20VC: The Most Insane Story in Startups: Airwallex: The Angel That Turned $1M into $1BN | The Fund That Pulled a Term Sheet & Lost $1BN | Rejecting Stripe's $1.2BN Offer | Scaling to $1BN in Revenue & 100% YoY Growth for 8 Years with Jack Zhang | The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

I don't know what is financial discipline.

So I don't have a budget.

I'm just like, hire as fast as possible, blow it all up.

And I realized at one point that we're running out of money.

Every month I'm raising money, basically.

So we went from zero to a billion dollar transaction volume within nine months.

So we basically never grow below 100% from 2015 to 2023.

We went to like 500 million ARR in August last year, then hit like 600 in November and 700 in sort of January and Feb.

Airwallex is the most insane story in startups of the last decade.

I went for a walk in the park with their founder, Jack Zhang, a month ago and I literally couldn't believe it.

It was insane hearing so many different parts from the angel investor that turned 1 million into what will be a billion dollar gain.

To the renowned global VC firm that pulled the term sheet and lost what will be a billion dollar gain.

To the company failing on their first three products.

To turning down a 12 billion acquisition offer from Stripe when they had just 2 million in revenue.

To hitting a billion in revenue by the end of this year.

And they've grown 100 every single year for the last eight years.

This is one of the great startup stories of our time and I'm so thrilled to welcome Jack Zhang, co-founder and CEO of Airwallex, one of the world's fastest growing global payments and financial infrastructure companies, dive into the show today.

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You have now arrived at your destination.

Jack, dude, I'm so excited for this.

Listen, we walked around the park and I heard your story.

And respectfully, I was like this is such an incredible story that I don't think many people know quite how awesome it is.

So first, thank you so much for joining me.

Thanks, Harry.

It's a great pleasure to join this show.

Normally I don't love the whole like oh, take me back to your childhood, because it's normally, like you know, going back to the early days of Stanford.

But you started in Australia and I want to start actually very young, because you started.

Was it working in a petrol station?

Can you just take me back to the first job and that early time?

I came to Australia when I was, I guess, 15-ish.

And I basically started high school and my family basically lost most of the money and I lost financial support when I was 16.

And I had to basically figure out how to survive in a foreign country by myself.

That's why I started working in a restaurant, working in a lemon factory.

You worked in a lemon factory?

Yeah, that's during summer.

You know I go basically take a few hours of train and buses to get on the mountain every day and to literally carrying lemon.

You know thousands of lemon boxes a day under the you know 40 degrees and for two hours a day, without even eating lunch.

How much did they pay you at the lemon factory?

They actually pay OK.

They pay like 14 bucks Aussie hour.

And because you kind of can work over the 20 hours limit during the holiday and it's actually a pretty decent income, but it's just a really, really tough job.

We nervous slash scared.

You're 16, 17 at this point on your own in a foreign country without financial security.

It's a pretty intimidating place to be.

Well, I guess it's just situation that you don't have a choice.

I left China where I was born and come to Australia.

By that time, I already in Australia for over a year.

I couldn't go back to China to do the exam to the universities because I wouldn't be that competitive anymore.

I don't even know how to return to the education system by that time.

Literally, you have to figure out how to survive and how to pay for the tuitions, which is very expensive for international students.

I remember it's $24,000 a year.

And you have to figure out the living expenses.

I have to do my part, just really work as many jobs as possible to figure out how to live on my own.

There's going to be a great visual that my team's going to make of a lemon factory in New York.

So what happens there?

We are earning 14 bucks an hour in a lemon factory.

We're working in restaurants.

What's the next step?

You go to university like, take me to this time.

Yeah, so i i went to to university in melbourne and that's where i met with my three co-founders, and i also work different jobs throughout the college and i was working a restaurant as a dishwasher, working about as in a western hotel, as a bartender I basically work like between 4 to 1130 and in a bar.

And once that's finished, I started working in a petrol station from midnight to 8 a.m.

So I literally work 16 hours straight, four or five days a week.

What were you doing in the petrol station?

That's just doing overnight shift and sitting there doing cashing the people, paying the petrol and selling lollies.

Selling lollies.

That is the most random thing to sell in the petrol station.

You know, like you go to petrol station and be like, oh you know, do you want to, just you know, pay for five bucks for three chocolate, and you know that type of stuff.

Do you know what?

I don't actually drive.

I don't know if you noticed, I haven't passed my test.

It's one of my many flaws.

And so petrol stations is not something I know too well, but I will go for a lolly.

So we're there, we're at Melbourne University this time and we've met our three co-founders at this point, correct?

I met one out of the three co-founders when I got into University of Melbourne in the first year.

So we went to basically the same faculty and we all started computer science.

My CTO, Jacob, he's like one year older than me, but like 100 times smarter.

So you meet him at university, you become friends.

Do you start tinkering on ideas together then when you're doing CS together?

I mean, they spend most of the time playing Dota and then competing against each other.

And I was pretty suck at playing Dota, to be fair.

And I was literally, you know, I spent most of my time working, little time in a university.

You know, I kind of just try to spend as much as I can.

But, you know, I wasn't like the best student in my college.

You know, compared to my high school, I was like the top, top student of the school.

Where at university I was just like an average student, because I just didn't spend enough time to study.

Dude, you're working 16 hours a day.

I mean, poor you.

The university is like the side gig.

So what was the first thing that you started?

If I say to you like your first entrepreneurial thing, what was your first entrepreneurial thing?

So I started a magazine called Urban Exploration when I was back in high school.

I was like 13, 14, together with the student in the sort of student society.

And everyone's obviously working for free.

And, you know, we need to raise money for student funding.

And I need to figure out how to do that.

And we were essentially going to the restaurants and you know, computer shops and stuff around the school to raise money.

And they were like oh, why don't you just send some flyer, just for you know 2, you know per person, and you know we'll give you some money.

But we kind of nobody want to take flyers, you know, like who cares?

So that we thought we might just write something more interesting and put those ask for those restaurants in the essentially a magazine or booklet we created and and then hopefully that people will be interested to take it.

But because we write quite interesting stories like student love stories, how to play Counter-Strike, and because the school that we were in the best schools and we write really interesting stories.

And that magazine just got viral because we printed out of the school for free and we didn't have any costs and we have very limited print.

And everyone kind of want a copy of it.

And I think over like a year and a half we got like 8000 merchants that putting ads on the magazine.

And we actually made decent amount of money.

And then obviously we kind of donated to the school kind of a massive early success in my, I would say, when I grew up, you know, before I came to Australia.

Do you think people are born entrepreneurs or do you think you can become one when you think back to that as a 13, 14 year old?

I think when you grow up that if you taste what success looks like early whether a spot or any type of mass competition or Olympic competition or any type of competition or any sort of team spots the tough experience when I kind of lost financial support and when my family kind of lost most of the money, that really toughen you up right.

You become quite resilient.

100 hours a week at this age and had to go through that mental challenge of figuring your life out at such a young age, I think you become a lot more resilient.

People ask, I get burned out, I'm just working too hard and blah, blah, blah.

I'm like, dude, what are you talking about?

You know, do you know what is, you know, tough life looks like?

You know, like me in Australia, especially, you know, it's a very wealthy country in general.

And there's less people have experienced this tough things in life.

And generally people have a different perspective what life is, right?

So funny for me.

I work seven days a week and three years in people like you know what.

You won't be able to keep this up.

Five years in, you know, you've done five, but you won't be able to keep this up.

And I did a hundred hours a week for about 20 years, dude.

And you still look about 25.

Well, I kind of look a bit old now.

And the amazing thing is that you did that on things you didn't love.

I've done 100 hours a week for staff for 10 years.

But dude, mine is like in cushy offices with lovely things around me.

You did shit jobs, no offense, in the early years, working insane hours.

That's also what's so insane.

Like lemon factories and restaurants.

I didn't enjoy those jobs.

Right.

So when I was working in the lemon factory have, you know, under the 40 degrees sun and carrying these boxes or washing dishes, I mean, I'm thinking about one day, you know, I'm, I don't want to do this anymore.

I want to do a real proper job.

I want to write a code.

The show has been very successful, I think, but also because I'm very open about like my life.

You know, I saw my grandparents lose everything.

They lose their home overnight.

You lose all security as a family.

And it's very jarring.

I'm always actually running from that.

The reason I work so ferociously hard is because I don't want my family to ever be in that place.

That's why I'm working so hard, if I'm honest.

Are you running from that financial insecurity still?

