when was monzo founded
Looking back on my notes, all our conversations were about picking the right agency to run PR and another agency to run our paid social campaigns. Tom taught himself HTML on the side. Its important to note that we had zero real customers at this stage. This then squeezes the Series A investors who are now doing more and more seed deals. Founded in early 2015, our mission is to build the best bank account in the world. The two co-founders of GoCardless convinced him that dating was a terrible business, and they were probably right, he concedes. You might not be getting any salary, but at least youre joining as a co-founder with a double-digit equity stake. The Monzo card was hot coral (aka bright pink) - the colour alone often started a conversation when customers pulled it out of their wallets to pay. Without vendors, no customers are going to show up. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Empirically, this works very badly, what works much better is putting together a prototype superfast, and pushing it out to a few dozen people., I am a huge subscriber to the lean start-up concept, this is the lesson that Y Combinator instil into you., But, and this may be the key point, no one has started a bank like that.. If your team doesnt have an agreed scope with sufficiently granular time-estimates for each component piece of work, your project will inevitably overrun, and sometimes by an order of magnitude. What was their language and behaviour during the tough period? So, it switched from competing with eBay to providing tools to help support sales. Reduce costs, seek out revenue and keep burn to an absolute minimum. Ive been involved with 4 startups over the last 10 years or so, 3 as a co-founder. So if youre hiring from big companies, watch out for this. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. In the simplest case, the agreement will be no money invested, equal equity splits, zero salary. Its very, very rare for a top-quality VC to pull a termsheet. If your co-founder says just trust me, see above.4. We provide general intelligence for technologists in the information age. One of the main parts of the business plan is the relaunch of Monzos personal loans and borrowing products. Later that year, we added Reactions - if youd received money from a friend, you could send a quick response - just a single emoji. We grew it to around 50 universities across the UK, which took two years. Before I started, we got an investment offer from Y Combinator. U.K. Challenger Bank Monzo Lays Off 8% Of Staff Due To COVID One large dating site books over 70% of its annual revenue in the first quarter of the year. (The truth is, within weeks of running that news piece, I knew it was far from certain Blomfield would ever return, with multiple sources, including people close to and worried about Blomfield, confiding in me how burned out the Monzo founder was. Just 8% of new members join from paid channels. You should aim to appear to be the hot deal of the year. Youll need to raise significant amounts of early capital to invest in infrastructure that will only start to pay off years later. The solution is to come up with a scoped deadline - a date in the future by which you will have implemented an agreed list of features or functionality. This will involve reference calls to previous employers or colleagues, and checking your company documents, employment contracts, IP assignments etc. Youre two, three or four people in a bedroom living on baked beans, working all hours of the day to get a working prototype to show to customers or investors. We won a business plan competition, scooping a 1,000 prize. This was used to launch a student marketplace, a kind of eBay for students. By now, it was 2004, the internet was beginning to look a lot more real than during the bullish dotcom days of the late 1990s. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it. When all you have is a hammer, everything looks like a nail. The exception might be an ultra-early pre-emptive offer, when you really dont need the money yet. We set out to prove them wrong. The product vision is vague and broad, but youre working every day to try to validate it with customers. Thats the denominator - 100 funded accounts. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. But it feels like people are confusing the specifics of blockchain with the generality of software. Most recently, Chinese tech giant Tencent took a minority stake in Monzo amid the firms December funding round. Youre joining a unicorn! BBC One - Watchdog - Monzo You couldnt make bank transfers or pay bills, for example, because we didnt yet have access to the payments infrastructure we needed. If you want to make your user numbers go up, put a big piece of paper on your wall and every day plot the number of users. I started angel-investing in 2021, and a large proportion of the companies I put money into asked for help raising an investment round. The combination of these factors has lead to a massive rise in pre-emptive termsheets. The 35-year-old Monzo founder was already struggling to meet the daily demands of running a digital bank that had grown to nearly 5 million customers and had become a success story for Britains fintech sector. It arguably doesnt have a very strong brand or personality. Vesting means that stock is earned over the lifetime of a persons involvement at a company. I vividly remember stuffing envelopes at the time, thinking each of these cards is another person who wants to use our product. Once we swapped the key metric to daily transaction fees, the problem went away. And even if he did, he has learned the hard way that there are aspects of running a large company that not everyone enjoys. We had a pretty big waiting list at this point, but the Invite friends to get bumped up the queue felt a little old and ineffective. 