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

The conversation with Nick revolved around his leadership approach at Revolut, emphasizing KPI-driven management and the importance of hiring self-motivated, excellent employees. He discussed the challenges and strategies involved in expanding Revolut into new markets, particularly the U.S. and Latin America, and the significance of obtaining banking licenses before scaling customer bases. Nick also reflected on the company's product development, highlighting successful innovations and the role of brand marketing. He shared insights on navigating regulatory environments, the complexities of the U.S. banking market, and his vision for Revolut's future growth and market leadership.

• The speaker discusses the competitive landscape between UK and US products, emphasizing that the UK product is less liquid and more expensive.
• The speaker questions the rationality of choosing the UK product over the US product if the latter is superior.

"I just don't understand how the product which is being provided by UK can compete with the product provided by us. It is less liquid, so it's much worse compared to us plus it's much more expensive because it is based on M."

• The speaker highlights the perceived inferiority of the UK product in terms of liquidity and cost.

• The company sets five to six annual goals, which are quantified and cascaded through departments, teams, and individuals.
• Performance is reviewed quarterly, focusing on metrics, skills, and cultural values.

"We set up the goals for the companies usually have five six goals a year and then we quantify these goals."

• Goals are quantified to ensure clarity and focus across the organization.

• The speaker manages over 40 direct reports and emphasizes the importance of selecting strong and excellent individuals.
• Excellent individuals are self-guided, while strong individuals need direction but can achieve goals independently.

"The key is to select all your direct reports, get the strong excellent so they're able to reach the goal themselves without you directing them."

• Selecting capable individuals reduces the need for constant oversight and ensures goal achievement.

• Employees are expected to perform strongly or excellently within three to four weeks.
• If performance is lacking within the first few months, it is unlikely to improve significantly.

"If you see a person is not performing for one two months, most likely they will not perform for the next year."

• Early performance is a strong indicator of long-term success within the company.

• The speaker prefers collaboration over competition among employees.
• Emphasizes teamwork and working towards common goals.

"I think they should collaborate, they should work as a team, they should work on common goals."

• Collaboration is seen as more beneficial than internal competition for achieving company objectives.

• The speaker acknowledges mistakes in scaling, particularly in hiring experienced managers through executive recruiters.
• Emphasizes the importance of execution over presentation in leadership roles.

"I hired like, you know, 55 through executive recruiters... I ended up, you know, firing 49 or 50 of them."

• Experience with scaling has led to a more discerning approach to hiring and leadership.

• The speaker identifies areas for personal improvement, especially in hiring for new roles.
• Learning from the market and understanding roles before making hiring decisions is crucial.

"Every time when I hire a new role which I never hired before, I first interview the whole market."

• Understanding the market and role requirements is essential for effective hiring.

• The speaker believes effective CEOs maximize output from limited resources.
• Emphasizes brainpower and cost-effective problem-solving over high spending.

"What really delivers the most is your brain power... to solve the problem the most cost-effective and efficient way."

• Efficient resource allocation is key to successful leadership and company performance.

• The speaker has shifted from a data-driven approach to embracing brand marketing.
• Strategic brand asset acquisition, like AirPods and jet bridges, is valued despite challenges in measuring ROI.

"I do believe in brand marketing now before I didn't... I personally believe IR on it is amazing."

• Brand marketing is now considered an important complement to performance marketing.

• Securing a banking license before acquiring customers is advised to streamline the process.
• Having a large customer base can complicate regulatory approval due to increased scrutiny.

"Whenever you want to build a bank, you'd rather get a banking license before you have customers."

• Early licensing can prevent delays and regulatory challenges as the customer base grows.

• Initially, there was a misconception about the necessity of involving experienced banking professionals to communicate with regulators, which was later found to be misleading.
• Establishing direct communication with regulators and explaining innovations in simple terms proved more effective.
• Demonstrating superior performance through data compared to legacy banks was crucial in gaining regulatory trust.

"Whenever you speak with Regulators yourself, whenever you explain exactly in English what we do, how we do it, because you build it yourself or I build it myself, I can explain it in very simple terms."

• Direct communication with regulators by the company founder or builder is more effective than relying on intermediaries.

"You show data as well that our results are better compared to Legacy Banks, that's in the end what matters."

• Providing concrete data showcasing superior performance compared to traditional banks is key in regulatory discussions.

