Elliot Moss
That was Aaron Neville with Tell It Like It Is, a nice relaxed way to start the programme this morning. Good morning this is Jazz Shapers, I am Elliot Moss, thank you very much for joining me. Jazz Shapers is the place where you can hear the very best of the people shaping the world of jazz, blues and soul and right alongside them we bring someone who is shaping the world of business, we call them Business Shapers. And conveniently, I have a Business Shaper right in front of me, his name Taveet Hinrikus and he will tell me how I didn’t quite pronounce that properly but we will come onto that in a minute and he is from Estonia, but more importantly he is the Chairman and Co-Founder of TransferWise and if you haven’t heard of TransferWise, they are the peer-to-peer international money transfer platform. You are going to be hearing all about how Taveet has been disrupting the world of what they call fintech and what you and I would call financial technology. Lots coming up from him very shortly. In addition to hearing from Taveet you will also be hearing from our programme partners at Mishcon de Reya, some words of advice for your business. And on top of all of that of course we’ve got some brilliant music from the shapers of jazz, blues and soul; Avishai Cohen is in there, Kandace Springs is in there and so is Sarah Vaughan with this, it’s One Mint Julep.
A very different bit there of music from Sarah Vaughan with One Mint Julep. You’re listening to Jazz Shapers and as I billed earlier, Taveet Hinrikus. Hinrikus I think, say it for me.
Taveet Hinrikus
Taveet Hinrikus.
Elliot Moss
There you go, you see that’s how you’re meant to say it. Taveet Hinrikus, I’m going to get it right so brilliantly by the end of the programme, but it will be too late by then, is my Business Shaper today and he is as I said also earlier the Chairman and Co-Founder of TransferWise and they are the people that enable you to send money around the world or rather exchange money around the world and not get fleeced by those naughty people at the banks. Lovely to meet you.
Taveet Hinrikus
Thanks for having me.
Elliot Moss
Tell me in your own words, the more articulately what TransferWise is?
Taveet Hinrikus
So we really started TransferWise to solve a personal frustration. So myself and my Co-Founder Christopher were both from Estonia, we moved to London and as it happened we had a need to send some money back to Estonia or send money from Estonia to London. And realising every time we go to a bank to do it, the bank takes advantage of us. You end up paying your bank £25.00 and then what you don’t know, what the banks hide from you, they have another 3, 4, 5% hidden mark-up on the exchange rate. So if you send a £1,000 from London to Tallinn, you end up losing anywhere between £50.00 up to £100 of it. And that just does not make sense. We are in the 21st Century, emails, flying cars, it’s all here, but you know yet you know when you’re sending money it takes a long time, three or four days and a bunch of it goes missing. So we found a better way of doing it and we kind of used that with a couple of friends and it worked you know. It was quicker, it was cheaper and then we were thinking about wait a moment, there are hundreds of millions of people all around the world who have a need to make international payments and we could do something to help these people.
Elliot Moss
And back then in 2010 you’d, I believe you’d previously been working for Skype. Apparently you were the first employee at Skype, you’ve got a history of being involved in computer science though you can tell me more about that as well. There is one thing being an employee, there’s another thing having the craft skill of being able to engineer and there is a third thing which says I’m going to go and do something about it. What always intrigues me about the people I meet is what’s the thing that made them actually say I am going to do and create a business here. Why did you create a business? Because you could have just gone, this is a problem I’ll just work my own way round it. Instead you’ve decided to create a whole new world.
Taveet Hinrikus
It’s very simple. We just saw we can do something better, we saw there was a need for this in the world and we can make a positive impact and then you know you can, yeah you can stand back and think okay you know, I’ve fixed my problem and say hey you know there is an opportunity to make the world a better place and that kind of makes sense. Also you know you will think of the alternative which is going to work for a bank or a telco, just a bit more exciting to do something.
Elliot Moss
But it was your first venture though right, is that correct?
Taveet Hinrikus
Yes. So as you said, I was the first employee in the team that built Skype which was a super exciting journey, it was huge rollercoaster, learnt a lot and all the things not to do as well. But then you know, once you go through something like that and with Skype kind of, one of the biggest takeaways is that you can change the world you know, sitting in the suburbs of Tallinn in Estonia, you can really change the way people communicate around the world.
Elliot Moss
Stay with me for more from my Business Shaper today, that’s Taveet Hinrikus and he is the Chairman and Co-Founder of TransferWise and they are hopefully I believe changing the world bit by bit and day-by-day. Stay with us right now because it’s time for some more music, it’s Kandace Springs with Novocaine Heart.
Kandace Springs there with Novocaine Heart. Taveet Hinrikus is my Business Shaper today, Chairman and Co-Founder of TransferWise and they’re the people that enable you to make international payments around the world without paying ridiculous charges. So I want to just go back a little bit, before you got into Skype which I believe was sort of 2003-2008 time. Just go back into your first degree, I have it here that you didn’t finish that degree is that correct?
