Tom Blomfield, Partner, Y Combinator; Co-Founder, Monzo

23:39I was like, what the hell? Which meant I had to leave the country, which was pretty brutal. And I landed back in London. And back at GoCardless, I'd met this lady, this lady called Anne Bowden, who was a very, very senior banker. She was like chief operating officer or something of one of the big banks. And she'd become an advisor at GoCardless and bounced between a few different jobs. And I was kind of chatting with her every two or three months. And she was she tried to buy a bank to start with. And she was really following the regulation very closely. It was like, we can actually get a banking license from scratch.

24:14And so, like, literally the day I landed back in London, I went to see her and she'd assembled a small team. And she's like, I'm doing I'm going to start a bank. And I it was very funny. I basically met she paid all these consultants who are going to like one consultancy was going to get her the license and another consultancy was going to write the software. and I went in and like we talked about earlier my brain just like saw all this stuff and I was like this is a logically this does not make sense and I was like sort of went through her plans like this is wrong and this is wrong and this is wrong and rather than getting upset and getting angry she's like well why don't you help me fix it then like if you've got better ideas like come and you should be the CTO make it better and I had nothing to do so I was like oh why don't I hang around for a week or two so I ended up becoming I guess the CTO I guess like she sort of waved around the title co-founder and it was a very strange experience um because uh for so many reasons the arrangement was always very informal she'd always sort of say don't worry I'll take care of you and I you know where's my equity agreement where's my contract oh no no don't worry about that I'll take care of you um and I put my life savings into it I put about a hundred thousand dollars of my savings to like pay because I recruited a bunch of engineers I got Jonas to move over from New York um and I'd start paying them out of my own pocket and she'd

25:36Tom Blomfield:always say don't worry don't worry we'll we'll wow Tom that's a lot of money yeah and it was 25 I did 26 27 at the time it was like all of my life savings but I I thought this like idea was so huge and so exciting and I you know I trusted her and she she'd say I'll take care of you and trusted that and we tried to raise money but the issue i think was um i mean she was very very experienced she was probably in her mid-50s um and she came from a world where for deals like this you'd go and raise like a billion dollars from private equity and and banks to buy another bank right and the numbers she was talking about were like hundreds of millions or billions and you know employing consultancies for a few million each to do some stuff around the side was totally normal.

26:23And so we turn up to these meetings with private equity and they'd look at me and think, who is this kid? He can't be the CTO of a bank. But then we also, the next day, we'd go and pitch angel investors and venture capital and seed funds. And they'd see me, Y Combinator, late 20s, self-taught programmer. We like that profile. And then they'd look at her and see this middle-aged banker and be like, what's she doing on the team? And so the two of us were just very mismatched team.

26:50Tom Blomfield:And she was twice your age. Yeah. And she was very experienced and a certain set of investors loved her and hated me and a different set of investors loved me and hated her. But there was no overlap. No set of investors liked us both. And so we just couldn't raise money. And so I was there for about six months and it just, it got worse and worse and worse. She was quite volatile and I just ended up getting fired like three or four times in that six month period. And she'd always say she'd always fly into a rage and fire me. And then the next day kind of phone up to apologize and make everything good again.

27:22But after six months of that and not raising money, I was just done with it. Honestly, I just I decided I couldn't work with her. And I so I resigned. I just said, keep everything. I'm going I'm just going to go go on vacation. I need a break. And her response was to call an all hands meeting and fire the entire team on the spot,

27:43Tom Blomfield:which was just what why did she think you were trying to steal them or something and so she was just gonna fire everyone before they had a chance to leave on their own no i think she just flew into a rage and couldn't control her emotion it was the next day and said oh no no i didn't mean to fire you all come back we'll come back and they're like no thanks oh my gosh okay so just to this is gonna this is an interesting story but just two really simple lessons and i know carolyn you'll agree with me you shouldn't be fired several times and rehired by your boss you know the ceo at a startup and get everything in writing and get your investment like legally properly papered yeah totally like an equity investing i absolutely like this is you're absolutely right and i i knew this myself at the time and i just like made excuses um but you're totally right.

28:38And like, I think picking a co-founder that you believe is like high integrity and smart and hardworking and like honest is really, really important. And I was just so excited by the vision and the potential of the idea that I overlooked a lot of other stuff that normally I, you know, you shouldn't overlook.

