Episode summary
Xero CEO Unafraid of the ‘SaaSpocalypse’ | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · 7 min · Hosts: Carol Massar, Tim Stenovec · Guests: Sukhinder Singh Cassidy
Summary
Sukhinder Singh Cassidy argued that AI is more likely to expand Xero’s market than replace it. She said Xero sits as the system of record for small and medium-sized businesses, so its value is not just software but the data, domain expertise, privacy layer, and translation of powerful AI tools into something SMBs can actually use.
She pushed back on the idea that the recent SaaS selloff means software is dead, saying the market is treating very different software businesses as if they face the same risk. Xero, she said, is building vertical domain LLMs on top of horizontal models from companies like Anthropic, and it uses multiple LLMs behind its own AI technology, Jax. Singh Cassidy said the company’s internal tests showed how quickly AI can build simple workflows, but also how it runs into the need for deeper data integration and product complexity.
She said investors remain supportive and cited early adoption of Xero’s AI features: 300,000 customers using new gen AI features launched in the last year and more than two million using traditional AI over the past 20 years. On the demand side, she described small business activity as durable across Australia, New Zealand, the US and the UK, with Xero seeing signs of return to growth in the southern hemisphere.
Key takeaways
- Singh Cassidy said AI is a net TAM expander for Xero, not an existential threat, because the company owns the data and workflow layer for SMBs.
- She said the recent selloff in SaaS stocks does not distinguish between software businesses with different customer positions and moats.
- Xero is building vertical domain LLMs on top of external models and says its own AI technology, Jax, already supports product use.
- Singh Cassidy said 300,000 customers are using Xero’s new gen AI features and more than two million use its traditional AI.
- She said small businesses remain durable in Australia, New Zealand, the US and the UK despite tariffs and uncertainty.
Notable quotes
“We think for us AI is a net TAM expander including the tools offered by many of the power powerful LLMs”
“we are the system of record. We are the collector of data for the SMBs who work with us”
“I think that AI technology is something we at Zero also take advantage of”
“I like using these tools because I think my job, our job is to understand the power of this technology and harness it, not be afraid of it”
“300,000 of our customers are already using new AI gen AI features we launched within the last year”
How the episode opens
Bloomberg Audio Studios podcasts radio news. — You're listening to Bloomberg Business Week with Carol Masser and Tim Stenc on Bloomberg Radio.
Our next guest in the software space, Sukinder Sincy, CEO of the cloud-based accounting software maker Zero, trades in Australia. Sukinder, welcome back. It's it's nice to have you back on here.
Um, we wanted to start with with everything that's been going on over the past few days. The concern that was really sparked by Anthropics Claude coming out with this tool that allowed legal analysis that for a long time was really the remit of of specialized companies and it got this conversation started. Hey, some of these SAS companies are really at risk some say because of what AI and AI tech can do.
Is your business at risk? We think for us AI is a net TAM expander including the tools offered by many of the power powerful LLMs. Now the question is why?
I think when you think about uh companies like zero, we are the system of record. We are the collector of data for the SMBs who work with us. So it is not just about the software.
It is about the data you provide. It is about your domain expertise in your vertical. It is about your ability to take the power of these tools and translate them for your customer and your customer needs that and of course it's about the trust privacy kind of layer that um I would say the 99% of SMBs in the world who are not builders of technology will look to companies like zero uh to make accessible to them.
So we see an opportunity for TAM expansion in our markets. And when you say TAM expansion, you're talking about total addressable market.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai displacement fears
- saas selloff
- llm adoption
- small business accounting software
- chatgpt impact
Companies and tickers mentioned
- Xero
- Anthropic
- OpenAI
Watch the episode
Watch “Xero CEO Unafraid of the ‘SaaSpocalypse’ | Bloomberg Businessweek” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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