This episode is actually part of a larger narrative spanning three years. It began back in Season 1 in 2020 with our first conversation in the season finale with Hendra Kwik, CEO and co-founder of Payfazz, rural Indonesia’s largest and longest-running fintech platform, who talked then about the origins of Payfazz and their mission of financial inclusion.
This narrative continued in Season 3 in 2021 with the season premiere where we welcomed Hendra back on the show and this time he talked about the next stage of Payfazz’s growth which is building the future of internet finance in Southeast Asia through the Fazz Financial Group, formed by Payfazz and fellow YC company and Singaporean infrastructure fintech Xfers joining forces.
And now in Season 4 in 2022, we get to know Fazz Financial Group a little more through the financial technology group’s other co-founder, Tianwei Liu, the CEO and co-founder of Xfers. An engineer by trade, a founder by experience, and an angel on the side, he brings his various hats to the show and sheds light on the infrastructure and crypto aspect of Fazz Financial’s mission of reinventing internet finance in Southeast Asia as one of the leaders and pioneers of payment infrastructure here in Southeast Asia.
Timestamps and Highlights
- (00:12) Paulo recaps the Fazz Financial Group evolution through the podcast;
- (02:53) Paulo introduces Tianwei;
- (03:57) What excites Tianwei about Southeast Asia; “[The other time] I was just joking with Hendra, startups are a [fast-paced] thing. And every generation we see new exciting things happening. And even though we have just been doing it for a short [time], if you look at it, it’s probably just five years, it feels like a decade has passed, [or even] two decades.”
- (05:46) How Tianwei decided to return from Silicon Valley to start Xfers in 2015, 2016; “The decision for a lot of the stories that I hear about founders that started up in this region over the last few years, one common theme is definitely because this is home. This is where we are natively grown up. And we feel that there’s something that eventually long-term, down [the road], we want to build successful companies or [bring] the things that we are seeing overseas back [to our] homeland.”
- (10:05) Driving the evolution of fintech in Southeast Asia through payment infrastructure; “We were pioneering bank transfer-as-a-service…Xfers has successfully demonstrated to the regulators for the last five to six years, [that] we can do it just as safely…Now you have FinTech investment space, the blockchain space, the payments space…But the basic building blocks of being able to receive payment, send payment and make this whole seamless and low cost, it’s really a great leap forward.”
- (13:49) Three reasons why Xfers joined forces with Payfazz to form Fazz Financial Group; “A lot of the time payments is really a commodity product. I think we are not yet at the luxury of the Valley where people value developer-friendliness above everything else…Unfortunately, when you are in Asia most of the time, it’s always commercial…So over time then what is the key differentiating factor for a commodity product? It’s really the distribution that you have.”
- (18:13) How the evolution into Fazz Financial has shaped Tianwei as a leader; “We want [Fazz Financial] to be a Southeast Asian company and not [confined] to any country. And that is something that in the last two years has really materialized.”
- (20:08) How Xfers works to support Payfazz agents and users; “But a large part of the agent’s and people’s lives depend on us working right now. We serve probably north of half a million customers on a daily basis right now. So all these people depend on us actually being able to operate and continue staying up.”
- (21:35) Why Xfers ventured into developing Singapore’s first stablecoin through StraitsX; “[Stablecoins are] one of the so-called Holy Grails of crypto. You can’t buy a coffee if the price just keeps fluctuating…stablecoin is something that a lot of our customers [have been] asking for. They need a product that is built on a blockchain designed from the ground up that they will be able to [build] additional services on.”
- (24:45) The value of localized products in crypto; “If we leave it to external folks to build it, the future will be in their direction. And that’s something that we have a huge resounding [belief] at Fazz Financial Group. We need to [build] out the future of the Southeast Asia financial ecosystem ourselves…we need to figure out how to make sure that there is a thriving decentralized finance and ecosystem in the blockchain side in the Asia Pacific.”
- (27:13) What the future of crypto and payments infrastructure is in Southeast Asia; “Real world utility trumps everything.”
- (29:20) Rapid Fire Round
About our guest
Tianwei Liu is the CEO and Co-founder of Xfers. He keeps Xfers focused on its vision to build South-East Asia’s most trusted digital financial ecosystem. Along with the management of Xfers in Singapore, he is currently driving Xfers’ expansion into Indonesia and engages closely with Xfers‘ banking and merchant partners to accelerate the growth of fintech and digital businesses in the region.
After his graduation, Tianwei returned to Silicon Valley as a Software Engineer working on developer tools at WIMM Labs, a start-up that built the world’s first Android-based smartwatches. Together with his team at WIMM Labs, they laid the foundation for Google’s WearOs™ that powers its smartwatches (WIMM Labs was acquired by Google in late 2012).
