
London’s Lonely Unicorn: Two Frugal Expats and Their Billion-Dollar Startup - tokenadult
https://www.bloomberg.com/news/articles/2016-06-13/london-s-lonely-unicorn-two-frugal-expats-and-their-billion-dollar-startup
======
kbenson
As the embedded video alludes, it's not that revolutionary an idea to pool
transactions and use local resources to fulfill more cheaply if possible.

That said, the world is full of wildly successful companies that just executed
well on not very revolutionary ideas, and they provide real value that was
largely absent before they grew to prominence. Sometimes it's not about doing
something new, it's about doing it _well_ , or doing it in a way that allows
more people access.

~~~
jlg23
Or, in the case of international money transfer: They see through the existing
system and just openly do what most banks have been doing all the time behind
the scenes, passing most of the savings to the customer.

The only problem I see with this specific business model: As soon as enough
people use it, this method of transfer will be the norm and all the big banks
will offer it too, thereby invalidating the justification for the existence of
the new players. (Mind you, still a great win for the customer!)

~~~
lumberjack
>The only problem I see with this specific business model: As soon as enough
people use it, this method of transfer will be the norm and all the big banks
will offer it too, thereby invalidating the justification for the existence of
the new players.

Yes exactly what I was thinking. But by that time Transferwise could be a
reputable brand with lots of customers so they could pivot to offer other
financial services.

~~~
RangerScience
And almost certainly better tech.

You ever check out the OS your bank is running?

~~~
jlg23
Honestly, I don't care whether I am driven over by a Porsche Cayenne or a
Willys MB.

And while I have not worked in the banking sector myself, lots of my friends
did - and it was not cobol. They are catching up and they all _know_ that
their mainframe sw is dated and act upon it.

I don't think the "quality" of the tech is of any relevance here.

EDIT: Well, I actually know some guys who bit the bullet and learned cobol
when they were just turning 20. By the time they turned 30, they did not have
to work anymore.

~~~
jomkr
I'd have 100% more trust in a system written in COBOL than node.js.

~~~
joe563323
But it is currently maintained by the new nodejs devs who figured maintaining
COBOL pays greater.

------
mingabunga
I've been using this for the past 6 months. It works really nicely and removes
a lot of friction - it's just like sending money to another local account.
I've paid people in Netherlands, Australia, Germany and they recently started
allowing US$ paid to Ukraine, so I've been able to pay software developers
there.

~~~
nikon
Forgive my off-topicness - do you have any advice on sourcing developers in
the Ukraine specifically?

~~~
ccozan
Generally LinkedIn. Just say your what are you looking for, and they will find
you.

I am getting at least 2-3 of them ( meaning, companies in Ukraine ) per month.

~~~
brilliantcode
How much is the salary and what's the skill level like?

I'm very interested in Eastern European developers, they seem to get shit done
and rarely complain.

~~~
throwaway_374
This kind of commoditization attitude of developers really fucks me off. "Shut
up and code and don't complain". Nah, you can fuck right off mate.

~~~
striking
Is there anything wrong with looking for developers that don't complain?

Total aside: As an Eastern European emigrant, I don't really mind being
characterized as hard-working and rarely-complaining. I like to think it's
true.

~~~
abraae
Depends what you're complaining about.

If you don't complain when you see something wrong, e.g. a bad design choice -
then you're basically a yes man (or yes woman), and you're only useful to
companies who are either already perfect, or who don't want your help to do
better. The first does not exist and the second would be a crap place to work.

~~~
striking
Right, yeah. I definitely complain when there's something egregiously wrong.
But as much as I like to hear myself speak, I try not to overdo it.

------
lordnacho
Transferwise is a great service, I use it myself. They even give you a volume
discount if you ask for it.

But what really surprises me is that it got to where it is at all. If you look
at it, their business model is not revolutionary. Their prices are not cheaper
than for example UKForex (OzForex), who provide the exact same service, and
were around years before.

The business is simply a click interface for exchanging money; you send in
your currency, and they send in the agreed amount to the other side. The price
difference between these shops is minimal.

It could not be simpler. I've traded currencies as a professional, there's not
a whole lot of other steps behind the scenes.

But I doubt most people have heard of UKForex. Transferwise however are on
billboards everywhere, acting as though they invented the idea of swapping one
currency for another. And acting as though you are cutting out the middle man,
which you are not. You still need a bank.

Well played to them though, it seems they've used some of that startup hype
attitude to get themselves a nice little business.

~~~
falsedan

      > They even give you a volume discount if you ask for it.
    

Just contact support? How much volume do they look for?

