# Revolut CEO Nik Storonsky: The Drive to Build a Global Banking Empire
**Source:** https://youtu.be/hT_MAAwFLIc?si=jZia4-zKcn4mA2d9

## Summary

Nik Storonsky, CEO of Revolut, discusses his relentless competitive drive, stemming from childhood, and his audacious vision to build Revolut into the number one global bank across 100 countries. He details Revolut's evolution from a travel card to a full-service digital bank and outlines his philosophy of self-competition to achieve aggressive expansion and disrupt traditional finance.

- Nik Storonsky's competitive drive stems from childhood sports and olympiads, with a lifelong desire to be 'number one' and extreme frustration with being 'number two'.
- Storonsky famously declared, 'I'm coming for his dinner' regarding Jamie Dimon and the US market, signifying an ambition to disrupt not just retail but also enterprise and investment banking.
- Revolut began as a simple card for spending abroad at interbank rates, evolving into a digital bank offering diverse services including credit, wealth, trading, crypto, business accounts, and non-financial products like e-sims and booking stays.
- Storonsky's audacious goal is to make Revolut the number one bank in at least 100 countries, currently operating in 30-38 with plans to expand into 10-15 new markets every 1-2 years.
- He views the global banking landscape as fragmented, presenting a 'unique chance' to build a unified global bank offering superior services at better prices, challenging the need for physical branches.
- His competitive philosophy involves not focusing on external competition but rather on 'outcompeting oneself' by striving for 'almost 100%' effort every day.
- Storonsky believes investment banking is ripe for disruption due to its manual and expensive processes, envisioning a future where it can be made 'much cheaper'.

## Transcript

[[0:02]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2s) 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 going to have a lot of fun today." I text my partner Rob. I was like, "I think me and Nick are going to do a masterpiece cuz 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? >> I was extremely competitive since I was 6 years old. So, it was always in a competitive sports or competitive olympiads as well. And for me it was always a natural desire to be number one in 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 number two. So, I always had this character.

[[0:48]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=48s) >> You think the competitive drive came from sports? What sports were you playing? >> I was doing a lot. I was doing kind of, you know, swimming, boxing, a lot of sports. Yeah, in in the childhood. I think it's more like a character and genes combination that you get. You know, some people are extremely competitive, some people are not competitive at all. >> So, how do you look at the competition? I heard this We were talking earlier. It was one of the most hilarious quotes where somebody asked you like, "Oh, you're you want to 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."

[[1:19]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=79s) >> [laughter] >> I mean, the the idea was that, you know, lunch is always you know, something small and dinner is usually in US much larger than in Europe as well. So, like coming for dinner means, 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. >> How so? >> I mean, it's still very manual, still very expensive. I mean, it's all possible to make it all much cheaper as well. Why not?

[[1:51]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=111s) >> Okay, so explain cuz like I think a lot of people that are going to be listening to this don't like they don't they're not going to understand what Revolut is today and where you're trying to go. So, like explain what you're doing like the state of the business now and then what you're trying to do moving forward. >> So, maybe I start with 2 years ago with what we started. So, I started with a simple card which allowed you to spend money abroad at interbank rates avoiding effective banking fees and with good effects rates. And then at later stage I expand into other products into credit, wealth and trading, crypto, business accounts. We also build a lot of non-financial business. So, the result now we are a large digital bank providing all the services that banks provide plus providing a lot of services on top of it. For example, you can book stays with us, you can buy e-sims and so on.

[[2:45]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=165s) >> [sighs and gasps] >> And then the idea is to build a large global bank which is number one in at least 100 countries. And that's what we are trying to do now. So, right now we're live in 30 probably 38 countries. In majority of them we have banking licenses. And then we are slowly expanding 10-15 new markets every I would say 1 to 2 years. >> Okay, so this goes back to again we just hit on what how this country started. You're super competitive. You say these like little lines, right? That you're like you just dropped there. But like you just like oh, I want to build the number one bank in 100 different countries.

[[3:21]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=201s) >> Yeah. >> You understand that's that's a a wild wild like thing to say and an ambition. I don't think you say it casually like oh yeah, I just want to be 100 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. >> Yeah, basically mentally for me if I chosen to do this game, right? And as I said before I need to be a number one in And right now there is a huge opportunity in the world where we have many countries and then in in each country have 10, 20, 30, 40, 50 banks. They're all very fragmented. Basically, there is a unique chance in the world to build a global bank which provides much better services and products at the much better price in every single country. And then effectively to optimize to compete with these banks to to drive prices 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.

[[4:23]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=263s) >> Can you say more about this like this ambition or this like competitive drive that you have? So like like how how does it manifest in your life every day? Like you wake up with just like a burning desire to achieve mission success? Are you looking yourself in the mirror and just like I'm not doing enough? Like what is happening? Like I'm interested in you the entrepreneur and then we'll talk about the business, but like this is a fascinating part for me. >> Well, basically it's a banking business and the way I view it, okay, if I chosen to be in this business, I need to be a number one in it. And obviously there are tens of thousands of banks in the world. And what it means to be a number one, okay, it means to be number one in country 1 2 3 4 and so on. Let's say it's 100 countries. And then in terms of competition, how I look at competition, I mean to be honest I don't really look at competition. I look at 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, sir. Every day you need to be like almost 100% every day. And then even if you lose to competition, then uh you cannot really blame yourself because okay, every day you were at 100%, right?