Or do you think you're running towards something, if I were to ask you?

I think that you have different phases in life, right?

So that's kind of why I started Airwallex.

You know, I basically, after I graduated, I went to work at Aviva.

I work in a bunch of investment banks as a developer slash, you know, algorithmic trader.

And when I was doing those jobs and I really enjoyed writing code.

But that's not enough to give me the financial security.

So I was doing a lot of stuff on the side.

I was importing, exporting businesses for exporting olive oils and wine from Australia.

So you had an import.

Tell me about- Yeah, putting olive oil and wine of Australia to China and other countries.

And I was importing textiles from China to Australia.

And I had a business of real estate development.

I have a business of architecture and project management.

And I have all these side businesses.

That, to be frank, generating millions of income every year passively.

Obviously I work full time.

I work pretty hard in my job and I work another six seven, eight hours and I work all the weekends for my side hustle.

Make 200000 a year on my full time job and I make two three four, 5 million a year on the other side hustle, as that business is getting more mature.

Dude, how the fuck did you do that?

Two, three, four.

I mean, that's real money when you are full time working at Aviva or as an algo trader.

And then you're doing an import export business of olive oil.

That's not an easy business to do, is it?

It's actually pretty easy.

You think about it, right?

Tell me, teach me, dude.

You literally just find a supplier, find a buyer, and you're not a producer.

You don't need to do any marketing.

It's just B2B, right?

All you need to do is finding buyers and sellers.

And at one stage, I was a reseller of phone cases.

I found an Australian manufacturer not manufacturer, it's more like a brand creator called Qualock.

Essentially, now it's a private equity-owned business.

This actually went pretty big.

I worked with those guys that are designers, and I helped them to sell phone cases.

I was making a decent amount of money.

I just have a lot of these side businesses that are making money.

At one stage.

Come back to the financial insecurity I probably made more than 10 million when I was 28 29.

And I had financial security.

At that time, my real estate business is getting real scale, right?

We start building like 40, 50 apartments, 40, 50 million Aussie dollar project.

I wasn't, from time, evolved anything, but that's kind of the direction we- So you just got people to run them for you.

Yeah.

And one of the guys running that for me was my co-founder, Max Lee.

He's the head of product design.

He went become architect and then started the real estate business with me, started a coffee shop with me in which we found the foreign exchange and international payments issue.

That's lead us to founding Airwallex.

But we had financial security at that time.

And me and Max.

It was basically just in a coffee shop and thinking about we cannot doing this for the, you know, just make money for the rest of our life, right?

And we wanted to creating real scale business leveraging technology.

You know, I went to college when I see like Facebook took off.

I don't know if you know, like we don't use Facebook when we were in college.

We were like MySpace, there's like HiFriends, Friendster.

Facebook was not a thing.

And we just see that shoot off, right?

I mean, Google was not even a massive company back then.

And we just saw the whole internet took off.

And especially you also saw the internet in China took off to the early 2000s.

So the like of Tencent and WeChat and Alipay and Alibaba all took off.

And you just live in this time that a lot of the generational company get created.

The lovely thing for me is I knew parts of this story, but I didn't know a lot of this story.

But before we just go to the founding of Airwallis there, you have all of these side businesses.

How do you think about the importance of focus?

Because when I hear people with lots of side businesses, I'm always like why didn't you just focus on the real estate company?

You could have made that 10x bigger.

How do you think about the importance of focus versus when it's worth it to have a portfolio?

Because I need to really enjoy and passion about what I do.

And I'm not passion or enjoy any of these business that I started.

I always say that just like a business that making money and I'm not interested.

Obviously, I want a financial security, but making money not going to make you happy.

I wanted to leveraging my engineering skillset to create real amplified impact at scale.

And so I starting like probably 10 plus businesses.

And what I really concluded is I don't like any of them.

I still wanted to pursuing what going to make me excited and passionate about.

And that's kind of leading to the whole founding story of Airwallex.

I feel sorry for many people today, because I think so many people actually don't find what they truly love.

I'm so lucky, honestly, Jack.

I found Venture when I was 13 years old by watching the social network.

That's how I got exposed to Venture.

I'm very lucky that I found that because it's... Well, it took me a decade, right?

I started when I was, I mean, if you count in the early days, I mean, more than a decade, right?

You started washing dishes and petrol station and lemon factory.

Then you go from like there to like imported exporting.

You go from trading, you go from like architecture, real estate and coffee shop.

I mean, all that kind of lead to is a bigger idea that you feel passionate about.

So take me to the moment where you found that passion, where you're like, you know what?

I've tried these 10 businesses, but this is the thing that I want to do.

I always knew I love technology.

That's why I keep my job of writing code, even I'm making 10 times the money on the side.

So I never resigned.

I never thought about resigning because I need to write code every day.

So I feel that one day when I actually want to start a business, I can still creating something.

When we running the coffee business, the idea was not really running a coffee business.

The initial idea was that okay, we need to.

Basically, I would look at In Australia there's a biggest telecom called Telstra.

And Telstra publishing the fastest 50 growing company every year in Australia.

And more than half those companies are retail businesses like burger chain or coffee chain or some sort of these retail chains.

I started like a burger chain and I started like a coffee chain.

I mean when I say chain, it's only just really one business at a time and was supposed to become a chain.

But during that setting up process, the first problem we found is that there's no square equivalent in 2013.

The whole point of sales payments, order management in the back of the kitchen, the ordering system, the delivery system, nothing was really set up.

So I was like, I should start basically a Square, plus the whole backend order management system.

And I pitched the idea to my CTO, Jacob, and I was like, dude, let's do something together.

I think this is a real opportunity.

At that time also NFC, the touch payment started changing the consumer payment behavior.

I was like let's build something that can support NFC payments and let's go into build this point of sale system and payment system for offline merchants.

And he's like, oh, no, no.

I think QR are going to take over the world.

I mean because he at the time started a company in China, in AI, and he just started the AI business 10 years too early.

And he's like, I don't believe this whole NFC thing.

He's like, QR are going to take over the world.

We should build a QR thing.

And I was like, nobody using QR.

I never heard of this thing.

I mean, this is a very China thing.

I don't think so.

And then we kind of just debated.

Then we end up just can't agree on the idea.

And then we let it go.

I mean, that could be another billion dollar startup in 2013.

And we'll just keep building the coffee business.

And halfway through, when we launched the coffee business, then we were essentially importing beans from Brazil, from Indonesia, and importing packages from China.

And payment is a real issue.

And my co-founder's name is Max Lee.

The same name is on the OFAC. blacklist.

And his payment just got blocked somewhere in the middle because it's going through the Swift network and bounced back after two months.

And he just keep complaining to me why I'm sending a payment to Brazil and take two months for the payment to come back.

And I really look under the hood as like what is this SWIFT thing that built in the 1970s and how does SWIFT work?

So if you're sending money from say, NET West to a bank in Brazil, a small bank in Brazil, they're not going to have a bilateral relationship.

Essentially, they go through the swift network.

There's a lot of intermediaries, the large global banks that have dominated that kind of relationship.

So essentially, NetWest will go to Barclays, Barclays go to Citi, Citi go to Itaewoo and Itaewoo go to this smaller bank in Brazil.

The smaller the country it is, the more counterparty in the middle go involved and they charge a higher fee and slow down the process.

And there's a more complicated compliance process because the Swift messages only contain 140 characters.

You can't really pull all the information to reduce false positive.

And I was just like, this just doesn't make any sense.

Why this thing being existed for 50 years and processing trillion dollar every day?

Why can't we fundamentally build a new system to help people to moving money?

Just like you're moving information, like in data.

If the data on the internet is real time, why money is not?

Essentially it's data.

It's a ledger, right?

I get you, Jack, but what happens then?

Because, as you said, Swift created in the 1970s one of the most concrete architectures, which we don't really question.

I mean, we still send Swift payments today.

Well, I mean, it's still dominating the payment world today.

So what happens then?

You're like, hey, this is broken.

We should have another way.

What do you do next?

Initially, I thought, well, let's just do point to point, right?

If you have like, people want to send money from Australia to Brazil and you have people from Brazil want to send it to Australia and you can kind of just net it off right.

And that's the initial idea we raised our seed round.

But when we actually build the algorithm and we realized the amount of volume we needed to make that take off, you know it's like billions, of billions right, and we're just never gonna work.

I don't even know how to get a you know a hundred million volume.

Where do i get the balance?

And then, end of the day, we just we raise the money.

