Revolut with Rishi Stocker (Big Bets 3)
This is a newsletter about big bets, explored through conversations with the product leaders who worked on them. For this one, I chatted to Rishi, who was employee number 16 at Revolut, about big bets the company has taken - from crypto-trading to credit, insurance to rewards. Revolut was founded in 2015 as a way to make money transfers and spend money abroad, but today they describe themselves as ‘a global financial superapp’, offering a wide range of financial products to consumers and businesses. At their last funding round, more than a year ago, they were valued at $5.5 billion.
Big bets as a business model
Big bets are the reason Rishi was hired by Revolut. He was an early user of the product, and less than a year after the company was founded he got in contact with Nikolay, the founder, out of the blue. His message said: you have a great product in zero fee FX transfers, but you’re not making any money - you need other products, and I have some ideas. Less than a week later, they made him a job offer.
Revolut has launched an extraordinary number of bets for a company that’s only five years old. I find this particularly interesting, because when I spoke to a VC friend (and major fintech investor) about this project, he said he looks for the exact opposite: ‘The key for startups is maniacal focus on one thing so that the business can succeed’.
But Revolut had good reasons to go after bets before others would have done: they were committed to losing money on their core product by deliberately offering FX transfers for free, so the money was always going to have to come from somewhere else. And while it’s true that most start-ups focus on one thing, banks (Revolut’s competitors) offer a wide range of products. ‘Other fintechs were focused on unbundling services from banks, and just doing one thing really well. We were the first to think about rebundling: because the fact of the matter is that consumers don’t want to have to download a load of different apps, and go through KYC [financial onboarding] loads of times,’ says Rishi. And most importantly, they had such strong product market fit with their core offering - they were adding 3000 or 4000 accounts a day with no marketing budget - that it created space to work on new things, because they didn’t have to worry about actively growing their central product. It also created a ready-made user base for all of their bets, a sizeable part of which was the attractively affluent segment of people who travel abroad.
I ask Rishi how they decided what proportion of their effort to put into bets versus their core product. He laughs: ‘In the early days, we always deprioritised optimisation of the core to experiment with new stuff.’ Revolut’s bets have included credit, stock-, gold- and crypto-trading, rewards, insurance of various kinds, Business Accounts and many more. Lots have paid off; some haven’t. This proliferation of services was at odds with what other popular London fintechs were doing at the time, for example Monzo with their relentless focus on high quality design and polishing their core product. Rishi explains that very early on they switched from ‘adding nice features to make things easier to use’ to working on things that would generate a lot of revenue.
One benefit to going big on bets early on, Rishi points out, is that your users give you a lot of leeway to test stuff out. ‘Our first customers were evangelists and early adopters, they were willing to try new things and didn’t mind a basic MVP.’ It got harder as the business scaled, and started to serve more middle-of-the-road consumers who essentially just wanted things to work reliably.
Revolut’s bets playbook
I try to find out where the ideas for Revolut’s various bets came from - some of them were those original ideas Rishi contacted Nikolay with, and others were inspired by various different people and competitors. Overall, though, I get the impression that Revolut didn’t agonise over which bets to pursue, because they were so good at shipping MVPs quickly and deciding whether they worked that the opportunity cost of each one wasn’t especially high. Having worked in fintech myself - a highly regulated, slow-moving industry - I’m impressed at how easy Revolut has made this look.
Nikolay always pushed the team to start with the experience they wanted to achieve for the end-user. A typical project would kick off with a designer crafting the front-end as though there were no restrictions from partners or regulators. ‘Once we got it to the place where it was ten times better than any other experience on the market, then we could worry about how to make it happen. You can always find a solution,’ says Rishi.
Was there an amazing product team promoting this lean, iterative culture? Nope, for quite a long time, Revolut had no product team at all: prioritisation decisions were taken in a Monday morning meeting attended by 5 or 6 people from different parts of the business. As Rishi describes the process in more detail, I begin to understand one reason why they were able to move so quickly - they didn’t have to hire a dev team to start a new bet. Their developers weren’t allocated to particular areas of the product: ‘as soon as one sprint had finished, you could grab them and use them for a brand new thing.’ The downside of this was that engineers were context-switching a lot, but the upside was velocity and a huge amount of entrepreneurial energy in the business.
Many of the MVPs were sub-par, but they helped Revolut learn what would stick and what wouldn’t. An example was crypto-trading - Revolut started offering it before the first real crypto boom, at a time when buying cryptocurrency wasn’t easy to do for everyday traders. There were serious risks involved in this bet, not least that their more conservative banking partners could get scared and shut them off completely. To be able to appease their banks and move quickly, they had to ship a version in which users didn’t actually hold the underlying asset of the cryptocurrency. Despite these things, they believed it was worth trying because there could be significant upside, and they were right: the feature drove huge user growth, leading to three or four times their average daily user sign up. This bet was here to stay.