28:56Tom Blomfield:Yeah. It's kind of like being in a bad relationship. You sort of overlook some red flags. Yeah, it's crazy. So I was, you know, I was out of a job The other like 12 people I'd hired were out of a job. And we went to the like the local bar. And basically after a while, we're like, wait a second. Why don't we just do this ourselves? Who said that? Do you remember that moment? We actually went back and forth for like two weeks trying to negotiate with Anne to be like, we've all worked for like six to nine months on this project. Like, you can't do this on your own. And we don't want to work with you anymore.

29:36So like we'll negotiate. So you take some equity and step back and like we'll run the company because we didn't want to abandon all this work we've done. But after two weeks, we kept getting to an agreement and like lawyers would draft up the paperwork. And then she would just like fly into a rage and rip it up and say, you're all fired again. The fuck out. And it was like, what? So after two weeks, at the start of the two weeks, there's no way you can start again. There's so much wasted work. By the end of the two weeks, it's like, well, there's no other option. You know, like this is not someone we can negotiate with.

30:05It's not being reasonable. So you've just got to start from scratch. And yeah. So there were 13 of you who she had fired and you all started Monzo like a few weeks later. Yeah, I think there were, including her, I think there were 14 and 13 of us started Monzo.

30:26Tom Blomfield:Oh my goodness. What a stat. But the crazy thing is that, so we found out later that we were actually not the first team. She'd had a previous management team that she'd basically done the same thing to. She'd hired a bunch of people and then fired them, shut it down, started a new entity. And then after us, she went and hired a third management team and stuck with it. And Starling is like a pretty successful bank. Like it's a multi-billion dollar company. Really? She actually like got the license, built the bank. I was just going to ask, whatever happened? So she ended up being actually, she ended up making it work even after even being a terrible boss.

31:05Yeah. Yeah. Wow. Yeah. Sterling's a good company. They were more focused on B2B. By this time, Monzo was doing well in consumer. And so they focused more on business banking. But she ultimately raised money, I think, from like a hedge fund billionaire, basically personally bankrolled it, gave her like$100 million. And yeah, she built the company, built a team, built a technology, got a license. It was pretty remarkable.

31:33Tom Blomfield:I'm surprised. So you all said, okay, we're going to just start from scratch, rewrite the code. Were there things that you said, but we're going to change this or we're going to focus more on this because that was what we wanted to do? A big change was that we'd started writing in a combination of Ruby and Go because I liked Ruby and I'd hired a couple of Ruby devs and some of The other program is like Go more and whatever. We couldn't decide. And luckily we managed to scrap all that and just rewrote everything in Go. It was much, much better. But like in terms of the product, we'd actually not built very much at Starling.

32:11And yeah, it was just very, very early still. So we started from scratch. I think we at Starling, or at least when I was at Starling, which I think was called starting we um the initial idea was basically to go and piece together off the shelf systems from different banking vendors and we would build a bank by like cobbling together like a core banking system and a payment processor and a credit card processor and like kind of cobble it together with a lot of external vendors and we'd spent four five six months meeting with them all and realized it was all just kind of vaporware and we should just write more or less all of it from scratch And so when we started Monzo, yeah, we'll just like just write more of it in-house from scratch.

32:54And that works super, super well.

32:56Tom Blomfield:Wow. I bet it was so much better written than like Lloyd's Bank could have ever produced. Yeah. The crazy thing about the big banks is the software was written before the Internet existed a lot of times. And it was the way these big banks grew was by acquisition. So there's like multiple small banks and like one bought the other and then the next thing. And they never consolidated IT systems. So they'd have like multiple different systems all written in like COBOL from before the internet. And they'd be trying to have these things operate a 24-7 bank on the internet. It just doesn't work. So the opportunity to start again with a kind of greenfield with modern databases, modern programming language.

33:36It's like banking software is actually not that hard. But all of the banks are running on tech that's like 50 plus years old.

33:43Tom Blomfield:wow so that's an advantage that you had that you could all just build it all from scratch yep can we pause for just a second so i can ask tom at this point so it's been many many years what are your parents thinking of all this of your whole journey well my mom passed away sadly like halfway through building monzo um my dad is very proud i mean he's uh he put an angel check into Monzo in the first round. Oh boy. And a couple of friends of mine and my uncle all angel invested in the first round at like a 10 million valuation. So they're very happy. And they were big supporters. Like my dad and my uncle, especially were like big early users of the product.

34:26And they just gave so much like brutal product feedback. You know, like whenever anything wasn't working, I'd get like angry emails about like, you know, got to fix your product. But they're big, big, big supporters and I think very proud. And it's been really nice to have friends and family be like early investors and to have actually made it work for them and to give back life-changing amounts of money sometimes.

