Wyre Founder Michael Dunworth Is $267 Million Richer After Selling His Crypto Startup
Wyre was co-founded with Ioannis (Yanni) Giannaros, a software engineer who lived in the bunk bed under Mr. Dunworth’s in the shared “Hacker House” in Silicon Valley when he first moved to the United States in 2013.
It was a rented house filled with cheap bunks, where tech founders and budding software developers paid $200 a night as they tried to find their place.
Wyre uses blockchain-based technology to offer merchants fast cross-border payments and sells a crypto-based payment application programming interface (API), allowing businesses to connect directly to crypto-fiat payment infrastructure. secure and regulated.
It has money transfer licenses in 27 US states and operates in China and Brazil.
Bolt, which is known for its one-click payment service for merchants, was reportedly valued at $11 billion in a funding round in January, and saw Wyre as a way to add support for cryptographic transactions to its services.
“Bolt is an incumbent in the payments space, and they can see that crypto is where the market is going,” Dunworth said.
“They’re like Peter Parker, and we’re the spider that’s going to bite them, turning them into Spider-Man.”
It’s a superhero analogy that shows the roots of Mr. Dunworth’s whirlwind journey to success are still fresh in his mind.
Becoming friends with Mr. Giannaros, the couple’s first business idea was to dress up as superheroes like Batman and Spider-Man and dry-clean around San Francisco.
To their surprise, the business took off and they soon found themselves driving around town with loads of washing and developing relationships with laundromats.
But after a disastrous public holiday, when all the laundromats closed and they were forced to insert dollar coins into coin-operated washing machines to complete their orders the same day, Mr Dunworth knew that was not right. not be his big break.
“I remember sitting outside the laundromat saying, what am I doing?” said Mr. Dunworth.
“Even if we could create an awesome app that coordinated superheroes to locations, I didn’t want to start a laundry business.”
By then, online shopping had solidified as a daily habit across America, and Messrs. Dunworth and Giannaros saw an opportunity to develop a one-click payment product.
Snapcard, which would become Wyre, was founded in 2013, and the pair created software that would consolidate a user’s purchases from stores like Kmart, Zara and Amazon into a single shopping cart.
While the customer would only pay once for their different purchases, Snapcard would zoom out to the backend by paying all the different merchants and cutting 2% off the cart value.
The idea was novel, and soon they had a rapidly growing customer base.
“At one point, Yanni had the best credit rating in North America because we bought everything on his credit card,” Dunworth said.
“He was buying about $100,000 worth of stuff a day and paying it back immediately.”
Getting into crypto
At the time, bitcoin was emerging as a hot new idea among tech workers, and Dunworth thought of offering cryptocurrency payments as a novelty.
Locking in the price at checkout, Snapcard would receive bitcoin payments through a Coinbase account (the founders were friends and lived down the road from Silicon Valley), convert it to US dollars, then pay merchants, cutting off their 2% usual. on my way.
Again, to the pair’s surprise, demand took off and Snapcard found itself thrust into the world of banking licenses and blockchain-based transactions.
It was 2013, and the price of bitcoin had just jumped from $15 to around $1150 and anyone who had cryptocurrency was more than happy to spend it shopping online.
Anticipating the eventual slowdown as the price fell, Mr. Dunworth and Mr. Giannaros began building cryptocurrency wallets and began the painstaking process of determining what banking licenses they would need to facilitate the movement of crypto to the United States.
It was around this time that they launched Boost, a bitcoin-focused venture capital accelerator led by Adam Draper, which paid US$10,000 in exchange for 6% of the company. A deal which Mr Dunworth now describes as ‘pretty good for them, isn’t it?’
But $10,000 didn’t really take them too far, so within 12 months Snapcard needed to raise more money in its first seed round.
With venture capital flowing much more freely now, Dunworth found the process excruciating. He ended up sending cold emails to 2300 different people, got 600 replies, which led to 100 calls, then 25 meetings which served two checks.
“It’s so difficult to raise funds,” Mr Dunworth said. “It’s the toughest process in the world, made even tougher because we weren’t Stanford alumni with four years at Uber. It’s impossible to overstate how awful this process is.
Eventually, they banked $1.5 million, which allowed them to rent an office, even though the couple had two mattresses on the floor in an adjoining room where they slept for three years.
Snapcard had rolled out its crypto wallets by this point, and Mr. Dunworth had dove headlong into the Wild West of crypto regulation and know-your-customer requirements.
“The hardest part isn’t taking someone’s money, it’s making sure it’s not fraudulent,” Mr Dunworth said.
While consistently ensuring Snapcard complied with strict financial product banking regulations, Mr. Dunworth and Mr. Giannaros decided they did not want to start a company like Coinbase, which offered brokerage services. and negotiation.
Their API system was born out of the idea that businesses around the world wouldn’t want to go through the rigorous compliance steps, but instead could sign up for Snapcard and plug and play.
When bitcoin plunged into a bear market around 2015, the Snapcard team realized they had built strong rails to convert bitcoin consistently and securely into any local currency.
Thanks to the global and instantaneous nature of the blockchain, Snapcard could start offering cross-border payments to merchants dealing with manufacturers in developing countries like Brazil and China.
As it stands, banks would take six days to settle cross-border payments, while Snapcard could offer same-day settlement.
“It was awesome, we just used the bitcoin network to do it instantly and freed up liquidity for all those traders,” Dunworth said.
“And this industry was not at all sensitive to volatility in the crypto markets.”
Snapcard was renamed Wyre, and Mr. Dunworth and Mr. Giannaros experienced a burst of growth that saw their technology underpin well-known crypto brands like Metamask and Rarible.
Dunworth said Wyre’s success stemmed from detecting and solving the problem that merchants trying to do business with cryptocurrencies didn’t want to go through the lengthy licensing process just to offer crypto payments in their products.
The pair spent years acquiring proper banking licenses in various jurisdictions and built a crypto-payments API that offers other startups fully compliant on-ramp and off-ramp payment rails.
The company has also taken advantage of the boom in e-commerce and Amazon merchants by using bitcoin and blockchain instant transfer technology to offer cross-border payments with fast-growing markets like China and Brazil.
“There’s a lot of stuff in the right place at the right time, but there’s also the hard truth that we built this armored architecture with all the right licenses that, touch wood, haven’t been hacked to date. “said Mr Dunworth.
That growth and the $90 million in revenue Wyre recorded last year finally brought Bolt, and its $1.5 billion acquisition, to the table.
Mr Dunworth said the decision to sell was not difficult as the start-up had moved beyond its fast-growing roots and settled into an established business. Add to that, Mr Dunworth was ready to step back from the fray and return home to Australia.
“At this point, I was really out of breath,” Mr Dunworth said. “My sanity had been battered for years, and I was getting to the point where I had this massive impostor syndrome.”
Mr Dunworth returned to Australia, intending to stay for two months, but the relief of stepping back from day-to-day management of Wyre overwhelmed him and Mr Giannaros took over the CEO role when Bolt was acquired. .
“We are still working on my role in Wyre’s new place within Bolt,” Mr Dunworth said.
“But it’s all up to Yanni and if he needs me there. If he does, I’m in. If he’s ready to go, I’m going to take a break and play my old video games and try to remember who I really am.