Rod Drury founded Xero, a cloud-based accounting platform. Drury got the capital from selling another company, AfterMail, for $15M plus $20M in a potential earn-out—not bad for a company with a little more than $2M in revenue.
Rod Drury is the founder and CEO of Xero, a cloud-based accounting platform that competes head on with Intuit’s QuickBooks.
Started in 2006, Xero now boasts 700,000 subscribers and a market capitalization of almost $3 billion. Xero was picked by Forbes as the World’s Most Innovative Growth Company in 2014 and 2015.
Drury got the capital to start Xero from selling another software company, AfterMail, for $15 million plus another $20 million in a potential earn-out—not bad for a company with a little more than $2 million in revenue.
Drury offers all kinds of insight in this interview including:
How to Avoid an Earn-out
Drury never saw a penny of his earn-out money, matching the experience of many entrepreneurs who agree to be acquired using this financing scheme. These days I run a company called The Value Builder System™ where we help entrepreneurs avoid earn-outs. Our goal is to ensure your business is so attractive that you receive multiple offers forcing a buyer to move the amount set aside for an earn-out into the cash offered to you at closing.
Generally speaking, the higher your Value Builder Score, the higher the proportion of your offer that will be in cash. Figure out where you’re at by getting your Value Builder Score.
Rod Drury is the founder and CEO of Xero, the leading international cloud accounting solution for small businesses. Rod is a member of the New Zealand (NZ) Hi-Tech Hall of Fame and an Honorary Fellow of the Institute of IT Professionals NZ, as well as being awarded the 2013 Ernst & Young New Zealand Entrepreneur of the Year, NZ Herald Business Leader of the Year in 2012, NZ Hi-Tech Entrepreneur of the Year in 2006 and 2007, and World Class New Zealander for ICT in 2008.
John Warrillow: Hey guys, this is John Warrillow. This episode of Built To Sell Radio is brought to you by the