Xero | Trent Innes
Conversation with Trent Innes
Xero is a brand that really lived up to their original promise - they actually did make accounting beautiful! They followed a design-orientated approach from the beginning and have always focused on innovation. Today they’re as dedicated as ever to supporting business owners and ensuring they thrive through these unpredictable times. We chatted to Trent Innes, the Managing Director of Xero. He takes us through Xero’s journey from startup to main contender.
“One of our first employees was a designer and the intent behind that was to make accounting as fun as it could be.”
Xero has been incredibly innovative in it’s people-centric approach. The brand really lived up to their promise and they did really make accounting beautiful.
As the Managing Director of Xero, Trent's focus is on building strong teams to help small businesses in Australia and Asia thrive. In our chat Trent explains the importance behind the Xero user interface, how they made meaning out of data and really turned traditional accounting on its head. They really shock things up and haven’t stopped. He takes us through the challenges and the biggest moments of growth.
The secret sauce in Xero, Trent explained, is that from the start, when Rod Drury and Craig Walker sat down at that kitchen table 13 years ago to write Xero’s first code, their approach was design-oriented. “One of our first employees was a designer and the intent behind that was to make accounting as fun as it could be” he explains.
Today the accounting platform is used in more 180 countries by 1.8 million paying subscribers and integrates with 700-plus add-on apps. In four years, subscriber numbers and revenue have quadrupled, with the latter sitting at $552 million in 2019.
They smashed their original goal of ‘making accounting beautiful’ and now they’re more than ever focused on the business owners needs. Especially during these challenging and unpredictable times. Trent talks through the support and opportunities for business owners and how they’ll thrive coming out of COVID19. We hope you enjoy this one it's a must for any business owner!
Mentioned in conversation…
The people-centric approach that sets this global tech company apart
How they ensure innovation thrives through the Xero company culture
Making meaning out of numbers and the impact this has on small business
Who and how companies will thrive coming out of COVID19
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Full Podcast Transcript - Trent Innes, Xero
Pru:
Hey, Trent, and welcome to the show.
Trent:
Thanks for having me. I'm really excited to have a good chat to you today.
Pru:
Me too. Me too. Now, I am a huge Xero fan. Within Owners Collective, we've educated over 15,000 businesses now. We've recommended Xero to every single one of them, so I know that we're in for a good chat today, because it has absolutely revolutionized so many small businesses, truly because it was accounting made beautiful. But it wasn't always this way, and I know that you're an accountant by trade, so I was hoping that you could kick us off by painting a bit of a picture about the challenges that small businesses faced around managing their financials pre-Xero.
Trent:
Yeah. It's a great question. First of all, thank you so much for promoting Xero so hard. We should actually have you on some form of commission potentially. I'm really happy that you're doing that.
Trent:
Look, for me personally, as you mentioned, I am an accountant and I love numbers and I love accounting. I just love how beautiful it is. For me, it always made sense, but that's not the case for all business owners. Most people, believe it or not, when they go into business, they don't go into business to manage their financials. They normally go in either to follow a passion or through necessity or for other reasons. It's very rarely to manage their numbers, but managing numbers is so, so important. The reality is so many businesses fail because of poor cash flow management. That's the biggest reason they fail. The way to get around that or to have that opportunity to be more successful is to have a much better understanding of your numbers.
Trent:
One of the ideas behind that was how do you actually make accounting fun, almost, or more beautiful. Right back when the product was designed and launched back in New Zealand in 2006, they took a really designed orientated approach to try to make accounting more fun, more easy, and more beautiful, so people didn't find it a chore anymore, which is, I think, historically how they always looked at it.
Pru:
Yes. I couldn't agree more. Also, it was so disjointed back then as well. People were managing on spreadsheets or the accounting software that was out there, it wasn't in real time, so if your accountant was working on it, it could be conflicting to what you were working on. It was just all a bit of a mess, wasn't it?
Trent:
Yeah. Most of the accounting programs back then had quite high barriers to entry. You needed to actually understand technology to a degree, because you needed to be able to install it and update it and be able to work that out. It was actually predominantly written by accountants for accountants, yet small business owners were trying to use it. It was taking it from a very different angle. But the vast majority of people, back before the cloud came along and the barriers to entry got reduced to access this sort of technology and this sort of solution, were pretty much pen and paper and spreadsheets, as you mentioned. They weren't kept up to date. They didn't invoice on time. They didn't understand their current cash position. They just weren't managing the financial aspects of their business, because it was just too hard. The cloud really changed the barriers to entry and made it much more accessible for many more business owners.
