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The Tech Leaders Podcast: Episode #122 - "Practice Makes Progress" with Kate Hayward
Episode Overview In this episode of The Tech Leaders Podcast, host Gareth interviews Kate Hayward, the UK Managing Director at Xero. The conversation dives into various topics, including the role of AI in accounting, essential skills for future accountants, financial literacy challenges in the UK, and the balance between career and family life.
Key Themes and Discussions
- Good Leadership
- Definition of Leadership: Kate emphasizes that consistency is crucial for good leadership. A leader's predictability fosters trust and allows team members to focus on problem-solving rather than managing their leader.
- Leadership Traits: Kate refers to "leadership shadows," where team members learn from consistent behavior, stressing the importance of discipline and habit.
- Career Journey
- Background: Kate’s journey began in accounting due to her family's influence, though she initially pursued a biology degree.
- Experience in Big Four Firms: She shares valuable lessons from her time at Ernst & Young and KPMG, particularly in problem-solving and client relationships.
- Transition to Xero: Kate joined Xero during a transformative phase as the company shifted from founder-led to CEO-led, focusing on global expansion.
- Financial Literacy Challenges in the UK
- Stigma Around Financial Knowledge: Kate discusses the cultural stigma in the UK that prevents individuals from admitting a lack of understanding around financial matters.
- Know Your Numbers Initiative: Xero's effort to improve financial literacy among small business owners is highlighted, aiming to provide accessible financial education.
- AI in Accounting
- AI's Role: Kate believes AI can enhance the work of accountants and bookkeepers by automating repetitive tasks, allowing professionals more time for advisory roles.
- Concerns of Job Loss: Contrary to fears of job losses due to AI, Kate reassures that the demand for accountants and bookkeepers is still high as they adapt to new tools.
- Skills for Future Accountants
- Emphasis on Soft Skills: The next generation of accountants will need strong interpersonal skills to build relationships with clients.
- Critical Thinking and Problem Solving: As automation increases, the ability to critically assess and solve problems will be vital.
- Tech Proficiency: Familiarity with technology, especially AI, will become essential as the landscape of accounting evolves.
- Work-Life Balance
- Managing Career and Family: Kate shares her experience balancing a demanding career with family life, advocating for an environment where women don’t feel pressured to choose one over the other.
- Supportive Work Culture: Discussed the importance of organizations supporting employees through maternity leave and facilitating flexible working arrangements.
Key Takeaways
- Consistency in Leadership: Trust and predictability are foundational for effective leadership.
- Importance of Financial Literacy: Building financial confidence from a young age can empower future generations of entrepreneurs.
- AI as an Enabler: Embracing AI can lead to increased efficiency and deeper client relationships in accounting.
- Evolving Skill Sets: Future accountants must adapt to changing technologies while maintaining strong soft skills and critical thinking abilities.
- Workplace Flexibility: Organizations need to foster environments that support both career advancement and family commitments.
Conclusion The episode concludes with Gareth reflecting on Kate's insights, particularly the importance of financial literacy and the need for a supportive environment for entrepreneurs and small business owners. Kate’s passion for her work and the mission of Xero to improve financial literacy and support small businesses is evident throughout the conversation.
For more insights, visit Xero’s [Know Your Numbers](https://www.bedigitaluk.com/) initiative, which provides free financial literacy resources.
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This episode of The Tech Leaders Podcast shines a light on the dynamic intersection of technology, leadership, and financial literacy, offering valuable perspectives for both established leaders and aspiring professionals in the tech and accounting fields.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:00So I think anything to take away repetitive, more manual tasks that together are really, really important to make sure you've got the right data to make the right decisions. anything that can reduce the time that accountants and bookkeepers have to spend doing that, isn't it for the better?
0:21The backbone of the economy isn't forged by industry giants. It's built by small business, and yet almost half of Britain's small business owners don't even know if they made a profit last month. Today's guest is on a mission to solve that very problem. Kate Hayward is the UK managing director of Xero, one of the world's leading accounting software platforms, supporting millions of entrepreneurs, helping them take control of their finances. Before joining Xero, Kate built her career across three of the big four consultancy firms in both the UK and Australia. And in this episode, we cover the lessons Kate took from her consulting years and how that has shaped her leadership style today.
1:09We also cover why financial literacy in the UK remains such a major blind spot, the likely impact of AI on bookkeeping and the skills the next generation of accountants and fintech entrepreneurs will need to thrive in a world driven by automation and AI agents. This is a really honest, energizing conversation. Kate is so passionate and really gives us loads of insight on the relationship between people and technology. It's a fabulous conversation. This is Kate Haywood.
1:47Kate Haywood, thank you so much for coming on the Tech Leaders podcast. How are you today in sunny Winchester? Well, I'm well, but it is not sunny. It is another rainy day. My two-year-old said to me today, mommy, why are you raining again? And I said, because we live in England. Yeah, try living in Wales. It's that time of year, unfortunately. But look, Kate, thank you so much for joining us. I've been really excited about chatting to you. We are indeed a Zero customer and a big fan of your product. So we were very, very excited that you accepted the invitation to come on. But first of all, let's start with the question we always ask our guests to kick off any interview.
2:26What does good leadership mean to you, Kate? I mean, there's so many traits probably you could put here, but the one that always resonates with me the most is good leadership is being consistent. I always think when you're leading team, when you're leading people, them knowing how you're going to show up day in, day out, that they can trust who you are as a person, how you work, what you need is so helpful, because it means that they're not worried about managing you. They're worried about solving problems for the customers, for whatever work they're doing, whether it's a team. So consistency is always the big thing for me because that cost, I always talk about leadership shadows.
3:01You never know who's in your shadow, who might be watching or who's following you. If you're consistent, your shadow is just really consistent for them. And actually, they might be watching and learning from you in that way. So for me, it's always been about consistency. That's such an accountant thing to say, by the way, but it is absolutely true. So I mean, if you are at the end of the day, you've got to get the respect of your troops. People respect consistency and the key word discipline, because consistency is discipline, isn't it? Consistency is about habit and being habitual. And that is often about discipline.
