Part IThe Story
On February 26, 2015, during one of the coldest New York winters on record, two Estonian men in their underwear ran through the financial heart of Manhattan at lunchtime. Wall Street was full of people in overcoats who were trying to get a sandwich and get back inside. The two runners were Kristo Käärmann and Taavet Hinrikus, co-founders of a four-year-old London company called TransferWise. Their business existed to tell people that their banks were quietly taking a cut every time they sent money abroad. Years later a Singaporean newspaper editor reported that Käärmann was, she was "quite certain," one of only two start-up founders to have streaked down Wall Street in his underwear. The other was the man running beside him.
The joke behind the stunt was easy to read. Their company's marketing was built on the claim that banks hide things, so the founders turned up at the banks' front door with nothing hidden at all. It was cold and it was undignified. It also told you exactly what was on offer. I have not found any record of what the bankers thought.
Stunts are cheap. The stunt is worth holding onto because of what came after it. Over the next decade the man in his underwear on Wall Street became Estonia's first billionaire. He led his company onto the London Stock Exchange without hiring a single investment bank. Then he led it out again, toward New York. Along the way he was fined twice, by two arms of the British state, for failing to disclose things. The first fine came from the tax authority, over a capital gains liability. The second came from the financial regulator, over his failure to mention the first. Käärmann built his public life on the claim that the hidden cost is the real cost. He spent the middle of it learning how much it costs to leave something unsaid.
He is not a natural protagonist. Journalists who have spent time with him describe a man who seems more interested in mechanisms than in himself. His name changes depending on who is printing it. It is Käärmann in Tallinn, with the umlauts, and Kaarmann in the London financial press, without them. Even his name loses something in conversion.
By the Numbers
The Arithmetic of Kristo Käärmann
£500Missing from his £10,000 Christmas bonus after a single bank transfer in 2008
$70,000First outside funding, from Seedcamp, August 2011
0.63%TransferWise's average fee in Q1 2019, against a 7% global average for sending $200
47Autonomous teams inside TransferWise when it had roughly 300 employees
£421mRevenue in the financial year before the 2021 direct listing
16 millionUsers by December 2023
£350,000FCA fine in October 2024 for failing to disclose his tax issues
The Five Percent Nobody Mentions
The founding story has been told so often that it has gone smooth, like a coin passed between too many hands. It is still worth looking at closely, because the details tell you a lot about him.
In 2008 Käärmann was 28 and working in London as a management consultant at Deloitte. That Christmas he received a bonus of £10,000. Years later, speaking to an Asian banking broadcaster, he described his situation with a straight face: "I had a very nice problem in my hands. I had too much salary." Interest rates were higher in Estonia than in Britain. So he did the obvious thing for a man who had bought his first stock at sixteen. He moved the money home to a savings account, where it would earn more.
He used HSBC. He paid the bank a £15 fee. A week later the money arrived in Tallinn, and it was £500 short.
He assumed there had been a mistake, so he called the bank. There had been no mistake. The bank had converted his pounds at a rate about five percent worse than the rate he could see on the Reuters and Bloomberg terminals, which is the rate banks use when they trade with each other. That spread was the business. It was not a clerical error. It happened on every cross-border transfer, at every bank, and nobody told the customer.
— Kristo Käärmann, to BBC News, 2019I had foolishly expected that my UK bank would have given me the exchange rate I saw when I looked on Reuters and Bloomberg. Instead the bank had used an exchange rate 5% less favourable, which is how it and all the other banks get their cut. It was my mistake.
It was my mistake. Most founders tell their origin story as an injustice done to them. Käärmann tells his as an embarrassment. In the BBC version he calls himself "incredibly stupid" before he says anything about the bank. Anger came later, and in public he was willing to be angry: "Whenever you move money around the world, banks take a cut, it's a big cut and it's unfair," he told the BBC in 2015. But the first thing he felt, by his own account, was the particular shame of a numerate person who has been out-arithmeticked. He had spent his career advising European banks and insurers on how to modernize their processes, first at PwC and then at Deloitte. He knew where the plumbing ran. He had simply never looked at this particular pipe from the customer's side.
There was an earlier lesson too, which the shorter retellings leave out. When he first moved to Britain and tried to open a bank account, the process required, as he later told his university's magazine, an absurd number of visits to various offices. He came from a country that was already building its reputation for digital government. When the account finally opened and he logged into online banking, he found it could do almost nothing. He could check his balance. That was about it. "Time passed," he said, "and I understood that the banking system there operates in a different way and one can handle it although with some inconvenience."
Although with some inconvenience. That is how a consultant talks: dry, accommodating, not quite contemptuous. A British bank made him wait in queues, then took £500 from him in a single transaction. He did not storm out. He took notes.
Generation D.I.Y.
To understand why a £500 loss turned into a multibillion-pound company and not a letter to the editor, you have to go back to a country that did not exist, in its current form, when Käärmann was a small boy.
He was born in August 1980 in the Estonian Soviet Socialist Republic and grew up in Tallinn. He was eleven when Estonia regained its independence in 1991. Hinrikus was ten. What followed was one of the stranger natural experiments in modern economic history. A small country of roughly a million and a quarter people had to build a state, a currency, a banking system and a telephone network more or less from scratch, in a few years, using whatever was at hand.
Käärmann later described that moment in a blog post written after a talk to 200 entrepreneurs in Ljubljana. It is the closest thing to a political statement he has published:
"One day every soviet factory, shop, collective farm, car repair shop lost its customers, budgets, leaders and purpose. We had to start from 0 again."
The generation that came out of the collapse, he wrote, did whatever could be done with the skills they had. "We were creating little wooden bits for Ikea, subcontracting software development for Siemens and filling orders from as far as Dubai." He called them Generation D.I.Y., and he did not treat the label as a compliment. His point was that they sold their time. They were contractors and subcontractors on the edge of richer economies, and they did well enough as long as foreign investment and cheap credit kept arriving. What he hoped for was the next generation, their sons and daughters, who might become a "Product Generation," people who built things they owned and did not just sell hours to the highest bidder. "The failure rate in building products is 10x higher than in outsourcing," he wrote, "thus is does not hurt to remind ourselves that both the satisfaction and financial outcome of building great products is 100x of that in successful outsourcing."