After WIMM Labs’ acquisition, Tianwei worked at Amazon Lab126 from May 2012 to June 2015, of which during the period, he and his team built the big data ingestion infrastructure that allows for real-time processing and analytics of the health status of all Kindles devices used daily by Amazon’s customers.
Tianwei holds a Bachelor of Engineering (Computer Engineering) in 2011 from the National University of Singapore. Tianwei also spent a year working at Silicon Valley while studying at Stanford University under the NUS Overseas College (NOC) Programme.
Paulo: So, Tianwei, what’s been keeping you up recently and what makes you excited about Southeast Asia these days?
Tianwei Liu: Hey, thanks for the introduction, man. I didn’t know I had such an extensive career, but you know, looking back and it has been quite a while. [The other time] I was just joking with Hendra, startups are a [fast-paced] thing. And every generation we see new exciting things happening. And even though we have just been doing it for a short [time], if you look at it, it’s probably just five years, it feels like a decade has passed, [or even] two decades. We feel like old dudes but it’s a very thriving environment right now, and I think things are definitely moving much more rapidly and things are getting more exciting.
But I go back [from] the bay area back to Singapore itself, that was in 2015. Things were starting to pick up. Southeast Asia was getting really hard, a lot of investment coming in. And that’s where people are saying that this is the next big thing. This is the fastest-growing region in the world.
Fast forward five years, right now, you’re really seeing not just the investments are coming in. We are seeing serious money being raised in the last couple of months and then [many] more LPs and large funds are looking at Asia and constantly making huge bets on the Southeast Asian ecosystem.
And this has driven a lot of changes that we are seeing in the market. And also definitely a lot of the excitement. So you see talent-wise [Southeast Asia] is definitely having a whole generation shift, like the first generation of folks from Lazada or some of the NOC mafia.
Paulo: The unicorn mafia as well.
Tianwei: Yeah, the unicorn mafia, they are in a second stint or [working on] a new startup or new ideas. And then you have these unicorns and decacorns right now, having people from their early days jump right into this, where [they] go in to start a new startup and raise record fundings in the seed round and [beyond]. I think this definitely feels like an entirely different world. And the quality of the talents has reached a whole completely next level. And I’m very, very excited to see what is going to be the things that they build in the coming months too.
“[The other time] I was just joking with Hendra, startups are a [fast-paced] thing. And every generation we see new exciting things happening. And even though we have just been doing it for a short [time], if you look at it, it’s probably just five years, it feels like a decade has passed, [or even] two decades.”
Pioneering Payment Infrastructure in Southeast Asia
Paulo: And you actually mentioned outside of the call that you and Hendra also have become more active in angel investing yourselves. I would love to talk about that a little later, but first I also want to dial back. You mentioned there being a really big difference today and five years ago and I want to talk about that in the context of founding Xfers or starting Xfers. Specifically, you already had a lot of things with Google and then Amazon. What was behind the decision to actually come back to Southeast Asia to start Xfers? And were there any specific tailwinds or external factors in the market that convinced you guys to start this business?
Tianwei: Given that same context I was talking about, I think that winds have changed right in the past for me to come back and do something. Back then, five years ago, I would say, it’s not really the hottest thing. People always tell you that the “playground” and everything is happening in Silicon Valley.
Home is where your venture is
And that is a big part of everything. I have so many of my housemates and friends that I met over there. And some of them eventually became my colleagues over here. So it took me a long time to convince them right. This itself is a thriving market and it’s just exciting that you can be a world-class team here and build on solving real-world problems over here.
So then the success of Sea, Grab, Garena and all those guys definitely started to move these things in the right direction. But compared to five years ago, it’s a lot easier right now for me to convince some of my friends who are very established at Facebook and Google that, “Hey, there is an interesting opportunity to work over here.”
But if you look back five years ago, for me, the decision for a lot of the stories that I hear about founders that started up in this region over the last few years, one common theme is definitely because this is home. This is where we are natively grown up. And we feel that there’s something that eventually long-term, down [the road], we want to build successful companies or [bring] the things that we are seeing overseas back [to our] homeland. This is definitely where one of the key factors is your families are here and you want to eventually come back to Asia. So that’s part of the reason why I was looking at the bigger picture.
Back then I [had spent] about six years in the Valley, first as an engineer at WIMM Labs, then eventually at Amazon. I was working in a startup environment and then I got involved with a mega corporation, Amazon. I have good things to say on both sides, right? You just learn different skill sets and the differences are very contrasting, right? In one, you are just hustling and trying to make things work. The other one really shows you what scale is.
Amazon’s scale was really exciting as a young engineer for me. When I was there, the big data infrastructure was in its infancy. These days, for a lot of people, big data is like a buzzword, and during those days, we were just simply battery processing [with] Hadoop [and] MapReduce. And these [were] new topics and it was exciting because they’re processing huge amounts of distributed systems and stuff like that. But the main thing that I was looking at then, after spending six years over there were also three big areas.
