竞争、投入强度与打造一家1150亿美元的全球银行｜Nik Storonsky，Revolut

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

1. The Competitive Drive

I’ve been extremely competitive since I was 6 years old. It was always in competitive sports or competitive Olympiads as well. For me, it was always a natural desire to be number one in whatever I choose to do, right? If I choose to play a game, I need to be number one. I’m extremely pissed off if I’m number two. I’ve always had this character.

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

I was doing a lot: swimming, boxing, a lot of sports in childhood. I think it’s more a combination of character and genes that you get. Some people are extremely competitive; some people are not competitive at all.

How do you look at the competition? We were talking earlier, and I heard one of the most hilarious quotes. Somebody asked you, “Oh, 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.”

The idea was that lunch is always something small, and dinner is usually much larger in the US and in Europe as well. Coming for dinner meant not only going for retail business, but also for enterprise, and potentially for investment banking, because it’s also possible to disrupt investment banks.

How so?

It’s still very manual and very expensive. It’s possible to make it all much cheaper as well. Why not?

Okay, explain, because I think a lot of people listening to this don’t understand what Revolut is today and where you’re trying to go.

Yeah.

Explain what you’re doing, the state of the business now, and what you’re trying to do moving forward.

Maybe I’ll start with what we started 12 years ago. I started with a simple card that allowed you to spend money abroad at interbank rates, avoiding excessive banking fees and getting good FX rates. At a later stage, I expanded into other products, including credit, wealth and trading, crypto, and business accounts. We also built a lot of non-financial services businesses. As a result, we’re now a large digital bank, providing all the services banks provide, plus a lot of services on top of that. For example, you can book stays with us, buy eSIMs, and so on. The idea is to build a large global bank that’s number one in at least 100 countries. That’s what we’re trying to do now. We’re live in 30, probably 38, countries. In the majority of them, we have banking licenses. We’re slowly expanding into 10 to 15 new markets every 1 to 2 years.

Okay, this goes back to how this conversation started. You’re super competitive. You say these little lines, right?

Yeah.

You just drop them there. You’re like, “Oh, I want to build the number one bank in 100 different countries.”

Yeah.

You understand that’s a wild thing to say, and a wild ambition. I don’t think you say it casually, like, “Oh yeah, I just want to be number one in 100 countries.” You actually mean it. What is your inner monologue in terms of competition and how you view this game that you’re playing?

Basically, mentally, if I’ve chosen to play this game, as I said before, I need to be number one in it. Right now, there’s a huge opportunity in the world. There are many countries, and in each country there are 10, 20, 30, 40, 50 banks. They’re all very fragmented. There’s a unique chance in the world to build a global bank that provides much better services and products at a much better price in every single country. The idea is to compete with these banks, drive down the prices of their products, improve the customer experience, and save customers time, because you don’t need all these physical branches for banks and so on.

But you’ve got to say more about this ambition, this competitive drive. How does it manifest in your life every day? Do you wake up with a burning desire to achieve mission success? Are you looking at yourself in the mirror and thinking, “I’m not doing enough”? What is happening? I’m interested in you, the entrepreneur, and then we’ll talk about the business. This is the fascinating part for me.

Well, basically, it’s a banking business, and the way I view it is: if I’ve chosen to be in this business, I need to be number one in it. Obviously, there are tens of thousands of banks in the world. What it means to be number one is to be number one in country one, two, three, four, and so on—say, 100 countries. In terms of competition, to be honest, I don’t really look at the competition. I look at myself and think, “What would I do to beat myself? How would I outcompete or outsmart myself?” The philosophy is very simple. Every day, you need to be almost 100 percent. Even if you lose to the competition, you can’t really blame yourself because you were at 100 percent every day. I think that’s the mentality that will help you win, most likely.

I love this. Have you spent any time with Tobi Lütke, the founder of Shopify?

No, not yet.

He was on the show. I’m actually recording with him in another 2 weeks. He says he likes to take the view that he’s a corporate raider: somebody has now bought Shopify—it’s him—and he asks, “What the hell was the previous management doing? How would I improve every single element of what this previous management was doing?” Even though it was him.

Mm-hmm.

You said basically the same thing. You can’t really control what your competitors do. I can control what I do. Let me analyze how I’m doing, and then ask how I would beat myself from the outside.

Yeah. That’s part of the game as well.

Why do you think you have this opportunity to be number one? What do you see that they’re doing wrong that you think you can do better?

2. The Founder Advantage

A lot of them are not founders. That’s number one, right? They’re there for 3 or 4 years at best. They just collect their bonuses and play it safe, and then they might optimize certain operating metrics. But they’re not really 10x people, right? They’re just there for their bonuses for 3 or 4 years. As a result, they don’t really need to make bold decisions. They always play defense. They never play offense. I have a different style. Of course, I play defense as well, but I always think, “Okay, what can I do more? Which industry can I go into? Which product can I launch?” I’m always pushing myself to do more.

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

It’s much easier to compete against non-founders, right? If I were competing with all the banks and they were all founder-led, as a result, we would all have much better products by now. That’s not what’s happening, right?

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

A professional CEO’s ultimate goal is not to improve the organization. Their ultimate goal is to protect their job. By definition, they make suboptimal decisions for the company because they think about themselves and the company as 2 entities. I think about myself and the company as one entity. I do everything that’s good for the company, and I never try to diverge between what’s good for me and what’s good for the company. For me, it’s the same. I have 100 percent alignment with the company.

