How to drive word of mouth | Nilan Peiris (CPO of Wise)

1. 0:00 – 3:27

   Nilan’s background

   1. NPNilan Peiris0:00

      Some people focus on conversion rate, like, I'm gonna make this really, really slick. And that's cool, you get a bit more growth. But to get to recommendation, you gotta blow your s- user's socks off. You have to give them an experience they didn't know was previously possible. And when you're in that place of doing something that no one has ever done before, that's when you get it.

   2. LRLenny Rachitsky0:20

      (instrumental music) Welcome to Lenny's Podcast, where I interview world-class product leaders and growth experts to learn from their hard-won experiences building and growing today's most successful products. Today, my guest is Nilan Puris. Nilan is chief product officer at Wise, where he's been for over 11 years, basically from the beginning of the journey. If you're not familiar with Wise, you should be. They make it incredibly easy and cheap to send money internationally. I am a regular user and customer. And because the product is so great, they've grown primarily through word of mouth. About 70% of their growth comes through word of mouth. And in our conversation, Nilan breaks down exactly how they made word of mouth so successful for their product. I don't know any founder who wouldn't wish to have more word of mouth growth, and Nilan's advice is the most tactical and useful advice I've ever heard for how to actually drive your word of mouth growth. I am really excited for you to hear this episode and to learn from Nilan. And so with that, I bring you Nilan Puris after a short word from our sponsors. This episode is brought to you by Pendo, the all-in-one platform for product-led companies building breakthrough digital experiences. With all the tools you need all in one simple-to-use platform, Pendo makes it easy to answer critical questions about how users are engaging with your product, and then turn those insights into action. With product analytics; low-code in-app guides; user feedback and session replay; customizable roadmaps; and AI-generated insights and campaigns; Pendo is the only solution you need to build, ship, and optimize a successful product-led motion. But don't take my word for it. Create your free Pendo account today and start building better experiences across every corner of your product. P.S. Want to take your product-led knowhow a step further? Check out Pendo's lineup of certification courses, led by top PLG experts and designed to help you grow and advance in your career. Learn more and experience the power of the Pendo platform today at pendo.io/lenny. That's P-E-N-D-O dot I-O slash Lenny. This episode is brought to you by Wix Studio. Your agency has just landed a dream client, and you already have big ideas for the website. But do you have the tools to bring your ambitious vision to life? Let me tell you about Wix Studio, the new platform that lets agencies deliver exceptional client sites with maximum efficiency. How? First, let's talk about advanced design capabilities. With Wix Studio, you can build unique layouts with a revolutionary grid experience. It watches elements scale proportionally by default. No-code animations add sparks of delight, while adding custom CSS gives total design control. Bring ambitious client projects to life with any industry with a fully integrated suite of business solutions, from e-commerce to events, bookings and more. And extend the capabilities even further with hundreds of APIs and integrations. You know what else? The workflows just make sense. There's the built-in AI tools, the on-canvas collaborating, a centralized workspace, the reuse of assets across sites, the seamless client handover, and that's not all. Find out more at wix.com/studio.

2. 3:27 – 6:11

   A brief overview of Wise

   1. LRLenny Rachitsky3:28

      Nilan, thank you so much for being here. Welcome to the podcast.

   2. NPNilan Peiris3:32

      Thanks for having me, Lenny.

   3. LRLenny Rachitsky3:33

      So you're chief product officer at Wise, which, I don't know if you knew this, but I'm a very happy, uh, weekly...

   4. NPNilan Peiris3:39

      Oh.

   5. LRLenny Rachitsky3:39

      ... active user of. To give folks a little bit of context on Wise, could you just explain, what does Wise do? And also share maybe a few stats to give people a sense of the scale that Wise has reached at this point.

   6. NPNilan Peiris3:51

      We're looking to solve the problems associated with cross-border money movement, which is that moving money across borders is pretty slow, it's actually really expensive, and it can be really hard to do. We solve it with three products: our, our money transfer product, which is what we started with; our account, which we like to think of, uh, trying to solve the problems of international banking with our account for people and for businesses; and then finally, we've also got an enterprise product where we take the underlying infrastructure that's powered those products that we built, and embed them in the banks and products that people use every day. And then zooming into the numbers, so we've gotta come a, a little way on the journey, so today we're now moving about $12 billion a month, growing at between 30 to 40% year on year. We take about .65% on average across all our routes, uh, as price, and we've been profitable for about more than four years now, with 20% EBITDA margins. But probably the stat I'm most proud of, and the hardest thing to make happen out of all of that, was, uh, we acquired 70% of the users that found out about Wise last month through word of mouth. So contextually, we have 16 million customers and we're acquiring about a million a quarter, uh, about 10 million actives, and, um, yeah, so out of the million that joined Wise for the first time, 700,000 found out about Wise from a friend.

   7. LRLenny Rachitsky5:36

      There's a couple stats there that really stand out to me. One is, you're gaining a, a million new users a quarter, which is insane. Just, like, a million new people joining Wise every quarter. That's a, a astounding number. The other number is what you just shared around word of mouth, that basically more than two thirds of people are discovering Wise and joining Wise through word of mouth. I want to spend the bulk of our conversation on this topic of word of mouth. I think it's extremely rare how you've been able to increase word of mouth, and just how much of your growth comes through word of mouth.You've essentially developed a system for how to

3. 6:11 – 7:56

   How word of mouth is measured

   1. LRLenny Rachitsky6:11

      drive word of mouth, and how to basically structure your team, your goals, your priorities, and things like that in order to lean into this growth channel. And so I just have a million questions around how you think about word of mouth. And the first is just like how do you even, how do you measure word of mouth? How do you know that, say, 70% of your growth is coming through word of mouth?

   2. NPNilan Peiris6:28

      We ask customers, is the, is the short answer. Uh, so we, we have an attribution model, as you can imagine. We've had one from the early days. And it overlays all the kind of cookie, um, the referrer data and cookie data you have on, on visits coming to the website, so you kind of know that. And then you obviously have the soundtrack stuff. And we, we sample and ask customers a, a set of questions on this, and then overlay that onto the what turns up in your, in your web tracking as direct traffic to give you, give us a sense of how big that word of mouth number is. That's what gets us back to the 70% stat.

   3. LRLenny Rachitsky7:05

      And very practically, how do you actually ask people? Is there a little pop-up on the website?

   4. NPNilan Peiris7:09

      It's actually integrated into the flow. So when we built it originally, we thought it was quite cool. Like, marketing and acquiring customers is part of the product, and we should actually stitch that into the experience seamlessly so that we're able to do this more effectively going forward.

   5. LRLenny Rachitsky7:26

      That's actually at Airbnb exactly how the team did that, to understand what percentage of growth was word of mouth. It's just a little interstitial pop-up when you visit, say, airbnb.com, "How did you hear about us?" You think there's be, some fancy ways to understand this stuff, but it's just like, just ask people. They'll tell you how they heard about it.

   6. NPNilan Peiris7:40

      Yeah.

   7. LRLenny Rachitsky7:41

      Awesome. Okay, so just to kind of dig into the meat of it, what has been the biggest shift in helping you significantly grow word of mouth and make it such a huge lever of growth for Wise?

   8. NPNilan Peiris7:53

      Yeah. Before I launch into this, let's just also take a step back,

4. 7:56 – 10:21

   Why Wise leaned into WOM

   1. NPNilan Peiris7:56

      and like why even focus on this?

   2. LRLenny Rachitsky7:58

      Mm-hmm.

   3. NPNilan Peiris7:58

      So in the early days when I met the founders there, uh, Christo and Taavet, uh, it was quite funny. I got intro-ed to them when they were just the founders and without a team really, and with the, the beginnings of a product. And they said, "Dylan, you've got to meet these guys. They've got a great product. They just don't have any customers."

   4. LRLenny Rachitsky8:17

      (laughs)

   5. NPNilan Peiris8:18

      And, uh, I sat there with them, and we kind of launched the first Google Ads. And in the early days, you kind of like try, try everything, (laughs) hoping, hoping that something works. But taking a step back, like think of money as like the ultimate commodity. It's pretty hard to build, like, an expensive business that, that moves your money somewhere and it costs a lot, so there's less of it afterwards. So building like a brand-led, um, money transfer business, like it's, brand's got to be pretty damn good, right? (laughs) It's got, you're gonna feel pretty special afterwards, uh, in order to kind of have less money afterwards. So what we're looking for always, well, what channels out there are super scalable and can reach our entire audience, but have an incredibly low distribution cost? So that's one thing that led, led us to word of mouth. And the other bit, when we get on to talk about marketing later, the other challenge with marketing which is unique is because we're lower price but a superior product, we have less margin to spend on marketing than others in certain paid channels. So that's a- another reason why marketing's inherently hard. Our marketing team does amazing work at, at Wise in order to work within those constraints. But back to, um, your question, which was like what's the biggest thing we've done to shift word of mouth? When I joined Wise and started wrangling with word of mouth, I, I spent a bunch of time with friends of mine in the US and around the world, um, Henry Chen, um, some of the other kind of like growth gurus. Like this is, like, going back 10, 12 years. Like word of mouth, like who's done it? What's the system? What do you measure? There wasn't really anything out there. So we kind of had to figure it our way out. So first step was asking it, but the second step was kind of figure out how do you know what's driving it? And the best proxy we found for this was something that most people have heard of,

5. 10:21 – 16:13

   Why Wise built their WOM motion using the NPS method

   1. NPNilan Peiris10:21

      but we actually use quite a lot, is net promoter score.

