S10E2: The Next Wave in Digital Payments with Larry Diamond and ZIP

We can probably say here today we're the only fintech company that actually bought a mining corporation. We did 3 months due diligence on a gold and copper listed ASX company, and we actually reverse listed onto the stock exchange, which was how we got there in the first place, which itself is a crazy story.

Welcome back to Season 10 of The Room Podcast. Claudia, can you believe it's been 10 seasons?

Madison McIlwain truly cannot believe it will be 4 years of The Room with you this year. I'm thrilled to be back behind the mic with you for season 10. For all of our listeners since season 1, you truly have been with us for some formative years.

If you're new here, Claudia and I started The Room podcast with the mission of opening the door to the room where it happens, in turn sharing the stories from some of the world's most iconic founders and funders. All in an effort to inspire and educate the next generation of entrepreneurs. And thanks to you all, we were recently listed on the Forbes 30 Under 30 Media List for 2024.

So why us? We're two best friends who met as product managers in 2018, then realized as we were making career transitions into myself, founder, and Madison, funder, wanted to talk to the entrepreneurs that had built great companies. Since starting the podcast, I founded Pryve, a commerce payment startup. Raised venture capital and have faced a ton of challenges. Madison became a partner at Defy VC, was the first investor in my startup, and is now at Harvard Business School and is a pair VC scout coming to the table with the fresh funder perspective.

Over the course of 9 seasons, we've had over 88 guests amassing over $50 billion in enterprise value, ranging from conversations with the former founder and CEO of Zillow, Spencer Raskoff, to Michelle Zatlin, the founder of Cloudflare, Grammy Award-winning artist Sierra, and the creator of Next.js and CEO of Vercel, Guillermo Rauch.

Looking forward, as we continue to expand both online and offline, we are excited to announce the Room Podcast Summit in summer of 2024. The best way to stay in the loop is to subscribe to both the podcast and our newsletter, which you can find at theroompodcast.com.

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Welcome back to The Room Podcast for another episode of Season 10. We are absolutely thrilled to sit down today with Larry Diamond, co-founder of Zip and CEO of ZipUS. Larry founded Zip, listed on the Australian Stock Exchange in 2013, and led the company from a technology startup to an ASX 200 global buy now, pay later leader with over 12 million customers across 14 markets. A fun fact from the recording, did you know that Zip might be the only fintech company globally to have ever bought a mining corporation along the way? Well, we'll dig into that fun story during today's sit down. But 11 years later, Zip is continuing to disrupt consumer fintech, and Larry is taking the reins and bringing Zip to the US to tackle the buy now, pay later market. This is a fun one, and we discuss themes such as the future of fintech and BNPL, the balance of innovating and building for your customers' needs, and go-to-market advice for fintech and SaaS founders. We hope you enjoy this sit down as much as we did. Let's open the door.

Larry, first of all, thank you so much for joining us here today in The Room.

Thanks so much for having me today. It's great to be here.

We're really delighted to have you on, and we're excited to start at the beginning where we love to learn a little bit more about where you grew up and how has that shaped your view of the world?

Definitely a good place to start. As you can tell by the accent, I'm Australian, which is not too far away from where I am today in New York City. But growing up in Australia, I think there's probably a few things for those who have been out there would be aware of. First and foremost, it is a very diverse, multicultural society. The country's only been around for a couple of hundred years. So most people, first or second or third generation. So understanding diversity, different ways of thinking, acting, behaving gave me certainly a great bedrock into going global and working in very different countries. I think secondly, being remote at the other end of the world almost forces you to also take this real global perspective, get really excited about what's happening across the shores and possibly why you see so many Aussies leave and travel. Wherever you go, you always bump into Aussies and Australians. There's this deep passion to see what's out there. And then finally, there's a have a go culture. Don't be afraid to give something a go, a start. Australia is also well known to be early adopters when it comes to technology. So a lot of the global tech companies tend to actually run pilots and prototypes in the Australian market. So I think all of those things really, when I look back, gave me a lot of the ingredients to pursue what I've done over the last few years.