34:52Tom Blomfield:I would like you to tell us what Monzo had when you were first building this that was just so embraced by the users, like you didn't have to go into a branch to set up an account. Yeah, I'm actually recording this from the Monzo office. I've just been talking to all the Monzo product managers about like this exact question. Like what was the thing in the early day that was kind of magical? When we all started Monzo, we had no idea what the answer to that question was going to be. Like literally, we didn't know what the product was really going to be. We thought maybe we'd have like an API and allow developers to build apps on top of their bank or something.

35:30I was quite analytical I think and I assumed we'd have to offer like loads of cash back or like a really high interest rate or something and in in the UK for reference customers use debit cards and their checking account here that's their their main financial sort of instrument they don't have credit people don't use credit cards in the UK and reward points or cash back whatever not a not a big thing here and we just assumed the answer to like why will people sign up would be something economic we'd give them some kind of monetary benefit they'd sign up and that just turned out to not be true and the the amazing thing is how we discovered this so we thought it would take a couple of years to get a banking license in fact it took us three and a half years to get a banking license and i remember back in the i've just been reading all my notes from the time and um it's full of like yc mantras like launch early and talk to users or like um this idea that we go for two years without getting a product out there without launching without getting user feedback was like terrifying and so we figured out a way really early to use prepaid debit cards which kind of the thing you give to your kids to not a full bank account you know like yeah no one really used that back in the day but it allowed us to prototype the bank and get these cards out really really quickly and then start experimenting and it turned out it's basically what people loved about it was a combination of an amazing like slick user interface really really good customer service everything was on your phone and then a sort of mission and brand and tone of voice that seemed really human and approachable and honest not like a big corporate but the early product was basically like a debit card and the cool thing was when you tap the debit card to pay contactlessly back then it would take your bank normally two or three days for the transaction to actually hit your account and as a young person who didn't earn very much money going overdrawn was always a worry like i'm going to run out of money i go out over the weekend tap tap tap tap tap and on monday morning the statement gets updated like oh my god i'm 100 pounds overdrawn and i'm getting hit with all these charges the first thing we did was because we wrote modern software um we could process the transactions in real time and so as soon as you tapped your phone would buzz with a push notification your balance would update and you'd know exactly how much money you had at all times and that just sounds so trivial today but having a instantly up-to-date balance was like the first thing.

37:47And then on top of that, we made the push notification, like actually instead of the garbled like 18 character description that you'd normally get, we'd make it look like the actual merchant. Like you just shopped at Pret-a-Manger or McDonald's or whatever. And then we'd include a map and then we'd get the actual logo of the merchant and we'd categorize it all. And it's like, it just felt very delightful. Like it felt like a bank should, should kind of feel like if you built it in the 21st century, not the like 19th century.

38:15Tom Blomfield:Right. but remarkably it was a lot of those very small ux things that really drove a lot of usage and then a bunch of behavioral psychology actually we stole a lot of this from grouper we had a wait list and there was something like three or four hundred thousand people on the wait list to get a card um and then once you'd gone through the wait list on an account we would give you a golden ticket which allowed you to get one person to skip the queue so it kind of reverses a lot of psychology of um a lot of companies will say if you sign up we'll pay you money or if you convince your friend to sign up we'll give you 50 and the psychology of that is kind of like you know it's kind of a grubby thing to do to hassle your friends so we're going to pay you to make it worth your while whereas for us it's like there's this scarce valuable resource called a monzo card and it's so valuable we're only going to give you one golden ticket and so you're going to value even more people like put these things on ebay and sold them and it was like for a year or two the golden tickets were in very, very high supply.

39:11So we got to about a million customers with basically no advertising spent.