The typo in that sentence is his. I have left it in. It is the sort of slip a person makes when typing fast, between other things.
Hinrikus tells a version of the same story with more color. When Estonia was building its phone network, he told the BBC, Finland offered the new country its old telephone exchange. "We were bold enough to say no we don't want it, we can live without one for another year or two until we can afford something modern." And on the domestic level: "If you had to fix your washing machines you had to use parts from your car, if you wanted something you had to build it yourself."
Those two sentences contain most of what you need to know about how these men later approached British banking. The first says: refuse the hand-me-down infrastructure, even if refusing means going without for a while. The second says: when the official supply chain fails you, build your own out of whatever is lying in the garage. TransferWise would do both. It refused to sit on top of the correspondent-banking system it was competing against, and it assembled its first version out of two personal bank accounts and a chat window.
Käärmann's own early biography reads like a test run. He made his first stock market investment at sixteen. As a second-year student at the University of Tartu, Estonia's old university town, he founded a financial portal. He did bioinformatics and data-mining research with the group of Jaak Vilo, a Tartu computer scientist. That is an odd entry on the résumé of a future payments executive, though it makes more sense if you think of money movement as one more problem of finding a signal in noisy data. Then he went to the large consultancies, and then to London. Each step was a little more international than the last. Each one put him a little closer to the rooms where incumbent financial systems were being patched up.
Even now, his personal website lists among his current activities something called the Young Scholar Grant, a private sponsorship for twenty Estonian undergraduates starting degrees at top universities in Europe, Britain and the United States. The program sends young people outward, across borders, on money from someone who learned what borders cost.
A Party in 2007
The two men met at a party in London in 2007. The party is recorded. What was said at it is not.
Hinrikus already had the more glamorous résumé. He had been Skype's first employee, or its second, depending on which newspaper you read. Either way, he had been in the building when a handful of Estonian engineers built the internet telephony company that would later be bought by Microsoft and would become the founding legend of Estonian tech. By the time he met Käärmann he was Skype's director of strategy. He had already watched a small team from a small country take apart a large, sleepy incumbent industry, telecoms, by routing around it.
Their financial lives were mirror images. Käärmann was paid in pounds but had obligations at home, a mortgage in Estonia among them. Hinrikus was paid in euros by Skype in Estonia but lived in London and needed pounds for rent and bills. Each was quietly losing money every month to the same spread that had cost Käärmann his £500.
So they stopped crossing the border. When Käärmann needed to send money home, they agreed on an amount and looked up the mid-market rate for that day, the same Reuters number the bank had refused to give him. Käärmann then made an ordinary domestic transfer, pounds to pounds, into Hinrikus's British account. Hinrikus made an ordinary domestic transfer, euros to euros, from his Estonian account into Käärmann's. No money ever actually crossed a border. Two local payments replaced one international one. Neither bank took a cut, because neither bank was asked to convert anything.
"So, actually, we never moved the money across borders," Käärmann explained to the broadcaster Emmanuel Daniel, "but made a paid transaction among ourselves."
Seedcamp, which would later back the company, described the early arrangement as "exchanging money over a Skype chat." The detail is almost too neat. The first version of one Estonian disruption ran on the infrastructure of the previous one.
What happened next was not a eureka moment. Other Estonians in London heard about the arrangement, and so did people back home with the opposite problem, and they wanted in. The informal swap became a circle of friends, and the circle grew. Whenever one side needed to send money, as Käärmann put it, "we would call up the group." For a while it was a favor economy, the kind of thing émigré communities have always run among themselves: hawala networks, family remittance chains, someone's cousin who is flying home next week and can carry an envelope. The innovation was not the swap. Immigrants had always been doing that. The innovation was noticing that the swap could run at scale if someone did the matching, held the money, and pegged everything to an honest public rate.
There was one more thing he noticed, and it may matter more than all the others. When he wondered whether anyone would use a service like this, his worry was not about technology. It was about trust. He told the BBC he wondered whether anyone would trust a website "set up by two Estonian dudes."
Companies House records an earlier beginning than the press releases do.
On March 31, 2010, Kristo Käärmann registered a company in England and Wales called Exchange Solutions. Its share capital was £100, divided into one hundred shares of one pound each. A year later, on March 31, 2011, it still had exactly one shareholder: Käärmann. On May 31, 2011, he split each share into a hundred, giving 10,000 shares at a penny apiece. That August the company received its first outside money, $70,000 from the London accelerator Seedcamp. Among the other early financiers was Sten Tamkivi, investing through a company called Seikatsu. On November 11, 2011, Taavet Hinrikus joined the board. The company would not be renamed TransferWise until July 19, 2012.
When an Estonian business journalist went through these filings at the time of the listing, he noticed that the paper trail did not quite match the legend of two co-founders. Hinrikus's explanation was cheerful and very Estonian: "Kristo and I began working with TransferWise in spring or summer of 2010. Building up the firm is the most important part of a startup, the documents can be always submitted for registration later."
The documents can be always submitted for registration later. Put that sentence next to where this story is going and it starts to look like a theme. At the time it was simply true. Paperwork followed the work. Nobody was harmed and nobody was misled.
One kind of paperwork they did not leave for later. Before launch, Käärmann and Hinrikus went to Britain's financial regulator, then the Financial Services Authority, and got clearance and licenses. "It was the first time they had ever seen anything like us," Käärmann told the BBC. A peer-to-peer currency matching service run by two Estonians in a London flat looked, to a regulator in 2010, like something between a remittance shop and a curiosity. The founders could have launched first and asked forgiveness later. Plenty of the fintech companies that followed did exactly that. They chose to go through the front door.
