Competition, Intensity & Building a $115 Billion Global Bank | Nik Storonsky, Revolut

1. 0:00 – 2:04

   Coming for Jamie Dimon's dinner

   1. DSDavid Senra0:00

      [static] All right, I had to tell them to start recording immediately because even the conversation we were just having, I was like, "Oh, we're gonna have a lot of fun today." I texted my partner, Rob. I was like, "I think me and Nick are gonna do a masterpiece," 'cause I've been hearing about you from other founders for years, about, like, this guy's super competitive, he moves excessively fast, and he's a conqueror. Can you explain, like, how you view competition and, like, what you're trying to do in the world?

   2. NSNik Storonsky0:24

      I was extremely competitive since I was, uh, six years old, so it was always in competitive sports or competitive, uh, Olympiads as well. And for me, it was always a natural desire to be number one, uh, in, uh, whatever I choose to do, right? Like, if I choose to play a game, I need to be number one, and then I'm extremely pissed, pissed off if I'm, uh, number two. So I always had this, uh, character.

   3. DSDavid Senra0:48

      You think the competitive drive came from sports? What sports were you playing?

   4. NSNik Storonsky0:51

      I was doing a lot. I was doing, uh, kind of, you know, swimming, boxing, uh, a lot of sports, yeah, in, in childhood. I think it's more like a character, uh, genes combination that you get. You know, some people are extremely competitive, some people are not competitive at all.

   5. DSDavid Senra1:04

      So how do you look at the competition? I heard, uh, this-- We were talking earlier. It was one of the most hilarious quotes where somebody asked you, like, "Oh, you're, you wanna expand the bank into the United States, right? And are you coming for Jamie Dimon's lunch?" And you go, "I'm coming for his dinner."

   6. NSNik Storonsky1:19

      [laughs] I mean, the, the idea was that, you know, lunch is always, you know, something small, and dinner is usually, in the US, much larger, and in Europe as well. So coming for dinner meant, you know, not only going for retail business, but also for enterprise as well, also potentially for investment banking, because it's also possible to disrupt investment banks.

   7. DSDavid Senra1:41

      How so?

   8. NSNik Storonsky1:42

      I mean, it's still very manual, still very, uh, expensive. I mean, it's all possible to make it all much cheaper as well. Uh, why not?

   9. DSDavid Senra1:51

      Okay, so e-explain, 'cause, like, I think a lot of people that are gonna be listening to this don't under-- like, they don't, they're not gonna understand what Revolut is today and where you're trying to go.

   10. NSNik Storonsky1:58

       Yeah.

   11. DSDavid Senra1:58

       So, like, explain what you're doing, like, the state of the business now-

   12. NSNik Storonsky2:01

       Yeah

   13. DSDavid Senra2:01

       ... and then what you're trying to do moving forward.

2. 2:04 – 6:12

   Building the #1 bank in 100 countries

   1. NSNik Storonsky2:04

      So maybe I'll start with, uh, uh, 12 years ago with what we started. So I started with a simple, uh, card, which allowed you to, uh, spend money abroad at interbank rates, avoiding, uh, effective banking fees and, uh, uh, with good FX rates. And then at later stage, I expand into other products, into credit, wealth and trading, crypto or business accounts. We also build a lot of, uh, non-financial services business. So as a result now we are, uh, a large digital bank, uh, providing, uh, all the services the banks provide, plus providing a lot of services, uh, on top of it. For example, you can book stays with us, you can, uh, buy eSIMs or-- and so on. And then the idea is to, uh, build a large global bank, which is, uh, number one in at least 100 countries. That's what we are, uh, trying to do now. So right now we're live in 30, probably 38 countries. Uh, in majority of them, we have banking licenses. And then we are slowly expanding 10, 15, uh, new markets every, I would say, one to two years.

   2. DSDavid Senra3:08

      Okay, so this goes back to, again, we just hit on what the-- how this conversation started. You're super competitive. You say these, like, little lines, right?

   3. NSNik Storonsky3:15

      Yeah.

   4. DSDavid Senra3:15

      That you're, like, you just drop there. But, like, you're just like, "Oh, I wanna build the number one bank in 100 different countries."

   5. NSNik Storonsky3:21

      Yeah.

   6. DSDavid Senra3:22

      You understand that's, that's a, a wild, wild, like, thing to say and an ambition, and I don't think you say it casually. Like, "Oh, yeah, I just wanna be 100, uh, you know, top number one in 100 countries." Like, you actually mean it. So, like, go into, like, how this... Like, what is your inner monologue in terms of, like, competition and how you view, like, this game that you're playing?

   7. NSNik Storonsky3:42

      Yeah, basically, uh, mentally, for me, if I've chosen to do this game, right, and as I said before, I need to be in number one in it. And right now there is a huge opportunity in the world where we have many countries, and then in, in each country I have ten, 20, 30, 40, 50 banks. They're all very fragmented. Basically, there is a unique chance in the world to build a, a global bank which, uh, provides much better services and products at a much better price, uh, in every single country. And then effectively to optimize, to compete with these banks, to, to drive, uh, prices, uh, on their products down, to improve customer experience, to save customers time as well, because you don't need all these physical branches for banks and so on.

   8. DSDavid Senra4:23

      But you gotta say more about this, like, this ambition or this, like, competitive drive that you have. So, like, w-like, how, how does it manifest in your life every day? Like, do you wake up with just, like, a burning desire to achieve mission success? Are you looking at yourself in the mirror and you're just like, "I'm not doing enough"? Like, what is happening?

   9. NSNik Storonsky4:37

      No.

   10. DSDavid Senra4:37

       Like, I'm interested in you, the entrepreneur, and then we'll talk about the business.

   11. NSNik Storonsky4:39

       Yeah.

   12. DSDavid Senra4:39

       But, like, this is the fascinating part for me.

   13. NSNik Storonsky4:42

       Well, basically, it's a banking business. And the, the way I view it, okay, if I've chosen to be in this business, I need to be number one in it. And obviously, there are tens of thousands of banks in the world. And, uh, what it means to be number one, okay, it needs to be number one in country one, two, three, four, and so on, and say it's, uh, 100 countries. And then in terms of competition, uh, how I look at competition, I mean, to be honest, I don't really look at competition. I look at, uh, kind of myself, right? And then what would I do to beat up myself, right? To outcompete, to outsmart somehow. And the philosophy is very simple. So every day you need to be, like, almost 100% every day. And then even if you lose to competition, then, uh, you can't really blame yourself because, okay, every day you were at 100%, right? So I think, you know, that's, that's the mentality that will help you win, uh, most likely.

   14. DSDavid Senra5:35

       I love this. Have you spent any time with Toby Lutke, the founder of, uh, Shopify?

   15. NSNik Storonsky5:39

       No, not yet.

   16. DSDavid Senra5:40

       Okay. So, uh, he was on the show. We're-- I'm actually recording with him in, like, another, like, two weeks. But he says he likes to take the view that he's a corporate raider, that somebody now has bought Shopify, it's him, and he's like, "What the hell was the previous management doing? How would I essentially improve every single element of what this previous management was?" Even though it, uh, it, uh, it also is him.

   17. NSNik Storonsky6:00

       Mm-hmm.

   18. DSDavid Senra6:00

       Uh, so you said basically the same thing. It's like, well, okay, you can't really control what your competitors do. I can control what I do. Let me analyze how I'm doing, and then how would I beat me, you know, from the outside?

   19. NSNik Storonsky6:10

       Yeah. That's, uh, part

3. 6:12 – 8:45

   Why founders beat professional CEOs

   1. NSNik Storonsky6:12

      of the game as well, yeah

   2. DSDavid Senra6:12

      Why do you think you have this opportunity to be number one? Like, what do you see that they're doing wrong that you think, think, think that you can do better?

   3. NSNik Storonsky6:18

      A lot of them, they are, are... They're not founders. That's number one, right? So they're there only for three, four years at best. They just collect their bonuses and the safe rate, and then they might, you know, op-optimize certain, uh, operating metrics. But I mean, they, they are not really 10X, uh, people, right? So they are... I mean, they're just there for their bonuses, effectively, for three, four years. As a result, they don't really need, uh, do bold decisions. They always play in defense. They never play in offense. I have a different style, right? So yes, of course, I play defense as well, but I always think, okay, what I can do more, right? Which industry I can go? Like, which product can I launch? Or, and so on. So it's like, you know, always pushing myself, pushing myself to do more.

   4. DSDavid Senra7:00

      Why do you think it's important that you're competing against non-founders?

   5. NSNik Storonsky7:03

      I mean, it's, uh, much easier to compete not against founders, right? If I would be competing with all the banks, and they were all founder-led, as a result, we would all have, you know, much better products by now.

   6. DSDavid Senra7:13

      [laughs]

   7. NSNik Storonsky7:13

      That's, that's not what's happening, right?