Pru:
Yeah, absolutely. Even thinking back to those days as well, where people were keeping their receipts in shoe boxes, it was not that long ago really.
Trent:
No. Believe it or not, there's still a lot of people out there that still do that. There's still a lot of the market out there where they do do that and go visit their accountant once a year and dump a shoe box of receipts on the desk and get them to go through it. But there's so much great solutions out there now, like Xero, that can help you manage that and take that pain away from you and just help you get back to doing the thing that you love, which is probably running your business rather than doing your accounting.
Pru:
Exactly. Exactly. You did mention just then that Xero, obviously, started in New Zealand. Can you tell us how it did kick off and also the problem that it initially set out to solve?
Trent:
Absolutely. I'll be paraphrasing a little bit, because clearly I didn't start it. I've been lucky enough to be involved since back in 2013 in the Australian part of the business. Look, it did start in New Zealand back in 2006. It was created by an entrepreneur called Rod Drury.
Trent:
The story goes that he was basically trying to solve a problem. He's a technologist at heart. He actually just previously sold another business and he went down to visit his accountant at a different location, went down with all his information on... It might have been even a floppy disk or a USB key at that stage, which is showing you that it actually doesn't sound that long ago, but it probably is. When he went down and they actually put the disk in or the USB key and loaded it up, they were operating on different versions, so they couldn't actually read the data. So Rod went, "This is crazy. There's got to be a better way that we can actually have one shared set of financial information stored centrally where we can both access it, both work on it from remote locations and be able to collaborate together to actually better help me run my business." And that was really where it formed from.
Trent:
If you think back to 2006, that was just before the iPhone came out. So 2007 was when the iPhone was released and the cloud was just really quite early in its days, but Rod really saw the potential of mobility and cloud and how that could actually change the world of accounting for small business and really, as I said before, remove some of those barriers. Because it was hard to set up for businesses before that, and so as a result they relied much heavier on pieces of paper, and as you said, and shoe boxes.
Pru:
Yeah, and on their accountants as well, I'd say.
Trent:
Yeah, but [crosstalk 00:05:35]-
Pru:
Did the market take it up... Sorry, go ahead.
Trent:
And they still do. They still rely really heavily on their accountants and bookkeepers, and probably even more so now, because they can actually talk to them in real time. Their accountants and bookkeepers can actually help them analyze their business far greater than they ever could before.
Pru:
Absolutely. Did the market take to Xero pretty quickly?
Trent:
So the thing when I joined back in 2013, not many people really knew who we were. There was a lot of early adopters that were jumping on board that saw the potential of it. It takes a long time to build an accounting solution. Just to get up to functionality parity with the long-term desktop solutions took some time. Being back in 2013, people, when I used to say I worked for Xero, they thought I worked for a photocopy sales company at that stage. And that joke never gets old, but it was actually quite true and came up a lot. So it took a while to get that momentum, but now you can see our results now.
Trent:
We just announced our results, is it the 31st of March, it's now over 914,000 subscribers in Australia, so it's actually really taken off now. But I think that was just a great riding the wave of cloud adoption, riding the wave of mobility, and just also riding the wave of the change in the way that we work. The way that we work now has changed quite dramatically, as well. That's never been more prevalent than obviously during Covid times at the moment as well, where we can actually work anywhere, anytime, on any device. That's really the way we need to be able to set up these days.
Pru:
Do you see that, with the rise of the cloud across that time period, was it just good timing for Xero or were there particular things that you did at particular stages that really emphasized that growth?
Trent:
I think it's a combination of both, Pru, to be honest. I think there was definitely... There's always a bit of luck in timing, isn't there? But you've got to see that potential. I think Rod is an amazing visionary and he could see the potential of the opportunity to democratize technology through the use of the cloud. His view always was that from a potential market opportunity that small business was probably the largest un-monetized opportunity on the internet at that stage. Because big business had already made quite large investments and it had gone into mid-market, and consumers had quite a lot of choice, but small business had been largely ignored because it's so fragmented and diverse. So there was a massive opportunity in that sector of the market.
Trent:
At that stage as well, digitization was starting to rise as well. We were starting to see government starting to digitize processes and procedures and so we could work really close with them to help streamline and remove some of that red tape and compliance burden from small business. But even at the same time, if you think historically, most small businesses operated very much in their suburban or geographical region. Whereas with the advent of ecommerce coming through at that time, as well, when we'd come out of the back of GFC, when you started to see Amazon really start to tick up, and eBay, that ability to trade anywhere and for a small business to appear big, it rode the wave of that as well. So it was all those things combined that I think really helped drive the success of Xero. But there's still a long way to go, as well.
