The Secrets to Building a Global Platform and Ecosystem | Xero Global CSO Damien Tampling

I found this, putting together some content for this presentation, quite tough. The main reason being the diversity of this region, diversity of the companies that I've seen attend these events, and I think some of the challenges and things you face when you're a $1 or a $2 million company through $20, through $50, through $100, and, you know, into the billions like Ed was just presenting to, are all really quite different and quite nuanced. So what I've tried to do is take a more philosophical approach today. What I've done is kind of step right up and think about at a more philosophical level some of the things that I think are really important to every phase of that journey and some more kind of, if you will, principles that I would encourage people to think about as they're scaling their businesses. So just a little bit about more the last 4 years, bit of context. So I live in Singapore. This is home for me. I've been lucky enough to enjoy this part of the world now for 5, 6 years, so didn't travel far to get to Suntec. But whilst I've been here, I've been working for a company called Xero. Xero is originally an Australian-founded company, and you can probably— sorry, New Zealand-founded but listed on the ASX in Australia. You can probably tell from my accent. And in the last 4 years, we've been super busy scaling this business on a worldwide basis. So we've doubled subscribers. These are some of the half-year results. We've doubled subscribers. We've doubled operating revenue. We've tripled our annualized monthly recurring revenue, and we've quadrupled the lifetime value. So that journey has just spun up, certainly with the backdrop of COVID a whole nother set of kind of learnings from my perspective as the chief strategy officer, some of which I've put into the content that I'll talk to you about today. Xero is an accounting and business platform, for those that you don't know, a SaaS-based business for sure, subscription-based model, but focused on small to medium businesses. The beauty of this event is that many of the people in the room fall into that category. So hopefully our customers are ours, or if not, they might even be partners of ours in the ecosystem of the business. So as I mentioned before, I found it pretty difficult because there was so much you want to cover and you're sitting there thinking, having invested in or founded companies myself before the Xero chapter, what did I kind of want to know when I was, say, doing something or building something that was a couple of million and the challenges I had? I'm touching on the tip of the iceberg. I will finish with a little bit of time because if there's anything in the room that you want to get up and just say, can you talk to us about this or can you take us in a completely different direction, I'd love to hear from you. The first thing philosophically, I'm at a SaaS conference but I'm going to talk about people. You can't get onto the internet these days much and not find something about ChatGPT and the impact some of that area of tech is having, but I am obsessed with people. I really am. And I find that even in big businesses like the ones that I've worked for, the processes in this area are still quite loose. When you're a $20 or even a $10 or a $1 million business, you obviously tend not to always have a head of HR or a head of PX, which ironically makes it even more important that you're super disciplined around who you're hiring, the processes you take them through, and just that whole journey. This up here is something we put together in a business that I work for, and you can probably tell by the, um, the spectrum down the bottom 'cause it applies to Xero. And it was about trying to get more sophisticated and more conscious about who we were trying to hire and the process we wanted to step them through. And what I really wanted to do was put this in place with my teams and my leaders and right down to the last person that had been recruited in the business to know how we do things in this area and the standards that we wanted to apply. Now you'll hear of some of these legendary processes in large companies like the Googles and others in the world. But I think hiring people and getting the right people and thinking about why they fit within your culture and what you're looking for in a specific team is a discipline well worth getting in place really early. And it's such an important part of your success. A lot of people say customers are the most important thing. And that's a long, long debate to have. And I think in some parts right. But to be honest, the people are the ones that are going to get you the customers, whether it's actually out selling to them or managing the accounts or actually just working on the processes on your website or in your app. So I obsess over this area. I don't see in a lot of companies, early stage companies, I'd love to think that every founder or CEO would actually have almost their pipeline for customers and sales leads, but their pipeline for talent. And to that level obsession, I track it. I have a list. All the people I meet in my journey over life, I put it into the same place and actually keep track of them on LinkedIn. I keep track of what they're doing and where they're moving. And I kind of move them around almost like a mind map of people that I may not have even, in some cases, even met but heard exceptionally good things about in this region and others. And I'll often come back to it when I'm thinking about hiring for a role or when someone comes to me and says, do you know someone that's good in this particular domain? And if it's someone that I'm close to and I want to help out, I'll go back to that list like you would a sales pipeline and kind of pore over it. So I would employ you all to kind of think about this area because it's one of the things I think can make a massive difference. The next one I want to talk to you about is— and this is a particular framework that in a past life I worked at Deloitte for a long time. And it is really at its core about innovation and differentiation. I think it's really important