Wonga cofounder Errol Damelin: From 'legal loan shark' to London startup and fintech mentor (original) (raw)

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Errol Damelin pushes things to the limit. In 2011, he ran the Antarctic Ice Marathon in temperatures that reached -28 degree celsius. He came eighth out of around 40 people, recording a time of just over 5 hours and 14 minutes, and raised over $70,000 for the charity Water.

His company, Wonga, was an equally intense project. Damelin and his cofounder Jonty Hurwitz worked 20-hour days to build an online lender that shook up the consumer credit market, offering short-term, high-interest loans online at unheard of speed. High-profile, brash TV advertising campaigns helped fuel growth and it was eyeing a £1 billion stock market flotation just six years after it was founded.

But his business provoked an extreme reaction from the public. It was dubbed a "legal loan shark" by the press and politicians and IPO plans were scrapped. The new City regulator, the Financial Conduct Authority (FCA), eventually forced Wonga to write off hundred of millions of pounds in loans for failing to properly check that customers could afford them. Damelin left the online lender in a storm of negative headlines and political pressure in mid-2014.

Rather than retire to the countryside, Damelin has quietly established himself as one of the most important and influential figures in the UK tech sector.

He is now — arguably — the messiah of London's fintech scene.

The South African has invested in around 30 tech businesses. He was an early investor in some of London's most successful startups, including $1 billion money transfer business TransferWise and PurpleBricks, an online estate agent that launched an IPO in 2015 which raised £240 million. Damelin is now regarded as one of the savviest early stage investors in Europe and is particularly influential in London's booming fintech — financial technology — sector.

Beyond his investments, dozens of former Wonga employees who learned their trade under him have gone on to take key jobs in fintech. Almost 200 ex-Wonga staffers are still in finance and many have gone on to set up their own businesses, drawing on what they learned under Damelin and Hurwitz to blend big data and borrowing.

He even changed the way we talk about money. The language of "democratising" finance that Damelin espoused, opening up credit to those unfairly excluded, has become a cliche in fintech, with scores of startups promising to democratize everything from currency exchange to hedge fund trading strategies.

Those who worked closely with Damelin liken him to Steve Jobs or Jeff Bezos — a big picture thinker whose single-minded drive and determination helped create a billion-dollar business out of nothing. Like Jobs, Damelin exerts a "reality distortion field" — a famed ability to convince and cajole. To this day, many former Wonga employees believe Wonga was not a shabby payday lender but a force for good that was unfairly persecuted by over-zealous government agencies and do-gooder politicians looking for headlines.

Some in the tech world say Damelin is closer to hard-headed Silicon Valley libertarians such as Peter Theil and Travis Kalanick, and that this free market idealism set Wonga on a collision path with regulators.

Business Insider has spent the last few months speaking to more than a dozen people, including former Wonga staff, investors, and entrepreneurs who work with him, to understand how Damelin went from being a public pariah to one of the most influential figures in London tech. (Damelin declined to be interviewed for this piece.)

'20-hour days for years on end'

South African-born Damelin is energised by smart, young people and tries to meet as many as possible.

26-year-old Oxford graduate Dan Garrett fit Damelin's the bill perfectly. Garrett is the cofounder of Farewill, a startup that aims to automate and digitise much of the will-writing process. He was introduced to Damelin through another London investor last year and met Damelin in North London for coffee last April.

"I met up with him in a cafe in King's Cross and had a two-and-a-half-hour-long meeting that was unbelievably interesting," Garrett recalls. "He's incredibly bold in what it takes to built business."

Garrett's head was set spinning by the speed and scope at which Damelin thought. At the meeting, he pushed Garrett to imagine Farewill not just as a 1billionbusiness,buta1 billion business, but a 1billionbusiness,buta10 billion business. Damelin ended up investing in Farewill.

Damelin is described by those who know him as a natural entrepreneur and was already on his second business by the time he had the idea for Wonga. (His first made steel wire; his second dealt with supply chains.)

