The High Flyers Podcast with Vidit Agarwal
00:21:00 · Jack Zhang
[00:21:00] S1: in the first twelve to eighteen months become a disaster. Okay. We started a company and the idea was that we can build a peer to peer algorithm to get the best price for people exchanging currencies, right? So if you have customer sending money from Australia to Hong Kong, you have also have customer that sending phones from Hong Kong to Australia that in in theory that you can just to do a match and you get the the fair exchange rate, which is the interbank rate. But we never able to get that algorithm working in reasonable way because that just we just that essentially is a marketplace. You need to boast the demand and supply in a lot of transactions in different countries for your algorithm to work. And you need like a decent scale for that to work. And we did a simulation on the algorithm. We just can't see how can we get the scale by bootstrapping it, but just do a peer to peer matching. Ultimately, that's how we, that's the original idea. We failed miserably on that, but we didn't give up. Just continue to figure out ways to build it out. My experience in as a sort of algorithmic trader or technologist in the front office of investment bank kind of helped as I build market making FX trading engines multiple times. And was lucky I cold called Macquarie and another liquidity provider in The UK, and they are willing to work with us. We have zero transaction volume. I called a bunch of friends in Hong Kong and Australia that used to work with me and I said, Hey, can we connect your interbank liquidity? I don't have to figure out this peer to peer algorithm. And the response was like, Are you kidding me? Like, come back, talk to us when you have a billion dollar quid, like a billion dollar volume. Right?
00:22:54 · Vidit Agarwal, Jack Zhang
[00:22:54] S0: Wow. [00:22:54] S1: And I would like, because in the interbank world, people talk about, and we got rejected by all my friends and luckily I cold called a few people and they are able to convince them to work with us and give us in the bank liquidity. [00:23:12] S0: The interesting part that you're saying here is you said earlier to me that you're an introvert. Introverts don't cold call. Cold calling requires you to like put yourself out there. I think you've clearly got that desire to connect with people. [00:23:24] S1: You basically facing two sort of binary outcome. You either cold call or you fail. It's a very easy binary choice to make. Right? I don't think that kind of approved that I'm extrovert or introvert. I just facing a multiple choice with a binary outcome. [00:23:42] S0: True, true. So how did you get people to agree to work with you then? Because as you said, payments is so complicated and you require that credibility. How did you convince people?
00:23:42 · Vidit Agarwal, Jack Zhang
[00:23:42] S0: True, true. So how did you get people to agree to work with you then? Because as you said, payments is so complicated and you require that credibility. How did you convince people? [00:23:57] S1: We are lucky we got venture backed. I mean, we leveraged the investor name and that kind of give us in twenty fifteen, early twenty sixteen raise venture funding in Australia is quite rare and it's still quite nascent in the industry and are able to leveraging the story that we're able to raise venture money and to build that credibility for people to work with us. Also selling the vision of the company. When we had nothing, basically said to the guys, they're giving us IntraBank liquidity that we are going to be processing billions in the next twelve to eighteen months. Right? And then hopefully that will come true. Also getting licenses in Australia and Hong Kong was generally difficult at time. I have to get my ex employer, now my ex manager to kind of write a recommendation letter to ASIC to say I have the credibility to run a FinTech business or market making business in FX and non cash payments. That is also challenging.
00:23:57 · Jack Zhang, Vidit Agarwal
[00:23:57] S1: We are lucky we got venture backed. I mean, we leveraged the investor name and that kind of give us in twenty fifteen, early twenty sixteen raise venture funding in Australia is quite rare and it's still quite nascent in the industry and are able to leveraging the story that we're able to raise venture money and to build that credibility for people to work with us. Also selling the vision of the company. When we had nothing, basically said to the guys, they're giving us IntraBank liquidity that we are going to be processing billions in the next twelve to eighteen months. Right? And then hopefully that will come true. Also getting licenses in Australia and Hong Kong was generally difficult at time. I have to get my ex employer, now my ex manager to kind of write a recommendation letter to ASIC to say I have the credibility to run a FinTech business or market making business in FX and non cash payments. That is also challenging. [00:25:00] S0: Back to the episode in a moment. If you're new to the highflies podcast and enjoying today's episode with Jack saying you might enjoy episode 130 with Paul Bassett from square peg or episode 120 with Tim Doyle and Alex Badrin and enjoy all 150 plus episodes on our website at www.thehighfliespodcast.com. Now back to the episode. I have heard a story, so I want you to tell me if this is true or not. I heard that early on you met the Google co founder Sergey Brin, and he said your ambition is not big enough and you've reinvented the product. Is that true? [00:25:41] S1: That is not true.
00:25:41 · Jack Zhang, Vidit Agarwal
[00:25:41] S1: That is not true. [00:25:42] S0: Okay. Did you meet him at all or was that later in Airwallex? [00:25:46] S1: That's later in Airwallex. So I met him a few times but not not early stage. [00:25:52] S0: Okay. Right. Because because I I think you did tell me the other day that you've rebuilt the business three times, right? So when was that first reinvention, I guess, that you were like, okay, we haven't reached product market fit, we need to reinvent.
00:26:07 · Jack Zhang
[00:26:07] S1: Well, did the peer to peer algorithm and we used that to raise venture funding, but that never comes to reality because we didn't have the scale and the volume to do that, to make the algorithm work. And then we got lucky that we cold called liquidity provider to get Interbank liquidity and then to work with the company had nothing. Then we got the infrastructure to get the best FX rate for our customers. We also build an invoicing, like a bill pay platform on top of that for SMEs in Australia. And that's the sort of the second time we were building the product, try product market fit. We also failed miserably because we can't find enough customers making international payment in the limited corridors that we have payment rails to. I think at that time, initially we can only pay out to Hong Kong and then a few like Asia countries and we just couldn't get. And we also don't have the money to acquire SMEs, which is very expensive. I think that the cost of acquisition is above a thousand dollar and then we just don't have the funding to do so. But we did leveraging the bill pay platform and the interbank FX liquidity, FX trading platform to raise series A from Tencent and Sequoia and Mastercard. Obviously a very complicated process to convince them. I think we were lucky that we got into the Mastercard global sort of STAR Pass program as the only company out of Australia in history and also the first company in Asia Pacific. And that give us a lot of leverage from a credibility standpoint. So the Mastercard being helping us connect to different banks, CEOs and stuff like that. And our vision also evolved from just FX trading platform, giving wholesale or interbank liquidity to retailers or small businesses to build a next generation money movement platform to disrupting SWIFT, which is built in 1973 on top of a correspondent banking network that on top of like thousands or tens of thousands banks that we start building direct money movement rails ourselves by integrating with local payment infrastructure in every country in the world. You need to be regulated, you need to get the central bank approval, you need to work with a financial institution or bank in general to access the local payment schemes, one by one, country by country.