2000- 2023 Swyrich Corporation, all rights reserved. I have done both in the past. The issue was switching off., He said the stereotype of superhuman tech bosses could not be further from the truth. And with that development, Tom returned to London, another string to an already impressive bow. Is it a bit early to hire a Head of Marketing? - conversation with Eileen in June 2015, four months into the life of the company. Im a follower of Paul Graham and the YC camp of startup wisdom. A normal company might get 20 no responses before they get a yes. I think a lot of customers were proud to pull out their Monzo card and feel like they were part of something. Predictably, this just further increases valuations. 31 min read. But then he seems to have entrepreneur flair running in his veins. First, a note about the context. Its standard for investors to require the unallocated option pool to be topped up to a level that will equal 10% (sometimes less) of the post-investment shares, but for this to happen immediately before the new investor puts money in. If you dont have a CEO, youre in for a potentially awkward discussion about who runs fundraising. Investment rounds are getting done faster and faster - it may only take a couple of partner meetings over a handful of days to get a termsheet for a seed round. CFD and Forex Trading are leveraged products and your capital is at risk. 09446231). It also helps catch bugs early, and makes you consider how your code will interact with the existing codebase from the very start. There are plenty of open-source co-founder agreements published by law firms. If youre a repeat founder with even moderate previous success, or you have some amount of traction, these numbers will be a lot higher - Ive seen seed rounds of 3m on 30m in London this year. I was chatting with an investor a year or two ago, shortly after our Series A, and the subject of revenue goals came up. At the same time, we interviewed and hired a young guy called Tristan as a community manager - he was in his early twenties, hed graduated in Economics and spent the previous year in Egypt working with a local startup, where hed picked up Arabic. Blomfield followed the case closely. So, if you are a Lloyds customer and want to share your transaction data with Monzo, Lloyds must share that data. Ancient Calabria was in Lecce. Passion Capitals Monzo shareholding is worth about 5x the size of all their raised funds combined. Essentially, existing shareholders get diluted by the top-up, but the new investor does not get diluted. Meanwhile, Blomfield describes his resignation as a Monzo employee as bitter-sweet, and is keen to praise what the Monzo team has already achieved, including since his much-reduced involvement. I find this much more compelling than a polished pitch deck. Experience award-winning platforms with fast and secure execution. The campaign turned out to be a huge PR coup, but mainly for reasons we had not anticipated. You lament all the technical debt that was accrued by those idiots who arrived before you, slowing down the pace of feature development. The market is changing so quickly that it may not stay correct for long. 5. Im not sure how repeatable this lesson is - lots of companies have tried crowdfunding since, and its no longer newsworthy. This is traction. If feels like non-technical people discovering that people can automate things and being very excited by that.. Tom says that fintech became a word around 2012/13, at least that was the first time Tom spotted it, but in practice, if not in name, it had been going for 12/13 years or so. You should therefore be selecting companies based on whether you think they will be one of those winners. You will need their signature on every official corporate action for the future of your company (ie future fundraising). VC returns are extremely skewed by a tiny number of outsized successes. Founded in 2015, Monzo is a digital, mobile-only bank based in London, offering both current and business accounts.It was set up by Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Rippin and . This is quite common. Empirically, most people do not get shit done. But he discovered that writing HTML, or other code, looked enough like school work that his parents didnt notice; they thought he was diligently upstairs, laying the foundation stones to a career in the professions. Have each team break down the key metric into its component drivers or KPIs that individuals can influence. Youve got thousands of paying customers, and you occasionally see people in public using your app, which feels fantastic. If you enter a market like payment processing, be prepared for the long-haul. Dont feel like you need to cover your whole pitch-deck in the intro meeting. And I say this as an angel investor myself! The only effective way to estimate effort is to break the project down into chunks of work that can individually be estimated. They all performed fine. {.sitecore-form .contact-form, .sitecore-form .contact-us-form {width: 100% !important;}}. Clearly Tom is no mean programmer, but he goes all modest when asked about this. Not true, says Blomfield, telling me it was a five-day project designed to get back into coding and play with a robotic 2D printer. Theyre the numbers that tell you whether youre improving or not. 09446231). You could simply be wrong about the savings you can achieve at scale. In a brief but candid telephone interview, Blomfield also revealed that, as well as being unhappy during the last couple of years as CEO when the company scaled well beyond a scrappy startup, the pandemic and subsequent lockdowns exacerbated pressures placed on his own mental well-being. In no case should any chunk be more than 2 developer-days, and