The Generalist - The Unrelenting Ambition of Airwallex
The $5.6 billion fintech has established itself in APAC. It will not rest until it wins the rest of the world.
Jack Zhang is one of the most ambitious CEOs operating in tech. In nearly every conversation you have with someone who knows him well, there is a point where the discussion turns to his intensity. You will hear things like:
The almost mythic proportions of Zhang’s drive were one of the key reasons I was so excited to write a partner piece on the company he has built: Airwallex.
The other reason is simple: Airwallex has grown at a startling pace to become one of the most compelling financial technology companies on earth. In the eight years since its founding – a sprint in the complex, regulated world of fintech – Airwallex has constructed a sophisticated suite of products and established itself as a major player.
A late 2022 round valued the firm at $5.6 billion, a testament to its scale. Its backers include blue chip investors like Sequoia China, DST Global, Tencent, Hillhouse Capital, and Greenoaks. Recent financial information suggests Airwallex’s annual revenue run rate is closing in on $400 million with an annual volume run rate of $80 billion.
As Zhang’s firm has scaled, it’s increasingly going head-to-head with the industry’s heavy hitters, including Stripe. Airwallex has also been forced to reckon with the challenges of an intense, high-pressure culture that mirrors the characteristics of its CEO.
The Generalist has spent the past five months researching Airwallex to build the most detailed chronicle of its rise to date. We’ve spoken with more than 15 sources, spent hours with leadership, and reviewed internal collateral – including employee engagement survey results that speak to Airwallex’s cultural issues and turnaround.
The result is a story of uncommon willpower, the dividends and consequences of hyper-growth, and the ongoing battle to build the world’s most important financial infrastructure.
Brought to you by Airwallex
Airwallex is a leading global financial platform for modern businesses, offering trusted solutions to manage everything from payments, treasury, and spend management to embedded finance.
With our proprietary infrastructure, Airwallex takes the friction out of global payments and financial operations, empowering businesses of all sizes to unlock new opportunities and grow beyond borders. Proudly founded in Melbourne, Airwallex supports over 100,000 businesses globally and is trusted by brands such as Brex, Rippling, Navan, Qantas, SHEIN, and many more.
For more information on how Airwallex can help you simplify your global payments and financial operations, get in touch with our team today.
If you only have a few minutes to spare, here’s what investors, operators, and founders should know about Airwallex.
This piece was written as part of The Generalist’s partner program. You can read about our ethical guidelines in the link above. We always note partnerships transparently, only share our genuine opinions and commit to working with organizations we consider exceptional. Airwallex is one of them.
Jack Zhang waited for his train, his body aching. To pay for his undergraduate degree at the University of Melbourne, Zhang had taken a job at a lemon factory in the mountains outside Victoria’s capital city. Each work day, Zhang woke at 5 AM to begin a more than two-hour commute, catching a train to the suburbs, switching to a bus that took him into the countryside, and walking the last mile and a bit to the processing plant for an 8:30 AM start.
For the next ten hours, Zhang repeated a simple, exhausting task: he picked up a box of lemons and loaded them into a truck. He picked up a box of lemons and loaded them into the truck. He picked up the lemons and loaded them into the truck. The weight and repetition gnawed at the muscles of his forearm, the small of his back, the soles of his feet. At half-past six, Zhang would put down the boxes – this time for the night – and reverse the long journey home.
One evening, Zhang’s train didn’t arrive. He waited for half an hour, then an hour. He realized it wouldn’t come that night only as the late Australian summer sun began to set. It was Christmas Eve.
Zhang was 30 kilometers from home, on the outskirts of Melbourne, with the sun and temperature falling. If he’d had more money, Zhang might have called a taxi service. Even on Christmas Eve, some enterprising driver would be willing to make the trip. If he’d been a different person, he might have asked a friend to pick him up.
Instead, the seventeen-year-old student turned back to the road and began to walk. Zhang can’t remember what he thought about on the long journey back to the city, but during those days, his mind tended to flow in a common direction. It streamed not so much toward an idea as an urge, a demand: More. That was what Zhang thought about as he lifted boxes of lemons into the back of a truck and what he would think about as he served drinks to businessmen at the bar of the Westin Hotel two years later. He would look at their suits and monogrammed shirts, watch as they sipped expensive cocktails, and think: I want what they have. I want more.
