Handling Explosive Growth with Lucy Liu, Co-Founder of Airwallex

Kris: From Lawson Media - This is Building A Unicorn, the show exploring what it takes to build a big global business. I’m Kristofor Lawson.

Kris: We live in a global market. It’s no longer good enough for startups to just focus on their local consumers - we have to think globally if we ever want to hit our market potential. And in the process of thinking global, as a business owner you might find yourself needing to send payments around the world. For a long time those payments might have been made through bank transfer, or online systems like Paypal. The problem with these systems is the fees. I recently had to cash a cheque sent to me from a US advertiser… firstly I couldn’t remember the last time I saw a cheque - and secondly it cost me close to $50 in fees and bad exchange rates.

Kris: But there are companies out there trying to solve this problem. In the past few years we’ve seen a rise of consumer focused companies like Transferwise who are charging customers the actual exchange rate with a small fee on top. And another one of those providers is Airwallex - a company which makes it easier for businesses to process international payments. They’ve also recently hit a $1 Billion dollar valuation.

Kris: Lucy Liu is the President and Chief Operating Officer of Airwallex but says those titles don’t really have much meaning.

Lucy Liu: I think titles in startups are always quite vague. I tend to tell people I do pretty much everything other than writing code and develop software.

Kris: Lucy was born in northern China, although her family lived in Shanghai for most of her childhood. Shanghai is one of the largest cities in the world and was an incredibly busy place. Lucy’s father was a stock trader, and her mother was a kindergarten teacher. And when she was 12 the family moved from Shanghai, across to New Zealand.

Lucy Liu: I think for me, my childhood was probably a little bit different to most of the kids in China, because I went to a bilingual school, so I studied English very early on, and when I moved to New Zealand, most of my friends had to go to a language school, whereas I was fine, so I think that definitely changed my perspective a little bit... so I didn't find it very difficult to live in an English speaking country.

Kris: What was that experience like for you as a 12-year-old, moving from Shanghai, which is a very incredibly busy place.

Lucy Liu: Yes.

Kris: And then moving to New Zealand, which is not?

Lucy Liu: People say New Zealand's covered in animals. It is. We had this park next to our school, which is actually... My high school was actually very much in a CBD area, but we still had sheep in the park next door, so it was very quiet. I think I liked it because it was very natural, and I liked sports, so it's always good to have the I guess, the places to go to on the weekends, and go to the beach, whereas Shanghai is just very crowded and very busy. Yeah. It's a very different experience.

Kris: And were you a good student growing up? Were you someone that really enjoyed learning, or?

Lucy Liu: I was top of the class. I can say that, but I don't think I was super into study, academics, per se. I just did very well, but I'm not... I don't think I was too hardworking to the point that I was only studying most of the time, I did skip a grade in high school, which means I went to uni while 17, but that means also finishing earlier, and I think it was a little bit different, but I think it was quite fun.

Lucy Liu: Being Chinese, I did violin, so I was in the orchestra three times a week, and I was in the choir, so quite involved musically, and yeah, that's about it. Sports-wise, you know I did hockey. I did badminton. Tried a bit of everything.

Kris: As Lucy finished school she started thinking about what she wanted to do in life. She applied for universities around the world - however decided that she would move to Melbourne. And her parents decided to move across as well.

Lucy Liu: I actually applied for both engineering and commerce, and I got into both, but… in terms of career-wise, I always wanted to go into finance. I was very interested in engineering because I was like hooked on Discovery Channel, and for like a really long time, and I just wanted to... I always liked experimenting with things, but I think just the... In terms of being Asian, a girl, somehow commerce made a little bit more sense. But I think it all worked out, because it doesn't really matter. I'm working with up to 100 engineers now at Airwallex, and I still get to be part… things that engineers do. I'm just not the one personally getting hands-on and doing it.

Kris: And it was during this time at the University of Melbourne that Lucy met some older students who would eventually become her co-founders at Airwallex… although at the time she had no idea that they would ever end up working together.

Lucy Liu: I actually met my, one of our co-founder Max through a friend, so he was at the architecture faculty. I was at commerce, and he went to high school with our CTO, who went to uni with our CEO, so someone's... Everyone's connected in some way.

Kris: When Lucy finished university, in late 2012 she landed her first job - working for the biggest investment bank in China.

Lucy Liu: I did a lot of internships when I was at uni, so there were always banks or securities, trading companies, and I think the first job was like a full-time job, was with CICC, which is a joint venture bank in China…. The biggest investment bank in China, ‘cause we were educated very heavily on how many IPOs we did, and all of those things. I think real world is definitely different to what you learn on textbooks, and but the thing about my master's degree is actually quite... It was quite case study spaced, rather than learning at all of the theories, and even when I was in uni, I did a little bit of stock trading myself, so it was actually quite easy to get the gist of things, and the market was doing well when I first started the job, so yeah. It was, everything's just happening very quickly in China, so it was a lot of fun, I think.

Kris: So this is kind of like in the midst of this sort of massive boom that's happening in consumer electronics, and things like that, and China is playing like this pivotal role in a lot of these companies. What did your sort of role entail? What were you doing?