[[5:30]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=330s) So I think you know that's that's a mentality that will help you win. Uh most likely. >> I love this. Have you spent any time with Tobi Lutke, the founder of uh Shopify? >> Uh no, not yet. >> Okay. So uh he was on the show. We're I'm actually recording with him in like another like 2 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 basically improve every single element of what this previous management was?" Even though it also is him.

[[6:00]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=360s) >> Mhm. >> 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? >> Yeah, let's uh probably give it away. >> 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? >> A lot of them they are not founders. That's number one, right? So they they are only for 3 4 years at best. They just collect their bonuses and that's it for it and then they might, you know, optimize certain parity metrics. But then they they are not really 10x people, right? So they are and they just there for their bonuses effectively for 3 4 years. As a result, they don't really need to 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 get? Like which product can I launch and so on. So it's like, you know, always pushing myself, pushing myself to do more.

[[7:00]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=420s) >> Why do you think it's important that you're competing against non-founders? >> I mean, it's 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. That's That's not what's happening, right? >> Say more about the difference between in your perspective between a founder and a professional CEO. >> Well, professional CEOs, ultimately their goal is not to improve organization, right? Their ultimate goal is to protect their job. So they, by definition, 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 a company as as one entity, right? Like I do everything what is good for the company and I never kind of 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.

[[8:01]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=481s) >> Yeah, I heard you say something like your entire life is work. It's like 99.5% of the your time is dedicated to your built to building your business, correct? >> Yeah. Yeah. Yeah. Also, when we 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 then my answer is very simple. Every time when you think as a regulator that I'm 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.

[[8:39]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=519s) >> Cuz there's no separate This is what I hate when everyone's like, "Oh, it's just business. It's not personal." It's like no such thing with founders. >> Yeah. Yeah. >> So, this is another thing that surprised when 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? >> Yeah, basically when we got 7 million customers and then we applied for banking license, uh the entity with a zero customers is less riskier compared to an entity with a millions of customers. And then the regulator's eyes, they become, you know, much more riskier to you, right? Because for them it's much easier to to give a a license to a company with a zero customers because maybe they will have zero customers customers in 3 4 5 years time, right? If you give her a banking license to a company with 5 10 million customers, and something goes wrong, right? Then my regulator will be to be to be blamed.

[[9:36]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=576s) >> Why were you not regulated before? What was the state of the business when you applied for the banking license? What were you doing before? >> Well, we simply got e-money license, payment licenses. So, we we were on >> just moving money. >> much lighter licenses, yes. >> Okay. >> Yeah. And then the the idea was banking license back then was 3 4 years to get, while e-money license you can get within 1 year. So, obviously as a founder, you want to to do things faster. So, that's why we went for e-money license. And then we got a lot of customers, and then we moved to banking license, and then it became almost because we were very very large. Uh, I think in history of UK, uh, it never happened before that uh, a company with uh, 7 or 8 million customers in UK applied for for banking license.

[[10:19]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=619s) >> So, is that difficult process? Like what happened? >> Uh, it took us almost uh, 5 years to to to get a banking license in UK. Yeah. >> Okay, so what would you do differently before? You would have tried it like what you I think the way you put it is like regulation is 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? >> 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 their accounts. They need to start trading stocks with you uh, ETFs and so on. So, they need to trust you and then in their minds uh, I mean they they trust banks.

[[11:06]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=666s) >> What do you think the American like companies are doing wrong about this? >> To build a very large business to capture large market share, it's it's just unavailable. So, I think in US uh, a lot of companies started like Chime, 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 >> Explain why they can't become a large business without it though.

[[11:32]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=692s) >> Just because they are not a bank, right? They they can target certain uh, niche audience, certain cohorts of customers I don't know the low income and so on. But they can now never go to to prime audience, right? And they can never become uh, a prime bank account without the banking license. >> But why do you think that relegates them to being a small company? >> Well, just because uh, yes, early adopters 10 to 20% of population will try them. Maybe it will go from early adopters to their friends, family and another like you know, 2% so 4% of population. While you want 40, 50, 60, 70%. For example, in Ireland we have our 80% market penetration. So, four out of five Yes.

[[12:08]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=728s) >> Four out of five adults use uh, Revolut accounts. >> Okay, how did that happen? >> Slowly. Uh, I think a combination of uh, of competition, very bad banks. They have only four banks which are bad, plus a very small country with a lot of people living outside of Ireland as well. So, I think all together it led to us being 80% of 80% of the market. If you look at other markets, for example, in the UK, we're about 20% penetration. France is 20%, Spain uh several markets are 30 30 40% penetration. So, it is possible to go to 60 70 80 as as Ireland shows, but for it to be a bank.

[[12:47]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=767s) >> So, I'm very curious like when you're going into a new market and you said there's just bad banks, just like low competition here. Like what are you seeing that they're doing wrong? >> Well, they they they're stuck in limbo of professional management who are extremely risk-averse. As a result, there is zero lack of zero intention to innovate. Um and then uh all the resources spent on uh protecting what they have already, right? So, for example, you can have a very old 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, that's the problem. Plus, on top of it, uh because a lot of them are not technical, so they don't really understand how to do a lot of technical things. As a result, for them default choice is to uh not do anything for regulators and then for uh for for legacy banks because doing anything is a 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 building tech. And I think all these people are very bad at building tech.