   8. DSDavid Senra7:15

      [laughs] Yeah. Say more about the difference between, in your perspective, between a founder and a professional CEO.

   9. NSNik Storonsky7:22

      Well, professional CEOs, uh, ultimately, their goal is not, uh, to improve organization, right? Their ultimate goal is to protect their job. So they, by definition, uh, they make suboptimal decisions for, for the company because they, they think about themselves, and they think about the companies as two entities, right? I think about myself and as the company as, as a one entity, right? Like, I do everything what is good for the company, and, uh, I never kind of, uh, try to diverge myself what is good for me. Uh, this should be different to what is good for the company. For me, it's the same. So I have, like, 100% alignment with the company.

   10. DSDavid Senra8:01

       Yeah, I heard you say something like your entire life is work. It's like 99.5% of-

   11. NSNik Storonsky8:07

       Yeah

   12. DSDavid Senra8:07

       ... the ti- your time is dedicated to your bui- to building your business, correct?

   13. NSNik Storonsky8:11

       Yeah, yeah, yeah.

   14. DSDavid Senra8:12

       Yeah.

   15. NSNik Storonsky8:13

       Also, what we w- when we speak with regulators, they're all are kind of, yeah, but, you know, growth or it's not a good mentality and so on. And my answer is very simple. Uh, every time when, uh, you think as a regulator I am excessive risk-taker, it's completely wrong, right? Because I'm the only one motivated for this company to succeed and to survive, right? And that means I'm actually not going to take stupid excessive risk compared to professional CEOs or professional boards.

   16. DSDavid Senra8:39

       'Cause there's no separate... This is what I hate when everybody's like, "Oh, it's just business. It's not personal." There's, like, no such thing with founders.

   17. NSNik Storonsky8:44

       Yeah, yeah.

4. 8:45 – 12:47

   Revolut's biggest mistake

   1. NSNik Storonsky8:45

      It's so, yeah.

   2. DSDavid Senra8:46

      So this is another thing that, uh, surprised when I s- I started reading about you, was originally, you, you set out to, like, not be regulated, and there was something about you saying this is, like, the, the worst mistake you ever made. Can you talk about what happened and how you learned this lesson?

   3. NSNik Storonsky9:00

      Yeah, basically, when we got several million customers, and then we applied for banking license, uh, the entity with zero customers, uh, is less riskier compared to an entity with, uh, millions of customers. Uh, and then the regulator eyes, they become, you know, much more risk-averse to you, right? Because for them, it's much easier to, to give a, uh, a license to a company with zero customers because maybe they will have zero cu-customers, uh, customers in three, four, five years' time, right? If you give a, a banking license to a, a company with five, 10 million customers and something goes wrong, right? Then the regulator will be to, to be blamed.

   4. DSDavid Senra9:36

      Why were you not regulated before? What was the state of the business be- when you applied for the banking license? What were you doing before?

   5. NSNik Storonsky9:41

      Well, we simply got e-money license, payment licenses. So we, we went for-

   6. DSDavid Senra9:45

      You were just moving money

   7. NSNik Storonsky9:46

      ... mu-much lighter licenses. Yes.

   8. DSDavid Senra9:48

      Okay.

   9. NSNik Storonsky9:48

      Yeah. And then the idea was, uh, banking license back then was, uh, three, four years to get, while e-money license you can get within, uh, one year. So obviously, as a founder, you want to, to do things faster, so that's why we went for e-money license. Then we got a lot of customers, and then we moved to banking license, and then it became almost impossible because we were very, very large. Uh, I think in the history of UK, uh, it never happened before that, uh, a company with, uh, seven or eight million customers in UK applied for, for banking license.

   10. DSDavid Senra10:19

       So was that a difficult process? Like, what happened?

   11. NSNik Storonsky10:22

       Uh, it took us almost, uh, five years to, to, to get a bank license in UK. Yeah.

   12. DSDavid Senra10:26

       Okay, so what would you do differently before? You would've tried, like, what you... I think the way you put it is like regulation, it's not a moat. That's not the, the right word to, to... But it's like there's a huge benefit to actually getting yourself regulated. Is this correct? Is this the way you thought about it?

   13. NSNik Storonsky10:41

       It's like, uh, there are pros and cons. Uh, to build a large business, uh, it's a must, right? Uh, because, uh, if you want to really compete with banks, you need to get, uh, trust from customers. They need to put salaries in. They need to put a lot of their wealth in the accounts. They need to start trading stocks with your, uh, ETFs and so on. So they need to trust you. And then in their minds, uh, I mean, they, they trust banks.

   14. DSDavid Senra11:06

       What do you think the American, like, fintech companies are doing wrong about this?

   15. NSNik Storonsky11:10

       To build a very large business, to capture large market share, it's, it's just unavoidable. So I think in US, uh, a lot of companies started like Chime, uh, Cash App. Uh, it was simple before 10, 12 years ago. They all never went for banking license. I think it's a big mistake. So they could never become a large business because-

   16. DSDavid Senra11:28

       E-e-explain why they can't become a li- large business without it, though.

   17. NSNik Storonsky11:32

       Just because they are not a bank, right? They, they can target certain, uh, niche, uh, audience, certain cohorts of customers, uh, I don't know, low income and so on, but they cannot n-never go to, to prime audience, right? And, uh, they can never become, uh, a prime bank account without a banking license.

   18. DSDavid Senra11:48

       But why do you think that relegates them to being a small company?

   19. NSNik Storonsky11:51

       Well, just because, uh, yes, early adopters, one, 2% of the population will try them. Maybe it will go from early adopters to their friends, family, and other like, you know, 2%, so 4% of the population, when you want 40, 50, 60, 70%. For example, in Ireland, we have, uh, 80% market penetration. So four out of five-

   20. DSDavid Senra12:07

       In Ireland?

   21. NSNik Storonsky12:07

       Yes. Four out of five adults use Revolut accounts

   22. DSDavid Senra12:11

       Okay, how did that happen?

   23. NSNik Storonsky12:12

       Slowly, uh, I think a combination of lack of competition, uh, very bad banks. They have only four banks, which are bad, plus very, uh, small country with a lot of people living outside of Ireland as well. So I think altogether it led to us being eighty percent of, uh, eighty percent of the market. If you look at other markets, for example, in the UK, we're about twenty percent penetration. Uh, France is twenty percent, Spain. Uh, certain markets are thirty, thirty, forty percent penetration. So it is possible to go to sixty, seventy, eighty as, as Ireland shows. But for it, you need to be a bank.

   24. DSDavid Senra12:46

       Okay.

5. 12:47 – 17:20

   Why legacy banks can't innovate

   1. DSDavid Senra12:47

      So I'm very curious, like when you're going into a new market and you said there's just bad banks, there's like l- uh, low competition here, like what are you seeing that they're doing wrong?

   2. NSNik Storonsky12:56

      Well, they, they're stuck in limbo of, uh, professional management who are extremely risk-averse. As a result, there is zero lack of or, or zero intention to innovate. Um, and then, uh, all resources are spent on, uh, uh, protecting what they have already, right? So for example, you can have a very old, uh, legacy third-party core banking system. Obviously, you need to change it to your own or to, to some new provider. But then banking management will never do it because, uh, it introduces risk, right? Because you need to migrate customers, you know, something might go wrong, and they're, they never take a risk, right? So there's a problem. Plus on top of it, uh, because a lot of them, they are not technical, so they don't really understand how to do a lot of technical things. As a result for them, uh, default choice is to, uh, not do anything for regulators and then for, uh, for, for legacy banks, because, uh, doing anything is risky in an industry where you lack certain skills, so certain technical skills. And banking is about, uh, it's not only about like regulation, it's also about, uh, building tech. And uh, I think all these people are very bad at building tech.

   3. DSDavid Senra14:13

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   4. NSNik Storonsky16:42

      Yeah, exactly. They just don't even think about building products, right? Because they, they just don't feel it, they don't use it, they don't, uh, they don't know how to do it. They're just professional managers. I think it's very important for... to build successful business, you need to obviously good tech- be a great manager, like very tough manager, be very in details and be very good product person as well to know how to build and turn the product. Tech regulation, compliance, people altogether, uh, it's, it's like a machine, right? So there are inputs and then the whole machine should produce you right output, which is amazing product that people use.

6. 17:20 – 20:28

   Running a company like a machine

   1. DSDavid Senra17:20

      Okay, explain how you're building this machine.

