Home' Trinidad and Tobago Guardian : October 8th 2015 Contents Transferwise, a startup I recently
invested in, is a great example of
a business born out of frustra-
tion---and that s partly why I got
The two co-founders, Kristo Käärmann and
Taavet Hinrikus, were each paid in the currency
that the other needed: Taavet was paid in euros
but he lived in London; Kristo was earning pounds
but had to pay his mortgage in euros. Both men
were using banks to transfer funds to the other
currency, and losing five per cent of every trans-
action in fees.
The two entrepreneurs came to an agreement:
Taavet would put euros into Kristo s bank account,
and Kristo would put pounds into Taavet s, elim-
inating the banks processing fees. Soon, Trans-
ferwise---a peer-to-peer matching service for
people trading one currency for another---was
up and running.
So why is this model so special?
The international money transfer market pro-
vides an essential service to people around the
world---according to some industry estimates,
US$5 trillion to US$10 trillion is transferred annu-
ally---yet the system hasn t improved much over
the past decade. It was ripe for disruption, espe-
cially since many banks were charging unnec-
essarily high fees for the same services, and some
were not as transparent about these fees as they
should have been.
People who send money through Transferwise
(often workers in developed countries sending
money to relatives in developing nations) find
that they can transfer money more quickly and
at a lower cost.
Another innovator that caught my eye in this
sector was Fourex---the UK-based startup won
a Virgin Media Business Pitch to Rich New Things
Award, which I judged in London this past June.
Fourex takes a different approach to international
money exchange: it relies on automated machines
that convert foreign coins and paper notes into
pounds, dollars or euros. No staff is required to
man the machines, so the machines locations
can be more convenient than exchange bureaus.
Industries that have remained unchanged for
a long time are often the most in need of someone
to come along and shake them up. Why does
it sometimes take so long for disruptors to arrive
on the scene?
Three conditions are required for a potential
disruptor to become a leader:
New tech: The first condition is that the
company s technology must offer a sim-
ple, seamless and intuitive solution to
a problem. Remember: Customers don t care
about why you re able to offer a better product.
They only care about getting better results. So
the back-end systems need to be strong enough
that customers can use the interface on their first
try, without instructions.
Reach: A business must be able to
attract users beyond early adopters.
One of the reasons so many industries
are experiencing disruptive change now isn t
because the Internet changed the world, but
because better connectivity and a global increase
in the use of smartphones has created the critical
mass required to make many new business models
Timing: Disruptive innovations often
arrive just as the public is growing
familiar with a new technology and is
ready to explore the possibilities.
Transferwise is only able to produce impressive
peer-to-peer match rates because users trust the
service. Fears about online scams were prevalent
in the Internet s early days, but they re now easing;
users know that they re not sending their money
into the ether. The service would be useless if
nobody was ready to make the leap.
Every industry faces disruption at some time
or other. If your business is in a sector that hasn t
changed much in recent years, you ll need to
keep up with new technologies and innovations,
or risk losing market share to newcomers. There
are resources available that can help you get
ahead, for example, Virgin Media Business digital
skills hub for startups and small businesses
My main message to entrepreneurs who want
to break into a tired sector is to keep researching
trends in your markets and stay open-minded
with regard to collaborations, opportunities and
new technologies. Even Transferwise and Fourex
will have to do this in order to avoid being dis-
(Richard Branson is the founder of the Virgin Group and
companies. He maintains a blog at www.virgin.com/richard-
branson/blog. You can follow him on Twitter at
OCTOBER 8 • 2015 www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG13
Shake up a tired industry
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