Cambrian Fintech with Rex Salisbury
00:24:32 · Rex Salisbury, Jack Zhang
[00:24:32] S0: I think it's a personal bank account because you don't... You haven't even formed the company at [00:24:35] S1: this point. I I haven't even go... I haven't even resigned at that point. I was still a full time working in investment bank. I still, you know, hadn't registered the company. So that, obviously, give me a lot of motivation. So, basically, I think I got all the money close to midday, and I I resigned in afternoon. And and and that's that give us the initial capital to build the the the kind of initial product of Airwallets. And and, obviously, I really kind of appreciating the trust and the the bad that she put on us, and and I bought it for to be the cofounder of the company to do... To build this company together, and she become the CEO role and kinda leading the the finance and the... At the the back office for an additional few years. And now she's leading our PR commerce team globally. [00:25:27] S0: Any founders watching this, I invest very early, usually first check-in, but I will not wire money to your personal bank account. You do have to have a business, incorporated, and a business account. So that was probably your easiest raise. Talk to me about maybe your hardest raise.
00:25:47 · Jack Zhang
[00:25:47] S1: I think there's many rounds of pretty hard, and and obviously, series a was pretty hard because we kind of build a product, and then we'll fail the first time. We'll build the next product, which we know gonna fail again. But we do have product market fit for a few 100 SMBs in Australia. We're able to leverage in the product to raise our series a, and, and Tencent was was was one of the investor. And the the founder sort of asked them, why can't we build a product ourselves? Why a small startup in Australia can do better than what we do? We have, you know, hundreds of thousand employees and have a big fintech division. And and the the investment team is sort of not really sure what to say. And the deal just kinda got stalled for a couple of months until I had the opportunity to meet with the the president in Hong Kong and able to kind of convince him to continue to... You know, he would convince him to convince the founder of Tencent to approve the deal. And then, you know, at that time, we were only have a few weeks to money left with the bank and kinda almost, you know, bankrupted. And, you know, we also raised around Series D in the middle of COVID. And I I remember that the time we we we were about to close the round, and The US stock market crashed three times, like a 30% essentially. So the 10% down on Monday, 10% down on Thursday and then Friday, we were closed on Friday evening. I wasn't sure if we we able to close around because our revenue also down 30, 40% in in just a matter of couple months because we have bunches customer intuition and travel all kind of went to zero. But lucky the investor, you know, closed the route. So, you know, that's many of these stories happen throughout the last decades.
00:27:38 · Rex Salisbury
[00:27:38] S0: Yeah. And I think those are important stories for founders to hear because I deal with a lot of founders who are... You know, they're trying to raise an a. It's really hard. They're working with a strategic who's, on one hand a great partner. On the other hand, they have these conflicts that they have to navigate around the investment team versus the business wanting to do things. So thanks for sharing some of those things. There are a lot of folks listening probably going through similar experiences to what you've been through. I think one other thing I wanted to talk about, too, is just how your go to market has worked. So we've talked about the product, how it's had these kind of three distinct phases. But how do you think about kind of marketing yourself to customers? And in particular, I think it's interesting you guys have built out a partnership with the McLaren F1 team, which before they actually started leading the constructors championship this year. So maybe talk about just how you think about go to market broadly.
00:28:33 · Jack Zhang
[00:28:33] S1: Yeah. We... Because as the DNA of AirWallet has really kind of started infrastructure business, it's very much of a selling to enterprise customers. It's a very sort of outbound sales driven. And that was the case for, I guess, the first five years of the company. And at one point, we realized we need to kind of do go to market in so many different countries, and it's very efficient of of, you know, using just sales, and only outbound to to to to kind of acquire customer. We start building a marketing function so the company moved from a very outbound driven company to, you know, now to kind of probably, like, I would say, seven years out in the journey that we start to have, you know, marketing function without having a partnership team. And over time, you know, now... Nowadays, probably, like, 70 plus percent of the the customer acquired from marketing. So it's kinda really shifted, from a outbound motion to a majority of inbound motion and partnership motion. And as we kind of shift into that inbound motion, we spend a lot of money on paid and and organic. But at certain point, you couldn't really invest more money because the CAC just sort of become inefficient and that the LTVs to CAC is... Doesn't make much sense. That's when we realized we need to keep investing in brand in top of the funnel and middle funnel, and then doing fully integrated campaigns so that we can continue to invest in more marketing dollar for the CAC to work. And that's basically when we started this... We started this journey about two years ago. We sponsored MacFunner, and, obviously, we got quite lucky. And, you know, MacFarlane was a tier two team at that time, but then they just did extremely well when when the constructor championship last year, and they're probably gonna win this year again. And we were also starting sponsor Arsenal and doing long at home campaigns and integrated campaigns. And as we kind of invest in more on top of funnel, and we found that we can put more dollar into the, lower funnels, so basically paid an organic investment that we... Just the last quarter, we saw our new customer grow about 50, and CAC went down 30%, because we're able to put more dollar into work. And as we invest in more marketing, the investment on on brand kinda is stable. Mhmm. But, that kind of stopped paying off.
00:30:57 · Rex Salisbury, Jack Zhang
[00:30:57] S0: And how did you know when it was time to invest in doing these global brand initiatives? Because a lot of, you know, companies, as they're starting to scale, they're trying to decide between do I scale engineering, product, go to market and sales, or do I start investing in brand? And if you invest in brand, oftentimes, there's kind of a large nebulous ROI. So have you been able to measure how effective that's been for Airwalks? [00:31:20] S1: I think we didn't know. I mean, arguably, we could have invested a bit early, but we... Because we didn't know. And and it's always hard to understand the ROI of investing brand because it's harder to measure. Right? Because the only way to measure is fully loaded CAC. Right? And and we... But at that point, we already kind of break even, so the company is not burning money. And we cannot... And we still have close to 500,000,000 in the bank. We're kind of sort of able to experiment a few things. And even we make mistakes, and we we should... You know, that shouldn't damage the company so much. It would not change the trajectory of the company. And we we also really struggle to kind of getting the efficiency, you know, by putting more dollar into into paid and and and SEO and, you know, that's kind of when we started to sort of experimenting, investing in brand and fully, fully integrated campaigns.
00:31:20 · Jack Zhang, Rex Salisbury
[00:31:20] S1: I think we didn't know. I mean, arguably, we could have invested a bit early, but we... Because we didn't know. And and it's always hard to understand the ROI of investing brand because it's harder to measure. Right? Because the only way to measure is fully loaded CAC. Right? And and we... But at that point, we already kind of break even, so the company is not burning money. And we cannot... And we still have close to 500,000,000 in the bank. We're kind of sort of able to experiment a few things. And even we make mistakes, and we we should... You know, that shouldn't damage the company so much. It would not change the trajectory of the company. And we we also really struggle to kind of getting the efficiency, you know, by putting more dollar into into paid and and and SEO and, you know, that's kind of when we started to sort of experimenting, investing in brand and fully, fully integrated campaigns. [00:32:20] S0: So basically, you know, company is breakeven. You realize doing paid acquisition, you've kind of capped that out. But now that you're breakeven, it's like, okay. Let's invest in brand and see how that experiment plays out.