TransferWise: from frustration to the competitive money transfer service

TransferWise: from frustration to the competitive money transfer service
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       TransferWise is one of those startups, whose idea was totally based on founders’ personal experience, which is great since the product solves the problem that many other people might be faced with. A project with Estonian roots, now headquartered in London, has been repeatedly noticed by experts and marked by famous media: a ‘Wired UK’ startup of the week, No. 12 in Startups.co.uk list of 100 best startups in 2012, No. 8 in CNBC Disruptor 50 list in 2015 and many more. The founders were exceptionally honored too: in 2015 Taavet Hinrikus and Kristo Käärmann got the titles of the best startup founders at the Europas, received the Web Entrepreneur of the Year award at Europioneers and were named Ernst and Young UK Entrepreneurs of the Year 2015. Impressive, isn’t it?

       In 2007,Taavet Hinrikus and Kristo Käärmann realized how much money it cost to transfer money between the UK and Estonia: Taavet was based in London but paid in euros; Kristo worked in London but paid a mortgage in Estonia in euros. They each needed what the other had, so they figured out a fair way to exchange money, using the mid-market exchange rate: the real rate – without the markup rate and fees charged by the bank. They saved thousands of pounds and realized there were millions of people across the world that could do the same. This is how Taavet Hinrikus and Kristo Käärmann came up with an alternative money transfer system: in 2011 TransferWise was born.
TransferWise: from frustration to the competitive money transfer service
       We had a great opportunity to interview Martin Sokk, Head of Product at TransferWise, and find out more about becoming of the new money transfer service and the company’s plans for the future.

       How long did it take to turn an idea into the real service? Can you describe the obstacles you faced during the product development?

       Since moving money is a regulated business, building the product was slightly more complicated than just putting up a website. Kristo and Taavet put a huge effort into the initial product launch, which required delving deep into regulatory documents and sacrificing a lot of free time, all for getting the permission from the British Financial Conduct Authority (FCA). In the end, it took 9 months to get the first license with no external help.

       Was it easy for you to go global? How did you promote TransferWise and make people believe in its safety and efficiency?

       TransferWise has always been a global company. We aim to make the world a bit better by making the financial system fair.
       When we launched with a TechCrunch blog post in 2011, the amount of customers that started coming in immediately was astonishing. Since then it’s mostly been about educating our potential customers about the real cost of money transfer.
       In a nutshell – when you transfer money internationally, banks and brokers often hide the real cost so you end up paying more in fees than you thought you were going to. Sometimes this is because of the markup they put on the exchange rate or because there are additional charges that they just don’t tell you about upfront.
At TransferWise, we’re always completely transparent about the total charge and we make that as low as we can. So we’re making sure that it’s our customers that benefit and not the banking system.

TransferWise: from frustration to the competitive money transfer service
       Do you still consider TransferWise to be a startup?

       Although we are a company of 400 people strong, we practice a lot of things that many larger companies find difficult to do – such as autonomous teams.

       The principle of autonomous teams at TransferWise is very well described at the company’s Product Engineering Blog:
“At TransferWise we run autonomous, independent teams. Each team is trying to learn what matters to our customers. We measure our progress on doing this with Key Performance Indicators (KPIs).
… Founders have to trust their teams, customers have to trust startups. If this doesn’t happen – the startup will fail. We have a belief that through the discipline of learning to trust our peers within our teams we get very good at understanding how to help our customers trust us.
At Transferwise, we’re trying to maintain this accountability to our customers by devolving accountability from our founders to our teams. In a sense, our customers hold our teams accountable through the Key Performance Indicators (KPIs) we track. These KPIs track the team’s impact on our customer’s lives and as a consequence drive our growth”.

       How fast did you manage to find investors?

       Ideally, you need to set up your business so that you’re not desperately dependent on external funding. If you can make it work and still get investors that are sincerely interested in backing your business, that’s when you get the best deal.

       How many people do work in TransferWise? Could you please also give more details about the team of developers?

       We are a team of more than 400 people and 40 nationalities, with offices in 4 countries. Diversity is one of the key elements to building a strong team, so that’s what we’re striving for.
Our engineering team shares their insights regularly at our Product Engineering Blog:tech.transferwise.com

       Who are your main competitors?

       We are working to make the financial world more transparent, so our real opponents are the hidden charges often imposed on money transfer.

       What about some goals set for the future of TransferWise?

       We want to make the world a fairer place, so there’s still a lot for us to do. We are constantly opening up new currency routes. Some of the next ones we’ll be launching are Japan, Brazil, and Russia.
The greatest success is seeing the impact our product has on people’s lives. For example, we put €30m of our customers’ money back in their pockets in the last month alone.

       We are very thankful to Martin Sokk and Marek Unt for this great interview and their time spent with VCEE Startups. May all your goals be achieved!

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