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[[16:26]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=986s) That is deel.com/sindura. >> So, one of your advantages as you see it is you're competing against non-founders. You're competing against professional CEOs and these professional CEOs are not technical. So, they actually can't invent technology, so therefore they cannot innovate. >> And that's what you're attacking. >> 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 They don't know how to do it. They're just professional managers. Thing is very important for to build successful business, you need to obviously go to 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 all together. 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.

[[17:19]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1039s) >> Okay, explain how you're building this machine. >> I mean, you need to visualize in your head kind of, you know, what are the inputs in this machine and what do you want to achieve? What are the goals, right? And then uh Inputs is obviously your organization, your structure, your people. How you build product, what you want to build. And then you effectively observe kind of, you know, the whole structure working, the whole product being built, and you always interfere, right? If something goes wrong, and then you kind of change certain parts of the machine. For example, when we started, it was a very small team, 10, 20, 30 people. We hit a bottleneck when kind of team team grow, but then speed slow down. Machine stop working, so what I did, I I I just ensured that we have, you know, 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 using the same tools. And they were all independent. But then again, we hit bottleneck with regulation compliance. Again, I built another muscle in the machine, which is reg affairs, government affairs department, and so on. So, they they had to produce in certain outcomes. Then we hit again a bottleneck with hiring fast enough good people. Again, we build a lot of process for recruitment targeting the best people.

[[18:38]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1118s) >> [gasps] >> So, it kind of, you know, moves in circles, right? You you you build something, then you hit a bottleneck, right? You identify the problem, you solve the problem, you go again. >> 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? >> Yeah. >> I heard about what you just described before, where it's 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, right? At 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.

[[19:15]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1155s) >> I think what what was useful as a trader was risk management and then quantifying everything. Uh Uh because there are fortunately unfortunately in in banks or in other organizations, um a lot of things uh evaluated based on their people's intuition, which in a lot of cases simply wrong, right? So, in order to evaluate correctly what is done and what is not done, you need to have a metrics, you need to have KPIs.

[[19:44]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1184s) >> Wait, are you saying dumb or done? >> Done. Done. >> Okay. >> Done. Done. >> Okay. >> I'm not going to call myself dumb. >> [laughter] >> Metrics and KPIs that actually kills politics within an organization because um Look, everything is transparent, right? You as an 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 to to have as a part of the machine. When I worked in the bank, uh they didn't really really have it. So, they had the professional CEO, then they had their a lot of politics within an organization. and I think it's it's just simply wrong how how people run general businesses.

[[20:28]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1228s) >> Okay, so explain like setting these little bets up. >> I mean, to be honest, it's pretty simple because we were always high velocity for the company when we release a lot of features, a lot of products. And then at certain point of time, I decided to install discipline in building bets because we're building a lot of things, but we were not really tracking how they were performing. So, we simply build there a stage of process when first there is kind of, you know, a 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 if decision is made, we fund the bet. So, we separate a team of up to 10 people, front-end developers, back-end developers, designer, product owner, sometimes data scientist, operation manager. And then they build a new product within 9 to 18 months. And then when they launch the product, we simply look at growth of the product in terms of gross profit. And because we've done it for last 10 years, we already have launched, say, 50 bets. And then we know that our top 10 bets, they grow, say, 10-20% month on month and they produce, I don't know, 1 million GP, 2 million GP, 3 million GP each month consecutively.

[[21:43]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1303s) And 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. And then bets 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 lines. So, I think this process is just, you know, very disciplined to always filter out things that don't work out. Even myself, 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 so times. And I think only approach which like completely algorithmic, right? Top bets you continue to fund, bottom bets you just cut like within 18 months.

[[22:34]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1354s) >> trader in you. >> Exactly. >> 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 when he was obviously building company. And he has a great line where he's like you need to pour gasoline on the promising sparks. So, your whole thing is I'm going to cut the bottom, but then the top performing would do you have a percentage of the 10% top? Usually >> up to 25% of all the guys. >> Okay, and then you're just now we know >> We scale it up. >> 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?

[[23:06]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1386s) >> It's not necessarily 10. Like it can be a bit more. It just depends 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 to probably two, three back-end developers. You need uh two In our case, because we also produce mobile apps, you need uh two to four front-end developers. So, three to four back-end developers, one product owner, one designer, and it gives you 10 people. >> Is the way you're structuring these teams changing because of AI now?

[[23:34]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1414s) >> Yes, that's actually um a thing now that I'm kind of, you know, trying to change because last 10 years I think I I optimized a lot how you direct people, how you build organization around people, around their strengths and weaknesses. Like avoiding politics, putting KPIs, and so on. But, actually avoiding people's weaknesses, right? With AI structure needs to be a result of, 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 of one uh one developer can do front-end, back-end, can even do, you know, data science as well. So, it should be a result.

[[24:13]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1453s) >> Can you give me a download of your thoughts about how AI is changing the way that you're running your company? >> Well, many things under I think we are just in the beginning. So, we automated customer support about some 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 increase speed of engineers by 30%. Translation, uh cross-selling as well done by uh LLMs now. Um a lot of things, but I think ultimate goal is uh at least a bit for us now is to be able to build uh like full-stack AI employee. Uh I think it's completely doable with our current technology. So, it's it's not like uh chat tool or another like interface where you tell what to do and then 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, but I mean, sooner or later, you know, majority of companies will come to.

