Xero's in-house talks legal focus amidst aggressive growth

by Mackenzie McCarty19 Feb 2014
Accounting software company Xero hasn’t spent much time out of the spotlight this past year, first with its launch into the US market and, more recently, with the appointment last week of former Microsoft CFO Chris Liddell as company chairman.

The realities of serving as in-house counsel to such a rapidly-expanding company are exhausting, to say the least. However, Xero’s global head of legal functions, Matt Vaughan, tells NZ Lawyer that taking on the role a year ago was ‘a no-brainer’.

“I started at Xero about a year ago now. In that 12 months, we’ve been experiencing what we call ‘hyper-growth’, where our employee numbers have gone from roughly 300 to roughly 700 today,” said Vaughan.

“So in the last year, that’s lead to a couple of key events, one being that we gained $180m of capital in October - roughly $150m was from US-based investors. That was really to put gas in the tank…We sought that capital from some really strategic and savvy tech investors to drive our aggressive global growth strategy.”

The second key event Vaughan singles out is last week’s appointments announcement. While the aforementioned Chris Liddell replaced Kiwibank boss Sam Knowles as chairman, Bill Veghte, general manager of Hewlett-Packard's Enterprise Group, joined the company’s board as an independent director. Peter Karpas, a former vice president of Paypal, was also appointed as chief executive of Xero's North American business.

Vaughan says the aggressive growth is certainly exciting, but requires constant prioritisation and focus from a legal perspective.

“It’s a blend of what’s going to help our growth and what’s going to make sure that we’re protected at the same time and managing growth in a sensible way.”

When he came on board last year – following a stint as in-house counsel for PwC and property management company Charter Hall in Sydney – Xero was listed on both the ASX and NZX and Vaughan was its sole in-house counsel.

“If you combine all those factors, that was the reason for the first hire and we’ve since grown the team. We’re sitting at three today and we should be at four in the next few weeks, so we’re just trying to grow that team with the business.”

One subject that often comes up as one of the benefits of working in-house as opposed to private practice is work/life balance – something Vaughan admits to having little of. When NZ Lawyer first tried to contact him, last week, Vaughan was in San Francisco. The week before, he was in Melbourne. But he insists the positives far outweigh the negatives.

“It’s hugely different from private practice and some of the other in-house roles I’ve done. It’s a lot closer to the heart of the global executive team, so that means I’m in all the key meetings with all the other heads of business units, which is really key in such a fast-growing company; to make sure that you’re aware of everything that’s going on and the business’ priorities as a whole.

I wouldn’t say that [work/life balance] has been one of the key draw-cards. But I think one of the advantages is that you get to share in the success of the business. Actually being invested in the company is really key and you just don’t get that in private practice. The associate that we hired [for the capital-raising initiative last year] was from Bell Gully. We talked about work/life balance – we closed that out with very minimal external assistance and we didn’t sleep really for that week, but we closed it out – just me, him and the CFO, really. It was funny to hear him say he gets more work/life balance working at Bell Gully!”

As Xero continues to grow, Vaughan says the plan is nevertheless to keep it New Zealand-based.

“It’s now the intention to hire sole counsels into the four core markets reporting back into Wellington, which will create certain challenges. But it’s important to get that level of specialisation as each region grows enough to justify that hire. The third hire who just started was a US-qualified lawyer. He’ll be reporting to me, but he’ll autonomously deal with issues in that region. The fourth hire is that same role in Australia in our Melbourne office…You try to make those hires to ensure that you’re covering a wide spectrum of work, from IP to privacy to commercial contracts, compliance, capital-raising, HR –whatever it might be.”