The Exchanges

Q You said about iterate fast. You spoke earlier about product velocity. I spoke to Anu before the show, and she said that one of the many achievements you've had is like the unbelievable acceleration in product velocity that you've been at the center of. How do you accelerate product velocity as you do as specifically as possible?

A I mean, we can take this back to 20 20, right, the early weeks after I had started. It was important to do two or three things. The first was have high conviction in the two or three things that we were going to do, so focus, and then make sure you got those across the finish line, number one. Number two, I think it was this thing about playing across different horizons. So the first horizon being stuff that you can ship in the next six to eight weeks, and then stuff that you knew had longer lead times, right, but you needed to get started now if you wanted to meet that thing that you wanted to launch in three quarters from now. Right, so building a clear view of how do you play across these horizons and get going. Right, so, so the subscriptions product that we launched in, ah, I want to say early July of 2020, um, we'd taken many runs at that product internally. Right, and it was still spinning. But we hadn't brought it across the finish line. So that was one where we said, okay, digging in, we're gonna ship this in four weeks, let's, let's figure out everything that we've learned, make the right decisions, and just crack on. And, and we did. So that one was a, this is a four-week horizon thing, we're gonna get it done. The longer horizon, you know, an example of, uh, of one, uh, borrowing business. That we'd already launched loans and overdrafts, um, but it was clear as, as …

AI assessment note: “The first was have high conviction in the two or three things... playing across different horizons”

Q You said about iterate fast. You spoke earlier about product velocity. I spoke to Anu before the show, and she said that one of the many achievements you've had is like the unbelievable acceleration in product velocity that you've been at the center of. How do you accelerate product velocity as you do as specifically as possible?

A I mean, we can take this back to 20 20, right, the early weeks after I had started. It was important to do two or three things. The first was have high conviction in the two or three things that we were going to do, so focus, and then make sure you got those across the finish line, number one. Number two, I think it was this thing about playing across different horizons. So the first horizon being stuff that you can ship in the next six to eight weeks, and then stuff that you knew had longer lead times, right, but you needed to get started now if you wanted to meet that thing that you wanted to launch in three quarters from now. Right, so building a clear view of how do you play across these horizons and get going. Right, so, so the subscriptions product that we launched in, ah, I want to say early July of 2020, um, we'd taken many runs at that product internally. Right, and it was still spinning. But we hadn't brought it across the finish line. So that was one where we said, okay, digging in, we're gonna ship this in four weeks, let's, let's figure out everything that we've learned, make the right decisions, and just crack on. And, and we did. So that one was a, this is a four-week horizon thing, we're gonna get it done. The longer horizon, you know, an example of, uh, of one, uh, borrowing business. That we'd already launched loans and overdrafts, um, but it was clear as, as …

AI assessment note: “It was important to do two or three things. The first was have high conviction”

Q How do you think about that sequence? I'm so sorry for this. Brilliant schedule. Well, maybe not so brilliant schedule, given that I'm just so interested by this. But how do you think about the right sequencing then, given the many options you have in front of you?

A Sure. So with investing, right, and like we've done with every other product that we've built, we built it with really going deep in understanding what our customers wanted. What we learned from customers was that the two reasons that most British customers, most customers in the UK, Stay out of investing and keep their money in cash, by the way, which is one of the largest savings versus investments markets in the world, right, is because of two things. One, they think it's only for rich people, and two, they don't understand it. Now, if you take those two insights, what we did with the product, and the reason we're on the journey, is we said, okay, let's start it at, let's solve those two problems. Let's make education available to customers in the app, so we demystify it, and it's not terms and conditions or disclosures. It's like, let me tell you what you need to do to make A good decision here. And we said we can start investing with as little as one pound, right? The idea was to solve for getting this vast majority of people, we have north of ten million customers now, Harry, right? To get started on the idea of making long-term decisions with their money. So we started, we've started with mutual funds, and in time we will do ETFs and all sorts of other asset classes, and so to your point about sequencing, along that journey, the other asset classes will come, and there'l…

AI assessment note: “So we started, we've started with mutual funds, and in time we will do ETFs”

Q So when we break down your one 45 on the retail side, what does that look like in terms of how Monzo fundamentally makes money?