I love how the identity as a country really has shaped who you are as an individual. And then of course, looking forward, what that's meant for your career and taking this Aussie identity to the world. So I guess in that vein of who is Larry, did you always think that you were going to become a founder?

That is a good question. When people also call me an entrepreneur, I really find that an odd word. When I think of an entrepreneur, I think about someone who is a serial entrepreneur. You've started multiple businesses, you're on to your second, third, fourth. I did sell a few baseball cards, the equivalent in Australia, basketball cards, but really Zip was my first business. That I started as a founder. And I'd been conditioned to go to high school, get good grades, go to university, and then join the workforce. I never thought that I had it in me to become a founder. And for how life turned out, I ended up there. But a lot of my history really came to bear. I was a counselor for a youth movement and was quite involved in many things at school and working with different teams. So it all really came together, but I probably wouldn't, if you had asked me this question when I left college, would I be a founder? I don't think it would have been high up on the list.

Speaking of college, let's dig a little bit deeper into your early career and how you ended up innovating in fintech. You attended University of New South Wales, and then that kicked off a career in retail technology and investment banking, where you held roles at Pacific Brands, Deutsche Bank, and Macquarie Capital. Tell us a little bit more about this first decade of your career and some of the key lessons that were learned along the way that brought you a bit closer to where you now are with founding Xip.

Yes, as you flagged, studied tech at university. So I was coming out of the dot-com boom and dot-com bust, and that's pretty much when I was going through initial college in, in 2001, 2002, 2003, and joined a tech— it was a Bachelor of Technology at UT, University of Austin, Texas. So hook 'em horns, developed also great appreciation for America there. And really I learned database design, business analysis, and that really set me off in the direction of technology. Ended up working, as I said, for a company called Pacific Brands. First role out of university was a business analyst in the tech division of Pacific Brands. Pacific Brands is really a fast-moving consumer goods, FMCG business. It includes brands like Hanes now, which, which you guys should be familiar with over here. And when I look back on that time, it was an amazing time in my life because it taught me not to be afraid to ask questions. Coming in as an early 20s, working with the commercial leaders of lingerie and footwear and sporting businesses and being able to ask any question you want in the guise of trying to bring it a technology solution. And so spent a few years at Apple City Brands, lost my way a little bit there and decided I want to get into a lot of finance and investment banking. Actually trying to have a crack at getting to investment banking after college. My grades weren't good enough, but of course it's all about endurance. So I did a master's in commerce, majoring in finance in parallel and managed to get a job at Macquarie, which is number one, number two investment bank in Australia. It was again, a real formative time for me. Came in with a great group of people. It itself is an entrepreneurial culture, even though it sits behind a big investment bank. All the bosses there really run their own practice. And I learned analytical skills. I learned how to read financial statements. And there was a real strong camaraderie where even if you got given a real difficult task and you had to have it on the desk of your boss by 8 AM the next morning, people would stay late and people would really help you. And it's funny, I think Steve Jobs said, when you look back, the dots connect, but when you're looking forward, it's really hard to see that. And as long as you're doing things that are additive, you're really pushing yourself. And when I look back, I am in fintech, those finance and technology aspects, had I not worked in technology for a few years, had I not worked in the world of finance for, for 7 years, I wouldn't have had a lot of those ingredients to, to carry me forward now.

It's awesome, especially on this podcast to see how No one's career is a straight line, but then looking backwards, it all makes perfect sense that these are the ingredients that have informed the unique insights that you've been able to collect to start what is now Zip. And so in the first 12 years of your career, you saw the opportunity to digitize financial services with innovative products and bring customers and merchants together. So let's zoom in to 2013 a little bit more. You teamed up with Peter Gray and started Zip. Tell us, what was the initial aha moment that made you and Peter decide to go on this journey together?