It all started with a LinkedIn Search
First is solving real world problems. I would have to say that, in the Valley, I got bored after a while as an engineer just solving first-world problems. And while I was at Amazon, I was optimizing ads, I was trying to figure out where to display ads, and [figuring out] why is the device out in the field slightly not doing too well. So it’s [that], right, versus what I saw as an opportunity to do real impact, somewhere closer to heart, and also in a market that is definitely going to [have] future potential.
The second part, of course, is looking at the emerging market as a whole. I have to say, after growing up I realized I’m not the smartest guy around. I looked at my peers when I went to Stanford, and one of the professors was telling me that, and it’s something that I really hold true to this day, you are the average of your five closest friends, and you want to hang out with people that are smarter than you. So I try to constantly do that. But then at the same time, when you are looking at competition and stuff like that, when I was in the Valley, I was just one of the engineers among a group of really, really brilliant people.
I know that the opportunities for me to grow might not be as great as compared to an emerging market where, I remember then LinkedIn was still in the early days. I was searching LinkedIn one day trying to figure out what was the niche that I can focus my effort on. So I searched “payment”, “emerging market” and I remember I was adding [filters] like “AI”. And you know within Southeast Asia, that’s non-existent, there’s no such people around. That’s something that I thought [was] definitely a space where I can make something that becomes a niche of mine.
And some of the early books I was reading then and have been impacted by even today for startup and stuff, like Zero to One, [says that] you want to find a space that you have high growth, and [where] you’re going to be the biggest fish around. You can do things that other people can’t do. So that was where I saw a lot of opportunity, and I’m still seeing a lot of these things happening again in Asia, right?
So you can find something that you will be in the top few guys on the list, making really large scale meaningful impact to a large demographic of people, while being able to do it in a market that is not as mature or very, very high growth, as compared to being in a very competitive market in other regions of the world. So that was another key reason that we looked at this market as a whole.
“The decision for a lot of the stories that I hear about founders that started up in this region over the last few years, one common theme is definitely because this is home. This is where we are natively grown up. And we feel that there’s something that eventually long-term, down [the road], we want to build successful companies or [bring] the things that we are seeing overseas back [to our] homeland.”
Paulo Joquino: That’s a theme that’s shared by a lot of founders, as you mentioned, and even across the founders that I’ve had here in the show, it’s usually a similar story. Regardless if they are in Silicon Valley, China or Australia they see the opportunity to come back home and obviously, where you came from and your family is here and all of that, just adds onto the incentive to actually come back and build something.
And moving on from starting a startup, I also wanted to talk about how given that Xfers has been very much involved in the payments infrastructure space here in the region, how has that sector evolved since 2015 or 2016 especially with regards to how SMEs are involved in the picture?
Tianwei: Definitely. I think when I first came back, I think the story that I was always sharing with some of the people here about the reason why I started to do payments was that, one Christmas in 2012 or 2013. I can’t remember the date anymore, but basically I was working at Amazon then, Kindle Paperwhite just launched. It was an awesome product. Everybody was raving about it. It was the first time the e-reader lit up, just think about it, right, versus now we have so many different things, but then that was a big thing.
How Christmas Kindles got me into fintech
And a lot of my friends in Asia wanted me to help them to buy one because I have an employee discount. So I was just trying to figure out over Christmas, how to ship it back to them. So FedEx and everything looked easy, but when it came to payments — that was some time in Christmas, I remember I was sending 10 units and I was asking them to pay me with Venmo, PayPal, whatever it is. Then [I] came to realize that those products are not available in Asia and it is just too expensive, right? Venmo wasn’t here, PayPal charges 3%. I don’t want to do that.
And they will just end up saying, “no, I’m going to do a bank transfer,” which is fine. I’m going to give them my bank account. Then I received eight payments. I started off with eight transfers for 10 products. And one of the transfers is twice the amount, and it doesn’t show names. The reconciliation’s a nightmare. I’ve got to figure out who’s going to pay me. And it took me all the way to Chinese new year. I’m Chinese —
Paulo: From Christmas all the way to Chinese New Year…
Tianwei: And I was like, “Hey –” I still remember then, we didn’t have WhatsApp or anything. I was just writing an email to the guys and saying, “Hey, Chinese New Year’s coming, man. And you guys still owe me money.” And that’s a bad thing in the Chinese world. So they’re like, “Yeah, yeah.” So it’s like a […] for personal frustration.
And then I started to realize that, “Hey, this is all bad.” Why isn’t there FinTech [solving this]? And the infrastructure was missing. As an engineer and developer then, my first call was, “Hey, if I have an API, I will build a product like Venmo and it’s going to be great.” But then I start looking at it deeper and realize that there is an API and there’s an infrastructure.