3:30So it's a brilliant answer. And I thank you so much for sharing that. So for the listeners who are unfamiliar with yourself and possibly zero, can we maybe get a bit of an introduction, certainly in terms of the early days and why you pursued the path that you did? So I am an accountant and I actually became an accountant. I've worked out due to my family background, basically. Your parents' accountants, yeah? No, they're not, which is interesting. So my dad left school at 14 and was a chippy or a carpenter, self-employed. And I remember vividly my mum, must have been monthly whenever she did it, the adding up machines, do you know, that you used to press with the white paper?
4:11She used to do his books every month or whenever it was. Terry, the accountant would come around and mum and dad, that meeting with Terry would be terrifying. Did we do have a good month? Did we not have a good month? Anyway, you can imagine a chippy self-employed dad, the ups and downs of that. So the inconsistencies of that, I remember as a child vividly. My dad actually, very proud of my dad. When he was 40, he actually did his GCSEs A-levels and degree because he didn't want those ups and downs anymore. So he went into construction about health and safety to have basically a salary because he wanted to provide more for us.
4:45So really proud of him. But he taught me, you need to work hard. You need to be educated. If you work really hard, you can be successful and you can be good at anything. He also said one other thing to me, okay, there's two givens in life, death and taxes. So that's how I ended up thinking maybe there's something in accountancy that I want to do. I randomly did a biology degree though, because a family friend was actually a dentist. And I saw they had a nice house and he had a great job. I did work experience for a week and decided it's not for me. I don't want to be looking in people's mouths saying, did you actually study dentistry then or just a generic biology degree?
5:23I did the A-levels to maybe study dentistry. Luckily did my work experience and then just applied and said, I don't want to study accountancy at university. Obviously in the UK, you don't need to do that. So I was like, I actually really enjoyed studying and learning about biology. So I just did that as a degree, but probably knowing I wouldn't end up in a science field. And then classic careers at university, there was Ernst & Young there on careers day. They were saying, you could come and work during the summer here. And the salary of like a summer internship from EY was incredible. So that's where it all started.
5:55But luckily, or unluckily, I don't know. I ended up doing strategy operations M &A. So I became very, not just on the accounts, I became very business focused. And so that's how I worked through some of the big four. I went to Australia and actually met one of the partners at Deloitte. He then ended up in Xero and brought me into Xero. So that's my weaving story of how I've ended up being the MD of Xero from knowing about business, being an accountant, and then family, small business. Absolutely brilliant, brilliant overview. You spent a very formative part of your career at EY, global, you know, big four consultancy firm.
6:32I know you worked at KPMG as well. What did you learn from the big four world that you take into your zero experience? I think there's something brilliant that those programs provide and it's a way to problem solve. So very early on, you're taught, how do you understand a problem? How do you break it down? How do you analyze it? How do you bring that back together? And I think that business side is so relevant to anything you do. And then the other side that they're very, very good at is client relationships. So you learn how to talk to people, how to build trust, how to communicate effectively, but actually have challenging conversations and push people to maybe think differently, which I think is really, really important for any work, just life skills, basically.
7:16Yeah, absolutely. Sorry, you work for Deloitte as well. So you work for all of them pretty much. but interestingly on delight then i was going to ask you about that because i know that was in australia i think kpmg and delight were in australia what was that like then you obviously up sticks and leave why did you go to work in australia and what was what's your memory of that experience now in terms of you growing as a person as a business person what did you get from it so the final chapter of my london career is actually mergers and acquisitions and let's just say, you work hard and you party hard at that stage of your life.
7:50I'd met my partner and we weren't ready to do the let's move out of London and settle down. We wanted a bit more of an adventure. And my brother actually still lives in Australia. And he sent me a picture of him on the Manly Fast Ferry commuting to work as I sent him a picture of me on the Northern line going to work. And I thought something's quite wrong here. Maybe that's somewhere where I could go. So that was the rationale of just trying something new. Obviously having the skill set of being a big four meant we were quite transferable. But I actually quit my job and then left and then got a job there.
8:17And I think all it taught me was it's a really, really long way from home. It was quite scary. I had my brother, but you lose all your friends and you have to start again. But it's also so liberating. It was a great way of life in Australia. Obviously, it's very, it's not raining there most of the time. And so you in Sydney. Yeah. Okay. And I'm quite an active person and throw myself in. So I did the bronze medallion, which is the life savings. So I was a lifesaver on Bondi Beach. I'm not on Bondi Rescue though, unfortunately. And so there was lots of other parts that I put to it. But then from a career perspective, it was really fascinating because Australia is obviously, compared to London, the market felt smaller.
8:55So I got to experience a whole heap of other problems that I was consulting on that maybe in London, you were very, very specific to a sector and a technical line. Whereas Australia, it was kind of could work on anything. So that being thrown in at the deep end to a new country, a new set of problems, even things that you take for granted of cultural aspects or different business problems, even who are the big players that you should know about? It's not your Sainsbury's and your Morrisons, it's your Coles and everything. There's just inherent knowledge that you have to always feel like you're on the back foot.
9:26And how do you go over that? So there was lots of like micro learnings that I had. So yeah, I have phenomenal experience, great friends, great working relationships. This time of year, when it actually gets to about February and I and go, why did we move back? Yeah, I know. So you joined Xero at quite a fascinating time. The company was just scaling globally. Yes. So it was a bit of a risk for you joining a scale up from a very stable, big fall background. Talk us through how that opportunity came about and what type of organization did you go into? So as I kind of alluded to earlier, I met a partner, a Deloitte partner in Australia.
10:05I was moving back to the UK. So I actually was trying to work out what I did next. I love consulting on Australia, but I wasn't sure I wanted to continue doing that in the UK. I was kind of ready to be in a business, seeing how it goes through. It was a little bit fortuitous. As you said, Xero was going through a change. So it was going from being founder-led from Rod Drury over to its first CEO, Steve Vamos. And the Deloitte partner that I with an Australia, Damien Tampling, he took over as Chief Strategy Operations Officer. So it was the first time that Xero globally had had a Chief Strategy Officer.
10:39As you alluded to, it wanted to scale globally and it probably needed a strategic path to do that. So essentially, and this is a big thing that I talk about when we're talking about leadership, there's three things I always look for at work. The first one is really important to me is the people? Do I respect the people? Am I going to learn something? Are they consistent? Do I enjoy spending time with them at the end of the day? You spend five days a week at work for a lot of time. So I want to be around them. So he was the one that actually rang me and said, I need a strategic leader based in the UK because it's one of the key markets and we want them to scale.
