Show Notes
Hello and welcome to the bottomup skills podcast. I'm
Mike Parsons the CEO of
Qualitance. And today we're talking about the growth strategy of none other than Revolut. I mean the guys at Revolut, they are a pretty clear leader in the Neo bank slash FinTech market. So we've done a lot of work stuff, being how they build product, how they build teams.
Got a great study, uh, on our website at bottom-up dot IO. So check that out. But today, We're going to revisit their growth strategy. We're going to do a 20, 21 update. We're going to get the latest and we're going to see what we can learn from their journey. We're going to dig into some of the new product features.
They have, how they're expanding in different markets. And we're going to ask ourselves, are they up for the [
00:01:00] challenge? Can they transition into doing more than one thing? In the face of really fierce competition. I mean, it's getting hot in here, so let's dig into it. Okay. So quick snapshot on the growth of Revolut and boy, I got to say, I gotta hand it to these guys.
They've got some pretty serious growth going on. Let's start with customers. Now, uh, proceeding, uh, 2020 and all things that are COVID, we saw them ramping up pretty nicely. So from about early 2017, up until early 2019, they went from zero to about 6 million customers, not bad and, um, good growth. Um, and you know, did that across a couple of markets too.
So. They didn't kind of line for a while, um, in 2019 and then kind of go going again [
00:02:00] and then they hit another flatline, um, which was, uh, obviously no surprise there. February, March 20, 20, things really slowed down. Sort of at about the, um, roughly about the nine, eight or 9 million Mark, but all credit to these guys because, um, as things kind of calm down a little bit at the back end of 2020, and as we look right now in April, 2021, they have hit 15 million customers.
So if we step back just a little bit, that's 5 million customers, um, Since that six Mark and well beyond. And actually they've done this only since 2017, so it's not even funny five years. So, you know, they've roughly been growing at about 3 million plus customers a year. Um, so the growth is pretty exceptional.
[
00:03:00] Now, if we now kind of move across to their evaluation, this is what they're worth to investors. They have previously raised, um, 5.5 valuation that's $5.5 billion in their series D round. So you're getting pretty late in the investing game year. You're not too far off IPO and, um, their last and most recent round, they came in at 5.5 billion, which, uh, Is interesting.
Cause that was probably, uh, somewhere in the space of, uh, eight to 9 million customers. So you can do the math there to kind of work out the value per customer. The interesting thing is because they've grown so much since that D series round of investment, the rumor is, and it's, this is hot off the press.
This is literally just a few days old is that they are talking. Uh, two investors again, and they are looking at more than a 10 billion valuation that's [
00:04:00] post-money valuation. So if you want to look at growth, you know, it's the classic startup gain, lots of customer growth, lots of growth in the valuation.
So as a snapshot, 50 million customers, Roughly 10 billion valuation. That's solid. That's really, really solid. So good on them. Now the question is, you know, they started off being brilliant at like sending money to your friends, maybe, um, you know, currency when you're on holiday. That was certainly the kind of.
Early adopter, innovator segment. They went after they got that growth. But now, uh, it's really interesting. Um, next Darren AUSkey, uh, CEO and co-founder of overload recently kind of shared the, what they think their, their mission is right now. And they're gonna, this is according to him and I quote. We're on a mission to build the world's first global financial super app.
[
00:05:00] And, uh, that's pretty bold and heavy stuff. And a big tactic in that strategy is going to be getting a banking license in the U S and we're going to talk about that in a little bit. Another thing. That they've seen as they think about the U S and we think about their growth strategy, how they're going to grow the business.
Here's another interesting insight that they've shared, and it's about going after a new segment, the small business. So you got to remember, well, it's pretty famous for being a very consumer focused offering. So now they're going to stop moving across into small and medium businesses. Um, you know, the fascinating thing about that is that not only goes to.
Helping them with their banking. I think, um, I think you're going to see them, uh, do a full play here. Think about zero or QuickBooks, uh, for small business. I think they're going to, uh, I think there's a lot of clues that that's the way [
00:06:00] they're going to play this. Uh, I've got, I've managed to do some research here and I've got another quote, uh, from Starsky that I want to share with you.
Uh, not only about small business, but how they're going to do it. He says small and medium-sized businesses are massively underserved in the U S and we want to empower them with tools to grow and scale globally. So this is sounding like Neo bank plus FinTech, plus I dunno, turbo boost. And then here is a really good thing.
He identifies. Um, some of the challenges that they face as tackling fragmented processes, high fees, and other banking, pain points, uh, we've built an end to end solution that saves business owners time and resources to focus on what really matters running their business. Now, nothing revolutionary here, but I always love it when a company is prepared to.