A Two answers for that maybe. The first is just what that revenue mix looks like, right? So we're targeting and very close to, um, these numbers. We're about a third, a third, a third, A third is transaction-based revenues, interchange, FX, and so on. A third is on-balance-sheet lending, when customers take out an unsecured borrowing product from us, loan, or an overdraft, or Monzo Flex. And then the last one-third is what I describe as good fees. And I say good fees because this is not stuff where we make a, we make money when customers make mistakes. It's not gotcha fees, right? These are fees like subscriptions, when someone takes out a subscription product from us, or on the, On the marketplace of the original mortgage in the future, right? It includes interest, the interest margin that we make on the savings product, right? So that's the last one third.

AI assessment note: “We're about a third, a third, a third, A third is transaction-based revenues”

Q Why has no one won the U.S. yet?

A It's interesting, um, Harry, so I've spent a lot of time You know, looking at, talking to different US fintech companies. There's lots of hypotheses. I have a couple. One is too much cheap capital chasing US fintech. Because what that, I think, ended up doing was create a context where most fintech entrepreneurs felt like they were being incented to grow users, right? And the number of businesses that we look at in the market, which is a mediocre product, Sort of fueled by CAC marketing dollars, but the actual business, the actual product doesn't resonate. The actual product is not doing what they want it to do, and the monetization is coming from, you know, Early wage access or some, like one piece of it as opposed to all of the other sort of talk about the business is staggering. So I feel like money, you know, money chased the wrong things, and people sort of built businesses that were sort of gag-fueled businesses in effect. But there's another reason, right, which is U.S. fintech has been a developed industry for a while, and in, in being a developed industry for the last couple of decades, what you have is really great fintech companies that have solved thin slivers of needs, right? So for P to P, There's a Venmo, right? Or there's a cash app. For, you know, point of sale lending, there's someone else. For something else, there's someone else. So it's a very fragmented fi…

AI assessment note: “One is too much cheap capital chasing US fintech.”

Q But that's not type two fun. I mean that in a nicer way. There's no fun about that. I've, I've been rejected many times too for fun, isn't it?

A But, but if I, but yeah, not for public, but not for public record, but many of those are great stories. We actually recount and tell ourselves, remember that? And then my team will say, will say to me like, you should never have gotten out of bed for that call, right? You should never have gotten out of bed for that size of check. And I'd be like, dude, the question would be what would I get into bed for, not what would I get out of bed for even, right? Because you just had to do what you had to do. So, no event in isolation may feel like that, but that phase feels like type two fun. That phase of, you know, the whole world's sort of crashing around you, there's not many believers, and yet you have this conviction that you're gonna build this thing out with this amazing team with you, and that You know, as I was saying earlier, you sort of see through the storm. It's extraordinary. It's an extraordinary privilege to have an experience like that.

AI assessment note: “no event in isolation may feel like that, but that phase feels like type two fun.”

Q Is it difficult coming in as a CEO when there is such idolization of founders today?

A I'm sure it was difficult in some ways early on, but it was difficult only in that I was an anomaly in the context, right? So as I was building relationships with the Monzo team, the investors, right? Uh, I mean, you know, I won't be stretching it to say that, you know, most people, investors included, were used to seeing a 20, thirty-year-old sort of person in a founder pitch mode. So, in that sense, hard, because there was an expectation of what they expected to see, and then I rock up, and it's different, right? So, uh, earning credibility and trust takes a different path. It was easy to see me as someone with lots of experience in big companies and a safe pair of hands, But would I 10 X the company?

AI assessment note: “in that sense, hard, because there was an expectation of what they expected to see”

Q So when we break down your one 45 on the retail side, what does that look like in terms of how Monzo fundamentally makes money?

A Two answers for that maybe. The first is just what that revenue mix looks like, right? So we're targeting and very close to, um, these numbers. We're about a third, a third, a third, A third is transaction-based revenues, interchange, FX, and so on. A third is on-balance-sheet lending, when customers take out an unsecured borrowing product from us, loan, or an overdraft, or Monzo Flex. And then the last one-third is what I describe as good fees. And I say good fees because this is not stuff where we make a, we make money when customers make mistakes. It's not gotcha fees, right? These are fees like subscriptions, when someone takes out a subscription product from us, or on the, On the marketplace of the original mortgage in the future, right? It includes interest, the interest margin that we make on the savings product, right? So that's the last one third.

AI assessment note: “We're about a third, a third, a third. A third is transaction-based revenues”

Q How do you think about that trade-off? Because everything's a game of trade-offs, which is what's so hard in kind of managing businesses and product strategy, but that trade-off between new product innovation like, um, uh, investing in different stocks and then crypto versus mortgages, student loans. How do you think about that trade-off?

