I was the 1st employee of Skype. Now I’m fighting for fairer finance with TransferWise. I'm Taavet, AMA!

Hi Taavet, great to see you on Reddit.

1) How will you overcome issues with the net-off model in corridors with asymmetric remittance flows or regulatory obstacles?

2) (When) will TransferWise grow to remittances to developing countries in the global south?

3) Is the bank (or debit card) to bank model here to stay, or will we start seeing more pay-in (credit card, cash/e-cash, virtual currencies, etc.) and pay-out (mobile wallets, credit card, etc.) methods?

4) What is the toughest part of marketing new and innovative money transfer services to migrants, and what is TransferWise's solution?

Thanks,

Laurent from TawiPay

Thanks for the thorough questions. We're committed to supporting all currencies and corridors with the most used payment methods eventually - where the flows are asymmetrical we'll work with partners to help out.

The toughest thing is to earn peoples trust when dealing with their money.

Mr. Taavet, as you know remittances are getting to be more and more real-time (read: instant), with added competition from messaging apps, who would also be entering into the payments space. My question is besides "traditional" remittances will you be getting into the space of micro-remittances (small-value transfers)?

The world of money transfer is huge - if you add up classic remittance, first world to first world money transfer, SMB segment, etc this ends up being huuuuge. We think its important to be really good at something so we'll focus on expanding on what we have today - there are so many more source and destination currencies to cover for us. And once we're done with all of that we'll think of other stuff like micro-remittances.

Why did you leave Skype in the first place?

I joined the team in 2002 when Niklas and Janus and sold Kazaa - I realised that they were far from being done with disrupting and decided to join them. I left end of 2008 which felt like forever in one company. Skype had been bought by eBay in a very successful transaction, I had spent a couple years in the new eBay world and I felt that at that point there is more to learn in the wild wild world outside Skype/eBay. Also it was obvious at that point that Skype will be busy with other things (being bought and sold) versus innovating on the product. And boy I was right - life outside a cozy corporate has been hell of a lot of fun!

Hi Taavet, big fan of TW. Can you enlighten us about what is the hardest part of saving money in transfers? i.e. is it your own cost base, currency risk, or marketing the service to get scale? Or is there such a huge margin in what other people provide that saving money is as easy as just offering a lower price?

Thanks for a great question. Its easy if you focus on doing things right for customers - that really means not being greedy and building things in a modern way (think Skype, etc). We're super focused at offering our customers the lowest possible cost and we dont have crazy bank cost structure (bricks and mortar, legacy it infra).

but the largest money transfer providers for consumers are Western Union, MoneyGram, Xoom... not banks? How do you see your cost structure being different from their online units? Or is TransferWise more focused on larger amounts & SMB segment?

Actually I bet that banks transfer much more that WU, MoneyGram and Xoom - these guys combines are ballpark $100B/year. Banks are doing way more than that, but more of that in non-remittance corridors. And btw we really got stared and focus on money transfer between developed markets - starting with UK<>Estonia, then UK<>Euro Europe, now all of Europe <> US, etc.

Mr Taavet, TransferWise is expanding globally into various (developing) markets which depend on remittance, do you plan to hire people from these developing markets rather than just out of say Estonia, UK or US?

We'll continue growing our existing centers (UK, Estonia, etc), but also we will be expanding to where our customers are. When we see lots of customers in developing markets we'll have people there too. Until that we'll be happy to get these people on board - we have 30 nationalities already in the team.

Like every CEO/Founder, there must be something related to work that keeps you up at night, What keeps you up at night Mr. Taavet, something that you perhaps might fear?

I find it hard to draw a line between work and non work - I only have one life so I share it with everyone. My 18 month old daughter keeps me up at night mostly - last night she punched me in my face multiple times.

What does it take to bring down the cost of remittances to a flat fee instead of % of the money being sent?

Better technology > better products > more competition. But at the same time the companies need to be able to earn some money to have a sustainable business.

On an average, what % of transactions are fraudulent on TransferWise? what is your plan to minimize it?

I just tried calling our fraud guy - its 11pm in Estonia so he must happily be asleep already.

We put lots of effort into into avoiding money laundering - there's a team focused on it and we're regularly being checked by govt authorities and our partner banks. Same regulation applies to us as banks.

Do you think the banks are capable of innovating anymore? If not - then how will the financial landscape look like in 10years time? Services like Transferwise have taken big share of banks business in different areas?

Its really hard to innovate if you are a large and slow corporation like most banks. Also they are really dependent on the revenues from overpriced services. There's a great book called Innovators Dilemma that talks about this - its really hard for most organisations to disrupt themselves.

If we look at it now there are many sectors that used to belong to banks where innovation is happening - lending (p2p lending, etc), funding (crowdfunding), money transfer, asset management, etc. In 10 years time I predict that 30-40% of financial services will be provided by tech startups.

But what will happen to the convenience that the banks offer right now? Currently I can get a loan, transfer money and open another account all in 1 meeting with a bank representative. Why would I want to visit 3 different webpages to do so in the future? To save money? For sure yes, but will that outweigh the convenience? What are your thoughts?

