Elevator Pitch is a regular feature on Lifehacker where we profile startups and new companies and pick their brains for entrepreneurial advice. This week, we're talking with Kristo Käärmann, Co-founder of TransferWise.
In 128 words or less, explain your business idea
TransferWise is a financial company for people that travel, live and work internationally. It makes sending money overseas up to 8 times cheaper than the bank, and its Borderless account allows you to manage money in 28 different currencies.
We launched in 2011 when my co-founder Taavet and I realised how expensive it was to transfer money between the UK and Estonia. Taavet was London-based but got paid in euros; I worked in London but paid a mortgage in Estonia in euros. We each needed what the other had so we figured out a fair way to exchange money by using the mid-market rate – without the exchange rate markup and fees charged by banks. We realised there were millions of people across the world who needed to do the same.
What strategies are you using to grow and finance your idea?
Word of mouth is still our single biggest growth channel. By building a product that’s 10x better than existing alternatives, people recommend us to their friends and family.
We’ve got two million customers around the world, close to 900 currency routes, and we’re moving more than A$1.5 billion a month globally.
As of last year, we’re a profitable business and we’re only just getting started. er hundreds of millions of dollars to hundreds of thousands of people around the world.
What’s the biggest challenge facing your business?
Our biggest challenge is that most people are still unaware that banks take a huge percentage of their money in hidden fees when sending money abroad. We recently did a study in Australia that showed only 20% of people could identify the true cost of a sending money abroad - the upfront fee plus the bank’s markup on the exchange rate.
People are also quite apathetic about their banks and a lot of people have been with their bank for years so think it’s going to be too much hassle to use an alternative.
How do you differentiate your business from your competitors?
For years, banks and other providers have charged a lot of money for moving money internationally because they could. We’ve built a local network of bank accounts across the world which means that most of the time, money does not have to cross borders so we can cut out extortionate bank charges.
We’re always completely transparent about the cost - there’s a single upfront fee and the exchange rate you get is the one you see on Google, with no hidden charges.
What one phone, tablet or PC application could you not live without?
I’d really be struggling without the Alarm Clock app - there would be quite a few early morning missed flights without it. Slack, Google Hangouts, Gmail and Calendar apps have made it extremely easy to keep on top of everything especially when I’m travelling, to any one of our nine offices around the world.
What’s the best piece of business advice you’ve ever received?
My maths professor said: “Every human being when born is set up to run 100m under 9s, but only very few choose to make it happen.”