The service launched in 2011. Users could move money at the mid-market rate for a flat fee of 0.5 percent. For the first year the founders paid for it out of their savings. Customers came in a trickle, mostly by word of mouth. Then a technology website gave it a good review, and the trickle became a flood.
Käärmann later described the moment the model met reality, and the description is so ordinary it is almost funny. The public launch was meant to let people send money to and from Britain and continental Europe. "And 15 minutes later," he said, "someone put £2,000.00 on our account to send to France."
The obvious problem followed straight away. A swap only works if there is someone on the other side. The friends' circle had balanced itself because Estonians in London and Estonians at home had roughly symmetrical needs. Strangers do not. Fifteen minutes after launch, TransferWise was holding £2,000 that needed to become euros in France, and there might not be a matching flow of euros wanting to become pounds. The company would have to hold reserves on both sides of every route and manage liquidity like a small, nervous treasury department. That treasury eventually grew into what one investor would later describe as "sophisticated treasury and ledger technology" plugged directly into domestic payment systems around the world. On that first day it was a £2,000 problem, and a good one to have.
Sticking It to the Man
From the start, TransferWise's marketing had an enemy. That was the strategy, not a side effect of it.
The company's pitch was not "we are cheaper." It was "they are hiding something." Käärmann believed, and said publicly, that the banks could not simply lower their exchange-rate markups to compete. Doing so would amount to admitting that the markups had been unjustified all along. In his view the incumbents had a structural reason not to fight on price. To defend themselves, they would have had to admit what they had been doing.
The industry, he said, had not noticed what was coming. "In most of the successful disruption cases the industry doesn't see what has hit them," he told the BBC in 2015, with what the reporter described as a glint in his eye. "Banks are very slow to move. While all the other sectors that are driven by technology like media, newspapers, music have all been disrupted, nothing exciting has been happening in banking for the last twenty years." Hinrikus was blunter. The banks, he said, "have fallen asleep."
That message played well in London, and it also played well with a particular kind of investor. Richard Branson, who built an airline and a brand by casting himself as the cheeky challenger to British Airways, was interested early. By Käärmann's own telling, the young company was too small for him at first. When TransferWise grew, Branson came in on a significant round, and the endorsement was worth almost as much as a marketing campaign as it was in cash. Branson likes sticking it to the man, Käärmann observed, and TransferWise was, more or less, a company built to stick it to the man.
The rest of the cap table read like a register of earlier disruptions. Peter Thiel, the PayPal co-founder and early Facebook investor, invested. So did Max Levchin, his fellow PayPal co-founder. So did Niklas Zennström, co-founder of Skype, and David Yu, one of the founders of the betting exchange Betfair. Each had made a fortune finding a market where a middleman was taking too much and building something that removed the need for him. The venture firms were the expected names: Index Ventures, Valar, IA Ventures, Andreessen Horowitz, IVP, and the Edinburgh fund manager Baillie Gifford. Seedcamp later called TransferWise the "Robin Hood" of currency exchange. The phrase is a little embarrassing and was obviously meant to be.
Raising money in London was harder than any of that suggests. Käärmann has said that British investors were difficult to persuade, and that founders should not spend too long reshaping a product to please them. A single trip to New York brought in $1.3 million. That is the second time in this story that New York turns out to be the place where the money and the conviction were. It will not be the last.
Which brings us back to the streak. It happened in February 2015 in the financial district of the city that had funded the company when its adopted home hesitated. By that September the company had moved more than $4.5 billion of customers' money, employed 400 people in five offices, and was being valued by Silicon Valley funds, according to press reports, at about $1 billion. That year the World Economic Forum named Käärmann one of its Technology Pioneers. He was 35 by then, a little old for stunts and a little young for Davos. He did both in the same year.
Forty-Seven Startups
In May 2015 an Estonian business daily, Ärileht, interviewed Käärmann about the company's growth. TransferWise had just hired its 300th employee, Wade Stokes, the former chief financial officer of Estonian Air. He was one of the more senior hires in a company that was still mostly young. The interviewer asked, gently, whether Stokes was its oldest employee. Käärmann laughed. Wade was youthful enough, he said, and the rest of them weren't exactly a kindergarten. Youthfulness, he added, in my rough translation, was "courage and ignoring borders, a matter of mindset, not age."
The interview contains a fact that most English-language profiles skip. About 80 percent of the company, more than 200 people, worked in Estonia. TransferWise had its legal home and its brand in London, its biggest investors in California and New York, and most of its staff in Tallinn. Its biggest single transaction to date, Käärmann told the paper, had been converting eight million dollars into euros. The company that called itself "money without borders" was spread across three: legal, financial and human.
Around the same time, Käärmann wrote a short essay for the diaspora publication Estonian World under the headline "Startup = speed." It is the most detailed account he has given of how he thinks about organizations, and it is notably free of jargon.
"A startup is defined by growth," he wrote. "Growth is generated by the speed of the organisation, with a bit of luck." Luck, he admitted, could not be optimized. Speed could. His question was how a company of 300 people could keep the intensity of a five-person team in which everyone spends every waking thought on the product.
"In theory, you might think the answer is simple: divide 300 people into 60 teams of five, and that is it. So why has no organisation quite done this?"
His answer: "We have. With 47 teams, each one is working like a small, well-funded startup."
The structure was unusual in one specific way. TransferWise's teams did not own products, features, platforms or functions. They owned what Käärmann called "levers of success": a measurable outcome a customer would care about. One team worked on nothing but how fast payments arrived. Another opened new currency routes. Others worked on cost, on payment methods, on convenience. Each lever could be measured on its own, and each team reported its progress to the rest of the company in weekly "heartbeat" reports. Code ownership was deliberately loose, so that anyone could commit code to another team's codebase, with the owning team responsible for overall design and quality.