   2. NSNik Storonsky17:21

      I mean, you need to visualize in your head, uh, kind of, you know, what are the inputs in this machine, uh, and what do you want to achieve? What are the goals, right? And then, uh, inputs is obviously your organization, your structure, uh, your people, how you build product, what do you want to build. Then, uh, you effectively observe kind of, you know, the whole structure working, the whole product being built, and, uh, you always interfere, right? If something goes wrong, and then you kind of, uh, change certain parts of the machine. For example, uh, when we started, uh, it was a very small team, ten, twenty, thirty people. We hit a bottleneck when, uh, uh, kind of team, team grow, but then speed slow down. Machine stopped working. So what I did, I, I just ensured that we have, you know, very-- a lot of very small independent team who just work on the same platform, right? And then speed increased because people, people work was paralyzed, so they work on different products, different features, uh, using the same tools, and they were all independent. But then again, we hit bottleneck with, uh, regulation compliance. Again, I build another muscle in the machine, which is the reg affairs, government affairs department and so on. So they, they had to produce, you know, certain outcomes. Then we hit again a bottleneck with hiring Fast or enough good people. Again, we build a lot of, uh, process for recruitment, targeting the best people, and so on. So it's, it kind of, you know, moves in circles, right? You, you, you, you build something, then you hit a bottleneck, right? You identify the problem, you solve the problem, you go again.

   3. DSDavid Senra18:47

      And so now you're adding another essentially like skill to this machine that is your company. You were... Before you started Revolut, you were doing... You were a trader, right?

   4. NSNik Storonsky18:57

      Yeah.

   5. DSDavid Senra18:57

      I heard about what you just described before, where it's just like you have a... I don't even know if you call them bets. Like, you'll have, like, 20 different ideas or, like, small teams working on 20 different ideas-

   6. NSNik Storonsky19:07

      Yeah

   7. DSDavid Senra19:07

      ... right, at a time. Explain how these teams are structured and, like, how your previous career as a trader influenced the way you're building and managing your company.

   8. NSNik Storonsky19:15

      I think what, what was useful as a trader was, uh, uh, risk management and then quantifying everything. Uh, uh, because there are fortunately or unfortunately in, in banks or in all organizations, um, a lot of things are, are evaluated based on their people's intuition, which, uh, in a lot of cases is simply wrong, right? So in order to evaluate correctly what is done and what is, uh, not done, you need to have a metrics, you need to have KPIs.

   9. DSDavid Senra19:44

      Wait, are you saying dumb or done?

   10. NSNik Storonsky19:45

       Done. Done.

   11. DSDavid Senra19:46

       Okay. [laughs]

   12. NSNik Storonsky19:47

       Done. Da, da, da.

   13. DSDavid Senra19:48

       What a great said dumb.

   14. NSNik Storonsky19:48

       Well, I'm dumb as well. I'm dumb as well, yeah. [laughs] Metrics and KPIs that actually kills politics, uh, with an organization because, uh, look, everything is transparent, right? You as a individual contributor, you as a manager, do you achieve your metrics? Do you achieve your goal, right? Why you haven't achieved it? So it doesn't matter what you say. I mean, there are objective numbers. I think it's extremely important, uh, to, to have, uh, as a part of the machine. When I worked in the bank, uh, they didn't re-really have it. So they had the professional CEOs, and they had a lot of politics with an organization. And I think it's, uh, it's just simply wrong how, how people run general businesses.

7. 20:28 – 23:31

   Funding winners and cutting losers like a trader

   1. DSDavid Senra20:28

      Okay. So explain, like, setting these little bets up.

   2. NSNik Storonsky20:32

      I mean, to be honest, it's pretty simple because, uh, we were always high velocity for the company when we released a lot of features, a lot of products. And then at a certain point of time, I decided to install discipline in building bets because we were building a lot of things, but we were not really tracking, uh, how they were performing. So we simply build a staging process when first there is a kind of, you know, decision to produce a bet. It can be bottom up or top down. Then there is a discussion, call it committee, whether it makes sense to produce the bet. And then, uh, if, if decision is made, we, uh, fund the bet. So we, uh, separate a team of up to 10 people, front-end developers, back-end developers, uh, designer, product owner, sometimes data scientist, operational manager. And then they build a new product within nine to 18 months. And then when they launch the product, we simply look at, uh, growth of the product in terms of gross profit. And, uh, because we've done it for the last 10 years, we already have, uh, launched, say, 50 bets. Uh, and then we know that our top 10 bets, they grow, say, 10, 20% month on month, and they produce, I don't know, one million GP, two million GP, three million GP, uh, uh, each month, uh, consecutively. Then if we release a bet, and then we see that this bet is historically in cohort of bottom 25% of all the bets, we simply sunset it. So we instill discipline when we're not really running businesses which are not growing very fast. Uh, and then bets, uh, which are growing very fast, we're actually doubling down, right? So we give them more teams. One team becomes second team, three teams, four teams, five teams, then becomes department, then becomes a, a major P&L alliance. So I think this process just in a very disciplined to always filter out things that don't work out. Even myself, uh, I kind of, you know, I don't really trust my intuition in terms of which products to build, which products not to build because historically I was wrong so many times. And I think only approach which, uh, like completely algorithmic, right? Top bets you've continued to fund. Bottom bets you just cut like within 18 months.

   3. DSDavid Senra22:34

      This is the trader in you.

   4. NSNik Storonsky22:36

      Exactly, yeah.

   5. DSDavid Senra22:36

      There's a lot of what you're saying reminds me of Bezos and the way he describes this, all these like obviously these disparate bets that he would place inside of Amazon, uh, when he was obviously building the company. And he has a great line where he's like, "You need to pour gasoline on the promising sparks." So your whole thing-

   6. NSNik Storonsky22:50

      Yeah

   7. DSDavid Senra22:50

      ... is I'm gonna cut the bottom, but then the top performing... Do you have a percentage? Is it 10% top?

   8. NSNik Storonsky22:54

      It's usually up to 25% of all the bets.

   9. DSDavid Senra22:56

      Okay, and then you're just now we know-

   10. NSNik Storonsky22:58

       We just scale it up. Yeah.

   11. DSDavid Senra22:59

       Okay. And you're dedicating a lot more money and resources. Why is it important at the very beginning before it's unproven to, to cap the team size of 10?

   12. NSNik Storonsky23:06

       It's not necessarily 10. It, it can be a bit more. It just depends, uh, how complex is the product, but it should not be more... Generally, it should not be more than 10 people. I guess, as a rule of thumb, okay, you need probably two, three back-end developers. You need, uh, uh, two... In our case, because we also produce mobile apps, you need to have, uh, two to four front-end developers, so three to four back-end developers, one product owner, one designer. That gives you 10 people.

8. 23:31 – 25:23

   How AI is changing Revolut's team structure

   1. DSDavid Senra23:31

      Is the way you're structuring these teams changing because of AI now?

   2. NSNik Storonsky23:34

      Yes. That's actually, um, I think now that I'm kind of, you know, uh, trying to change because, uh, last 10 years, I think I, I optimized a lot how you, uh, direct people, how you build organization around people, around their strengths and weaknesses, like avoid your politics, putting KPIs and so on. That's actually avoi-avoiding, uh, people's weaknesses, right? With, with AI, structure needs to be rethought, to be honest with you. I think the team should not be 10 people anymore. It should be two people, three people at best because one, uh, one developer can do front-end, back-end, can even do, you know, data science as well. So it, it should be rethought.

   3. DSDavid Senra24:13

      Can you give me a download of your thoughts about how AI is changing the way that you're running your company?

   4. NSNik Storonsky24:18

      Well, many things, and I think we are just in the beginning. So we automated customer support. So 90% of all customer support team is automated now. We're doing the same. Before it used to be 5,000 people plus. Now it's, uh, it's, it's much less. Obviously, engineering is automated as well. We increased speed of, uh, engineers by 30%. Uh- Translation, uh, cross-selling as well done by our LLMs now. Um, a lot of things, but I think ultimate goal is, uh, at least a bet for us now is to be able to build a, like, full stack AI employee. Uh, and I think it's completely doable with the current technology. So it's, it's not like a chat tool or another, like, interface where we tell what to do and then it, it produces something. No, it's, it's more like AI employee, which can join calls with you, which have email, which have Slack account, which have access to all internal, uh, back office system and, uh, can do work. So I think that's kind of, you know, the, the ultimate goal that, I mean, sooner or later, you know, majority of companies will come to.

9. 25:23 – 29:59

   50 direct reports and spreading innovation fast

   1. DSDavid Senra25:23

      Yeah. You keep mentioning over and over again like, uh, I don't know if you used the word bureaucracy. I don't think you did. But, like, you, you hate politics. You want to minimize that. You want, like, data. You're much more like just, "I don't care what you say. It's like did we hit the numbers or not, and is this growing or not?" What's your organizational structure? Do you just have a, a shitload of direct reports? Like Alexander Wang was sitting in that chair like two weeks ago.

   2. NSNik Storonsky25:42

      Yeah.

   3. DSDavid Senra25:42

      And he has some crazy shit, like 200 direct reports [laughs] .

   4. NSNik Storonsky25:45

      Oh, really? Yeah.

   5. DSDavid Senra25:46

      Yeah. So, like, what, what's your s- how, how are you organized?