I'm struggling moving USD -> GBP, hitting the daily ACH limits & frustrated
that the creaky US banking system doesn't have a better interbank transfer
system than wiring funds for tens of dollars a pop (and presenting a physical
form).

~~~
lordnacho
Yeah just go on the chat and tell them you've sold a house.

------
EliRivers
Hello all.

I used transferwise in November to move money to Japan.

The exchange rate applied was the actual fucking exchange rate. I paid
Transferwsise a couple of quid.

Worth every fucking penny. Worth swearing. Use Transferwise.

~~~
DarthMader
What's the foremost authority for realtime ForEx rates?

~~~
phillc73
Don't know about foremost, but I always use xe.com

~~~
socialist_coder
Yeah, I was investigating transferwise because supposedly it was cheaper than
xe.com but it seems like they are pretty competitive with each other. I've
already been using xe.com and see no reason to switch.

I transfer my entire salary from USD to EUR every year so I definitely want to
get the best rate.

~~~
phillc73
I only use xe.com as my go to website for looking up current exchange spot
rates. I didn't even really know they had a transfer service.

I am a very happy Transferwise user. I used to always check the exchange rate
on xe.com, then switch to Transferwise to compare before transferring. Now I
don't bother, because Transferwise has always been very close to the spot
rate.

------
CamMacFarlane
This is great, as someone who frequently transfers money from the US to Canada
I wish I had known about this sooner. Hopefully they can actually make some
money.

~~~
hackerboos
I use them every two weeks to move Canadian dollars to British pounds.

Nobody else comes close in terms of exchange rates and level of service.

~~~
briandear
WorldFirst does. There are plenty of competitors in the space that do a great
job at this.

~~~
no1youknowz
Can you elaborate on the other competitors?

Thanks

~~~
stevanl
Direct competitors would be the likes of Azimo and WorldRemit.

For larger transfers (ie above £5k/$6k) you have a slew of them; Global Reach
Partners, Moneycorp, World First, and Rational FX to name a few.

Disclaimer: I am a co-founder of CurrencyTransfer.com, an aggregator of some
of the above larger transfer companies.

------
maverick_iceman
Interesting that they use the word expat instead of immigrant. I don't think
if these two were from Asia/Africa they would have been called expats.

~~~
idiot_stick
> _I don 't think if these two were from Asia/Africa they would have been
> called expats._

And you base that on....? Why do people search for injustice?

~~~
CptJamesCook
The left has been teaching people to believe they are victims for more than a
decade now. That's why they search for injustice.

~~~
Veen
If you think the victim mentality is limited to the left, you've obviously not
being paying attention to the alt right or Christian conservatives.

~~~
CptJamesCook
The true alt-right is tiny. Well, since alt-right has been defined to include
white supremacy, anyway.

The left is huge.

------
tejasd
While I haven't used TranferWise yet, I think it's a brilliant idea (and yes,
their exchange rates look phenomenal)!

There's also a service called PeerTransfer for foreign tuition payments that
essentially aggregates outgoing payments, and buys forex in bulk.

Another cool development in the area is Visa (The Card issuer) opening up
their APIs to allow direct Card-Card transfers like with Square Cash when they
just started out. Barring regulatory hurdles, this method (Card-Card
transaction using the Visa/MasterCard/Amex network) is probably the most
efficient way of sending money across currencies.

------
swang
It would be nice if this could be applied to places where I don't have a bank
account and just need say, $500USD converted into another country's currency.
My bank here allows me to withdraw twice from foreign bank ATMs but I have a
feeling they are messing with exchange rates and I'm still stuck with a bad
deal. I won't even bother with real exchanges in the States or in the other
country. Everything just feels like highway robbery.

------
inopinatus
Is this basically electronic Hawala?

~~~
jlg23
Yes, though without the negative connotations the term "hawala" carries in the
West because all transactions are still fully documented and the broker gets a
much lower share (for pure monetary international transfers in the hawala
system, fees can go as high as 60% with 25% already being considered a "good
deal"). And one does not have to pass high/drunk armed guards and is not paid
from a huge pile of cash that just sits on the floor in a corner of the room.

PS: Sorry, no source for the numbers but my own experience in Northwestern
Africa.

~~~
true_religion
At 60% fees and drunk/armed guards, Hawala sounds like money laundering
except... even worse rates.

~~~
jacobush
There is no laundry or laundering there. It's like washing your clothes in a
puddle of mud. It's not black exactly but it ain't white money either.

------
uladzislau
Read about some challenges they are facing as many other money transfer
startups. It's actually a very hot niche at the moment.

[http://uladzislau.com/online-money-transfer-
startups/](http://uladzislau.com/online-money-transfer-startups/)

------
phillc73
Transferwise is by far the best international money transfer service I have
ever used.

I regularly move money between Euros and Pounds Sterling, sometimes into
Australian dollars too. These are typically not large monetary amounts, maybe
up to a few thousand Euros, but often just a couple of hundred.

