20Growth: How Transferwise Acquired Their First 5M Customers: The Two Types of Content All Companies Must Create, How to Crush Competition With Performance Marketing, What Growth Hacks Worked and Did Not with Nilan Peiris, CPO @ Wise

Nilan Peiris is Chief Product Officer at Wise, where he leads on growth across channels including product and platform. Prior to Wise, Nilan was VP Growth at HouseTrip, in charge of scaling the company’s growth in the European market. He’s also worked as Chief Marketing Technology Officer at Holiday Extras, where he was responsible for all areas of technology, marketing and customer acquisition. Nilan also advises a number of early-stage startups on growth and getting to traction. In Today's Episode With Nilan Peiris We Discuss: Lessons Scaling Transferwise to the First 1M Users: What growth tactics worked in scaling Wise to 1M users? What growth tactics did not work? What did they learn? What did Wise not do that Nilan wishes they had done? What single product change completely changed the trajectory of their growth? 2. How to Use Content to Crush Competition: What are the two different types of content that all companies must now make? What are the single biggest mistakes companies make with content today? What do you do when your competition can spend 7-8x more on marketing? Is SEO and SEM dead today or does it still play the same prominent role? 3. Wise's Framework on How to Win at Performance Marketing: What have been Nilan's single biggest lessons on how to win in performance marketing? What are the biggest mistakes companies make today in performance marketing? When is the right time to diversify and add new channels? What level of channel concentration would concern Nilan to see? 4. The Secret to Adding More Products: When is the right time to add a second product? How does Nilan define great product marketing today? How can one do amazing and targeted product marketing with several products aimed at different customers? What are the single biggest mistakes that companies make with brand marketing?

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  I define product marketing as this closing this delta between the perceived value a customer has of the product and the actual value that you deliver them. You have to be an order of magnitude better than the alternative to get word of mouth. You need to give customers an experience they did not know previously existed.

• 0:19Harry Stebbings?

  This is 20 Growth with me, Harry Stebbings. Now, 20 Growth is the show where, once a month, we sit down with the best growth leaders in the world to discuss their tips, tactics and strategies on how they scaled to their first a million plus users. Today, we're joined by Nilan Peiris, Chief Product Officer at Wise, with 10 million customers today. Now, Nilan has been at the forefront of all growth for the company and leads on growth across channels, including product and platform. But before we dive into the show's day, let me tell you about Canva. When I spoke to Canva co-founder Cliff O'Brecht on the podcast last year, he touched on how visual content is fast becoming the fuel that's driving the modern workplace. Your team needs to create an engaging visual pitch deck to sell in an idea.

• 1:02Harry Stebbings?

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• 1:45Speaker 02

  You have now arrived at your destination.

• 1:48Harry Stebbings?

  Nilan, this is such a joy to do. I've been really looking forward to this, so thank you so much for joining me.

• 1:52Harry Stebbings?

  Thanks for the invite, Harry.

• 1:54Harry Stebbings?

  Not at all, but I would love to start with some chronology. So how did you first make your way into the world of growth and product? And what was that real entry point for you?

• 2:02Speaker 00

  Wow, going all the way back, I did maths at university, which I advise everybody to do out there. Looking at problems and trying to find a completely different way to look at the problem that no one else had looked at before, that enabled you to solve it in a way no one had done it before.

• 2:17Harry Stebbings?

  So I just have to ask that. You said there about kind of doing things differently and in ways that other people hadn't done before. And why you like maths in that way. I always wonder, are playbooks good or bad?

• 2:27Speaker 00

  In product and in growth, where this reaches its forties, when the playbook becomes something that feels like a reproducible model. And that is in two forms. Usually there's a kind of a market expansion playbook. So we know this works and we're going to keep doing this again, again, again. And in my experience, it's usually disappointingly not much. Like, there's there's very few truly globally scalable products that you build once and they just kind of go everywhere. Every country has a nuance usually then. That could be regulatory, it could be financial systems, it could be cultural. And these are the things that get stuck in the way of the playbook.

• 3:01Harry Stebbings?

  Terribly annoying, much nicer if it was just repeatable. I actually find playbooks can be more applicable on channels. Like, there's a playbook to creating good Twitter content. There's a playbook to creating short-form video hooks. Do you see what I mean?

• 3:13Speaker 00

  Yeah, and that type of like growth hacking marketing side, you see this and you're quite successful at the podcast playbook. But the bit that the edge is, is usually in the creativity.

• 3:26Harry Stebbings?

  Telling the story. I completely agree.

• 3:27Speaker 00

  Oh, when someone figures a different way, a different form of content, that suddenly gets cut through. Everyone will start copying that. But these kinds of bursts usually have an outsized outcome.

• 3:38Harry Stebbings?

  I agree. I always think actually to Seth Godin and the purple cow, which is kind of the power of being different, not better. And I think we get to that point when we look at like content landscapes today. Okay, we have that. How did you come to Wise then? Because you were an advisor at Wise first, right?

• 3:51Speaker 00

  Yeah, yeah. So I was consultant for a while and then dot com boom two happened. And I started working with companies, getting them online. Most of the shops on Oxford Street didn't have online shops. So I helped help build and launch their shops. And they asked me to run their shops. And once I ran a revenue line, I realised that's what I wanted to do for the rest of my life. And I've been doing that for the last, more or less. Fifteen to twenty years, I think even twenty years now. And that is because it's so hard, like figuring out how you get people to turn up on your site or download your product and use it. You need to use psychology, marketing, mathematics, like technology, everything. That's what gets me out of bed in the morning and that's what I've been doing ever since. So starting off with very large companies and then over time, working with early and earlier stage.

• 4:35Speaker 00

  Tell I ran into Cristo and Tavat probably twelve years ago now.

• 4:38Harry Stebbings?

  Where was Transferwise then?

• 4:39Speaker 00

  Yeah, so I met them. You'll enjoy this. I got introduced to them by an angel who I'd helped previously. And he said, you've got to meet these guys. There are just two of them. They have a great product. They have no customers. They definitely need someone like you. I met them. They had a great product. They had no customers. And I started working with them, helping launch their first marketing campaigns, helping start to build a product part-time. After a couple of years, went full-time and started building the team.