Definitely had I not met Peter, I wouldn't be here sitting and chatting to you guys. Some people build businesses top down. For me, it was very much about partnership. And I actually randomly met Peter. I had never known him. I was trying to get a startup off the ground in consumer lending in fintech. And as I was pitching all these investors, they said to me, look, great idea, Larry, great pitch deck. Great problem to solve, absolutely nothing about credit risk. I said, fair point. So I put a job advert out there looking for a chief risk officer, bumped into Peter Gray, and we absolutely hit it off. Although we come from different parts of Australia and we're about 10 years apart, the chemistry was absolutely there. Same strong sense of values around people, but really a passion to leverage technology to do things better in the world of financial services. We'd all had terrible experiences with banks, consumer credit that misunderstood us as individuals. And I was very much someone coming from outside the industry, but very curious about the sector. Peter was someone who had been in the industry. We worked for about 6 months for free, unfunded, really galvanizing around this mission to provide better and fairer financial services to consumers. And I think when you go up against the banks, the competition is pretty cool because the banks are not customer-centric. They don't talk to their customers, understand how they're feeling, iterate with customers. So we thought we had a real great opportunity there to kick it off.

What was a few of the unique insights that maybe you brought from the table having been an outsider to the industry? And how did that evolve over time into defining what problem you wanted to solve initially?

Having been in tech, I coded in Future Basic and Apple Basic back in the day. This idea that actually you can deliver anything for a customer, that mindset from someone who's worked in big businesses in those first couple of months, we're trying to get the product off the ground. And Pete was saying, but can we do that? I'm like, yes, we can literally design any experience we want. And so my passion for great UX, great experience, removing friction, combined with his understanding of the sector, the compliance, the minimum requirements to deliver responsible credit. That healthy friction really helped us design the right product. And it was a real step change for what was out there in Australia at the time. So often those differing views coming together is where the magic happens. You actually need to lean into that. And that's why I always advocate, it doesn't matter how you construct the team or the leadership team, as long as you have all the right ingredients, you've got a winning formula.

And so with those ingredients, Zip started by focusing on becoming the buy now, pay later leader in the Australian market. Tell us a little bit more about your initial product and go-to-market strategy, putting those ingredients together and actually getting it in the hands of customers.

They always say you've got a certain amount of cash and you've got to get to the next gate before the cash runs out. And we raised a very small seed round. It wasn't a big seed round. And I remember each day coming in, working out how do we get our product out there as quickly as possible, because that's going to be the next test for us. And so from starting the company in June of 2013, we had our first customer by December of 2013, 6 months later. And when that first customer came through the checkout, when you are building your first product and prototype, I remember pitching a merchant to say it was a hipster bicycle shop selling $600 bicycles. And we said, hey, we've got this great solution. It lets people pay over time, interest-free, instead of paying upfront. And I remember he was asking me, show me the product, how does it work? But when you're in startup mode and scale-up mode, you can't wait for the solution. You can't wait to have everything. You have to sell ahead of time. And so that did require a bit of belief on his side. We built a solution that basically let you split the transaction over 6 months, interest-free. Naomi came to the checkout around Christmas time, 10 years ago in fact, and she had a choice as she was buying that bicycle for her son for Christmas. She could put on a credit card and get stung with 30% interest, 25 days after statement. She wasn't particularly excited about that. She could pay with a debit card, but of course it's a really financially draining time at this time of year, buying presents for friends and family and colleagues, shopping for the festive meals. Or she saw this button at checkout, which she hadn't seen before. She was an Aussie, so she wanted to give it a go. And she could split that over 3 months interest-free. When she clicked that button and chose Zip, we realized even though the product was clunky, the friction was terrible, it wasn't real time. We knew we had something there. It was a win for the merchant. It was a win for the customer. And it was a win for Xip because we were now able to acquire customers through this flywheel of distribution. And the rest is history, as they say.

You touch on something that is so important to building a business and building a startup, which I think a lot of folks in the Valley don't really internalize, which is you can't wait to have built the end product to start selling it. Coming from a product and technical background, going into B2B SaaS, I personally was very much like, how could we possibly sell something? That isn't ready to use. That's just such a key thing that many folks have to unlearn in order to actually find out whether people are willing to open their checkbooks and buy something that you are planning on building. That's a really important insight for founders. Going from the hipster bicycle shop to becoming a listed Australian Stock Exchange 200 company, many things happened in between and there was incredible growth there. When did you first feel you had reached this ambiguous product-market fit moment?

