This post is part of Accel’s Secrets to Scaling series, where leaders from across our portfolio share their learnings and advice with the next generation of European and Israeli entrepreneurs building global winners.
Monzo is a UK startup success story and one of Europe’s leading fintechs. The digital-only bank was founded in early 2015 with the mission to build the best bank in the world, challenging long-standing traditional banking formats. In August 2016, Monzo became a regulated bank and it now empowers more than five million people around the world to manage their money more effectively. I caught up with co-founder and former CEO Tom Blomfield, who stepped back from his role at the beginning of 2020, and heard more about his journey at the helm of the company, the lessons he learned along the way, the impact that leading the business had on his mental health and his tips for other entrepreneurs.
You’re a serial entrepreneur, so let’s start at the beginning. What inspired you to get on the entrepreneurship journey?
I started out when I was about 15 years old, building websites for estate agents and learning to code without really ever knowing it was going to be a job. When I got to university and joined what was then called Oxford Entrepreneurs, building a company seemed way more exciting than a law degree. I’d studied law, and it seemed like a very linear career path, whereas entrepreneurship and starting businesses seemed to have so much variety. Coupled with that, I was always frustrated when things didn't work the way I thought they should; any process that was inefficient, or just clunky and horrible.
I guess entrepreneurship was an opportunity to fix those things that didn’t seem to work as well as they should. And the other great thing was you could get started with almost no money, so you didn't have to pass an exam or get anyone’s permission - you could just write some code and get a website up on your own. This was an amazing feeling, in contrast to our relatively rigid formal education process. Writing code and starting businesses didn't need anyone's approval, which in itself was hugely appealing when I was younger.
You’ve co-founded several businesses over the years. How much more prepared were you - or otherwise - for Monzo as a result?
I think it helped me skip the first year or two of mistakes when I started Monzo - I could get quickly onto year three’s mistakes! The experience also let me be way more ambitious, because I’d done it a couple of times before. We’d raised funding, and I knew people like you and the Accel team. I could walk into an investor's office and say I want to start a bank and not get laughed out of the place.
We ended up having to raise a lot of money for Monzo and, having done it before, I think that lent some amount of credibility and also made hiring a lot easier. Particularly on the engineering team in the early days. We got some very, very strong engineers early on. I do think having that past experience with setting up businesses lets you take more risks and be way more ambitious, because people take you more seriously.
Let’s talk about culture. Monzo has an incredible pool of young, ambitious talent. You’ve talked about ‘folklore’ before. How did Monzo create that special culture? Was it deliberate or organic?
It was very deliberate. It came not just from my experience but Jonas’ [Templestein, co-founder and CTO] as well. He was very passionate about creating a supportive, forward-thinking culture. We’d both worked in places where we admired some things and - honestly - didn't admire others. So, we both came into Monzo intending to be very, very deliberate about the culture, probably Jonas even more so than me, actually.
We set some principles down - values that we really believed in. Things like transparency - both internally and externally with your community. And those things really pay dividends. They were intentional and we put things in place to maintain that culture.
I think ‘folklore’ really is the right word. When you're small, everyone knows the founding stories - they were around to see it happen! But as you grow, you have to be very intentional about teaching each new generation - each new batch of new joiners - the folklore of the company - the things that were formative in the early years and developed such a tight bond for the team.
How did you manage to build that evangelism externally with your customers?
Very early on we were interviewing a marketing hire and asked them to set up a bunch of Facebook ads and spend £1,000 to £2,000 on trying three or four different campaigns. One was “here’s a bank with no fees”; one was “no FX markup”; another was something about budgeting. But the fourth one was “help us build the kind of bank that you'd be proud to call your own”. Basically, help us build a better bank. It was really mission-oriented and invited people to join that mission. And it performed three or four times better than any other campaign.