I heard you say something like your entire life is work. It’s like 99.5 percent of your time is dedicated to building your business, correct?

Yeah, yeah, yeah.

Yeah.

When we speak with regulators, they’re all concerned about growth and say it’s not a good mentality. My answer is very simple: whenever you think, as a regulator, that I’m an excessive risk-taker, you’re completely wrong. I’m the only one motivated for this company to succeed and survive. That means I’m actually not going to take stupid, excessive risks compared to professional CEOs or professional boards.

Because there’s no separation. This is what I hate when everybody says, “Oh, it’s just business. It’s not personal.” There’s no such thing with founders.

Yeah, yeah.

Another thing that surprised me when I started reading about you was that originally, you set out not to be regulated. You said it was the worst mistake you ever made. Can you talk about what happened and how you learned that lesson?

3. Why Banking Licenses Matter

When we had several million customers, we applied for a banking license. An entity with zero customers is less risky than an entity with millions of customers, and in the regulators’ eyes, that makes them much more risk-averse toward you. It’s much easier for them to give a license to a company with zero customers, because maybe it will still have zero customers in three, four, or five years. If you give a banking license to a company with 5 or 10 million customers and something goes wrong, the regulator will be blamed.

Why weren’t you regulated before? What was the state of the business when you applied for the banking license? What were you doing before?

We simply had e-money and payment licenses. We went for—

You were just moving money.

—much lighter licenses, yes.

Okay.

The idea was that a banking license took three or four years to get, while you could get an e-money license within a year. As a founder, you want to do things faster, so that’s why we went for an e-money license. Then we got a lot of customers and moved to a banking license, and it became almost impossible because we were very, very large. I think, in the history of the U.K., no company with 7 or 8 million customers had ever applied for a banking license.

Was that a difficult process? What happened?

It took us almost five years to get a banking license in the U.K.

Okay. What would you do differently? I think the way you put it is that regulation isn’t a moat. That’s not the right word, but there’s a huge benefit to actually getting yourself regulated. Is that correct? Is that how you thought about it?

There are pros and cons. To build a large business, it’s a must, because if you really want to compete with banks, you need to get customers’ trust. They need to put their salaries and a lot of their wealth in their accounts. They need to start trading stocks with your ETFs and so on. They need to trust you, and in their minds, they trust banks.

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

To build a very large business and capture a large market share, it’s unavoidable. In the U.S., a lot of companies started, like Chime and Cash App, 10 or 12 years ago, and they never went for a banking license. I think that’s a big mistake. They could never become a large business because—

Explain why they can’t become a large business without it, though.

Just because they’re not a bank. They can target certain niche audiences, certain cohorts of customers—low-income customers, for example—but they can never reach a prime audience. They can never become a prime bank account without a banking license.

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

Early adopters—1 or 2% of the population—will try them. Maybe they’ll reach their friends and family, another 2%, so that’s 4% of the population. But you want 40, 50, 60, or 70%. For example, in Ireland, we have 80% market penetration. Four out of five—

In Ireland?

Yes. Four out of five adults use Revolut accounts.

Okay, how did that happen?

Slowly. I think it was a combination of a lack of competition and very bad banks. They have only four banks, and they’re bad. It’s also a very small country, with a lot of people living outside Ireland as well. Altogether, I think that led to us reaching 80% of the market. In other markets, for example, we have about 20% penetration in the U.K. and 20% in France. In Spain and certain other markets, it’s 30 or 40%. So it is possible to reach 60, 70, or 80%, as Ireland shows. But to do that, you need to be a bank.

Okay. I’m curious: when you go into a new market and you see bad banks and low competition, what are they doing wrong?

They’re stuck in limbo because of professional management that is extremely risk-averse. As a result, there’s no intention to innovate. All their resources are spent protecting what they already have. For example, they might have a very old, legacy, third-party core banking system. Obviously, they need to change it to their own system or to a new provider, but banking management will never do it because it introduces risk. They need to migrate customers, something might go wrong, and they never take a risk.

That’s the problem. On top of that, a lot of them aren’t technical, so they don’t really understand how to do many technical things. As a result, their default choice is not to do anything, both for regulators and for legacy banks. Doing anything is risky in an industry where you lack certain skills, like technical skills. Banking isn’t only about regulation; it’s also about building tech. I think all these people are very bad at building tech.

So one of your advantages, as you see it, is that you’re competing against non-founders. You’re competing against professional CEOs, and these professional CEOs aren’t technical, so they can’t invent technology and therefore can’t innovate. That’s what you’re attacking.

Yeah, exactly. They don’t even think about building products because they just don’t feel it. They don’t use it, and they don’t know how to do it.

They’re just professional managers. I think it’s very important to build a successful business. You need good technology, to be a great manager—a very tough manager—to be detail-oriented, and to be a very good product person as well, to know how to build and turn the product. Technology, regulation, compliance, people altogether. It’s like a machine, right? There are inputs, and then the whole machine should produce the right output, which is an amazing product that people use.

Okay, explain how you’re building this machine.

You need to visualize in your head what the inputs in this machine are and what you want to achieve. What are the goals? The inputs are obviously your organization, your structure, your people, how you build products, and what you want to build.

