Transcript
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Nik Storonsky explains how Revolut scaled from a tiny customer base to massive daily signups, largely through organic growth in the early years. He discusses the first successful products, especially the multi-currency card, and why building a much better product mattered more than starting with a specific category.
Do you want to go head-to-head with Amex, Platinum, and Chase Sapphire?How will you compete?Nik Storonsky is the co-founder and CEO Revolut, one of the world's leading neobanks.They started with foreign exchange, but now do everything from bank accounts to business services to mobile plans, and they're expanding in the United States.Cheers.
Cheers.
So as you look back on it, how did Revolut get to scale?Like what worked and caused growth?
I mean to be honest here, I was never kind of not optimizing to get scale quickly.I was just you know working on the product and then solving problems and turned and then initially when I started we had probably 1 to 10 customers per day, then it went to 100 customers, then to 500, andthen 2,000.Now we have about 100,000 customers joining every day.So I was never kind of not trying to optimize to get as many customers as possible.I was more focused on building products, getting a license and so on.
But you presumably thought a lot about distribution dynamics and how to get customers to refer other customers and things like that, the kind of the growth, consumer growth side of things.
Yeah, we we actually started doing growth I think 2022 first time when we started having like serious budgets on growth.
As in but you didn't for the first 7 years of
No, we didn't.It was like purely organic, yes.And that's when we built you know all the models, you know paybacks or TVs per customer, and then also built the referral marketing product as well.
But the first 7 years was just organic building financial products you thought were good.
Yeah.
But how do people discover them?
Uh word of mouth uh plus we've done obviously PR as well.
Mhm.What were the best products from an acquisition point of view?
Well, best product was initially first product that we launched it was multi-currency card with zero FX fees.
It's interesting that both you and Wise were able to get to based on consumers frustrations with FX fees.Like the frustration with the incumbents in that product was so high that it has birthed multiple successful fintechs.
Probably.I mean, if you look at banks, majority of products are actually very bad, right?So it's not only kind of multi-currency transfers but also credit business credit business products.Almost every single product is really bad.I mean, acquiring used to be a bank, right?So I think it wasn't about multi-currency transfers or card.It was more that we picked up certain product and we made we made it you know so much better.It could have been acquiring that you've done.It could have been maybe credit as well wealth and trading.Robin Hood done it.
So you think there's nothing special about starting with multi-currency cards?You think you could have in another universe started with a lot, you know, checking accounts or
I I think as soon as you build much better product compared to banks, which is also much cheaper, then it's pretty easy.
The conversation turns to Revolut's product development system, from small teams and first-principles design to validation, funding, and scaling. Nik describes how new bets are approved, tested, and either expanded or shut down based on performance.
What was the second product that worked that you know, when did you prove to yourself that this wasn't a fluke and that you could repeatedly repeatedly built financial product?
Well, business accounts.We built business accounts and offering wasn't about multi-currency card anymore.It was a digital bank account and without any marketing we first started problem with 10 business customers a day.Now we're onboarding maybe 1 and 1/2 thousand business customers a day.And then only I would say 30% of it is paid marketing.The rest is still organic.
One of the things that looking at Silicon Valley um successful product companies tells you is there are many many paths to heaven.You know, there are many ways to build a successful product organization and you've Apple that famously doesn't do any kind of focus group testing and they just build the products that they know in their heart of hearts areright in this um very functional organization and then you have, you know, other Google or Facebook develop products in totally different ways.What is the Revolut system for for building products?
So we just separate a small team of 10 people smart people, smart product owner, good designer, good developers.We just build what makes sense from first principles point of view.So it can be either replicating existing product but building it so much better or trying a new products which we think make sense.To be honest, everything new is forgotten old, right?We haven't built any product which worked, which wasn't an old product which was built badly by our organizations.We have internally a new bets process when everyone in the company can raise an idea and then goes through validation.And then if idea is validated then it goes to well called committee of people who've done it before and then they decide whether to fund the idea or not.
What's validation?
Well, first I think it goes to team which validates like you know unit economics, financials and so on, whether it makes sense.In majority of cases it makes sense because cost of the team is pretty low compared to if idea is useful for customers that pay for it.You can generate like tens of millions of dollars right compared to cost of the team which is small.And then it goes to people who built new bets before and then general managers and then they also validated from again purely common sense perspective.And then if everything is approved, then we separate a small team.We we hire people there, additional people there then they build the product within 9 to 18 months.And then we look at the growth of the product.So if if there is you know a lot of growth then we scale up the team.
So one team becomes two teams, three teams, four teams, department and so on.And then for the bets which don't grow we sunset them.And then for bets slash grow but not very fast we just leave them alone.
But I'm surprised that ideas would need to be validated economically because you're distributing products across millions of customers, won't the cost of you know, can't kind of any idea support a five to ten percent engineering team to godevelop a V one of us?Like it's very unlikely that a product won't work economically when you have such a large customer base and you can kind of fix it with pricing.
