• Xero now has 100,000 paying customers – up from 45,000 at last year’s Annual Meeting
• Xero’s first 50,000 customers took 5 years to achieve, the second 50,000 was achieved in 10 months
• Annualised committed monthly revenue has risen to $34.5 million, up from $25.5 million at 31 March 2012
• 57% of Xero’s committed monthly revenue is from offshore markets, up from 51% at 31 March 2012

I’ve been critical of Xero myself in the past, and have had to suffer the displeasure of CEO Rod Drury, someone who doesn’t appreciate criticism, especially not from someone in his own country. As an aside, and having spent time talking with, and questioning other public and private technology CEOs, I would suggest that Xero needs to get a little more used to this side of public exposure – especially as it moves into the more critical US market. Anyway, that aside, the Xero numbers firmly put it into escape velocity, here follows my reasoning.

MyPOV

Many critical commenters point out that Xero has not yet reached profitability and continues to add expense to its business by way of staff hiring. This criticism is unsurprising given that Xero comes from a country which has little experience in high-growth software businesses. To understand the dynamic it is important to understand the accounting software industry where three vendors, MYOB, Sage and Intuit claim incumbency globally. Given this triumvirate, it soon becomes clear that anyone who wishes to break their hold on the market needs to scale quickly in terms of customer numbers – with 100k customers, Xero is now a recognized competitor and this leads it into the territory of the other big software trend, acquisition. This is not a “slow organic growth” opportunity – anyone wishing to challenge the incumbents (and contrary to public perception, Xero has a number of competitors in the space trying to do so – FreeAgent, KashFlow, Pearl, Zoho etc) needs to focus on rapid growth in order to both beat the other new upstarts, and gain the attention of the big boys.

When Xero was first formed, and perhaps in an attempt to appeal to parochial New Zealanders, there were many comments from the leadership about wanting to build a long term New Zealand business. This has softened recently with an admission in the past year from Drury that an acquisition would occur should the price be right (in that instance Drury suggested that his personal metric was a higher price than that garnered by TradeMe, a $700M acquisition). With the market capitalization hovering around the $600M mark now, a close to $1B takeover looks plausible. Obviously the number of potential acquirers reduces as the price goes up but both Intuit and Sage are no doubt putting a ruler across Xero as they realize their own cloud strategies are lacking. There are also a number of other vendors who sell to the SMB space who will be looking at the company – it’s worth noting that Xero competitor Outright was recently purchased by large US hosting company GoDaddy – it’s a natural fit for GoDaddy who has millions of SMB customers, so don’t look past other ISPs, general technology companies, banks or business service provision organizations taking a look at Xero. Given a very low level of liquidity for Xero (share turnover is incredibly slow and the vast majority of the stock is owned by 100 individuals) and the $1 per share initial purchase price at IPO, there could well be some pleased investors who could reap a 5x or more return in the event of an acquisition.

Xero has its share of detractors – many venting their spleens anonymously on New Zealand’s NBR website. Most of their criticism focuses on two distinct areas;

1. Criticism of immature investors who seem unwilling or unable to question the Xero strategy
2. Questions around profitability

The first criticism is probably fair. As I’ve said before most investors seem a little too eager to give Xero free realm to do as they see fit – it’s unusual for this to be the case with public companies and sometimes lulls them into a false sense of complacency which is dangerous when new markets are entered, as an aside it will be very interesting to see what happens if and when Xero lists on the Australian stock exchange where it has neither the home town advantage nor the lower maturity level of investors. I do note with interest that institutional investors are taking more of an interest in Xero now – this should improve the level of debate.

In terms of the second question about profitability – despite being a critic of growth-at-all-costs strategies – Xero is one example where the only option is to scale to size – and in doing so become a target for acquisition – this is clearly what is occurring and, given the fairly large cash reserves, and the positivity and deep-pocketedness of some of its backers (notable MYOB founder Craig Winkler, TradeMe founders Sam Morgan and Rowan Simpson and uber investor Peter Thiel), extra cash injections shouldn’t be hard to come by.