ideally theyd be around a day each (4 hours). Number of Founders 40. YC has a great Series A pitch deck guide here. Press | Monzo Strong Brand Loyalty / Personality- the best brands position themselves as expressions of their customers personality. Conversely, you should make sure to reply promptly to any follow-up requests they have. Youll often reach profitability very early on, and it may feel like youre on a startup rocket-ship. Youre told that your stock options are underwater. What started as a prepaid card has blossomed into a fully-fledged current account, with overdraft facility and lending options. The termsheet will often leave room to bring in additional investors. Id argue this is sometimes even more important than the industry or the idea itself. It should appear in your companys balance sheet as a liability - Director Loan. Tell me about a time when you were really struggling to raise money to keep the company going. If you clicked on this link with a Monzo app installed, it would just deep-link straight into the Monzo account with all the payment information pre-populated. Monzo confirms 60M down round, with a new pre-money valuation of 1.24B. More press followed over the next few months: We were covered in the Guardian, The Memo, Bloomberg (complete with weird sci-fi photoshoot), Business Insider, Techcrunch again, plus a bunch more. Ultimately, you want your sales team to be closing recurring deals, which will drive revenue in a predictable fashion. This is network effect in full force. You join in a very well-defined role, after the team manager recruited you. This is evidence of your traction. If youre in the fortunate position of having multiple, competing termsheets, you need to think about how to pick. As a UK-based company, Monzo will likely list on the London Stock Exchange. And top of the disruptive threats to banks is fintech. You join the company to do a specific role, but you spend your first week or two figuring out what you should actually be working on. Ive been thinking a little about how it worked so well for Monzo in 2015 and 2016. Its using that money to grow the team, increasing headcount to 60 people. Or you could convert this excess demand into secondaries (see above). We anticipated the round would sell out, so we set up a pre-registration system so that our customers could invest before the general public, and we capped individual investment at 1000 to maximise the number of people who could invest. And we let people quickly upload profile pictures to make it feel more personal. The main danger is that you now have so much money that you over-hire and increase your burn rate too fast, without having the business to back it up. @media (max-width: 991px){.agreement-section label {margin-bottom: 20px; display: block;}} How Does Monzo Make Money? The Monzo Business Model In A Nutshell How you get to a yes decision - an offer to invest - varies from fund to fund. They are usually not as valuable as you think. In fact, the overriding problem it solves is being able to buy drugs and various forms of pornography on the dark web because it is an anonymous currency, if you take an anarchic view, it is great, if you trust central banks and want to prevent things like money laundering and terrorism, a traditional currency works just fine., This does not mean Tom doesnt believe blockchain doesnt have its uses. Jonas (one of our cofounders) first came up with the idea to add emojis to the push notification customers received to alert them about spending. The Covid-19 crisis halved Monzos revenues overnight. Existing customers can get help via the app. It was founded by Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Rippon and Gary Dolman - who all met working at Starling Bank, one of Monzo's biggest competitors. Your investors may want to release something to the press - usually in an outlet like Techcrunch. Your relationship will be like a marriage, but even more intense. And Uber was great at raising capital. Make a note of the common questions they ask, and make sure you have good answers to these. Monzo IPO - Investing Pre-IPO - Forge Global Inc Uber took this to an extreme, weaponising cheap capital. This makes it Europes third most valuable neo-bank behind Revolut and N26. Theres no mentorship from more experienced colleagues or even code-review, simply because the company is still too small. Its definitely the right time for me to move on. Big companies seem to train managers to be interrupt-driven, rather than proactive. Focused on solving problems, treating customers fairly and being totally transparent, its current accounts are currently used by over 2.5 million people, and customers have spent more than 5 billion with its cards so far. Tom Blomfield on mental health, the Covid-19 crisis and the myth of superhero tech bosses. Arguably, choosing the right person is more important than the choice of the VC firm itself. vest) on the first anniversary of my joining the company. We then added Split the bill functionality for a single payment, plus a more general Request money feature, and finally more complex Shared Tabs for multi-day trips away with friends and family that might include dividing several payments. What Is The Monzo Card & Should You Get One? A fast-growing team of more than 1000 people work across Monzos offices in London, Cardiff, Las Vegas, Los Angeles and remotely around the world. So, as well as a great idea and impressive founders, you ideally need. If you get a very early pre-emptive termsheet, other firms may be too far behind to get up to speed in 5 days from a standing start. So as an eight-year-old he had a lemonade tent and played a computer game called Lemonade Stand where you ran a lemonade stand, and he was fascinated by it. In fact, high-churn businesses often have