Like example is we launched Revolut Lite across many countries, 100 plus countries without the banking license and then without e-money license, purely like you know money transfer business.And then the idea was to build the Venma internationally.It didn't really work out because we thought distribution costs would be much lower.So it didn't really grow organically fast enough.So we had to do performance marketing and then unit economics where the performance marketing didn't really work in terms of payback.So in majority of cases 90% 90% of cases yes, you're right.If it works out, it works out very well financially, but there are some cases, exceptions which you still need to validate.
Brian Armstrong from Coinbase has talked about how when he was first pitched USDC, he thought it was kind of a silly idea.He wasn't convinced, but sure, okay, if you guys want to go work on that, have at it.Are there ideas that came to you that you were initially not fully convinced, but ended up being successful?
To be honest, I'm always in 99% of cases I'm always up for new ideas.Just try them.
open minded.Yeah.
Yeah, the reason why
that surprised you.You didn't expect it to work.You were open minded, but you were pessimistic, but then it had performed your expectations.
I just had too many failures in the past when my judgment was wrong.So now like you know fully optimistic.I think it's it's not about the idea even though idea is is important.I think it's about execution to be honest.
Mm.
You can make almost any idea work.
Can you?Even the bad ones?
If it's not that bad, then you know you can make it work or at least spend enough effort and enough time on it.Yeah.
And And are bringing you the plausible ideas.
I
mean, if it if the team is very strong, then even if idea is average, you can still make it work.
Mm.
There are cases when idea is great, business model is great.
Yes.
Team can be bad, can still fly.
What's your favorite example of the great idea, great team intersection?
Well, I think our subscriptions team department is very good.And then when we when when they came and then they said, okay, we want to launch like additional ultra subscription.
Mm.
I thought it was idea was okay, right?It ended up, you know, being amazing bet because it's it's a very expensive subscription.So ultra is effectively ultra bank account where you pay about I think it's €50 per month.But then it gives you additional a lot of additional benefits.And I thought I mean, idea is okay.Probably this business won't be very large.It ended up being very very large business.
The closest comparison it's it's kind of like an Amex premium card or something.Yes.Yes.
They explore whether Revolut's growth is driven by viral mechanics, why peer-to-peer helped in some markets, and why KYC friction limits network effects. Nik also explains why Revolut relies less on lending and more on subscriptions and transactional revenue, which he sees as higher-quality and less cyclical.
Um I'm so interested here you say this growth dynamics were not critical in the early days of Revolut because firstly so many financial products spread because you know, a payment transaction has two legs.And so it just very well suited to viral product growth, whether it be, you know, bill.com or, you know, PayPal where you can send money to an email address even if they are not signed up for PayPal.Like it's a very classic acquisition dynamic.And so it's interesting to me that that wasn't the case for for you.And also, I mean, the peer-to-peer product is now so successful.
Peer-to-peer is definitely acquisition driver, especially in countries where they don't have very good payment system.So for example, in certain markets in Europe, we
Ireland.
Ireland is one of them.Romania is another.So yes, it worked in many markets where bank payment system is pretty old.
Okay.I would draw
But I would not say it was primary kind of acquisition.
Yeah.
Yeah.
Cuz I would draw a distinction between word of mouth where someone has to like go to a bar and be telling you, hey, I discovered this great new product last night, and then viral product adoption mechanics where ifI want to pay you money, you become a Revolut user, and then you can tune it.It's like, have you thought of, you know, sending money and you can promote that?You know, Meta does Meta does a very good job at this where when they want to grow new parts of the product, they promote them in the app, and again, you you have knobs and dials similarly that youcan use.And so the in product growth stuff feels to me
Yeah, of course.We tried a lot of things.P2P included like problem with the banking product KYC onboarding, right?It's a lot of friction.
Mhm.
So even if you have this viral things, then you know
There's a steeper drop off.
Yeah, it's a lot of drop off.Yeah.So it's it's not really viral and
Yes.
Plus you cannot really sell it to worldwide, right?You always need to sell into countries where you have licenses.
Yes, but it can be viral in the same way that, you know, Facebook was viral in the early days where they would go college campus by college campus.Like you can't do the in cross border transfers, but there's so much activity within a country that you can get viral growth within a country.
Yeah, if you can onboard subject to one click as as a Facebook, yes.
Yeah.Yeah.Which again, you think the KYC is a bigger impediment?
So when we first launched, there was a lot of virality because we were doing onboarding.I think it was up to 1,000 or 100 euros.You can do it without KYC.So back then this regulation allowed to to do it.So there was a lot of virality, but then I think it was stopped 2017 or something.
So the KYC changes actually
Yeah.
made the the viral growth loop a little harder.
