Starting Up TransferWise – It Would Never Work

By Guest Author | TransferWise | October 13, 2015

This is a repost of the original article by Kristo Käärmann, co-founder of TransferWise, published in the Summer 2015 issue of CoFounder.

Very few startup success stories begin with a business plan, an investor presentation or any other textbook step they teach you at business school. Often, true innovation emerges from a bored engineer’s hobby project (Google), or hardware put together in a garage somewhere (Apple, Dell) or perhaps as an operating companies’ side project — this is how Estonian tech startups like Fortumo, Erply and Zero-Turnaround began.

One of the investors of TransferWise, Sir Richard Branson, started his enterprise young, building his first venture – Student magazine – aged just 16. He went on to build the multi-billion dollar enterprise we now know as Virgin. Branson is an inspiration to any budding entrepreneur, but growing up in Estonia we had our own role models. As kids, we all knew the story of Jüri Mõis, the man who went to Finland to exchange currency with only a duffel bag and a dream. Jüri became one of the three founders of Hansapank. Unlike Branson, we didn’t consider Jüri as particularly entrepreneurial, instead he was seen like any other Estonian guy who just got things rolling at the right time — for me, this sums up the Estonian spirit.

Before TransferWise, I worked as a management consultant at Deloitte. When I first mentioned to my British colleagues that my friend and I were planning to bring greater transparency to foreign exchange by building an entirely new platform, I was told it would never work. My colleagues said we’d never be able to find investors, they said we’d never get people to trust us over their banks and many of them just couldn’t understand how we could charge so little for something notoriously expensive. But growing up with tales of Hansapank gave us confidence — after all, all you need to start a company is an entrepreneurial spirit and a good duffle bag.


Actually, it was slightly more complicated than that. Since moving money is a financial business, we needed to be fully regulated by the British Financial Conduct Authority (FCA). This required delving deep into a 400-page document. Once we were fully regulated, we only needed to invest 450 EUR to start accepting large amounts of money in the UK and could begin to pay-out to the recipient in another country.

The TransferWise website is a bit like a tiny version of an online bank: far from being rocket science but not easy either. It seemed impossible to find someone in Estonia or the UK who was willing to code a quality online bank without costing us, big time.

Fortunately, the solution wasn’t any farther than behind the Urals. When nobody in Estonia could help build a bank, a new friend of mine from Omsk stepped up to the task — he thought is was the most exciting project he’d done so far. Igor’s code was miles above what I’d seen in British banks, and his 12 EUR hourly rate kept me in the plus zone. Young online entrepreneurs who don’t use international talent in their projects – which is so easily available on sites like and – are making their lives more difficult and expensive than necessary.

Soon enough, we had a minimum viable product (MVP), but it was as ugly as sin. Good Estonian design helped remedy this for another 500 euros. Now, all we needed was to rent a server for 30 EUR a month for our online bank and we were all set. In total, the platform cost us 2,000 EUR to build. Even today when we’ve expanded our server park extensively, TransferWise’s infrastructure costs are still in the same ballpark.

When the technology blog TechCrunch wrote about TransferWise for the first time in 2011, all we had was the website we’d built for a few thousand euros, no business plan, no presentation, not even a single investor’s e-mail. Fifteen minutes after the article was published, the first person sent us 2,000 GBP to convert into euros and send it back to Germany. Another ten minutes and another 1000 EUR came in — that’s when we knew we were on the right track.

Launching a financial service built for 2,000 EUR was daring, but definitely one of the best decisions we’ve made. Today, more than 250 people work at TransferWise. We’ve just launched in the US and will be opening offices in New York and Florida in the coming weeks. By the end of the year, we’ll also have offices in Berlin and Australia. Today we’ve transferred over 3bn GBP of customers’ money, saving them 135m GBP in hidden fees.


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