   2. LRLenny Rachitsky10:25

      Hmm.

   3. NPNilan Peiris10:26

      So from the very early days, we'd start asking customers, and you probably have seen this survey, "Would you recommend Wise to a friend?"

   4. LRLenny Rachitsky10:34

      Never seen that, ever in my life.

   5. NPNilan Peiris10:36

      (laughs)

   6. LRLenny Rachitsky10:36

      No, I've never been asked that question. (laughs)

   7. NPNilan Peiris10:39

      Exactly.

   8. LRLenny Rachitsky10:40

      Yeah.

   9. NPNilan Peiris10:40

      There's ............................ And then at the end, you got this scale, zero to 10, and the theory is nine to 10 are promoters and zero to seven are detractors. Six to seven... Sorry, zero to six are detractors and seven to eights are kind of like neutral on your product. The intriguing bit was when we overlaid this. So we have, uh, word of mouth, which is about 50-odd%, and then we have a referral program. When we overlaid the referral data over the MPS survey's c- data, we saw something really interesting. Um, very low invite rates at one to six, and not just invite, uh, conversion rates of users that joined were invites. But when we got people from the sixes to the seven and eight group, they doubled the number of people they told. Eight to nine, they doubled again. And nine to 10, they doubled again. So this is pretty crazy when you see it for the first time, uh, I'm gonna get, get back to your question in a sec, but this is quite cool build-up to it. Because when you're a product manager, like you've been in your career, one of your jobs is to figure out what, what metric are you gonna optimize for? What are you gonna try to get the business to ground behind? And if you optimize for something like conversion rate, and you move conversion rate with 10%, you kind of get this one-off hit. But if you move the MPS, like (laughs) from 30% to 50%, you increase the viral coefficient of your customer base. So every customer that goes through tells X many more. When you model this through, the ROI on MPS increases is absolutely huge.So it's kinda gotta (crosstalk) this is the thing to zoom in on, so how to move it. So then the second magic of MPS is you get the numbers, but you also get the comments underneath it.

   10. LRLenny Rachitsky12:33

       Mm-hmm.

   11. NPNilan Peiris12:33

       Uh, I remember in the first year we built the MPS survey and we emailed out every week all the comments to the whole company, which was pretty small, and we kept doing that I think up 'til about three or four years, everyone got the MPS comments. And when you read the comments, and now obviously we've got like all kinds of fancy, (laughs) fancy waddle sitting on top of these things, customers kept telling us the same things: make it faster, make it cheaper, make it easier to use. So you know at the beginning when I said price, speed, ease of use, we kind of figured this out by, like, thinking hard about this question, "How do we make this product so good that people will use it, but they'll recommend it?" And customers were pretty clear. The ones that were evangelical, is the word we use, are the ones that had a much... Had this cheaper experience. The ones that we're talking about had a fast experience. So it's about price, about speed, it's about ease of use. And when you generalize and take a step back and look at consumer product companies, they have these product pillars, I call them, a- and they usually have KPIs around them. The second insight we got, found, uh, is when we entered markets like when we entered the US for the first time, if we entered with a product that was priced at, say, 5.9% and the alternative was 6, customers would use us, but they wouldn't talk about us. We only got the advocacy when we were eight to 10 times cheaper.

   12. LRLenny Rachitsky14:06

       Mm-hmm.

   13. NPNilan Peiris14:06

       That's when, that's when the, uh, that's when people started talking about it.

   14. LRLenny Rachitsky14:11

       Let me actually interrupt you here a bit just to kind of set a little frame around this 'cause this is extremely interesting, and I think people may miss, I think, some of the really interesting, uh, insights here. Like, what I'm hearing is essentially there's this clear sense that you had to grow through word of mouth because of the business model. Like, you didn't make a lot of money per user, and you didn't have a lot of money to spend thus to help grow. So essentially it's like, "How do we grow through word of mouth?" And then it's, "Okay, what do we need to convince people to share this product?" And you used MPS, which I think a lot of people use, and also a lot of people probably know like, "Let's make our product more awesome so that people talk about it." Like, those are kind of like, "Oh, yeah. Of course." But I think what I'm hearing is that you did that's really unique is when you found this, like, huge delta between these detractors and even, like, seven or I guess it was like six and below and then seven or eight and then nine, 10 kept kind of doubling. So one is just this focus on, like, how do we get someone from there to there? Two, is this really big focus on the comments of the MPS score- survey, not just like, "Oh, we have this percentage of distract- detractors." And then also, I love how you just kind of create these, like, pillars essentially of, like, we're gonna work on these three things, these are the three levers to help grow word of mouth for this product. Does that sound about right?

   15. NPNilan Peiris15:25

       That all, all makes sense. Um, obviously at the time it was, it, it's also way more chaotic. So like-

   16. LRLenny Rachitsky15:33

       Yeah. (laughs)

   17. NPNilan Peiris15:33

       ... at the beginning, like, everyone thinks it's 20 different things, and then over time slowly you understand that it's these things again and again. And a lot of building a successful business is kind of building conviction that these are the things that matter. So now I'd say it's price, speed, ease of use it sounds like, but, you know-

   18. LRLenny Rachitsky15:51

       Yeah.

   19. NPNilan Peiris15:51

       ... go back seven, eight years, we, we were arguing with each other around what... Is it for us? Is it this? Is it this? And like, trying to get clear on what, what are the things we-

   20. LRLenny Rachitsky15:58

       That actually-

   21. NPNilan Peiris15:59

       ... ?

   22. LRLenny Rachitsky16:00

       ... that would be useful actually to know, like, it sounds like of course gonna be price and speed-

   23. NPNilan Peiris16:04

       Yeah.

   24. LRLenny Rachitsky16:04

       ... but what are the things you kind of realize you don't need to focus on as much based on these surveys?

   25. NPNilan Peiris16:09

       Oh, wow. That's a really hard one. Um-

6. 16:13 – 18:55

   How WOM solves trust problems

   1. NPNilan Peiris16:13

   2. LRLenny Rachitsky16:13

      (laughs)

   3. NPNilan Peiris16:13

      So then the challenge is, as you know, everything is important.

   4. LRLenny Rachitsky16:17

      Yeah.

   5. NPNilan Peiris16:17

      Yeah. And, uh, things that we use, we have a bucket called convenience, right? (laughs)

   6. LRLenny Rachitsky16:22

      Mm-hmm.

   7. NPNilan Peiris16:23

      And inside the convenience bucket, there are many, many things, right? (laughs) It's, uh, hiding in there, and it's actually... You can measure this on contact rate, conversion rate, whatever many, many different ways and get many slightly different answers. Um, so I think I've learned there isn't... I haven't got a good answer on things we-

   8. LRLenny Rachitsky16:41

      Well, you said trust-

   9. NPNilan Peiris16:42

      ... we, we haven't.

   10. LRLenny Rachitsky16:42

       ... which is interesting. Like, it's... I'm... Obviously trust matters, but maybe it's something-

   11. NPNilan Peiris16:47

       Trust certainly matters. I mean, yeah. Trust is a good one. Let's talk about that one a bit. So I'll talk you through the trust problem. So I, I ran into the trust problem hardest in marketing. So just imagine you just started out, you've got a money transfer company. It's good. Your product's really good. It's really cheap. So you put an ad out and it says, "Move money with Wise," and really cheaply like, "Is anyone going to click that?" (laughs) Right? People did, right? "Is anyone gonna use it?" Yet people did use it. And you did, you know, work all the usual trust elements. But the bit I found that really helped and the way I got my head around this was what people trust is their friends.

   12. LRLenny Rachitsky17:33

       Mm-hmm.

   13. NPNilan Peiris17:34

       And this really was way stronger a trust signal than anything I could put on a landing page. And even when people came in through marketing, they'd been told, right? So marketing can aid recall and all kinds of things 'cause people are... Tell about their friends that have a use case later on than Google and like, "Ah, I remember this guy used this." Uh, and we do definitely get users, especially today as we've got a larger brand, uh, through marketing direct. Um, but the trust in isolation is a really hard problem to solve. You need to get underneath the skin of what it means. People don't think, "My money is safe. I don't know if this company is reputable." Like, you have to unpick each of these problems and figure out systemically how to solve them. And we've done this to some extent, but really there's a massive shortcut, which is if you deliver your customers a good experience then figure out how do you make it so good they'll recommend it, then, uh, that kind of shortcut a lot of really hard trust problems.

   14. LRLenny Rachitsky18:28

       What did you find most helped increase trust in that way? Is it just, get more people using it and then they'll share with their friends? Or is there something you did there too?

   15. NPNilan Peiris18:36

       No, it was literally get more people using it and they'll share with their friends. There, there's obviously a bunch of learnings we've had around what specific trust elements matter, especially geographically but they're less powerful in the macro than, than get more people to use it. So coming back to that, and I'd love to get your thoughts on this one.