Pru:
Yeah, absolutely. Was Australia the first market that Xero focused on?
Trent:
No, no. Very much New Zealand. New Zealand born and bred. That's where we have our highest market penetration. We've got offices in New Zealand. We're listed in Australia these days, but we were listed in New Zealand and then dual listed. Then we moved our listing solo to the ASX a couple of years ago now. We've also got offices, and quite sizable offices now, in the UK, the US, South Africa, Hong Kong, Singapore, Canada. I'm sure I'm missing somewhere, but it is a truly global company now.
Pru:
Yeah, awesome. When you came in, so you said that was in 2013, where were you seeing the opportunities then?
Trent:
This is going to sound really, really geeky. I love accounting and technology and I love, when they're combined, what they can do together. I know that sounds terribly geeky, but it's actually quite true. I'd actually been working in business application software pretty much my whole career. I really only did a very small stint as an accountant way back early in my career and then found my way into technology and had always worked in this application space. I could see that it had never really taken off in small business. I saw it as an amazing opportunity.
Trent:
Rod, like most true entrepreneurs, is also massively charismatic, so when I met him as well and I understood what his vision was and how he could articulate it, I could see that there was so much opportunity. It was a no brainer and I've never looked back. It's definitely been the best job that I've had in my career.
Pru:
Yeah. Incredible. Incredible. Now personally, I believe that at the heart of Xero is really, I think, you guys have such a people-centric approach. The way that I see it is that that plays out both internally and externally. Internally because there's huge focus on your team and really driving innovation, and of course that comes out of people's brains initially. Then also externally. I think this real people-centric approach that you had was revolutionary to the traditional financial service providers that were out there in the market.
Pru:
I wanted to have a little bit of a talk about that. Initially to start with, probably externally, so your clients so to speak, is that I think a huge part of your growth was definitely the design contributor here. You did make accounting beautiful right from the start. Can you tell us why that was important?
Trent:
And that's no mean feat, by the way, I don't think, making accounting beautiful.
Pru:
No, it's not.
Trent:
Historically, you had to apologize for being an accountant. When you get introduced at a barbecue, my wife always joked about this, because she's not an accountant, she's always joked that it's got a bit of a stigma attached to it. Yet, funny enough, accountants, the ones I meet and see, are actually a lot of fun. But you almost had to apologize for being one, because it was actually seen as one of those boring [inaudible 00:11:47] tasks, but a super important role. The reality was to do it before was really hard for small businesses.
Trent:
So very early on, Rod actually hired a designer and what they did was spend a lot of time with small business owners walking around behind them, tracking what their day looked like. If I go back from a design orientated perspective, in the very early days when they sat down with someone who was using desktop software, what they saw was that they would come in in the morning, they'd turn their computer on, and while it was booting up, back in those days, they'd go and make themselves a coffee, then they'd sit down and then they'd log in to their banking software to see who paid them for the day before and who'd they'd made payments for and what their cash position was, yet these two processes were completely disjointed. You had banking over here and you had accounting over here. Most small business owners would either get to that... The good ones would do it daily. The bad ones would do it monthly or even quarterly or annually when they went and saw their accountant and try to catch up.
Trent:
What they did from a design perspective, and this is just one example, is to work out how they streamline that process. That's really where bank feeds came about from. That was the ability for a small business owner to log in to Xero first thing in the morning, because it's an online service, it's always available, and that bank information is there ready to go, so they know their cash position instantly.
Trent:
So it was actually removing that friction point between their bank and accounting. One of the challenges for small business always around accounting has been around the outside of their accounting records is this massive amount of friction. Whether it's friction with their banks, financial services, whether it be with their suppliers, their customers, or even government, they've got to do all this work around the outside of it to make it work. What we really tried to do from the early days was to try and work out how we can make that experience far more beautiful and reduce the amount of burden and time it takes to do all those tasks, so a small business owner can actually get back to doing what they love, which is running their business.
Pru:
Yeah. And bringing it all into one place as well. As you describe it then, I get these awful flashbacks of looking at the bank and then talking to the accountant every other month and then whatever the government required as well. It was so disjointed. When you are a small business owner, it would seem that everything's yelling at you to do every single day, it seems like. It was just in the too-hard basket, because it was so fragmented. So bringing it all into one place, in a place that actually looked good, and I just can't stress this enough to the listeners how passionate I am about this component of Xero-
Trent:
You are. You're speaking [inaudible 00:14:25]. I can hear it coming through. But the reality, it solved a massive pain point for people.
