00:55:42 · Henrique Dubugras, Jack Zhang
[00:55:42] S0: then at this point, you're saying you're raising the money. You kinda knew it was not working, but, like, you know, let's just keep going. [00:55:46] S1: Yeah. We kinda know it's don't... Doesn't work, but we still wanna raise money so that we can keep building the the new idea that gonna make it work. Yeah. So the second idea is, okay. So we're just gonna get interbank liquidity from a bank, then build, like, a few payment corridors and Australia and China being the first corridor, Australia and Hong Kong and Australia and China being the first corridor. We hope there's enough trading volume to kind of [00:56:10] S0: But what get us was to the customer product? Like, what were they seeing? [00:56:14] S1: So we built an invoicing product. Invoice. So basically, any merchant in Australia, they sell to China. And at that time, China's sort of middle class is booming. They're buying a lot of product from Australia, like cosmetic product, you know, house product and then honey and all that type, like milk powders. You know, a lot of people from Australia are selling e commerce product to China, and then we basically want to build an invoicing product to help the merchants in Australia to get paid. And that's also failed. We just couldn't get enough merchant because the SMBs are very less profitable. We don't have enough. At that time, we raised $3,000,000 We couldn't get product market fit at scale. There's just not enough people who want to get paid from Australia to China. [00:56:59] S0: Interesting. So the two first products, like, failed completely.
00:56:59 · Henrique Dubugras, Jack Zhang
[00:56:59] S0: Interesting. So the two first products, like, failed completely. [00:57:02] S1: But we're leveraging the second product to raise more money. [00:57:05] S0: Okay. [00:57:06] S1: So the fir... We're leveraging the first failed product to raise three. Yeah. And then we're leveraging the second failed product to raise from Sequoia and Tencent and Mastercard, I think, which is the turning point. [00:57:18] S0: Oh, interesting. So, you know, at this point, you're already raising, like, a series a from Sequoia, Tencent. And, like, I guess, why do you think they invested? [00:57:26] S1: I think because the vision I was talking about is building the largest money movement network in the world to completely displacing SWIFT. So the infrastructure vision is very big. Even though I was building a part, I don't even know whether it's gonna work or not, actually getting the volume. Because you can keep building infrastructure, but still, you need... Like, infrastructure is like the railways. You still need a train, you know, to carrying stuff on the on the rails to making money. Yeah. Right? So just at that time, we know it's a big idea to build a railway, but we just don't know what product you can carry on the train. [00:58:00] S0: And how do you meet Sequoia and [00:58:02] S1: all of them? Well, I'm the... A city investor of Gobi Partners knows Steven, who is a partner of Sequoia China, leaving Melbourne. So that's kind of a coincidence that he just happened to be leaving Melbourne, that's kind
00:58:02 · Jack Zhang, Henrique Dubugras
[00:58:02] S1: all of them? Well, I'm the... A city investor of Gobi Partners knows Steven, who is a partner of Sequoia China, leaving Melbourne. So that's kind of a coincidence that he just happened to be leaving Melbourne, that's kind [00:58:19] S0: of how we got introduced to him. And then Tencent was, you know, also that also came together and then, you know [00:58:27] S1: Tencent was just a friends of friends introduction, and we hustled [00:58:31] S0: And how much money did you raise in this round? [00:58:33] S1: I think we're raising about $13,000,000 from Tencent, Sequoia, and Mastercard in that round. [00:58:38] S0: And that was a turning point. You're like, okay. Now I have like... I've raised, like, $16,000,000. You know, we shouldn't be able to make a product that works.
00:58:38 · Henrique Dubugras, Jack Zhang
[00:58:38] S0: And that was a turning point. You're like, okay. Now I have like... I've raised, like, $16,000,000. You know, we shouldn't be able to make a product that works. [00:58:45] S1: Yeah. There's a lot of story in that $16,000,000 or the $13,000,000 because there's no product market fit. And we know the product doesn't have product market fit. We really need the money from Tencent and Sequoia to keep building this infrastructure business to find product market fit. And then we passed the investment committee of Tencent in September 2016. But when they actually you know, this is like a small check, like a $6,000,000 from Tencent. It's a very small check. And the investment committee passed and everything. Then when they actually submitted approval for Pony, the founder of Tencent, to sign off, Pony said no. And they basically asked the team, like, why can't we build this ourselves? And the team didn't know how to respond. And this is September 2016. When I was talking to Sequoia, the idea I sold to Sequoia is Tencent is going lead the investment. And when Tencent invests, we're going to be able to power the WeChat Pay global money movement. So Sequoia is like, we're only going to invest if Tencent invests. [00:59:52] S0: Yeah, because like if you're going have Tencent's global business, that sounds like a great business. [00:59:56] S1: Yeah. But in fact, I know that Sequoia doesn't know. I actually got rejected by Pony. [01:00:03] S0: So the whole thing can fall apart?
01:00:05 · Jack Zhang
[01:00:05] S1: Yeah. The whole thing can fall apart. This is September 2016. 2016. I was having so much anxiety. And the Tencent guy is like, there's only one or two person in Tencent can change pony's mind. It's either Martin or James Mitchell, the president or the chief strategy officer. I basically was waiting for a meeting for three months. I couldn't get a meeting with either of them. And then by sort of December 2016, James Mitchell having a holiday in Melbourne in a winery in The Peninsula. And I basically just tried to get a meeting to meet with James while he's on holiday for three weeks. I couldn't sleep for every single day in that three weeks because James, I'm just checking, like, can James meet today? No, no, no, no, It's because he's on holiday. Throughout the entire Christmas of twenty sixteen, I didn't able to meet even in Melbourne. Then finally meet James in a subsequent morning on the January 5 in 2017 in Hong Kong, and that's where we had the meeting. And I was able to convince James to invest. I think James just have a sort of picture memory. So if he remember, when he did the RPO for PayPal back in the day is when he was at Goldman, I think more than 40% of the revenue in PayPal coming from FX, cross border transaction. He just felt that's a very big market. And it seems like I have the background, because I was a trader and I've built FX technology before, to have the right skill set to tackle this problem. And he asked for a demo at the of the meeting. We did a demo. When we that's the invoicing product actually going to fail. And then when we actually do the pay button, there's a page called four zero four. So there's an underlying bug in the code because our payment partner in China is a very bad technology company. And I just made up of reasons like, oh, maybe it's the FIBO or Tencent blocked us.
01:02:06 · Henrique Dubugras, Jack Zhang
[01:02:06] S0: Oh, wow. But [01:02:09] S1: yeah, so JAMES was able to convince Pony to proceed with the investment in February. At that time, we had six weeks of money in the bank. [01:02:18] S0: Wow. So you're almost going under. [01:02:21] S1: Yeah. I leveraged Tencent to go Sequoia then... [01:02:25] S0: And did you have a plan b? No. No. No plan b? A or plan a? [01:02:29] S1: I was... I was trying to have plan b, but think about it as like a product pre revenue. You wanna raise $30,000,000 and you have this best investor in the world that's so close to you. Are you really gonna settle for less? [01:02:45] S0: Yeah. Yeah. [01:02:46] S1: I was just all in on these three investors and and leveraging Mastercard on the side. [01:02:51] S0: So... Then did you eventually get... Did you get the Tencent Global business? [01:02:55] S1: Not until three years later. [01:02:57] S0: Oh, really? [01:02:57] S1: And we make no money. [01:02:59] S0: Oh, wow. [01:03:00] S1: That was the story that we sold to Sequoia. [01:03:03] S0: Got it. Got it. Got it. So Sequoia invested and Tencent invested. You raised this round, and then how did it build from that? What was the next product?