Oh yeah, 100% yeah.
Though you can you can presumably still do a lot of nice viral growth where, you know, if there's money waiting for you and you just need to go through KYC to claim it, then like you can do oneleg of the transaction and not complete it, right?And that will still be plenty enticing for a customer.
That's true.Yeah, we we also have it.But again, it's like, you know, this K factor is never larger than one.So you cannot really experience initial growth.It's always, you know, less than one.
Could you not?Like there could be a K greater than one product.Not too pessimist.
Everything we would tried so far last 12 years always less than one.
Okay.So you're in the K is less than one business.The thing I find interesting about Revolut's business is you're a bank whose primary revenue source is not net interest margin, which is obviously unlike other banks.Did you arrive at this accidentally?Was it part of your thesis for Revolut?Like you're very different in that way and it's quite asymmetric versus other banks.
I think it's pretty Once it's pretty simple because we started in UK and Europe and then in UK and Europe conditions are very tough, right?For for startups.So interchange is very low.Plus credit is extremely regulated.You cannot really charge customers very high interest rate, same as you can do in Mexico, Brazil, for example.So you end up For example, you'll have like 10 20 30 startups starting in financial services, and then the majority would die, right?And then we were forced to optimize our transactional business and to effectively make it profitable.If we would start in Brazil and Mexico, we would obviously be focused on credit business because it's less regulated compared to Europe.We would make a lot of money on a credit business, but in Europe it's not possible.
But aren't you developing a balance sheet because you have one side of it, which is the deposits and you could build the other side of it with loans?
Yeah, but before we got deposits and we couldn't build a credit business.Now now we can build a credit business.Now now Yes, now yes, we are.
And will you build a traditional bank credit business where you have the deposit side and you have the the loan side or will it look atypical in some way?
Well, I think our business model and then my personal opinion is we want to have the least amount of risk.So even if we lend, it won't be a large portion of balance sheet.So, at the moment target state is less than 10% and then the rest we would securitize.
Why?
Well, first the simpler the model the better from a regulator point of view.Plus again, if we want to be a tech business, right?We would rather be institution business.As soon as you get into lending business your multiples become similar to banking multiples.So, if you look at tech business multiple, you can usually get like 40 50 PE.In banking business you'll be lucky if you get 10 PE.
But is that because because like I'm always skeptical of multiples based arguments because ultimately the business is good or it isn't and you know you can educate investors if the business is in fact good.Like when we started Stripe, people thought payments businesses were horrendous and deserving of low multiples and everything like that and like over time they came to appreciate payments businesses more, but if we had been fixated on kind ofthe multiple you know that people ascribed to the business we might have you know been scared off this path and so I think you just need to decide is this lower quality or higher quality as a profit pool?And so do you think it's like actually a lower quality profit pool or investors just have a a weird hang up?
I think it's more the business itself.So, if you look at credit business in banking general credit business so every time when you do a loan or credit card you need to put provisions against it.And then reality amount of these provisions highly depend on the models that you use on economic conditions because reality you you don't know like you know in three or four or five years will you receive the loan back,right?So, you you kind of model it.On average you hope to receive money back, but reality things can change, right?And this uncertainty is being priced in I think by investors and generally by low multiples because okay bank can produce a lot of money now from credit portfolio, but looking two three years time unemployment goes from 3% to6%
Yep.
and all profit is gone, right?Plus they're losing money.So I think this
Okay.So you you think fundamentally making your money via credit is this very cyclical profit stream that can be entirely wiped out in a downturn.It's very sensitive to you doing the math right, whereas the nice thing about subscriptions is ultimately people are paying you this money on a recurring basis.And yeah, in a downturn maybe some people cancel their subscriptions, but like you can't make negative money on subscriptions.You can only yeah, shrink the books slightly.That's what's much higher quality.
Yeah, exactly.It's it's similar to selling options, right?You kind of collect premium for for 10 years and then year number 11 you you lose it all, right?So that's the problem.
Nik details how Revolut launches products in test markets, measures them against historical cohorts, and scales only the strongest bets. He also explains the automated cross-sell engine, indirect P&L attribution, and why a single success metric is essential for accountability.
Okay, I want to go back to your product development methodology though.So okay, you're describing the early um the early stages of there's some top-down product ideas, there's some bottoms-up product ideas.They have to be validated that if it works it can actually be interesting economically.You have a talented product leader and a few engineers working on it.Then what?Uh like how do you decide which products actually get the in product distribution and how do they earn that?How much are you willing to give them credit for oh, I think this will become a good product over time?Product developers always tell you oh, I would be doing very well if you just gave me more distribution, but like the product people like to blame distribution, the distribution people like to blame the product.Maybe you can talk a little bit about how the scale-up works.
So basically it's pretty simple, right?Um so we got the team that work on the product for up to 18 months and hopefully they launch the product.
