Behind the Brand®

Faye Pang Episode
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Jeff Adamson: [00:00:00] Welcome to Behind the Brand, the podcast that explores how technology, innovation, and other forces of change are reshaping age old industries and giving rise to new opportunities. Join me, Jeff Adamson, one of Neo Financial's co founders and an awesome lineup of guests to discuss how the world is evolving to meet the needs of customers.

In the next few episodes, we're focusing on the financial industry. In Canada, This is a space that has been dominated for decades by the big five banks who hold 93 percent market share. There's an incredible number of opportunities for innovation in this space. On this episode of Behind the Brand, I'll be speaking with Faye Pang, country manager at Xero.

Xero is on a mission to become the most trusted and insightful small business platform in the world. At the time of this recording, Xero has market cap of over 20 billion and has over 3 million subscribers around the globe. to transform the way that they do business. Prior to Xero, [00:01:00] Faye was the general manager for Uber Eats Canada, where her and I were actually rivals, competing in the food delivery space.

In this episode, we cover a lot of topics, from how Xero chooses talent, to how Canadian SMEs are struggling, and how open banking can revolutionize the way that Canadian businesses do their accounting. I want to start out with your experience with Uber, because this is where, even though we never really met each other, I feel like we kind of did meet each other through competing against one another while you were at Uber and I was at Skip the Dishes.

Tell me a bit about your experience with Uber Eats, because you guys launched Canada, but you launched Uber Eats globally.

Faye Pang: Yeah, that's right, Jeff. Yeah, it's really nice to be spending some time with, uh, my former mortal enemy. And so, uh, yeah, I was on the original team that launched the Uber Eats app back in 2015.

And this is a little known fact, but Toronto was actually the global test city for that app. So Uber Eats had existed in some shape or form before that, really living within the Uber rides app. And then in [00:02:00] 2015, the decision was made, we're going to launch the first standalone app in Uber history. And for various reasons, competitive, like media market, et cetera, Toronto was chosen to be that first city.

So at the time there were six of us on the ops team. You know, they dropped in engineers and product folks from San Francisco into our Toronto boardroom for a couple of weeks, and December 9th, 2015, we launched in Toronto with 80 restaurants on day one. So, it was a trip. So much fun. And, uh, I distinctly remember Thinking about how we're going to compete against Skip the Dishes and where you all had, you know, stronghold markets and how well you were doing at the time and just really being like a really good push for us from a competitive standpoint to say we've got to deliver better value and do it faster and leverage our unique advantages at Uber to, uh, to try and make a dent.

So

Jeff Adamson: fun times. You guys launched in Toronto and I remember being like, well, that's not good. I mean, [00:03:00] we hadn't even raised any VC money at all. So it was literally me and a few friends maxing out our credit cards at that point. In fact, we still were ordering like we would occasionally order from restaurants that wouldn't get orders like on our own credit card just to kind of like fake it till you make it.

And then you guys launched Just Eat had launched in Canada.

Faye Pang: And then you had the food delivery explosion with Doordash coming to the market. That was a really fun time.

Jeff Adamson: It was a fun, yeah, it was fun. It was also terrifying because, yeah, yeah. We were like, how the heck are we going to do this? And I remember hearing stories about Uber.

I'm like, yeah, some restaurants are getting like 20 to 30 orders a day from Uber. And like we had like one restaurant maybe in Canada that that was doing that type of volume and and maybe it's like it gets amplified but you'd be like every restaurants getting 20 or 30, you know, orders a day and it's like you guys are like the big boogeyman against us.

I mean, Uber was still a startup. It's very, very big one. But this was almost a startup within a startup. And I feel like a lot of [00:04:00] companies do this where they try to. Launch like a digital sub brand or they'll try to do something different. And it really never gains traction. Like you hardly see success stories like this.

What do you think made Uber Eats successful? Because Uber Eats expanded globally from Toronto.

Faye Pang: And we, we often refer to ourselves as the startup within the startup of Uber, right? So at that point, ride sharing was well established. Really, the thesis was, if we can have this fleet and network of cars in any city, like, What could, what else could we deliver, right?

If we can deliver people, what else could we do? And there were so many hypotheses that we tested in that space, whether it was packages, pharmaceutical goods, et cetera. And ultimately like food was the thing that hit. Um, but Uber was really good at that time. And still today of incubating ideas internally and carving out the space and saying, you know, here are the guardrails and we're going to, you know, Funness, um, but we're also going to measure how well it does relative to our internal benchmarks and make some big bets.

