The Chris Voss Show - The Chris Voss Show Podcast – Larry Diamond, Co-Founder and US CEO of Zip a Leading Financial Services Company

Starting point is 00:00:00 You wanted the best. You've got the best podcast, the hottest podcast in the world. The Chris Voss Show, the preeminent podcast with guests so smart you may experience serious brain bleed. The CEOs, authors, thought leaders, visionaries, and motivators. Get ready, get ready, strap yourself in. Keep your hands, arms, and legs inside the vehicle at all times, because you're about to go on a monster education rollercoaster with your brain. Now, here's your host, Chris Voss. Hi, folks. It's Voss here from thechrisvossshow.com. There you go. That makes it official. Welcome to Big Show, my family and friends. We certainly appreciate you guys because we couldn't ever do it without you if it wasn't for you guys.

Starting point is 00:00:51 You guys are the most wonderful audience in the world. Has anyone ever told you that? Because I try and tell you guys as much as I can. You know, for 15 years, we've been bringing you the smartest people, the CEOs, the billionaires, the White House advisors, governors, congressmembers, U.S. ambassadors, astronauts, TV, Pulitzer Prize winners. Some of the most smartest people from all the top news domains in the world. And when you guys listen, you guys join an elite crowd of people that bask in the Chris Voss Show glow, as we call it. I'm actually ordering some coffee mugs that show that I'm drinking from the Chrisris voss show glow cup so maybe we'll add those to the merch as well uh and all that we

Starting point is 00:01:30 do in inviting you down that road is could you please for the love of god already invite your friends family relatives to the show reach out to people i mean i want you to go door knocking on saturday morning and say hey we're not with the Mormons. We're not with the Seventh Day Adventists. We're with the Chris Voss Show. And we want you to know that if you listen to the Chris Voss Show, you're going to be smarter, brighter. You're going to know so much. You're going to enjoy and bask in the Chris Voss Show glow. And guess what?

Starting point is 00:01:56 There's no membership fees. So there you go. That's all you have to do. So get out there and knock on some doors, people. Stay away from the door signs that say marketers will be shot. Don't do that. Today we have an amazing young man on the show. He's going to be talking to us about his amazing company called Zip.

Starting point is 00:02:15 And we're going to get to know what they do. It's an app where you can pay later where you want. Larry Diamond is the co-founder and US CEO of a leading financial services company called Zip. Larry co-founded Zip with Peter Gray in 2013 with the goal of disrupting the broken credit card model, using technology to create a more accessible and flexible alternative. He's led Zip from a fintech startup to one of the leading digital payment tech companies. And today, Zip is listed as an ASX company with millions of customers globally. Before Zip, he spent 12 years in retail technology and investment banking, where he first

Starting point is 00:02:59 saw the opportunity to digitize financial services with innovative products that bring customers and merchants together uh zip is a leading financial services company offering innovative people center products that provide customers and merchants together they bring them together on a mission to be the first payment choice everywhere and every day zip provides flexible and accessible payment options to customers and is committed to responsible lending and being steered by Zipsters that are experts in retail, finance, and payments. I'm going to be a Zipster. Welcome to the show, Larry. How are you?

Starting point is 00:03:33 I'm doing very well. Thanks for having me, Chris. There you go. And when it says steered by Zipsters, is that your customer base, I guess? No, they're actually the Zip employees. Oh, the Zip employees. Zip employees, the Zip employees. Oh, the Zip employees. Zip employees, the Zipsters. Oh, there you go.

Starting point is 00:03:48 Well, if it pays well, I want to be one. But Zipsters, I like that. So I was walking around the office there going, I'm head chief Zipster. We can give you the role of chief evangelist officer. Oh, there you go. I like that. But I want the Zipster in the title too.

Starting point is 00:04:03 I think that's fun. I think it's fun. So give us your.co.com. Where can people find you on the interwebs to get to know more about you and your company? Yes, we are www.zip.co. There you go. Nice and simple. 2013, you guys have been around for a long time. 10 years, man. Congratulations. Thank you. Thank you. Thank you. I didn't have any gray hair before I started, so it's been quite the journey.

