Nik Storonsky, Revolut Founder: What Revolut Needs to Do to Hit $100BN Valuation | E1233

1. 0:00 – 0:43

   Intro

   1. NSNik Storonsky0:00

      (instrumental music plays) I just don't understand how the product which is being provided by UK can compete with a product provided by US. It is less lucrative, so it's much worse compared to US. Plus, it's much more expensive because you pay stamp duty, right? So, it's like, it's- it's- it's just not rational.

   2. HSHarry Stebbings0:15

      And so you would list in the US?

   3. NSNik Storonsky0:17

      I consider myself a rational person, right? If I get better product from UK, I will list in UK. But so far, if you just compare those products, I mean, one is far ahead compared to the other.

   4. HSHarry Stebbings0:26

      Ready to go? (instrumental music plays) Nick, I'm so excited to do this. Thank you so much for having us in your office, first.

   5. NSNik Storonsky0:42

      Thanks for coming.

2. 0:43 – 1:34

   Revolut’s Approach to KPI-Based Leadership

   1. NSNik Storonsky0:43

   2. HSHarry Stebbings0:43

      Not at all. Listen, I was chatting to Klaus Halmos 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 Revolut is one of the most KPI-led companies. And so I just wanted to start with, how do you approach KPI-based leadership, and what does that actually mean?

   3. NSNik Storonsky0:58

      Well, basically, so the whole, uh, goal setting, right? So we set up the goals for the company. So usually, we have five, six goals, uh, a year, and then we quantify those goals. So what does it mean to achieve certain goal? Then we cascade these goals on the department level, and then on the team level, and then on individual. So every single, effectively, team, department, and, uh, all the company, we have metrics describing, uh, the performance. And then, uh, all people go through a performance review process, uh, every quarter. Then they're judged based on their metrics, what they delivered, their skills, and then, uh, cultural values.

3. 1:34 – 5:21

   Building & Hiring Team

   1. NSNik Storonsky1:34

   2. HSHarry Stebbings1:34

      In terms of the management when you get the metrics, how many of your thoughts are about distributive management? I spoke to a lot of your team, and you have a lot of direct reports.

   3. NSNik Storonsky1:42

      Yeah.

   4. HSHarry Stebbings1:42

      How many direct reports do you have, and how do you think about distributive management?

   5. NSNik Storonsky1:46

      So we've got, uh, 40 plus reports. I mean, to be honest with you, I, I built the team already for the last five years. So generally because I don't really work with people who are not excellent. Another way I define, uh, people who are excellent, strong, average or below average, it's pretty simple. So they should be like a self-guided missile, right? So excellent people, they select the goal themselves and they press the button and they reach the goal themselves. Strong people, you need to show them the goal and they reach the goal themselves without you iterating with them. Average people, you need to, on a weekly basis, iterate to reach the goal. And then my below average people, I mean, you iterate with them, but you know, sometimes or very often, they don't reach the goal. So the key is, uh, to select, uh, all your direct reports, either strong or excellent, so they're able to reach the goal themselves without you kind of directing them.

   6. HSHarry Stebbings2:38

      Will they be excellent on day one? And how long do you give them to get good enough?

   7. NSNik Storonsky2:43

      Well, majority of people are, you see them performing strong or excellent up to three, four weeks, right? So they hit the ground running on week three. Majority of them, they actually from week one. So generally, if you see a person is not performing for one, two months, most likely they will not perfor- performing for- for- for- the next year. So I don't really believe in kind of, you know, needing some time to adapt, to speed up. So if the person is not delivering within the first three months, most likely they will not.

   8. HSHarry Stebbings3:13

      What are the most common ways you find them not delivering in the first three months? Like, what are the most obvious signs?

   9. NSNik Storonsky3:18

      Well, I just give them the goals, right? And then you have some weekly or biweekly catch-ups, and then they show you what they produced, and then, uh, you just observe what they produce for two, three weeks, uh, how smart they are, how deep they go with their analysis. It's just based on what they show you.

   10. HSHarry Stebbings3:32

       Do you agree with, "When there's doubt, there's no doubt"?

   11. NSNik Storonsky3:34

       When there is doubt, there is no doubt?

   12. HSHarry Stebbings3:36

       Yeah. When you start-

   13. NSNik Storonsky3:37

       Yeah, 100%. I mean, as soon as they start doubting, I mean, well, there's no doubt.

   14. HSHarry Stebbings3:41

       In terms of the different people, I- I love that kind of spectrum from like, you know, excellent to strong to average.

   15. NSNik Storonsky3:46

       Yeah.

   16. HSHarry Stebbings3:46

       I chatted to, I mean, your, uh, your Alan Changs of the world, but so many who worked with you-

   17. NSNik Storonsky3:50

       Okay.

   18. HSHarry Stebbings3:50

       ... and have worked with you, and they said that 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?

   19. NSNik Storonsky4:05

       I don't think it's fair, right? Uh, because I was always looking for people who can, uh, deliver, right? So I was always execution-oriented rather than, uh, talk-oriented. Because if you look at all those management consultants, they come to you with a nice presentation, explain you how to get things done. Uh, reality here is, uh, when you start hiring management consultants to help you run the company, that means your employees are not competent in what they do, right? And for me, it's- it's a bad sign.

   20. HSHarry Stebbings4:33

       Should employees compete?

   21. NSNik Storonsky4:36

       Should employees compete-

   22. HSHarry Stebbings4:37

       Yeah. You said that-

   23. NSNik Storonsky4:38

       ... with each other?

   24. HSHarry Stebbings4:38

       Yeah.

   25. NSNik Storonsky4:39

       Um, no, I don't think so. I- I think, I think they should collaborate. Uh, they should work as a team. They should work on, uh, common goals.

   26. HSHarry Stebbings4:47

       Can I ask, when you look back at the growth of the team in particular, what was the most painful scaling bit, and what did you learn from that?