when you're starting and founding a company and scaling it that you keep coming back to what it is you think really makes you different and unique. I think often I do come across a lot of founders that have kind of bumbled into an idea or come up with an idea, if you will, not always linked to a customer problem, or where it has, it may be good or a little bit better, but they've not spent enough time thinking consciously about what exactly makes it different and other areas that they can actually lean on or exercise that makes it even more compelling and more different. This model up here has a view that there's 10 ways you can be different. People often err on the area in the middle, the orange, the offering. They think about what's the product, how's the product different? Well, my product has this widget and it does this and it does that, and that's what makes it better. But there is so much wide open space, and increasingly in the last 10 years in the way you configure that product or the way it's actually experienced that's been really just coming to the floor. Certainly in the SaaS industry, we see that a lot. You'll see a company like Xero, The founder of Xero, Rod Drury, a Kiwi, he just got annoyed about having to take a box of receipts to his accountant every quarter and every half year and have accounts done. He just felt it was highly inefficient. At the core of the innovation there was about how he could drive collaboration between him as a business owner and actually his accountant. Then from there, it was also then leaning into things like SaaS at the time when it was really just unfolding, as well as open banking and some other key trends around the world. So in some ways, it kind of lent into a profit model that was more subscription-based. It lent into using a network, which was really the network of accountants and bookkeepers. And it also lent into a couple of others in here around brand as well, like obsessing about that kind of local groundswell of small businesses and the communities they operate in and making sure that was a core tenet of the brand that we were building. Now what you'll find with companies is if they do one of these things, it's usually not enough to go and become a $100 multi-billion company. It's when you get a combination of these things in what it is you're doing that you really get breakthrough. And there's lots and lots of examples of innovation where you can go through and think about a brand like an Uber or a Nespresso— it doesn't need to be in software— and think, yeah, it's doing that one, that one, and that one, and I definitely see that as quite different relative to its competitors or in its industry. So the second thing I'd say, people, obsess over them, get very sophisticated. And deliberate about them. And the second thing I'd say is make sure you're really conscious around what's making you different, and it holds true as well as you scale. This one, karma. It's a great Hinduism, Buddhism concept, which some of the people in this region more than many others will appreciate. I'm a big believer in this event, to be frank, is really about giving back. It's about sharing knowledge. It's not really about hard sell on a stage. A number of years ago, working with another colleague of mine, we came up with this idea of— we call it karma business. The topic of this presentation was about ecosystems and how you build them. It's a pretty fundamental tenet of how you do that. The model goes that everything starts with sharing. It's all about sharing. If you're selling it to someone and you turn up with a proposal and you shove it across the table, 9 times out of 10, it ain't gonna work, if I'm honest, unless they've come to you and they've said, "I need exactly this." For the other 99% of the time, it all starts with sharing. It all starts about giving. When you riff with someone and you share with someone, a customer or otherwise, you often get into the process of refining pretty quickly. "Oh yeah, that could work. What about this and what about that?" That refining is completely magical. That's the stuff where you get to know them, they get to know you, they share a bit more, you share a bit more. Eventually, the time will come where hopefully the phone picks up or an email comes in or they hit you up and say, "Hey, you know what? You know that idea we've been talking about? Can you send us a proposal on that?" or "We'd like to have you come out and pitch a little bit more." From there, the delivering happens. When you deliver, when your product delivers, guess what happens? Usually more sharing, some of it conscious, some of it unconscious, but it actually is a virtuous cycle and a virtuous wheel. That model of karma business at its core is really just saying the more you give out, you tend to get back. When it comes to an ecosystem, there couldn't be a better model to think about, but to be honest, it applies to all selling and I think whether you're a software company or otherwise, there's a lot in it in terms of thinking about it. And years ago, there was an organization in a past life where I was trying to get to a place where I got the opportunity to propose to someone. And I went into the executive and I— almost like little stick figures that you mark on the wall in a jail in a Hollywood movie— I said, hey, these are all the opportunities and things we've been sharing over the last 2 and a half years. And we've been refining lots of them. 