‘We outsmarted the system’: Wise founders on fintech success

Kristo Käärmann and Taavet Hinrikus about to hit big time as Wise lists on London Stock Exchange

Fintech firm Wise’s direct listing plan buoys City of London

For the co-founders of the money transfer firm Wise, who will become billionaires when their fintech company lists on the London Stock Exchange in the coming days, the venture began as a way to outsmart the big City beasts whose ranks they are about to join.

Wise’s chief executive, Kristo Käärmann, has blogged about how he and his business partner, Taavet Hinrikus, set up Wise due to frustration with the “hidden exchange rate markups” that banks charge for cross-border transfers.

While working for Deloitte in London, Käärmann wanted to transfer his £10,000 Christmas bonus to an Estonian account and was staggered to be slapped with a €500 charge.

At a party, he met Hinrikus, who already had startup success under his belt as the first ever employee of Skype and its former director of strategy.

Hinrikus was similarly irked by being hit with disadvantageous exchange rates wiring money to the UK. The pair, both now 40, came up with an innovative workaround. Each month, they’d look up the true exchange rate. Hinrikus would put money into Käärmann’s Estonian account in kroon, the local currency. Käärmann would top up Hinrikus’s UK account with pounds sterling.

“It felt like we had outsmarted a system that was built to fleece us,” writes Käärmann. “It felt good.”

Ten years on, the idea is about to make them billionaires, if they reach the £9bn valuation they are rumoured to be hoping for.

The two have already been estimated as the richest men in Estonia, thanks to the growth of Wise, previously known as TransferWise. Success building a cross-border tech business has even led to them working with the Estonian government on Covid-19 immunity passports.

First job shadow day as lingerie salesman for @KrissSoonik in Paris. danger of a black hole forming due to concentration of busty show-ware

— Kristo Käärmann (@kaarmann) January 21, 2011

Progress was slow at first, they have said. They faced multiple rejections from European investment groups and Käärmann pitched in answering calls on the customer service desk in the early days.

These days, he lives a very different life and also uses his Twitter account to help boost his wife’s lingerie business.

Käärmann is active on social media, which he uses to promote a business that now claims to have had nearly 6 million active customers in 2021.

Contributor

Rob Davies

The GuardianTramp

Related Content

Article image
Fintech firm Wise valued at almost £9bn on stock market debut
Largest-ever flotation of a UK tech company boosts London’s hopes of attracting more listings

Mark Sweney

07, Jul, 2021 @4:50 PM

Article image
Fintech firm Wise’s direct listing plan buoys City of London
Money-wiring company’s float likely to be seen as a victory for chancellor’s planned stock market changes

Rob Davies

17, Jun, 2021 @2:51 PM

Article image
UK fintech sector hits multibillion-pound peak of investor interest
Banking app Revolut has been valued at £24bn while Wise, the forex transfer business, has listed at nearly £9bn

Kalyeena Makortoff Banking correspondent

19, Jul, 2021 @11:01 PM

Article image
There is much to like in Wise’s direct approach to London listing | Nils Pratley
It will hopefully chip away at the outrageous fees investment banks charge in conventional IPOs

Nils Pratley

17, Jun, 2021 @6:48 PM

Article image
UK fintech investment hits new record after £18bn buying spree
Deals in first half of year leave UK second in world behind US, as global fintech investment soars to $98bn

Phillip Inman

10, Aug, 2021 @6:28 PM

Article image
Revolut becomes UK’s biggest fintech firm with £24bn valuation
Surge comes after banking app raised $800m from new investors Tiger Global Management and SoftBank

Kalyeena Makortoff Banking correspondent

15, Jul, 2021 @6:57 PM

Article image
The surge in ‘buy now pay later’ – and why we should be worried
Fintech firms are jostling to offer millennials interest-free payment plans as they shop online. Retailers love it of course, but all this unregulated lending is ringing alarm bells

Rupert Jones and Kalyeena Makortoff

18, Sep, 2021 @3:00 PM

Article image
Hut Group CEO to get £830m in shares in one of UK's biggest payouts
Matthew Moulding’s windfall after rise in share price prompts calls for higher taxes on wealthy

Jasper Jolly

15, Nov, 2020 @6:15 PM

Article image
Vaporiser maker to be first medical cannabis firm listed in London
Kanabo issues prospectus for London Stock Exchange after clearance from FCA

Rob Davies

29, Jan, 2021 @5:27 PM

Article image
London Stock Exchange poised to list first company with all-female board
Atrato, which aims to raise £150m, is run by three women including Good Energy founder Juliet Davenport

Kalyeena Makortoff Banking correspondent

25, Oct, 2021 @11:09 AM