This is Zack Fuss, an investor at Irenic Capital, and today we’re breaking down Wise. Wise helps individuals and small businesses move money across borders. It offers significantly faster and cheaper international transfers than traditional banking routes because of its innovative closed-loop system. Twelve years after its founding, Wise serves six million customers and earned close to £1 billion in income last year. Investors currently value the business, which is listed in London, at £6 billion. To break down Wise, I’m joined by former payments exec and now investor at Sydney-based TDM Growth Partners, James Revell. We cover the broken system of correspondent banking, which has led to slow, opaque, and expensive transfers and then explore how Wise has counter-positioned itself to take advantage of this large market. Please enjoy our breakdown of Wise.   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.    -----   This episode is brought to you by Tegus. Tegus is the modern research platform for leading investors. I’m a longtime user and advocate of Tegus, a company that I’ve been so consistently impressed with that last fall my firm, Positive Sum, invested $20M to support Tegus’ mission to expand its product ecosystem. Whether it’s quantitative analysis, company disclosures, management presentations, earnings calls - Tegus has tools for every step of your investment research. They even have over 4000 fully driveable financial models. Tegus’ maniacal focus on quality, as well as its depth, breadth and recency of content makes it the one-stop, end-to-end research platform for investors. Move faster, gather deep research to build conviction and surface high-quality, alpha-driving insights to find your differentiated edge with Tegus. As a listener, you can take the Tegus platform for a free test drive by visiting tegus.co/patrick.   -----   Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke   Show Notes  [00:02:27] - [First question] - Overview of Wise, their key product, and core competency  [00:04:17] - The founding story of Wise and the road leading to today [00:09:18] - Wise’s size and scale today compared to 2011 [00:11:07] - Their competitive advantages and how it informs their goals  [00:19:24] - Exploring Wise’s closed loop system and why their model can’t be copied [00:21:28] - Unique characteristics of their business model that allows them to capture such robust margins [00:25:32] - Overview of Wise’s unit economics and their revenue model [00:34:49] - Interchange fees and how Project Zero guides the business [00:36:44] - Why their lower take rate doesn’t destroy the industry  [00:38:24] - Ways Wise’s business model can’t simply be copied and replicated  [00:44:35] - Thoughts on who their true competitors are [00:48:10] - Their customer acquisition flywheel  [00:49:49] - Float, increasing net margin, and how they contribute to durability [00:53:55] - Key risks associated with Wise when evaluating the business [00:58:35] - Reasons behind the decision to raise money as a direct listing in the UK [01:01:03] - How people looking at Wise should think about margins over time [01:03:32] - Lessons for builders and investors when studying Wise’s story