BottomUp - Skills for Innovators

Hello, and welcome to the modem up skills podcast. I might pass since the chief executive officer at QualityNet and here we are, we're on our third part into a 14 part series on design thinking, one of my absolute favorites and talking about favorites. Let's talk about Airbnb because. We are now going to look at how Airbnb uses design thinking with employees in the previous show, we covered how, uh, Airbnb uses design thinking with customers.

Let's have a look at how they do it with employees and let's see what inspiration, what tips and tricks we can take from Airbnb. When it comes to designing the. World of an employee. Now there's a couple of cool things that I want to focus on here. A mixture of structural and tactical, and to look at some of the, the results that it garnered, but perhaps the first, most fundamental thing that Airbnb did is they re-imagined, uh, human resources, you know, human resources.

Was often, you know, right next door to the accounting and finance and perhaps the legal team in a traditional office and, um, was sorta hidden in the back corner. Well, you know, what's really interesting about Airbnb. They put them front and center and rather than calling. The whole team human resources.

They became the employee experience team. And actually the chief HR officer now is the chief employee experience officer. And by making such a fundamental organizational change and reframing the expectations from. Human resources to employee experience. They really unlocked a world of magic. And what's so elegant about this is that this is a company that is so famous for customer experience.

Obviously it was so damn straightforward to continue thinking about user journeys, user insights. Customer experience and just merely mirroring that on the inside with employee experience. So they have it. This is the first fundamental step. When you think about using design, thinking on the inside is shift away from just human resources and redefine the role of what was your HR team to own the employee experience simple, but yet just so powerful.

So. Let's break down what this meant, not just in name, but let's have a look at the roles, the responsibilities, what was the, uh, the mission for the now the employee experience team? And I want to start by just explaining. What a normal HR team would take care of. They'd go out and recruit a new employees.

They would manage, develop and support the talent already in the organization. And you know, the big one, it makes sure we would all get paid to payroll and benefits. Uh, maybe throw in a bit of health insurance alone. For the bride, this is the traditional HR remit, but let's have a look at what Airbnb added, uh, to the traditional HR, uh, mandate and how they increased it by more than double.

And what we'll do in a moment is we'll have a look at some of the results that got so. We've got recruitment. We've got talent payroll and benefits, the cornerstones of human resources. Well, check this out. They added four new responsibilities to the employee experience team. Number one, ground control all about celebrating culture, all of the facilities.

So essentially the spaces and all the different modalities that they have to cater for. Food very important. And lastly citizenship, and that was all about how Airbnb contributed, uh, in the communities, in which it worked. So there you go. You've got the big four, let's break them down and look at how they really shaped the organization.

The big one in my mind, it depends if I'm thinking about lunch or not, but. The big one in my mind is ground control. This is all about culture. This is about defining, celebrating, showcasing, and essentially turbocharging the culture inside of the organization. And their whole culture is based around belonging, uh, which is really powerful because they also propose that on the outside as well.

So ground control is a group. It's a team of people inside of the organization and their job is to celebrate. Showcase culture. And what's really interesting is we'll see that come back in some of the. Uh, some of the outputs are a little later on facilities, if you've ever had the chance to go to an Airbnb.

You'll know what I mean by these offices are absolutely wonderful. Rich, diverse. Interesting. I could. I'd never get bored. Uh, working from different spots throughout, uh, the Airbnb office, they've done a wonderful job. It's all themed they've even, uh, had this great idea that, uh, different rooms are actually based on the rooms that their hosts have all around the world, which is really, really neat.

When it comes to food, uh, I can assure you, I've actually had some lunch there, uh, uh, at eight, eight Brandon in San Francisco. And I can tell you the food is wonderful and you've got a ton of different options, but it's really great because it's part of your, uh, employment, the, uh, great food and dining experience comes with it.

It really reinforces belonging. And frankly, you can eat really, really well. And you don't have the hassle of having to leave the office. And lastly, there's the citizenship team and this one's really important because. You know, the company really needs a connection between what's happening on the outside.

In the end. They're not without controversy and challenge. A lot of cities attribute a rise in rental prices to Airbnb. So it's so important that Airbnb works together with the communities that they are active in to better understand them and to work together, to get better outcomes. So that's the citizenship team.

So look at those big four. On top of the standard recruiting talent and payroll responsibilities, this dramatically changes how you think about the use of design thinking because not only did we see that they've successfully built trust to consumers, they're created a place where employees can belong to.