Starting point is 00:04:31 Well, being an entrepreneur, it ages you fast. It's kind of like being an entrepreneur is like, you ever see those analogies they do, the side-by-sides of the presidents, like when they enter office and when they leave, especially when they've been there for eight years? Obama went in, he looked like he was 10, and then he comes out and he looks like he's 100. Those sort of analogies. It's kind of like that, being an entrepreneur.

Starting point is 00:04:52 So give us, in your words, a 30,000 overview of your company and what you guys do. Yeah, look, Zip, Z-I-P, we really want to disrupt the world of financial services. And the product that we have here in America really is a credit card of tomorrow for the customer of tomorrow. You know, we don't believe the banks are doing it right. We believe many customers are caught in the blind spot of the traditional banks, that they're underserved, misjudged. And we feel that we can understand customers a lot better. We're customer centric. And so we give customers credit.

Starting point is 00:05:24 We help them build their profile over time. And ultimately, the long-term plan is we want them to come and bank with us too. But right now we are in the buy now, pay later space. So if you go to the checkout of places like Best Buy, you can spread the cost of those AirPods over two months and provide that flexibility. There you go. And this is probably an important app to have since Black Friday is just down the corner. You want to grab those Black Friday deals, stack them up. I've been doing that with some of my accounts. I'm like, they pay everything down so we have plenty of money to grab up all the Black Friday portal the black friday uh sales so get ready now absolutely through the accounts get ready to hammer down i want millions spent on every black friday deal i

Starting point is 00:06:15 can get uh wow uh so uh these are good i you know i i've used them uh some of your competitors over the thing i'm going to try your guys' service out now. I've downloaded the app. And they're great, especially for, you know, you shop, you see something you want. Maybe you want to put it on a float, you know, where you don't want to spend the cash right away because you're an entrepreneur. You're always juggling cash in different ways. And you're like, hey, I'd rather put some money over here for advertising or stuff. But they're kind of great on the flip to take and do those.

Starting point is 00:06:48 And I really like them. What do you find most customers find appealing? You know, you just triggered for me our first customer. And the story that we like to tell is, as you said, 10 years ago now. So it's been a few years but naomi came through the checkout she was looking to buy this the story we we like to tell is she was going through the checkout around christmas time so coming up to this this time of year and she was looking to buy a bicycle for her son for for christmas uh 300 300 bicycle and at checkout she basically had a couple of options right option one

Starting point is 00:07:26 was she could put on the credit card and get stung with 30 interest after 25 days and she wasn't best pleased to do that her second option was paying from the debit card her bank account but of course as we know christmas is an incredibly busy time shopping for presents for friends and families uh you know purchasing food etc or she could select zip and pay over three months in in equal interest-free installments and so when she selected us for that we we sort of realized we had product market fit and so you know we we see we see the zip solution back to your question really being used from the aspirational you know buy now buy more better, to also the everyday. It really started in the Gen Z and millennial space, but it's really starting to move right up to those even in 40s and so forth who are looking

Starting point is 00:08:18 for the home, for furnishing, and for fitness. There you go. I mean, sometimes people, maybe they're between paychecks. They, you know, they're waiting for that Friday paycheck. There's a purchase, you know, like I've, I've used it for like, I remember one of my favorite coffee places that are coffee from, they ordered this massive 50% off sale. You went all in? I went all in, man. i bought hundreds of dollars for the coffee and because it was it was like a i don't know it's a once a yearling i'm sitting around right now almost a black friday ready to punch that button again because i need more coffee but it took i think i bought like a year's worth of coffee or something but it was 50 off and so i

Starting point is 00:09:01 grabbed it but i i imagine you know people that live paycheck to paycheck, or at least they get their money every two weeks. Unlike us entrepreneurs, we're just like, hey, just give me some money. The least successful ones. Can I come over for dinner? Yeah, sure, anytime. So they basically can grab these deals. If they see something they want, a gift they need to buy for maybe a, what is it, a Christmas thing or something along those lines. You know, everyone sometimes gets squeezed, you know, and you see a deal and you want to grab it and you want to go.