Zhang was willing to work to achieve his goals; in fact, he wanted to work. For as long as he could remember, he’d possessed an intensity that startled his parents and didn’t always suit the quiet conformity expected of schoolchildren in his native Shandong. The loneliness of arriving in Australia as a sixteen-year-old with little grasp of the language had sharpened that drive, as had the family financial problems that had made paying for his undergraduate education his responsibility. Though Zhang may have seemed like a timid young man to many of his classmates and colleagues, inside, he was a knuckle of potential energy, a bowstring pulled taut, a ballistic missile looking for a fitting target.
Today, Jack Zhang has more. Twenty-two years after working in the lemon factory and making the long Christmas Eve walk back to Melbourne, Zhang is the founder and CEO of Airwallex, a global fintech giant with offices in eleven countries and annual volume nearing $80 billion. Its clients include influential unicorns like Brex, Navan, Rippling, and Canva. A $100 million Series E extension, announced in October 2022, affirmed a $5.6 billion valuation. Late last year, Airwallex officially became cash flow positive. Even more impressive than these figures is the platform Airwallex has built – a multi-product suite spanning global payments, treasury, spend management, and embedded finance.
That Airwallex has reached those milestones less than eight years after Zhang co-founded it from his specialty coffee shop in Melbourne is a testament to the speed, intensity, and ambition he has cemented at its core. Though Airwallex recognized the opportunity in global payments long after rivals like Wise and Stripe, it has matured into one of the market’s power players. Established as the default choice in the Asia-Pacific (APAC) region, Airwallex has set its sights on the rest of the world, opening offices across North America, Europe, Latin America, and the Middle East with encouraging results.
It has not been a straightforward journey – less a country bus commute than a Shinkansen ride on kinked tracks. By Zhang’s count, Airwallex has nearly died three times and nearly been bought once, with a $1.15 billion offer from Stripe in 2018 rebuffed at the eleventh hour. To reach its current station, Airwallex has foiled scammers, wrangled regulators, outmaneuvered competitors, and occasionally, fought with itself. Though Airwallex would not exist without Zhang, and it is impossible to picture a rosy future devoid of his surging will to power, it is also true that missiles do not make easy managers.
Former employees have voiced concerns about Airwallex’s high-pressure culture and overreaching leadership in recent years. Review sites paint a checkered picture, and low employee satisfaction ratings recorded early in 2023 quantified the unease. Many high-growth companies experience operational and cultural challenges as they morph from scrappy startups to multi-pronged enterprises at warp speed, but if Airwallex is to fulfill its generational ambitions, it will need to durably improve on this front. Great companies cannot afford to churn through talent or expect to get the best out of a wearied workforce.
To Airwallex’s credit, it has recognized this weakness and acted to correct it. The past two years have seen the firm bolster its people function, revamp internal communications, institute new employee reviews, and more granularly measure engagement. Reports viewed by The Generalist, shared for the first time, show a culture moving decisively – if not unilaterally – in the right direction. But culture changes over years, not months, and only time will show whether the trend continues. For Airwallex to reach Zhang’s goal of eclipsing the world’s biggest financial companies, it must maintain its momentum.
In addition to studying Airwallex’s cultural transformation in action, The Generalist has spent five months reviewing internal and external collateral and interviewing leadership, investors, employees, and customers. In total, we spoke with more than fifteen sources; many of their stories and commentary are being published on the record for the first time. The result is a portrait of an impressive but complicated company, a detailed chronicle capturing Airwallex’s serendipitous founding, remarkable growth, and unrelenting ambition.
Stare at it long enough, and you can see what people mean when they say China is shaped like a rooster. Pull the map up in front of you, activate a cloudwatcher’s gaze, and it appears. The beak sits in the northeast, peering over Vladivostok; the chest holds Shanghai, proudly puffed towards the sea, and the tail feathers sweep across disputed Tibet up to the fringe of Central Asia.
Jack Zhang was born on one of the rooster’s errant feathers in 1985. The province of Shandong sticks out from Mainland China, jutting into the Yellow Sea and toward the Korean peninsula. Though Shandong is the country’s second most populous province, Zhang was raised in a “small town” on the outskirts of one of its major coastal cities. His parents worked at large domestic banks, putting them in China’s upper middle class. Zhang’s father held a particularly illustrious position, overseeing thousands of employees as one of China Construction Bank’s regional managers.
