David vs. Goliath

Xero vs. Intuit (QuickBooks)
david vs goliath xero

The challenge: Why should entrepreneurs mess with their accounting routine?

What they did: Quickbooks was once the default for small businesses looking for accounting software. But scrappy upstart Xero seems to be pulling in customers with its streamlined, web-based accounting software integrated with ADP payroll services. (Sales, the company says, doubled to $15.5 million during the year ended March 2012.) Users can set up accounts to automatically reflect their bank, PayPal, and credit card transactions. And it's cheap: $29 a month covers unlimited users. One secret, says Jamie Sutherland, president of U.S. operations in San Francisco: Xero (backed by PayPal co-founder Peter Thiel) offers free practice-management tools to accountants so that they'll recommend it to their clients.

This story is from the September 24, 2012 issue of Fortune.
  @FortuneMagazine - Last updated September 12 2012 01:19 PM ET
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