11:13The other two bits I look for at work are, does it resonate with me from a values perspective and what they're trying to do? When he actually first contacted me, I was like, Xerox? What do you mean zero? So I don't want to work for a printing company. Why are you going to work for a printing company? Having zero obviously weren't as big in the UK then. And then I looked and I was like, hang on, accounting, tech, and small business. This is like my trifecta of everything that makes sense for me. And then the opportunity I think is the third, like, is it a good business model? Is there opportunity to grow?
11:45They're the three things that I look for. What's really interesting, and it talks a little bit about, I nearly didn't take the role. And the reason I nearly didn't take the role was because I just got married. And I said to Damien, this is a big job. I want to start a family. And he said, okay, good for you. Congratulations. What's that got to do with anything? And I was like, well, I want to take some time out to start a family. He's like, okay, and that is temporary. And this is going to be a multi-year opportunity. And we want your skill sets to do it. So I bring that up just because it's something that's not often talked about of taking leadership positions in high tech growth businesses, when you're often trying to do two very important things in life at the same time, have a family and build that part of your life by building a good career.
12:32So that's how I ended up at Xero. So it was, I say, part luck, good relationships. And then everyone says, yeah, but you also earned the position, which yes, I work hard and it was good. Joining Xero at that time, fascinating. So Gary Turner was the original MD of the UK. Still loved working with Gary and still in contact with him now. Was he the founder, Kate? So Roger was the founder from New Zealand, but he was the founding of the UK business. So he started the UK basically. So when I joined, it was exactly that. It was going from a CEO, founder-led business to a CEO-led business. And I'd say we were going, we're in the gangly teenager stages of everyone was passionate.
13:14There was a real problem to solve. The customers love zero. There was enough scale that there was some defined roles, but it wasn't like heavy process, clear opportunity, definement, clear execution. It was very much, we're going after it and we just keep going. So I took on the global strategy role. And again, from the UK, it was great to see cloud accounting was just at its beginning. And some, you'd still argue it still is today. There's so much opportunity still to go. So I think the risk for me felt worth it because the business model and the opportunity was solid and I believed in it. And we had a really good product.
13:48Like I did my research, the product was good, the customer research was good, and then the people was good. So I felt like it was the accountant in me. It was a risk-based decision, and I thought it was a good one. Yeah, well, it's turned out to be a good one, I suppose, isn't it? And yeah, I mean, that's really so much to unpack there. I think one thing I wanted to, the direction I wanted to go in, though, is that you, obviously, you just seem to essentially get promoted every year or every other year from the global strategy executive GM and now the managing director. Can you talk us through that journey?
14:19How did that happen so quickly? And what is your current role? Okay, so it's a double question again. What do you do as managing director of Xero? So let's start with that. As the managing director of Xero UK, I am responsible for everything that our UK customers experience. So I'm involved in the product development, what we put on into shipping. I'm responsible for our go-to-market. So how we sell to customers, how we market to customers. I'm responsible for the over 650 people in the UK that work for Xero UK. So it really is the cross-functional end-to-end delivery into the UK market. So that's my job in a nutshell.
14:56And then how I got there. So I started with global strategy. And then I actually had the baby. It was very good. And then I came back and we had done a few turns of the strategy and I was quite clear. We were all quite clear what we needed to do. But strategy is only as good as the execution that you are able to deliver. And there was a part of me that was itching to get into delivery. So I actually also wanted to be much more focused on the UK. Having had a baby, sometimes global hours, I wanted to just feel the customer impact. So I took on the director of operations role for UK and EMEA, and that gave me a real sense of how to execute.
15:34So it was still that strategic execution with real operations of the business. I then went and had a second baby, and Xero supported me through that. Oh, congratulations. Thank you. And then on, I came back from maternity, about a month before I came back from maternity leave. We then transitioned to a second CEO. So we'd gone founder to first CEO, to second CEO. our second CEO, Sukinda. She is a global CEO based in Silicon Valley. And her strategy was a refresh, but being very, very prioritized. You may have heard of it, but it's the three by three. And one of those threes was the UK. And her feeling was, it's one of our key markets that we must invest in.
16:11I want a leader to wake up every day to think about the UK. And so I came on maternity leave. I was promoted again to take over country manager of the UK. So that's where the journey was my first P &L of leadership of the UK. I still reported into an MD who had a portfolio of other countries as that kind of support system to not just leave me at the deep end to taking over one of our biggest regions. But I think my strategic mindset, my operations and my commercial mindset, it gave me the skill set. And then being an accountant, loving small businesses, all of that together meant I was an ideal candidate to actually lead the UK.
16:46And then after that, I think I had a year of being the country manager and almost training wheels off. Okay, you're ready. You're the MD. Take on full responsibility for yourself. A crash course then, Kate. A dummy's guide to being a country manager onto an MD. And so, yeah, I got promoted to the managing director role April of this year. So huge thanks to Zero for supporting me to do that. Yeah, that's incredible. It sounds like they've supported you. just, you know, it's very impressive the support they've given you across the board. And one of those things, and this is something that stood out for me when you were talking, is how they supported you through two pregnancies.
17:23And, you know, maybe let's go with this one. So many women do feel, at conversations on this podcast about this a couple of times, many women in leadership roles feel they have to choose between a sort of career progression and starting a family. So what's been your experience? And you've obviously given us a bit of an answer on that already. But what I want to ask is, how can organizations create an environment where women don't feel that tension. So I'm a big believer that the two can exist. I didn't believe it before, but I think having gone through it, I'm quite passionate that we should be able to do it.
17:52The environment that is required, basically open conversations about what that can look like. I think the thing that we sometimes, the way that I've done it, so I actually, again, hired someone that was pregnant. I think the thing that we shouldn't say is you can have it all and you can do it all. You can't do it all and have it all. You can have it all, but you can't do it And I think there's a slight difference there. But would you really want to? You can't do everything for your family all day and do a big job or a medium job all day. You have to balance and you have to prioritize. And I think finding that, and that's true for anyone, whether you're a male or female, that's just life.
