My Week: Errol Damelin of Wonga

The entrepreneur on dealing with the fall-out after his online lender made the wrong sort of headlines.

Last Updated: 22 May 2012

Last Friday there was a story about us on the front page of the Metro. We’d spoken to them about the business because it’s an interesting story, especially our new iPhone application (it’s the first time you can get a cash advance anywhere in the world totally over mobile), but we didn’t have a sense that it was going to be a front-page story. We woke up on Friday morning and there it was – and a pretty controversial take on it, to put it mildly. But my first reaction wasn’t negative, actually. It was just about being realistic. The story was already there so there was no point wishing it wasn’t; it was just a case of dealing with it.

There was some mistaken journalism involved: some of the facts are just wrong and some of the numbers quoted are not about our product. The core example is a £1,000 loan for six months – but you can’t take a Wonga loan for six months, you can only take it for 30 days. It’s like quoting the price of a Mercedes for a Toyota; it’s just not the same thing. So that was a little frustrating. But I don’t have a personal gripe at all. We got a lot of publicity as a result, and it wasn’t all negative. Also, I understand that people feel concerned about consumer products. In this area of the economy there’s good reason to be concerned because there’s a history of consumers not being well treated by financial services providers, especially in the unsecured lending space.

The decision we had was: do we leave it at Metro and stop taking calls? Or do we roll with it? And we chose to roll with it. I feel absolutely confident that we are the best solution for people with short-term cashflow problems. So we decided to engage and spend time with some journalists. We did a whole bunch of interviews, including the BBC and CNN, and the coverage was very, very balanced. I think part of being an entrepreneur is being comfortable and happy with some level of ambiguity. There are challenges and there is change. Friday was an amazing day, one of those days you live for as an entrepreneur – when you walk out at the end of the day and everything about the business is different.

But although the story dominated Friday, it hasn’t really dominated the whole week. We’ve been preparing to move offices – out of the serviced office space that we’ve been in for nearly three years. It’s time to find a long-term home for Wonga, somewhere that we can personalise more than a serviced office. But we’re not moving far from our current offices in St John’s Wood, because we love this part of London. The new place is a bit nearer Regents Park and it’s convenient for people to get there. I’m a big believer in starting in serviced office space, because when we started with two people three years ago we had no sense that it would be 60 people today – it could have been 120 or it could have still been two of us. But buying property is a time-consuming activity that you don’t want to get wrong, so we’ve taken our time over it. Now we’ve reached point as a business where we needed a permanent home, and we also have more of an understanding of our staffing levels. Added to which, opportunistically, it’s a good time to buy.

We are also busy hiring at the moment – into the technology side, plus product, marketing, customer service – all through the business, actually. We’re always looking to the future at Wonga; something like 60-70% of our people spend their time on future products. I spend my time generally 6-12 months in the future, thinking about what the challenges are going to be and making sure we’re adequately resourced. I’m very positive about Wonga’s future; we’re in a strong position. Our revenue growth will be a few hundred percent this year and profitability will grow too. Most start-ups try to solve small problems, which is fine. But I want to solve this big problem and build something very meaningful. The nice thing about solving a big problem is that when you start solving it well, it gets big. Wonga’s going to be a big business.

Errol Damelin is founder of Wonga, an online micro-lender.

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