There’s no such thing as a sure bet, and I’ve had some people within the orbit of some of the incumbents in the space suggest that these players are finally going to counter Xero’s rise, in their words “the empire is about to strike back”. It’s hard however to see clearly how any of the incumbents could really do what is needed, which is to disrupt themselves before Xero (or more likely, Xero’s acquirer) does it for them. Xero looks set to make a handful of people a pretty impressive return.

Disclosure - I have consulted for MYOB and Xero and aman investor and director of Connect2Field which is 30 percent owned by Accounting software company Reckon. I am also co-founder of LiveMigrate which provides migration services from desktop accounting software to Xero. I advise many companies (either formally or informally) in the accounting software ecosystem. 

In announcing the deal, Ed Molyneux of FreeAgent says that 60mo will be their entre into the US market, and FreeAgent will leverage the knowledge about US accounting and taxation that the 60mo team have. To fund the acquisition, FreAgent tool on a round of funding from Lightbank, a Chicago based VC.

60mo has now shut down new signups and according to Molyneux is building a US-centric version of the FreeAgent application, in doing so they’re squarely going to move into competition with Xero. FreeAgent intends to backwards-integrate some of the cashflow focused functionality of 60mo into its own product.

MyPOV

This is big news for the SaaS accounting space. UK is a busy market with a number of vendors competing for market share – FreeAgent has arguably the biggest slice of the market there, it’s 20000 or so customers making it close to twice the size of Xero with other vendors such as KashFlow also in the mix. Moving to the US now makes sense since no one has yet gained any real market awareness there. While Xero has been building a local US team over the last few years, it’s safe to say that they are very much still in the initial stages and haven’t cornered the market yet. For the record – since the start of 2011, FreeAgent have grown from 4000 to 20000 customer, a growth rate that puts them at the forefront of this nascent sector – that’s an indication of the validity of their approach, regardless of the fact that ny of those customers have been gained through a low-margin partnership with a UK bank.

It will be very interesting to see the approach that FreeAgent takes with regards their go to market. Xero is strongly focused on partnerships with accountants and the like. In the UK FreeAgent has varied approach that sees them partner with a variety of organizations (accounting firms and banks for example) but is also a strong direct sales company.

FreeAgent has a rabidly supportive customer base in the UK – if they manage to have users as satisfied in the US as those across the pond, it’s going to be super-interesting to watch as they go head to head with Xero.

A recent blog post from Neil Ballard was a really interesting glimpse at the differences in the way traditional vendors and startups view competition. It was especially interesting for me since I have done a bit of consulting with large organizations, and have often been surprised at just how worried they are by the tiniest of competitors. I’ve also been amazed at just how that worry often leaves them incapable of responding.

Ballard was reflecting on the focus that Sage, a massive global company with hug momentum, gives to KashFlow a small (albeit vocal) startup targeting a sub set of the space Sage plays in. As Ballard pointed out;

Time and again, Sage employees at various events shared their fear and awe of KashFlow with me and others. A very reliable source even shared with me the tendency of Sage North America reps to bring the ‘KashFlow latest’ to meetings over a period exceeding 12 months! Incredibly, all seemed convinced that KashFlow existed purely to annihilate Sage. Like a seventies era anarcho-terrorist cell. On more than one occasion I even pleaded that KashFlow staff did not spend every waking hour plotting the downfall of Sage; they did not spend their waking hours muttering their hate and loathing like possessed madmen, complete with wide-eyes and salivating like devil-dogs! But each time it just would not be believed! This paranoia had spread and had gripped the organisation.
Why was an entire organisation of such magnitude allowed to be gripped by such terror? Why (and how) are thousands of employees of a multi-billion pound organisation all obsessed with one guy and his tiny company. I repeat, why? WTF??! This company claim to be the world’s 3rd largest ERP vendor, amongst many other things. They have fingers in plenty of pies. Why oh why?