Wonga cofounder Jonty Hurwitz with one of his mathematical sculptures. Yui Mok PA Archive/PA Images

Damelin met Jonty Hurwitz, Wonga's cofounder and the architect of the platform's technology, while the pair were working in the same shared office space in Highgate, London, in 2005.

"We both saw each other operating, we were both looking to sell our companies, and then we started talking," Hurwitz told BI.

"Errol came to me and said let's build an online lending platform. Everything else evolved as we dove in."

Hurwitz, also a South African, is a techie at heart and had not worked in finance before. Damelin had been in investment banking in Israel early in his career but envisioned Wonga as a tech company that just happened to be in loans. He told the Evening Standard in 2011: "We're to money what iTunes is to music."

Founded in 2006, Wonga — the name is slang for money — was revolutionary in many ways. Nobody had thought to sell loans online before, and nobody had thought to automate as much of the credit checking and lending process as Wonga did, making it incredibly speedy.

Wonga's "sliders," engineered by Hurwitz, were equally novel. Customers could adjust a slider on a screen for the amount they wanted to borrow, and the length of time they wanted to borrow for, seeing immediately what it would cost. No more complicated mental maths involving interest rates.

"Everyone remembers the slider," says Matt Robinson, the cofounder of house sales platform Nested, another company Damelin has invested in. "That's the kind of product innovation I'm aiming for at Nested, which tells you how cool that was. It captured everything people wanted from that interaction."

Damelin saw Wonga as a "disrupter," shaking up the sleepy world of mainstream finance to offer credit to people unfairly excluded from the market. In a debate on the Occupy Wall Street movement at the Oxford Union in 2013, Damelin sided with the occupiers and said finance had "long ago forgotten what they were about, which was to serve their customers." He said he wanted to make banking "independent of race, of gender, of class," and said: "The technology and the data exist today, certainly in this country, to make decisions that are truly blind and are still good decisions." This, he said, would help social mobility.

Wonga's simplicity and speed — customers could have money in their account within hours — helped it to success almost overnight.

"It took off pretty much right away," Hurwitz recalls. "It just kept doubling and doubling and doubling."

He remembers the early days of the business as "20-hour days for years on end. When I look back, that's all I see. Not that it wasn't stimulating. [But] We weren't having a laugh, it was just, work continually."

Extensive and expensive advertising proved a further spur to growth. This included prominent TV ads and sponsorship of football teams Blackpool and Newcastle. (Wonga's TV ads repeatedly ran into trouble with the Advertising Standards Authority.)

"By some accounts, by revenue Wonga was the fastest growing company ever," Hurwitz says. "We were processing close to a billion pounds after just a few years of operating."

'He would not lose'

Wonga sponsored football teams Blackpool and Newcastle. Barry Coombs EMPICS Sport/PA

Damelin was the man steering this rocket ship, serving as CEO from Wonga's founding until 2013.

Hurwitz, who was CTO, says Damelin was "a much more natural CEO." A former colleague of Damelin's remembers a story about him applying for jobs upon graduation. He was surprised by a string of rejection letters — it turned out he had only applied for CEO roles.

Damelin's management style was friendly but determined. He was generous with his time and took a genuine interest in the people around him. At the same time, he would not tolerate slacking and was always pushing people to the limits of what they could achieve.

Says a former executive: "Did he think you were sandbagging or being intellectually lazy? That was the thing that he would not let lie. He would keep hitting the same point and bending your mind until you committed to a path of action that was not any of those things."

Members of the management team would get late night emails written at 1 a.m. or 2 a.m. GMT with the entire message just in the subject line, a habit he shared with Amazon founder Jeff Besoz of whom Damelin is a great admirer. One entrepreneur mentored by Damelin today still marvels at the extreme clarity of his emails.