The banks have not provided that as a service and it’s not easy to build a FinTech product. So the first thing I thought then is, really, I can do this myself. So as an engineer, that’s where we started. But if you look at this, actually, digitally that’s how the whole landscape evolved. The APIs to automate your transfer and do all these transactions which is the basic foundation needed for any fintech to build were nonexistent. I think in 2015, then there wasn’t even a FAST transfer for folks in Singapore, like bank transfer isn’t instantaneous.
Building confidence in regulators that fintechs can do it too
So a lot of these things have come a long way in the last five or six years. Hopefully, we were part of the reason that contributed to it. We were pioneering bank transfer-as-a-service; we build APIs around virtual accounts, and we automate people’s ability to send money. And on top of that we have to build of course the compliance layer around the whole solution, right?
I think we spent a long time…being able to be compliant to local regulators, and handling the fraud that is happening on the ground so that the regulators start to open up. Because they used to have a mentality that these are things that can only be done by the bank. Because the bank can be restricted and controlled and protect the consumer.
But I think Xfers has successfully demonstrated to the regulators for the last five to six years, [that] we can do it just as safely. It’s not better, but at the same time at a faster, lower cost and promoting innovation. So on top of that, you’re seeing a booming of fintechs. Now you have FinTech investment space, the blockchain space, the payments space, whatever they want.
But the basic building blocks of being able to receive payment, send payment and make this whole seamless and low cost, it’s really a great leap forward. I was selling them that pitch that it takes 18 months for any FinTech then, in 2015, to start a company because it takes that long for you to figure out how to build an API and build the basic services.
Paulo: Right, right. Then you have to talk to the regulators as well, and then get all those approvals right now.
Tianwei: So like you can’t even launch a product within 18 months. Right now I think it can be [done] without help at all, hopefully. And other players around as well, get this done within a week or even a month. And at least you can test out your concept very quickly and fail very cheaply. So that is a huge leap forward and I’m excited to see what new things people are doing.
“We were pioneering bank transfer-as-a-service…Xfers has successfully demonstrated to the regulators for the last five to six years, [that] we can do it just as safely…Now you have FinTech investment space, the blockchain space, the payments space…But the basic building blocks of being able to receive payment, send payment and make this whole seamless and low cost, it’s really a great leap forward.”
Joining forces with Payfazz to form Fazz Financial
Paulo: Now that you’re coming on seven years, another highlight of Xfers’ growth has been the fact that it joined forces with one of our early portfolio companies at Insignia, which is Payfazz, Indonesian rural FinTech, and formed Fazz Financial Group, which is this whole ecosystem of different financial services. I want to dial back that point in time, when you first met Hendra connected with Payfazz, what was the opportunity that you saw that convinced you guys to come together and form this FinTech group?
Tianwei: I think there are three major things.
From fellow YC alum to angel investor to co-CEO
First is of course our relationship. So Hendra and I have a long history. Funny thing is, he was in YC. I was in YC, but I think I was a batch ahead because of some visa issues. He was the first Indonesian founder; he [couldn’t] come there. So we were in some group and one day [he] sent an email to all the people in that group. And I think somehow I was the only one who replied for some reason. I don’t know why I did that. Sometimes it’s just serendipity and I replied. And he was like hanging out with me, then he eventually wanted to start fundraising because he can’t go to the Valley then.
So he was delayed at that for a year. He came to Singapore; I was hosting him at my house, I just said, “Bond with me. And then we will figure out how to fundraise.” And I really liked some of the things that he was doing [with] financial inclusion, which is a common vision that we have. Financial access [and] financial inclusion of a different space and just different geography. So I also became [their] angel investor. Then he was expanding [across] Indonesia, which I think was a very, very important bucket that eventually we want to [build for] Xfers. Fast forward, he eventually managed to get into YC in person.
And the rest of the folks [came], it was like, I think 2017, 2018 [when] Xfers was looking to expand to Indonesia and guess who I know in Indonesia? I only knew Hendra. So I went on a plane flight and one of the few people that I hang out with over there has always been Hendra. So we knew each other for quite some time. So there was a strong relationship right there.
Differences in jurisdiction, united by vision
Then of course, then the second part is of course, where we have a common vision. We concluded that the biggest problem that we always see is that the infrastructure side of [financial services] is definitely lagging across both [Indonesia and Singapore] and there is synergy between the [companies].
Xfers is always doing the infrastructure layer and we have been supporting Payfazz. When we went to Indonesia, we helped them with their API and the tech stack, which is already a synergy, but the bigger picture is this whole entire reach of trying to push across Southeast Asia. And on the regulation side of things, the licenses and stuff is always a biggest challenge for all FinTech trying to enter the market, and going cross border as well.