Pru:
It really has and it's made people get excited about their numbers because they can look in there. There's almost a gamification feel to reconciling your accounts. Talk about some innovation right there, gamifying, reconciliation. This is pretty cool.
Trent:
Yeah, it's funny, probably most of the people that I interact with are either small business owners or on Xero these days. I've probably sold it quite well [inaudible 00:14:53] over the journey. I used to always laugh. I'd see other parents at my kid's sporting events some times on a Saturday morning and you'd see them on their phone just swiping left or right. I always wondered whether they were on Tinder or doing bank reconciliation. When I'd talk to them, most of the time they're actually doing bank reconciliation. That's actually really cool. It means that as they're getting updated, they're actually looking and going, "I actually understand my cash position."
Trent:
So we know, unfortunately, even being a pre-Covid times, we look at our data at an anonymized aggregated level with a program called Small Business Insights... And the idea behind that is to try and get some really aggregated views of what's happening across the small business economy in Australia and across the world, the countries we operate in. The reality is, on average, about 50% of small businesses, in any given month, are not cash flow positive. And so they operate [inaudible 00:15:49]. People say cash is king, cash is absolutely king of small business. You have to be on top of your numbers and you have to understand your cash position to be able to manage your business.
Pru:
Yeah, and particularly for small business owners because there's quite often not that savings account sitting behind them. As much as we all wish that there was and it should be there, quite often it's not. A couple of bad months or you don't get paid for an extended period of time that you should be paid, it can bring a business to its knees.
Trent:
It can really, really quickly. But we know that if you've got a better insight into your numbers, then you've got a much better chance of being successful.
Pru:
Yeah. That's really a good segue. You mentioned it there, but I do want to just jump in a little bit here further, is that something that I believe you were quite heavily involved in was the launch of the Xero Small Business Insights, which went beyond the numbers to make a bit of meaning about that data and what that actually means. What spurred that on to bring that to life?
Trent:
It actually was my idea to actually do this a couple of years ago. What I suddenly realized, I was talking to a number of government officials and a number of industry bodies that actually specialize in small business. I came to the conclusion that most of the discussion around small business, because they're so diverse and fragmented is that there was a lot of rhetoric around there but it was based on very small sample sets. It was either based on maybe a politician's constituent in one electorate, Bob Plumber that's experiencing x, y, and z, or it might be a lobby group potentially you're looking at, or ABS data at that time, which was quite small samples sets.
Trent:
The reality was that actually there wasn't a lot known about the small business economy at scale, yet if you look at it as a consolidated group, it's one of the largest employers in almost every country, and in Australia that's true. It's a massive contributor to GDP as well and it's also where a lot of our innovation comes from. Innovation comes from small business, yet we didn't actually understand a lot about them.
Trent:
I saw it as an opportunity to actually, with data on our platform at an aggregated anonymous level... So I just have to really highlight the fact that we're looking at this very anonymously and aggregated... to actually see some of the trends that are happening in small business. The original program we set off was to look at things like cash flow, how many businesses were cash flow positive, how long was it taking for a small business to get paid, so what do their payment times look like, where was the employment growth coming from, from a full-time, casual, and part-time perspective, which sectors were growing faster and was there a correlation. We also started looking at importing and exporting. I was really keen to understand if we were a nation of makers are takers, so we started looking at that as well. Then we were looking at the adoption of technology. That's really where we started and we looked at the trend lines over time.
Trent:
Since then, we've also done a number of special purpose reports as well where we've started to delve into the detail to actually see if we can see some trends happening across the economy as well. The program is continuing to evolve and it's something that I'm super passionate about, because ideally if we do it properly, it should help us to focus where our investment should be going into small business to actually help them grow and be more prosperous.
Pru:
Yeah, 100%. I always read the reports that come out of it. I would really encourage all our listeners to as well. There's some fascinating statistics in there. And I agree, I think the government, I know that they've got many jobs on their hands, but their reporting on small business it's not on the ground, it's too slow, it's too small a sample size. I think what's coming out of Xero is really, again, quite game changing.
Trent:
Yeah. I was basically going from surveys to data. It's looking at data insights rather than survey insights. It's definitely a journey we're on. We're very conscious as well that to make sure there's no biases in it, because they're customers just on the Xero platform, so we actually use some external economists to actually help us with that as well, to look at that and make sure that it's normalized for the overall economy as well. We also see at as an opportunity to help us tell stories about small business that nobody else can tell. I think that's one of the fundamental things we want to achieve.
