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?
01:03:03 · Henrique Dubugras, Jack Zhang
[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? [01:03:10] S1: Well, the P2P failed and the invoicing product failed. We finally raised this money. We were like, okay, let's build an API product to helping larger Internet company to moving money globally. So, you know, travel companies paying like tourist guide drivers, marketplaces paying sellers around the world. And that business took off. And it's like an API based FX and payout product globally. It's a mass payout product. And we got a large customer like HaiGuide, which is one of the largest sort of travel OTA in Asia. Then we got Easy Transfer, which is one of the largest sort of tuition payment company. [01:03:51] S0: And who were your competitors at this time? Like, who was? [01:03:54] S1: There was not much competition in APAC, which is really the only competitor is banks, the Citibank [01:03:59] S0: So there wasn't, like, any, like, global platform or anything of No. [01:04:03] S1: Wise was a consumer business back then. Neum hadn't even started. So we're early mover in that sense. [01:04:11] S0: Got it. And then how fast did it grow? Like, how long did it take to get the first $10,000,000 in revenue?
01:04:17 · Jack Zhang, Henrique Dubugras
[01:04:17] S1: I mean, we don't even think about revenue for the first couple of years. The whole benchmark is volume. So we spent 2017 to build out a product. The first customer we onboarded is Mastercard, who also invested and promised they're going to give us more than $1,000,000,000 volume to power Mastercard Send. They called Home Send at the time, which is a cross border remittance product. Instead of the billion dollar volume they promised, we spent the whole year building product for them. We got less than a million dollar volume a month. And it's all high risk transactions because it's like aggregator by aggregator. And we essentially have to take the product to sell to somebody, and we thought we were going to sell it to Mastercard, but that completely fell apart. But what we actually were to achieve success is from January 2018. We got a tuition company, we got a few travel companies, then the volume from zero to a billion in that year. So we had 100 times the volume in a year. Then we made $2,200,000 in revenue that year, and we got an acquisition offer from Stripe at the end of twenty eighteen. So it's like in one year, we went from zero to process 100x volume. And in the middle of twenty eighteen, we raised another $80,000,000 from Sequoia and Tencent again, plus a bunch of other really big investors like Hugh House and Horizon Ventures and blah, blah, blah, blah, blah. At the end of twenty eighteen, we were kind of growing like almost 100% month on month, and Stripe made us an acquisition offer. [01:05:51] S0: Well, how did you meet Stripe?
01:05:51 · Henrique Dubugras, Jack Zhang
[01:05:51] S0: Well, how did you meet Stripe? [01:05:53] S1: They reached out to us. So Will, the CFO at the time, and reached out through Sequoia. [01:06:00] S0: So how much was the offer? [01:06:04] S1: It's $1,200,000,000 in total, so about $800,000,000 on the cap table and $400,000,000 on the side. [01:06:08] S0: And how much is Stripe worth at the time? [01:06:11] S1: $9,000,000,000.9000000000. [01:06:13] S0: So this is all... This is like almost 10% of Stripe. [01:06:15] S1: I think they try to do equity swap at 20,000,000,000. They... I think they are signing a term sheet with Tiger and DST for a $20,000,000,000 offer at a time. [01:06:26] S0: Wow. So crazy. So this is like three... Not even three years in, and you get a billion dollar acquisition offer? Yes. That's crazy. Like, what was going through your mind? [01:06:34] S1: I feel it's a bit unreal because at that time, you know, the first two products all failed. I mean, what we've really building is only building for two years, right, 2017, 2018. And we only had business for a year. And the business isn't that big. We just built this bunch of rails around the world. A lot of the rails, that hasn't even materialized yet. Mean, we haven't got we've built integration with all these banks around the world, but we haven't had the modem gone through these banks. So it's like I feel it's almost like a lack of confidence, like, number one, why are we worth a billion plus dollars? Number two is like I only started to taste the scale or the success of the fun part of building a startup. It's only two years of in