• Speculation remains a significant aspect of the crypto market, but there are valid use cases like stable coins and instant money transfers.
• Regulatory challenges include different licenses and rules in various countries, which can lead to inefficiencies like high false-positive rates in transaction blocking.

"A lot of use cases in crypto is still speculation. People speculate is more, I would say, entertaining for them."

• Speculation dominates the crypto market, although there are practical applications.

"There were certain rules attached which actually cost you kind of 99% false positive."

• Regulatory rules can lead to inefficiencies and require negotiation to optimize.

• US tech companies' aversion to regulation leads to partnerships with banks, which slows down operations due to non-automated processes.
• The US market is credit-driven, and the inability to use the balance sheet limits the efficiency of credit card offerings.

"There is a culture in tech companies, they don't want to be regulated, because they don't want to be regulated, they need to partner with a bank."

• Avoidance of regulation by tech companies leads to partnerships, which can hinder efficiency.

"The US is a credit-driven market, and whatever a customer spends with a credit card, banks actually make much more money from a mission compared to debit card."

• The credit-driven nature of the US market presents a challenge for non-bank entities.

• The strategy involves applying for banking licenses in key markets like Brazil and Mexico to capture significant market shares.
• Product introductions vary in success, with some initially underestimated products proving to be successful due to market scale.

"We applied for a banking license in Brazil, so we got a banking license in Mexico ahead of New Bank."

• Strategic licensing in major markets is crucial for expansion.

"Whenever we launch product Market, with the right product Market fit, just scale super quickly."

• Successful product launches are dependent on achieving the right product-market fit.

• A committee evaluates potential product launches based on past experiences and opinions.
• Multiple product bets are run simultaneously, with only a fraction achieving significant success.

"We just have a committee of people who done it before, who launch products before, and they have an opinion."

• A committee-based approach is used to evaluate and decide on new product launches.

"Out of 27 bets that we launched, last two and a half, three years, like amazing worked probably say five."

• Only a small percentage of product bets achieve significant success, but the overall portfolio generates exponential revenue.

• Discusses the challenge of scaling teams effectively without wasting resources, especially when evaluating various business bets.
• Emphasizes the importance of adding teams for successful bets while maintaining simplicity in operations.

"You add more people to work on kind of new features for this particular product."

• Highlights the strategy of increasing workforce for promising projects to enhance product development.

• Expresses enthusiasm for certain products, particularly highlighting eim as a standout in the market.
• Describes the success trajectory of these products from initial stages.

"I like actually eim it work pretty well for us eim yeah it's it's a very nice product I think it's the best in the market now."

• Acknowledges eim as a leading product, showcasing confidence in its market position and potential.

• Discusses the importance of maintaining simplicity amidst numerous business bets and products.
• Uses analogy of cars to illustrate how complex functionalities can be presented simply.

"If you look at the car right car has you know a lot of functionality but then it's it's pretty simple right."

• Highlights the need to present complex systems in an accessible manner to avoid overwhelming users.

• Outlines a vision for expanding into 50 markets and becoming a leading player in 90% of them.
• Plans to increase localized banking services and grow the user base significantly.

"Three years time would love to be probably Al in 50 markets... providing local accounts or local credit cards."

• Sets ambitious targets for market presence and service localization to enhance competitiveness.

• Predicts a shift towards fewer, larger global banking players due to technological advancements.
• Compares the banking industry's evolution to that of the venture capital sector.

"I think we have a unique opportunity to actually scale and build a glob bank across many many markets purely because Tech allows us to do it."

• Identifies technology as a key enabler for expanding banking services globally and consolidating market presence.

• Discusses the motivations and challenges of going public, including liquidity benefits for investors.
• Considers the pros and cons of listing in different markets, particularly comparing the UK and US.

"Public markets allow you to have more liquidity compared to just private markets."

• Emphasizes liquidity as a primary reason for considering a public listing to facilitate investor exits.

• Describes a consistent company culture across global offices focused on intelligence, ambition, and hard work.
• Explains strategies for maintaining tight control over the cap table to prevent dilution and maintain company value.

"Our culture is the same across all offices so people are smart people are hungry people working hard."

• Asserts the uniformity of company culture worldwide, emphasizing shared values and goals.

