Zip CSO shares what it takes to transition from startup to scaleup 

News article

Dr Tommy Mermelshtayn is the Chief Strategy Officer of Australia fintech darling, Zip. 

Since its launch in 2013, Zip has transformed itself from a local company to a global BNPL powerhouse. Most recently, their recent merger with US-based Quadpay and expansions into new markets in the Middle East, Canada and Czech Republic has seen Zip’s phenomenal success as a leading BNPL company. 

During a virtual fireside chat, Dr Tommy sits down with Antler Australia Managing Partner, Bede Moore, to discuss Zip’s growth to date, what it takes to excel in corporate strategy and what happens when a business is ready to step up to the next level. 


You can watch the virtual fireside chat here.

Or alternatively, read the transcript below, including the audience Q&A. This transcript has been edited for length and clarity and starts from the beginning of the panel discussion. 


Bede Moore (BM) (00:07): 

Hi to everybody. Thanks for joining us during freedom week for those of you to whom that applies, and to the rest of you, just, anyway, lovely to see you. Still coming from home for me here in Sydney. I hope many of you are planning more adventurous outings this evening after we've heard from Tommy, who is our special guest here tonight. He is the CSO of Zip, which, of course, is a global leader in digital retail, finance, and payments. 

Over the last five years, Tommy has been at Zip, and he's played a central role in driving the company's transformation, which has seen it turn into a global BNPL powerhouse, where it operates now in Australia, NZ, the UK, the US, and South Africa. 

Along with leading the strategy of Zip Co, Tommy drove Zip's 2020 merger with the US-based BNPL company, Quadpay, and has been responsible for building out Zip's new markets in the Czech Republic, the Middle East, Canada, and they are currently looking at a range of other jurisdictions. He came to Zip after being the head of strategy in New Markets at Equifax, he holds a PhD, so it's actually... It's Dr Tommy, from the University of New South Wales, and has degrees in finance and information systems from Stern School of Business at NYU.

It is a pleasure to welcome him here today. Thanks for taking the time, Tommy.

Tommy Mermelshtayn (TM): 

Thanks, Bede, and welcome... super excited to meet the Antler community and plug into the startup ecosystem here in Australia. So, thanks for having me.


Awesome. Thank you. Well, let me perhaps give a brief potted history... and it is brief because Zip has grown immensely quickly as a company, and a really critical section of it, You have been there in the leadership. 

Larry and Peter founded it in 2013 as Zip money, And they were offering digital credit options to customers, having raised the grand total of $170,000, which, given its current markets cap, is wild and almost impossible to imagine. By early 2015, it actually... it reverse-listed using the shell of a company, I think, onto the ASX in-


Rubianna Resources, which is a mining company in Perth. And they actually had to fly out and do diligence on the shelf because they didn't want any liabilities from old mining tenements. So, literally, they flew out to WA, and that's how we inherited Philip Crutchfield, our first chairman, actually.


And what was Rubianna Resources doing, just out of interest? Was it a prospecting company or something?


Yeah, it was looking for gold.


Wow. The most-


Hopefully, they found it with Zip.


Yeah, that's right. That's [crosstalk 00:03:22].


Actually, a lot of those shareholders ended up believing in the story, and have stayed in the journey. So, prior to COVID, where we have our AGM or an investor day, they would actually come to ABL's office and we would meet some of the original investors in Rubianna.

BM: (03:42)

That must be the coolest... And I do like that, they were looking for gold but they found it in a FinTech company that kind of emerged from the shell. It's kind of interesting... It's an interesting one. 

And so, that was the kind of mechanism for them to kind of raise $5 million, right? As I understand it, that happened roughly a year before you joined the company? Tell us a little bit about what Zip looked like when you arrived, and what it was that convinced you to join the company?


Sure. So, you've got to remember, eight years ago, there weren't Antlers, there weren't Blackbirds, Air Trees, Square Pegs, and the ASX was a very healthy, and remains a very healthy, viable option for early-stage businesses to raise capital. And you see the health of the IPO market here. And so, that was the first... There was a lack of startup capital, really, which drove the decision to do the reverse listing. 

When I joined... and, funnily enough, when I joined and actually when I started working for the business are two different things, because Larry and Pete, I got to know through my times at Equifax. And what I was doing at Equifax, actually, that was a good segue to Zip, was I was driving corporate development and new markets there. So I was looking at trying to transform a credit bureau to a data analytics business.

And one of the things I did there was created a FinTech type of offering, because the idea is, the products themselves are data, and the beauty of a bureau business is the more you use the business, the more data you create, the more valuable the bureau becomes, similar to our two-sided network here at Zip. 

And I felt that we were just at the beginning, the cusp of growth from FinTech, and there was a huge amount of disruption to come. And once you plug into bureaus for credit or ID services, you're pretty hooked. You build scorecards off the back of it. So I came up with an offer, which basically said, for the first 12 months any FinTech that's really small could just get free services, unlimited use of free services. But that actually plugged me into the ecosystem, and through that experience, I got to meet lots of businesses.