It’s an interesting trait and one which I believe isn’t specific to Sage – in corporate rooms all across the world, highly paid strategy analysts are spending time agonizing over the impact of a tiny player in their space. That in itself is bad enough, but the flow on effects are far worse.

From my observations, it seems to me that the organizations who are most concerned by the moves of their competitors take this concern and turn it into a kind of paralysis. Large organizations are generally less nimble than startups, but when faced by perpetual fear of competition, the agility they do have can be wiped out. Ballard contrasts with with startups where;

Every single SaaS vendor with any measure of success cares little for what others are up to. Even the closest of competitors. This is a time of fundamental change in the delivery of IT services. The potential market is massive, whatever the niche. They just want to get their share and then some! There’s no time to waste worrying about others.  There’s plenty of land for everyone. Of course, common-sense means be aware of what the others are doing, but it doesn’t distract from the total confidence that is all-pervasive in a real SaaS org. Their culture is more concerned by there only being 24 hours in the day!

I’m asked on almost a daily basis what the prognosis is for large technology businesses. My answer is generally the same – the incumbent vendors have the money, the access to smart people, the patent suite, the customer base, in fact everything necessary to continue to prosper on an on-going basis. The one factor that impacts upon their ability to do so is an organizational paralysis caused primarily by fear – fear of change, fear of risk and fear of competitors. Again as Ballard points out;

Single-mindedness, focus and confidence in the mission – all traits common to successful SaaS vendors. A singular belief in what all involved are doing as a team – as a collective – is what drives those that thrive. Disrupting the old ways of doing things, yeah, but more so improving the customers lot and gaining commercial success as a by-product.

The one lesson to drive home for those of us who have the dubious honor of consulting within large technology vendors is that only by focusing on the opportunity at hand, and not at the people biting at your heels, will you continue to thrive and prosper.

As things stand today, I reckon that the current crop of pure play accounting vendors (for example) will need to have close on a million paying customers each before they become genuine leaders. Even at those levels they’d likely only be generating £120-140 million a year in revenue based upon today’s average selling prices achieved in the market…The players have always said the domestic market is large enough to support their offerings. I don’t believe that’s true because I don’t believe the market is going that way.

I believe that all of the current crop of SaaS accounting vendors who are gunning to be genuine leaders expect that they can convert a significant proportion of customers that the incumbent providers, MYOB, Sage and QuickBooks hold. In doing so I believe they should theoretically be able to build scale without needing a multi-currency play.

1000000 Customers is Plenty

In Australia/New Zealand, the incumbent accounting vendor, MYOB has around a million customers. This on a platform that is not only antiquated, but doesn’t allow for multi currency. Looking at the million or so businesses who use MYOB, anecdotal discussions suggest that a massive proportion are sole trader or micro-businesses in the service industries. These folks are only and likely will only sell into their home markets and hence have no need for multi-currency. Moving up a tier on the triangle we have exporting business such as one of my interests, Cactus Climbing. These organizations quite potentially sell internationally but have made decisions not to take on the foreign exchange volatility of selling in multiple currencies and instead trade in their own home currency. This is the approach we use at Cactus, selling globally but in New Zealand dollars. At the top of the pyramid are those businesses that need multiple currencies – the software businesses, international consultancies and the like who truly need a multiple currency solution. Again anecdotal evidence would suggest that this is a small proportion of total MYOB customers.

Interestingly, and coincidentally, Acclipse recently announced that they are rolling out a client-side application into the Australian and New Zealand market. This product looks to be a direct competitor to Xero (its UI looks very derivative) but at a much lower price point. While the product is not available to test yet, it appears that the major difference between it and Xero functionally is the fact that iBizz will not have multi-currency. While some of the reason for this may well be the complexities involved in creating a multi-currency platform, part of it is also a determination on investment versus return and a nod to the fact that multi-currency isn’t important, at least when you have a million customer strong incumbent product, and the vast majority of those customers don’t need to go multi.

There’s a World Outside of the US?