   27. NSNik Storonsky4:54

       Well, uh, I think, you know, I- I made a lot of mistakes scaling team, and I think the most painful mistake was believing... Well, I- I never believed it, but I was forced to believe that, you know, in order to scale the company, to hire experienced professional managers. That's a dead end.

   28. HSHarry Stebbings5:12

       Mm-hmm.

   29. NSNik Storonsky5:12

       I think I hired like, you know, 55 through executive recruiters, paid like, you know, 2 million in fees. I ended up, you know, firing 49 or 50 of them, so it's such a waste of

4. 5:21 – 8:22

   Nik’s Leadership

   1. NSNik Storonsky5:21

      money.

   2. HSHarry Stebbings5:22

      How did you change as a leader? I mean this in the nicest way. You've also got a lot more friendly (laughs) .

   3. NSNik Storonsky5:28

      Uh, I was always friendly.

   4. HSHarry Stebbings5:30

      You were always friendly?

   5. NSNik Storonsky5:31

      Yeah, but, uh-

   6. HSHarry Stebbings5:31

      You feel more comfortable with media?

   7. NSNik Storonsky5:34

      Well, yeah, probably because, you know, I- I know, by now I have a lot of experience speaking on media.

   8. HSHarry Stebbings5:39

      Mm-hmm.

   9. NSNik Storonsky5:39

      Yeah. But I was always, you know, holding people accountable to deliver, right? You know, sometimes I was communicating more in a harsh way, or sometimes, you know, in a softer way. But I was always, you know, forcing people to- to deliver that.

   10. HSHarry Stebbings5:54

       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"?

   11. NSNik Storonsky6:01

       Uh, usually when I hire people in a new area that I haven't worked before, for example, when I started Revolut 10 years ago, I was hiring my first head of compliance, head of recruitment, head of people. Uh, I'm terrible at hiring (laughs) my first roles, and they were, uh, kind of in the role before. So I ended up, you know, uh, trying it on many people, uh, until, you know, I find, uh, the good ones. And I'm, I learned how to do it now, so every time when I hire a new role, uh, which I never hired before, I first interview the whole market, try to learn from people how they do their job. And only after I learn how they do their job, I kind of, you know, select the, the best person for the job. 'Cause really if you never kind of, you know, worked with, uh, I don't know, designers, you have zero skills to hire designers. If you've never worked, uh, in reg affairs or, or government affairs, you have zero skills to assess who is good, who is not. So in order to, uh, first learn the skills, you need to interview, like, as many people from this area as possible. Then you learn, and then you'll, you'll be able to select.

   12. HSHarry Stebbings7:04

       Can I ask, when you think about the different areas where you invest in, you mentioned that kind of the compliance, the regulatory, do you think the best CEOs are the best resource allocations?

   13. NSNik Storonsky7:12

       I think so, yeah. I think the best CEOs are, can squeeze a lot of IRR out of, you know, very little resource.

   14. HSHarry Stebbings7:22

       When you think about where you squeezed IRR most effectively, what comes to mind first?

   15. NSNik Storonsky7:28

       Myself. Um, yeah, I think I'm very efficient into, uh, getting people to deliver with, uh, small resources. Yeah, and I'm very cost-conscious as well, so I'm, uh, I think, you know, people when, when they throw money at the problem, they're just throwing people. I think, you know, what, what really, uh, delivers the most is, uh, your brain power, right? When you sit down and then, uh, force yourself to think how to solve the problem the most kind of, you know, cost-effective and efficient way, that's actually much more powerful compared to spending millions on, I don't know, external people, external consultants and so on, or hiring, you know, super experienced professionals for a lot of money.

   16. HSHarry Stebbings8:08

       Where did you spend money that with the benefit of hindsight you wish you hadn't?

   17. NSNik Storonsky8:12

       Well, I think we're very efficient on spending money, to be honest with you. Um, I think, uh, when I look at our costs, I think our top cost is actually marketing now, and then the second cost is people.

5. 8:22 – 9:10

   How Have Nik’s Views on Brand Marketing Evolved?

   1. NSNik Storonsky8:22

   2. HSHarry Stebbings8:22

      Has your i- uh, idea around brand marketing evolved? You know, before, you were 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?

   3. NSNik Storonsky8:39

      I do believe in brand marketing now. Before I didn't. Uh, and, uh, but you need to be very careful in, uh, what you buy as an asset to show your brand. Uh, for example, recently we started buying AirPods, uh, jet bridges, uh, and, uh, I personally believe IRR on it is amazing, um, but, you know, we clearly cannot measure it. But if your brand marketing's only a very small portion of performance marketing and you can afford it, and then you believe, you know, that these assets are great,

6. 9:10 – 11:00

   Takeaways from the Banking License Process

   1. NSNik Storonsky9:10

      I mean, why not?

   2. HSHarry Stebbings9:10

      Can I ask, when you think about, um, bluntly, th- the expansion to the US and banking licenses, I do want to start on the banking license. It took longer than expected. What did ... This one was from Mickey, so you can blame him, not me. What did you learn about building a regulated business from the banking license process taking longer?

   3. NSNik Storonsky9:30

      Oh, what I really learned is, uh, it's, uh ... So whenever you want to build a bank, you'd rather get the banking license before you have customers. So that's, uh, kind of, you know, key lesson, because as soon as you have many customers, millions of customers, tens of millions of customers, regulators will be, um, kind of, you know, much more thorough in assessing your capabilities. As a result, uh, the whole license process will take, you know, much longer. And then for smaller banks or for banks who don't have clients, they, they don't really assess because there is nothing to assess, right? So they grant the license much easier.

   4. HSHarry Stebbings10:06

      Can I ask you though, if you have that status much earlier, and you wanna say, "Monzo," where you did decide to get it earlier, 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?

   5. NSNik Storonsky10:24

      Oh, 100%. No, really, too, you can also build the governance process a- around the products, uh, around all the countries in a very tech-driven, efficient way. So yes, it will be a bit slower, but, I mean, not that slow to be honest here. If you really apply, uh, brains how to optimize governance, how to build a whole structure, processes, who approves what and when, uh, you can do it, uh, much better compared to legacy banks.