"No project managers, no committees, fewer meetings," he wrote. And then, in a line that may be the closest thing he has to a management philosophy: "Speed is not about working faster. Speed is about working smarter."
The essay is candid about its limits, and that is part of its appeal. He lists successes and then "some challenges emerging, too." He does not claim to have solved the problem of scale. He claims to have found a working answer and to be watching it closely.
What the essay does not say outright, but implies, is a theory of where an organization's character comes from. It comes from what each small team is told to care about. Tell a team to own "the iOS app" and it will care about the iOS app. Tell it to own "the speed of payments" and it will care about the customer's money arriving.
He made the same argument more directly years later, describing advice he got from early investors as the company grew from hundreds of people to thousands.
— Kristo Käärmann, on the TDM Growth Partners Scaling Up podcast, 2026If we hire a large number of bankers, we're going to get a bank. That's not what we started to do. Another bank is not a solution. We're building something new and we'll see what it's going to look like, but we'll do it from the first principles.
It is the Finnish telephone exchange again. They were offered the old equipment, already trained and ready to install, and they said no, even though saying no meant making do for a while.
In 2025 Käärmann used his LinkedIn account to promote the third intake of the Wise Product Academy, a program that hires people with no product-management experience and makes them associate product managers from their first day. "Maybe you don't get in, maybe you don't make it through to graduation," he wrote. "Bit if you do, it will definitely change your future." The typo is his again, and so is the tone. Beneath the post, a customer had left a long, polite, furious message addressed to "Dear Mr. Käärmann": a transfer had been stuck for more than twenty days, and support had sent only generic replies. Building something new from first principles also means owning the queue.
The Price Goes Down
Most companies, once they have customers and scale, start working out how to charge them more. Käärmann made a public commitment to do the opposite. He has repeated it so often, and acted on it so consistently, that it reads less like a slogan than like a rule he has bound himself to.
The company calls it Mission Zero: international payments at zero cost and, eventually, zero time. Käärmann was describing it to interviewers as early as the late 2010s. The aim is not modest. The early fee was 0.5 percent on top of the mid-market rate. By the first quarter of 2019, according to Fortune, the global average cost of sending $200 internationally was 7 percent by World Bank measures. TransferWise's average for such transfers was 1 percent. Across all transfers it was 0.63 percent. The company had five million customers and was moving $5 billion a month. A funding round that May valued it at $3.5 billion, roughly double the figure reported a year earlier. Fortune put Käärmann, then 38, on its 40 Under 40 list.
As one investor interviewing him put it, the principle is that "unlike most mission statements, though, this one actually constrains how Wise operates." It shapes pricing, product design and capital allocation. As volumes grow and unit costs fall, the savings go to customers in lower prices and not to shareholders in wider margins. The bet is that a cheaper product wins a larger share of a vast market, and that the volume eventually pays for everything.
The bet only works if the company survives long enough to collect, and survival takes money. In September 2020 the company had just reported a year in which revenue grew 70 percent and profit exceeded €20 million. Käärmann gave an interview to the Estonian tech publication Geenius in which he explained why profit mattered to a company dedicated to cutting its own prices. In my translation: "To fix international banking, we need a company that is here not just for a year or two, but for decades. To build that kind of machinery, financial independence, and being in a good, comfortable place with our numbers, is very important."
The word that matters there is independence. For a man from a country that spent fifty years without it, the word is not neutral. Profit, in his telling, is not the point. It is what keeps the company out of anyone else's control. A profitable company does not need to raise money on someone else's terms. It does not have to accept the old equipment.
He tested that independence in public at least once before it was fully funded. On June 24, 2016, the morning after Britain voted to leave the European Union, sterling went into free fall. TransferWise did not quietly widen its spreads to protect itself, the way an old-fashioned bureau de change might. It paused service and told customers so. A company whose whole pitch is that it shows you the real rate has a problem when nobody knows what the real rate is. Its answer was to stop and say why.
In February 2021, the company stopped calling itself TransferWise. "Today, we're changing our name from TransferWise to Wise," Käärmann wrote on the company blog on February 22. "Our customers now need us for more than money transfers." The multi-currency account, the debit card, and the infrastructure that other banks were starting to rent had outgrown the original name. Dropping "Transfer" was a statement of ambition. The same month, though no customer could have known it, Käärmann paid HM Revenue and Customs a penalty of £365,651.
Cool
One word kept coming up, the Yahoo Finance reporter noticed, when he spoke to Käärmann in June 2021. The word was cool.
Wise had just confirmed that it would list on the London Stock Exchange through a direct listing. That mechanism, made famous by Spotify in New York in 2018 and rarely used in Europe, skips the usual underwriting process. There would be no investment banks building a book of orders, no new money raised, and no carefully priced first-day pop to hand to favored institutional clients. One morning the shares would simply start trading, beginning with an opening auction like any other day.
Most chief executives on the eve of a listing spend their interviews explaining why investors should buy. Käärmann spent his admiring how the thing worked.
"One of the cool things about going public or listing our shares is we can now have a much broader ownership and that also means our customers can become owners of Wise, which is really cool," he said. Then he made an argument that was really a restatement of Mission Zero in the language of equity: "We think about it this way: we had £421m of revenue in the last financial year but what it really means is our customers paid us £421m to do what we do last year. That's pretty cool. But imagine if lots of them were also the owners of the company – then, their interests would be even better aligned."
The company built a program around the idea and called it OwnWise. Customers who bought shares and held them for at least twelve months would receive one additional share for every twenty they held. About 4,000 current and former employees were already shareholders. Matt Briers, the chief financial officer, put the logic plainly: "Because we don't need to raise capital, we have the opportunity to do this and it's in our DNA and our principles to do this transparently and fairly."
The bypass was the same move as the original swap. In 2008, two Estonians had avoided a bank's conversion fee by making two domestic transfers. In 2021, the company they built avoided the investment banks' underwriting fees by not raising money at all. Each time, the cut belonged to an intermediary who was quietly taking it, and each time the response was to arrange things so that the intermediary was not needed.