Zhang’s parents did not take long to realize their son was unlikely to repeat the reliable, orderly path their careers had followed. From a young age, Zhang evinced an outspokenness that even he finds difficult to articulate decades later. “My parents always felt that my personality is a bit…” he began in our conversation, trailing off and thinking for a moment. “A lot of the kids – you tell them to do something, and then they will do something. I’m always very vocal about things, how things should be done. I never really listened to my parents. I was always creating a bit of trouble.”
Zhang might have been a troublemaker, but he was no truant. Though he struggled to keep his opinions to himself, he found little trouble applying his intense, hyperactive mind to his studies. In those days, Zhang was more interested in accumulating social capital than financial capital, with his intellect providing a steady flow. He was known as one of the district’s best students by his early teenage years. “I think generally people respected me as ‘academically strong,’” he recalled.
A coveted extra-curricular post as head of a student-run magazine called Urban Exploration fortified his stature. It also gave Zhang an early taste of independent work and the satisfaction of running something. “It was one of the inspirations that made me want to do things,” he said. “Like do interesting things.” Urban Exploration also gave Zhang an outlet to talk about one of his passions: computer games. Like so many other tech entrepreneurs, Zhang discovered software engineering through these games, spending free time playing titles like Counter-Strike on his desktop.
Despite his precocity, Zhang’s parents still worried about him. His headstrong demeanor might not have impeded him yet, but it was an uneasy fit with the surrounding environment. “In China, if you’re very vocal about things, that’s not necessarily a very good thing,” Zhang said. “That’s why they decided to send me to Australia.” A more liberal atmosphere would give their teenager a better chance to fulfill his potential.
Within the Western world, Australia was a practical choice. The United Kingdom was considered too expensive, and America, in the aftermath of 9/11, didn’t seem particularly hospitable to immigrants. Zhang’s father traveled to Melbourne to assess the city alongside a few other Chinese parents who were considering sending their children abroad. In late 2001, Jack arrived in the antipode alongside four other Chinese students, settling in time for the start of a new Australian school year.
It proved a startling change. “I was used to [seeing] cosmopolitan cities, and you go to Melbourne, you go to my school, and there are sheep and horses, and you can’t really see any buildings.” Even small details conspired to Zhang’s feeling of dislocation. His unfamiliarity with the language and surrounding environments often led to him getting lost in Melbourne’s suburbs. “I just have a terrible sense of direction. I got lost all the time. Because I [didn’t] recognize some of the bus stops or whatever, like, I just constantly [got] lost.”
The greater shift occurred in Zhang’s inner landscape. “I went from, academically, the top 100 in my school to some random student that didn’t speak English very well,” Zhang recalled. The social status he had enjoyed as the student leader of Urban Exploration also evaporated beneath the Victorian sun. “Going from that to [becoming] nobody [was] very interesting. [It makes] you want to do something, right? You want to get back to where you were.” Australia may have offered a freer environment better suited to Zhang’s forthrightness, but that meant little for someone who didn’t have the language to express themselves. Though in the long run, moving to Melbourne allowed Zhang to flourish, in the short term, it seemed to harden something in him, sharpen his desire to prove his abilities.
High school was a drab, lonely period in Zhang’s life. “It was very difficult to make friends,” he said. “There [were] literally less than ten Chinese folks in my school, and most of them were from Hong Kong and Macau. At that time, there was a bit of racism from [them towards] anyone from the mainland.” Even amongst his compatriots, Zhang felt like an interloper. “You always feel you’re kind of the minority in society.”
The challenge of learning in a new language muted the impact of Zhang’s natural intelligence. He graduated high school in 2003 with improved English and a place at the neighboring University of Melbourne to study computer science.
It was at university that Zhang met Jacob Dai. In many respects, the young men had lived parallel, though subtly different lives. Like Zhang, Dai had been an exceptional student in his native China before emigrating to Australia in high school. Unlike Zhang, a boisterous personality hadn’t been the cause of Dai’s departure – his Chinese high school held a partnership with an Australian institution, and Dai was simply excited to experience life in a new country.
An encounter at one of the university labs evolved into an easy friendship marked by a shared interest in technology. The pair would frequently work on school assignments together and discuss the merits of alternate approaches. “I was always working with Jack…[discussing] a different solution to solve the same problem,” Dai said. That ability – to tackle a challenge together, but from disparate angles – would prove invaluable in time.
