00:00:16 · Robin Walters
[00:00:16] S0: Hello, hello, and welcome to our third podcast of 2018. Just in case you didn't quite realize it, you're currently listening to the podcast of tech.eu, Europe's premier technology industry information portal and market intelligence platform. My name is Robin Walters. I'm the founder and editor of tech.au, and I like to use this podcast to discuss recent noteworthy news from European startups, VC firms, tech companies, and governments alike, and also regularly feature interesting entrepreneurs and investors from across the continent. Today, we're actually featuring two interviews. One is with Nik Storonsky. He's the founder and CEO of UK based fintech sensation Revolut, and one with Sandis Kondrats, who's the founder and CEO of Anatomy Next, which is the startup that recently won the Tech Chill Pitching Competition in Latvia. And I spoke to both entrepreneurs in Riga when I attended the conference and we'll be listening to them both later on. But before that, here's an overview of some recent European tech news that I thought was remarkable enough to warrant a second or closer look. And of course, how can we not start things off with the impending IPO of Spotify? As you've probably heard by now, the Swedish music streaming giant is planning to list its shares on the New York Stock Exchange, but there's a bit of a catch. Instead of a traditional IPO that makes shares available to the general public, Spotify is opting to directly list on the exchange, making its shares available only to institutional investors and thus eliminating the need for underwriters, aka the banks, that set an initial price, among other things. So either way, the non IPO IPO, as some people are calling it, will be very interesting to watch. Spotify currently boasts more than 70,000,000 paying subscribers. It just renegotiated long term licensing deals with three major record labels and its valuation has hit at least 19,000,000,000 US dollars in recent times. The company has generated revenue of a little over €4,000,000,000 last year, up from about €3,000,000,000 the year before. The company's losses, however, have more than doubled, reaching €1,240,000,000 in 2017 versus €539,000,000 in 2016. And now it's just a matter of counting down to the actual listing, which will be happening in a matter of weeks.
00:02:26 · Robin Walters
Now sticking with the music theme, Facebook has recently signed a deal with ICE Services, which is a licensing group and copyright database of some 31,000,000 works that represents PRS in The UK, STIM in Sweden, and GEMA in Germany, basically to provide music licensing and royalty collection for works and artists that are represented by the group whenever their music is used on Facebook, Instagram, Oculus, and Messenger. The company followed up on the news last Friday when it announced a similar agreement with Warner Music, which was the last major label that was not yet working with the social network. And now let's listen to our first interview of this podcast with Nik Storonsky, who's the founder and CEO of UK based fintech startup Revolut. The company is basically a digital banking alternative that includes a prepaid debit card, a currency exchange, a cryptocurrency exchange, and peer to peer payments. The company has been on a bit of a roll lately. First, it broke even. Then Revolut announced that it now manages around $1,500,000,000 worth of transactions every month. And to top it off, the startup has managed to attract, about 1,500,000 registered users so far. So let's listen to the interview. Hey. This is Robin from tech.eu, and I'm here in Riga, Latvia for the Techtool Conference. I'm sitting now with Nik Storonsky, who's the cofounder and CEO of Revolut. Revolut is a digital banking alternative fintech startup based out of London. But can you give me a better description?
00:03:50 · Nik Storonsky, Robin Walters
[00:03:50] S1: Yes. So we do everything what banks do, and we do it cheaper and better. Simple as that. You can sell money, exchange money, transfer money, spend with a card, buy, you know, insurance, etcetera. [00:04:01] S0: Great. How long has the company been around? [00:04:03] S1: We launched two and a half years ago. [00:04:05] S0: And you've raised quite a bit of funding along the way. How much money have you raised and from which investments? [00:04:10] S1: About $90,000,000. And how's it going? [00:04:13] S0: What are some of the numbers that you can share with us? [00:04:15] S1: Yeah. We're doing great. So we're growing 10x every year. So we're now processing $1,500,000,000 every month, onboarding five to 10,000 new users every day. We have 1.4, 1,500,000 clients now, 22,000 business accounts. So, yes, it's it's growing very fast. Very happy with it. And then looking forward to expansion now outside of Europe. [00:04:38] S0: How do you get those users? What's your go to market strategy? What's your, you know, your strategy to recruit? [00:04:43] S1: Word-of-mouth, I would say. So that's a primary growth driver. And, obviously, when we when we're going to a new country, we try to make a buzz about us just to build this group of, you know, early adopters, people who who try our product and then recommend to to their friends and families.