Lucy Liu: I was an investment consultant. My daily job would be trying to advise and also help my clients, corporate or individuals, make I guess... Not so much trading decisions, but how to structure their portfolios, their investments better, so a lot of my clients were actually already listed, so they would try to… better structure their shares, because a lot of them cannot be liquidated. They are already... They were just restricted shares, per se, so they tried to get liquidity out of it. They tried to increase the efficiency of things, so yeah. That took up I guess most of my time, and also I had some individual clients who were looking to make investments, so I think both within China and overseas.

Kris: When you went to New Zealand, you said it was quite a different experience going to New Zealand, and you lived in New Zealand for quite a bit of time, and also in Australia, which don't have that same kind of population density that you experience in China. What was it like, at a personal level, going back into that busyness of China, and Hong Kong, and Shanghai, et cetera?

Lucy Liu: I wouldn't lie, I actually enjoy living in Shanghai a lot, for different... I think I enjoy living in Melbourne and Shanghai, but for different reasons. Shanghai, you get super fast internet shopping. Everything gets delivered next day. Almost everything you want to do can be done in an app or on your mobile phone… But Melbourne, you get that shopping at the market, going brunch with your friends, very, very good coffee, so it's kind of different lifestyle, and I think as I travel a lot these days, I actually enjoy having a bit of both. But I think back in the days, when I was a kid, I think kids adapt very quickly, so they just living with every environment you throw them at, into. Yeah, so I think population-wise, definitely Shanghai has the population of the entire Australia, if not more, and Hong Kong equally, even more dense, in terms of everyone.

Lucy Liu: If you go to our Hong Kong office, you will see these massive apartment buildings, all very, very close to each other. But yeah, I think personally, I don't mind it unless I'm like super busy all the time. Then probably I say, "Oh, I feel like going back to Melbourne for a break."

Kris: Now around 2015 - Lucy got married and decided it was time to take a mid-career break. Both her and her husband wanted to get away from the busyness of Shanghai. So they started travelling so they could see the world…. And it was on this journey that Lucy became involved in Airwallex.

Lucy Liu: We went to, so Scandinavia, so we went to Sweden, Norway, Denmark, and then we went to Japan, and then we ended up in Melbourne, visiting my parents. Two of our co-founders at that time opened a café in Docklands… and I was visiting Max almost every afternoon, because obviously I was on holiday, but he's not, and he was working at the café, and we were talking, and then Jack, they were co-owners of that café, coming at 3:00 p.m. while he was still working. Yeah, and then we just got chatting about an idea that Jack was having, and that's I guess how Airwallex started.

Kris: And the idea was to fix some of the frustrations they were having with payments around the business… so what was it that was so frustrating about the way that business transactions were happening?

Lucy Liu: All of us were working sort of in institutional banking sector of the bank, when we don't tend to experience what it is like to be a smaller business, or a corporate. As an individual, I think... I know there are certain hidden costs in all of those things, with your credit card, which your FX. Going back to my Scandinavian trip, we had to exchange money all the time, every time we'd go to a new country, and I'd see myself being ripped off because my cash just keeps on decreasing. And I think when they opened the café, they all of a sudden realised, oh, my god, as a small business, you sort of experience these frustrations as well, because you don't get the level of service a bigger corporate would. You don't really have a banker sort of helping you 24/7. The price you get is pretty much the same as the individual, but... It is different, because you're running a business, and you have to care about your P&L. You have to look at the amount of money you make.

Lucy Liu: If it's, you're losing 5% on FX, that's probably half of your profit margin. I think around that time, Transferwise, was into their second or third year, and they were only doing visuals in the UK, and we saw, it's actually quite interesting. There are still things that you can do in terms of foreign exchange, even though it's a very commoditized sort of financial product. So we were thinking, ah, we probably can do a foreign exchange for businesses, but then you don't want to be a broker, because there's really no innovation in that. So we explored payments, because payments will require you to have certain scenarios, and certain cases where there's a user case, so that's how our first product or idea started.

Kris: The founders started the process of putting their ideas into action… but to make any progress on a concept in the foreign exchange market - Lucy says they had to go all in from the start.

Lucy Liu: We agreed very early on that if we are going to do it, we have to 100%, 200% be involved in it. We didn't want to be the startup that everyone still had a very culpable full-time job, that's sort of doing it on the side on the weekend, so I was already unemployed, so it wasn't a very hard decision for me, but from when we incorporated our company to everyone quitting, it was only like one or two weeks.

Lucy Liu: So.. Jack Zhang is our CEO. Our CTO is Xijing. His last name is Dai, and Max is our other co-founder who's been the firefighter of the business, always being thrown into areas where it's the most difficult, the most challenging, so currently he's managing our customer success team.

Kris: One of the difficult things when starting any business is figuring out things like equity splits, et cetera. How did you all decide on splitting up your company amongst yourselves? Was it just an equal split, like everyone got 25%, or how did you decide on those things?