So you have the idea hey, i want to reinvent the swift network, i want to change payments, and at that point, before you build products, you go and raise money.

Well, this is another funny story.

So when I was doing the coffee business and I was thinking about starting Airwallex at a time.

And one day I just finished work on Friday.

I went to the coffee shop to catch up with Max, another co-founder of Airwallex.

And I said, I'm going to resign.

Let's do this seriously.

And I met a girl who is a friend of Max, called Lucy, who just resigned as an investment banker and wanted to get married and have a family in Australia and just hit it off with her.

She's kind of curious about the coffee business.

She's like oh, I want to talk to you more about coffee business and maybe I can invest in this coffee business.

And then we say, oh, let's just grab dinner, right?

So we grab dinner and then she's like, and then, you know, blah, blah, coffee business.

I was like, actually, you know what?

I'm actually going to really stop keep investing in this coffee business.

I'm going to start a new business that really revolutionizing cross-border payments and fundamentally changing how money move around the world.

And then she's like, oh, tell me more about it.

Because I was like oh, I have a background in FX and I'm an engineer and my co-founder was a genius engineer.

I made a pitch.

And she's like, how much money are you raising?

I'm like, oh, I'm probably going to raise a million US.

And she's like, what about if I give you two million?

This is a girl that you met for the first time in your life and you only talked for less than an hour, and then she's offering you 2 million.

I was like, for how much of the company?

She was like, I'll give you $2 million for 40% of the company.

Initially, my reaction was, should I take it seriously?

But then she's...

So let's really kind of have a deeper conversation in law school tomorrow."

So law school is from University of Melbourne, because she also went to University of Melbourne.

So all four of us went to the same college.

She's like, let's meet at eight o'clock tomorrow and we'll go deep on this.

I'm like, okay.

I feel that she's serious.

We went to the law school on, I remember, Saturday.

This is the second day I met her.

She basically negotiated with me for three hours by 11 o'clock.

We agreed that she's going to invest a million, because I don't want her own 40% of the company.

She's going to invest a $5 million post for 20% of the company.

And her husband was there strongly against it.

And she's like, we're going to use this money to buy houses and we're going to have a family.

What are you doing?

She's like, I'm king and I actually wanted to join these guys.

And she just pushed that through and we just end up agreed verbally that we're going to do the deal.

The crazy thing is this is before even I resigned from my full-time job in ANZ, and this is before I even have a company registered.

Then by Monday, I got a text message from my bank account.

It's like, you got a million US dollar wire to your personal bank account.

Obviously, I gave her the bank account, but I just didn't expect that she would just wire without anything signed.

Wow.

And so then you put the paperwork in place.

Yeah.

And that took like months.

Yeah.

So like literally I got the money three days over the weekend after the first time I met her.

And that ended up probably one of the best investment people ever made.

I mean, this is like a girl that, I don't know, 25 years old or 24 and never made any investment.

It's her first investment.

On a 9 billion valuation.

If you assume a reasonable dilution, you're turning a 1 million there into a billion.

Yeah.

I mean, it's crazy.

And I kind of just- I'm going to give her some advice if she's listening.

Stop investing.

You will never make such a good investment again.

You've reached the high.

That is insane.

I think she made a few other investments and then didn't turn out to be good afterwards.

And I think she stopped investing.

That is insane.

Oh my gosh.

Okay.

So you get a million wired to your personal account, which nowadays would be, like you know, a challenging compliance problem, by the way.

But you have a million wired to your account and you get to work.

What happens then?

I resigned.

I literally got the money and I resigned the same day.

I love this.

So you resigned, you go to Max and you're like, right, let's do this.

Let's get to work on our wallets.

Yeah.

And there's a fifth co-founder, which is Keylock, and I used to work together.

I basically kind of forced him to resign because he was like, got three kids, a lot of obligation.

And he's one of the best engineers I know.

And we worked together in National Australia Bank.

And so basically me, Max, and Lucy, we just went to the downstairs of the net building.

It was like, we're not going to leave until you resign.

So go resign.

And she was stuck there for two hours talking to his manager, which is also my previous manager.

And I was like I know that you're going to get returned because you're one of the best engineers they ever had.

But dude, we're not going to leave until you resign. whatever that time is.

So go fucking get resigned.

And he did.

Deal with your wife later.

We kind of like literally forced him to resign.

Were you nervous at all about leaving the safety net, going all in on our wallets?

Was there ever a part of you that was like, this is real.

I'm leaving security.

Yeah.

I mean, like, and also like early days, I also went like all in, right?

I just, we just live in like a 10 square meter office.

Like we sleep in a sleeping bag and we're just working there 20 hours a day, running cold.

You slept in a sleeping bag?

Yeah.

Like me and Max and Jacob, three of us literally.

You know, obviously kind of hard for Lucy, the girl, to fit in.

But, like you know, three of us, like we're literally, and Max, actually four of us and we'll just like live in the office.

Okay, so we've got a million dollars, you've got the four of you, and now you're just building product at this stage, correct?

And then raising money, because I don't think the million is enough.

Yeah, the million is not going to get you very far.

Yeah, so we raised another 2 million from a VC in Hong Kong because all the VCs kind of rejected me in Australia.

It was only three VC.

It's so funny, though.

Let's just go to that, sorry.

Yeah.

Australian VCs rejected you.

So what happens?

You go out, you don't have product at this time, but you've got the million dollars from Lucy.

And so you're like, hey, I'm Jack and I'm doing Airwallex.

What happens?

Yeah, basically I went out to pitching the idea of building a new foreign exchange and money movement network.

A lot of people think I'm crazy.

And one of the VCs actually believed in and actually wanted to write a check and lead the round.

And, But I think one of the founders of the VC that is the Matrix Partners, and they gave the term sheet, they signed and they took it back.

Yeah.

So they basically said I had a call with the founder after they signed the term sheet and they were like oh, I don't think this algorithm thing is going to work.

And that's not a defensibility anyway.

And yeah, so they basically took it back.

What deal did they have on the table?

That was $10 million post.

It's a $2 million, $8 million pre.

And I literally rejected all the other VCs already by that time.

And the only one I haven't rejected, this is Gobi VC from Hong Kong.

And they end up putting a million dollar and plus other smaller VCs that are putting the 2 million together.

That is a billion dollar pullback.

Yes.

I mean, they should have closed the deal as they signed the term sheet.

They signed the term sheet?

Yeah, they signed.

Wow.

Yeah, that's appalling.

That's bad, bad.

Yeah.

Okay.

And this is like one of the most famous VCs in Asia.

And the other Australian VC said no?

Yeah, they didn't even want to meet me.

They didn't want to meet you?

No.

So I didn't even get a meeting.

I just got an email.

So funny, both VCs that rejected me, now it's on Airwallet's cap table.

No way.

Yes, they invested in a $6.2 billion valuation.

A square peg and...

No, so SquarePak invested in Series A+.

Essentially, that saved us from dying.

There's three times that we almost died, and that's the second time that we almost run out of money.

SquarePak invested it, but Blackbird and Etri was the two largest VC in Australia.

Together with SquarePak, they're the three biggest VC.

Yeah, but Airtree and Blackbird rejected us multiple times and they now joined.

They wrote the largest check, at 62 billion, ever in our history.

Whoa.

So fun fact, John Henderson, who's at Airtree, was the first person to ever believe in me.

He introduced me to like one of my business partners.

He's introduced me to my best friends.

So John, I don't think you were probably at Airtree at that point, but... I think he was.

Well, then you fucked up.

No, but like, I think we had like a, you know, I love John and we had a great conversation.

But, you know, I guess for whatever reason, I didn't invest.

I don't get it.

I'm just going to be totally honest.

Like, you know, you very kindly invested in Project Europe.

It's so obvious.

But dude, I wouldn't.

I have a VC now on the side, right?

I have a VC called Capital 49 and I wouldn't invest in myself.

I think that's crap.

So then you're a bad investor, because if I had spent any time with you, I would have asked you about growing up and your first jobs in a lemon factory and being a restaurant waiter.

Nobody ever asked me.

That's what's ridiculous.

Why did no one ever ask you?

Because if I heard that... You know who asked that?

Who?

At Series C, Yuri Miller from DSC asked me.

That's why Yuri is Yuri.

But dude, your product doesn't matter.

That's crazy.

So that's another crazy story.

Basically, first time I met Yuri and I talked to the partner about the business, obviously because that's Series C And that's straight after.

I reject the Stripe acquisition offer.

And Yuri basically didn't ask me anything about my business.