Zhang had more pressing problems in the short term, however. A change to his father’s job at China Construction Bank radically impacted his earning potential. To support her son’s schooling, which was especially expensive at that time because of the disadvantageous exchange rate between Aussie dollars and yuan, Zhang’s mother left her job and started a company of her own, selling internet voice calling solutions to local Chinese businesses. It was a tough job that required constant hustle and offered little security. “The only reason she [did] that was to support my [studies],” Zhang said.
Zhang had worked in high school, scrubbing dishes at a local restaurant, before eventually graduating to some light cooking duties. His family’s financial difficulties meant employment was no longer optional but mandatory. To try and maximize his earning potential, Zhang sought out arduous, manual work – a job that would pay an above-market rate because it had to.
And so Jack Zhang arrived at the lemon factory and began to lift boxes. There is something telling in that when he recounts that job today, Zhang is casual about the length of his circuitous commute and the fatiguing nature of the work. What seems to annoy him most is not the effort he expended but that one of his co-workers didn’t share his industriousness. “The other guy [tasked with loading boxes] was the boss’s son,” Zhang said, eyes glinting with ferocious humor. “And he doesn’t do shit.” Much of Zhang’s next two decades would center around finding a home for his intensity – and colleagues who shared it.
Not all of Zhang’s odd jobs required quite as much perspiration. Standing behind the bar at the Westin Hotel, fixing drinks for Melbourne’s businessmen, ignited his envy but didn’t require the same backbreaking exertion. Watching a mid-level ad executive in a chambray suit sip a martini, Zhang felt it might take relatively little to make him happy. “I look at all these people drinking in a bar. I was like, ‘Ok, I would prefer to be drinking in a bar and having a decent job and wearing a suit to work every day.’” The world he wanted tantalized within touching distance but remained out of reach.
Zhang had the energy, the ambition, the drive, but lacked the knowledge of how to apply it. He also did not know just how far it could take him. As he approached his college graduation, that gulf continued to show itself. Classmates applied to job openings he never saw at companies he didn’t know existed. “They would say, ‘Oh, I would love to go to Goldman Sachs,’” he recalled. “And I would ask stupid questions like, ‘What is Goldman Sachs?’” Everyone around him seemed to be better prepared and better networked – to have a better plan for their lives.
Zhang’s frenzied employment schedule had taken a toll on his studies, leaving him with a middling academic record. Combined with the absence of permanent residency status, that complicated his post-university job search. “I applied to all the investment banks and [almost] all of the consulting companies. They all rejected me, never got an interview.”
In the end, Zhang secured an engineering position at insurance multinational Aviva, one of just two graduates. That he was successful in his application owed much to his tendency to answer even boilerplate questions with unvarnished bluntness. When he asked his manager later why he’d hired him over hundreds of more outwardly impressive candidates, Zhang was reminded of one of his responses. “He asked me, ‘What is your plan for the next three to five years?’ And a lot of the people [he interviewed] were well prepared. It’s like, ‘I want to be a senior engineer, or I want to be a manager in five years.’ Whatever. When I look at that question, I’m like, ‘I have no idea what I’m going to be doing in three to five years. But one thing I know is that I’m going to try to figure this out very, very quickly by working really, really hard.’ That was quite an honest answer. He’s an engineer, he likes honest answers. That’s how I got the job.”
Zhang did work very hard – both in and out of the office. At the same time as he worked for Aviva, he broke ground on several side projects. The first was a derivatives trading algorithm that quickly racked up major wins. “It looked at different historical data and tried to trade a certain trend,” Zhang explained. It worked frighteningly well. In less than a year, Zhang’s system – which he had coded himself – turned a few thousand dollars into $500,000. The student who had sorted citrus to pay for his schooling had become a demi-millionaire before his Goldman Sachs-chasing classmates could secure their first bonus.
It took Zhang even less time to lose his earnings. The onset of the Global Financial Crisis in 2008 rocked markets and scuppered the software developer’s algorithm. In just three days, Zhang lost everything. “It only worked in certain market conditions,” he chuckled.
Rather than cow him, the disintegration of Zhang’s bank balance seemed to embolden him. He rebuilt his trading algorithm to operate more conservatively. He started an export business, selling Australian red wine and olive oil to overseas purchasers. And, alongside fellow University of Melbourne alum Max Li, he began to tip his toe into real estate.