   6. NSNik Storonsky25:48

      Uh, so I have about 50, 51, 52. Um, really to, I'm not even speak... Well, I, I speak with my direct reports, but I also go deeper, right? I go down to individual contributor in, in important projects. So I can speak directly with designer, with product owner, with a developer. Philosophy is very simple, right? So whenever you hire, uh, smart, self-guided people, you don't really need to manage them. So you just need to show them direction and then ensure that they're all synchronized. So it's like an army, right? So you need to ensure that all people are using the same standardized equipment, right? That's what you need in the company as well. You not need their every single team or department to reinvent their own, uh, uh, bicycles right, or their own weapons. No, it has to be, uh, the same standard approach. And then if someone invents, you know, some additional, uh, kind of tool or additional instrument which allows us to move even faster, then we need to standardize it across all, all the teams and departments. And that's what I, what, what I do very well. I'm, I'm very good at spotting, uh, innovation in one team or one department and then actually spreading it, uh, across the whole company.

   7. DSDavid Senra26:55

      Can, can you give me an example of you spotting an innovation and spreading it through the other departments?

   8. NSNik Storonsky27:00

      For example, recently was, uh, we for, for design, uh, we always use the Figma. Uh, right now I spotted that one team is actually producing designs much faster, uh, using LLMs. And then instead of actually designing in a certain, uh, interface or the product they, uh, they simply upload it, our design system on the code level to LLM, and then they prompt to produce certain flows based on our, our design system. As a result, the whole design is not really a frame in Figma, but it's like a live interface on your laptop or on your simulator. So you can click through things. It, it reacts and so on. But, uh, the most important thing, you can do it three, four times faster compared to doing frames in, in Figma or screens in Figma. And then I'm pushing, uh, the whole system to all designers now.

   9. DSDavid Senra27:51

      Have you spent any time, like, reading about, like, entrepreneurs, like, from the past at all?

   10. NSNik Storonsky27:55

       Yeah, of course. Yeah.

   11. DSDavid Senra27:56

       Like anybody stick out that, that you admire or you studied?

   12. NSNik Storonsky28:01

       Yeah, of course. I, uh, I read books about, uh, Henry Ford.

   13. DSDavid Senra28:05

       I'm, I'm glad you said Henry Ford. You're sitting here talking about, like, you're building a machine. You're, you're like observing these innovations in all different parts of your machine, and I need to make sure that it's spread throughout th-this entire machine. That's like Henry Ford.

   14. NSNik Storonsky28:16

       Yeah.

   15. DSDavid Senra28:16

       Andrew Carnegie, he would travel around the world. Now we obviously, uh, technology can proliferate. You know, somebody could tell you about it. You see it online or whatever. He'd have to like physically go and travel to the factories 'cause they're building physical stuff.

   16. NSNik Storonsky28:25

       Yeah.

   17. DSDavid Senra28:26

       And like, oh, wait, this idea in Britain, I take... I'm gonna take back to America. And that's the way he, Carnegie, Ford did this too. But Carnegie specifically sounds exactly like you, where he's just like, "I don't care if it's a five percent improvement in one percent of our business. Like if there's a better way to do it, we are going to do that." And he was moving against usually older competitors that would not invest in technology. And in fact, when they found out that he was spending so much resources on it, they thought he was fucking crazy and actually gave him, 'cause he ran that company for thirty years, it actually gave him this compounding advantage that by the time, like his, his competitors could never, uh, catch up. He was like so far ahead. But it's like you, you were thinking very similar to Carnegie in, in what you were just describing.

   18. NSNik Storonsky29:05

       I think it's super important is you're just building the machine which moves fast and which achieves the goals. Um, and then if, if you spot innovation in certain part of the machine, you need to spread it as, as fast as possible.

   19. DSDavid Senra29:15

       Yeah. And so th-this idea that, um, you, you kinda hate like managers that just pass along like what to do, correct? You've, like, eliminated them from your company?

   20. NSNik Storonsky29:25

       Yeah, exactly. I-I-I've seen so many, uh, by now last, last ten years. I just simply what they do, okay, they, they take information from their individual, uh, from individual contributors, and they pass it to, I don't know, stakeholders, right? I mean, it's like what, what, what's their value add, right? Did you change direction of the team? No. I mean, they know what they're doing. Okay. Did you bring any innovation? Did you identify the easiest way to achieve the roadmap, right? No, not really. But I mean, what, what's your job? Like, you know, just, you know, taking, uh, numbers from them, passing to myself. I just don't get

10. 29:59 – 33:31

    Hiring self-guided missiles

    1. NSNik Storonsky29:59

       it.

    2. DSDavid Senra29:59

       You prune your team is what I've heard.

    3. NSNik Storonsky30:01

       Yeah.

    4. DSDavid Senra30:01

       And you're searching for, I think, what you call self-guided missiles.

    5. NSNik Storonsky30:04

       Yeah. Self, self-guided people. Yeah.

    6. DSDavid Senra30:05

       It's almost like a, a, a founder and employee form is what you're going after.

    7. NSNik Storonsky30:10

       I always joke that, you know, self-guided people are like self-guided missiles, right? Uh, so you've got, uh, brilliant people. You don't even need to tell them what the goal is. They self-identify the, uh, the goal, and then, uh, they self-reach it, right? So they're like self-guided missile, which also identify the goals. Then, uh, people who are good but not excellent, you need to tell them the goal, and then they are without any kind of iteration, they, they will reach the goal. Average people, you tell them the goal and then You need to spend weekly iterations with them to direct them, to tell them what to do, and then they will reach the goal, right? So you spend management time. That's what I, I don't want. And then below average people, okay, you s- you, you give them the goal, uh, you spend time on them, and then, uh, most likely they will not hit the goal, right? So that's a problem. So in order for you to have as many direct reports as possible, you just need to minimize management time spent on each of them.

    8. DSDavid Senra31:05

       Let's just assume you've gotten rid of all your below average people anyways. How do you identify the average people, and then do you just fire them as well?

    9. NSNik Storonsky31:13

       I do, yes. Uh, like a lot of people I know who are very good executives, uh, they struggle with this.

    10. DSDavid Senra31:20

        Why do you think they struggle?

    11. NSNik Storonsky31:21

        I think it's just, you know, uh, they much more care about being empathetical to other people rather than caring about winning. So I think if you're much more weighted in terms of winning, right, your empathy to other people is at second place, and then you, you will do, uh, right decisions even if they are tough decisions. And then people who are kind of, you know, more empathetical, less are attached to being a winner, then they might prioritize their being number two or number three or number four rather than, uh, prioritize getting better people in their team.

    12. DSDavid Senra31:56

        Have you heard E- how Elon speaks about this?

    13. NSNik Storonsky31:58

        No.

    14. DSDavid Senra31:58

        So he, he would tell the people, uh, like, the people managing the engineering team, he's like, "If your engineer's like you, you're do- you're not doing the right job."

    15. NSNik Storonsky32:06

        Yeah.

    16. DSDavid Senra32:06

        And his whole thing was exactly that.

    17. NSNik Storonsky32:08

        Yeah.

    18. DSDavid Senra32:08

        He's just like, "We're here to win. We're here to achieve the goal, and then how people feel is, like, completely secondary to that."

    19. NSNik Storonsky32:14

        Yeah, exactly.

    20. DSDavid Senra32:14

        That's more how you think.

    21. NSNik Storonsky32:15

        I think it's very important whenever you hire an executive or you observe executives are, like, people who are very likable by their direct reports, uh, it- they might not be the right people. Uh, I think the best executives are, they're very tough, right? Well, they might be likable, right, but then likable is never the goal for, for the executives. Or the goal is always to achieve the goal, right, with the minimal number of resources spent. So they're, they're the best.

    22. DSDavid Senra32:44

        Say more about this 'cause I, I heard this, like, y- you, you like small... You like large outcomes that come from small inputs. You just said something like that just now. Like, achieve the goal with the minimum amount of resources.

    23. NSNik Storonsky32:55

        Yeah.

    24. DSDavid Senra32:55

        So it's like a, almost like an art to, like, I know you don't think of yourself as an artist [laughs] for sure.

    25. NSNik Storonsky33:00

        Yeah. Yeah.

    26. DSDavid Senra33:00

        But, like, there is, like, an art. You're trying to, like... It's not just you wanna win. You also wanna win, like, the right way, where it's like you could win and you just expended way more resources than somebody else who's like, "No, I wanna try to find the minimum in- out, uh, input possible for the largest outcome."

    27. NSNik Storonsky33:13

        Yeah, exactly. If you think what founders, what entrepreneurs, what are, like, great executives do, okay, they have, uh, the goal they need to reach or end to end. So what it means, okay, they need to identify direction, where to go, and then they need to build something within this direction with a minimal number of resources spent.

11. 33:31 – 37:38

    Too much money makes founders weaker

    1. DSDavid Senra33:31

       Do you see a lot of waste in the, like, American entrepreneurial ecosystem, though?