Pru:
Yeah. Look, Trent, was there anything that really jumped out to you when you kicked off this program, anything that quite surprised you that came out of those insights?
Trent:
Look, I think absolutely and there still is all the time. I think a couple of things that have really jumped out is just how seasonal small business is. This would seem very logical of course, but if you look at the month of December, cash flow jumps up quite heavily, because generally they have quite high trading months heading into Christmas as an example. Then it drops off really heavily in January and there's a direct correlation between that and casual employment coming down dramatically.
Trent:
What it suddenly highlights when you look through this is that small business owners, in terms of cash flow, have very few levers that they can pull to manage their cash. Casual employment is one that they can pull really quickly. Payment times, how long it takes them to pay other people, they can pull that lever potentially as well. But they haven't got that many levers and so understanding what those correlations are between that and the seasonal impact that it has, I think, was quite interesting.
Trent:
We also did some reports recently as well that looked at the amount of money that small businesses spend on technology. It's actually quite dramatically low. On average, a small business spends about 1% of their turnover on technology solutions, which we thought was quite low. It's much lower than mid-market and enterprise. Yet, the ones that spend more actually grow incrementally faster and actually higher more people as well. So when they digitize their businesses, there's always been this view, I think historically, that if they digitize they'll actually hire less people. It's actually not the case, it's the opposite. When they digitize and become more effective and widen their addressable market, they actually hire more people and their business grows faster.
Pru:
That's a really interesting one, because it's efficiencies, right?
Trent:
Yeah, it's efficiencies and addressable market, so there's two sides to that coin. So there's being more efficient on your side of the business, where you're actually operating your business more efficiently, but equally that then frees up time and potentially addressable market for you as well, because that gives you technology to think outside of your normal channels, so where you might actually attract customers from. You think about... Covid's a fascinating study, I think, in hindsight when we look back at it, but you look at all the small businesses that have pivoted during this time and found other channels to market, and the ones that were set up for success in that time were the ones that were much more digitized than the ones that weren't.
Pru:
Yeah. I couldn't agree more. My business is predominantly online these days. It was business as usual for us, which I'm incredibly grateful for, and because we rely so heavily on technology in the backend. Now that puts us into a good segue here into Covid. Xero was really fast to act here on doubling down on support. Can you tell us what you and the team made happen behind the scenes to really support businesses when that impacted?
Trent:
Yeah. The first thing we had to do was... So I've been going through this for a while... look after our Asia businesses as well. So they were actually impacted by Covid earlier than Australia was. As a global company, we've been monitoring this around the world. The first thing for me, from an Australian perspective, was to make sure that our people were set up and able to work from home and be able support our customers and partners and their families as quickly as they possibly could. We've always had the capability for people to work from home, but it's been a choice, whereas we suddenly mandate that they have to in their environment. Everyone's environment's different. Some people have got children. Some people are by themselves. Some people live with their parents. They were all set up in different ways.
Trent:
The first thing was to make sure they were set up to be successful as they possibly could be. That really meant almost over communicating to them for a period of time to make them feel safe. That was really the first thing to focus on. Then we quickly pivoted off the back of that to make sure that we were set up to be able to help our customers and partners as best we could through this time, because they were obviously facing a high level of uncertainty.
Trent:
If you look at the small business economy, I've been looking at it in a number of different buckets to go through this journey. Believe it or not, there are actually some small businesses that are thriving in this environment. Ones in ecommerce, transport and logistics, they are absolutely doing phenomenally well. We're seeing that come through in our data that they're actually going really well. You've got some that have gone into survival mode and pivoted. You think about your local café that's gone from a scenario of having people sitting inside to actually going to takeaway. I've heard of stories of a party provider for kids that actually generally goes out to people's houses and entertains the children for a kid's birthday party, they're now doing online parties. So in fact, if anything, they're actually opening up their addressable market more broadly than their local suburbs they normally operate in. They've really pivoted to survive.
Trent:
You've got quite a few that have gone into hibernation mode. In hibernation, they've actually gone and decided it actually isn't worth them opening at this point in time, so they're just sitting there. There are some, unfortunately, that are ceasing. We look into those and it's tragic to see those, but some of them, probably, their fundamentals of their business probably weren't where they needed to be anyhow and operating in very good times for a long time.
Trent:
The other thing we're actually seeing as well now is business creation is on the rise. If you look at history, history shows us in any hard economic times that we go through, we haven't had any, to be honest, since probably the GFC really. If you go back to GFC or all the way back to the last recession that we had in the early '90s or even the dot-com bust, out of all of those spawned innovation and business creation. You actually saw people [inaudible 00:25:53] off the top of that.