• 5:06Harry Stebbings?

  Before we dive into kind of the marketing channels that we leveraged at the early days, what worked, what didn't, just to set the foundations, like what do Wise do? What are the products and set those?

• 5:14Speaker 00

  Wise is focused just on one thing, which is solving the problems with cross-border money transfer. So the one market we're focused on is the cross-border money movement market, which is huge, about a trillion in terms of cross-border flows for consumer, about ten trillion for SMB. The problems with cross-border money transfer, like it's slow, it's expensive, it's hard to do and it's not very transparent, frankly.

• 5:39Harry Stebbings?

  Okay, so we have this very strong belief that actually these additional fees are wrong. We should make it more transparent and we should actually remove them in most cases, in all cases. So what is that entry then? What were the first channels you did when you came in? How did you get the first customers?

• 5:52Speaker 00

  Our first customers came the day we we launched Wise was when the the TechCrunch blog post went up and our TechCrunch, first TechCrunch interview happened. The post went out and then you saw the first customer that we that we didn't know, that we hadn't found ourselves, kind of started trickling in. Post that, it was all very hacky, word-of-mouthy, right? So trying to find communities of people that were sending money internationally and starting to talk about Wise with them.

• 6:17Harry Stebbings?

  Does that mean like seeding Facebook communities?

• 6:20Speaker 00

  When I talk through the growth model now, it'll sound very logical. But in the early days, like with every startup, you just try everything. So we tried absolutely every single marketing channel in a very systemic way, as well as trying hard to get word of mouth to work. What worked? Uh. So everything did work, but to differing extents. So we had paid marketing working well. It's about thirty percent of the one point five million customers we acquired last quarter came in through paid, about seventy percent came in through word of mouth. And if you went back ten, twelve years, it was about thirty percent through paid, seventy percent through word of mouth. And that paid has been really important and it works really hard.

• 6:57Speaker 00

  Getting underneath the skin of it, what's really working there was social for us, which started off being Facebook, now has gone increasingly towards YouTube as well. Talk to me, like, what have been lessons in making YouTube work? Taking a step back, why social worked for us is it is ultimately word of mouth works. So people telling their friends about Wise and this great product is driving word of mouth is what's been the big driver of Wise's growth. And when the marketing amplifies that, that's when it works best. So Facebook supports marketing to your friends. So if you have a a usage of Wise, then it's likely that your friendship group may need to send money internationally. Think French students in London, no French students in London, small business owners who are exporting will know other small business owners they're exporting.

• 7:40Speaker 00

  And when you advertise to and target to people who are similar to your existing customer base, then this becomes pretty effective. That's where the Facebook thing started. On YouTube, this more came out of our SEO playbook around creating really useful content for our end users. What does that mean, sorry, creating useful content for end users? The way way I think about content, starting with SEO and then going to YouTube, there's two broad kinds of content that I see people push out there and I encourage people building building startups to do. One is what I call on topic content, and you should really think through how you can own all the on topic content in your chosen vertical. And then there's the off topic adjacent. So I'll talk you through it with examples. So on the on topic side for Wise, if it's sending money internationally,

• 8:23Speaker 00

  you want to build the best page on the internet that tells people how to send money to India, for example, right? But then you can go a step further. You know, your customers are. With Barclays, if you build a better page than Barclays has on how to use Barclays to send money internationally, then people will link to this page and it will naturally go up the rankings and you'll start getting traffic on Barclays, on Western Union, et cetera. If you start helping people understand their fees, the exchange rate, this page becomes even more useful. What else do you need? When you send money internationally, you need those like pesky BIC and IBAN codes. So obviously, if you search for a BIC or an IBAN code, you'll find why is there, because we've built pages on every BIC and IBAN code. We bought and built our own BIC calculator and IBAN calculator and converters

• 9:06Speaker 00

  so that you can look up your own bank's BIC and IBAN, which is surprisingly hard to do with some banks. So yeah, making really useful on-topic content for people trying to to move money internationally is.

• 9:18Harry Stebbings?

  It reminds me of actually Zoopla's strategy of having where you put in your postcode and it'll do like a guesstimate of your house price.

• 9:23Speaker 00

  Yeah.

• 9:23Harry Stebbings?

  And it's a very useful tool, which is actually an incredible lead gen tactic.

• 9:28Speaker 00

  Yeah, absolutely. So that's the the on-topic one. And the off-topic is where you go slightly further. So maybe you're looking at content that's useful for students living in London. And then that naturally turns into YouTube content, if that makes sense. Increasingly, we even have some of our own sub-brands running this stuff focused on different different demographics and different markets.

• 9:47Harry Stebbings?

  What didn't work?

• 9:49Speaker 00

  So what's really hard to do is Above the Line and getting it Above the Line to work. And I think we've run Above the Line TV campaigns.

• 9:55Harry Stebbings?

  Above the Line?

• 9:57Speaker 00

  Above the Line is is brand advertising. So you have two types of marketing, performance marketing, where you spend some money and you try to measure a user turning up. And then brand, where you you spend money and you can do it relatively strategically. You could build, you could spend the money to solve a perception problem in the market, to raise awareness of your product. And then you have to measure in like maybe a much more difficult way what the impact of this is. To answer your question directly, things that struggled to work were getting Above the Line to work. When you look at our marketing mix, it looks light on that. And and we still wouldn't say have cracked it. It's hard, right? So our customers aren't everybody in the UK, for example, or everybody in Australia.

• 10:36Harry Stebbings?

  Specifically, why is it hard to get Above the Line working? And why do you think you've struggled?

• 10:40Speaker 00

  So I think there's two parts that may. Above the line easier. If you have a mass market product that's relevant to everyone, then generally mass market channels will work. And the second part is who else is competing for that eyeball at that point in time? And can they monetize that user better than we can? And therefore they can spend more in acquiring the customer. So these are the economical side of this, acquiring a targeted audience. These are the parameters that make it a little challenging.

• 11:05Harry Stebbings?

  Can I be blunt?

• 11:06Speaker 00

  Yeah, go for it.

• 11:07Harry Stebbings?

  I don't know how spicy I can be.

• 11:08Speaker 00

  No, as much as.

• 11:09Harry Stebbings?

