June 25, 2025 • 35 mins
This week on The Business of Tech podcast, we unpack the sixth annual 2degrees Shaping Business Study, a barometer for the mood and ambitions of Kiwi business leaders as we hit the midpoint of 2025.
The headline? Optimism is back, at its highest level since the research began, with more New Zealand companies describing themselves as thriving rather than just surviving.
Optimism on the rise
After years of economic turbulence, the study finds that over half of businesses anticipate revenue growth in the coming year. As Mark Callander, CEO of 2degrees, told me on the podcast, given the “survive to 2025” mantra that coloured our thinking last year, it’s little surprise that 45% of them are feeling more optimistic this year.
“What’s more encouraging is that a lot of those businesses deem themselves to be more productive,” he said.
“Many of them have launched a new product or service in the last 12 months. And again, off the back of that, the intention around investing in business development, sales and marketing is also increasing.
“So, some really positive indicators in terms of the way businesses are feeling. And I think it’s a great outlook to move from surviving to thriving towards the second half of this year.”
Register to download the 2025 2degrees Shaping Business Study.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Welcome to the Business of Tech, brought to you by
Two Degrees, the podcast where we examine the tech related trends,
challenges and opportunities shaping New Zealand's business landscape. I'm your host,
Peter Griffin, and today we're diving into insights from the
sixth annual Two Degrees Shaping Business Study, exploring what's top
of mind for New Zealand businesses right now. This year's
(00:29):
study lands at quite a pivotal moment. After years of uncertainty,
business optimism has jumped to its highest level since the
research began. More KEII companies are thriving rather than just surviving,
according to the research, which surveyed over five hundred business
decision makers, and over half of businesses anticipate revenue growth
(00:51):
in the coming year. There's a clear focus on productivity,
innovation and harnessing digital tools like AI to get ahead,
but it's not all smooth sailing. Rising costs, sluggish customer
demand and the ongoing pressure to upskill and digitize remain
front of mind. The big question how in New Zealand's
(01:12):
business leaders planning to turn this optimism into real world
results and what support do they need to get there
to explore what's top of mind for New Zealand businesses
right now. I'm joined this episode by Mark Callender and
Steve Yerkovich. Mark is the CEO of Two Degrees, the
driving force behind the study, and a champion for business
(01:32):
connectivity and innovation. Steve is the chief executive of Kiwibank,
with a front row seat to the financial realities and
ambitions of Kiwi businesses nationwide. We'll explore what's fueling this
newfound optimism, how businesses are tackling cost pressures, the evolving
role of AI and digital skills, the new investment boost,
(01:54):
tax incentive, and what the government and business community can
do to ensure this momentum isn't lost. Whether you're a
startup founder, a seasoned CEO, or just passionate about the
future of New Zealand inc. This episode is your essential
guide to the business mode of twenty twenty five and
the strategies shaping are collective future. So let's get started.
(02:27):
Mike and Steve. Welcome to the Business of Tech. How
are you doing?
Speaker 2 (02:30):
Really good? Thanks Bena, good, Thanks Penner.
Speaker 1 (02:32):
Yeah, so we just got off stage really good event
here at endzed me the launch off the Shaping Business Study,
which is in its sixth iteration. Now, this is around
five hundred business decision makers that you have been surveying
every year. So that's over three and a half thousand
people that you've surveyed and some pretty high times as well.
(02:55):
It really kicked off around the near twenty twenty COVID times.
Speaker 2 (02:58):
So was it just before was it the first one? Yeah,
it was just before.
Speaker 3 (03:02):
And the original intent behind the study originally was to
kind of understand how business were surviving post COVID, So
that was the original nucleus behind it, and then obviously
we've since continued to invest in it to develop a
longitudal study which has been great.
Speaker 1 (03:18):
Yeah, And the headline really is that increase in optimism
that you've identified, which is the strongest since the study began.
So there's a sense that we're pulling out of some
pretty dark times.
Speaker 2 (03:32):
We've turned a corner.
Speaker 1 (03:33):
There are lots of challenges identified, but maybe let's start
with some of the headline stuff that sort of underpends
that optimism. There's more more growth anticipated, there's more appetite
for investment, particularly in technology and AI.
Speaker 3 (03:46):
Yeah, so the optimism, and again some people have been
surprised at the optimism.
Speaker 2 (03:50):
I'm personally not.
Speaker 3 (03:52):
The terminology you know, survived to twenty five was coined
at the end of last year. You know, we're now
midway through twenty twenty five and I think, you know,
things are looking up. You know, as the survey outlined,
forty five percent of businesses are feeling more optimistic than.
Speaker 2 (04:08):
They did last year.
Speaker 3 (04:09):
Again, last year is a pretty tough year, so it's
no surprise to see that bounce. I think what's more
encouraging is a lot of those businesses deem themselves to
be more productive. Many of them have launched a new
product or service in the last twelve months, and again
off the back of that, you know, the intention around
investing in business development, sales and marketing is also increasing.
(04:30):
So some really positive indicators in terms of the way
businesses are feeling, and I think it's a great outlook
to moving from surviving to thriving towards the second half
of this year.
Speaker 1 (04:39):
Has to reflected in your own business two degrees, have
you been thriving in the last year launching new products
and services as well?
Speaker 3 (04:47):
Yeah, so we've been really busy. We're not immune to
some of the challenges like lower household spending. The backdrop
of that is we also see incredible growth across you know,
certain astics of our business. So as large enterprise and
government sectors have looked to save money, you know, as
a value provider, that's where two Degrees steps up really strongly.
(05:09):
They see us as an opportunity to use our productivity
tools such as flex or to save the money through
the telecommunication spend to reinvest in that in other areas
of the business such as AI and other growth initiatives.
So we are thriving again. We've got a great brand,
we've got really good momentum in the market. We're three
years into the merge now, which is coming to an end.
(05:29):
So we're in a really strong position, which is great
for two Degrees.
Speaker 1 (05:32):
In the wider team and Steve at Kiwibank, there's a
lot of talk, for instance, in the primary sector we
just had field days. It was an optimistic tone there.
Farmers are out looking at investing again and plant we've
got investment boost that was announced in the budget. Interest
in your perspective, what you're seeing from a banking perspective,
(05:54):
appetite for taking out loans to invest in business what
are you seeing.
Speaker 4 (06:00):
Well, I think, you know, the Agrey market's in a
pretty good spot. You know, you've got a very very
strong milk price you've got you know, and we're a small,
open economy, so when we're moving stuff to other countries,
you know, we naturally benefit. Interest costs for their borrowing
will be down pretty significantly, you know, two three hundred
basis points or two or three percent for most customers.
So that's you know, that's good news for them.
Speaker 2 (06:20):
What I think.
Speaker 4 (06:21):
The Boost scheme that helps people is when they're on
the cusp of deciding whether they're going to invest or not,
it gives them a little bit more of an incentive
knowing that the you know, the payback, that extra twenty
percent deductibility might be the difference between doing it or not.
You know, they'll have a business plan, they'll be thinking
about what they want to do. That might be the
thing that gets it across the line. And I think
(06:42):
when confidence has been pretty fragile for a while, those
are the sorts of things that sort of add up
to people wanting to take the initiative. We've been in
a bit of a unique position because even though we're
the fifth biggest player in a market that's obviously dominated
by offshore own banks, we've been the fastest growing and
so a sense of enthusiasm and getting out and talking
(07:03):
to customers about you know, what do you want to do,
what do you want to achieve? Is pretty infectious actually,
and I think it's not a complicated strategy by any sense,
but a bit of enthusiasm from the bank are around
what's your goals, what's your dreams? Where do you see
the opportunities? How might you think about automation, how might
you think about investment, how might you think about productivity?
And those sorts of things and investing in that. The
(07:25):
good thing I think about the technology set we're seeing
at the moment is that the payback is much shorter
term and you can sort of see the jobs that
could be maybe tackled by than technology. You know, if
you think about health and safety with robotics and automation
and logistics, much safer, don't make mistakes, don't have a
bad day on the showroom floor or in the warehouse.
(07:47):
So those sorts of things, you know, obviously offer great
payback if you're willing to make the investment up front,
and it's what it's really aimed at, isn't it. It's
the advanced technology that's really going to increase productivity for
your business or your competitiveness. I mean, it's it's applicable
to uts and other things as well. But what advice
(08:07):
are you able to give to your customers about the
types of technologies they should be investing in you as
a as a sort of driver off innovation in this country. Yeah,
I mean, I think there's a few things that strike me.