We always like to tell people that Southeast Asia is a great market. It has huge potential. And I have learned over the years that it’s obviously not just one country; there are actually 10 of us, and then every different jurisdiction is different. We [talk about] a dream that we can unify this region, but we need to understand that there are regulatory challenges across different jurisdictions. It’s actually the biggest problem.
And the two of us came together to solve that problem immediately, the Singapore side Xfers can handle the regulations and Singapore perspective. [While] Hendra and his team have done a tremendous job in Indonesia, trying to secure the licenses and [working with] the regulators. So that immediately becomes a huge value add for our combined ecosystem that we can [build] functionality across the ecosystem, helping ourselves grow rapidly at the same time, enabling financial access to the rest of the FinTech through the B2B arm that we have.
Payments (financial services) is still a commodity in Southeast Asia, so distribution is the way to win
And last but not least is of course the tremendous distribution that the Payfazz guys have really built out in Indonesia. As a payment guy, I was always telling people I wasn’t a payment expert before I entered the space. But after two or three years, I’m the tech guy, coming from engineering backgrounds, so trust me when I say it, I was like telling a lot of people the differences when I was in the valley and over here. I’m all for tech, best API, best-in-class, and I think we are. And that is very, very important, but we also must understand the cultural differences of how something is.
A lot of the time payments is really a commodity product. I think we are not yet at the luxury of the Valley where people value developer-friendliness above everything else. I was in that environment for six or seven years. Unfortunately, when you are in Asia most of the time, it’s always commercial. Look at the reality [of it]. Who is negotiating the BD deals? It’s always a commercial [angle]. You don’t see the engineers, I’m the only engineer there [in the deal], and that usually is the afterthought.
Unfortunately that’s how the ecosystem is set up. So over time then what is the key differentiating factor for a commodity product? It’s really the distribution that you have. What do you uniquely have that others do not have? And Payfazz, kudos to their hard work on the ground building a very extensive agent network is something truly unique to our infrastructure that allows us then to basically provide something that’s truly unique in the market itself.
And those are the key considerations with Hendra. And I was talking about why we’re coming together and we’re building a diverse team across the region. Being a Southeast Asia company itself is super important for the whole group to go ahead.
Paulo: And instead of a garage, you guys were just hanging out at your house instead of the
Tianwei: Different houses even.
“A lot of the time payments is really a commodity product. I think we are not yet at the luxury of the Valley where people value developer-friendliness above everything else…Unfortunately, when you are in Asia most of the time, it’s always commercial…So over time then what is the key differentiating factor for a commodity product? It’s really the distribution that you have.”
Paulo: Right, different houses, when you start to think of all these things and put the pieces together. Yeah, it’s already been, I would say, two or three years already, since you guys have partnered together. And FFG has certainly grown since then in terms of, also making a lot more, minority investments in other fintechs, and just expanding as a whole in terms of the distribution that you mentioned. One thing I was curious to know about is how this whole joining forces with Payfazz forming FFG influenced you or impacted you as a leader, leading Xfers and how you see your role in the company?
Tianwei: This is something that is of course a challenge. A company coming together, [from] different cultures, is something that I learned a lot over the last few weeks. But I truly am — and Hendra has said the same thing. We truly believe in diversity: a whole group from different walks of life.
Experience of diverse company cultures in the Americas brought to Asia
That’s how we experienced it when we both worked overseas. Hendra worked in South America while I was mostly in North America. So when we were there, we saw a fusion of culture, and we as foreigners [were] able to blend in and learn so many different things from different people [from] different walks of life.
And that’s the kind of long-term vision we want to build. We want [Fazz Financial] to be a Southeast Asian company and not [confined] to any country. And that is something that in the last two years has really materialized. We have seen that happening. We have a very diverse workforce right now and COVID has accelerated that. Then we are a distributed workforce across seven countries across Southeast Asia. So we have folks in Taipei, Taiwan. We have folks in Malaysia, Vietnam, Singapore, Indonesia, and even China, I think. So that is truly rewarding.
Leaders leading leaders, remotely
We are seeing how this company is coming together. That’s something that we, as leaders, have to evolve to be able to work with a more diverse workforce. And then being able to do it in a COVID environment. So, one thing I think we both learned on the fly is that after this whole merger, COVID happened. So to this day, a lot of the senior management to this day I have not met in person. Like we would have been just doing calls and we know each other, almost by talking to each other through the number of calls [we] do. It’s quite often, but we actually haven’t physically met besides me and Hendra, and some of the key founders we have met before, the second level managers and senior leaders, a lot of them are just purely remote.
And that has become a challenge but also a blessing where you can see that things have to continue evolving. People have had to treat things as a new normal, and [getting] used to being able to operate in that kind of environment and not expect like we can do this later. The later will not come; we don’t know when [we] will eventually evolve out of [this]. We have to work as though this is the new normal. And that has actually been a huge challenge, and at the same time, an interesting thing that happened to us.