39:15Tom Blomfield:I cannot believe that story. Carolyn, can you believe that a golden ticket is what drove users? And I read somewhere that you went, yeah, from zero to a million users in two and a half years with no advertising spent. That's amazing. Because the product was so good, basically. Yeah. And every investor told us it wasn't going to be possible you know just like you're going to have to spend three or four hundred dollars to acquire a user you want a million that's three or four hundred million dollars in advertising like not possible and we said no no we're going to do it all through like behavior psychology and user experience and word of mouth and network effect and every investor told us we were idiots and it would never work and we actually raised our first three or maybe even four rounds of funding from passion capital the same the same people who'd invested in go cardless yes in our first three rounds because we didn't get a single other term sheet for like the first two years of the company no way oh my oh i love stories like this passion capital wins yeah yeah and they've done very well out of it but i mean i'm good friends with them eileen was on my board i saw her for dinner last night we're very good friends she's she's like one big reason this company exists because literally we we pitched to every investor i traveled to the valley so many times and pitched all the famous investors and they all had they had this like group think of like here's why we all believe challenger banks won't work it's like you'll never get customers and oh once you've got customers they'll you'll never get them to deposit their salary or once you've got them to deposit their salary well you'll never make revenue off them it's like we just had to beat down each of these assumptions until eventually like oh well challenger banks are actually a great investment it turns out um so i want to ask about fraud because i do know that obviously if you're a bank um that's a huge problem and you guys did pretty well fighting against it right yeah relatively i think relatively so if you're handling money you're going to be a target of fraudsters and it's impossible the only way of having zero fraud really is to like shut down your business and not transact any money which is not that useful for customers so you're always fighting this balance between like ad user friction and uh trying to reduce fraud to the greatest extent possible and we because we had modern it systems modern like software and like machine learning we could basically build like these fraud detection algorithms um we just got a couple of our interns honestly to build it two guys called daniel and kriesh who joined us both out of cambridge they were both just recent grads just as we were getting hit by fraud and everyone else was too busy building the bank so we we put daniel first and then priesh onto this problem and basically said go and figure it out it's like a 21 year old and daniel built a machine learning system that reduced the amount of fraud we're seeing by like 99.5 or something it was absolutely crazy like really cutting edge stuff back in the time wow back in the day and both of those guys are now uh like director or vp level at Monzo still.

42:15Tom Blomfield:I was going to ask if they're still at Monzo. They are both still there. Daniel got so angry fighting these fraudsters. He actually became a volunteer policeman as well on the side. He was just so upset that some of these fraudsters weren't getting prosecuted. He was like, no, I'm going to uphold the law. Wow. And there were all kinds of fraudsters. There were like professional ones and amateur ones, right? Yeah, the full range. And the most basic is like you steal a credit card from elsewhere and use it to load money onto your Monzo card and then go and go and you know withdraw the cash from ATM and you basically turn that stolen credit card into broad cash like ultimately what everyone's trying to do all the frauds that they're trying to get cash at the other end where you might like make a payment on a crypto site or a gambling website to get credits out to then recycle and those are the sort of amateur ones all the way up to I mean North Korean sort of money laundering rings to try and money for the North Korean regime like Eastern European people smuggling gangs which some of some of that got pretty dark honestly so we'd work with the intelligence services to to shut down actual like sex trafficking people smuggling rings there were one of the most memorable was um uh we got this big wave of chargebacks um about 2017 i think and they were all from gas stations so people you could go to a gas station you could put your monzo card in and you know pump a a gas tank full of gas or petrol in the uk like fine or whatever how much is a gas tank full of gas it's a hundred pounds maybe something like that but we got these chargebacks for sort of 10 000 or 20 thousand pounds it's like what is happening here and it turned out what the criminals had figured out that as long as your monzo card had at least one penny on the all of the gas machine would just the petrol pump would check that it had at least a penny on and then allow you to pump unlimited gas fine but still like how they how are they doing more than a tanks full what these guys were doing was taking ford transit vans that they'd retrofitted and turned the back of the transit van into a huge gas tanker and gone in the middle of the night, put a Monzo card in, authorised one penny, and then pumped 20 ,000 pounds worth of gas into the back of these transit vans.

44:40Tom Blomfield:Oh, my God. My goodness. So that one was funny. And the police really paid attention to that one because ultimately what you've got then is like a rolling bomb. You know, 20 ,000 pounds worth of petrol in a, you know, poor transit van is extremely dangerous. I wouldn't want to be driving on the motorway with that next to me. Oh, my gosh, that's crazy. But you guys sort of noticed the weird... Yeah, the weird pattern. The great thing was because we'd written the software in-house, because we had these programmers who were able to respond pretty quickly, we usually get hit with a wave of fraud. And then 24 hours later, we'd be able to write new rules or adjust the models to kind of shut this new vector down.

45:21But it's like a continual game of cat and mouse. They're coming up with new schemes. You're shutting them down. We were able to keep our loss rates dramatically lower, actually, than most of the big banks because these guys, the big legacy banks are using outsourced software providers to get a change done can take days or weeks or even longer. So by that time, the fraudsters have stolen a lot of money. We were just able to be a lot more reactive.