So, well, credit [00:05:00] to Travis at the time, um, and Jason Droege, he was ahead of Uber Everything just to say, you know, we want to make a bet in this space. We have this hypothesis, thesis around, uh, the fact that Uber could do this well, and just testing and iterating, like, the first few iterations of Uber Eats before we launched the app.

They did not make money, right? They were not scalable. It was a lunch product in the back of vehicles driving around town. Like, can you remember? Yeah. So it's beautiful product. I loved it. Turns out it wasn't profitable and probably would never be right. So that was the very first iteration of the rates second, and then it continued to expand from there.

So it was just a really fun environment. Pre IPO, obviously, um, heavily, heavily focused on growth. But the environment that Uber cultivated and still has to this day was really one of innovation and just trying stuff, right?

Jeff Adamson: Yeah. And it feels like a lot of the things that you said about doing it, doing a startup within a startup successfully sound like things that we already kind of know.

I think the difference though, is that you actually did them. I remember the cars driving around [00:06:00] and it was like five minute delivery.

Faye Pang: That's right.

Jeff Adamson: But like you utilize, it was just so difficult to actually have the proper utilization to make that turn. And then you killed it. I think within Six months or something.

I think it was, it was killed. And, uh, whereas I think when you, when you look at other brands that are doing things that aren't working, they can't scale, they just keep doing them and drag them out. And then they end up just, instead of iterating on the product, they just kill the whole program.

Faye Pang: Yeah, for sure.

And making the decision to deprecate or kill something is one of the toughest ones you can make, right? There's a sunk cost fallacy. There's all of this emotion tied up in it. But, uh, at Uber, in those days, it was very much like, you know, failure is a lesson for us and something that we can take away to the next.

Jeff Adamson: How much do you think of Uber Eats success and how much influence did Travis Kalanick have at that stage in the business? Like, I wonder, is, is more credit attributed to him than it's worth? Or is it actually, was he legitimately that important to the success of Uber and Uber Eats at that stage?

Faye Pang: Yeah, I would [00:07:00] say TK, I mean, he permeated everything within the Uber culture, right?

But certainly the head of Uber Everything, his name's Jason Droege, like, incredible. leader and thought partner to TK. And so he really drove the vision for Uber Everything and Uber Eats. What I think Travis brought to the table was just, you know, the pace, the desire to like, try new things, make big bets, challenge convention.

Those were the things that, from a culture perspective,

Jeff Adamson: just

Faye Pang: went all across, up, down, and sideways. But Jason Droege was really the one that empowered us as an Uber. We called the move everything, but the Uber everything team to say, how are we actually going to launch, you know, a totally standalone app in Toronto in two and a half months.

And then, yeah, how did we then scale that to the world? Uh, both of them played a like really, really pivotal role for sure.

Jeff Adamson: So what led to your, to move over to Xero? What was that process like?

Faye Pang: My move to Xero, funny enough, Xero called me when I was pregnant with my second son, [00:08:00] um, and thinking about actually going on mat leave, Jess, if you can believe it.

And they said, listen, we're. Scaling the business in Canada. Have you heard of the brand? I said, of course I have. Would you want to come in and help run the Canadian business as a country manager? And one of the things to know about me and my history is my parents were small business owners, right? They were first generation Chinese immigrants that came to Canada and immediately set up their own small business.

Jeff Adamson: What kind of business?

Faye Pang: It was the glamorous business of wholesale meat distribution. So they would literally Whoa! Take deliveries from like the Maple Leafs and the Olymials of the world and they would process it in their warehouse and then pack and prep it to restaurants and supermarket requirements and then they would hand deliver that to Like Chinatown here in Toronto Scarborough, etc.

So they ran that business for 23 years like super unglamorous But I had a first, you know, front row seat to my mom running the books, my dad running the shop, them not having a proper accountant for many years, them [00:09:00] not being able to have access to capital, you know, the challenge they went through with staffing and payroll and knowing how much money they had.

in the bank at any given moment. And so when I learned more about what Xero did, I really thought a lot about my parents, to be honest with you, of the impact that technology like Xero and others like us can have on helping small businesses better understand their financial position, get better access to capital and ultimately survive and thrive, right?

So that was really my motivation for coming. I'd worked with small businesses in the context of Uber Eats and the restaurant business, but this was a chance for me to get into a whole different ballgame and really try to improve small business outcomes here in Canada. So I really gravitated towards that element of the opportunity.

And then the other piece was just the culture, you know, a lot to love about the Uber culture, but one of the things that really drew me to Xero was it's a really human company. In fact, that's one of the core astounding values of Xero was this notion of human. And yes, we're a technology [00:10:00] company, but we're building tech for humans and.