  Revolut have so many different products today. I'm sure they can monetize across those different products if they wanted to more efficiently on a per customer basis. They could extract more value from them.

• 11:20Speaker 00

  That's a good question. We should definitely go deep into this. So leaving the marketing to aside, let's talk about fintech and neo bank business models. So our overall business strategy is that we drive our costs down every quarter. And then every quarter after we reduce our costs, we add our margin on top and that's our price. The strategic thesis at the heart of Wise is whoever has the lowest cost, highest quality product will take the whole cross border market. The challenge to this is if somebody cross subsidizes this cross border stream with another stream where they're earning a lot of income on. So neo banks have two other principal streams that are really valuable. One is in holding deposits and what's called interest income from their customers.

• 12:04Speaker 00

  And the second is lending. Let's come back to lending. Any neo bank could take its interest income and use it to offer cross border transfers for free. So there's two challenges with this. One is like, it's actually very expensive moving money internationally. So you couldn't do it for free, right? But you could kind of maybe subsidize the cost a little bit. So working it backwards, if your customers are moving 10 billion and it costs you 3% to move that, that's an awful lot of your interest income that will go in moving this. So it's incredibly expensive covering the costs. The second challenge though, is what happens if customers are expect to get all of their interest back? And that's this trend that we've begun to see and begun to drive in the market around

• 12:45Speaker 00

  this. So historically, banks offer low retail deposit rates and then lend out at much higher amounts. And that difference is called the bank's net interest margins, how they make money. Through, over the last two, three year, two years, as interest rates have gone up, what we've seen is a number of innovative products entering the market where consumers can now get access to central, effectively central bank rates, which is what the bank gets, which is much higher, about between three and five percent at the moment. Wise, we offer this to our end customers as well. So in Wise, you can, in the Wise account, you can push one button and hold all of your cash in government bonds. And that means you'll get a three to five percent interest rate. When you spend with your card or you send

• 13:28Speaker 00

  money out, we aggregate up and sell those bonds. When you put more money in, we put more in. But what this means is we're in the market with an interest rate of four percent. So if any of banks starts using that money to subsidize another product, it becomes unfeasible because then people would churn. So I think these two bits, right, running the service, the cross-border services for as low cost as we can, others have a much higher transaction cost of running it. Two, putting pressure on the other income streams that other near banks would have around net interest margin, I think end up with a long-term better outcome for customers.

• 14:01Harry Stebbings?

  When we get back to above the line being so challenging, I'm just intrigued, why bother doing it then? If it's so difficult to do and you can actually get a relatively guaranteed performance marketing strategy, why bother?

• 14:14Speaker 00

  So just you try everything. So when you're starting out and even still today, you still keep trying everything to test to see whether the assumptions you had previously are still true, whether someone's come up with a new creative or a new creative way of using the format that gets cut through and works better.

• 14:29Harry Stebbings?

  Can, did cats stay the same over time? Do they get cheaper? I'm always thinking this with companies as I invest today. I'm like, they should get cheaper over time because you build brand, word of mouth, things you use more, you become more well-known. But then part of me thinks they get more expensive because you saturate your core market and you're reaching kind of further and further edge cases in terms of customers. Which one is it?

• 14:51Speaker 00

  You just said there. I think both those things happen literally at the same time. So as you start out, usually there isn't much competition, especially maybe on the very targeted audiences that you're going after at the beginning. Over time, as the competition enters, it kind of goes up in the market and then slowly, slowly over time comes down for us. We had this really fun challenge. There were a small, there's still a bunch of the market, not much, I'd say about ten, fifteen percent of the market that will Google before they send money. So they'll Google cheapest way to send money to India. And people were doing this before WIGS existed and companies like Western Union existed there. Western Union is seven to eight times more expensive than WIGS. So they could spend seven to eight times more than us on marketing.

• 15:34Speaker 00

  And therefore, there's no way we would ever be able to compete on those SEM key head terms. That was the point at which, when we started realizing the economics of this, we pushed so hard towards word of mouth. Moving on to word of mouth, what it became was understanding what would it take to build a product that's so good that people would talk about it? How do you instrument that product? And how do you organize a company and systemize it to enable and drive that word of mouth growth?

• 16:02Harry Stebbings?

  This is too good. I always have founders who are very product led and they're like, you know, I built amazing product and customers will come. And I go, no, that distribution is a product in itself.

• 16:13Speaker 00

  Yeah.

• 16:13Harry Stebbings?

  And we must create an archetype that, do you agree with me? Or is that what you're saying in terms of create such a great product that people talk about it?

• 16:21Speaker 00

  Totally. But so just stepping it through and making that more practical. With us, customers talked about price, talked about speed, talked about ease of use. You can measure price, you can measure speed, you can measure ease of use. When we enter a market, we find that if we are slightly cheaper than the incumbents, then we don't really get hockey stick like growth. Banks are at six percent, we're at point three in most markets. When we launched in some markets, say we were at five point eight, when you're at five point eight, you don't get any growth. So we learnt you have to be an order of magnitude better than the alternative to get. Word of mouth. You need to give customers an experience they did not know previously existed.

• 17:06Speaker 00

  So when found to say I built a great product, it needs to be that great. People didn't know you could move money instantly. Right. So we're moving about sixty billion pounds instantly from one side of the world to the other. And that is the kind of experience to get people.

• 17:19Harry Stebbings?

  You do, but actually I think you can be taken for granted unless you message it well. My, my question too is like, unless you're very explicit about those benefits, it's going to be very challenging for consumers to understand them. If you told me Harry naught point three percent transfer fee, I'd be like, cool, but it wouldn't strike me that shit. That's a twentieth of the cost of the competitor. So how do you think about product marketing and messaging the measured data of how you're better?

• 17:47Speaker 00

  I think you more or less got to my definition of product marketing. Actually, it was my dad that taught me this. So my dad used Wise and then he'd use Barclays and then he'd tell me it's he Barclays would say it's three pounds. And it see with Wise, it will cost two ninety nine and he'd miss the whole hidden fee in the exchange rate. And so he'd tell me, yeah, I like your products and it saves me like ten twenty p. And I realized that even my dad didn't understand how much he was saving. So we spent a lot of time trying to create a UX that explains to customers really clearly, like a picture that says this is how much this transfer costs you. And this is how much you would have spent with your bank by showing the rate and how much was hidden in the rate.