18:25You have to work out that balance of what that looks like. Verify that case for sure. I got two daughters, seven and 10. It's tough, it's tough. It is tough. And I think having that, I think individually, you have to work out where your balance is and what you're happy to sacrifice in some ways or prioritize. So someone asked me the other day, do you mind being away from the kids? And I was like, I hate being away from the kids for a long period of time. But if once a week I miss drop off, if I miss drop off and bedtime, I'm okay with that. That doesn't, for six other nights, if I'm there, I'm okay with that balance.
18:54But some people may not be in that's okay. So I think there's a part there where personally, everyone just has to work out where they are. I think then support from a business is having open conversations. So actually, if you want to work flexibly, is that going to work in your role? Some roles, that's just not possible. And that's okay to have the honest conversation. Let's not try and kid ourselves that's required, but are there other things where you're suited and how can we make it work for both sides? I think it is that partnership that you need to have versus all for one or all for the other.
19:21And the big thing I'm a believer in, when people go on maternity leave and come back, treat them as a new starter. Because a year, six months, nine months, especially in high tech growth businesses, things change quickly. And so you come back and you're like i don't know half these people this is growing this is changing and you people forget and then you have this worry that you're not up to speed and you're trying to get up to speed and come back and you so just treat them as a new starter have an onboarding process get them back in i think that's one of the very tactical things that we try and do to really support oh that's cool i've not come across that before but that that totally makes sense i think you know things are improving i think slowly but surely but we do need to get them get this sort of sort of stuff out there so that this progression does sort of proliferate faster because, you know, there are certainly organizations who still stigmatize parenthood a little bit for female leaders more than men, I think, in my opinion.
20:18And I think it's something we do need to work on collectively as a society. I think it's still the same for men. Like, I still think it's really hard if you are a dad and you get the phone call to pick your kids up from school. I still think that's hard yeah i just think it i just had a lot yeah yeah no it is it is the one thing i think with dads is you do sort of almost get told you know well shut up you're just the dad you know you're yeah i got a friend who lives in romania and it's sort of government sort of you know legislation for the parents to have two years paternity leave and maternity leave in one yeah so basically they you get to split it however you like so the woman can take a year then the man can take a year they can take a year together.
21:00Do you know what I mean? As long as it's collectively two years, which I thought is fab, isn't it? That's a really good system. We've got friends in Sweden where the mum takes the first year and then every dad takes 12 to 15 months so that the woman goes back to work. They're not worried about the childcare. So I just think what a great, like there's things like that that I just think are, yeah, incredible. Yeah, absolutely. So on the subject of children, I just remembered as we were talking something that I did read about you, that you are a very keen gymnast. You'll be pleased to know my two daughters are gymnasts as well.
21:31So the question I've got, because I wanted to bring that up, but the question I've got for you is being a gymnast is all about discipline. It's a really difficult sport, you know, very difficult sport for young girls to take on. Yeah, like I said, discipline, hard work. How was being in gymnastics for the early part of your life? Has that shaped you at all in terms of your business outlook? Yes, one for the good and one that I probably have to work on a lot, I would say. I think one for the good. Someone actually said to me yesterday, Kate, I think you've got a time machine. How do you get so much done?
22:02Like, I swear you've got another 24 hours in our 24 hours. And I think having been a gymnast where you train a lot, you work hard, you have to be efficient, effective, and you think about how to break it down. I've got gymnastics, and I've got school, and I've got this, and then I want to see my friends. You get very, very good at being disciplined in that regard the other thing that it teaches you is practice makes progress yeah if you keep practicing it will work if you keep like work really really hard it's similar to the hundred hour concept but i think in gymnastics you literally see it those that are in the gym all the time you do continue to go and that yeah i am like that work if i know something's struggling if i'm struggling if i keep going if i keep i'm just determined i've got that extra gear of the drive to not give up.
22:47I think the thing that it does have though, which I am very aware of now, and I'm so conscious of as my two-year-old started in four-year-olds and I've not taught her in the living room the other day. I'm like, oh no, she's going to be a gymnast. There's a sense of perfectionism with gymnastics that you have to be careful. So you obviously start from your school, then everything's wrong. It's like mark off, mark off, mark off, mark off. So you always feel like you have to be perfect. And I think that's not healthy in business because perfection is the enemy of the good again it's it's about progress it's about learning so you have to flip that on its head which is gymnastics as well because you keep learning you keep trying but yeah the the drive the hard work discipline are all great things i think for business but just that perfectionism is something that i have to yeah because perfection is sometimes paralysis isn't it you know what i mean and done done beats perfect as the old adage i think that's an australian taught me that but yeah i think sometimes you've got to guess if you if you were striving for perfection, it will literally cripple you.
23:45And you'll end up with no end product because you're looking for something that's just unachievable, you know? Well, then I remember my early days as an analyst, I'd obsess over a piece of work until it's perfect. And then I'd hand it in and any red line, I'd be like, I failed. Because at gymnastics, you'd be like, oh, mark off. And that feeling you kind of have to get through of like, actually, no, share early, share progress. Red lines are okay. It's about improving. And I think that mindset is slightly different to gymnastics. Yeah, yeah, for sure. This episode was brought to you by Be Digital.
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25:02The Know Your Numbers initiative. I love that. I don't know an enormous amount about it. We did a bit of research on it. But let me kick off with this. Zero recently, recent research found that nearly 40 % of small business owners don't know whether they were profitable last month. I totally believe that. I would argue it's probably more than 40%. But, you know, some people maybe bend the truth on these things when they're giving you their feedback and more than half avoid their finances altogether. Yeah, that's definitely true. So what do you think is driving this confidence gap among entrepreneurs?
25:34Why is this like this? You know, why do people ignore the numbers so much? I think we have a real issue in the UK, a real stigma about pulling your hand up to say, I don't understand. And why? I think genuinely, where do we get to... That's weird that is though, isn't it? That's absolutely right. We're terrified of making a mistake. The Americans are not like that. Exactly. But I think there's two bits. We have a culture where we're not big risk takers, but we link to that. We would probably take risks if we understood numbers more. But why don't we understand the numbers? Where are we meant to know about numbers?