His drive seemed relentless. In what little spare time he had he ran but would still take calls about the business mid-jog, the mobile phone mic bouncing off his chest. Recalling a supposed "casual" kickabout with staff in the park one day, an old colleague says: "He was relentlessly competitive in everything he did. He would not lose."

Damelin at the DLD Conference in Munich in 2012. Johannes Simon/Getty Images

There was little to suggest this intensity in his early background. Damelin was born in 1969 in Klerksdorp, a small mining town of 350,000 people about two hours drive from Johannesburg. His father was a country doctor, his mother a housewife.

At the University of Cape Town, however, Damelin was exposed to South Africa's highly charged politics in the 1980s. Damelin organised civil disobedience protests in the last days of apartheid and told the Guardian: "It was very political. I grew up in the 1980s and was very ANC-aligned. I was very politically active."

After graduating, Damelin went to Israel to work in investment banking in the 1990s. While he was there, he did a year's military service with the Israeli Defence Force and some trace his intensity to this experience.

Whatever the origin, his energy and drive was infectious. Damelin attracted talented people who saw Wonga as a dynamic, exciting tech company. His ability to motivate was legendary.

Marina Theodosiou was a decision scientist at Wonga and remembers: "We had our kick-off event with Errol. He stood in front of us and said if you like a day-to-day job then you need to walk out now. I want innovators and I want disruptors and I want people that will challenge everything. The vision that he set up for the business, that was what drove the whole thing."

Wonga moved into two townhouses on the edge of Regent's Park. People were working in bedrooms with Georgian-style regency wallpaper, while others set up laptops near fireplaces. When it got too crowded, people would log on to the wifi from the garden. People would run up and down 4 or 5 flights of stairs to talk to various departments in the various room, like one big extended family.

'Wonga was caught up in a media storm'

Somewhere around the turn of the decade, things began to sour.

The company was growing explosively and attracting investment by the bucket load, close to $150 million in the end. But as it grew it attracted more and more scrutiny from the press and politicians. What they found alarmed them.

Labour MP Stella Creasy was a vocal campaigner against the payday loan industry. Gareth Fuller PA Archive/PA Images

Wonga was dreamed up as a sort of "Uber for money" for the Facebook generation, perfect for young professionals taking unscheduled weekend breaks. Damelin also said it was a tool for social mobility, saying Wonga's data-centric approach gave people who would otherwise be shut out of financial services access to credit.

But it was often used by people in desperate need of cash. As the financial crisis and resulting recession began to bite, Wonga became the poster child of a new wave of "payday lenders" whose high-interest, short-term loans were seen as preying on the misfortunes of the poor — exploiting the problem rather than helping to solve it.

A4e, a company that helps people re-train and get back into work, summed up the perception when it told a 2012 parliamentary inquiry into payday loans: "Now more than ever the need for credit and the surge in payday loans reflect the fact that people are finding it hard to pay their basic household bills. The dramatic rise of Wonga is just one of the signs that this problem is out of hand."

Wonga made a £10 million profit on revenues of £73 million in 2010. Just 2 years later it made a £60 million profit on revenues of over £300 million.

Politicians and the press found Wonga's annual interest rates of up to 5,853% on a loan obscene. The Daily Mail dubbed it a "legal loan shark."

The company insisted the reality was more complex than the figures suggested. Yes, the loans were high-interest but interest accrual stopped after 60 days, meaning the APR — an annual interest rate — wasn't relevant. Parliament's 2012 report agreed that APR "should no longer be used to measure and compare the cost of payday loans."

But Wonga was still pricey — roughly £1 a day for every £100 borrowed plus a £5.50 upfront fee. If you borrowed £400 for 14 days, you would have to pay back £461.50 after two-weeks. If you couldn't, interest would accrue for a further 60 days.

Damelin tried to position Wonga as a premium product, telling the Telegraph in 2012: "The pricing is a function of value. We're not trying to build the cheapest product in the world; we're trying to build the best product in the world and the best product services a need and it costs money."