7. 18:55 – 20:51

   How to get to 9 or 10 on the NPS scale

   1. NPNilan Peiris18:55

      Um, so as you said, lots of people go up to NPS and they kind of heard people talk about it, heard people talk about recommendations. So my, my learning on this is you got to work really hard (laughs) to, to get recommendation. So to get a nine or a 10... So NPS is, uh, 70%. So it's really, really high. So it's kind of higher than the iPhone and Google, Google Search, so like really, really high.

   2. LRLenny Rachitsky19:22

      Wow, that's awesome.

   3. NPNilan Peiris19:23

      So often they're high. And when, when we launch a market, or at the beginning it was like much lower, so like 20s and 30s, so to set it in context, like (laughs) banks and financial services, NPS is -30. Right? So most people don't recommend (laughs) banks. Right? So it's like, comes, comes from a low base. But what I found is, uh, when you build a product, most founders and most teams kind of stop when it works, right? And as a next step, some people focus on conversion rate, like, "I'm gonna make this really, really slick." Okay? And that's cool and you get a bit more growth. But to get to recommendation, you've got to blow your users' socks off, and the thing I... the phrase we use is, "You have to give them an experience they didn't know was previously possible." And when you're in that place of doing something that no one has ever done before, that's when you get it. So the bar is all the way up there. And to put that in context, that means figuring out how to move money instantly. That means figuring out how to drop the price all the way from six, all the way down to .35. And that's because there are systemic infrastructure issues in moving money infrastru- money around the world, which some, uh, people haven't solved before. And these problems are just really hard to solve, they take years to solve, but they have huge kind of returns

8. 20:51 – 21:31

   Determining what will wow users

   1. NPNilan Peiris20:51

      when you do it.

   2. LRLenny Rachitsky20:52

      I love that just as a framework, 'cause how do we... (laughs) We need to blow our users' socks off. And again, it just comes back to how do you can get people to want to share this product and drive word of mouth, blow their socks off. I want to dig into how you actually just figured out what these attributes are. Obviously you talked about this NPS survey highlighting things. How did you decide it was instant money movement and some of the other things? Is it just basically looking at these survey results and picking the things that come up most often?

   3. NPNilan Peiris21:20

      Yeah, it was, uh, talking to customers and looking at the survey results and then through that in many different ways, price will come up, speed will come up, ease of use will come up, and they kind of aggregate up to that.

9. 21:31 – 23:24

   Common missteps companies make when trying to drive WOM

   1. NPNilan Peiris21:31

   2. LRLenny Rachitsky21:31

      I think a lot of people listening are still gonna be this like, "Okay, uh, like, we're just gonna make our product awesome and it's gonna grow." And like in a sense, yeah. In another sense, what you're sharing is essentially kind of a really simple framework for how to actually do that. To kind of go a little deeper there, when you see other people trying to drive word of mouth, trying to drive virality, is there anything you s- think people often do wrong? Is there other missteps you've taken in trying to drive word of mouth?

   3. NPNilan Peiris21:59

      It's this thing around growth rate. So especially product-led growth, which is what we're talking about. So if you can imagine we're going to open a new market to Indonesia, and the fastest way to do it is to take... Someone else has figured out how to move to Indonesia, we take that, uh, infrastructure and we'll plug it into Wize. You know what? We can do this. We'll get some users, but it doesn't grow like a hockey stick. It doesn't grow like a hockey stick 'cause we haven't fundamentally changed the problems in moving money internationally. So got this mantra, like, you've got to build a 10X better product than what's there, and if it's 10X product better, it basically... it doesn't exist already, right? (laughs) So if you're, if you're plugging in something else, that, that's kind of a misstep. So there, it comes from a very logical place, "How do I get users quickly? I, I could take a shortcut and do this." But that you kind of realize is wasted effort. So the step then becomes this much harder question of these types of questions, like what is theoretical minimum cost for moving money into a market? What is the theoretical maximum speed? Not just make it instant, make it cheap. Like what actually is the lowest it could possibly be? And instead of like incrementally going, doing a jump to make it a little better, a little better, a little better and you kind of never get there, how do we take two years and end up there?

10. 23:24 – 25:45

    Using the “working backward” method at Airbnb

    1. NPNilan Peiris23:24

    2. LRLenny Rachitsky23:24

       I love that. It's something that I talk about a lot, something I learned at Airbnb is this idea of working backwards from the ideal instead of working forwards from like, "How do we iterate and make this s- better and better and better?" It's like, "Okay, if we could start again and we could create the ideal experience, what would that look like?" And then work backwards from, "What would it take to get there?"

    3. NPNilan Peiris23:44

       And what's a- an example of that at Airbnb? What was an ideal that you guys went for and then built?

    4. LRLenny Rachitsky23:49

       The ideal was there was this whole process where the founders hired this storyboard artist from Pixar to draw out the ideal experience of a host and a guest. So there's these storyboards sitting in the office, and I think there's 12 kind of they call them key frames of just, like, the booking experience being really seamless, arriving in the home and being really amazed, uh, going out and finding things to do. So this became essentially the vision of the company is let's make each of these frames, these key moments of a journey for our hosts and guests, as incredible as possible. That was one, and that became kind of the vis- the... Essentially the strategy for a couple, for a few (laughs) years is just like make each of these frames awesome. And then there was another project that I worked on around booking on Airbnb.I don't know if you remember this, if you've used Air- Airbnb much, but most of Airbnb back in the day was, you request to book with a host. You're like, "Hey, can I stay in your home?" And turned out, 50% of the time the guest was ignored or rejected, and the hosts were just like, "Nah. No thank you." Now, over 80%, as far as I know, of bookings are instant bookings, where you just book and it's done, just like every other place you book online. And so that was a huge transition that I worked on, and that came from, if we were to start Airbnb again today, or if someone were to disrupt Airbnb, what would it look like? And obviously, it'd be, you just book. You're not sitting around hoping someone is cool with you. So that came from that idea of just like, "What would be the ideal Airbnb experience?"

    5. NPNilan Peiris25:15

       Those are incredibly inspiring. Um, I'll try and share a couple of stories, uh, analogies in, in, from Wise. Um, I'll talk about two things. Let's talk about price first. Um, so like, it's a good, it's a good question, right? So money transfer has been around since the Medicis, right?

    6. LRLenny Rachitsky25:33

       (laughs)

    7. NPNilan Peiris25:33

       How does, like, uh, few people get together... And it, it's evolved towards moving trillions around the world. And generally retail, consumers paying about 6 to 7% around the world to do it.

11. 25:45 – 27:51

    How Wise is able to offer drastically lower money transfer fees

    1. NPNilan Peiris25:45

       How does a small team in Europe start out and figure out how to move it? We launched at .5%, and now we're down to about .35%. So what, what changed? Um...

    2. LRLenny Rachitsky25:57

       Yeah. I was gonna ask, how did you, how did you do that? That sounds like everyone would want to do that.

    3. NPNilan Peiris26:02

       Yeah. So let's try to unpick it a little bit. So first question you'll ask is, I know what you're doing. You're losing money on every transfer.

    4. LRLenny Rachitsky26:08

       Hmm.

    5. NPNilan Peiris26:08

       It's like, that must be what you're doing. But we've been profitable for, uh, five years, and the, one of the magical things here was, uh, like, we're actually profitable on every transaction. So it was probably about four or five years ago, um, I led this project to kind of start to pull together our pricing. So every month, you get bills, and they turn up in your P&L. But every single bill we got, we allocated the cost back to the customer, or the transaction that generated it. And then we add our margin on top, and that's our price. And when you look at this and you analyze it, you'll find, obviously there are 20% of customers generating 80% of the costs, and what you do is you get those 20%, you give them a raise, because they should cover their costs, and you drop the price for everyone else. And then the team works really hard on reducing these costs down. And then you move into a different segment in the market as the price costs come down. Does that make sense, Lenny?

    6. LRLenny Rachitsky27:13

       Yeah. Essentially charge the heavier users more to counteract less frequent users. And, and essentially, that drives word of mouth.

    7. NPNilan Peiris27:22

       Totally. But it's down to this level of, if a customer, if an Australian customer calls up asking, "Where is my transfer?" That cost of that call gets allocated back to the AUDGBP route. If a, a Brazilian business needs, like, 20 documents in order to be verified before we can give them an account, the cost to verify and check those customers goes back there. So that, that at a very atomic level starts happening. So yeah, as you said, the more, uh, the more expensive customers, uh, end up paying, paying

12. 27:51 – 32:02

    The three costs associated with moving money

    1. NPNilan Peiris27:51

       what they cost.

    2. LRLenny Rachitsky27:51

       And it's, and sounds like the more expensive markets.

