Founded in 2010 by two friends looking to avoid rip-off foreign exchange fees, TransferWise is now a billion-dollar business that helps its customers move cash cross-border each month at a fraction of the fee that banks and traditional foreign exchange companies charge.
But, he explains, the way of working at TransferWise – which emphasises rapidly rolling out its services to new countries – means “radical levels of ownership and empowerment to ensure tax keeps up with the business”.
At TransferWise, all functions – be they tax, business or profit-oriented – are organised into independent, autonomous teams, which “choose what problems to solve and where to spend the most time”, explained Chan.
“So for me, that's a really refreshing way to manage tax. Inevitably, there are challenges,” Chan said. “However, this simply means that tax must be even closer to the business than ever before and this means building very strong relationships internally”.
Finding a minimum viable product
Chan explained that TransferWise’s culture is different to that of traditional companies in many ways. One familiar aspect is its focus on its customers, though the company takes this to greater lengths in its operations than many others.
“We are absolutely customer-centric in the way that we think,” he told the audience. “One of our core values is customers > team > ego. It seems obvious, but it helps to really focus our minds on … our customers.”
“Breaking it down, this means asking yourself where we can have the most direct impact on our customers. Which projects genuinely make our products better? Which parts are actually for my own ego and aimed only to make my life easier?”
This mindset is particularly helpful for such a rapidly expanding company, with the tax team expected to be able to be compliant with tax laws in new countries as quickly as possible.
Many tax departments would insist on a phased implementation, with several years taken to integrate new laws and requirements into the company’s enterprise resource planning (ERP) system.
“While we are always fully compliant with all tax laws, we ask ourselves what the minimum viable product is. What's the MVP that solves the problem at hand?”
“This removes the likelihood of long multi-year system implementation projects that would delay international expansion to help our product to save money for even more customers. If we were to move slowly, it would not be fair on customers who would continue being ripped off by foreign exchange fees and charges until we make our services available to them.”
Very public feedback
Each month at TransferWise, the whole company gathers for a public ‘retro’, or meeting. Each department has to present to the entire company on the work it’s been doing during that month.
“As an autonomous team, the success and impact of the tax team is measured by clear key performance indicators (KPIs). This means that we are transparent in how well we have done and where we over or under delivered. This is discussed in an open forum that welcomes anyone, including those from wider finance, legal, product, and banking. Our plans, which are always designed to be aligned with the overall TransferWise mission, are again public within the company along with clear KPIs."
Throughout the day-long event, representatives of many businesses described their practical approaches to technology, digitisation and associated areas of planning. A common theme was that of a ‘technology roadmap’ – generally a multi-year plan of where the company should be at certain points.
Given the month-to-month feedback structure at TransferWise, however, the technology roadmap looks a bit different for Chan.
“Technology roadmaps for me are simply the aggregate of our regular planning and retros on how we are doing and what we need to do next,” said Chan. “We will, however, take time to pause and think about what else is lurking on the horizon.”
“But for now, while this means a long-term implementation project is unlikely and not suitable for our continued growth, it means that I am able to continue focussing on ensuring the tax team is fully aligned with our mission to help customers and to only spend time on projects that make a real difference to them.”
“It's been a year since leaving the traditional corporate world and I am fully embracing this new way of working.”
Some of the business practices Chan described seem alien to a traditional business environment, or even intimidating for the individuals carrying them out. Perhaps top of this list is the ‘blameless post-mortem’ concept, where any major mistake results in a department head emailing the entire company detailing the impact of their mistake, the steps that led to it and how they will avoid it in future.
But such directness and the relentless focus on growth has helped TransferWise make a name for itself as a disruptive force in the foreign exchange market. Perhaps a few established companies that could pick up some tricks from the way plucky start-ups think about tax.