Wonga also argued that it was much more transparent than the bank, showing up front exactly how much it would cost to borrow money through its slider system. The charges were cheaper than going into an unplanned overdraft at the time, which could wrack up huge, hidden fees. Many of Wonga's customers were simply making a rational decision to borrow from Wonga to pay off more expensive debt, the company argued.

Hurwitz says: "Wonga was caught up in a media storm that should have encapsulated much more. Even to this day unauthorised overdrafts have not been caught up in that net. I still marvel that they don't have to show APR after all that we went through." (The FCA recently launched a review into unplanned overdraft fees and Labour MP Rachel Reeves is calling for a cap on them.)

The Archbishop of Canterbury Justin Welby vowed to put Wonga out of business. Victoria Jones PA Wire/PA Images

Stories of everyday suffering kept emerging. In 2012, for instance, the Guardian spoke to 55-year-old council worker called Yomi. He took out a £900 loan for 35 days to pay for student accommodation for his son — the perfect sort of scenario the company envisaged Wonga being used for.

But repayments were taken out of Yomi's account automatically, leaving him without enough money to live on. He was forced to take another loan to make ends meet. He told the paper: "When they take the money out of the account, that reduces your disposable income for the month; halfway through the month I had no money so I took out another loan with Wonga. Once you start it, you don't stop."

The Independent called Wonga "an unnecessary evil." Labour MP Stella Creasy attacked Wonga as part of a wider campaign against payday lending. The Office of Fair Trading said the industry caused "misery and hardship for many borrowers," but stopped short of action. Newcastle fans protested Wonga's sponsorship of the club. Former Labour leader Ed Miliband vowed to go after the "Wonga economy" and even the Archbishop of Canterbury Justin Welby weighed in, telling TotalPolitics he had met Damelin and told him he planned to set up local community credit unions that would "compete you out of existence."

At the height of its infamy, staff would refer to the business simply as "W" when talking about work in the pub, for fear someone would hear them talking about Wonga and have a go at them — or worse.

'The guy's really f***ing smart'

The negative press torpedoed plans for a listing in 2012 that would have reportedly valued the company at £1 billion. But Damelin stood firm.

"I remember Errol's point was that the Archbishop of Canterbury needs to talk about Wonga to be relevant," says Sam Cohen, a former Wonga employee who now works at online estate agent YOPA. He remembers being impressed by Damelin's "ability to understand what's going on in the media and understand that Wonga was highly politicised. There were figures in the media that were leveraging that."

Damelin gave interview after interview to the press to put over his side of the argument. Behind the scenes, he met over 100 MPs to lobby for Wonga.

Wonga's sliders let customers adjust how much they want to borrow and for how long. Nick Ansell PA Archive/PA Images

Part of what makes a successful entrepreneur is the force of will to believe that you can change the world around you. Damelin believed that he could convince the world that Wonga was a force for good.

In many cases, he could. Former executives who worked closely with Damelin liken his strength of character to that of Steve Jobs'. No matter what you thought when you walked into a meeting with Jobs, he could make you think the opposite.

Says one former executive of Damelin: "It sounds obvious but the guy's really f***ing smart. You're trying to come back with your counterfactuals and your rational arguments but he's really clever. He's a difficult man to win an argument with. Sometimes you would have to go back two or three times to have the same discussion because you realised you didn't get it right the first time around."

Damelin was not a lone voice protesting Wonga's innocence.

The board and management team also believed the company was in the right — they had data. Wonga had a low default rate by industry standards. It rejected two-thirds of applicants. And it had a high "net promoter score," a measure of how many customers would recommend it to a friend. Wonga's NPS was in the 70s. Many banks register negative scores. How could Wonga be bad when so many people were recommending it?

'If Barclays wants to speak to me, they'll have to send their CEO'

Still, the pressure was beginning to show.