I haven't specifically counted, but I gueas I've made around 25 transfers with
Transferwise. Compared to using banks directly, and even other "traditional"
Forex services over the last 16 years, Transferwise is fast and very low
friction.

I did have to verify my identity once my transfered totals had exceeded £15k,
but that has been the only delay. They just do a very, very good job.

------
fapjacks
Transferwise was great, at first. I was an early adopter of Transferwise. Some
years ago, my brother (and I, sort of) started filming documentaries and I
handled a lot of the money and payments to some of the people involved in his
documentaries overseas. At one point without warning, Transferwise left my
brother stranded in Europe without a way to get money. Transferwise held onto
a few thousand dollars for a few weeks without any contact or update or
anything. Every time I would email or call, I would get some customer support
who would ignore my replies or transfer me around with increasing wait times
between transfers until they hung up, sort of typical phone hell. When we
_finally_ got a hold of someone at Transferwise, it turns out they decided
that what we were doing was a cover for illicit activities (which is pretty
bizarre, if you knew the people involved, and despite his published
documentaries, footage, and even the receipts we kept for tax purposes).

Having family stranded overseas by this billion-dollar unicorn left a really
bad taste in my mouth. The worst part was being left with absolutely zero
recourse for the thousands of dollars that they were just holding on to _for
weeks_ without any contact with us. If you don't want to serve us because of
some bizarre, hallucinatory conspiracy, fine, but don't hold onto the money
for weeks in the interim without an explanation.

------
throwawaytwise
Throwaway for obvious reasons.

I applied for a position as a software dev there a few years ago through a
friend. I hated every single moment of it.

It was like they exported the very worse from Silicon Valley's bullshit start-
ups attitude. They just couldn't shut the fuck up about how they were really
changing the world (yeah right), how awesome it was to work 60 hours a week
for such a great Vision, how sick their (mandatory) team-holidays were, how
everything and everyone was so siiiick here, mate.

I did all the rounds up to the one with the VP of Engineering who asked me to
code FizzBuzz on a whiteboard (no kidding) and then spent the rest of the hour
bragging about how last week he had turned down an "amazing engineer" (his
words) because he wasn't "cool enough" to be one of them. You know, he was a
bit of a loser, mate.

It really felt like a cult of ego-obsessed people with some narcissistic
disorder; even worse, it felt like everyone was lying.

That said I'm sure there are a lot of nice people who work there, this is just
my experience so take it with a grain of salt. The product is also good, I
used it a few times myself.

~~~
stronglikedan
> VP of Engineering who asked me to code FizzBuzz on a whiteboard (no kidding)

I agree that a VP in a late stage interview should not be asking this of the
candidate, but I will say that I recently had to hire a new team member, and
FizzBuzz helped me to immediately weed out the candidates during the initial
interview. I'm talking like 50% of the candidates, and one guy even asked if
he could take it home and send me the code. Another acted like I was asking
him to produce something for the company for free, before even reading the
three lines of requirements, and then tried to back peddle when he did read
them - of course, I was already holding the interview room door open for him
by that time. All told, a FizzBuzz test in the initial round saved hours of my
(and their) time.

~~~
jldugger
> I'm talking like 50% of the candidates, and one guy even asked if he could
> take it home and send me the code.

I'm still trying to reconcile this with my own experience at work. I work for
a university department, and hire student employees. Zero people have ever
failed our fizzbuzz question on the interview, while it was on there.

You would think that post graduation there would be a _lower_ number of degree
holders who can't code.

~~~
kevin_thibedeau
There are a lot of "HTML programmer" types out there who piece together
snippets without ever having to think about how best to solve a problem, deal
with the fundamentals of computer arithmetic, or data structures. These people
can't do fizzbuzz or something simple like construct a linked list (good one
for the managed code generation used to containers).

------
jerf
(Tone: Genuine question I'm curious about because I don't know fintech.) How
does this model end up interacting with wire transfer laws?

~~~
rfrey
From (way down in) the article:

"In April, after New Hampshire’s banking department cited TransferWise for
operating in the state for a year without meeting money-transmitter
regulations, the company agreed to pay a penalty equivalent to the fees it had
earned during that time. (The startup has since begun offering its services in
the U.S. through a partnership with a fully licensed bank, New York-based
Community Federal Savings Bank, and has obtained its own money-transmitter
licenses in many states.)"

------
schintan
USD to INR rate is less competitive than an Indian bank. Probably because not
many adopters in India.