Though Zhang had no experience in the sector, he had natural commercial instincts and an innate work ethic. Combined with Li’s architectural expertise – he had gotten his Masters in the discipline – they made a compelling team. Together, they founded a real estate business: Li handled the design, and Zhang took care of the operations. Zhang kept the venture growing before and after work, on the weekends, and during whatever breaks he could steal from Aviva and his next employer, National Australia Bank. Soon enough, he and Li graduated from handling simple residential properties to larger commercial ones. Bit by bit, Zhang’s bank account crept closer to its previous high – then surpassed it.
By 2013, he and Li were ready to push their business to the next level. It was in observing a difference between their native China and new Australian home that the pair spotted an opportunity in the food and drink industry.
More than London, Milan, or New York City, Melbourne is increasingly regarded as the epicenter of coffee culture. Home to more than 2,000 cafes, the Australian city has spawned the “flat white” phenomenon, followed by a trail of “magics” and “piccolos” heading to your trendy neighborhood coffee shop in the coming years. Such ubiquity was already well established by 2013, starkly contrasting Zhang’s native China. When he returned home, he noticed the scarcity of specialty shops.
The absence of a coffee culture in China was the product of a commercial reality, but one that Zhang and Li felt was primed to change. Older generations hadn’t much of a taste for lattes and cappuccinos, but their more cosmopolitan children increasingly did. “We see that my generation and below, those that were educated in the West – they start [having] a lot of demand, a lot of consumption ability,” Zhang said. “So we see a trend of specialty coffee getting very popular in the region. [That’s what] we thought! But at the time, it hadn’t happened.”
It was a shrewd reading of the market. In the eleven years since, a rush of established and insurgent coffee brands, such as Peet’s, Tim Hortons, SeeSaw, Manner, and Luckin, have flooded the Chinese market.
Zhang and Li devised a plan. They would start by opening a coffee shop in Melbourne to test their concept and work out the kinks. After all, that was where both of them lived and had built their real estate expertise. They would not treat it like their other projects, though. Rather than building it bespoke, they would orient every detail to be replicable, extensible across dozens, perhaps hundreds of stores. “I [was] thinking about building something like a Blue Bottle. We build everything so you can franchise, so you can build many shops. Everything we designed is designed [for the] mass market. It’s not designed just to build one shop.” Once they succeeded in Australia, they’d move to China and begin in earnest.
Before it opened its doors, Zhang and Li’s coffee concept nearly repaid their efforts many times over. In thinking about maximizing their store’s throughput, Zhang began exploring point-of-sale (POS) solutions. Although Square existed in the United States, it had yet to reach the Australian market. Though Zhang looked, he couldn’t find a good domestic solution that allowed customers to use near-field communication (NFC) technology to make purchases with their phones. Why not build one?
A conversation with his college friend Jacob Dai dissuaded Zhang. After staying on for a Master’s in software engineering, Dai had embraced innovation’s unpredictable frontier. His first job after graduation had been at an online payments startup. Like Zhang, the Global Financial Crisis had altered his trajectory; in its wake, Dai’s employer failed to raise capital and shuttered its doors. A slew of other tech jobs followed. In China, Dai worked at an artificial intelligence startup that used its technology to help internet companies censor pornographic images, followed by a spell at a “smart loudspeaker” upstart. Zhang was impressed by Dai’s eclectic experiences, deep technical expertise, and knowledge of alchemic technologies like artificial intelligence.
Dai didn’t like the point-of-sale pitch. It was too small, too short-term, he told Zhang. “[Jacob] was like, ‘This is a shitty idea. NFC is going to become the past. In China, it’s all QR code – QR codes are going to take over the world,’” Zhang remembered. “I’m like, ‘Ok, maybe this is not a good idea. So we gave it up.” With a rueful laugh, Zhang reflected on the commercial implications of this unpursued path. “I think our business is probably even bigger today if we got there earlier. Because this is like two or three years earlier than Airwallex [was] founded.”
In 2014, Zhang and Li opened Tukk & Co. in Melbourne’s Docklands neighborhood. It offered good coffee (and burgers) in a popular location – just a stone’s throw from the city’s Marvel Stadium. Alongside a steady supply of regulars, Tukk could count on the intermittent traffic of Australian Football League fans and concertgoers.
Tukk & Co. matured into a viable and profitable business. But the shop’s habit of introducing its founder to interesting problem spaces proved even more useful than its steady cash flow.