[[25:23]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1523s) >> Yeah, you keep mentioning over and over again like uh I don't know if you use 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 is 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 2 weeks ago, and he had some crazy [ __ ] like 200 direct reports. >> Yeah. So, like what's your How how are you organized?

[[25:48]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1548s) >> Uh so, I have about 50 51 52. Um reality I'm not even speak Well, I speak with my direct reports, but I also give a deeper, right? I give it down to individual contributor in in in bottom projects. So, I can speak directly with designer, with product owner, with uh 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. This is like a nightmare, 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 don't need every single team or department to reinvent their own bicycles, right? Or their own weapons. Now, it has to be the same standard approach. And then, if someone invents, you know, some additional 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 I do very well. I'm I'm very good at supporting innovation in one team or one department and then actually spreading it across the whole company.

[[26:55]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1615s) >> Can you give me an example of you spotting an innovation and spreading it through the other departments? >> For example, recently was we for for design, we always used Figma. Right now, I spotted that one team is actually producing designs much faster using LLMs and then instead of actually designing in certain interface of the product, they they simply uploaded our design system on the code level to LLM. And then, they prompt to produce certain flows based on 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 reacts and so on. But, 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 the whole system to to all designers now.

[[27:51]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1671s) >> Have you spent any time like reading about like entrepreneurs like from the past at all? >> Yeah, of course. Yeah. >> Like anybody stick out that that you admire you studied? >> Yeah, of course. I I read books about Henry Ford. >> I'm I'm glad you said Henry Ford. You're sitting there talking about like you're building a machine. You're like observing these innovations in all different parts of your machine. And I need to make sure that it's spread throughout the this entire machine. That's like Henry Ford, Andrew Carnegie. He would travel around the world. Now, we obviously our technology can proliferate, you know, somebody can tell you about it, you see it online, whatever. He'd have to like physically go and travel to the factories cuz they're building physical stuff. And like, "Oh, wait, this idea in Britain, I take I'm going to take it 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 5% improvement in 1% 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 what he was spending so much resources on it, they thought he was [ __ ] crazy and actually gave him, cuz he ran a company for 30 years, it actually gave him this compounding advantage that by the time like his competitors could never 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.

[[29:05]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1745s) >> I think it's super important to you're just building a machine which moves faster, which achieves the goals. And then if you if you spot innovation in certain part of the machine, you need to spread it as as fast as possible. >> Yeah, and so this idea that you you kind of hate like managers that just pass along like what to do, correct? You've eliminated them from your company? >> Yeah, exactly. I've seen so many by now last last 10 years. I just simply what they do, okay, they they take information from their individual from individual contributors and then they pass it to I don't know, stakeholders, right? I mean, it's like what what was 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 road map, right? No, not really. But I mean, what what's your job like, you know, just you know, taking numbers from them and passing them to myself? I just don't get it.

[[29:59]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1799s) >> You prune your team is what I've heard. And you're searching for I think what you call self-guided missiles. >> The self-guided people, yeah. >> It's almost like a founder and employee form is what you're going after? >> I always joke that, you know, self-guided people are like self-guided missiles, right? So you got brilliant people, you don't even need to tell them what the goal is. They self-identify the the goal and then they self-reach it, right? So they're like self-guided missile which also identify the goals. Then um people who are good, but not excellent, you need to tell them the goal and then they're 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, uh below average people, okay, you you you gave them the goal, um you spent time with them, and then 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.

[[31:05]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1865s) >> 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? >> I do, yes. Uh like a lot of people I know who are very good executives, they struggle with this issue. >> Why do you think they struggle? >> I think it's just, you know, 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 empathetic and less uh 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.

[[31:56]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1916s) >> Have you heard how Elon speaks about this? >> No. >> So, he would tell the people uh like the people managing the engineering team. He's like, "If your engineers like you, you're doing you're not doing the right job." And his whole thing was exactly that. 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." >> Yeah, exactly. >> That's more how you think? >> I think it's very important whatever you hire an executive for, your observe executives uh like people who are very likable by their direct reports uh it they might not be the right people. I think the best executives there are they're very tough, right? Well, they might be likable, right, but then likable is never the goal for for executives. right? is always to achieve the goal, right? With the minimum number of resources spent. So, they're they're the best.

[[32:43]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1963s) >> Same word with this cuz I've heard this like 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. >> Yeah. >> So, it's like a almost like an art to like I know you don't think of yourself as an artist for [laughter] sure. But like there is like an art you're trying to like it's not just you want to win, you also want to 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 want to try to find the minimum input possible for large outcome.

[[33:13]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=1993s) >> Yeah, exactly. If you think what founders do, what entrepreneurs do, what are like great executives do, okay, they have the goal they need to reach 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. >> Do you see a lot of waste in the like the American entrepreneur ecosystem though? >> I think there is too much money, right? There are a lot of founders they think money is free, which is probably almost free in in California because you can raise you know so much money at the ridiculous valuations, and then just spend. So, I think there is definite culture of uh trying to solve problems with money rather than with your brains.

[[33:55]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2035s) >> Explain to young entrepreneurs that are going down that path why that's not the right move. >> Well, for example, you you're into B2B business, right? And then you kind of you know start up a company, you you have your first sales, first say 1 million ARR, and then you decide to scale it, and then suddenly you decide to hire expensive VP of sales who will who will hire another like you know 50 sales people to sell your product. You need to find a way to start selling a product cheaply, build a system, and then simply feed additional employees into the system, so you always have you know great payback. Starting big, hiring you know very VP of sales who will hire also very expensive team or is a decision.

