20VC: Revolut Founder Nik Storonsky on When and Where Revolut Will IPO & What Revolut Need to Do to Hit $100BN Valuation

0:00I just don't understand how the product which is being provided by UK can compete with the product provided by US. It is less liquid so it's much worse compared to US plus it's much more expensive because it pays time easier. It's just not rational. And so you would listen to the US because it's a version of personal right? It's already an answer. So unless I have a better product from UK and if I get a better product from UK I will listen to UK. So far if you just compare this product one as far as compared to another. This is 20VC with me Harry Stemings and the showstay is the one that everyone has been waiting for.

0:32Revolute is the generational defining company of our time, 50 million customers, $2 .2 billion in revenues and aiming to be the number one bank in the world. Joining me today we have Nick Storonsky, Found and CEO Revolute to discuss growth and IPO plans, how Revolute approaches new products and building a hiring machine and why work life imbalance is the secret success. This was such a special one to do live in Ravallute's offices. But before we dive in today, if you're driven by the pursuit of knowledge and personal growth, you'll love exploring the vast collection of insightful book summaries on the Blinkist app.

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3:40Learn more today at Secureframe .com. It is a must. You have now arrived at your destination. Nick, I'm so excited to do this. Thank you so much for having us in your office first. Nice work, I mean. Not at all. Listen, I was chatting to Klaus Humbles before and he said, you know, I'm not going to do the German accent because I'm terrible at it. But he said that Revolute is one of the most KPI lead companies. And so it's just wanted to start with how do you approach KPI based leadership and what does that actually mean? Well, basically, so the whole goal setting right so we set up the goals for the company So usually we have five six goals or a year and then we quantify these goals So what does it mean to achieve certain goal?

4:20Then we cascade these goals on the department level I don't know my team level I don't know I'm individual so every single Effectly team department and on the company We have metrics describing the performance. Then all people go through performance through the process every quarter. Then they're judged based on their metrics but they're delivered, their skills, and then cultural values. In terms of the management when you get the metrics, how do you think about distributed management? I spoke to a lot of your team and you have a lot of direct reports. How many direct reports do you have and how do you think about distributed management?

4:54So we've got the 40 plus reports And, it's been a while since I built the team for the last 5 years. So, generally because I don't really work with people who are not excellent. Another way I define people who are excellent, strong, average, a little, average, pretty simple. So they should be like a self -guided missile, right? So excellent people, they select the gold themselves, press the button, then they reach the gold themselves. Strong people in it to show them the gold, then they reach the gold themselves, without you iterating with them. average people in each on a weekly basis iterate to reach the goal.

5:30And then I believe rich people, I mean you iterate with them, but you know sometimes they're often the non -rich the goal. So the key is to select all your direct reports with a strong excellent. So I am able to reach the goal themselves about you and I'm directing them. Will they be excellent on day one and how long do you give them to get good enough? Well, majority of people you see them performing strong X1 up to 3 or 4 weeks, right? So they hit the ground running on week 3, majority of them, they actually are from one week one. So generally, if you see a person who is not performing for one or two months, it was like a level before performing for the next year.

6:09So I don't really believe in kind of you know, needing some time to adapt, to speed up. So if the person who is not delivering for the first three months, it was like a level not. What are the most common ways you find them not delivering in the first three months? What are the most obvious signs? Well, they just give them the goals, right? And then it helps some wiggly or biwiggly kicker chops, and then they show you what they produced. And then you just observe what they produce for two, three weeks, how small they are, how deep they go with their analysis. So just based on what they show you, do you agree with when there's doubt?

6:38There's no doubt. Current something. I mean, it's not doubting them, but there's no doubt. In terms of the different people, I love that kind of spectrum from like the accent to strong to average. I chatted to it, I mean, you were, are you Alan Changs of the world, but so many who worked with you and have worked with you. And they said, what you look for in people has changed a lot over the years. You used to like not like the management consultants and the investment bankers, and now you've got a lot more professional management. How do you think about that? And is that fair? Other things fair, right?

7:07Because I was always looking for people who can deal with, right? So I was always executioner, rather than docker, because if you look at that, you're all this management consultants, they come to you with a nice presentation, explain you how to get things done. Relative here is when you start hiring management consultants to help you run the company, that means your employees are not competent what they do, right? And for me, it's a bad sign. Can I ask when you look back at the growth of the team and protect you about what was the most painful scaling? But then what did you learn from that? I made a lot of mistakes, scaling team, I think the most painful mistake was believing.

