The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:50:23 · Harry Stebbings, Jack Zhang
[00:50:23] S2: Wow. Okay. So you had these two mega unicorns just ripping, and they are driving your zero to a billion. [00:50:29] S0: Yeah. I remember, like, one day, Xian basically need to pay suppliers in China, and they gave us $20,000,000 And our partner in China was the supplier for Xian. And he's basically saying that volume got lost between two of their customers, right? So from Xi'an using them directly to using us, and we're 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're literally going to turn your reels off, and we're to keep Xi'an. And so I basically have forty eight hours to integrate with a new partner that able to pay into China. And otherwise, I was going to, you know, fuck up my biggest customer or the only customer at that time. [00:51:09] S2: So you call up a new partner and [00:51:10] S0: you're I like call our 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 forty hours straight, went live on Sunday night. [00:51:22] S2: Jack, this whole conversation has been a continuation of literally me getting goosebumps at you having these, like, forty eight hours to save a Xi'an contract, which is a lifeblood of the business at that point. [00:51:33] S0: Yeah. Who is kind of 90 of the business at a time. Okay.
00:51:33 · Jack Zhang, Harry Stebbings
[00:51:33] S0: Yeah. Who is kind of 90 of the business at a time. Okay. [00:51:37] S2: And so we do the 0 to a billion, and now we're like, we have a real, real business. Correct? [00:51:42] S0: Yeah. This is like by end of twenty eighteen, we have a real business. We have not a lot, we have probably like a 100 customers, but all kind of pretty big customers. [00:51:51] S2: And so then we go out and raise more money? [00:51:52] S0: No, before that, literally I started taking off in January by April. And then Tencent and Mastercard Tencent and Sequoia said, we want lead another round. So they basically lead at a $400,000,000 pre, they invest $80,000,000 so a $480,000,000 post. So they basically but at that time, the business had no revenue still, like a very little revenue. But the volume is like doubling, tripling every month. And we had like 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 us. [00:52:35] S2: Stripe reached out to buy you. How does that work? Does John and Patrick send you a DM on Twitter? What does that look like?
00:52:35 · Harry Stebbings, Jack Zhang
[00:52:35] S2: Stripe reached out to buy you. How does that work? Does John and Patrick send you a DM on Twitter? What does that look like? [00:52:40] S0: Will Gabrick, the CFO at the time, I think now he's CPO, he reached out through Sequoia. And he said, I just want another have a conversation to see what you guys up to. And obviously, like, I'm like a huge admirer of Stripe, right? So every fintech out there will be like, you know, 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 will 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 the whole day together. [00:53:30] S2: He flew to Shanghai?
00:53:30 · Harry Stebbings, Jack Zhang
[00:53:30] S2: He flew to Shanghai? [00:53:31] S0: 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 and the future. At that time, we're kind of thinking about going to build merchant acquiring, essentially competing with Stripe, because Stripe was not really in 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, right? 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. 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 been like ten months. You really started even getting product market fit. [00:54:45] S2: So what happens then? Is it, we should work together or we should buy you? What do you say?
00:54:45 · Harry Stebbings, Jack Zhang
[00:54:45] S2: So what happens then? Is it, we should work together or we should buy you? What do you say? [00:54:50] S0: 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 like I made comment and we just worked out. 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 for financial services. And obviously, Stripe is much, much ahead of us. But this is before COVID. I mean, Stripe is like a $9,000,000,000 company. It's very similar to the scale of Airwallis today. And I kind of really liked Patrick, and he's like, this guy is so smart. He's, like, much smarter than [00:55:24] S2: me. Can I ask you, what makes him so smart? The Collisons are always hailed as, like, you know, aren't they geniuses? What do you think makes him so smart from ideating with him, from working with him on a Google Doc?
00:55:24 · Harry Stebbings, Jack Zhang
[00:55:24] S2: me. Can I ask you, what makes him so smart? The Collisons are always hailed as, like, you know, aren't they geniuses? What do you think makes him so smart from ideating with him, from working with him on a Google Doc? [00:55:34] S0: I mean, it's not that the Google Doc that 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. All this field that I have never 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? If you talk about fintech, I think I'm as good as these guys, right? But if you're just talking about biology or quantum physics or China history I mean, I'm a Chinese. I feel ashamed that he knows more China history than me. And it's just like, how can you read so many books and just understanding so much? It's like before AI, you know. [00:56:20] S2: How do they table a 1,200,000,000 offer? [00:56:23] S0: So essentially it's complicated deal construct. Essentially it's $800,000,000 on the cap table and $350,000,000 to me and my co founders. And I think it's a $50,000,000 or I think $25,000,000 to the core employees, close to one point two one point one one one point seven five or something. [00:56:40] S2: What happens then? You sit down with your co founders. How does that conversation go?