Who has bought software from a US-based company recently? Or, for that matter, from any vendor worldwide. The default currency for software companies, and the default currency for a huge number of companies regardless of the industry type, is US dollars. This being the case, one only needs to look at QuickBooks four million or so customers to see that a similar triangle occurs to that in MYOB’s home market. Of those four million customers, a massive proportion have no need for multiple currency functionality and, all things being equal, should be able to be moved from QuickBooks to a SaaS product regardless of the multi-currency functionality that product holds.

Micro != SMB

The vendors who currently serve the freelancer and micro end of the foodchain (FreeAgent, KashFlow, Xero, iBizz) serve customers who generally have relatively simple needs. Multi-currency is, I believe, an outlier requirement for these organizations. Moving up the stack into more mid sized businesses (and the term “mid sized” means different things in different countries) and multi-currency is critical – Intacct, TwinField, FinancialForce and others absolutely need to provide robust multi currency tools.

Does It Matter?

The existing Cloud vendors targeting the micro space are doing one of two things – either focusing heavily on their domestic market (Saasu, iBizz, FreeAgent, KashFlow) or expanding heavily internationally and trying to bulk up over time (Xero specifically) In the case of the latter strategy, multi-currency is more important and it must be noted that Xero has an elegant and robust approach towards multi-currency.

So it really is a case of horses for courses. For the strategy that Xero has chosen, yes multi-currency is important. But is multi-currency an imperative for all SaaS accounting vendors? Clearly not!

We analysed our trial data and found that the vast majority of people who never converted from free trial to paid-up had logged into the software only once or twice. It could be argued that this just means they quickly determined the software wasn’t for them and went off into the sunset never to be seen again. Maybe.

But we phoned up thousands of would-be customers and asked why they hadn’t continued with the software – the overwhelming response was “I just never got around to looking at it properly”.

The science of customer acquisition is massively complex, and it’s very interesting seeing KashFlow be so open about their experiment. I have a couple of thoughts around trial periods.

If they don’t start using the product straight away, they never will

I’m a firm believe in the adage that immediacy is everything. I’ve long thought that for many applications an extended trial period only gives prospective customers the ability to put off actually diving in and learning about the software. By putting this off the software remains out of sight. And, as we all know, when something is out of sight it tends to be out of mind. SMBs (the target market for KashFlow) are very time poor and are constantly faced with a deluge of things to do. I’ve seen it happen time and time again that when a task is put off for an extended period of time it has the tendency to slip off the radar and be forgotten. I suspect that a significant proportion of the cold prospects that SaaS companies in the SMB space have are ones who simply “never got around” to trying out the product.

Complex solutions need sufficient due diligence

Accounting solutions, even for SMB customers, have a degree of complexity that shouldn’t be under emphasized. There is a high degree of functionality that SMBs need to assess to determine suitability for purpose. The move to 14 days gives SMBs a very limited time frame with which to try a product and many people would suggest that by limiting this time many users simply avoid signing up at all.

The other issue that is of real relevance for users of SMB accounting software that are migrating from a legacy solution is the significant barriers to migration that exist. Moving from desktop accounting to cloud accounting products is a very difficult process – I’ve been involved in moving 10 or so businesses from MYOB to Xero for example, despite having 15-odd years experience in SMB bookkeeping, and having studied accounting practice, it really is a dog of a process. As an aside that’s one of the reasons that I’m part of a joint venture, LiveMigrate, that offers a migration service from desktop to cloud accounting products – automating migrations is, I believe, one of the the biggest things a vendor can do to increase conversion and uptake.

My suggestions

This is a complex area and their are people who focus exclusively on strategies for sales pipeline management. I don’t purport to be such a specialist and I suspect the majority of SaaS vendors are also not experts and cannot afford the services of these specialists. Luckily there are a range of analytics tools available that SaaS vendors can use behind the scenes to measure this process. In particular Totango is a tool that helps vendors gain an understanding of users behavior resulting from different product offerings, trials and marketing communications to prospects.