There were probably a couple of key moments. So getting the first customer, you've sort of landed, but one customer is not going to get you there. And the next task was to get to 100 customers. And we did that over the course of the next couple of months. Still, we weren't convinced because ultimately, how do you build something big and widely addressable versus something that's niche and only resonating with a small share of the population. And I think to validate that, it was probably the types of merchants and vendors that we could convince to adopt Zip. In the beginning, it was a lot of small, medium-sized businesses, mom-and-pop stores across fashion, homewares. We were able to land our first major enterprise account, which was a product called Thermomix. It's this all-singing, all-dancing cooking device in the kitchen for about $2,000. And we were able to convince this merchant to switch from their current incumbent to us. And we did that as well, not through taking the primary business, but through giving us a pilot to prove that we could do it for lower cost, higher approvals, and a much better customer experience. And I think once we landed that real big enterprise merchant, it was validation of what Naomi had gone through a year earlier, but also that even though we were an unknown brand, merchants were happy to engage with us. And then off we went, 24,000 merchants later, here we are.

Oh my gosh, 24,000 merchants. That's an insane number just to conceptualize from that initial go-to-market that you're speaking about with your product. Along the way, of course, your company took on venture capital to help fuel this growth and establish the business all the way through to your IPO, which is an accomplishment that every founder dreams of when launching on their journey. First of all, congratulations. But second of all, it does take a first yes. And we always like to know who was that first person to say yes to investing in Zip.

I say the journey is often more important than the destination. So if we go back to how the story started, Peter and myself, we'd never really raised capital before. We'd never spoken to VCs. Through that initial seed round, I think we pitched about 60 investors. The 3 Fs, the fools, family, and friends. That's where you're going to find that initial money. But that journey itself and getting a no from so many people allowed us to go back to the drawing board, refine the pitch, the USP, how we define the problem, what it looks like. And I can say if we didn't go through that process, we wouldn't have landed with that initial Zip prototype, we raised $170,000. That was our seed round. And there was one chap in particular who said to us, look, I'm not sure if this thing's going to work. There's maybe a 20% chance that this gets going, but I really like you guys. I resonate with you. You guys are partners that I can talk to. And he said, look, I'm investing in you in addition to the big idea that you're sort of trying to solve. And he really was the first to unlock that initial $50 grand and then the others came through. And the funny story is after the $170 grand, I joke because Max from Affirm, who started at a similar time to us, I think raised $80 million for his seed round. So hopefully my next one is that big. But we, the Australian VC market in 2015 was pretty nascent and pretty small. And the story goes that when we tried to raise our second round, it was pretty much impossible. We had one offer that was going to wipe out all of the the founding team from an equity perspective. And that wasn't going to obviously fly. And a friend of mine said that there was a listed company that was a mining company. And so we can probably say here today, we're the only fintech company that actually bought a mining corporation. We did 3 months due diligence on a gold and copper listed ASX company, and we actually reverse listed onto the stock exchange, which was how we got there in the first place, which itself is a crazy story. As founders, you gotta do whatever it takes to cut your way out of the jungle.

I actually think we have to go there right now. We'd love to hear more about that crazy story. You're like one of the OG spackers, it sounds like.

Pretty similar to that model.

Walk us through just how this even came about and any insights you have from that experience of unique capitalization structure.

This was more an accident that turned out to be really productive and profitable for the group. However, after that seed round in 2013, we couldn't raise the next round. As I mentioned, there was one guy that made an offer. And so at a point where we were extremely desperate, people had been working inside the business now for 6 months for free, but still remain committed to this master vision of disrupting financial services. And a friend of mine said, look, there's a listed company called Rubiana Resources. It raised $20 or $30 million to dig for gold and copper. Hadn't been successful and really was becoming a listed cash box. And in hindsight, all that work I'd done in investment banking gave me the confidence to look at something so ridiculous. Because you can imagine if I took this idea back to the team and said, guys, how about we go public? And they said, that's crazy. All the rules around minimum viability, minimum revenue, we didn't tick any of those boxes. And when we wrote the pros and cons down the list, The cons list went pages and pages. The pros was, okay, we're getting some cash, which obviously keeps us alive. But again, desperate times call for desperate measures. We flew over to Western Australia. We did 3 months due diligence on all the mines, made sure there was no nuclear waste. We sold the one mine through a back-to-back as part of the listing. We re-complied with Chapters 1 and 2 of the ASX and we listed, renamed the company. And the rest is history. And we raised $5 million the one year, then it was $20 the next year, $40, $80, $160. And we wouldn't be here today without that crazy beginning.