Lucy Liu: I can't give you the exact percentages, but it's... We didn't... I don't think we spent a lot of time on this, but it's not it’s not an equal split, and you don't want it to be trust me. From experience, or from my conversations with other companies, I think, or VCs, they don't tend to like when companies are equally split.

Kris: Why is that?

Lucy Liu: I think it's just on the track, you still want to have one slightly more dominant person, just in terms of voting powers, and how terms are negotiated. Not so much on how you actually think. I don't think it affects how we do things, or how we think, but on paper, there needs to be one person who is, I guess, more than others.

Kris: And how did you decide who does what in those early days? Yeah. How did you split up the tasks that needed to be done?

Lucy Liu: Our first employee or fifth co-founder is actually one of Jack's ex-colleagues, so he's also a software engineer. We ended up with three software engineers, Max, and myself, so obviously the three of them were being very focused on software development, architecture, and then we realised, no, Jack cannot spend his time coding, otherwise he gets too involved in it, and then he doesn't do anything else, so then Jack, even though he's a software engineer, decided to take more on the fundraising, the business, hiring. You cannot imagine how time consuming hiring is in the early days. Like we were interviewing… from nine to like five, and that goes your day. For myself, I was managing the finance, getting everything set up, bank accounts. Again, how difficult it is to be a small business, and have bank accounts. And we knew that we needed multiple entities as well, because we're running a global business by default.

Lucy Liu: You can't really be a cross border payment if you don't have other entities in other bank accounts. So it was very administrative, and we had to do all the PowerPoints, Excels, projections, all of those things... so I don't think we really had a split, other than people who can write software, and people who can't.

Kris: Lucy is highly organised and so that left her doing a lot of the operational setup while the others in her team were focused on coding. But to really stamp their mark on the industry they needed to raise money to build a team.

Lucy Liu: We actually got our first sort of VC investment pretty early on, so only two or three months after we started, and the seed investment was I guess invested by myself, and the other co-founders. Yeah, so our pre-A was sort of January, February of 2016, so only two months after we started.

Kris: You said hiring was sort of like challenging in those early days. How were you thinking about hiring, as a brand-new team, building this brand-new service, how did you know who to bring onto the team?

Lucy Liu: I think we just, first we started with our network, so people we knew, people who we know are good, and it's always easier to convince people to join when there's a trust relationship already there, but obviously when we're hiring out compliance managers, and all those… positions where we don't actually know anyone, then we had to go through a recruiter, which could have been expensive, but we didn't have an HR, and we had a very, very small fish, so it's actually quite difficult to get people from bigger companies or banks, where or pretty much all of our target candidates are.

Kris: How long did it take to actually get the product to an MVP stage, where you could actually put it out in the market to customers?

Lucy Liu: We had our first sort of product after about six, seven months, so mid-2016, but that product no longer exists now, because… after releasing it, we thought… this is probably not good enough, and also, we probably didn't get our product market fit right the first time. So instead of actually going to the very small businesses, which that product was targeted at, we started doing API solutions for larger internet companies, and enterprise. I don't like to say enterprise, but much bigger companies… Our product was launched 18 months later, so beginning of 2018, we started to get all the real traction from… clients at that time… which proved this time, we got it right. Sort of got it right, and then now, 12 months later, we are revisiting our SME solution, and we now have a MVP, or actually it's a pretty comprehensive product to be released to the market for the smaller clients as well.

Kris: Okay, so the first product was targeted at those smaller companies, but you put it out in the market, and it wasn't successful, or you just weren't getting people signing up? What was the issue?

Lucy Liu: I think a lot of people signed up, but it's a... The issue at that time was that AML, and a lot of KYC, so what we call compliance issues, so with the smaller the business are, the... Everyone's a little bit different. They're all small businesses. They all have different requirements. We did not have a customer support team. The operations team was tiny, so it's very difficult to cater to everyone's needs, and also follow up on the compliance requirements, getting the volume through. I can give you an example. Like a small business might have regular transactions every month, every quarter throughout the year for a fixed amount, but compare that to our API client of a, say, marketplace, e-commerce website, that could be transacting 10 times more than their monthly volume 10 months ago, so business grow more quickly at scale, when they are much larger, or when you get it right.

Lucy Liu: We're not going after the really traditional, sort of importing exporting businesses. Instead we're going after the newer business models, companies that really need that support system in place for them to grow their business overseas.

Kris: Right, like SAAS companies, and things like that.

Lucy Liu: Yeah. SAAS, marketplace, e-commerce, very interestingly live streaming. Companies that try to replicate their business model in multiple countries, but have difficulties doing so because of the lack of payment infrastructure.

Kris: At what point did you realise that that first product that you built was not the thing that you needed to pursue, that you needed to sort of evolve this towards bigger companies? Was there something that you noticed that... Because that seems like a very different direction to take the company, and I'm sure you put months and months of work into this one thing, and then to have it not perform in the way that you wanted.