Then you observe the whole structure working and the whole product being built, and you always intervene if something goes wrong. You 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 the team grew, but then speed slowed down and the machine stopped working.

So what I did was ensure that we had a lot of very small, independent teams working on the same platform. Then speed increased because people’s work was parallelized. They worked on different products and different features using the same tools, and they were all independent.

But then again, we hit a bottleneck with regulation and compliance. I built another muscle in the machine: the regulatory affairs and government affairs departments, and so on. They had to produce certain outcomes. Then we hit another bottleneck with hiring fast enough and finding good people. Again, we built a lot of processes for recruitment, targeting the best people, and so on.

It kind of moves in circles, right? You build something, then you hit a bottleneck. You identify the problem, solve the problem, and go again.

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

Yeah.

I heard about what you just described before, where you have—I don’t even know if you call them bets—20 different ideas, or small teams working on 20 different ideas at the same time. Explain how these teams are structured and how your previous career as a trader influenced the way you’re building and managing your company.

What was useful as a trader was risk management and quantifying everything. In banks, or in all organizations, a lot of things are evaluated based on people’s intuition, which in a lot of cases is simply wrong. So, in order to evaluate correctly what is done and what is not done, you need metrics. You need KPIs.

Wait, are you saying “dumb” or “done”?

Done. Done.

Okay.

Done. Da, da, da.

What a great—you said “dumb.”

Well, dumb as well. Dumb as well, yeah. Metrics and KPIs actually kill politics within an organization because everything is transparent. As an individual contributor or as a manager, do you achieve your metrics? Do you achieve your goals? Why haven’t you achieved them? It doesn’t matter what you say. There are objective numbers.

I think it’s extremely important to have that as part of the machine. When I worked in the bank, they didn’t really have it. They had a professional CEO, and there was a lot of politics within the organization. I think it’s simply wrong how people run businesses in general.

Okay, explain setting these little bets up.

To be honest, it’s pretty simple. We were always a high-velocity company, releasing a lot of features and products. At a certain point, I decided to instill discipline in building bets because we were building a lot of things, but we weren’t really tracking how they were performing.

So we simply built a staging process. First, there’s a decision to produce a bet. It can be bottom-up or top-down. Then there’s a discussion—we call it a committee—to decide whether it makes sense to produce the bet. If the decision is made, we fund it.

We separate out a team of up to 10 people: front-end developers, back-end developers, a designer, a product owner, sometimes a data scientist, and an operations manager. Then they build a new product within 9 to 18 months. When they launch the product, we look at its growth in terms of gross profit.

Because we’ve done this for the last 10 years, we’ve launched about 50 bets. We know that our top 10 bets grow, say, 10–20% month-on-month, and produce, I don’t know, 1 million GP, 2 million GP, 3 million GP each month, consecutively. If we release a bet and see that it’s historically in the bottom 25% of all the bets, we simply sunset it.

So we instill discipline, and we don’t run businesses that aren’t growing very fast. For bets that are growing very fast, we double down. One team becomes a second team, then three teams, four teams, five teams. Then it becomes a department, then a major P&L line.

I think this process lets us discipline ourselves to always filter out things that don’t work. Even I don’t really trust my intuition about which products to build and which not to build, because historically I’ve been wrong so many times. I think the only approach is completely algorithmic: you continue to fund the top bets, and you cut the bottom bets within 18 months.

This is the trader in you.

Exactly, yeah.

A lot of what you’re saying reminds me of Bezos and the way he describes all these disparate bets he would place inside Amazon when he was building the company. He has a great line: “You need to pour gasoline on the promising sparks.” Your whole thing—

Yeah.

—is that you’re going to cut the bottom performers, but then the top performers—do you have a percentage? Is it the top 10%?

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

Okay. And then you know—

We just scale them up, yeah.

Okay. And you’re dedicating a lot more money and resources. Why is it important, before a bet is proven, to cap the team size at 10?

It’s not necessarily 10. It can be a bit more. It just depends on how complex the product is, but generally, it should not be more than 10 people. As a rule of thumb, you need probably two or three back-end developers. In our case, because we also produce mobile apps, you need two to four front-end developers, three to four back-end developers, one product owner, and one designer. That gives you 10 people.

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

Yes. I think now I’m trying to change it, because over the last 10 years I’ve optimized a lot of how you direct people and build an organization around people, their strengths and weaknesses—avoiding politics, putting in KPIs, and so on. That’s actually about avoiding people’s weaknesses. With AI, the structure needs to be rethought, to be honest with you.

I think the team should not be 10 people anymore. It should be 2 or 3 people at best, because one developer can do front end, back end, and even data science. So it should be rethought.

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

Many things, and I think we’re just at the beginning. We’ve automated customer support, so 90% of the customer support team is automated now. We’re doing the same elsewhere. Before, it used to be 5,000 people plus. Now it’s much less.

Obviously, engineering is automated as well. We increased the speed of our engineers by 30%. Translation and cross-selling are also done by our LLMs now. A lot of things. But I think the ultimate goal, at least a bet for us now, is to be able to build a full-stack AI employee. I think it’s completely doable with current technology.

It’s not like a chat tool or another interface where we tell it what to do and then it produces something. No, it’s more like an AI employee that can join calls with you, has email, has a Slack account, has access to all internal back-office systems, and can do work. I think that’s the ultimate goal that, sooner or later, the majority of companies will come to.

