A2Z Fintech
00:37:35 · Zubin Vandrevala, Aman Narain
[00:37:35] S1: Why would the same economics push three giants out and pull one upstart in, I guess? [00:37:41] S0: If I answer it myself, because the retreat and the advance are, if you'd like, the same spreadsheet, read from opposite ends. For an incumbent, every country is a branch network, a legacy core, and a compliance team all paid for locally. If the country is 1% of the income, the spreadsheet says, Leave. For Revolut, a new country is a new license, but also a compliance and a translation all on one global stack. The marginal country is incredibly cheap, Zubin. [00:38:17] S1: Yeah. Except the part that isn't cheap is the part the incumbents are really fleeing. Right? It isn't the branches. It's the compliance. And compliance doesn't get cheaper on a better stack. He admits it himself with political tension. Right? Especially sanctions. You can't do a lot of things in many, many, many, many countries. [00:38:37] S0: Yeah. And that's the unpaid bill that he knows about. [00:38:41] S1: And there's a second difference from HSBC and Standard Chart. Their network was ports, physical places where ships tied up. Shanghai, Bombay, Singapore, and a branch on the quayside to finance whatever came off the board. [00:38:56] S0: And Revolut's network is platforms. No quayside, no ships, one stack, and a customer anywhere you can reach it.
00:38:56 · Aman Narain, Zubin Vandrevala
[00:38:56] S0: And Revolut's network is platforms. No quayside, no ships, one stack, and a customer anywhere you can reach it. [00:39:04] S1: Right. They bank ports. He banks a platform. And that changes who you're for. Right? A port banks, follows cargo, trade finance, corporate clients, high margin. A platform follows peoples, travelers, expats, a money builder in Texas sends home to Mexico. That corridor alone is $65,000,000,000 a year. [00:39:27] S0: Thinner margins, a vastly bigger crowd, and that decides the retreat. When the numbers turn, you can close a port. You can't really close a platform. Which is why they could [00:39:37] S1: leave, and I guess he can't. [00:39:40] S0: Which is why the American charter matters so much and why it may just be a trap. [00:39:45] S1: Right. Let's go back to Durban, and that's one's my department. I'm going to take this, right? US debit exchange for big banks is capped at around, what, 22¢ a swipe. Banks under $10,000,000,000 of assets under management are exempt and can earn well over a dollar on a $100 purchase. Right? So Revolut raised that exemption today through a partner bank. Win your own charter, cross 10,000,000,000, and up to 70 of that income goes. [00:40:16] S0: Yeah. I... You know, I think you need to have a new portrait of Dick Durbin right next to Dee Hawk for you. So the license he's chasing may cost him the income it was supposed to protect. [00:40:31] S1: Yeah. And and Europe says he'll survive it. Interchange there has been capped at, what, 20, 30 basis points for years, and he built this anyway.
00:40:31 · Zubin Vandrevala, Aman Narain
[00:40:31] S1: Yeah. And and Europe says he'll survive it. Interchange there has been capped at, what, 20, 30 basis points for years, and he built this anyway. [00:40:41] S0: Then a prediction, I suppose, because we should put our money where our mouths are. Citi's ATMs lead didn't last. The competitors took years to catch up, but they did catch up. Reed's global consumer bank lasted, though, for forty years before his successes began selling it. The stack advantage is real, but the compliance is where it gets tested. So before Revolut reaches a 100 countries, it will pull out, I think, of at least a couple. [00:41:10] S1: Yeah. And I'll take the other side. Right? Every red cell he's ever met, he's tried to engineer in a way. A country is just a very large red cell. He'll fix it before he leaves it. [00:41:20] S0: In the log, we check-in three years. [00:41:23] S1: Yeah. And if I win, you're buying the flat whites, man. Oak knock. [00:41:26] S0: Oak knock. Yeah. Canary Wharf large one. [00:41:30] S1: When he'll call it a relaunch? [00:41:32] S0: And notice what the bet really is, Zubin. It's a bet on one man's patience with a red cell, which actually neatly brings us to what that patience is worth to him. [00:41:44] S1: $33,000,000,000 his reported stake, right? 28.7% of $150,000,000,000 right? Make it physical. Dollars 33,000,000,000 is what the whole of Revolut was worth at its, what, 2021 fund round. Five years ago, that number was the company. Today, it's his slice.