Lucy Liu: I think that what we did well was we had a very good architectural network in place in the first place, so even though the application interface was not good enough, we didn't even... I think we personally didn't even like that product very much. We just tried to release something for the sake of it, but we were still able to continue use our infrastructure, the network that we built, the banking relationship, all of those things, it’s just the application was different. And we always wanted to do an API solution, because it's the stickiness, and the... It's a lot bigger than an web app, right? Not everyone has the technical resource to integrate with us, and also we can't just be an API company. A lot of companies want to move quickly, and they wanted to have an manual way of doing things, which is why we then went back to our first part. We changed it to something that is more adaptable, more flexible, and more user-friendly.

Kris: Let's talk about trust, because trust is a really big factor when it comes to finance companies. The bigger the company is that you're trying to deal with, the more important it is to… have the trust that you're going to be able to facilitate these transactions in a way where they're not going to lose their money, et cetera. And as a new company, that could be a really difficult thing, so how did you go about actually building trust with these more enterprise businesses, and what was your pitch to them?

Lucy Liu: Around our Series A time, so we took investments from TenCent and Sequoia China. So that's around when people really started to... People began to realise, oh, you're a serious company. You're not just a startup, because startups in financial services is actually not a very positive term. People would much rather go for, say, for options, existing banking relationships that they have, and we participated in Mastercard Start Pass. I think it was the end of 2016, and they also became an investor in us, a minor investment in us in Series A, so we really used our investors as a way of demonstrating that we are serious about what we're doing, and everything we do is very safe. You don't need to actually see us as someone who's just going to take your money and go away, but we still struggle with it, up till today.

Lucy Liu: Better now than before. It's just, I guess, demonstrating that you have the licences. We were quite lucky that we got our AFSO very early on, and then we started applying for licences in different countries, building up our compliance team, legal team, doing our audits. These all were very boring, but very necessary things. Yeah, and clients talk to each other, so you want to have that good word of mouth between the key decision makers, but it's also very important to have, especially dealing with these larger clients that have a champion within their business who will actually believe in what you're doing, and also who would actually spend the time and effort championing your product, because in the... Even in tech companies, they will have different processes and procedures for onboarding different suppliers, and also using new systems, and finance guys might really [00:36:00] like us, but then a techie might like, oh, no, we don't have time. It's actually working out how you can get somewhere senior enough in the business to actually support you, and getting everything there for you.

Kris: Coming up after the break - Airwallex continues the process of building trust and in doing so becomes a unicorn.

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Kris: This Is Building A Unicorn, I’m Kristofor Lawson.

Kris: Lucy and the team at Airwallex started raising money early in their startup life. But the process of actually getting investors on board is never easy. Despite having a great pitch deck - Lucy says investors really didn’t understand how the company was going to achieve their goals.

Lucy Liu: Starting from pre-A, I think definitely our business model was something that's interesting to the VCs. Our CTO was using this super complicated algorithm, and it just looks very high tech, and fancy, and we would do demos on his computer screen, but so it was interesting to the VCs, but they didn't really understand what's so special or whether this actually can be done, because it will require a lot of resources, and a lot of money invested. It's not something that you can get started, start earning money, and then grow. It's something that you just have to make a lot of up front investment. Like I said, it was like two years before we even had real, meaningful transactions, so definitely I think in at least the very first round, it was difficult, but I think we were probably one of the only very few B2B payment companies in existence at that time.

Lucy Liu: There was a lot of other consumer remittance, credit card occurring businesses, but only B2B finance, probably only the more traditional companies were doing it. It was interesting to them, and this is probably this is an industry or sector that we want to make a bet on, because the industry is big enough. There is definitely demand for it, and nobody has really nailed it properly yet, so for them, I think it was a bet on the industry, as well as on our team, to really get it done.

Kris: Was there a point where you realised that actually this is starting to gain meaningful traction?

Lucy Liu: I think that we realised there was traction very quickly after we properly reorganised our... Also, how we sell is actually quite important as well, because you're taking sort of existing financial products, but you're providing the end to end solution. You're trying to convince the client this is what you need, rather than integrating with four or five different systems, banks. We can do end to end for you, but you have to be willing to invest the resources into working with us, and sometimes that's actually a quite hard decision for them. But once we got the first few clients on board, we quickly realised how fast API clients are going to grow, compared to just manually processing payments. Take one of our clients as an example. They used to do swift payments for every single universal payments, so sorry, going backwards. They are a tuition payment service provider, so they would help Chinese students pay for their university fees overseas. And They used to have someone sitting at the banks counter, and just filling in forms, dealing with emergencies, and making the payments via swift, and you can… thousands of students need to pay their tuition fees, especially during the peak seasons of August or September.

Kris: So they had someone physically sitting in the bank…?

Lucy Liu: Yeah, because if there is an issue, you can still do it with internet banking, but if there is an issue, obviously you need to call the bank, and then they need to figure out what's wrong, right, so it's much easier to just have someone sitting there. Even if you have 1% failure in your payments, that's say, 10 or 100 out of thousands of students, so… the solution we put right in was batch, so they could upload everything onto our system, or power through us, through our API to us, and we would process it for them. We would deal with the compliance issues, if the banks ask, and also the success rate was just a lot higher. And yeah, so that's tuition payments, you're looking at thousands of dollars, or tens, twenties thousands, but taking another extreme example is like live streaming, is usually typically like $5 or $10 payments, which doesn't really make sense for the company to process via any sort of banking product, because the swift fees, or the cross water payment fees would be around $50.