• 18:30Speaker 00

  And we iterated and iterated and iterated and iterated this till the point that when we show this to people, they're like, oh my God, I didn't realize it was that amount. One of the biggest areas of growth that we had was when we took that picture and we put that on the success screen. So once you've done a transfer and it completed, it's like you saved twenty five pounds. So I believe they saved some money, but they didn't believe the twenty five pounds. But then we put this, what we call a comparison graph on that page that really like explains to you where exactly this number comes from. People like, oh my God, and this thing started getting screenshot and shared on Twitter. We saw like, I think it was a three to four X increase in our recommendation rates off the back of that. And what's changed here is we haven't changed anything. Customers are still saving the same amount.

• 19:11Speaker 00

  But now they know what the value we've delivered is. And so I define product marketing as this closing this delta between the perceived value a customer has of the product and the actual value that you've delivered them, which is usually could be higher and is in our case. The way I look at the return on our product marketing is how much have we closed that? And I know that if our customers believe they're having more value from Wise, they recommend more. So that's kind of how it how it all works through.

• 19:38Harry Stebbings?

  I totally get you. Do you know what I think now the best thing is like, how do you create UGC on the savings gap that you create? Which is like, how do you create, congratulations, you saved twenty five dollars or twenty five pounds. With that, you could have bought thirty three thousand straws.

• 19:52Speaker 00

  Yeah.

• 19:53Harry Stebbings?

  Do you know what I mean?

• 19:53Speaker 00

  All that, all that kind of stuff.

• 19:55Harry Stebbings?

  It's like thirty three thousand straws, huh?

• 19:57Speaker 00

  Yeah.

• 19:57Harry Stebbings?

  That's fucking random.

• 19:58Speaker 00

  The other one that we had this on was on speed as like sixty percent of our transfers are instant. And customers would go through the transfer and get to the page and will say, the money's there. And then I remember a research team like interviewing these customers and asking customers, where do you think the money is? And they go, I don't know. It's with Wise. It's in the account. You realize customers didn't believe the money was actually gone from the UK to Australia and was available for somebody to spend in their bank account in under twenty seconds. That's how we define instant. And so we built a little whizzy animation that kind of like shows the money going and then landing there. And then when we ask people, where's the money? They go, it's in the other person's account. That's amazing. They can go spend it. So again, like this UGC really bringing to life that and we could have a lot of fun with it.

• 20:43Speaker 00

  That went faster there than the like, sometimes like not as fast as speed of light, but pretty, pretty damn close sometimes.

• 20:48Harry Stebbings?

  How quickly do you know when a new product is working?

• 20:51Speaker 00

  Yeah, it's pretty fast when you see the hockey stick happen. A good example is Brazil, when we launched the Wise account in Brazil, it went like that. It's still, it's still going like that in Brazil. And that's mainly because we found a way to help Brazilians move money internationally really cheaply, especially when traveling.

• 21:10Harry Stebbings?

  In a way that New Bank happened?

• 21:12Speaker 00

  In a way that New Bank haven't, to the point of this is what the, our partnership with New Bank is. So New Bank have offered the Wise account now to their customers. And we have New Bank and Wise co-branded cards to their Ultra Via Letter, their most valuable customers. And we continue to work with New Bank to kind of improve and build out that proposition.

• 21:30Harry Stebbings?

  How do you know when to kill a product?

• 21:31Speaker 00

  We know when to kill a product, usually when it's not working, when it's not paying for itself, that's a good sign.

• 21:37Harry Stebbings?

  My question is, it obviously doesn't pay for itself. And I think about content a lot in this, why have we been successful, honestly? It's not my dulcet tones or my charm, clearly. It's I just grinded longer than anyone else. And for three years, I didn't make any money and we didn't have a thousand plays on a show. And so like the payback period is so long.

• 21:55Speaker 00

  Yes.

• 21:56Harry Stebbings?

  And it wasn't obviously working. And so I find often it doesn't pay for itself until it does. And then it really does.

• 22:04Speaker 00

  The second reason, so one is when it doesn't pay back for itself. And that, and you're right, that isn't a problem, but it does become a problem if, imagine the costs of running it become really high. So when the costs are marginal, you can kind of keep something ticking over. When the costs become really high, you have to pay for that. And that means going to charge this customer over here to keep this going. And then suddenly this becomes less competitive. So we've learned to be very disciplined on this front. The second point, it's not the financial cost that's the real inhibitor, it's the people cost, it's your time. How much time have you got to keep running a product that you hope will take off? What else could you be doing with that time? And there are some things where teams have grinded away and grinded away and grinded away at Wise and then things have taken off.

• 22:48Speaker 00

  And then there are other ones where they've grinded away, grinded away. And then there's been this other thing that started moving really fast that they've jumped on top of and killed this one instead.

• 22:56Harry Stebbings?

  I guess there's also like this outcome scenario planning, which is important as well, which is like, to what extent is the upside capped? Unlimited, a needle mover? And if it's like a massive needle mover for the company, which could be unlocking South America.

• 23:10Speaker 00

  Yeah.

• 23:10Harry Stebbings?

  Massive, fuck, we could probably hold out longer to see. But if it's like SMBs in south of England need this, or it's a much more, whatever that is, that outcome is smaller, fucking cut it quicker.

• 23:21Speaker 00

  I mean, you figure it all out. So that's absolutely right. So what we do is we have in our heads like, and Google have this famously, like it has to be a billion dollar business. So we have, what is the minimum hurdle rate that something needs to hit? And you're right, we don't time bound it, but we shouldn't be working on things that can never be huge.

• 23:37Harry Stebbings?

  Yeah.

• 23:38Speaker 00

  So everything has to be huge. Every teammate wise is clear what huge means.

• 23:41Harry Stebbings?

  What is the minimum hurdle rate for you?

• 23:43Speaker 00

  Very big. Unfortunately, as a public company, I don't think you can share the specifics, but it's very big. And the bit I'll share back is we look for payback generally within 12 to 24 months. So you look at the costs, how much would it cost? And then you can work backwards to what.