Wise began trading in early July 2021 in what the London press called an £8 billion debut. By September it was valued at almost £12 billion. Käärmann became, by Forbes's reckoning, Estonia's first billionaire. The magazine's 2022 list valued him at $1.2 billion. Hinrikus had crossed the billion-dollar line briefly after the listing, but by the cut-off date in March 2022 he had fallen back to about $700 million. The co-founders had always described themselves as sharing the leadership work. Their fortunes were now separate, and so, before long, were their opinions.
Then growth stocks fell out of favor, interest-rate fears spread through the market, and Wise's share price fell more than half. By late June 2022 the company was worth £3.9 billion, about 57 percent below its debut. Käärmann had said, shortly after the listing, that the share price would depend more on the mood of the market than on Wise itself. The Estonian press later noted, with some relish, that on this point at least he had been right.
The share price was not the only thing that happened to him in 2022.
Personal Admin
The May 2015 profile in Ärileht had introduced him with a description that reads differently in hindsight. Kristo Käärmann, the paper wrote, always seemed carefree and in good spirits. He was a new-generation entrepreneur who had too much to do building his startup to worry about tax systems or complain about state policy.
The writer meant it as a compliment.
Here is what happened, as reconstructed from the regulator's final notice and contemporary reporting. In 2017, Käärmann sold shares in his company worth £10 million. The sale created a capital gains tax liability of £720,425.80. He did not notify HMRC and did not pay. He filed his 2017/18 personal return late. In February 2021, HMRC fined him £365,651. The tax authority classified the default as "deliberate." In September 2021, two months after the listing that made him a billionaire, HMRC added his name to its public list of deliberate tax defaulters.
As The Guardian observed, the company on that list was not distinguished. He appeared alongside restaurants, builders and a strip club. The founder of a company whose whole reason for existing was to expose hidden charges now had his own name published for failing to declare something.
The company's explanations made things worse. Wise described the problem as a failure to keep his "personal admin in order." A spokesman later said that he had "forgot" to file and pay. Either may be true. The British state did not frame it that way, and neither did the next institution to look.
Between February and September 2021, Käärmann held two senior manager functions at Wise Assets UK Ltd, one of the group's regulated entities. He was its chief executive and an executive director. Under Britain's Senior Managers and Certification Regime, the Financial Conduct Authority expected him to tell it about anything relevant to its assessment of whether he was fit and proper to hold those roles. He knew about the HMRC fine and its circumstances for more than seven months. He did not tell the regulator. According to the Evening Standard, officials only found out when journalists approached them.
Wise's board, chaired by David Wells, hired outside lawyers to investigate. The investigation ended in the fourth quarter of 2021. Its findings were shared with the FCA, and the board concluded that Käärmann remained fit and proper. It required him to take remedial steps, including hiring professional tax advisers to manage his affairs. In June 2022 the company announced that the FCA had opened its own investigation. The regulator had the power to withdraw his approval as a senior manager. In practice, that would have made it very hard for him to keep running the company he founded.
That May, the Standard later reported, he announced he would take a three-month break from work to spend time with his newborn son. The share price was falling and the regulator was preparing an investigation. He went home.
The investigation took more than two years. On October 28, 2024, the FCA announced its decision. It fined Käärmann £350,000 for breaching Senior Management Conduct Rule 4, which says in full: "You must disclose appropriately any information of which the FCA would reasonably expect notice." The fine would have been £500,000. He received a 30 percent discount for agreeing to settle. The regulator called his conduct "careless, as opposed to deliberate or reckless." It did not ban him.
— Therese Chambers, joint executive director of enforcement and oversight, Financial Conduct Authority, October 2024We, and the public, expect high standards from leaders of financial firms, including being frank and open. It should have been obvious to Mr Käärmann that he needed to tell us about these issues which were highly relevant to our assessment of his fitness and propriety.
Frank and open. Those two words describe Wise's brand as well as anything the company ever paid an agency to write. They are now part of a regulator's verdict on its chief executive.
Käärmann's statement was short and turned straight back to the business: "After several years and full cooperation with the FCA, we have brought this process to a close. I remain focused on delivering the mission for Wise and achieving our long-term vision for being 'the' network for the world's money."
The temptation is to read all this as hypocrisy, and that reading is too simple. Hypocrisy implies a performance, and very little in Käärmann's record looks performed. A better reading is that the trait that made him useful also made him exposed. He is fascinated by mechanisms and impatient with paperwork, the sort of person who notices the five-percent spread in a bank's exchange rate and does not notice his own filing deadline. A founder who is careless about his tax return and unreasonably careful about everyone else's money is a recognizable type. The founding story turned on a moment when he said it was my mistake about something a bank had done to him. Thirteen years later, a regulator told him that this time the mistake really was his.
The two numbers almost match. His company was founded on a £500 surprise caused by a 5 percent gap. His reputation was damaged by a £720,425.80 liability on a £10 million gain, which works out at a little over 7 percent of the sale. At about the same time, his company was advertising that the world's average remittance cost was 7 percent.
Class B
By 2025 the argument was no longer about hidden fees. It was about who should control the company and where it should be listed.
That year Wise proposed moving its primary listing from London to the Nasdaq in New York. It also proposed extending, by ten years, the life of the Class B shares that gave their holders, chiefly Käärmann, outsized voting power. The listing move made strategic sense to the board. The United States was a large market for the company, and American investors had backed it when London hesitated, going all the way back to that single fundraising trip that brought in $1.3 million. The voting-rights extension was harder to defend in governance terms. It is the kind of measure proxy advisers and pension funds dislike on principle: a founder asking shareholders to let him keep outsized control for another decade.
The most notable opponent was Taavet Hinrikus. The man from the party in 2007, the other half of the original swap and the other man running down Wall Street, publicly opposed the extension of the supervoting shares. The co-founders who had once balanced each other's currency needs now held opposite positions on how much control Käärmann should have.