And I was doing work within FinTech Australia off the back of Equifax. And you could feel that change was in the air, that businesses were going to create new models. And I was looking for an opportunity that really was within the credit landscape because that's what my background was. And Zip started off as a point of sale lender, trying to really disrupt that Harvey Norman interest-free credit card offering. And when I unpacked what Larry and Pete were creating, I was like, "Actually, there's something really unique and novel here, and I think it has legs," and so that's why I jumped ship. Funnily enough, I do my induction session here at Zip, and I, hand on heart, think I have one of the best jobs in Australia, and I really do believe that, I'm not just saying that.

And I often reflect on why that is, and I look back at the decision that made me join Zip. The focus on financial responsibility, the culture that's been created, the leadership team, Larry and Peter, the founders, the opportunity around payments and credit more generally, which I think is still hugely exciting in an area that continues to get investment and a lot of focus, and the opportunity is big. And probably the biggest one for me is having a real impact. So, when I joined Equifax, quite early in their transition, there was a very big focus on our B2C offering, a direct to consumer financial literacy. By the time I left, when they were bought out by a big US giant, they'd lost a bit of that feeling. And giving money to consumers is one of the most immediate ways to impact their lives. If you do it in a way that's transparent, fair, and really different from old school credit cards that are reliant on interest in revolving debt, that's a very attractive proposition and it very strongly resonated with me.

So, when I joined, we were around 40 people, we're pushing over a thousand now. Small office in York Street. One of the first things I did was help us move into a subway space on bridge street. And I just got deeply involved in everything and anything because it was startup 101. I never worked for a FinTech startup, but I actually consider myself a general so I'm actually not very good at anything, I'm okay at a lot of things. And there were a lot of things to do, whether that was managing integration, selling to merchants, and so on and so forth. So it's been an amazing journey, and the business is very different but it's retained a lot of that original magic.

BM (08:33): 

And, I mean, it really means that, though, you kind of were there in the inflection point, right? So, obviously from 40 to a thousand is this, I think, a critical period, and it's a hard part to learn because only very few businesses really get to go through that inflection. Tell us a little bit about the expansion that occurred between going from having 40 people to actually being able to consider doing a merger by 2020. Those four years must have been subject to a lot of growing pains. What really unlocked that for the business?


I guess it's always about taking people on the journey. So, being clear on where you want to get to, not always 100% sure of how you're going to get there. Because, every six to eight months, things would change, the business would be in a new chapter of its growth. What we found was there were these chapters, and each chapter presented itself with a different range of opportunities or challenges. I remember when we were around 80 or 90 people, everything was on fire, literally everything was on fire, and we just couldn't understand what was going on. Why? You sit next to this individual. How could you have not had a conversation around something you're both working on?

And it was just, "What's going on?" And during that time period, it was communication. So, we were used to a relatively small business, our communication channels, our huddles, bringing everyone together, was really easy. But as we started adding a lot more people and making sure that we're aligned, we realized that we needed to really double down on communication. And it was the first time we actually created true strategic artifacts, like the plan on the page, that north star vision, the product strategy. And those were important artifacts to start bringing people into the journey and create the operating leverage within the business so that everyone knows what we're running towards, what are the key metrics we're trying to move, what are the strategic pillars? And then, the first time we expanded offshore and the first time we launched a new product, or we did a reorg around different customers, merchant and consumer because we finally had a big enough engineering practice and product team to start building out our practice so we can actually focus on our two specific cohorts of our network.

And each time we evolved, there was a change, and the resilience and finding people that can actually work through that change was one of the critical things when we were looking to hire talent, particularly leadership. To this day, we look for that resilience, because we know that the business will continue to evolve. So scale up is hard, but then how do you build the global powerhouse? How do you go into... from 13 markets to 20 markets? That's the next stage of our growth. And that resilience to change is always going to be important for us.

"If there weren't fires, then you're probably doing something wrong because you're not going hard enough, you're not going fast enough, you're being too conservative. So it's okay to have fires... The trick is knowing which ones are going to become out of control and which ones you need to address today versus tomorrow."

BM (11:37) 

Yeah. One of the things that I think is quite interesting is, you talked there at the beginning of your answer about culture, and when founders are... I mean, everything was still on fire with 90 people in the business. I'm sure there's a bunch of founders, probably on the line right now, who are just thinking about how much of an engulfing fire is in their five-person business, for example, right now. When you're at that stage, you're five people or whatever, the last thing that you're thinking of is what your culture is going to be, what your vision is going to be. It's often something that is absent from these earlier stage businesses. And yet, I'm going to guess that you would say that one of the things about Zip is that, when it was at that 40 person company all the way through to a thousand, one of the sustaining components, one of the pieces of glue, was the company culture.

How much was that a central piece for this scaling, and how did you and the executive team kind of use it to build the company?


So, I guess there's two pieces there. First of all, there are always fires. There are always small fires burning, and that's okay. If there weren't fires, then you're probably doing something wrong because you're not going hard enough, you're not going fast enough, you're being too conservative. So it's okay to have fires, it's just about... The trick is knowing which ones are going to become out of control and which ones you need to address today versus tomorrow. In terms of the culture, a lot of it happens without being quite thoughtful. So there's the combination of being active in trying to codify values and do those things. We didn't do that when we were a 40 person business. It was more about how did we behave, how did we think, how did we look to hire people that had the right traits that aligned with the kinds of things that were important to us. And simple things like just good humans, people who actually cared about what we were trying to do, people that understood that there was an opportunity and it would be a challenge.