They work up to 18 months before launching anything?
So from the moment we decide to launch uh to launch is usually 12 to 18 months because it takes time to to get the team, on board the team, build the product, go through all this approval process onthe banking side.Um so 18 months probably good number.Uh
Because you're a regulated bank, you have to go to your bank regulator to get sign off on the product.
So it's
a bank regulator, but more like you know internal governance
Oh, I see.Your internal function.
So we launch the product and then we release it we first release it in a test country, for example Ireland or UK or whatever.And then if it works, if everything is fine, we release it to more countries and more countries and more countries.And then we add it to our cross-sell engine as well, which is automated.So there's no kind of you know distribution problem, right?It's automatically being added to hopefully the whole user base if everything works fine.And because we've done it for a long time now, we have already historical data on performance of say about 100 bets.And then we just look at month one after launch, what is gross profit compared to previous bets.Month two, month three, month four, month 12.And then how it's stuck with all the other bank bets.That it is top 25% quantile of all the bets.
We just scale it up.So we we hire more people.We have two teams, three teams, four teams and so on.Bottom 25% we just don't do much, so we redistribute the team to to do something else.And then in the middle sometimes we we keep the team, sometimes we don't keep the team.
Is a new product like that actually an option or are there costs to shutting it down?Like are consumers annoyed if like they were relying on a product and then it goes away or are there some products you kind of I don't know, if you had a pension product you can't you actually just kindof can't turn that off because it's your pension or something.And so do you think about the cost of shutting off a product when you decide to fund it to that different by product?
Yeah, of course we we look at custom detriment, right?If if there are already customers using the product if there is detriment we just keep it as it is.So we stop investing it, so we just maintain it.
Mhm.Can you tell me about the automated cross-sell machine?
Automated cross-sell machine will basically we have many products on the platform and then we effectively have machine learning model that decides based on certain events, based on customer profile kind of which is the most suitable product at thispoint of time, right?For example, it can be I don't know, you you land in Ireland, you have UK account with Revolut, and then we offer to you a SIM, right?Because for example, you you land in Ireland and then you spend money on Aer Lingus, right?Because we see all the transactions, we can offer you a SIM policy from ours.And on top of it, we also have LLM model which actually behaves like as account manager, right?It through kind of you know human reasoning it looks all the products at all events and all suggestions generated by machine learning model and then decides which product to push to customer in this particular point of time.
So it's kind of all automated.
I haven't thought that you are in a much better position to cross-sell products than anyone else because you see what people are spending money on.And also you can just if they're overpaying for something, you kind of know.
I mean we we we don't see the full details of the bill, right?We just see the transaction.
And so the cross-sell engine has some propensity model for the customer and you're basically trying to find the conversion maximizing sale, like the thing that they are most likely to buy next.
So bit more complex than it's not only conversion, it's it also takes into account GP, the product and we're also trying not to spam customers.So there's certain negative value of message to customer.So altogether model makes a decision.
And it's interesting that you describe products needing to perform well on a revenue cohort curve where it's a little like a race where like your job is to stay in the pack or stay the front of the pack,but you're judged relative to other products.Have you ever had slow burn products that for whatever reason had a gradual start?Maybe the team was just like learning exactly how this works, but like that wasn't actually any negative signal about the product.It just took a while for them to get going and then really took off.
To be honest, it's almost never happened.I don't even remember the example when Heroes kind of you know slowly growing and then started growing fast.Usually trend is your friend.The thing is growing in very quickly first few months, it will continue grow very quickly.
Cuz you know a classic bigger company behavior might be to say oh this isn't working yet, but there's a good reason for it and blah blah blah.You think that's all excuses and the trend is your friend.
statistically trend is your friend yeah.
Yeah.Why don't other companies operate in this Revolut model of developing many new additional products to cross-sell the customer with.This field is applicable to many other consumer companies.Grading them against the curve of how other products have done at a similar age.I don't think most companies even that sell multiple products are that strict.Instead they make excuses for why the product isn't performing and oh yeah we just need more staffing and you know they're not as strict.
Yeah, I think I think because majority of companies that don't do many bets at all, right?So because we've done a lot of bets and we had feedback loop
Mhm.
a lot as well compared to other companies and because of that we are very strict.
Yes.
Other companies okay they do probably seven eight bets and feedback loop is delayed plus many changes.So as a result they never end up implementing any kind of strict process on your bets.
Yeah.Are there products you've done that have not
been well suited to this model?I can imagine say a product that involves changing many different parts of the Revolut experience would be hard to fit into this new bet model because it's fundamentally much more infrastructure rewiring or something like that.I don't know.Um but yeah, do you sometimes have to do products that don't fit into this standalone bet model?
I mean to be honest, you can fit any product into this model uh even if it is a product which is very new to us, for example not financial product uh and it can be B2B product.Uh for example we've done a bet Revolut people.