    3. NPNilan Peiris27:55

       Indeed. And the more expensive, systemically expensive markets. But let's get to that. So what, what are the costs? So if you look at our P&L, uh, there's just three, uh, three costs, uh, at transaction level. You've got people costs. You've got the cost of risk, realized risk. And then you've got partner fees. And so if you've got this mission of moving the world's money for almost nothing, or zero, as close to zero as you can, you've got to invest as much of your cash flow in engineering to try to engineer away these three problems. So just to take you through briefly on that, and remember, we're trying to do this 10 times better than anyone else. So how do you, how do you really step change the experience on each of them? I'll, uh, I'll cover a couple with you. Uh, so let's do the risk one first. So there's two risks we have. We have, uh, FX risk, when you come to Wise you see your rates, and then you may send us the money a little later. If you're, like, moving a million dollars, you can't usually move it instantly. It might take you two to three days to move it. Rate's locked. Could move against us, we'd lose some money. So that cost, if you look back, uh... So we've halved that cost, like over the last few years. And you can kind of imagine through understanding the bits of the product that generate exposure and limiting it and bunch of algorithms behind that. But the more inspiring stuff is the, uh, is the people costs, uh, and the partner costs, uh, go through each of these one at a time. So the people costs are, uh, customer service team, operations teams. But I like to think of that as the cost of poor quality. So you bring up customer support if the products aren't clear, you hire lots of people in the back office if you haven't automated it. We get like 20% improvement, you know, and yes, we're doing that, but come back to your question, how do you step change that? How do you do a 10x better experience? I'll share with you a story, uh, from Singapore. It's quite a fun one. 'Cause I went to Singapore about six, seven years ago, and, uh, MA, uh, we asked for a license, we had 20,000 people on the wait list or so saying, "Wise, please come to Singapore."

    4. LRLenny Rachitsky30:04

       Wow.

    5. NPNilan Peiris30:04

       And, uh, we went there, we asked the regulator, "Hey, could you give us a license?" And they, they gave us a license. But they said, "You have to physically meet every single customer."

    6. LRLenny Rachitsky30:13

       Agreed.

    7. NPNilan Peiris30:14

       Face-to-face. And this is, this happens, this is, uh, remember, like, there are banks that people use, so people go into banks usually, and you meet, you know, you get face-to-face verified when you open a bank account. And we're like, "You don't need to do this in, in, uh, in Australia, in the UK, in other countries around the world." They're like, "In Singapore, if you want a license, you need to do this." So we, uh-We actually sent a small team out to Singapore and we opened an office for WeWork (laughs) and customers... Like, you went through this really slick flow, they got invited in to come and see, see the team.

    8. LRLenny Rachitsky30:50

       Amazing.

    9. NPNilan Peiris30:50

       And customers hated it, right? And it was really expensive, right? Obviously.

    10. LRLenny Rachitsky30:56

        Yeah.

    11. NPNilan Peiris30:57

        But the magic was we got, uh, we got the customers not to complain to us, but to complain to the government.

    12. LRLenny Rachitsky31:05

        Hmm.

    13. NPNilan Peiris31:05

        It took a year of lobbying and a year of, like, building, like doing something unscalable effectively, before we got the world's first eKYC license in Singapore. So you could take a selfie, picture of your ID, and then you could get verified. And that's what I call a 10x better experience than anyone else in the market, and that led to advocacy and word of mouth off the back of it. And that's, that loop of getting your customers to help was also one of the, the learnings of word of mouth.

    14. LRLenny Rachitsky31:35

        Was the product team involved? Were you involved in that (laughs) on the ground stuff or was it, uh, like a central issue?

    15. NPNilan Peiris31:40

        Yeah, yeah. I mean, so we... Generally we... When we got to have a look, we're running cross-functional teams, but this is a verification team. The team that would actually, would verify the docs you sent it to us, they went out to Singapore and verified them on site face-to-face. So the fun bit here is how, like why would a cu- why would customers, like, help, help a company, right?

    16. LRLenny Rachitsky32:00

        Mm-hmm.

    17. NPNilan Peiris32:01

        And this was, uh,

13. 32:02 – 34:11

    Rational vs. irrational reasons behind recommendations

    1. NPNilan Peiris32:02

       one of the other learnings on word of mouth, like, the way I think about this is there, there's the rational reasons why people recommend, which we've covered, but there's these emotional ones as well. Softer ones people would call brand. I, I prefer to call it on the mission. So we thought our mission, which is to make the world's money move instantly at the touch of a button, uh, for almost nothing, was a very personal thing. It was like an internal company thing 'cause we think our customers cared about it. And then we, we rebranded, like, eight, nine years ago, our first rebrand, and we broke our mission and sent it to our customers. We got more new customers from that email being forwarded around than any other kind of marketing. And when you... I show this when I talk at conference, this email broke all the rules of marketing. It didn't have a call to action, it didn't have a button to sign up, it didn't have anything in it, right? But people just forwarded it around saying, "You should check out Wise." And it's not all of the customer base, but there was a proportion of the customer base that this resonated in. And I think it's the authenticity within which they could see that we were genuinely trying to br- just, like, trying to bring the prices down was a, a scheme to help us grow faster. Which is kind of where it started out, it was actually genuinely because founders, like, they were really upset about how much it cost to move money and, like, uh, they founded Wise to solve that problem and they're still really passionate about solving that problem. And I could see that authenticity flow through the whole company 'cause we got to, uh... When you look at Wise, we're, we're full of, uh, people on visas and immigrants and people that have worked and live around the world and struggled with this problem and are passionate about solving it. And so they wanted to help us solve it, and so the second part of being, of this word of mouth engine is for us, we managed to get this mission thing to work. So somehow we emotionally connect our cause and then a- see, going, taking a step back, getting 10x better on price is through our customers helping us do it, which gets us even cheaper, which then brings more customers that then creates this flywheel that, that spins around.

14. 34:11 – 38:14

    Prioritizing customer happiness

    1. NPNilan Peiris34:11

    2. LRLenny Rachitsky34:11

       (laughs) What a flywheel you, you guys have built. This reminds me of a lot of different things. One is, you talked about how there's, like, the, the reality of the things people need and then there's this, like, soft fuzzy stuff that's harder to quantify. I actually used a framework just like that on that product I talked about of instant booking. I kind of built a roadmap around the reality of what people actually need in order to feel comfortable guests booking instantly, and then there's I call it the perception, like, what are their fears about letting guests book instantly? And there's a lot of work to just, like, convince them you think you're going to get all these guests that are really scary or whatever, but in reality never happens. Like, it's really rare something bad happens and if it does, we're gonna cover it. So I think that's a really cool framework when you're trying to get people to adopt something is think about what do they actually need and then how do you convince them of the things that are just in their head. And it sounds like the, win there was kind of this sharing your mission and your values as a, as a business?

    3. NPNilan Peiris35:05

       Yeah. It just sounds, again, very twee, right? And like, twee, like-

    4. LRLenny Rachitsky35:08

       Right.

    5. NPNilan Peiris35:08

       ... sounds very corporate. Sounds like it's never gonna work, but I think it's also with Airbnb the authenticity is there, right? People being passionate about making that experience work for both sides of the marketplace is kind of clear. So I'm kind of taking a step back, personally very, uh, passionate about, uh, customer-led growth.

    6. LRLenny Rachitsky35:26

       Right.

    7. NPNilan Peiris35:27

       And how that turns into shareholder value.

    8. LRLenny Rachitsky35:31

       Hmm.

    9. NPNilan Peiris35:32

       So, right, taking a step back, we're kind of... Every business I've ever worked in, it's always got these two lists. A list of things to do for your customers and then it's got a list of things to do to make money, (laughs) right? And you generally do everything you need to do to make money and you do two things with the customer list and you go customer-led business, right? (laughs) And the neat thing about Wise, and I'm pretty sure you'll see the same thing on Airbnb is, we just had one list, right? Which is this list of things that you need to do to make customers happy and it's prioritized by impact on the really hard things. If you do these really hard things, they have an incredible impact for customers, but hints on your growth and on your shareholder value.

    10. LRLenny Rachitsky36:11

        That is really interesting. Airbnb was not quite like that. It's actually become more like that with a lot of just, like, let's build awesome products and not focus on experiments as much. So that's really interesting that prioritization basically at Wise came from what are people telling us. I guess let me ask actually, how did you know what the impact would be on customers? How did you decide? Is it, like, frequency of how often people request it? Is it we need to lower the cost and so we're just gonna prioritize the things that will lower prices most?

    11. NPNilan Peiris36:37

        Definitely on the journey at the beginning you're into split testing, right?... let's try to take apart, a split test on price. So you systemically drop the cost. Imagine we drop the cost and the question is, like, do we drop the pri- do we pass that on to customers or do we keep some of it?

    12. LRLenny Rachitsky36:53

        Hmm.

    13. NPNilan Peiris36:53

        Right? And split testing on the price thing, like, if the split test is gonna mean you end up with more revenue, it means you drop the price by 10% and there happened to be, that day, more than 10% more customers in the market who were... They saw the price at one pound, but they see the price at 90p, at 10% lower, and they're like, "I wasn't gonna shift that, buy it at one pound, but I'm gonna buy it at 90p." So this is, like, pretty hard to kind of do this. But this word around conviction is one I use a lot, where you build this conviction that price is what matters, and through these incremental split tests you will take a long time to go there, but at some point you kinda go, "Actually, I've got enough conviction." So there's one kind of strategic bet at the heart of Wise, that is if we have the lowest cost platform and it's really fast and really high quality, the world's volume will switch to us. Um, and just marginally getting there step by step by step by trying to track the incremental return is actually slower, and there's a point that comes that you go, "I feel really comfortable investing in price. I feel comfortable investing in speed. Because I know it's gonna pay back. And not necessarily this month, but eventually it will, and I need to make gains on all three levers in order to get there." Does that make sense?

