Steve's ITK

By Steve O'Hear

Steve's ITK: Timing is everything





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Steve's ITK

May 29 · Issue #24 · View online

Steve's In The Know: Thoughts from a European tech insider.

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Opening thought: When a PR plan comes together
You have got to hand it to the TransferWise comms team, they certainly know how to execute a PR plan. The fintech ‘unicorn’ made two major announcements within the space of less than a week, with both generating significant and far-reaching coverage. 
The first is that, six years after launch and following around £91 million in funding, the company is now operationally profitable. Breaking down the numbers further, TransferWise says it is currently seeing £8 million per month in revenue, which extrapolates to a £100 million revenue run-rate, and is growing 150 per cent year-on-year and expecting to do the same this year.
The second announcement was that TransferWise has launched a new product that goes beyond simple international transfer. Dubbed ‘Borderless account,’ the company is now offering a new online banking account aimed at businesses, sole traders and freelancers who need to conduct business across borders and in multiple currencies, and who want to take advantage of TransferWise’s low exchange rate when doing so.
What was particularly interesting from a PR perspective is how the company, albeit subtly, tied these two seemingly disparate news events together but in way that did not let one detract from the other.
Included in the announcement about being profitable was the following canned quote from TransferWise co-founder and CEO Taavet Hinrikus:
“This is just the starting point. With the unique platform we’ve built, we’re looking forward to creating a new kind of financial services for the future.”
Note the line about this being “just the starting point” and the reference to TransferWise as a platform. The word “services” is plural not singular, too, no doubt deliberately planted to prompt the most eagle-eyed journalists in this space to speculate and ask if TransferWise was going to launch a new product, which, of course, I gladly did.
In fact, my resulting headline on TechCrunch led with both the company’s profitability and upcoming new products, an angle that almost all other news outlets missed (perhaps you can be too subtle?).
I also speculated on what TransferWise’s new financial services could be. That is the kind of thing that can easily come back and bite a journalist: in the event of being entirely wrong, you can end up looking pretty stupid. 
My tentative guess was that the company could easily enter the friend-to-friend mobile payment space, with a product similar to PayPal-owned Venmo or Barclays Pingit, or launch a TransferWise debit card for lower exchange rates when spending abroad or in multiple currencies.
Regardless of if I was ‘on the money’ or not, there was no way I wasn’t going to want to cover TransferWise’s new product when it was finally unveiled, although I had no idea it would be quite so soon. 
My coverage of TransferWise’s new ‘Borderless’ account focussed on what the new business banking product does, who it is aimed at, and who it competes with.
Despite confirmation that TransferWise also plans to roll out a version for consumers and launch a debit card of its own, I was especially keen to downplay the rather tempting but lazy narrative of startup A versus startup B – ie TransferWise versus Revolut (or any number of burgeoning fintech startups). 
Instead, TransferWise’s main target here is undoubtedly the incumbent banks, and initially the rather neglected SME or sole trader market, for which the need to receive and make payments in multiple currencies and to and from different countries is increasingly a requirement.
As far as I’ve seen, the company was pretty disciplined in sticking to this line of attack too. As one PR I know likes to tell her clients, it’s rarely a good strategy to talk smack about a competing startup when you both share a much larger common enemy. In other words, when applied to startups, the old adage that a rising tide lifts all boats (for a while, at least) can actually be true.
One of the other interesting things about the two announcements, perhaps because of how much publicity they both generated, is the amount of backchannel communication I then received, which hasn’t all been positive.
A number of people have questioned if the company is really operationally profitable overall or if it is simply profitable in a few currency routes or the U.K. alone. However, my understanding is it is absolutely the former: it is not profitable in all markets but is definitely generating cash as a whole.
Competitors have also been in touch (as they have tended to do over the years, more than almost any other startup I’ve covered) to point out that TransferWise isn’t the only fintech launching an international banking account for SMEs. They also claim that the company’s rates aren’t always good value depending on how much money you need to transfer in a single payment. Feel free to argue that one out amongst yourselves.
Bonus: Which London VC recently used a PR firm’s free service for pre-seed startups rather than retaining and paying for an agency of its own? I guess that’s one way of displaying burn rate leadership.
Things I wrote
Mogees picks up seed funding to put audio-based gesture recognition tech into new devices
Plum bets on Facebook Messenger as the place to manage your finances
Healthcare booking platform DocPlanner raises €15M Series D
Quiqup, a London-based on-demand delivery startup, raises £20M Series B
TransferWise launches ‘Borderless’ account for businesses, sole traders and freelancers
Feast It lets you book ‘street food’-styled catering for your next corporate or social event
Shipamax raises $2.5M for its cloud software platform for the bulk shipping industry
Fintech unicorn TransferWise reaches profitability, planning ‘new financial services’
Appear Here, a marketplace for short-term retail space, raises $12M Series B
Notion Capital outs new $80M ‘growth equity’ fund to invest in enterprise Saas and cloud portfolio
Backed by Chinese gov, Silk Ventures is a new $500M fund to invest in European and U.S. ‘scale-ups’
Closing thought: What would you ask the TransferWise co-founder?
I’m scheduled to interview TransferWise co-founder and CEO Taavet Hinrikus at Startup Grind Europe in London in a couple of weeks, the first time we have ever battled it out on stage.
I had planned to ask why the company wasn’t venturing into new products, including doing a card of its own, and to focus on what parts of the financial services pie Hinrikus planned to take a slice of next. However, that has now been partially answered.
Hinrikus is also a pretty active angel investor. His personal fintech investments include Habito (mortgages), Yoyo Wallet (mobile money wallet), Curve (all-your-cards-in-one), and Coinfloor (a bitcoin exchange). 
So, what questions would you put to the carefully spoken member of the unicorn club? Hit reply.
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Till next time,
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