7:45Well, I never believed it, but I was forced to believe that in order to scale the company to hire experienced professional managers, that's the dead -end. I think I hired 55, so for example, I could just feel like I'm a 2 million and a few that ended up firing 49 or 50 of them. So it's like sure, it's not money. How did team change as a leader? I mean this in the nicest way. You also got a lot more friendly. I was always friendly. You were always friendly? Yeah, but so. You still more comfortable with media? Well, yeah, probably because I have a lot of experience speaking on media. But I was always holding people accountable to deliver it.

8:23And sometimes I was communicating one harsh way or sometimes in a softer way, but I was always forcing people to deliver. What do you think when you look forward now, you most need to work on in your own leadership style? Where are you like? I'm still not great, and I'd like to get better. Usually when I hired people in a new area that I haven't worked for, for example, when I started revenue to New Zealand, I was hiring. My first head of compliance, head of recruitment, head of people, I'm terrible at hiring. My first roles I've never kind of know worked before, so ended up trying in on many people until I find the good ones.

8:59I learned how to do it now, so every time when I hire a new role, I wish I'd never hired before. I first interviewed the whole market, try to learn for people how they do their job and only after I learn how they do their job, I kind of you know select the best person for the job. Israeli if you never kind of know worked with their designers, you have zero skills to hire designers, you know worked in the regga phase or government affairs, you have zero skills to assess who is good who is not. So in order to our first learn the skills you need to interview as many people from this area as possible, then you'll be able to select.

9:35When you think about the different areas where you invest in, you mention that kind of compliance to the regulatory. Do you think the best CEOs are the best resource allocations? I think so. I think the best CEOs can squeeze a lot of IRI, a lot of very legal resource. When you think about where you squeezed IRR most effectively, what comes to mind first? myself. I think I'm very efficient into getting people to deliver with a small resource. And I'm very cost conscious as well. I think people when they throw money, the problem they just throw people. I think what really delivers the most is your brain power.

10:17When you sit down then I process myself to think how to solve the problem the most, kind of in a cost -effective and efficient way. That's actually a much more powerful compared to spending millions on external people, external consultants or hiring super experienced professionals for a lot of money. Where did you spend money with the benefit of hindsight you wish you had? I think we're very efficient on spending money to balance you. I think when I look at our top cost, I think our top cost is actually marketing now and then our second cost is people. Has your idea around brand marketing evolved?

10:49You know, before you're a very data driven performance driven guy, we like seeing what inputs lead to what outputs. And brand marketing is fucking hard because it's like 50 % worse, but you don't know which one has your ideas on brand marketing changed. I do believe in brand marketing now before I didn't and what's usually very careful in what you buy as a method to show your brand. For example, recently we started buying airports, jet bridges, I personally believe I are on it is amazing. But you know, we clearly cannot measure it. But if your brand marketing is only a very small portion of performance marketing and you can afford it and then you believe you know that these assets are great and why not?

11:29When you think about the expansion to the US and banking licenses, I do want to start on the banking license. It took longer than expected. What did you learn about building a regulated business from the banking license process taking longer? Oh, what I really learned is that so whenever you want to build a bank, you'd rather get a bank license before you have customers. So that's a key lesson because as soon as they have many customers, millions of customers, tens of millions of customers, regulators will be much more thorough in assessing your capabilities as a result, the whole license process will take a lot longer.

12:05And then for smaller banks or for banks who don't have clients, they don't really assess because there is nothing to assess, right? So they granted the license much easier. Can I now see that if you have that state as much earlier and you want to say, And one of the way you did decide to get it out of here, it inhibits your ability to execute on product in such a fast way because you are bluntly encumbered by regulators much sooner, no? Like, do you wish you'd done it sooner? Or harm's done. No, really, you can also build the governance process around the products, around all the countries in a very tech -driven efficient way.

12:40So yes, it will be a bit slower, but I'm not as slow to know. If you really apply brains, how to optimize governance, how to build a whole structure, processes, who approach work and when. You can do it much better compared to legacy things. Why did you know that earlier and when you reflect on it? I wasn't experienced right, so I didn't know what is the right way. It's already wrong. How would you rate your relationship with the regulators today? It's actually much better again because I was inexperienced and I have this perception in my mind, which was Well, not forced on me, but confirmed by many, many people and investors, because I'm young, right?

13:19Tech here. I should not speak with regulators because they will not understand me. Instead, I should hire some great here banking CEO who have been in the business for a long time and then need to speak with regulators. What I really found is actually very bad advice, right? Because whatever you speak with regulators yourself, Whatever you explain exactly in plain English what we do how we do it because you build it yourself or I build it As of right, I can explain it in a very simple terms and because we're also Envating a lot in this areas compared to legacy banks you show data as well that our results are better compared to legacy banks But that's in that world matters right if you show data That's how you've been looking on three or four years ago That's how we do now.