Lucy Liu: So they can't just process $5, because it's otherwise going to be negative $45. One of the things, infrastructure side things that we built on was local payments, so say, we're both in Australia, and I pay you. Obviously it's free for individuals, and businesses as well, but if I'm in China and I pay you, obviously I have to pay a cross border fee, so it was, the risk would be I move... I aggregate all of my Chinese payments through Australia, and then I would go through local payments, so in that sense, I can make $5, $10, because for me, everything is batched, and there's a routing, and going through local is a much cheaper and faster and more guaranteed. Yeah, so we definitely saw a huge demand in these new business models, and obviously the banks, I'm sure, would love to solve it for them, but it just wouldn't happen as quickly as we would execute things.

Kris: Airwallex raised $3 Million US dollars in their seed round in July of 2016. And through 2017 raised a Series A of $13 Million in May followed by an additional $6 Million in December. And all that cash was used to help establish themselves as a global player. Because when it comes to processing foreign transactions - you have to think globally from day one.

Kris: When you're thinking about a business in sort of like the global perspective, and you have to think about it inherently globally, how does that affect the way that you go about building out the teams for the business, and how do you think about where people need to be located, and what area, what countries they need to focus on?

Lucy Liu: For us, I think we definitely thought that having a UK or general EU licence would be important, and in terms of talent, UK is still leading in terms of payments. Most of the payment startups are in the UK, and all of the big, the banks are there, so I think talent is definitely one area to consider when you're trying to open up an office. Most of the regulators would require us to have a physical office, physical entity, a local director, most likely, and a local compliance officer in that area. If sometimes we will hire the compliance prior to the application of the licence, or during the process to show that we're very serious about what we're doing. Some countries do allow you to have your compliance officer overseas, but most likely, you need someone on the ground, and also in terms of localization strategies, having someone who know the market is very important.

Lucy Liu: We can send as many people as we want from a quarter of other offices, but you will still need someone there who really knows people in the area. Our head of Euro expansion is ex Transferwise, so… You have to understand it's very difficult for people to work in the satellite office, because they're far away from everyone else. When they onboard people is only a few people in, I don't know, like a shared office. Sometimes six or 12 months, or even 18 months on track, you still only have three to five people, so you're really going to need someone who believes in your vision, and also very passionate about what you're doing. Otherwise you probably see a lot of turnover, or the turnover, it's just a lot of churn, and it's not very good for the business. So for us, we've... At the moment, we would onboard people in a bigger office if they don't have a lot of senior people in that office, so...

Kris: You want to get them onboarded in one of your main offices, so that they can really understand the culture of the company….

Lucy Liu: Yeah. Exactly.

Kris: … and then take that with them?

Lucy Liu: Yeah. Yeah, so for example, if we hire someone in the US, we'll have them spend two weeks in our Shanghai office, visit our Melbourne office as well, get to know everyone so it's just another name you see on Slack, because you put the names to the faces, and then you get... You learn about the culture, the business, before you return to the office that you are stationed at… That helped, and also try to onboard more than one person at a time if it's a very small office. Even for us in Melbourne at that time, if we have two or three guys starting on the same day, it's quite... It's just a lot more people than him starting by himself, and you get that support, and the people are, I think, culturally feeling more involved.

Kris: Airwallex now have eight offices around the world, and more than 270 staff… And as the business has grown so has the requirements for which employees they bring into the business.

Lucy Liu: We still have a lot of our very early employees with us… The type of people that we look for, or we work well with, has never really changed, but obviously you want people who can grow with the business. You might find that the, supposedly the senior management of your founding sort of team is probably down the track not suitable anymore, so you would want to hire people either above or below them, so it's being a quite difficult decision, or we spent a bit of time working out that structure. But in terms of personality, I think people who work well in a startup sense it's always someone who's very hardworking, who takes on the share of what they want to do. And generally a very good communicator, because communication's quite chaotic when you have eight offices, and so many people, and you don't know everyone's name, right? So that hasn't really changed, but we did have periods of high turnover, especially when we are very close to project deadlines, or when are sort of pivoting but not really pivoting.

Lucy Liu: We've had turnovers, especially when we hire people from traditional banking...

Kris: Right. Do they sort of, coming from a traditional background, then somewhat struggle to deal with the pace of change in your business?

Lucy Liu: The pace of change, lack of structure, and also... sometimes we bring someone who is very, very senior, who are just too far away from the actions in their previous jobs. Like people tell you. One, you're a lot bigger, you need someone who professionally managed the business, or managed a team, but then you find out they're not culturally good fit with your existing team. People join startups for a reason. They want to get things done. They don't like, or they don't work well in the environment where there's just lots of unnecessary politics... But you can't really avoid... Once you're bigger, you can't avoid structure, and you can't avoid putting in processes, and we're running a finance-related business, so of course there's auditing requirements, governments, all those boring but necessary things.