So a lot of those things just happen. And then, as you continue to grow, it becomes important to codify them. And that's when you start creating the values, individual cues, and some of the other physical artifacts that live within the office. The graffiti. I remember the first time we graffitied a wall and we're debating what to put on it. So, we started off with more just what's cool, and then we were like, "Actually, let's put some of our values up there." I got a photo from Larry, actually, the CEO, co-founder, and he was in San Fran just meeting businesses and FinTech investors. He met Ribbit. They have beautiful graffiti, "It takes money to change money." And so those kinds of things actually just stick with you. So it's a combination of things that happen by themselves, and being quite conscious of creating some of those codifying tools.


And I think the other piece, though, as you mentioned, is that you literally had to kind of reorg to accommodate the kind of scaling of the business. Obviously, there are fires and there are communications that are not working effectively. 

How does the leadership group sit around and make those decisions, that we need to reorg, we need to restructure? Is that something that you take out of your everyday work and you go and sit down and think about, and then come back to the business and roll out. How did that take place?


Well, it happens probably in two ways. So it been consciously when we're doing planning and we're doing, "Okay, these are the strategic pillars, these are the initiatives, and how does that flow into budgets?" So even at that 40 or 50 person business, you're probably not doing it to the level of detail that we're doing today, but we had a view of, "These are the things we want to do over the next three to six months. Do we have the people and the resources to deliver, and what are the trade-offs we need to make," and so that drives one element of org design. 

And then the other is, it just becomes obvious like we have to do something because either thing aren't working or we're not taking advantage of the opportunity. And you just realize you have to do it. And the quicker you do it, the faster you execute everyone, everyone's better off for it.

The beauty is, the reorgs are typically because of growth, it's not because... In our case, it was about how do we manage continued growth? There's only one time in the history that I've been here that was really around the call site equation, which was during the uncertainty around COVID, where we had to make very quick decisions in a world of unknowns. And those were very hard, but the leadership team came together really effectively, and we did what I would say was one of the best jobs I could have ever imagined or hoped for, because we did it with humanity and with the right leadership team. But it's usual growth, so it's a good story. We have to change because we have an opportunity we want to take advantage of, and people rally around that.

And as long as they're still aligned with where the business wants to go, they'll realize that there's going to be lots of opportunities, but also most likely blocks of change. And some people can work through that and others probably can't, and those don't make it to the next stage of growth. So not everyone that's with us today was with us when we were 40 people. I'm quite fortunate that I have, but every day I have to ask myself, "Am I going to be good enough to get us to the next level?" And that's the reality of the situation.

BM: (17:012)

Yeah. So you're the CSO of the business, and what that means is, I think, to a certain extent, is not just governing the strategy of the business now, but being the chess master who is looking down the board and thinking about what is coming. I'm interested to know how you've... The business has had incredible success through the growth of BNPL. 

How did you think about that? How did you think about anticipating movements in the market? And considering specific things that you've been involved in, like the Quad Pay deal, how did those all get pieced together to build the business?


Often it's through conversation. So, you spend time with Larry and Pete, you spend time with merchants, you see what's happening in the consumer space. There are these macro trends that are happening by themselves, and you just sort of distil all that information and figure out where do we play and where do we not play today? 

Part of it is luck, so you have to make the right move at the right time. So the fact that we moved more into payments from credit when there were opportunities because there were debit schemes coming up, access to data, merchants were looking for new tools, customers' behaviours were changing. And so, not only knowing what to do but also when to do it, is just as important as what to do. And then there are times where you've just got to be bold. And so, what we do is, we have two horizons we play in, so we've got to deliver on the six-month plan, but we also have a vision of where we want to be in three years.

For us, five years is just too difficult. In the dynamic world we play in, it feels like a stretch to even get to three because there's so much... so many opportunities that we want to run after and we want to evolve to. So, being very clear on short-term goals and where you want to be over the next three years is how we've balanced our planning cadence. And then there are choices in the risks you make. So, I remember quite fondly a conversation we had as an executive team and then at a board level, which was, we built a very large and impressive business here in Australia and we felt this could become a $5 billion fourth pillar and challenge the big banks. Or do we take this business and say, "Well, actually, this idea of simple interest-free instalments, customers changing the behaviour, merchants looking for new tools to engage with different customer segments. Is that an Australian phenomenon or is there an opportunity in other markets?"

And we were very clear that there was going to be a shift and a shift away from credit cards and... And, actually, in an emerging market, not only a shift away from credit cards, just a new form of credit that's fundamentally better. And we said, "Well, we know it's going to get more expenses to go global, we know it's going to be hard, but if we want to go global, and if that's part of our ambition and we want to be part of a global powerhouse or build a global powerhouse, we've got to go global and we've got to go global now." We saw Afterpay making their moves, we saw Klarna making some of their moves. And it was a conscious decision, and then you build a plan on how you're going to execute. But they're choices, you have to make those choices.

