Taavet Hinrikus: The Quiet Revolutionary

Taavet solo 1

Taavet Hinrikus grew up in the fin de siècle days of the Soviet Union as one after another eastern European country threw off the oppressive shackles of Communism. That may go some way to explaining his desire for yet more revolutions.

He was employee No. 1 of Skype, which was built in the former Soviet republic of Estonia. For Hinrikus, whose world was utterly transformed when Estonia was freed, the idea of changing the rest of the world had a huge attraction. “‘Let’s go out and build a global telco.’ Let’s go change the world. That sounds kind of scary to do,” he says.

Hinrikus: “You can change the world from an old Soviet-era building. You can start a revolution.”

Scary was good. Coming from one of Europe’s smallest countries — Estonia has a population no greater than that of Copenhagen — Hinrikus saw that revolutions are built on the size of the dream, not the size of your country or company.

“The lesson was that you can change the world sitting in an old Soviet-era building, in a room that has not seen a renovation in 20 years,” he says “You can start a revolution from there.”

“Seeing that you can have this profound impact on the world it is a bit like a drug. After you have done that, you don’t really want to go and get an average job.”

The Bank Battler From Estonia

June 1981
Hinrikus is born in Estonia, in the former Soviet Union.
October 1997
At 16 years old, he is taken on as a senior engineer at Halo Interactive DDB, the first digital media agency in Estonia.
September 2000
He becomes project manager at Equitygate.com, a financial advisory partnership.
February 2002
Hired as product manager at Joltid, the world leader in peer-to-peer technologies. Hinrikus is put in charge of product development and the launch of PeerEnabler.
January 2003
Hinrikus drops out of his computer science degree at Tallinna Tehnikaülikool and becomes the Director of Strategy and first employee at Skype. Oversees Skype’s rapid growth.
December 2010
After leaving Skype, Hinrikus returns to university, and graduates from INSEAD with an MBA in General Management.
January 2011
Hinrikus and his co-founder Kristo Käärmann launch TransferWise.
May 2013
TransferWise secures $6 million investment from Peter Thiel, first investor in Facebook.
April 2014
TransferWise hits £1 billion of customers’ money transferred.
June 2014
Hinrikus and Käärmann secure $25 million investment from Sir Richard Branson.
February 2015
TransferWise receives $58 million funding in a round led by Andreessen Horowitz.
February 2015
TransferWise launches in the U.S, bringing the number of TransferWise offices to five: London, Tallinn, Cherkassy, New York and Tampa.

Hinrikus is on to his second, or perhaps third, revolution depending if you count the revolution in his homeland. As the co-founder of currency exchange start-up TransferWise, he wants to topple the banks as his country once toppled its Soviet oppressors. He doesn’t mind if it is a peaceful toppling, or if they fall hard.

“If the banks lower their rates, and everyone gets access to better services, then I would say we have a huge impact,” he says.

TransferWise started, like all good start-ups, by solving a very simple problem. Hinrikus and his co-founder, Kristo Käärmann, had moved to London from Tallinn. Hinrikus was working for Skype, while Käärmann was employed locally.

“I was being paid in Estonian kroon and had to get it converted to sterling. My co-founder had to pay a mortgage in Estonia in kroon, but was being paid over here in pounds. We were both getting hit by fees,” he explains.

£3 Billion in Money Transfered

“I started to pay my kroon to his account in Estonia, and he did the same with sterling here. We would look online for the mid-market rate to set the exchange rate,” he said. They had a couple of other friends join in, and by the end, there were five or so people doing this regularly, he says. And so the company was born.

Since those early days in 2011, the company has mushroomed. Earlier this year it landed a $58 million round led by Silicon Valley venture firm Andreessen Horowitz, backers of Facebook, Twitter, Airbnb, Github and Pinterest. Ben Horowitz joined the board, his first European board seat. It’s not as if the company lacked for investors before: existing TransferWise backers Sir Richard Branson, Peter Thiel’s Valar Ventures, Index Ventures, IA Ventures and Seedcamp all joined the round.