Starting point is 00:09:43 That's why it's smoothing. There you go. So what different services or brands can people use it with? Can they use it with some of the bigger shops like Amazon? Or what are some different ways people can use it? Yeah, so the Zip products over here in the States, we're actually running two major markets, Australia, where I'm actually from, been living here for a year now running the Zip business, and over here in the states we're actually running two major markets australia where i'm actually from been been living here for a year now running the zip business um and and over here in the

Starting point is 00:10:09 states so when you look at america we are in in places like fanatics so you want to go and buy some merchandise buy some tickets um best buy fashion brands like fashion over and sheen but the other beautiful thing about zip is you know we're really trying to be that that credit card of tomorrow is you can use us anywhere so once you download the zip app uh effectively you can split any purchase in in four out there in the wild so even at merchants where zip isn't accepted whether you're going as you said the big the big coffee purchase or or jumping into walmart or any other, you can actually generate a painful, effectively credit card on the fly and use that to shop anywhere. And it was something we pioneered

Starting point is 00:10:50 about six years ago here as the new form factor. And so you can make your own credit card? Like basically you get like a virtual scan that you can use the NFT or NFC? Yeah, NFT. Don't do that. That's coming. that's in the future product roadmaps uh no you're spot on right you generate a virtual card a one-time virtual card for the amount of the purchase so it could be a 200 purchase and allows you to basically spread the cost of that over one or two pay cycles works incredibly well as you said for

Starting point is 00:11:21 people that budget month to month all those that have infrequent income. You might have a side hustle or a gig economy worker and you're getting paid infrequently throughout the month. A tool like Zip really lets you manage and spread the cash flow responsibly over those one or two paychecks. There you go. And I've just been sitting here signing up to the service going through all the different prompts and stuff. So now can it only do four payments system or can you do more payments? So this paying four, which 10 years ago really hadn't been heard of. Customers and many Americans are starting to see it at many, many checkouts. But our mission really is to be the best at delivering short-term credit to America.

Starting point is 00:12:15 Those, I would say, FICO, 670 and below, is about 100 million Americans that we believe are underserved and delivering any short-term credit experience. So paying for is where we are today, but we are looking at how we evolve the product over the next year or two. But paying for really seems to be the mode of choice that customers have gravitated to. It's very easily, you pay every fortnight for about three fortnights and works comfortably over those paychecks there you go there you go so people can't get too over their head they they have to they can keep it kind of nice and clean and and be able to do it very well uh so it'll you guys have a chrome integration uh app i think with it yeah yeah so

Starting point is 00:12:59 we've got a chrome extension we're also integrated into the microsoft edge browser uh you'll you'll see us at at some of those stores that I mentioned earlier. But then again, in the wild, from the app, you can actually shop at any site across America and split any purchase in four. Very, very easy. Wow. That's pretty amazing, man. And so people can do that. I mean, they pay, I guess, a nominal amount of interest for what they would do for that.

Starting point is 00:13:24 Can they pay it off quicker and cut the interest? Absolutely. So we really want to empower customers and provide flexibility. People have gravitated to the pay-in-four because it is set and forget. As you say, we're not encouraging customers to build high balances that incur high revolving interest. It neatly amortizes over those three pay cycles. And so people really tend to use it as an entry product into the world of credit, learning these great habit and preferences. And so we do include features in the app that allow you to pay back

Starting point is 00:13:56 quicker, right? We actually encourage customers to pay back quicker. And the quicker you pay back, that also allows us to say that, all right, you might've come in and got a credit limit of $300, $500. Okay. You've demonstrated really healthy behavior. We can start to increase your internal zip score, which allows you access to more credit. So really focused on those responsible attributes. There you go. I imagine, so with being able to create your own credit card, you can use it virtually anywhere that accepts credit cards. You don't have to have it integrated into different services like Amazon,

Starting point is 00:14:36 Newegg. You can just use the credit card on Amazon or Newegg, et cetera, et cetera. Yeah, spot on, spot on. What's interesting is we actually do work with Amazon in Australia. We've been working there for five years. So if you do go to the checkout in Australia, you will see Zip. But over here, Visa is a key partner of ours. And so a lot of the technology has come such a long way in the last few years

Starting point is 00:14:59 that virtual credit cards allow you to deliver that experience and also really constrain the risk. You never lose the credit card number. You don't exchange personal information with the different merchants and vendors. There you go. And you can just pay in store with the app, order what you want, shop, zip it, check out, and you can get an instant decision with no impact on your credit score so you can see what you can get an instant decision with no impact on your credit score so you can see what you can finance there.

