Fireside Chat with Nikolay Storonsky (Revolut) | Disrupt SF 2018

Nikolay Storonsky took his company from a $350 million valuation to a $1.7 billion valuation in under six months. Hear how he did it.


Fantastic thanks very much now those of You who aren’t familiar with revolute I’ll just bring you up to speed What’s going on in Europe at the moment Is a fascinating new era of banking Challenger banks startups challenging The the old system of banking the at the High street the main street stores that You know very well and its really very App based it’s very aimed at the new Generation of the smartphone generation Isn’t it and that’s been going on in Europe for the last couple of years and Revolute is now pushing out here to North America yeah just to give you a Idea about us so we will launch the Business three years ago and it’s a Factory I’ll turn to your bank account So we do everything what banks do but we Do it ten times better and ten times Cheaper and it’s all up base within two Minutes you can have open your soul bank Account you can send money you can Borrow money exchange money by Cryptocurrency Invest money as well so we are growing Extremely fast weather with zero Marketing so we opening seven eight Thousand accounts every day we have About three million users also entered Into business accounts world as well so Opening about Hana two hundred business Accounts every day again with the zero Marketing you’re doing in it you’re

You’re you’re you’re doing the whole Interview on your ride which is Marvis So I don’t have to do any work but look Like what I want to know is a little bit More about you in the company you know That you were saying earlier that just Now that you’ve managed to achieve this Without any marketing what do you think Is this special source behind revolute That’s made it as successful as it has I Mean the special source is not the Secret or SS it’s the usual thing 10x Right so if you want a product to be Sold in huge quantities right where the Zero marketing has to be a gentle super And ten times better as simple as that So that’s what we do and it’s obviously You don’t have to run any physical Stores of course so you you know Shopfronts doesn’t that mean that the Barriers to entry are pretty low well do You feel the plenty of competition in Europe we have Mons oh you have n 26 you Have a starling Bank as well Yapping at your heels what how do you Think that you’re going to be able to Compete with these guys just providing People with the better products as usual So if you look at other competitors They’re always behind us like you know Two to three years behind threads so We’re fasting releasing new features we Are faster in expanding also the fury up As well so they’re always you know

Trying to get job but never come you’ve Raised something like three hundred and Almost three hundred and forty million Dollars so you have an enormous war Chest and you’ve expanded to about what Twenty-eight countries in Europe yeah Already a lot faster than some of your Competitors well what’s interesting as Well it’s not just doing banking is that You’re also doing other products aren’t You I noticed that you you’ve looked you Had a premium version it’s kind of weird To have a bank that have a premium Version surely a bank should just have You know treat people equally no maybe That’s not true is it But this premium version is got a sort Of a metal card you were launched that Recently didn’t you why would you launch Me well it’s not a gimmick corn it’s a Gimmick isn’t it well metal metal covers Are quite a special product right so Show me a bank who gives you a premium Called a premium product which has metal Card which has dedicated concierge which Has cash back in the cryptic RSS right Dedicated concierge so like a sort of Butler well it’s kabuki tickets you know Restaurants and so on although the main Thing for me personally it’s a cash back Which you can set up all synchronous Imaging yourself you’re paid right Everywhere with a metal card so when you Pay something yeah you you lots of lots

Of cards have cashback schemes don’t Know to encourage you to spend and so I Think it’s something like is it up to One Sent you can get cash back from all of Your spending you know you can get that In cryptocurrency yeah in that cash back Now what do I get to choose what sort of Crypto can’t you’re not giving me Dogecoin are you no no Emily you can Choose a Bitcoin litecoin this erimalai Cash back in Bitcoin yeah yes if you Want who hands up who likes the sound of That Few people seems like quite popular what I mean the waiting’s wait a second now Let’s just just slow down a second so I Get cash back in cryptocurrency and it’s In my revolute wallet where what about The security of that wallet can it be Hacked I mean this is been great right Obviously because we provide banking Products and I figure we have banking Level level governance right so we need To go through all this in a penetration Testing quarterly have machine guns Where is where is the crypto currency Held so you have cryptocurrencies held In cold wallets so we don’t disclose Waitis and it’s obviously not alone it’s Called wallet somewhere sorry In London can disclose where is it Swiss bank account I really said Although worse off right they have a lot

Of well – all this information So you’ve got loads of cryptocurrency Just in on hard drive sitting in you Know surrounded by barbed wire somewhere Sitting so where is secure place it Harmless well there you go that’s well I Don’t think I’m gonna get much further With that line of questioning but but That’s really fascinating it’s really Innovative and do you think that’s what What’s kind of really attracted your Audience you know that kind of gimmick And not gimmick perhaps but I don’t Think it’s not one line number one thing That they I think the me thing is it’s Really beautiful or cut the way it’s Done right and for sheet metal card it Is yes so if you look at this yeah I won Yes can you show it to me Alaa forwardly you left your wallet Bangle okay somebody will have it you’re Taking this the whole strategy though Revelry is you’re doing this so you’ve Got this premium product You’ve been banking which is you know Hard enough as it is and you’re doing Cryptocurrency wallet Oh by the way now can you explain to me Can I trade cryptocurrency to other Exchanges from your wallet so you can Trade cryptocurrencies within the wallet But you can’t our will transfer you Transfer them to trade inside your Environment yeah okay but so you’re sort