Taveet Hinrikus
Yeah so I went to study computer science in the University of Tallinn back in Estonia in the Technical University of Tallinn which was kind of fun, but also not so fun so when we were getting Skype going it just felt so much more exciting to work on that versus going back to class to listen to a Professor read to you from the notes he had prepared twenty eight years earlier. He was probably still projecting some from what you call a piece of plaster you know before you had Powerpoint and all of that.
Elliot Moss
The laminate, I know the ones you mean, because yes I do remember those. When I started working in about 1993 they were still going.
Taveet Hinrikus
Exactly. So it was just much more exciting to be…
Elliot Moss
Doing it.
Taveet Hinrikus
…to help get Skype going. And then after Skype it was like you know having to go back and have a job at a bank or a telco, it just felt wrong.
Elliot Moss
But the question I have I guess behind that is, does it matter whether you have a formal University education at all in terms of the skills that you have needed along the way on your journey. Has it bothered you? I know you went off and did a MBA anyway from INSEAD in 2010 if I am correct. But that, that first part, was there anything you think you missed?
Taveet Hinrikus
No. So I think me personally I have you know, I guess I can say I have been lucky in all I do, but I have definitely been fine without it. I think you know education is I think it’s an interesting challenge I would say. You know if you look at people who come with University degree, they don’t often know that much just yet. You still need to put in a lot to get them going and I think you know a big factor probably is that you know Universities tend to pick up you know the kind the smarter people so, although it is just pure filtering and selection you know, you know that someone coming out of Cambridge you know is bound to be relatively smart. Have they you know, do they come out of there as a fully shaped final product? Absolutely not. Which you know maybe it’s fine, maybe not, but you know I think you know funnily enough you know education is probably one of the sectors which has been least disrupted by technology and the cycles of change in education are incredibly big, so you know I do think education is falling a little bit behind times.
Elliot Moss
Just a thought also just about Estonia. For me, I mean I am aware of a fair few and almost disproportionate number of entrepreneurs that have come from Estonia especially in the tech space. Is there a reason for that? I mean I just, it’s occurred to me as we are talking that I am, I feel like there would be, you know it’s a relatively small country and yet you’ve been exporting smart people who do big things. What’s that about?
Taveet Hinrikus
No, it’s, that’s actually very simple in a way. We believe in the forest and trees, we enjoy lots of sun as it clears our mind and as a result we get to be creative and create things.
Elliot Moss
It’s that easy. Good. We needed more forest and trees and maybe we need to just all relax a bit more and then we would have the focus.
Taveet Hinrikus
But also like you know everything we do in addition is you know like in every entrepreneurial ecosystem having success stories is incredibly important so. You know I would say it was, we were just lucky that Skype was created in Estonia and that has in return given Estonia thousands of people who were influenced by Skype directly by working there and so on. It’s given the kind of the knowledge and confidence to the young people in Estonia to go down the entrepreneurial paths you know. Before Skype, if you graduated from University and you go work for a start-up, you know your mum is going to ask you, so what happened dear daughter? Were you not good enough for the telecommunication company? Were you not good enough for the bank. Kind of after Skype it became legit to be an entrepreneur you know, people thought you can make a difference. You can also earn a living okay. So now as a result of it, if we look at the kind of all of the leading Estonia and companies; TransferWise, Starship, Taxify, Pipedrive, kind of companies that are world leading in their area, they all have a Skype connection somehow. So having that success story early on is incredibly important.
Elliot Moss
Stay with me for more from my Business Shaper today, that’s Taveet Hinrikus and he is the Chairman and Co-Founder of TransferWise and just then talking about the insight into the Estonian ecosystem as I think people call it. The latest travel in a couple of minutes and before that some words of wisdom, I hope, from our programme partners at Mishcon de Reya for your business.
You are listening to Jazz Shapers with me, Elliot Moss. Every Saturday I get to talk to someone who is shaping the world of business, doing things that are disrupting the world around us and making life easier for you as well at the same time one hopes. If you have missed any of the previous almost three hundred programmes, go into iTunes, put in the words ‘jazz’ and ‘shapers’. Another destination is CityAM.com. If you go in there you will also find a few really good ones. Talking of CityAM, my Business Shaper today is Taveet Hinrikus is on the short list in fact of the 2017 Entrepreneur of the Year Award I believe. Taveet’s been talking to me about his business that he founded back in 2010 it’s called TransferWise, he’s the Co-Founder of that business. It’s been funded very heavily hasn’t it? I mean around a hundred million US depending on what day you do the transfer, the exchange rate. Why did you go down that route? Was it in imperative, could you not have done this business without external funding.