exceptionally impressive growth numbers in their first months or years because theyve found some viral loop, the crack cocaine of startup-land, which provides an explosive catalyst for new-user acquisition. It was just obvious to him that he should write our Twitter posts himself. Theyll need another 5 days. If you have multiple founders, nominate one to run the fundraising process. I dont know, Blomfield told the Guardian. For the latter, it provides a positive response to the perennial request of can you just implement XYZ for me?. If youve been fundraising for 3-6 months and youve had 30-40 nos from decent VCs, then youre in a tough spot. You might join as the first professional programmer or designer, but youre still more-or-less on your own. Calls with US investors ate into his evenings, sometimes running until 2am. With a pub chain, there might be a huge asset base, so it was a case of using this more effectively, or with a manufacturer, working on a just-in-time process. In this way, Tom got all this exposure to very different business models. So thats Tom Blomfield. As a project progresses, you should be regularly deploying your code - use a feature-switch to keep new work visible to only staff or small segments of your user base. Monzo would later end up cutting 66 jobs, temporary furloughing roughly 175 workers, closing its Las Vegas office and securing top-up funding that cut its 2bn valuation by 40% to 1.2bn. HR follows up explaining that as part of the acquisition, some departments will be downsized. Dont do this. Treat any tax relief as a secondary benefit. You jokingly talk with your cofounders about which island youd each buy when you sell out for billions in a few years time. There was a company in the New York called Grouper Social Club. We spent the first couple of months of the companys life furiously writing a banking licence application, believing that the licence might be granted within 12 months. We quickly decided wed rebuild the investment registration page ourselves, and planned to relaunch the campaign a few days later. I think we had folks out flyering and offering discounts in local shops, but again it was a lot of manual work with no discernible impact. StoneX Financial Ltd (trading as City Index) is an execution-only service provider. There wasnt even a public release of the app you could download from the App Store. We finally got the Alpha prepaid debit card programme live to the public by November 2015 - it was a chance for people to get a card, try out the app and give us feedback to help improve the product. Pre-launch, there are no metrics - investors will often get carried away imagining your huge future success. If you are open and communicative with these early supporters, theyll turn into your most loyal customers and vocal advocates. To get those pitch meetings, youll need to have spoken to 200 companies. A termsheet is not binding on the VC (they can still technically back out), but prohibits you from soliciting investment from other VCs after youve signed it, usually for a period of 30 or 45 days. Your mum tells you that you should have stuck with your well-paying job at Oracle. List of top Monzo Alumni Founded Companies Currently, Monzo holds a 39% share of UK digital banking users. Great banking experience. This is good for both developers and business-people. It will be most relevant for founders who are raising a Seed or Series A round, with some amount of product development and early customer traction. And that brand didnt really extend beyond a companys name and logo. And I feel so much lighter now. It says it's adding 200,000 more each month. In the meantime, you can trade shares with City Index in these easy steps: Alternatively, you can practise trading shares in a risk-free demo account. It was also a Faustian bargain. We support CTOs, CIOs and other technology leaders in managing business critical issues both for today and in the future. The Estate Agent was Wilson Heal, who were great guys., Next stop for Tom was Oxford, where the foundations were apparently laid for what no doubt seemed like a promising career as a lawyer in the making. As most marketplace models needs some kind of critical mass, focussing on growth first makes sense. There are much more complete retention guides out there, but Ill give a quick summary here. It is probably the slowest, hardest and most expensive way to raise money. I wont ever work with these folks again. It doesnt dilute existing investors - no new shares are created - and the money goes to the person selling the shares, not to the company. Theyll say this is going to be an exceptionally hot round, you need to get in before they run a full process.. If not, perhaps one of the other VCs in the process might take the additional secondary allocation. You do not want to be seen shopping around your unsigned termsheet, but you can say something like: There are two other interested firms, and theyve already put in a lot of work with us, so I want to respect that work and give them a chance to get to the end of their process. Three co-founders feels like the right number. The Monzo IPO is likely to happen in 2022 or 2023. In terms of profitability, Monzo lags behind the others, which managed to boost their income amid the pandemic while Monzo widened its losses. And this brings us to the question, for how much longer will we will have cash? Just focus on growing every month, and the rest will take care of itself. You may think about paying an Investment Bank or some other kind of advisor to run your investment process. Ended the year with about 600k Beta customers. These are the numbers that you track in daily stand-ups, and measure conversion between each stage. Inevitably, investors are paying serious attention to "unit economics - how much do you