• 23:57Harry Stebbings?

  Does that frustrate you being a public company? Cause you have less flexibility on extended paybacks. Because public markets are essentially saying, hey, I mean, they're a short term voting machine in many respects, not a long term weighing machine.

• 24:10Speaker 00

  Yeah, yeah.

• 24:10Harry Stebbings?

  Get back to that. Yeah. And so respectfully, they don't always give you the luxury of 24 to 36 months for a more outlandish bet that could pay back. They want the much more tangible, shorter. Is that frustrating for you?

• 24:23Speaker 00

  No, I think, so we haven't changed since we've been public. And a really good example of a very long term bet that is weighed in the, in the public market very visibly is our investment in price. We've dropped price quite a lot this year so far. So say we drop price by 10%. There's not 10% of marginal customers hitting our product that will then switch to Wise at that point in time. Does that make sense? So you drop price by 3%, it's not like magically there's a 3% who weren't going to use Wise and now are going to use Wise. So incrementally, we've got more revenue.

• 24:57Harry Stebbings?

  Yeah.

• 24:57Speaker 00

  So this is much more a long term bet, kind of like Amazons, that you keep chipping away at driving down your cost and your price. And eventually the market will switch to you. And so the people looking for us, investors looking for us to kind of like optimize the company for maximizing growth in the next three months. Like this doesn't make any sense. Maximizing growth in six months doesn't make any sense. But maximizing growth over a five year horizon or three to five year horizon where this makes a lot of sense. So the public markets, yep, they're there and people will invest in the stock. People will look at the short term results. And make their own judgments about it. But there's enough investors out there that buy into our longer term vision on price,

• 25:37Speaker 00

  which means we can keep doing this. On the challenging side, though, there will always be, there'll always be noise from people that don't buy into your strategy. But as long as you can find people that buy into your stock, you're fine.

• 25:48Harry Stebbings?

  Do you worry with the outcome scenario plan, like estimating upside? The challenge is some of the biggest outcomes come from toys or come from non-obvious ideas that started off as side projects. You know, one of the engineers kind of tinkering about and actually it wasn't a big ambitious play. It was kind of something that someone just kind of tried and whoa, it took off.

• 26:08Speaker 00

  Yes, this is true. This has happened. So we, we encourage this. So a fun bit we haven't got to is how we run. So historically, we ran in autonomous, independent teams. When I joined, it's about 10 odd years ago, every quarter we'd get together and every team would talk about their plan. They get feedback from everyone around, including customer support to Cristo and Tavert. And then they'd adjust their plans and then they'd execute and then they share back how they did. And this kind of made logical sense. We had teams around each of the big problems you need to solve to get to low cost instant transfers.

• 26:45Speaker 00

  We had a team on driving down the costs of KYCing a customer, a team on making it easier to onboard, a team on making the pay into the payouts really cheap and quick.

• 26:54Harry Stebbings?

  So just to be honest, these verticalized teams are by product or by function?

• 26:58Speaker 00

  They're cross-functional teams with everything you need in order to move those KPIs.

• 27:02Harry Stebbings?

  Gosh, you said like independent companies.

• 27:04Speaker 00

  Yeah, but with a matrix structure where all the engineers report up to CTO, all the product managers up to me and designers up to the VP of Design, et cetera.

• 27:12Harry Stebbings?

  And they're all fighting for resources?

• 27:14Speaker 00

  No, if a team's doing well and it's able to invest, it can ask for more resources and able to take off.

• 27:19Harry Stebbings?

  Was that a good structure?

• 27:20Speaker 00

  That works and it works up to a point. Now we have teams into squads and squads into tribes. And these guys and ladies hold the teams accountable in very much the same way. The strategy still does come bottom up. Does that make sense? Cause the teams are still incentivized to do this, but the accountability is there around their local leaders. Make sure that it's working.

• 27:42Harry Stebbings?

  I don't understand, sorry, the transition from these independent autonomous units to squads and teams and tribes.

• 27:48Speaker 00

  Yeah, I'll step it through. So a good way of explaining this is like, we, as I shared at the beginning, every quarter, they would stand up and talk through their plans. This works fine when it's six teams. When it got to thirty or forty, it stopped working. So we started grouping those teams into units. Call them squads.

• 28:06Harry Stebbings?

  Yep.

• 28:06Speaker 00

  And then you kind of hired somebody to run the squad and tell them you're accountable for the outcomes of the squad. And so that same structure that we were running when we were startup is kind of happening within the squad. Does that make more sense?

• 28:18Harry Stebbings?

  Totally does. Where does that break down?

• 28:20Speaker 00

  So we went from squads to tribes. It keeps laddering up. So it works. It even works when you're public because I, when I stand up and talk through our product strategy, I have kind of like a whole engine that synthesizes all of these up and helps me talk through to the market, where are we going? What are the big levers of growth in Wise? And like, like I talked you through at the beginning, where we have a money transfer business, we have an account business, we have an enterprise business, and can explain what our strategy is in each of these areas. But they will come bottom up rather than me saying, I think our strategy in X should be, should be this.

• 28:50Harry Stebbings?

  You, you mentioned the different business units and there's quite a few. You mentioned like thirty, moving from six to like thirty. But how do you think about effective product marketing when you have so many different ones? It's so easy when it's like, hey, fast and quick, done. But when it's thirty and you have like multi currency accounts and cards and partnership members, how do you do it?

• 29:11Speaker 00

  Yeah, it's not easy. And I wouldn't say we've done it particularly well, still work in progress, but the answer is you devolve it as much as possible. Great example is Wise Platform, uh, where we're taking Wise, our infrastructure out, and we're selling it to banks. So most of the near banks in the world use Wise, Mercury, Brex, Ramp, Bluevine, Monzo, N26. They all offer Wise to their end customers to move money internationally. Google Wallet is powered by Wise, Stripe users, platforms use us too. But probably more excitingly, some of the largest banks in the world are starting to use Wise. It's done very well in APAC. So some of the largest bank in Indonesia, second largest in Japan, third largest in South Korea.

• 29:51Harry Stebbings?

  So you run it as a separate business, really?