Oh my gosh. Fascinating just to see how creative you can get. And to your point about the previous experience for you doing investment banking, how that bleeds into unique skill sets that can come through on the entrepreneurial journey that you wouldn't have even expected. I'm curious, how many customers did you have at this moment in time?

We had about, we were doing $30,000 a month in revenue. I think we were doing $300,000 a month in transaction volume. Customer numbers would be in the thousands. Really statistics that you cannot go through a front door listing. It's called a reverse listing, not dissimilar to the SPAC phenomenon that we saw recently. But yeah, quite remarkable. Got us listed in half the time and the public equity actually is a great funding platform for early stage tech. Different countries have a different flavor to it.

It's really to the point that there's no one way to fund a startup and you got to do whatever it takes for it to live another day. Diving into the entrepreneurial journey, we know it's never a straight line. And I think the story that we just chatted through is a great example of that, but maybe tell us about another time where things did not go as planned.

That comes up all the time. So being agile and being nimble and really having that growth mindset and an ability to not be too proud, I think is a critical part of being part of a founding team. And this happened countless times. The perfect time was we were selling in our initial product prototype into the fashion category and we were getting no bites. The merchants were saying no to us. The conversion wasn't working. We're starting to lose market share. And through that journey, it allowed us to really build the Buy Now Pay Later product that really has built the success of the company. It was through that journey, through the failure that allowed us to go back. We took it really personally. We were embarrassed. We felt it all because we'd committed sweat and tears to building this initial product prototype and it hadn't gone well. But because of that, and because of the passion in the business, it forces you to go back to really look at every aspect of the experience and go back and then recreate. And so in general, as we've built Xipa over the last 10 years, this idea that you might have had that initial spark as a founding team, but dynamics change, market conditions change, consumer preferences change. Nobody knows anything anymore. Even if you are the most senior person in the business, you've got to let the data do the talking and you've got to get customer feedback and you have to continuously feed that back into all your thinking. That culture really helps create longevity and sustainability in your business and be able to handle things that don't go well, a sort of agile approach to those conditions.

You touched on the buyer of your product, which was initially the fashion market and retailer, which you'd had some exposure to working at Pacific Brands. A bit of my backstory too, I had been at Gap working on our product supply chain team for all of our brands. So not just Gap, but Banana Republic, Old Navy, and We were thinking about when I was there in 2018, implementing a buy now, pay later solution. And the biggest technical challenge we faced wasn't the initiative or desire to implement this. It was really the payment rails and technical APIs that we didn't have externalized to work with a party such as Zip. Could you just talk to us a little bit of the go-to-market strategy and where the rubber met the road on the technical implementation for this product for your core customer?

There's a couple of pieces to answer that question. First of all, the biggest challenge with designing a product is the go-to-market. How do you get the velocity? How do you get adoption? And when we're looking to disrupt financial services, we realized that going direct against the banks was going to be impossible. You'd need to have billions of dollars in advertising and marketing spending. So this whole consumer finance distribution, working at the checkout at that moment of truth and piggybacking off retailers such as Gap, Amazon, eBay. As they say, product is king, distribution is God. And so working on the great success of the BNPL industry, embedded finance, sitting on the shoulders of all the retail giants. But as you say, when you pitch a merchant saying we can increase your sales risk-free and it's plug and play, that took away that third no, which was it's too hard to integrate. And what we've seen with the proliferation of e-commerce checkouts such as Shopify, BigCommerce, WooCommerce. But equally, the payment service providers, we're starting to see a lot more consolidation around the checkout with brands like Stripe and Adyen who are offering merchants integrate once and we can open up multiple integration methods. Because if someone comes tomorrow wanting to pay with their left hand, for example, there's a million customers want to pay with the left hand. Retailers should be free to test and experiment with that new payment method. And so we've seen a lot of that happening. Interestingly, in, in America, Zip pioneered the use of virtual card technology. So we used the existing checkout and we sent a one-time virtual card for the exact amount of the transaction behind the scenes. And that allowed us to actually cut down months and months of integration to weeks.