“We want [Fazz Financial] to be a Southeast Asian company and not [confined] to any country. And that is something that in the last two years has really materialized.”
Paulo: We talked about the organization and how it has grown. I also want to talk about the product itself, how Xfers works specifically, say, for example, with all these like Payfazz agents, for example. How does it work from their perspective on the ground?
Tianwei: From a product perspective, what we want to serve [go from] SMEs to very heavy enterprises. We are helping them to digitize their business. And I, as an engineer, always believe that when technology truly works it disappears. Like people actually don’t realize what is happening on the backend.
Hidden, but making a 10x difference in 1M+ customers’ lives
So the last two years, a lot of the infrastructure [we’ve built] and investment [we’ve made go] into making sure things are regulation compliant, reducing the cost in terms of running some of these operations, and at the same time, improving the reliability and dependability of all these products.
So a lot of the agents definitely over the last two years — from our survey and management — have really experienced a drastic improvement of, at the micro level, at least 10x because of the SLA in terms of response. I’m an engineer; I always tell people, 90% is easy, right? 99% is probably okay. 100% percent is insanely hard. So the last percentage itself is truly something that a lot of work has to go into.
But a large part of the agent’s and people’s lives depend on us working right now. We serve probably north of half a million customers on a daily basis right now. So all these people depend on us actually being able to operate and continue staying up. Can you imagine making a payment in front of a counter and it doesn’t work? I think that itself is going to cause a lot of disruption to people’s daily life. And that’s where, when everything works, we disappear behind the background and that’s where a lot of our product and improvement have been done over the last two years.
“But a large part of the agent’s and people’s lives depend on us working right now. We serve probably north of half a million customers on a daily basis right now. So all these people depend on us actually being able to operate and continue staying up.”
Fazz Financial’s foray into crypto through Xfers’ StraitsX
Paulo: And more recently you’ve made [your] foray into crypto which has been well documented over the past year, with the launch of StraitsX and then also Singapore’s first stablecoin, XSGD. I would love to know from your perspective as CEO, what was the thought process expanding into this particular sector?
Tianwei: We can’t talk about Xfers without mentioning this whole project. [It’s] been a great success over the last two years.
Answering the Call of Crypto Customers
So I think first is that the Xfers team are very early adopters of crypto. A lot of people here are very, in the crypto terms, “gen.” We believe heavily in the future of crypto and the blockchain technology side of things. Since early 2015, we [have known] about these things. We were watching it from the side and personally I have dabbled in a couple of them. As a company, however, we [have been] always focused on [building] infrastructure-as-a-service. We want to make sure that this is a long-term infrastructure investment.
And over the years we [were] very fortunate of course, to be serving a lot of these companies that are pioneers in this industry. I think from a B2B perspective, we serve some of the largest crypto businesses in the world that are based in this region, be it Binance, be it Gemini, Crypto.com.
These are some of our customers that have been growing [the] space as well. And of course, keeping them regulation compliant and helping them deal with the local challenges of doing payments here has been a huge part of our investment down the line. And for the YC side of things, we always listen to what our customers want. And what has been happening on the ground is that, over the years, we have [been] constantly asked by a lot of our clients in those spaces that they need a product like a stablecoin.
Stablecoins: The Holy Grail of Crypto
If you read up on stablecoins and you look at it about crypto’s problems and what they’re trying to solve, it’s one of the so-called Holy Grails of crypto. The example that a lot of [folks like] MAS have probably given is that bitcoin is probably not a suitable payment method. You can’t buy a coffee if the price just keeps fluctuating. The technology itself is something revolutionary, but in terms of the adoption side, we need just to bridge the curve and cross the chasm, and [this] stablecoin is something that a lot of our customers [have been] asking for. They need a product that is built on a blockchain designed from the ground up that they will be able to [build] additional services on.
I think the last two years is when we see a huge flourish of the decentralized finance space, what they call “DeFi”. A lot of products are now being reinvented or rebuilt. The financial products we know traditionally are now being remade on blockchain. And when it comes to that space, they again need a currency or a form of payment that is native to the blockchain itself, and that’s where the stablecoin comes in.
Years in the making
And that’s why when we started this project and I was talking to my first engineer about the project, it was like actually three to four year ago.
Paulo: Was there something that specifically happened three to four years ago? Since you’ve been looking at it since the start of Xfers, and it’s probably a timing sort of thing that made you decide…
Tianwei: I think when we were looking at the stablecoin project, I think it started in 2017, the last boom cycle. I think crypto has seasonal cycles. Now we are in the so-called a third [boom] market or whatever you want to call that. But you know, in 2017 itself there were a lot of high points, and we were looking at [solving] this problem [with] a fundamental product for people thinking about how to build infrastructure for the future, and stablecoins was definitely a topic that keeps coming back. And we, as a team, invested our time to look at how we can make this possible in a non-speculative way, really investing to feed the future of infrastructure around the space.
