This post is part of Accel’s Secrets to Scaling series, where leaders from across our portfolio share their learnings and advice with the next generation of European and Israeli entrepreneurs building global winners.
Digital cross-border payments platform Zepz (formerly WorldRemit Group) started in the same way many start-ups do: the founder experienced a specific pain point in their own life and felt there must be a better way to solve the issue. For Zepz founder Ismail Ahmed, the challenge was particularly personal as it involved sending money to his family in Ethiopia following the war in their homeland of Somalia. Each transaction involved a lengthy journey and large fees, so Ismail set out to change things and help the millions of people like him who were trying to improve the lives of those they care about. In 2010, Ismail founded WorldRemit - alongside Catherine Wines and Richard Igoe - determined to bring the Jurassic offline remittance industry into the online future.
Now led by CEO Breon Corcoran, Zepz (the company’s new Group name) operates two market-leading brands - WorldRemit and Sendwave - with more than 11 million users across 150 countries. Following the company’s announcement that it has raised $292 million, achieving a valuation of $5 billion, I sat down with Ismail to find out his advice for entrepreneurs looking to expand internationally, what they should look for in an investor, his tips for managing the CEO transition and more...
Prior to founding WorldRemit, you’d spent quite some time in the money transfer industry. Following your move to the UK, you also became a user of money transfer services. Tell us a bit about your decision to leap into entrepreneurship – what was the dawning moment?
I’ve done many different things in the years I’ve been involved in the money transfer industry, but it was as a student that I first experienced the costs and inconvenience involved in sending money back home.
I was born and raised in Somaliland. A lot of people from my region, including my brother and sister, moved to the Gulf countries when oil was discovered. My family became recipients of remittances, which accounted for a big chunk of the country’s GDP. I got a scholarship to come to the UK but, just before I left, war broke out in Somalia and my family became refugees in Ethiopia. The last transaction I received as a recipient came from my brother who was in Saudi Arabia at the time, which enabled me to buy a ticket to London. One of the first things I did after arriving in the UK and starting university, was to send the bulk of my maintenance fees back to my family in Ethiopia. I’d gone from being a recipient to being a sender, and that was the beginning.
I did all kinds of temporary jobs to make money to live on, some of which, like strawberry picking, were really tough. This was when I learnt about the costs and inconvenience of transferring money abroad. I’d have to travel into London from Ashford in Kent, where I lived at the time, which in itself was expensive and time-consuming. And on top of that, I had to pay fees of between 20 and 30 percent, depending on the amount I was sending.
It was the idea that there had to be a better way of sending money that led me to set up what was probably the first money transfer service to the Horn of Africa. So I was still a student when I made my first foray into entrepreneurship.
Many entrepreneurs start a business because they’ve encountered a problem and figured there must be a better way of doing things, like you did. In its early days, WorldRemit was 100 percent web-based. Back then, how difficult was it to persuade people who’d normally send money home from a local shop to do it via the internet?
Remittances are unique in that, unlike travel, which went online very early, they largely remained offline for a long time. WorldRemit was one of the first players to move traditional migrant remittances online. One of the challenges we faced in the early days was getting the trust of senders who’d grown used to going into a physical location – often in their own neighbourhood – to transfer money abroad and purchase mobile top-up to communicate with family, for example. At the time, particularly in Europe, senders weren’t required to provide photo ID to agents, because most people were sending less than €1,000. The agents weren’t required to know who the customer was unless they were sending much larger amounts.
At WorldRemit, because the regulations were changing to reduce fraud, we had to demand information such as a customer’s date of birth. But most people weren’t willing to give this information to us. There were doubts around what we were going to do with it, people weren’t familiar with us, and many didn’t even trust that we were regulated. Some of the traditional agents, especially in London, also sowed seeds of doubt in the minds of customers, many of whom would give us false dates of birth. Then, through our data verification processes, we’d find out that a date of birth was incorrect, and we’d point this out to the customer. Many migrants at the time weren’t aware that banks could verify these details against credit reference agencies. So the traditional agents spread fake news, saying that WorldRemit was connected to the Home Office.
How did you overcome these challenges?
We had to phone customers and explain what we were doing; assure them that we weren’t carrying out credit checks, and that it wasn’t going to affect their credit score. We explained that it was just a simple – one-off – way to verify their identity. This took us a while, and traction was pretty low – particularly for the first 12 months.
What helped us make it were the partnerships we’d built with big brands on the receiving side, which instilled more trust in us. We had banners all over our website highlighting the four or five loyal partners we had at that time that recipients were familiar with. That was when migrants began to trust us.
That makes sense. So WorldRemit today is a large business with 1,250 employees and part of the Zepz group alongside Sendwave, in locations all over the world. What’s your advice to fellow entrepreneurs who’ve yet to expand internationally? How should they approach it, and what pitfalls should they avoid?
You have to be ambitious and go beyond your immediate horizons. I think it’s a lot easier and cheaper to build a global business now. It’s easier to do the research needed to understand how a market works, for example. A lot of startups tend to focus on one market and wait until they’ve fixed everything there before they approach others.
We launched in Canada just a few weeks after we’d started in the UK in 2010, against the advice of everyone who told us we should fix everything in the UK before going to other markets. We subsequently launched in Australia, and then other parts of Europe. By 2013, we were one of the most global fintech businesses in Europe.
It’s easier to learn other markets when you’re very small. You’re nimble, and you can learn a lot faster
- even before you’ve actually fixed your product issues. Fixing issues with your product requires an understanding of your different customers in different geographies. That’s one area where WorldRemit succeeded in the early days – going global and growing in many markets early on. If you look at our competitors who waited for years before going into other markets, you’ll see they struggled to learn how the Australian market works, for instance.