And this all came from this powerful insight, which is total. Pure design thinking, which is, don't think about this as human resources define it as the employee experience team. So this is so good because this has opened up all of these new ideas. It's opened up a whole new mandate for what was the human resources team and is now the employee experience team.

Let's take a quick moment just to, to have a look at some of the results that this is. Actually achieved for the business. Um, uh, just over a year or two ago, um, they, uh, the company advertised that they had 900 open positions in the organization, 904 that they received 180,000 CVS in applications. 900 positions, 180,000 applicants.

Pretty impressive stuff, particularly in a knowledge economy where talent is so scarce. Now I did a little bit of a study on Glassdoor and indeed, and I tend to do this with all of my case studies. And I have to say the numbers are really good for Airbnb. And I recently updated them and they even got better post COVID and Brian Chesky was actually, um, Acknowledged as being one of the better leaders throughout the covert, uh, process.

So kudos to Brian, but let's have a look at the numbers. 91%. Of the people reviewing. These are their employees that are reviewing, uh, the company. And just so you know, over a thousand employees have actually reviewed on gloss, stole 91% approval of the CEO. That's extremely high. So just so you know, uh, better than Revolut, better way better than, than we work and right up there with zoom.

Where they're also very, very strong is that 81% would recommend working at Airbnb to a friend. Um, and okay. Really interesting thing. The deliberate things that I just described to you are exactly the most mentioned things that people say are the positives about Airbnb in 57 different reviews. People actually specifically referenced the food.

Done by the employee experience team. The second thing is great company culture. They...

Hello, and welcome to the bottom up podcast. I might pass ins I'm the chief executive officer at quality sense, and we are into the second, the second part of our deep dive into design thinking. And as you will have worked out from the first episode, I'm rather keen on design thinking. It really is a powerful problem solving too, that puts users at the very center, uh, uses as the primary source of inspiration validation of how to build a great product, a great service, perhaps even a great company and talking about companies.

Uh, today we're going to look at a case study, a company that uses design thinking in many different ways and. We will study, eh, B N B. So what we're going to actually do in this episode is we're going to look at how they use design thinking with customers, uh, on the outside and in the following episode, it's again, we're going to double down on Airbnb.

We're gonna look at how Airbnb uses design thinking with employees on the inside. And I cannot tell you that there are a few companies that have put. Design at the heart of their business, like Airbnb. So we have got a lot to learn. So let's set the context before we look at how they've used design thinking to be so successful.

Now, when we talk about this success of Airbnb, The real context here is that the value that they've created when you think about this scale and their impact on travel, hospitality and accommodation, what they have done has been achieved in just a little over 10 years. Hilton who are a little bit similar in terms of size and value creation have been in business for over a hundred years.

So when you, when you actually start to unpack how much. Success Airbnb has had how much they have grown and compare it to traditional, uh, travel accommodation hotel companies. This is when you appreciate, they have not only grown bigger than them, but they've also done it in a 10th of the time, which is really it's exponential.

It's, um, it's ridiculous growth. And to put that growth into perspective and to understand the scale of their business. They have well over 6 million listings on Airbnb and you can find them in over 191 countries. If you wanted to get that many listings, you would need to grab at least the top five hotel companies in the world and combine them to have a comparative number of accommodation listings.

That is how powerful the Airbnb story is now. Yes. I know what you're thinking in a work from home quarantine post COVID world. Maybe they're not as big. That's true, but also you could say that for their category, but we all know that they have catapulted into popular culture into the way we travel, the way we experienced cities.

And that's why it's such a powerful case study because design is really at the heart of it. So. The primary approach, um, has been through, uh, design thinking to build their customer experience. And what's really interesting is they famously and very openly talk about how they, they kind of struggled at the start a little bit, but it was through deploying design thinking, getting to understand their customers, that they actually had their breakthroughs.

Now, Joe Gambia, who's the chief product officer. He talks about designing for trust. Now, if you think about this paradigm, this is the greatest challenge that they face as a business because they don't own any homes. They don't own any hotels. They don't own any airlines. So what they have is an experience either in a browser or in an app.

And there's not a lot to grab onto there. It's not like you see the hotel, Airbnb hotels, um, as you walk down main street or high street. So trust is everything, uh, for Airbnb. Actually Joe has famously talked about how designing for trust is really at the core of how they have built the customer experience.