We're humans building it. And so how do you kind of approach the process and how we do business with that front of mind? So I really resonated with that through the interview process.

Jeff Adamson: Help our listeners understand what does Xero bring to the table for people?

Faye Pang: If you haven't heard of Xero, uh, it's a cloud based accounting software, right?

So we serve 3. 95 million small businesses around the world today. Uh, and we really help small businesses manage their books, right? And stay on top of their financial position. Everything from bookkeeping, reconciliation, tax compliance, and ultimately we started over 17 years ago in Wellington, New Zealand, off our founder Rod Drury's vision, which was There's got to be a way for me to better collaborate with my accountant.

You know, at the time, he was basically sending floppy disks of data in the mail to his accountant so that by the time it got to them, it was out of date. And they were going back and forth on like, well, what is [00:11:00] the real position today? And he observed an opportunity to actually build a ledger in the cloud.

Ahead of his time, this has never been a desktop product that was adopted to cloud. Xero has always been cloud first. And so the idea was we've got this great technology, we can have a real time ledger that I can collaborate with my accountant or my advisor on. And then therefore, what's that going to unlock for me as a small business owner in terms of insights?

Right, in terms of timely decision making, uh, and then if I think about connecting in additional apps, and so Xero has a thousand apps in our ecosystem, everything to help you from payroll to timesheet and scheduling, payments, capturing your, you know, your carbon footprints, like whatever you want to do as a small business, these all now plug into Xero.

And so you've got that small business platform that really enables small business owners and their accountants and their bookkeepers to better collaborate and ultimately create better outcomes.

Jeff Adamson: And how much of it is automation as well as collaboration? Like, Yeah, because when I think about what you, what you bring to the [00:12:00] table, and I just, you know, I worked with a lot of SMBs, my family growing up as well, small businesses in our family.

So many of them get bogged down by the day to day kind of drudgery of doing things that just need to be done and they don't have anyone to do them. They can't pay for someone to do it, so they end up doing it themselves. And that's time away from doing many of the things they love, which might be spending time with their family.

And so when I see companies like yourself. Bringing technology at the table that cuts down on some of that, that work, saves time, automates things. I know that that's like a mother or father who gets to go home a little bit earlier that day. And spend time with their kids. Um, and you were probably one of those kids growing up, but like, how much is this?

Is this a time saving tool as well as as a collaboration tool?

Faye Pang: You nailed it, Jeff. Yeah, definitely. There is so much that technology can unlock in terms of giving small business owners back time, right? And if you think about. Time being their most valuable resource in [00:13:00] life. There's a pretty high threshold for small business owners to really want to do everything themselves, right?

If you think about just the mentality of starting your own businesses, wanting to rely on yourself and wanting to roll up your sleeves and get your hands dirty. And unfortunately, what we've seen is that really extends for far longer than it should when it comes to managing the books and doing the stuff that just need, you need to keep the lights on, whether that's payroll or again, tax compliance, just chasing payments.

that you're owed and thinking about how you're going to pay the bills that you need to pay. That's stuff that no small business owner is like, I'm so excited to start my own business so that I can manage my accounting. So no one ever, right? They want to focus on their product and their service and their customers.

And so a hundred percent zero really adds a lot of value for those small business owners, just in automating stuff and using You know, AI and ML to actually intelligently code transactions and help take that from a multi hour a month process to minutes, right, [00:14:00] and really giving them that time back to focus on building their business.

Uh, so 100 percent we see folks really adopting Xero for that purpose and again gaining time back. And then it amplifies again when you plug in all the things that can plug into Xero. Uh, we've got some incredible. Payroll partners in Canada, right? Folks like Wage Point and Payment Evolution, Rise and Humi.

And so we have small business customers that are actually leveraging that technology to make payroll, which today is still very manual for a lot of small businesses, like literally run out of an Excel spreadsheet. We see them actually using the latest technology to get back time, minimize errors and create a better employee experience too.

Jeff Adamson: You mentioned that Xero is is a Global business based out of New Zealand. And I feel like it's like one of the only global businesses I've heard based out of New Zealand, which I kind of like, like, I feel like it's everyone loves people from New Zealand. So that's like a really good. It's probably good for your brand.

I expect, but what are you seeing in other countries? Because I feel like very few people get the experience like starting and [00:15:00] running a company, you know, zero to 20 in another country. And so maybe they don't know how each country is different. And like some countries have really, really good Regulatory frameworks for people to get up and running and some don't.