Wonga's management struggled to keep pace with the growth of the company, according to former staff. The headcount ballooned to over 500 but structures did not keep pace. Some projects were doubled up on while other teams sometimes fell idle.

Cofounder Hurwitz left Wonga in 2011. He says: "It started out as quite an idealistic thing and as the negativity started setting in I wanted to completely change the direction. I wanted something different out of the business and by that stage we already had large shareholdings and momentum in a particular direction."

Wonga was a shirt sponsor of Newcastle United while the team was in the Premiership. Reuters/Andrew Yates

Hurwitz said the exit was amicable but reflects: "In hindsight, I probably should have kicked and shouted a little louder in terms of what I was feeling."

Damelin stepped back from the CEO role in 2013, becoming chairman. Neil Wass, brought in as COO in 2012, took over the top job. (Wass went on to run Uber in Europe, the Middle East, and Africa, and is now a partner at tech venture capital firm Atomico.) But Damelin, as the founder, still loomed large in the business.

Despite the negative press, Wonga's loan numbers just kept going higher and higher. Damelin was buoyed by his position as the founder and CEO of Britain's most successful tech company and some began to be rubbed up the wrong way by his self-confidence. An executive remembers Damelin saying in a meeting: "If Barclays wants to speak to me, they'll have to send their CEO." Damelin denied saying this when contacted by BI and suggested the quote may have been misheard.

Even as 2014 dawned, the management team were confident they could overcome the hurdles facing the business. Jonathan Galore, who worked at Wonga from 2011 to 2015 as head of international and then CTO, says: "There certainly wasn't enough experience with the regulator. You have to remember that up until then, the regulator for the OFT, the Office of Fair Trading. A very different kind of creature to the FCA which was not only new to that sector but new altogether, it rose from the ashes of the FSA. People didn't really know what to expect.

"If you combine that with the confidence that the business had, I think there was fundamentally an incredulity about what the regulator might change."

£220 million of loans written off

The Financial Conduct Authority (FCA), a new regulator with powers to oversee consumer lending, came down hard on the entire short-term lending industry in 2014 and made an example of Wonga.

The FCA forced the company to compensate 45,000 customers £2.6 million in early 2014 for unfair debt collection practices after the regulator found it had sent threatening letters to customers from a non-existent law firm. The company narrowly avoided criminal prosecution.

A small group of demonstrators protest against loan company Wonga outside offices after a May Day rally in London May 1, 2014. REUTERS/Luke MacGregor

The regulator also forced Wonga to write off £220 million worth of loans to 330,000 customers for failures around affordability checks.

This was perhaps the company's biggest transgression. Could people actually afford to pay back the money they borrowed?

Wonga focused too much on speed and accessibility. Default rates, a key internal metric, were a poor proxy for consumer outcomes. Wonga used something called a "Continuous Payment Authority" on its loans, which let it automatically pull repayments from people's accounts rather than putting the onus on the loanee to repay. To default, borrowers would have to literally run out of money. Wonga would extend loans to people struggling to pay old ones back, as council worker Yomi's story showed, digging them deeper into debt. Charity Citizens Advice said Wonga's lack of affordability checks laid "debt traps" for people.

'He's very Ayn Rand in that respect'

Damelin left Wonga in 2014 and Andy Haste, a respected City veteran, was appointed to transform the business. Haste said at the time that Wonga had "lent to people we should not have lent to" but he would "not apportion blame" to Damelin.

The most common explanation for Wonga's downfall among former staff is the company's momentum: it got too big too quickly. Hurwitz says: "I think we grew too fast. We went from startup to financial institution in the space of a short few years and I think the necessary checks and balances - it was being treated more like a Google than like a bank."

Wonga adhered to the Silicon Valley maxim of "move fast and break things." This did not go down well with the regulator, which did not appreciate a business pushing boundaries in an area full of at-risk consumers.