And we saw a lot of merit and that’s why we started exploring this idea with our lawyers, our banking partners, and of course our regulators. And it only took us all the way to 2019 before the whole product finally matured and we have been very fortunate and very blessed with how the market has seen it and the adoption itself the last two years shocked us even, that it’s something that’s grown tremendously and that’s something that’s very happy to know.
“[Stablecoins are] one of the so-called Holy Grails of crypto. You can’t buy a coffee if the price just keeps fluctuating…stablecoin is something that a lot of our customers [have been] asking for. They need a product that is built on a blockchain designed from the ground up that they will be able to [build] additional services on.”
Paulo: I was also wondering, especially for these customers, like Binance and Crypto.com, which are very much global companies as well, what’s the value of having that local partner in Xfers, for example, to navigate the [crypto] space, you mentioned about regulation, but are there any other aspects that you guys help [with]?
Tianwei: If you understand the crypto company, one of the big things about cryptocurrency is the inclusive nature of it. The idea that this is a decentralized technology that anybody can participate [in] and there is no centralized governance and restriction about who can be involved in what ways and means makes [this] something of a worldwide movement.
Inclusive nature of crypto opens up doors for localized innovation
It’s almost similar to some of the things I was talking [about] to early folks, when I came back to build Xfers in Asia, we as locals in the countries that we’re in need to participate and put out the infrastructure of what we dream for ourselves.
If we leave it to external folks to build it, the future will be in their direction. And that’s something that we have a huge resounding [belief] at Fazz Financial Group. We need to [build] out the future of the Southeast Asia financial ecosystem ourselves.
[For us] Southeast Asians, we’re here to build the future for our family. So we have to see how we can participate heavily in it. The world is moving towards the blockchain side of things. I have conviction on that and that’s a very long-term thing. We will move in that direction, but a lot of those products are being built based on the US dollar.
Don’t wait for foreign players; we need to build our own future
And that’s still going to be that way for quite a while. But there is a much larger market outside of the US as well. There’s the European market; there’s the Asia Pacific market. And what used to work over there might not work here. That’s just like the same reason why PayPal wasn’t here, and that Venmo wasn’t here. If you’re not investing into building out things that we, as locals, are going to be using and wait for a foreign company to bring something to you, you’re going to always be behind the curve.
Paulo: Does that issue still apply with decentralized platforms given that you can literally build these organizations from across the globe?
Tianwei: Yes and no. I think what we are seeing is that the world is getting closer. The teams have been decentralized and people can be working from all parts of the world but then if you look at the market adoption where most of these successes are happening, I think a huge part of it is still happening in Western civilization, where both of these things are still happening in the US.
Just look at the product line. I was talking to a couple of friends just about three years ago when we wanted to start the stablecoin project. You’re going to have a world that is going to be nominated in US dollars, everything is US dollars-based, but day-to-day wise, do we ever see a US dollar and we will use it as the ultimate payment [method]?
I don’t think that will ever happen. So we need to figure out how to make sure that there is a thriving decentralized finance and ecosystem in the blockchain side in the Asia Pacific. Be it Singaporean dollars, Indonesia rupiah, Philippine pesos or in Vietnamese dong, it has to be built out by the locals, and that will require us to be the pioneers. And actually working very closely with regulators to build out that ecosystem for ourselves.
“If we leave it to external folks to build it, the future will be in their direction. And that’s something that we have a huge resounding [belief] at Fazz Financial Group. We need to [build] out the future of the Southeast Asia financial ecosystem ourselves…we need to figure out how to make sure that there is a thriving decentralized finance and ecosystem in the blockchain side in the Asia Pacific.”
Paulo: The emerging markets are really right for this kind of technology, perhaps even more compared to say more developed markets, When it comes to emerging markets, like south Asia, what you’ve seen so far, what’s the next step for this whole space and mature, you think.
Tianwei: I think when we speak in terms of the SME payment space, which is where we have more invested the most resources, I think compared to five years ago, digitalization because of COVID, in some sense, has really, really caught up. We are seeing a lot more businesses willing to adopt payments that are fully digitalized. Compared to five years ago, it’s quite hard to explain to a lot of people how to adopt technology, “pay now” and QR and stuff like that.
SMEs are ready and craving for digitalization
These days, I think the newer generation of SMEs are moving towards that direction and we want to be the [infrastructure] that is powering them and making sure that we are building out products that are hyper-local and able to serve them in their needs in the coming years. So that is where we feel we will play a very, very crucial role because of our long-term investment into the infrastructure side of things, and at the same time, the licenses that we have already secured.
So the group is looking to launch more products that are focused on SMEs. And providing them the kind of banking needs they need for different parts of their businesses. And that will mean more things will come in the coming months.