I mean there are some absolute poster sholds, whether you
know that be Rocket Lab or one of our own.
Speaker 2 (08:25):
Customers down Aerospace.
Speaker 4 (08:27):
You know, you know, driving affordability for space is you know,
huge opportunity. But people can be a bit overwhelmed by
that fact. They sort of think, oh, my business is
not like that, you know, it's not heavy on tech.
But actually almost every business has got an opportunity to
move things forward. And so, you know, when I think
about it, the number one thing I'd say is be
(08:47):
curious and just start getting involved in using it. Kind
of get over yourself if you're worried about, oh, I'm
not a tech person, I'm not a digital person. You know,
what we're seeing here is the ability for techechnology to
do jobs that are you know, repeatable processes. If you've
got decent documentation, can see the tech really tackling those jobs.
And so there is a full spectrum of jobs that
(09:11):
can be tackled by the tech. But their curiosity and
wanting to get involved and really giving it a crack
to understand it, or buddying up with another business that
might be a little bit further ahead, or leaning on
a provider like two Degrees to help you get an
understanding of what's available and learning by doing.
Speaker 2 (09:27):
Is the number one thing I'd say.
Speaker 1 (09:29):
Yeah, that was an interesting thing Mike in the study
around digital skills and a sense of confidence there that
businesses feel are quite well prepared, they have the skills
needed for the transformation that the business needs to go through.
You know, talk to a lot of businesses, education providers,
government don't get that sense of confidence there, but when
they assess themselves they go, yep, we've got it covered.
(09:51):
What's your sense.
Speaker 3 (09:53):
Yeah, So again, I think the really interesting thing with
AI is is it actually can be used by the
man on the street a little and on the street
the fear factor shouldn't be there. It's such an easy
tool to pick up trial error and play with. So
from a technology inspective, AI, you know, we just encourage
everyone to be curious with a technology. I mentioned before
(10:15):
that you know, small business in particular. You know, you
used to the analogies of the small business owner being
the IT manager and the HR manager. You know, AI
is a phenomenal tool and a very cost effective tool
for taking that burden away from a small business. The
really interesting thing that I think came out of the
Shaping Business study that we did this year was the
(10:36):
focus on increased spend on AI as a productivity tool
as opposed to employing people. Yeah, all right, so that
is a big trend. It's been talked about for a
long time. Again, we don't look at AI as a
people replacement. We look at it as a business enhancement.
You get natural productivity through that. But it's really interesting
to see that that, you know, that flavor is now
(10:56):
coming through the study.
Speaker 1 (10:58):
It's so interesting because Tells Truth has just said they
expect to have a smaller workforce in five years to
im BT whatever it's called now similar sort of things.
So we're starting the narrative starting to shift from it
sort of it will work in tandem with you to
Actually there will be a reduction in overall headcount in
some organizations, but the people who remain will have much
(11:18):
more fulfilling jobs.
Speaker 2 (11:20):
And it's the.
Speaker 3 (11:21):
Type of roles that will be confected, so it should
enhance a lot of roles. It should enhance a lot
of businesses. There will naturally be some roles that won't
be around in five years time as a result of it.
We talked a lot around the education with AI. So
if you want an organization to embrace embrace AI to
be more highly productive and more innovative, you can't start
with we're going to take head count out. So you've
(11:44):
got to get the settings and the incentives right to
embrace new technology. And again that's the journey we're on
at two degrees. And we looked on embedded and kind
of all of our tools and all of our behaviors
across the businesses as much around behavior and education changes.
We put the technology into our call centers, did all
the call translation and did all the summary note codes,
but at the end of the call, everyone was reviewing all.
Speaker 2 (12:05):
The note codes.
Speaker 3 (12:07):
So you have to create the right behaviors and the
cultural settings to get the gains out of any technology.
Speaker 1 (12:13):
You've both been in North America recently looking at the
rise of agentic AI. So this is moving from the
likes of Chat GP, This is moving from the likes
of Chat, GPT and copilot, which is actually according to study,
thirty two percent of businesses are using from seventeen percent
in the previous year. So that's good. This stuff is accessible,
it's relatively cheap. But the next wave is so called
(12:36):
agentic AI. Steve took us through that transition from these
sort of information based generative systems through AI that actually
can make decisions on your behalf.
Speaker 4 (12:48):
Yeah, I mean what really struck me was, as I
mentioned earlier when we were having the breakfast, was what
really struck me was the speed. So four or five
months ago, I was with a group of chief excs
X through our partner Visa, and they were showcasing you
know what they were basically calling, you know, the the
(13:08):
dawn of agentic commerce. And to be fair, that was
the first time i'd heard the term, not the first
time i'd heard about agents, not the first time i'd
heard about you know, large language models or large research
models doing jobs. But roll that forward five months and
arriving in San Francisco. You know, billboards talking about the
lowest cost, low code agents to help your business thrive.
(13:32):
And so one thing I'd say, you know, I'm not
an advertising expert, but when people start putting up billboards
above the line to showcase what they've got to sell,
that's moved really fast. And that was the real thing
that struck me that it had gone from sort of
interesting idea, let to showcase it to actually massive companies
like Salesforce, you know, talking to them, you know, some
(13:54):
of the largest and most valuable market cap companies in
the world, saying you know, here are the jobs that
are being tackled by these agents, and mark touched on
in the breakfast as well as you know, it's very
likely you'll see a suite of agents because the cost
of the agents doing the work can be optimized by
very specialist agents doing a particular part of the job.
So you can see, just like you're do in your
(14:15):
own workplace. Now, you know, you might need three or
four people that are experts in areas to come back
to give you the answer you're after, because, like most
decent problems, not one person can solve them. So seeing
the agents being able to gather the policy, seeing them
be able to understand the trend, seeing them be able
to action what the plan looks like, you know, document it,
follow it up, explore things that might not be documented
(14:37):
as it sort of blows your mind when you think
about the number of things across your organization where people
are grinding away to try and find the latest version
of something or produce something, or the hours that go
into producing PowerPoint decks and those sorts of things where
that time could be spent on much more interesting, more
complex problems than producing that stuff. So that feels like
(14:58):
a really big shift to me.
Speaker 1 (14:59):
Yeah, at QUI Bankers, is that where you are sort
of at with your own use of AI at the
moment that real productivity play or are you starting to
experiment with AI for financial services for dispensing financial advice
for instance?
Speaker 4 (15:13):
Here, No, we're not in the robo advice, that's what
it's normally described at. What we are at is we've
seen huge gains and we've got an international award much
like Mark talked on in the call center, which is
in our business banking center. So if you think about
tens of thousands of small business owners that have a
lot of stuff that they need doing, don't have a
lot of spare time bringing into our contact center to
talk to our business bankers about the job that they
(15:33):
need fixing. The technology platform we use is able to
understand what the question is that people are really trying
to solve, because often customers will explain an issue but
it's not really the problem they're trying to solve. But
being able to understand what that sentiment is and route
them to the right bank or at the right time
saved us heaps and heaps of time. And I think
(15:54):
about this technology being grateful team and grateful customer. So
the bank has got the right call at the right
time and less agitated when they had to answer the question.
They've also got better information and able to push back
and give better answers. So we're really at the early
edge of utilizing the vendor AI. So our lending platform
(16:14):
is one of the world leading lending platforms that will
make a credit decision for you. So it's a job
that's been done in the bank, but if you think
about an agent doing that job, you know they always
get it right. They don't have a bad day at
the office. They're not feeling tired or grumpy. They're always
doing that job. And so if you can tune that,
you can get big benefits. But we are not out
doing experiments or proof of concepts. We are much more
(16:36):
about a pathway to production. How do we get that
to help our customers and help our team. So we're
absolutely not at the cutting edge of that, but I've
never been more convinced that we need to go faster.
Speaker 1 (16:46):
Yeah, and you're a big proponent of open banking, and
I see great thing you've done. You've waived the fees
on API interactions that third parties will have to share
customer data. So I guess some of those companies will
be adopting AI. I guess that's innovative, but also some
risk involved in that. You're not taking the risk with
your own customers, but their data might be going to
(17:10):
startups that are a bit more aggressive on AI.
