Martin Mignot interviews Nik Storonsky, founder and CEO of Revolut, at Slush

[Music] all right good morning everyone thanks for being here uh I'm Martin moo I'm one of the partners at index Ventures uh index is an early stage Tech investment firm investing across uh Israel Europe and the us as one team globally based between London New York where I am based and San Francisco and we've been investing in early stat tech for the past uh three decades and we've been fortunate enough to work closely with Nick from uh from revolute for almost a decade uh as well well so Nick I'm really super excited to be here

with you today there's uh there's tons to talk about a lot of news at revolute I still remember the first time I met you which was uh in 2015 you were pitching at sit camp and at the time it was in shage I still remember in London and at the time I was banking with HSBC and things were so bad that every time I had to make a transfer I was booking a slot of 20 minutes in my calendar and that was really terrible so I try I downloaded the app tried it and realized I

could do it in 20 seconds instead of 20 minutes and for free and that's where I realized this is really something special and we need to be investing in this company since then 8 eight or nine years later the company has grown this simple app that was doing mostly FX has grown a lot across all dimensions new products new GEOS and financially so yesterday you announced your 50 million customer Mark congrats on that amazing achievement uh last year you announced more than $2 billion in in Revenue than half a billion pounds and and more than

two um more than half a billion in uh in net income you are the fastest growing the most downloaded Financial app in Europe across 20 countries and uh and very recently you also uh concluded a secondary at 45 billion doar valuation which makes you the uh most valuable private tech company in Europe so congrats on all of that when you're hearing all those Milestones do you take time to celebrate them or you already focus on the next one and what is the next one well I mean obviously if you achieve something great uh yeah you

need to celebrate but for me it's like five minutes happiness and you know I move on to to new big thing and you have a big party actually coming for the for your 50 million we have 50 million Parts in London yes and um so if you look at revolute today you know 45 billion you've reached this incredible uh scale and and success does it look like what you had in mind when you got started with the business is it pretty much where you thought you would be there or is it very different well to

be honest you when I started I didn't really think ahead what will be in 5 10 years I I was just trying to survive as a business and um yeah it's uh pretty simple we back then when we started we just had the 3 months view what we need to build in 3 months and then we build it and then move on for next 3 months so we never had like you know longterm Horizon long-term planning so we were just trying to survive try to build the features products that people want and it was actually

very very short-term driven rather than longterm and is it still the same or has it changed as you've grown uh bigger uh as we grow bigger we we started planning uh for longer time frame we still uh like plan precisely for probably a quarter quarter to a year and then longer term plans I me in reality we try to do it but uh it never works you know something pops up director resources yeah so if you were to paint a picture of where re where you see revolute kind of long term uh the direction it's

going can you can you do that or not even uh yeah I mean uh if if you think in numbers we we just want rev to be uh number one uh global bank in 100 countries with 100 million daily active customers and then 100 billion revenues a year so it's definitely doable because Market is so huge and banks are very fragmented I would say so they not really competing globally and and you personally what is that you achieved a lot um what is still your personal ambition well I mean the there's not much else to

do right so so I I keep doing it do you uh can you just maybe describe for the people here what does a typical day for you look like well it depends on the day on the week so I mean usually on Mondays I do um business reviews for key departments uh half of Tuesday is also business reviews and what what is Business Review can so Business Review is like standardized approach for every single department when general managers report on kpis metrics road map problem so 15 to 30 minutes uh for each department then half

Tuesdays uh uh product reviews all of Wednesdays product reviews and I start also one-on once on Thursday and product reviews what how does that work so product review is uh uh every single product team or majority of product teams they present uh how they want to change uh their product clients screen by screen in uh figma and you still yeah still very involved yes I approve yeah you still approve everything and yes I still command I still work with the designers I still go down to kind of you know each indidual contributor if I want

to change something so you never got out of the funder mode for you that was always nothing thing is super important I think as soon you start tradition manage uh I think uh it's the beginning of the end for the company because reality is super important for every single manager to uh uh well to be strategic but also to be in detail and then going down to the level of individual contributor uh through all the management layers uh to see what what reality is right because problem is with majority of managers they are not into

