Growth = Product ( Design X Engineering) ^ Marketing

Val Scholz at UXDX Community: London. Video: https://youtu.be/zlqoaWC1PfE

Readable transcript: edited from the recording's captions for readability (fillers and false starts removed, punctuation and section headings added). Wording is the speaker's own. Timestamps are positions in the video. Names marked [?] could not be verified against the audio.

Revolut's growth figures

[00:00:10] We moved more into design and marketing, and lately I'm doing growth and product. So I'll just talk to you for a bit about Revolut. We started in July 2015, and since then we became the fastest growing company in Europe. We just raised two hundred fifty million at close to a two billion valuation.

[00:00:32] Growth figures: it took us roughly two years to hit 1 million users, and now we've doubled the figure in the last six months. It's the same with daily active users. We have a core focus right now to get people to use Revolut more on a daily basis, so every feature we release is currently targeted on this. We're close to reaching 1 million monthly active users. The way we define an active user is someone that makes a transaction. We don't really care if you open the app, we don't really care if you, I don't know, do whatever you want with Revolut, unless you make a transaction, because that's the way we see that you're really active with our product.

[00:01:19] The second thing, as you can see, is transaction volume. It's massive, because people start using the product more and more, and we also mature as a business and add the full service to Revolut. The way we started was that our founder found a flaw in the system, which was that currency exchange was very expensive. If you went, for example, to the US, let's say you gambled and wanted to spend 5,000 pounds, the currency conversion already swallowed around 8% of your money. Nik was a trader back then, and he knew that exchanging money doesn't cost anything for big banks, and that's how Revolut was created.

[00:02:00] Since then we went from a pure travel product to actually starting to disrupt the whole financial industry, and added multiple products: crypto, currency exchange, better savings accounts. We're going to launch a wealth platform with zero-commission trading. Currently we're close to 1.7 billion monthly transaction volume, and the target is around three to four billion monthly at the end of the year.

Growth starts with big problems

[00:02:34] This is probably the most interesting for all of you. I think, like most hypergrowth companies, we do one thing very differently to traditional startups. The way we see growth, it's mostly product related. It's not really marketing or any of the traditional channels. The way we look at anything at Revolut is whether it's a big opportunity, and you can also look at other startups like Uber, Palantir, or whoever's in the market. Usually the way you start thinking about something is that you need to identify opportunities. You need to understand really big problems in the world.

[00:03:13] To give you an example, a very good source is the Y Combinator startup requests. Every year they publish a new list of requests for startups, ideas that someone should solve, where they define big problems. You can just go through the list, choose any topic and start a startup, and you will probably get very big traction. To give an example from Revolut, one thing we figured is that people have a hard time saving money. I think in the US over 90% don't have more than $1,000 in their savings accounts, which is really curious, especially based on the salaries that some people earn.

[00:03:57] The second thing is, for example, cryptocurrencies were a massive hype at the end of last year. What a lot of people underestimated is that it was very hard to buy crypto. For a lot of you it was very complicated and complex, because it was built by engineers for engineers, and then suddenly it became very mainstream, and a lot of people didn't know how to get verified for certain exchange markets, how to actually buy crypto, how the whole wallet and IDs and so on work.

[00:04:29] But there are also other topics. There's still no global medical ID in the world. I'm from Austria; my whole medical record is Austrian, so when I moved to the UK it was basically erased and it's back to zero, and there's actually no reason for this. That's something that [?] tried to solve. Mass transportation is another one. Probably you heard about Tesla, but it's actually the Boring Company. They're basically trying to do something about public transport. Especially in LA there's a massive problem with car transportation and it's just not feasible, so they're thinking about new solutions like the Hyperloop, or I think they have these new buses that can go over cars and stuff like this. Essentially you can just figure out any big problem, like waste, health, education, and how you actually solve the problem.

Knowing the problem better than anyone

[00:05:30] Next one. The second thing is that in everything we do, we try to be better than anyone in the market, so we dig deep to the root cause of every problem. A good example is international money transfers. A couple of years ago it was very expensive and slow to move money around the globe. To propose a solution for this you really need to understand the market, you need to understand the problem, you need to understand regulations, laws, et cetera. It's not just, "Oh, I have a cool idea, let's fix it and build something cool." We've probably spent 70, 80 percent of our time just on the problem, just trying to know better than anybody else in the market how to solve the thing.

[00:06:10] For example, with international money transfers, the core issue why it's slow to move money from the EU, let's say, to the US, is that usually you go through a central bank. If you transfer money, there's a central bank that guarantees to both banks that the money flow is actually happening. Why is this important? Because when you move money, the transfer itself is basically instant. Bank A says, "I transfer this money to bank B," and then bank A has a deficit, because the money didn't arrive yet. If the customer withdraws that money, the bank has the risk that they actually lose money. So in order to prevent this, the central bank guarantees both parties that they can trust each other, and that's why it's actually quite fast.

[00:07:02] The issue is that worldwide there's no central bank. If you move money across the globe, there's nobody that guarantees that this money flow will actually happen, and that's why there are a lot of lending, borrowing and intransparent practices. The other thing is that to solve this problem you need to understand the regulations in each market, how the whole financial landscape works, and why nobody has solved it yet. Because banks make a lot of money on this, and also because banks usually didn't have global networks. The whole data infrastructure was split up between different data centers, and they weren't really connected. So even, let's say, a bank that operates in a lot of different countries worldwide: their companies don't speak to each other, they don't have access to the data, and that's why they can't do fast and free money transfers.

Build something far better, or copy and undercut

[00:07:58] The next one: once you're at the stage where you figured out what the opportunity is and what the problem is, then you need to come up with the solution. Something I learned quite early is that you should always build products that are a hundred X better. Nobody cares about products that are five X or 10x better than what you expect. The issue is that customers usually overvalue what they already have; with the 10x, you think it's way cooler than it actually is. And the other issue is that a company always overthinks the value that the new product creates. So to make a big difference you need to create a way better product.