00:04:43 · Nik Storonsky, Robin Walters
[00:04:43] S1: Word-of-mouth, I would say. So that's a primary growth driver. And, obviously, when we when we're going to a new country, we try to make a buzz about us just to build this group of, you know, early adopters, people who who try our product and then recommend to to their friends and families. [00:04:59] S0: Obviously, you're not the only company trying to make banking sexy again, making it cheaper, better, a better user experience. What would you say sets you apart from your competition the most, you know, especially Monzo, Transferwise, these companies? [00:05:11] S1: We do much more than Transferwise, and we'll do it for free. Right? So Transferwise, they will change it from half percent to 1% with the transfers for free. And on top of it, we we do we do much more. Right? So you can spend with a card. You can have bank account with us. You can exchange money between your your accounts. So it's much wider product and a much sleeker compared to Transverse and much cheaper as well if we compare ourselves, like, you know, to to to other digital banks, such as small zone number twenty six. Again, product is much better. They don't provide interbank FX rates, and they are much slower compared to us in [00:05:46] S0: terms of, you know, releases of new products. Right. So it's more features and slightly different business model. I mean, you have a subscription product called premium. Yeah. How much does it cost, and what does it give you?
00:05:46 · Robin Walters, Nik Storonsky
[00:05:46] S0: terms of, you know, releases of new products. Right. So it's more features and slightly different business model. I mean, you have a subscription product called premium. Yeah. How much does it cost, and what does it give you? [00:05:56] S1: So it costs £7 a month. It gives you additional perks such as unlimited effects, double limits on ATMs for free, gives you wholesale pricing on different insurances, gives you free travel insurance. There are, like, so many perks. [00:06:13] S0: Great. You've also recently integrated cryptocurrency exchange, so only for premium users for now, I think? [00:06:20] S1: No. We actually unlocked it for everyone. So, yes, initially, it was for premium users. Now everyone has access. [00:06:27] S0: Right. So tell us more about the future. What what can you do [00:06:29] S1: with it? So we are adding a few more cryptocurrencies. So we're also working on integrating with a few exchanges in US as well to to serve US market. We are also working on allowing people to send the cryptocurrencies out of Revolut wallet to other wallets outside of our ecosystem, and then just just, you know, making other product much better compared to competition. [00:06:50] S0: From a geographical standpoint, what is your expense strategy? What are the markets that you want to tackle next? [00:06:55] S1: So the moment, we're very strong in The UK. We're always strong in Continental Europe, but we're working on it. And then we're expanding into US, Canada, Australia, Singapore, Hong India. What do
00:06:55 · Nik Storonsky, Robin Walters
[00:06:55] S1: So the moment, we're very strong in The UK. We're always strong in Continental Europe, but we're working on it. And then we're expanding into US, Canada, Australia, Singapore, Hong India. What do [00:07:04] S0: you actually need to do to launch in a new market? [00:07:07] S1: A lot of things. So we actually have a huge process in order to to go through because... I mean, it really depends if the license are easy to get. Right? We apply for licenses, and then we build infrastructure ourselves. Licenses are difficult to get. We strike partnerships usually with two banks, and then use the infrastructure and launch the product. But a lot of moving parts, and it's it's complex. [00:07:27] S0: I can imagine. So in general terms, how is the fintech scene in London these days from your perspective? [00:07:34] S1: It's booming. I mean, it's it's amazing. Right? So if you look across all, startups at the moment, I think fintech is, the most hot area to be in. Just, industry is huge. Financial services, 20% of GDP in almost any country. It's dominated by, very old corporates, right, who don't innovate. And then for us, it's a perfect opportunity to kind of build something great and then take the share of the market from them. [00:08:00] S0: Great. And from a product standpoint, what can we expect from Revolut in the next, like, let's say, two or three years?