Wow.

Super interesting. And thank you for drawing out that tension between the stakeholders and the ecosystem from the retailers to the banks to, of course, you all who are providing this service directly for the end consumer. I'm curious, just like, how has your relationship with the banks evolved to today? How do you guys think about them as a stakeholder and partner in the ecosystem?

We see banks probably with a few different hats. If I look at the American market, we believe that we genuinely can be the best at serving the 35% of adult Americans that are caught in the blind spot or underserved from traditional financial services. So when we look at how banks are underwriting and serving I guess the Gen Z and emerging consumer, all those with different credit experiences, we think we can do a better job. The banks do a good job for that segment of population, but we genuinely feel that we can do a really good job. We partner with banks in terms of our transaction services, our backend infrastructure, you know, as a fintech, what I think we can do better than the banks is we're programmed to talk to customers. Every quarter, we have 20 customers that come in. And we go through and we ask them how they're finding the product, how they're feeling. And the reason we love what we do is we see payments as an access point to the relationship between us and the customer. Because we can talk to them every day, we can talk every week. So I see fintech as that experience layer that is always going to do a much better job. The banks provide us with capital infrastructure. And that's why I do see a wonderful partnership between the two sides of the ecosystem.

I'm seeing Claudia nod. I know this is something that she thinks about with her business at Pryve.

We do sort of the subscriptions billing experience layer for retailers, e-commerce brands. And so it's fascinating and such an interesting sort of part of the stack where you have all these payment gateways, payment processors that have built this platform, but there's so much sort of business intelligence and experience that can be innovated on top of that platform layer that folks are really just starting to tease apart now. Especially as more and more transactions happen online. So the experience layer on top of payment stack is a really fascinating place to watch and see evolve over time.

Absolutely. We've seen Uber originally was offering payment choice. Now it's payments becoming invisible. But again, it takes the fintech and that experience layer to identify those new trends and try and solve around them.

I know Claudia is one individual who's gone from Australia to New York. It seems like Larry, that might be you as well, now being based in New York and most recently transitioning to being the CEO of Zip USA. Congratulations. Tell us more about this expansion into the US market.

It's great to be here. We're just coming up on the one-year anniversary, full-time here with the family. I've been traveling though with a few years beforehand. If we rewind the clock to call it 2020, actually under the COVID of COVID prior to that, we had been very much an Australian-centric business. But as technology knows no barriers, no borders, we saw these trends and we believe that these trends were equally as applicable in developed and developing markets. And so we ended up going on this real big global expansion play. So we entered the US market actually via an acquisition in 2020. And we were going after this coalition of founders model, this idea that let's have teams that are on ground in the market that have that local flavor, that local understanding, particularly the go-to-market and how to problem solve. But still had a shared vision around disrupting financial services with better and fairer technology. And so it's been quite the ride. Having been on the ground here, I think what I've tried to bring to the table has been really the internal workings of what I think is best, the culture, how we organize as teams, how do we drive openness and transparency? Because if you can hire great people, organize them well together, put them in single-threaded ownership teams, make them feel like business owners. You get this incredible results, but it's easier said than done. We really focus on the culture, the ways of working. We see that as the secret sauce really to the success of the business.

I think every US-based company could use a little bit more of Aussie culture. So I love this advice to our audience base. And just piggybacking on that a touch more for our founders who are listening and might be from outside of the US and thinking about breaking into a new market with us here. You mentioned one path around an acquisition that helped fuel this growth here in 2020. Any other piece of advice that you would have for those founders?