A Sure. Um, yeah, so I mean, the, the quick backdrop though of this is that we intend to meet all of these needs of a customer, right? Budget, borrow, spend, save, insure, invest, all of that In a single place, right? That's what we're building. Um, the sequencing is driven by many things, right? It's driven by when we feel ready in terms of, uh, you know, everything that we need to do to launch that product. Where does it fit into our journey of sort of building out the economics of the business? What are customers saying they want right this second? So a bunch of different things end up informing that particular sequencing. Um, mortgages as an example, I don't think we will ever do it on our own balance sheet, but we already are making mortgages visible to our customers Even if they've not, if it's not a Monzo mortgage, they've taken it from somewhere else in the app, leveraging our technology, a customer can actually track their mortgage.

AI assessment note: “The sequencing is driven by many things, right? It's driven by when we feel ready”

Q Why has no one won the U.S. yet?

A It's interesting, um, Harry, so I've spent a lot of time You know, looking at, talking to different US fintech companies. There's lots of hypotheses. I have a couple. One is too much cheap capital chasing US fintech. Because what that, I think, ended up doing was create a context where most fintech entrepreneurs felt like they were being incented to grow users, right? And the number of businesses that we look at in the market, which is a mediocre product, Sort of fueled by CAC marketing dollars, but the actual business, the actual product doesn't resonate. The actual product is not doing what they want it to do, and the monetization is coming from, you know, Early wage access or some, like one piece of it as opposed to all of the other sort of talk about the business is staggering. So I feel like money, you know, money chased the wrong things, and people sort of built businesses that were sort of gag-fueled businesses in effect. But there's another reason, right, which is U.S. fintech has been a developed industry for a while, and in, in being a developed industry for the last couple of decades, what you have is really great fintech companies that have solved thin slivers of needs, right? So for P to P, There's a Venmo, right? Or there's a cash app. For, you know, point of sale lending, there's someone else. For something else, there's someone else. So it's a very fragmented fi…

AI assessment note: “There's lots of hypotheses. I have a couple. One is too much cheap capital”

Q Is it difficult coming in as a CEO when there is such idolization of founders today?

A I'm sure it was difficult in some ways early on, but it was difficult only in that I was an anomaly in the context, right? So as I was building relationships with the Monzo team, the investors, right? Uh, I mean, you know, I won't be stretching it to say that, you know, most people, investors included, were used to seeing a 20, thirty-year-old sort of person in a founder pitch mode. So, in that sense, hard, because there was an expectation of what they expected to see, and then I rock up, and it's different, right? So, uh, earning credibility and trust takes a different path. It was easy to see me as someone with lots of experience in big companies and a safe pair of hands, But would I 10 X the company?

AI assessment note: “investors included, were used to seeing a 20, thirty-year-old sort of person”

Q But that's not type two fun. I mean that in a nicer way. There's no fun about that. I've, I've been rejected many times too for fun, isn't it?

A But, but if I, but yeah, not for public, but not for public record, but many of those are great stories. We actually recount and tell ourselves, remember that? And then my team will say, will say to me like, you should never have gotten out of bed for that call, right? You should never have gotten out of bed for that size of check. And I'd be like, dude, the question would be what would I get into bed for, not what would I get out of bed for even, right? Because you just had to do what you had to do. So, no event in isolation may feel like that, but that phase feels like type two fun. That phase of, you know, the whole world's sort of crashing around you, there's not many believers, and yet you have this conviction that you're gonna build this thing out with this amazing team with you, and that You know, as I was saying earlier, you sort of see through the storm. It's extraordinary. It's an extraordinary privilege to have an experience like that.

AI assessment note: “no event in isolation may feel like that, but that phase feels like type two fun.”

Q How do you think about that sequence? I'm so sorry for this. Brilliant schedule. Well, maybe not so brilliant schedule, given that I'm just so interested by this. But how do you think about the right sequencing then, given the many options you have in front of you?

