Fortune’s latest issue has a short article on Xero’s continuing efforts to penetrate the US market for cloud-based SMB accounting against Intuit’s Quickbooks Online.  If you are not familiar with Xero, it is the leading cloud accounting application for SMBs in its home country of New Zealand and “neighboring” market of Australia.

Xero

Quite rightfully, most of the press coverage on the company surrounds its nearly $2 billion market cap and 20x market cap to sales ratio, as well as its attempt to conquer the US Market against Intuit. There is no question the Xero/Intuit battle is a great potential story.  It is classic David and Goliath storyline, pitting the new, pure cloud vendor against the legacy giant saddled with the huge installed base of shrink-wrapped software. (Remember when people bought software on disks?)

I happen to be a happy Intuit shareholder and a Quickbooks online user, so I do have a “dog in this hunt”, but that does not mean I am not impressed with Xero, I am.  (It’s always been a matter of the price one has had to pay for their growth rate!)

But what really impresses me about Xero is their investor presentation.  The company’s investor presentation should be required reading for any B2B SaaS executive team.  The presentation is clear on the company’s:

• SaaS Economics (CAC, LTV, Renewal rates)
• How it sees its P&L evolving as it grows
• Separating its domestic versus international markets (though providing highly selective numbers on the US Market)
• Strategy for building its Ecosystem

The section entitled “SaaS Scorecard” could be applied to any B2B company trying to build a platform strategy:

Summary

There’s nothing in the Xero presentation that makes it clear they will succeed in the US.  (After all Quickbooks has built a tremendous ecosystem as well.) But the company is crystal clear in what it is trying to do and how it is trying to do it–which is rarely the case.

The market for SMB accounting software is so fragmented there is a good argument to be made that both companies will succeed at the expense of all of the others! I hope that is the case.