earn (or lose) from each extra "unit (normally a customer) per year? This is one reason Stripe focusses so hard on serving other startups, and banks target teenagers. Do they add useful insight, or just like the sound of their own voice? But it is useful, I think, for deepening the engagement you have with your early customer base or community, especially where you want to get them involved in product or brand development. In fact, he was building the founding blocks for this later success as a fintech entrepreneur. And when a brand really resonates with a customer, it becomes an extension of their identity. See Terms of Use for details. b) Equity split We wanted to change that. However, these articles do often drive more inbound interest from (lower tier) VCs who missed out on the round. We ran 3 or 4 hackathons early on (even before we had live prepaid cards) and folks came up with a handful of interesting ideas, but we realised pretty quickly that this wasnt going to be a big growth mechanic. Customers had to come to an event at our office to pick up the card because we hadnt yet built the functionality to collect customers postal addresses or post out cards. What we did was position it like concert tickets, we said you had to pre-register. So the opportunity to invest was presented like it was a rare and exclusive opportunity, only available to those who reacted quickly. I dug out our stats for 2017 - about 60% of our signups were WAU on day 90. You ask where the marketing department sit, but youre told theyre in a different office. So what does "getting shit done look like? Second, it prevents scope creep during the project, as youve locked-in the features that are going to be delivered. Please dont ask me to invest in your company! This speeds things up a lot. This can then create a very aggressive bidding war. With this in mind, you want to think about how to create a sense of scarcity and urgency about your round. This would not have happened even 3 years ago. People in the audience are crying. I was recently talking to a handful of successful startups founders about issues they were facing as they scaled up their companies. If you dont have the good fortune to have multiple, competing termsheets, I think its still worth doing the reference calls - you need to know what youre about to get into. Focused on solving problems, treating customers fairly and being totally transparent, its current accounts are currently used by over 2.5 million people, and customers have spent more than 5 billion with its cards so far. [1]. Generally, only the weaker companies need to use advisors. Once you sign a termsheet, the lead VC will do some basic due diligence (this will be less onerous in seed/series A compared to later rounds). After 5 years, the company has raised 100m at a 1bn valuation. 1m at 5m valuation might be a typical pre-seed round at the moment for first-time founders in London whove not been through an accelerator. Friends in other startups tell you to check what the investors liquidation preference is, but no-one at the company can seem tell you. We figured that the best people to be making referrals were those who were already actively using the product. We had a really engaged set of users, and Tom applied some of this aforementioned psychology. Monzo Bank Ltd is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. In a low-churn business, the graph looks like a layer-cake, with each new month of users adding a layer of revenue on the top of the business. And sometimes doing things that look a little crazy from the outside. As youre raising a seed round or Series A, this process can be pretty lightweight. It typically makes the conversation more awkward as the founders talk over each other, or one person sits silently in the background. If a VC wants to invest in your company, theyll issue a termsheet to be the lead investor. Monzo has now raised about 435m, but for every clinched investment, another 50 meetings ended in rejection. Say 100 users sign up for Monzo, complete KYC, register a card and load money into the account. So what are the characteristics of high- and low-churn businesses, and what techniques can you use to minimise churn? A network effect is different - the product itself actually improves as more of your network joins. Once you get cash out of an ATM, you cant compare prices, accumulate cash or loyalty points, cash is great for anonymity, if you dont want to report taxes properly or you are a money launderer, cash is brilliant. Negative unit economics could be fixed with scale. If your friends werent on Monzo, you could still request money with your personal Monzo.me link, which would allow folks to pay you using another bank card or Apple/Google Pay (and Monzo covered the transaction fees), and included a little upsell for Monzo at the end. I didnt know if it was some weird power play, or if he just lacked any kind of manners. Since they areactionablemetrics, the entire process becomes an optimisation problem. in crowdfunding at Monzo, across 3 or 4 rounds. With fundraising done, now is the time to get back to work! Before that point, prepaid cards had only really been used for kids accounts (Osper and GoHenry had both been founded in 2012) and the financially excluded - people who couldnt get full bank accounts. It was one of the first app-based banks to enter the UK market, founded by Gary Dolman, Jason Bates, Jonas Huckestein, Paul Rippon, and Tom Blomfield in 2015. If you dont already have useful investors, programmes like Y Combinator can be really useful for getting in front of VCs at Demo Day. Number of Non-profit Companies 1. Ive seen Index and Sequoia recently making a bunch of seed-stage investments in Africa, for example.
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when was monzo founded
