Xero and Sky: A story of two chief executives

Thirty nine years ago Canadian musician Neil Young put out Rust Never Sleeps, an album that included the anthemic rock track Hey Hey, My My.

Together with its acoustic counterpart My My, Hey Hey it book-ended the platinum album and catapulted Young back into the charts. The album was inspired by the time Young spent with punk deconstructionists Devo along with his own growing sense of irrelevance in a musical marketplace shaken and stirred by the likes of Johnny Rotten (who is referenced in the song).

The most famous line from the track is ‘‘it’s better to burn out than to fade away’’.

The song came to mind a couple of times this month when two very different CEOs resigned in quite different contexts.

First there was the chief Xeroer and part-time bogan, Rod Drury. Drury founded Xero in 2006 as the world was just waking up to software as a service (SaaS) companies that lived in the cloud as opposed to massive fat apps that sat on a local server.

Drury was the local personification of Steve Jobs’ ‘‘reality distortion field’’ where a charismatic jeans-clad leader can convince themselves and others that almost anything is possible with a mix of bravado, smarts, passion and bloody persistence.

Listening to Drury at an annual meeting, it seemed that world domination was not just possible but inevitable. I remember attending one annual meeting in 2012, when the company barely had 50,000 subscribers, when Drury promised they were on track to getting 20 times that number within five years.

As distorted as that reality seemed at the time, Drury and his team actually pulled it off. Last year they announced one million users thanks to hundreds of people working around the clock.

The other defining thing about Drury was his approach to people, both operational and directorial. The senior management team at Xero has been updated and changed more times than I can remember, but with the common theme of having the right people at

Fellet tried every trick in the book, but none appear to have worked.

the right time.

The same is true of the Xero board, which resembled a revolving door of talent that could lend value relative to the challenges of the time, and would then be moved out. During its 10-year listed history, Xero has had three chairs and God knows how many directors cycle through.

Sky TV CEO John Fellet had a different set of skills. The first was a terrific appetite for risk-taking. Setting up the version 1.0 of a satellite TV service is a big bet on some pricey kit.

Originally as COO, then CEO, Fellet oversaw the big bet with a tight focus on execution and cost control. As a result of this he was able to take a business that was losing up to $1 million a week and turn it into one of the top cash cows in the country for nearly a decade.

He also had a ferocious capacity for productivity, able to process vast amounts of work in compact timeframes and famously replying to all emails in less than a day.

He was also besotted with distribution partnerships, signing up many of the big telcos and power companies into long-term bundled contracts. Contracts that reflected centralised control over content and the linear programming of that content.

And that’s what’s killed Sky, the removal of centralised content control courtesy of the internet. Suddenly content became ubiquitous and delivery moved from linear to on-demand. So not only could consumers watch whatever they wanted (apart from live All Black tests), they could dictate when they watched it.

Fellet tried every trick in the book, but none appears to have worked. The most recent one – an anorexic version of Sky for $25 that competes with a super-fat version of Netflix for $15.99 – is a datapoint of how hopeless the situation is for Fellet’s company.

So it was not surprising to hear his plans to retire. There’s talk about a younger person having the necessary vinegar to take the company forward, but I’m not sure that’s within the constraints of a centralised command and control business model.

So two resigning CEOs, both smart, both having delivered billions of dollars of wealth to shareholders (including themselves) but very different contexts. Drury a digital native in a digital world voluntarily taking a leaf out of his own playbook – stepping down to allow a better suited person to take the company to the next step. Fellet – a man out of times and out of time.

‘‘Rust never sleeps’’ is an apt coda for a man who had disrupted the paradigm of terrestrial television 20 years ago, only to himself be disrupted a generation later.

❚ Mike ‘‘MOD’’ O’Donnell is a professional director and writer. His Twitter handle is @modsta . He’s previously been a shareholder of both Sky and Xero.