   6. HSHarry Stebbings10:49

      And so you didn't because you just didn't ... Why did you nod earlier then when you reflect on it?

   7. NSNik Storonsky10:54

      Uh, I, I wasn't experienced, right? So I didn't know, uh, what is the right way. (laughs)

   8. HSHarry Stebbings10:59

      (laughs)

   9. NSNik Storonsky10:59

      Yeah. So I did it

7. 11:00 – 12:34

   Relationship with Regulators

   1. NSNik Storonsky11:00

      wrong.

   2. HSHarry Stebbings11:00

      How would you rate your relationship with the regulators today?

   3. NSNik Storonsky11:04

      It's actually much better, uh, because, uh, again, because I was inexperienced and I had this perception in my mind which was, uh, um, well, not forced on me, but confirmed by, you know, many, many people, investors, uh, that because I'm young, right, and very, like, you know, techy, uh, I should not speak with the regulators because they will not, uh, understand me. Instead, I should hire some gray hair banking CEO who, who've been in the business for a long time and then they need to speak with regulators. Uh, what I really found is, is actually very bad advice, right? Because, uh, whenever you speak with regulators yourself, whenever you explain exactly in plain English what we do, how we do it, because you build it yourself or I built it ourself, right, I can explain it in, uh, very simple terms. And, uh, because we're also innovating a lot in these areas compared to legacy banks. Um, and, uh, you show data as well that our results are better compared to legacy banks, that's in the end what matters, right? If you show data, you show that.That's how you've been, like, you know, three or four years ago. That's how we do now. That's how other banks are doing. We are ahead of them. That's what matters. The problem with, uh, uh, traditional banking CEOs, they're not tech-driven at all, um, and then they, they, they'd rather speak in the very vague jargon to hide, uh, their incompetency or their limited knowledge in, in tech-related, uh, matters. So regulators, I don't think they'll like it.

8. 12:34 – 14:21

   Lessons Around Crypto

   1. NSNik Storonsky12:34

   2. HSHarry Stebbings12:34

      What have been your biggest lessons around crypto, Nick?

   3. NSNik Storonsky12:37

      Biggest lessons around crypto?

   4. HSHarry Stebbings12:39

      Yeah.

   5. NSNik Storonsky12:39

      Uh, never speculate (laughs) in crypto.

   6. HSHarry Stebbings12:43

      (laughs) Have you changed your mind on anything in crypto? You made the decision to include crypto early. How do you reflect on that now?

   7. NSNik Storonsky12:50

      I think it's a good decision. Um, I think, um, uh, because reality, a lot, a lot of use cases in crypto is still speculation, right? People, I mean, speculate is more, I would say, entertaining for them. Um, but then, uh, some use cases are definitely valid. For example, stable coins or enabling, or instant money transfers through stable coins, uh, competing with Swift, of course, modern banking system. Yeah, it's, uh, it's actually very valuable.

   8. HSHarry Stebbings13:18

      What's been the biggest challenge with the crypto product?

   9. NSNik Storonsky13:21

      There were quite a few. I mean, really, probably the biggest challenge is different licenses in, in different countries and then different, uh, rules attached to these, uh, licenses. I remember when we received our crypto license, like, several years ago in UK, there were certain rules attached to it, which actually caused a kind of a 99% false positive. So for example, a person wants to send money in crypto to another account, and then, uh, we will block this transfer because of certain rules imposed by regulator. But then in 99.9% of cases, we were wrong, you know, blocking this transfer because, I mean, transfer is, uh, was okay, right? It wasn't fraudulent, wasn't... It took us, you know, some time to explain to regulator, to show data that, uh, these rules that you imposed on us are actually wrong rules. We should, uh, kind of optimize it, uh, and then, uh, we can capture, you know, more kind of, you know, fraudulent transfers, and then not waste time of, uh, like, in- innocent people.

   10. HSHarry Stebbings14:18

       I t- totally get you. You mentioned that kind of the different regulatory

9. 14:21 – 18:19

   Why Has No One Won US Neo Banking?

   1. HSHarry Stebbings14:21

      elements. You moved, uh, out of the US as another geography. I don't, I don't understand the US, Nick, if I'm honest, 'cause like, I think, and the thing I love about Revolut is, Revolut is the one company from Europe that shits on its US counterparts. Like Chime is the biggest, you know, player in the US, which is like a quarter of the size of Revolut, which is completely unique. Why has no one been able to win US neobanking? I, I don't understand that.

   2. NSNik Storonsky14:45

      Well, I think, uh, in US, um, first of all, uh, so there is a culture in, uh, tech companies, they don't want to be regulated. Because they don't want to be regulated, they need to partner with a bank to use their license and use, use their platform. As soon as you partner with a bank and use their license, use their platform, you, you need to, uh, follow their processes, which are not automated, which are not, uh, built as a product. It, it slows you down. Plus, on top of, there is a compliance with the bank that needs to approve every single screen, every single, uh, marketing material and so on. And because they are not very efficient, it slows you down. Uh, plus, uh, because you're not a bank, you're 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. Uh, and, uh, whatever a customer spends with a credit card, bank receives actually much more money from emission compared to debit card. And banks, they, uh, effectively spend part of this interchange to do, to give additional benefits to customers, you know, air miles or points. As a result, credit cards are much, uh, more attractive for customers compared to debit card. Well, as a result, you see Fintechs purely partnering with a bank issuing debit cards, just not very attractive value proposition.

   3. HSHarry Stebbings16:01

      So when we think about going into the market, it's been hard. (laughs) What's been harder than you thought and what's been easier than you thought?

   4. NSNik Storonsky16:09

      I mean, 99% of things were harder than I thought. (laughs)

   5. HSHarry Stebbings16:14

      (laughs) Yeah, the, the few things that were easier were things that actually don't matter as well. Nothing in life that's, like, meaningful is easy.

   6. NSNik Storonsky16:20

      Yeah, nothing's easy.

