The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:08:31 · S1, Nik Storonsky
[00:08:31] S1: What do you think when you look forward now you most need to work on in your own leadership style? Where are you like, I'm still not great, and I'd like [00:08:37] S0: to get better? Usually, when I hire people in a new area that I haven't worked before, for example, when I started Revolut ten years ago, I was hiring. My first head of compliance, head of recruitment, head of people, I'm terrible at hiring. My first roles, never, kind of, you know, worked before, so I ended up, you know, trying it on many people until, you know, I find, the good ones. I learned how to do it now. So every time when I hire a new role, which I never hired before, I first interview the whole market, try to learn for people how they do their job. And only after I learn how they do their job, I kind of, you know, select, the best person for the job. As already, if you never kind of worked with the designers, you have zero skills to hire designers. You never worked in the reg affairs or government affairs. You have zero skills to assess who is good, who is not. So in order to first learn the skills, you need to interview as many people from this area as possible. Then you learn, then you'll you'll be able to select. When you think about [00:09:36] S1: the different areas where you invest in, you mentioned that kind of the compliance, the regulatory, do you think the best CEOs are the best resource allocations?
00:09:36 · S1, Nik Storonsky
[00:09:36] S1: the different areas where you invest in, you mentioned that kind of the compliance, the regulatory, do you think the best CEOs are the best resource allocations? [00:09:43] S0: I think so. Yeah. I think the best CEOs can squeeze a lot of IRR out of, you know, very little resource. When you think about where you squeezed IRR most effectively, what comes to mind first? Myself. Yeah. I think I'm very efficient into getting people to deliver with small resources. Yeah. And I'm very cost conscious as well. So, I'm... I think, you know, people when they money at the problem, they just run people. I think, you know, what really delivers the most is your brainpower, right? When you sit down, then forces yourself to think how to solve the problem the most kind of cost effective and efficient way. That's actually much more powerful compared to spending millions on, I don't know, external people, external consultants, or hiring, you know, super experienced professionals for a lot of money. [00:10:33] S1: Where did you spend money that with the benefit of hindsight you wish you hadn't? [00:10:36] S0: Well, I think we're very efficient in spending money, to be honest with you. I think, when I look at our costs, I think our top cost is actually marketing now, and
00:10:36 · Nik Storonsky, S1
[00:10:36] S0: Well, I think we're very efficient in spending money, to be honest with you. I think, when I look at our costs, I think our top cost is actually marketing now, and [00:10:44] S1: then the second cost is people. Has your idea around brand marketing evolved? You know, before... You're a very data driven, performance driven guy. We like seeing what inputs lead to what outputs. And brand marketing is fucking hard because it's, like, 50% worse, but you don't know which one. Has your ideas on brand marketing changed? [00:11:02] S0: I do believe in brand marketing now. Before I didn't. And but you need to be very careful in what you buy as a method to show your brand. For example, recently we started buying AirPods, JetBridges. I personally believe IRON, it is amazing. But, you know, we clearly cannot measure it. But if your brand marketing is only a very small portion of performance marketing and you can afford it, then you believe, you know, that these assets are great, why not? [00:11:29] S1: When you think about the expansion to The US and banking licenses, I do wanna start on the banking license. It took longer than expected. What did you learn about building a regulated business from the banking license process taking longer?
00:11:29 · S1, Nik Storonsky
[00:11:29] S1: When you think about the expansion to The US and banking licenses, I do wanna start on the banking license. It took longer than expected. What did you learn about building a regulated business from the banking license process taking longer? [00:11:42] S0: Oh, what I really learned is, so whenever you want to build a bank, you'd rather get a banking license before you have customers. So that's a key lesson because as soon as you have many customers, millions of customers, tens of millions of customers, regulators will be much more thorough in assessing your capabilities. As a result, the whole license process will take much longer. And then for smaller banks or for banks who don't have clients, they don't really assess because there's nothing to assess. Right? So they're granted a license much easier. [00:12:12] S1: Can I ask you, though, if you have that status much earlier and you are saying, well, I'm sorry? You did decide to get it earlier. It inhibits your ability to execute on product in such a fast way because you are bluntly encumbered by regulators much sooner. No? Like, do you wish you'd done it sooner? [00:12:30] S0: A 100%. No. In reality, you can also build their governance process around the products, around all the countries in a very tech driven, efficient way. So, yes, it will be a bit slower, but I mean, not that slow, to be honest here. If you really apply brains, how to optimize governance, how to build a whole structure, processes, who approves for and when, you can do it much better compared to legacy things.
00:12:30 · Nik Storonsky, S1
[00:12:30] S0: A 100%. No. In reality, you can also build their governance process around the products, around all the countries in a very tech driven, efficient way. So, yes, it will be a bit slower, but I mean, not that slow, to be honest here. If you really apply brains, how to optimize governance, how to build a whole structure, processes, who approves for and when, you can do it much better compared to legacy things. [00:12:55] S1: Why did you nod earlier then when you reflect on it? [00:12:58] S0: I wasn't experienced right, so I didn't know what is the right way. I said [00:13:01] S1: it wrong. How would you rate your relationship with the regulators today?
00:13:01 · S1, Nik Storonsky
[00:13:01] S1: it wrong. How would you rate your relationship with the regulators today? [00:13:06] S0: It's actually much better, again, because I was inexperienced and I had this perception in my mind, which was, well, not forced on me, but confirmed by, you know, many, many people, investors that... Because I'm young, right, techy. I should not speak with the regulators because they will not understand me. Instead, I should hire some gray hair banking CEO who've been in the business for a long time, and that they need to speak with regulators. What I really found is is actually very bad advice, right? Because whenever you speak with regulators yourself, whenever you explain exactly in plain English what we do, how we do it, because you build it yourself or I build it myself, Right? I can explain it in very simple terms. And because we are also innovating a lot in these areas compared to legacy banks, you show data as well that our results are better compared to legacy banks. But that's in that world matters. Right? If you show data, that's how you've been looking three or four years ago. That's how we do now. That's how other banks are doing. We're ahead of them. That's what matters. A problem with the traditional banking CEOs, they are not tech driven at all. And then they they they rather speak in a very vague jargon to hide their incompetency or their limited knowledge in in tech related, matters. So regulators, I don't think they like it. [00:14:22] S1: What have been your biggest lessons around crypto, Nik?