Why Ignition will grow up with an American accent
Co-founder and CEO Guy Pearson tells Accounting Times how the company’s centre of gravity will shift this year to the US.
When Silicon Valley Bank blew up in the US last week it sent a shiver through the tech sector. The Federal Reserve stepped in to guarantee deposits last weekend, but uncertainty remains about possible aftershocks for Australian tech companies with exposure to the bank, or even the broader US market.
Local start-up Ignition, which has just celebrated its tenth year supplying professional services with proposals, engagements and billing software, quickly realised it – and its US clients – would fortunately be unaffected.
“Ignition operations and payments are not impacted by the SVB news,” says co-founder and CEO Guy Pearson. He says a few customers met delays accessing funds but Ignition was working with partner Stripe, a large US payments provider, to expedite switching bank accounts.
More than that, Mr Pearson is confident that Ignition’s long-term growth prospects will keep riding “strong momentum in the US”. With its course unchanged, at some point this year North America will usurp home base as Ignition’s most important market.
“It's our largest revenue region and it's growing the fastest, has the most efficient unit economics, and we've got the biggest partnerships with Intuit, Gusto, Xero,” Mr Pearson tells Accounting Times. “It’s already our largest payment processing region.”
He says the bulk of Ignition’s 6,000 global customers are evenly divided between Asia-Pacific and North America, but the latter is quickly moving ahead.
“The Americas are growing 30 per cent faster month over month than Australia. The market is 10 times as large, just cottoning on to what we’re doing.”
Part of the momentum came in the wake of COVID, which has accelerated a trend away from cheques towards digital processing and Ignition’s contract software was in the right place at the right time.
But luck had nothing to do with it.
Mr Pearson (pictured above with co-founder Dane Thomas) says he has watched many Australian companies going off half-cocked stateside, but now is the moment for Ignition.
“We've been patiently waiting with presence in market since 2014-15 to try to figure out the right time to scale up.”
“In the US, no one has any idea who we are. But when they look at us and Thomson Reuters, Intuit, Gusto standing behind us as go-to-market customers …”
“The conversion rates being the same as Australia – a very mature market where we do have brand recognition – is the right indicator of things come for the future.”
And the potential market is huge, he says, with about 300,000 CPAs and bookkeepers plus many more in the broader professionals services, such as law, which currently account for just one-in-five customers.
Key to its North American expansion will be its 50 staff – more than a quarter of its headcount – which includes its R&D team, CFO and Drew Woodcock, recently hired as vice-president of sales working out of Austin, Texas.
“We have quite a few of that senior leadership team already calling either the US, Canada or the Americas home.”
Pearson says the hiring of Woodcock doesn’t signal Ignition is going to recruit an “army of salespeople” and when it comes to expansion in a market, he is only too aware the company recently got things wrong.
In January, Ignition joined the ranks of global tech businesses everywhere by announcing job cuts. Modest by the standards of Amazon and Meta – 16 staff from nearly 200 – but the result of overestimating prospects in the UK.
At the time, Mr Pearson said it was the “hardest day” and blamed his own misjudgement, but says there was little choice because the UK investment failed to add up.
“My job is to make sure everybody who's in the company is safe, rather than particular individuals.”
“It helped set the ship right, focusing on the broader company rather than those individuals. And we will still continue to try and figure out the EMEA [Europe, Middle East and Africa] market.”
With a dozen staff still in the region and 1,000 customers in the UK, the footprint there is six times larger than pre-COVID but Pearson says there has never been a “silver bullet to figuring out the UK”.
“We gave it some time to work, but it didn’t play out.”
So it will be slow-but-sure stateside, with an R&D team focused on making the customer experience easier by working smarter rather than just building a “feature factory”.
“Customers need to feel this is my favourite piece of software every single day,” he says. “It doesn’t mean we don't create value, but sometimes people will jump over a couple of hurdles to realise value, but others may not. So if we can make it easy, then the theory is everyone does it.”
“We'll likely end up the year with a fairly flat head count in the sincere belief that we've got the team to be able to continue to grow successfully.”
The product already takes in US nuances such as date formats, but also local regulations and compliance around payments.
As well as high-profile tech partnerships, Ignition is also working on building relationships with CPA bodies, which are organised state-by-state rather than nationally as in Australia.
“In the US every state has a state CPA body and they are actually quite large
because there's one, not multiple, within that state that looks after that whole state.”
Signed up so far are Maryland and Colorado while in January Ignition became a strategic partner of the National Association of Enrolled Agents, representing 8,000 professionals who will use its tax templates and payment automation.
If Ignition’s centre of gravity shifts stateside this year, Pearson says its distinctive culture will stay unchanged.
“Culture has probably been an underlying part of our strategy over the years. We do what we think is right, we're incredibly transparent internally with what we're doing and why, sharing numbers and all those sorts of things.”
“We really try to live out our values. One of them is we work without ego.
And we like solving problems, that's what we align around.”
In interviews with potential employees, he asks atypical questions.
“Can you have a conversation, plainly put? And are you comfortable enough to be vulnerable, and therefore make a good part of the team?”
“The idea is if we can have people who care more about the common goal, we can get along with other people and drive forward together.
“And culture, even if it changes from Aussie jokes and Aussie quips to more American jokes and American quips but they are respectful and thoughtful of each other and all those sorts of things stay true, it'll work.”
But this year’s target – tech crunch and flaky banks notwithstanding – is clear.
“We’re building a global company but our focus 100 per cent is on the largest country that's got the best unit economics and is growing the fastest. It would be silly not to be.”
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