A reseller deal with British Telecom saw Xero’s shares rise to an all-time high this morning. But the company is struggling to fill 36 new positions, chief executive Rod Drury tells NBR, who is now eying the US.

Before the start of trading today, Xero announced it had tied up a reseller deal with BT, whose small business website reaches 1.7 million customers.

The deal mirrors those that Xero has already struck with Telstra, which will sell Xero’s software-as-a-service accounting software through its coming small business website, launching July, and one already live with Telecom NZ.

Mr Drury says that because his software operates over the internet, the likes of telcos and banks - who have an established online presence - make more sense as a reseller network than the channels that accounting software makers have traditionally pursued.

Xero’s shares (NZX: XRO) , which had an IPO price of $1 but has sunk below 70 cents at the start of this year, have been on a steady climb over the past couple of months.

This morning, Xero's shares - which closed yesterday on $1.30 - leapt as high as $1.71 before settling down around $1.45.

Mr Drury’s family trust owns 25 million shares in Xero or around half the company, meaning it would have been enriched by around $10million at the height of this morning’s advance.

It’s also good news for David Kirk, who came in on the IPO with 500,000 shares, and other major holders including Sam Morgan (2.91 million shares) and MYOB founder-turned-Xero-backer Craig Winkler, who took the lion’s share of the recent $23 million placement.

When contacted by NBR, Mr Drury professed to be relaxed about his companies rocket ride, describing it as “the joys of having a low liquidity stock” where relatively small positive - or negative - demand can have a big impact on price due to the releatively small number of actively traded shares.

However, “It does make it easier to walk down the isle of the plane,” Mr Drury concedes.

The elusive break-even point
The Xero boss is still cagey on what constitutes a breakeven point for his company, which currently has around 6000 customers, more than half of them gained this year as sales accelerate.

When NBR previously spoke to Mr Drury, he mentioned two different customer targets for breaking even: 15,000 and 30,000.

So which number customer number constitutes a break-even point?

“Somewhere in between 15,000 and 30,000,” says Mr Drury, depending on how much Xero focuses on building its customer base, and how much on increasing its average revenue per user (arpu).

The low marginal costs associated with Xero’s internet delivery model mean it’s all gravy after the 30,000th customer mark, Mr Drury maintains, setting up his company to become one of New Zealand’s largest.

Struggle to hire staff
Xero is also using some of the funds from its recent $23 million share placement to hire 36 new staff - including around 20 developers for its New Zealand operation (where all product development takes place) and business development and sales staff for Australia and the UK.

Despite the slow-down, Mr Drury says only “three or four” positions have been filled so far, and it’s looking like hard work to recruit for the rest. The skills shortage remains particularly acute in the developer market.

Once the new staff are on deck, they will focus on new Xero functions like job costing and time sheeting that will bring accounting functions into the front office, Mr Drury says, and allow his company to charge on a per-user basis, raising its arpu. Beyond those, expect small business features that extend beyond accounting and finance. “Accounting was only ever the beach head,” says Mr Drury.

Where next? The US
Mr Drury is calling a pause, saying Xero will now concentrate on building relationships with Telstra and BT head of his product’s debut on their respective web portals around July.

Once new bodies are on board, and internal marketing staff at BT and Telstra sufficiently converted to Xero’s world view, the company will attack the US market.

The US market is important of itself, and for the influence it exerts on the rest of the tech world, says Mr Drury. “We have to do something there.”

In its quest to crack North America, the company will be looking to leverage the skills of its newest board member - expat Kiwi Andy Lark, who today is Dell’s global vice president of enterprise sales and in charge of the tech world’s largest e-commerce site, Dell.com.