Mhm.
So we built internally HR system for ourselves and we decided to make it a new bet and then we separate into standalone team plus we sell it externally.It's kind of a new bet but we cannot really cross sell it to our retail customers.
What about products that just don't generate revenue at all by design?And so imagine if I'm a product leader and I'm building a financial insights product and it generates a lot of engagement with the app because it sends people a summary of their transaction activity and ways to spend moneyand blah blah blah.But like the point is not revenue, the point is app engagement.Uh how would you grade my success?
We still have PNL attribution to it by um indirect attribution of PNL because you can also calculate it.
So you have some churn model.
So we'll have two numbers.One is direct GP and another one is indirect GP.
And so I have some synthetic profit that I can attribute to myself because I saved this many customers from churning by having them come back to the app and or had them spend incrementally here.
I give example.So we got rep points.Uh it was also a new bet.
What is rep points?Is that rewards?
points is more like a reward system.So you got points and you can effectively using these points to buy additional products that we offer.
Yes.
As accounting GP, it's very small but then if you if you calculate indirect GP uh then it's very high.
That's very interesting because I feel like a lot of the the successful companies get to an understanding of their economic equation and then take that very seriously where, you know, Amazon says oh, an incremental prime subscriber is extremelyvaluable and so we're going to set up a movie studio so that we drive more prime subscriptions and it sounds crazy but like if you really believe the math on how much a prime subscriber is worth then itmakes sense or Google was always very fixated on just how valuable the incremental search customer was because of the lifetime value of the advertising revenue and so they do all sorts of crazy things, you know, pay a lotof money to become the default Safari search box.But again it was all that attributed P and L and so you think the attributed P and L revenue is very important so that you can actually then create uh accountability with product teams to know if something's working
or not.
you need to have one number which defines whether a product is successful or not.
Yeah.I think a lot of companies actually don't do that to a to a surprising extent chase through the full accountability with a synthetic revenue number.
The discussion covers Revolut's efforts to move users from lightweight usage to salary deposits, along with negative churn and cohort behavior. Nik then shifts to AI's growing role inside the company and explains how Revolut chooses markets based on regulation, competition, and unit economics.
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How important is the way people think about neobanks as I understand it whether there's like an an account or an account is whether people deposit their paychecks and so you can use Revolut like a majority of Ireland likeuses Revolut uh in in in some degree but they might just use it for peer-to-peer or something like that but they're like they have an account and then there's like using Revolut as your primary bank account, which inthe banking industry, people basically think of us, do you get your paycheck deposited there?How important is it that you move people from being a lightweight user to a heavyweight user, from like occasionally using certain features to actually being the place that the paycheck is deposited?
Means super important obviously, right?Because as soon as you get salary into the account, then people use a lot of other products that we have that we have.If they just using PTP, they I don't know, load load $20 send money to someone, it's not very profitable for us.So we spend a lot of effort to move salaries of these people to to Revolut.And overall, I mean depends on the country, like it's from 10 to 20% of monthly active users we have salaried accounts.
What moves people over?
That's a very slow burner, right?So we we actually spend a lot of time and effort building products for kids because kids as soon as we capture kids, then we can easily move them to 18 plus account because it's very hard to move adults.
Yes.It's a tale as old as time and I remember when I was in secondary school, maybe a a similar experience, the local bank came and they gave us a soda and a bag of chips to sit through apresentation on like how to save money.And then they gave us all a bank account.But you know, they were in the school age 13 or 14 doing customer acquisition on the theory that bank accounts are very sticky.But okay, but you see very different behaviors from the people.Presumably like if you have 10 to 20% primary banking share amongst kind of the regular population, presumably that's way higher amongst the younger population because they're Revolut native.
Yeah, if you look at different cohorts of users, then we probably capture more than 50% of users up to 35 years old in almost every single country where we're in in Europe.And then where we have difficulties capturing 50 60 70 plus people who still holding on majority of liquid assets.But then it's very hard for them to to move you know from legacy bank to digital bank.
And so how what's that 50% of under 35 statistic?
Well basically if you if if you take all the countries in Europe
Yeah.
then if you take I don't know kids then people from 18 to 25 25 to 30 30 to 35 and then older.In majority of countries we already captured more than 50% of people up to 35 years old.
Having any kind of Revolut account.
Yeah.
How is this product development engine different as a regulated business versus if you were just a a normal tech company?
Well I think in a normal tech company it's much easier to do because in banking you need to go through many approval process.And then the way we structured so basically because we have many banks so then the way the approval process works we call it neap new new product approval process.
How do you minimize churn?
Well trying to build the best product.
But more than that.
More than that.
Because again you're very quantitative you're very product oriented and this is the thing that quantitative product oriented people obsess over.