    2. NSNik Storonsky33:35

       I think there is too much money right there. A, a lot of founders, they think money is free, which is probably f- almost free in, in California because you can raise, you know, so much money at, uh, ridiculous valuations and then just spend, uh... So I think there is def- different culture of, uh, trying to solve problems with, uh, money rather than with your brains.

    3. DSDavid Senra33:55

       Explain to younger entrepreneurs that are going down that path why that's not the right move.

    4. NSNik Storonsky34:00

       Well, for example, you, uh, you're into B2B business, right? And then, uh, you kind of, you know, set up a company. You, you have your first sales first, say, one million ARR, uh, and then you decide to scale it, and then suddenly decide to hire expensive VP of Sales who will, who will hire another, like, you know, 50 salespeople to sell your product. You need to find a way to start selling a product cheaply, build a system, and then, uh, simply feed additional employees into the system so you always have, you know, great payback. Starting big, hiring, you know, very expensive VP of Sales who will hire also very expensive team, uh, is, is wrong decision.

    5. DSDavid Senra34:41

       Okay, so essentially, like, they remove the constraint for money, therefore they're not developing the skill set that constraints make you. If you're gonna survive under the set of constraints, you actually have to be good. You actually have to be talent. You actually have to be resourceful, and they're essentially papering that with money, and it might work for the short term, but long term they're gonna get beaten by somebody like you.

    6. NSNik Storonsky34:59

       I mean, if we are in the same industry, then yes. For what, uh, I mean, in many cases in US, uh, it's not that competitive, right?

    7. DSDavid Senra35:05

       Wait, that's a wild statement. Why would you say in the US it's not that competitive? I feel other people would feel it's the most competitive environment. What do you see as a European?

    8. NSNik Storonsky35:13

       I mean, Europe is even less competitive [laughs] .

    9. DSDavid Senra35:15

       Yeah [laughs] . So you're saying start China?

    10. NSNik Storonsky35:17

        China, China is competitive, yeah.

    11. DSDavid Senra35:18

        [laughs]

    12. NSNik Storonsky35:19

        So China is nine and six, right? And then e- even if you are good in Europe or even if you are good in US, I mean, how can you out-compete the people who work nine to 10, six days a week, right? Plus they have, uh, very good education, technical education, so it's very hard. When I started, uh, I started in a co-working space with 140 companies. Um, within, uh, five years' time, only three companies survived. They all worked on the weekends. Within, uh, 10 years, only two companies survived out of 140. So I think working weekends is a must if you want to survive, purely statistically.

    13. DSDavid Senra35:54

        Okay, so working seven days a week is one thing, but working nine to nine or 10 to 10, like, what, what is it? What is the actual culture?

    14. NSNik Storonsky36:00

        Well, I work like that, right? Um-

    15. DSDavid Senra36:02

        [laughs] You're the founder, though.

    16. NSNik Storonsky36:03

        I, uh, yes.

    17. DSDavid Senra36:03

        I don't know a single founder that's like, "No, I'm gonna... I'm, I'm on PTO." Like, I understand that. I'm talking about your, your-

    18. NSNik Storonsky36:09

        And then, uh, yeah, my direct reports, like absolute majority of them, they work like that, right? They might be, like, a bit less alignment in, you know, for direct reports of my direct reports. But still I think out of all European companies, we're probably one of the hardest working, and, uh, I think we're also one of the hardest working companies if you include US as well.

    19. DSDavid Senra36:32

        I wanna know what you think, like, the people, the entrepreneurs that are, that have this, like, Calif- California tech, like, culture and operating system. What do you think they're doing wrong? You said there's just too much money They're not that competitive? [laughs]

    20. NSNik Storonsky36:46

        No, ev-everything else seems there is there, right? There is an ecosystem.

    21. DSDavid Senra36:50

        Mm-hmm.

    22. NSNik Storonsky36:50

        Talent is very good. You've got, you know, great universities, plus, uh, like a lot of expats, you know, coming to study in these universities. Uh, people are rather hardworking. But the, the culture when, you know, there's, you know, too much money and then people spend... choose to spend a lot of money on the problems, I think it's the wrong culture.

    23. DSDavid Senra37:10

        'Cause they're not so- actually solving the problem, the underlying problem?

    24. NSNik Storonsky37:13

        I think it just, uh, it's a lot of waste, number one. And then, uh, you're not really developing yourself as an entrepreneur. It's so easy to kind of, you know, close the problem with the money. If you have unlimited number or unlimited amount of money, I mean, you just, you know, throw money here, here, here. But then you're not prepared for the future when, you know, for some reason money can disappear.

    25. DSDavid Senra37:33

        That's a very interesting take. You're not developing yourself as an entrepreneur.

    26. NSNik Storonsky37:37

        Yeah.

12. 37:38 – 41:08

    What Europe's constraints taught Revolut

    1. DSDavid Senra37:38

       Give me examples of how you developed yourself.

    2. NSNik Storonsky37:40

       Well, what we started, if you look at the unit economics of the business, we started with a negative, uh, gross margin. Uh, and the negative gross margin continued for next three, four, five years until we optimize it to up to eighty percent of positive gross margin. And then if you look at, uh, why is that, right? So in our business, if you look at, uh, Europe, everything is extremely capped and regulated compared to US. For example, interchange is, uh, twenty base points versus one half percent or in US. Credit card rates are capped in majority of countries. Like credit is very limited, right? You cannot really freely give credit to many people. It's very difficult to effectively set up a bank in Europe, again, country by country, because even if you have a bank license in Europe, you cannot be a primary bank because, uh, with the regulation doesn't allow you to, uh, start issuing local accounts unless you set up a local branch of the bank in that country.

    3. DSDavid Senra38:32

       You need to have physical location.

    4. NSNik Storonsky38:34

       I mean, it's, uh, you need to have an office, you need to have local connectivity, local regulation. And so also you go country by country, and it takes a lot of time, a lot of, uh, resources as well. So different languages as well.

    5. DSDavid Senra38:45

       And you had to do all of this?

    6. NSNik Storonsky38:46

       Yes. Plus very tough employment laws in, uh, in, uh, many countries. In US it's very easy, right? I mean, it's like employment at will. Uh, in Europe it's not like that. Uh, so you need to be very careful how you hire, who you hire. So all, all this together has actually produced environment which is not very profitable, right, and very difficult to build a company. Then, uh, even in that environment, we kind of succeeded, right? But then, uh, we succeeded because we spend a lot of, uh, time and a lot of, uh, energy and a lot of, uh, kind of, you know, brain power to optimize on every single problem. If I would start the same business in Brazil or, or like in the US or maybe in other countries, in Mexico, uh, certain aspects would be much easier. If you look at unit economics, uh, credit is so much easier to give. Interchange is not capped. Technically, this difficult environment in Europe actually, uh, taught us how to, uh, build business in a very, uh, kind of in a competitive landscape. You see what I mean?

    7. DSDavid Senra39:45

       Okay. So if you were surviving in this very difficult environment, now you have a skill set that people that did not have to go through that-

    8. NSNik Storonsky39:51

       Yeah

    9. DSDavid Senra39:51

       ... and now you have to compete head to head with them in, let's say, uh, like America, they're gonna be very hard to compete with. You're gonna be very hard to compete with 'cause they haven't developed the same skill sets and they didn't go through all the stuff you did.

    10. NSNik Storonsky40:00

        Yeah. Yeah.

    11. DSDavid Senra40:00

        Okay, that makes perfect sense. I found one of my all-time favorite quotes when I was reading the book Zero to One. The quote says: "The single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas." That is exactly what AppLovin has done with their advertising platform. AppLovin connects you with over a billion potential new customers in mobile games. AppLovin allows you to capture undivided attention. AppLovin ads are full-screen videos that are watched for an average of thirty-five seconds. That is retention that blows other ad platforms out of the water. And you can launch on AppLovin in minutes. You set the goal, and AppLovin achieves it. No complex setup, no expertise needed. And AppLovin scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results scale to hundreds of thousands of dollars of spend per day and increase their revenue by millions. So you want to get started quickly before all of your competitors are on AppLovin. And you can do that by going to applovin.com. That's applovin.com.

13. 41:08 – 49:28

    Why VCs are like football cheerleaders

    1. DSDavid Senra41:08

       You've said some very interesting things about investors that I want to talk to you about because it's really important. This show, the whole idea was just like, I think entrepreneurs are the most pe- important people in the world. The idea that, you know, somebody has an idea and it doesn't exist, and they, they through, through determination, agency, you know, aggression, like they make something that didn't exist that started in their mind real. And in your case, you have, you know, you're in 40 countries or whatever the case is, thousands of, uh, employees. How many customers? Tens of millions, like from an idea that you had, you know, when you were what, in your late twenties at the time?

    2. NSNik Storonsky41:42

       Twenty-nine or thirty.