'But not one opportunity have you given me to actually propose to you something more to be able to do for you.' The executive kind of said, 'Well, I've never thought about it that way, and I can see where you're coming from. OK, how about this? How about that?' And actually, even exposing this model and just the fact that I was trying to approach every interaction with them as an opportunity to share and help them and give more back really kind of opened the door up. So I've seen it work in action in a very deliberate way. Some of you will know this character, Gandalf the Grey, from the famous movie The Lord of the Rings. And the famous line, one of the famous lines in the movie is really all about what you decide to do with your time, as Gandalf briefs Frodo, one of the other characters, about the kind of the heavy weight of the ring, which is literally in The Lord of the Rings. And the reason I put it up there is because I don't think there's anything more important when you're a founder than thinking about where you're focused and about being deliberate. And in this part of the world, I think it's a particularly important concept, especially the second one. Time after time, big business or small, being a chief strategy officer, part of the role is all about trying to help people and executives make decisions. There is just so many opportunities, and you get pulled into them all the time. But the best companies have that belligerent focus on 2 or 3 things and doing them really well. And it's talked about so much, but in practice, when you go into companies small and large, it just— you just see the constant tension of being pulled in 1,000 directions. So if there's another area that you could focus on as a founder in scaling up your business, it's just thinking about all the things you've got on your plate in the next month, the next 6 months, and the next year, and actually saying, does it look like too much? And if there was only 3 or 4 things on that page that I could actually do and do well, what would they be? And which ones would I cull? We often in the executive boardroom would have discussions not about the yes list and the focus list, but of course the no list. You'd sit there sometimes staring at the wall struggling to put the things up on the list of things that you're actually saying no to, which was a surefire check and balance that you were probably saying yes to too many. The second part of that is being deliberate. I think it's just slightly different. In this part of the world, one of the best examples of it I can give and I see often is organizations being sucked into other markets. Southeast Asia, you know, is rich with opportunity, but in fact, even calling a conference AsiaPac is, for someone that's now lived here for a while, kind of brings a wry smile to my face because there is really no such thing. Every country in this region is almost like another planet, and they've all got their nuances. And with startup and tech companies, what you often see is someone they know or an old colleague will come in the door and say, I want you to come and pitch on this, or could you come and sell XYZ, or could Could you set up over here? And because in those early stages you're kind of going where the money is, and sometimes there's an element of desperation to kind of keep things evolving and building, you just go. And people find themselves sucked all of a sudden into Indonesia or Malaysia or popping up in a place like India. And I think in the early stages of the company, it's just super dangerous, especially some of those markets given how big they are. I mean, even going to the US, every state in the US is its own kind of journey and has its own nuance, certainly in tax and accounting software particularly so. But I can't underline this point enough that I think being really focused but also being super deliberate about the choices you're making, and a bit like being focused, standing back and saying, okay, are we setting up a payment gateway over here, or are we setting up an enterprise sales team over there, or are we moving into multilingual language in a certain area? Because it's a very conscious choice that we're making or because something's actually just kind of taking us there. So I think this is a particularly important concept. North Star metrics, I think hopefully it's a concept many of you would be familiar with when you kind of search it on the internet, because I was thinking about it more from the context of my experience. But when I search on the internet, it comes up about philosophically, what's your North Star metric in life? But I think in this instance what I'm referring to is really the north star metrics of the different teams in your business and really getting quite crisp around what that is. So a DocuSign, if you will, has a north star metric of documents, funnily enough, signed. But what happens in tech companies is they'll often kind of go, oh, my north star metric is number of users or it's the number of documents we've ingested or it's the number of XYZ and it just gets lost. The connection between what the number one really most important thing to be happening is and actually you making sure the teams are focused on that is quite important for them scaling and coming back to the previous point, focused on the right things. The same thing with Booking Holdings or Airbnb. One of their, or their north star metric is around the number of nights booked. It's not number of users, it's not number of bookings, it's actually number of nights booked. Quite intentionally, that forces people to have to think very carefully about the return on investment about attracting a new user versus actually just getting an existing one to book a longer stay. And of course, it's the latter that actually really may well contribute more to that North Star metric. So I think thinking through your different teams, whether it's the sales team, the product team, or the company at large, and forcing yourself to try and make sure that you don't have 10 North Star metrics, because what it will do is it will create all sorts of tension from your team saying, well, we need more money because we want to do this or that, and actually probably in that mix of metrics is the number 1 or 2 most important thing to do. I think the other thing to mention on this is often can get confused if you're big enough with things like OKRs and other measures of success, but the North Star metric should be something that kind of lasts longitudinally a lot longer. DocuSign doesn't go around changing their North Star metric every year or 3 or 5. It's something that has been really crisp from the start, and everyone in the organization focuses on it and lasts the test of time. An OKR or a KPI, of course, might be something that you might have for a given year or a given couple of years. I think understanding that difference is really important. Last but not least, I wanted to put