   7. HSHarry Stebbings16:22

      Do you think the Revolut brand is strong in the US?

   8. NSNik Storonsky16:24

      Uh, not yet, but we will get there. As soon as we get bank license in US, uh, launch a bank there. Uh, it will take time, but I think, you know, we can get where we are now in Europe in years.

   9. HSHarry Stebbings16:35

      I saw your talk with Antoine. Uh, not Antoine, Martin, sorry, at Index, and you said about the US banking license. Is that now? Like, how do you think about the staging of the US rollout and the banking license there?

   10. NSNik Storonsky16:47

       So basically, first, we need to, uh, roll out our UK bank, uh, so go through all its mobilization conditions, and then put our UK customers on the bank. As soon as we get that done, it actually unlocks, uh, us, uh, or our ability to, uh, apply for license in the US.

   11. HSHarry Stebbings17:04

       What will you do to win the US in a way that people who've tried before haven't won the US with?

   12. NSNik Storonsky17:10

       People in the US never tried the digital bank, uh, with a credit card, with all the functionalities that we have already. So, one simple app where you have all the financial services that you need to spend.

   13. HSHarry Stebbings17:23

       Do you think Monzo did?

   14. NSNik Storonsky17:25

       Uh, Monzo still are not in the US as far as I know.

   15. HSHarry Stebbings17:30

       I mean, they expanded there. It just didn't work.

   16. NSNik Storonsky17:34

       It didn't work. Okay. Yeah, maybe.

   17. HSHarry Stebbings17:36

       (laughs)

   18. NSNik Storonsky17:36

       Maybe I'm not up-to-date on Monzo.

   19. HSHarry Stebbings17:38

       Uh, don't worry about it. I, I asked them, and it was a bit of an awkward conversation.

   20. NSNik Storonsky17:41

       Yeah.

   21. HSHarry Stebbings17:41

       Um, so I totally get it. You're also in LATAM, uh, and crushing there. How do you feel about the LATAM market? What did you do that worked really well?

   22. NSNik Storonsky17:50

       Uh, now, what we've done, we, we applied for license in, uh, Brazil, for bank license in Brazil, so we got a bank license in Mexico, Nubank. Uh, we, I think we applied already in Colombia, uh, for bank license. So we're working on that there as well, basically trying to capture, like, you know, top, top four, top five markets, uh, and, uh, launch-

   23. HSHarry Stebbings18:11

       Can you do north and south America at the same time?

   24. NSNik Storonsky18:14

       ... uh, yeah, you can parallelize, yeah. I mean, it's hard but, uh, almost anything is possible.

10. 18:19 – 24:58

    A Product That Had the Biggest Impact

    1. NSNik Storonsky18:19

       (laughs)

    2. HSHarry Stebbings18:20

       When you look back at the products, what product introduction that you made has been the biggest needle mover?

    3. NSNik Storonsky18:25

       In the reality, it changes. Like three years ago or when, wh- when we launched there, or five years ago, business scales already, you know, went very well in terms of growth. Uh, but then recently, we launched also, I don't know, eSIMs growing super fast, ref funds growing super fast 'cause our scale is so much larger compared to five years ago. So whenever we launch product with market, uh, with the, with the right product market fit, it just scales super quickly. So you cannot really compare with the also very successful product that we launched five years ago because yes, five years ago, it was super fast but if you look at speed of growth now, it, it was very slow.

    4. HSHarry Stebbings18:59

       What product did you think would be a mega hit that wasn't?

    5. NSNik Storonsky19:03

       I'm actually pretty bad at this. Uh, like every time when I think, uh, a certain product that it will be a mega hit, uh, it's not. (laughs) And sometimes, uh, when I'm, uh, well, when I think it will not, it will, yeah.

    6. HSHarry Stebbings19:18

       Which one when you thought it would, did it not most comes to mind?

    7. NSNik Storonsky19:22

       Uh, well, for example, uh, we launched salary advance, uh, to compete with credit card. So the idea is there a person just, uh, well, receives salary now account, uh, and then, uh, halfway through the period for the salary, uh, they press a button, they receive half of your salary. So it's pretty cool. So it competes with credit cards and it competes with loans. Uh, much cheaper as well. But, uh, it didn't work for us because, uh, the whole conversion funnel was, uh, very bad. First you need to sell to enterprise, then enterprise needs to sell to their employees. You also need to sell into payroll systems. So if you look at conversions, I mean, uh, for, for a lot of effort, we ended up having, I don't know, like 100 plus, uh, people using a salary advance product. So we decided just to stop.

    8. HSHarry Stebbings20:07

       Well, this is the hard thing when you get to your scale, which is like, it just has to be meaningful and there's opportunity cost to everything that you do. You know, I always chat to Anton and 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?

    9. NSNik Storonsky20:22

       Uh, so usually to launch a product, you need to have a very, very small team of, uh, 10 people. They will work on the product for, say, one to two and a half years. Cost will be probably, I don't know, two, three million pounds, um, and, uh, because they're all independent, you can run all of the bets, uh, independently. Um, and, uh, so the way we think about what to launch or what not to launch, w- we just have a committee of, uh, people who've done it before, who launched products before and, uh, they have a opinion. And, uh, so when everyone is positive, we'll, we'll launch things. When everyone is negative, we, we don't launch. If, uh, there is a mixed opinion, we still launch.

    10. HSHarry Stebbings21:04

        How many bets do you have running at a time?

    11. NSNik Storonsky21:06

        Uh, 20 plus in parallel. These are-

    12. HSHarry Stebbings21:09

        20 plus bets?

    13. NSNik Storonsky21:09

        Yeah. Yeah. So if you look at the last two, three years, we launched, uh, I think 27 bets.

    14. HSHarry Stebbings21:14

        Okay, so you have 20 plus bets running at once.

    15. NSNik Storonsky21:16

        Yeah.

    16. HSHarry Stebbings21:16

        And then how ... What percent make it?