The example that some commenters on the initial post gave of prospects who might sign up for a trial only to be cut off after the 14 day free period but before fully assessing the application is a valid one. While not resolving all the issues people brought up, it might be worth KashFlow automating a change whereby trialists that use the application over a certain amount, but haven’t fully made a purchasing decision, are offered an extension to their free trial.

Either way it’s an interesting experiment and I look forward to seeing some more data surfaced about the results.

Three years later and that business is still using similar systems to what it was when I wrote that post. So I was excited to sit down the other day to talk with Andre Mulvenna, US GM and co-founder of Brightpearl, a solution that I call ERP for the SMB – one that offers eCommerce, Inventory management, Accounting, Order processing, CRM and Servicedesk – and all from one integrated system.

Brightpearl have recently introduced their multi channel offering, which is a really compelling proposition for businesses that follow a multi channel strategy (as my one does) – perhaps selling through eBay plus their own webstore. With this offering, businesses can integrate their ecommerce solution on Magento, a marketplace approach with eBay and all the while have things updated in real time within their core back office system, Brightpearl.

The offering is pretty compelling. Brightpearl was already a product I was very bullish on – it delivers far richer functionality than the other SMB account applications like Xero. Freeagent and Kashflow, but at a significantly lower price than the top shelf SaaS products from NetSuite and Intacct. This multi channel adjunct is a compelling proposition. Of course there is the usual caveat and that is that by tying their horse specifically to Magento and eBay, Brightpearl misses on delivering a strong proposition for the legion of organizations that use other solutions – Shopify and Virtuemart among many others. I put this to Mulvenna who said that they;

we would like to deepen our relationship with eBay/Magento communities before we work on other integrations

It’s a strategy that makes some sense, by going deep with these two channels, Brightpearl delivers very deeply and should manage to capture significant customer numbers from these two channels. it’s also a strategy that seems them pick a couple of key winners and partner deeply with them. But yet, I’d love to see them spread a little broader and support a few more platforms.

While meeting with Mulvenna in San Francisco where he has moved from the UK to open a beach head operation, I was impressed by the traction that Brightpearl is gaining it what can well be regarded as the holy grail of software markets. As I remarked when speaking to him, Brightpearl stands largely unchallenged by cloud applications in the large space between the micro business offerings and the mid sized business products. If Brightpearl manages to execute, they look set to be the only credible alternative to the QuickBooks hegemony for mid-sized businesses.

Given the funding round it seemed timely to reflect a little on what the emergence of Wave means for the business models of companies targeting SMEs

Traditional Approaches

Led by vendors Sage, MYOB and Intuit, the traditional approach to SME accounting products is to have a dual sales strategy. These three customers all sell boxed software through traditional retail channels but also have an extensive partner network where accountants, bookkeepers and other professionals on-sell their software – either for commissions, margin or as a service backed offering. This has traditionally been an excellent approach, it leverages SMBs trusted advisers and the reach of High Street retailers.

A move to cloud computing however makes this traditional channel difficult. Retailers have difficulty understanding the concept of selling a fully virtual product (as an aside I know of some vendors who actually sell SaaS licenses in a box just to make customers feel they’re buying something real). At the same time professionals are wary for two specific reasons;

1. They tend to be highly conservative and are unwilling to move from a product they know and trust
2. Cloud has the potential to reduce the traditional areas that practitioners have been able to monetize their service, practitioners are naturally nervous about that

Traditional meets Cloud

Led by high profile vendor Xero, but with significant players including FreeAgent, KashFlow and others, this method mixes cloud software with generally traditional sales channels. While most cloud vendors forego direct retail channels, they instead replace this with sales/marketing initiatives such as those shown by Xero who has a sales/marketing partnership with telco T-Mobile. Similarly FreeAgent has a partnership that sees Barclay bank customers being offered the FreeAgent product.

This strategy has paid dividends for many vendors – Xero boasts of 50000 or so customers while the less visible vendors are all clocking up numerous wins as well.

The Brave New World

While consumers have long been accustomed to receiving free services in return for targeted offers (be it via advertising with Google or targeted services from Mint) it is relatively rare in the business world. The proposition however is obvious – micro businesses are very cash poor and a significant proportion of them are likely to be happy to receive special offers in return for free provision of services.