This was in the days when no one knew our brand, but I think people have this latent appetite to get involved with causes they believe in. And almost everyone dislikes their bank, which really helped us. We knew there was something there from the very early days and we put that to work by doing tons of in-person community events at our offices. It was also helped by the scarcity and waitlist to get a card. Then, to get a card, you had to visit us physically in the office, hear me talk about our mission and vision, and hand over £100. Only then did you get a Monzo card.
The behavioural psychology of exclusivity played into this, and helped create that early nascent community that we then fostered through things like crowdfunding, hackathons, publishing our product roadmap online, which I think we were one of the first to do. All of those things helped fuel awareness and evangelism.
How did that customer-first approach evolve as the company grew and you needed to consider other elements of the business? Did you have to make trade-offs?
We had the slider firmly set at 100% customer focus and 0% sustainability and revenue in the early days, which stopped us making hard choices. For example, we found that free ATM usage – especially abroad - was costing an astronomical amount of money every year, but it took us a long time to address that. It took probably 12 months longer than it should have done because we were so obsessed with doing the best thing for the customer and not charging fees. We should have made those hard decisions much earlier.
Stepping back a bit. You were leading this rocketship business that was quite unique in terms of its community and product-first approach having to be balanced with regulatory requirements. How did your approach to leadership evolve as the company grew?
I think being a leader of a large group of people is really different to being part of a small team or even being a good manager.
Early on, I knew everyone by name, we sat at the same desk - I never had an office. There was a huge feeling of ‘everyone's in this together’, which has persisted throughout the life of the company. But when we got to almost 2,000 people, there were many hundreds of people I’d never even met so I had to be much more conscious of the way I communicated and even the way I carried myself around the office. If you’re stooped over with a frown, thinking hard about something, or just slightly grumpy and distracted, people pick up on that in a way I just didn’t realise.
You’re constantly on show and, especially when you're over 1,000 people, you've got to pick one or two key messages and just repeat them endlessly. Although you may have said it 100 times, for the person you’re talking to, it’s maybe only the first or second time they’ve heard it.
Figuring out leadership at scale is really different to leading 20 or 25 people and it takes time. I ran regular company-wide Q&As, which is a great way to connect with people around the world who I didn’t have a personal relationship with. With just one hour to communicate effectively with 1,000 people worldwide, being thoughtful and deliberate about what you communicate is key. I asked my senior leadership team to each send a brief written update to the whole company once a month or so. You’ve got to sit down and prepare for it and get into the right headspace for those crucial moments. I found that focusing on communicating just one thing - like unit economics - and making that the company’s north star has an incredible impact and really helps focus people’s effort and attention.
Building on this, let’s talk about transparency. Monzo is one of the most open companies when it comes to information sharing. How do you think about transparency and is there a point where it works against you?
In the early stages -the first four or five years - we didn’t see a downside to it. Transparency felt like our superpower. We had the view that, if teams are working on solving a problem for the customer, the only way they can effectively do that is if they have all the relevant information. So, we had this devolved decision making set up and people had to have all the details and parameters within which they could make decisions. This is empowering and creates a huge amount of trust. For example, the whole team knew when we were in the middle of raising a funding round. The positives of transparency are better decision making and increased trust.
The downside - beyond the obvious leaks that happen when the company gets much larger - is that it can feel like there’s an information firehose and it’s impossible for people to consume everything. You need to be more deliberate in what you’re communicating and curate the important information for people.
What do you wish you’d known in the early years of building Monzo in a regulated industry? Do you have any insights on working with regulators?
Working with regulators involves a lot of hard work, paperwork and bureaucracy. As an entrepreneur, there is a benefit - it creates a significant barrier to entry, which means many other entrepreneurs will steer clear of your industry and there’ll be less competition. There are also a lot of frustrations and constraints and things take longer, but that’s just part of working in a regulated industry.
In terms of tips when working with regulators, I’d encourage people to do the opposite of a VC pitch.