Another example we can use is once we were already on the ground in the US, we expanded into Canada and also Mexico. And there's some pretty gnarly challenges I would say that we had to deal with. One is even the technology architecture, which way do you go? And we had this big battle, which was, we also used the same technology stack to scale into UK, Singapore, South Africa, is do we run the purist model, which is we have teams that are responsible for different parts of the customer journey. So it could be the acquisition team or the engagement team and keep them purist, i.e., that's the team, but they focus on different markets. Or do we actually fork the code? And that way we can have local teams that can really run hyper experiments to work out the product market fit doesn't need any variation or local adaptation. So I think it comes down to, in order to answer that question, you have to really test the market first. So I'd be careful at committing yourself too early before you've done that work and done the hypothesis, done the local market testing, then to understand what technology architecture you're going to use to also enter the market, which can save you huge amounts of money, but equally can be a problem for you because it can distract you from your core market as well. So balancing those things is really important.

I love that you bring this capital M market into the conversation, which is where I'd love to go to next. Just thinking about the huge boon we saw in fintech and consumer shopping online as a result of the pandemic, and then unrelated or somewhat related around just now where we are in the economy with interest rates and thinking about how that impacts fintech at large for consumers. What are your thoughts on what's going on and specifically how Zip is thinking about continuing to put your consumers and your customer base at the core of your business?

The markets have gone through a pretty crazy time. Let's say pre-pandemic, post-pandemic, and then the post-pandemic correction, right? It's been this crazy rollercoaster. And if you look at our share price, you can probably see the gyrations that we've all felt going from $7 billion market cap, well, a billion or two back down to a couple hundred million, up to $7 billion, then back down to $400 million. So you can just see the gyrations that are happening there as the cost of capital gets higher. But those moments also teach you as leaders and give you an opportunity to pause, to reflect, to look at the world around you. Capital is definitely scarce. And I think we're seeing that now. Being very focused on the next gate, the next deliverable is really important. We use those moments. There's the internal and there's the external. When the cost of capital is cheap, you do invest in things that are slightly outside the core, slightly adjacent, might have payoff in, could be horizon 2 and horizon 3. And I think what we've seen is, and certainly when we've spoken lots about partners, it's all about doing less better. What is our competitive advantage? What is our competitive moat? And making sure that we are really investing in that, not going after the shiny thing or the new idea or something that might be untested. So you've seen this real consolidation of thinking. And I think that's also something to keep in mind as you grow a business. As you get bigger and bigger and becoming more and more successful, often you start to invest outside of the core. I would argue it becomes even more incumbent on you to protect and quarantine the core, quarantine the product and engineering resources that are focused on the core, because that really is the advantage that compounds over time that others won't be able to catch up to. We definitely were invested in many markets and many different products. And if cost of capital is cheap, as I joke, in a parallel galaxy, we've built the world's largest global buy now, pay later platform. But alas, in this galaxy, slightly different. And I think fintechs will remain, they will continue to remain, but you've got to make sure that you focus on the critical underlying economics and also stress testing those for different conditions. A lot of businesses don't do enough scenario planning. And the scenario planning itself is a great exercise, even if the chances of the probability of that scenario, 1 in 10, what are the mitigating factors and how are we going to organize around that? I think doing that twice a year, for example, could be really effective. So you as a team know how to respond natural reactant are aligned to that. And maybe you can build defensibility around it too. The US consumer for us is remaining resilient. As interest rates have risen, we've obviously had to increase our costs with our various partners, but it's demonstrated to us the willingness and engagement from our customers and merchants for these products and services. So it's almost invigorated the sector. Economics have changed, of course, but it's a very sustainable and exciting business. And we see the BNPL as credit card of tomorrow for the customer of tomorrow. That's not going away.

I think it's incredibly salient to comment that during these times, you really need to double down on the core of your business. And so that's a perfect segue to what is on the Zip roadmap for 2024? What is the Zip team looking forward to and what are your big bets for this upcoming year?

