WEBVTT - Xero CEO Unafraid of the ‘SaaSpocalypse’

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News. You're listening to Bloomberg

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<v Speaker 1>Business Week with Carol Masser and Tim Steneveek on Bloomberg Radio.

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<v Speaker 1>Our next guest in the software space Sue Kinder Syncassidy,

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<v Speaker 1>CEO of the cloud based accounting software maker Zero Trades

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<v Speaker 1>in Australia. So Kinder, welcome back. It's it's nice to

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<v Speaker 1>have you back on here. We want to start with

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<v Speaker 1>everything that's been going on over the past few days.

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<v Speaker 1>The concern that was really sparked by Anthropics Claude coming

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<v Speaker 1>out with this tool that allowed legal analysis that for

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<v Speaker 1>a long time was really the remit of specialized companies

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<v Speaker 1>and it got this conversation started. Hey, some of these

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<v Speaker 1>SaaS companies are really at risk. Some say because of

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<v Speaker 1>what AI and AI tech can do, is your business

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<v Speaker 1>at risk?

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<v Speaker 2>We think for us, AI is a net TAM expander,

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<v Speaker 2>including the tools offered by many of the power power ms.

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<v Speaker 2>Now the question is why, I think when you think

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<v Speaker 2>about companies like Zero, we are the system of record.

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<v Speaker 2>We are the collector of data for the SMBs who

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<v Speaker 2>work with us. So it is not just about the software,

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<v Speaker 2>it is about the data you provide. It is about

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<v Speaker 2>your domain expertise in your vertical It is about your

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<v Speaker 2>ability to take the power of these tools and translate

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<v Speaker 2>them for your customer, and your customer needs that. And

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<v Speaker 2>of course it's about the trust privacy kind of layer

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<v Speaker 2>that I would say the ninety nine percent of SMBs

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<v Speaker 2>in the world who are not builders of technology will

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<v Speaker 2>look to companies like zero to make accessible to them.

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<v Speaker 2>So we see an opportunity for TAM expansion in our markets.

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<v Speaker 3>And when you say TAM expansion, you're talking about total

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<v Speaker 3>addressable market, and when you talk about SMBs, you're talking

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<v Speaker 3>about those small and medium sized businesses which you guys

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<v Speaker 3>cater to.

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<v Speaker 2>Please go ahead, Yes, sorry, I sorry for the acronyms.

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<v Speaker 2>And to your point, I think we see all of

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<v Speaker 2>these powerful tools, including from the horizontal players technology we

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<v Speaker 2>need to take advantage of, as well as building proprietary

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<v Speaker 2>technology in order to make it understandable for the ninety

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<v Speaker 2>nine percent of SMBs who don't go to work in

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<v Speaker 2>the morning thinking I Am going to build text software.

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<v Speaker 2>They're thinking about their business.

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<v Speaker 3>To be fair, I mean everybody that we talk about

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<v Speaker 3>with this impact that we've seen on some of these

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<v Speaker 3>SaaS companies, the software as the service companies, And we've

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<v Speaker 3>talked with our own mandeep Seing of our Bloomberg Intelligence team,

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<v Speaker 3>who says software is not dead, Like, you know, let's

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<v Speaker 3>have some perspective at the same time in terms of

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<v Speaker 3>the AI spend build an impact. In particular, we're early

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<v Speaker 3>on in this game and this change and this disruption.

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<v Speaker 3>So is it fair to say that there is going

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<v Speaker 3>to be some disruption that maybe some of what you

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<v Speaker 3>do may be replaced by AI or some of these

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<v Speaker 3>AI chat programs if you will.

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<v Speaker 2>You know, I think I would. I would say it differently.

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<v Speaker 2>I think that AI technology is something we zero also

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<v Speaker 2>take advantage of. So we're you know, building our vertical

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<v Speaker 2>domain LMS on top of the powerful technologies coming out

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<v Speaker 2>today because what our customer needs. Again, I'm going to

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<v Speaker 2>come back to we're financial operations backbone for small businesses

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<v Speaker 2>who ninety nine percent of the day don't wake up

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<v Speaker 2>think about technology or quite frankly, financial operations. They want

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<v Speaker 2>to spend the majority of their time think about their

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<v Speaker 2>business and for them, we need to be a forced multiplier.

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<v Speaker 2>So think of us as a translation layer for that

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<v Speaker 2>small business, taking advantage of both proprietary data and the

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<v Speaker 2>power of these horizontal technologies.

