Revolut Growth Strategy in 2021

BottomUp - Skills for Innovators

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 ...