45:47Tom Blomfield:Okay, because of your amazing software. I saw your Y Combinator very slickly produced backstory on you. And you told a story that was so shocking about how at Monzo, you had a round that was about to close. Boris Johnson announced lockdown and the deal evaporated. Can you tell us about that? Yeah, it was really tough. And I think the background is like, we were growing very fast. By this point, we were about, we'd just gone from like a million and a half customers to about four and a half million customers in one year. We were growing crazy, crazy fast, but we were also our unit economics were not as strong as they should be.

46:29So we were losing about 100 million a year, which meant every year I had to go out and raise a lot of money. and I think up until that point I probably raised 250 or something maybe 300 and this was going to be another 100 million on top and so the setup of the story is like I'd done a bad job burning too much cash actually like I should have just like been way more on top of this a couple of years earlier and got the cash burn under control and I think some of our competitors did a much better job on that TransferWise and Revolut they just raised a lot less because they burned less In any case, it had taken me nine months to get this round together.

47:05The valuation was like a couple of billion. It was pretty high. And it just taken me nine months to, I think, 96 no's in a row from different investors around the world. And we'd finally found these two, maybe three lead investors. They were actually Canadian pension funds, all of them, who'd agreed to come in to put 100 million in and add a flat to our last valuation, which was 2 billion. And yeah, the world, like we'd gone through diligence, we'd gone through the legal agreements, everything like had been drafted and agreed. It was literally just waiting for signature on Monday morning. And this was Friday afternoon.

47:42And yeah, COVID was ravaging Europe at the time. Italy was probably a month ahead of us. And like the death rate there was crazy. and they announced lockdown and like London was in panic I mean I I was in a taxi back from the office with a chair and a monitor because I was like I'm gonna have to work from home I don't know how long for um and I got the phone call from the Canadian pension fund in that taxi ride home that basically you know the the woman I was working with was distraught her IC back in back in Canada had just phoned everyone and said no like all deals are on hold like we're not doing anything.

48:18And so 100 million got pulled 72 hours before signing. And I don't know how much runway we had at the time. I mean, the weird thing about being a bank is we have to hold a lot of capital in reserve, like in case anything goes wrong. So we had a lot of capital available, like we probably had 70 or 80 million of capital available. But like 50 million of that was regulatory reserves. And if you start to dip into that, the regulator gets, pays a lot of attention. And if you dip too far into it for too long, they just basically say it's shut back down. And so we were in danger of dipping into our regulatory reserves.

48:55We actually never even touched the reserves in the end, but it was looking really, really bad.

49:01Tom Blomfield:How did you pull out of that situation? We went to the existing investors and asked them to support the company. And this was, it was not a fun process, honestly. um and i think you sort of it's still like i think there are a lot of very high emotions at the time like we were in the middle of covid at the time every venture fund was basically doing the exercise of like which of our portfolio companies do we support and which which of our companies are we going to let go bankrupt really honestly like it's a brutal truth yeah um and so we went to our existing investors and you know there are a bunch of very good investors out there including y Combinator and asked them if they'd step in and do this 100 million round at a flat valuation of 2 billion.

49:45And initially, everyone was sort of like, yeah, of course, we'll step in. And then a few days or a week went by and they obviously talked to the rest of their partners and they were deciding which companies they wanted to. And a couple of the funds said, actually, we'll do it, but we don't think we should do it at the 2 billion valuation. We'd actually like a discount. We'd like a cheaper price for supporting you. And I'm very conflicted about this whole process. Like it felt like a betrayal, but I realized that sort of maybe sounds very entitled. You know, like I had built a company that was burning 100 million a year.

50:22That was on me. That was my fault. I didn't have, I don't think I had any God-given right to future investment. You know, this is a business decision. but the in a few of the investors it felt like sort of smelt blood you know they thought they saw the company was in a bad position and they thought they could basically get a few extra points of equity yeah at a time when we were at our weakest um and that just felt and you know again i go back and forth like do i have any right to feel like that but that is how i felt the time I felt like we were in a really, really tough position. And these people who talked about partnering with us for 10 or 20 years were using a point of extreme weakness to extract greater economic share.

51:10And that was really, yeah, really tough. But I mean, ultimately, they put the money in. We ended up doing it about 1.1 or 1.2 billion post money, something like that. So it's sort of 40 % discount. Again, it's, you know, boo-hoo-hoo. I only raised 100 million, a billion valuation. In a sense, like, it's great. It kept the company alive. Many, many, many founders would be delighted to get that amount of money for so little equity. But at the time, it just felt...