Yeah. You keep mentioning over and over again—I don’t know if you used the word bureaucracy. I don’t think you did. But you hate politics. You want to minimize that. You want data. You’re much more like, “I don’t care what you say.”

It’s: Did we hit the numbers or not? Is this growing or not? What’s your organizational structure? Do you just have a shitload of direct reports? Alexander Wang was sitting in that chair like 2 weeks ago.

Yeah.

And he has some crazy setup with 200 direct reports.

Oh, really?

Yeah. So what’s your setup? How are you organized?

I have about 50, 51, 52. I speak with my direct reports, but I also go deeper. I go down to individual contributors on important projects, so I can speak directly with a designer, a product owner, or a developer.

4. The Self Guided Organization

The philosophy is very simple. Whenever you hire smart, self-guided people, you don’t really need to manage them. You just need to show them the direction and ensure they’re all synchronized. It’s like an army: you need to ensure that everyone is using the same standardized equipment. That’s what you need in a company as well.

You don’t need every single team or department to reinvent its own bicycles or weapons. It has to be the same standard approach. If someone invents an additional tool or instrument that allows us to move even faster, then we need to standardize it across all the teams and departments. I’m very good at spotting an innovation in one team or department and spreading it across the whole company.

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

Recently, for design, we always used Figma. Now I’ve supported one team that’s producing designs much faster using LLMs. Instead of designing in a certain interface or product, they simply uploaded our design system at the code level to an LLM and prompted it to produce certain flows based on our design system.

As a result, the design isn’t really a frame in Figma; it’s a live interface on your laptop or simulator. You can click through things, and it reacts. The most important thing is that you can do it 3 or 4 times faster than making frames or screens in Figma. Now I’m pushing the whole system to all the designers.

Have you spent any time reading about entrepreneurs from the past?

Yeah, of course.

Anybody stick out that you admire or studied?

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

I’m glad you said Henry Ford. You’re sitting here talking about how you’re building a machine, observing these innovations in all different parts of the machine, and making sure they’re spread throughout the entire machine. That’s like Henry Ford.

Yeah.

Andrew Carnegie would travel around the world. Now, obviously, technology can proliferate; somebody could tell you about it, or you can see it online. He had to physically travel to the factories because they were building physical stuff.

Yeah.

He’d think, “Oh, wait, this idea in Britain—I’m going to take it back to America.” Carnegie and Ford did this too, but Carnegie specifically sounds exactly like you. He was like, “I don’t care if it’s a 5% improvement in 1% of our business. If there’s a better way to do it, we’re going to do that.” He was moving against older competitors who usually wouldn’t invest in technology.

When they found out he was spending so many resources on it, they thought he was fucking crazy. He ran that company for 30 years, and it gave him a compounding advantage. By the time his competitors realized what was happening, they could never catch up. He was so far ahead. What you just described is very similar to Carnegie.

I think it’s super important. You’re just building the machine that moves fast and achieves the goals. If you spot an innovation in a certain part of the machine, you need to spread it as fast as possible.

Yeah. This idea that you kind of hate managers who just pass along what to do—is that right? You’ve eliminated them from your company?

Yeah, exactly. I’ve seen so many of them over the last 10 years. They take information from individual contributors and pass it to stakeholders. What’s their value add? Did you change the direction of the team? No. They know what they’re doing. Did you bring any innovation? Did you identify the easiest way to achieve the roadmap? No, not really. What’s your job? Just taking numbers from them and passing them to me? I just don’t get it.

You prune your team, is what I’ve heard.

Yeah.

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

Yeah. Self-guided people.

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

I always joke that self-guided people are self-guided missiles. You’ve got brilliant people; you don’t even need to tell them what the goal is. They identify the goal themselves, and then they reach it themselves. They’re like self-guided missiles that also identify the goals.

People who are good but not excellent need you to tell them the goal, and then, without any iteration, they’ll reach it. With average people, you tell them the goal, and then you need to spend weekly iterations directing them and telling them what to do. Then they’ll reach the goal, so you spend management time. That’s what I don’t want.

Below-average people: you give them the goal, spend time on them, and most likely they won’t hit the goal. That’s a problem. In order to have as many direct reports as possible, you need to minimize the management time spent on each of them.

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

I do. A lot of people I know who are very good executives struggle with this.

Why do you think they struggle?

I think they care much more about being empathetic to other people than about winning. If you’re more weighted toward winning, your empathy for other people comes second, and you’ll make the right decisions even if they’re tough. People who are more empathetic and less attached to being a winner might prioritize being number two, number three, or number four rather than getting better people on their team.

Have you heard how Elon speaks about this?

No.

He would tell people managing the engineering team, “If your engineer’s like you, you’re not doing the right job.”

Yeah.

His whole thing was exactly that.

Yeah.

He’s just like, “We’re here to win. We’re here to achieve the goal,” and how people feel is completely secondary to that.

Yeah, exactly.

That’s more how you think.

I think it’s very important when you hire or observe executives. People who are very likable to their direct reports might not be the right people. I think the best executives are very tough. They might be likable, but being likable isn’t the goal for executives. The goal is always to achieve the goal with the minimum amount of resources spent. They’re the best.