Yeah we used to have this framework of state machine all familiar with this how many people on board it how many people went through I don't know from being P2P customers to salaried customers how many of them churned.But then it just became you know too complex.So we end up just having cohorts of customers who joined the country and then how many of them are still with us within 12 months 18 months 24 months.Then what we observed is that we have a smile, right?So out of 100 customers, monthly active can be say 30 people can be monthly active, but then after two years it will be 65 70 customers so people return to us.
Yes.
So we actually have I would say negative churn.
Hm.Why do people come back?Like why do people leave but then come back?
I think it's more because larger and larger pushing population started using Revolut.So people who got churned because of different reasons, they still hear about it from friends, family and then they come back.
I see.So you have multiple word of mouth kind of shots and goal.Okay, so yeah, I was curious to ask you about AI.Um how AI pilled are you in how you run the company?
Well, I was started with AI about two years ago and the goal was just to optimize customer support, translation.Now it's almost in every single area of the company.Obviously engineering as well, marketing.Now I even trying to create AI employee end to end.So yes, we were very involved.And last 10 years I optimized a lot of things in the company just based on people, based of advantages and disadvantages of people who build all the systems of KPIs, roadmap, process, hiring, performance management.And now it might be all redundant, right?Because of AI in two three years time.So it's kind of you know, we all reinventing how how the company should work.
How's it changed how you hire either at an overall company level or at in the individual team level?Like are the eight person teams, should they now be three person teams or can just you have higher aspirations for what an eight person team can accomplish?
I mean, technically one person can accomplish much more now.I would even say you don't really need to have separate Android developers, iOS developers.One front-end developer can do things.You can even have you know, one developer covering front-end, back-end, possibly data science as well.So you can have, you know, one person doing all all aspects of of the product.We should probably still have a designer, although it's so much easier to design.So one developer can do a design as well.So a team can be of two people probably.
But like you work in this relatively standardized way of product bets where you put a small team on something to initially test it.Has the size of that product bet initial team changed and shouldn't it change if not?
I mean not yet to be honest here.So we are still operating in the old framework.
Is that very old-fashioned of you?
Yes, pretty old-fashioned now, yeah.But I just preferred to continue doing things that work then in the meantime experimenting with new things and then when we have a proven track record that new things really work for us we will start changing.
But that's interesting because you you think that a four-person team is too like kind of cannot bring a new product to market even with all the new productivity enabled by AI?
No, four four four four people team definitely can.It's just because all the processes within Revolut still we still set up like you know by specializations.Okay, you need to have iOS developer and have the system you know how system operates then Android developer, then back-end developer, then data science, then ops manager.So thing is it will be very hard to just hire one person who will get access to all the systems and then produce with with AI all all required code.
I see.So partly it's just you need to reorient Revolut a bit.
So we need to change process here.
So how does this change the shape of the Revolut organization?
Well first of all we're just trying to automate a lot of things and then hopefully when automation is done we can start hiring less people.So at the moment I don't think we're at the stage when automation is done.
You traditionally competed with legacy banks and so people might go to their bank for FX or they use a Revolut multi-currency card.And you had a lot of advantages where you had no tech debt and you had no retail branch presence to have to afford and kind of many other advantages for such traditional banks and so you're very successful.As you go to Brazil, you compete with Nubank and as you go to, you know, um Kazakhstan, I guess you compete with uh Kaspi?Is that their name?
Yeah, it is Kaspi there, yeah.
yeah.
We are not in Kazakhstan yet.
Okay, but when you when you do, um how is the world going to look different when you're competing with neobanks rather than traditional incumbents?
Well, obviously it's more difficult, right?Ultimately, when we go into the country, the decision to go into the country is a combination of uh uh how bad banks are, right?Because there's less competition and then what is kind of you know unit economics customer and how difficult is to get a license.
Yeah.
Obviously, if a country has a lot of digital banking competition, it's difficult to get a license, unit economics not great, we will not go there or we try to kind of deprioritize it.
Mm.
And then we try to prioritize markets where there are a lot of legacy banks, unit economics is great, and then hopefully it's easy to get a license.
Okay, so you look for markets with sleepy incumbents.That's a good market for Revolut.What predicts unit economics of a market other than how rich people in that market are?
Well, it's interchange legislation or laws and then legislation on credit rates as well.And then generally if inflation is high, then credit rates are even higher and then the margins are even higher.
But isn't it surprising then that you grew up in Europe where both interchange rates and lending rates are regulated?Like wouldn't that be a bad market in this rubric?
very bad market, yeah.
So does the rubric miss something?
I think it's just because we started in Europe, where it is very hard.Um, I think out of, you know, 50 initial banks, probably like, you know, three four survived.So we we really survived in a tough competition.But then, you know, that means we are more kind of, you know, fit to compete in other markets.