    14. LRLenny Rachitsky38:13

        Yeah,

15. 38:14 – 46:11

    How Wise approaches experimentation

    1. LRLenny Rachitsky38:14

       absolutely. So es- essentially, in that track of work, instead of everything that you did to reduce price, there wasn't, like, an experiment to see what impact does this have on growth or revenue. Instead, it's just, "We know reducing price is gonna help us grow, and so we're just gonna track how much we're cutting price." And that's... like, essentially the goals, I imagine, were just cut the price by some amount, find a way to make it this much cheaper every, say, quarter or year?

    2. NPNilan Peiris38:38

       Yeah, that's it. You got it. And that conviction, uh, is called, um... That extends to kind of our product management approach on the UX, so, um, this great line we use internally, I'm sure you've heard it, like, you can't split test your way to love, right? So this, uh, experiment led product management approach where you kind of throw a bunch of things at the wall, and then you kind of see what sticks, generally we don't advocate this. Obviously there's a bit of it that happens, but generally don't advocate it, mainly 'cause engineering is expensive, and you can actually figure out what matters to customers (laughs) through other means, some of the, the techniques we've taught, and build it. There's a story I, I like to share. We... I had a product manager, uh, join our Referral a Friend team, uh, viral growth team, and invite team, and, uh, after a quarter I said, "So, w- what are you gonna build?" And he's like, "I'm gonna... I wanna test everything. I'm gonna test the landing page, I'm gonna test the subject line, I'm gonna test the program, so I don't know yet till I run through all the tests, then I'm gonna come back and tell you what I'm gonna build." I said, "You know, I'm gonna do this. I'm gonna give you three weeks, and you're gonna pick one thing to change, but you're gonna go talk to people (laughs) and get qualitative insights and build your own gut feel around what matters, and then launch it and split test it and see if it worked." But this thing of building conviction on what matters, and I watch how teams slowly build this, and you need the data there to make sure it doesn't become a hubris, right? Uh, that enables you to make much bigger changes than just experimenting away, and it forces you to get clearer on what actually is the problem to solve here, and how do I solve it really, really well? Does that make sense? Lenny, do you disagree? It's a bit provocative. There's some people that are pretty strong on the experiment led approach.

    3. LRLenny Rachitsky40:30

       No, there's many ways to do it. There's no right way, and, you know, it's working, so (laughs) I'm not gonna argue. This episode is brought to you by Masterworks, the premier art investing platform where some everyday investors have earned a 35% net return. Yes, a 35% net return alongside 16 other exits, including 10 and 17% net returns. Contemporary art has outpaced the S&P 500 by 136% over the last 27 years. Citibank and Deloitte have reported that contemporary art has performed well as an inflation hedge, and the appreciation is almost entirely uncorrelated to other financial markets. Even the CEO of Blackrock, Larry Fink, has said it's one of the greatest stores of wealth internationally. However, there's never been a way to invest in it practically without spending millions. But now, Masterworks allows almost anyone to invest in works by artists like Banksy, Basquiat, and Monet. In fact, Masterworks' latest exit just last month delivered another double digit annualized net return for their investors. Since the New York Times first reported on them in 2019, they've grown to over 800,000 users and had some new offerings sell out in literal minutes. Well, you get special access and can jump the wait list queue at masterworks.art/lenny. As with any investment, past performance is not indicative of future performance. Investing involves risk. See important regulations and disclosures and aggregate advisory performance at masterworks.com/cb. Again, for special access to skip the wait list, go to masterworks.art/lenny. So what I'm hearing, essentially, the experimentation culture at Wise is instead of just run, test everything that you're thinking about, throw out a bunch of ideas and see how they go, it's more let's just decide we believe in this idea, and let's go bigger there and run an experiment, maybe not even. Is that roughly how you think about it?

    4. NPNilan Peiris42:18

       Yeah, yeah, yeah, yeah, and is that something that you see in yourself in practice elsewhere?

    5. LRLenny Rachitsky42:23

       It's interesting how many parallels there are to Airbnb, 'cause this is what Airbnb is doing now. There's been a shift recently where instead of everything is very data, experiment driven, uh, it's very just, like, let's build really great products that the founders are really excited about and that the execs are hearing from people. Let's just build things that are awesome and launch them, and we believe that things will grow, and Airbnb's doing great.

    6. NPNilan Peiris42:47

       Yeah. The, the challenge of this i- is the... Because it does become this hoop- hoobroosting of where it's like, okay, someone's, it's someone's opinion, right? So you have to be... I think it's X, right? And everyone thinks they're kind of Steve Jobs type thing. So you-

    7. LRLenny Rachitsky43:00

       Yeah. That's right.

    8. NPNilan Peiris43:01

       ... you have some, some way of using data to kind of get this conviction and show why this is what we should do. Uh, but try to learn how to, to build that fast. That's the only slight, slight difference. So it's less, um, product managers or me saying, "Hey guys, I think it's X." It's generally data-driven, uh, and qualitative insights driven as well.

    9. LRLenny Rachitsky43:23

       Yeah. Like personally, I would always index towards running experiments just to put this out there. But I think in this case it makes sense where you just know we need to do these three things. Just make it cheaper, make it faster. Like you don't need to A/B test every idea there. The- probably the main downside of not testing everything is you may be hurting things along the way and you may not know it.

    10. NPNilan Peiris43:42

        I, I mean yeah, so we definitely do. So you're right. Uh, but there's a very different thing to when you look at, uh, the... from a sample size perspective. Um, you want to do a beta and understand the negative impact. It's a holdout group that's smaller, uh, than, uh, a test to get a significance. Like it's quite... Define the criteria to know whether something is breaking is generally a different thing to say is this a material, materials result in a test? Yeah.

    11. LRLenny Rachitsky44:09

        And along those lines, the other benefit of experimentation is you know the impact. And so team members can understand, here's what I did this quarter this year.

    12. NPNilan Peiris44:16

        Yeah.

    13. LRLenny Rachitsky44:16

        How do you think about just like, you know, performance reviews and people's impact and that kind of thing?

    14. NPNilan Peiris44:20

        Yeah, it's a good one. This one's definitely an ongoing debate.

    15. LRLenny Rachitsky44:23

        Mm-hmm.

    16. NPNilan Peiris44:23

        So, um, I generally ask teams what's their impact, right? So every quarter, every team, what... Founder Christo will ask for the ship and I typically ask how many people used it, what was the impact on volume, et cetera. And we have analyst teams that can answer this either with, uh, pre-post analysis, all kinds of techniques or, or through split tests. We, we generally have this. The debate is, is where the analysis slows us down and we wouldn't make a decision off the back of the analysis. And then this generally is, uh, what you said, where the team needs it for validation mainly for themselves, um, and maybe a little for performance, but not, not too much. And so we're just... there are ways in which you can maybe get some read on it that isn't quite as strong as a split test.

    17. LRLenny Rachitsky45:13

        Right.

    18. NPNilan Peiris45:13

        Which we'd use in these things. It's more just getting some... You can understand that people worried when you do split tests that slow down the release of something. Uh, but you just... in order to get, get an impact, if you know you're not gonna roll it back, then okay, you should just roll it out and try to reduce the need for the validation.

    19. LRLenny Rachitsky45:31

        I think that there's an interesting correlation between products that grow through word of mouth and less need to experiment with everything. Airbnb is also actually 70% of growth is word of mouth from the last stat that I heard. And then you think about, you know, all these social consumer apps, they mostly grow through people sharing with their friends and a lot of them come from just the founder's intuition of what a great product's gonna be. I think about Snapchat and recent mobile social apps. And so I think maybe there's something there about just like as a founder trusting your gut more often and... but then it becomes difficult as you grow, you have to delegate and then you have to trust people on your team making

16. 46:11 – 48:06

    Thoughts on performance reviews and general analysis

    1. LRLenny Rachitsky46:11

       the right decisions. I guess is there anything there that you've learned about just like trusting individual product teams to make decisions that you can't for sure know were positive or negative without running experiments?

    2. NPNilan Peiris46:22

       Uh, so I mean we... As I say, we... Almost everything we do, we have some way of understanding the impact. So that, that's always there. We definitely have things where the team does something where Christo or I would say, "This is just crazy." And it's like, "There's no one's ever going to use this." And then they... We have a culture where people are encouraged to, to do these things if they, if they, if they believe in it.

    3. LRLenny Rachitsky46:48

       Is there an example then?

    4. NPNilan Peiris46:49

       Uh, yeah, a couple. So the one, one thing that, uh, my head of... Head of SEO always talks about is a currency converter. So like, like the Wise homepage is a pretty good currency converter. It's got a decent one on there. There's tons of traffic on currency converter. So if you click Wise and then now it's a little bit hidden on send, it's there. It's pretty cool, the currency converter.

    5. LRLenny Rachitsky47:10

       Oh, I see it at the bottom there. Yeah, it's like a little gold...