Some kind of favor larger companies over smaller companies. What are you seeing from that global perspective? And what can you kind of tell our listeners about what's different about Canada?

Faye Pang: Happy to share some global insights on that front and maybe to call back to a podcast that you did recently with Hannah Zadie from Well and Simple.

Like You both were talking about how Canadian consumers, in large part, are being underserved by our financial systems in the regulatory environment today. Uh, and one thing that you said, Jeff, really stuck with me is Canadians seem to be okay being okay. And I would say that I would extend that to small businesses too, because what we see is that Canadian small businesses are really doing it tough.

Relative to their counterparts in other parts of the world, and I'll give you some data to back that statement up. We do a very regular, [00:16:00] always on program called Zero Small Business Insights, XSBI for short. And this is anonymized and aggregated data across tens of thousands of small businesses in North America.

Tracking three key metrics, right? So, sales growth or decline. Payment times, so late payment times, and how long are they waiting to get paid, right? So key markers really laddering up to what's the cash flow position of Canadian small businesses? How crunched are they feeling? In the headline from our latest data, which is a period ending September of 2023,

Jeff Adamson: is that

Faye Pang: Canadians continue, Canadian small businesses continue to struggle in this way.

So for six consecutive months, Sales have been lower than a year ago. And they're currently waiting in Canada over a week to get paid past the deadline, right? So eight days late on average. We call these unauthorized loans. For a small business, this could be make or break, right? We often hear the saying like, Cash is king.

It is especially true in the environment that we're [00:17:00] operating in today. And so both of those things combined that, you know, consecutive six month sales decline over the year before and then waiting on average eight days to be paid beyond the due date that they've got on the invoice. There's some significant cash flow crunch in the system

Jeff Adamson: today.

They're getting pinched. It sounds like they're getting both sides.

Faye Pang: Yeah. And you asked the question, like, how does that compare? We, we do XSBI across, um, all of our major markets around the world. And so, you know, we see better results in the UK and the US. And of all the markets, Canada has the dubious honor of the slowest Yeah.

Sales growth over that time period, right? So that data to me, and it's real like anonymized aggregated straight out of the ledger to say, we know from our data and from XSBI that Canadian small businesses are lagging behind those counterparts in the UK and the U. S.

Jeff Adamson: So what do you think is contributing to this?

You know, the lagging sales growth? The delay in getting paid. What are the root causes?

Faye Pang: [00:18:00] Yeah, there's a few things. And, um, there's been no shortage of, uh, thought pieces recently around the declining Canadian productivity across, you know, the entire, um, economy. But in particular, when you think about small businesses being 98 percent of all businesses in Canada and 53 percent of the GDP, there's a lot to be concerned about, right?

It's just the macro trends are really showing that there's. There's stress in that system in terms of what's contributing to it. I think there's a few things, right? One is mentioned earlier, the regulatory regime. We don't have open banking here in Canada and we don't have real time rail payments modernization.

And so those are things that are, we've seen in other markets, like the UK, as an example, they launched open banking over five years ago, it was a force multiplier for tech adoption within the small business ecosystem, and it contributed to an explosion in fintechs and ultimately. Competition and better choice for small businesses.

And so they were able to use different methods to both make and collect payments, again, contributing to [00:19:00] reducing that pinch on late payment times, and just the burden, the financial burden of collecting payments. And so regulatory regime, we are behind in Canada, and there's been, even on your podcast, so much good discussion around open banking, the impact that's going to have on Canadian consumers.

What we saw in the UK is it had a outsized impact on, you know, Small businesses, right? So we don't talk about that enough. Um, open banking is going to be so meaningful for the average Canadian consumer. It's going to be a game changer for small businesses because it's just going to unlock all of this additional benefit and time back when you think about tapping into the technology.

And the example I'll share with you Jeff is today, right? Credential sharing and screen scraping. is the most common way for a small business to get their bank data into zero. And that is a fundamentally flawed. Yeah, I know it's, it's painful to think about, but that is the industry standard. And it takes them so much time to, you know, check if the connection is working, refresh.

Okay. It's not working today. I'll [00:20:00] try back again tomorrow. Or in an extreme cases, their accountant or bookkeeper is trying to run that for them and they're hitting up on MFA or multi factor authentication. Now the small business owner is getting a text at, you know, 11 p. m. at night saying someone's trying to log into your account.

Do you consent? So that whole flow is so broken, so inefficient, and it's creating a lot of unnecessary friction in the system, right? So that's tying back that we can give to small business owners. And ultimately, like, open banking will help with that.