Speaker 4 (17:12):
Yeah, I mean that's right, But I mean I think
what's the counterfactual to that is, Oh, we should charge
people for their own data. We should prevent the competition,
we should pretend that we've got all the answers, and
you know, you look around the financial services world, or
the telco world or whatever it's. You know, there's no
one company that fixes all problems, and I think by
opening it up and embracing it, it'll make us better.
(17:34):
You know, we'll have to run faster and there'll be
a few times where we're not up to speed, and
that's the market. We should learn from that, we should
respond to it, and we should be better. And you know,
we want to grow. So if we want to grow
and you're a small bank at the last stop before Antarctica,
then you've got a partner with people and you can't
do it all yourself.
Speaker 1 (17:52):
Yeah, Mike, it's obviously not all about AI. That was
actually sort of a little bit down the list of
priorities in terms of when it comes to growth in
what businesses are interested in investing in. Websites are actually almost
top of the list, and sales and marketing, So it's
those sort of traditional things that when businesses are looking
towards growing again and bringing in more revenue, it's those
(18:15):
basic things that they're looking to invest in.
Speaker 2 (18:17):
Now, Yeah, one hundred percent.
Speaker 3 (18:19):
Again, it'll be a reflection again of the small business
and meeting business that we've captured in the survey. But
the study certainly shows if you come back to my
earlier point around you know, more than half of the
business of launching your product or service in the last
twelve months. Launching the product or service is one thing,
but how do you get customer eyeballs on it? How
do you sell it? How do you make money? And
(18:40):
that's where I think you've seen the back to basics
when it comes to traditional sales and marketing, social media,
website development and getting it out there. I would add
that to Steve's point, the AIS and all of those
ecosystems as well. So even a small business creating a website.
Speaker 1 (18:57):
Agentic it just does it in seconds.
Speaker 3 (18:59):
Yeah, and I use you know, I've talked about a
AI a lot. I've moved on from you know, twelve
months ago. AI been one of the tools you have
to run and use in your business to being the
tool that is the center of your business. Steve Grade
a great example of the you know, the HR person.
I've seen again a demo of an AGENTIC HR onboarding person.
(19:20):
So when a new employee starts, you know, you've got
the natural things like, you know, the policies, the contracts,
et cetera. But the agenda AI agent can create an
it help just stick it for your laptop, for your
mobile phone, organize the meetings, send to your induction materials.
So again that's enhancing the onboarding experience for new employees
(19:42):
and younger talent. You want to create in a world
that they live in. So again it's getting that balance
right between you know, doing the basics well from a
technology perspective, but also embracing the future of AI.
Speaker 2 (19:52):
And I think as.
Speaker 3 (19:54):
Leaders of businesses, it's it's very early in the hype curve,
but you need that vision and you need that leadership
that Steve talks about to make sure that our business
is going to thrive in the long term. I think
the biggest threat to our businesses is a pure AI startup. Yeah,
we're embracing it and building it into legacy. You got
to think around what does what does the new bank
look like or the new telco look like? In five
(20:16):
years it'll be an AI bank called Yeah. So you
can't ignore the technology.
Speaker 1 (20:21):
And that's why you see the billboards and San Francisco
all about AI because they're genuinely building AI centric organizations
over there. We're bolting it on here at the moment,
but that's the transition we all have to go on
to be competitive as well.
Speaker 3 (20:36):
And if you think around talent and getting the people
we want in our organizations, if you don't have the tools,
the platforms, the mindset, I'll go to an AI startup
because that's the language they used to in the world
they want to live in.
Speaker 1 (20:50):
Yeah, just on the talent. That is one of the
barriers to growth, and that is finding really highly skilled people.
Although when it comes to digital skills, had a lot
of the self reporting from these businesses is that they
feel they've got it covered. What's your sort of stands,
both in your organizations hiring people. What's it like out
(21:11):
there at the moment getting the right sort of talent,
particularly in those highly skilled tech related areas.
Speaker 2 (21:16):
I would actually say it's improved a lot.
Speaker 3 (21:19):
Again, if you look back twelve to eighteen months, the
employment market was very tough. You had challenge is finding
the right talent, the cost of that talent and everything
in between. Now we have a I think we have
a market where again if you position your business properly,
and again it comes back to if you're wanting to
(21:40):
get great young technology and talent in your business. They
want to hear an AI story when they hear me
talk about my business and my team talk about their business.
So again i would describe the market is easier to
get the talent we need, but that doesn't remove the
onus on us to make sure that the environment's right
when they get there.
Speaker 4 (22:00):
Yeah, i'd absolutely echo marx comments. A couple of things
I'd add. One is, for most existing businesses, you've still
got that challenge that Mark talked upon, which is the
transition from the heritage systems to the new. So you
still need an engaged team that's willing to work on
the current state or the historical state and into the
new state. So holding on to decent talent that's helping
(22:23):
us get off that old stack and onto a new
capability is quite a conundrum, right, because you really value
those people when you need them, but you also got
to understand that they want to be future ready as well.
They don't want to be the last one working on
the old system when everyone else has moved to the
new system, so you know there's rotation and making sure
that you're insenting people in the right way. I'm also
(22:45):
super encouraged by the idea that people will come into
those technology jobs without having to have had to do
five ten years of coding. You know, you will see
the technology being able to create huge amounts of the code.
So people are creative people that are got a vision
for what could be achieved, but maybe not the traditional education.
(23:06):
I think the technology can be a real game changer
for them. And we talk a lot about the digital divide,
but I'm very hopeful that, you know, particularly when you
think about the multicultural cities in New Zealand like Auckland,
that the creativity, the flair, you know, that will be
a big step up and when using these tools rather
than having a traditional education that's been advantaged by where
(23:27):
you've been or your access and those sorts of things.
So I'm actually quite positive that there can be a
leap frog for people to jump into roles.
Speaker 3 (23:36):
You know.
Speaker 4 (23:36):
And if you think about a small business owner that
you know would have been overwhelmed by the idea of
organizing an agency to create a website and you know,
all of the kind of jargon that came with it
and all of the mystique to being able to create
something where you know, you're trying to explain what your
business does in your community and why you think should
be people with you business owners will be good at that.
(23:56):
The rest of it will the technology or sort of
mask that complexity of hope in the future.
Speaker 1 (24:00):
Yeah, Like in the wake of COVID, they did Digital Boost,
which was a whole scheme to try and very quickly
get a lot of small businesses online and using Shopify
and things like that to at least keep trading through lockdowns.
That scheme has wound down, but you almost don't need
it anymore because in the agentic world. I used replet
(24:20):
recently to rebuild my entire website and poured overall the
content content.
Speaker 3 (24:25):
You know.
Speaker 1 (24:25):
It costs about the same or a little bit more
than a WordPress website, but it was done literally.
Speaker 2 (24:30):
In a day. Yeah.
Speaker 4 (24:31):
I mean that's a huge advantage, right. That allows you
to work on the getting interesting stories, to build rapport
with people, to understand the trends, not be their grinding
to get a new website up, which is a necessary
evil but not something you probably feel like is a
massive differentiator for you. And I think that's why when
Mark was talking about people revisiting the sort of foundations
like a decent website like you know, moving from conversation
(24:53):
to close, all those sorts of things. I think as
people see what better looks like, hopefully they're chuning themselves
and say, you know, I have to do better than
this because you know, all things being equal, am I
paying a much enough for search optimization?
Speaker 3 (25:06):
You know?
Speaker 4 (25:06):
Am I showing up in these right places for people
when they're making these decisions? And I think, you know,
for those that are listening, you know, just to experiment
a little bit with you know.
Speaker 2 (25:14):
You pick your tool.
Speaker 4 (25:15):
But for one I use as perplexity, going too perplexity
and ask it to give you I'm going to Wellington
for three days, you know, give me accommodations and places
to eat out and interesting things to do. The answer
you get back is so much richer and so much
more contextual than Google. With all due respect to Google,
will be you know, a list of paid ads telling
(25:35):
you about you know, you can stay here, you can
do this now. Obviously they're trying to tweak with Gemini
and give a little bit more context to the ads
that they're serving. But it's a very different world where
you can get back and itinery that tells you interesting
things to do. You can tune it for your budget.