details as a result they cannot direct well and so you've got about 40 direct reports like a bit more yeah like 40 45 yeah 40 45 yeah who who are there well every single general manager responsible for pel for uh products so because we have many products in the company so we have probably up to 15 general managers then uh a person responsible and what is a product give us like like product for example it's retail account business account uh wealth and trading uh crypto acquiring uh credit okay so major major products yeah uh so

then uh I've got uh core functions uh reporting into me uh like people uh uh technology uh core uh my kind of you know own team we call it core uh and so on so overall if you look it's 40 45 people or plus new territor here was also report directly to me because uh I think it's very good when you hire a c for the territory to to report directly to F because they they Lear much faster what's your core team you say I have my own core team what what is that uh it's

started with fond Associates I think I'm the first one in the market who invented the concept of fond Associates uh because um I was cheap of Staff no what's the difference well basically when when when when the company killed of more than 100 people and then I hired all this uh experienced Executives I realized it doesn't work all this experienced executive failed miserably so I need to fix things so I end up hiring my own team of uh eight people like just smart bright uh young people X McKinzie X ban or X Investment Banking have

you know hung and design know to build things then I just dropped one or two people for each of the problem on on each of the problems I face or on each on departments that need turn around that's how I kind of invented the concept of f asses um now it's probably a 30 40 people team uh some of them report to me some of them report to Chief of Staff but uh the job they do is still the same is a turn around makes sense on so on top of your D you also recently

launched uh your own family off/ Venture fund called Quantum Light so what's the philosophy behind it how does it work I mean it's a very disruptive approach to venture capital in particular I don't know about the other asset class but is for Venture and also what's the goal behind it is it is it Financial return is it giving back to the ecosystem is it keeping your pulse on Innovation uh so basically yes I have family office and then I have a standalone business called Quantum Light so quantum light is a venture fund which invest in

startups uh but it invests based on the uh models rather than human judgment so the way it works about 3 years ago I uh I build a very small team uh which uh collected a lot of data on startups and then they trained the machine learning model on data since 1990s and then the data can be uh who's the founder who invested in the company uh is the founder like you know stem nonstem age and so on so we collected about 300 features uh across uh um every single startup we trained the model uh on

the data since 1990s and then effectly the model predicts uh which startups to invest so it's completely outbound investment you do not really need to kind of dive deep in the company uh it just gives you a list of companies to invest uh and uh yeah it works well so I I launched it two years ago um uh we've done I think more than 12 Investments now team is uh 20 25 uh people majority are data scientists data Engineers so it's Standalone business uh I'm not involved daily so there is IIA who is the CEO

of this business but I help how again and there's a I mean I think it's a really super interesting disruptive approach especially for kind of a series B when you have enough data to kind of identify interesting companies but the other thing that's really cool that you do with quantum is you started publishing these playbooks which is basically kind of open sourcing what you learn from revolute and and how you build the company and I've been you know I wrote a LinkedIn post about it if if you folks want to check it out uh your

first Playbook was about performance and how you manage performance at revolute I recommend everyone and all the entrepreneur I work with to read it because I think it's really interesting and and really good um but do you want to talk to us a little bit about how you what's in this Playbook and how you manage performance and how much you obsess about it and how you measure it and implement it as a process because I think it's such a key part of the success of revolute yeah so uh basically when I started the revolute 10

years ago uh I didn't believe in management at all and then I remember a lot of V that told me I need to hire experienced managers and I was I was always asking him what what exactly they will do just Manish people no I need people build products right or or sell the product uh anyway so so with time I learned that action management is important and U but I learned it from first principles and uh basically I quantify uh everything what a person does a team does a department does a company does so the

way it works it starts with a with a company goal so we always Define uh five six company goals for the year uh and then we cascate these goals uh to the department and on the team level and individual level and then we build the uh the whole software around it is called the revolute people uh and we actually selling it now to um to other companies so revolute people.com and then effec revolute people uh Play Books everything what we do in terms of goal setting hiring uh scorecards for hiring people scorecards for Performance Management

uh performance review how to do performance review we do performance review every quarter super important so we calculate effectively how many strong people we have how many average people we have how many people we have below average so we have system filtering out people who are not performing on a qualily basis so so it's a proper machine which uh uh with the only goal to produce the best quality people that we have in revolute and it's all kind of you know quantifiable it's all very process driven it's all very producti as well and uh in