Jeff Adamson: Yeah, there's a lot to unpack there, Faye, because it seems like such a hack to get access to the data to really create value for both businesses and consumers.

What are some of the biggest risks you see with continuing with that type of an approach, other than the inconveniences, but is it, is there a privacy risk? Is there a risk that this data somehow ends up in the wrong hands?

Faye Pang: Yes, is the short answer, Jeff. And the irony of the whole thing is, you know, one of the topics that gets brought up [00:21:00] a lot within open banking and sort of the need to move slowly and carefully is this idea of security risk and saying, you know, do we have all the guardrails in place?

And do we have the right system and framework to mitigate that security risk? It's one of those things where, actually, if you think about the status quo, There's a ton of risk inherent in the system today. The example I'll give you is accountants and bookkeepers that are in a lot of cases, the most trusted business coach and advisor for a small business owner.

They've given them, them free reign to say, I want you to have access to my bank account. I want you to be able to like, you know, pull that in, whether it's read only access or what have you and pull it into zero and just tell me what I need to know on a monthly basis. I don't need to be involved in the details.

I've actually been sent a picture by an accountant to say, Here's what I have on my desk today. And it's all of their clients, bank cards and bank numbers with the password for their online banking account right on there. It would make a bank executive cringe because they, you know, that's a massive security risk, [00:22:00] right?

The customer has obviously violated. The T's and C's on their bank account to provide that, but they're just so sick of having to work around MFA and having to work around all these broken connections and screen scraping being an imperfect solution. So it's a perfect example in my mind of, you know, we've really tried to address all the security risks.

Before we move forward at all. Yeah. And instead we've created a whole new bucket of risk because like the show must go on, right? Small businesses need to operate. They trust their account or bookkeeper and they need the data. Yeah. It's a funny thing to think about, but it's how things are operating today.

Jeff Adamson: It seems like a ticking time bomb to continue with where we're at. And maybe that's the wrong way to think about it because it's, it's kind of like everyone on the surface may think playing it safe is safe. You know what I mean? Like if you just play it safe, You know, we'll, we'll kind of prevent anything bad from happening.

But then I think you kind of wake up 20 years from now and you look at some of the places that maybe have taken a little bit of risk in smart ways and they've mitigated those risks and. They've made, you know, plans around them, and [00:23:00] they've built, put really great teams on those risks, and then they get ahead, the risk pays off, and it pays off, and maybe one risk doesn't, doesn't pay off, and then you take a step back, but then in kind of pushing the envelope, you kind of see some of these countries that are just getting further and further ahead, and, and we kind of look at some of these numbers with Yeah.

With productivity being on the decline, entrepreneurship being on the decline, you kind of look at what that's going to end up being in terms of quality of life. And I think about my, my two sons at home and the life that I want them to have. I want them to grow up in a country that's prosperous. And I feel like that's what we had when we grew up.

Like it was, there was so much optimism. And now it's like, we got to get that back. You know, there's a lot of talk about consumer driven finance slash open banking, like what should we call it? But yeah, you don't hear enough about the small business and the benefits to small business. And I think people kind of think about it as, okay, it's either going to benefit a small business or it's going to benefit a consumer.

And what they don't realize is that benefits to small business are benefits to consumers in the form of lower prices. And so the [00:24:00] more costs that are passed on to businesses in the form of, you know, not using technology, high costs of regulation, the customer always ends up paying. Especially when we're dealing with kind of a cost of living crisis and runaway inflation.

Now more than ever, we actually need to get people thinking about this as something that's good for all of Canada, not just consumers. How do you think we get people to care about this? Like how do you, is it a rebranding thing for open banking? What do you think we should be doing?

Faye Pang: I mean, I think those of us who have been close to the issue for the last couple of years would say a hundred percent open banking needs a rebrand, right?

Because no one understands what it means. It sounds really scary. It sounds like you're giving open access to your password and your bank account, which of course it isn't. I think consumer driven finances is closer, but what we have really chosen to do is try in our discussions with regulators and the ecosystem to say, let's focus on And let's also focus on benefits that we've seen from other markets,

Jeff Adamson: because

Faye Pang: everything that you said earlier, hey, we've got to [00:25:00] move slowly, we've got to move carefully, I would maybe agree with that if Canada was going first, but we're decidedly almost now going last within our OECD counterparts, and so they're really good frameworks and lessons that we can take from the likes of the UK and Brazil and to just apply You know, that here in Canada without having to completely reinvent the model, right?

So there's a lot of goodness that we can learn from the other markets and then adapt it in the market here today. Um, so I, I absolutely think it needs a rebrand, but what we've chosen to focus on is if open banking were here, consumer driven finance were here, what would that mean in terms of the day to day for a small business owner?