BM (20:07): 

I'm really interested in this. I think this is a very common line of questioning out of Australia, and Australia has demonstrated, particularly in the last few years, the ability to export various different types of technology globally with great success. But when you were trying to make that critical decision about, "Well, can we compete globally," How was what your sense of the global landscape, and potentially the disadvantages of doing it from Australia, or alternatively, a sense of being innovative but still from Australia, can you talk about how that featured in the decision making?


Yeah. So it's not always about three moves ahead, it's about the next move, right? So the idea was, "We want to expand beyond Australia so let's start with New Zealand." So we didn't have to go very far and proved to ourselves that we could run a business in another market. And then, also the Part Pay acquisition, which was the beginning of the global expansion plans, over around three years ago now, was also about acquiring a technology platform. So we had a lot of IP and a lot of capabilities, but the platform we built, the original platform that we built eight years ago in Australia, it wasn't really fit for purpose, wasn't lightweight enough. And there was a lot of work to be done on that platform to be able to scale it into other markets. So it was a combination of, one, trying to find an opportunity in another market. And two is, if we can acquire a platform that we can add some of our core capabilities to, and some of our IP, that would be a perfect combination. And we found that.

And so we found a business in Part Pay that not only had the platform in New Zealand business, but had exposure to the US, the UK, and South Africa. So immediately, with one move, we were able to, one, tick two of the boxes, prove to ourselves we can move into another market, and two is, acquire some tech and core capabilities to then enable the next move after that.


I realized that I completely neglected to say at the beginning that we would welcome people's questions throughout the course of this, and some people have already started to do so. Please, if you have any questions for Tommy, please put them in the Q&A tab in the bottom ribbon of the screen, and I will incorporate them as we're moving along. One question that's kind of... or one thing that kind of touches... from the audience, Tommy, is with regards to differential performance in different markets, which is obviously... as you go global, is one of these challenges. 

How do you deal with entering into tougher markets, like, I guess, the US, the UK, Europe, where there are other large competitors, and building differentiation? How does that kind of change your strategy when you're thinking about entering into those sorts of places?

TM (23:21): 

Sure. So, I guess you've got to cut it into a number of different factors. One is we're resource-constrained. We're limited by capital, we're limited by people, and so we need to be quite conscious of which markets we enter into. And it's a combination of being strategic because that's a large market, the dynamics in that market are going to be good for these types of products and services. We'll look at the competitive landscape, we'll look at the [00:23:48] economics, the regulatory construct, the size of the prize. So we'll form a view of a market, that's one piece. And then it's, "Do you have an angle?" So, are you going to be able to enter, compete and actually build a business, and scale it quickly? So one of the questions I have is, "If you get a million customers reasonably within the first 12 to 18 months, do you have a plan on getting that?"

And often you're following, in our case, merchant or partner, or it could be an inorganic acquisition that gives you that baseline of the customer base that you can grow from. So it's a combination of those two things that we're always straining, measuring and monitoring, and learning, in terms of a market entry. And then, different markets are going to be quite different, so we'll look at the market like the US... and we're probably number four there... We want to be a top-three player in the markets we plan, but the US is... It is the largest of the large, $5 trillion addressable opportunities. And if you're the fourth player there, we think actually you build a very nice, very large business. And like credit cards, it's not a winner take all type of mentality, and there will be many players that are either global and big or segment-specific, that will build very sustainable large businesses.

And then you go to the next level, which is how do you actually compete in the US? What are the things our competitors know that differentiates us? And there's a handful I can go into, but it's... our revenue model is quite different, our technology stack is different, the way we integrate, the way we use virtual technology with virtual part technology, open and closed loop. The way we leverage our global relationships and our global merchants, the way we innovate with some of the products and the way we pass customer fees on to... in certain verticals. So there's a range of things that are specific to that market, which is similar to some of the other markets we play in but quite different to Mexico, where it's an emerging market and where we're one of the first in. And there it's about how do you find the right merchant partners and how do you amplify the brand? How do you deal with un-banked?

This is often the first credit product for a lot of consumers in those markets. So there's going to be a playbook that there'll be things that are similar, and then there'll be a playbook that things are different. But then we have one resource pool, so it's about how do we allocate resourcing across all those opportunities, and where are there efficiencies? If we're going to build something, can we build it once, and offer it into multiple markets?


So, probably now, you've kind of gone into enough new markets where, just for example, you have a developed market playbook and a developing market playbook. I'm just interested, though, if you were to kind of describe it, is the entry strategy, "Okay, we're going to go into a new market and we're going to put up a core offering, and then we will refine it per that geography and per what we find when this experimental implementation period?" Or would you say, prior to going into the US, "We're going into the US. We think we need to adapt our product strategy in these ways in order to be competitive there," such that it is a different business that you are putting on the ground from day one? How do you set about making those decisions?


Well, we think about what we need, actually, to compete, and when. And the truth is we try to keep it as close to the core as possible because that gives us the ability to take our platform, then again go into another market and drive the efficiencies across the group. Pay in four, for us, is one of the flagship products, and the beauty of that product is you can launch it... it's relatively light so credit risk decisioning is important, but where you're getting 25% of the payment upfront, you're getting a data marker immediately. It often meets a lower regulatory threshold, although we'll get credit licenses in every market we play in. It's a great acquisition channel for customers, and a great first product to learn about them, increase their account limits as they grow, and then offer them differentiated products and services over time.