Quantum Light uh we effectively uh wrote all the playbooks that we with time developed in revolute how to manage people how to hire people how to do expansion how to do compliance uh how to do risk management and so on because with time because I I approach everything from first principles since I kind of hired experience executive it didn't work for me so I stopped believing in you know traditional approach of hiring experienced people so I develop everything from scratch just based on my experience and of course you know things um didn't work as expected

so I itated itated itated until I kind of found the the best way to do XYZ and the and we uh kind of documented everything in playbooks and you think those playbooks could apply to any company and any type of funer or do you think you have to be a special type of funer and Company for that to to really work yeah I think uh it can apply to almost any scale up right to because reality if a company is small 10 20 30 up to 50 maybe 100 people you do not really need to

have a processes because you know everyone right you know who is good who is not as soon as you more than 100 people then yes you need to have process in place so I think for companies more than 50 to 100 people it is applicable to every single company because reality as a as as a manager or as a Founder you need to know exactly what every single person is doing in the company at this particular point of time uh so it's super important otherwise people start working on the wrong things otherwise people start being

lazy they focus on things that are not important to the company it's super important to Quant ify everything and ensuring that uh people a all run in the right direction and B they all run very hard yeah the you mentioned the word first principle quite a few times and you know it's a word that's being overused these days but I think in your case it really does apply and I think that's something I really always hugely admired in you is that you you never took and I was one of the you know old VCS I

was telling you to hire experienced people so you know I was on the wrong end of that I I'm I'm happy to admit it but you really always took that first principal approach and and and did thing your own way in a very you know you got to a very successful and also very unique outcome something that really fits yourself and and um and revolute but you also had some Inspirations you know I think you know you mentioned red alio kind of principle you know early on in your journey is that still an inspiration of

you have you added some more and also more broadly who do you go to when you are thinking through a problem you just do it on your own in you know dark room or do you still ask for some feedback from some specific people who may have gone through the same Journey yeah remember principal so I read it maybe more than 10 years ago when it was just PDF of 50 pages I really loved it because it was not uh it was very direct it wasn't PR polished and then uh I think 5 years later

he published a book yeah which is now like 400 pages is very P polished so I I don't recommend reading it it's so much worse compared to initial like principles that had in PDF uh and uh yeah I think uh like what what he wrote makes sense and uh you know really kind of not use it but uh yeah sometimes you know applied it in my own way influenced the way you it influenced you know the way I thought but I think it's more my education because I I kind of you know studed physics math

so I I learned to model life right and then I always kind of you know model uh any aspects of life in a in a in a quantitative way how the company should operate how person should operate how you need to invest as well with with Quantum Light yeah and I think I kind of know the answer but there's something that that I really wanted to ask you which was when you started a company early on you made three very big strategic decisions which were one is going multicountry which is definitely you know was totally

contrarian to anything that people were doing in fintech at the time the the conventional wisdom was fintech is very localized there's a lot of Regulation you have to be one country you can't do multiple countries the other one was doing multiproduct it was like even most oh you either do consumer or businesses you decided to do both and then the third one is you built almost everything in house which was very unusual it was a time where you had to buy everything up the Shelf other s providers and you never really did that I mean

you did for some aspects you the processing for a while was was third party but today most of your stack is built in house everything is and so those and those three decisions were very uh unique very contrarian and eventually they turned out to be right and how but it's not really something that you can iterate like you made them and then you leave through them how did you how did you make those decisions early how do you know that that was the right thing to do uh well first of all I'm very controlling right

I I just hate uh outside dependencies which I don't want to control and uh as a result because I'm very controlling I early on you know brought everything in house cuz uh in business if you are dependent on some critical vendor I mean it can kill you right and uh you need to go and then beg a vendor to I don't know solve some bugs or it just it's not worth it right so this this decision to to bring everything house and then going uh multicountry multiproduct uh I think it's more my nature right so