------
dboreham
Surprised to not see any mention here of legal and regulatory risk. One of the
reasons moving money between countries is hard and expensive is that it is
often done by people either trying to avoid tax liabilities, and/or by people
involved in illegal activities and as a result governments are understandably
keen to tie transfer agents up in rules regulations and liabilities. Ask
HSBC...

~~~
Symbiote
They're compliant with British regulations.

I was given extra checks to make before my first transfer, since I was paying
into an unusual type of account.

~~~
phillc73
Once my total transfers had exceeded £15k, I was required to undergo further
identity verification checks. Pretty standard KYC procedures I thought.

------
kriro
I wonder how much of their valuation the Brexit vote cost them. It might
eradicate a good chunk of their customer base. How would one go about modeling
this, how are VCs modeling this?

Imagine a company built around some service for expatriates in Britain closed
their series A and their series B was happening sometime around/after Brexit.
I guess that would be down round territory?

------
CalRobert
I will say, their product is excellent and I've used it to transfer quite a
bit of cash over the last few years. I tried a competitor of theirs
(currencyfair) and the UI wasn't as nice a few years ago, which was about the
only differentiator. Hope they can turn a profit soon.

------
chx
I am just a very satisfied customer. They managed to be cheaper than using
even a dedicated FX company for international transfers (I do Canada-Austria,
Austria-Canada, Canada-Hungary) and the process is pretty seamless and it
doesn't take longer than a SWIFT transfer usually.

------
keeptrying
Hmmm I heard these guys make less than $10million a year in revenue.

Possibly the lowest revenue to valuation ever?

~~~
jkaljundi
Their revenue in the year ending March 2016 was 28 million pounds, transaction
volume 800 million pounds per month. Last September they already did 5 million
pounds a month, growing ~2x / year.

~~~
to3m
In case anybody else is wondering - these details are public. Any time you see
a story about a UK company, and this one is no exception, you can get some
information about it from the company registry at Companies House:
[https://beta.companieshouse.gov.uk/](https://beta.companieshouse.gov.uk/)

1\. type in company name or part thereof

2\. select it from the list

3\. click the "people" tab and see if you recognise any names from the article
or whatever (this can be helpful if there were several likely-looking results)

4\. click "filing history" and download the accounts and annual return (with
list of shareholders)

Most of the time this isn't actually very interesting, but if you're being
nosey, there's no reason not to. (The reduced accounts you have for small
companies (turnover < £15m, something like that...) are usually particularly
unilluminating, though some of the figures can be suggestive and the
shareholders list may be interesting.)

~~~
Kexoth
I just tried your link & it's a very interesting option to be honest :)

In my country (Macedonia) these reports on private held companies can be given
after 2 fiscal years & you have to pay for them per company searched.

I'm very curious to see what's the case in other countries on this topic :)

------
throwaway5752
_" The company says it is always improving the software that automates the
matching process, including complicated solutions that cover, say, a pound-to-
dollar transaction with multiple dollar-to-euro and euro-to-pound swaps. If
TransferWise can’t find a match, it becomes a market maker, using its own
money to complete the deal in the hope that another customer who wants to send
at least as much money the opposite way comes along later. In doing so, it is
essentially acting just like a traditional foreign exchange broker."_

And this is how it spectacularly imploded 5 years from now.

~~~
pdeuchler
Yeah this caught my eye as well... seems like an extraordinary increase in
risk for a relatively small gain, not to mention the other costs of changing
your business model from a glorified escrow service to an investment bank.

I hope for their sake they have someone who knows what they're doing running
that department and hedging appropriately...

------
rohi
I think [https://www.instarem.com/](https://www.instarem.com/) does something
similar.

------
kristianp
How does this compare to xe.com, which I have used in the past? They're a
canadian company, been doing this for a long time, low cost.

------
aaronbrethorst
Value creation > 'innovation'

------
ucaetano
If you're poor, you're an immigrant.

If you're rich, you're an expat.

~~~
Swizec
While this sounds true and everyone likes to harp on it, there's another
consideration. An immigrant is somebody who intends to stay forever, an expat
is someone who plans to go back home eventually.

There are also legal considerations. My US visa for example specifically says
it's a non-immigrant visitor's work visa. Legally speaking, I'm an expat.

Culturally ... I like to call myself a dirty immigrant. Riles people up a bit
:P

edit for background: I come from the border between Central and Eastern
Europe. Some say Slovenia is one, some say another. In the UK I would most
definitely be an evil evil immigrant. In the US nobody really cares as long as
I'm not brown.

~~~
NoMyGodIsThis
" I come from the border between Central and Eastern Europe. Some say Slovenia
is one, some say another."

Compulsory link, shirley?
[https://youtu.be/bwDrHqNZ9lo](https://youtu.be/bwDrHqNZ9lo)

~~~
Swizec
My house is actually about 50 meters to the right of that river. So I guess
I'm from the Balkans.