    6. NPNilan Peiris47:11

       Yeah, but, but, but if you Google currency converter, there's tons of traffic, right? And that, that, uh, converter on the Wise homepage obviously is... includes our price and lets you sign up. And so like should we build a currency converter, right? Should we try to capture this traffic? Is it more effective to try to push our, uh, our own product there? And you can kind of understand why... It was Christo actually, not me, who was like this is, this is a crazy idea, and the founder and the SEO team went out and built it and it's like huge there, all right, in terms of, uh, in terms of visits. Uh, I think it's... We've got a currency converter app out there. I think we've got multiple f- out there. Uh, and yeah, people discover Wise through that as like example of off-topic traffic. But that's a, a good example of one of those things where, uh, yeah, the founder had a... founder said no or well that's a bad idea and we kind of went ahead and, uh, and

17. 48:06 – 51:57

    How Wise provides a 10x better banking experience

    1. NPNilan Peiris48:06

       did it anyway.

    2. LRLenny Rachitsky48:07

       Awesome. I'm just thinking about broadly all the things we've been talking about. There's a couple things that were floating around in my head. One is, reminds me of Amazon where Jeff Bezos kind of realized like there are things that are gonna be always true with Amazon. People always want cheaper prices, they want faster shipping and I think there, but there's something else. And it feels like you guys found the same sort of thing. Like what are the three things people always want with a money transfer product and let's just make those as incredible as possible and in your eyes make them 10 da- 10 times better than what anyone else ha- has out there.

    3. NPNilan Peiris48:40

       Yeah, totally. The Bezos one example, it, it is relevant and use it a lot when we talk to investors in the market, um, when we're public. Kind of helps validate this low cost cutting price story. What's interesting is what changed though. So, uh, we started with transfers, but we got to account and then we got to enterprise and just how... What changed was...We realized, with account, if you just have to move $10, you're not gonna download an app and do it.

    4. LRLenny Rachitsky49:08

       (laughs)

    5. NPNilan Peiris49:09

       If you do it once, you're just gonna do it in your bank. And so, that was a little bit of the insight behind building the, the Wise account. And we kind of focused on, there's a real problem with international banking. So, really good example is for businesses. So if you're a business, say, in, um, say a business in Europe, and you've got a customer in Australia. And you wanna get paid, you send them an invoice in, in euros, and someday, some money's gonna turn up in your account. You're like, "I don't know." Right? They paid you in AUD, it got changed by three banks on the way through, you don't know what it is. What you'd love to do is invoice them in AUD, and get AUD in your bank account. You might even have people you need to pay in AUD, so it would be cool to keep it there. But to get an Australian bank account, I found out, you need to fly to Australia (laughs) . You need to incorporate a business in Australia, you need to go to a bank with all those papers, and then they will give you an Australian bank account.

    6. LRLenny Rachitsky50:05

       Hmm. Great.

    7. NPNilan Peiris50:07

       So with Wise, you can get an Australian bank account number with three clicks. Anyone can, and any business can. And you get an Australian balance and a US and a UK and a Swiss balance. And this is killer for fe- for businesses to receive money internationally. And then the next big jump we did, uh, and for consumers, so there are plenty of people, like if all your banking is in the US, you probably shouldn't use Wise. But if you're somebody who uses another currency a lot, then you probably should use us as your primary bank. There's some people, for example, who live in one country and get paid in another country, and this is, Wise is great as a, as an account for managing that. And we found with that, we got about, like as we launched the account in markets, it was about, you know, like a 20 to 30% more volume, cross-border volume, coming through, coming into Wise from that market. Just a good example of how, well, it's not price, not speed, you could argue it's kind of ease of use, but we had to kind of evolve it in order to get to the next tranche of the market. Does that make sense, Lenny?

    8. LRLenny Rachitsky51:07

       Absolutely. And it all just comes back from what would be the theoretical ideal situation for people transferring money, say from Australia. And what I'm hearing is you just like find all the little friction points that get in the way. In this case, you're like, "Okay, we'll create you an (laughs) Australian bank account, and you don't even worry about it."

    9. NPNilan Peiris51:25

       Yeah, that's exactly it. And so now then you have all these other problems 'cause we got like about $12.5 billion in, in deposits now, which is like a, a time. And the next problem customers are at is like, "I want a return." Right? And we don't, we quite deliberately don't have a banking license, so you have to figure out how we, how we're gonna solve that. So we, we now put customers' money in government bonds, US bonds, and when you pay with your card, it dynamically sells those bonds. And that's how we give you a, an interest rate in like, around about 5% right now, given where bond

18. 51:57 – 53:47

    Advice on how to approach word-of-mouth marketing

    1. NPNilan Peiris51:57

       rates are.

    2. LRLenny Rachitsky51:58

       Yeah. Interest rates are quite high, for better or worse. Zooming out a little bit, for folks that are starting to like, their wheels are turning, they're like, "Okay, I wanna think about word of mouth, driving word of mouth. I'm gonna go look at my survey results, I'm gonna figure out these pillars that are driving word of mouth, I'm gonna think about how to make things 10 times better." Just like broadly, for someone that's starting to approach this, what would you say to them? How would, should they approach this? Any major learnings at a higher level of just like how to drive word of mouth for a product?

    3. NPNilan Peiris52:30

       I think it just comes back to talking to customers, and this is the question we've kept coming back to, like what would it take to make it 10X better? And then you get clear in your head what it would take, and then it's usually the thing that everyone's looked at before and thought, "That's re- that's, that's imp- it's the thing that's impossible." One more example is like on the partner side, like so rather than find a cheaper bank for a banking partner, you think, "Well, the cheapest banking partner is the central bank," right? And imagine you're a startup, how the hell do you get a bank account at the central bank? (laughs) But that, that kind of thinking, we, we now have a bank account at the Bank of England, National Bank of Singapore, Bank of Australia, and each of these was like as hard as, you know, getting that face-to-face verification thing in Singapore. It took like years of lobbying and all kinds of stuff in order to make it happen, right? But it's setting your goal all the way up there. That's what enables you to build a 10X better product. That's what gets you some word of mouth. So, the first step is getting super clear on, what's the problems that the cu- my customers are caring about, worrying about? And then once you're clear there, like as you said, how, how can I solve that completely, and what's the best it could possibly be? And then the hard bit is figuring out how to move

19. 53:47 – 55:59

    Building a culture of doing hard things

    1. NPNilan Peiris53:47

       that.

    2. LRLenny Rachitsky53:48

       A lot of these things you're talking about are just, they sound like they are either impossible, like no way we're gonna achieve that, or really, really hard, and a lot of companies and a lot of founders, teams are just like, "Okay, we're not ever gonna create a bank here. We're not gonna be able to create a bank in, an Australian bank account for everyone." What is it about your culture or approach to these problems that you think that's unique to Wise that's like, "No, we're gonna spend three years figuring this out 'cause it's that important"?

    3. NPNilan Peiris54:15

       I think it's two bits. So one is like, definitely the founders have this philosophy that, unless you're doing something hard and new, it's kind of a waste of time. (laughs) So I think that, that also kind of runs through the culture. So it's quite a rude awakening when people join Wise 'cause they're like, "Okay, I've got to come and just like play around with a few things." You're like, "No, actually, you need to" ... The culture of the front end team is like we're super incentivized to do the hard things, and that's what's rewarded. And that's quite hard, you know, to create the air cover. You can imagine like there, in the early days or months when growth was slow and people like turn on the money taps for marketing and you're trying to keep focused on plugging away at these hard things, it's quite hard also to get the, the management cover in order to let the teams keep doing this. Uh, and then it's also hard just to turn up to work and really keep-... you can imagine being in Singapore, verifying customers face-to-face thinking, "This is going nowhere, this is going nowhere, this is going nowhere," and then suddenly it changes, right? It's that. That's what progress very much feels like at Wise. And we try to recognize that and create a culture that enables that.

    4. LRLenny Rachitsky55:21

       And it feels like there's also just a lot of patience for these things. There isn't like, "We need to hit this quarterly goal. Why aren't we creating banks in Singapore yet?"

    5. NPNilan Peiris55:29

       Yeah, exactly.

    6. LRLenny Rachitsky55:31

       Awesome. The other kind of like metaphor that's rolling around my head is something Seth Godin talks about. I don't know if you've heard of this guy. He's a marketing guru, and he has this concept that you wanna build something that's remarkable. Because if something is remarkable, it'll spread. And if you think about the word remarkable, it's something worth remarking about, which essentially is word of mouth.

    7. NPNilan Peiris55:49

       Yeah.

    8. LRLenny Rachitsky55:49

       And so that's his, his kind of mission and his, uh, I don't know, advice to people, is build something remarkable, something people wanna remark about. And clearly you all have been doing that.

20. 55:59 – 57:54

    The macrostructure of international banking and where Wise fits in

    1. LRLenny Rachitsky55:59

       And that's actually a good segue to where I wanted to go, which is around how you structure your team and how you incentivize the team, organize teams to achieve all these sorts of things. So maybe just broadly, is there something unique to how you think about work structure, incentives, goals, things like that, in order to achieve these really hard things?