Lucy Liu: You have to balance business growth, business growth with all those borrowing stuff, because otherwise you will never get anything done.

Kris: And it was 2018 where Airwallex really started to grow with an $80 Million dollar funding round in July… followed by a further $100 Million in March of 2019 - bringing their total investment to more than $200million US dollars, making them a unicorn - a company valued at more than $1 Billion. Which is a huge feat considering the company is less than four years old.

Kris: When you're looking to raise money, how did you decide... When is the right time to raise?

Lucy Liu: People ask me that question, or ask that question all the time, but I think for the Airwallex thing, we were just always very focused on what we're doing, rather than worrying about, how should we... How to time your fundraising. I think you want to time it as close to your business needs as possible, which sometimes is not always according to what you want. You have to recognise there's time for due diligence. There's time for trying to find the right investor, or talk to the investors. It's just too time consuming, and towards I think series B, series C, we just let it happen when for example, series B, we were going to raise it a lot, a few months later than when we actually did it, but for us, we were growing our API product. We needed money for hiring more people, so our existing investors just basically say, "You know, we can support you," and that's how it happened.

Lucy Liu: And having that, your existing investors there to provide the support is actually quite validating, because it saves you time from going out to the market again, doing all the pitching, and we sort of stopped doing that after series B, because it's just... We want to be focused on what we're doing.

Kris: You can just go back to that existing investor pool, and say, "Hey, we want to do this. We need more money. Can you help us?"

Lucy Liu: Because I think even in the earlier days, we... You can do as many forecasts as you want. You can make the spreadsheets really pretty, and you can say, "Oh, this is exactly how much I need in a year," but that's not how it works, because you could be seeing new business opportunities, and you could be spending more than you anticipated. You could be making more than you anticipated, so it's really having that momentum going, and not be like, oh, my god. I'm running out of money, or your lack of cash is slowing down your growth. That's probably one of the things you want to avoid, but raising too much when you don't actually need it is sort of still damaging to the cap table, and also to… incoming investors… because when they give you money, they expect you to spend it on business growth, right, but they don't just actually want the money to be sitting there in the bank forever.

Lucy Liu: It makes you feel safe, but it also means you are not growing quickly enough.

Kris: As we mentioned earlier - Trust is a really important issue when dealing with any kind of financial services business, and Lucy says that raising all that cash, and becoming a so-called unicorn - has been incredibly important in showing validation for their concept. It provides a level of trust for businesses that they deal with. However in the world of banking they are still fighting an upward battle because they are still relatively small compared to some of the existing players.

Lucy Liu: I think with, in terms of banking or in terms of partnerships, it changes the dynamics in the sense that they realise you have... It's a validation, but if you're talking to traditional companies, or some of the financial institutions, a lot of the times, they still don't really get this fundraising idea, even though there's so many tech companies, and it is like a VC sort of thing is very popular these days. A lot of times regulators still don't really understand, and partners sometimes, they try to figure out, what does this actually mean? It's a title, right but, or a label people put on you, but they don't really get what it actually means from a business perspective, because they will still be looking at revenue. They will still be looking at cap table structure, and they will be like, why do you have so many shareholders? And they just try to do due diligence on your shareholders, and we actually had a case of scenario when they were asking for the passport of Pony Ma, and we're like, sorry, I can't get that for you

Lucy Liu: Yeah, so you're still run into different problems every day, but definitely, people are quite buzzed about unicorn status and all of those things. For us internally, it's good from a spirit, a team spirit point of view. We had a little mini celebration, but other than that, for us, it's just raising money for business growth. It's not really anything more than that.

Kris: Are you done raising, or?

Lucy Liu: We don't know.

Kris: You don't know.

Lucy Liu: We don't know. Yeah.

Kris: Yeah. Do you think there's too much of a focus on needing to raise capital? Because, and once you take it on, you kind of have to keep going, right, to sustain that.

Lucy Liu: I think we get asked a lot about fundraising, when it's actually not something that we even spend a tenth of our time on, from an everyday perspective. And Jack always said, “Oh, you know, it's like I'll be so happy one day when I don't have to it personally”. We don't spend as much time on it as we used to. We have our team, legal counsels, and also our finance team helping us, whereas in the early days, we had to do all the number crunching and all the due diligence ourselves. We still get... I still remember series A, where we were getting the money from Tencent, and I was like, actually checked our bank balance when they said they transferred us the money. Whereas now, we're just like, oh, it happened.

Kris: Right. You were sitting there waiting, like oh, they say they're going to send the money to me. I'm going to...

Lucy Liu: Whereas now, it's probably like we probably forgot to check to, and then we're just like, ah, okay.

Kris: Wait, hang on, so you forgot to check that $100 million just turned up in your bank account.

Lucy Liu: Well I just think we wouldn't be watching it as closely as we used to. You know how they say traders don't really feel money? They feel more, it's just numbers to them. Once you get too emotionally attached to the sense that it's capital money, you sort of... Your emotions change, and how you see things change. So yeah, for us, it's just numbers.