51:40Tom Blomfield:It was a down round. Yeah, it was a down round, and the press really leapt on it, and it sort of really hurt morale. It led to a lot of stories about in the press, or whatever, you know, Monza recovered eventually, but it was tough. But that was sort of the key. You got that money and were able to sort of scratch forward. I bet a lot of people opened up new accounts, though, with COVID, not having to go into a branch. Yeah, I think so. And that was around the time, honestly, I left the company. So I got the round agreed with the existing investors. but I was at such a point of I'd been fundraising for nine months I mean the the pressure of running a regulated bank had got to the point where I was not in a good way it was I was about to say flippantly like I wasn't having a good time and I think that's a enormous understatement I was at the point where I just I had insomnia I wasn't sleeping I was massively like anxious and depressed and just probably not making good decisions as a result and I just hit a wall where my brain stopped working and I just had to go to my board and my investors and say like I just don't think I can do this anymore and it was not a great point to leave the company I it was not in a strong position we we got the funding lined up from our existing investors but it was not like I left the company in a great spot to like go and grow it was in a tough spot and luckily we had I just hired a guy called TS Anil to um to run our US business and I asked him instead of being the CEO of the US business if he'd step in and be the the CEO of the whole global business and he asked if he could have 30 minutes to talk to his wife about it and then and then yes so I'm very very fortunate that he was there um Jonas my co-founder was CTO and and stuck around for another few years to run it and I just hired a new COO called Sajata and really them and the executive team pulled it, like pulled through.

53:42And I left Monzo in almost exactly five years ago and we were doing about a hundred million in revenue and losing a hundred million a year. And now Monzo is doing about just over a billion in revenue and making about a hundred million in profit. So the -

53:56Tom Blomfield:Wow, that's amazing. Yeah, I'm hugely, hugely grateful and proud of what the team has done. So you left five years ago at a real kind of low point for you personally. Yeah. I imagine you spent some time recovering. Yeah. I mean, my brain really didn't work. Like I, I couldn't think. It's so weird to say, and I, um, a couple of silly, trivial examples, but like when you get, you know, you sort of log into a website and you get those two factor authentication codes sent to your phone and you have to type in the number. I couldn't remember a six digit number. I'd have to go number by number and type in one after the other because I couldn't hold six numbers in my head.

54:39I just my memory was totally shot. I tried to take a vacation. We were in lockdown. Eventually COVID lifted. And I tried to book a flight somewhere. And I just couldn't. The uncertainty and the anxiety of like, should I get the morning flight or the afternoon flight? My brain just couldn't deal with it. It's like it's it's so weird. like I that is weird I just thought I'd be like mentally handicapped but I had no idea if I'd ever recover and it felt my brain just didn't work it was such a bizarre experience um but after a couple of years I got back to like it felt like I was back to 90 percent and now after a few years it took you years two years to get to 80 to 90 percent and I thought I'd that I thought that was where I'd stop I thought I would never be as sharp as I was and luckily that's not I feel like I am actually back now probably after three or four years my brain it's like when hard problems come up my brain starts firing like my brain starts like looking for the answer now it was before hard problem comes up and my brain would retreat and say I can't I can't think about this problem because it might cause more anxiety but now my brain like actually like actively attacks problems again in a way that makes me feel like I did before.

55:56But it literally three or four years to get back.

56:00Tom Blomfield:Wow. Well, I'm glad you're back. Can we talk about your time at Y Combinator? And at what point did, who reached out to you and when to be a visiting group partner? So Anu from Y Combinator on the continuity team was on my board at Monzo. So I knew them pretty well. And then I think Anu must have said something to Michael or something like, you know, Tom's sort of available and whatever, he could be a good VGP. So Michael, I think, emailed and I met him and a few others. And I'd actually been angel investing. So towards the most of 2021, for about nine months in 2021, I started angel investing.

56:42I made about 75 angel investments.

56:44Tom Blomfield:Over a nine-month period. yeah wow tom and so i'd sort of had a like a crash course in investing and basically michael said well you're doing the same investing but you could do it with our money instead of yours and you'd have you know a bunch of colleagues around and a like a finance team and a great legal team to help you do all the documentation which honestly i hated and basically you can do all the stuff you you like and seem to be good at and you'll have a team to do the rest of the stuff that that you don't enjoy so much and it seemed like kind of a no-brainer and in a way it felt like coming home or coming at least coming full circle.

57:16Let's put it that way.