Trent:
Really, to answer your question, it was thinking about how do we actually help all of those different types of customers and our partners, being accountants and bookkeepers, at this time. The short-term focus was really to work out how best can we help. We did some changes to our products really, really quickly. We adjusted our products to be able to easily process JobKeeper. That was something we needed to do really quickly.
Trent:
We've stood up the Business Continuity Hub, so that was one centralized place where we could distill all the information coming down through all the governments, both federally and state, and put it into a language that was easily understood by accountants, bookkeepers, and small business owners. We also pivoted really heavily to running lots of webinars. In addition to the JobKeeper stuff, we actually released a short-term cash flow analyser inside the product, as well. For our accountants and bookkeepers, last week we just released a thing called document packs, which is all about allowing them to do electronic signatures, as well, so they don't have to actually meet people in real life anymore. It was really about pivoting to work out how we could best help in this time.
Pru:
Wow. That's incredible. That's a lot of work to get done in such a short period of time. The Business Continuity Hub, just for the listeners, definitely head over there for a look as well, because I know that there's... I feel like everyone's starting to get their heads around it now, but there's still some questions unanswered, so that's a good place to be.
Pru:
Interesting as you talked, I was reading something the other day, I think it was in The Australian or something like that, about how accountants are emerging as the new superheroes. Accountants are really getting their time right now. It's good to know that Xero's supporting them to be able to do that, to shed their normal suits and show their superhero stars. Everyone's quite in love with their accountants right now, I think.
Trent:
Yeah, both accountants and bookkeepers. Never forget the bookkeepers. They do a lot of hard work for small business owners as well. You're absolutely correct. They have been the superheroes. They got absolutely slammed, slammed and jammed actually, between their clients and what was coming down from government and trying to actually distill that down into understandable information back to their clients and work out their eligibility for the various government programs that came down, like JobKeeper and others, was actually really hard. They've worked tirelessly to make that happen. We're just trying to do the best we can to support them.
Pru:
Yeah. Very cool. Very cool. Okay. Well, if we can flick our focus just for a minute onto internally. You did mention there, when Covid hit, that you really focused on your team, initially, making sure they felt safe and supported and they were able to work from home. On a larger scale, Xero is known for innovation, that's what it does, that comes from the people inside it. I've heard you describe Xero as still operating with quite a start-up mentality, even though it's clearly grown beyond a start-up now. Can you describe to us what that means to maintain that start-up mentality?
Trent:
Yeah. I've thought about this a lot. As I said before, I clearly didn't start with Xero, but I've been there during the scale-up phase. I think the scaling up of business has its own challenges. It's different than the start-up phase, but scaling up is interesting. It's thinking about what things scale well. Ultimately, what scales really well is purpose, values, and behaviors. They are things that [inaudible 00:29:13] an organization. It's deciding whether you are a purpose and values led organization or a rules-based organization. You still have to have rules and processes, don't get me wrong. Everyone has to have that, because at a certain level compliance that you need to meet.
Trent:
But fundamentally, it's about allowing your people to be set up to bring their whole self to work, because that's where the innovation comes from. Innovation comes from people, innovation comes from teams. It's having them empowered to able to do that, where they actually feel some freedom to be able to experiment and some freedom to be able to be innovative. I think that ultimately it comes down to how you treat and engage your people is where that innovation comes from.
Trent:
I don't think that changes whether you're a start-up, a scale-up, or a corporate, because you look at some of the really amazing, large corporate tech giants, many of them, as well, are still very innovative and they still have... I think, ultimately, it comes down to the culture inside their organization. But focusing on culture by itself is a little bit dangerous. You've got to focus on the things that actually lead to that culture, because culture can be positive or negative. I think it's the purpose and values and behaviors and how you actually operate within those that actually leads to whether you have positive or a negative culture.
Pru:
Incredible. There are so many sage pieces of wisdom in what you just said there. Can you give us an example of how you bring that to life on the ground?
Trent:
It's through empowerment. Ultimately, it's empowerment. Do you truly empower your people or not? The great thing about empowerment, with empowerment comes accountability. If you empower your people and they actually understand the accountability that they need to deliver off the back of that, the vast majority of them will pay you every single time. Most people don't go to work to have a bad day. I fundamentally believe that. Yet historically, I think we've set up all these rules and policies in businesses to actually protect you from the very small percentage of people that actually don't want to do the right thing. Whereas the vast majority of people, especially in a professional environment, want to do the right thing and they want to have a great day. You need to set them up for success.