Kris: Coming up after the break, Lucy shares her tips for tackling the Chinese market, and how explosive growth can affect the way you build a team.

(AD BREAK)

Kris: This is Building A Unicorn - I’m Kristofor Lawson.

Kris: Airwallex has been going from strength to strength and they recently decided to move their official headquarters from Melbourne across to Hong Kong. A lot of their clients are in Hong Kong and China so they wanted to be as close to their big clients as they can.

Kris: You're from China, and so you understand the Chinese market in a lot deeper way than many… other companies understand. It's a market that a lot of big US-based companies, big Australian companies, really struggle to deal with. What is it about China that many companies get wrong?

Lucy Liu: I think a lot of people recognise that there's a cultural difference, but they don't change the way they operate when they open up their Chinese office, so a lot of the complaints I get from people working for US or European companies are, every decision is made by headquarter, which is actually why I don't like this headquarter title. For us, it's not really about where everything is, and we're a global business. We're supposed to be everywhere, and our strategy is supposed to be localised for different markets, but from a vision, and from a company operations perspective, we should be global. We should have that global mindset, but for some of the much bigger companies that try to target the Chinese or Asian market, a lot of decisions, a lot of the things are still very much centralised, and I think that's one of the issues.

Lucy Liu: I understand why it is that way, because you're still... You don't want the local markets to be doing their own thing, and you're one company, right? You have to have that control, which is I think why company like ours exists, and where a company like them exist, is it's not really one or the other. It's more like who does what better, and how you can work together, so we're working with some of the US-based companies, tech companies or non-tech companies on there Chinese or Asian strategies, and how to get it done better. And they're helping us with other markets as well, because you can only stretch yourself so thin. You can't risk being too spread out, and not focused on what you know... The priorities, there have to be a list.

Kris: So in some ways, companies that are going into China, like it's important to think about that kind of, almost decentralised strategy, because of the requirements of the local market? Is that correct?

Lucy Liu: It's not just China, I think. If you take southeast Asia is another example. Every country is different. People see it as one region, but the regulations are different. Languages are different. Currencies are different. So you can't say, "You know, I see Asia as one region, and I just... This is my Asian, you know, like sort of way of doing things." Every market's just too different, and that's one of the things that we spend the most time on, is integrating into the local system, complying with the local regulations, and having the local people there to really tell us what is different, what needs to be done differently. There's no such thing as one size fit all, and you can't... Just because one thing worked in one market doesn't mean it's going to work in another market.

Kris: How important is it, especially in Asia, how important is it to actually have people on the ground, in those countries, for a business like yours?

Lucy Liu: You don't necessarily need people there, but you need them to understand what is going on there, and also be within close proximity to what is happening in... Because especially in Asia, I think face to face meetings are very important. Jack and I used to just fly over to somewhere to meet the banks, or meet the regulators, because they don't really tend to go for the emails, and it's much faster to explain things when, and build on the trust when you meet them. Yeah, and also, there is still some, I think, differences in perception of the Chinese, I think... I don't think Chinese people work differently to Americans or Australians… Most of the founders I know of tech companies are well-educated, and they're all went to US and European universities, so I don't think there's a difference on how tech companies operate. Thinking about that scale, and also you're looking at a market of billions, rather than millions. Sometimes a lot of companies struggle. They're like, we have this five year plan. I'm like, a Chinese company will do it in six months and crush you, so you know there is capital in the market to support these fast growing companies, and just... Things just move beyond imagination. Like, there's coffee shops, will have a strategy of opening 100 shops in a month, so it's not very sustainable.

Lucy Liu: Like you might say, "Oh, no, no. That's probably not gonna work," but that's what's happening, so your strategies need to change.

Kris: Building a company that caters to explosive growth also requires a different mindset when hiring. You’re not only having to think about building your team, but having the right processes in place that allows that team to scale rapidly. And Lucy says building a global business also highlights differences in how different countries approach rapid expansion.

Lucy Liu: I think for us, we definitely did a very good job while hiring a good HR business partner early on. That made a lot of difference on our hiring strategies, and also being able to hire fast enough is one of the things that we constantly try to nail at, because you can grow as fast as you can, but you can't if you don't have enough people. You're always fighting with, competing with harder internet companies. Sure, we're a unicorn, but there are so many other unicorns in China doing interesting things, and there's also a cultural difference from an engineering perspective, because we tend to find that Silicon Valley, or Australian, or London developers are more focused on asking why? And structuring things perfectly to make it sustainable, make it secure. You know, it's a very engineering heavy mindset, but it's a good thing. Don't get me wrong, but when you were moving in the Asian market, that's just... Too much planning is not going to be good for growth.

Lucy Liu: On the other end of things, we have a lot of Chinese developers not asking why, and just doing things, and sometimes it hurts the business because you might not have done your QA process properly. You might have released something without your approval, so, and that's a very consumer-based sort of product development as well, because you could have app, and they could be changing things in the background without you noticing. For a business product, it's... Everything is very noticeable, and so yeah. Coming back to that, how do you grow quickly? It's all about people, and having the right people in place makes a lot of difference, and having a balance between getting things perfect, and releasing things fast enough.