Say more about this. I heard that you like small inputs that produce large outcomes. You just said something like that: achieve the goal with the minimum amount of resources. It’s almost like an art. I know you don’t think of yourself as an artist, for sure, but there is an art to it. It’s not just that you want to win. You also want to win the right way, where you might win but expend way more resources than somebody else who says, “No, I want to find the minimum input possible for the largest outcome.”

Yeah, exactly. If you think about what founders, entrepreneurs, and great executives do, they have a goal they need to reach, end to end. They need to identify the direction to go in, and then build something within that direction with a minimal number of resources spent.

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

I think there’s too much money out there. A lot of founders think money is free, which is probably almost true in California, because you can raise so much money at ridiculous valuations and then just spend it.

So I think there’s definitely a culture of trying to solve problems with money rather than with your brains.

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

For example, you’re in a B2B business, right? You set up a company, you make your first sales, say, your first $1 million in ARR, and then you decide to scale. Suddenly, you decide to hire an expensive VP of Sales who will hire 50 salespeople to sell your product.

You need to find a way to start selling your product cheaply, build a system, and then simply feed additional employees into the system so you always have a great payback. Starting big and hiring a very expensive VP of Sales who will also hire a very expensive team is the wrong decision.

So essentially, they remove the constraint of money, and therefore they’re not developing the skill set that constraints force you to develop. If you’re going to survive under a set of constraints, you actually have to be good. You have to be talented. You have to be resourceful, and they’re essentially papering over that with money. It might work in the short term, but in the long term they’re going to get beaten by somebody like you.

If we’re in the same industry, then yes. In many cases in the U.S., it’s not that competitive, right?

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

Europe is even less competitive.

Yeah. So you’re saying China?

China is competitive, yeah. China is 996, right? Even if you’re good in Europe or the U.S., how can you outcompete people who work 996? Plus, they have very good technical education, so it’s very hard.

When I started, I started in a coworking space with 140 companies. Within 5 years, only 3 companies survived. They all worked on weekends. Within 10 years, only 2 companies survived out of 140. So I think working on weekends is a must if you want to survive, purely statistically.

Okay. So working 7 days a week is one thing, but working 9 to 9 or 10 to 10—what is it? What’s the actual culture?

Well, I work like that, right?

You’re the founder, though. I don’t know a single founder—

Yeah, yes.

—who’s like, “No, I’m going to… I’m on PTO.” I understand that. I’m talking about your—

The vast majority of my direct reports work like that. There might be a bit less alignment among the direct reports of my direct reports. But still, I think we’re probably one of the hardest-working companies in Europe, and one of the hardest-working companies if you include the U.S. as well.

I want to know what you think the entrepreneurs with this California tech culture and operating system are doing wrong. You said there’s just too much money. They’re not that competitive?

No. Everything else seems to be there, right? The talent is very good. You’ve got great universities, plus a lot of experts coming to study at these universities. People are rather hardworking. But the culture where there’s too much money and people choose to spend a lot of money on problems—I think that’s the wrong culture.

Because they’re not actually solving the underlying problem?

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

That’s a very interesting take: you’re not developing yourself as an entrepreneur.

Yeah.

Give me examples of how you developed yourself.

When we started, if you look at the unit economics of the business, we started with a negative gross margin. The negative gross margin continued for the next 3, 4, 5 years, until we optimized it to as much as 80% positive gross margin.

If you look at why that is, in our business, Europe is extremely capped and regulated compared to the U.S. For example, interchange is 20 basis points versus 0.5% in the U.S. Credit card rates are capped in the majority of countries. Credit is very limited; you cannot freely give credit to many people. It’s very difficult to effectively set up a bank in Europe, country by country, because even if you have a bank license in Europe, you cannot be a primary bank. The regulations don’t allow you to start issuing local accounts unless you set up a local branch of the bank in that country.

You need to have a physical location.

You need to have an office, local connectivity, local regulation, and so on. So you go country by country, and it takes a lot of time and resources. There are different languages as well.

And you had to do all of this?

Yes. Plus, there are very tough employment laws in many countries. In the U.S., it’s very easy; it’s employment at will. In Europe, it’s not like that, so you need to be very careful how you hire and who you hire.

All of this together actually produces an environment that’s not very profitable, and it’s very difficult to build a company. Even in that environment, we succeeded. We succeeded because we spent a lot of time, energy, and brainpower optimizing every single problem.

If I started the same business in Brazil, the U.S., or maybe other countries like Mexico, certain aspects would be much easier. If you look at unit economics, credit is so much easier to give. Interchange is not capped. This difficult environment in Europe actually taught us how to build a business in a very competitive landscape. You see what I mean?

Okay. So if you were surviving in this very difficult environment, now you have a skill set that people who didn’t have to go through that—

Yeah.

—and now you have to compete head-to-head with them in, let’s say, America, they’re going to be very hard to compete with. You’re going to be very hard to compete with because they haven’t developed the same skill sets and they didn’t go through all the stuff you did.

Yeah. Yeah.

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.”

You’ve said some very interesting things about investors that I want to talk to you about because it’s really important. This show—the whole idea was that I think entrepreneurs are the most important people in the world. The idea that somebody has an idea that doesn’t exist, and through determination, agency, aggression, they make something real that started in their mind. And in your case, you’re in 40 countries or whatever the case is, with thousands of employees. How many customers? Tens of millions? From an idea that you had when you were, what, in your late 20s at the time?

