00:15:39 · Aman Narain, Zubin Vandrevala
[00:15:39] S0: And and same move as the 2015 card. Give away the spread to get the customer. In eleven years, he has never once acquired a customer by lending Yeah. [00:15:49] S1: Which is a flywheel adapting to the market. Right? In London, the wedge was a card. In Mexico, it was a deposit rates. The first step changes. The refusal to climb onto the credit rung does it. [00:16:00] S0: And the float has a weather problem. Analysts rule of thumb, every 100 basis points of rate cuts costs a digital bank with a 5% loan book, 15 to 22% of its float revenue. Nubank is naturally hedged. Cheaper money means more credit demand and fewer defaults. Revolut is the one who dressed for one kind of weather. [00:16:24] S1: Yeah. Interest is about a quarter of his revenue. Right? 74% is fees. [00:16:30] S0: And look at the purest float and fee business that's listed, Wise. As rates eased this year, its growth slid from over 30% to 19. Same species, same coal. [00:16:43] S1: Yeah. Then then the honest summary. Right? You removed credit risk and accepted rate risk. A choice, not a free lunch. [00:16:49] S0: He he... He'd say it's cheaper risk. [00:16:52] S1: And and he might be right for a decade at a time. Right? Rates don't default. [00:16:56] S0: And every risk we've named so far, he's either removed or priced. Not one of them is inside the building. So let's go inside.
00:16:56 · Aman Narain, Zubin Vandrevala
[00:16:56] S0: And every risk we've named so far, he's either removed or priced. Not one of them is inside the building. So let's go inside. [00:17:05] S1: Yeah. Let's go inside. Right? 15,000 staff from 110 countries on his own count. And at the top, more than 40 direct reports. Yeah. Confirmed. Right? Including the three people whose job is it to tell him, essentially, finance chief, the general counsel, and the credit risk officer. [00:17:22] S0: Picture that diary. Twenty minutes each of a week is thirteen hours of one to ones before he even opens dashboard. [00:17:30] S1: His version has no layers, nobody between him and the numbers. The version from former executives, it's... Isn't a structure. [00:17:37] S0: You know, we've been trained classically in business school about span of control and things. But before we judge it, put it next to the most valuable chipmaker in the world. Jensen Huang runs NVIDIA with around 60 reported direct reports. [00:17:51] S1: I I knew you would go there. [00:17:53] S0: And no one on ones at all. I mean, I would love to work for Jensen for multiple He says he can't. So so he puts a problem in front of all of them, and and then they will attack it together. [00:18:05] S1: So funny isn't crazy. It's two third of Jensen. [00:18:08] S0: Which is the real question. Is this the new way of running a company, Zubin, where dashboards and AI replace the middle layer, if you'd like, and the chief executive talks to everybody all at once? Or is it that span of control that works right up until it doesn't?
00:18:08 · Aman Narain, Zubin Vandrevala
[00:18:08] S0: Which is the real question. Is this the new way of running a company, Zubin, where dashboards and AI replace the middle layer, if you'd like, and the chief executive talks to everybody all at once? Or is it that span of control that works right up until it doesn't? [00:18:25] S1: Yeah. And Jensen's version, just to kind of get us on the same page for those who follow along, because everyone hears the same thing at the same time. Storonsky runs through one chair on a Monday, same span, different wiring. [00:18:38] S0: The stakes are very different. You know, in a chip company, a red cell is a delay. In a bank, a red cell could be a regulatory incident, a detailed Monday weekly business review, and, you know, endless, you know, meetings and debate. [00:18:53] S1: It's phystech chalkboard run weekly on the whole company. [00:18:57] S0: And, you know, I'll defend Storonsky because every bank I've worked in have had those meetings I just talked about. The difference is that we found the red cell six weeks after the quarter end in a deck that took a fortnight to build, and nobody remembered who owned it. You know that. You worked at a bank. [00:19:15] S1: I remember those days. Yes. Yes. [00:19:17] S0: He's compressed all of that quarter into a week and and the deck into a screen. That's not cruelty. That's that's low latency. [00:19:26] S1: Latency for the number. Right? What's the latency for the person who owns that number? [00:19:31] S0: Which is, I guess, where the karma comes in.