57:17Tom Blomfield:Were you, did you move to the San Francisco area at this point then? No, initially, this was still when YC was all remote during COVID. Oh yes, it was remote for a very long time. Yeah. So this was end of 22, early 23. So I did two batches that were, the entire batch was fully remote. So it really didn't matter where I was. So I did them from London mostly and kind of did a few trips out to San Francisco. And then by late 2023, I think I got the visa and moved out to California. And then you finally, for the first time in your life, got a promotion to become a partner at Y Combinator, which is very exciting.

58:00Tom Blomfield:I'm very curious because I think you're in London now. You're about to host a YC event for possible startup founders. And I know you're doing a get together for the alumni and everything. I'm curious if London will ever be the Silicon Valley of Great Britain, or what's your opinion of London versus San Francisco? I don't think anywhere in the world is going to be anywhere close to Silicon Valley anytime soon, like in the next several decades. London has improved dramatically since we first tried to raise money in 2005 with Harj and Kool, so like 20 years ago, and we got literally no meetings. We tried to raise money with GoCardless, it was Group A at the time, in 2011.

58:51And before YC accepted us, we literally got zero meetings. Not a single investor would even meet with us in London in 2011. After we got into YC, every VC in town contacts us, obviously. And now in 2025, London is in good shape. I think there's like a tech ecosystem. It's like a flywheel. You've got to, you have companies that do well, that maybe there's an exit, the founders become VCs, the early employees become angel investors. Other employees start new companies. It's like, it's a flywheel that needs to accelerate.

59:22Tom Blomfield:And I imagine Monzo is a big part of that flywheel. and go cartless really a lot of people have come out of go cartless and created like duffel uh steve is a yc alarm and a go cartless alarm and um yeah like dozens of found dozens of companies come out of both companies so london is in a strong state compared with where it was 20 years ago but compared with silicon valley it is a different universe still um but i think that's true of anywhere like even like boston is a different universe really yes what's the one ingredient that london could have uh that you think could make it better for startups optimism it's a single thing it's uh when i said to people in london that i was going to start a bank i was 29 years old i never worked in a bank and people told me i was stupid lots of rude words i can't repeat on this podcast but um we have so many phrases in europe that are designed to drag people down you know like too big for your boots or ideas above your station know your place tall poppy syndrome all of this stuff like you shouldn't aspire to be different or exceptional you should just stick in your lane and that's such a really european trait i don't know it's like hangovers from like the aristocracy and the class system and stuff just like keep the peasants in their place but california feels still like a kind of frontier state so like a silicon valley especially there's like there's almost there's like abundant wealth to be created europe feels like there's finite wealth and everyone's fighting over their share of a fixed pie yeah whereas california feels like um there's potential like abundance there's like such an enormous like set of opportunities you can all win and you can all succeed and so people like lift each other up you you come to silicon valley with an amazing idea um even a stupid idea honestly and people just like encourage you and like ask how they can help make introductions and it it feels like um positive sum you know we'll all succeed together not like if you succeed i'm going to lose out somehow so it's that optimism and and um belief that anyone if they work hard enough can can make something exceptional it's kind of the American dream almost and it's I think there's no greater place for that than Silicon Valley I agree Tom I did see I think you've tweeted about the fact that you had tinnitus or I think they say tinnitus in the UK can you tell me about yeah yeah tell us about that yeah um it was really weird it was uh it really came out of nowhere i think i had like a sinus infection my ear got blocked about 20 21 22 and then when it unblocked i just had this awful ringing in my ears um really debilitating and i went to see a bunch of doctors and no one really seemed to know what it was like maybe i had a viral infection that like damaged my ears it could be stress related like various different lifestyle choices i'd also actually just started learning to fly and so being up in like low pressure and really loud noises with the the airplane engine could have been a cause as well and it was just um but no one had any idea how to cure it it's like basically just learn to cope with it and i i tried i sort of resigned myself like it's going to be like this bad for the rest of my life And I actually found a device.

1:02:59I don't want to do a plug for it necessarily, but I think it's called Lanier or something, which it sounds ridiculous. It's called bimodal stimulation. You basically put some headphones on and strap some electrodes to your tongue. and electrodes to your tongue that sounds much worse than it actually is just it's a device that goes on your tongue and very low voltage electrical shocks your tongue on your tongue and basically it plays sounds in your ear of different frequencies and this is basically like very high for me at least like i've lost high frequency hearing and instead your brain creates that noise in the absence of the high frequency and so effectively like your brain is just making up noise it doesn't really exist and so what this device does is play sounds into your ears and zaps your tongue at the same time to kind of teach you when it's real sound and when it's like your brain creating the sound so it plays high frequency noise and like zaps you in a way that actually just it sounds it's it feels like um a fizzy drink in your tongue it's not at all painful but your brain adjusts to it to learn when the sound is real and when the sound is like being created by your brain and