Kris: Do you struggle to get enough people?

Lucy Liu: Yes, we definitely do. Also, we always had very high standards in our hiring. Even recruiters are like, some of the recruiters are even refusing to work with us now, because our process for even hiring a junior developer is code test, interview with senior engineer. We interview with CTO, and I think we're still at a phase where the founders can personally assure that we do the final interviews, and not all of us, but at least with one of us, to make sure that there is a good culture fit, as well as from a professional experience perspective, they match what we are looking for. Not sure how long that's going to go for, but we hope for as long as possible, because… What's worse than not having enough people is firing people, and also getting the turnover, and people leaving during probation because then you have to go through the whole process again.

Kris: Do you remember your first conversation that you had to have with someone, to say, "I'm sorry, but you're not a great fit"?

Lucy Liu: I think people know when they're not a good fit. It's not like... At least the conversations I've had, as soon as we sat down, I think the person know what I'm going to say, and it's just a matter of working out where people are at, and also how to both move on, because people don't want to stay where they're not a good fit either, so... definitely a difficult conversation.

Kris: In banking and finance industries, in many countries are kind of broken. In the US, for instance, people still send a lot of checks for B2B transactions. That's something that I personally find incredibly frustrating, when I have that conversation with a company, and they're like, no, we pay by check. I'm like, we don't accept checks. That's not a thing that we do anymore, but as you expand your business, and you're looking at the UK, and Europe, and you're looking at the US, are you noticing any sort of trends in the types of conversations that you're having with people in those markets, where the processes haven't really evolved in the same way that they have in Asia, or in countries like Australia, where payments happen digitally all the time?

Lucy Liu: Yeah, so I think for Asia's it’s quite interesting that people never really used credit cards, so people just jumped from cash all the way to e-payments. It was like we never really... I think, at least my parents' generation, or people older than me, probably never really consistently used cards. Their cards are binded to their Apple Pay, or their WeChat pay, or Ali Pay. They're sort of combined e-payments with card payments, whereas in the... Check, all of those things, it's definitely something that our Asian customers struggle with. It's like, what is a check? Let alone, like credit cards, because some of the credit cards they issue in China or Southeast Asia doesn't really work in the US, because the card processing thing, yeah, it's a very complicated system, and an old system as well. When we're talking with Visa and MasterCard, even themselves are trying to reinvent that whole process, and trying to change the rules of how they process payments, because it's just not fit for globalisation, or it's not fit for digitalization.

Lucy Liu: They're very used to people just... Australian using the Australian card in Australia, but that's not the case anymore. And Europe is actually a very interesting market as well. You would think that e-payments is everywhere, it's cardless, it's cash-less, but actually it's not. But banks are trying to be more progressive as well, pushing people onto platforms, and also pushing people to use digital payments, and the way you do it is not actually just to say, oh, it's easier to pay, but to give an example, how people started using We Chat pay in China is because everyone sends red packets, or what we call money, to people during Chinese New Year, and WeChat pay launched its function where you can easily send some money to your relatives or friends, and people would get very excited if you send them like $5 on WeChat, and that's how it all started.

Lucy Liu: The Chinese Uber, DiDi they would give coupons to all of the WeChat pay users, so people would bind your We Chat pay to their DiDi account, and all of a sudden, you sort of foster this user behaviour that is, people just get used to it. I think the way Europe and US are trying to do it is also enable e-payments for your utility bills, or enable cardless metro rides, subway rides, so it has to be something that's linked to their everyday life, and even for business it's the same, so director bid, or something that's related to how they do the business. Otherwise, you might be stuck in a cycle where, oh, we don't take cards, or we don't take e-payments. We only take checks, so it's like those types of things, or I only pay with checks. The user behaviour has to be built up over time, and yeah, so we get this all the time. The payments rolling out, but then people actually don't using it, are not using it because they're just not something they're used to.

Kris: Like that's a difficult to change, to change the fundamental behaviour of how businesses operate, because that's what it requires, because people were used to doing things one way, and then...

Lucy Liu: Yeah. I think any startup that changes behaviour is one that will do very well. Even if it's something that's like a tiny thing that is different.

Kris: You’re really, a very young company. Essentially three and a bit years into your journey. When you look at everything that you've achieved so far, how do you feel?

Lucy Liu: Honestly, it doesn't feel like three and a half years. It feels more like a 10 year journey. It's definitely quite amazing to look back and think that we were only four or five people company three years ago. We're very grateful that most of our first few employees are still with us, so looking back at the photos, and also how young everyone looked. It was like, startup definitely makes you look older, too tiring, but I think we don't spend that much time looking back at things unless we hit those milestones, and then it's the end of the year, and people get emotional. But I think we feel very lucky. You need a bit of luck when you're running a startup, and you're starting something new. But on top of luck is just working as hard as you can, and be very focused on what you're trying to achieve.

Kris: Thanks to Lucy Liu for taking the time to speak with me for this story.

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