I doubt many people get a loan and transfer money in one go. I can totally see a world where current universal banking model is not the only one.

I definitely considering we are in the midst of the millennial generation shift. Do you think TransferWise will stick with what it knows to do best and remain a single product type of company or diversify itself after it's present globally?

Focus is incredibly important - there is so much to do to keep winning money transfer globally, we'll stick to that.

Hi Taavet, do you perceive the rise of mobile money sending services (such as M-Pesa in Kenya) to be a threat to your business?

No, not at all. Rather is an opportunity - we should be sending money to M-Pesa and others. Anything that makes moving money easier for people is a win.

Hi! Is TW the first business you ever founded? If not, could you share some stories about your previous ventures in founding a business?

Its the first one I founded.

Thanks for all the really great questions. I'm going to wrap it up for tonight, I'll check back in tomorrow for any questions or follows ups that I missed.

If you want to give TransferWise a try for yourself, you can get your first transfer free here: https://transferwise.com/u/f25b

Also - if you like what you see, we're hiring and we'd love to hear from you: http://transferwise.com/jobs

How did you and Kristo know that you will make a good team? Have you had previous businesses with your cofounder?

We did not. But we thought we'd give it a try. Also we were on a trip together - that always shows if you can live in a confined space together or not.

Evening, Taavet! Great to see you on here :) The Seedcamp team has a question for you... TransferWise has achieved so much in so little time, what lessons can you pass on to startups who are just starting out on their journey?

https://www.youtube.com/watch?v=VcjzHMhBtf0

Aim high and only hire the best.

Hey Taavet. What do you focus on at TransferWise these day? Fundraising, product, growth or something else?

Hmm. What do I do? In the broadest sense I'm growing the business and keeping our culture. In practice that means lots of product, marketing, people work.

Do you see a role for Bitcoin in the future of money transfers, or are its days numbered?

Bitcoin is exciting but I'm not quite sure we've found the killer app for it yet. But I'm staying hopeful that soon someone will find it!

Mr .Taavet, would you see some form of synergy of your global-transfer network, the money transmitter licenses that Microsoft is now acquiring and Skype - Do you see TransferWise working with Skype/Microsoft for in-app money transfer?

I think there are things like that to try out for sure - noone knows if people will use Skype or other messengers for money transfer, but before someone tries we will never find out!

How do you move money without banks being involved in the process?

How can you predict when my money will be there if there is nobody money to swap it with!?

In our peer to peer model the money often times exists in the other country so there is no need to really move it - that's why we can do it cheaper and faster. If there is noone to swap it with then we will go out to the interbank market and buy the missing currency.

What is your opinion on company builders/startup studios?

Some are doing a fantastic job - Seedcamp (we're a seedcamp company btw), techstarts, ycomb. Also in terms of company builders betaworks is doing awesome.

Any advice for someone trying to establish a similar vehicle (high equity ownership of each venture, lots of shared resources, mostly internal ideas, quick and lean implementations, an experimental approach)?

It needs a very special team in the mothership. And even then you want to make sure every project gets staffed with a dedicated team as soon as possible. There are few examples of people being able to work on multiple things successfully...

Hi Taavet, thanks for coming out here. In a spirit of transparency and not-hiding, could you share any insights about TransferWise performance in Q1 2015 (revenues, volumes, unique customers) across top geographies?

Between us I'll share that Q1 went really really well - we're live in the US and its our fastest growing market.

Because you just launched in USA late last year, it is obviously your fastest growing market... by definition when stating from zero. But how an outsider could verify claims about TransferWise's rapid growth if you are not sharing specifics? What risk do you perceive in transparency whether your revenue in US in Q1 was $100K or $1M?

We're in a competitive market so it would not be wise to share revenue and user numbers. But to give you an idea - our team is growing for a reason - to support a fast growing business. Beginning of last year we were 50 people, now were 300 employees and we're still just getting started.

Can you prove you were the first employee of Skype?

Everyone before me was called called co-founder - it still hurts to talk about it... here's a fun picture from ~2004 when were were like 20-30 people https://m.flickr.com/#/photos/jurvetson/43922369/

What prompted your decision to make the close button have identical functionality to the minimize button? Groundbreaking aggravation!

That was a strategic choice - we needed to keep the p2p network nodes running so we did not really want people to shut skype down. But also people did not know that by closing they would not receive calls.

Which currencies and countries do you plan opening next?

Pakistan went out last week. From top of my head Australia and Mexico are going out next.

Hey Taavet, In the United States what is your send differential when you transfer money to India? Why would customers leave Xoom, Western Union and TransFast?

Few things that make us stand out: * we always use the mid market rate for conversion and are very transparent about the total cost * we're confident we're always cheaper * we have an awesome easy to use product

If you want to try out use this link to get first transfer for free https://transferwise.com/u/f25b

Thanks! I will give you a try. ☺

You give the mid-market rate, but when you charge 1% you effectively become everybody else.

Totally disagree. Anyone can charge what they want but they should be honest and open about this.