He just asked me a bunch of stuff, how I grew up.

And after that, they were like, we're going to invest at 1.1 billion, $100 million.

So I was like, literally like within two hours, we grade the term.

It's crazy.

But this is what I find astonishing, which is like again dude, I really don't care what your business is.

No offense.

You are the person who's going to drive it.

You will be for the next 20 years.

I can tell whether I'm going to invest in you from hearing about how you think about working in the lemon factory and being on your own in australia at 16 with no financial security.

Dude, there are so few people who can go through that unwavering hard times and get through it yeah, but like you wouldn't volunteer, like to pitch your story that before people ask you.

You know what i mean.

That's where like, the onus is on the question.

Asker, i don't think there's ever such thing as a bad you doing a bad interview.

No one ever gives me a bad interview.

I give them a bad interview, which is me not asking the right questions.

Same for VC.

Well, you're asking the right question now, maybe.

But you mentioned Yuri there.

Yuri is an astonishing man himself.

How was that meeting?

At that time, you know I think I was, you know, Sequoia and sort of Tencent and Mastercard led my Series A And Series C.

We got like because we just, you know, rejected like acquisition offer from Stripe for close to 12 billion and that was a big thing.

And we got term sheet from Hill House, from Goldman, wanted to lead a billion dollar round.

And the term was not the best.

And Neil Shen from Sequoia, China at the time, and basically don't want me to take the deal because he's the one that recommend me not to take the Stripe deal.

He still said, you know, you should just make the right decision for yourself and for the company.

And Neil Shen introduced me to two companies.

He introduced me to John Linford from DST and he introduced me to Scott from Tiger.

You know, I had a chat with both and DST ended up leading the round.

How was the meeting with Yuri?

Was it a cool meeting?

You mentioned him asking- I mean, it's a weird meeting.

I mean, imagine you are Series C, you raise us above a billion dollar and all you really care about is how you grow up.

It's kind of weird, right?

And they give you literally a verbal term sheet on the spot.

It's also kind of-

Weird.

Again, I don't know if it is when you think about like... Like a billion?

I've never... The true generational defining companies are founder-led.

You know we have Bailey Gifford on the show and of their top 10 positions, nine of the best companies in terms of performance are founder-led.

If that is the case, 90% of the best performers are founder-led and we're only here.

Jack, the other thing that we both know now as investors, a billion dollars does not cut it.

$10 billion is what we need for this venture model to work.

If that's the case and they're founder-led, I don't care about your pricing this quarter or your growth this quarter.

I care about you.

Yeah, I mean, I just saw this crazy people willing to bet on people at that point at billion dollar valuation.

I do just want to go back and take it chronologically because it's such a cool story.

Okay, so the matrix term sheet was pulled and we get some other VCs in.

Cool.

What happens then?

Like, when does first product go out?

When do we get product?

And we kind of know that.

And then we were like, oh, we need basically doing the hard way.

We really need... plug our FX engine to an interbank liquidity, whether the Goldman or GP.

Obviously, Goldman or GP are not going to take my calls and we need to build, getting licenses everywhere around the world.

Connect to the local clearing infrastructure one by one.

It's going to be hard, but that seems the only way we can do it.

And we basically pivoted at that point that I cold called McCrory.

8 AM, I remember.

Then I cold called a guy who took an overnight shift in McCrory to cover the markets, because FX is 24 by five and a half markets.

Tom took the call from McCrory.

He's a junior guy, can only work on a night shift at a time.

And he was about to finish work at 8.

And he took my call.

And somehow, I mean, I pitched him.

He got him excited.

And he's willing to invest a whole team of engineers from a core bank to connect me to the interbank market so that I'm able to get two basis point of liquidity from a cost point of view.

So I can even build my FX engine by streaming prices.

And for the first couple of years, our FX price was literally trading back to back to Macquarie.

Because normally for the interbank liquidity you can't trade sub half a million or million bucks, right.

So that's how you kind of trade on the interbank.

And I was able to convince Macquarie to build me a product that you can even trade 20 at a two basis point cost price.

That co-work I remember even after Series A when we raised 13 million from Sequoia and Tencent and stuff and MasterCard.

I went to pitch to Barclays a friend I used to work together.

I met him in Hong Kong and I sit in one side of the boardroom, which is like a five meter long table.

He want to sit on the other side of the boardroom.

And I was like, dude, what is happening?

And I made a pitch.

He's like, oh, come to talk to me when you have a billion volume.

That's helpful.

Yeah, that's helpful.

I'm like dude now.

Barclay is a great partner, but we only start working together when I have 10 billion volume or something.

And Tom, the guy who took my cold call, now is the head of distribution in Macquarie.

Phenomenal pick from him.

Okay.

And so we have that.

Do we have product market fit pretty much straight away post that?

No.

And I got the FX engine, build it out, and I need a bunch of payment rails.

So I connect to a bunch of aggregators initially, because I need the coverage.

And then I even connect to Currency Cloud, who ultimately become a competitor later.

Essentially, I connect to a bunch of competitors ultimately to get me the coverage of the network and I have the product going.

But in terms of the customer we want to target to, we're initially targeting SMEs in Australia.

We just never really figured out what the product is.

We built an invoicing product to allow SMEs to sell around the world to get paid through a payment link and then by integrating with a bunch of payment service providers.

And we just never really get product market fit on that product.

It's because the acquisition is too high of SMBs and we never really got product market fit.

At that point, we know we need to raise more money, otherwise we're going to be dead.

So we basically went to raise money from Sequoia and Tencent.

With the product, we know it's going to fail.

What happens?

So basically I have a product that working, right?

I know it's not going to have product market fit, but I need more money to figure out what the product market fit is.

And I basically went to pitch for Sequoia and Tencent.

And one of the idea is actually to pivot the product to API, product to service, in Tencent to kind of power WeChat Pay global settlement.

When Chinese tourists come to London airport, they will pay using and someone will settle the merchants doing the FX on the back of that.

And we were thinking we can do a lot better over the network and we can do a lot better than a 10 cent treasury department.

And the idea is to maybe that's an opportunity to pivot and leveraging 10 cents of volume to grow the business.

And then knowing that the SME product probably going to fail because we only got like 100 customers by that time.

And we were raising at $60 million valuation with no revenue.

But how does that work?

You know that this isn't working.

You know that it's not going to work and you're going to have to figure it out.

And so you go to Sequoia and you pitch what?

Ideas or?

Well, I pitched a vision.

I pitched the vision of building the largest payment network in the world, alternative to Swift.

And that fundamental infrastructure is going to be so important and that's going to take years to build.

That's why we don't have any revenue.

How did it go?

How did the meetings go?

And then obviously I pitched Tencent at the same time and I told Sequoia Tencent might want to lead the round and kind of play the kind of competition game.

And Sequoia be like, yeah, if Tencent's co-leading the round, we're in.

But then Tencent did all the RC and everything passed RC.

At one point I was super happy this is going to be done.

And the founder of Tencent said just go through the normal corporate approval process.

And the founder of Tencent didn't approve.

After three months process, RCO passed.

He just basically is like Because the idea is that this is going to help Tencent to do global VCHP settlement.

And then Pony, the founder, was like, why can't we build ourselves internally?

Why a 10 people startup can do a better job than us?

We have hundreds of thousands of engineers.

And then the investment team didn't know what to say.

So what happened?

So basically that deal was stalled and Sequoia was not willing to invest until Tencent kind of make a decision and are basically running out of money.

And the Tencent investment team was just super helpful.

They were like you have one opportunity to pitch to either the president, Martin Lau, or James Mitchell, the chief strategy officer.

These are the two people who can convince the founder of Tencent to invest, to kind of basically approve the deal.

And I basically waited for almost three months to able to have a time slot to meet with James and Martin.

How did that go?

And I remember I basically met with James Mitchell in Hong Kong in 5th of January, 2017.

And I told my team, this would be the most important meeting of my life.

And I test the product, everything until like 3 AM.

And I kind of told my CTO, nothing can go wrong during the meeting.

I went to pitch and so funny that James actually was at Goldman before and he did the RPO of PayPal.

And he remember majority of the revenue of PayPal actually coming from cross-border payment.

And he kind of didn't really need me to convince him that much.

And he kind of sort of convinced me this is like a large enough market and this is a good guy to kind of chasing the opportunity.

And at the end, he's like, oh, why don't I just take a look at your product?

I was like, yeah, let's do that.

And I'm demoing the invoicing product which I know is going to fail, not going to have product market fail, but it's a working product, right.

