Ukrainian billionaire Vlad Yatsenko and his Revolut project
The story of a simple Ukrainian guy who was born in the GDR, in the family of a career soldier who graduated from the Black Sea National University (at that time, a branch of the Kiev-Mohyla Academy) in Nikolaev in 2006, can serve as a good example of how, with a great desire, you can become an ordinary dollar billionaire.
It’s about Vlad Yatsenko, one of the founders of the startup Revolut, which in just a couple of years turned into the largest neobank in Europe…
And from the latest news – that the company Revolut, a British player in the field of consumer financial technologies, has attracted another round of financing in the amount of 800 million dollars and is estimated at 33 billion dollars … (For comparison, in the past 2020, in July, figures were $ 500 million and $ 5.5 billion, respectively).
Yatsenko’s share in the company after the close of the round may be 3.87%. The shares that he owns are valued today at approximately $ 1.3 billion.
THE ADVANTAGES OF ONLINE BANKING
Quarantine in Ukraine forced many businesses to adapt, get used to living and prospering in new conditions. We switched to online and banking services. True, many “virtual” banks have been operating in the world for a long time, having digitized their business processes by switching to an online format. It was for them that the term “neobanks” was invented.
They do not have branches, their employees are several times smaller compared to ordinary banks, therefore they offer high rates on deposits, simplify the process of obtaining loans, and often do not charge fees for servicing cards and transferring funds. At the moment, the most successful stories of launching neobanks are associated with Europe, where the UK is leading.
British fintech company Revolut was launched in 2015 by Russian Nikolay Storonsky and Ukrainian Vlad Yatsenko. The British love to travel and, when paying with a card in other countries, they lose on unreasonably high bank fees.
Only in 2015, they made 65 million trips abroad, where they spent £ 26 billion on cards. This is where Revolut came to the rescue, revolutionizing by saving money for British tourists.
“The service provided an opportunity to transfer money abroad and convert currencies without commissions, take loans, open company accounts, trade cryptocurrency, buy insurance, etc. All operations with Revolut cards are performed in the application of the same name on a smartphone. The company operates in the EU and US markets, with about 16 million customers and over 150 million transactions per month”, – writes TechCrunch, the US startup publication.
THE WAY TO AN EXPENSIVE PROJECT
How did it all begin? After graduating from the university with honors, Vlad Yatsenko almost immediately ended up in Krakow, at Comarch he programmed and provided technical support.
And already 4 years later, in 2010, he took up the position of senior software developer at the London bank UBS. Then he briefly stayed at Deutsche Bank and Credit Suisse (where he finished working in 2014).
It was then that the future partner in Revolut Nikolay Storonsky, who was running around with the idea of creating a multicurrency card, found him. He was looking for a co-founder, and in the end offered Vlad to create the entire technical part of the project for a 20% share of the company. Storonsky invested £ 300,000 in the project.
Oddly enough, investors immediately believed in the startup. Already in July 2015, they invested $ 2.3 million, which was clearly not superfluous. Outwardly, everything seems light and beautiful. If you go to the kitchen, where everything is just being cooked…
IT IS SO HARD TO START
“When we started, there were two of us – we ourselves”, – Vlad Yatsenko said in an interview. “We were looking for the first developer here in London. It took about a month to hire him. It is always difficult – when there is just an idea, and nothing else really exists. So we worked with freelancers…
In 2015, when the product was launched, we already had a development team, but there was only one full-time specialist in it. For the entire 2015, two new engineers came to us. Of course, there were people in support, in internal operations, but until 2016 there were only twenty people in the team… In our first business plan, we have a figure: 30,000 users after the first year of work. And it turned out 300,000 “. Yes, they made a mistake, guys…
“… Then we started here, in the Canary Wharf coworking space”, – said Vlad. – “At first we had a couple of tables, at which 3-4 people were sitting. Then we hired two interns for technical support. I remember there were constant phone calls: we were interfering with someone, then someone was interfering with us. Then, when there were more of us, we moved to a separate office …
It’s not really an accelerator, it’s more of a community. To get there, you need to submit an application with a description of the business. They focus on fintech. It’s called Level 39. Many startups go through their selection to get office space.
Rather, it is an environment in which people with similar interests are found. There was always some kind of exchange of experience with people who are also starting something interesting. At first we grew up within this office. We changed one floor to another, moved to a separate office, changed it to a larger one. And in July of this (2018) we moved to a separate building…”
Fintech startup Revolut has had its own banking license in the EU since the end of 2018, which allows the company to offer additional financial services without involving other companies (as well as without cooperating with other banks). And Revolut is going to enable clients to switch to Revolut Bank in 10 more countries. The Bank of Lithuania has granted a specialized license – this is not a full-fledged license.