You can do all those things if that's the one
thing you try. For me, that was a massive eye
opener around the richness and the context that it can
(25:57):
be generated through really simple prompting, really simple conversation, which
is actually, you know, I've got a medium budget. That's
the sort of language you can use and it will
tune back a really good answer for you, and that's
a game changer.
Speaker 1 (26:09):
The flip side of that as a business, and I
think this explains some of the growth and investment and websites,
is you need to optimize your content to end up
in that perplexity result or in AI overviews on Google.
You have to give more explanatory information Q and as
things that the algorithm is going to pick up and go.
(26:29):
This is actually useful information, experiential stuff. That's why I
redd it is so popular for training these models, because
there's lots of people giving advice, so that's a big factor.
Even down in this part of the world. Mark the
study has always been a good barometer off some of
the macro stuff, and I guess the optimism reflects the
(26:50):
lower interest rates and the lower inflation. However, there are
some challenges remaining particularly around sluggish demand and cost and
you know the majority of businesses are going to put
their prices up in the next year. The most common
increase will be in the eleven to twenty percent band,
although you know a fair chunk of them nearly a
(27:11):
quarter sead potentially forty percent or above. I thought we
were sort of over those big, chunky price increases, but
it seems not.
Speaker 3 (27:19):
Yeah, So the study essentially says there will be fewer
but larger increases. And if I look at the backdrop
of the last twelve months, even from my own business perspective,
of my own personal perspective, you've just got to look
at sectors such as the electricity sector where there have
been you know, significant price increases. You know, to the
(27:41):
extent that impacts their householder is one thing, But when
you have businesses turning off production or reducing and exporters competitiveness,
I think there are some areas where when New Zealand
does have to have a good hard look at kind
of the settings. We have to make sure that those
price increases don't have been going forward.
Speaker 2 (28:01):
So inflation of pressures are there, they are real.
Speaker 3 (28:04):
And again it's how as a small meeting business, you
can navigate that and like I said, try and trying
to absorb some of the cost increases where you can.
But to a point Steve made down says earlier, it's
around not always been about price, and it was encouraging
to hear you know what customers experience when they go
(28:26):
to kiwibank. It's a different type of service. They're getting
something better. That's really encouraging, stuff that pushes things beyond price.
Speaker 1 (28:34):
Now and again, yeah, maybe expand on that of it, Steve,
that was a really good point you made.
Speaker 2 (28:37):
Yeah.
Speaker 4 (28:38):
I mean when you think about what people really value,
and that's his customers, not what we think they value,
but what they say they value is they value know me,
understand me, offer me products that are timely and relevant.
So you tell me what's going on and then get
me fast decisions and so. And then the fifth one
is price. And so what I always sort of say,
you know, prices an issue, it's not that issue. So
(29:01):
then I think it is about Okay, so what do
those customers really want to know? Which is most people
will say when they're shifting from one band to another,
is particularly in businesses. I felt like I was just
a number my relationship. Managers are turning over all the time.
They don't really understand my business. All those sorts of
things can be helped by the tech, but the enthusiasm
(29:21):
of the team member to show up and you know,
and have her excited about trying to win your business
goes a long way. Because I always think about business
owners and people that are leading businesses. You lay awake
at night worrying about what's going on. Can I win
a customer, lose a customer? Can I find the right people?
Speaker 2 (29:37):
You know?
Speaker 4 (29:37):
Is that project going properly? And then to have a
big key service provider like a bank turn up and
just treat you like another number is very jarring. And
so what Mark was saying before about the fundamentals being done, well,
I am still a massive fan of those, and enthusiasm
goes a long way. Understanding your customers goes a long way.
We all pay, you know, a bit more for things
(29:58):
that we value. So if the customer can think about
am I getting value from this provider and what I
want to know about it, whether it be that they're
fighting for fear and wanting to change things like two degrees,
or you know, they're a new Zealand owned business which
is trying to help them rather than Australian owned business.
Speaker 2 (30:14):
You know, we've got to make that real.
Speaker 4 (30:15):
It's got to mean something, not just be enough to
rely on that. Oh they'll come to us because we've
got a good, decent strap line or whatever.
Speaker 3 (30:22):
A good real example from a Turtoris perspective. We you know,
we like to think of ourselves as a software company
and not a sut telling communications company. We've built a
productivity tool called Flex and it's a you know, it's
a phenomenal tool that automates as much as we can
for an end user. So a really simple example, if
you're a business with twenty or thirty staff and you've
(30:43):
got a new starter, you want to order a new phone,
or port a number or turn on international roaming. You
don't have to speak to us to do that anymore.
We're there if you need us. We've built the tools
and the software for you to do it yourself. So
that's where we push productivity back to the businesses to
make a difference and give them time back in their
day versus the traditional model of getting frustrated and trying
(31:04):
to deal with the human on the other end.
Speaker 2 (31:06):
Of the phone. Yeah. Great.
Speaker 1 (31:08):
Just finally, guys, there's a section in the report looking
at what can and should the government be doing to
promote these things productivity growth in the economy. So you know,
the industry wanted, according to the businesses surveyed, wanted some
tax incentives. They seem to have got that in the
budget and investment boost. The R and D tax and
(31:30):
center is there. It's good to see R and D.
Appetite to invest in R and D is up as well.
That's in the report, particularly among the bigger businesses. So
have we got the settings right? Has the government done enough?
Do you think the Prime Minister this week is in
China hustling going for growth as he has been in India.
The primary sect the milk prices are up again, so
(31:52):
they're going to expect bigger payouts in the next year.
Are we doing enough? Has the government done enough? The
government's doing something which is good. So again, if you're
a small to medium business, cash flow is just critical.
So you know, tax relief and tax benefits is certainly
something that we see as a common theme amongst small
(32:13):
to medium business. So the you know, the recent announcements
for that person that was potentially on the fence around
making an investment to putting some money back into the economy.
It's a good step in the right direction. I think again,
all businesses out there will at this point in time
say they need more. But that's always the conundrum. It's
a big one, six billion dollars. It's going to cost
(32:34):
investment boosts. Steve, what do you think it's going to
have a good return on investment? Yeah, I mean I
think it's it's a positive step.
Speaker 4 (32:40):
I mean my view, and Mark's probably got much more
visibility to this than I have in a lot of ways.
But you know, I think that the ask of government
is to get the big settings right. And so if
you think about why electricity is spiky because it's been
difficult to invest in long term and so you know,
if you are switching on and off, whether you can
do gas exploration.
Speaker 2 (33:01):
When investors are.
Speaker 4 (33:02):
Looking around the world where they want to invest, the
fact that things can change on in a very short
cycle is difficult. And so I think cross party around
some of the larger infrastructure and creating an environment where
big investors with lots of capital and deep pockets see
New Zealand as a place that's stable to invest in
(33:22):
is the things that shift things. It's going to be
a huge demand for data centers in hyperscale capability. Have
we got the settings right for it making sure that
this is the number one place that they want to come.
Can we give them the access to the power and
water and things that they need? You know, those are
the things that they're enablers. Smaller medium businesses will get
on with doing their stuff every single day. I think
(33:43):
the business of government is to try and get those
big settings right. It's difficult when there's three year terms
and it's difficult when you can't agree on the big things.
And so hopefully we see parties start to look into
those big shifts that we need in health and infrastructure
and say we're going to take a longer term view
because actually everyone benefits and regardless of which side of
the earlier on, we're better off when we make those
(34:04):
big shifts.
Speaker 3 (34:04):
And we've been doing a lot of work with the
Chamber of Commerce in Auckland obviously around how can we
make Auckland a tech hub all right? Now, again you
come back to fundamental settings you've got to have in
an environment. You've got to have connectivity. You've got to
have technology, it's got to be cost effective, so you
have to get the settings right to meet our ambition
to lift wages in this country, to get foreign investment
(34:27):
in So all of those factors need to be solved
with time. But again it's a it's a spans political systems,
it's a you know, it's a multi decade view that
I think we need to take as a country. But
if we get it right, you know, the opportunity is
areen us.
Speaker 1 (34:49):
That's a wrap for this special episode of the Business
of Tech. A huge thank you to our panelists Mark
Calendar and Steve Yerkovic for their insights and their candor.
