Reflections on 3 years of (Transfer) Wise | Part V: Other Strategic Topics

(^ Mission Zero - How? ^)

Let’s talk about strategies. Jesse, one of the VCs who invested in Wise explained why he thought Wise was built to last. I am equally bullish and agree with the reasons listed, a lot of which have been covered in earlier parts of this series. Here I look at a few other topics.

Fiscally responsible and disciplined

Anybody working at Wise would have remembered Matt’s frequent appearances on the biweekly team call, talking about everything finance. It left a lasting impression on me: the company was always run in a responsible way financially. It made sense post-product-market-fit in the scaling phase of the company.

It went hand-in-hand with the extreme form of autonomy that is mentioned in Part II, and let me explain. At times, I felt that Wise was run like a machine on auto-dial: everybody and every team seemed to know exactly what to do next. The numbers Wise was dialling? They were the likes of unit economics, CAC, LTV, revenue, EBITDA and most importantly, P&L. It rendered positive results as Wise had been profitable since 2017, which was rarely heard of in the fintech world even to this day.

Another way to look at this: given that Wise already operated at a micro/team level with a data-driven approach, it was natural to operate in the same way at a macro/organisational level, with a different set of data to drive decision-making.

My view on this is two-fold:

• I liked the discipline it displayed (credit to Matt and leadership as a whole), which laid the foundation for the pre-IPO preparations as well as the post-IPO operations. It also served as the conscious voice in the room, pulling people back and letting them pause and rethink what they wanted to achieve: not just single-mindedly following the mission but in a fiscally responsible way.
• I was concerned about the lack of innovation-based forward-thinking and forward-planning, in other words initiating speculative projects that could have outsized success in the future, which leads nicely to the next topic about moonshot projects, or lack of them. The question here is whether the speculative R&D spend could have had its place, even if starting from a tiny percentage of the revenue.

Lack of moonshot projects

I am a fan of moonshot projects because I believe for companies to continue innovating, unbounded creativity and innovation should be encouraged and put into practice by launching projects that have a longer payback period. The question to answer here is not the usual such as how we keep growing 50% YoY in the next 3 years, but where we see ourselves 5 or 10 years from now. It should be even more so for a profitable company like Wise because there is more space for cash made available to fund those initiatives.

My view of the reason why it lacked the initiative was that most moonshot projects are driven top-down with an appropriate level of resources to match, and Wise was not an organisation comfortable making those bets. Leadership might have been concerned about pushing it through against the autonomous tide, attracting noise against it. On the other hand, a bottom-up moonshot is almost impossible due to visibility and resource constraints.

As I often voiced during my time at Wise, I was in favour of leadership taking initiative in areas they had the fullest visibility. Kicking start moonshot projects was one of those areas in which they should have the conviction to make a push. It should not be seen as going against autonomy because no other group could have taken the initiative due to limited visibility. And the strategic value would outweigh any concern.

Crypto, what crypto?

Speaking of a moonshot, let’s talk about crypto. This topic is always interesting.

• For one, it had been heating up in those years, going through boom-bust cycle, therefore most fintechs would have paid attention to it, if not already taking action.
• Secondly, cross-border money transfer is supposedly one of the obvious use cases that blockchain and/or crypto could implement that have real-world values.
• Thirdly, with a large engineering population (see Part IV dedicated to engineering organisation), people would inevitably take an interest in it.

For Wise’s position at the time, I think it necessary to single out crypto (currencies) and then talk about blockchain separately:

• Wise had no plan to move into crypto at the time, because of the payment infrastructure it had been building that relied on interfacing with one or more banks per individual country/territory. In certain countries/territories, and/or for certain banks, crypto was considered a no-go, meaning that there would be a blanket ban for doing business with any partner dealing with crypto. Wise did not want to be in that position therefore steering clear of crypto was an easy decision to reach.
• I felt at the time that Wise should have invested in blockchain by prototyping an on-chain money transfer application or even creating its stablecoin to work around crypto volatility. I still don’t know why these projects didn’t get started. An easy explanation would be the resource constraints which are common in a growing company. Another possible reason could be the autonomy throughout the company (see Part II) which could make it difficult to initiate moonshot projects.

In short, my view is that it was a waste of opportunity not to invest in areas such as blockchain which could become a competing payment rail to the existing, peer-banking-based rail that Wise has already been building. I don’t think it would be a strategic detour; rather it would have created another space for the company to innovate in. And there could even be synergy between the two payment rails.