected knowledge workers and investment down here. Silicon Valley is an overnight sleep from most places in New Zealand. The same marketing person at $US150k might work in NZ for $NZ120k and be able to go mountain biking after work. Affordable, high performance, international broadband gives us the opportunity to attract substantial inward investment.

How do we pay for all this? Well it’s actually free. International broadband can fund itself – we just have to get organized.

Traditional telco models rely on a big upfront costs and customer fragmentation. There are minimal margin costs for services, so pricing is for revenue maximisation not public benefits. Logically the market has woken up and various schemes are now aggregating demand so that the pool of money for broadband can be used to provide broader benefits to New Zealand. This allows the expensive infrastructure to be funded and paid for on a cost plus, open access model.

Older New Zealand investors got used to augmenting their income with high interest rates in recent years. Where they used to get 8+% on their money they now get 3%. Consquently there’s plenty of demand for higher coupon bonds. Income for those investors is the cost of capital required to connect New Zealand internationally. A billion dollars of investment may only require $80m per annum to fund. This is quite reasonable as Telecom received about that same last year as a dividend from it’s 50% share of Southern Cross – the monopoly international cable provider.

As a rough back of the envelope calculation, that $80m, divided by 2 million users who access the internet via their phone, home account and at work, is about the cost of a cup of coffee a month. So, connecting New Zealand to the rest of the world, and the resulting step-change in opportunity only requires coordination – not cash.

Everyone, even the incumbent telco’s, can win with this model. There has never been such an opportunity to step-change New Zealand’s productivity and connect our many small businesses directly into global markets. Here is a real silver bullet. They don’t come along often. Let’s not waste the opportunity.

Blog Bits

April 30th, 2008 at 2:52 pm by David Farrar

David Cohen at NBR covers the apology from Hot Topic to the Listener and notes that by allowing a comments section on your apology, you sort of undermine it.

Rod Drury tries out his Freeview box. He likes the high definition but given a choice between HD and being able to time shift on MySky, he puts the time shifting as more important.

Martin Hurst asks whether shorthand should still be taught in journalism schools, with the greater use of digital recording devices.

David Weigel at Reason looks at most over-rated Presidents. He chooses Abraham Lincoln, Theodore Roosevelt, and George HW Bush.

Conrad Reyners at Salient blogs on the Business Roundtable forum on public policy held last night. Sounds like Rod Deane stole the show.

Fibre, fibre, fibre

April 8th, 2008 at 10:07 am by David Farrar

Very welcome news on Monday that Kordia is going to invest in a new fibre cable between New Zealand and Australia. Initially it will have 240 Gb/s of capacity. But it it not just the capacity that is welcpome, but the competition it will provide to Southern Cross Cable and Telstra who have pretty much all the international bandwidth.

Southern Cross Cable has also announced a boost in capacity to 860 Gb/s so we will in a few years have 1 Tb/s capacity. But that only allows 125,000 to be using the Internet at the same time at 8 Mb/s or 1 MB/s.  The SCC has 2.5Tb/s maximum capacity but new technology may push this even further.

The other fibre that has been in the news had been the NZ Institute’s proposal for how to get fibre rolled out to 75% of premises by 2018.  Basically they propose the creation of a dedicated fibe company which will do the last mile fibre to homes, and provide open access to all providers at a regulated price. They estimate this will cost between $4 and $5 billion based on 25,000 kms of fibre duct at $150,000 per km.

They also estimate that $3 to $4 billion of that can be met by private investment and that a Government commitment of $1 billion over ten years ($100 million a year) is needed to reach 75% of the population.

Bernard Hickey supports the plan and says:

The goverment has already posted a budget surplus before accounting gains and losses of $3.649 billion in the seven months to the end of January. That’s an average of $521 million a month.

Meanwhile our productivity growth keeps slowing, as this chart on the left shows. Just imagine if many of us could work from home with much faster connections and we could access overseas markets more easily.

Surely it’s time our government did something useful with that money to invest in the nation’s future. I can think of nothing better than spending $1 billion of public money to build a broadband network that would generate around $4 billion a year in economic benefits. It would pay for itself in extra tax revenues within a year or two. Just imagine if the government had done this three years ago instead of wasting money with its nutty free student loans (bribe).

I’ve yet to fully get to grip with the pros and cons of the NZ Institute proposal, but I think it is an excellent contribution to the debate, and am trying to learn more about it.

Rod Drury has also blogged in support of it:

The FibreCo solution is very logical and I think takes into account the concerns of the many stakeholders around this issue. Some very smart people took the time to really think about this.

I like that it balances private and public sector needs. It builds on what we learned as a country in the 70’s, 80’s and 90’s. It is a savvy financial solution.

I think there is going to be a lot of discussion this year on fibre.