Käärmann won. Shareholders approved both measures in July 2025. On July 21, he published a short post on the Wise blog titled "A note about our proposed listing move." It was later updated to remove a reference to a proxy adviser's voting recommendation, after that adviser's report turned out to say something different. Even the company's victory lap needed a correction.
The Estonian press, which had followed him from the first funding round through the tax-defaulter list, summed up his year at the end of December 2025. The headline said he had caused panic in the City of London. The article added that although the share price did not show it, the year had been a successful one for the company's leader, and that his first victory had been over his own co-founder. The London financial establishment had been unsettled by the departure of one of its largest technology companies to New York. Its banks had once been too sleepy to notice two Estonians going around them. Now they watched the company leave.
What should we make of a man who built a company on the idea that intermediaries should not take what they have not earned, and who then asked his shareholders to grant him ten more years of extra votes? One answer is that he is a founder like any other and does not want to hand over the thing he built. Another, which he would probably give himself, comes from the Geenius interview in 2020: decades, not a year or two. Independence. The mission constrains the company only for as long as someone who believes in the mission is there to enforce it. Supervoting shares are the corporate version of refusing the Finnish exchange. They are a way of saying no to the hand-me-down governance of a normal public company, because he thinks normal governance would eventually hire the bankers, raise the prices, and build another bank.
Neither answer is fully satisfying. Hinrikus, who knows him better than any shareholder does, was not persuaded.
In a Lunch with The Times interview, Käärmann offered a figure that is hard to forget once you have read the founding story. Wise, he said, now moves 5 percent of the world's money for people across borders. Five percent was what HSBC skimmed from his Christmas bonus in 2008. It is now, by his account, his company's share of all the money ordinary people send to one another across the world's borders. In between: an unpaid tax bill on £10 million of stock, two fines, a newborn son, a co-founder on the other side of a vote, and a company that is now, according to an investor who knows it well, the infrastructure that other banks and fintechs rely on.
Companies House, the British registry where this began with £100 of share capital, keeps a public list of every directorship Kristo Käärmann has held. There are twelve. Four of them are companies called Parrot 1, Parrot 2, Parrot 3 and Parrot 4. All four were incorporated in 2021 and all four have since been dissolved, for reasons the register does not explain. The oldest active entry is Wise Payments Limited, appointed March 31, 2010, the day Exchange Solutions was registered. The newest is a company called Wise Group List Co, appointed March 23, 2026.
Each entry ends with the same fields. Nationality: Estonian. Place of residence: United Kingdom. And beneath them, on every active line, in the plain sans-serif of the British state:
Identity verification status: Verified.
Part IIThe Playbook
Käärmann's career is not a set of rules handed down from a finished success. It is a record of a few strong instincts tested repeatedly against reality, sometimes winning and sometimes costing him badly. The principles below are taken from the evidence in Part I. Some are worth copying. One or two are warnings. The best of them share a trait you can see in the original currency swap: the work is not to compete with an intermediary on its own terms but to restructure the transaction so the intermediary is no longer needed.
The principles
- 1.Treat your own embarrassment as market research.
- 2.Run the solution for yourself, then for people you trust.
- 3.Make the hidden price the enemy.
- 4.Get permission before you need it.
- 5.Organize around outcomes, not functions.
- 6.Refuse the incumbent's people as well as its methods.
- 7.Use scale to cut prices, not widen margins.
- 8.Treat profit as independence.
- 9.Remove the intermediary from your own capital structure.
- 10.Raise money and list where you are understood.
- 11.Treat the founder's personal admin as company infrastructure.
- 12.If you hold on to control, be clear about why.
Principle 1
Treat your own embarrassment as market research
The founding story of Wise is a story of personal humiliation, told by the person humiliated. "I realised that I had been incredibly stupid." "It was my mistake." Käärmann did not turn the £500 loss into a grievance against HSBC first. He treated it as evidence that his own model of how the world worked was wrong. A former bank consultant, someone who modernized bank systems for a living, had not known how banks priced currency conversion. If he did not know, nobody did.
That is the useful part. Founders are told to look for pain points. Shame is a better signal than pain, because it marks the gap between what a sophisticated person assumed and what is actually true. Pain tells you something is unpleasant. Embarrassment tells you something is hidden, and hidden things are where incumbents keep their margins.
Tactic: List the last three times you felt stupid as a customer, and ask whether the thing that fooled you is fooling millions of people who never noticed.
Principle 2
Run the solution for yourself, then for people you trust
TransferWise was a working service long before it was a company. Two men with mirror-image currency needs used a public reference rate and two domestic transfers to cut out the bank entirely. Then the swap spread to a circle of Estonian friends in London and at home, who called up the group whenever they needed to send money. Only after the model had run for months inside a trust network did the founders register it, raise money and open it to strangers.
The order matters. A friends' circle tests the mechanics, such as the reference rate and settlement times, without the trust problem that kills most financial products. When strangers arrived ("15 minutes later, someone put £2,000.00 on our account to send to France"), the founders already knew the swap worked. What they did not yet know, the liquidity problem, was a scaling problem, not a problem with the concept. They had separated the two risks.
Tactic: Before building for a market, run your solution by hand for a small group who will forgive mistakes, and treat the first stranger's transaction as the start of a new, separate set of problems.
TransferWise's marketing did not claim to be cheaper. It claimed the banks were concealing something, and Käärmann argued that the banks could not respond by cutting their markups without admitting the markups had been unjustified. That is a strategically valuable position. The challenger competes on transparency, a dimension where the incumbent cannot follow without hurting itself.
The Wall Street streak, the talk of Robin Hood and the investors who liked "sticking it to the man" all came from the same decision: show the real number, the mid-market rate, and let the customer work out the difference. It works because the enemy is a practice and not a company. Wise did not need to make HSBC look bad. It only needed to make the gap between two exchange rates visible.