[00:08:40] A really good example is Robinhood in the US. Previously it cost a lot of money to trade stocks, and what they did was make it completely free. That's something that didn't exist in the whole market, and that's why they had this massive growth opportunity.

[00:08:56] A tip that we usually use: if you identify a big opportunity and understand the problem, we usually copy a competitor and completely undercut the market. A good example is Amplitude. Mixpanel was the big guy in the market; it dominated the whole landscape. Amplitude came, basically copied the product and made it for free, so it completely killed the business model of Mixpanel, and nowadays Amplitude is way bigger than Mixpanel, because Mixpanel can't compete with it. In our example it's TransferWise. We have the same product as TransferWise, but it's offered for free, so in a way they can't compete with us, because we're doing the same thing, and with one you have to pay for it and with one you go for free.

Spreading it through networks

[00:09:48] The fourth thing is phase two; that's actually when growth starts. With everything you do, you should think about how you can spread it to users. If we take as a given that you built something that is very valuable, that people like, and that's way better than what exists in the market, how do you actually spread it across the globe? At the scale and growth of companies like Uber and Facebook, you can only reach that scale if you leverage a network.

[00:10:24] There are two networks in the world that are kind of free for us. One of them is the users' network: your friends, family and so on. The second one is partnerships. For example, if we work together with Uber, we can leverage Uber's network, their user base, and you can do this with promotion codes, strategic partnerships and many different ways.

[00:10:52] Some common suggestions for hacking growth: there are usually waiting lists, something that we do, Robinhood does, most of us do. It's basically that you force people to invite someone else. I'm personally not a big fan, because I don't think it works nicely. You get a lot of shitty quality traffic and then you have to fix it at a later stage. The second thing is feature unlock. If you have something that a lot of people want, for example crypto exchange, you can ask people to give you something in return. Something that also works, and every big company has to pay for these systems. And the last thing is partnerships.

Tie everything to activation

[00:11:38] What I would mention for these free things is that you should always consider activation. All these systems should always be linked to what you consider an activated user. It doesn't matter much if you had a lot of signups if people don't actually use your product. Let's say I just care about signups. What happens is, in this example, we asked you to invite your friends. If we don't care about the activation, I can just go to my mom and say, "Hey, can you sign up? It takes two minutes." That basically means I got my invite, and the company got a user that doesn't want the product and is probably [?] and leading nowhere.

[00:12:22] In that sense, what you usually see with referral programs is that the company wants you to do a certain action. Let's say Airbnb gives you a lot of credit if you invite someone, but they actually want that person to make the first booking. So you don't get any money unless the person makes a booking above a certain value. The reason for that is that if that person makes the booking, there's probably an 80, 90 percent chance that that user actually sticks, and will use Airbnb also in the future.

Engagement: the Instagram example

[00:12:53] One thing I noticed is that most people understand how it works but don't consider basic engagement at all. It's pretty cool to build very advanced UIs, to build products, back end and front end, and marketing, but the most important part is to think about the whole user journey. The easiest example is probably Instagram. Who is on Instagram? Quite good.

[00:13:29] The way they hacked it is that it's just a natural feeling to want some sort of feedback, kind of like the feedback to the speakers. If you upload a picture, you do it because you want your friends to tell you, "Oh, you look great, it's an amazing holiday," or whatsoever. The thing is, because of all this mass communication and all this noise, people aren't really talking, but double tapping a picture, just giving a like, is not a lot of work. So Instagram, for example, used this to get you to post more and more. Whenever you upload something, they have an algorithm that gives you a certain minimum amount of likes, just to have this feeling of, "I'm actually pretty cool." So even if you don't have many friends or whatever, there's always a way to get likes, and then you feel like a really important person.

[00:14:26] And that's just designed in that way. The way Instagram pushes it, the way they think about the whole journey, it's not just you uploading a picture. It's also displaying it to the right people at the right time. They want to guarantee you a certain amount of likes, and they are ready to give you that certain amount of likes, because if you don't get these likes you will stop using it. It's the same with re-engagement. I don't know if you noticed, but if you don't post on Instagram or don't open Instagram for a while, they send you messages about who is joining, friends from Facebook, friends from your contacts, and they do this just to get you back into the app to upload a picture and go all over again.

Adoption, engagement and re-engagement

[00:15:07] Usually the way you should structure it is: feature adoption is automated triggers that get people using your feature or product quickly. Let's say we want people to save money. We could set up an automated trigger after the first exchange, or after the first card payment, or after they did more than five transactions last month, something that is very frequent. Then engagement: you're using this product, but you need to get feedback. For example, if you're saving towards a goal, what's your progress? Something that makes you happy and feel accomplished. And the third one is that if, for whatever reason, you stop using a feature, you need to find ways to get people back to use it.

Launching big: the crypto example

[00:15:58] Next, and that's basically addiction. The last bit, the last 1%, is when you have everything ready: you need to announce it big time. The way we do it is we usually have these different channels, which are notifications, email and push, blog, website, media, PR. For example, with crypto, which is a good example, we had around, I think, 2015 outlets lined up when we launched. It was everything from the New York Times and CNBC to smaller crypto sites. That was just one bit. We added a website, we added a blog, we had social media, where currently our followers all together are around 200,000, and then we also streamed it out to existing users. The bigger you get, the more reach you actually generate for this.

[00:17:00] To go back to the crypto example: because of the way we designed the virality into the product, that announcement pushed the whole thing, because people invited more friends, and then it just went completely viral. That's where I'll pause my presentation, because I thought it's probably most useful if you ask me questions.