Twenty five Shaping Business Study paints a picture of the
business community that's optimistic, ambitious, and ready to innovate, but
also clear eyed about the challenges ahead. If you found
(35:11):
today's discussion valuable, register to download the twenty twenty five
Shaping Business Study using the link in the episode description.
Subscribe to the Business of Tech for more conversations at
the intersection of tech and business on iHeartRadio or your
favorite podcast app. Thanks to two Degrees for carrying on
this important longitudinal study and for their ongoing support of
(35:32):
the podcast over the last one hundred and four episodes,
and finally thanks to you for listening. Here's to a productive,
innovative and optimistic year ahead for New Zealand business. Kakataana
Welcome to the Business of Tech, brought to you by
Two Degrees, the podcast where we examine the tech related trends,
challenges and opportunities shaping New Zealand's business landscape. I'm your host,
Peter Griffin, and today we're diving into insights from the
sixth annual Two Degrees Shaping Business Study, exploring what's top
of mind for New Zealand businesses right now. This year's
(00:29):
study lands at quite a pivotal moment. After years of uncertainty,
business optimism has jumped to its highest level since the
research began. More KEII companies are thriving rather than just surviving,
according to the research, which surveyed over five hundred business
decision makers, and over half of businesses anticipate revenue growth
(00:51):
in the coming year. There's a clear focus on productivity,
innovation and harnessing digital tools like AI to get ahead,
but it's not all smooth sailing. Rising costs, sluggish customer
demand and the ongoing pressure to upskill and digitize remain
front of mind. The big question how in New Zealand's
(01:12):
business leaders planning to turn this optimism into real world
results and what support do they need to get there
to explore what's top of mind for New Zealand businesses
right now. I'm joined this episode by Mark Callender and
Steve Yerkovich. Mark is the CEO of Two Degrees, the
driving force behind the study, and a champion for business
(01:32):
connectivity and innovation. Steve is the chief executive of Kiwibank,
with a front row seat to the financial realities and
ambitions of Kiwi businesses nationwide. We'll explore what's fueling this
newfound optimism, how businesses are tackling cost pressures, the evolving
role of AI and digital skills, the new investment boost,
(01:54):
tax incentive, and what the government and business community can
do to ensure this momentum isn't lost. Whether you're a
startup founder, a seasoned CEO, or just passionate about the
future of New Zealand inc. This episode is your essential
guide to the business mode of twenty twenty five and
the strategies shaping are collective future. So let's get started.
(02:27):
Mike and Steve. Welcome to the Business of Tech. How
are you doing?
Speaker 2 (02:30):
Really good? Thanks Bena, good, Thanks Penner.
Speaker 1 (02:32):
Yeah, so we just got off stage really good event
here at endzed me the launch off the Shaping Business Study,
which is in its sixth iteration. Now, this is around
five hundred business decision makers that you have been surveying
every year. So that's over three and a half thousand
people that you've surveyed and some pretty high times as well.
(02:55):
It really kicked off around the near twenty twenty COVID times.
Speaker 2 (02:58):
So was it just before was it the first one? Yeah,
it was just before.
Speaker 3 (03:02):
And the original intent behind the study originally was to
kind of understand how business were surviving post COVID, So
that was the original nucleus behind it, and then obviously
we've since continued to invest in it to develop a
longitudal study which has been great.
Speaker 1 (03:18):
Yeah, And the headline really is that increase in optimism
that you've identified, which is the strongest since the study began.
So there's a sense that we're pulling out of some
pretty dark times.
Speaker 2 (03:32):
We've turned a corner.
Speaker 1 (03:33):
There are lots of challenges identified, but maybe let's start
with some of the headline stuff that sort of underpends
that optimism. There's more more growth anticipated, there's more appetite
for investment, particularly in technology and AI.
Speaker 3 (03:46):
Yeah, so the optimism, and again some people have been
surprised at the optimism.
Speaker 2 (03:50):
I'm personally not.
Speaker 3 (03:52):
The terminology you know, survived to twenty five was coined
at the end of last year. You know, we're now
midway through twenty twenty five and I think, you know,
things are looking up. You know, as the survey outlined,
forty five percent of businesses are feeling more optimistic than.
Speaker 2 (04:08):
They did last year.
Speaker 3 (04:09):
Again, last year is a pretty tough year, so it's
no surprise to see that bounce. I think what's more
encouraging is a lot of those businesses deem themselves to
be more productive. Many of them have launched a new
product or service in the last twelve months, and again
off the back of that, you know, the intention around
investing in business development, sales and marketing is also increasing.
(04:30):
So some really positive indicators in terms of the way
businesses are feeling, and I think it's a great outlook
to moving from surviving to thriving towards the second half
of this year.
Speaker 1 (04:39):
Has to reflected in your own business two degrees, have
you been thriving in the last year launching new products
and services as well?
Speaker 3 (04:47):
Yeah, so we've been really busy. We're not immune to
some of the challenges like lower household spending. The backdrop
of that is we also see incredible growth across you know,
certain astics of our business. So as large enterprise and
government sectors have looked to save money, you know, as
a value provider, that's where two Degrees steps up really strongly.
(05:09):
They see us as an opportunity to use our productivity
tools such as flex or to save the money through
the telecommunication spend to reinvest in that in other areas
of the business such as AI and other growth initiatives.
So we are thriving again. We've got a great brand,
we've got really good momentum in the market. We're three
years into the merge now, which is coming to an end.
(05:29):
So we're in a really strong position, which is great
for two Degrees.
Speaker 1 (05:32):
In the wider team and Steve at Kiwibank, there's a
lot of talk, for instance, in the primary sector we
just had field days. It was an optimistic tone there.
Farmers are out looking at investing again and plant we've
got investment boost that was announced in the budget. Interest
in your perspective, what you're seeing from a banking perspective,
(05:54):
appetite for taking out loans to invest in business what
are you seeing.
Speaker 4 (06:00):
Well, I think, you know, the Agrey market's in a
pretty good spot. You know, you've got a very very
strong milk price you've got you know, and we're a small,
open economy, so when we're moving stuff to other countries,
you know, we naturally benefit. Interest costs for their borrowing
will be down pretty significantly, you know, two three hundred
basis points or two or three percent for most customers.
So that's you know, that's good news for them.
Speaker 2 (06:20):
What I think.
Speaker 4 (06:21):
The Boost scheme that helps people is when they're on
the cusp of deciding whether they're going to invest or not,
it gives them a little bit more of an incentive
knowing that the you know, the payback, that extra twenty
percent deductibility might be the difference between doing it or not.
You know, they'll have a business plan, they'll be thinking
about what they want to do. That might be the
thing that gets it across the line. And I think
(06:42):
when confidence has been pretty fragile for a while, those
are the sorts of things that sort of add up
to people wanting to take the initiative. We've been in
a bit of a unique position because even though we're
the fifth biggest player in a market that's obviously dominated
by offshore own banks, we've been the fastest growing and
so a sense of enthusiasm and getting out and talking
(07:03):
to customers about you know, what do you want to do,
what do you want to achieve? Is pretty infectious actually,
and I think it's not a complicated strategy by any sense,
but a bit of enthusiasm from the bank are around
what's your goals, what's your dreams? Where do you see
the opportunities? How might you think about automation, how might
you think about investment, how might you think about productivity?
And those sorts of things and investing in that. The
(07:25):
good thing I think about the technology set we're seeing
at the moment is that the payback is much shorter
term and you can sort of see the jobs that
could be maybe tackled by than technology. You know, if
you think about health and safety with robotics and automation
and logistics, much safer, don't make mistakes, don't have a
bad day on the showroom floor or in the warehouse.
(07:47):
So those sorts of things, you know, obviously offer great
payback if you're willing to make the investment up front,
and it's what it's really aimed at, isn't it. It's
the advanced technology that's really going to increase productivity for
your business or your competitiveness. I mean, it's it's applicable
to uts and other things as well. But what advice
(08:07):
are you able to give to your customers about the
types of technologies they should be investing in you as
a as a sort of driver off innovation in this country. Yeah,
I mean, I think there's a few things that strike me.
I mean there are some absolute poster sholds, whether you
know that be Rocket Lab or one of our own.
Speaker 2 (08:25):
Customers down Aerospace.
Speaker 4 (08:27):
You know, you know, driving affordability for space is you know,
huge opportunity. But people can be a bit overwhelmed by
that fact. They sort of think, oh, my business is
not like that, you know, it's not heavy on tech.