We are building a future where no one wonders how blockchain works but everyone uses it
I fundamentally think that a lot of these things will disappear in the background. I don’t think the future of SMEs will be like accepting bitcoin payments. I don’t think that that will happen. That is not how I see it. I believe it’s just that these things are going to be fundamentally powered at the backend by blockchain technology or something that’s happening behind the scenes, but [in my] day-to-day life, I’m just making a payment to buy a coffee. Do you really need to know how the payments are being done in the background? And in the long-term I don’t think my mom would even know.
I was always telling [people] that in some sense, we are seeing a new generation of dotcoms. I was in the Valley when the dotcom bubble burst, and [how it became the] way it is, and when Amazon rose and everything. Just 10 years and 15 years back, telling people that you can buy things online, it’s like a crazy thing, right? Like what are you talking about? Today’s it’s a [fact] of life. Do people still ask you how the internet works? They don’t. It disappears in the background, businesses still continue running.
So that is the standard general trend. I think blockchain and all this stuff are just buzzwords today, but very soon it will be back to [answering the question of] how it makes these things faster, cheaper, and better for day-to-day life. Real world utility trumps everything.
“Real world utility trumps everything.”
Rapid Fire Round
What are the top 3 skills a CEO should have?
Tianwei Liu: I think first is storytelling. I realized that [over] time I’d just become a storyteller. I just constantly tell people the story to be able to paint a picture of the vision of where things [are headed] and convince people on doing that.
The next spot is probably on the execution side of things, which heavily goes back to hiring and convincing people so that’s something that I spend more than 50% of my time on, which is just people management, making sure we have the best people that’s working on the job and enabling and empowering them.
[Third is] having an ear to listen to what is happening on the ground. As a CEO and as a leader in general, it’s a constant process of learning and [seeing] how the market is changing like [I] mentioned five years ago versus now is hugely different. And being able to be proven wrong and be able to take feedback and constantly learn is a key skill set that I think [CEOs] and all leaders should have.
Advice for angel investors or aspiring angel investors?
Tianwei: For that, to quote one of my angel investors who invested in Xfers, “It’s all about deal flow.” At the end of the day it’s all about dealflow. If you see more happening and you’re exposed to it, you probably will be able to make better choices.
Paulo: Do you have a best practice or something that’s worked for you?
Tianwei: Well, what I will cover might not work for everyone. Hendra and I are just very fortunate that we [became] YC alumni and we do see a lot of deals from the YC [side of] things. And you know that the ecosystem is just tremendous. If anything, I always tell all the founders that I have advised before, if we can get into YC, please do.
YC is a huge value add ecosystem. It’s like getting to Harvard. And that network will be able to get you a lot of dealflow that’s very unique, and you can see some of the best things happening around the world and see whether that can be mirrored back into different markets that have a unique niche itself.
Another part of course has to do with what we are doing. We are fortunate enough that we are in the payment infrastructure side of things. And we see interesting companies almost on a regular basis because we serve them, and when their transactions are flying through the roof and you’re like, “Wow, how are you guys doing? Super exciting. Can I understand more?” We just tend to always get more dealflow that way.
But I think on the other side is probably looking at what YC are investing into. Participate in some of these things or work at some of these companies and that’s another big part of it. Being in the trenches is a bit different from looking from the side. Because you have been in the trenches, you know what is happening and you will probably have some level of insights and —
Paulo: A lot more empathy.
Tianwei: — empathy for what is happening on the ground. Yeah.
What’s your biggest advice for early-stage tech founders raising their first round?
Tianwei: For that, it’s the same advice I always give to a lot of companies that I advise. Team is the most important part. Find complementary founders. This is probably the most important part that you can do [in terms of] hiring. People are also very, very important, probably spend at least 50% of your time on that because that’s how tremendously important it is for you to build up.
Probably I think [that’s] why YC has this thing, right? That if you come in as a solo founder, it’s going to be very difficult. You need to at least have another co-founder and they have seen from their data that most of the early stage company problems are founder-related. So the team that sticks together is probably the team that will make it. And we are very fortunate that with Payfazz and Xfers, you see all the founders are still around, because we have been sticking together and that itself has a complimentary skill set allowing us to basically go further. You want to go far, you need to go together.
What do you do to de-stress?
Tianwei: I like to run. Don’t forget about your health. Startups are a marathon. I think the COVID has [actually] helped. I actually workout twice a week right now. So that is actually really bringing a lot of additional energy in some sense. And during those runs, I’m thinking about things, right.
So when I am running, I’ll be thinking about things, and then when I come back I might do a few more things that I’ve thought about during the runs, and that’s helped me to be de-stressed quite a bit. So always make time for yourself. I guess that’s super important for anyone who is trying to do anything. Your body is your temple. You need to make sure that it is functioning well. And that is the basic foundation for everything else.