Starting point is 00:15:26 And imagine as people do your loans and pay them back, their ability to maybe borrow more gets better as they build an internal sort of credit with you guys. Yeah. One of the big things for us is FICO is really a key determinant of credit behavior. But we believe that FICO isn't perfect. It has biases in the system. It's based on historical credit data. And so what we found is Zip does use FICO in its underwriting, but we use a range of alternative data assets.

Starting point is 00:15:56 And we actually underwrite every single transaction as it comes through. And so what we learn about customers demonstrates that many, know, many, many, many times a customer, you might have been in a relationship, had a shared bank account, you've split up and your credit file has been impacted. But actually, how are you today? And you're fantastic credit. And so we've been able to demonstrate a real differentiation versus the traditional banks. We process about $350 million a month right now, and our loss rates are very healthy.

Starting point is 00:16:31 So we've been able to demonstrate that we can underwrite customers from FICO 700 all the way down to 500 and null files, but that these customers are paying back. They're great customers, and we give them an internal zip score, which is sort of an internal zip credit score. And the more that you use our product, our services, we get to know you, allows you to build that credit profile over time. There you go. And people can, you know, they can keep from getting in trouble. They split it in four payments. They can pay it off. You know, they can probably match it to, can you choose

Starting point is 00:17:02 what date you want? Like if you want to match it to whenever their paycheck comes every couple of weeks. So we've got a couple of features called the payment date change, which does allow you to shuffle a couple of repayments. We are looking at a lot of new and exciting technologies over the next few years where we incorporate bank transactional data into the Zip app and really allow us to start to work with many other transactions across your spending. For now, it's pretty much the pay biweekly with a couple of flexible date changes. There you go. And then you have an area on your website for how to become a Zip merchant.

Starting point is 00:17:47 So if you're a merchant out there, you're looking to sell stuff, you can use Zip to integrate into your flexible sales platform. In 10 minutes, it says, no APA is required, and you can basically start utilizing the service. You know, when we started Zip 10 years ago, you looked at the e-commerce landscape at

Starting point is 00:18:08 the time. A lot of sites were on bespoke e-commerce platforms, which meant that if you wanted to, we really wanted to sort of democratize the ability for not just big end of town, but also midsize and small firms to be able to offer consumer finance, offer installments, offer credit at the checkout that had only been afforded really to the big end of town. And as these new platforms came online, such as Shopify, BigCommerce, WooCommerce, and Wix, and payment service providers such as Adyen and Stripe became more and more pronounced, we had an ability really to plug in into that infrastructure. And so you can now basically sign up, become a merchant,

Starting point is 00:18:46 and with a couple of clicks of a button, you can effectively activate Zip at the checkout. And so we've seen incredible growth over the last 10 years from the improvements in technology, the improvements in integration. And ultimately, what we're trying to do is remove the complexity and overhead for a merchant of Endor to offer Z it, but even test and experiment with Zip.

Starting point is 00:19:08 Because the data we see are higher average order values, converting browsers into paid customers, and that it's incredibly complementary to other consumer finance options you might have at checkout, right? Private label, credit cards, and other such alternative payment methods. There you go. It's, according to your website, 20% increase in conversion and top-line sales, 80% increase in repeat customer rate, 60% increase in AOV, 20% of all sales processed through Zip. That makes quite a difference on people's website. And I imagine they spend more, right?

Starting point is 00:19:42 Because, like you said, because, you know, they're like, you know, you're like, maybe I'll spend $100 and buy this. And then you're like, well, I can put on a payment program. They got such a great deal or the sale going on or whatever. Let's buy a few more. And then they can take advantage of good deals. And that's easy when I'm after. You give me 50% off, so I'm going to buy it.