But actually almost every business has got an opportunity to
move things forward. And so, you know, when I think
about it, the number one thing I'd say is be
(08:47):
curious and just start getting involved in using it. Kind
of get over yourself if you're worried about, oh, I'm
not a tech person, I'm not a digital person. You know,
what we're seeing here is the ability for techechnology to
do jobs that are you know, repeatable processes. If you've
got decent documentation, can see the tech really tackling those jobs.
And so there is a full spectrum of jobs that
(09:11):
can be tackled by the tech. But their curiosity and
wanting to get involved and really giving it a crack
to understand it, or buddying up with another business that
might be a little bit further ahead, or leaning on
a provider like two Degrees to help you get an
understanding of what's available and learning by doing.
Speaker 2 (09:27):
Is the number one thing I'd say.
Speaker 1 (09:29):
Yeah, that was an interesting thing Mike in the study
around digital skills and a sense of confidence there that
businesses feel are quite well prepared, they have the skills
needed for the transformation that the business needs to go through.
You know, talk to a lot of businesses, education providers,
government don't get that sense of confidence there, but when
they assess themselves they go, yep, we've got it covered.
(09:51):
What's your sense.
Speaker 3 (09:53):
Yeah, So again, I think the really interesting thing with
AI is is it actually can be used by the
man on the street a little and on the street
the fear factor shouldn't be there. It's such an easy
tool to pick up trial error and play with. So
from a technology inspective, AI, you know, we just encourage
everyone to be curious with a technology. I mentioned before
(10:15):
that you know, small business in particular. You know, you
used to the analogies of the small business owner being
the IT manager and the HR manager. You know, AI
is a phenomenal tool and a very cost effective tool
for taking that burden away from a small business. The
really interesting thing that I think came out of the
Shaping Business study that we did this year was the
(10:36):
focus on increased spend on AI as a productivity tool
as opposed to employing people. Yeah, all right, so that
is a big trend. It's been talked about for a
long time. Again, we don't look at AI as a
people replacement. We look at it as a business enhancement.
You get natural productivity through that. But it's really interesting
to see that that, you know, that flavor is now
(10:56):
coming through the study.
Speaker 1 (10:58):
It's so interesting because Tells Truth has just said they
expect to have a smaller workforce in five years to
im BT whatever it's called now similar sort of things.
So we're starting the narrative starting to shift from it
sort of it will work in tandem with you to
Actually there will be a reduction in overall headcount in
some organizations, but the people who remain will have much
(11:18):
more fulfilling jobs.
Speaker 2 (11:20):
And it's the.
Speaker 3 (11:21):
Type of roles that will be confected, so it should
enhance a lot of roles. It should enhance a lot
of businesses. There will naturally be some roles that won't
be around in five years time as a result of it.
We talked a lot around the education with AI. So
if you want an organization to embrace embrace AI to
be more highly productive and more innovative, you can't start
with we're going to take head count out. So you've
(11:44):
got to get the settings and the incentives right to
embrace new technology. And again that's the journey we're on
at two degrees. And we looked on embedded and kind
of all of our tools and all of our behaviors
across the businesses as much around behavior and education changes.
We put the technology into our call centers, did all
the call translation and did all the summary note codes,
but at the end of the call, everyone was reviewing all.
Speaker 2 (12:05):
The note codes.
Speaker 3 (12:07):
So you have to create the right behaviors and the
cultural settings to get the gains out of any technology.
Speaker 1 (12:13):
You've both been in North America recently looking at the
rise of agentic AI. So this is moving from the
likes of Chat GP, This is moving from the likes
of Chat, GPT and copilot, which is actually according to study,
thirty two percent of businesses are using from seventeen percent
in the previous year. So that's good. This stuff is accessible,
it's relatively cheap. But the next wave is so called
(12:36):
agentic AI. Steve took us through that transition from these
sort of information based generative systems through AI that actually
can make decisions on your behalf.
Speaker 4 (12:48):
Yeah, I mean what really struck me was, as I
mentioned earlier when we were having the breakfast, was what
really struck me was the speed. So four or five
months ago, I was with a group of chief excs
X through our partner Visa, and they were showcasing you
know what they were basically calling, you know, the the
(13:08):
dawn of agentic commerce. And to be fair, that was
the first time i'd heard the term, not the first
time i'd heard about agents, not the first time i'd
heard about you know, large language models or large research
models doing jobs. But roll that forward five months and
arriving in San Francisco. You know, billboards talking about the
lowest cost, low code agents to help your business thrive.
(13:32):
And so one thing I'd say, you know, I'm not
an advertising expert, but when people start putting up billboards
above the line to showcase what they've got to sell,
that's moved really fast. And that was the real thing
that struck me that it had gone from sort of
interesting idea, let to showcase it to actually massive companies
like Salesforce, you know, talking to them, you know, some
(13:54):
of the largest and most valuable market cap companies in
the world, saying you know, here are the jobs that
are being tackled by these agents, and mark touched on
in the breakfast as well as you know, it's very
likely you'll see a suite of agents because the cost
of the agents doing the work can be optimized by
very specialist agents doing a particular part of the job.
So you can see, just like you're do in your
(14:15):
own workplace. Now, you know, you might need three or
four people that are experts in areas to come back
to give you the answer you're after, because, like most
decent problems, not one person can solve them. So seeing
the agents being able to gather the policy, seeing them
be able to understand the trend, seeing them be able
to action what the plan looks like, you know, document it,
follow it up, explore things that might not be documented
(14:37):
as it sort of blows your mind when you think
about the number of things across your organization where people
are grinding away to try and find the latest version
of something or produce something, or the hours that go
into producing PowerPoint decks and those sorts of things where
that time could be spent on much more interesting, more
complex problems than producing that stuff. So that feels like
(14:58):
a really big shift to me.
Speaker 1 (14:59):
Yeah, at QUI Bankers, is that where you are sort
of at with your own use of AI at the
moment that real productivity play or are you starting to
experiment with AI for financial services for dispensing financial advice
for instance?
Speaker 4 (15:13):
Here, No, we're not in the robo advice, that's what
it's normally described at. What we are at is we've
seen huge gains and we've got an international award much
like Mark talked on in the call center, which is
in our business banking center. So if you think about
tens of thousands of small business owners that have a
lot of stuff that they need doing, don't have a
lot of spare time bringing into our contact center to
talk to our business bankers about the job that they
(15:33):
need fixing. The technology platform we use is able to
understand what the question is that people are really trying
to solve, because often customers will explain an issue but
it's not really the problem they're trying to solve. But
being able to understand what that sentiment is and route
them to the right bank or at the right time
saved us heaps and heaps of time. And I think
(15:54):
about this technology being grateful team and grateful customer. So
the bank has got the right call at the right
time and less agitated when they had to answer the question.
They've also got better information and able to push back
and give better answers. So we're really at the early
edge of utilizing the vendor AI. So our lending platform
(16:14):
is one of the world leading lending platforms that will
make a credit decision for you. So it's a job
that's been done in the bank, but if you think
about an agent doing that job, you know they always
get it right. They don't have a bad day at
the office. They're not feeling tired or grumpy. They're always
doing that job. And so if you can tune that,
you can get big benefits. But we are not out
doing experiments or proof of concepts. We are much more
(16:36):
about a pathway to production. How do we get that
to help our customers and help our team. So we're
absolutely not at the cutting edge of that, but I've
never been more convinced that we need to go faster.
Speaker 1 (16:46):
Yeah, and you're a big proponent of open banking, and
I see great thing you've done. You've waived the fees
on API interactions that third parties will have to share
customer data. So I guess some of those companies will
be adopting AI. I guess that's innovative, but also some
risk involved in that. You're not taking the risk with
your own customers, but their data might be going to
(17:10):
startups that are a bit more aggressive on AI.
Speaker 4 (17:12):
Yeah, I mean that's right, But I mean I think
what's the counterfactual to that is, Oh, we should charge
people for their own data. We should prevent the competition,
we should pretend that we've got all the answers, and
you know, you look around the financial services world, or
the telco world or whatever it's. You know, there's no
one company that fixes all problems, and I think by
opening it up and embracing it, it'll make us better.