⇄
Two Logics of Cross-Border Money
How the incumbent model and the Wise model differ on the same transaction.
| Dimension | Incumbent bank model | Wise model | Strategic effect |
|---|---|---|---|
| Exchange rate | Interbank rate minus an undisclosed spread (~5% on his 2008 transfer) | Mid-market rate shown to the customer | Transparency moat |
| Fee | Flat fee (£15) plus hidden spread | Disclosed percentage (0.5% at launch; 0.63% average by 2019) | Price signal |
| Money path | Cross-border correspondent transfer | Paired domestic transfers backed by reserves on both sides | Structural bypass |
| Response to scale | Protect margin | Pass lower unit costs on to customers (Mission Zero) | Share capture |
| Incumbent counter-move | Cutting the spread means admitting it was unjustified | Nothing to admit | Incumbent trapped |
Tactic: Find the price your industry hides, publish it next to your own, and make the comparison something your competitors cannot safely respond to.
Principle 4
Get permission before you need it
Before TransferWise launched, its founders went to the Financial Services Authority and got clearance and licenses. "It was the first time they had ever seen anything like us." In the 2010s, the usual fintech approach was to launch fast and settle with regulators later. Going to the regulator first looked slow. Over fifteen years it proved to be a compounding advantage. One long-time investor described Wise's relationships with regulators as "a significant competitive advantage rather than a constraint," the kind of infrastructure that turns a company into something other banks rely on.
In a regulated industry, permission is part of the product. A competitor can copy a product in a quarter. It cannot copy a regulator's decade of familiarity with your systems. Käärmann seems to have understood this early, perhaps because his consulting career taught him how institutions decide what to trust.
Tactic: In any regulated market, go to the regulator before launch, explain the new thing you are building, and treat the relationship as an asset that grows over years.
Principle 5
Organize around outcomes, not functions
At roughly 300 people, TransferWise ran 47 autonomous teams. None owned a product, platform or function. Each owned a "lever of success": a measurable outcome the customer cared about, such as payment speed, cost, or the number of currency routes. Teams reported weekly in "heartbeat" updates, and code ownership was deliberately loose. "No project managers, no committees, fewer meetings."
What makes this work is that each lever can be measured on its own. If a team owns payment speed, nobody outside the team needs to supervise how it gets faster, because the number shows whether it did. In effect, Käärmann replaced management oversight with measurement. He was open that the model created new problems, and that openness is part of the lesson. This was a structure he kept testing, not a doctrine.
Tactic: Break your customer's definition of a good outcome into independent, measurable parts, and give each part to a small team with full authority over how to improve it.
Principle 6
Refuse the incumbent's people as well as its methods
Early investors told Käärmann to put senior bankers on his board and management team. He declined: "If we hire a large number of bankers, we're going to get a bank." It is the business version of Hinrikus's story about Estonia turning down Finland's old telephone exchange. The point is that the people who arrive with old infrastructure bring its assumptions with them.
The principle is easy to say and hard to follow. Experienced industry hires lower short-term execution risk, and their absence worries investors and regulators. Käärmann's answer was to build a pipeline of his own. The Wise Product Academy hires people with no product experience and makes them associate product managers from the first day, so the company's habits are formed by people who never learned the incumbent's. The trade-off is real: Wise had to learn some lessons the slow way. But what it learned was its own.
Tactic: When you hire experienced people from the industry you are disrupting, hire them for specific expertise and not for leadership culture, and grow your culture-setters from people the industry never trained.
Principle 7
Use scale to cut prices, not widen margins
Mission Zero commits Wise to pushing the cost and time of cross-border payments toward zero. It is the clearest case in this profile of a mission statement that actually binds behavior. By 2019 TransferWise's average fee was 0.63 percent, against a 7 percent global average for small remittances. As volume grows, unit costs fall and prices follow.
That runs against the usual logic of a growing company, where economies of scale turn into margin. Käärmann's bet is that in a market this large and this badly served, the cheapest reliable provider takes so much share that absolute profits grow even as unit prices shrink. The strategy also protects itself. A competitor trying to undercut Wise must be willing to lose money on a product whose price keeps falling.
Tactic: Write down, publicly, the direction your prices will move as you grow, and let that commitment make capital-allocation decisions for you before anyone is tempted to argue otherwise.
Principle 8
Treat profit as independence
In 2020, with revenue up 70 percent and profit above €20 million, Käärmann explained why a company devoted to cutting its own prices still needed to make money: fixing international banking takes "a company that is here not just for a year or two, but for decades," and building that machinery requires financial independence. Profit, in this view, is not a reward. It is protection from other people's terms.
That framing paid off in 2021. A profitable Wise did not need to raise money in its listing, so it could choose a direct listing, skip the underwriting banks, and design OwnWise for customers. A company that needs capital has to accept whoever supplies it. A company that does not need capital can decide who owns it.
Tactic: Get to profitability early enough that your next major structural decision, whether a listing, a pivot or a market exit, does not depend on anyone else's money.
Principle 9
Remove the intermediary from your own capital structure
The direct listing repeated the original currency swap at the level of the company. In 2008 two Estonians avoided a bank's conversion spread with paired domestic transfers. In 2021 their company avoided the underwriting fee by raising no new money and letting shares open in an ordinary morning auction. OwnWise, with one bonus share for every twenty held for twelve months, made customers into owners. As Käärmann put it, "our customers paid us £421m to do what we do last year... imagine if lots of them were also the owners of the company."
A founder whose business is cutting out intermediaries looks inconsistent if they pay intermediaries handsomely for their own transactions. Käärmann applied his thesis to his own capital markets, and the consistency strengthened the brand. The company showed it believed what it told customers.
Tactic: Check whether your company's financing and governance decisions follow the same principles you sell to customers, and fix the places where they don't before someone else points them out.