So we definitely do have a core offering, but even with the core offering we have to then plug into local repayments, so it's not only scheme, there could be repayment types, different bureau data, or alternative data sources, different comms, different languages. So you still need to always localize. So it's that combination of the glocal. What can we take out of global and then how do we get the teams to localize it, but then make that something that's as much rinse and repeat. So once we go... and we've done Spanish, now we can do French, because we've built language translation onto the platform. And often it's like... We could deliver it as an MLP, minimal level product, and it can meet the market requirements, or we can add a little bit more and then create the agility to then adjust it again with relative lift for another market. And it's those debates that are often the really important ones.

BM (28:49)

One of the questions that came up, it just kind of filtered through on your answer, is a more general question. You mentioned six month and three-year strategies, and Ollie's asking how does Zip set goals to track how these strategies are coming to fruition?


Yeah. It's the planning cadence, it's being very clear on the goals and the KPI. So, plan on the page, OKRs, strategic pillars, key initiatives. We're very clear on the numbers we want to hit. Those being customer numbers, transaction volume revenue. We're very clear on the other numbers, like customer services, CSAT, NPS, response times, uptime on the platform. So different teams will have different KPIs or different OKRs, but they all align to a group plan. And so, right now what we've done is, we have a group plan that is for the business, every market has a plan that aligns to the group plan, every team has a plan that aligns to their market plan. So you see nice alignment, both across geos but then down the geos and across all the different teams.

So, if you're not clear on what are the things you want to move, and the goals and the metrics, then people are running around without clarity, and it's wasteful.

"I view my role as the storyteller, but I don't create the story...the story is created across the business."

BM (30:09): 

And is that planning... is that driven out of your office? Are you kind of running that kind of OKR development process, or how does it kind of get initiated and run?


So, I view my role as I'm the storyteller but I don't create the story, so the story is created across the business. And so we bring in executives, we bring team leaders, country MDs, and there's this process where it all comes to the surface, and it evolves, right? So, the first time we do it, it's probably a very heavy lift, and every once in a while, you probably take a step back and you do a full refresh. But our planning cadence is we do quarterly product planning and half-yearly plan on the pages. So, we do it relatively quickly and we're always taking in new information, and often within the hat, things change and the plan will change as well. It's my team that brings that back together. But what we don't want is where it doesn't feel like it's owned within the business. So if the people that are going to execute on the plan don't feel like they were heard, or they don't feel like they've participated in the plan and the planning process, then they're less bought into the plan. And that's harder, the bigger you get, right? So we're still working through how to communicate the plan when you're hiring so quickly, you're in so many countries.

And a lot of the local markets are then more interested in what's happening in their local market as opposed to the group plan, and so that's again where you need to double down on communication. But you need to carve out enough time to create that because the value you'll get by taking two or three days, or whatever it takes within your specific business, to create that, to be very clear on where are we going, what are we trying to achieve, how will we know if we're in the right direction? What are the key milestones, what are the metrics we need to move to get me to the next series or to get me to the next market or the next product launch, unless we have those clear goals, then people are just not going to be as efficient or effective as they can?


So, Val put in a question, which I think is kind of relevant here, is how much... What are the main lessons and differences between running a $100 million a year business, to a billion-dollar business? I mean, this is one of the core things. I'm imagining that this has been a relatively consistently done process and management style that has existed throughout the scaling of the business. But I'm interested to know is that true, and what are the differences, would you say are obvious between the two sizes of business?


I think you can overcook it, so you need to create the right playbook and the right amount of planning and strategy and thinking for the size of the business you are at. Because if you spend all your time just thinking about the future, you're not actually building your product or getting into the market, and you don't have the resources or the people that can help you with that process, then you've probably missed a trick. So I think it needs to be fit for purpose. And our planning cadence is evolving all the time, and it's probably at a level of maturity that I like, but not where I hope to get it, so we're continually working on it. 

In terms of the differences between a hundred mil and a bill, I mean, a lot of the things are still there but you're doing it at a different level. So, like risk and compliance, and the expectations around governance and decision making. Delegated authority, who can make those decisions? Is it a type one or a type two decision? How do you then build the teams where they know that they have the authority to make those decisions and they can work effectively?

So I think there are differences, governance being a big one, but ultimately a lot of the seeds and the same processes are there, they're just done at a different level.

BM (34:05)

Right. So, thank you, everybody. This is now turning into a very active Q&A session, so thank you for everybody coming in and asking your questions. Again, I think an associated question to this, how to plan and manage the growth of a business from Ben Wise. How do you balance the need for global products and experiences for scale against the need for localization and specifications inside a particular market?


Well, I guess, again, there are some things that are non-negotiables. Every market you play in, you need to have stability of the platform, security compliance. And so those needs are whether you're processing one transaction or a million transactions, whether it's a developed or an emerging market, so there's a piece of work that's going to be the same, regardless. Then, when we're scoping out the entry strategy and what it's going to take to win, we'll take that into account. How much additional work above and beyond our core offerings do we need to create to be able to localize? And that makes its way into why we may choose not to go into one market versus the other. That's part of the upfront work, where we're scoping that out. And then it's... Again, as I said earlier, it's being smart about, if you're building it, even if it's localized, can you build it in a way where you can still take it to another market, or that concept into another market, with a little bit less uplift?