It's a prototype leveraging the same, the infrastructure is the same.

And I got a 404 on the spot when I clicked the pay button.

And my face just went like blue and I dodged it.

I was like, maybe the link was blocked by the Tencent firewall.

I mean, maybe it is, maybe it's not.

I mean we never actually found it out, because at that time the PSP we are using under the hood also has some bugs.

We didn't know if it's the error caused by the underlying PSP was all caused by really, the Tencent firewall.

We never know.

And he loved it?

What happened with that?

He just like, oh, it doesn't matter.

And then he actually went ahead and I thought it's like gone, the deal.

But he actually went to Commence Pony to invest.

So we got the investment the day after that.

And then obviously Sequoia and then Mastercard also came in with Tencent.

Do you mind that Sequoia were like, oh, we'll only invest with Tencent?

I like investors who are conviction driven.

I don't give a shit who's investing with me.

I'm investing because I love Jack.

Well, I mean, this is series A, right?

This is not seed round.

This is series A. Normally people will have product market fit and have zero revenue.

So the idea was that Tencent is going to give me revenue.

And MasterCard was also in the round and MasterCard supposed to give you revenue as well.

So Sequoia's revenue conviction are based on to the other investor, which is Tencent and MasterCard, supposed to be the two biggest, largest customer for us.

Was that the first near-death experience that you mentioned earlier?

I would say the second one, because the first one was the VC that kind of supposed to invest together with Lucy.

They didn't wire the money until like five months later after they signed the term sheet.

So they were basically like, show me the demo, show me the demo before they wire the money.

I mean, this is like 2015, so the market is a bit.

I think it would be a bad thing for any VC to do that today.

It is, but it's not that long ago.

It's only nine years ago.

I agree with you totally, but it's not 20 years ago.

I bought out that investor in this round, by the way.

I'm very happy about it.

Yeah, I know that investor.

It's a good one to buy out.

So yes, completely.

Okay, so we raised this money.

We've got Tencent.

We've got Moscow.

We've got Square.

This is the dream cap table now.

Does it just go off to the races then?

Is it like rocket ship from there?

No.

As I said, we're supposed to have MasterCard and Tencent as a customer.

The Tencent deal took me three years after that point.

It's a big corporate, right?

It just takes a long time.

The same thing from the WeChat paid department.

They were like, why can't we build it ourselves?

So they end up essentially what Airwalls built themselves and only using us as one of the liquidity providers.

So that was really not the product we want to sell to them.

And we just become one of the vendors they have, together with JP Morgan and other liquidity providers.

And Mastercard supposed to give us a billion dollar volume from the Mastercard same product, but we got less than a million dollar.

And it's just so much high risk transaction at a time.

We had to like literally off board that part of the business.

So when does it start to go really well, Jack?

Essentially, this is the third year I'm starting the company.

I started a bit late, December 2015.

So 2016, the peer-to-peer algorithm failed.

The invoicing also failed in 2017.

In 2017 I raised the money from my Series A and started pivoting the product to an API-driven product to sell to large enterprises for global money movement.

And then Tencent and Masterclass are supposed to be the customer.

And we build a product for a whole year, we end up not getting any customers.

And then we're running out of money again, because we were very aggressive hiring.

And so by end of 2017, we're also running out of money.

That's where SquarePak came in.

I started the business, one of the inspirations is because of the founder of SquarePak.

And he's also one of the most famous entrepreneurs in Australia.

He started one of the biggest tech companies in Australia called sikcomau, which is the largest job marketplace in the world at one point.

He was the idol of any entrepreneur in Australia.

So I basically admired him for a long time.

And Paul reached out, said, we'd like to have a conversation.

And we really had a great conversation.

He liked the vision and mission of the company.

And he ended up leading a series A extension.

Another $6 million essentially gave us the bracing room to really take off the business.

And that was on the vision too.

To build an alternative to Swift, the largest global payment network.

On the third iteration.

Yes, yes.

I mean, to be fair, that is amazing.

I mean, like, again, suspending disbelief.

You're looking back now at a track record of fuck.

The first didn't work, the second didn't work, the third didn't work.

So what happens then?

We raise the $6 million more.

Yeah.

And that we able to sell to other businesses other than Tencent and Mastercard a lot of tech companies, basically- And they started adopting.

They started off.

And that we got a few companies that sending tuition payment around the world and they are massive.

So we went from zero to a billion dollar transaction volume within nine months.

Whoa, whoa, whoa, whoa, pause.

What, 2017?

This is January 2018.

We onboarded that customer.

And January 2018, we also onboarded Shein.

So, you know, I wish I had invested Shein at the time.

They were like a series B company.

And I just really just have these two massive customers that I'm riding on top of them go global.

Wow.

Okay.

So you had these two mega unicorns just ripping and they are driving your zero to a billion.

Yeah, I remember like one day, Xi'an basically need to pay suppliers in China and they gave us 20 million and our partner in China was the supplier for Xi'an.

And they basically saying that volume got lost between two of their customers, right?

So from Xi'an using them directly to using us and we still using them under the hood, right?

But obviously we do the FX and they just do the last mile payment because they have the license in China.

We didn't.

They were like, no, we're not going to do it.

We literally going to turn your reels off and we're going to keep Xi'an.

And so I basically have 48 hours to integrate with a new partner that able to pay into China.

And otherwise I was going to fuck up my biggest customer, or the only customer at that time.

So you call up a new partner and you're like- I call a new partner.

I was like, let's fix out the legal contract later.

Let's go live on Sunday night.

So we basically start integration on Friday night.

Worked 48 hours straight, went live on Sunday night.

Yeah.

Who is kind of 90% of the business at a time.

Okay.

And so we do the zero to a billion and now we're like, we have a real, real business, correct?

Yeah.

This is like by end of 2018, we have a real business.

We have not a lot.

We have probably like a hundred customer, but all kind of pretty big customers.

So then we go out and raise more money?

No, before that, literally.

I started taking off in January by April and then Tencent and Sequoia said we want to lead another round.

So they basically lead at a $400 million pre, they invest $80 million, so a $480 million post.

But at that time the business have no revenue.

Still like a very little revenue, but the volume is like doubling, tripling every month.

And we had all the big investors backing us, right?

And we got the Series B at a ridiculous evaluation, again from the same investor, but we added a bunch of other investors.

Imagine you from near death in January 2018 to then in October 2018, Stripe reached out to buy us.

Stripe reached out to Bayou.

How does that work?

Does John and Patrick send you a DM on Twitter?

What does that look like?

Will Gabrick, the CFO at the time, I think now he's CPO, he reached out through Sequoia.

And he said, I just want to have a conversation to see what you guys are up to.

And obviously, I'm a huge admirer of Stripe, right?

So everything tech out there will be like.

Stripe is the golden standard of developer-friendly APIs and documentation.

And I'm a huge fan of what Stripe and John have built.

And I was like, oh, if I ever get a chance to talk to Stripe, yeah, I'm all in to learn, right?

The conversation with Will went really well.

And then all of a sudden that Patrick reached out, wanted to catch up.

At that time, we were literally setting up a developer hub in Shanghai.

He said he would fly to Shanghai to see me.

Yeah, so he went fly to Shanghai to literally to see me and my co-founder, and we spent a whole day together.

He flew to Shanghai?

Yeah, he flew to Shanghai.

Probably the first time he went to Shanghai or second time, I don't remember.

How was the day together?

We went through the product in the morning and we just talked the whole vision about the company in the future.

At that time we kind of thinking about going to build merchant acquiring, essentially competing with Stripe, because Stripe was not really an APAC at the time.

And we already built the payout rails and the FX, and the pay-in is just a natural evolution of connecting the end-to-end part of the platform.

Because all our customers that are paying out to contractors developers suppliers, tuitions around the world that need pay-in.

They need process online payment and offline payments and we kind of have to do that.

And then Patrick basically said oh, we're going to build payout because we have all these pay-ins around the world and we need to do payout and we haven't built anything.

Kind of makes sense that we either sort of work together or maybe we should buy you guys.

And I was like kind of weird.

You know like you have the best FinTech company in the world that talk about potentially going to buy you.

And you literally just like one year in the business.

I mean, obviously we started for more than three and a half years at a time but the real product market fit only being like 10 months.

You know like you really started even getting product market fit.

So what happens then?

They say, well, we should work together or we should buy you.

What do you say?

He said, let's just spend more time together.