Andy Haste, former CEO of RSA, was brought in to run Wonga after the regulator cracked down on the company. PA PA Archive/PA Images

A partner at a London VC firm said: "Errol's view of the world was, consumers are smart, I'll charge whatever they're willing to bear because I believe in the market. He's very Ayn Rand in that respect."

Wonga's vision of the informed consumer and the supreme market left little space for an understanding of more irrational motives: desperation, fear, greed, addiction.

Labour MP Stella Creasy told the Guardian in 2012: "The mistake they are making is to assume that people, when faced with a financial penalty, have the option to avoid it. In their mind they have the option of choosing not to extend a loan, when they see the costs. What they don't understand is that they are dealing with a clientele who doesn't have that choice."

'Errol came under a huge amount of pressure'

Damelin sold £17 million worth of shares in Wonga shortly after leaving in 2014 but he did not walk away unscathed. He received extensive online abuse, according to those close to him, including virulent anti-Semitic attacks and threats to his family.

Damelin in a 2012 interview with the Guardian. Screenshot/YouTube/The Guardian

Towards the end of his time at Wonga, the business was trying to diversify and Damelin was also increasingly isolated at the top, flying around the world trying to set up new branches of the business.

Wonga set up subsidiaries in places like South Africa and Canada, branched into small business lending, and was developing an instalment payment product.

Hurwitz says: "Errol came under a huge amount of pressure. That pressure was very difficult to manage and control. The media storm ran away. It all just became so clouded in chaos."

Damelin and his wife of 15 years split "amicably" in 2013. The stress of running a business like Wonga cannot have helped.

Damelin was "absolutely exhausted" when he left Wonga, Hurwitz says. "He took some time out, he really needed to break and have some time out."

A friend of Damelin's says: "He took it very personally when he felt like the business had let down the customers."

'It's not like a dirty little secret'

When Hurwitz left Wonga in 2011, he devoted himself to tech-inspired sculpture. He has made some investments, in record checking startup DueDil for example, but he told the Evening Standard: "The two main aspects of my life are art and big data."

Damelin, however, could not resist returning to startup land, although this time not as a founder. After some timeout to recharge, he threw himself into investing.

While at Wonga, Damlein had taken early stakes in online money transfer business TransferWise and online estate agent Purple Bricks. Since leaving, he has backed startups including app-only business bank Tide, Farewill, anti-fraud software business Ravelin, Citymapper, Nested, CurrencyTransfer.com, online mortgage broker Habito, and Cleo, an AI-spending assistant. Damelin does not just offer cash but also hands-on mentorship.

Dan Garrett, founder of Farewill and one of the entrepreneur's Damelin has backed. Farewill

Despite his extensive involvement and activity, Damelin keeps a low-profile these days. His investments are not always made public and when they are he is often described in releases simply as a serial investor.

What do theses entrepreneurs make of his legacy? Says one, who didn't want to be named: "It's not like a dirty little secret, [Wonga] is a big business. It's nothing to be ashamed of, there's a huge amount of learnings from it."

Damelin is able to offer more practical advice than other investors, says the entrepreneur. London's tech investment industry is dominated by former bankers and management consultants who have moved into venture capital. Alongside Zoopla founder Alex Chesterman and Saul Klein (an investor who founded LoveFilm with Chesterman), Damelin is one of the few figures in London tech who has been there, done that.

The entrepreneur says: "If you talk to most other venture capitalists, they're very English, very polished, little bit more relaxed. Errol is more — bang, bang, bang."

He is happy to field calls day or night and those close to him say he invests for the pleasure of mentoring young entrepreneurs rather than an overriding financial motive. Damelin is a familiar face at Entrepreneur First and other startup demo days around London.

Farewell's Garrett says: "It isn't just like a mercenary business relationship. He cares about us and he cares about our idea. He cares about making our company come to life."

Damelin is what is known as an angel investor: an individual making relatively small investments with their own money. But his acumen has caught the attention of London's venture capital community, who make investments in the millions with other people's money.