Like many businesses, big and small, Tukk relied on imports. Packaging, straws, napkins, and other materials were bought from overseas suppliers and sent to Australia. While that process helped keep Tukk’s costs in check, it introduced considerable financial and operational overhead. For a vendor in China to receive payment, Tukk needed to find a way to convert its Australian dollars into yuan and then have the converted sum hit the seller’s correct bank account. Making that happen involved back and forths with banks in both countries, a hefty foreign exchange (FX) fee, and significant delays. In 2015, Zhang found himself wondering why there wasn’t a better solution – and if he should build one.
Other factors impacted Zhang’s growing interest in a new chapter. His investments and real estate exploits had made him wealthy, giving him a life that his younger self would have intensely envied. He was thirty, married, and a multi-millionaire. He had a young daughter approaching her first birthday. Yet he couldn’t help feeling a sense of dissatisfaction, a kind of festering discontent.
Sure, he liked his job as a software engineer at ANZ, one of Australia’s “Big 4” banks. It kept him busy and gave him a place to practice his craft. “I had a full-time job because I love writing code,” he said. But it felt vaguely pointless. What did he want out of it? A pay raise? A promotion? He already earned ten times his managing director’s salary outside the office. Zhang wanted to keep writing code, but do it somewhere that could match his velocity. When he held his daughter, he couldn’t help but feel unimpressed by his achievements. “I look at her, I was like, ‘I haven’t done anything that [makes] her proud,’” Zhang said. “I want to do something different. I want to do something meaningful to the world that she feels she is proud [of] her Dad.’ That’s why I resigned.”
Zhang’s last decade had taken him far. He hoped his next would make it seem like little more than a footnote.
In 2015, Lucy Liu went on holiday to Australia. The University of Melbourne graduate had spent the previous four years between Hong Kong and Shanghai, working for financial firms. Though stints at Barclays and CICC, a Chinese investment bank, had been advantageous for her career, she missed the friends she had made en route to receiving a Masters in Finance, as well as the Australian lifestyle.
Max Li was among the friends Liu was excited to reconnect with. A coffee aficionado, Liu looked forward to seeing his store and trying its concoctions for herself. While visiting Tukk & Co. one Friday evening, Liu and her husband were introduced to the store’s other owner, Jack Zhang. “I finished work a little early that day,” Zhang said, “I went to the coffee shop, was chatting to Max. Lucy was there. We got introduced, and we said, ‘Let’s grab dinner.’”
It was over dinner that Zhang shared his plans for the future. He, Max Li, Jacob Dai, and Ki-lok Wong – a co-worker from NAB – were going to build an international payments business to solve the foreign exchange problems they’d encountered running Tukk & Co.
It was a strong quartet, Zhang felt. Jacob Dai was a talented technologist who had already fulfilled the role of CTO at previous startups. Max was a gifted and remarkably flexible designer, capable of designing both buildings and software applications. Ki-lok Wong was the junior partner, an “employee number one” with a co-founder title and a 5% stake. As he told Liu, Zhang planned to head to Hong Kong in the new year to raise seed funding.
Lucy Liu was intrigued by the pitch and Zhang’s plan of attack. How much money did he want to raise? “I said, ‘I want to raise $1 million, and that should be enough to get us going,” Zhang recalled. He hoped to give away no more than 20% of his business in exchange for that capital, an implied post-money valuation of $5 million.
Liu surprised him. “She basically said…‘Why don’t I give you $2 million? And then you don’t need to raise any more? I’ll give you $2 million for 40% of the company.” All of a sudden, Zhang found himself in a negotiation with a counterparty he barely knew. “This is like the first time I ever met her. I don’t know what she does at all. Then she just went quite serious about it.” Liu ended the meal by suggesting the four of them meet at the University of Melbourne’s law library the next morning to discuss the details – 9 AM sharp. If Zhang had doubts about Liu’s seriousness, that suggestion disabused him of them.
Melbourne’s law library is a dull, porridge-colored building interrupted by a stripe of glass. When Zhang met Liu and her husband there the following day, he sensed a simmering tension. “Lucy’s husband was strongly against it. He was like, ‘We were going to use the money to buy an investment property, and now you’re going to invest the money,” Zhang remembered. That briefly slowed talks, but it was resolved soon enough. By noon, the parties had reached a deal: Lucy Liu would invest $1 million for 20% of the company.
