Xero continues march into US, launches partner marketplace

Showcasing more than 350 partner integrations, the marketplace is part of Xero's plan to set itself apart from fellow accounting software provider — and leading US competitor — Intuit and QuickBooks Online.

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As part of its mission to broaden its US footprint, small business cloud accounting software provider Xero on Tuesday announced the launch of a new partner marketplace.

Showcasing more than 350 partner integrations, the marketplace is designed as a central location where customers can find, compare and choose from a bevy of SMB tools and software that integrate with Xero's cloud accounting software platform. 

Business tools that integrate with Xero range from Square and ZenPayroll, to Constant Contact and Google Docs. It's these partner integrations that Xero is betting on to set itself apart from fellow accounting software provider — and leading US competitor — Intuit and QuickBooks Online.

Xero says it delivers more than five times the number of third-party integrations compared to QuickBooks. It's also undercutting the legacy vendor on price.

According to Peter Karpas, the US CEO of New Zealand-based Xero, the differences between Xero and Intuit continue to stack up from there.  

Rather than fostering an open ecosystem of partner providers, Karpas said Intuit has been opting for acquisitions in order to own all of the tools themselves.

"They are taking a Frankenstein approach, they don't believe in an open ecosystem," Karpas said. "That probably stems from a desktop view of the world and it's indicative of the values of a legacy company."

And he should know. Karpas spent more than 10 years at Intuit, followed by a stint at PayPal before taking on the task to lead Xero's charge into the US market.

But even with all of the challenges that come with that task, Karpas is undeterred. He's optimistic, in fact. With a recent $2.7 billion valuation backed by the potential for an initial public offering on a US stock exchange, Karpas said the US is the next logical location to add to established Xero markets in New Zealand, Australia and the UK.

Of course, there's no amount of optimism or logic that can ensure success in a country where small business owners loathe change. Which is why Karpas said Xero plans to focus on businesses that aren't bogged down in existing, legacy IT infrastructure.

The way Karpas sees it, the small business customer base is broken down into four groups, and at least three of them are ripe with client prospects. 

"The first group consists of businesses that are entirely new, and they are up for grabs and we can win them over," he said. 

The second group Xero will target is the Excel users. The primitive yet pioneering spreadsheet software is still the number one piece of accounting software in the US.

But Karpas said the cloud is working to change all of that.

"The cloud, with our API, all the sudden means that you don't have to enter data for three hours," he said. "That means the value equation changes in terms of Excel. The cloud itself and the advantages of it are going to help grow the market."

The third group is made up of current Quickbooks users who are unsatisfied with the platform and looking to defect.

"And there are a lot of them," Karpas said, "and they need to know there is an alternative."

Karpas concedes defeat on the fourth group, which he said consists of satisfied QuickBooks users.

"We are never going to get them and that's fine. In the first three groups there are plenty of customers for Xero to grow tremendously for years to come. That's the plan, to focus on those three."