Principle 10
Raise money and list where you are understood
TransferWise struggled to persuade London investors. A single trip to New York brought in $1.3 million. Fifteen years later, Wise moved its primary listing to the Nasdaq, to the dismay of a City that had claimed it as a London fintech success. One Estonian headline said he had caused panic in the City. Across the whole story, the money and the conviction kept turning out to be in New York, while the brand, the regulators and the legal home stayed in London, and most of the early staff worked in Tallinn.
The lesson is not "go to America." It is that a company's geography can be split up. Talent, regulation, capital and customers do not have to sit in the same city, and a founder who treats them as separate decisions has more options than one who accepts the default. A company called "money without borders" has, unsurprisingly, treated its own borders as negotiable.
◷
The Geography of a Borderless Company
Key decisions about where Wise's capital, people and listing should be.
2010
Exchange Solutions registered in England and Wales with £100 of share capital.
2011
Seedcamp provides the first $70,000; launch at mid-market rate plus 0.5%.
Early years
London investors hesitate; one New York trip raises $1.3 million.
2015
About 80% of 300 staff based in Estonia; Wall Street streak in February.
2021
Renamed Wise; direct listing on the London Stock Exchange in early July.
2025
Shareholders approve a primary listing move to Nasdaq and a ten-year extension of Class B shares.
2026
Käärmann appointed director of Wise Group List Co.
Tactic: Treat where you hire, where you are regulated, where you raise money and where you list as four separate decisions, and choose each based on where the relevant people understand you best.
Principle 11
Treat the founder's personal admin as company infrastructure
This principle comes from a failure. Käärmann sold £10 million of shares in 2017 and did not pay the £720,425.80 in capital gains tax he owed. HMRC fined him £365,651 and called the default deliberate. He then failed for more than seven months to tell the FCA, which learned of it from journalists. The regulator fined him £350,000, called him careless rather than deliberate, and, by its enforcement director's account, found it should have been "obvious" to him that he needed to disclose.
The lesson for founders is uncomfortable. Once a company is regulated, and especially once it is public, the founder's private paperwork stops being private. The trait that drives a founder, impatience with process in favor of work on the mechanism, can be harmless when the process is a company registration and serious when the process is a disclosure obligation. Wise's board eventually required him to hire professional tax advisers. A founder who sees this coming can do that years earlier, at almost no cost.
!
Anatomy of a Disclosure Failure
How a personal tax error became a regulatory matter.
| When | Event | Category |
|---|---|---|
| 2017 | Sells £10m of shares; CGT of £720,425.80 neither notified nor paid | Origin |
| February 2021 | HMRC fines him £365,651 for deliberate failure to notify | Penalty |
| Feb–Sept 2021 | Holds two senior manager functions; does not tell the FCA | The real breach |
| September 2021 | Named on HMRC's public list of deliberate defaulters | Exposure |
| Late 2021 | Board's external investigation; remedial steps required | Governance |
| June 2022 | FCA opens investigation | Scrutiny |
| October 2024 | FCA fines him £350,000 (cut from £500,000) under Conduct Rule 4 | Resolution |
Tactic: On the day your company becomes regulated, hand your personal tax and disclosure obligations to a professional with a standing instruction to tell you, and your board, anything a regulator might want to know.
Principle 12
If you hold on to control, be clear about why
In 2025 Käärmann asked shareholders to extend his Class B supervoting shares by ten years, and he won, over the public opposition of his own co-founder. The case for it is consistent with his record. A mission that binds pricing only lasts as long as someone with the power to enforce it is in charge, and a normal public company will tend, over time, toward hiring bankers and widening margins. The case against it is just as clear. A company whose brand is built on not taking more than is earned now has a founder holding more votes than shares.
This is not a principle to copy without thinking. It is a principle about honesty. If a founder keeps control, the justification has to be specific (in his case, decades-long commitment to Mission Zero), and the founder has to accept that the justification will be judged against what he actually does. Käärmann's record on prices supports his argument. His record on disclosure does not. Shareholders sided with the prices, and his co-founder did not.
Tactic: If you ask for disproportionate control, tie the request publicly to a specific, measurable commitment, so that holders can see whether the control is serving the mission or the person.
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Part IIIQuotes and Maxims
In their words
— Kristo Käärmann, to BBC News, 2015Whenever you move money around the world, banks take a cut, it's a big cut and it's unfair.
— Kristo Käärmann, to BBC News, 2015In most of the successful disruption cases the industry doesn't see what has hit them.
— Kristo Käärmann, 'Startup = speed,' Estonian WorldSpeed is not about working faster. Speed is about working smarter.
— Kristo Käärmann, to Yahoo Finance UK, June 2021We had £421m of revenue in the last financial year but what it really means is our customers paid us £421m to do what we do last year. That's pretty cool. But imagine if lots of them were also the owners of the company – then, their interests would be even better aligned.
— Kristo Käärmann, personal blog, on post-Soviet entrepreneursOne day every soviet factory, shop, collective farm, car repair shop lost its customers, budgets, leaders and purpose. We had to start from 0 again.
Maxims
- Your embarrassment is data. If a sophisticated customer was fooled, most customers are being fooled and haven't noticed.
- Test the swap before you build the system. Run the solution by hand within a network of trust before exposing it to strangers.
- Compete where the incumbent can't follow. Transparency is a weapon because answering it means admitting what you were hiding.
- Permission compounds. A regulator's long familiarity with your company is harder to copy than any feature.
- Give teams outcomes, not territories. A team that owns a measurable result needs less supervision than one that owns a function.
- Refuse the old equipment. Hire the incumbent's people and you will rebuild the incumbent.
- Let scale lower the price. A mission that binds pricing is worth more than one that only decorates the website.
- Profit buys independence. A company that doesn't need money can choose who owns it.
- Your private paperwork is public infrastructure. Once you are regulated, what you fail to disclose costs more than what you failed to pay.
- Control needs a reason that can be checked. Founders who keep extra votes should tie them to commitments others can measure.