Listen to understand too, they [
00:07:00] understand their customers and is really clear about what they face as a challenge. And we'll happily put that up as their mission. So quite clearly, if we want to think about growth, it's all about the U S it's all about small businesses. So let's break this down a little bit because it's not all like sunshine and, uh, balloons and party favorites.
So good news is for Revolut that they've applied for a banking chatter in the U S challenges. This thing takes forever and not everybody gets one. And it might not necessarily even, even if they did get it, if they, if Revolut gets a full banking charter, so they can operate as a licensed bank, that doesn't necessarily mean success.
And we'll come to some reasons why in a moment, but let's just kind of look at where the complexity here starts to come to the fore. And I've got this big [
00:08:00] insight that actually. I think Revolut is about to go through its hardest period yet because they grew up being this challenge of brand. They did a couple of things.
One thing, particularly well with currency and money transfer between friends like this little niche, and now they've ballooned into 15 million people. And now they got to do a lot of things, a lot of different offerings from crypto to insurance, to banking, to credit cards, et cetera, et cetera. But they've also got to do that in a number of markets.
So they're obviously revving up in the U S they're they're revving up in India too, but here's an interesting thing. They have already launched, failed and closed in Canada. I just couldn't make any money, too many incumbent constraints, pretty close market, probably very similar to Australia. It's quite hard to shake up the financial market in Australia too.
[
00:09:00] So isn't that interesting? Um, like they've already kind of basically said Canada, adios. See you later. So maybe they might have to do that in India, too. The reality here is the game is going to be so different for them in growth. The reality here is that they've got a big play for the U S and small businesses.
They've got a big play here for a banking charter, but here's the thing. They might not get that banking charter. And even if they do, there are plenty others that have one too. And this is a really new paradigm because this becomes very much about product differentiation in a competitive maturing market, which is something they're not used to.
They are competing with traditional incumbent. Banks legacy banks and fintechs. They're now moving into a more and more regulated space [
00:10:00] with which they're not really that used to. So there's some pretty interesting things happening. So let's, let's look at this well, let's break down their challenges in the U S um, you know, chime and Vajra are the big leaders.
Who, uh, who've been, you know, operating and succeeding and growing in the U S for more than five years, chime, wait for this has 12 million customers in the U S at least they've also said, Hey, you know what? Banking chatter. It'd be pretty interesting. And Varo last August already got a charter. They're the first Neo bank to do so, and check out this Varo.
Doubled its users in 2020, they're there nearly 2 million accounts. And they're like this really early stage company Revolut doesn't even have a quarter of their customers and doesn't have the [
00:11:00] charter and chime has 12 million customers. And they're thinking about a charter too. So the real story here is Revolut might be a bit late to the party there.
This strategy, which I talked about in the previous episode, they've played the, what I call the front end. Um, neobank and it B that they have realized that they need to be a full state bank, full stack bank, not working with partner banks. To do the backend of their banking because they don't have a license, but they actually need to go get those license, those charters, but a lot of other people have them already.
So this is a big strategic challenge that they need to do. Not just in the UK, not just in Australia. But in the U S and India, and many, many other markets across 15 million customers. Plus they've got the expectation from their exists, getting investors to make a lot of money when they go [
00:12:00] IPO, this is a new paradigm for them.
This is the new challenge. They've shown that they can grow, they can build teams. So they have the capability to perform, to create high-performance teams, to build a great product. Something that customers love. The question is, can they come and have a second chapter here because this will be a more strategic, um, challenge.
And it will be, um, a challenge of the size that they have not seen before. This will be. Massive for them. So it's going to come down to people and culture. It's going to come down to leadership and we break all of that down in our case study that we did on Revolut, which you can get over at bottom-up dot IO.
Now I've just done a growth. I am going to dig into all sorts of other new product features. Things they're doing internally with their people, with their culture, how they're doing [
00:13:00] their marketing over the next coming podcast episodes. So I'm really excited to share that with you. So I hope you stick around for this series on neobanks, fintechs and Revolut.
Okay. So if you're really getting into this kind of stuff, make sure you head over to bottom. Uh, bottom up.io. We've got design thinking, agile courses. They're all free or totally open source. So jump over there to bottom-up dot IO. Grab one of those courses. Uh, it's yours to use and enjoy. And of course, um, let us know if you've got any feedback, send us an email at skills at bottom-up dot IO.
I'd love to hear what you're enjoying about the podcast and what you'd like me to cover in the future. Okay. That's it for the bottom-up skills podcast, that's a wrap.