26:10Where do we get taught about numbers? And if you think about the life cycle of it, in schools, it's probably not taught across all schools. Actually, the Department for Education have got a new curriculum coming out today, and I'm hoping that this comes up more. But it's not embedded in schools with a very practical way. I often say, I love trigonometry. But I mean, did you learn about pensions, compound interest? Did you learn any of those life skills that you need, credit cards, etc? Then there's no entrepreneurial or small business skill set that you're then taught. So you might go to university and learn about being a business owner, you might take an apprenticeship and be very hands on, but where's the apprenticeship for entrepreneurs?
26:48And I think the big thing that we found is underrepresented groups. So whether that's economic deprivation or females, this actually impacts them more. And so we're basically just trying to spark the conversation of shouldn't financial education just be a given across the whole life cycle. And actually, if we did that and people, there was less stigma about not understanding your numbers and you had some of the basics, maybe you'd ask more questions. Maybe you'd understand a bit more. And that's not to belittle or say it's their fault because why should they know if no one teaches them? So essentially zeros know your numbers is free financial literacy content accessible to anyone in snippets to just help to try and spark that conversation to understand the basics of actual financial information.
27:34Financial literacy was non-existent in schools when I was growing up. I understand that it is a little bit now, but it's still very much, it's still very basic, isn't it? I mean, it's just about a profit and loss statement, you know, an income and expenses statement looks like and what interest rates are. I mean, just things like that. I mean, these are more valuable to you as an adult than calculus or algebra ever will be, you know? So it's crazy, isn't it? But how are you seeing this play out? And are you seeing light at the end of the tunnel, Kate? I hope there will be. I think we're just at the start.
28:06We're calling for government to do a bit more. So we're actually working with Small Business Britain on something called the Maple Review, which is looking to identify and dismantle the barriers to entrepreneurship caused by economic deprivation. So we're doing research at the moment of what could that look like. I think financial literacy will be part of that. I think the Know Your Numbers content has gone out. And we've actually also started an ambassadorship program, whereas we know accountants and bookkeepers are brilliant for small businesses. When you've got an accountant or bookkeeper, the success of the small business is amplified.
28:38So we've actually set up a mentorship program where accountants and bookkeepers can support small businesses looking at some of this content to make sure they understand. So we've had a huge number of accountants and bookkeepers sign up for that because they're so willing to help. And so really hoping that we can actually start a bit of a movement to just break down the stigmatism and then get this movement, get people understanding. Because even if it does go into schools, you've got whole generations of small businesses that never had this. So, yeah, I'm excited for what we can start. I think that is just imperative that we see this through because I think it's so important.
29:11It's so ridiculously important. I was chatting to someone about this on the podcast before about you look at the top technology startups and scale-ups that have come out of the Western world in the last 30 years. And, you know, at the very top end, they're all American companies. The only European success story at the top end now, you know, is Spotify. And there's just not enough success stories coming out of the UK. There's entrepreneurialism, there's hubs in London and other parts. there's some good work being done, don't get me wrong, but there just needs to be more, I think, more entrepreneurialism in the UK.
29:49And there needs to be more capital flowing for UK businesses to scale. So I don't know, what's your take on that? 100 % agree. And I think that's the bit of, if you think about the economy, if we got more small businesses, a small percentage of small businesses scaling a little bit more or growing a little bit more, the impact on the economy would be huge. I think the thing that I would touch on here is that in the UK, we have a habit of calling everything a small business. That can be like a one-man solopreneur all the way through to a larger employing business. And they're quite different. And the access to capital is very different.
30:24So that middle set of maybe a bit bigger than a one-person sole trader, access to capital, access to information, knowing what they can get hold of, understanding their numbers, There's a huge gap here. And I think actually for them to understand the stability, the growth potential of their businesses and the support they could get, and then getting access to capital to grow because they're good businesses. I think if we could try and solve that, it'd be great for the small businesses. It would be great for our economy. It'd be great for our communities. I think one thing I always think about is when we talk small business, you're talking about your high streets.
30:55You're talking about your communities. You're talking about the things you will interact with as people every day. How can we support them more? It's not just big business. Small businesses represent a huge part of the economy in the UK yeah they're the backbone and I think what we're proud British people as well yeah I do think it comes back to this this culture of being scared of making mistakes though I honestly think that's the root cause of the lack of entrepreneurialism because and what I mean is is that it's not just you know making being afraid to make a mistake is one thing on a small scale but if you across a lifetime that is the difference between you know taking a risk, leaving your job to set up a business to do something you're passionate about because you're scared of what your family will say.
31:35You're scared of what your friends from school will say. There's an old, it was the old proverb, isn't it? The tall nail gets the hammer or the tall poppy syndrome gets chopped down. And that just sums up British culture towards entrepreneurs. It is changing though, I think. It is changing. And I think on that, it was funny, someone said an American colleague talking about access to capital. And in the UK, you'd be asked, or how many times have you failed or failed? You're a bad candidate in the US. It's how many times have you failed? You haven't failed yet, go away. Like you need to fail three or four times.
32:05Yeah, yeah, it's a badge of honor. Yeah, it's a badge of honor. You've tried, you've failed, you're working hard, you've learned. I just think it's, yeah, I agree with you. Yeah, it's a bit sad, isn't it? So look, Xero is well known for simplifying accounting, I think it's fair to say, which is a very welcome, probably the reason why you guys are very successful. So within the domain of bookkeeping, sorry, How is technology now enabling businesses' owners to make better, more proactive decisions? Do you know what I mean? How are you leveraging technology to help entrepreneurs right now? I think the main basis, again, you've touched on about Xero, it was simplifying recording information in a way that made sense.
32:43So business owners and their advisors could collaborate to understand their business. So that goes from pulling data in from all the different sources of your invoices, your expenses, your bank, bringing it all into one platform, and then bringing the smarts, the automation. I mean, we're going to probably end up talking about AI, but even before the generative AI. Oh, if we have to. If we have to. Before that, the machine learning, the automation, the categorization to simplify things, even bank feeds, being able to have a live bank feed to see transactions in one platform. It's all essentially to bring it in one place in a coherent way.
33:18So you can see the numbers, like we were saying, your profit and loss, your cash flow, to make business decisions together. And I think that's always been, is to make life easier. So people can spend less time doing the boring, not boring, the very important, but more manual jobs and why they don't get into small business so they can spend more time on the business. So that's, we've been doing that for years and we'll continue to do that. Yeah. And that's the perfect segue, I think, into AI, Kate, isn't it? Because AI agents is the next level of this, isn't it? So we did talk a little bit beforehand about AI replacing elements of what a bookkeeper and what an accountant does.