So he started this whole documentation on Google Sheet and just 10 20 pages long and asked me to make comments.

So I made comment and we just worked out.

I was like, wow, the vision of the company in the next decade is kind of very much the same.

We all wanted to build AWS or financial services.

And obviously Stripe is much, much ahead of us, but this is before COVID.

I mean, Stripe is like a $9 billion company.

It's very similar to the scale of Airwallis today.

And I kind of really liked Patrick and it's like, this guy is so smart.

It's like much smarter than me.

Can I ask you what makes him so smart?

The Collisons are always hailed as like, you know, plenty of geniuses.

What do you think makes him so smart from ideating with him, from working with him on a Google Doc?

I mean, it's not that the Google doctor make me think that he's smart.

He's just like so intellectually honest about everything.

And also he's like able to go deep in multiple dimensions.

He read about China history.

You know, he knows China history more than me.

And he knows about quantum physics.

He knows, you know, biology.

You know, all this field that I have never like gone into.

And he's able to talk about it for hours.

And I'm just like, how can one person able to go deep in multiple dimensions?

You know, if you talk about FinTech, I think I'm as good as these guys, right.

But if you're just talking about like biology or quantum physics or china history, i mean, like i'm a chinese, i feel ashamed that he knows more china history than me.

And you know just like how can you read so many books and just understanding so much?

It's like before ai.

You know how do they table a 12 billion dollar offer.

So essentially it's a complicated deal construct.

Essentially it's 800 million on the cap table and 350 million to me and my co-founders.

And I think it's a 15 million.

I think 25 million to the core employees close to 12 111, 175 or something.

What happens then?

You sit down with your co-founders.

How does that conversation go?

And he invited us to San Francisco and we had a great conversation.

I kind of at that time, I'm kind of almost get convinced.

And he sent his whole team to Melbourne.

They did like a whole week of due diligence with like all the senior people from Stripe.

I met with Claire, the CEO at the time, and I met with the whole team.

I was really impressed.

And I kind of basically said, I think we're going to do it.

But obviously you know, like it just kind of you know, are you really going to do it on the back of your mind?

And I fly back to Melbourne and I was working in San Francisco two weeks and try to figure it out.

I couldn't figure it out.

I mean, I was like 70 percent.

I wanted to do it.

But like this voice in my head is like, are you going to do it?

Are you going to do it?

I'll ultimately be like, okay, so if I sold the business, I was I think 34 at a time, 33 at a time.

And it's going to five-year lockup, right?

So I'll be closer to 40 when I finish the lockup.

And what can I do like a 38, 39-year-old?

Can I be blunt?

How much money would you have made from the deal?

If I knew Stripe going to get to a hundred billion, I mean I would probably made like at least 3 billion.

You know, at that time, you know, Stripe was going to raise the $20 billion round.

We know that we probably can raise another round and at a billion.

It wasn't really a valuation.

It was like financial was not really what I've been thinking about.

So why did you not?

I kind of grew up in Australia.

I didn't live in a very luxury lifestyle, right?

So I didn't need any money.

There's no even like hot in the shops, right?

Billionaires and anyone that just go to the same supermarket.

So it's a very sort of socialized society.

And I think with like 200 grand, you can live a pretty good life.

And I didn't know what to do with the money anyway.

And that's not what I actually thought about at the time.

And I really thought about is what's going to make me happy.

And I went back to Melbourne, asked my co-founders, like, let's just vote, right?

Because I really can't figure it out.

You know, Lucy is like I don't really care because I my family is, you know, is wealthy and I don't need more money.

I really enjoy it.

I think we should keep building.

My CTO, Jacob is like, you know, it's really up to you, Jack.

I mean, this is your mission, your vision, and we all here to help you.

And then ultimately it's your call.

And Max is like, I think I'm okay to sell.

I mean, that's a lot of money.

Good old Max.

And then we were like, we couldn't decide.

And we asked our senior leadership team to vote.

Surprisingly, only one people wanted to sell.

Literally 90% of people said, they think we can build a bigger business.

So you fired that one person?

Well, that person joined Stripe even worse.

No.

Yes.

That's the whole story.

Yeah.

I mean, we all kind of tried to hire her afterwards and I kind of sued her and she sued me.

That was a whole complicated story.

That vote was a very telling sign, wasn't it?

I mean, I don't think she's that great anyway, so it's kind of fine.

But just she has so much proprietary knowledge of our network and we were worried about she's going to give away to Stripe.

That's a long story.

Yeah, I mean, that's really, I went back to Melbourne and changed my mind.

I was like, I don't think I want to be doing another startup when I'm 38.

I think I'm going to give it a shot on this one and put all my life into it.

And that's it.

So one thing that really inspired me from talking and spending time with Patrick is that I said oh, what's a long-term thing for Stripe or for yourself?

Are you going to be here forever or blah, blah, blah?

And then Patrick just said to me that he's going to build Stripe for the next 20, 30, 40 years.

And I just never heard a founder told me people were dedicated their entire life to building a business.

That was so inspiring to me.

That's what I want to do.

Build a real economic infrastructure that changed the world, impacting millions of businesses growing on the internet or growing globally.

So we turn that down and we're now back to business, baby.

We need to scale volume.

We have Sheehan and we have this other lodge provider.

Is it now like just all hands to the pump?

Scale, scale, scale.

Yeah, and we got the money from DST.

So we got another a hundred million dollars and a bunch of other investors.

When you raise a hundred million dollars and you suddenly have like quite a lot of money, is it difficult in terms of constraints that are now removed and just spending?

Yeah, and I didn't understand what that means at the time.

I don't know what is financial discipline.

So I don't have a budget.

I'm just like hire as fast as possible, blow it all up.

And I realized at one point that we're running out of money.

Like I was like- Yeah, you didn't have a budget.

Yeah.

And we went from, I think, 100 something people to 600, 700 people in a year.

And then I realized our volume grow, but our revenue didn't grow as fast.

We really need to raise another round and We also the vision kind of started evolved after Series C, After rejecting Stripe offer, I'm like okay, we're going to competing long-term.

And, you know, I mean, obviously Stripe is a payment lab business.

We are banking lab business.

But at that time, we're not a banking business yet, right?

We're just like a global money moving infrastructure.

We were like, okay, we need to become a true global new bank.

And then we need to build our card issuing infrastructure so we can issue corporate card.

We need to build merchant acquiring infrastructure so we can handle the payment side of the money flow as well.

So we basically need to evolve from a single product company to a multi-product company, an end-to-end platform with infrastructure and software to supporting global businesses.

I basically put most of the money out of the 100 million to build this new product and not investing in the existing product.

And that is the biggest bet I made.

Essentially, you've investing like more than half the money you raise onto the product that you're not going to have any revenue for the next three or four years.

Did that not strike you as alarming at the time?

But we kind of realized once we sort of reject this drop offer and ultimately we're going to compete, it kind of scares me that if I don't invest fast enough, ultimately, you know, we just don't have a role to play.

So it was the right thing to make those investments?

Well, we kind of did two things.

We went all the way into international expansion.

So we start opening offices in the UK, in the US and like everywhere.

And that kind of took be a disaster because we kind of didn't have product market fit in any of these places.

And then that international expansion basically just failed.

And that was because of product market fit?

Yeah.

We're not hiring fast enough.

We're not building product enough.

We don't have a real product in the UK, but we hired a bunch of teams here.

How long does it take you to realize that the international expansion not working?

Rollback pretty quick.

I mean, you just don't have any revenue because nobody's going to buy your product.

So six months later, you're like, uh-uh, cut.

Yeah, I didn't cut.

I basically keep going.

And because we had an infrastructure here, we needed people to manage the infrastructure, and we keep trying.

And a lot of the people I hired are my friends.

So you just persisted through to product market fit in these geographies?

Yeah, it took me three years to get PMF in the UK.

Wow, that's a lot of money.

Well, I mean, it's a small team.

And then we also churn a lot of people.

So that was the mistake I made.

When you say that was a mistake you made, what was that mistake?

Just bad hiring?

We also didn't have the product.

I think we just hired too early.

And also we don't really know what sort of people to hire.

It's kind of a combination of both.

What do you mean you don't know what sort of people to hire?

I'm a product engineer.

I really no idea how to build a commercial organization.

And all we did is selling to large enterprises, right?

But we have a lot of VC network in APAC.

And when I come to UK, I don't have the VC network.

I don't really know how to sell to large enterprises.

I don't have any VC network here.

No one opened a door for me and we just couldn't really sell the product.