Several leading VCs say Damelin is viewed reverentially in the investment community and an early bet from the South African often helps convince VCs to invest at a later stage. The logic is the same: despite its eventual fate, Wonga was one of the UK's biggest tech businesses and Damelin's expertise and contacts are invaluable. An entrepreneur who can a call on him for help and advice has a better chance of survival than one who cannot.

'There's a sense of alumni'

Damelin's legacy extends beyond his direct involvement with entrepreneurs. His and Hurwitz's fingerprints can also be found in fintech businesses across London.

A quick LinkedIn search reveals that over 180 people who used to work at Wonga still work in financial services in the capital and close to 50 who specifically mention fintech. LinkedIn is by no means exhaustive but is a good indicator.

The CEO of online business lender Liberis is ex-Wonga; so too is the CTO of instant credit provider ZestMoney; the head of data science at challenger bank OakNorth is another former Wonga employee; as is the founder of online mortgage broker Habito; the CEO of online mortgage company BlueZest is ex-Wonga; and the head of international at US online lender OnDeck is another former staffer — the list goes on. Nearly all of these businesses lend money online in one way or another.

Says one former Wonga exec: "There is a sense of alumni. Quite a lot of advice is exchanged. There are WhatsApp groups. For a lot of people, it was an extraordinarily formative period in their lives. Most companies you join don't turn into the most contentious rocketship in UK business history."

Sometimes the advice exchanged is reflections on what not to do, given Wonga's experience. But, one way or another, it often seems to come back to the company.

At its height, Wonga employed around 500 people at its offices opposite Mornington Crescent tube station in North London (Asos shares the same building). The company acted as a fintech training ground, teaching people how to blend big data with consumer lending.

Funding Circle

One of the deepest drinkers from Wonga's talent pool is Funding Circle, a peer-to-peer platform that lets people lend money directly to small businesses online. Funding Circle's head of infrastructure, two general counsels, head of payments, head of global delivery, and chief marketing officer are all former Wonga employees, according to LinkedIn. Several industry sources suggested that as many as 30 former Wonga employees are working across the organisation. (Funding Circle declined to speak to BI for this article.)

Many of the Wonga old guard still meet up from time to time, usually at leaving parties. The former Wonga exec says of Damelin: "He doesn't show up to all the leaving dos but he'll definitely show up for the bigger ones. He's not on the WhatsApp groups but he's definitely still providing guidance. In many ways, it's easier for him to provide mentorship for these people now that they're not under the weight of him."

'Fintech companies have been able to surf off the connections we made'

More broadly, Wonga can lay some claim to sparking London's fintech industry, seen as one of the most vibrant in the world. The term has only just come into fashion in the last 7 years or so, by which time Wonga was celebrating its fourth birthday.

Hurwitz says: "All the other fintech companies have been able to surf off the connections we made with the banks, for money processing and things like that. These things didn't exist. A big part of what we had to do is lay down the infrastructure for the fintech space."

Wonga's bold, fun brand and big marketing budget have also been mimicked by startups that have come after it, most notably TransferWise. The online money transfer company's biggest expense is marketing and it is known for its eye-catching publicity stunts, such as flashmobs of people in their underwear.

Hurwitz adds: "At the time we were unable to raise debt, we were unable to raise capital, because the VCs themselves hadn't ever seen a model like this. It got VCs understanding that whole investing model better. That massively paved the way for other finch startups."

Wonga's two main venture capital investors — Balderton and Accel — have backed fintech startups such as GoCardless, Nutmeg, Revolut, Credit Benchmark, Crowdcube, OpenGamma, WoldRemit, and GoFundMe.

'We have made real progress in transforming Wonga'

While the likes of TransferWise and Funding Circle have flourished, both achieving $1 billion plus valuations, Wonga has wilted.

The FCA capped interest rates across the payday loans sector in January 2015 and clamped down on companies' ability to pull money directly from bank accounts.