1:04:09Tom Blomfield:And this has cured you? Basically, yeah. If I really concentrate now, I can hear some faint ringing in my ears right now. But I have to really concentrate on it. Whereas before, it was debilitating. There's this tinnitus test you can do. I mean, it's subjective. It's all like the patient fills in a score of how annoying it is, basically. And I scored something like 75 out of 100, which is quite bad. And now I think I score like 15 out of 100. So it's not zero, but it's totally fine. So I was really happy with it. I have a very close family member who has this, and I'm going to get him on this.

1:04:45It's worth it, right? Worth trying. Yeah, I don't think there are that many downsides. I was curious how you came up with the name Monzo. And I don't know if there's a good story there, if it was just like a random, just popped into your head kind of thing. But I'm always interested in that. Yeah. So we actually picked the name Mondo because it kind of means like world in like Italian and Spanish sort of. and then we got sued we got a trademark dispute from a german company and we had to rename but we really liked our m logo so we went to our customer base and i was like hey we actually said like we've been sued kind of embarrassing has anyone got any good suggestions for names and we got 14 000 name suggestions and uh we picked monzo add one of those suggestions and it's uh it's been great.

1:05:32I much prefer it now to Mondo. Yeah, I love it. Yeah, that's great. And you kind of turn lemons into lemonade, which is you like made it a whole thing and made it a contest. And I think that's great.

1:05:42Tom Blomfield:It's been so fun catching up with you and learning about your early history, which Carolyn and I didn't know that much about. So really fascinating to talk to you. Good luck with your events in London. Hope you meet all sorts of wonderful people who apply to Y Combinator. And thanks again for telling us your story. It's been wonderful. Thank you for having me on the show. I've really enjoyed it. Great. We'll see you soon. Bye, Tom. Great to see you. Carolyn, that was so fun catching up with Tom. Yeah, it's great to catch up with Tom. And I actually had forgotten that he was Grouper too. I just hadn't thought about Grouper in a while.

1:06:22That was such a fun startup. I'm sad that didn't

1:06:25Tom Blomfield:I am really sad. I feel like we need to get Waxman on here someday and talk about the death of Grouper. But I, you know, I had kind of forgotten that Tom was originally involved in Boso with Harj and Kulvir. I, of course, remember him from, you know, Go Card List, but he has all these different YC touch points through almost every part of his, you know, post-university career. It's kind of interesting. Yeah, it is interesting. I'm so glad he's a YC partner now. He's doing such a great job and spending some time in London, you know, getting people fired up for startups. So that's exciting. He's spreading the optimism, which is exactly what you got to do here.

1:07:12Tom Blomfield:Because there definitely is a mentality here of like, if you fail, that's bad. Whereas in Silicon Valley, failure is not held against you. and you just go on to the next thing. He has a lot of good lessons learned for startups. Get everything in writing. Don't listen when the CEO says, oh, I'll take care of you. I'll take care of you. You can say, thanks, I really believe you, but I do need to get the legal paperwork and I'm not gonna be able to keep going until I get that from you. I mean, he lost 100 ,000 pounds. That's so much money. That's, yeah. Yeah. Yeah. I was actually, when I asked the question about his, what his parents at the time thought about his startup journey, I was also thinking to myself, what if one of your children comes to you and says, I'm really sorry, but I just like lost a hundred thousand dollars.

1:08:05And I just don't feel like getting it back. I don't feel like fighting with the person who took it. And you'd be like, wow, dude, go be a lawyer. Like this doesn't happen to lawyers, you know?

1:08:15Tom Blomfield:Yeah, exactly. But yeah, so many lessons like that along the way. So many lessons like that. And choose your co-founder and spend your money wisely and be very on top of your burn because it can catch up with you and all of a sudden you're raising money on not a strong footing and the investors will stick it to you. At the end of the day, most investors are not like meant to be kindhearted people. They're there to get the deal done. And you can't control something like COVID lockdown and his entire deal evaporated. I mean, how depressing is that? Which is another lesson. It is never a done deal until the money is in the bank.

1:09:03That's true.

1:09:04Tom Blomfield:So that was a great episode in terms of interesting stories and important lessons for founders to learn from. Yeah, exactly. Yeah. All right. See you, Levy. It's going to be a good episode and I can't wait for it to come out. I know, me too. I will see you next time. See you next time. Bye. Bye.