29 or 30.

Yeah. It’s absolutely incredible. I think that’s a miracle. And yet, a lot of what founders say about investors in private, they do not say in public. We were talking earlier because I saw this clip of you where you compared investors to football cheerleaders.

Yeah.

Can you explain why you made that comparison?

I gave you this history before. When I started the company, it was 12 or 13 years ago. Back then, in Europe and the U.K., it was an extremely difficult environment to raise money.

Simply, there weren’t that many VCs around, and they were more like private equity guys: extremely aggressive and extremely legalistic. To raise money, you had to sign a lot of bad conditions in your shareholder agreement: liquidation preferences, board seats, reducing your voting rights as a founder, and so on. These people basically think that because of them, the company was created, because they gave it money, and that they’re entitled to a large part of its success. That’s the mentality of quite a few investors who invested very early on, like in my company, for example.

I think that mentality is largely wrong, because getting money from LPs is extremely easy. Their business is very simple: they have LPs, collect money from them, and then invest in startups. Their business model is 2 and 20. It’s so much easier than building a real operational business from scratch because they never risk their own money. They don’t really need to work hard. There is competition, but it’s just for getting deals. I think their job is so much easier. That’s number one.

Number two, back then there was almost no competition compared to what there is now in VC circles. There was this opinion that VCs would help you run the company and that the company would be successful because they’d give you advice on how to run it. In reality, almost none of them had ever built a company. They just raised money from LPs and invested it in many companies. Sometimes they had board seats and sometimes they didn’t, but having a board seat doesn’t teach you how to run a company at all. You’re just an observer.

As a result, you have all these people with a lot of power because they give you money and put certain conditions in the shareholder agreement. They also have this mentality that they can tell you what to do as a founder, and in my experience, that was very dangerous. I had many cases in the past when certain VCs gave advice that was simply wrong for the company. My advice to entrepreneurs would be: even if you raise money from VCs, pay a lot of attention to the shareholder agreement. Make sure they’re purely financial players, with no voting rights and no seat at the table for decision-making. That’s super important, because if something goes wrong, you effectively have cheerleaders watching the match, trying to play it instead of the professional players. That’s always a disaster.

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

One piece of advice was, “You know what? You need to hire experienced executives.” No, it doesn’t work. In my first 5 years, I had probably 50-plus experienced executives. I kept only 2. Why do experienced executives almost never work out? It’s the same as football players, right? They have their prime. There really is a prime age, and it doesn’t mean they’ve become less good. I think their priorities change. They’ve probably also become less good. Things change: times change, competition changes. People who were good before, who had a track record of being good, might not be good in your company in the future. That’s number one. It’s extremely naive to think otherwise.

Number two, there’s also negative selection bias. When I hire people, I look at their track record of achievement, and they need to be in the top 1% compared with their peers in terms of career progression. Then I try to pick them up when they’re 25 or 30 years old, so they continue on the same trajectory at Revolut. When you’re hiring experienced executives, there’s negative selection bias. People who are extremely good have already made it. They’re probably running their own businesses, retired, or doing something else. The people who never had that extreme career progression, whom you hire as experienced executives, are by definition less good than people with extremely fast career progression who are already not in the market.

Okay, so you found that the advice they gave you was completely the opposite of what you should have been doing, based on what you just said?

Yeah, exactly.

Okay.

Yeah. A lot of the advice is that certain people in the company are good because they’re experienced. I think the opposite. One of them—he’s actually quite a good investor—was forcing me to fire my best person because he was too hardcore.

Who do you think wins? This guy needs to work nine to five. Okay, tell me more about this. You obviously fought back. The guy didn’t get fired. What happened?

Of course I didn’t fire him. I said no. That’s it.

Okay. That’s it? And the guy—

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

Did you have a fight with the investor? What happened?

Yeah, I did.

And how did you settle it? You had all the power? What happened?

I fought with him.

Oh.

Even though they had a coalition of many investors, they stepped back.

Okay, so how did you get them to step back?

Pretty early on, I realized that quite a few VCs aren’t very operational, and they can be dangerous for the company if they have enough power. So every single investment round, I removed VCs and took board seats. Now I don’t have any VCs on the board. I think that’s best. You always need operators rather than VCs on the board—people who have actually built businesses and know how to do things.

Your mindset reminds me a lot of Travis Kalanick from Uber. He was on the show, and I think one of the clips that got millions and millions of views was about this. He thinks that just doing no harm is an excessively high bar for a VC.

That’s right.

He said something like, “Over 90% of VCs can’t even not fuck things up.”

Yeah.

He’s like, “Not even be helpful. They just can’t not fuck things up.” I think he said that 1% in his experience have actually been helpful. And the thing he would tell all entrepreneurs, I think he said on the show, is, “Tell them to give you the money and go away.” That’s how you think.

Those are the best. And yes, make sure the shareholders’ agreements ensure they don’t have any powers.

Yeah, I’ll make you richer. You just leave me alone, basically—

Yeah, yeah.

You also set up your own—I don’t know if you call it a VC fund. What is this?

Yes, it’s a VC fund.

What’s it called, first of all?

QuantumLight.

Explain what you’re doing. This is funny. I just picked up on this now because you were analyzing the legacy banks. “Look at 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.”