• 29:53Speaker 00

  Within Wise. And so to get to your product marketing question, this team and this squad within Wise has to do its own marketing. So we run, I kickstarted it, Wise Connect, our enterprise conference. We run it in London, in Singapore and in San Francisco. And we've gone from a standing start to doing that in like, I think we're now in our second year of running it three times. And this time around in London, we managed to fill a room with 200 bankers from tier one banks in Europe. So we do have a centralized marketing function, but really it's devolving and embedding marketing within those teams.

• 30:26Harry Stebbings?

  How do you prevent brand confusion when you have successful product marketing in one category, when it's like, hey, you've sold so well in terms of product marketing for simple and cheap. And then the bankers are like, really?

• 30:36Speaker 00

  Yeah.

• 30:37Harry Stebbings?

  We're going to use Wise as a B2B?

• 30:38Speaker 00

  Or going further, like our consumer marketing can feel like it's bashing banks. Like, how do we, how do we tailor that?

• 30:43Harry Stebbings?

  Yeah.

• 30:44Speaker 00

  So we've, we do have a very strong brand marketing team that puts the architecture in place around all of this and things through what is the Wise brand, what is the platform brand, et cetera. And then from a creative strategy, everyone, everyone understands that we're going to end up becoming an API business at Wise. In a five to 10 year period, the majority of our customers won't be using our apps. They'll be in banks and therefore we need to evolve our marketing strategy. We can't be having stuff here that makes it harder for that to happen.

• 31:13Harry Stebbings?

  Do you need a brand if you're going to be an API business in 10 years?

• 31:16Speaker 00

  We absolutely need a brand. If you're going to be an API, it's just, it's just a different kind of brand as a B2B.

• 31:21Harry Stebbings?

  You don't need a consumer brand, you need a B2B brand.

• 31:23Speaker 00

  So there's a very fun part around how the consumer business and the B2B business work with each other. No bank would ever integrate Wise, would ever use our infrastructure if our consumer business didn't exist. Our consumer business sets the expectations in the market of it's going to be cheap, it's going to be easy to use. A consumer business has taken something like between 10 to 20% of some of the major banks in the UK's volume.

• 31:49Harry Stebbings?

  I remember when I interviewed Terry Angloss from Mastercard when he was running their M and A team. And he said to me, you ever wonder why these massive card transaction machines sponsor football tournaments? And it's because consumer trust is everything. And so when you go into a store in Colombia and you see Visa or Mastercard, as a consumer, you've seen it on the side of the burner bow and you're like, oh, trust. Now I know that brand. And that is the power of brand for us and for Visa.

• 32:16Speaker 00

  We stumbled on this earlier wise. So obviously, anyone out there starting a fintech business, when you talk to your customers and find out why they aren't using you is because they don't trust you. And the first thing anyone will tell you is the way to build trust is brand marketing. And I say it's really hard, actually, to build trust because you're like, my dad was used to using his bank. And you can go into a bank, you can touch a bank, you can feel a bank. And suddenly, you see an ad on the internet that says cheap money transfer. You're going to click it and you trust it. You have to spend a ton of money on marketing to get somebody to trust you with their money. And the pivot we made was realising that it's much easier to get people to trust their friends. They already trust their friends. And if you focus on giving them a great service, then that covers the trusting for us.

• 33:00Harry Stebbings?

  So how does that change your strategy then?

• 33:02Speaker 00

  No, not really. So what we learnt was like, we do have all the usual things you'd expect us to invest in from a product marketing perspective to tell customers, this product is safe. However, when we're a 70% word of mouth business, I'm under no illusion that most of the work on getting people to trust our product is from our customers telling their friends, it's safe. My money turned up at the other end.

• 33:23Harry Stebbings?

  So like, you know, I had Val Schultz, who was the first head of growth at Revolut on the show. And he was really interesting. He was like, we changed product strategy to really focus on group payments, because fundamentally, social pressure drives adoption. And actually, if you have nine people playing football, and there's 11 in the team, I'll say, fuck's sake, Neil, get a Revolut card, so we can actually pay for the pitch together. And it changed product strategy by realising that friends drive adoption.

• 33:50Speaker 00

  That's very smart.

• 33:51Harry Stebbings?

  I thought it was quite a good one.

• 33:52Speaker 00

  Yeah, it's very, very smart. Lots of the neo-banks, when you look at Monzo, you look at Chime, they find a hack that really drives adoption. I think Chime with get paid a day early. Because of the quirks of the US payment system, you can get paid a day early. If you switch to using Chime, people switch to using Chime. And then similar, this kind type of social pressure and some of the features Revolut built out in the early days definitely helped drive their adoption.

• 34:14Harry Stebbings?

  What hack you did worked best?

• 34:16Speaker 00

  Just sharing with people how much they've actually saved is probably the single biggest. The other part I didn't share. So within the 70%, that's word of mouth about, say, 20 to 30 is refer a friend and the rest is pure word of mouth. And the refer a friend, we've tried everything under the sun. So we've tried sending chocolate, like you refer someone to Wise, you get money, like I get money, you get money, we both get money, we've played with different amounts of money.

• 34:41Harry Stebbings?

  From an economic psychology perspective, does the amount of money that you offer as an incentive drive a corollary return?

• 34:49Speaker 00

  So what happens is it drives users, but it doesn't drive what I call customers. So a customer, if you define as a profitable user, like it's very easy to drive users, right? Because if you give an incentive like that, but when you look at the growth off the back of these, like, like giving a very heavy incentive, you'll see something that looks like a hockey stick. If you look at revenue or like profit, it will look much, much more tame, right? And then when you try to understand the marginal cost of the extra incentive, it generally will fall off.

• 35:14Harry Stebbings?

  How do you think about knowing the CAC budget that you have? Because LTV is varying. And I think actually for banks today, it's becoming increasingly challenging. Before banks and fintech products, you had incredible stickiness and your LTVs were long. Now I think you have this increasing transience between different services. Most Monzo users are also Revolut users. They're also probably a traditional bank user as well from their teenage years. They kind of have. And so the LTVs are more variable, which changes your CAC budget. How do you think about that?