this one up because I think in 2023, it's never been more important. It's been a crazy few years out there with the amount of money available. But I think of the pitches we'd see at Xero, we would probably see 300, 400 easily, organisations coming through the door with IMs and packs and information. Very rarely in the last 3 years will you get many of those scale-up companies talking about profitability. Very rarely will you find a page in that document that talks about actively cash burn. Very rarely will you get a page in that document that talks about how they think about return on— what where they're investing their dollars, even if it's hundreds of thousands of dollars, how they're thinking about what return it is they're pursuing and how they turn off and on those investments. I think there's a real opportunity for anyone that's in this room or at the conference that's at that stage of growth to lean into it. Like, people that are sitting inside corporate development teams or executives looking to invest and even VCs, they're thirsty for that information. In fact, having a page like that in an information memorandum that actually says, we've thought about this. This is what we think we would dial down, and here's where we've tested it to get to a higher margin or a higher degree of profitability. It may not— well, not be what you're doing because you've got a journey to go on, and there's plenty of market opportunity there. But just demonstrating that awareness is something that I think is quite devoid in the materials that exist out there. And investors, I think, are really now more than ever focused on making sure that the founders of the company understand, if you will, the DNA of how they can dial up and dial down things to make money. So I promised I'd leave a little bit of time at the end. 6 takeaways that I've touched on everything from karma to what makes you different. But embed those processes early and make sure they're hiring practices that are known to everyone. And you can nuance those slightly for hiring a salesperson to hiring a product person. Be really clear on what makes you different. Hopefully you're sitting there thinking about that model before and going, okay, I reckon of those 10 areas of differentiation, I would think the company that I'm building would tick 3 or 4 of those. If not, it might be there's something you could be doing around your pricing that actually builds more of a moat around your product and your business. The Karma business model, so I think certainly the topic I think today was around ecosystems and many of these things apply to it, but if there was one in the 6 things that I've mentioned that's the most important for an ecosystem, It's making more of what you offer available. It's making the tools. It's opening up data. It's allowing people to build on you and with you that evangelizes that ecosystem and has other people actually out there building and supporting your product beyond the walls of the people that you control in your business. Being focused and deliberate, make sure you know what the metrics are in your business that matter the most and understand the commerciality of investments, which is really a subset of knowing how to be able to communicate that path to profit. But I think it's important as well that you show just an ability to be able to show where you're investing and why and what actual return you're expecting to get from it. It sounds like a basic thing, but having read 500 IMs a year or had my team do that for basically the last 20 years, it's rare. And some of this stuff is just great because it stands out, a founder that's thinking about a business differently. So with that, I will ask if there's any questions and say thank you. Sure. So the question was, um, how do we, um, uncover innovative opportunities and think about new paths to market? Um, we spend a lot of time at conferences like this. So the team do go to not just Saastra but others around the world and just spend time hanging out with other founders and companies to see what they're doing. Um, we have a, um, very large ecosystem. So from ground zero, we realised that we wouldn't be able to build everything that a small business would want. So there's an ecosystem platform, if you will, like an app store in Xero that's 1,000+ partners around the world. They're a huge source of innovation because we share an API with them and it's a two-way street, but it allows us to, for example, see a software company in Ireland that's growing at, you know, 1,000 users a month, and you actually start to look over into that data and go, "There's something going on there." Whatever it is that they're doing is clearly kind of meeting a market need, so we'll use the information sources like that. We spend lots of time with our partners. So the Stripe team are here, out there, the Amazons of the world. We'll spend lots of time with them in their headquarters, with them in the region, talking to them about some of the product roadmaps and things they're doing. And we do all the normal things inside the business, hackathons and other things to think about other ways of doing things. We'll often bring in externals. All our M&A as a company is actually seen as an opportunity to actually learn. And share as well, share back. So it's really a myriad of different things that we're kind of trying to think about, you know, in terms of being innovative. And spending time in market is really important too. So we held— Xero holds its own event, XeroCon, and that's 2,000 to 5,000 people in Australasia and the US and the UK. And so again, spending time in a room with all of those organizations— we're lucky enough to have a customer group that is accountants and bookkeepers as much as it is small businesses. And so I will say the amazing thing about that is the accountant and bookkeeper is so close to so many businesses. It's a bit of a one-to-many. So when you're going and talking to an accountant bookkeeper, you're actually really talking to someone that may have 1,000 or 300 or 500 other customers behind them. So again, those channels is probably another way to think about it, are also fantastic sources of ideas and innovation.