So, trying to build as much of the efficiency you have so you are meeting local needs, it feels local, it tastes local, the comms are local, but the brand is global, the platform's global. So there's being quite considered around what those choices are.


I mean, the obvious question for me that kind of pops up and is, I think, also associated, is one of the major trends in FinTech that has emerged largely during your tenure at the company, is obviously crypto. And there are lots of different kinds of applications, and I know that Zip is looking at them. 

How do you think about this entire new tranche of finance and how Zip will play in it? And, again, considering the very, very different implications in each local regulatory environment, what's been the internal discussion with regards to that?


That question's so deep. So, it is a trend we must understand and understand how to play in the longer term because it could fundamentally change financial landscapes, where you take the intermediary out of the equation. There are short term needs. So, when we survey our customers, there's clearly latent demand to access cryptocurrencies, to be able to buy them, sell them, to get prices, to see how they're trading over time. And so, when we surveyed our customers and we speak to our customers, that's a need today that they're looking to get exposure to, and it aligns with our purpose and our mission so we're like, "Yes, let's move into that space." And there are many good partners that can take a lot of that regulatory piece out of it and that are specialists in that space, we don't have to build everything. And we have the customer base, we can build the experience layer over the top to deliver that value add service, but that's only the tip, right, so that's where we are today.

But as you start thinking about defi NFTs, how does this really evolve over the next three years? We're still working through that, we've got some theories. There's two pieces for us. One is how do we make sure we have the people in the business that are experts enough to help educate us? Because we don't know everything, right? We can't be across all the details. And should we make an investment, should we stand up [inaudible 00:38:07]? How much should we put into it? How much should we put into it today? What is it going to look like over the longer term? And so, even during one of our exec off-sites, we had an expert come in and we're really just trying to unpack what this could mean for financial services more generally. What could it mean for the landscape, and then how do we, as a business, play within that ecosystem, whether that's how customers borrow money, spend money?

And then you start forming an ethos and, well, the easiest and the shortest... the most immediate need is, "Well, how do you educate customers around what it means and how do you give them access?" Then, longer-term, how do we leverage some of the technologies, how do we leverage distributed ledgers to either make our business more efficient or to plug into the new ecosystem? I think it's a really exciting space. It's one of the areas that I'm personally trying to learn more about as it's evolving so quickly, and I think there'll be a lot of really interesting opportunities for anybody that plays within financial services.

BM (39:16): 

So, I mean, but that sounds like very has been, in some senses, like a top-down, where you as the leadership group identified a new set of products or a new trend within your industry, and have started investigating it and trying... And then you hire experts in, and you build a kind of product offering around it. Is any of it being... Is any of it bottom-up? How much of it's being pushed bottom-up?


It's probably a combination. There are some things that do come top-down because you could see the writing on the wall that there's something that you need to be conscious of. Those could be regulatory changes, could be new technologies like NPP, so there's a lot of things that you sort of see coming at you, that you're going to have to react to or not react to, but you have to make a conscious decision. The other thing is our staff are deeply interested in it. They're all trading it, they all have hobbies, they're working on things on the side. We start losing talent to crypto startups, you take notice of that because they think it's exciting and interesting. So how do you make sure that you have something just as interesting within the business that you can incubate? So I'd say it's definitely a combination.

And the other is, it's the customer research we do, so we have a pretty strong voice of customer function. They're always doing things around prototyping but also serving, and so we did some paint the door tests. Would you want it? Click this button. Oh, it's not available. Sign up here. So it's a combination of those things that come through, and then ultimately... The biggest debate in this business is products season. So, when you get everyone in a room and you get all the needs and all the wants, and you know what your resource constraints are, that's where the decisions and the rubber actually hit the road. And so we've been looking at it for a long time, but when is it going to make it into the product line, when are we going to have the first release or the MLP out there? And if we do that, what are the other things, either our core offering or new products and services, for either customers or merchants that we won't deliver and have because we're going to focus on crypto?


Dalton has asked, I think, is a great question and it kind of relates to this, and maybe it is when you start losing greater engineers to crypto businesses, but how do you evaluate whether a strategy needs more time to work, or whether you've actually... your approach was incorrect, right? So it's like, "Oh no, we've chosen the right strategy, but our implement is problematic," or, "No, actually this is the wrong direction entirely." Talk us through that kind of decision-making process as a leadership group.


Well, when we invest or stand behind an initiative, we have a view of what it'll deliver. And so we don't do these very long, formal business cases, but even in product season, what are the metrics we want to move, what are the initial success metrics from either customer uptake or transactions? Whatever it may be is whatever the numbers that we think are important and related to that as a successful initiative. And if it's not delivering on it, you've got to have the hard conversation, "Why? Did we get it wrong? Were we wrong? Did we deliver it poorly? Were we too early? Did we not resource it appropriately? Was it because the org wasn't designed around it?" So we've done things where... because, below the water, there's always a lot of paddling, where we've put stuff in the market and it just didn't hit the mark, and you've got to go back and have to really understand why. And being honest about that, so you can't just continue to sink un-sunk costs, more and more resources.