33:53And maybe I said in a bit of a negative tone and you pushed back and said, you see it as a good thing. So let me just get your thoughts on it. Then let me ask you the broad question. Is AI, this is a bit of a bonehead question. AI, is it good for accountants or bad for accountants? Over to you, Kate. I would say it's good. And let me break that down. I think what is AI or what's AI in accounting and bookkeeping? We just spoke about a lot of accounting, some entry part of accounting is data entry. But that is not what accountants and bookkeepers do today. If anyone thinks... Nor do they want to do it.
34:27Nor do they want to. So if anyone thinks that's all they do, they're very wrong, basically. I can't put it any other way. They are the trusted advisor to many, many small businesses. They are their source of truth. They are their support system. That is who they go to. If you think through the COVID period, who were the busiest people that helped small businesses? It was the accountants and bookkeepers. yeah so i think anything to take away repetitive more manual tasks that together are really really important to make sure you've got the right data to make the right decisions anything that can reduce the time that accountants and bookkeepers have to spend doing that isn't it for the better and why have more time to actually analyze that information have more time to have deeper customer relationships with their customers to have more conversations maybe they'll have more time to be like, hey, you've been having a great business for three years.
35:18I also know there's this grant that you could get from the government. Have you thought about growing? Isn't it great and exciting that actually small businesses and accountants and bookkeepers could have more time to have those conversations? And the other bit to this, so I've been on the road recently, we have the Zero Road Shows. And then I was in Cornwall with one of our great accountants and bookkeepers. And he specializes, no coincidence, with a lot of farmers in Cornwall. Do you think any AI agent is going to understand the intricacies of farming in Cornwall versus farming in the Lake District versus a fishery in Wales, that deep customer, you're just never going to build that level of understanding.
35:54And I think this is, again, I go back to the point, every small business is so different. That contextual pieces, all we're trying to do is speed up, automate and help so you can have those very personalized, tailored conversations. So that's my view of AI for accountants and bookkeepers. Yeah, that's a really good answer. Some really good points there. I think it's the nuances that are the thing. You just can't train models to have that level of nuanced thinking. Do you know what I mean? And small businesses are slow nuanced. Yeah, absolutely. Well, most new small businesses, you get the obvious outliers, like where there's a big market like hairdressers and shops and things.
36:33But in the professional services world, for instance, most of the small businesses emerge as very specialist organizations, you know what I mean? That's what we do. We're an IT asset management company in a very specific domain of IT and procurement, you know? So, yeah, I mean, that's knowledge which is really difficult to replicate with technology and agents. So are you seeing any, like, job losses as a result of AI agents taking accountancy-based capabilities off businesses right now? Because, I mean, you know, with these things, you generally do get a lot of job losses. And then you get a net positive, you know, influx of job roles and new careers as a result of the technology, don't you, in previous innovative periods like dot-com boom, for instance, and things like that.
37:22So what are you seeing? So I think if you actually go back to what was happening in the accounting and bookkeeping industry before AI, there was a huge issue with attracting talent. So we know that there'd been a number of people that hadn't been doing accounting qualifications. The industry has never had a sexy, probably isn't the right word, but that attractive, sexy vibes that maybe other industries have. So there'd been a real shortage of talent. And it was something actually worrying the industry. And I think, so how again, do you flip it on the head? Maybe we don't need the large numbers of people coming into the industry that we maybe did before.
37:54So I actually think this is a way to provide leverage to accountants and bookkeepers. We're thinking, how do you have an AI agent? Like you'd have maybe a number of juniors in your staff, but how do you actually continue to make sure that the profession is attractive and bring on new people and junior talent that's actually got different skill sets? So maybe they're AI native, they're tech native, they've got deeper, we talk about it, client relationship skills, that they can actually have a lot more problem solving skills. So I actually think it will be a change to how we think about the profession of what skill sets we need and how you bring talent up and through.
38:29But I don't at the moment, and we can't see anything where people are losing jobs. If anything, there is so much work for them to do. It means they can take on a cast of clients. So it's not as though the work's drying up and they're getting rid of people. It's almost the opposite. They can go out and serve more. So it should make them more profitable if they think about it. It should mean that they can have better relationships with clients, do more advisory type work. So yeah, I'm actually very excited and optimistic about the profession. Yeah, absolutely. So can you talk us through what Xero is doing right now in terms of AI, in terms of helping small businesses and helping accountants work smarter?
39:02Like what are you doing right now and what's on the sort of R &D product roadmap for the future in terms of, particularly interested in agentic AI. I don't know if you're looking at that. So what are you doing and what are you going to be doing for small businesses and accountants? So if you hadn't, Jaxx is just our zero. So we launched that over a year ago, but the first use cases were about small businesses. So it's helping them with things like invoice creation and email. So very much some of those repetitive tasks for small businesses. At XeroCon Brisbane this year, and then our roadshows here in the UK, we spoke a lot more about some of our AI, agentic AI use cases and workflows.
39:39The big one that I think is getting a lot of excitement is AI bank rec. So essentially, bank reconciliation is a key bookkeeping job to be done. And how do you make that work for you? Essentially, we want all of our agentic AI to work for you. So how do you wake up in the morning and you've had 500 reconciliations to do and it's done 400? I think the thing that we're doing differently and that we're getting good feedback on is we're making it very transparent. AI in financial software needs to be safe. It needs to be very trusted. The big thing we know is there is no point doing it if it's wrong.
40:18So it's more hassle to get it wrong than to stop and pause and say, we can't reconcile this because actually it's different to what we've seen before, or it's new, or we don't understand. So I think that's some of the AI that you'll see Xero coming through, that because it's financial information, we're taking a very, very secure and positive way to make sure we're doing it properly. There's a lot more coming through from our accountants and bookkeepers as well. So Xero Partner Hub is what it's called. There'll be a lot of use cases coming through for that. I think the other one that we see and we feel is there's lots of talk about agentic AI and agents doing specific tasks.