I was pretty impressed to see that Wave is claiming that it already counts some 75,000 small businesses as customers, this only 11 months after its launch. Clearly the average revenue per user that Wave can drive from targeted offers is likely to be less than the subscriptions charged by the paid products. As such Wave is likely to need a much higher number of customers to generate sustainable revenues. That said however I have spoken to a number of businesses who have balked at the subscriptions being charged by the other SaaS accounting vendors. This along with the fact that Wave claims 50% more customers after 11 months than Xero has gained after four or so years – speaks to the potential of an entirely new business model.

Of course that’s not to say that Wave renders the other vendors obsolete – there is undoubtedly a place for a paid SMB accounting application, however Wave, by following both a new delivery model and a new business model, is well placed to become a very important industry player.

How Will Other Vendors React?

In theory there is nothing stopping one of the other SaaS vendors from delivering a low level free product. The reality however is that the investments they’ve made in chasing a channel strategy, and the basis upon which their business has been built make this highly unlikely. Rather I would suggest that another entrant will potential emulate Wave’s approach. The barriers to entry here are low and it comes down more to the ability of a vendor to build the relationships and momentum to gain traction. Wave’s 75000 customers and significant funding round will help get it that momentum.

Ed Molyneux, FreeAgent CEO says the investment will be used primarily for design and engineering investment.

FreeAgent recently inked a high profile deal with Barclays bank that sees the bank push FreeAgent to its small business customers. While the Barclays deal is high profile – scuttlebutt says that it’s a poor commercial arrangement but if FreeAgent are able to leverage the profile of the Barclays deal and the product development that this funding round enables, they’re well placed to build a stronger position in their home market.

First up, ClearBooks more coverage of them here)

ClearBooks stole some thunder from all the other UK based players when they announced that they were the first UK based online accounting system to deliver automatic feeds (clarification, Xero has automatic bank feeds but isn’t a UK based vendor). Autobank feeds are part of the value proposition for accounting applications, for the uninitiated, instead of having to log into online banking and download a bank statement before importing it into the application, users are now welcomed every morning by their latest transactions, directly in the application dashboard. It really is an amazing timesaver and a feature that, of itself, justifies the move to SaaS.

ClearBooks have partnered with US based online banking intermediary Yodlee to enable feeds for its customers from;

• RBS
• Barclays
• Natwest
• Santander
• Lloyds
• Halifax
• Band of Scotland
• FirstDirect
• HSBC

Aside from the Yodlee integration, ClearBooks is now boasting 2000 customers overall. While straight out customer numbers aren’t overly meaningful (revenue per user being a much better measure), it is one way of measuring scale and presence within a market. ClearBooks 2000 number compares with around 10000 paying customers for competitor KashFlow.

Interestingly, Xero doesn’t break out numbers across regions, Xero seems to discount the use of regional customer number comparisons, although it must be noted that Xero themselves crow about overall global customer numbers – currently at around 45000

The second update is for LiquidAccounts (more on them here)

Liquid was the first company to be accredited by the new BASDA (Business Application Software Developers Association) Cloud Vendor Charter. One point of difference for Liquid is an import service foe Sage customers, as well as this, Liquid guarantees that you can export your data whenever you like as well (just hope your replacement vendor uses a similar data structure and allows for the importation of data).

Liquid is about to launch version 8 of their product which includes a number of additional modules including;

• Contact management
• Timesheeting
• Stock control
• Job costing
• Invoice scanning and uploading to the app

Liquid have also recently entered into a partnership with UK company formation agent @UK PLC to launch www.cloud-start-up.com, a service that brings together some basic company formation activities with a SaaS accounting application. The idea being that companies have a similar set of needs upon startup and that these can be fulfilled by one provider, this package gives UK business the ability to obtain;

• UK company formation
• A UK domain name
• Webmail Service
• A basic website
• Membership to a “business club”

It’s another take on the oft-attempted “business in a box” concept – The contention that SMBs need a packaged diverse set of services is a valid one, MYOB recently produced this video showing how New Zealand and Australian companies are using (and more importantly not using) a web presence.