(17:34):
You know, we'll have to run faster and there'll be
a few times where we're not up to speed, and
that's the market. We should learn from that, we should
respond to it, and we should be better. And you know,
we want to grow. So if we want to grow
and you're a small bank at the last stop before Antarctica,
then you've got a partner with people and you can't
do it all yourself.
Speaker 1 (17:52):
Yeah, Mike, it's obviously not all about AI. That was
actually sort of a little bit down the list of
priorities in terms of when it comes to growth in
what businesses are interested in investing in. Websites are actually almost
top of the list, and sales and marketing, So it's
those sort of traditional things that when businesses are looking
towards growing again and bringing in more revenue, it's those
(18:15):
basic things that they're looking to invest in.
Speaker 2 (18:17):
Now, Yeah, one hundred percent.
Speaker 3 (18:19):
Again, it'll be a reflection again of the small business
and meeting business that we've captured in the survey. But
the study certainly shows if you come back to my
earlier point around you know, more than half of the
business of launching your product or service in the last
twelve months. Launching the product or service is one thing,
but how do you get customer eyeballs on it? How
do you sell it? How do you make money? And
(18:40):
that's where I think you've seen the back to basics
when it comes to traditional sales and marketing, social media,
website development and getting it out there. I would add
that to Steve's point, the AIS and all of those
ecosystems as well. So even a small business creating a website.
Speaker 1 (18:57):
Agentic it just does it in seconds.
Speaker 3 (18:59):
Yeah, and I use you know, I've talked about a
AI a lot. I've moved on from you know, twelve
months ago. AI been one of the tools you have
to run and use in your business to being the
tool that is the center of your business. Steve Grade
a great example of the you know, the HR person.
I've seen again a demo of an AGENTIC HR onboarding person.
(19:20):
So when a new employee starts, you know, you've got
the natural things like, you know, the policies, the contracts,
et cetera. But the agenda AI agent can create an
it help just stick it for your laptop, for your
mobile phone, organize the meetings, send to your induction materials.
So again that's enhancing the onboarding experience for new employees
(19:42):
and younger talent. You want to create in a world
that they live in. So again it's getting that balance
right between you know, doing the basics well from a
technology perspective, but also embracing the future of AI.
Speaker 2 (19:52):
And I think as.
Speaker 3 (19:54):
Leaders of businesses, it's it's very early in the hype curve,
but you need that vision and you need that leadership
that Steve talks about to make sure that our business
is going to thrive in the long term. I think
the biggest threat to our businesses is a pure AI startup. Yeah,
we're embracing it and building it into legacy. You got
to think around what does what does the new bank
look like or the new telco look like? In five
(20:16):
years it'll be an AI bank called Yeah. So you
can't ignore the technology.
Speaker 1 (20:21):
And that's why you see the billboards and San Francisco
all about AI because they're genuinely building AI centric organizations
over there. We're bolting it on here at the moment,
but that's the transition we all have to go on
to be competitive as well.
Speaker 3 (20:36):
And if you think around talent and getting the people
we want in our organizations, if you don't have the tools,
the platforms, the mindset, I'll go to an AI startup
because that's the language they used to in the world
they want to live in.
Speaker 1 (20:50):
Yeah, just on the talent. That is one of the
barriers to growth, and that is finding really highly skilled people.
Although when it comes to digital skills, had a lot
of the self reporting from these businesses is that they
feel they've got it covered. What's your sort of stands,
both in your organizations hiring people. What's it like out
(21:11):
there at the moment getting the right sort of talent,
particularly in those highly skilled tech related areas.
Speaker 2 (21:16):
I would actually say it's improved a lot.
Speaker 3 (21:19):
Again, if you look back twelve to eighteen months, the
employment market was very tough. You had challenge is finding
the right talent, the cost of that talent and everything
in between. Now we have a I think we have
a market where again if you position your business properly,
and again it comes back to if you're wanting to
(21:40):
get great young technology and talent in your business. They
want to hear an AI story when they hear me
talk about my business and my team talk about their business.
So again i would describe the market is easier to
get the talent we need, but that doesn't remove the
onus on us to make sure that the environment's right
when they get there.
Speaker 4 (22:00):
Yeah, i'd absolutely echo marx comments. A couple of things
I'd add. One is, for most existing businesses, you've still
got that challenge that Mark talked upon, which is the
transition from the heritage systems to the new. So you
still need an engaged team that's willing to work on
the current state or the historical state and into the
new state. So holding on to decent talent that's helping
(22:23):
us get off that old stack and onto a new
capability is quite a conundrum, right, because you really value
those people when you need them, but you also got
to understand that they want to be future ready as well.
They don't want to be the last one working on
the old system when everyone else has moved to the
new system, so you know there's rotation and making sure
that you're insenting people in the right way. I'm also
(22:45):
super encouraged by the idea that people will come into
those technology jobs without having to have had to do
five ten years of coding. You know, you will see
the technology being able to create huge amounts of the code.
So people are creative people that are got a vision
for what could be achieved, but maybe not the traditional education.
(23:06):
I think the technology can be a real game changer
for them. And we talk a lot about the digital divide,
but I'm very hopeful that, you know, particularly when you
think about the multicultural cities in New Zealand like Auckland,
that the creativity, the flair, you know, that will be
a big step up and when using these tools rather
than having a traditional education that's been advantaged by where
(23:27):
you've been or your access and those sorts of things.
So I'm actually quite positive that there can be a
leap frog for people to jump into roles.
Speaker 3 (23:36):
You know.
Speaker 4 (23:36):
And if you think about a small business owner that
you know would have been overwhelmed by the idea of
organizing an agency to create a website and you know,
all of the kind of jargon that came with it
and all of the mystique to being able to create
something where you know, you're trying to explain what your
business does in your community and why you think should
be people with you business owners will be good at that.
(23:56):
The rest of it will the technology or sort of
mask that complexity of hope in the future.
Speaker 1 (24:00):
Yeah, Like in the wake of COVID, they did Digital Boost,
which was a whole scheme to try and very quickly
get a lot of small businesses online and using Shopify
and things like that to at least keep trading through lockdowns.
That scheme has wound down, but you almost don't need
it anymore because in the agentic world. I used replet
(24:20):
recently to rebuild my entire website and poured overall the
content content.
Speaker 3 (24:25):
You know.
Speaker 1 (24:25):
It costs about the same or a little bit more
than a WordPress website, but it was done literally.
Speaker 2 (24:30):
In a day. Yeah.
Speaker 4 (24:31):
I mean that's a huge advantage, right. That allows you
to work on the getting interesting stories, to build rapport
with people, to understand the trends, not be their grinding
to get a new website up, which is a necessary
evil but not something you probably feel like is a
massive differentiator for you. And I think that's why when
Mark was talking about people revisiting the sort of foundations
like a decent website like you know, moving from conversation
(24:53):
to close, all those sorts of things. I think as
people see what better looks like, hopefully they're chuning themselves
and say, you know, I have to do better than
this because you know, all things being equal, am I
paying a much enough for search optimization?
Speaker 3 (25:06):
You know?
Speaker 4 (25:06):
Am I showing up in these right places for people
when they're making these decisions? And I think, you know,
for those that are listening, you know, just to experiment
a little bit with you know.
Speaker 2 (25:14):
You pick your tool.
Speaker 4 (25:15):
But for one I use as perplexity, going too perplexity
and ask it to give you I'm going to Wellington
for three days, you know, give me accommodations and places
to eat out and interesting things to do. The answer
you get back is so much richer and so much
more contextual than Google. With all due respect to Google,
will be you know, a list of paid ads telling
(25:35):
you about you know, you can stay here, you can
do this now. Obviously they're trying to tweak with Gemini
and give a little bit more context to the ads
that they're serving. But it's a very different world where
you can get back and itinery that tells you interesting
things to do. You can tune it for your budget.
You can do all those things if that's the one
thing you try. For me, that was a massive eye
opener around the richness and the context that it can
(25:57):
be generated through really simple prompting, really simple conversation, which
is actually, you know, I've got a medium budget. That's
the sort of language you can use and it will
tune back a really good answer for you, and that's
a game changer.
Speaker 1 (26:09):
The flip side of that as a business, and I
think this explains some of the growth and investment and websites,
is you need to optimize your content to end up
in that perplexity result or in AI overviews on Google.
You have to give more explanatory information Q and as
things that the algorithm is going to pick up and go.