Rishi tells me that bets didn’t have specific sponsors on the leadership team, but they did have a huge amount of top-down support: Nikolay himself took a very close interest in all the bets, and it was him who drove the bets agenda. Sometimes this was a source of conflict within the executive team: for example the ops and tech teams would have preferred to stabilise the core product instead of launching so many new ones. The same was apparently true of the company’s aggressive international expansion: most of the leadership team was opposed to it, but Nikolay insisted. ‘His approach of being dictatorial in the early days paid off,’ says Rishi.
Another interesting part of Revolut’s playbook was that they were willing to change their mind and back out of a bet. For a while they were working on a bet to whitelabel their FX mobile wallet services and provide them to banks to offer to their customers. But they pulled the plug on it at the very last minute, even though the eng had been done and people had been hired to run the product, because they decided they didn’t want to support two platforms. How did it get to that point? I asked. ‘We had the attitude in the early days that it was good to line up as many options as possible and then make a call just before the point of no return,’ says Rishi. ‘We didn’t want to shut off any avenues until we had to.’
Choosing the winners
What was Revolut’s approach to deciding whether a bet was working or not? ‘They weren’t given a lot of time to prove success,’ says Rishi. ‘We could typically take a call on something within a 3 month timeframe’. The metrics of significance were revenue, DAU, or new users generated by the product: those that were doing well on these measures would be given more people very quickly. And they had to show this success without anything in the way of a launch - Revolut didn’t even have a marketing team until the end of 2017. ‘No product really laboured for months and then took off; it was always quite binary from the beginning.’
I ask about a bet that didn’t work out, and he gives me the example of travel insurance. The travel insurance industry is very old school - most people still buy it up front for the whole year. Revolut’s idea was to create a pay per day product, which would be activated by using your geolocation to automatically detect if you were abroad, and then turn itself off seamlessly when you returned home. It was a cool idea (I actually used it and thought it was pretty good), but it was riddled with technical challenges, such as the fact that not everyone has their tracking on when they go abroad, and it led to lots of customer support tickets. Crucially, it wasn’t valuable enough to users to drive growth.
‘If one product was really taking off, we’d kill another to focus on it,’ says Rishi. Revolut’s premium tier, in which users paid a monthly subscription to get access to higher limits and add-on services, happened to be the thing that was taking off at the time they tried insurance, so they merged the insurance team into the premium team to give them more developers. Neatly, they did the same with the insurance product: they removed it as a stand-alone offering, but left it as a bonus for premium tier customers.
The Premium product actually became a sand-pit for future bets, because it provided a cohort of users to try things out on, from whom they already had recurring revenue. These very engaged customers, who loved to respond to surveys and offer feedback, were the successor to Revolut’s evangelistic early customers for trying out new ideas. If a bet proved popular among premium users, they’d unbundle it and launch it as an independent product for general users.
The fast and furious approach to bets couldn’t last. In year 3, they restructured into proper product teams, and began to invest more in optimising the products that were already live. The core product was divided up into multiple product teams - although Rishi points out that the teams working on new bets were still larger than the core.
As some of the bets started to mature, they shifted from staffing them with smart, young, scrappy generalists, to experienced specialists. The stock trading product was a good example of this: having built a speedy, basic MVP which proved very popular, they decided to hire someone who’d run something like this before. They tracked down the cofounder of a trading start-up, Free Trade, and asked him to come and take the reins.
In the early days, the main focus had been speed-to-market, and they’d happily used partners to ship something quickly (e.g. Simplesurance for device insurance). But as they grew, they came to see the benefits of slowing down and relying on partners as little as possible. ‘Ultimately it meant we were able to take on fewer bets at a time, but we had a lot more control over the user experience.’
There were other factors providing drag: they were an international product by now, and internationalising all these new services took time, and required approval from multiple regulators. Not to mention the fact that they became a bank, which came with a lot of regulatory scrutiny and time-consuming processes. ‘The more licences you have, the harder it is to be nimble,’ says Rishi ruefully - he’s obviously someone who thrives in the early stage environment.
As our conversation draws to a close I’m left wondering if it would be possible, or advisable, for other companies to try to copy Revolut, which is unique in so many ways - from their founder to their relentless culture. Without a doubt, they wouldn’t have enjoyed the huge success they’ve had without their radical strategy of big bets. They’re an extreme example of the benefits of spreading your bets, across different products and geographies: not every bet will be a winner, but at this scale they don’t need to be.
Taking on lots of bets as a very young company may seem crazy but has some clear benefits: your early users are more likely to be open to new things, your organisation is still nimble and flexible
Sometimes great execution is better than great strategy: if you build the muscle for speedy execution on your bets, you’ll dramatically increase your chance of success by trying so many more things
Taking a call on your bets quickly can free up resources to channel into more promising products
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