It’s fair to say Leanne Graham knows a thing or two about scaling a small company into global tech giants – so it speaks volumes that she’s chosen to get involved with archTIS (ASX:AR9).
Graham is a non-executive director at the emerging tech company, but most investors would know her from her time at $7 billion WAAAX-stock darling Xero as its global sales manager.
She told Star Investing this week that she plans to be an active board manager and to help the company scale its solution — mostly because she saw the benefits of cloud collaboration in the accountancy space and now wants to help unlock those same benefits for governments.
“The big thing for me with archTIS is that it could be such a valuable product,” explained Graham.
“Day-in and day-out you hear stories about security being breached at the highest levels and information being shared that shouldn’t have – and those stories have a flow-on effect”
One of the main sticking points in getting people to adopt a cloud accounting solution (a la Xero), is that people feared that their sensitive financial information would end up in the wrong hands.
So, they don’t end up realising all the benefits of cloud collaboration, and for complex organisations such as governments, end up working in silos – not sharing information with each other.
“You look at the enterprise world, both government and the enterprise world, and they’ve been the laggards in taking up cloud, and rightfully so,” Graham said.
“Until a solution like archTIS comes to the market which can guarantee that safety, they’ll be living inside their siloed world.
“So we’ve a real opportunity to open that up so that the world can be more collaborative but feel completely sure that that information is safe, and being shared in the right hands.”
Having seen first-hand the benefits of accountants and small businesses collaborate on the one cloud platform in Xero, Graham’s convinced that archTIS could pull off the same game-plan.
“I think what archTIS has, which is really key, is a really highly skilled set of individuals on the board and the exec team,” she said.
“It’s something I want to be highly involved in – because when you look at a lot of young companies they’re always resource-short.
“So where a board can help to be part of the resources, to help with execution rather than the strategy side, the better it is.”
But to get to a point where archTIS could make a difference around the world, it needs scale. That’s something Graham is very familiar with.
The pursuit of scale
She joined Xero in 2009, when it was still the little Kiwi company that could, and helped guide it to the multi-national cloud accounting behemoth it is today.
“The strategy at the time was very much a direct strategy, but small businesses would go to the cloud, find a new way of doing things for an accounting system that connected to their bank,” Graham recalled.
“Certain markets did take it up, but the level of scale wasn’t there at that stage. He [Xero founder Rod Drury] asked me to join the organisation and run the sales and look at global sales and look at the strategy for direct and channel sales.”
The a-ha moment both she and the company hit upon was that selling directly to millions of small businesses would have taken too long and been too laborious for a small NZ company.
Instead, they decided to target accountant practices in key markets.
“Instead of building a market to get accountants and bookkeepers to resell our solution, what we went about doing was educating that market to look at their own businesses — to look at productising their own services so that they could use a platform to do business with their customers more efficiently and more productively,” Graham said.
“Therefore they put Xero in the core of their own world, of their own processes, and therefore endorse, in fact in most cases force the product, into their client base which then enabled scale.”
Nowadays, she advises several tech companies on how to scale effectively using experience from a 30-year career in tech.
She says scaling the smart way is key to small tech companies fulfilling their promise.
Chasing scale, the smart way
While shareholders are increasingly patient with companies that put off profit or dividends as they chase scale to enable market share, there is always the danger that companies over-extend a limited balance sheet and burn through cash at a rapid rate.
“You can easily waste a lot of money going into any country,” said Graham
“The reality is you’ve actually got to test the market first and ensure that you’ve got the right networks and partnerships in those markets to work out whether you have a product that actually can scale there.
“So just turning up and setting up a team, nine times out of ten, isn’t successful because there is, because it costs a lot of money and takes a long time to really establish yourself and understand those markets.”
It’s why she thinks tech companies are better off going it slow, rather than over-extending themselves to get shareholders excited by blue-sky potential.
“Everybody wants to see fast scale overnight and often you look at products, and you think well, of course it’s going to get that scale eventually, but it’s a lot harder than anybody thinks,” Graham said.
“The reality with new markets is that even though you might be offering a solution which is objectively better than what customers have in their market, the ‘better the devil you know’ attitude is still there.”
Aside from taking a more measured approach to scale, having the right partners in each market is vital.
For archTIS, partners such as enterprise giant Oracle and Deloitte are bringing back “multiple commercial opportunities for the company”.
While in the old school having a ‘channel partner’ was basically a synonym for a reseller, Graham says the best partners aren’t simply there to make a buck in the short-term.
“I think a lot of early-stage companies out there enter into partnerships simply because they want to keep the news flow going. The reality is that it takes time and money to get the type of partnerships which truly create value off the ground,” she said.
But in archTIS’ case, Graham clearly sees the potential for archTIS’ product suite to truly add value to the ecosystem, rather than just be a sales opportunity for a tech vendor.
“There’s different types of partnerships that create value, such as the integration partner, the consulting partner, or your infrastructure partnerships,” Graham explained.
“The really important part of those partnerships is that you’re able to make what they do better rather than just be a product for them to sell.”
This content is produced by Star Investing in commercial partnership with archTIS. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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