[[34:41]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2081s) >> Okay, so essentially like they remove the constraint for money. Therefore, they're not developing the skillset that constraints make you. If you're going to survive under this set of constraints, you actually have to be good. You actually have to be talented. 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 going to get beaten by somebody like you. >> I mean if we are in the same industry then yes, for what the I mean in many cases in US it's not that competitive, right? >> 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?

[[35:13]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2113s) >> I mean the Europe is even less competitive. >> Yeah. So you think it's not competitive? >> China China is not competitive, yeah. So China is 996, right? And then even if you are good in Europe or even if you are good in US, I mean how can you outcompete the people who work 9 to 9 6 days a week, right? Plus they have uh very good education, technical education. So it's very hard. When I started I started in co-working space with 140 companies. Within a 5-year time only three companies survived. They all worked on the weekends. Within 10 years only two companies survived out of 140. So I think working on weekends is a must if you want to survive, purely statistically.

[[35:54]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2154s) >> Okay, so working 7 days a week is one thing, but working 9 to 9 or 10 to 10, like what what is it what is the actual culture? >> Well, I work like that, right? >> You're the founder. I don't know a single founder that's like no, no, I'm I'm I'm on PTO. Like I understand that. I'm talking about your >> Uh yeah, my direct reports like absolute majority of them they work like that, right? >> [sighs and gasps] >> They might be like a bit less alignment in in our 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 I think we are also one of the hardest working companies if you include US as well.

[[36:32]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2192s) >> I want to know what you think like the people the entrepreneurs that are that have this like Calif- California tech like culture and operating system, what What think they're doing wrong? You said there's just too much money. They're not that competitive. >> [laughter] >> No, everything else is seems there is there. There is a ecosystem. Talent is very good. You got, you know, great universities plus uh like a lot of expats, you know, coming to study in these universities. People are rather hard working. But 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 wrong culture.

[[37:10]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2230s) >> Cuz they're not solving actually solving the problem, the underlying problem. >> I think it's just a lot of waste, number one, and then 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 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. >> That's a very interesting take. You're not developing yourself as an entrepreneur.

[[37:37]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2257s) >> Yeah. >> Give me examples of how you developed yourself. >> Well, when we started, if you look at the unit economics of the business, we really started with a negative gross margin. And the negative gross margin continued for next three, four, five years until we optimized it to up to 80% of positive gross margin. And then if you look at why is that, right? So, in our business, if you look at our Europe, everything is extremely capped and regulated compared to US. For example, interchanges 20 base points versus 100% in US. Credit card rates are capped in majority of countries. Credit is very limited, right? You cannot really freely give credit to many people. It's very difficult to actually set up a bank in Europe given country by country because even if you have a banking license in Europe, you cannot be a primary bank because with regulation that's allow you to uh start issuing local accounts unless you start a local branch of the bank in that physical location.

[[38:34]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2314s) >> I mean, let's say you need to have an office, you need to have local connectivity, local regulation, and so on. So, you go country by country and takes a lot of time, a lot of resources as well. So, different languages as well. >> And you had to do all of this. >> Yes, plus very tough employment laws in in many countries. And US is very easy, right? I mean, it's like employment at will. In Europe it's not like that. So, you need to be very careful how you hire, who you hire. So, all all this together is actually producing environment which is not very profitable, right? And very difficult to build a company. And then even in that environment we kind of succeeded, right? But then we succeeded because we spend a lot of 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 was to have the same business in Brazil or like in 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 kept. 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.

[[39:44]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2384s) You see what I mean? >> Okay, so if you were surviving in this very difficult environment, now you have the skill set that people that did not have to go through that, and now you have to compete head-to-head with them in let's say like America, they're going to be very hard to compete with. You're going to be very hard to compete with cuz they haven't developed the same skill sets and they didn't go through the stuff you did. >> 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 35 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 They put your ads in front of over a billion potential customers.

[[40:50]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2450s) Other businesses have seen immediate results, scaled to hundreds of thousands of dollars of spend per day, and increased 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. >> You 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 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 employees, how many customers? Tens of millions? Like, if from an idea that you had, you know, when you were what? In your late 20s at the time. Yeah, it's it's absolutely incredible. I think that's 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 because I saw this clip of you where you compared investors to football cheerleaders.

[[42:02]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2522s) Can you give Can you explain why you made that comparison? >> Well, basically uh uh I I I gave you this story before. So, what I what I thought of the company was 12, 13 years ago, um back then in Europe and in the UK, it was extremely difficult environment to raise money. Simply, there were not that many VCs around and then there were all more like private equity guys, like extremely aggressive, extremely legalistic. So, to raise money, you had to sign a lot of bad conditions in your shareholder agreement, uh liquidation preferences, board seats, 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 kind of created because they gave money. And that they are entitled to less part of its success. So, that's the mentality of like you know quite a few investors that invested very early on like in in my company for example.

[[43:03]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2583s) I think it's kind of largely wrong this mentality because uh getting money from LPs is extremely easy. I also >> Wait, getting money you said? >> Getting getting money from 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 220, right? So, it's so much easier compared to building a real operational business from scratch. Uh because they never risk with their own money, right? They don't really need to work hard. I mean, there is competition but competition is just enough for getting deals. So, I think their job is so much easier. That's number one. And then number two is uh back then there was you know almost no competition compared to what it is now 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.

