The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
01:12:02 · Jack Zhang, Harry Stebbings
[01:12:02] S0: Yeah. We went to, like, $500,000,000 ARR in August last year, then hit, like, 600 in November and 700 in sort of January and February. And the business just can still grow insanely fast. [01:12:16] S2: 700 in January, February. 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. More than a billion. Why did you do a deal at 9,000,000,000? 9 x is is a public markets multiple. [01:12:36] S0: Well, we raised around 6.2, like, literally when announced last week or this week. [01:12:41] S2: That was at 6.2? Yeah. Why did you do that deal? [01:12:45] S0: Well, we started the deal end of last year. And, you know I'm [01:12:48] S2: so sorry to be so blunt, but it's like that... That's like a six x revenue multiple. [01:12:52] S0: Like Well, I mean, people don't really look at Jack, [01:12:54] S2: I would have done that fucking deal. [01:12:56] S0: I mean, people don't really look at revenue multiple anymore. Right? People are looking at gross profit. You know, we're doing $450,000,000 gross profit this year. So essentially it's, you know, 13 times of this year gross profit. I mean, it's not bad. I mean, if you look at that, that's kind of the same sort of multiple Stripe or, you know, the Revoluters are doing. [01:13:14] S2: Yeah. I'm saying that's a good deal for investors to do. [01:13:17] S0: And I think people are on... Like, Li Chenli don't give you too much credit on the growth rate today. They don't give
01:13:17 · Jack Zhang, Harry Stebbings, Harry Stebbings
[01:13:17] S0: And I think people are on... Like, Li Chenli don't give you too much credit on the growth rate today. They don't give [01:13:22] S2: you too much credit on the growth rate? [01:13:24] S0: No. I don't think so. I think people are really looking at public market calm and, you know, 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 like in 2021, right? People will go burned. People all growing 100% and just went from growing 100% to like 20% in like months. Yeah. I think people just like, investors just got burned through that experience. And think people just give you less credit that you can grow at this high speed for a long period of time. [01:13:52] S2: How much did you just raise just now? [01:13:54] S0: We raised $300,000,000 [01:13:56] S2: $300,000,000 Are you still on the 'hey, I need to be fundraising every month' train? [01:14:00] S0: No. I'm actually buying back the Airwalla stock myself. So I actually in the process of taking a debt of $70,000,000 to buy Airwalla secondaries. No Because I just have so much confidence to the company. [01:14:13] S1: No way. Yes. You're taking out a $70,000,000 debt. [01:14:17] S0: Yeah, with some of my co founders. Yeah, we are literally buying our own stock. [01:14:22] S2: Wow. You're buying it from early... [01:14:24] S0: Yeah, early investors. Wow. [01:14:26] S2: Do you get that [01:14:27] S0: at a discount? We haven't done that yet. Let's see. [01:14:29] S2: Can I join? That was a question.
01:14:29 · Harry Stebbings, Jack Zhang, Harry Stebbings
[01:14:29] S2: Can I join? That was a question. [01:14:34] S0: Yeah. That's what I a joke. Yeah. No. [01:14:36] S2: Of course. No. No, dude. If you haven't realized by now, I do these shows just for moments like that [01:14:42] S1: where I'm like, woah. That is insane. That is nuts, dude. The growth rate of a 100% a year for eight years straight. [01:14:51] S2: Can I ask, did you take your secondaries out along the way? [01:14:54] S0: I took some secondaries, not a massive amount of money, but I did. How do [01:14:58] S2: you advise founders on that? We mentioned 2021, a lot of founders took them out then, I think they're wrongly chastised for them, I think they're very good in a lot [01:15:05] S1: of cases. If you were to advise me as a founder, Hey, Jack, secondaries, what do you think? [01:15:10] S0: I recommend founders take enough secondaries so that they can account for life, right? 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 don't I think the living standard is much lower than London. I think in London, you need like 20,000,030 million dollars 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. [01:15:41] S1: I totally do. But for any founders, do not take out 20,000,000 or $30,000,000 from my round. If it's too early, I think also timing matters.
01:15:41 · Harry Stebbings, Jack Zhang
[01:15:41] S1: I totally do. But for any founders, do not take out 20,000,000 or $30,000,000 from my round. If it's too early, I think also timing matters. [01:15:49] S0: Yeah, yeah, yeah. I think like for a late stage founder, like, you know, above a billion dollar valuation, I think 20,000,000 to $30,000,000 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 for a founder to not think about money too much, and just really focus on the vision. [01:16:06] S1: Do you love being a CEO? You mentioned your product, your engineering centrality as who you are. [01:16:12] S0: Do you like being a CEO? I don't like the every day of the job of a CEO, and I like I'm able to control the destiny of the company. And I ultimately answer to the outcome of the company, the outcome of the customer, the outcome of the employee. 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. [01:16:43] S1: What did you not do in the Airwallet's journey that with the benefit of hindsight you wish you had done?
01:16:43 · Harry Stebbings, Jack Zhang
[01:16:43] S1: What did you not do in the Airwallet's journey that with the benefit of hindsight you wish you had done? [01:16:49] S0: A couple of things. Number one, I hired the first 100 people in Airwallet by myself on LinkedIn. And obviously, there's 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 do that myself. Today, could just get 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 product market fit, right? And that could really put in a lot of risk to your company. And we lucky 2021 happened, and we lucky that Ian closed around in 2020 when our revenue halved and COVID happened and stock down 30%. But I don't think everyone is going be that lucky. So do that. And I think the other thing is just really focus on investing in the culture early. [01:17:41] S1: 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.
01:17:41 · Harry Stebbings, Jack Zhang
[01:17:41] S1: 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. [01:17:46] S0: The first four, five years, we hired a lot of people with a lot of great experiences. They're from a bank, they're from Citibank, they have built a SWIFT network before. They know the thing, and they join, 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 people think they know how to build a startup that worked. And ultimately, it's not about the experience. It's about the competency, right? It's about the curiosity, the determination, about the resilience, and about the belief and 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 like fire all of them and that is a tough, tough decision. And we really slowed down the company. We had like bad press about it. There's a lot of planning to go through. [01:18:36] S1: Should you always take the highest price on fundraising? [01:18:39] S0: No. I think you should always prioritize what gives you the biggest leverage. The leverage on brand, the leverage on hiring, the leveraging on commercial opportunities. [01:18:49] S1: Do venture firms, brands make a material difference? [01:18:53] S0: Yes. Only the top five make a difference. [01:18:56] S1: So having Sequoia makes a big difference? [01:18:58] S0: Huge difference, whether I like it or not. [01:19:01] S1: Why would you not like it?