You wouldn't guess by Kristo Käärmann's cool, reserved composure that he's the co-founder of a billion-dollar tech startup (or that he played keyboards in his college band).
TransferWise, which Käärmann co-founded with Skype's former director of strategy, Taavet Hinrikus, aims to make money transfer painless and cheap through its web platform and mobile app. Launched in 2011, the London-based company expanded to the U.S. in earlier this year in January. Since then, it has completed over $1 billion worth of the nation's transactions.
On Tuesday, in the spirit of a nationwide push for philanthropy, TransferWise announced that it would be giving away $100,000 worth of money transfers to 1,000 American startups -- meaning that those selected will be able to make transfers at the true exchange rate. This could help entrepreneurs cut significant costs when paying international employees, or importing and exporting goods.
As TransferWise's most promising market, the U.S. is certainly one area where general manager Joe Cross hopes to attract more clients. Currently, the company partners with just a handful of upstart banks to get a foothold.
"In the early days, TransferWise was part of this London tech scene where there was a real sense of community. Startups were really helping each other out," said Cross. "We wanted to offer something that would really help companies like we were back then."
The campaign doesn't have any major restrictions, but recipients will have to be less than two-years-old, and have fewer than 20 employees.
Moving beyond its scrappy roots.
A company that started with just "two Estonian dudes with a website," as Käärmann puts it, TransferWise has managed to rope in major investors, like Richard Branson and Peter Thiel.
In January, Andreessen Horowitz led a $58 million dollar Series C funding round for the company, which gave it a "unicorn" valuation. Backers say they're hungry for the startup's transparent pricing structure.
"For decades, foreign exchange has been ripe for disruption, so it's been great to see startups like TransferWise bringing transparency to the market -- offering better rates, great customer service and an ease of use that is transforming its market," Branson said in a statement.
TransferWise isn't shy about hating how big banks do business (namely, that lofty 3 to 6 percent fee they charge above the mid-market rate on exchanges). TransferWise charges a flat fee of just 0.5 percent in the U.K. (0.7 percent in the U.S., or one percent on small transactions), on top of the existing exchange rate. It claims to save global users more than $34 million each month.
The ultimate goal, Käärmann says, is to get the transfer rate down to zero. "The more people we have on the platform, the cheaper it becomes for us to move the money," he explains. Within the last month, TransferWise cut the rate on U.S. transfers to India by 40 percent.
TransferWise is not yet profitable, but Käärmann insists that he likes it that way.
"We're not profitable today, but we don't have to be. We can invest in growth," he said. "If we wanted to, we could have been profitable a year ago, easily."
Brian Riley, a principal executive advisor with financial research provider CEB TowerGroup, is similarly optimistic about the business model. "When you think about the repetitive nature of it [transferring money], these are more than just one-off transactions," he says. "What's interesting about TransferWise is that they have picked up early the importance of linking up with banks."
He concedes that U.S. competition is stiff -- nodding to Venmo, or Western Union -- but flags that the biggest threat to the survival of TransferWise will be establishing the infrastructure to do business here long-term.
The U.S. chapter.
The startup has encountered obstacles in expanding into new markets, including different cultures having different approaches to payment. In the U.S., for example, Käärmann explains that users tend to prefer writing checks as opposed to dealing with apps. That makes marketing -- and capturing the consumer's trust -- a significant challenge.
What's more, he notes that the American payments network is significantly slower than it is in the U.K., where transactions are typically processed within 24 hours. In the U.S., it can take up to five days.
"U.S. users of TransferWise are disadvantaged compared to Australians, Europeans, [and] the British, because there's no way we can offer these services with the U.S. infrastructure," he adds.
Moving forward, Käärmann hopes that more banks will embrace the disrupters that are trying to make money transfer as easy as sending an email. In the meantime, he'll settle for building out TransferWise's global presence, and reducing those fees gradually over time.