Airwallex - Case Study
Since its launch in 2016 Airwallex has raised USD 22 million in investment. It has built a global network, developing strong relationships with banks and regulators worldwide and using local partners where necessary to make the most of foreign markets.
The company is fast building an impressive client list. As well as handling Asia-Pacific cross-border transactions for Mastercard, Airwallex processes payments in Australia for Chinese social media giant WeChat. With more than a billion WeChat transactions made in Australia each year, it’s a huge market.
Airwallex has successfully navigated the strict and complex regulations that govern the transfer of funds in and out of China. China is a major focus for the company, which has more than 30 employees in Shanghai.
But for founder and CEO Jack Zhang, China is just part of the plan to lead the cross-border payments industry worldwide. In 2018, it’s expecting to double its global workforce to 120. “We have got so much opportunity ahead of us,” he says.
Key learnings
- Focus on relationships and reputation: Make sure incountry regulators understand your business model, and build and protect your reputation to deter competition.
- China is a key market in Asia – but it’s not the only one: Other Asian nations offer huge opportunities for Australian businesses, India and Indonesia being two great examples.
- Look beyond traditional recruitment methods to get the right people: Candidates applying to work at Airwallex are judged on how fast they learn, their adaptability and passion for the role, not just their qualifications.
- Go to market early to improve your product: Your product doesn’t have to be perfect from launch – feedback from customers will help you make it better.
- Be strategic when choosing investors: The right investors can not only offer financial support, but practical help and have a positive impact on your brand from a PR perspective.
- Partnering with competitors can pay off: Airwallex joins forces with other firms when it suits to take advantage of their relative strengths in different markets.
- Take advantage of changes in the global economy: The rising standard of living in China means new opportunities for Australian businesses.
Focus on relationships and reputation
Relationships and reputation are key to success in Asia, says Jack. “We spend a disproportionate amount of our time getting regulators comfortable with our process and our model and what we’re doing.”
That reputation is crucial when it comes to holding would-be competitors at bay. “We work in one of the fastest-moving industries in the world. People are very quick to adapt, things are changing very quickly,” he says. “There’s always a risk of someone coming in and replicating your idea. You almost have to expect it’s going to happen, but once you’ve got that reputation it’s very hard for people to come in and compete against you.”
“Our number one priority is abiding by their rules. We’re very strict around making sure we don’t do anything that carries any kind of risk because our reputation is the only thing we’ve got.”
China is a key market in Asia - but it's not the only one
Airwallex is exploring markets around the world, and has licences pending in many major economies. Asia holds huge potential for the company. “I think a really exciting product for us in the future would be instant or real-time payments between India and China. That’s the new frontier of trade,” says Jack.
Indonesia has proved another strong market for Airwallex, and Jack urges other startups to consider it. “Indonesia is the most surprising, undertapped resource for Australian businesses. It’s our closest neighbour. Jakarta is closer to Perth than Perth is to Melbourne or Sydney, and yet there’s still very little trade there.”
Jack spends around 70 per cent of his time travelling to different markets, and takes every opportunity to learn from clients and partners who are experts in local regulations and practices.
Look beyond traditional recruitment methods to get the right people
Jack believes that qualifications are less important than how hungry a candidate is for the role, and how adaptable they are. “People in Australia are far too set on experience when they’re hiring,” he says. “Some of our best hires have almost been straight out of university.”
Rather than using a standard interview format, the Airwallex team asks candidates to pitch a solution to a business question, such as how they’d go about working in a new market. The candidate receives feedback on their presentation, and is set another task for a second interview. They’re then scored on how well they’ve taken on board the feedback given.
“Really, we’re evaluating them on how much they’ve learnt,” says Jack. “If they’ve really taken on board everything we’ve said, and you can tell how passionate they are, then we think they’re a good hire. We generally find that works way better than a standard procedure.”
Recruitment has not always been easy. In the early days, Jack – an engineer by trade – admits he found it difficult to hire salespeople because he didn’t know how to interview them.
That’s improved, but recruitment still takes up to 25 per cent of the company’s time. However, while once Airwallex would approach people they thought would be a good fit for the business, now it’s common for potential hires to knock on the company’s door. The firm also ensures it is front-ofmind for good candidates by networking at industry events.
Go to market early to improve your product
In the early days Airwallex worked hard to make their product as perfect as possible before testing it in-market. “We were refining it internally but eventually we had to push it out to the client, and then we found that all the refinements we’d made were useless,” says Jack.
“My recommendation would be to push out early, even if you need to refine the product a lot. You might crash once or twice but we find we are able to manage client expectations. Your unique advantage to the client doesn’t change, so you just need to have a very fast turnaround approach and be able to build in the features that the client needs iteratively.”
Jack adds it is important that you have something to show potential clients, even if it’s not perfect. You just need to work out how good it needs to be to engage them.
Be strategic when choosing investors
The right investors can offer more than financial benefits. “They can give you not just credibility, but clients. Our investors are our biggest clients,” says Jack.
The right investors can help you enter the market and you might even be able to leverage their own brand to give yours more public exposure. Airwallex has recently partnered with fellow Melbourneheadquartered VC Square Peg Capital for a USD 6 million investment, aligning with Airwallex’s commitment to disrupting both the Australian market, as well as book ending the Southeast Asian corridor.
Partnering with competitors can pay off
The FX market is huge. It handles three and a half trillion dollars a day and there are many companies operating in the same space. It is perhaps surprising, then, that Airwallex readily enters into partnership with some.
“While we are essentially competitors and a lot of those guys are using the same business model as us, we all have really different strengths jurisdictionally,” says Jack. “The Americans are really strong over there, the Europeans or the British are really strong in their part of the world. So while we’re all competitors we’re all really close – we partner together where we can.”
Take advantage of changes in the global economy
Jack sees massive opportunities for Australian businesses able to capitalise on the shift in the global economy. “The best deal to do in town in 2007-2010 was get your product manufactured in China and sell it to the rest of the world. Now the biggest ticket in town is to manufacture a premium product in Australia and sell it direct to the Chinese consumer,” he says.
“Australian businesses are in this incredible position to sell direct to the Chinese consumer and I think people recognise how important that is. I can’t remember the last time a company I spoke to was selling products to America.”
He says many older-style marketing and advertising ideas that don’t work in the West can be hugely successful in China, allowing companies to rapidly attract huge customer bases.
A future filled with opportunity
The future is looking bright for fintech startups, with increased regulation in the banking industry encouraging customers to look outside the big institutions for financial services, and the rise of open banking creating opportunities for startups to develop new services.
This bodes well for players like Airwallex, and Jack is confident the company will continue to grow, particularly as investment is unlikely to be an issue while owning assets in Australia is seen as a smart move by Chinese venture capitalists.
“Within the Asian region Australia is a safe bet. It’s a stable economy – we’ve had nearly 27 years of uninterrupted economic growth,” he says. “There’s certainly some huge benefits, around the quality of the regulation and our financial system, in being based here and that’s a big selling point for us.”
Ultimately, says Jack, Airwallex is aiming to become the number one brand for cross-border payments, for both businesses and individuals.
“The company has recently changed tact and started to aggressively target large merchants, seeing immediate success at the enterprise level. They will continue to focus on these sized institutions across China, Europe, North America, Southeast Asia and Australia moving forward but still believes SME sector has scope; and won’t discount this an option for later down the road.”
“I think that we could very easily scale our business 10 or 20 times in the next couple of years. Watch this space!”