The sharemarket darling Xero exceeded $1 billion dollars in market capitalisation yesterday.
Rod Drury says that the focus is on growth, not profit at this early stage of the company’s life.
It’s been operating since 2007.
It has chewed through tens of millions of dollars in capital.
It has not earned a profit.
Therefore, it is not a business. It is a misallocation of capital.
Xero might make beautiful accounting software, but it makes ugly financial statements.
It is farming for capital gains, but with Ministry of Science & Innovation grants to help it along.
It is creating jobs – just over 200 – at a cost that makes Russel Norman’s “green jobs” look like a bargain.
Before even turning a profit, it has started to act like a big corporate with its hiring policies.
Rod Drury is the best marketer in New Zealand history.
I have no idea how he does what he does, but it is the ultimate symbol of value transference as long as Xero never goes below its 1.1 million future customer valuation.
When that happens, will the grants taxpayers gave Xero ever be repaid from the millions of dollars Rod Drury & Co have received in selldowns?