I like uh trying things and uh I learned very early on that no matter how smart you are just I cannot predict what happens so for me the best way just uh try things and then uh if I feel or if I get some you know quantitative feedback that uh make it works you know I I continue going the same direction and then if if I try things and it doesn't work you know it's fine I mean no no kind of strings of right and to and today of the this question of global versus local

because the argument of it should be a local business because it's locally regulated is is a valid argument it is but also arguments on the other side and so where do you standing that band and what are the advantages that you have by being you know so so broad yeah I think you you can uh uh you can achieve your goals in uh being local and then being Global as well it just being Global is much more difficult right and then uh I I decided for myself that I want to be Global because it's uh

for it's more meaningful goal more profitable and larger business yes it's much more difficult to build but why not and so we've talked about all the things that you've done right a lot of big strategic decisions that you got right the most important one I would say are they are there any other big strategic decisions you got wrong well many to be honest with you like for example um for a long time I wanted to be as less regulated as possible it was completely wrong decision uh I think it would be much easier for us

to receive all the bank El that we needed when we were small with a small number of customers that's CU reality when you have like 10 20 30 million of customers 50 million of customers now every single regulator uh like scrutinizes you a lot before giving the license if you have only I don't know 100,000 customers for them it's super easy to to give a license because uh it's much less riskier for them so that was you know wrong decision um like another wrong decision was uh the way we've done expansion as well uh so

following this principle of uh launching things super fast uh it actually doesn't work for expansion because uh when you launch things super fast we go for light a license like you know e-man money transfer um then your product becomes uh much less comprehensive compared to banking product and as a result there is not that much product Market fit so we had to redo the whole expansion uh later right so we wasted a lot of resources and uh time doing expansion uh in the wrong way so now the way we do expansion we always uh not

rush it so we apply first for banking lense and we get banking lense and we're launching all the products and M that we have instead of our going MVP way launching some products so that's another uh big strategic decision decision that is the wrong and and so talking about expansion the US is uh you know so you launch in the Americas more broadly Brazil Mexico you know Colombia is coming and and a few others uh any learnings from those and then how does that apply to the US and H how you know what is your

strategy to crack the US market which you haven't really cracked yet yeah so us is a uh is a credit card driven Market um so in uh Finance uh debit card card uh makes much less money compared to credit card on The Interchange interchange is fee that aerion pays you as an issuer so the way market is structured in the US uh everything is credit card driven there is 2% interchange so for every $100 transaction uh bank is receiving uh $2 in interchange and then Bank spends majority of these $2 on uh points or a

mil or some benefits and then if you just launch a debit card interchange is only I don't know half% in us so you cannot really compete with credit card as a result if you're not a bank in US you cannot issue credit card onl you cannot win the market so in the US you need to be credit driven so yes we need to have a banking license to launch a product yeah as a as a customer of a US Bank I won't name names but I have to tell you that revolute is much needed uh

in terms of experience it's uh it's it's basically where the UK banking system was 10 15 years ago so I can't wait for you to really make it there um talking about compliance and uh risk and compliance the other week I had some of your team come to present um and to demo what you built you know in house so we talked about building everything in house and you really built this incredible engine that ingest all rules and Regulation and can turn it into uh key risk indicators that you can track in real time then

you can go back to the original the source of of of the risk indicator and um so first of all it's it's a really impressive tool that that you built and also Al what was interesting is that they were it was the the team that built it and that is in charge of compliance but they were also thinking about selling it to third parties so similar to revolute uh people the the the hiring man people Performance Management tool that you are selling you also now working on selling your core compliance and and risk engine so

I'm CU about so it's a bit of a kind of AWS strategy of you you build your core product and then you sell them is that is that a core part of the future strategy do you think that's going to be big Revenue driver for the company and is there anything that you can't sell to third party that is too proprietary I mean as I said before I'm just trying things and you know hopefully some that will work I mean that's a very simple strategy so we build something and then we want to try to

sell it to third parties and uh if third parties love it you know we we continue doing it so I don't know whether it will work or not in the future but uh now we just want to try to sell it awesome well I think we I think we're at time um that was fast yeah that was really quick I don't know if there is a transition or yeah I think we're good all right well thanks Nick thank you it's good to see you thank you thanks everyone