That nicely sums up Larry Diamond’s journey from investment banking to co-founder and chief executive of point-of-sale credit and digital payments fintech Zip Co, one of Australia’s newest “unicorns” after its market value surpassed the hallowed $1 billion mark.
“I spent about seven years working at Macquarie and Deutsche Bank, which was really such an exciting place, particularly Macquarie, you know the culture there was unbelievable,” Diamond, who began his career as an analyst at Pacific Brands following a technology degree, recalls in a podcast with Westpac Wire.
“I learnt a lot, (but) wasn't really enamoured by the culture in some of those later years. And then I really have to thank my former boss who made me redundant, which had that not happened I wouldn't have been here today.”
In the six years since Diamond founded Zip with Peter Gray, the company has grown to around 1.3 million customers and more than 14,000 merchants including major retailers such as Bunnings and Chemist Warehouse. In its most recent quarterly update in April, revenue grew 20 per cent to a record $23m as the “buy now pay later” (BNPL) sector continues its rapid ascent.
Westpac has been along for the ride since 2017 and invested around $50 million in Zip – today representing about 15.8 per cent of the company – as part of a strategy to partner with fintechs amid breakneck changes in technology and consumer preferences. While there’s often discussion about the challenges fintechs have working with banks, Diamond says there’s also several benefits including expertise, experience and credibility.
“I see huge opportunity going ahead, the wheels are starting to move,” he says of Zip and Westpac’s scope. “I think the technology is at a place where it's becoming a lot easier to have these conversations so as that gets better and we can connect more easily I think a lot more opportunity will kind of come out of the relationship.”
Following the past few years of the BNPL space and fintechs more broadly adjusting to greater regulatory scrutiny, Diamond says one of the major developments in coming years will be “Open Banking”, a new government mandated regime under which consumers will have greater access to their financial data from institutions. The federal government’s pilot program for sharing generic product data got underway this month before full rollout slated for February.
“I think it’s going to be huge once that's fully rolled out, ultimately delivering better customer outcomes. The ability for players to kind of harness that, understand the data and drive meaningful insights…I think will be hugely valuable,” he says.
“The ability to offer products quickly and easily in the digital world through all these APIs (application programming interfaces) is going to be very, very fascinating.
“You cannot get past the technology and companies that are winning in market are companies that can test, experiment, ship quickly, get value into the hands of customers very quickly, learn and that feedback cycle.”
Diamond, who admits he’s been far from a serial entrepreneur, says he got drawn to the potential in “disruption of the credit card” when consulting to small business fintech lender Prospa after exiting investment banking. However, he struggled to attract investors until meeting Gray, who had more direct experience in consumer credit, and firming up the idea for Zip.
“At the time both Pete and I had a newborn … we never had an office as well,” Diamond recalls.
“It was very, very chaotic. But I think we both had really good partners that kind of supported us during that phase and we had to have really strong conviction in what we were doing because it was very tough in the beginning.
“No salaries, I was borrowing from some people that I knew just to kind of pay the bills, but because we both had high conviction we were kinda willing to do it.”
Reflecting on Zip’s growth in a short period, Diamond says the co-founders’ shared values of openness and transparency -- along with empowering people -- has assisted the transition from a start-up to a company planning to soon have more than 200 employees.
“I think the culture that we've created which is around the openness and the empowerment and building strong evangelism, I think when you kind of look at all those things that's really permeating,” he says.
“This ability to change, speak openly and adapt, which I think are critical elements for success, seem to have been ingrained in the company and probably are testament to where we are today.”
By Michael Bennet
Editor, Westpac Wire