‘We had massive headwinds in front of us’

Afterpay boss Nick Molnar has lifted the lid on his company’s torrid time at the start of COVID-19, when its shares dropped by 90 per cent.

Nick Molnar, CEO of Afterpay at Bondi Beach. John Feder/The Australian.

Afterpay chief executive Nick Molnar has lifted the lid on his company‘s torrid time at the start of COVID-19, when its share price dropped 90 per cent in three days.

The buy now, pay later provider was hit hard in the early days of the pandemic sell-off, with co-CEO Anthony Eisen writing a letter to shareholders in March to reassure them of its financial position.

“Due to the dynamic nature of Afterpay’s system and the short duration of our receivables book, we are able to manage losses in real time by identifying them early and modifying risk parameters in the system immediately,” the company said at the time.

Nick Molnar, in a new report on innovation during the COVID-19 pandemic, said that despite the massive setback the tumult ultimately accelerated innovation for his company and allowed it to grow faster than it otherwise would have. Afterpay has since expanded its foray into the US – where it is mulling a listing on the NASDAQ – as well as Europe and Canada.

“We had massive headwinds in front of us,” Mr Molnar said.

“COVID-19 has given us the tailwinds to accelerate investment in our business and double down on our strategy, including global expansion and expansion into new vertical markets.“

Afterpay‘s share price sank as low as below $9 in March 2020, but has since bounced back to be worth around $122, giving the company a market capitalisation of $35.3bn.

The ‘Become 2021’ report from Mastercard and Harvard Business Review Analytic Services, released Tuesday, found almost half of Australian and New Zealand companies – 47 per cent – invested more in innovation than they did before the pandemic.

“That‘s significantly higher than their global peers,” Mastercard vice president Kallan Hogan said in an interview.

“We‘re investing more here globally on innovation versus our global peers, and I think that’s a great sign for Australia and New Zealand.

“Companies like Afterpay have been able to disrupt their industries, but also successfully partnered with the likes of Mastercard to scale quickly and get very close to the customers‘ needs.”

The local report, when compared with Mastercard‘s Global Become 2021 report, also found local organisations lag in a few critical areas, such as measuring the impact of innovation on business performance, and acquiring at least one business for its innovation capabilities in the last three years.

According to Mr Hogan, this gap can be closed by building metrics into their innovation initiatives to ensure accountability, and prioritising acquisitions and partnerships with businesses known for their innovation capabilities.

“As the world continues to emerge from the pandemic’s long shadow, the pace and speed of innovation has brought on new opportunities, but also some challenges,“ Alex Clemente, Managing Director, Harvard Business Review Analytic Services said.

“Many organisations have proven they can be fast, agile, and emerge stronger after whatever next awaits, but there are some gaps in what businesses saw as important and what consumers need during and after the pandemic.

“I believe business and society are now forced to redefine what it means to be innovative. And businesses everywhere should re-evaluate if the new-found velocity and pace of change can be sustained.”