(26:29):
This is actually useful information, experiential stuff. That's why I
redd it is so popular for training these models, because
there's lots of people giving advice, so that's a big factor.
Even down in this part of the world. Mark the
study has always been a good barometer off some of
the macro stuff, and I guess the optimism reflects the
(26:50):
lower interest rates and the lower inflation. However, there are
some challenges remaining particularly around sluggish demand and cost and
you know the majority of businesses are going to put
their prices up in the next year. The most common
increase will be in the eleven to twenty percent band,
although you know a fair chunk of them nearly a
(27:11):
quarter sead potentially forty percent or above. I thought we
were sort of over those big, chunky price increases, but
it seems not.
Speaker 3 (27:19):
Yeah, So the study essentially says there will be fewer
but larger increases. And if I look at the backdrop
of the last twelve months, even from my own business perspective,
of my own personal perspective, you've just got to look
at sectors such as the electricity sector where there have
been you know, significant price increases. You know, to the
(27:41):
extent that impacts their householder is one thing, But when
you have businesses turning off production or reducing and exporters competitiveness,
I think there are some areas where when New Zealand
does have to have a good hard look at kind
of the settings. We have to make sure that those
price increases don't have been going forward.
Speaker 2 (28:01):
So inflation of pressures are there, they are real.
Speaker 3 (28:04):
And again it's how as a small meeting business, you
can navigate that and like I said, try and trying
to absorb some of the cost increases where you can.
But to a point Steve made down says earlier, it's
around not always been about price, and it was encouraging
to hear you know what customers experience when they go
(28:26):
to kiwibank. It's a different type of service. They're getting
something better. That's really encouraging, stuff that pushes things beyond price.
Speaker 1 (28:34):
Now and again, yeah, maybe expand on that of it, Steve,
that was a really good point you made.
Speaker 2 (28:37):
Yeah.
Speaker 4 (28:38):
I mean when you think about what people really value,
and that's his customers, not what we think they value,
but what they say they value is they value know me,
understand me, offer me products that are timely and relevant.
So you tell me what's going on and then get
me fast decisions and so. And then the fifth one
is price. And so what I always sort of say,
you know, prices an issue, it's not that issue. So
(29:01):
then I think it is about Okay, so what do
those customers really want to know? Which is most people
will say when they're shifting from one band to another,
is particularly in businesses. I felt like I was just
a number my relationship. Managers are turning over all the time.
They don't really understand my business. All those sorts of
things can be helped by the tech, but the enthusiasm
(29:21):
of the team member to show up and you know,
and have her excited about trying to win your business
goes a long way. Because I always think about business
owners and people that are leading businesses. You lay awake
at night worrying about what's going on. Can I win
a customer, lose a customer? Can I find the right people?
Speaker 2 (29:37):
You know?
Speaker 4 (29:37):
Is that project going properly? And then to have a
big key service provider like a bank turn up and
just treat you like another number is very jarring. And
so what Mark was saying before about the fundamentals being done, well,
I am still a massive fan of those, and enthusiasm
goes a long way. Understanding your customers goes a long way.
We all pay, you know, a bit more for things
(29:58):
that we value. So if the customer can think about
am I getting value from this provider and what I
want to know about it, whether it be that they're
fighting for fear and wanting to change things like two degrees,
or you know, they're a new Zealand owned business which
is trying to help them rather than Australian owned business.
Speaker 2 (30:14):
You know, we've got to make that real.
Speaker 4 (30:15):
It's got to mean something, not just be enough to
rely on that. Oh they'll come to us because we've
got a good, decent strap line or whatever.
Speaker 3 (30:22):
A good real example from a Turtoris perspective. We you know,
we like to think of ourselves as a software company
and not a sut telling communications company. We've built a
productivity tool called Flex and it's a you know, it's
a phenomenal tool that automates as much as we can
for an end user. So a really simple example, if
you're a business with twenty or thirty staff and you've
(30:43):
got a new starter, you want to order a new phone,
or port a number or turn on international roaming. You
don't have to speak to us to do that anymore.
We're there if you need us. We've built the tools
and the software for you to do it yourself. So
that's where we push productivity back to the businesses to
make a difference and give them time back in their
day versus the traditional model of getting frustrated and trying
(31:04):
to deal with the human on the other end.
Speaker 2 (31:06):
Of the phone. Yeah. Great.
Speaker 1 (31:08):
Just finally, guys, there's a section in the report looking
at what can and should the government be doing to
promote these things productivity growth in the economy. So you know,
the industry wanted, according to the businesses surveyed, wanted some
tax incentives. They seem to have got that in the
budget and investment boost. The R and D tax and
(31:30):
center is there. It's good to see R and D.
Appetite to invest in R and D is up as well.
That's in the report, particularly among the bigger businesses. So
have we got the settings right? Has the government done enough?
Do you think the Prime Minister this week is in
China hustling going for growth as he has been in India.
The primary sect the milk prices are up again, so
(31:52):
they're going to expect bigger payouts in the next year.
Are we doing enough? Has the government done enough? The
government's doing something which is good. So again, if you're
a small to medium business, cash flow is just critical.
So you know, tax relief and tax benefits is certainly
something that we see as a common theme amongst small
(32:13):
to medium business. So the you know, the recent announcements
for that person that was potentially on the fence around
making an investment to putting some money back into the economy.
It's a good step in the right direction. I think again,
all businesses out there will at this point in time
say they need more. But that's always the conundrum. It's
a big one, six billion dollars. It's going to cost
(32:34):
investment boosts. Steve, what do you think it's going to
have a good return on investment? Yeah, I mean I
think it's it's a positive step.
Speaker 4 (32:40):
I mean my view, and Mark's probably got much more
visibility to this than I have in a lot of ways.
But you know, I think that the ask of government
is to get the big settings right. And so if
you think about why electricity is spiky because it's been
difficult to invest in long term and so you know,
if you are switching on and off, whether you can
do gas exploration.
Speaker 2 (33:01):
When investors are.
Speaker 4 (33:02):
Looking around the world where they want to invest, the
fact that things can change on in a very short
cycle is difficult. And so I think cross party around
some of the larger infrastructure and creating an environment where
big investors with lots of capital and deep pockets see
New Zealand as a place that's stable to invest in
(33:22):
is the things that shift things. It's going to be
a huge demand for data centers in hyperscale capability. Have
we got the settings right for it making sure that
this is the number one place that they want to come.
Can we give them the access to the power and
water and things that they need? You know, those are
the things that they're enablers. Smaller medium businesses will get
on with doing their stuff every single day. I think
(33:43):
the business of government is to try and get those
big settings right. It's difficult when there's three year terms
and it's difficult when you can't agree on the big things.
And so hopefully we see parties start to look into
those big shifts that we need in health and infrastructure
and say we're going to take a longer term view
because actually everyone benefits and regardless of which side of
the earlier on, we're better off when we make those
(34:04):
big shifts.
Speaker 3 (34:04):
And we've been doing a lot of work with the
Chamber of Commerce in Auckland obviously around how can we
make Auckland a tech hub all right? Now, again you
come back to fundamental settings you've got to have in
an environment. You've got to have connectivity. You've got to
have technology, it's got to be cost effective, so you
have to get the settings right to meet our ambition
to lift wages in this country, to get foreign investment
(34:27):
in So all of those factors need to be solved
with time. But again it's a it's a spans political systems,
it's a you know, it's a multi decade view that
I think we need to take as a country. But
if we get it right, you know, the opportunity is
areen us.
Speaker 1 (34:49):
That's a wrap for this special episode of the Business
of Tech. A huge thank you to our panelists Mark
Calendar and Steve Yerkovic for their insights and their candor.
Twenty five Shaping Business Study paints a picture of the
business community that's optimistic, ambitious, and ready to innovate, but
also clear eyed about the challenges ahead. If you found
(35:11):
today's discussion valuable, register to download the twenty twenty five
Shaping Business Study using the link in the episode description.
Subscribe to the Business of Tech for more conversations at
the intersection of tech and business on iHeartRadio or your
favorite podcast app. Thanks to two Degrees for carrying on
this important longitudinal study and for their ongoing support of
(35:32):
the podcast over the last one hundred and four episodes,
and finally thanks to you for listening. Here's to a productive,
innovative and optimistic year ahead for New Zealand business. Kakataana
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