    2. NPNilan Peiris56:17

       There's two unique, uh, lenses on this. Uh, one is in the macro structure and one is in the micro structure. So at the macro level, if you look at international... Actually, international banks, they don't really exist (laughs) . I'm not sure if you've moved around between countries, but say you open a bank account with Citibank in the US and then you go to Citibank in the UK, your c- your Citibank account doesn't exist in the UK. You have to go to Citibank in the UK and open a Citibank account. And actually (laughs) , it turns out with some of these banks, to move money between your bank accounts is an international transfer. It's like, it's crazy. So when you take a step back and look at how the market looks, you have at one end international banks, which are local tech stacks. So they... There's a core banking system in the US and one in the UK and one in Europe, say, for Citibank or for HSBC, but they have deep local integrations, so they are directly integrated in the payment system. Citibank in the US has got relationships, say, with the Federal Reserve, et cetera. Other end of the spectrum, you've got something like PayPal. So it's a tech company. It's got a single global tech stack. Doesn't run a different version of PayPal in Australia than to the US. But it doesn't have deep connections. It hasn't got five central bank accounts, right? It hasn't got any of that. And I like to think of in the middle, you've got Wise, where we have a single global tech stack and we have deep local infrastructure. Now, from a technological perspective, like just take a step back and think through this, this is actually non-trivial to figure out how to design.

21. 57:54 – 1:01:49

    How Wise solves for local regulations in their onboarding flow

    1. NPNilan Peiris57:54

       So let's take something like the onboarding flow. So we have global product teams who are one part of product teams, called global product teams. So we have a single onboarding flow that will give you a Wise account, and it's the same code that runs whether you are in Brazil, New York, or Australia. The regulation in Australia and Brazil is really different, and it isn't black and white in any country, right? So there's like a bunch of like... You get, like, a bunch of things you just shouldn't do in terms of letting people get... certain kinds of people who shouldn't get access to, to accounts, and then you need to check these people are using it, and different, different jurisdictions have completely different requirements. An example is, is Japan, you have to take a picture of the front of the ID, the back of the ID, and the side of your ID (laughs) . It's the only country in the world that you have to do this.

    2. LRLenny Rachitsky58:47

       Wow.

    3. NPNilan Peiris58:48

       Now, imagine you're the product manager for onboarding and someone tells you, "Design the onboarding flow to give somebody a bank..." Just imagine gathering all the requirements from every country in the world (laughs) , 'cause there's li- there's no... a very little similarity. You can't just say, "I take the US and copy it somewhere else." Uh, it's, it's very, very, very different. You take forever to try to get that and then normalize that into a, in a domain model and try to figure out how you're gonna structure the, the data around this. So it then becomes like, what is the organization structure that enables us to discover what, uh, domain model, let's call it that, for the, for the onboarding flow should look like? And you end up with a global product team that owns overall KPIs around conversion rate, et cetera, and you have local regional teams that own the conversion rate and the cost to do KYC for their market, and they contribute to the global product code base. So we have weak product ownership where anyone can make a code change and, uh, pull requests, and these guys own the vision in the center, but the only way that vision can evolve is by getting the feedback from these guys in the market as they're constantly pushing stuff forward. And through that process, like, like artifacts start emerging, where other markets are like Japan, and slowly you start splitting off that and, and creating sub- sub-types for it, and slowly the model emerges from that. And so with this structure, the thing to optimize for is a really hard one. That problem that every global business has is, how do you get this collaboration to work between the local and the global? But unlike every other business, we... You kind of... Most businesses solve this probably, as you know, is you have... You usually have the US and then you have international, and international is usually a bum fight where everyone's arguing to get their thing prioritized, right?

    4. LRLenny Rachitsky1:00:29

       Mm-hmm. That's right.

    5. NPNilan Peiris1:00:30

       Whereas, whereas here, you're kind of letting the local teams commit directly to the code base, and then this global team's got this challenge of doing this, and we, over time create, uh, sub-teams around parts of the regionalization of the structure, around different objects as they emerge. Uh, but that, broadly speaking, is the, uh, first problem, like the global problem. And the other bit with us is, this is quite unique to us, 'cause most fintechs out there, usually in one market And that's... Like, you take Robinhood, it was in the US, it came to u- the UK, then went back to the US. Uh, you take Monzo only in the UK, N26 only in Europe, up in, in Australia, Chime only in the US, and that's because their home markets are so big and one regulator is a ton of work to manage (laughs) .

    6. LRLenny Rachitsky1:01:15

       (laughs)

    7. NPNilan Peiris1:01:16

       And the second complexity we have is we have all these markets we have to be in because we're international by default. So a lot of our thinking is, where do we take that into- turn that into competitive advantage, and which customer base really needs that? Which is what zooms us into that positioning on the international account.

    8. LRLenny Rachitsky1:01:32

       It just comes back to again, again, again and again, doing the hard thing. (laughs)

    9. NPNilan Peiris1:01:37

       Yeah.

    10. LRLenny Rachitsky1:01:37

        Knocking people's socks off, and that feels like that's the formula for Wise.

    11. NPNilan Peiris1:01:41

        I think yeah, you more or less got it. So that's one bit on structure. So this global local thing.

    12. LRLenny Rachitsky1:01:45

        Mm-hmm.

    13. NPNilan Peiris1:01:46

        And then the second one has been a bit more of a journey.

22. 1:01:49 – 1:03:26

    How Wise structures teams

    1. NPNilan Peiris1:01:50

       So when we started early on, we ran in autonomous independent teams, all focused on KPIs. And these KPIs rolled up to make it cheaper, make it faster, make it easier to use. You can imagine like a KPI tree and teams around bits of their KPIs, and every quarter they'd talk through how they move their KPI, et cetera. This, this kind of worked. And the way we ran our planning is, every quarter every team would stand up and talk through its plan, get feedback from other teams, and then move on. This worked till we got to 30 teams, (laughs) and then...

    2. LRLenny Rachitsky1:02:22

       (laughs)

    3. NPNilan Peiris1:02:22

       You, you go from ha- doing this in the afternoon to doing it in two days, and like, it's just like, "Whoa." So y- we started heading towards the Spotify model where we group the teams in squads and into, into tribes. Today, I think that autonomy is at the squad level. So the squads are around products. So we'll have a Wise account squad, a business squad, a Wise platform, my enterprise product squad. You'll have a North Am squad that looks after the North American product. And a LatAm squad, et cetera. And then, you know, financial crime fighting, et cetera. And inside those squads, you've got the teams. And the squad, like imagine you have the director for the Wise account. Well, he's gotta have a vision for the account, you've gotta say where it's going. You've gotta keep your teams on track against it. The teams aren't off doing whatever they want. They kind of need to be on track versus the overall vision. And you're accountable for the results of that squad. And squads are in tribes. The tribe provides overall leadership and a slight, it's a light touch strategy on the squads. And that's more or less our structure and how we've evolved towards it.

23. 1:03:26 – 1:08:01

    The small change that generated a 3x increase in referrals

    1. NPNilan Peiris1:03:26

    2. LRLenny Rachitsky1:03:26

       Is there anything else along the word of mouth concept that you think would be useful for people to share? Either how you think about it, team structure, anything else?

    3. NPNilan Peiris1:03:35

       There's one tiny bit I'll share, which was, uh, around marketing and referral. This was super interesting for me. Um, so we've been running a, like Airbnb, we've been running a referral program for now 12 years. And after 12 years, you've kind of tested everything anyway. (laughs) And like I said, by this point, you have literally tested everything. So when somebody comes up with something that has like a 300% increase, like, go, "Whoa, that's super interesting." (laughs) Like, what just happened?

    4. LRLenny Rachitsky1:04:03

       Wow, I'm excited to hear this.

    5. NPNilan Peiris1:04:04

       And, uh, yeah, I'll share this one 'cause it's interesting. So we run many, like, variants of refer-a-friend, where you'll get different kinds of benefit. We've tried chocolate, we've tried money, we've tried $200, $500, $10. You get some, I get some money, like all kinds of things. More or less headed towards three, three for $100. Generally, it's like our sweet spot. Anyway, there's a pretty creative PM there. And he was, again, talking to customers, and he, he spotted this thing, which was pretty cool, which is when you do a transfer with Wise, at the end you get this email. The email says, "Well done. Your, congratulations, your money's there in the other person's account, and you saved $10 on this transfer." And he got this insight, was, which was, uh, which was pretty awesome, uh, was he realized that people believed they saved money, but they didn't believe the number.

    6. LRLenny Rachitsky1:04:59

       Hmm.

    7. NPNilan Peiris1:05:01

       And he then thought, "Well, what would it take to get them to believe the number?"

    8. LRLenny Rachitsky1:05:05

       That seems right.