Nik discusses why the US was historically difficult for neobanks, how regulation is changing, and what Revolut must do to compete there. He also covers the company's credit-card-led US strategy, the euro stablecoin idea, and his AI venture investing work.
Yeah, so let's talk about the US market.Um, the US has historically been very resistant to neo banks.Uh, remember Simple?
Yep.
Like that was about 20 12 2013.
think those were the earliest one, yeah.Even before Europe, yes.
Yeah, around then.And various foreign neo banks have tried to enter the US market.Why like the US is such a quick adapter of so many technologies and invent so many of the technologies.Why is like leaving aside Revolut for a second, we'll come back to that.Why is the US so slow to get neo banks?
Well, I think historically it was a very tough regulator.US regulator was one of the toughest one.That's number one.Number two, all these startups they couldn't really get a banking license, so they chose not to get a banking license because it was difficult.The traditional tech companies they don't want to be regulated because it kills their business.And as a result, they jumped into partnerships with legacy banks.And it doesn't really work because okay, we got one tech and then we got compliance people in banks.And it's different company that don't really, you know, match together.So the model was wrong.
So you think you have to be willing to own the stack end to end including all the licensing, which was tricky in the US because it was such a stern licensing regime.
Yeah, plus culture was okay, you need to have tech separate to compliance.
You need to have tech separate.
it's it's one business risk.You also need to automate tech, automate compliance with tech and so on.
Yes.And so why did we not see you know, a version of Simple that worked where again Simple tried to do the tech via partners, but why didn't someone try why didn't someone try to start a neo bank thatowned the licensing end to end in the US?
I think it was very difficult to get a license and now Square Cash App I think they have a bank license now they they now activated but took them four five years.
Yeah.
Now time change definitely with the with the new administration.
And so is the current regulatory environment better in the US?
Process quicker yes now you can get the license within a year.
Okay.
Before it took you it could take you four five years.
And you guys have gotten that you will get that?
So we received the conditional approval so that are like you know two more approvals that we need to receive.
And it's from the OCC?
OCC yes.
Okay very good and so you guys will be going big in the US soon like when you get the
Well next year yeah hopefully.
What do I need to change about the product to be successful in the US?
Well definitely it needs to be credit card led because you've got a lot of benefits in US
Yeah.
from Amex from Chase so we'll we'll do the same which will be credit card led proposition a lot of benefits as well.
Okay so you want to go head to head with Amex Platinum and Chase Sapphire?
Yeah.
How will you compete?
Well offering the same benefits so better plus the whole proposition that we have because they're offering just you know payments products we're offering wealth crypto trading and so on.
Why launch your own euro stable coin?
It's good business obviously that's number one number two is basically there is a USD stable coin and there is no equivalent or credible equivalent for euros I'll get them given over the way in Europe you know we shoulddo it.
Yes you said you've been doing this for a very long time it's been multiple years.
Yeah tech was built a long time ago.
How do you organize your day?Are you waking up and going wherever your curiosity takes you or is it hyper scheduled?
Monday to Friday it's hyper scheduled 15 or 30 minutes slot so usually it's like business reviews product reviews one on ones and then Saturday Sundays is more like you know freelancing and free thinking.
Revolut's kind of company that does a work from home policy of you know you can work from home two days a week, Saturday and Sunday?
Yes, true.I try to limit the external meetings as much as possible and spend 95% of my time internally.
Do you think most CEOs are too externally facing in how they spend their time going to conferences and all this kind of stuff?
100% I think I do have a location for conferences maybe you know two, three times a year for a session.
Yeah.Um and you just want to be within the building reviewing the actual product.
Exactly.Products and the business process yeah.
What are you actually reviewing?Like are you looking at metrics dashboards with people and kind of what are you Nick adding versus you could also have an automated system that you know shuts down any product that's failing to meet its revenue goals?
Yeah basically we have all these KPIs, road maps and process actually targeting execution.So before I was doing it manually and now it's all kind of you know semi-automated with performance team also reviewing everything, reviewing the KPIs are correct, the road map is executed for each team department on the on thecompany level.So what I do is obviously product, right?Product direction, product features and then detecting as well, right?There can be a lot of cases when everything is rosy, KPIs are good, everything is measured.But then things can be even better, right?And then I just know it.
What is the that you're detecting if the KPIs look good?In what way are they trying to bamboozle you?
I mean you need to dive deeper than KPIs, right?Because KPI can be met because of external factors and because of luck.And then you dive deep and then you look at the product, product features and speed of development as well.I'll give you an example.For example Wealthfront trading product I think a two or three years ago it grew up 60 to 80 percent year on the year.And then I thought it's not enough, right?It should have been like 300 percent.And then I dive deep and what I realized the quality of product wasn't great, features were not good.And yeah, then we changed the team and now it's growing 300 percent.So like having intuition for these things.