Liu was capitalizing a company that technically didn’t exist. Though he’d decided to leave, Zhang had yet to give his notice to ANZ and had done none of the work to incorporate the unnamed company. On Monday morning, Zhang woke to discover that Liu’s $1,000,000 had hit his personal bank account. It felt surreal – and more than a little nerve-wracking. Over the course of a weekend, Zhang’s startup had gone from a possibility to a reality. Suddenly, he had a promising idea and actual shareholders – or he would, once he set up a cap table.
Liu’s money accelerated Zhang’s timeline and caused him to reconsider the founding team he’d assembled. “I [felt] a little obligated to look after [their money],” Zhang said. “I was like, ‘Why don’t you join us as a co-founder so you can watch us spend the money? This is a startup, there’s more than a 90% probability it’s going to fail. So then, at least you know we tried 150%. We won’t try less than that, and we will work our asses off, and you’ll know how your money is spent.” It was an unorthodox decision but one that proved effective. Liu joined as a formal co-founder, taking over finance and operations.
Few venture investments have delivered as monumental a return as Liu’s pre-seed bet on Airwallex. Today, Zhang’s firm is valued at $5.6 billion. While Liu’s stake has undoubtedly been diluted by the $902 million in capital raised, on a gross multiple basis, her initial $1 million has been returned 1,100x – with likely more to come. And yet, there was a very real moment when it looked like Liu’s money might evaporate before Airwallex shipped a usable product.
Despite pulling in his initial $1 million target, Zhang decided to head to Hong Kong all the same. While Liu’s capital had bought him some time, he knew he would need further firepower to build the product he had in mind.
Zhang received a warm reception from many of the region’s active investors. Matrix Partners’ China affiliate showed particular interest in his idea, extending a term sheet. Zhang signed, impressed by his conversations and the firm’s domestic influence. He subsequently ended discussions with nearly all other interested parties. It was a mistake.
According to Zhang, not long after he’d signed the term sheet, Matrix asked to introduce him to the firm’s managing partner. Zhang didn’t think much of it, but afterward, the firm called and said they wanted to renegotiate the deal. To the new CEO, it was a clear sign they’d lost their conviction. “They bailed…They said, ‘Oh, it should be a lower valuation.’ I can hear from [that] line that they didn’t want to invest anymore.”
It put Zhang in a tricky situation with limited leverage. Would he have to return to the investors he’d just rejected and tell them the opportunity was open again? What kind of message would that send?
Luckily, there was one firm Zhang hadn’t officially ceased discussions with: Gobi Partners. The Hong Kong firm moved to fill the vacuum left by Matrix’s retreat, offering to lead a $2 million seed round on a $10 million post-money valuation. There was a catch, though: Gobi would only wire the money after Zhang built a working MVP. It very nearly killed the business.
Today, if an Airwallex user in Australia wants to pay a supplier in China, Hong Kong, America, or Europe, it can be managed in just a few clicks. Airwallex offers payouts to more than 150 countries across over 46 currencies. It costs markedly less than using traditional financial institutions, which often add hidden fees, and is many times easier and more flexible. If you want to send out 1,000 payments at once, or have them follow certain workflows, you can. It’s extensible and powerful but also impressively simple: an intuitive orchestration layer that sits on top of a messy web of financial institutions and connections.
Jack Zhang’s initial attempt to solve international payments looked very different. Rather than handling foreign exchange via banks and other intermediaries, Airwallex’s founding team sought to create a peer-to-peer (P2P) solution. If a business owner in Melbourne needed to pay a supplier in Hong Kong in USD – a commonly used currency in the city – all they would need to do is deposit AUD on the Airwallex platform and wait for the platform to match them with a suitable counterparty; perhaps, a Hong Kong business looking to pay an Australian company. Instead of leveraging an interbank system, the money from each party could be used to pay the other vendor; no currency needed to leave the country. By cutting out middlemen, Airwallex could offer an efficient service at a much lower cost.
It was an elegant concept, but not without its complications. For one thing, for Airwallex to match demand across currencies, it would need to assemble a large network of users. For it to work at all, there would need to be sufficient demand on both sides of the major currency pairs. You needed enough people who wanted AUD and USD to be able to make that matching work. “There was always this tricky point of like, ‘How are we going to get enough participants?’” Zhang said. This would only get trickier as the business scaled. If you wanted to add more currencies, you needed to build volume for them, too. For example, if a user wished to trade Nigerian naira for Mexican pesos, Airwallex would have to have demand for both on the platform.