[[44:05]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2645s) Reality like almost none of them they ever build any company, right? So, they they just raise money from LPs, they invested their money in in many companies and uh sometimes they have board seats, sometimes they don't. Having a board seat or doesn't uh teach you how to run a company at all, right? You you are just an observer. As a result, you have all these people with a lot of power, right? Because they give you money, they put some conditions in shareholder agreement. Uh and then they also have this mentality that they can't tell you what to do as a founder, right? And that's in my experience was very dangerous. And I had many cases in the past when certain VCs I mean, their advice was simply wrong for 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 have no right, uh no voting right, uh no seat at the table at decision-making. Super important.

[[45:07]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2707s) Because uh if something goes wrong, right? Uh you effectively have cheerleaders, if 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 why, you know, a >> always disaster. >> Why do you say some of the advice they gave you was dangerous? >> I mean, one of the advices was, "Okay, you know what? You need to hire experienced executive." You know what? No, it doesn't work. Uh when I started first five years, I had probably 50 plus experienced executives, I kept only two, right? Within one year. It just doesn't work. Why is that? Why experienced executives, you know, almost never works work out? It's the same as football players, right? They have their prime. Like really similar, 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, probably they 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. And then, number two, there is also a negative for selection bias, right? If you think that people who extremely good, like for example, how I hire people, uh I look at their their track record of achievement, and then they need to be top 1% of compared to their peers in terms of their career progression.

[[46:38]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2798s) >> [gasps] >> And then I try to pick up them when they are 25, 30 years old, so they continue on the same trajectory in in in Revolut. Uh whenever you're hiring experienced executive, really there is a negative selection bias, because people who extremely good already made it, right? Uh and then they either probably running their own businesses, uh or they retired, or something else. And then people who never had this extreme career progression, who you hire as experienced executive, they just, you know, by definition less good compared to people with extremely fast career progression who already not in the market.

[[47:11]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2831s) >> 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. >> Yeah, exactly. And then 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 one of them, he's actually quite quite a good investor, he he was forcing me to fire my best person because he was too hardcore. So, a lot of this relationship is yeah.

[[47:41]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2861s) >> [laughter] >> This guy needs to work 9-5, okay? So, how did this like tell me more about this? Like you obviously fought back, the guy didn't get fired, what happened? >> I mean, of course of course I didn't fire him. I said no, that's it. >> Okay, but that's it? And the guy >> He took it to the limit, yeah. I mean, we good friends. >> did you have a fight with the investor? Like what happened? >> Yeah, I have a yeah. >> Yeah. And so, how did you settle it? You had all the power? Like what happened? >> I fighted with him and then yeah, even though they they they they had a collision of, you know, many investors, but you know what? They they they step back.

[[48:13]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2893s) >> Okay, so how did you get them to step back? >> Well, I think, you know, pretty early on I realized that like quite quite a few of VCs, they are not very operational and they can be actually dangerous for the company if they have any power. So, every single investment round I just, you know, remove VCs. So, took you know, both seats. So, now I don't have any VCs on the board. I think that's the best. You always need to have operators rather than VCs on the board, who people who actually build businesses, who who know how to do things.

[[48:45]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2925s) >> Your mindset reminds me a lot about Travis Kalanick from Uber. He was on the show and I think he like one of the clips that went like got millions and millions of views was on this where he just actually thinks that like just doing no harm is an excessively high bar for a VC. He said something like over 90% of VCs, they can't even not [ __ ] things up. Not much to be He's like, not even be helpful. They just can't not [ __ ] things up. And then he said like 1% in his experience have been actually helpful. And his thing would which he would tell all entrepreneurs, I think he said on the show, is just like, tell them to give you the money and go away. That's how you think.

[[49:18]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2958s) >> I mean, also about some of the yes, ensuring shareholder agreements, they just don't have any powers. >> Yeah, I will make you rich richer. You just leave me alone. It's basically >> Yeah. >> You also set up your own, I don't know if you call it a VC fund. >> Yes, it's a VC fund. So, basically >> What's it called, first of all? >> Uh Quantum Light. >> Okay. >> So >> 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 going to show you a different way to do it.

[[49:52]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=2992s) >> Yeah, basically the idea was in I think it was 2022 or 2023 when I came out with this idea and the idea came actually from my personal pain, from a fight with investor. It was actually one of very big names. They entered or they invested in Revolut. It was uh I think just after COVID or during COVID when all the stocks went up, they invested at 33 billion valuation. So, basically they they they had legal right to uh not to allow us changes in shareholder agreement because they were like, you know, last investor, blah blah.

[[50:30]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3030s) >> So, you had a bunch of these bad experiences with with VCs. You're going to start your own VC fund. Explain how your fund is different. >> So, basically I had this fight and then, you know, I was extremely pissed off and I thought, you know what, I I also need to compete with VCs in that business because they they >> [laughter] >> are so bad and out of my frustration I started the fund as well. And then the idea was basically to invest not based on a human judgment, but based on their science and based on their machine learning models. Statistical statistical investment is number one. Number two, actually help with founders with operational advice or playbooks that we develop to travel how to hire people, how to do performance management, how to do product expansions, and so on. 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 as a as a client helps to sell into other enterprises. Or potentially sell to our um our customers as well, our revenue customers. So, I think overall, plus my personal advice, obviously. So, I thought overall the package was so much better compared to purely financial players, uh VCs.