Trent:
I think historically we've focused the wrong way. We've actually focused on the minority that are doing the wrong thing, rather than the majority that want to do the right thing. You set that up in your environment. Then if you have that environment operating well, if you do have some that don't really live up to that expectation, they get filtered out anyhow, naturally.
Pru:
Yeah. Absolutely. I couldn't agree more. I think that just fundamentally as human beings, we want to do a great job.
Trent:
We do.
Pru:
Whether that's in our workplace or whether it's washing the dishes or whatever it is. We fundamentally... We like to do things well.
Trent:
We want accolade. We strive it. We thrive on it. We actually want it. We want to feel like we've done a great job and we actually want someone to recognize that we've done a great job. I think that's ingrained in us as humans. One of our core values, we've got five values inside Xero, and one of them is actually is human, that's actually one of our values. As a digital online company, it's actually my favorite one is that actually making sure whatever we do is very human orientated, we actually have a real view to make sure what impact this will have on people.
Pru:
I love that. I love that. Now, one final thing on internal people and culture here is that I know that you've spoken before about empowering your employees to go above and beyond for your customers. Can you give us maybe an example of that or how that plays out in the real world?
Trent:
Well, I think it's about giving them the opportunity to actually speak up and have a platform to speak. There's no bad ideas, necessarily. You maybe can't do everything all the time that you'd want to do, and so you've always got to make choices. That's part of running a business. It's having the ability for people to be able to stand up for what they believe in. Some people will feel comfortable being able to do that and owning it. Some people may not.
Trent:
We use a tool internally called Officevibe, which we've used... I think we learnt it just after I started, actually. We've had for a long time, so getting close to seven years now, where part of that is actually measuring the health and wellbeing of our people, but at an aggregated view. But it also allows them to actually give us feedback. They can either own it and put their name to it or they can do it anonymously, but it actually allows them to actually have a voice as well. That's one of the things I read every single day, making sure that we're actually getting that feedback as well. Because we always think everyone tries to do the right thing by their customers. You can't always get it right 100% of the time. You just can't. But I think the key thing is being aware of that and being open to getting that feedback, so really encouraging our people to give us that feedback.
Trent:
The same goes with our customers as well, has been making sure that we're very open to their feedback as well, engaging with them on social when we need to. We've got online community groups for our accountants and bookkeepers who actively support each other in that also. But also they give us feedback on the good, the bad, and the ugly, because we don't always get it right. When you don't get it right, that's a learning opportunity to actually try and get it right.
Pru:
Yeah. And I think that this is what Xero does get right. It's modern day business. It's a conversation. It's not, "We're the business. You're the customers," it's opening up all the channels of communication internally and externally and coming full circle, I guess, back to where we started with the interview, which is having that people-centered approach broadly across the business.
Trent:
I think that's definitely the intent. One of the things I'm really passionate about is trying to create the organization that I think most organizations should be in the future, and the kind of organization I tell my children to work in. That's something I've been pretty passionate about. I know that makes it very personal. It's not just about my children, of course, but I think if you take that very personal view... I want them to work in an environment where they can truly bring their whole selves to work, not just their best self.
Trent:
I think, if I look back early in my career, I almost had two personas. I hate talking about myself in the third person, but I had work Trent and home Trent. If I'm honest, I didn't really like work Trent very much. I had to spend a lot of time probably being somewhere I really wasn't probably aligned in values that I didn't truly believe in. I think, if anything, I probably wasn't having a good time, and yet I think the environment I was working in, or the company I was working for, probably wasn't getting the best value out of me either, because I actually wasn't bringing my whole self to work. When you can do that, that's when you end up with a truly diverse and inclusive environment.
Pru:
Yeah. Absolutely. When people are able to bring their whole selves to work, the good, the bad, the vulnerable... Not that that's bad... but the vulnerable, I think that's where it then allows the, I guess, the walls to come down. That's where true creativity emerges from.
Trent:
It's true creativity, but it's also, you've got to remember who your customers are. We are building product, selling product, supporting product, and marketing product to small businesses who, by their very nature, are very diverse. There's nothing more diverse than the business worlds in small business. If we don't have a diverse and inclusive environment internally, we can't support our customers.
Pru:
Sage words, Trent. Very sage words there. I guess a question, and I don't ask all my guests this, but it comes to mind right now, I'd like to know what are you most proud of so far?