    3. DSDavid Senra41:43

       Yeah. It's, it's absolutely incredible. I think that's a, a miracle to me. And yet a lot of the discussion that takes place that what founders say about investors in private, they do not say in public. And so we were talking earlier, um, because I saw this clip of you where you compared investors to football cheerleaders. [laughs]

    4. NSNik Storonsky42:01

       Yeah.

    5. DSDavid Senra42:02

       Can you give, can you explain why you made that comparison?

    6. NSNik Storonsky42:05

       Well, basically, uh, I, I gave you this, like, history before. So when, when I started the company was, uh, twelve, thirteen years ago. Um, back then in Europe and in the UK, it was extremely difficult, uh, environment to raise money. Simply, there were not that many VCs around, and then there were all, uh, more like private equity guys, like extremely aggressive, extremely legalistic. So to raise money, you had to sign, uh, a lot of bad conditions in your shareholder agreement, uh, liquidation preferences, board seats, or like, you know, reducing your voting rights as a founder, and so on. So these people basically think that because of them, the company was, uh, kind of, you know, created because they gave money, and that they are entitled to lash- Part of its success. So that's the mentality of, uh, like, you know, quite a few investors that invested very early on, like in, in my company, for example. I think it's, uh, kind of largely wrong, this mentality because, uh, getting money from LPs is extremely easy. I also have-

    7. DSDavid Senra43:12

       Wait, getting money, you said?

    8. NSNik Storonsky43:13

       Getting, getting money from... Uh, because their business is very simple, right? Okay, they, they have LPs, they collect money from them, and then they invest in startups, and then they have a business model of two 20, right? So it's so much easier compared to building a real operational business, uh, from scratch, uh, because they never risk their own money, right? Uh, they don't really need to work hard. I mean, there is competition, but competition is just, you know, for, for getting deals. So I think their job is, uh, so, so much easier. Uh, that's, uh, number one. And then, uh, number two is, uh, back then there was, you know, almost no competition compared to what it is now, uh, in, in VC circles. And back then there was, uh, basically this opinion that we as VC will help you run the company. The company will be successful because we'll give you advice, you know, how, how to run a company. Reality are, like almost none of them, they ever build any company, right? So they, they just raise money from LPs, so they invested their, their money in, in many companies. And, uh, sometimes they have board seats, sometimes they don't. But having a board seat or doesn't teach you how to run a company at all, right? You, you, you're just observer. As a result, you have all these people with a lot of power, right? Because they give you money, they put certain conditions in shareholder agreement. Uh, and then they also have this mentality that they can tell you what to do as a founder, right? And that's, uh, in my experience, was, uh, very dangerous. Uh, and I had many cases in the past when, uh, certain VCs... I mean, the advice was simply wrong for, for, for the company. So I think, you know, my advice to entrepreneurs would be even if you raise money from VCs, try to pay a lot of attention to shareholder agreement, right? And then to ensure that they're purely financial players, that they have no right, uh, no voting right, uh, no seat at the table at decision-making. Super important because, uh, if something goes wrong, right, uh, you effectively have cheerleaders, you know, who look at the match, and then they try to play this match, you know, uh, instead of professional players, and that's, you know, always disaster.

    9. DSDavid Senra45:23

       Why do you say some of the advice they gave you is dangerous?

    10. NSNik Storonsky45:26

        I mean, one of the advices was, uh, "Okay, you know what? You need to hire experienced executive." You know what? Now it doesn't work. Uh, when I started, uh, first five years, had probably fifty plus experienced executives. Uh, I kept only two, right? Within one year. It just doesn't work. Why is that? Why experienced executives, you know, almost never works or work out? Uh, it's the same as football players, right? They, they have their prime. Like reality, I mean, there is a prime age and, uh, like it doesn't mean they became, uh, less good. I think they, they changed their priorities, right? Plus, uh, probably became less good. Plus things changed, times changed, competition changed. So people who were good before, who had, you know, past track record of being good before, uh, they might not be good in your company for the future. That's number one. It's extremely naive to think so. Uh, and then number two, there is also a negative for selection bias, right? Uh, if you think that people who are extremely good, like for example, how I hire people, uh, I look at, uh, their, uh, track record of achievement, and they, they need to be top one percent of, uh, compared to their peers in terms of their career progression. And then I try to pick up them when they are twenty-five, thirty years old, so they continue on the same trajectory in, in, in Revolut. Uh, whenever you're hiring experienced executive for... Reality, there is a negative selection bias because people who are extremely good, they already made it, right? Uh, I don't know, they either probably running their own businesses, uh, or they're retired or something else. And then people who never have this extreme career progression, uh, who you hire as experienced executive, uh, they just, you know, by definition, less good compared to people with extremely fast career progression who are already not in the market.

    11. DSDavid Senra47:11

        Okay, so you found basically the advice they gave you to be completely the opposite of what you should have been doing based on what you just said.

    12. NSNik Storonsky47:16

        Yeah, exactly.

    13. DSDavid Senra47:17

        Okay.

    14. NSNik Storonsky47:17

        Yeah. Uh, and then, uh, yeah, a lot of advice when, you know, they think that certain people in the company are good because they're experienced. Well, I think I'm really opposite. And then, uh, one of them, uh, he's actually quite, quite a good investor. He, he was forcing me to fire my best person because he was too hardcore. [laughs] So a lot of the things that just-

    15. DSDavid Senra47:40

        Who, who do you think wins? [laughs]

    16. NSNik Storonsky47:41

        Yeah. A lot of-

    17. DSDavid Senra47:43

        This guy needs to work nine to five. Okay? So how did this... Like, tell me more about this. Like, you obviously fought back. The guy didn't get fired. What happened?

    18. NSNik Storonsky47:50

        Uh, I mean, of course, of course I didn't fire him. Uh, I said, no. That's it.

    19. DSDavid Senra47:55

        Okay. Well, that's it? And the guy-

    20. NSNik Storonsky47:56

        Take it or leave it. Yeah. I'm not going to fire him.

    21. DSDavid Senra47:58

        And then what did... Did you have a fight with the investor? Like, what happened?

    22. NSNik Storonsky47:59

        Yeah, I had, yeah.

    23. DSDavid Senra48:00

        Yeah. And so how'd you settle it? You had all the power? Like what happened?

    24. NSNik Storonsky48:04

        I fought it with him and then-

    25. DSDavid Senra48:05

        Oh [laughs] .

    26. NSNik Storonsky48:06

        Yeah. Even though they, they, they, they had a collision of, you know, many investors, but you know, they, they, they stepped back.

    27. DSDavid Senra48:13

        Okay. So how did you get them to step back?

    28. NSNik Storonsky48:14

        Well, I think, you know, pretty early on I realized that, uh, like quite, quite a few of VCs, uh, they are not very operational and they're, they can be actually dangerous for the company if they have enough power. So, uh, every single, uh, investment round, I just, you know, remove VCs. So I took, you know, board seats.

    29. DSDavid Senra48:34

        [laughs]

    30. NSNik Storonsky48:34

        So now I don't have any VCs [laughs] on the board. I think that's the best. You always need to have operators rather than VCs on the board who are people who actually build business, who, who know how to do things.
14. 49:28 – 54:28

    Starting a fund to compete with VCs

    1. NSNik Storonsky49:28

       yeah.

    2. DSDavid Senra49:28

       You also set up your own... I don't know if you call it a VC fund. Like what is this?

    3. NSNik Storonsky49:32

       Yes, it's a VC fund. So basically, uh-

    4. DSDavid Senra49:34

       What's it called, first of all?

    5. NSNik Storonsky49:35

       Uh, Quantum Light.

    6. DSDavid Senra49:36

       Okay.

    7. NSNik Storonsky49:36

       Um, so-

    8. DSDavid Senra49:37

       Explain what you're doing. This is funny. I just picked up on this now because you were analyzing, like, the legacy banks. You're like, "I'm not..." Like, look at all the, all the obvious mistakes they're doing. Some of that came through experience, right? Hard-fought experience. The way they're doing it doesn't make sense. I'm gonna show you a different way to do it.

    9. NSNik Storonsky49:53

       Yeah. Basically, the idea was in, uh, I think it was 2022, uh, or 2023 when, uh, I came out with this idea, and, uh, the idea came actually from my personal pain, from a fight, uh, with investor. It was actually one of very big names. They entered all the investment Revolut. It was, uh, I think just after COVID or during COVID, uh, when all the stocks went up, they invested at 33 billion valuation. So basically, they, they had legal right to, uh, not to allow us, uh, changes in shareholder agreement because they were like, you know, last investor, blah, blah.

    10. DSDavid Senra50:30

        So you had a bunch of these bad experiences with, with VCs. You're gonna start your own VC fund. Explain how your fund is different.