A Sure. So with investing, right, and like we've done with every other product that we've built, we built it with really going deep in understanding what our customers wanted. What we learned from customers was that the two reasons that most British customers, most customers in the UK, Stay out of investing and keep their money in cash, by the way, which is one of the largest savings versus investments markets in the world, right, is because of two things. One, they think it's only for rich people, and two, they don't understand it. Now, if you take those two insights, what we did with the product, and the reason we're on the journey, is we said, okay, let's start it at, let's solve those two problems. Let's make education available to customers in the app, so we demystify it, and it's not terms and conditions or disclosures. It's like, let me tell you what you need to do to make A good decision here. And we said we can start investing with as little as one pound, right? The idea was to solve for getting this vast majority of people, we have north of ten million customers now, Harry, right? To get started on the idea of making long-term decisions with their money. So we started, we've started with mutual funds, and in time we will do ETFs and all sorts of other asset classes, and so to your point about sequencing, along that journey, the other asset classes will come, and there'l…

AI assessment note: “we've started with mutual funds, and in time we will do ETFs”

Q Is there a loss leader product in this product suite? One which you need to have, but it's not a great business, but it's important for the rest?

A The challenge is going to be defining what's a product versus what's a feature and stuff like that, but we don't seek to monetize every product and feature, right? So as an example, the gambling block, right? I don't know if you know about this feature that we built, right? A few years ago, three, four years ago, coming out of a, a customer feedback about someone who had spent too much money online gambling the night before because they kept topping up their account. A customer service agent that was talking to them had this idea that maybe we should just give them the ability to block those transactions. So customers can set up a gambling block on their account which says that, don't let me top it up, and if I choose to unblock it, I have a 24 hour cooling off period, right? The staggering numbers, Harry, more than 600,000 customers have turned that on.

AI assessment note: “we don't seek to monetize every product and feature”

Q Is there a loss leader product in this product suite? One which you need to have, but it's not a great business, but it's important for the rest?

A The challenge is going to be defining what's a product versus what's a feature and stuff like that, but we don't seek to monetize every product and feature, right? So as an example, the gambling block, right? I don't know if you know about this feature that we built, right? A few years ago, three, four years ago, coming out of a, a customer feedback about someone who had spent too much money online gambling the night before because they kept topping up their account. A customer service agent that was talking to them had this idea that maybe we should just give them the ability to block those transactions. So customers can set up a gambling block on their account which says that, don't let me top it up, and if I choose to unblock it, I have a 24 hour cooling off period, right? The staggering numbers, Harry, more than 600,000 customers have turned that on.

AI assessment note: “we don't seek to monetize every product and feature, right? So as an example”

Q How do you think about that trade-off? Because everything's a game of trade-offs, which is what's so hard in kind of managing businesses and product strategy, but that trade-off between new product innovation like, um, uh, investing in different stocks and then crypto versus mortgages, student loans. How do you think about that trade-off?

A Sure. Um, yeah, so I mean, the, the quick backdrop though of this is that we intend to meet all of these needs of a customer, right? Budget, borrow, spend, save, insure, invest, all of that In a single place, right? That's what we're building. Um, the sequencing is driven by many things, right? It's driven by when we feel ready in terms of, uh, you know, everything that we need to do to launch that product. Where does it fit into our journey of sort of building out the economics of the business? What are customers saying they want right this second? So a bunch of different things end up informing that particular sequencing. Um, mortgages as an example, I don't think we will ever do it on our own balance sheet, but we already are making mortgages visible to our customers Even if they've not, if it's not a Monzo mortgage, they've taken it from somewhere else in the app, leveraging our technology, a customer can actually track their mortgage.

AI assessment note: “the sequencing is driven by many things, right? It's driven by when we feel ready”

Q How much time on app looking at balance?

A Right, so that's, so that's not the thing. Engagement is how much do you use Monzo, right? We don't look at it, so we look at it in terms of weekly transacting usage, not just revenue active. You could have a lazy balance with us and make, be making money for Monzo. I don't think of you as an active customer. Are you using the product, right? So that's engagement. Why is that important? Well, because it's correlated with the high ARPUs that you see. Those are our average ARPUs. You can imagine, like, what the highly engaged customers, even within, within the base, you know, disaggregate that, what those ARPUs look like. So engagement drives greater economics for the product itself, but also the ability to buy more product from Monzo, right? I mean, here's, I mean, an example, you know, we talked about investments a lot today, but When we launched our investments product, I literally did one press interview, and by that evening, we had a 150,000 customers add themselves to the waiting list for the Monzo investments product.

AI assessment note: “that's not the thing. Engagement is how much do you use Monzo”

Q What do you not monetize today that will be the biggest monetization lever in the future?