00:41:44 · Zubin Vandrevala, Aman Narain
[00:41:44] S1: $33,000,000,000 his reported stake, right? 28.7% of $150,000,000,000 right? Make it physical. Dollars 33,000,000,000 is what the whole of Revolut was worth at its, what, 2021 fund round. Five years ago, that number was the company. Today, it's his slice. [00:42:06] S0: And it's growing faster than most companies do. 75,000,000,000 late last year, 115 in July, 40,000,000,000 in under a year. Now let's put a banker next to him. Jamie Dimon, twenty years running the biggest bank, arguably the most successful bank in America, and by the estimates we're working, worth around 3,100,000,000. Not bad. But Storonsky is 10 diamonds. And at 200,000,000,000, where his stake reportedly rises to 40%, 24 diamonds. [00:42:44] S1: That's a good line as the wrong point. Time fortune is compensations, pay stock awards to an employee set by a board and voted on by shareholders. It's cap in the low millions. Storonsky's fortune is ownership. He hasn't paid it. He kept it. Right? So banking as a career caps you. Banking as a founder, I guess, does not. [00:43:07] S0: You're right. I got carried away. It's a good lie, but it's the wrong lie. Strike the ratio. Keep the instrument. [00:43:15] S1: And the instrument tells you that what each man does next. Right? Dimon, by the accounts we have, has begun selling JPMC stock. Storonsky, by the accounts, went the other way.
00:43:15 · Zubin Vandrevala, Aman Narain
[00:43:15] S1: And the instrument tells you that what each man does next. Right? Dimon, by the accounts we have, has begun selling JPMC stock. Storonsky, by the accounts, went the other way. [00:43:25] S0: This is Project Shasta, and I'll say what the dossier reports and no more. In August, shareholders voted on amended articles. Per press reports, the ceiling on borrowing against Revolut shares rises from $50,000,000 to $2.50. And the 10% cap goes and so does the independent board veto. [00:43:46] S1: And we owe him the other side. Right? Revolut calls it administrative housekeeping. Another reading says it was an employee liquidity program, not a founder margin facility. So we don't know which is right. And and nobody has published the loan to value limits or the margin call triggers. Right? Open questions, not a story. [00:44:05] S0: But if the reporting is right, it's the rule running backwards. He won't let the bank lend more than a fifth of its deposits, but he'd borrow against his own company with the veto gone. [00:44:17] S1: Sure. Sure. Sure. If the report is right. So let's let's move on. [00:44:21] S0: Yeah. Yeah. Then there's the comparison I'd rather make, and it's about temperament, not about money, Zubin. If anyone in the story is the next Jamie Dimon, it's David Velez, A lender, prices default for a living, builds that fortress one country at a time. Storonsky isn't the next diamond. [00:44:43] S1: Next Elon?
00:44:43 · Zubin Vandrevala, Aman Narain
[00:44:43] S1: Next Elon? [00:44:45] S0: He's the next Elon. And and not because of the speed and the scale. Plenty of founders have those. Because of the transformation, Musk didn't build a cheaper car. He changed what a car company is. Storonsky isn't building a cheaper bank. He's trying to change what a bank is for. And he'll [00:45:05] S1: take that compliment, right? Like FTC's Patrick Jenkins wrote this month that Europe may finally be buying his pitch to be the closest thing the continent has to a Bezos or a Musk. [00:45:16] S0: Right? Then let's count the parallels because there are more than what people realize. [00:45:22] S1: Yeah. Like, first principles, Musk famously priced a rocket for its raw materials, not for what the industry charged. Storonsky was trained in Phystech to derive everything and memorize nothing. [00:45:35] S0: The culture. In 2019, after an investigation into the hours, he told his staff, Revolut is not a lifestyle business. In November 2022, Musk told Twitter staff they'd need to be extremely hardcore. Long hours, high intensity. [00:45:53] S1: Right. Same email three years apart. I guess different letterheads. [00:45:57] S0: Yeah. The org chart is flat, engineering led, as we talked about, and the founder inside every product decision. [00:46:05] S1: Yeah. The the side projects. Right? Musk has rockets, tunnels, brain implants. Swarovski has venture funds run by an algorithm and a stated interest in health tech.