Of taking this very large kind of Amazon Approach aren’t you it’s like you know You’re you know banking cryptocurrency Wallet Concierge services I mean where else can You go I mean for now we’re we we are Constraint on financial services and the Information sources for example one of The services that we we are launching is A commission free trading so in the u.s. You have the service in Europe you don’t Have it yet so that’s this were working On what management as well when you can Declare a legate certain amount of your Money and then to professionals to Invest for you so this is this is going To check on the Robin Hood in particular Over here with this commission free Trading approach so they’re coming it From the sort of commission free trading Approach and apparently they’re now Going trying to go into banking and You’re already a bank you’re coming out Into commission free trading who’s going To win thing to build a bank as much More difficult than Russia so for us to Move to Commission free trading is much Easier in terms of interface licenses Infrastructure than from Commission free Trading to to become a bank and issue Cards issuance so I would our decimated Like you know 10 percent versus 90 Percent of complexity and so you said

That you going to launch into North America what’s the launch date so expect To have it here by by end of their a Year so we already have for about sixty Thousand people are in the US on a Waiting list you have 60,000 people Waiting to get a revolute card right now Yeah without even you haven’t done any Marketing just announced What so when when when can we expect October or I will say closer to December Closer December yeah excuse me my Friends going off that’s embarrassing Apologize so October you say November Will not Taylor Hello December December I think but your Your PR man is having a heart attack on The front row here I think somewhere you Are now your interesting fellow aren’t You you were the state swimming champion In Moscow yeah we’re sweating at the Swimming here when I when I was a school Online at Union Avedon few spots a Competitor you done do you still swim Earn well occasionally yes occasionally The do you think it’s kind of Interesting that a Russian launching a Bank in America in 2018 well the reality I left Russia won almost 13 years ago Right so when I was 20 years old so I Mean yes you can claim I have you know My origin in Russia but but reality I’m Like a roll citizen right because I Lived like you know in the K I spent a

Lot of time in the US as well so I mean The reality I don’t really have any kind Of you know specialized nationality now You’re citizen of the world Yeah exactly yeah there was some an Article I read about you recently said That you you you encourage a long hours Working culture in revelry is that true I don’t encourage nowaday I just observe It right so when I come in love is that I like a lot of people there when I Lived over there are a lot of people There and I wrote myself personal very Long right so I just observe it and I Think they’re the reason why we’re Having a war now so just you know people Are passionate about you know what they Do they they really want to change the Way banking is done so it’s you it’s More about the fact that everyone’s Passionate about working yeah so that Patient as a result of the rock long Hours and that’s what I observe right It’s not like I’m pushing one outside I Just tell you what I see right and did I Get paid more if they work longer well There is a bonus system where you So ever have half a year with a stock Option bonuses based on the performance But it’s not correct it’s not related at All with a number of hours you put in Because I mean for us We we want to have like you know output All did all the staff get revolute cards

Yeah the middle girls for free Metal cards for free um you had a bit of Controversy recently didn’t you because There was you had to institute a whole Bunch of new features and techs on Customers and a whole lot of people Couldn’t access their revolute banking Account there was a bit of a bit of a Twitter storm about it wasn’t there People were on vacation and couldn’t Access the bank account and it was a Little bit problematic what went down There so we we introduced a new Compliance system which does in a Transaction monitoring both against Fraud on you know against money Laundering and because we’re innovators We are trying new things all the time And then we introduced additional model On top of old models which performed by The way quite quite well but it also Increased percentage of a number of Locked accounts right and then there is A process how people can unlock accounts And in reality was less than a 0.1% of Our customers but people don’t like when The one that counts had being locked as A result we had I don’t know quite quite A few customers who complain the Twitter Mmm and but I guess he you know you over That hump now and that was a that was Something you sort of had to get over With the KYC but it’s interesting also You’re trying to do a lot of anti-fraud

Systems I noticed that you are doing Something called an anti-fraud Disposable card how does that sort of Operate yes it’s a very cool product so Within the app you can generate the Disposable virtual card so every time When you pay with this card I’ve got Number changes so as a result it can Never be hacked it’s a sexually brought Like a pedophile yeah so it actually Brought fraud On e-commerce down I don’t remember the Numbers question if my 20 or 30% that Must be incredibly useful I don’t think I haven’t actually heard of another bank Doing that is that is that a unique I Think we were forceful there all right You’re kind of your unicorn actually Basically now from you how’s it feel to Be a unicorn Same as before times before no different I mean let’s just see what team is Bigger there’s a lot more attention by The way we just continue to working hard And innovating all the time You’re the do you think that with this Sort cryptocurrency aspect that you’re Doing do you think that might be have Sec implications do you think have you Been talking to the regulators about That Of course so in the u.s. cryptocurrency Is actually regulated in Europe it is Not so every time when we approached FCA