How much easier would it be for them to access their bank information to be able to reconcile their books? To share their data and their financial position with folks of their choosing at any time to be able to drive. Lending outcomes, access to capital, right? Additional unlocks or reporting obligations depending on the type of business that they [00:26:00] are.

So there's so much goodness that can happen. Again, put it in the hands of the small business owner, but ultimately let's make it less painful for them to tap into the resources that are available to them across Canada. And you, you talked a little bit about, hey, it seems like it's getting harder and harder to start a business and successfully run a business in Canada.

I think there's just been no shortage of recent information to suggest that's true. Even at the start of this month, the office of the superintendent of bankruptcy said 4, 800 businesses filed for insolvency in 2023, and that's up over 40 percent year on year. I talk to our business customers as often as I can.

And what I'm sensing recently is Hey, there's a lot of, for those that took SIPA loans through COVID, there's a lot of angst around needing to repay that. And then they're not seeing that pop back again as supported by the XSBI data around sales starting to return. They're getting crunched and pinched on all sides right now.

And I think, yeah, it's, it's been really hard as a small business owner to stay positive through that.

Jeff Adamson: Well, that was [00:27:00] going to be my next question is what are some of the things that, that are actually giving you optimism about small businesses in Canada?

Faye Pang: Yeah, I think I continue to be just so impressed by the resilience and the creativity that we see from small businesses across the country and certainly in our conversations with them.

Just yeah, this is a tough time, but we are trying new things. We're adopting new technology and we're looking at things like digitizing payment options. So I think there's more and more openness. to discussing those things and to being, being open to adopting them, which ultimately we know from our data will actually help them drive better business outcomes.

So that's, that gives me, that gives me a little bit of hope for sure. I'm probably more on the pessimistic side, to be honest, based on all the data that I just shared with you, Jeff, but I think the, the resilience is absolutely there and the realization and the recognition that they've got to be creative, agile, and leveraging the resources around them.

Certainly. The other thing that gives me. Hope [00:28:00] is, you know, we see in Canada over half of the Canadian small businesses are connected to an accountant or a bookkeeper. That's one of our core beliefs here at Xero is, you know, the technology is really great, but in the hands of a seasoned professional who's done this across many small businesses, it's even more powerful, right?

Mm hmm. And so the propensity for small businesses to pick up that advisor, to lean into them, make sure that they're, you know, getting the relevant benchmarks, that they're really leveraging the full power of tools like Xero, that They have visibility to the grants and support programs that are available to them.

I think that is something that we get pretty excited about, right? Because we see again, the power of that accountant or that bookkeeper, that financial advisor to really help be the business coach for small businesses versus them always feeling like they have to DIY. The whole thing.

Jeff Adamson: I heard you mentioned earlier that you guys are using AI and machine learning and it wouldn't be a podcast in 2024 without talking about AI.

So I have to and I'm always trying to we just had Mike from Ada on and I was like really [00:29:00] worried that because I'm always on the lookout for for like fakes fake AI companies because like you and I both know that like everyone's an AI company now and it's like everyone's a tech company. And it's like, ah, yeah, you get different treatment by investors.

But I mean, the reality is like, there are some legitimate companies that are legitimate AI companies. And AI, I think was very early in AI, by the way, like, I believe your competitors claims to be an AI company as well. So I don't think either one of you are, but how are you using AI and how is this going to impact actual business owners?

Faye Pang: We've actually had AI in the product in some form or shape since 2018. And so if you think about accounting and that whole process of reconciling your books, connecting a transaction to office supplies or transaction to food or traveling expenses, like it's highly repetitive in a lot of cases. And so that is a perfect use case to say, how do we [00:30:00] leverage AI and ML models to actually help?

So, um, we're going to intelligently code some of those things, and again, save folks time. So that's been embedded within Xero for a number of years now. We've also recently started to leverage Gen AI for things like our Xero Central and Support Center. We have a really, really well built out knowledge base that gets used for By all of our customers to just understand support and zero and actually 90 plus percent of our support inquiries get handled by zero central.

We've partnered with our partner who's actually based in Montreal to embed gen AI into folks that are using zero central. To more intelligently surface the right answer. There's so much content in there. We're now actually piloting using gen AI to help them find the answer faster. Accounting is really interesting because there's a lot of repetitive tasks, but it's also pretty binary in terms of like, you can't really leverage gen AI cause you really need to get it right.