So instead of saying it's totally revolutionary and going to change the world, say it's not revolutionary at all, and it's exactly the same as everything they’ve always seen and approved. Couch it in terms they understand and try to make it appear as similar to something else they've approved previously. There’s no upside to regulators taking additional risk.
It’s always tough to hire senior, experienced people - more so in a regulated business - but you’ve made some great hiring decisions. How did you do it and what did you learn along the way?
I think just being able to interview for raw smarts is really, really important.
Just pure intellectual calibre - and that doesn't mean academics. Some of the best people like Oliver Beattie, Monzo’s former VP of Engineering, didn’t go to university. He dropped out and moved to Hawaii when he was 17 or 18 to work for a tech company and he’s a phenomenally smart guy. Mike Hudack, our Chief Product Officer, is a high-school dropout who went on to work at Facebook and Deliveroo. The ability to recognise that intellect in other people is just so important.
Our most senior hire was TS Anil, who we hired in January 2020 to lead our US business and is now CEO. We’d been talking to him for a while and met face-to-face several times over about twelve months. I realised that he not only had a huge amount of experience as a CEO of banks, but was also empathetic, warm and charismatic in a quiet way. He was very thoughtful about people’s feelings. If we’d brought somebody who was brash and aggressive, it would have just fallen apart. But to have the combination of intellect, banking experience and empathy was just so important.
I’d had a tough year, made harder by COVID, and finally put up my hand and said: “I need some help here”. We were lucky that TS had already been in the business for three or four months. He was really getting up to speed well and had been looking after our lending business for a few months, tackling one of the thorniest parts of the company. I phoned him up on a Friday and asked if he wanted to take on a bigger role. And TS said, “give me the weekend to think about it.”
Moving on to your recent journey. You stepped back from your role as CEO in early 2020 - it was a difficult time for you personally. When did you start thinking it was time to hand over control and how did you have the confidence to do that?
It was really, really tough and emotional - it wasn’t a snap decision. Yes, there was a tipping point but in the build up I’d realised that I wasn’t enjoying the role anymore. I wasn’t sleeping, which impacted my decision-making, I was anxiety-wracked and never switched off from work. I felt that I wasn’t performing at the level I knew I was capable of, which was frustrating, and my ability to make good decisions was impacted.
I started talking to our chairman Gary [Hoffman] and Eileen [Burbidge], one of our board members, and basically said we need to make some changes and the plan was for me to make the move in 18 - 24 months or so. Then COVID hit, a funding round got pulled, we were working seven days a week and the pressure was just so intense I’d reached my limit. We were just so lucky to have TS in place and Sujata [Bhatia, COO] joining, so the transition could happen then and I could step down into a different role and support TS in his new role as CEO. A year on, I’m sleeping well and I'm optimistic about life and really optimistic Monzo. I think the team is so strong and I'm proud of the stuff that we've built together.
Having been through this experience, you know all too well that being a founder can be a very lonely place. There’s a lot of pressure to deal with. How can the startup community support founders and entrepreneurs better?
There are a couple of things I've talked about before. Trying not to idolise or put founders on a pedestal as much and just accept that we're all people and we have strengths, we have weaknesses and flaws, and we make mistakes and that's normal. We have capacity to grow as well.
I think there’s too much of a superhero syndrome with founders - they’re supposed to know all the answers and, as soon as they don’t, it shatters the illusion and they’re seen as failures.
I don’t think either extreme is true - the answer lies somewhere in the middle.
Practically, I think that the thing that really helped me was peer support networks or talking with a group of founders where there's no vested interests. They’ve got no skin in the game, but just sharing war stories was really great for me in the early days. I’d advise founders to get together every month or so with a group of about six or eight other founders. It’s a great way to realise that you’re not going through this alone - it’s not a unique experience. The benefit is not even necessarily about sharing tactics or tips; it’s just sharing pain - it’s a kind of emotional support group, so I’d really encourage other entrepreneurs to do that.
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