Hiding some of your fees in obscure exchange rates (that people dont understand) is unfair and taking advantage of your customers (abusing their trust in you).

Hi Taavet, we met for the first in 2008 when you were at Skype and I'm happy with what you've built at TransferWise - I use it myself. The question I have is: how is Bitcoin going to change the industry you're operating in?

Hey Simone - hope all is well with you! We're still waiting to find that out. Bitcoin is a great piece of technology, but we have not quite found the killer app for it yet. Today there are many ways (TransferWise for example) that are much better than anything bitcoin.

How long does it take for TransferWise to get to breakeven? (assuming Facebook does not acquire you soon :))

We're really gung-ho about investing into growing the business as fast as we can. We can adjust the speed and decide when to breakeven depending on the conditions around us.

Hi Taavet, thanks for hosting this event. There was an article recently on Grunderszene that TW is opening an office in Berlin. Why did you decide to expand to Germany? Will your German users see the same creative ads there as on the streets of London? :)

Germany is a big market therefore its quite a logical next step for us. Or first step in Europe. Dont know what creative we will use there yet. Watch this space.

Hello! Im an Estonian myself, and I want to know if you studied IT or something like that, and where? At the moment im planning on switching subject/university and I don't really know where im going with my life. IT is something that is somewhat intresting to me, but not much.

I'm not sure i'm the best to answer - I dropped out from uni myself (it was much more exciting to get skype going).

You've said it's a competitive space, are there any other non-bank firms you think are doing good work?

Anyone who puts the customers front and center and focuses on transparency is doing a good job!

In other fintech verticals wealthfront and lendingclub are examples of great services.

Taavu! (full disclodusure I'm his classmate) why do you think are banks having such a hard time changing their profit margins in your segment? Surely it would be easy to smoke you guys out just by reducing profits to your level - which would still be profitable?

Valhallasse! They are bound by a legacy structure - old it infra, bricks and mortar and lots of greed. I really dont see them being able to drop their prices to match us. And its quite hard to give away profits ;) you kind of get stuck to that like a drug.

One more question :) Do you plan to organize regular meetings with your users, such as the expat dinner in Berlin? (https://transferwise.com/blog/2014-03/ich-bin-ein-transferwiser-we-took-berlin-to-dinner-heres-what-happened/) I was once invited to have a dinner with Kristo in Frankfurt and I really enjoyed meeting with him and with the fellow users.

We are constantly in touch with our customers and having different events. Hopefully will happen again in Frankfurt too.

What would you recommend seeing if visiting Estonia?

Go in the summer when the days are long - Estonian stay up all night and go crazy. Make sure you go to sauna and try to see a song festival https://www.google.co.uk/search?q=song+festival&espv=2&biw=1362&bih=674&source=lnms&tbm=isch&sa=X&ei=4c8uVYmqAdThavatgegN&ved=0CAcQ_AUoAg

Hi Taavet ! Thank you for building transferwise and making us push the boundaries in what we expect from the financial world ! What advice can would you give someone who wants to join your team ?

we need people who are smart, ambitious and focused on learning! also dont forget fun :)

Hi, Thanks for doing this. What was the hardest moment in your startup life? How did you preservere?

What's hard? I'm loving every day of this very long term mission. Of course there are difficulties, but otherwise it would be boring. Its never easy to make the world a tiny bit better.

Mr. Taavet, will you be adding ancillary services to your product, such as bill-payment and mobile-top-ups in the days to come (similar to what Xoom and Remitly, et. al. are doing?)

Never say never. But for now we have so much more to do with the current services.

What role does currency cloud play with TW? and if they go out of business, what happens to you?

We work with a number of different partners. No single partner failing will affect our service.

Hi Taavet, when are you going to get married ? I want an invitation to the wedding, btw.

Silvia, I did not know you had a reddit account!

Hi Taavet,

I like your attitude and how you're living life to the fullest outside of the cozy cooperate world. I'm a UK native, and will be moving to Tallinn this July.

Does Transferwise offer Java related internships for postgraduates? If so, how could I get involved?

Many thanks

Awesome to hear your going to try life in Tallinn.

You can find all our open jobs/ intern positions here: https://transferwise.com/jobs

When you guys at Skype have any disputes do you use PriitK's old baby SubSpace/Continuum to duke it out? Jav duels to 10 at high noon.

I don't know why moderator bot tried to remove this question..?

haha :) we do it the nordic way with either a sauna or wife carrying competition http://www.eukonkanto.fi/en/ and http://en.wikipedia.org/wiki/World_Sauna_Championships

Taavet, thanks for your time. What are the challenges for TransferWise to be as mobile friendly as other services like Xoom?

We'd love to get your feedback on our mobile products - we think they are brilliant! Apple recently features us and we have new version coming next week.

Aren't you afraid of the banks shutting down your relationships in the USA if you attack them like you do in the UK? They are powerful and can put you out of business quickly, not sure why you would take this approach to advertising.

Here's a quote to answer this "First they ignore you, then they laugh at you, then they fight you, then you win."