With different proposals FC is UK Regulator several time with a pressure FC with different proposals of all the Products they recommend was that they Are not regulating cryptocurrencies I Can’t advise so what it means is that Affected any company can watch Cryptocurrency and there are no Regulations to to follow I think it’s Being changed now what a special task Force created by FCA who she looks at Implementing some kind of you know Regulations around cryptocurrency in the UK and in Europe but it’s nothing well It’s not in production yet um you know You came from the urine from the Financial sector before you did revelry What what was the kind of the moments There Eureka moment when you decided to Do revolute well I always wanted to to Run my own business right what you were You were a trader right yeah I was I was The registry there yeah in Liberal Browser sexually or was 10 years ago That lean in rather wonderful boss yes It was last week so yeah I was I was Derivatives trader and they’re not after Being in the industry for I think seven Years I decided to create my own company In completely different sphere in a way It’s interesting isn’t it because you Have a similar idea to transferwise they Also didn’t like all the all the foreign The cut the costs of moving money around

The world and you sort of thought well I Can I can address this as well yeah Exactly initial frustration with banks Was because I was travelling abroad a Lot I was sending money abroad as well a Lot right and every time you you wasted No three four five six seven percent it Just adds up all the time and that was Frustration and I was always questioning How how to avoid it and initial product That we launched was just a simple Account plus a card which allowed you to Avoid the conventional fees of X fees And then what time we actually expanded It to to the full range of banking Service but the initial idea was to Avoid FX fees and you took a kind of an Unusual approach didn’t you when you Launched revelry you started with a UK Platform which is a crowdfunding Platform to launch it why did it was you Choose to launch a launch it using Crowdfunding it’s actually a great Marketing idea to crowd fund your Startup even though we didn’t really Need it because there were like a lot of Institutional investors who wanted to Invest we allocate a certain amount of Capital for crowdfunding platform so we Can have extra four five ten thousand Retail investors so what happens if Someone invests in you even in $100 Right they become your advocate right so They sell your product to the familiar

Their friends it’s like a powerful Marketing machine right like a measure Yourself ten thousand people speaking About your company over a day right That’s what happens when you do Crowdfunding and we’ve done it twice and I was perfect the result you actually Have quite most of the time as far as I Can tell actually you you managed to Leverage the sort of crowd aspect of of Not crowdfunding but I mean they’re sort Of the marketing the viral sort of Uptick of revelry you know you get a lot Of people like calling you out so going About in a good way on Twitter and Things like that Yeah so during crowdfunding campaigns we Did you know a few few few kind of Tricks well no tricks but like in a good Way to to increase promotion of our Product for example you can only invest You have at least you know I think Hundred people using revolution so we we Forced people to actually invite a lot Of friends first crowdfunding was you Can only invest if you buy premium Product from us so which which actually A spiked premium users acquisition so All these things they’re actually quite Awful I mean part of the reason till You’re successful in the way is that the Big traditional banks have actually Started to move away from retail banking Haven’t they

There’s less money to be made there’s More regulation about consumer Protection it’s just not as good a Business for the big traditional banks Anymore Well I disagree to to to the point it’s Not a good business I mean what we see In terms of numbers this is a very good Business and it will be even more Lucrative right as number one I think That the main problem that banks face is [Music] Legacy systems legacy culture and legacy People is alright I mean relatively felt Like you know senior management who’ve Never done check before they they simply Can’t show directions way way to go Right so you they I mean I know a lot of Banks are hiring at McKinsey Golota Wherever to create a mass strategy how To digitize their operations like in the Year time McKinsey prepares a report What to do right on diamonds you just Don’t process right instead of hiring Consultants you always need to hire tech People to to build great products they Just teach like generally I mean just Learn that approaches wrong and people People who are who are leading therefore They’re their own people’s own and I Imagine that you know with the amount of Funding you got the amount of traction You’re launching in North America later This year I mean obviously a little bit

Of a pathway to to exit or to IPO I mean What sort of preferred path would you Take if you had the choice I mean I Don’t really think about it or I think I Pure Creates all the friction actually Business because then you need to have Quite Auto burocracy governance and so On so it’s probably slowed you down Right so we actually try to stay in a Private as As possible you wanna stare as private As long as possible I should imagine Though there be a few very large banks Looking at you rather jealously about Some of your your such high growth in The last couple of years Yes through I mean we were like a lot of Baking series you know coming to our Office yeah knuckles yeah yeah they want To find out I get how we do things Purposely keep silent we’re telling you Know would all the same as you guys say Goodbye put the phone Fantastic thank you so much for coming To TechCrunch Disrupt Nikolai store ASCII from revolute Thank You thanks

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