    11. NSNik Storonsky50:36

        Yeah, VC fund. So basically, I had this fight and then, you know, I was extremely pissed off, and I thought, "You know what? I, uh, I, I also need to compete with VCs in their business because they- they- they're so bad."

    12. DSDavid Senra50:45

        [laughs]

    13. NSNik Storonsky50:45

        And out of my frustration, I started the fund as well. And then the idea was, uh, basically to invest not based on the human judgment, but based on their science and based on their machine learning models. Statistically, statistical investment was number one. Uh, number two, actually help with founders with operational advice or playbooks that we developed at Revolut, how to hire people, how to do performance management, how to do product expansions, um, and then finally help them sell their product as well because we are a large enterprise. We are buying, you know, from, from a lot of vendors. And having us, uh, as a, as a client helps to sell into other enterprises or potentially sell to our, um, our customers as well, ri- uh, our Revolut customers. So I think overall... Plus my personal advice obviously. So, uh, I thought overall the package was, uh, so much better compared to purely financial players, uh, VCs.

    14. DSDavid Senra51:37

        You just said your personal advice as well. So, like, are you just making concentrated bets? Is this, like, another thing where you're doing 20 or 50 at a time, or are you just, like, concentrating money behind a handful?

    15. NSNik Storonsky51:47

        Uh, it's again, it's statistical investment, right? So it's based on machine learning models. Uh, so the way it works, our model selects 30 to 40 companies to invest, uh, over two, three years, uh, and then puts equal amount of money in each, uh, in each startup. So we started with a fund, uh, a Series B fund, so it's close. It's, uh, ful-fully invested. Uh, it produced now, uh, like 56% IRR, so which is very high.

    16. DSDavid Senra52:11

        And you, you started, like, 250 million or something, right?

    17. NSNik Storonsky52:13

        We started 250 million, yes-

    18. DSDavid Senra52:15

        Okay

    19. NSNik Storonsky52:15

        ... with the first fund, so now it's like 56, 56% IRR. Uh, we start investing second fund now, which is, uh, uh, 500 million, so it's Series C now companies. Again, based on the model, uh, also very, uh, high return. Think it's, uh, top 5% of funds, uh, uh, in the world now in terms of returns. We'll probably do a large fund as well for, for late C.

    20. DSDavid Senra52:34

        Where's the money coming from?

    21. NSNik Storonsky52:36

        It's different LPs.

    22. DSDavid Senra52:36

        Okay.

    23. NSNik Storonsky52:36

        So initially I started, uh, 20% was my own money, so I put 20% of it or 25% of it, um, and then the rest came from other founders. Second founder already got, uh, quite a few institutional, uh, players as well.

    24. DSDavid Senra52:49

        I've never heard of somebody building a bank compare themselves to, like, Meta, so I'm gonna get into that in one second. But s- you don't do anything, like, fucking half-assed or, like, small, right? You're just like, "Okay, I started 250." Now you're just gonna see how far you can take this. This is gonna be like a, you know, a giant like Renaissance technologies kind of thing.

    25. NSNik Storonsky53:06

        Well, obviously, uh, uh, the goal, uh, is to build something large like, uh, BlackRock but in, uh, private markets. Uh, again, we'll see if we, if, if, if we get there. Uh, but I think idea and approach makes sense because, uh, like, you now have a lot of data on, uh, startups, and then you can apply all these machine learning models, uh, to identify the best ones. And then, uh, model is pretty sophisticated. So for example, one of their, uh, signals we'll look at, we'll look at, uh, who invested in the company, who's investing, and we'll look, we'll look not only in the fund performance who invest in the company but down to the partner level. Then we'll also look at the age of the partner. And then there are, you know, very interesting things when you look at, uh, these variables as, as age of the partner, and then you'd rather not invest in companies where partners who are investing are, are older than 40 years old. So the best, uh, cohorts are 30 to 40 years old of young partners who are investing. They're, they're, they're, they're the best at identifying good companies. Same, same as with executives as well. Yeah, so, so there's a certain prime age when you... wh- what, what you need to look at. Again, there are many variables, right?

    26. DSDavid Senra54:17

        Of course.

    27. NSNik Storonsky54:17

        Age is not only one thing, right? But, uh, statistically speaking, that's what you need to look at.

    28. DSDavid Senra54:23

        And is this a separate company from Revolut or is this-

    29. NSNik Storonsky54:24

        Yes, company is separate.

    30. DSDavid Senra54:25

        Okay. So completely separate.
15. 54:28 – 1:00:21

    From zero marketing to buying Europe's airports

    1. DSDavid Senra54:28

       Okay. You said something about, um, helping them sell, uh, their product as well. Talk about, like, the, the early days of, like, marketing. I heard you spent nothing on marketing for the first, like, five or seven years.

    2. NSNik Storonsky54:39

       Yes, first seven years it was completely organic. Uh, plus COVID also hit, and, uh, 2021, I remember our company was, uh, six, seven years old. Uh, COVID hit, and, uh, like, our revenues went down, I think 70%. And, uh, back then, uh, we were not in banking business. We were still kind of, you know, e-money with a travel card, so it was very heavily, uh, related to or related with travel business. And then as COVID hit, uh, travel business completely gone, um, so we had to survive. Uh, somehow we kind of optimized a lot during that time.

    3. DSDavid Senra55:17

       Okay, but explain You, you s- why you decided to start, to start spending money on marketing? 'Cause, like, I go to Europe, and it's just like I feel like I'm blanketed with your ads. I see your stuff everywhere.

    4. NSNik Storonsky55:27

       Yeah, yeah.

    5. DSDavid Senra55:27

       Now it makes perfect sense after talking to you. It's not like, "Oh, yeah, I'm gonna do, like, a little bit here, a little bit there." It's just like once I find something works, I just, you know, essentially go scorch, scorched earth on it.

    6. NSNik Storonsky55:36

       Yeah. Basically, the way I think about marketing, so I haven't done it for, uh, six years, seven years. I just didn't have time, plus we didn't have enough resources, but then when, when I started doing it, I, I, I went really, really deep. Uh, so basically I started with, uh, who we need to hire to run a proper marketing machine. Not like here and there, but, uh, scientifically, right? Where we need to invest money in marketing with, with, with the proper return. And then, uh, my idea was very simple. Uh, who are the companies with the largest marketing spend, and who are extremely cautious with their marketing spend? Uh, where is, you know, very low margin of error? And back then it was gaming companies, right? Gaming companies had, uh, a lot of marketing spend, performance ads, or certain, certain companies were also doing a lot of above the line, uh, campaigns.

    7. DSDavid Senra56:21

       The gaming companies were doing well or not?

    8. NSNik Storonsky56:22

       Gaming companies were the largest, uh, spending companies in the world on marketing. So if you look at their budgets, uh, it, it could easily be, you know, one billion plus on-

    9. DSDavid Senra56:34

       I know a lot of them are going to AppLovin. [laughs]

    10. NSNik Storonsky56:37

        [laughs] Yeah.

    11. DSDavid Senra56:39

        Which AppLovin's gonna print, like, six billion in profit this year.

    12. NSNik Storonsky56:42

        Yeah.

    13. DSDavid Senra56:42

        So they're doing well.

    14. NSNik Storonsky56:42

        It's, like, amazing. Yeah. Yeah, yeah. So I ended up, you know, hiring, you know, extremely good, uh, person who, who started running marketing at Revolut, and then we also then, uh, went very deep and started-

    15. DSDavid Senra56:54

        Wait, be- before I let you go on.

    16. NSNik Storonsky56:54

        Yeah.

    17. DSDavid Senra56:54

        Like, am I understanding you're, you're... So you're studying how gaming companies are advertising, or you just wanted to know what they were spending?

    18. NSNik Storonsky57:00

        The idea was, uh, who are the best professionals who know how to spend money in marketing, right? And then, uh, the idea is that these professionals will work in gaming companies because they have the largest budgets.

    19. DSDavid Senra57:12

        Got it.

    20. NSNik Storonsky57:12

        So that's how I got my first... Well, actually second. First one I fired. He wasn't for big gaming. [laughs]

    21. DSDavid Senra57:18

        Probably VC's cousin asked you to hire him or something. [laughs]

    22. NSNik Storonsky57:21

        Yeah. And anyway, we went, went very deep into, you know, performance marketing, LTVs, payback. And then, uh, recently we also started doing, because we, we got a banking license, and then what we realized, or what I realized, uh, quite early on, is all about trust, right? If you're a digital bank, you don't have branches. People don't see you physically. They trust you le- less by definition compared to HSBC, Lloyds, JPMorgan Chase, and so on. Then, uh, okay, how, how you build trust? How you arbitrage, uh, effectively performance marketing spend? Because in performance marketing spend you pay per impression, and then, uh, there are a lot of spaces in the physical world which you can buy who will al- which will also produce impression, but at a much cheaper price compared to, uh, the digital world. So for example, we bought probably now or 50% of all, uh, airports in, in Europe, right? Like, in, uh, almost 50% of airports in Europe will now have ads, right? Again, because of, of simple math. How many times a year people travel, right? How many times a year they're in the airport? How many impressions we produce? How much will it cost us, right? Now there is arbitrage to performance marketing. And then the similar ideas to, to other places in physical world. For example, we, we, we started now doing, um, equivalent of legacy branches, what we call a cult rev store, right? Rev experience. So we set up first, first shop in, uh, Barcelona, again arbitraging impressions of, uh, in physical world versus the digital world, because how many people pass every year our shop? Like probably similar-

    23. DSDavid Senra58:54

        What is the shop, though? Like what?

