{"id":695507,"date":"2026-05-26T10:54:16","date_gmt":"2026-05-26T10:54:16","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/695507\/"},"modified":"2026-05-26T10:54:16","modified_gmt":"2026-05-26T10:54:16","slug":"xero-ceo-tells-us-why-she-thinks-you-still-cant-clone-her-product-with-free-ai-and-the-tools-she-actually-uses","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/695507\/","title":{"rendered":"Xero CEO tells us why she thinks you still can’t clone her product with free AI (and the tools she actually uses)"},"content":{"rendered":"

Three months after Xero\u2019s Chief Executive Officer first said you couldn\u2019t replicate her platform with cheap AI tools (and after I tried it anyway<\/a>) Sukhinder Singh Cassidy is back with a sharper test on the new Switzer Talking Business podcast.<\/p>\n

Naturally, as the Chief Executive Officer of Xero, she\u2019s got a direct interest in defending the company against the AI panic that has helped to knock the company\u2019s share price from near $200 to around $76. But her case is still the most articulate explanation I\u2019ve heard from any ASX CEO of what large language models can and can\u2019t replace in business software.<\/p>\n

The Claude test, v2<\/p>\n

This time around, Singh Cassidy didn\u2019t just say AI couldn\u2019t easily replicate Xero. She told Peter Switzer blow-by-blow exactly what happened when she tried.<\/p>\n

\u201cI asked Claude to rebuild Xero. So Claude was able to upload my bank statement and was able to give me a profit and loss. But of course, it couldn\u2019t reconcile my transactions. And then I said, no, no, build a Xero competitor. And then it said, well, first you have to go get a bank. Then you will have to get several thousand banks. Then you will have to be able to make an invoice payment.\u201d<\/p>\n

The Xero CEO says all Claude did was produce a checklist of the actual financial-services infrastructure Xero spent two decades building, in the order it would need to be built before it could even start writing the software.<\/p>\n

\u201cClaude directed me to build the infrastructure of Xero in order to build a piece of software on Claude. So the point was not a line of code. The point wasn\u2019t just a shell of a website that says, \u2018hey, I can interpret your profit and loss\u2019.<\/p>\n

\u201cThe point is, and this is the point about Xero, we are a system of record.\u201d<\/p>\n

\u201cWe start with trusted infrastructure. We connect to your banks. We connect to the ATO, we connect to payment rails so you can make payments, receive money, send money on Xero.\u201d<\/p>\n

This is the part where I think we have to agree with her. When I ran my own experiment in February, I asked Claude Code to clone the user-facing features. It did, eventually, after a fashion. What I didn\u2019t ask it to do was clone the regulated banking relationships, the ATO integrations, the payment rails connections, the trust layer that has been built up over twenty years of compliance work. Those things aren\u2019t lines of code. They\u2019re contracts, licences, audited integrations and reputational capital. Free AI can\u2019t conjure those. Paid AI can\u2019t either.<\/p>\n

The AI tools she actually uses<\/p>\n

Singh Cassidy\u2019s broader frame is that the market is treating AI as a single thing rather than asking the harder question of who benefits and who gets hurt.<\/p>\n

\u201cThe market right now is reacting very much to AI indiscriminately. The market is having a hard time distinguishing between which companies are going to be net winners in AI, and which companies that produce software like Xero are going to be hurt by AI. We\u2019re very clearly in the camp that we are AI forward. And more importantly, our customers need us to be AI.\u201d<\/p>\n

The argument here is that there is a real difference between software companies that AI will help and software companies that AI will hurt, and that the market is currently failing to make that distinction at the share-price level. Sukhinder thinks Xero is in the first camp. Her evidence is the company\u2019s own use of Claude for engineering productivity, and the recent commercial partnership between Xero and Anthropic that didn\u2019t exist when she first ran her clone test.<\/p>\n

\u201cAI is there to make things happen. It can\u2019t make everything happen. The job for us at Xero is to take all of the infrastructure we built and take advantage of these magical technologies in ways that are still accurate, auditable, traceable, and use it in combination with all of our infrastructure in our own software.\u201d<\/p>\n

The specific example she gave of using AI day-to-day is a small one but illustrative. She\u2019s built her own agent on Claude that helps her team write in her voice.<\/p>\n

\u201cI have a skill that I\u2019ve built on Claude called Sukhinder Voice, and I give it to my team when they have to write something that they\u2019re trying to use my voice. It gets much closer because I trained an agent. Instead of trying to guess at it, this agent will help you write in my voice.\u201d<\/p>\n

What else we learned<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

AI as a search layer for Xero<\/p>\n

The Xero CEO added that AI is more than just a bolt-on feature. It can become a search layer tool.<\/p>\n

\u201cOne of the reasons we integrate and work with the large language models is also they are a new source of discovery. People are increasingly going to ChatGPT, Gemini and Claude to research accounting software. Why would Xero want to integrate? Because we have a massive focus on acquiring subscribers.\u201d<\/p>\n

How the Melio acquisition is going<\/p>\n

The market sold Xero off when it announced the acquisition of US bill-pay software Melio earlier this year. Singh Cassidy\u2019s case on the podcast is that the deal is performing.<\/p>\n

\u201cThe business when we bought it was growing more than 50 per cent year on year. It continues to do so, by the way, on a run rate close to US$200 million. We bought it to give us a significant step up in the US market, where we are a challenger brand. To give us both sides of the payment job. The combined business, on a pro forma basis, did $570 million in revenue last year. Melio allowed us to grasp another important small business job, attached to the jobs we already do, to be more competitive in the United States. That has propelled us to close to 30 per cent growth in the United States.\u201d<\/p>\n

The acquisition is dilutive to net profit in the short term. Xero has guided the market that Melio will reach breakeven on an exit run rate basis by fiscal 28. Until then, the operating leverage shows up in revenue rather than reported profit.<\/p>\n

How Xero is taking on the US<\/p>\n

The US market is the larger long-term prize for Xero, says Sukhinder. It\u2019s also where the company faces its most formidable competitor in Intuit, the maker of QuickBooks.<\/p>\n

\u201cIntuit is 40 years old and their home market is the United States. Xero is 20 years old, and our home market is Australia and New Zealand. We entered the US market as the challenger brand. When people choose us, they choose us because we are easier to use. Much more of an open platform. You can mix and match the kinds of applications you want to put on it. And number three, value. We are much cheaper than Intuit.\u201d<\/p>\n

Xero has roughly 2 million subscribers in Australia. It has around half a million in the US.<\/p>\n

\u201cWe grew the combined business with Melio, you know, north of 40 per cent, closer to 50 per cent this past year. Even the organic business of Xero alone is now growing north of 30 per cent, even before the addition of Melio. So although we\u2019re smaller, we are mighty.\u201d<\/p>\n

The full interview is available now on the all-new Switzer Talking Business podcast<\/a>.<\/p>\n

This article does not take into account the investment objectives, financial situation or particular needs of any individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances. Before acting on anything we discuss, we strongly recommend you seek the appropriate professional advice.<\/p>\n

\"Luke<\/p>\n

Luke Hopewell<\/a><\/p>\n

Luke Hopewell is Head of Content and Digital Marketing at Associate Global Partners and oversees content strategy for Switzer Daily and Switzer Report. He was previously the head of editorial at Twitter Australia, the editor of cult tech site Gizmodo, launch editor of Business Insider’s Australian edition, with stints various corporates like CBA and Telstra in-between. When he’s not writing, he’s getting outdoors and patting all the nice dogs he meets.<\/p>\n


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