Wonga's loan numbers fell from 3.8 million in 2014 to 2.1 million in 2015 and the amount loaned fell from £900 million to £400 million. Accounts show a pre-tax loss of £80.2 million in 2015.

A former Wonga staffer says: "What's happened is the regulation is so tight — it's what it should be — that it will never be a big business again. There'll be no sub-prime lender that ever turns a significant profit, just because of how the regulations backed up."

A spokesperson for the company told BI:

"We have made real progress in transforming Wonga and creating a sustainable business with an accepted place in the financial services industry. We have embedded good governance under a new leadership team, overhauled our systems and processes and changed the culture to ensure customers are at the heart of our business."

Employee numbers fell from 240 in 2014 to 192 a year later, according to accounts, in part due to redundancies. Staff who left say the innovative, startup culture fostered by Damelin has disappeared. Spending on software development fell from £10.4 million in 2014 to £500,000 in 2015. An area once reserved for a ping pong table was replaced with compliance staff.

Wonga's costly transformation and declining profitability forced it to turn to a credit provider of its own. A line in its 2015 accounts shows it agreed a €30 million facility for "working capital and loan book funding" in April of last year. Directors admit that "there is a material uncertainty which may cast significant doubt on the Group's and Company's ability to continue as a going concern."

'It was a collection of great people who wanted to build a great product'

Reflecting on what happened to Wonga, Michael Kent, a serial fintech investor and cofounder of money transfer business Azimo, told BI: "There's much more a process of doing this in America, saying we f**ked up, here's why. Nobody's actually stuck their hand up and said it's a disaster. Everyone's keeping schtum."

Venture capitalists fuelled Wonga's dizzying ascent, pumping in money and demanding growth. They have stayed silent since Wonga's run-in with the regulator. Accel Partners and Balderton Capital, two of London's best-known VC houses, were both investors. Both declined to comment for this article.

Errol Damelin at an Oxford Union debate in 2013. Screenshot/YouTube/Oxford Union

For many former Wonga staff, however, they have not spoken out because they do not believe it was a disaster. It is a testament to Damelin's powers of persuasion that many still believe the business was unfairly crucified, a victim of political and media pressure concocted in the heated environment of the financial crisis.

Damelin sold staff on a vision of Wonga becoming the Amazon of money — far bigger than just payday loans. Former data scientist Theodosiou says: "He [Damelin] was big on, 'We're not payday lenders, we are a financial technology innovation company. Amazon started with books, we're going to start with payday loans because there is a gap in the market but we're not here just to do that.'"

This vision was never realised. Former CTO Galore says: "It certainly was a collection of great people who wanted to build a great product and help people in doing so. I stand behind that. I think the business just got way ahead of everybody. People lost sight. The product was clearly abused by some members of our customer base."

1,400 payday loan firms have gone out of business since 2014, according to the Guardian. The collapse of the industry has not driven a rise in people turning to illegal loan sharks, as the payday loans industry predicted. The Citizens Advice Bureau, in fact, reported a fall in the number of people contacting it about problems with loan sharks.

Sara Williams, a Citizens Advice adviser, told the Guardian last year: "The worst excesses of the payday loan industry have gone."

'This is what he wants to be doing'

Damelin is still a shareholder in Wonga but does not spend much time thinking about the company these days.

"I think he's put it behind him," says Hurwitz. "I think he's moved on. But obviously, in life, we all look back on what we've done and, with some hindsight, think 'I would have done this differently, I could have done this differently.' No doubt he has that."

Damelin is mellower and more self-aware since leaving Wonga, say friends. He's also happy. Hurwitz says: "He's fine. He's a tough guy."

The 47-year-old no longer runs marathons but entrepreneurs still get phone calls while he is jogging, the mic bouncing off his chest.

"He's told me before this is what he wants to be doing," says one. "He wants to be helping people build the next generation of businesses, change the world. He's an entrepreneur right, he's a proper entrepreneur."