The vision really evolved from a single product company to a multi-product company.

But that evolved.

Took three and a half years to get the initial product market fit.

Just during that three and a half years.

We are too aggressive in international expansion while we don't have a good product.

And so we need more money.

Yes.

And at this point, our last round was the 1.1 with DST.

Yeah.

And we're running out of money again.

Are you nervous when you're running out of money?

Yeah.

And I'm at SoftBank.

And I was like, okay, so SoftBank was the go team VC.

This is 2019.

Okay.

And I fly all the way to London in October 2019, and SoftBank going to lead the round.

And this WeWork stuff happened.

And they stopped investing and they did all the work, but the partner going to invest in us got fired.

And I literally, in a situation, we're going to kind of die again if I'm not able to raise money.

What happens then?

Basically, I would have convinced the existing investor to give me a lifeline at convertible nodes.

So DST and Tencent led the convertible nodes.

Wow.

So we raised essentially, I think, $70 to $100 million convertible.

But the idea is that we're able to raise another round straight after that.

And I need to find an alternative to SoftBank.

And Hedo Sophia is the answer.

So Ian from Hedo that led our Series D to kind of get us going.

But the funny thing is that COVID happened in 2020.

When we signed in the SPA because we have a business in China.

We know that the virus is taking off.

And this is February 2020, and we were literally going through this due diligence stuff.

And the investors started asking me, what is this COVID thing?

I didn't know how to answer the question because I was like, this is going to be really, really bad.

And I can't say that.

You knew it was going to be bad.

I knew it was really, really bad because I have employees in China and it's like a shut down the whole city and all this crazy stuff.

I even wrote a text message to the prime minister of Australia to shut the border from China.

I remember that the week we actually closing the Series D, the US stock market tanked more than 10 three times.

This is the first time ever happened in the US history.

So the market went down 30%.

I called Neil Shen and I was like, do you think he ain't going to close?

And would you close if you are in this situation?

And Neil told me he's really not sure.

He's like, no one would know in this situation.

It's like never happened before.

I wasn't sure.

And nobody was sure.

To the credit of Ian, I mean, Ian closed.

What was that round?

That was, I think, 1.7.

This is like the round after the convertible.

So all the people that invest in a convertible get converted to the $1.7 billion round.

$1.7 billion.

How big was the check?

I think it was $150.

Obviously, like half that's already existing and Ian putting like $75 or $80 million.

How was Ian?

He's very behind the scenes.

He's very discreet.

He is.

I mean, Hedosofia is a very secretive fund and we weren't allowed to put a PR using the Hedosofia name.

So you would see a bunch of investors led the Series D, but Hedosofia was not named.

I think they changed the policy now.

Yeah, they have done.

They're much more public.

Yeah, and they're a little bit more public now.

But yeah, I think Ian sit on my board and he's one of the largest investors and not many people know about it.

Has he been a great board member?

Yeah.

I mean, he's been investing in the company from 2019 for like five, six round after that.

He just keep doubling down.

So I think we're probably one of the largest investment of Hitosofia in terms of dollar amount.

So you close that, we get going again.

Yes.

We keep plowing away at these international markets.

We are fucking relentless bashing product market fit in them and we fix it.

It starts looking really good.

When does the business really start humming?

I mean, 2020, obviously during COVID, our revenue went half.

That's why I wasn't sure whether we were going to close.

Because half our revenue is from tuition and travel, right?

And all this tuition- What's your revenue at that point?

Scrap acquisition at that time, we were only $2 million in 2018.

So we went $10 million in 2019.

So we five times the revenue in 2019.

So 10 million.

Then 2020, we had 20 million.

21?

21 that we went more than doubled again.

Wow.

In COVID.

2020 we doubled, right?

So that's where COVID and 2021 we more than doubled.

We kind of 2.5X.

Fuck.

2 million in revenue when Stripe did the 1.2 billion.

Yeah.

And I'm crazy.

I said no.

No, no, no.

I mean, now you look like a genius.

But, you know, if I was a VC on your board, then I would be supportive if you wanted to sell.

Well, I mean, from a Sequoia point of view, they invested $480,000 only for three months.

And you know they may just under double the money because they're 800 million on the cap table right.

I totally get it.

It does not do much for them in that respect.

And the fund size, totally.

Okay.

So we closed ahead of Sophia.

We're off to the races.

What happens now?

Then COVID happened, right?

So that we lost half our revenue and we were really figuring out what to do.

At that time, we started getting product market fit on the SMB banking product.

You know, we built the infrastructure.

We started to issue in corporate card.

We started getting the merchant acquiring thing, kind of built it out but ultimately launched in 2021.

The foundation of a global bank started to evolve.

I was the first three, four years of just basically building the best money moving infrastructure in the world to build the next generation of a global bank, build the future of a global banking.

And that obviously took a lot of money a lot of got to bet on this new product that only start generating revenue from 2022.

So from 2019, 2020, 2021, there's no revenue for all this new product.

Only from 2022, they start generating revenue.

With the board putting pressure on you because there's a lot of resources.

Well, the business is still doubling every year from the existing product.

And then 2021 happened.

And I just got investor knock on the door every single day, right?

So Grand Oaks led a round in January 2021 for $2.6 billion.

The Lone Pine led a round in June, July at $4 billion.

Dude, I'm not being rude.

Do you have any of the company left?

This is a lot of funding rounds.

Yeah.

We raised $400 million in 2021.

The valuation went from 1.7 to five and a half.

Every month I'm raising money, basically.

Then you raise three round and end of 2021.

SoftBank was talking to me about leading an 8 billion round.

And obviously we didn't entertain that conversation.

Do you not worry about the dilution?

At that time, I know the vision is really big.

How much capital required to build a global bank?

It's going to be in the billions.

I just want to raise as much money as I can.

And obviously I only raised like a hundred at a five and a half.

I should have raised more at a time, but I think air wallets will be dead without 2021.

We raised $400 million.

We really well capitalized.

The business keep doubling.

And we had enough money just to keep going.

And obviously we raised a flat round in 2022 because at that time we were burning close to 200 million a year.

And we weren't really sure how long we're going to last.

But we went profitable in 23.

And I just realized that we can just keep growing the business.

And then even in 22, 23, we keep doubling the business.

And we keep doubling the business while our headcount is not growing.

So we never did a layoff.

And we're able to continue to grow the business more than 100%.

So we basically never grow below 100% from 2015 to 2023.

Never grew below 100% for eight years straight.

Fuck.

And we're still growing 90% year on year last quarter.

You grew 90% last quarter?

Yeah.

We went to like 500 million ARR in August last year, then hit like 600 in November and 700 in sort of January and Feb.

And the business can still grow insanely fast.

$700 in January, Feb.

I'm about to say a bold statement given the volatility that we have within markets.

If I project forward to end of year revenues, your end of year revenues at this rate is like $900?

More than a billion.

Why did you do a deal at $9 billion?

9x is a public market's multiple.

Well, we raised around at $6.2 like literally last week or this week.

That was at $6.2?

Yeah.

Why did you do that deal?

Well, we started the deal end of last year and- I'm so sorry to be so blunt, but that's like a six X revenue multiple.

Well, I mean, people don't really look at- Shit, Jack.

Jack, I would have done that fucking deal.

I mean, people don't really look at revenue multiple anymore, right?

People are looking at gross profit.

We're doing $450 million gross profit this year.

So essentially it's 13 times of this year gross profit.

I mean, it's not bad.

I mean, if you look at, that's kind of the same sort of multiple stripe or the revolution they're doing.

Yeah, I'm saying that's a good deal for an investor to do.

And I think people don't give you too much credit on the growth rate today.

They don't give you too much credit on the growth rate?

No, I don't think so.

I think people are really looking at public market calm.

And because of what happened in 2021, so there's less investors out there believe that you can grow in 90 for a long period of time.

Imagine in 2021, people will go burn.

People all growing 100% and just went from growing 100% to 20% in months.

Yeah.

I think people just like investors just got burned through that experience.

And you know I think there's people just give you less credit that you can grow at this high speed for a long period of time.

How much did you just raise just now?

We raised $300 million.

$300 million.

Are you still on the, hey, I need to be fundraising every month train?

No, I'm actually buying back the Airwaller stock myself.

So I actually, in the process of taking a debt of $70 million to buy Airwaller secondaries.

Because I just have so much confidence to the company.

No way.

Yes.

You're taking out a $70 million debt.

Yeah, with some of my co-founders.

Yeah, we are literally buying our own stock.