00:19:31 · Aman Narain, Zubin Vandrevala
[00:19:31] S0: Which is, I guess, where the karma comes in. [00:19:33] S1: Yeah. So let's talk about karma. Built in 2020 in the annual report, points across more than 30 compliance workflows offer a late policy, a delayed suspicious activity report, a missing customer document. The scores roll up to the departments and become a multiplier on the team's bonus. So, compliance isn't a memo, it's priced into your colleagues' pay. [00:19:55] S0: You know, I saw this internal data. There was a report, didn't see the internal data. Saw the report on it that said that the adherence rose 25%. [00:20:04] S1: That's pretty wild. Right? Like, it measures whether report was filed on time, not whether it was right. A bank that has to gamify caution has told you its default setting. [00:20:12] S0: Or it's told you something about every bank, and this is the one indelicate enough to staple it to the bonus. I'll add what I hear firsthand because, as I said, I have friends who work there, exhilarating brilliant people with an absolutely ruthless mindset. For your first few years, you're literally only as good as your last month. And after that, it's your last quarter. Man, that sounds exhausting. Yeah. Very different from Google that we grew up at. But the cadence at which they deliver is an order of magnitude faster than banking, and that's the real competitive advantage as long as they don't screw it up. [00:20:56] S1: Let's park that caveat because we'll need it for that... The breach.
00:20:56 · Zubin Vandrevala, Aman Narain
[00:20:56] S1: Let's park that caveat because we'll need it for that... The breach. [00:21:01] S0: Yeah. And so let's talk about hiring then. I think it's the purest part of his machine. In the earlier years, he personally interviewed every engineering and product hire. It was like a massive quantified live problem solving exercise. [00:21:16] S1: Yeah. And, like, calculate interchange across fragmented corridors, redesign a database schema to cut latency on a whiteboard now. Fault in, you're out within minutes in the room. [00:21:29] S0: Yeah. I mean, you could imagine a physics major kind of like, you know, Elon's probably the same. Right? [00:21:35] S1: Yeah. Yeah. Yeah. Anyway, and and the defenders aren't paid to defend. Right? Alan Chan, employee number five, compares it to an Olympic training camp. Right? The 150,000,000,000 secondary made hundreds of employees millionaires in London, in Krakow, in Vilnius. [00:21:54] S0: Hundreds of millionaires in Krakow. That's a class mobility story, which I don't think many companies could ever tell. [00:22:02] S1: Yeah. And the number isn't anonymous. Right? Between twenty seventeen and 2024, five chief risk officers and four chief compliance officers averaging under eighteen months each. During the years, the PRA were reviewing the license. Right? Reported reason, a European that lost an argument with compliance could take it straight to the cheap exec. [00:22:23] S0: And the old chart that removes bureaucracy also removes the one layer whose job is to slow it down.
00:22:23 · Aman Narain, Zubin Vandrevala
[00:22:23] S0: And the old chart that removes bureaucracy also removes the one layer whose job is to slow it down. [00:22:28] S1: Right. And here's the half of the machine critics skip, and it's the half I spend my work life in. Right? It ships and scales at the speed banks don't. So a speed round, let's talk about it. Right? Customers, 20,000,000 when it launched its checkout in 2020, 55,000,000 by mid twenty twenty five, 80,000,000 now plus 800,000 businesses. [00:22:51] S0: Four times the customers in four years. And and let's talk about transactions, 590,000,000 in a month at the end of twenty twenty three, 940,000,000 just a year later. The UK, 9,000,000 customers by mid twenty twenty four. 13,000,000 this spring. [00:23:12] S1: Right. And licenses a full UK bank in in March, France in August, conditional approval for the American Bank this month, and Israel reported in its final stages. Most banks would take decades to collect that set. [00:23:25] S0: You know, and I think the importance of that number section of ours is it's not a growth curve. It's just a different clock speed. In most banks that we've known, a new product spends longer in committee than Revolut spends launching a country. [00:23:40] S1: Let's talk about the products, right? Check out first, Revolut One Click, Biometrics, One Card Number Typed In, launched in 2022 for British and European merchants, now live in The UK, Europe, Singapore, and Australia.