Taveet Hinrikus
I mean I would even, I would actually contradict you and say I don’t think we’re that heavily funded at all. I think we’ve been pretty efficient in using capital to create the company. But I do believe that to do what we wanted to do we did need external capital and venture capital was a good source for us you know. I don’t think it’s the right choice for every company, but we knew what we were building has global ambition, we knew that we needed to scale it fast and we knew that you know we won’t be able to do that based on the cash flow of the business. I mean when we started it was me and my Co-Founder and today we are eight hundred people in nine offices globally and that’s still kind of early days.
Elliot Moss
Why do they back you do you think? Apart from the business plan, is it you and your partner that they were interested in because I talk a lot to people about the money and coming in and I am sure you have applied it incredibly efficiently. But it’s still in the real world outside of start-ups, a hundred million is a lot of money that was kind of behind it. But why would a hundred million come to you and your business?
Taveet Hinrikus
It was just Estonian charm.
Elliot Moss
I knew you were going to say something like that. I could see it in his eyes. He is a cheeky one.
Taveet Hinrikus
But the reality is I mean you do it kind it step-by-step you know, I think you know kind of with raising venture capital is like many other things in life, you learn to walk before you learn to run and before you get to sprint. So, we started out raising 1.3 million dollars seed round which we put together from a very carefully curated group of people and investors so Max Levchin, founder of Paypal and so on. So we started with that and next time we went to series A of six million and then a series B of twenty five million. You do it step-by-step and every time we show that hey guys what I promise to you a year ago is what we have achieved and a bit more so that’s how we do it.
Elliot Moss
And I assume that you’ve got better at the pitching. I’m assuming that the first time round you were pretty nervous even though you are relaxed kind of guy who doesn’t sweat and whose heartrate is pretty low. You are imaging thinking, I hope this goes well because I really want that 1.3?
Taveet Hinrikus
Absolutely true. I mean yes, you know the kind of the pitch we can put down now is obviously like day and night. But the reality also is you know no one expects this kind of pitch from you when you are two guys who has just has their first customer. So you know the requirements change a lot. If you go with an over polished pitch on day one, that’s probably weird as well.
Elliot Moss
Stay with me for more from my Business Shaper, Taveet Hinrikus. He’s the Chairman and Co-Founder of TransferWise and they help you if you don’t already have that help to transfer money around the world without being charged too much. Time for some music, this Avishai Cohen with Motherless Child.
That was Motherless Child from Avishai Cohen. Taveet Hinrikus is my Business Shaper today. We have been talking about not being too polished first time round because I think people wouldn’t believe you, it wouldn’t sit right and now we are in this position as you said where there is eight hundred people, you’re in nine offices around the world and probably hundreds of thousands of transactions happening every year I am guessing. When people ask you about that and you’re in a relatively new stage, people asking you about defining success financially you know not even an investor, just someone who’s a friend and they say ‘so tell me what are you up to? How’s the business going? Tell me whether you are doing as well as you want it do?’ Do you talk revenue? Do you talk customers? Do you talk transactions? What is it that’s a quantitative measure for you?
Taveet Hinrikus
So in the early days what matters most is how quickly you’re growing. So it’s really about kind of proving that what you do is right. You know really you want your business to be growing twenty percent a month in the early days you know. Bear in mind you are starting from a very low base, but you know kind of we got into say year three of the business, we were still growing 15/20 percent month on month. So that’s what kind of what matters and what metric you use for it, I think it’s somewhat, somewhat irrelevant you know. We, you know, we like to talk because you know it’s all about the people so we like to talk about how much money we’ve saved people so we typically save our customers 1.5 million pounds in bank fees every day. But you know all in all you know today the business is very different from seven years ago so now we are a business which has revenue, we are profitable so you know it’s kind of very, very different you know. We are a business which has a run rate of more than a 100 million dollars in revenue and you know we are looking at doubling that in the next twelve months so that’s kind where we are today.
Elliot Moss
And that all sounds fantastically positive and it sounds like you’ve got the story that you want as you’ve gone about this journey. There must have been moments when this calm man that I see now was not so calm when he was also thinking I don’t know if I can do this when he looked into the black hole of not knowing quite how to fix a problem and then said am I going to carry on. Is that true or has it never got to those depths of you know personal challenge?