It has to be said that many companies have tried these one-stop-shop solutions but they’ve tended to be two simple for businesses in the real world. That said, for companies already using the @UK PLC service, they are able to obtain LiquidAccounts at a reduced add on fee of £15 or so per month, a discount on Liquid’s usual rate. If the marketing of this alliance is anything to go by, it may well be a pretty shoddy offering – the website was full of spelling errors, there was lots of information missing, and a bunch of dead links – makes me surmise that this “partnership” was something dreamed up over a couple of pints, primarily to gain some kind of short term marketing “pop”.

In terms of market development, Liquid is saying that their;

…monthly sales have trebled since we launched v7 earlier this year.  Our client base is now in the thousands,  and we have approximately 400 accountancy partners in the UK, and over 100 resellers. Some of our resellers white-label Liquid and we have several more in the pipeline.  We have clients in approximately 10 countries including England, Ireland, Scotland, Wales, Northern Ireland, USA, Switzerland, and France.  We also have a number of accredited partners and trainers (mainly accountants) around England and Scotland.

The UK SMB Accounting space is a pretty busy place – much more so than in the US despite the differences in relative market size. It’ll be interesting to see if we see any degree of consolidation or rationalization going forwards.

Anyway – it seems the series has attracted something of a storm from people up in arms at the way this is being articulated. Never one to avoid upping the ante, Jackson produced a press release detailing the complaints including;

• He’s not even started a business before!
• I’ve learnt nothing from watching his videos
• All his books are self published (and out of stock)
• He’s all style and no substance
• There’s nothing tangible or actionable in the advice he gives
• He’s  an egotistical, ignorant narcissist
• He talks about social media, yet only follows one person on Twitter.

In fact one commentator went so far as to complain about the fact that he “couldn’t identify with the character that Rugg Gently is trying to play” and that the production is “low budget”. He even went so far as to suggest that KashFlow should can the entire campaign – obviously someone with very little marketing experience. Other people get even more pent up about it all saying;

seeing as his advice tends to rotate around his mentors ‘planets’ rotating around him, the Sun, I would keep my business about as far away as his humanly possible. Why would I want to take any advise that would shift my business focus, my companies and my staff away from where it should – on the business itself to some freak show self proclaimed business guru with no real definable successes.

I find it hard to believe that people believe this is a real person. As Jackson himself said in reply to my comments,

I’m genuinely amazed at how many people think Tugg is for real. We thought people would instantly see that it was a compete piss-take of a certain kind of “business guru”.

What worries me is that this seems to show that people have become acusstomed to substanceless hyperbolic idiots marketing themselves as gurus.

If this was an American commentator reacting to a campaign in the US, where people tend to be far more conservative, then I’d understand it. but this is the UK – home to Monty Python and the Goon show. The KashFlow campaign is a direct descendent of these legendary comic shows and is in entirely the same vein. No one seriously believes that Tugg Gently is a real person, no one seriously believes that the specific messages he articulates are accurate. This is designed to be a mildly entertaining series of videos that gets the KashFlow brand out into the marketplace and in the memories of business people. On that measure Tugg Gently is a successful (if admittedly somewhat annoying) invention.

Luckily some people have a sense of humor – UK site Business Matters did a tongue in cheek interview with the character.

Even Rod Drury, CEO of competing company Xero gets the idea here, making the comment that “Personally I really like the Tugggently video’s.  They really appeal to my sense of humor. The production quality is excellent.”

So yes. This is parody,. This is humor. This is an attempt to have people remember a brand through something other than a free pen and a pen drive. Well done Duane, Tugg is a PITA but the campaign is just fine.

All Aboard for Profit Island from Duane Jackson on Vimeo.

Part 2: Social Media Success! from Duane Jackson on Vimeo.

Part 3: Attracting Corporate Clients from Duane Jackson on Vimeo.