The company uses European certification rules to operate in other European countries. Revolut is currently using its banking license in Poland and Lithuania. Soon, clients from Bulgaria, Croatia, Cyprus, Estonia, Greece, Latvia, Malta, Romania, Slovakia and Slovenia will also be able to become clients of Revolut Bank.
This is an opaque process: you (as a customer) need to follow the step-by-step instructions to transfer your account. But after the completion of the process, your deposits will be protected by a guarantee scheme. If Revolut Bank is closed, customers will be able to demand up to 100,000 euros…
TO MEET THE UKRAINIAN CONSUMER
In May of this year, Revolut directed its footsteps towards our country. Ukrainians will be able to accept money transfers from the British to their payment cards. According to ain.ua report, at the end of May Revolut launched money transfers to payment cards of Ukrainian banks. Service users can send funds to Ukraine in more than 30 currencies (money transfers in dollars, Swiss francs, euros, pounds, etc.).
Given the transfers in hryvnia are not available to Ukrainians yet. And if in Europe most transactions are carried out without commissions, then the commission for transferring funds to a Ukrainian card ranges from 3 to 5 euros. What can I say… It seems that there was one of the minor reasons why the company was not registered in Ukraine.
“From the very beginning, we were determined to expand the product line”, Yatsenko recalled. In the spring of 2017, Revolut launched two types of premium accounts, in the summer – accounts for business, in September they added device insurance, and early next year – health insurance for travelers. In 2018, we launched cryptocurrency trading: Bitcoin, Ethereum and Litecoin. It has never been proposed in Europe before.
INCOME AND EXPENDITURE PLEASURES AND SADNESS
The main source of income for Revolut remains interchange commissions, which the merchant’s bank pays to the card issuer. In second place are premium accounts. For £ 6.99 per month, the client will have access to cryptocurrency trading, international insurance, and will be able to exchange currency without commission without restrictions (a free account allows you not to pay a commission only up to £ 5000 per month). For £ 12.99 per month, cashback will be added for expenses in Europe and beyond (0.1% and 1%, respectively), no commission for withdrawing cash up to £ 600 and a concierge service.
Revolut has released some of its financial results to the press. In 2020, the company’s revenue was $ 361 million. However, this earnings data has been adjusted to reflect the appreciation of crypto assets – meaning that Revolut had some crypto assets on its balance sheet. It happened until July 27, 2020. Now Revolut acts as an agent to facilitate crypto transactions. And it no longer holds cryptoassets on its balance sheet.
At the same time, the company continues to report losses. As with most tech companies, losses are directly related to administrative costs. It seems like with a small staff of 2,200 people, the company managed to spend $ 367 million over the past year on administration expenses.
If we talk about the pros, then the proceeds from card exchange operations are a significant part of the entire revenue of the company. In 2020, cards and exchange offices brought in $ 131 million in revenue. Every time a Revolut customer makes a purchase with a card, the card scheme (Visa or Mastercard) returns a portion of the Revolut commission. In theory, this is a very small commission, but when you make millions of purchases, this is a completely different matter…
At the beginning of 2019, Revolut employed about 1,600 people. But inside the company there is a “human factor”. There were articles that just not everything is going smoothly with this sphere. Unfair layoffs, massive rush jobs, sky-high KPIs (Key Performance Indicator). The bosses demanded that employees stay after work, and also that they work on weekends.
Yatsenko was brief about this: “There is a possibility that someone could be unfairly dismissed as a result of a conflict with the manager”, – he admitted. “However, all accusations that we force employees to overwoork are groundless”.
At the same time, the company is not going to give up high KPIs. “In European startups, everyone wants to have a work-life balance, which is why they grow slowly. We are quite ambitious”, the businessman noted. He himself often leaves the office after 11 pm and works on weekends…
Despite the fact that Revolut has been actively expanding over the years, the UK has still been and remains its largest market. In 2020, most of the company’s revenue (which is 88.4%) was associated with this country. The European Economic Area (excluding the UK) accounted for 10.2% of revenue. And a tiny part went to the markets of the USA, Japan, Australia and other countries.
The success of neobanks in Europe is primarily related to legislation adapted to the needs of digital banking. The online payments market is governed by a directive obliging traditional financial institutions to open access to customer data for fintech companies, it provides a reliable system for remote customer identification. But in the USA there is no such thing, the rules are significantly different – moreover, in each state they have their own…
Revolut technology focuses on improving personalization and creating new tools that are not as popular as budgeting tools and other financial management functions.
“We believe Revolut’s superior customer experience and focus on rapid product development have positioned the company in a strong position to continue to scale in both existing and new regions”, – said Scott Shleifer, the partner at Tiger Global. “We’re excited to partner with the Revolut team to create the next generation of financial services”.
And at the end of the remark: if you work and think like Vlad Yatsenko, I suppose you will succeed… Maybe not so quickly on the Forbes list… But at least a million dollars in your account…