    17. NSNik Storonsky21:19

        So usually, uh, so out of 27 bets that we launched, uh, last two and a half, three years, like amazingly worked probably, let's say five. Um, five, six didn't work at all and they're, the rest are just, you know, somewhere in the middle. But if you look at the whole portfolio, how much money it generates, it's just amazing. It's, uh, it's exponential.

    18. HSHarry Stebbings21:41

        Okay. So with the five or six in the middle, because the five that work you're like, "Pfft, great, let's give them more money." With the five, six-

    19. NSNik Storonsky21:47

        Yeah, yeah, you kind of scale it up. Yeah.

    20. HSHarry Stebbings21:48

        ... how much more money do you ... Do you give them all the same? Does it-

    21. NSNik Storonsky21:51

        Uh, the way it works, uh, so you've got the team then they launch it, then, uh, you, you look at how much money they generate after they launch the product month one, month two, month three, month four, you compare it with the other bets when they launched it, you know, and then, uh, say top 30, 40%, if, if you have no growth stick, uh, you just allow them to hire additional teams and additional team. So one team becomes two teams, three teams, then it becomes a department.

    22. HSHarry Stebbings22:15

        Okay, so we have that. What about the ... And so they're the five that work. The five, six in the middle are really hard 'cause you don't wanna waste money. You ... There's an opportunity cost to those people. What do you do with the ones where it's like, hmm?

    23. NSNik Storonsky22:28

        So you don't scale it, right? So you still have only one team working on it. For, for those, uh, bets with really scaling up, producing a lot of money, you, you add more people to work on kind of, uh, new features for this particular product.

    24. HSHarry Stebbings22:41

        Which one of these bets today are you most excited about?

    25. NSNik Storonsky22:45

        I like actually eSIM. That worked pretty well for us. And-

    26. HSHarry Stebbings22:48

        Sorry, eSIM?

    27. NSNik Storonsky22:48

        eSIM, yeah. It's, it's a very nice product. I think it's the best in the market now.

    28. HSHarry Stebbings22:52

        It's a beautiful product. I've got it.

    29. NSNik Storonsky22:53

        Yeah, yeah, yeah. So it's super easy, uh, you know, compared to all other kind of standalone apps out there.

    30. HSHarry Stebbings22:59

        Are the winners obvious? Like do they always just go up into the right or does it take time for you to build conviction in what you like?
11. 24:58 – 25:28

    Private Banking

    1. NSNik Storonsky24:58

       is no problem.

    2. HSHarry Stebbings24:59

       Which product would you most like to do that you haven't done?

    3. NSNik Storonsky25:03

       Uh, private bank. Think it would be pretty cool to build a private bank.

    4. HSHarry Stebbings25:08

       Agreed. Why haven't you done it?

    5. NSNik Storonsky25:10

       I think it was too early. Uh, now we have a lot of customers, and then a lot of customers actually have a lot of balances with us. Uh, some of them have, you know, millions in our accounts. Uh, so I think it's time to build, uh, private banking for people with, uh, a lot of, uh, liquid

12. 25:28 – 27:13

    Revolut in 3 Years Time

    1. NSNik Storonsky25:28

       assets.

    2. HSHarry Stebbings25:29

       So we have Revolut today. What does Revolut look like in three years time, both from a product and from a business perspective?

    3. NSNik Storonsky25:36

       So in three years time, we w- would love to be, uh, probably live in, uh, 50 markets. Uh, to be, uh-

    4. HSHarry Stebbings25:43

       Where are we today? How many are we live in?

    5. NSNik Storonsky25:45

       Uh, 39 now.

    6. HSHarry Stebbings25:46

       Okay.

    7. NSNik Storonsky25:47

       Yeah. So we want to be number one in, uh, say 90% of those markets in terms of growth.

    8. HSHarry Stebbings25:54

       How many are we number one in today?

    9. NSNik Storonsky25:57

       I think we are number one in 19 or 20.

    10. HSHarry Stebbings25:59

        19, 20.

    11. NSNik Storonsky26:00

        And, uh, basically fully localized as a bank in, say, 40 markets. So providing local accounts, uh, local credit cards, uh, local payment methods, um, loans and so on. So just be, uh, as competitive or as, as local banks or even, you know, more competitive. So this is the goal. And then hopefully to have, uh, um, I would say 30 to 40 million, uh, daily active people. So now we're around 10 million daily active people.

    12. HSHarry Stebbings26:34

        So we have that in three years. Which market is the most important that you win?

    13. NSNik Storonsky26:38

        I think in three years it'll be too early for US to win. So yeah, maybe if we win, uh, every single, uh, large market in Europe. So top, top 10, 10 markets in Europe, yeah?

    14. HSHarry Stebbings26:51

        Okay. Top... Yeah. And then-

    15. NSNik Storonsky26:53

        So right now we have, uh, our penetration of market share, I would say it depends from 5% to sometimes 70%. On average I would say 10%. So if we manage to go from 10% to 30, 40%, uh, market share in our top 10 markets, so th- that will be already, uh, probably 4X business compared to

13. 27:13 – 28:30

    Will Banking Stay Fragmented or Consolidate?

    1. NSNik Storonsky27:13

       what it is now.

    2. HSHarry Stebbings27:13

       Do you think the market makeup of banking will fundamentally shift in the next generation? And what I mean by that is I saw actually your, again, talk with Martin, and you said about the huge fragmentation in the banking market.

    3. NSNik Storonsky27:24

       Yeah.

    4. HSHarry Stebbings27:25

       Do you think that will continue? Or do you think we will see, bluntly, a lot more concentration with fewer bigger players?

    5. NSNik Storonsky27:31

       Yeah. I think, uh, because of, um, uh, different regulations, different markets, all the banks are very local, right? Because it's very hard to kind of, you know, build a bank in one country and then scale it outside without, uh, proper tech. So I think we have, uh, as a company, we have a unique opportunity to actually, uh, scale and build a global bank across many, many markets purely because, uh, tech allows us to do it. And actually if you think about it, there are similar, um, similar picture was in venture business, right? So when venture business started, you have a lot of, you know, VC funds focused on the US, some VC funds focused on Europe, a lot of VC funds focused on Asia and so on. So they're, they're very similar to banking as well.