Basically, the idea came about in 2022 or 2023. It came from my personal pain, from a fight with an investor. It was one of the very big names. They invested in Revolut, I think just after or during COVID, when all the stocks went up. They invested at a $33 billion valuation. They had the legal right not to allow us to make changes to the shareholder agreement because they were the last investor, blah, blah.

So you had a bunch of these bad experiences with VCs. You’re going to start your own VC fund. Explain how your fund is different.

I had this fight, and I was extremely pissed off. I thought, “You know what? I also need to compete with VCs in their business because they’re so bad.” Out of my frustration, I started the fund as well. The idea was to invest not based on human judgment, but based on science and machine learning models. Statistical investment was number one.

Number two, we actually help founders with operational advice and playbooks we developed at Revolut: how to hire people, how to do performance management, and how to do product expansions. Finally, we help them sell their products as well, because we are a large enterprise. We buy from a lot of vendors, and having us as a client helps them sell into other enterprises or potentially sell to our customers—our Revolut customers—as well. So I think, overall… Plus my personal advice, obviously. I thought the overall package was so much better than what purely financial players, VCs, offer.

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

It's statistical investment, right? It's based on machine learning models. The way it works, our model selects 30 or 40 companies to invest in over 2 or 3 years, then puts an equal amount of money in each startup. We started with a Series B fund. It's closed; it's fully invested. It has produced, like, 56% IRR, which is very high.

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

We started with $250 million, yes.

Okay.

That was the first fund. So now it's at, like, 56% IRR. We’re starting to invest in the second fund now, which is $500 million, for Series C companies. Again, it's based on the model, and it's also a very high return. I think it's in the top 5% of funds in the world now in terms of returns. We'll probably do a large fund as well for late C.

Where's the money coming from?

It's different LPs.

Okay.

Initially, 20% was my own money. I put 20% of it, or 25% of it, and the rest came from other founders. For the second fund, we've already got quite a few institutional players as well.

I've never heard of somebody building a bank comparing themselves to Meta, so I'm going to get into that in one second. But you don't do anything half-assed or small, right? You're just like, “Okay, I started with $250 million.” Now you're going to see how far you can take this. This is going to be like a giant Renaissance Technologies kind of thing.

Obviously, the goal is to build something large like BlackRock, but in private markets. Again, we'll see if we get there. But I think the idea and approach make sense because now you have a lot of data on startups, and then you can apply all these machine learning models to identify the best ones. The model is pretty sophisticated. For example, one of its signals is who invested in the company and who's investing. We'll look not only at the performance of the fund that invested in the company, but also down to the partner level. Then we'll also look at the age of the partner. There are very interesting things you see when you look at variables such as the partner's age. You'd rather not invest in companies where the partners who are investing are older than 40 years old. The best cohorts are young partners between 30 and 40 years old. They're the best at identifying good companies. It's the same with executives as well. There's a certain prime age you need to look at. Again, there are many variables, right?

Of course.

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

And is this a separate company from Revolut, or is this—

Yes, the company is separate.

Okay. So completely separate.

Yeah.

And you have somebody else running it?

Yeah.

Okay. You said something about helping them sell their product as well. Talk about the early days of marketing. I heard you spent nothing on marketing for the first 5 or 7 years.

Yes. The first 7 years were completely organic. Plus, COVID hit. In 2021, I remember our company was 6 or 7 years old. COVID hit, and our revenues went down, I think, 70%. Back then, we weren't in the banking business. We were still kind of an e-money company with a travel card, so we were very heavily related to, or correlated with, the travel business. When COVID hit, the travel business completely disappeared. We had to survive. Somehow, we optimized a lot during that time.

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

Yeah, yeah.

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

Basically, the way I think about marketing is that I hadn't done it for 6 or 7 years. I just didn't have time, plus we didn't have enough resources. But when I started doing it, I went really, really deep. I started with who we needed to hire to run a proper marketing machine—not just here and there, but scientifically, figuring out where we needed to invest money in marketing to get the proper return. My idea was very simple: who are the companies with the largest marketing spend, and who are extremely cautious with their marketing spend? Where is there a very low margin of error? Back then, it was gaming companies. Gaming companies spent a lot on marketing, performance ads, and certain companies were also doing a lot of above-the-line campaigns.

The gaming companies were doing well or not?

Gaming companies were the largest-spending companies in the world on marketing. If you look at their budgets, it could easily be $1 billion-plus on—

And a lot of them are going to AppLovin.

Yeah.

AppLovin's going to print, like, $6 billion in profit this year.

Yeah.

So, doing well.

It's amazing. Yeah, yeah. So I ended up hiring an extremely good person who started running marketing at Revolut. Then we went very deep and started—

Wait, before I let you go on.

Yeah.

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

The idea was: who are the best professionals who know how to spend money in marketing? Those professionals would work in gaming companies because they have the largest budgets.

Got it.

So that's how I got my first—well, actually, my second. I fired the first one. He wasn't from a big gaming company.

Probably a VC's cousin asked you to hire him or something.