• 35:44Speaker 00

  I think the best performance marketers that I've worked with over the last 10 to 15 years, they know this. In businesses I've built previously and just some of the people say that built booking.com or Zalando, some of the early Rocket guys, it was always around when you're advertising, say you're advertising on SEM, on search engine marketing, and you get better and better at breaking down into smaller and smaller groups, your campaigns. For that campaign, you understand really well the cost. And for that campaign, you understand really well the LTV. And every campaign you run will have a different LTV and you need to kind of aggregate up campaigns to a level that you can get a decent read on the LTV.

• 36:27Speaker 00

  And the other way, I think it's at the end of the day, what you're doing is making a bet. So I'm going to spend fifty pounds on acquiring on my CAC because I think I'm going to earn fifty pounds back in a year. And the other way for our marketing teams, so when I've spent that fifty pounds, I am now in the red, correct, in acquiring the customer and I'm hoping it's going to track back to this. And the discipline of tracking how much are we down from all the bets that we've spent? And what's our flaw in terms of how much you're prepared to spend and how much you're prepared to lose? Because like you're not in control of whether these users are going to keep coming back and using your product. There's hundreds of other variables in there and that's the fastest way in which businesses go bust, right?

• 37:09Speaker 00

  When they spend a bunch of money acquiring customers that turn up, but the LTV doesn't turn up in the way that you expected.

• 37:15Harry Stebbings?

  When have you got it wrong and what did you learn from that?

• 37:17Speaker 00

  Probably the best example of this was how we became profitable. So we became profitable about four to five years ago and every year we would go raise money prior to this point. And every year, you probably know this from your portfolio, every year when we raise money, we told ourselves, this is the last time we're going to raise money.

• 37:33Harry Stebbings?

  Always, always the last.

• 37:35Speaker 00

  Yeah, we do, we do a little business plan that said we're going to be profitable in like twelve to twenty four months. And then every year we get to this point, like twelve, twenty four months later. And we've come up with all these really good ideas that we should invest in. Engineering ideas, they could be marketing ideas and we, we'd come up with these ideas, we thought they could work. And then every year we'd need to go raise again. And then we got to this point where it was about forty five years ago and winter was beginning to set in and we could raise, but we decided it would actually be far better to become masters of our own destiny and become profitable. We became profitable in about six to nine months and there was only one cost we changed to get there, which was our marketing spend. And I think I've shared this publicly before and this is about four years ago. We halved our marketing spend.

• 38:19Speaker 00

  We dropped ten percent on customers and one percent on revenue. And when you're in a business that's going grow, grow, grow, grow, grow, and then you turn around and you tell the marketing team and you work through the detail of it. We now need to get to profitability. This type of trick is hiding in there. And I've learned now, once I did that once, it's like this kind of inefficiency will build up all the time in marketing. So about two or three years later, we kind of ran the same drill without a need to do it. So we're going to halve the marketing spend. Tell me how much we're going to drop revenue and we barely dropped revenue, but made the product.

• 38:51Harry Stebbings?

  Why have a boulder increasing it?

• 38:53Speaker 00

  Exactly, but the point is it always generates a bit more revenue, as you can see. But there's a point at which it becomes less and less and less efficient. And unless you go back and do this, you you kind of miss this massive opportunity that's hiding in there.

• 39:05Harry Stebbings?

  But for the one percent, is it worth it?

• 39:07Speaker 00

  Obviously not, but it doesn't start off with a one percent. It starts off with the it's increased by five percent and you get like 10 and this and then suddenly at the end of it, the next increment is giant increment isn't generating that much.

• 39:17Harry Stebbings?

  What have been the biggest hiring mistakes you've made?

• 39:20Speaker 00

  I measure how many times do I say yes and it ends up not working out? Or how many times do I say no? So generally, I rarely am hiring into my reports. I'll do a final round for a leader into one of my teams. So I'll say no, but I'll always tell my team, you could ignore my no. But this is what I expect that person to have done in six months' time. If that doesn't work out, you'll need to let them go. And sometimes they say, yeah, this person can totally do that. And I proved wrong. So on both accounts, I get it wrong about 20 to 30% of the time. And this is after 10 years of trying. And having talked to others and watched others on this, I've learned that interviews aren't a substitute for the real thing.

• 40:02Speaker 00

  And you just have to hire quickly, try and support people as much as you can. And just sometimes it just won't work out.

• 40:08Harry Stebbings?

  Do you know what I love to do? I love to find a way to get them in beforehand, even for a day. Just in a day, I can figure out, especially on content, it's a really quick feedback loop. If you're a good video editor.

• 40:18Speaker 00

  Yeah.

• 40:19Harry Stebbings?

  I know how you work.

• 40:20Speaker 00

  That can work. But yeah, back to my interview questions. Love your feedback on this. So the two ones I ask are obviously a product one of. Talk me through an example of where you've been hands on in building something. And then I always explain, when I say hands on, I mean, you ended up having to code it. You had to design it, you had to write the copy, but it is that, like, where do you go the extra mile? And which extra mile do you choose to go? And then it's quite quickly you find the people who've never done that, right? And always work through someone and also just don't sweat the details. So that's. At all levels, we ask this question, even if you're coming in as effectively a VP of product for one of our sub areas. And then the second one is everyone has a reason for leaving where they are.

• 41:00Speaker 00

  And they're reasonably open about it and they're joining Wise or wherever because they think that reason doesn't exist in the place they're going to. So I try to get this out of them. And the way I get that usually is by saying, talk me through what really frustrates you about where you are. And then you kind of get into why does that really frustrate you? And then it'll always come down to the same things like my boss isn't behaving rationally. And they aren't optimizing for revenue, they're optimizing for X, or they're being too short term or this, or there's some toxic X, Y, Z in there that I can't. And then the question is like, well, why couldn't you fix this? What was the hard barrier that hit you hit that meant? Because if you're doing Wise, you're going to find these types of things. You need to be able to work through them.

• 41:41Harry Stebbings?

  Sure.

• 41:41Speaker 00

  So why couldn't you fix this? And in that, you find two things. One is whether they're able to kind of self reflect and say, actually, I understand why. The CEO or the founder was behaving that way. And if I was in that role, I would have done that. And that's usually a big tick. Or sometimes they're like, no, I don't get it. But ultimately through this conversation, they're really talking about their limit. Cause they hit their limit somewhere and you can kind of then evaluate, will they run into that every day, every week, every month or every year? Why isn't therefore would it work?