    6. HSHarry Stebbings28:17

       And so we move into a world of globalized banking players who own, bluntly, much larger proportions.

    7. NSNik Storonsky28:21

       Yeah. I think, uh, with time, in five years time, you'll, you, you, you'll see much less number of banks, and there are few global players.

14. 28:30 – 30:17

    Is Revolut Going Public?

    1. NSNik Storonsky28:31

    2. HSHarry Stebbings28:31

       Nick, what needs to change in the business before you go public?

    3. NSNik Storonsky28:35

       I mean, already we, we already run the business as a public company. We're just not public company. So we, we, we run everything because we're a bank, uh, so we need to have even stronger controls compared to public companies.

    4. HSHarry Stebbings28:47

       So why would you want to go public? You know, we saw Databricks do this secondary transaction, I think, yesterday. It was six to eight billion of liquidity to investors and to employees. You know, obviously Revolut publicly done the secondaries. Why, why would you want to?

    5. NSNik Storonsky29:00

       Well, we still have a lot of, uh, VC investors, right? Sooner or later, they'll want to, uh, kind of, you know, sell their shareholdings and they return money to investors. Uh, so I think public markets allow you to, to have more liquidity compared to just private markets.

    6. HSHarry Stebbings29:17

       Th- there's no way this is gonna get kept in, but I have to ask it.

    7. NSNik Storonsky29:20

       Sure.

    8. HSHarry Stebbings29:20

       Would you list in London?

    9. NSNik Storonsky29:22

       Would I list in London? Um... I mean, pro- p- problem with UK is, uh, if, if you think about UK versus US, uh, UK is much more liquid, right? And then, uh, trading in the US is free, right? If you look at trading in UK, you always, uh, buy a stamp duty tax, which is 0.5%. So I, I just don't understand how the product which is being provided by UK can compete with a product provided by US. It is less liquid, so it's much worse compared to US. Plus it's much more expensive because you pay stamp duty, right? So, like, it's, it's just not rational.

    10. HSHarry Stebbings29:59

        And so you would list in the US?

    11. NSNik Storonsky30:00

        Look, I'm, I'm, uh, I consider myself a rational person, right? That's, that's all I can answer. So unless I have, you know, a better product, uh, from UK, then yeah. If I get the bet- better product from UK, I will list in UK. But so far, if you just compare those products, I mean, one is far ahead compared

15. 30:17 – 30:48

    Response to Moving to Dubai Rumors

    1. NSNik Storonsky30:17

       to the other.

    2. HSHarry Stebbings30:17

       How do you respond to the suggestions that you move to Dubai?

    3. NSNik Storonsky30:20

       Well, I, I do spend some time, uh, in Dubai, uh, every year, so with team there, plus we're getting licenses. Uh, but no, I don't live permanently in Dubai.

    4. HSHarry Stebbings30:30

       Is the culture different?... across the world, when you go to different offices around the world, is Revolut a monoculture or are they actually very different independent cultures?

    5. NSNik Storonsky30:38

       Our culture is the same across all our offices. So people are smart, people are hungry, people are working hard, people want to achieve things. And that's common across all the cultures.

16. 30:48 – 31:41

    Maintaining Tight Cap Table Control

    1. NSNik Storonsky30:48

    2. HSHarry Stebbings30:48

       Can I ask you one on, uh, we mentioned the liquidity to ambassadors earlier. You've been unbelievable at maintaining a really tight control of your cap table. (laughs) Um, where other founders haven't, bluntly. What have you done to maintain such good control of the cap table?

    3. NSNik Storonsky31:04

       Control it on what?

    4. HSHarry Stebbings31:05

       In preventing secondaries, preventing private transactions, preventing side deals.

    5. NSNik Storonsky31:11

       Yeah, just because they're... Again, it's pretty obvious, right? As soon as you don't have control, so then every time when you try to raise a primary round, you're competing with all these early investors who want to sell at a large discount because, I mean, they made so much money and, uh, they're okay to exit, you know, as soon as possible because they, they make like, I don't know, like, 50x, 100x, right? And it actually prevents company to, to raise primary, uh, as a result because, uh, because they're really kind of inheriting the company, we had to put all these controls

17. 31:41 – 38:48

    Competitors Nik Respects Most & Why

    1. NSNik Storonsky31:41

       in place.

    2. HSHarry Stebbings31:41

       In terms of competitors that you really respect around the world, who do you most respect and why them?

    3. NSNik Storonsky31:48

       Well, uh, like, obviously if I look at competition, uh, Nubank is, is amazing what they do. Um, well, country's also great, right? There's no competition there and their rates are high. Um, credit card have, you know, very high rates as well. Uh, so I think, you know, Nubank is very strong. Um, then, um, I think JPMorgan, you know, have ge- a very good team, uh, in the US. So as a bank, uh, very strong. Well, if, if you look at Asia, right, so it's a bit different dynamic. So we've got companies like WeChat. So they're, they're very strong. And then, uh, in reality, there are, like, many good companies in-

    4. HSHarry Stebbings32:23

       Which will be a harder market for you to win, US or Asia?

    5. NSNik Storonsky32:26

       I think Asia.

    6. HSHarry Stebbings32:27

       Why?

    7. NSNik Storonsky32:28

       Well, because, uh, they don't allow you a banking license, right?

    8. HSHarry Stebbings32:31

       (laughs)

    9. NSNik Storonsky32:31

       In the US, I mean, that is a large challenge to get it.

    10. HSHarry Stebbings32:34

        It's also a fundamentally different UI that they're used to. I mean, it's, it's an entirely new product paradigm that you have to engage with. Culturally, it's not nearly as aligned as US and UK, so I, I totally get that. You must have quantum light, Nick.

