At 34, Jack Zhang found himself three and a half years into managing his startup, seated before Michael Moritz of Sequoia, a leading investor in Silicon Valley. Moritz had invited Zhang to his home, which offered a view of the Golden Gate Bridge, to discuss a potential sale.
Stripe was interested in acquiring Airwallex for $1.2 billion. At the time, the Melbourne-based firm had an annualized revenue of about $2 million, making the offer nearly irresistible with a revenue multiple close to 600 times. Moritz emphasized Patrick Collison’s status as a generational founder, suggesting the deal could lead to extraordinary growth. Zhang, though initially agreeing, spent two restless weeks in San Francisco contemplating the decision.
Ultimately, he returned home nearly 8,000 miles away.
“I deeply reflected on what drives me to build Airwallex,” Zhang explained earlier this week from overseas. “After three and a half years, the business was growing 100 times in 2018, and I had only just begun to experience entrepreneurship. That’s what I had dreamed of.”
His decision was bolstered by the fact that two of his three co-founders opposed the sale. A clear reminder of their vision also awaited him on the office whiteboard: creating financial infrastructure enabling businesses to operate globally as if they were local.
In hindsight, the decision seems foresighted. Airwallex now reports over $1.3 billion in annualized revenue, growing at 85% year-over-year, and processes nearly $300 billion in annual transactions. Zhang argues that the challenges faced have been integral to their success.
This resolve goes beyond just business strategy. Zhang, originally from Qingdao, China, moved to Melbourne at 15, navigating language barriers and financial struggles. He juggled four jobs to complete a computer science degree at the University of Melbourne, taking roles from bartending to farm work, which he recalls as his toughest job. He later wrote trading code at an Australian investment bank but found it unfulfilling.
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Before Airwallex, Zhang embarked on nearly 10 ventures, including a magazine at 14, a real estate company, import-export businesses, and a burger chain.
The concept for Airwallex emerged while Zhang operated a Melbourne coffee shop. Co-founder Max Li’s struggles with international payments—often blocked by intermediary banks—spurred Zhang to investigate the workings of correspondent banking and SWIFT, ultimately leading to the creation of their own global payment network.
Today, Airwallex holds nearly 90 financial licenses across 50 markets, compared to Stripe’s estimated half. Acquiring these licenses, particularly in Japan where it took seven years, has been arduous but crucial. In some regions, they even bought defunct companies to secure non-issuing licenses, rebuilding the technology from the ground up.
“You can’t just easily integrate with Mexico’s central bank,” Zhang remarked. “We maintain a secure room where access requires biometric scanning for central bank integration.”
These licenses are more than regulatory formalities. Unlike Stripe and Square, which must immediately transfer funds to merchants’ bank accounts in Japan, Airwallex can retain these funds in its ecosystem, enabling customers to manage finances entirely within the platform.
The foreign exchange benefits are notable: U.S. merchants transacting in Australian dollars can avoid conversion fees and utilize local balances for expenses, all at interbank rates.
“You no longer function like a U.S. company,” Zhang stated. “You operate globally without setting up physical entities.”
Zhang intentionally chose a gradual expansion, guided by a principle he terms the “path of maximum resistance,” where every license and integration creates barriers against competitors. “It took six and a half years to reach $100 million in annual revenue. But just over three years to hit a billion,” he noted.
Owning infrastructure is crucial, according to Zhang, as it ensures control over payment processes and data access, unlike relying on external platforms, which he sees as unsustainable.
Historically, Airwallex and Stripe operated in different regions with distinct client bases. However, with Stripe expanding internationally and Airwallex entering the U.S. market, their paths are converging.
Airwallex primarily targets CFOs in established markets like Australia and Southeast Asia, contrasting with Stripe’s developer-driven U.S. customer acquisition. More than 90% of Airwallex clients start with a business account, with many using multiple products.
Zhang acknowledges challenges, notably Stripe’s strong Silicon Valley reputation and brand recognition. “Our brand isn’t there yet,” he admitted, emphasizing the need to appeal to engineers and developers.
The competition is closely watched, with Sequoia and Greenoaks Capital investing in both companies. Zhang downplays any tension, suggesting investors are confident in the market’s potential.
Questions about valuation remain. Stripe’s $159 billion valuation contrasts with Airwallex’s $8 billion, though Zhang notes their transaction volumes are not as disparate as the valuations suggest. With Airwallex’s rapid growth, the revenue gap is closing faster than the valuation gap.
An IPO might eventually bring market recognition, but Zhang estimates it’s three to five years away.
Currently, Zhang is focused on future goals: reaching a million customers by 2030, achieving $20 billion in annual revenue, and increasing average customer revenue. They are also launching AI-driven financial products, leveraging a decade of financial data to set them apart from competitors.
As they strive to capture Stripe’s market share, the competition remains distant. Zhang and Collison, once amicable during merger talks, didn’t interact at a recent Greenoaks Capital event.