40:55One of the things we hear about a lot is how do you bring it all together? So the example I always give is you have to do one workflow, but you've got seven tabs open to do it. You have to go here in Outlook. Then you have to go here to do the report. Then you have to go here to do something else. Story of my life. I have to go to the government website to know which loan. And then I'm like, okay, seven work. And then you open up a new doc to get it done. How do you bring all of that into one place? And I think that's where we're excited to think about financial insights launched into Xero, where you can instantly go to email.
41:25And you're not just my brain, the scattergun brain, like how do you bring that all into one place? So I think it's not just about the AI agents itself. It's actually how do you do the interconnected workflow in one platform so the downtime isn't lost in between. Yeah, that's the really exciting part about Agentic AI is the multi-platform collaboration to achieve a goal. So if I can have an agent sitting in my browser or in my desktop, or even better, that can respond to my email because it can detect what the email is about. It'll know what I'm going to say. And then it also maybe would do social media for me and all other things.
42:04It responds to Teams messages or whatever. but doing it multi-platform that is like the dream isn't it that is the dream that is that capability is there but it's difficult it's not really rolled out to the typical business owner right now is it correct and i think the bit around there's use cases where that's easier and then there's use cases that you have to be careful of like we often say to an accountant please make sure you're not uploading loads of financial information into a generic tool that maybe you haven't got the right security settings for where they so that's the bit that you have to be very careful of in our industry to making sure that it's secure.
42:40Yeah, sure. So let me put you on the spot then in terms of accountants and business advisors in your world, okay? The next generation of accountants and business advisors, what will they need to bring to the table that perhaps wasn't essential 10 years ago? What skills are important going forward for accountants, do you think? The three for me is being able to have good personal soft skills and relationships. that is what they're going to win on. Because I think as doing very, very good financial information, part of that will be easier to do and more automated. So actually being able to connect with your customers, being able to connect with small businesses, being able to build those relationships.
43:18And that's what, when you hear about great accounting and bookkeeping and small business relationships, that's what resonates with them. I think the other one is, and this is something that's always worried me, when you're a junior, you learn the hard graft of how things work, you reconcile things, you do it all. If you don't have to do that in your development or your learning, how are you going to have the oversight skills to test something or to check it? Do you know, you look at something now and you're like, that feels off because you've just got those years of experience. Interestingly, both a lot of the professional bodies have been doing a lot of research on this.
43:52And when they bring together AI and financial learning, they're seeing that the skill sets are still there. So I'm positive that actually with the right education that'll be there but I think critical thinking and problem solving and checking so thinking of your AI agents as like your managers and skipping a few levels almost to be able to you wouldn't put I would say I wouldn't put one of my managers or one of my analysts out in the wild with a really senior client to start with so how do you build that skill set and then the last one is just tech skills like even we talk about this even at zero AI the proliferation of AI is huge a year ago I wasn't really using AI but I think we're all going to multi-generations I think we've got huge difference in generations in the workforce today.
44:32If you think about the different types, that's only going to continue. How do you continue to, for the new people, they're probably going to be better at this than maybe some of the generations we have in the industry now. How are you going to leverage their skill sets and that? So I think they're the three that I would boil it down into. Yeah, I think the last one, I agree with you, by the way, but I think the last one particularly, I think the ability to interact and almost overlay with technology is going to But basically, if you can do that well, then you have a superpower whereby you're an expert in everything.
45:03Do you see what I mean? To a certain point, of course. But yeah, and that comes from good prompting, but also knowing how to get the most out of the model. And crucially, for the model to know about you. So it's got all the context. Do you know what I mean? So I work with a different couple of LLMs, Grok and Claude and stuff like that. But ChatGPT knows more about me than anything else because I've been using it for longer. So it's got all this context. So every answer I get is within the context of what I've told it in a specific box within the settings. If anyone's not seen that, I would recommend you fill that in.
45:41But also it remembers previous threads. So I get everything within the context of what's gone on before. That's unbelievable. I mean, every prompt is significantly shorter. I can voice type a little prompt into it and get a really good answer because it's got all this context on me. That's when it starts adding serious value, doesn't it? But if that was sitting in my desktop and was able to interact with all the different platforms, I mean, that is, again, that's the dream, isn't it? Kate, you strike me as someone who's very organized. Am I right? I try to be. Well, my husband would say not at home.
46:14Are you allowed to be unorganized at home? Well, I'm not, but yeah. But what I want to say, can you just give us some tips in terms of staying organized, staying productive? you're the managing director of a huge UK entity, super busy, two kids. You've got to be organized. You ain't got a choice. How do you stay organized? How do you stay productive? Just little tips, maybe tools, platform. I don't know. How do you do it? How do you manage to pull this off? So I always think you feel from your own cup first. So before I can be organized, there's two things that I need to have, and that's sleep and exercise.
46:49So in my week, those are two things that I don't ever, they have to happen. So they are blocked every week. And they're my non-negotiables. And if something really needs to come in on the top of that, you're going to have to really persuade me. So I think having very, very dedicated time and non-negotiables is really important. I'm then also just quite fastidious in regularly checking, reviewing. I actually, we use Gemini. So Gemini, I've got a gem, which is what Gemini's platform is that goes into my diary. And like, am I spending too much hours on meetings? Is there agendas? I'm no agenda, no attender.
47:23I'm like, what's the meeting for the purpose? So there's very just like small tacks like that. And I've actually note system, I use Notion, because I think it's brilliant. And that helps plug in. So I think it's just being I'm quite routine based, like even with the kids, I do drop off these days, I then on negotiable. So it's just being quite routine, routines help for me. I've always been a routine person. But every month I do go through and I look back, what was a waste of time? What didn't work? And how do I improve? So it's that continuous improvement as well. So that's my last Sunday of the month.
48:00I sit down and go through both work and life. And my husband, we do it together because this is a partnership. There's no way I could do my job without his support. And he is incredible. So we just make sure, like I do at work, look back, look forward. how's it all going so communication on top of all is really important yeah no that's brilliant given you emphasized exercise and sleep i would guess have you got a wearable i have a darman watch though i often worry about my sleep score though i don't know if it gives me more anxiety about sleep score it could get a bit addictive that can't be careful what are you most excited about kate in terms of ai and i'm not talking about accountancy or zero at all i'm talking about general society, business, productivity, whatever, just what do you think is going to be the biggest benefit to you in terms of AI or to society?
