commentary Craig Winkler, the founder and former chief executive of accounting software firm MYOB, has made his first major investment since MYOB was taken over in February this year.
Xero's chief, self-made Kiwi entrepreneur Rod Drury, is clearly thrilled with the fact he's managed to get Winkler on board
And the new owner of MYOB, private equity firm Archer Capital, is not likely to be very happy — Winkler has ploughed almost $15 million into New Zealand company Xero, which is a small but fast-growing competitor to MYOB.
Winkler's investment is part of Xero's NZ$23.2 million capital raising; depending on how many existing investors take part in the raising, Winkler could end up with a stake of up to 24 per cent in the company.
Xero will use the cash to expand overseas, with Australia a major target. In an interview with The Age last week, Winkler said the big attraction for him was the fact that Xero's accounting systems were internet based (part of the growing software-as-a-service trend) whereas MYOB has stuck to the model of selling software in a box.
Winkler says this will give Xero an advantage when it comes to expansion.
"Regardless of where it has a presence, it has good prospects to be able to provide great services for those businesses that need to be able to access information anywhere at any time, that want to be able to share data with their accountants seamlessly, that want to be able to interact with other parties in their business," he told The Age.
Winkler will not take an executive role, but says he will help out where possible. He's also denied that the investment is some sort of revenge against his old buddies at MYOB.
But Xero's chief, self-made Kiwi entrepreneur Rod Drury, is clearly thrilled with the fact he's managed to get Winkler on board, and appears to relish the idea of taking on MYOB in Australia and taking market share off the giant.
So expect the battle between Xero and MYOB to heat up in the coming months. Drury is not above a bit of cheeky stirring — when MYOB was sold, he took out ads with the words "RIP MYOB" — and with Winkler and his money behind the company, Xero should be able to really push ahead with its growth plans.
This article by SmartCompany.com.au editor James Thomson is replicated on ZDNet.com.au courtesy of a reciprocal publishing agreement.
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I feel the author's word "cheeky" is code for a term that would be less appealing? The current status of MYOB has flown under most peoples radar and many will find out when it is all too late the ramifications of the latest change of ownership. I believe your column is not quite up to its usual reporting standard in this instance. There is a bigger story to be had with your topic. One could say good luck to the man for being so successful. His current track record doesn’t inspire me one little bit. Basically it will be the media that will finally expose cheeky people for what they really are. One could refer to other entrepreneurs/CEO's as cheeky when in fact, of late, some were found to be criminal.