If there was one sector that suffered the most this year, as interest rates rose and tech companies were sold down, it was. And if one company was at the heart of the market maelstrom, it would have to be Zip Co.
But the 40-year-old is unflappably optimistic. Some might think he’s delusional, but upbeat enthusiasm is part of his schtick. “As a founder, you shouldn’t get into this if you don’t have endurance,” he tells. He’s taking stock with the end of a harrowing year in sight. Despite multifarious challenges, including cutthroat competition and the spectre of regulation, Diamond insists buy now, pay later has a bright future.
Diamond insists the stock price fall is mostly due to macro factors: as the interest rates used to value future income streams increased, future income mathematically became worth less today, and valuations across the tech sector plunged. This was a quality needed in spades after Zip inked a deal to merge with US competitor Sezzle – which offered scale to compete with Afterpay, Affirm and Klarna – on the same day that Russia invaded Ukraine. “That’s when it all changed,” Diamond reflects. Five months later,. Zip has also walked from expansion into Eastern Europe, the Middle East, Africa and Asia, and is finding the exits tough going. “It is not the best time to be selling businesses in the fintech world,” Diamond says.
Diamond says he is under no illusion about markets’ laser-like focus on funding. “Retailers who sell clothing buy the yarn – that is their cost,” he says. “Our goods are money, and if we can’t get money, we don’t have a business model.”