    24. NSNik Storonsky58:55

        I mean, like, it's more like Revolut experience. So it's not a real banking legacy branch. You come in and then you experience all our products. It's all done in a very modern way, like Apple or type of store, but for, for, for, for Revolut. And then the idea is that we, we just generate impressions for people who- which pass the street who come, come over as well.

    25. DSDavid Senra59:15

        Like a lot of companies advertise in airports, and it's just like, oh, it's like something on the screen maybe for 30 seconds or whatever. It might be one billboard. It's like you walk... I'm walking for like two minutes, and it's still, I'm like enclosed. There's like a huge, like a... I'm in a cocoon of Revolut ads. How did you come up with that idea too, though?

    26. NSNik Storonsky59:31

        Just buying full airport.

    27. DSDavid Senra59:33

        I can't think of another company that I've seen do this, and I think, like, it's actually a really smart move. More people should do that. It's like I, I'm... There's, it's... I may not use your services, but, like, I definitely know that you exist and what you do. Like you essentially are aiming for ubiquity is the way, like, I was thinking about that when I was walking through the airport.

    28. NSNik Storonsky59:48

        Yeah. In my mind, we're just, you know, uh, paying for impressions much cheaper compared to in, in physical world compared to digital world.

    29. DSDavid Senra59:53

        But it, it's not just, like, paying for impressions though because, like, you know-

    30. NSNik Storonsky59:56

        I mean, building trust as well.
16. 1:00:21 – 1:03:58

    Funding moonshots like a global tech company

    1. DSDavid Senra1:00:21

       I'm not gonna walk past this and not know this company exists. One of the last things I want to talk to you about goes back to this, like, grandiose, like, ambition you have. I think people that may have not known you before this pick up on you're, like, super competitive. I mean, I love the fact that you were, like, kind of got pissed off at VCs. Like, all right, well, now I have to compete with you because you've made me so mad.

    2. NSNik Storonsky1:00:36

       Mm-hmm.

    3. DSDavid Senra1:00:37

       Um, but I've never heard anybody else building a, a bank. One, you said there's really no true global bank, and you want to be the first one, so I, I like the level of ambition. But then you compare just like we want to be a global technology company, and I think you, you might have mentioned a few companies, but the one I remember was, like, a global technology company like Meta. Explain that, the connection between what you're building, which may people think maybe, like, even a boring, you know, business that's been around for- banks have been around for a long time, but that's not the way you're, you're, you're viewing what you're building.

    4. NSNik Storonsky1:01:10

       Yeah. Basically our, our idea and our goal is to generate, uh, enough cash flow from this business to be able to fund, uh- Like really big bets, which can consume a lot of capital, right? Like for example, I would love to go into LLMs as well to build our own models in a way. And we, in fact, you know, build our own transactional model called Pragma. So it's LLM, but all transformer based on transactions rather than words. But, uh, I would love even to go deeper, right? To, to kind of build our own data centers to train our own model, own models to kind of, you know, to do a lot deeper tech compared to what we do now. But then, you know, it, it, it requires a lot of, uh, investments, right? And a lot of, uh, cash flow. So basically, to build a, a large business so that it produce so much cash flow that it is possible to fund some kind of, you know, moonshot bets, which might not necessarily produce P&L in the next, you know, three, four, five years.

    5. DSDavid Senra1:02:13

       Are these moonshot bets unrelated to like financial services?

    6. NSNik Storonsky1:02:17

       Yeah, most likely. Yeah. 'Cause I mean, in financial service, I mean, what else can we do? I mean, almost everything is invented already. So we just like, ultimately we're just, uh, rewriting legacy products, right? So we're building the same financial products, but we're building them much cheaper and much nicer compared to old ones. Plus, we are putting them under one umbrella in one app, so it's all very convenient. Plus, we also innovate on top, so they're all kind of, you know, interconnected with, with each other, talk to each other. But ultimately it's, it's the same old banking but done in a new way, right? What I really love to do is to, to, to go out of it and then, uh, do something that's never, wa-was never done before.

    7. DSDavid Senra1:03:00

       Inside the industry?

    8. NSNik Storonsky1:03:01

       In all industries, yeah.

    9. DSDavid Senra1:03:03

       All industries?

    10. NSNik Storonsky1:03:04

        More like in the tech industry.

    11. DSDavid Senra1:03:06

        Have you like shared publicly, like some of these like moonshot ideas, or you're like keeping inside the company, like?

    12. NSNik Storonsky1:03:12

        For now, all these ideas I just have, you know, in, in, in my head, and then I just know that we don't have enough resources, uh, and time to, to, to build them. Uh, but I hope, you know, in three, four, five years time, we might have enough resources to, to build them. Pragma is, uh, uh, it's foundational model trained, uh, on our transactional data. As I said, we have thirty million, uh, transactions every day. So we have billions and billions of transactions. And then it is possible effectively to train, uh, a transformer-based model on, on transactions and then use it in, uh, like almost any aspect of, uh, financial services. So it can be anti-fraud model, it can be, uh, credit model, potentially it can be investment model, or and so on.

17. 1:03:58 – 1:07:01

    Building an unstoppable machine

    1. DSDavid Senra1:03:58

       When you launch here, why would I want to use your bank as opposed to like JPMorgan?

    2. NSNik Storonsky1:04:04

       So JPMorgan is, uh, very local, gives you US bank account plus U-US based, uh, products. Uh, if you ever have exposure outside of US, we're a banking partner because we do everything what JPMorgan does for you in the US. Plus, on top of it, we provide all the global assets. Uh, you can have global accounts with us. So being in the US, you can open account in, uh, Europe or Australia. You can send money instantly between all countries, uh, and so on and so forth. So instead of, uh, giving you, uh, local-based financial products, local-based, uh, benefits with points, we give you effective global exposure. So that's our proposition. Plus, on top of it is, uh, much, uh, nicer in terms of interface, plus much cheaper compared to JPMorgan.

    3. DSDavid Senra1:04:48

       What's the difference way that, that you make money compared to the way they make money?

    4. NSNik Storonsky1:04:52

       They are much more, uh, credit focused compared to us. We are much more subscription focused plus transactional business plus commission focused.

    5. DSDavid Senra1:05:00

       What are you doing on the credit side? Are you just selling all that off?

    6. NSNik Storonsky1:05:03

       Credit is just standard products, credit cards and loans. Selling them off? Uh, not yet, no.

    7. DSDavid Senra1:05:07

       Okay.

    8. NSNik Storonsky1:05:07

       'Cause, uh, it's still very small portion of our balance sheet.

    9. DSDavid Senra1:05:10

       So you think your advantage relative to the legacy banks is you're more of a technology company?

    10. NSNik Storonsky1:05:14

        Our advantage is, uh, tech. Uh, and then, uh, if you think about banks, uh, in the past, uh, when, whenever they expanded country to country, they just bought all the banks. As a result, they have many systems in many countries. They don't really control anything. To produce any, uh, report takes months to extract data from, from different systems. Uh, our advantage is that we have, uh, just standardized one system, one, one ledger across many countries. As we go from one country to another country, we do not need to write things from scratch. We just, uh, adjust, uh, configuration of our software. You know, for example, onboarding UK, we adjust certain configs to change onboarding to US or to change onboarding to Mexico and, and so on. So it becomes, you know, one product which is highly configurable. We do not need to build, uh, another bank, another country from, from, from scratch. As you do it, you obviously need, you know, much less people to maintain it compared to ten banks in ten, ten countries. As a result, there is, uh, economy of scale, so we can sell products much cheaper compared to, to other banks. Plus, uh, the whole institutional knowledge, how you build product, how you do marketing, and so on. So you apply the same knowledge in, in, in any new country. And, uh, I think, you know, with time it can become like an unstoppable machine, right? Because it provides, uh, much better products and services at a much better price compared to local banks.

    11. DSDavid Senra1:06:33

        Over time, I'm building an unstoppable machine. That's a great place to end. Thanks, Nik, for the time.

    12. NSNik Storonsky1:06:37

        Thank you.

    13. DSDavid Senra1:06:38

        It was awesome. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review, and make sure you listen to my other podcast, Founders. For almost a decade, I've obsessively read over four hundred biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders. [upbeat music]

Episode duration: 1:07:01