"Innovation happens every day of the week and in every facet of the business, it's not only in product and tech. Customer service, they're all driving innovation."

BM (43:05):

So, I think the really hard part is knowing exactly how to design things to try and avoid that situation. And Michelle kind of asks here how you organize for innovation internally. So, you're trying to come up with a strategy for a particular new product. How is the strategizing actually done? The processes, the resource allocation? How do you do that as a business?


So, different questions around just innovation, more generally. We don't want to have an innovation function. It's one we've debated, and we've been very clear that that's not the kind of business we are. We even toyed with, "Do we need a growth team," and we had one for a short period of time. And there's so much opportunity to innovate around our core and new products that it's coming just from our core product teams and the product managers that have great ideas, that we don't actually have to incubate those as a separate function. What we need to do is, we need to carve out the time for them to invest in those ideas and innovate. And that's challenging because there's always pressing business needs and opportunities, and short term metrics that we're trying to hit. Because you've got to build and fly, right?

So, you're building for tomorrow, but if you're not flying the plane and hitting those numbers, especially if you're in the capital markets, there are broker forecasts that you need to be conscious of, and you're going to need continued access to the capital markets to meet broader global ambitions. You need to hit those short term numbers, but at the same time, you want to take advantage of the longer-term opportunity. So we've been very clear that innovation, core product, comes from the core teams. The product managers need to be thinking about what is next, what's on the roadmap, not only for this quarter or next quarter but do you want to do some testing, do you need some user research, do you want to do some experimentation? And so, when you get to six months down the line, you've already done the work, you've laid the groundwork, to justify that investment in that focus area.

And it flows into, into the planning cadence, either plan on the page or product season, or one of the other avenues, to sort of raise those initiatives. But it doesn't always have to be big bang things. It's not always a huge new product release. It could be, "Well, we could do collections a little bit differently. We could do customer service, or we want a trial a new chatbot." It doesn't have to always be these big bang bets. Innovation happens every day of the week and in every facet of the business, it's not only in product and tech. Customer service, they're all driving innovation.


For these... One of the real trends that I've seen with regards to companies trying to drive innovation internally is the creation of the chief of staff role in scaling businesses. Where CEOs will run through, they'll get a chief of staff, that person will get across the business, and then they get pushed out to try and operationalize new, interesting projects that are seen as being major product releases or innovations in the business. 

You made the really good point in your last answer that innovation can happen on a really small scale, all the way up to an entirely new business unit, but what's been your way of building out those larger strategic projects inside Zip? Has it been conceptualizing an idea, hiring people in to run it, or do you have a mechanism for pulling talent up through the business, and then getting them to build new things?


The key is it needs an executive sponsor. So it doesn't need a chief of staff, but it needs someone to champion it, because getting something new done, especially where it's cross-functional, and if it's really big and really different, you're going to need to think through how that affects the slice of the business horizontally? And it's important to have a strong voice and someone that's willing to believe in the initiative and champion it. So, that's one. So if it's really big, it typically has an exec sponsor. The other is, it needs to make its way into the plan, right? So if it's not in the plan, it's not going to get resources, it's not going to happen. So, if it's a big initiative, it has to make its way into the planning, and it gets resourced and then we monitor it.

So, there were some initiatives we wanted to do but we didn't execute them effectively. Well, does it roll into the next half? Does it roll to the next planning? Are we half pregnant with it and we're still going to invest in it, or are we going to pull back and actually not focus on it? But it's important to get the business behind it as well, so, again, it's the same product and engineering squads. If it's really, really big, and we've done it for a handful of things, like Zip business, right? So, in Australia, we identified the opportunity where small businesses need access to similar trade finance solutions. The same way consumers want to spread the costs over time, businesses want to spread the cost of invoices, supplies that they're buying until they get paid. So we stood up Zip Business and we're on an iteration of Zip Business, by the way. It's Zip Business because it's being called Zip Biz and I get in trouble every time I use Zip Biz. But now it's Zip Business and it's got a very clear product roadmap. And we iterated for the third time. It's actually now finally catching on, and what we did between time two and time three is we actually took it out of the core.

We stood up dedicated product squads, engineering resources, and stood up a separate P&L. We even gave them the authority and we were like, "Should we do it? Do you want to fork the app? Yeah, go ahead. Fork the app," which is a big decision because you lose a lot of the efficiency from the core. But it gave them... one is the agility to move quickly, the agility to make decisions, very clear on who the decision-maker is. They were allocated the budget in the P&L, and they're expected to now deliver on what is a relatively ambitious growth plan. But it was a big one, right? So it's a very different customer cohort. Their needs are somewhat different. How do you engage with them? In what channels do you engage with them? How do the products need to evolve continually for them? It just justified that kind of level of investment, but also separation. But it has to be pretty big for us to do something like that.