    11. NSNik Storonsky32:47

        Yeah. So yeah, l- l- let me maybe just, uh, spend one minute explaining what quantum light is. So basically, because I was, uh, raising money, uh, so many times, I've done like seven or eight times, and, uh, like almost every time I experienced, uh, some very negative experience. For example, I think it was 2019, uh, I agreed the, a term sheet with investor. I think it was like a 7 billion valuation. And then next day market dropped 10%, S&P dropped 10%, then term sheet was withdrawn and then it became like 5 billion or whatever. Um, then, uh, like even recently, like, you know, secondaries are all done, we kind of, you know, agreed everything with all investors and then, uh, there was like, you know, market drop. Then luckily it went back, but, uh, we, we had some investors, you know, withdrawing term sheets or like when I was, uh, raising money, uh, for, for Series A, like no one believed me. No one wanted to invest. I spent like, you know, four, five, six months going through every single investor and saying them that, "Okay, it's really great business." They, they looked at my unit economics and unit e- unit economics was negative. Of course it was negative because, you know, I just started, right? It's a volume game. Anyway, what, what I learned that, uh, a lot of investors, they are, A, following the crowd very often, and then B, they're very, uh, emotions driven, right? Sometimes they like the founder, sometimes they don't like the founder. They don't like the founder, they don't invest. So it's, it's not very scientific. Uh, so two years ago, I set up effectively a small team of data scientists and data engineers who collected a lot of data on startups and then would train machine learning models, um, on the startups, selecting the best startups. Then the machine learning model, uh, actually amazingly outperforms 95% of VCs out there on, on back test. And, uh, that's how I started this business. So effectively, I have an independent, uh, team of 20 people who are building and polishing, uh, data science models and then models give you a list of companies where to invest. Uh, and then we just go to this companies and invest.

    12. HSHarry Stebbings34:53

        Where's the entry point? Because you need to have enough-

    13. NSNik Storonsky34:56

        Series, Series B.

    14. HSHarry Stebbings34:56

        Okay. So you need to have enough data. So Series B. Okay. So you can select the best companies better than investors. Fine, cool. Um, generally though, if you can select them better and there's data for that, the winners are more obvious, yeah? And so if the winners are more obvious, selection is one thing, but winning is another. How do you think about winning when there's five others and you've got Sequoia and you've got Index and you have all the pretty, like-

    15. NSNik Storonsky35:20

        And in reality it's not that straightforward, right? If, if you look at companies that, uh, model selects and there we have we tested, uh, probably like 300 plus features, right? Then we selected now like best 25, which statistically give you signal, right? Whether to invest in the company or not. So the, the features are like obviously very important. Who are investors? Who is the lead? And, uh, the depth of the lead. So we, we actually track IRR for every single fund. And then based on this IRR, it's an input in the model. The model, uh, kind of, uh, selects whether to invest or not. Then who is the founder? Do they have sta-

    16. HSHarry Stebbings35:57

        Wait, wait. You track IRRs of seed funds?

    17. NSNik Storonsky35:59

        No, we, we track IRR on the kind of, uh, on, on the fund level for, for, for each investor. And then we... if we see a good investor with good IRR investing, it's obviously like a positive signal, right? Anyway, model takes say 25 features. One of the features is who investing, which is dynamic evaluation, quality of employees, uh, quality of founder, what they have no standard education, no standard education, age is important as well.

    18. HSHarry Stebbings36:24

        Why does age important? What do you find about age?

    19. NSNik Storonsky36:26

        Well, it's, uh, if you look at, uh, statistics, so 20 to 25 is actually quite negative. Like too early is negative, um, than, uh, 25 to 30 is, is okay,... 30 to 35 is the best age. Uh, after 35, I mean, there is a clear negative, uh, correlation, uh, with the success. So sweet spot is 25 to 35 for founders at series B.

    20. HSHarry Stebbings36:52

        Okay. So we have 25 to 35. You said education there, and you said, uh, investing in education early is, is important. Why do you think it's so important? And do you think our current education system does it right?

    21. NSNik Storonsky37:03

        Well, uh, I just look at the data, right, and then at stats, and then, uh, statistics clearly show that, uh, top universities, uh, STEM degree have a much more positive, uh, correlation with the success of the company. Um, and, uh, obviously, it's not for, like, any other profession out there, but particularly for startups, I mean, it is important. Purely based on stats.

    22. HSHarry Stebbings37:27

        Which was the hardest funding round to raise? You mentioned earlier that, you know, the series A, for example, you spent five months on. Which was the hardest round to raise?

    23. NSNik Storonsky37:35

        I think our first one was very hard. Um, the, the first one. Every single one was easier, easier than ... Uh, I think 2019 or ... Well, we, we, we started raising in 2019. We closed, I think, in February or in January 2020, just before COVID (laughs) . We were very lucky, but it, it took time to close it. It was tough.

    24. HSHarry Stebbings37:57

        How big was that round?

    25. NSNik Storonsky37:59

        So relation was five billion, which dropped 4,000.

    26. HSHarry Stebbings38:02

        Oh wait, you did it at five?

    27. NSNik Storonsky38:04

        Yeah, yeah, we did it at five. Yeah.

    28. HSHarry Stebbings38:05

        Oh wow, fuck.

    29. NSNik Storonsky38:05

        I had no choice. Yeah. Yeah.

    30. HSHarry Stebbings38:08

        Wow.
18. 38:48 – 39:43

    Definition of Success

    1. NSNik Storonsky38:48

       good.

    2. HSHarry Stebbings38:48

       Has your definition of success changed?

    3. NSNik Storonsky38:51

       Nothing if you define success or, or by kind of, you know, percentage of goals that you reached. That's very simple, right? If your goal is, I don't know, to be happily marr- married with kids and then you reach it, you are 100% successful, right? If your goal is, uh, I don't know, make more money, you haven't reached it, then, uh, you're not. It's a pretty simple definition.

    4. HSHarry Stebbings39:11

       Does money make you happy, Nick?

    5. NSNik Storonsky39:13

       I don't think money makes you happier. I think money is a just additional instrument that you can use in order to achieve certain goals.