48:48So for me, I think if we get it right, and we get it, as we talked about, small businesses are so different. But if we can give it to small businesses in a way that makes sense for them, they are the most time poor. We did a research study that said it's probably about a Wednesday at lunchtime before small businesses actually start doing their proper job because of all the admin. Imagine taking out those two and a half days of admin for small businesses with AI, the productivity gains that we'd have from small businesses and how the economy could bounce back. Like that for me is really exciting.
49:17Like I say, small businesses are the backbone of the economy. If we put them at the front and center, we give them the AI, the education, we make use cases for them. We could be, I'm hoping from a UK British perspective, it's been a tough ride for many small businesses. It's been a tough ride for us as an economy. How do we get that back? So that's actually what excites me about the power of AI. Yeah, what are you most fearful of then? I'm most fearful that we forget small businesses in this. And then we just put in into big businesses that there's not the education support incentives to get small businesses using this.
49:53So they get forgotten and the disparity that already exists between big businesses and small businesses extends. friends looking back now over your career so far and I know you've got a hell of a long way to go Kate but looking back in your armchair now over over the last whatever amount of years you know if you were to have a conversation with your 21 year old self okay what advice would you give to that person knowing what you know now trust your gut with the people that you work with so I had a few jobs where I thought the opportunity sounded brilliant on paper but my gut was like I'm not sure this person, they're not my people, they're not my tribe.
50:29And I took the job and I quickly realized they weren't my tribe. So again, I go back to just trust your gut on the people because they're the people that make you happy. Life to me is about people. Even though I work for a technology company, it will always come back to people. Brilliant advice. And let's finish on this one, Kate. We always ask the guests to give us a little bit of a recommendation in terms of a book or a piece of content, if you're not a reader, that has inspired you recently. Oh, the name of it. There's a recent book. Oh, and I can't remember the name of it. But basically, I'll describe it.
50:58I think it's called The Woman. But essentially, it was about a nurse who went to the Vietnam War. She was a master at that war. And they were the unsung heroes. And they weren't recognized when they came back from the war, even though obviously the American soldiers were. And it just talks to what they did, how they weren't recognized, mental health. It was just a very inspiring book about women and the future they've paved and everything like that. So it was a great read and it's awful that I can't remember the author of it. No, I can help you with that. It's The Woman by Kristin Hanna. Yes. Yes, that was my favourite book so far this last few months.
51:34I'm just quick at Googling things. So yeah, I haven't read it. You haven't read it. Well, I recommend you read it. So is it a fiction book? Fiction book, yeah. Oh, we haven't had many fiction books in this question. So yeah, there's answers to this question. So I think that might be a first. The reason I do fiction books is because I think everyone can say about the latest thing they're reading about AI or tech or whatever. But actually, for me, one of the things I do is I read a fiction book to switch off at night and to actually relate it back to people and humans. So I find that inspiring to think about.
52:06Absolutely. That's a brilliant take on it. Kate, I've so enjoyed this conversation. So what's next for Xero and what kind of exciting stuff have you got coming up in the coming months? Oh, so much coming up. I think XeroCon London will be next year and that's where you'll hear some big announcements, but you'll see us shipping some new exciting product. We've got lots of betas coming out in the next couple of months as well. So if you haven't heard of it, any Xero customers, we have something called the long and the short of it, which will tell you everything that has shipped recently and everything that is going to be shipped in the next quarter.
52:38So if you want to dig into any detail, then I would go there. Fantastic. Kate, thank you so much for joining us on the Tech Leaders podcast. Thank you.
52:51Wow, I really enjoyed that conversation. That was fab. So many bits and bobs to run through there. I think, you know, what stood out, I think, in this conversation was Kate's passion for financial literacy, and especially her belief that it needs to start much earlier, which I totally agree with. She made a brilliant point, actually, about the culture here in the UK. we often avoid saying, I don't understand, or we don't like to admit making a mistake, especially when it comes to money. And I think that that will resonate with a lot of people. But that fear of getting it wrong can really hold people back, not just in business, but in life.
53:29And I think that is a bit of a problem in the UK, is that with just this fear of being vulnerable. I think if we can build financial confidence from a young age, like teaching young people how to manage money, take measured risks, and learn from failure. I think we'll have a generation that's not afraid of the numbers, but empowered by them. And I wouldn't be surprised if that resulted in more entrepreneurs and more entrepreneurship and better entrepreneurs too. And I believe that's part of what the Know Your Numbers initiative and the financial literacy task force is all about. So yeah, but I thought that was absolutely fascinating.
54:02Kate is so passionate. It really came across as such a fascinating individual and Xero are doing great things. So thank you to Kate for coming on and thank you so much for listening. Please don't forget to leave us a review, obviously subscribe, or if you can engage with us in any way, it really helps us grow the podcast and give you more incredible guests like Kate.
54:30This episode was brought to you by Be Digital. Be Digital support leadership teams to optimize cost and get more out of technology investments. BDigital and the team have unrivaled expertise with technology license management and data remediation and are therefore perfectly positioned to help prepare organizations for AI technology capability. And on the last point, BDigital have developed a cutting edge AI readiness assessment, which provides tech leaders with a platform they need to make well-informed decisions about AI adoption strategy in 2024 and beyond. Go to Be Digital UK to find out more and get in touch.
From the publisher
Join us this week for The Tech Leaders Podcast, where Gareth sits down with Kate Hayward, UK Managing Director at Xero. Kate talks about how AI can make life easier for small business owners, the new skills the next generation of accountants will need, and how organisations can manage maternity leave for the benefit of everyone.
On this episode, Kate and Gareth discuss how gymnastics breeds discipline, why Britons are generally lacking in financial literacy, and the three things Kate looks for when starting a new job.
Timestamps:
- Good Leadership and Early Career (1:45)
- Xero – The "Gangly Teenager Phase" (9:00)
- Career or Family, or Both… (13:00)
- Discipline and Gymnastics (20:30)
- Financial Literacy and Entrepreneurship (24:20)
- Xero and AI (31:35)
- New Skills for Accountants (42:30)
- Tips to stay Organised, and Advice for 21-year-old Kate (45:45)
- Hopes and Fears for Future of AI (48:00)