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<v Speaker 1>So Zero stock slid close to sixteen percent in Wednesday's

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<v Speaker 1>session in Australia, bounce back a little bit today up

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<v Speaker 1>one point six percent. Yesterday's sell off as an overconcern,

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<v Speaker 1>was that overdone?

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<v Speaker 2>You know? I think that the market right now is

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<v Speaker 2>not distinguishing between the many types of software companies in

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<v Speaker 2>the position they play with their customers. So I do

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<v Speaker 2>think that the broad sell off does not really distinguish

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<v Speaker 2>between the value propositions of different software companies. So for us,

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<v Speaker 2>I mean, we did an investor briefing on Monday about

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<v Speaker 2>how excited we are about using AI technology and being

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<v Speaker 2>the layer that brings that to our customers with a

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<v Speaker 2>domain specific use case that can be multiplied. We think

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<v Speaker 2>with the use of this technology.

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<v Speaker 3>You know, it's interesting and there was I think it

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<v Speaker 3>is Financial Review where you gave an interview and they

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<v Speaker 3>did a story on you guys just this week, and

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<v Speaker 3>in a presentation to investors, you were cited as saying

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<v Speaker 3>that you used anthropics, clode coding claud excuse me coding

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<v Speaker 3>tools to try to clone Zero. Tell us about that,

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<v Speaker 3>tell us about investor reaction and what are the questions

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<v Speaker 3>you are getting from investors.

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<v Speaker 2>Sure, So, first of all, I mean I use all

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<v Speaker 2>the tools. I think if you're a CEO in today's age,

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<v Speaker 2>you know, use the tools, understand the power and the

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<v Speaker 2>limitations of the tools today and how they're going to

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<v Speaker 2>get more powerful. So when I used it, it was

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<v Speaker 2>very easy to build a simple reconciliation. When I tried

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<v Speaker 2>to do have multiple agents, they prompted me to go

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<v Speaker 2>build much of the technology Zero has. A good example

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<v Speaker 2>would be, Hey, it's great that you gave me your

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<v Speaker 2>bank statement, but I need you to be able to

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<v Speaker 2>plug in multiple bank feeds. Well, of course that's the

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<v Speaker 2>data layer I'm talking about at Zero. So I like

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<v Speaker 2>using these tools because I think my job, our job

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<v Speaker 2>is to understand the power of this technology and harness

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<v Speaker 2>it and not be afraid of it. Now, in terms

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<v Speaker 2>of other questions, investors are asking us, look, we have

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<v Speaker 2>had and continue to enjoy I think strong long term

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<v Speaker 2>shareholder shareholders in Zero. I think when we gave the

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<v Speaker 2>investor briefing on Monday, I think they were excited to

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<v Speaker 2>hear us talk about our differentiators and excited to hear

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<v Speaker 2>us quite frankly talk about AI adoption on our own platform.

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<v Speaker 2>We use multiple lms behind Zero's own AI technology, we

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<v Speaker 2>call it jacks, and we share with them the early

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<v Speaker 2>adoption figures on Zero. Three hundred thousand of our customers

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<v Speaker 2>are already using ai JENAI features we launched within the

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<v Speaker 2>last year, and of course over the last twenty years

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<v Speaker 2>we've used traditional AI and have well over two million

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<v Speaker 2>customers using traditional AI at Zero. Again, all you know,

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<v Speaker 2>all harnessing the powerful technologies being built, you know, and

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<v Speaker 2>so I think this is again very critical in understanding

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<v Speaker 2>our position in the market.

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<v Speaker 1>So kinder, just in the last thirty seconds that we

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<v Speaker 1>have with you, one of the reasons we like speaking

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<v Speaker 1>with you is because you have these small and medium

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<v Speaker 1>sized businesses all over as clients. What can you tell

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<v Speaker 1>us just about the current health of their businesses and

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<v Speaker 1>different areas of strength geographically in this economy.

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<v Speaker 2>Yeah, you know, Look, I would say small businesses are sharing,

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<v Speaker 2>are showing durability in this economy. I'd say in the

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<v Speaker 2>southern hemisphere where Zero was originated, Australia and New Zealand.

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<v Speaker 2>You know, the last over the last year, our own

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<v Speaker 2>data shows some final real time return to growth in

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<v Speaker 2>the US. You know you've a remarkably durable SNBAS. You know,

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<v Speaker 2>despite tariffs, despite uncertainty, the optimism index by the NFIB

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<v Speaker 2>remains at close to all time highs, so we would

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<v Speaker 2>see we see durability in in the UK where we operate.

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<v Speaker 2>You know, small businesses continue to need UH and get

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<v Speaker 2>a lot of support from the government on issue. H

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<v Speaker 2>m HM