Yeah. Anyway, we went very deep into performance marketing, LTVs, and payback. Recently, we also started doing this because we got a banking license. What I realized quite early on is that it's all about trust, right? If you're a digital bank, you don't have branches. People don't see you physically, so they trust you less by definition compared to HSBC, Lloyds, JPMorgan Chase, and so on. So, how do you build trust? How do you arbitrage performance marketing spend? In performance marketing, you pay per impression. There are a lot of spaces in the physical world you can buy that will also produce impressions at a much cheaper price than the digital world. For example, we probably now have ads in 50% of all airports in Europe. Almost 50% of airports in Europe will have our ads. Again, it's simple math: how many times a year do people travel? How many times a year are they in the airport? How many impressions do we produce? How much will it cost us? Now there is an arbitrage opportunity compared to performance marketing. There are similar ideas for other places in the physical world. For example, we've started doing the equivalent of legacy branches, what we call a Revolut store, a Rev experience. We set up our first shop in Barcelona. Again, we're arbitraging impressions in the physical world versus the digital world. How many people pass our shop every year? Probably—

What is the shop, though?

It's more like a Revolut experience. It's not a traditional bank branch. You come in and experience all our products. It's all done in a very modern way, like an Apple-type store, but for Revolut. The idea is that we generate impressions from people who pass by on the street and come in as well.

A lot of companies advertise in airports, and it's just something on a screen for maybe 30 seconds or whatever.

It might be one billboard. You walk for two minutes and you're still enclosed. I'm in a cocoon of Revolut ads. How did you come up with that idea?

Just buying the full airport.

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

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

But it's not just paying for impressions, though.

I mean, building trust as well.

I hear the trust thing was actually one of the most interesting insights, and you said a lot of interesting things today. But I think there's something about the ubiquity of it. It's not just one sign saying, “This is Revolut, and this is what we do.” It's entire hallways. You're walking, and you're surrounded by this. I'm telling you, I can't think of another company that does this. This was before I even thought of having you on the show. I just thought, “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 back to this grandiose ambition you have. I think people who may not have known you before this pick up on how competitive you are. I love the fact that you kind of got pissed off at VCs: “All right, well, now I have to compete with you because you've made me so mad.”

Mm-hmm.

I've never heard anybody else building a bank. You said there's really no true global bank, and you want to be the first one. I like the level of ambition. You compare it to wanting to be a global technology company like Meta. Explain the connection between what you're building—which people might think of as a boring business that's been around for a long time, since banks have been around for a long time—and how you view it.

Basically, our idea and our goal is to generate enough cash flow from this business to fund really big bets, which can consume a lot of capital. For example, I would love to go into LLMs and build our own models. In fact, we built our own transactional model called Pragma. It's an LLM, but it's transformer-based and trained on transactions rather than words.

I would love to go even deeper and build our own data centers to train our own models, to do much deeper tech compared to what we do now. But that requires a lot of investment and cash flow. So basically, the goal is to build a large business that produces so much cash flow that it's possible to fund moonshot bets that might not necessarily produce a P&L in the next 3, 4, or 5 years.

Are these moonshot bets unrelated to financial services?

Yeah, most likely. In financial services, what else can we do? Almost everything has already been invented. Ultimately, we're just rewriting legacy products. We're building the same financial products, but much cheaper and nicer than the old ones. Plus, we're putting them under one umbrella in one app, so it's all very convenient. We also innovate on top, so the products are interconnected and talk to each other. But ultimately, it's the same old banking done in a new way. What I really love to do is go beyond that and do something that has never been done before.

Inside the industry?

In all industries, yeah.

All industries?

More like in the tech industry.

Have you shared any of these moonshot ideas publicly, or are you keeping them inside the company?

For now, all these ideas are just in my head. I know we don't have enough resources or time to build them, but I hope that in 3, 4, or 5 years, we might have enough resources to do so.

Pragma is a foundational model trained on our transactional data. We have 30 million transactions every day, so we have billions and billions of transactions. It's possible to train a transformer-based model on transactions and then use it in almost any aspect of financial services. It could be an anti-fraud model, a credit model, potentially an investment model, and so on.

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

JPMorgan is very local. It gives you a US bank account and US-based products. If you have exposure outside the US, we're a banking partner because we do everything that JPMorgan does for you in the US. On top of that, we provide global assets. You can have global accounts with us. Being in the US, you can open an account in Europe or Australia, send money instantly between countries, and so on.

Instead of giving you local financial products and local benefits with points, we give you effective global exposure. That's our proposition. On top of that, our interface is much nicer, and we're much cheaper than JPMorgan.

What's different about the way you make money compared to the way they make money?

They're much more credit-focused than we are. We're much more subscription-focused, plus we have transactional business and commissions.

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

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

Okay.

Because it's still a very small portion of our balance sheet.

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

Our advantage is tech. If you think about banks in the past, whenever they expanded from country to country, they just bought other banks. As a result, they have many systems in many countries and don't really control anything. Producing any report takes months because they have to extract data from different systems.

Our advantage is that we have one standardized system, one ledger across many countries. As we go from one country to another, we don't need to write things from scratch. We just adjust the configuration of our software. For example, when onboarding in the UK, we adjust certain configurations to change onboarding for the US or Mexico, and so on. It becomes one highly configurable product. We don't need to build another bank in another country from scratch.

You obviously need many fewer people to maintain it compared to having 10 banks in 10 countries. As a result, there are economies of scale, so we can sell products much cheaper than other banks. Plus, we have the institutional knowledge of how to build a product, how to do marketing, and so on. You apply the same knowledge in any new country. I think, with time, it can become an unstoppable machine because it provides much better products and services at a much better price than local banks.

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

Thank you.

It was awesome.