Gobi Partners imposed a condition on their investment. Before their share of the $2 million round hit Airwallex’s account, they would need to see a product in action.
Back in Melbourne, Zhang and his team set to work building an algorithm to power their P2P exchange. Zhang hoped it would take no more than a month or two to create, meaning they could cash Gobi’s check by the end of the first quarter. Even if it stretched a little past that point, it would be alright; even with their new hires, Liu’s money should get them to the summer. Surely, it wouldn’t take them that long to deliver a simple proof of concept?
However, the more Zhang and Dai worked on the algorithm, the less confidence they had it would solve the inherent difficulties of their approach. How many people would they need to serve the AUD-USD pair? How much daily volume would it take to offer a reliable platform?
The months ticked by. Zhang tried to answer those questions decisively. “We kind of did a simulation, and [from that] we knew that algorithm was not going to work,” he said. “The number of participants [needed] is just too big. Even though we raised the money based on that [idea].”
The good news was that this simulation was sufficient for Gobi to formalize its investment. The bad news was that Zhang and Dai knew there was no future in their P2P architecture. If Airwallex were to succeed, it would need to start from scratch. “We did all that work and basically threw it to the bin,” Zhang said.
A lesser founder might have closed shop after the failure of the simulation, rejecting Gobi’s money in the process. There would have been little shame in it. As he had told Liu, most startups fail. He’d had an idea of how to improve foreign exchange, and it hadn’t worked. So it goes. By closing down early, he might have saved some of Liu’s money and avoided wasting Gobi’s time and capital.
Zhang wasn’t ready to give in, though. He and the team set about building an invoicing product that facilitated payments between CNY-AUD and visa-versa. Airwallex integrated with PayEco, a Chinese financial provider, to get that prototype up and running. Though smaller in scope, it solved some of the same problems, allowing businesses in Sydney to pay suppliers in Shanghai, for example.
A promising alpha set Airwallex on a better path. To fortify his company’s overseas operations, Zhang moved to Hong Kong and began building an on-the-ground team. From his new city and with the threat of immediate insolvency lifted, Zhang began to raise his sights once more. Though the invoicing product had potential, it was ultimately a point solution. Sure, it was useful to customers, but if Airwallex were going to become a truly massive business, it would need to innovate on a much deeper level. It would need to find another way to build true foreign-exchange infrastructure.
To do so, Zhang came up with an alternative. Rather than rely on a P2P model, this time, Airwallex would try to build on top of the established interbank system. In some ways, it was an even more audacious idea than his original one. Part of the reason he’d pursued his P2P approach in the first place was because no sane bank was likely to collaborate with a tiny upstart with $0 in FX volume.
Zhang reached out to his contacts in the Australian and Hong Kong financial worlds to test that assumption – and was swiftly, brutally vindicated. “I talked to my friends at some large investment banks…Everyone came back to me saying, ‘Hey, come back to talk to me when you have a few billion dollars of volume,” Zhang remembered. Such figures seemed impossibly out of reach.
In a fit of desperation, Zhang decided on a blunter approach. If his own network couldn’t help him, he’d start pitching banks cold, picking up the phone and convincing someone on the other side to give Airwallex access to the interbank markets. Zhang often strikes a straightforward tone in conversation, but it says something about his salesmanship that this directness worked. “I was quite lucky in that I just basically cold-called Macquarie Bank,” Zhang said. “A sales guy at the FX desk picked up the phone call. I just pitched the idea – ‘We’re venture backed, we’re going to be a massive business.’ And he [was] onboard! He helped us get onboarded and connected to the interbank market.”
Take a moment to digest Airwallex’s first few months of life, and you might find some obvious lessons. The rigamarole with Matrix Partners illustrates the danger of putting all your eggs in one basket; Gobi Partners’ terms and conditions demonstrate the risks of a contingent investment; and the narrowness with which Airwallex avoided rapid bankruptcy reveals the importance of running a business with some amount of financial buffer.
Jack Zhang seemed to learn none of these lessons. He continued to operate at an “all gas, no brakes” pace, trusting his ability to raise another round before Airwallex ran out of money. By the end of 2016, he found himself in nearly identical circumstances and under even greater pressure.
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