BM (49:50): 

I'm just going to point out to everybody that we unfortunately only have a few more minutes of Tommy's time. And I'm grateful to all of you who've participated for what's been an incredibly active and consistently attended session, so thank you so much. I also encourage you, within these last couple of minutes, unlike in a standard Q&A session, I can read all the questions, so you can put them in and I'll try and answer the ones that best fit in our conversation with our remaining minutes. 

I think I'm getting this name right when I say Louis has asked how much of your strategy is defined or carved around competitor movements? And are there measures or things that you've considered putting in place when competitors are growing at a similar place or entering into similar areas?


You dropped there for a second, but in terms of competitors, there always will be competitors, and the more successful you are, the more competitors there'll be. And there'll be startups that are trying to create products, there'll be a big end of town, like financial services businesses, that are moving into your space, or direct pure-play competitors. If you focus on them too much, then you're losing sight of who you are, what your competitive modes are and what you're trying to execute. I think it's naive not to acknowledge the moves they make, but we are very conscious of trying to focus on what our plan is. And if there is a move, we'll be considering whether we need to adjust our plan accordingly, but we don't want to over-focus on the competitor, we want to focus on us. Because, otherwise, you lose sight, you lose track, you're too focused on things that aren't important.

And they'll continue to do whatever they continue to do, but as long as you're executing on your plan and you think your plan's appropriate, that's important. But we obviously are always looking at what our competitors are doing. We look at their numbers, we look at their product innovation. We compete with them head-on at merchant checkout so we need to understand how they're delivering value to their merchant customers. How do we deliver value? How do we prove that our value is incremental? And so, I guess you've got to be conscious of competition, but if you're going to... every time they make a move, you're going to really start moving your playbook, you lose focus, and that's not going to end well.


I guess... and this is probably our last question... that being your own company, maintaining your own strategy is really important. And one of the things that you've been driven to do, probably as part of that, is acquisitions. When you did the Quad Pay acquisition, for example, how did you manage your sense of culture and strategy as a company when you brought in that new business? And I guess I'm going to tack on to the end of that, how have you managed to maintain that company and focus across different locations or geographies?


Yeah, no, it's a good question. So the first is, you've got to be upfront about it, right? So, when we're looking to acquire a business, we have this concept of the coalition of founders. What's the core DNA? What makes that business tick? How do they think, how do they make decisions? How do they think about engaging with customers? The good thing about the Quad Pay transaction was it was a similar platform. A couple of Aussie kids went over to the US and realized that there was a big opportunity and a big business to be built. So there was a lot of just... it was easy because there was some cultural alignment and there were a lot of synergies from the technology perspective. And they were part of the journey that we already went through. They were at around 90, 100 people, and going through that first growth spurt. Not first, but they were going through scaling pains, and we were like, "Actually, we could help you here, and we actually have some real value and there'll be some real synergies."

So I think making an assessment up right, and in particular around the leadership team and the core synergies and the strategic rationale of the acquisition, is... it's been super important. But not only with the US, it's also... It doesn't matter if it's a small bit or a big bit. If you're wrong, you probably lose more. But when we think about the acquisitions, and John with New Zealand that started it, Anuscha and Ziyaad, the founding team in the middle east, Michal with Twisto, and even where we go Greenfield, we have great leaders in Mexico and Canada. When we acquire businesses, we think about their founders... we need to think through are aligned to the culture and the way we go about doing business? So I think you've got to be really honest, upfront. And we look at a lot of things where we say no, actually, because there isn't that alignment.

The other piece, and the challenge we're going through today, is how do you then package up what makes Zip special, and bottle that up and deliver it to all the other markets? And, in particular, in a time of COVID, right? So, in core 24 months, 36 months ago, Larry and Pete could go on tours. Because a big part of our business culture is we are a founder-led business, and their values and their view of the world is so important, and to distil that to everyone in the business. So then you've got to use video, you've got to use more Zooms, you've got to use more [inaudible 00:55:18]. You've got to be clear on the kinds of leaders you bring into those businesses and how they align. So that is a continued challenge that we face today, and I'd say we're doing an okay job, but we want to do better there as well.

But there, again, on that one, even our people function has had to really uplift, like we brought Anna from Google. She's got that global experience. How do you maintain multiple offices, maintain the feel of those offices, the culture in those offices, even when you have different HR rules, different cultural nuances, different comp and executive packages, different REM philosophies, different talent pools? There are lots of nuances to each one of these markets, so making sure you have the strong people function that can help you navigate through those, I think has also been extremely important as we moved from an Australian business to a business that is aiming to be a truly global powerhouse.


That's super interesting, Tommy. Well, I know and I can see this from the comments in the chat, it's been an extremely interesting conversation. Tommy is the CSO at Zip, and we have benefited from an hour of his time. A big thank you to you. 

For those of you who joined us and are considering building a business, I would very much encourage you to join us, Antler, for our upcoming program which kicks off in January. You can apply at And we hope to see you again in this series, where we talk to leaders in the Australian and global tech world about their experiences. 

Tommy, thanks so much for your time, and we look forward to seeing you again.


This article was written by Anjali Warrier, Communications Analyst at Antler Australia.

Antler enables exceptional people to create exceptional companies. If you want to become a startup founder, find the perfect co-founder and create impactful companies to shape the future, apply now and begin your Antler journey.

*This event took place on October 13 2021

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