So we're moving carefully here, but we're always looking for ways to leverage that. Knowing the vast amount of data that we have and [00:31:00] our ability to, again, just save folks time by intelligently surfacing or automatically doing things for them.

Jeff Adamson: You know, we talked about this the other day, and it was what leads to the demise of an SMB is often not like a large, Company killer event it can kind of be these smaller tasks that build up and what's exciting to me about what zero is doing and even the promise of AI is to take some of the lower level tasks and remove them so that people can start thinking about the things that actually may kill the company.

Like, you know, lawsuits or big mistakes that could be made if you're just not, if you're just bogged down with the daily tasks from your own experience, like, has that kind of played out to be true? Or is it like, what do you think is leading to some of these companies? I think you said over 4000 last year declared bankruptcy.

Do you get any reporting on kind of the why that is or in your kind of your perspective? Feedback you're getting from SMBs.

Faye Pang: Yeah, we, I don't have any reporting on like that 4000 number and how it breaks [00:32:00] out. But certainly what we hear from both SMBs and then the accounts and bookkeepers that support them is at any given moment to small business owners doing the math on is it worth it, right?

What am I bringing in? Like, what am I, you know, what's the fulfillment that I get from delivering the product service that I'm delivering? And then, you know, what is my expended? Is it worth it? Right. And so we talked a little bit about this, like that mindset of just multiple years of challenge and grinding and having a pivoting through COVID and then new normal and the recovery from COVID.

And they're not so much a recovery from COVID. If you think back to last summer, there were so much. optimism around, hey, we're starting to see some of those macroeconomic indicators turn and we think that we might be on the up and up again, And again, from the excess bi data showed like, not really six consecutive months, right?

Continued decline year on year. And so I think just the exhaustion around that is one of the things people just throw on the towel and say it's not worth it. Um, in fact, I think I'm just gonna go back to my Corporate gig, right? There was this huge explosion at the start of COVID as we went to remote [00:33:00] work, and people just trying to make their side hustle their main hustle,

Jeff Adamson: and

Faye Pang: what, you know, the sense I'm getting is some of those folks have tried that and they've just realized, either not for me, harder than I thought, and, you know, I'm just going to go back to it.

Maybe a more stable sort of job. Um, but the other key thing really is people run on cash and that's why we are so passionate about cashflow at Xero and leveraging the tools and our ecosystem to help manage that. Ultimately they just run out of cash and then they've got to make a tough decision around, you know, is this something I still want to keep going?

So anything that we can do as an ecosystem from Neo and financial services to accounting platforms and advisors, um, to help small businesses. Stay on top of their cash, their cash flow and predictively looking forward to say, where are you going to be in six months, nine months, 12 months? I mean, that's just going to help improve financial outcomes and survival rates for small businesses.

Jeff Adamson: Yeah, I think on the banking side. If we can enable small [00:34:00] businesses to force banks to compete properly for their business, because I feel like today, and it's on the consumer side too, but everyone knows what it's like. You have something that shows up in your bank statement or something happens with your account and you have to call in, it takes an hour.

You talk to someone, they can't help you, they don't know who can, and it's not their fault, it's just that that's the system, that's just the way it is, and then you're so angry, and you want to take your business somewhere else, but then you're like, oh, it's so painful, because then I gotta like, move all my money, switch all my bills, move my direct deposit, it's like a heart transplant.

Basically, and with SMBs, that's probably 10 times worse, you know, they've got so many more payments, you know, you've got integrations, what to me, it feels like it's, you're just captured by these institutions, I never think that it's anything to do with the people who work there, they're always nice people, but the institutions just haven't, there's just been such a lack [00:35:00] of competition, you know.

Yeah, that I think is allowed the kind of festering and degradation of these organizations, um, to the detriment of their end customers, whether that be business or consumer to the point where they can't really go anywhere else very easily because you're like, okay, do I want to spend, if you're a business owner and you're like, do I want to spend a full day at minimum away from my business, switching over to a new company, That is going to be just as bad as the one I just came from.

It'll just be a different color. And instead of blue, it'll be green. So, you know, what I'm excited about is working with companies like you guys that are pushing the envelope that are kind of like banging up against the status quo, wanting to make things different. And I feel like we've got an ally in, in zero and, and I think there's many other companies as well that want things to be different.

They want things to be better. And they know the path to getting there is. It's going to be a little bit different [00:36:00] than the path that that got us to where we are now.

Faye Pang: I couldn't agree more with what you said. And I think ultimately there's, when you think about regulatory programs like open banking, payments modernization, like to your point earlier, there's a hidden cost of inaction, right?