Taveet Hinrikus
So it’s a journey and the journey is definitely a rollercoaster and you know you get hit in your face more often than you make progress, but you know I think I had what was in my favour was that I had seen this in Skype so you know I knew what the rollercoaster looks like and feels like. And as a matter of fact if it hadn’t been that way then I would have known you know we are not making progress you know we are doing something wrong. So I was kind of expecting it. You know that every day is a struggle you know, convincing the first people to join you when you know you haven’t raised the first million yet, all you have is a few customers, and it all looks like bloody hell how is this ever going to be a business. It’s hard and then obviously you know even as I am telling that it was all easy but you know the fundraising you know it’s not always that easy. You still have to go out and you know put on a pretty face and tell the story and you know and you are in a nervous couple of weeks when the investor is thinking about it so it’s about, you know, it about dealing, managing your emotions you know because at the same time when you know in the morning you’re having a discussion with investors you know, midday your key employee maybe telling him hey you know I want to do something else with my life and then in the evening you then go home and you have family with kids at home who are screaming at you so you know it’s about just coping with that.
Elliot Moss
A day in the life of coping Taveet Hinrikus style. Stay with me for more from my Business Shaper today, he is Chairman and Co-Founder of TransferWise, on the small matter of raising money, having children and managing people who want to go off and do other things. Just a very easy day you know that’s the way I look at it. Final chat coming up with him plus we will be playing a track from Curtis Mayfield, that’s after the latest traffic and travel here in Jazz FM.
That was Curtis Mayfield with the uplifting Move On Up. Taveet Hinrikus is my Business Shaper just for a few more minutes. I am going to pack a few questions in. We’ve talked about people investing in you, you also invest in other businesses. Is that for fun? Is that because you want a return? Is it a bit of both?
Taveet Hinrikus
It’s mostly for fun. You know I look at it as I see lots of young, ambitious, talented people and I want to help them, I want to see how I can be part of the journey and you know it’s not really about the money it’s more about giving some advice and then maybe writing a little cheque as well.
Elliot Moss
And in terms of giving advice, your own style in the business, you’ve just become Chairman, your Co-Founder is now the CEO. What is, are you the man who sits back and just says yeah you do what you need to do? Have you got a hard as whatever attitude? Where does it sit? What is your natural style and have you had to adapt it over the years?
Taveet Hinrikus
Something you clearly learn how to deal with, how to deal with leading people and it’s very different from when there is two of you and stuff that gets done is stuff that you do with your own hand and then you know starting to run a team and then managing teams of people and in the end if you are running an eight hundred person company it’s very different and there is nothing that you do anymore. So I think my style is really about trusting and delegating people but helping to making sure that we know what we need to achieve and that we are tracking that we are making progress towards it.
Elliot Moss
And finally in terms of the money, I mean you are now, your revenue you talked about before is I think over a 100 million dollars/pounds/euros, one of the same they are pretty similar at the moment. Valuations to you are irrelevant, but in the press people talk about it being a billion dollar plus valuation. Is this going to be a money day for you? Is there going to be a moment when you say I want X and I am out or is it not like that at all? If it isn’t like that, how do you not focus on that big figure because it will change your life? If it all goes well obviously.
Taveet Hinrikus
With TransferWise we believe it’s still early days so we have a ten percent market share in the UK, we are now in more than thirty markets. You know the goal is to make sure that we get to twenty percent in the UK which will be maybe by the end of next year then let’s make sure we get twenty percent in twenty five markets. We’ve recently expanded into small to medium business a lot to do with our new products and borderless account. Super exciting. So there is still so much more to do with TransferWise and really the focus is how do we make sure that TransferWise becomes the way money moves around the world.
Elliot Moss
And so what you are saying without saying is, Elliot I don’t think about the money no.
Taveet Hinrikus
No. I mean I think, you know the question, the important question I really like how do we make TransferWise succeed. You know if TransferWise succeeds then…
Elliot Moss
Then the rest follows.
Taveet Hinrikus
…it will be probably a good thing for everyone.
Elliot Moss
It’s been really nice talking to you. It seems like you’ve got things under control but also it seems like you have a pretty decent attitude to when things don’t go so well which I think is probably why you’re seven years in and still the business is growing so keep on going, whatever you’re doing it’s doing super well and good luck to you. But just before I let you go, what’s your song choice and why have you chosen it?
Taveet Hinrikus
So, it’s No Time To Play by Ronny Jordan. It’s from an album called Jazzmatazz and I actually remember it is probably from late 90s or early 2000 when I was busy with my first job and I think No Time To Play was kind of a good motto when you were getting into your career at the beginning and I think it’s a kind of great jazz fusion song.
Elliot Moss
Fantastic, here it is just for you.
That was No Time To Play by Ronny Jordan, the song choice of my Business Shaper today Taveet Hindrikus. Real focus from a person who understood first time round with Skype what it was like to be in a young business. Someone who is championing young people and who indeed invests in their businesses and someone who clearly said it’s not about the money it’s about creating a brilliant business and the money will come. Really good stuff. Do join me again same time same place, 9.00am next Saturday, Jazz FM is the destination you need. Meanwhile though stay with us because coming up next it’s Nigel Williams.