Wow.

You're buying from early... Yeah, early investors.

Wow.

Do you get that at a discount?

We haven't done that yet.

Let's see.

Can I join?

That was a question.

If you haven't realized by now, I do these shows just for moments like that, where I'm like whoa, that is insane.

That is nuts, dude.

The growth rate of 100% a year for eight years straight.

Can I ask, did you take secondaries out along the way?

I took some secondaries, not a massive amount of money, but I did.

How do you advise founders on that?

We mentioned 2021.

A lot of founders took them out then.

I think they're wrongly chastised.

I think they're very good in a lot of cases.

If you were to advise me as a founder, hey, Jack, secondaries, what do you think?

I recommend founders take enough secondaries so that they can live a comfortable life.

They don't need to worry about how do they feed the family, how do they support the kids, how do they buy a house.

In Melbourne, I think the living standard is much lower than London.

I think in London, you need like $20, $30 million to live a very kind of comfortable life.

I think that amount is right for a late-stage founder.

Because you just want the founder to be all in building the business rather than thinking about how to support the family.

If you know what I mean.

I totally do.

But for any founders, do not take out $20 or $30 million from my round.

If it's too early, I think also timing matters.

Yeah, yeah, yeah.

I think, like for a late stage founder, like you know, above a billion dollar valuation, I think 20, 30 million is a decent amount, but it's not like ridiculous amount that you set for your life or anything.

I think it's just good time for founder to not think about money too much and just really focus on the vision.

Do you love being a CEO?

You mentioned your product, your engineering centrality is who you are.

Do you like being a CEO?

I don't like the everyday of the job of a CEO.

And I like, I able to control the destiny of the company.

And I ultimately answer to the outcome of the event, like the outcome of the company, the outcome of the customer, the outcome of the employee right.

I wanted to have that control.

So I know that we are heading the right direction towards our vision.

I don't like dealing with the people issues, dealing with the policies, the procedures and all that type of stuff.

What did you not do in the Airwallet's journey that, with the benefit of hindsight, you wish you had done?

A couple of things.

Number one, I hired the first 100 people in Airwallet by myself on LinkedIn.

And obviously there's a lot of benefit doing that.

But I could have hired a good recruiter just to help me to do the outreach and give him the access of my LinkedIn password.

You know what I mean?

I didn't need to like do that myself.

Today I could just get an AI to do that.

Yeah, I think get a good recruiter early on that kind of make the hiring a lot more efficient.

Number two is that don't over-invest in international expansion when you don't have part of market fit.

And that could really put a lot of risk to your company.

And we're lucky.

2021 happened and we're lucky that EN closed around in 2020, when our revenue halved and COVID happened and stock down 30.

But I don't think everyone's going to be that lucky.

So do that.

And I think the other thing is just really focus on investing in the culture early.

Did you ever have a moment when the culture was broken and what did you do to fix it?

It's a lot of pain.

The first four or five years, we hired a lot of people with a lot of great experiences.

They're from a bank, they're from Citibank.

They built a Swift network before.

You know, they know the thing.

Then they joined telling me, like, you guys know nothing.

What you're going to do doesn't work.

We need to do blah, blah, blah.

And none of those people worked.

None of the people think they know how to build a startup that worked.

And ultimately, it's not about experience, it's about the competency, right?

It's about the curiosity, the determination, about the resilience and about the belief in the vision, about the passion.

And I think we should just have hired those curious determined, optimistic people from early on.

But we didn't.

So we had to fire all of them, and that is a tough, tough decision.

And we really slowed down the company.

We had bad press about it.

Just a lot of pain to go through.

Should you always take the highest price on fundraising?

No, I think you should always prioritizing what gives you the biggest leverage.

The leverage on brand, the leverage on hiring, that leveraging on commercial opportunities.

Do venture firms, brands make a material difference?

Yes.

Only the top five make a difference.

So having Sequoia makes a big difference.

Huge difference, whether I like it or not.

Why would you not like it?

Ultimately, you wanted to work with the best investor not only an investor, but also a friend and people you get along with and you like.

It's not saying I don't like the investor in Sequoia, but just saying that you just choose the brand over the people.

Which investor do you not have that you would like to have?

I wish I have someone like Michael Morris that invests in Stripe.

A true visionary investor supported the founder from day one.

I think Michael Morris played a very important role of Stripe's success, waving the flag of Stripe early days of Silicon Valley.

Early days of Stripe in Silicon Valley saying John Patrick going to be the next, Sergey Brin or Larry Page that they're going to build a trillion dollar company.

Blah blah, blah.

I don't think I had that support.

Have you met him?

Yeah.

I mean, Michael Morris invited me to his home and tried to convince me to sell the company.

Oh.

I mean, I wish I have an investor do that for me, you know?

How was that?

It's a beautiful home and there's a nice conversation.

And it didn't convince you?

Well, I mean, his argument makes a lot of sense that he's saying you know, like I said, you know why don't I just keep building and maybe sell later?

Like what now?

I haven't really figured it out.

You know, what I want to do with my life yet.

It's like you know, the earlier you can compound, the faster you can build a trillion dollar business.

I mean, it kind of makes sense.

Listen, I want to do a quick thought.

I've so enjoyed this.

When I ask you about a founder you deeply admire, other than the Collisons, who comes to mind first?

I really like Elon.

I think what he has done is able to ultimately is pushing the humanity forward.

If you could put all of your money into one company other than Airwallex, which company would you put all of your money into?

I would put half of my money in SpaceX.

I'd do the third.

I'd do OpenAI, SpaceX, and then Revolut.

I don't know about Revolut.

I mean, that's my competition ultimately in the future.

I'll put some money in Stripe.

You put some money in Stripe?

Yeah.

What's the hardest thing about your role today?

Make decisions knowing that more than 50% probability is going to be a wrong decision.

You should be a venture investor.

Do you like investing?

I don't think I'm a great investor.

I don't really know how to assess early stage founder very well.

Why do you think that is, you know, like before product market fit is really just based on people's personality.

I don't know how to make an investment decision based on people's personality or the history of people right?

That's why I said I wouldn't be able to invest in myself.

I just haven't seen enough data to build that confidence.

What worries you that you think not enough people are spending time on?

Generally, people are making decisions based on the knowledge they have.

And generally, that is not the right thing to do, because the biggest mistake you make is from making a decision based on the knowledge you don't have.

Penultimate one for you.

You're in london now.

Are you impressed by london's tech scene?

What do you make of it?

I think it's better than melbourne.

I love the global nature of of london and i've so far we enjoy meeting a lot of entrepreneurs.

I think uh it's, it's gonna be exciting place.

Do you love living here?

Yeah, apart from it's very expensive, you know, everything else is is pretty good.

Final one for you, dude.

Airwallet is in 2035, 10 years out.

Where are you then?

I hope we have built one of the largest global payments and banking platform to power modern businesses around the world.

I hope we have built a bigger business than Citi or HSBC, because when we succeeded doing that, millions of businesses around the world will benefit from the success of our mission.

Public?

Public or not.

Doesn't matter.

Would you like to be a public company at some point?

Inevitably, we kind of all have to think about that.

But right now we've been really head down building.

Dude, this has been one of the most awesome, fun, fascinating stories.

Thank you so much for sharing it with me.

And I cannot tell you how much I've enjoyed it.

Thanks, Harry.

I really enjoyed the conversation.

I think that has to be the greatest angel investment that I've heard of in a long time.

A million to a billion.

Incredible.

Eight years of 100% growth year on year.

What an insane story.

I feel Airwallex is just this untold gem.

I cannot thank Jack enough for sharing that story.

What an episode.

And you heard my gasps when he revealed some of those elements.

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📋 Summary

The Unlikely Architect of Global Finance: Jack Zhang and Airwallex

From Lemon Factory to Global Fintech

The Founding Philosophy: Solving the SWIFT Problem

Near-Death Experiences and Strategic Pivots

The Engine of Growth: 100% Year-on-Year

Lessons in Leadership and Hiring

🎯Key Sentences

📝Key Phrases

📖 Transcript

📋 Summary

The Unlikely Architect of Global Finance: Jack Zhang and Airwallex

From Lemon Factory to Global Fintech

The Founding Philosophy: Solving the SWIFT Problem

Near-Death Experiences and Strategic Pivots

The Engine of Growth: 100% Year-on-Year

Lessons in Leadership and Hiring

Deep Learning with ListenLeap

🎯Key Sentences

📝Key Phrases

📖 Transcript

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