Trent:
What am I most proud of? So a couple of things. I think probably the thing I'm most proud of... Clearly I didn't start Xero, I mentioned that a number of times now, so won't take credit for that. But I think one of the things I'm most proud of that Xero has done is it's proven you can build a global tech company from this part of the world and there's actually not that many of them, really, at scale. Really you hear about the likes of Atlassian. You hear about the likes of Xero. There are some others coming through, but not many of them get to scale in a true global sense.
Trent:
Why is that important? Well, why do I think it's important? It's because we're actually building product here. We make things locally. We're actually building, making, and exporting product, which I think that's something I'm really passionate about. That's creating amazing job opportunities for the next generation coming through. I actually read an article yesterday by Mike Cannon-Brookes from Atlassian. He actually mentioned something very similar to that, that it wasn't just Atlassian, it was actually all the people that have gone through the Atlassian workforce that may not be there anymore, but they're actually spawning off and creating new opportunities across the Australian landscape. That's actually really cool, because it's not just Atlassian per se, or Xero per se, it's actually all the people who've gone through that that are now going out and creating those next generation businesses. They're the ones that our kids will be employed in. That's probably the thing I'm most proud and passionate of. Oh, and we made [inaudible 00:38:03] as well.
Pru:
Indeed you did. And that's really exciting. I hadn't thought about it like that before, but, in terms of legacy, which you don't know what you're creating until you see it play out into the future generations, but it really is changing the landscape of what the Australian business world can look like.
Trent:
Yeah, correct, correct. And there's no reason... Australia is a great country. Why wouldn't you want to live here? Why wouldn't you want to create here? It's an awesome place to be. If you look right now, Australia, there's a lot of unfortunate things going on around the world at the moment and it's a bit depressing reading the papers and I feel for those people impacted in various parts around the world, but Australia's a great place to be right now.
Pru:
It really is.
Trent:
[crosstalk 00:38:39] I think the opportunity for Australia in the next little period of time is significant. There's a significant opportunity. There's an opportunity for us to really pivot and look at what we want Australia to be going forward and get some really clear leadership behind that. I think this can be even better than it is today.
Pru:
I absolutely agree. I think coming out of Covid where we've had this shake up, we've had to look at things, we've had to drop the stuff that wasn't serving us anymore, some people have had to pivot or to innovate or to get more familiar with technology systems, and now this... Other than New Zealand, Australia and New Zealand, there's no other place I'd rather be in the world. I agree with you. I think we've got this golden slice of time where, if people are willing to really back themselves and get behind it, the gates are open.
Trent:
Yeah. I completely agree. We've still got some hard times we've got to get through, but we are in a much better positions than many other countries around the world. It's a great opportunity for us to really strive to take advantage of that.
Pru:
Yeah. I agree. Trent, it has been wonderful talking to you today. I could honestly sit here and talk all day about, one, my passion for Xero, clearly, but also what you guys are doing to support small business out there. I think it's changed the game. It's really empowered people. I think true empowerment in small businesses comes from people understanding their numbers and understanding how cash is flowing through their business. No one's made a bigger impact on that than Xero. Thank you to you and the team. But before I do let you go, I'm going to ask you a few questions that we ask all of our One Wild Ride guests here. For you, tea or coffee?
Trent:
Coffee.
Pru:
Great. Fate or free will?
Trent:
Free will.
Pru:
Do you have any kick-ass daily habits in place?
Trent:
I do get up and run every single day or go to the gym, so I'm up every single day. I find that clears my head and makes me think about what I need to achieve that day. So I like to get up and go.
Pru:
Great. Oxygenated blood always fantastic. Now, Covid aside, if you could jump on a plane tomorrow and go anywhere in the world with anyone, where would you go and who would you go with?
Trent:
It would definitely be my family and it would be actually somewhere in Australia. This will sound quite boring, I've actually done a lot of backpacking in my days. I'm pretty prone to South East Queensland, so it would be somewhere up there where the water's a bit warmer.
Pru:
Excellent. Well, if you're up this way, definitely give me a bell. Then finally, who else would you like to see me interview on the podcast?
Trent:
That's an interesting question, but we were lucky to have Bernard Salt come in and have a bit of a chat to us earlier this week. He had an amazing perspective on what a post-Covid world might look like. I'd definitely recommend getting him in, if you can, for a chat. He's got an amazing... One, he was very inspiring, but he had some really good insights into where we might see this thing going. It definitely got us all uplifted and motivated inside Xero.
Pru:
Excellent. I'll definitely reach out to him. Trent, thank you so much for your time today.
Trent:
It's a pleasure. Thank you so much for having me on the show. Enjoyed it.
Pru:
Thank you.