Some reports suggested that the $58 million round valued the company at close to $1 billion, a claim that has not been confirmed. Horowitz said that the company was growing at 15-20% per month at the time of investment. At that time the company had transferred over £3 billion worth of customer money.
But Hinrikus is far from complacent, despite the many plaudits.

“Let me tell you something. If the story ended now, if this is as big as TransferWise gets, then I would call it a failure,” he says.

“We’re on the runway, we are accelerating, we know we are going to take off, we’re confident we’re going to take off, but the question is do we have enough speed to get to the moon? We don’t know that yet.”

The moon, as far as Hinrikus is concerned, is toppling the banks. Is there a risk that rather than lose the business, all the banks need to do is to adopt his model? If they do then rather than reach the moon, isn’t he just going to crash to earth?

The Danger Is We End Up Like Them

“The danger exists, but I think it is very theoretical,” says Hinrikus. “The much bigger threat is that we end up becoming like them. At one point, 10 years from now, there might be TransferWise and Western Union and we will both be big and slow and ugly.”

Speed, the need for it, is a thread through Hinrikus’s 34 years. He was just 10 years old, living in Estonia’s second city, Tartu, when the Soviet Union collapsed. He was 13 when the last Russian troops withdrew from the Baltic republic. While the geo-political world was in upheaval so too was the technological world. He was determined to be a part of it.

“My mom worked at the Estonian Literature Museum. My dad was a professor at university. They got computers — probably sent through as aid. This was in 1992. I had never seen computers before. That was when I decided I wanted to learned to program.”

But learning to program back then was no simple task. There was no World Wide Web in Estonia at the time. “I remember using FTP over email,” he says.

It must have worked. Hinrikus quickly grew tired of life as an Estonian high school student, so he got a job as a programmer after school. He was 16.

After graduating high school he moved to the capital, Tallinn, to start his studies at Tallinn’s technical university. It didn’t last; he had already moved on.

‘You Were Thrown Out About Six Months Ago’

“One day I got a note from my bank saying I had to pay back my student loans. And I was thinking, ‘why did they send me this?’ So I call my university, and they said, ‘oh, we are very sorry. I guess you didn’t get the memo. You were thrown out about six months ago.’”

The problem was that Hinrikus had bumped into an old friend, Toivo Annus, who was working with Niklas Zennström and Janus Friis. They had just sold the controversial Kazaa, an early music-sharing service that was the target of countless lawsuits, and were looking at what was later to become Skype. He ended up joining them and forgot the lecture theater.

“I remember thinking these guys are far from being done with disruption. Whatever they are doing, I thought it was going to be an unknown outcome. The unknown is exciting.”

He intended to stay only a short while with Skype, but that quickly became seven years. He only left after the company was sold to eBay (which brought him to London) and it was clear eBay was going to sell it again.

After doing a one-year MBA at Insead in Singapore (“Living for a year in a tropical climate — if you come from Estonia — is kind of exciting.”) he returned to London to found TransferWise.

Toyed With Coming A VC

Today his company has north of 350 employees, in London, Florida, Ukraine and in his native Tallinn where he spends time every month, and vacations there in the summer.

So what is next? Does politics attract him? Hinrikus is an advisor to the Estonian Prime Minister and was a signatory to a controversial letter that backed the Conservative government party in the recent UK election, despite not being eligible to vote in that election. “People who are 10 years older than me — they’re leading businessmen or politicians in Estonia,” he says. “I was too young when the revolution came.”

At one point, having left Skype, he toyed with the idea of becoming a VC but “I realized that hands-on building something is so much more exciting.”

Like many other successful entrepreneurs, Hinrikus wants to give back to his community. He is an angel investor although he admits he doesn’t have much time to spend with his companies. “I tell them that I’m never going to call you because you have your own business to run, I have my own business to run.”
What Hinrikus really wants to do is to change the world in the same way that Skype did. Anything short of a revolution, you get the feeling, just isn’t going to be enough.




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