A I still think transaction-based fees will be the biggest thing we do, but it's already there. So it's not as though it's a new thing we're building out. I still think it's going to be a big thing as we expand the ways in which people pay and get paid. Um, that's probably still going to be the biggest thing we do. But I think the, the, um, There's a subtext in the question that you're asking me, right, which is like, is there the one thing? And here's the deal. When we're building a product that is about meeting all the needs that your wallet has, it's by definition going to be a diversified revenues, which by the way is a high quality business model because it's not, it isn't hostage to, you know, economic cycles and, and, um, you know, credit cycles or interest rate cycles or any of that. You build it like a quality business.

AI assessment note: “I still think transaction-based fees will be the biggest thing we do, but it's already there.”

Q How much time on app looking at balance?

A Right, so that's, so that's not the thing. Engagement is how much do you use Monzo, right? We don't look at it, so we look at it in terms of weekly transacting usage, not just revenue active. You could have a lazy balance with us and make, be making money for Monzo. I don't think of you as an active customer. Are you using the product, right? So that's engagement. Why is that important? Well, because it's correlated with the high ARPUs that you see. Those are our average ARPUs. You can imagine, like, what the highly engaged customers, even within, within the base, you know, disaggregate that, what those ARPUs look like. So engagement drives greater economics for the product itself, but also the ability to buy more product from Monzo, right? I mean, here's, I mean, an example, you know, we talked about investments a lot today, but When we launched our investments product, I literally did one press interview, and by that evening, we had a 150,000 customers add themselves to the waiting list for the Monzo investments product.

AI assessment note: “We don't look at it, so we look at it in terms of weekly”

Q On the, like, product momentum element, Revolut have an insane product velocity, and I always attributed that to then not having a banking license, and so not needing to be quite so constrained, and you obviously have that. Is it the banking license that prevents the speed? Is it management? Is it team?

A In the arc of time, you have to get all of these things right. Right, so sequencing it, right, you know, should we have gotten a license later in a life cycle versus earlier? Here's the thing, when you're in the early days of a company, when you're building the foundations of the company, you build a great tech stack, you figure out the product market fit, and the brand, and how you want to go to market, and all of those things, but in a regulated business, you also put in place the muscles to operate this at scale in a regulated context, and Getting that right early on has meant a few things. It's meant that we've earned real trust from our customers. It's meant that we know how to do that and continue to scale. We know that getting it right actually creates a moat around our business in a very, very important way. So, Yeah, I mean, you know, this hindsight is a, is a lovely thing, and we could debate, you know, what sequencing is better or worse, but here we are, right, the largest UK digital bank, um, and, you know, so much more.

AI assessment note: “we could debate, you know, what sequencing is better or worse, but here we are”

Q On the, like, product momentum element, Revolut have an insane product velocity, and I always attributed that to then not having a banking license, and so not needing to be quite so constrained, and you obviously have that. Is it the banking license that prevents the speed? Is it management? Is it team?

A In the arc of time, you have to get all of these things right. Right, so sequencing it, right, you know, should we have gotten a license later in a life cycle versus earlier? Here's the thing, when you're in the early days of a company, when you're building the foundations of the company, you build a great tech stack, you figure out the product market fit, and the brand, and how you want to go to market, and all of those things, but in a regulated business, you also put in place the muscles to operate this at scale in a regulated context, and Getting that right early on has meant a few things. It's meant that we've earned real trust from our customers. It's meant that we know how to do that and continue to scale. We know that getting it right actually creates a moat around our business in a very, very important way. So, Yeah, I mean, you know, this hindsight is a, is a lovely thing, and we could debate, you know, what sequencing is better or worse, but here we are, right, the largest UK digital bank, um, and, you know, so much more.

AI assessment note: “we could debate, you know, what sequencing is better or worse, but here we are”

Q What do you not monetize today that will be the biggest monetization lever in the future?

A I still think transaction-based fees will be the biggest thing we do, but it's already there. So it's not as though it's a new thing we're building out. I still think it's going to be a big thing as we expand the ways in which people pay and get paid. Um, that's probably still going to be the biggest thing we do. But I think the, the, um, There's a subtext in the question that you're asking me, right, which is like, is there the one thing? And here's the deal. When we're building a product that is about meeting all the needs that your wallet has, it's by definition going to be a diversified revenues, which by the way is a high quality business model because it's not, it isn't hostage to, you know, economic cycles and, and, um, you know, credit cycles or interest rate cycles or any of that. You build it like a quality business.

AI assessment note: “There's a subtext in the question that you're asking me”