‘This can be bigger’: Xero co-founder Philip Fierlinger upbeat on new venture Upstock

He helped scale Xero into a $17bn cloud accounting behemoth but Xero co-founder Philip Fierlinger thinks his new start-up, Upstock, could be even bigger.

Upstock co-CEO Philip Fierlinger, centre, with founder and director Matt Watson, left, and co-CEO Duncan Ritchie.

He helped scale Xero into a $17bn cloud accounting behemoth but Xero co-founder Philip Fierlinger thinks his new start-up, Upstock, could be even bigger.

Launching in Australia this week thanks to a $NZ6m ($5.5m) capital injection, Mr Fierlinger’s follow-up effort Upstock is a business-to-business online marketplace aiming to digitise ordering for the hospitality and grocery industries, in the same way that Xero digitised manual accounting processes for accountants and small businesses nearly 20 years ago.

Teaming with fellow ex-Xero veteran Duncan Ritchie, who was its chief product officer and serves as Upstock co-CEO, Mr Fierlinger said the pair’s idea is a ‘no-brainer’ for Australian food and grocery businesses.

“When I left Xero I had pretty gnarly burnout, so I needed to take a few years to just kind of decompress,” Mr Fierlinger told The Australian. “I spent a few years doing some investment and advisory work with start-ups. And then a friend of mine who runs a soft drink business came to me with a problem, and said he gets all these orders at random through phone calls, emails and even by fax machine, and it was causing chaos and would cause friction in his relationships with the stores.

“I thought surely it must be a solved problem already, and there must be a solution that already exists, but it turns out that there wasn’t.”

Upstock has racked up 20,000 buyers and 1,000 suppliers on its platform since its New Zealand 2020 launch and has closed a funding round from backers including Icehouse Ventures, Possible Ventures, Sir Stephen Tindall’s K1W1 and NZVC and founders from tech firms including Vend and Campaign Monitor to now expand to Australia.

The platform offers an open marketplace for restaurants, bars and cafes to order from any supplier, and uses a ‘freemium’ model meaning it doesn’t charge upfront setup fees or takes any commission on orders from suppliers.

Upstock co-CEO Philip Fierlinger. Source: Supplied.

Mr Fierlinger said he has taken some key lessons gleaned from scaling up Xero, which have led to what he thinks has been a superior experience in company building with Upstock.

“It’s funny, when we started it, we thought ‘this is just going to be a fraction of Xero’ … Xero is just a monster and this huge enormous thing,” he said.

“And we thought what we were doing with Upstock was quite specialised. But we quickly realised that this opportunity keeps unfolding and expanding, and our customers are ranging from small artisanal producers to now some quite significant players.

“With Xero we made a fundamental shift in making accounting software accessible for regular people. Here the opportunity I’d say is more profound … We’re allowing people to do automated ordering, automated sales, automated invoicing, tools that only the largest multinationals had access to and a tiny fraction of the cost.”

The executive said he is keen to avoid some of the pitfalls that affected Xero’s journey, including its turbulent expansion to the US. Xero quickly took market share across New Zealand, Australia and the UK but has yet to achieve true success in the US market, remaining firmly behind rival Intuit.

“As an American, I was very aware that America is not a single market, it’s not even 50 markets,” Mr Fierlinger said. “It’s actually hundreds and thousands of metro areas, and so you have to really treat it that way and take it with that perspective.

“Xero scaled up to be a massive business very quickly, in actual team size, and that was a different time where you had to build a build a billing system, you had to build user forums, you had to build everything yourself. Now that software is all of the shelf, and you can run much leaner without building a 1000 person company too quickly.

“The other difference is straight out of the gate we have been focused on our values. People think that’s for big businesses or big teams, and that it’s this fluffy thing you put on the walls. No, it’s the operating system of your business, and it’s the rules of engagement, so that when you’re in a crisis you can immediately know the answer.”