If we just rewind back a little bit, we genuinely believe that we can be the best at serving 35% of adult Americans, 675,000 below, but really underserved, caught in the blind spot of financial services. So really investing in the assets around that, which goes to decisioning, how we understand customers, plugging in alternative data sets, not just FICO, which can actually unintentionally discriminate against different types of individuals. Could be younger individuals or those that were previously married and so forth. So investing heavily in alternative data to really understand customers and how they are today. We offer a pay-in-full solution today, but we really want to become the budgeting tool of these consumers for any of their short-term needs. So we are looking at expanding the product set both online, but also in-store. The Zip card is something that customers use every day over here in America. And what's interesting is America traverses both the first world of payments and the third world. So I come from a country where I don't carry a wallet. Everything is in the phone. Whereas here, everyone's carrying around the George Costanza wallet, right? It's got all the cards and everything like that. We do cater for all the different payment experiences, but really leaning into our customers, helping them budget and save, plugging in their bank transactional data. I think when you look at the banking sector, they're sitting on a wealth of data. Yet look at the products and services they deliver based on that. There's nothing there. And I think that's where fintech can become incredibly powerful by ingesting the bank transactional data, understanding customers, and then actually becoming an advocate for how to build financial strength and financial well-being. I think PFM still lives in version 1. What does version 2 and version 3 look like? And once we've acquired our customers at Checkout, where 80% of customers sign up, We then get them into the app and then how do we build that financial partnership with them over time? So a lot of thinking and product testing and discoveries going into that part for us.

Well, very excited to see Zip continue to expand in the US. I've seen you guys on TV quite a few times recently, so that's incredibly cool. A lot of exciting things ahead for the US consumer. Transitioning a little bit as we come up on time, Larry, it's been one year in the US. What's next for you personally? What are you looking forward to next year?

It's been a year of adjusting. The kids are settled, which is great. I'm really excited about the American consumer, about the American economy. We have restructured the leadership team here. We've got great leaders. The business is profitable. So we've got a really fantastic foundation as we move into next year. We're looking to ship value into the hands of customers as quickly as possible. We are Zip, Z-I-P, so we have to be true to the brand. We have to be faster than the competition. How do we really engineer more and more of that into our practices is going to be a big task that I want to focus on. And I'm a student. I'm a student of payments. I'm a student of culture. I'm learning more and more about the American consumer. I think the consumer has weathered the storm reasonably well, but we are cautiously seeing what's around the corner. I'm looking forward to building a really successful American business that you hopefully see alongside some of the big American brands that we see out there. So maybe we can list one day on the US market. Who knows?

Probably not by buying a mining company this time.

No, that won't be happening.

Well, Larry, we're gonna ask you our hero question for the podcast as we wrap up today. It's a question we ask all of our guests. Who is a woman in your life that has had a profound impact on you and your career?

The example I, I like to share is back in high school, my computer science teacher, Mrs. Stephanie Schwartz. Amazing woman. Definitely wouldn't have chosen and landed where I have through the journey of Zip without her education, her stewardship. She's an amazing woman. She joined IBM in the late '60s. She chose IBM interestingly because it was the only company that was offering equal pay to men and women and really learned the power of technology and for a whole host of reasons ended up in the education field, moving from college teaching to high school. What a powerful teacher and really teaching me the building blocks technology enables of experiences, of solutions, and helping make the world a better place. And also keeping the bar pretty high, getting into trouble if we were a little bit lazy with our responses, but really learning an appreciation for technology gave me the courage to know that we actually have all the tools at our fingertips, whether we have them individually or we can go and get them through partnerships to work with other individuals. And that gives you a lot of confidence in tackling any problem, any challenge and opportunity out there. And interestingly enough, she taught quite a few fintech founders that went on to build some amazing companies, some that have been bought by Square and others as well. So really amazing education and privileged to have had her as a teacher.

That's incredible. Very much a strong point around the, the importance of sort of education, especially early on in the STEM field. Larry, thank you for your time on the podcast. We've loved having you on. On and so excited for the world to hear your story.

Thanks so much for having me. I really enjoyed it. Claudia and Madison, thanks so much.

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