• 42:12Harry Stebbings?

  How quickly do you know when you've made a bad hire?

• 42:14Speaker 00

  Oh, I don't know the answer to this question, Harry. So I am constantly impressed with people's ability to learn and develop. And I've learned not to trust my judgment on this, if that makes sense as well. There are people that I said no to that have done amazingly, amazingly well. And I learn from every day.

• 42:31Harry Stebbings?

  When you reflect on those, what did you get wrong about that person's estimation?

• 42:34Speaker 00

  I think at the end of the day, we have our own preconceived ideas of how we solve problems. Like, I'm very opinionated on how I solve problems. And there are many other ways in which they can be solved. And all I really care about is the problem being solved, right? And the outcome happening, I don't really care how it happens. Sometimes the ways in which people work, I would look at and go, I would never, never do it that way. And therefore I think you're going to fail, but sometimes they, they succeed and you learn something.

• 42:59Harry Stebbings?

  We're going to do a quick fire, okay? So I'm going to say a short statement, you're going to give me your immediate thoughts.

• 43:03Speaker 00

  Okay, go for it.

• 43:04Harry Stebbings?

  So what's the most common expansive deadly mistake you see founders making?

• 43:09Speaker 00

  Marketing, so thinking that you can just grow your startup by doing some magic on Facebook.

• 43:15Harry Stebbings?

  I'm, I'm so with you, all thinking that hiring someone for growth.

• 43:18Speaker 00

  Oh, yeah.

• 43:18Harry Stebbings?

  Will suddenly find product market fit. What was the most dangerous myth floating around specifically about startup growth, do you think?

• 43:25Speaker 00

  Marketing, so I think it's the same thing around this, that there is some magical playbook. The bit I keep telling founders is every minute you put into product market fit or understanding what it's going to take to make a great product has such a huge return versus I'm going to find somebody who's going to solve the Facebook algorithm. Like, this isn't really what you should be spending your time on for the first three years.

• 43:47Harry Stebbings?

  I think it's also like, there's so much focus on that channel diversification. It is so hard to get a channel working efficiently. I remember Kit Bodnar at HubSpot said, you know, it takes one channel working well to get to 50 million in AR and two to get to 100. And I think a lot of founders I meet kind of really focus on diversification before they've hit any meaningful revenue.

• 44:04Speaker 00

  Totally.

• 44:05Harry Stebbings?

  It's like, fuck, if you get it working, double down. How does growth change in a world of AI? How does growth and product change in a world of AI?

• 44:11Speaker 00

  For me, it was, it is, how does it make payments faster? How does it make payments cheaper? So for us, it's kind of obvious, like we have big operational teams. We already use L L Ms to augment those teams. Some places L L Ms automate a hundred percent some of those tasks. With regards to content, like you've seen what people can do with content with these, with these wonderful tools. We're obviously experimenting with them as well.

• 44:34Harry Stebbings?

  What growth tactics stayed the same?

• 44:36Speaker 00

  I still think there's this role for creativity. So you can run two ad campaigns, you can run them with the same growth tactics, but same channels, same CPAs, same targeting. But one has a creative that is like got incredible cut through, incredibly talkable, incredibly viral, and one doesn't. And this is not formulaic yet, and there's still this opportunity for creativity that will always, always have an outsized return.

• 45:03Harry Stebbings?

  What have you changed your mind on in the last 12 months?

• 45:07Speaker 00

  I think I'm beginning to believe the hype behind L L Ms in places now and seeing them being practically useful at.

• 45:14Harry Stebbings?

  Where are you seeing them practically useful at scale that you didn't maybe believe before?

• 45:19Speaker 00

  So you've obviously played around with them, you kind of can find the edges of where they start hallucinating and they're less, less useful. And you have to engineer like hell to get them there. Where I found it useful is when they're augmenting a person and there's still somebody driving a little bit. But you can kind of see how it gets to the point that that person will also not be needed in a while as well. L L Ms and A I in general, I think we're all getting it wrong in terms of where that will end up.

• 45:43Harry Stebbings?

  Tell me, final one, what's the most recent product or growth strategy, not including Open A I, that you've been most impressed by?

• 45:50Speaker 00

  New Bank and J P Morgan, for two different reasons. So New Bank, very similar playbook to us, customer led business, incredibly high word of mouth, incredibly high N P S. Lo, when you open their analyst investor presentations, it's how they brought down prices, how they made the payments faster, et cetera. But when I look at their culture, it's really, really strong and we have a lot to learn from them. They're obviously ahead of us in terms of scale, great business. And at the other end of scale is J P Morgan. I mean, there have been large banks offering cross border services for years. Biggest like city HSBC Barclays, something sent that West JP Morgan. JP Morgan have a pretty good infrastructure. They built it out really well. They continue to innovate at scale and at the size they're at.

• 46:35Speaker 00

  And Jamie Diamond went pretty hard after payments. Payments have grown to be a material part of their business. And that is a real differentiator for them when they in their corporate banking and they bank banks when they bank banks as well. So still very impressed and inspired by JP Morgan.

• 46:50Harry Stebbings?

  I love that. And I'm also pleased with those suggestions. I haven't had either of them before on the show. So that's a good one. Thank you so much for putting up with my prying questions. You've been fantastic.

• 46:59Speaker 00

  No worries. Thanks for having me.

• 47:02Harry Stebbings?

  It was so much fun having Neelam in the studio there. If you want to see the full episode, of course you can on YouTube by searching for 20 VC. That's two zero VC on YouTube. I always love to see your thoughts and comments there. But before we leave you today, let me tell you about Canva. Many founders I've talked to touch on this idea of if you want to go fast, go alone. Want to go far, then go together. Canva helps your team go far together with their collaboration tools. Your team can work together in real time on the same presentation, doc, whiteboard and more with name labeled curses. Tag teammates in comments and assign tasks. Canva supercharges teamwork and simplifies workflows. With Canva, you can go far together and fast thanks to Canva's AI tools. Generate text and slides in seconds.

• 47:46Harry Stebbings?

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