“Why do companies even exist? What are we here for?” Tom Blomfield, the chief executive of challenger bank Monzo, has decided to ask a rather existential question.
“We have to be profitable and sustainable. But you also need to think about our impact on society and environment. If we don't do that, we make a bunch of profit and screw everything else up.”
Blomfield has a reason for this soul searching. His company disrupted the traditional banking sector in the UK, and now needs to refine and replicate its formula in a completely different market: the US.
Monzo’s meteoric rise from Shoreditch status symbol to £2 billion startup juggernaut was fuelled in large part by an almost cult-like customer following. Its growth to over 3.5 million users in the UK has led traditional banks to scramble to revamp their consumer banking services around user experiences that appeal to customers under 35.
Its success is also thanks to its team involving customers in growing the business from the start – something unheard of in banking. Monzo’s team raised capital through crowdfunding, asked customers to trial their beta products, and even re-named the business based on 10,000 suggestions from its own users (it had to change its original name from Mondo after a trademark dispute). Its own customers became invested in the business, and promoted it through word of mouth as if it were an exclusive club – handing out “golden tickets” to skip the queue and open an account.
But this collaborative approach with Monzo’s customer base could have gone badly wrong. After all, when the team started working together five years ago, they talked about culture a lot, but never wrote anything down.
“We somehow weirdly thought it was gonna be a process of osmosis, you know? They [new employees] come in the door and suddenly magically absorb all of this sort of history that we all had lived. And that – surprise – did not happen.”
The biggest problem was, ironically, Monzo’s closeness to its customer base. It hasn’t helped it become profitable – “We’ve still not cracked that one,” Blomfield admits – and it led to misunderstandings about making them pay for anything.
Blomfield says that him “banging on” about banks only caring about profits created a perception internally that making a profit is evil. “That’s not what I meant,” he says. “Genuinely, people thought that whenever we were charging for anything, that must be fundamentally wrong. But that was part of the culture we really fought to transform.”
To evolve Monzo needs to find ways of making revenue that are a fair and transparent exchange of value, Blomfield explains.
“I think the best businesses find something that's really positive for society and the environment and individual customers, and generates a really healthy, sustainable profit.”
Monzo, now fully established and facing competition from traditional banks and other challengers alike, may be running out of time to prove that it can build that sustainable profit. But culture, once again may be the key to its future success.
After all, Blomfield’s dream is to make Monzo work for literally anyone, including “people that don’t have a passport, people who are homeless to people who have just come out from prison”.
Sort out your mission statement: Grandiose statements like "Do No Evil" or "Move Fast and Break Things" don't actually mean anything in practice, says Blomfield. It is better to opt for a less catchy phrase that sums up your business to connect with customers in the long term.
Adapt your culture to your business – and ditch what doesn’t work: Do not assume that new people joining the business will already know your company culture and values. As your business grows, keep the bits of your culture that make sense. "We're now 1,400 people and have three million customers around the UK,” Blomfield says. “What parts of our culture worked when we were 15 people in startup servicing hipsters in Shoreditch, and which parts now don’t?”
Admit when you’re wrong: “A year ago, we did not have millions and millions of pounds [for advertising campaigns],” Blomfield says. So the company used transparency instead. You can say, “Look, here's our decision making process. Here's what we did. And it goes wrong. And it's explaining that to people, I think, does build trust.”
Natasha Bernal is WIRED's business editor. She tweets from @TashaBernal
This article was originally published by WIRED UK