What's the easiest way to annoy you in a product review?
Incompetency.
But what kind of in competences?There's many forms.
Well, I mean we we we have certain standards for quality, right?And everyone knows the standards and then if somehow I see product below the standard of quality, and we we've done many products so far that really annoys me.
I mean so shoddy product quality is the
Yeah, that we need to that we are kind of going to the same mistakes.
Yes.Has your AI hedge fund gone?
It's actually going well.It's now in terms of returns top three to four percent of funds in the world.So model really works.
And what is the model?
I mean model is a machine learning model so which effectively is trained on a lot of data on startups.And based on so it's feature based model.And then based on number of features it actually tells you which startups to invest.
Oh, it's not a hedge fund.It's a venture firm.
It's a venture firm.
an AI venture firm.Okay.
So they already invested in 40-50 deals last two three years and the returns are good.
Is the classic problem with this kind of approach this with private company investing?It's about picking the right companies and then being able to invest in them.And sometimes it's like very obviously good companies, but you just can't invest in them.
Yeah.
How does how does that work here?
So basically as you correctly noticed, Uh, first part to create a good model which will tell you with a high precision which startups to invest, which not.And then second to enter the deal.Then our sales proposition to founders is that uh A we will help them with Revolut operation playbooks.So we tell them how exactly Revolut hires people, how does performance management and so on so they don't reinvent things from scratch.
Mhm.
That's number one.And then number two I help with my personal advice.
Mhm.
And then number three is we help them to sell either into Revolut or into customers of Revolut as well.
I see.So uh you're a desirable investor and uh
So a desirable investor.
Exactly.You can trade the added value for that.Yeah.
The final section focuses on Revolut's IPO timeline, what still needs to be completed, and how Nik thinks about readiness versus valuation. He closes by describing Revolut's quantitative performance management system and how the company measures people and teams across roles.
When's Revolut going public?
Well, I hope uh 20 what's now 2026 2028 in two years time subject to a market being good.
What needs to be true for everything else to be ready or is it just already ready?
I'm in a still work in progress right now.We need to launch US.We need to launch a lot of new expansion markets.Uh we need to still prove that we can be as successful as in Europe in the markets outside of Europe, especially in credit lending markets.
Do you actually need to launch the US before going public?Like isn't Revolut a huge bank already with billions of dollars in profits?Like you're plenty scaled already?
No, of course I mean it's not necessary, but it's good to have.
Because investors are based in the United States and so again this home country bias means they'll be more interested in Revolut if you guys if they're familiar with the product.Uh
I mean I'm I'm not really optimizing on valuation or readiness for IPO.It's more like okay there's the road map that we want to complete and then let's focus on the road map.
You mentioned helping startups understand the Revolut playbooks.Where do you think the Revolut playbook is most differentiated?Like you talked about performance management, you talked about a few things.
Yeah, we see hiring, performance management, uh like product building as well.I think with AI it might be irrelevant.It might few years.
How do you do performance management differently?
I think it's very important to do it quarterly, because the majority of companies that do it once a year, I think it's too long.Problem is a lot of managers they inherently biased against kind of, you know, exiting on the promise.
Mhm.
So by having a process once a year, you're not really helping the company, right?Because okay, then you're forcing managers to kind of, you know, exit on the performance once a year.
Yes.
Reality, you need to do it as kind of, you know, fastest possible, right?You can't really do performance management once every month because it's kind of too time consuming.Once every quarter you can.
And do you try and make performance more quantitative than other companies, like the mapping products to where they should be on the cohort curve is maybe one example of that.Do you try to do that in other places?
Yes, so we we are trying to be as quantitative as possible.So every person is assessed on their skills, deliverables.Deliverables are measured roadmap plus KPIs.And then culture.So all these three aspects are assessed by manager plus functional manager plus there is a performance review on top of it checking that everything is correct and then the person's assessed.
But some domains are just fundamentally more quanti fiable than others, right?Like a salesperson, you can measure how much they sold, whereas a lawyer like you can only make that so quantifiable, right?
Well, in our case, we have metrics for almost each lawyer, I think.I mean, different for the team of lawyers because what lawyers do.For example, if you look at commercial lawyers, they process contracts, right?And then are they keeping with their SLAs?It's number one metric.How many deficiencies are within the contracts?Again, you can measure it.
Mhm.
Yeah, and so on.So you I mean, on the team level we definitely have KPIs.On individual level, or I'm not sure, but it's it's possible to do.
So do you think most companies are because I don't think most companies really believe that you can measure lawyers on a grid of KPIs and so do you think that again you can be more quantitative than you think?
You can definitely be more quantitative than majority of companies think.Uh can I quantify everything?Uh no.So you need to have like you know some other lead indicators rather than some KPIs.
Okay.We'll leave it there.Thank you Nick.
Thank you.