We got a lot of experience in Canada, where most of our customers only had credit, rather than debit, cards. We had to look for alternative payment methods, in order to capture payments from customers. This was a lot easier in the early days - if we tried to do it now, it would probably take years. So my advice would be to learn early when the business is still very small.
Shifting slightly to financing WorldRemit. There’s much more money available now than there was in the early days. What advice do you have for entrepreneurs when it comes to choosing the right kind of VC partner?
Start-ups are always short of cash, and when you’re short of cash it’s tempting to take money from any investor. But choosing the right VC for your startup is critically important. Entrepreneurs should be advised not to rush and take whatever money is available.
The history of your investor, their network, the level of support they provide to their portfolio companies – these are all important.
You need to ask yourself whether your investors are going to help you win the war for senior executive talent, for example, and whether they’ll follow up and continue to support your subsequent rounds. For companies with global ambitions, attracting the right talent is so important - that’s where you and Accel made a big difference for us, especially in the early days.
Choosing the right VC is so consequential for entrepreneurs, but I think many don’t realise this in the early days when they want to get on with building their product. They worry about who can give them money at what stage, and about dilution, and other things that actually become immaterial in the long term.
When Accel invested in the Series A in 2014, we were a very small, obscure startup. The business was generally doing well at the time – we had so many licences, we were one of the most global fintech players – but not many VCs had heard of WorldRemit, so attracting top talent was extremely difficult. We certainly made the right choice in VCs – after we succeeded in getting a cheque for $40 million for the Series A, we started to lay the foundations for what is now becoming a very big business.
I spent a lot of time researching - I probably did 10 different entrepreneurship classes and MBA – but I don’t think I ever received sufficient advice on how important it is to choose the right VC partner for your startup.
You mentioned the Series A in 2014. What do you wish you’d known then that you know now?
I think I seriously underestimated the investment we needed to rapidly scale a business – and that was in 2014. We had an ambitious expansion plan, but I never thought we’d need that kind of investment to achieve it. Looking back, we should have definitely raised money earlier. Our $40 million Series A was one of the largest in Europe at the time, but I wish I’d known we were going to raise 10 times that.
It’s another area I don’t think entrepreneurs get enough advice around. You often need a lot more money than you initially assume. It’s why the choice of VC is so important – especially in Europe, when there’s so much money around.
In 2018, you decided to hire a CEO. Can you share a bit about the thinking that went into that decision, and what you’d advise other entrepreneurs? When should you do it, and why?
I think this is a really important point for entrepreneurs. Like most entrepreneurs, I’d been very hands on in the company. By 2017/18, it was a big business – we were about 800+ people, and we’d reached a point where it was clear we needed someone who could scale the business further and take it to the next stage. I knew we needed to raise the bar and spend a lot of time finding someone at this level. The key for me was to get someone in who I could trust, who could do better and take the business from there. I’d hoped to hire someone earlier, but we were very ambitious and wanted to find a world-class CEO. These kinds of searches take time!
We were fortunate to find someone I trusted and who I knew was going to do far better than I could have done - definitely the right person at the right time. Very soon, we had a business where the CEO would seek my time and input on certain things, rather than me getting too involved in the day-to-day running of the business. It’s been a very successful partnership, and the transition has been as smooth as it could be for a founder in my position.
I agree, and a smooth transition like this is the exception rather than the rule. What were the pitfalls you were trying to avoid?
The board was very helpful during this process. Everyone listened to my advice and feedback on what I was looking for. I deliberately set the bar high because I knew that if we hired an average CEO, I’d have been hanging around, keeping an eye on what they were doing. And that just doesn’t work – they never assume the CEO role. Picking the right person helped us deal with the transition.
I spent time with Breon (Corcoran, CEO) when he joined, and was genuinely impressed at how much he already knew about the business and how much he’d done within a very short period of time. He’s got great attention to detail, he’s a fast learner, and he’s entrepreneurial. All of this built my trust. I didn’t see what I could add by staying around. I was more helpful detaching myself from the business and acting as a sounding board.
Life as an entrepreneur can be very stressful, especially in the early days. You worked long hours at the same time as raising a young family. What life hacks and coping mechanisms did you develop to deal with the stress and hard work?
I’ve always been a fitness fanatic, often jogging five or six days a week. But when we were in Hammersmith and Victoria, I added a three-to-four-kilometre walk to my daily schedule, even on the busiest days – a time for thinking and ideas. I used to bring lunch in with me rather than go to the local cafes so I could save time for the short walk I wanted to do.
Often the work would get very stressful in the early days – we’d have issues with the system, and our customers would call and complain when having issues with transactions. Even with that stress, the early run and the daily walk meant that, come what may, I’d always sleep well.
Exercise is helpful even in some of the craziest times.
We’ve covered some of the areas of business building that were harder than you expected. What has actually been easier than you thought it would be?
I think going global and scaling a business at a fast pace that prioritises speed over efficiency in the early days was a lot easier than we thought it would be. It was a lot easier to do some desk research on a particular market, hire one person part-time and incorporate a subsidiary somewhere. Due to the corporate mindset, teams often assumed adding a country would involve a lot of complexities but, in reality, it wasn’t as challenging as expected. We’d put all of the foundations in place for a global business such as compliance, having one platform for all the markets and so on. That international outlook early on helped us to quickly expand the business in new territories.
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