[[51:37]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3097s) >> 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 you're just like concentrating money behind a handful? >> [snorts] >> Uh it's again a statistical investment for us. It's based on machine learning models. So, the way it works, our model selects 30-40 companies to invest over 2-3 years, and then puts equal amount of money in each in each startup. So, we started with a founder series B fund. So, it's closed. It's fully invested. It produced now like 56% IRR.

[[52:10]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3130s) >> And you you started like 250 million or something, right? >> We started 250 million, yes, for the first fund. So, now it's like 56% IRR. We started investing in second fund now, which is 500 million. So, it's series C now companies. Again, based on the model, also very high return. I think it's top 5% of funds in the world now in terms of returns. We'll probably do a large fund as well for for late stage. >> Where's the money coming from?

[[52:35]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3155s) >> Uh it's different LPs. So, initially I started 20% was my own money. So, I put 20% of it or 25% of it, and then the rest came from other founders. Second fund, we already got quite a few institutional players as well. >> I've never heard of somebody building a bank compare themselves to like Meta. So, I'm going to get into that in 1 second. But, you don't do anything like [ __ ] half-assed or like small, right? You're just like, "Okay, I started 250. Now you're just going to see how far you can take this." This is it be like a, you know, a giant like Renaissance Technologies kind of thing?

[[53:06]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3186s) >> Well, obviously uh the goal is to build something large like BlackRock but in private markets. Again, we'll see if we if we if we get there. But I think idea and approach makes sense because uh like you now have a lot of data on startups and then you can apply all these machine learning models to identify the best ones. And then models pretty sophisticated. So, for example, one of their uh signals we look at we look at who invested in the company, who is investing. And we are look we are looking not only in the fund performance who invest in the company but down to the partner level. And 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 uh are older than 40 years old. So, the best cohorts are 30 to 40 years old of young partners who are investing. They they they they they're the best at identifying good companies.

[[54:09]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3249s) Same as same as with executives as well. Yeah, so so there's a certain prime age when you what you need to look at. Again, there are many variables, right? The age is not only one thing, right? But uh statistically speaking, that's what you need to look at. >> And is this a separate company from Revolut or is it >> Yeah, it's completely separate. >> Okay, so completely separate. And you have somebody else running it? >> Yeah. >> 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.

[[54:39]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3279s) >> Yes, first seven years it was completely organic. Uh plus COVID also hit and uh 2021 I remember company was six, seven years old. Uh COVID hit and uh like our revenues went down I think 70%. And back then we were not in banking business. We were still kind of you know, e-money with uh travel card. So, it was very heavily related to related with travel business. And then as COVID hit, uh travel business completely gone. So we had to survive somehow. We kind of optimized a lot during that time.

[[55:17]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3317s) >> Okay, but explain you you why you decided to start to start spending money marketing cuz like I go to Europe and it's like I feel like I'm blanketed with your ads. I see your stuff everywhere. Now it makes perfect sense after talking to you. It's not like, oh yeah, I'm going to 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 scorched scorched earth on it. >> Yeah, basically the way I think about marketing is I actually done it for 6 years, 7 years. I just didn't have time plus we didn't have enough resources. But then when I started doing it, I went really really deep. So basically I started with who we need to hire to run a proper marketing machine. Not like here and there, but scientifically, right? Where we need to invest money in marketing with with with a proper return. And then my idea was very simple. Who are the companies with largest marketing spent? Who are extremely cautious with their marketing spent? Where is the you know, very low margin of error? And back then it was gaming companies, right? Gaming companies had their a lot of marketing spent performance ads. So then certain companies were also doing a lot of above the line campaigns.

[[56:21]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3381s) >> Are the gaming companies doing well or not? >> Gaming companies were the largest spending companies in the world on marketing. So if you look at their budgets, it could easily be you know, 1 billion plus on the marketing. >> lot of them were going to AppLovin. >> [laughter] >> Yeah. >> Which AppLovin's going to print like 6 billion in profit this year. So they're doing well. >> like amazing. Yeah. Yeah. Yeah. So I ended up you know, hiring you know, extremely good person who who started running marketing at Revolut. And then we also then once we had a decent

[[56:53]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3413s) >> you go on, like am I understanding you're so you're studying how gaming companies are advertising or you just want to know what they were spending? >> The idea was who are the best professionals who know how to spend money in marketing, right? And then the idea is that these professionals will work in gaming companies because I have the largest budgets. >> Got it. >> So, that's how I got my first, well, actually second. First one I fired. He wasn't for big in gaming. >> Probably VC's cousin. Actually hired him or something.

[[57:21]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3441s) >> And anyway, we went went very deep into, you know, performance marketing, LTVs, payback. And then recently we also started doing because we we got a banking license and then what we realized, or what I realized 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 less by definition compared to HSBC, Lloyds, JP Morgan Chase, and so on. And then okay, how how you build trust, how you arbitrage effectively performance marketing spend because in performance marketing spend you pay per impression and then there are a lot of spaces in physical world which you can buy who will which will also produce impression but at a much cheaper price compared to digital world. So, for example, we bought probably now 50% of all airports in in Europe, right? Like in almost 50% of airports in Europe will now have ads, right? Again, because 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 it will cost us, right? And there is arbitrage to performance marketing.