And it's this Canadian consumers and small businesses continue to bear the cost of higher transaction fees, the lower options. tougher switching costs, right? And, um, the burden on that front. So there's just so much that we are inadvertently paying for as Canadian consumers today, that we're really passionate about trying to tackle that.

And ultimately we think Canadian small businesses deserve better.

Jeff Adamson: Company culture wise. So Xero being a Kiwi company.

Faye Pang: Yeah, we're, we're ASX listed, but founded in New Zealand. So we're listing on the

Jeff Adamson: Australia Stock Exchange. That's a bit of a split personality. If I think of a, of a company based out of New Zealand culture, I don't know, for some reason, I think of like Merino wool [00:37:00] type warmth, you know, like, I feel like it's just so happy go lucky, but are you guys secretly sharks?

Like, is it like, when I think about you came from Uber, which notoriously hardcore, Bro culture, then you go to, to zero. Am I getting this right? Tell me what it's been like for you,

Faye Pang: generalizations aside. No, it's, uh, it's, I, I appreciate that and I will say like any kiwis that I've met or had the pri privilege of working with during my time at Zero have been universally incredible.

It's so kind, it's so nice. But, uh, yeah, the culture at Zero and certainly within our New Zealand sort of heritage is very much like I said, one of. Humanity and empathy, compassion, and really caring for our customers, right? Like since the beginning of Xero's inception, uh, one of the key go to market motions and approaches was we're going to work through and with accountants and bookkeepers because they really hold the keys on the relationship with small businesses.

They're the [00:38:00] trusted advisors. And so this is a channel and a customer that we really want to nurture. And that has remained true. 17 plus years later. Um, so one of the things that was true when we first launched in New Zealand, as we scaled to Australia, as we launched in the UK and the US and now Canada, really heroing and Valuing the partnership that we have with accounts and bookkeepers and try to make them the heroes for small businesses.

So that gives you an indication of sort of how we work, not trying to cut them out or go around them as actually saying, Hey, we really want to work in partnership with you and building a product that makes sense for them. And really listening to their feedback as we think about product delivery and innovation for what that segment and customer really needs.

And so one of the things that I hear a lot is say, like, we love your team. Right? Uh, we love working with them, they show up for us, they're so, you know, passionate and they want to work with us. And that's not common or universal, unfortunately, these days. And so, I'm really proud of that fact. And that's, again, gives [00:39:00] you a sense of how our culture shows up on the outside, um, but it's something that is, you know, how we treat one another internally as well.

So that, that human value is really key.

Jeff Adamson: If you could go back in time and give the high school version of Faye any advice. What would you tell her?

Faye Pang: I actually had this conversation with some close friends recently and the the advice I would give her is to worry less about school. And my Chinese parents are so upset right now.

They won't listen to this, but like to worry less about school and worry less about grades. Um, I grew up. with a group of friends and in a cohort where it was like, you need to get into the best school and everyone was freaking out. And I would say, worry less about that. Study, study probably a little bit less and through high school and through university, like enjoy the clubs and the extracurriculars and focus on building relationships.

That's what you're going to remember from school. It's not the tests or the classes.

Jeff Adamson: I feel like you, just based on this conversation [00:40:00] alone, I feel like you did pretty well in school.

Faye Pang: Yeah, but it's, I did okay. I did okay. But I, um, even then I would say, Hey, I probably need to work less on the grades and more on just being in the moment, experiencing it and again, building the relationships.

Jeff Adamson: That's solid advice. Where can people learn more about Xero?

Faye Pang: So you can check out our website, Xero, X E R O dot com. And I give you a bunch of information around our products, et cetera. Feel free to, if you're listening, hit me up on LinkedIn. Always happy to connect with folks on the team. If you want to talk about partnerships, your accountant or bookkeeper, if you're a small business interested, you know, my DMS are always open to talk more about the product.

Jeff Adamson: Well, I'm a huge fan. We're all huge fans of what you guys are doing. Uh, we're cheering you on. I'm super grateful that you took the time to come on, Faye. I really appreciate it.

Faye Pang: Hey, thank you for having me. And thanks for letting me relive our old food delivery wars days. That was fun.

Jeff Adamson: Thank you for tuning into Behind the Brand. If you enjoyed today's show, [00:41:00] please subscribe and leave a review on your preferred podcast platform. If you're interested in learning more about Neo Financial, visit us at neofinancial. com. Behind the Brand is production of. Financial and media lab, YYC hosted by me, Jeff Adamson, strategy research and production by Philippe Burns, Dario Betcher, and Kyle Marshall.