• Acknowledges respect for various competitors globally, noting their strengths in different markets.
• Highlights the competitive landscape in regions like Asia and the challenges of entering these markets.

"New bank is very strong, then U I think GP morgam you have very good team in us."

• Recognizes the achievements of competitors while identifying strategic challenges in different regions.

• Shares personal experiences with the challenges of fundraising, including market volatility and investor withdrawals.
• Illustrates the unpredictability of securing investments and the impact of market conditions.

"I agreed the sheet with investor I think it was like s billion valuation and then next day Market dropped 10%."

• Reflects on the difficulties faced during fundraising efforts, underscoring the need for resilience and adaptability.

• Investors often follow the crowd and are driven by emotions rather than scientific methods.
• A small team of data scientists and engineers was established to collect data on startups and train machine learning models to select the best startups.
• The machine learning model outperforms 95% of venture capitalists in backtesting.
• The model uses 25 key features to evaluate startups, including investor profiles, founder characteristics, and company metrics.

"A lot of investors they are a following the crowd very often and be they very uh emotions driven right sometimes they like the F sometimes they don't like the F they don't like the F best it's not very scientific."

• Investors' decisions are often based on trends and emotions rather than scientific analysis.

"We tested 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."

• The model was refined to use 25 statistically significant features for investment decisions.

• Founder age is a significant factor, with ages 30-35 being optimal for startup success.
• Education, particularly from top universities and in STEM fields, correlates positively with startup success.

"30 to 35 is the best age after 35 I mean there is a clear negative correlation with the success so sweet sport is 25 to 35 for Founders."

• Founders aged 30-35 are statistically more likely to succeed in startups.

"Statistics clearly show that uh top universities uh stem degree have a much more positive correlation with the success of the company."

• Education from prestigious institutions and in STEM fields is linked to higher success rates in startups.

• The initial funding round is often the most challenging to raise.
• Market conditions can significantly impact valuation and funding negotiations.

"We started Rising 2019 we closed I think in February or in January 2020 just before Co we were very lucky but it took time to close it."

• Timing and market conditions play a crucial role in the success of funding rounds.

• Success is defined by achieving personal goals, whether they are related to family or financial achievements.
• Money is seen as a tool rather than a direct source of happiness.

"If your goal is I don't know to be happily married with kids and then you reach it you're 100% successful right if your goal is I don't know make more money you haven't reached it then you're not."

• Success is subjective and based on personal goal attainment.

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

• Money is viewed as a means to achieve goals rather than an end in itself.

• A disbalanced life, focused on specific goals, is believed to lead to greater success and potential happiness.
• Maintaining energy through lifestyle choices, such as exercise, is crucial for handling stress and pressure.

"More kind of imbalanced you are more focused on your goals sacrificing everything else more likely you will succeed these goals."

• An imbalanced, goal-focused lifestyle is seen as more effective for achieving success.

"In order to keep calm you know Under Pressure obviously you need to have a lot of energy and then in order to have a lot of energy need to build your lifestyle in the way that brings you a lot of energy right so it's obviously a lot of spots."

• Energy management through lifestyle choices is essential for dealing with the pressures of leadership.

• Working from various global locations can lead to a broader perspective and open-mindedness.
• The U.S. market is seen as a crucial milestone for European startups.

"When I started um kind of working from different cities I realized you know there is so much more like in another cities in terms of know lifestyle WEA infrastructure."

• Exposure to different global environments can enhance adaptability and perspective.

"I haven't w US market right I think it's very important to take this box especially for European startup for sure."

• Entering the U.S. market is a significant achievement for European startups.

• Continuous learning from successful peers and adapting strategies is vital.
• There is an interest in exploring new fields such as biomedicine or genetics.

"I call people who have done similar things in the past right so who built very L businesses."

• Learning from the experiences of others who have built successful businesses is crucial.

"I would like to try something in uh biom medicine or genetics uh yeah that would be very interesting."

• Exploring new fields presents opportunities for growth and innovation.

• Passion for the work and the desire to make a difference in the industry are key motivators.
• The necessity to stay engaged and avoid boredom drives continuous effort.

"I just need to do something right otherwise it's boring."

• Engagement and passion are essential for sustained effort and success.

"You have to have a passion to changeing ecosystem in the industry."

• Passion for industry transformation is a significant motivator for work.