[[58:31]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3511s) And then similar ideas to to other places in physical world. For example, we we we started now doing equivalent of legacy branches, what we call a cold rev store, right? Rev experience. So, we set up first fresh shop in Barcelona. Again, arbitraging impressions of in physical world versus digital world. Because how many people pass every year our shop? >> What what is the shop though? >> I mean, it's more like Revolut experience. 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 type of store but 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.

[[59:15]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3555s) >> Like a lot of companies advertise in airports. 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 2 minutes and it's still I'm like enclosed. There's like a huge like a I'm in a cocoon of Revolut ads. And how did you come up with that idea too though? >> Just buying full airport. >> 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. 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 were aiming for ubiquity is the way like I was thinking about that when I was walking through the airport.

[[59:48]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3588s) >> Yeah, in my mind the way I just see now paying for impressions much cheaper compared to in physical world compared to digital world. >> just like paying for impressions though because like, you know, >> I mean, building trust as well. >> You I think the trust thing was actually one of the most interesting insights and you said a lot of interesting [ __ ] today. But like I think there's something about the ubiquity of it. It's not just one sign saying, you know, this is Revolut and this is what we do. It's like entire hallways. Like you're just walking and I'm being surrounded by this. It's like I'm telling you I can't think of another company. This is before I even thought of having you on the show. I was just like, this is this is actually a really good idea. I'm not going to walk past this and not know this company exists. One of the last things I want to talk to you about goes right to this like grandiose like ambition you have. I think people that may not known you before this pick up on your 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 cuz you made me so mad. Um but I've never heard anybody else building a bank. One, you said there's really no true global bank and you want to be the first one. So, I I I like the level of ambition. But then you compare just like we want to be a global technology company.

[[60:53]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3653s) 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 that maybe like even a boring, you know, business has 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. >> Yeah, basically our idea and our goal is to generate enough cash flow from this business to be able to fund 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 and we 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.

[[61:40]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3700s) >> [gasps] >> But I would love even to go deeper, right? To to kind of to build our own data centers to train our own model all 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 there a lot of uh cash flow. >> [sighs] >> 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 two three four

[[62:13]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3733s) >> five years. Are these moonshot bets unrelated to like financial services? >> Yeah, most likely. Yeah. Cuz 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 rewriting legacy products, right? So we're building the same financial products but we are building them much cheaper and much nicer compared to all the 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 are all kind of you know interconnects with with each other, talk to each other.

[[62:46]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3766s) >> [snorts] >> But ultimately it's is 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 do something you know which was not done before. >> Inside the industry? >> In all industries, yeah. >> All industries? >> More like in tech industry. >> Have you like shared publicly like some of these like moonshot ideas or you're like keeping inside the company like

[[63:12]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3792s) >> For now or 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 and time to to to build them, but I hope you know in 3 4 5 years time we might have enough resources to to build them. Pragma is a it's foundation model trained on our transaction data. As a search, we have 30 million uh transactions every day. So, we have billions and billions of transactions.

[[63:40]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3820s) >> [gasps] >> And then it is possible effectively to train a transformer based model on transactions and then use it in like almost any aspect of financial services. So, it can be anti-fraud model. It can be credit model. Potentially can be investment model and so on. >> When you launch here, why would I want to use your bank as opposed to like JP Morgan? >> So, JP Morgan is a very local. Gives you US bank account plus US based products. If you ever have a exposure outside of US, we are banking partner because we do everything what JP Morgan does for you in US. Plus on top of it we provide all the global assets. You can have global accounts with us. So, being in US you can open account in Europe, Australia. You can send money instantly between all countries. And so on and so forth. So, instead of giving you a local based financial products, local based benefits with points, we give you effectively global exposure.

[[64:42]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3882s) So, that's very good position. Plus on top of it is much nicer in terms of interface plus much cheaper compared to JP Morgan. >> What's the difference between that you make money compared to what way they make money? >> They are much more credit focused compared to us. We are much more subscription focused plus transaction business plus commission focused. >> What are you doing on the credit side? Are you just selling all that off? >> Credits are just standard products, credit cards and loans. Selling them off or not yet, no.

[[65:07]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3907s) >> Okay. >> Cuz it's still very small portion of our balance sheet. >> So, you think your advantage relative to the legacy banks is you're more of a technology company. >> Our advantage is the tech. And then if you think about banks in the past, when when they expanding country to country they just bought other banks. As a result they have many systems and many countries they don't really control anything to produce any report. Takes months to extract data from from different systems. Our advantage is that we have 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 just configuration of our software. You know for example I'm boarding in UK we just selling configs to change on boarding to US or to change on boarding 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 in another country from from from scratch. As you do it you obviously need you know much less people to maintain it compared to 10 banks in 10 10 countries. As a result there is economy of scale so we can sell products much cheaper compared to to other banks.

[[66:16]](https://www.youtube.com/watch?v=hT_MAAwFLIc&t=3976s) Plus the whole institutional knowledge how you build product how you do marketing and so on. So you reply the same knowledge in in in any new country. And I think you know with time it can become like unstoppable machine right because it provides a much better products and services at a much better price compared to local banks. >> Over time I'm building an unstoppable machine. That's a great place to end. Thanks Nick for the time. 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 have obsessively read over 400 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.


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