    9. NPNilan Peiris1:05:07

       And so the fun bit was the approach. So then him and a designer sat there, and they sketched out an alternative email, and they went down to the coffee shop downstairs and they showed it to people, and they said... Just asked them what they thought, and they kept iterating it till they got to a graph. And this graph is like this, when you go through a money transfer thing, it pops up in places, th- behind the compare button. And this graph shows, with your bank, when you send, how much is in the rate, hidden as if this is how much you're sending, this is how much they take in the rate in a fee, and this is how much they, you can see in the fee, 'cause the fees are hidden in the rate for banks. And then this is with Wise. And they iterate this graph to the point that people looked at it like, "Oh my God, I'm never using my bank again. This number, this is crazy." And then they put this graph on the success page (laughs) when you did a transfer. Saying, "You save this." And put a share button there, (laughs) an invite, an invite your friends button. And that's what really drove it. And when you fast-forward to today, we've now got s- so it's actually quite hard. So we now have, I think, about 70 bank accounts around the world. So I think, like, the top three accounts, banks in the world where we log onto every day, and then we log the price and the quote for a bunch of different routes into a file. You can imagine how hard that is. I think I personally have about 17 of these still in my name. (laughs)

    10. LRLenny Rachitsky1:06:31

        (laughs)

    11. NPNilan Peiris1:06:31

        That I opened up around the world to help the team get going. Uh, but that's kind of one of the, yeah, biggest word of mouth growth or referral insights I've got to this comparison thing. Made it into our marketing, made it into our homepage, just went, went everywhere, all from that insight.

    12. LRLenny Rachitsky1:06:46

        And you said that that, like, 3Xed the sharing rate?

    13. NPNilan Peiris1:06:50

        Yeah, that 3Xed the sharing rate. When, so we always had the share button after you completed a transfer. But putting that there with, uh, with this graph, and that kind of got me to this, I'm curious in your take on this, on this definition of product marketing.

    14. LRLenny Rachitsky1:07:04

        Mm-hmm.

    15. NPNilan Peiris1:07:05

        Where customers use the product, and they think they got this value. But when they actually know the value they get.

    16. LRLenny Rachitsky1:07:15

        Mm-hmm.

    17. NPNilan Peiris1:07:16

        So we got this on speed as well, where...... we do an instant transfer and customers wouldn't know it was instant. So when you get an instant transfer, there's like this whizzy animation at the end and you kinda know the money's in the other person's account, ready to spend. And again, you see this big jump in referral rate when that happens. But people need to know it's happened. And closing this delta between what you've done and what's perceived to be done is what I call product marketing, like within the product. And that in its own right is a discipline I've learned.

    18. LRLenny Rachitsky1:07:43

        That's an awesome insight. Comes back to this framework we talked about of reality and perception, kind of in a flip way. Instead of getting people-

    19. NPNilan Peiris1:07:49

        Yeah.

    20. LRLenny Rachitsky1:07:49

        ... to adopt something, it's to appreciate (laughs) the work you've done to make it remarkable, to make them understand how remarkable it really is.

    21. NPNilan Peiris1:07:56

        Yeah. That was a... And I... That's something I'm continuously learning about, yeah, as we, as we go as

24. 1:08:01 – 1:09:13

    Nilan’s philanthropic endeavors

    1. NPNilan Peiris1:08:01

       well.

    2. LRLenny Rachitsky1:08:01

       That is extremely interesting. Before we get to our very exciting lightning round, I know you also do a bunch of charity work, and I wanted to give you a chance to share what you're doing there.

    3. NPNilan Peiris1:08:12

       Take 30. So this charity essentially came out of, uh, angel investing, is probably the way to say it. So I invest in, in startups, generally fintechs, mission-led founders, word-of-mouth type stuff, all the stuff we've been talking about that I'm passionate about. I... It's less investing, more helping. And, uh, yeah, just getting through the angel route. And then over time, I've realized the thing I'm most passionate about is, uh, market failures. So generally I find that, you know, the invisible hand means most human needs get, get fulfilled by the market. And there are a few things that don't. And I've, uh... There's a couple of exciting, uh, startups out there like who work really hard in this space. A couple are, uh, Beam in the UK working on homelessness, um, Affinity, a neobank in Ghana. And so this type of thing is stuff I'm most passionate about. So if any of you- any of your listeners out there know anyone doing anything of that kind, trying to solve these kinds of hard problems, definitely reach out. Always keen

25. 1:09:13 – 1:16:33

    Lightning round

    1. NPNilan Peiris1:09:13

       to talk.

    2. LRLenny Rachitsky1:09:14

       Awesome. And we'll link to those two you mentioned in the show notes, just in case people want to check 'em out. With that, we've reached our very exciting lightning round. Are you ready?

    3. NPNilan Peiris1:09:22

       Let's go for it.

    4. LRLenny Rachitsky1:09:23

       Let's do it. What are two or three books that you've recommended most to other people?

    5. NPNilan Peiris1:09:29

       Two ones at the other end of the spectrum. So one is, uh, (laughs) this sounds terribly pretentious. Uh, Crime and Punishment, uh, and the other one is, uh, Midnight's Children by Salman Rushdie. I rea- I read a lot. I'm very passionate about reading, uh, nonfic- uh, fiction mainly. I don't read... Non-fiction's like too much like work. And so, uh, I generally need to read before I go to bed to decompress my brain, um, so generally escapist type stuff. But, um, I'm curious what you think of this. Uh, for me, authors are, uh, people that create people with words. You know, like an... It's an artist is a good artist if he's a, like, makes a good likeness to somebody. But imagine that you create somebody with words and that person feels real, so they have some insight into the human condition. And what's amazing is if you learn something about what it means to be human from reading that. So like at their end of the scale is like Dostoevsky Crime and Punishment where this, uh, guy kills somebody and then just like it eats him up. It's pretty, pretty amazing book. Uh, it's not, not as heavy as it sounds, but that... Books like that are pretty awesome, so I recommend that a lot. And the other end of the scale is like sometimes you read a book and there's a single sentence where each word has been just stitched together and like... It's like, again, a work of art and there, uh, Rushdie, it's like probably the pinnacle for me, Midnight's Children, which is about, uh, partition in India, which is pretty... Through, through a metaphor, was pretty, pretty amazing.

    6. LRLenny Rachitsky1:10:57

       That's a beautiful answer. What is a favorite recent movie or TV show?

    7. NPNilan Peiris1:11:02

       Oh, gosh. I... Not... I don't put big on TV, but we, um... Yeah, we ran to Barbie by the kids, that one. That one probably-

    8. LRLenny Rachitsky1:11:11

       (laughs) I love-

    9. NPNilan Peiris1:11:11

       ... probably, probably is the last time.

    10. LRLenny Rachitsky1:11:12

        ... it. I just watched that too. So good.

    11. NPNilan Peiris1:11:14

        Oh, good.

    12. LRLenny Rachitsky1:11:15

        You can actually stream it now. I don't know when this comes out, but it just, uh-

    13. NPNilan Peiris1:11:17

        Oh, wow.

    14. LRLenny Rachitsky1:11:18

        ... it's on now. Yeah. You can watch it at home. Uh, but it's not, uh, not cheap. I think it's like 20 bucks in the US.

    15. NPNilan Peiris1:11:23

        Oh, geez.

    16. LRLenny Rachitsky1:11:24

        What is a favorite interview question you like to ask candidates when you're interviewing them?

    17. NPNilan Peiris1:11:28

        Yeah. So I only ask two... I got down to asking just two questions over time. The first one's probably my favorite, uh, which is, what is it that most frustrates you about why... Instead of why you're leaving, what frustrates you the most about where you're working right now? And this is as, uh, people... People always tell you why they want to join Wise or join whatever company you're coming to and that's not that interesting. But what's interesting trying to figure out is what they're running away from. And usually there's something broken there that's really wound them up. But what's more interesting is they've been unable to fix it. And so in asking this question and probing, you kinda get quite good at getting a sense of like, what is their limit? What's the thing they found and what do they get stuck with? And you kinda say, "Okay, you're gonna run into that here every day, every week, or... You should be fine." And that's, uh, that's kinda why I ask that question.

    18. LRLenny Rachitsky1:12:24

        I love that. What is a favorite product you've recently discovered that you really like?

    19. NPNilan Peiris1:12:29

        I recently switched to Arc-

    20. LRLenny Rachitsky1:12:31

        Mm-hmm.

    21. NPNilan Peiris1:12:31

        ... uh, browser.

    22. LRLenny Rachitsky1:12:32

        That's what I use.

    23. NPNilan Peiris1:12:33

        And yeah, the onboarding flow was mind-blowingly good.

    24. LRLenny Rachitsky1:12:37

        That's exactly how it felt. Like I had to tweet about it. It's like, "Holy shit."

    25. NPNilan Peiris1:12:40

        Yeah. I, I sent it to my onboarding team, everyone, and what I loved about it is it's clearly like if you c- try to use Arc with the same way you use Chrome, you'll just get really frustrated.

    26. LRLenny Rachitsky1:12:52

        Mm-hmm.

    27. NPNilan Peiris1:12:52

        So they, they know... But if you use it the way they want you to use it, it'd be amazing. So by figuring out how to get people to engage with you, you need to do, use this fundamentally differently. They managed to, managed to almost get me to (laughs) use it the right way. Still, (laughs) still struggling a little bit with it, but that's, uh, I thought was really clever.

    28. LRLenny Rachitsky1:13:12

        Awesome choice. We had, uh, Josh, the CEO of, uh, the Browser Company of New York it's called-

    29. NPNilan Peiris1:13:16

        Oh, wow.

    30. LRLenny Rachitsky1:13:16

        ... uh, on the podcast. And, uh, if you're interested in learning about Arc's story, definitely check out that episode.All right, next question. What is a favorite life motto that you like to repeat most to yourself? That you like to share? Anything come to mind?

Episode duration: 1:16:33