14:02This how all the banks are doing where I handle them. That's for matters. I problem with the traditional banking CEO, they're not tech driven at all. And then they would rather speak in the very vague jargon to hide their incompetency or their limited knowledge in interrelated matters. So regulators, I don't think they like it. What have been your biggest lessons around crypto, Nick? Meta -speculate. Encryfta. Have you changed your mind on anything in crypto? You made the decision to include crypto early. How do you reflect on that now? Nothing is a good decision because a reality, a lot of use cases in crypto still speculation where people are not going to speculate is more entertaining for them.

14:45But then some use cases are definitely valid. For example, stable currents or enabling instant money transfers through stable currents competing with Swift on corresponding banking system, the section they are available. Was it been the biggest challenge with the crypto products? They were quite a few. I mean, the reality is probably biggest challenge is different licenses in different countries and then different rules attached to these licenses I remember when we received the article license, like several years ago in the UK there were certain rules attached to it We actually cost kind of a 99 % false positive, so for example the person wants to send money in crypto to another account and then We would block this transfer because of certain rules imposed by regulated, but then in 99 .9 % of cases We were working in this transfer because I mean the transfer was okay, right?

15:33There wasn't fraudulent. It wasn't. We took us some time to explain to the lady, to show date, to this rules that we impose on us. Actually, the wrong rules. We should optimize it and then we can capture more fraudulent transfers and then not waste time of innocent people. You mentioned that kind of the different regulatory elements. You added the US as another geography. I don't understand the US, and I keep them on it, it's just like, the thing I love about Revolute is, Revolute is the one company from Europe that shits on its US counterparts. Like Chimney is the biggest player in the US, which is like a quarter of the size of Revolute.

16:08Which is completely unique. Why has no one been able to win US Neobinding? I didn't understand that. Well, a thing there in US, first of all, so there is a culture in tech companies that don't want to be regulated. it. Because they don't want to be regulated, they need to partner with the bank to use their license and use their platform. As soon as you partner with the bank and use their license, the platform, you need to follow their processes, which are not automated, which are not built as a product. It slows you down. Plus, on top of the research compliance or the bank that needs to prove every single screen, every single error, marketing material on their own.

16:43Because they are not very efficient, it slows you down. Plus, because you're not the bank and not able to use your balance sheet or your deposits. So you cannot really do credit cards efficiently and the US is credit driven market. Whatever your customer spends over credit card, bank receives actually much more money from a machine compared to debit card. And banks they spent part of this interchange to do to give additional benefits to customers in Emma or the points. The result of credit cards are much more attractive for customers compared to debit card. Well, the result is if index, pure repotting with the bank issuing debit cards, just not their attractive value proposition.

17:18When we think about going into the market, it's been hard. What's been harder than you to? What's been easier than you to? I mean, 99 % of things were harder than I thought. Nothing in life that's, like, meaningful is easy. Yeah, nothing is easy. Do you think the revenue brand is strong in the US? Or not yet, but we will get there. As soon as we get bank -alice in the US, launch in bank there. It's what's your time, but I think we can get where we are now in Europe in the US. I saw your talk with Antoine, not Antoine Lawson, sorry, at the end of the day, and you said about the US banking license.

17:49Is that now? How do you think about the staging of the US rollout and the banking license there? So, basically, first we need to roll out our UK bank, so you'll throw all these mobilization conditions, and then put our UK customers on the bank. Some of them get the done, the cashier and looks, our ability to apply for the US. What we do to win the US in a way that people who've tried before I haven't won the US web. I mean people in the US never tried their digital bank with the credit card with all of functionalities that we have already. So one simple up where you have all the financial services that you need.

18:25Do you think Monza did? Monza steal or not in the US as far as I know. I mean they expanded that. You also in Latin and crushing that. How do you feel about last time market. What did you do that worked really well? No, what we've done, we played for license in Brazil for bank lesson in Brazil. So we got a bank lesson in Mexico, I had a new bank. I think we played already in Colombia for bank lessons. So we're working on that car as well, basically trying to capture the photo of our markets. And launch. Can you do a new lesson in South America at the same time? Yeah, you can fertilize. I mean, it's hard, but almost anything is possible.

19:03When you get back at the products, what product introduction you made has been the biggest need only the question And the reality changes when the launch there are five years of your business now is already you know went very well in terms of growth But then recently we launched also I don't know is scenes growing super fast Rev ones growing super fast because our scale so much larger compared to five years ago So whenever launch for the cool market with the right product market fit just scale super quick So you cannot really compare with the also there is a successful product over lunch five years ago Because yes five years ago it was super fast But if you look at speed of growth now it was there slow.