    6. HSHarry Stebbings39:21

       What have you not achieved today that you most want to achieve?

    7. NSNik Storonsky39:24

       Well, I haven't won the US market, right? I think it's very important to tick this box, especially for European startup.

    8. HSHarry Stebbings39:32

       For sure. I totally agree.

    9. NSNik Storonsky39:33

       Yeah. It's always the opposite, right? US companies, they, they always win Europe and, uh, uh, I almost never see exception. So I think it will be very cool to tick

19. 39:43 – 45:34

    Quick-Fire Round

    1. NSNik Storonsky39:43

       this box.

    2. HSHarry Stebbings39:43

       Listen, I wanna move into a quick fire round. So I say a short statement and you give me your immediate thoughts. Does that sound okay?

    3. NSNik Storonsky39:48

       Yep.

    4. HSHarry Stebbings39:49

       So what do you believe that most around you disbelieve?

    5. NSNik Storonsky39:52

       I think, uh, majority of people believe that, uh, balanced life allows you to be happy and achieve your goals. I think in reality, uh, this balanced life allows you definitely to achieve your goals. So more kind of imbalanced you are, more focused on your goals, sacrificing everything else, more likely you will succeed these goals. And, you know, there is a high chance it will also bring you happiness.

    6. HSHarry Stebbings40:16

       What period of Revolut's growth have you been most imbalanced?

    7. NSNik Storonsky40:20

       Uh, every year is very imbalanced, right? So it's, uh, yeah, i- it became much more structured, much more kind of, you know, process-driven. Um-

    8. HSHarry Stebbings40:29

       I get it dude, but y- you're, you're very thin, you're athletic, you look fresh, you're not losing sleep, you're doing fitness.

    9. NSNik Storonsky40:36

       Yeah.

    10. HSHarry Stebbings40:37

        Talk to me, what does Nick's day look like?

    11. NSNik Storonsky40:38

        'Cause I, I, I have so much pressure and you know, like a lot of 99% of time is, is a lot of pain, right? Because reality, what happens is even if you have organization, um, then all the unpleasant problems when no one else solves, that goes into me and I ended up doing all these, you know, shitty jobs, right? Solving problems that, you know, no one else w- wants to solve or can't solve. And it's, it's pretty unpleasant. So 99% of time it's, it's not really pleasure. A lot of pain, a lot of pressure, stress. And in order to keep calm, you know, under pressure, obviously you need to have a lot of energy. And then, uh, in order to have a lot of energy, you need to build your lifestyle in a way that brings you a lot of energy, right? So it's obviously a lot of sports, you know, like-

    12. HSHarry Stebbings41:22

        What time does Nick get up in the morning?

    13. NSNik Storonsky41:24

        I mean, depends in which country I am, right? Because, uh, the way I manage the business, I, I work one, two, three months from different countries, from different offices. And that depends which time zone I am, right? For example, if, if I'm in UK, like probably I wake up, you know, 6:30, you know. Like sometimes, you know, a train in the morning, uh, sometimes not. Uh, but then I start, uh, 8:30, 9:00 AM. If I'm somewhere in, uh, kind of, uh, Asia, right, then I start in a bit later or much later, but then I work till, you know, 11:00 PM. Um, if I'm in the US, then I need to start very early, like, you know, 7:00 AM working.

    14. HSHarry Stebbings42:07

        Which venture investor do you most respect and learn from? Just learn from. Not like your favorite, like you go out for like holidays with, like you actually learn from. First call when you're in trouble.

    15. NSNik Storonsky42:17

        Well, I, I, I call people who've done similar things in the past, right? So who built very large businesses. So I've got a couple of friends who build, uh, very large businesses. And they're, some of them that never used VCs and, uh, they, they just print cash with businesses. So I think, you know, in some ways they are much better compared to me.

    16. HSHarry Stebbings42:39

        (laughs) What would you do if you knew you wouldn't fail?

    17. NSNik Storonsky42:42

        I would just keep trying things, but then I'm, uh, whenever I try things, I, I always think I won't fail.

    18. HSHarry Stebbings42:48

        (laughs) What have you changed your mind on in the last 12 months?

    19. NSNik Storonsky42:51

        Like, you know, I spent, uh, 15, 16, 17 years in UK, and uh, London really became a home city for me. But then when I started, uh, kind of working from different cities, I realized, you know, there is so much more, like, in another cities in terms of, you know, lifestyle, weather, infrastructure, that, uh, a lot of people because they're stuck in one city, living in one city, they don't really see it and they, they just become, you know, very close-minded. Um, I think when you kind of, you know, manage to work or live in many, many places, then you, you are much more open minded.

    20. HSHarry Stebbings43:24

        If you were starting Revolut again today, where would you start it?

    21. NSNik Storonsky43:28

        Hmm, US most likely. Yeah.

    22. HSHarry Stebbings43:30

        If you were advising a young person today coming out of university, what advice would you give them on optimizing their career?

    23. NSNik Storonsky43:37

        Well, I think they first need to really know what they like to do, what they enjoy doing, and, uh, just go into the area, uh, this area. If you, if you enjoy something, I mean, you definitely need to go there.

    24. HSHarry Stebbings43:49

        What consumer brand do you most respect?

    25. NSNik Storonsky43:52

        I think Apple, to be honest with you.

    26. HSHarry Stebbings43:54

        Why?

    27. NSNik Storonsky43:54

        I think they built cool products, they built a cool brand, and, uh, they managed to stay outside of, uh, scrutiny, right? Because they, they produce so much money, they're a huge monopoly, they, uh, charge a lot, and they are still a, a kind of, um, great company, right?

    28. HSHarry Stebbings44:15

        You can be CEO of any other company for a day. Which company would you choose to be CEO of?

    29. NSNik Storonsky44:20

        I would like to try something in, uh, biomedicine or genetics. Uh, yeah, that would be very interesting, just to learn, because I know zero about this.

    30. HSHarry Stebbings44:30

        Penultimate one. What would you do differently if you were starting Revolut again?

Episode duration: 45:34