Starting point is 00:20:02 Chris Chubb said. Well, I think, you know, the idea that you can buy now, you can buy more and you can buy better. It really plays to all of those different experiences, as you said, where it's the coffee deal, or I want to get a couple of extra outfits for the weekend or buy purchases for the kids for Christmas. And where the magic happens is you're on that product page and you might be looking at the pair of nike maxis and instead of paying 200 right below that price you can see that you can pay 50 times four over over those over those uh coming coming weeks and that's really where all the magic happens and it's sending more customers to the checkout it's sending customers with bigger

Starting point is 00:20:42 baskets and those customers have greater in intent when they go through the checkout. So when all those factors come together, merchants are seeing a really healthy uptick in their sales conversion. There you go. So let's see. They can use it with front-end checkout integration with Magneto 2, BigCommerce, WooCommerce, Salesforce Commerce Cloud, Shopify, and Carhook. I know Shopify is huge for commerce and business with Woo.

Starting point is 00:21:10 And so they can just instantly add a widget if they want to their site and start taking in the dealio. Yeah, there you go. So what have we covered on this service that we want to touch on and tease out to people look i i think i think ultimately think about uh you know think about american population 35 of america uh who really are they they they they tend to skew a little bit younger or a slightly lower FICO. They're caught in the blind spot of financial services. As a merchant, if you're looking to service these customers,

Starting point is 00:21:52 a product like Zip is absolutely exciting for you, and we'd highly encourage you to include it at checkout. And as you sort of touched on, it really is plug and play with all the e-commerce plug-ins and payment service providers. And then equally, you know, for us, the world of financial services is meeting innovation. And I think what you remember is if you go to other countries globally and you look at the share of e-commerce checkout that Buy Now, Pay Later represents in places like the Nordics, 20% of e-commerce is going through buy now pay later and many categories

Starting point is 00:22:26 in in countries like australia have between 30 and 50 of the checkout whether it's fashion footwear and apparel uh represented by buy now pay later the us is still relatively early on the journey 12 have have have come into contact with uh with the buy Pay Later, but it's still only a few percentage points of payment volume. So if you think about what's going to happen over the next few years, a lot of the studies are saying that BNPL volumes are going to triple over the next five years. And so it's going to really become important hygiene at the checkout and customers will end up interacting with these products and services more and more. So it's something to be incredibly mindful of. There you go.

Starting point is 00:23:10 It's definitely an exciting field. I see a lot of different pop-ups now for different stuff when it comes to financing. But this is really cool. So give us your final thoughts and pitch out for people to sign up with the service, whether merchants or consumers, and check it out. Check it out. So look, first of all,

Starting point is 00:23:31 we love customers. Customer first is one of our values. We love feedback. So any customers out there, please send us feedback, the good, the bad, and the ugly, merchants or consumers. We want to hear it. We built this company collaboratively with our customers. We have customer immersion sessions in our studios all the time as we learn and iterate. And going into the busy season, if you are a merchant, our team can sign you up in the next week and really help make this holiday season a real, real strong one.

Starting point is 00:24:00 And partnerships. If anyone out there is in the partnership space as well, we've got a team of about 500 over here in the States and we look at various partnerships with e-commerce, retailers every day of the week. So always open for business. There you go. Well, it's been fun to have you on

Starting point is 00:24:18 and definitely insightful. Great stuff there. Looking through some of our comments here yeah i don't see any of the qualify um all right so thank you very much we really appreciate it larry for coming on the show give us the dot co one more time i think it is yeah www.zip.co or you can head to the app stores and download us today looking forward to welcoming you on board there you go uh thanks to my honest for tuning in uh go to goodreads.com fortune to welcoming you on board. There you go. Thanks, Simonas, for tuning in. Go to goodreads.com,

Starting point is 00:24:47 Forge says Chris Foss, LinkedIn.com, Forge says Chris Foss, YouTube.com, Forge says Chris Foss, and Chris Foss 1 on the tickety-tockety, and then there's the Chris Foss Facebook, which is new,

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The Chris Voss Show - The Chris Voss Show Podcast – Larry Diamond, Co-Founder and US CEO of Zip a Leading Financial Services Company

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