19:42What product did you think would be a mega head? That wasn't I'm actually pretty better this like every time when I think on certain products that it will be a mega hit It's not and sometimes Nothing at all not it will Which one when you thought it would did it not most comes to mind? Well, for example, we launched seller events to compete with credit card. So they need their person just, well, reserve seller, now account and then half way through the period for the seller, the passing button, the receive half of your seller. So it's pretty cool. So compete with credit cards, compete with loans, match shipping as well.

20:23But it didn't work for us because the whole conversion funnel was very bad. First, you need to sell to enterprise, and enterprise needs to sell to their employees. You also need to sell into their systems. If you look at conversions for a lot of effort, we ended up having 100 plus people using the seller's hotspot. So when you decide it's just a sub, well, this is the hard thing when you get to your scare, which is that it has to be meaningful and there's opportunity cost to everything that you do. You know, I always chat down to him. He's like, oh man, it needs to be 10x. It needs to be 10x. How do you think about what is worthy of your time in terms of new products, in terms of size.

20:58So usually to launch a product into a very small team of 10 people, they will work on the product for say 1 to 1 .5 years. Of course, will be probably I don't know, 2 -3 million pounds, because they are independent, you can run a little bit independently. So the way we think about what to launch, what not to launch, we just have a committee of people who have done it before, or launch projects before and they have our opinion. And so when everyone is positive, we'll launch things. Everyone is negative, we don't launch. If there is a mixed opinion, we'll see launch. How many bets do you have running at a time?

21:3520 plus and per - 20 plus bets. If you look at the last three years, we'll launch the thing 27 bets. Okay, so you have 20 plus bets running at once and then what percent make it? So usually, so out of 27 desert we launched last two and a half, three years. Like amazing, the work probably say five, five, six didn't work at all. And the rest is just, you know, somewhere in the middle. But if you look at the whole portfolio, how much money you generate is just amazing. See if it's exponential. Okay, so with the five six, because the five that work, you're like, great, let's give them more money. With the five six, how much more money do you give them all the same?

22:14the way it works, so you've got the team, then they launch it, then you look at how much money they generate after the launch of the product, month one, month two, month three, month four, you get paid with other bets when you launch it, and then set up 30 -40 % if you have no growth stick, you just allow them to hire additional teams and additional teams, so one team becomes 2 teams, 3 teams and becomes a department. And so that defines the work. The five stakes in the middle are really hard because you don't want to waste money. There's an opportunity cost to those people. What do you do with the ones where it's like, hmm, so you don't scale it, right?

22:48So you still have only one team working in it. For those bets, what really is scaling up, producing a lot of money, you add more people to work on new features for this particular product. Which one of these bets today? I think you might see excited about it. I like it actually, it seems to work pretty well for us. It's a very nice product. The thing is the best in the market. So it's super easy, compared to all other kind of standalone apps all there. Other winners, obvious. Do they always just go up into the right or does it take time for you to build conviction in what you like? Surprisingly, on month one, month two, month three, really all this, you know, you don't have a belt.

23:24Do they present to you 27 bats at one time? How do you manage that hierarchy of information decision making? So we just build a nice tracking system. So we have a Giro, obviously tracking every single bed, then everything hits into a dashboard as well. So you just open the dashboard, and when you see the list of human beds, the list of beds that are being cooked and all are 20, which stage are they being developed, are they at our kind of approval process, then you see how much gross profit each bed generates, and so on and so forth. So it's pretty visual and they're clear. This can sound so random, but Ben Affleck gave a speech the other day about AI and movies and he said that art is knowing what to build and craft is knowing one to stop.

24:12Which I thought was a really nice description of Bunt needing forms of simplicity. Do you worry that with so many bats you lose simplicity and you get overcrowding? You need to solve this problem through interface. So, interfacing this super simple, right? So, you need to show the right product at the right time. If you look at the car, car has a lot of functionality, but then it's pretty simple. I'm talking about electric cars, screens. If you think about functionality of the car, there's a lot of... Yeah, but then it's very simple to build. So you just drive where you want, you play music when you want, and so on.

24:49So the same with banking products. And ultimately people need a lot of products, but then if you position everything in a very simple way, then there's no problem. Which product would you most like today that you haven't done? private bank, then all the pretty cool to build a private bank. Agreed. Why haven't you done it? I think it was too early. Now we have a lot of customers and a lot of customers actually have a lot of balances with us. Some of them have millions on our accounts. So I think it's time to build the private banking for people with a lot of liquid assets. So we have a revolution today.