Now, big part of trust is, you know, the feedback and the reviews that we give of the places we stay. Um, Um, the Airbnb, uh, experience. Alternatively, if you're a host, it's the reviews and the ratings of the guests. I mean, this is a key trust building factor. I mean, just, can you imagine buying something on Amazon without having a quick look at the reviews or if it's something a bit more significant, you might really study, uh, Reviews across different sites before making your purchase.

It's exactly the same with Airbnb. So what's really interesting is through understanding that trust was everything. Airbnb then went deep and said, okay, how do we make reviews even better? How do we create impartiality in customer feedback? So what they've actually done is created a quarantine system for reviews, and here's what that means hosts and their guests will only see reviews.

That they've received from a trip after both participants have written their review. So this helps them avoid somebody seeing before they've written their review of a host. If the host writes a very negative review, the guest might turn around and just write a negative one and get into sort of some sort of tit for tat.

So by creating this quarantine, they've improved the feedback by making it impartial so we can trust in the reviews. Now I want to stick on reviews for a bit, because this is actually very, very essential to the trust building, uh, activity and designing for trust and using design thinking is. Really at the center of understanding how Airbnb did it.

Um, so Airbnb did a study and they found that when we go to a listing and we're looking at a listing of a place of accommodation in this service, and they did this study with Stanford. So, you know, there's some pretty serious thinking going on here. They wanted to understand that when we're looking at that listing, what's our bias.

What are the things that. Prevent us from booking and what's the role of reputation. And what they found is that if you had 10 or more reviews of your accommodation, you were 10 times more likely to rent out via Airbnb. If you only had a couple of reviews, hardly anybody would book it. So there's sort of this magic threshold that they've discovered 10 or more reviews is what it's about.

That's why they improved the way we give ratings and reviews so that they're better quality. They want to stimulate more volume, but then here's the interesting thing. They've done a number of other things that really improve the experience. Not only encouraging us. To book more, but also to review more, let's have a look at some of the things that they did based on understanding what designing for trust was really going to take.

When they first launched the service, they would have really dodgy Handycam snaps, um, maybe, you know, poorly staged, poorly lit, uh, photos of the accommodation had taken on a phone. So, what did they do? They ran an experiment where they would have a ton of listings, some had professional and some had regular amateur photography, and the results were astounding listings with professional photographs are booked more than two and a half times more.

Than homes without professional photos. So photos displaying the very best version of a property. Well stage well lit. Using those nice wide angle lenses encourage people to book by a factor of two and a half times more. This is a dramatic change in the user experience. It was a great piece of design thinking.

And actually it's led, you will find many of the books and articles celebrating the. The life of Airbnb will actually point to the moment that they did this. This was a serious breakthrough for the business. And since then they've done a number of other really cool things around, um, designing the experience, building an experience that really starts and ends with trust.

One of those, uh, that they also did was they really designed more trust into the host. So you might see the property, but actually who's the host can, are they reliable? Can I trust them. So they cre...

Hello. Hello and welcome to the bottom up skills podcast and Mike Parsons. I'm the CEO of Qualitance. And today we are starting a brand new series of the podcast. We're going to go deep into the world of design. Thinking, and I have to tell you that when I discovered design thinking, it answered so many questions in my mind.

Um, the biggest one is how do you, if you've really got a great product and I feel like design thinking really answers that, but really, uh, from a. Human perspective from a desirability perspective. And so I'm really excited to start this enormous 14 part series a where I've taken design thinking and just broken it down into really snackable, bites, size pieces for you to use, uh, for you to learn from.

And maybe even give you a bit of inspiration as well. So, This series, we're going to talk about case studies. We're going to go through all the different tools we're going to go really, really deep. And my hope is that you'll be able to use empathy, which is really key to design thinking, understanding others, um, really feeling on their behalf will you'll be able to use empathy.

Not only on the outside of your business or company with customers, but also on the inside too. Um, hopefully I can help you generate a few new ideas. Maybe it's a feature, maybe it's a product. Hey, maybe it's a business who knows. And in quarter, that is this other goal that I really hope we can achieve together, which is developing user insights, really validated shoes about it.

What your users, what your customers need. And lastly, how to test these assumptions and make sure that they become validated insights. So there's so much to get out of design thinking. And, um, I think it's perhaps good to start with, uh, talking about what actually is design thinking, because it is used quite a bit, uh, in business and you'll find no end of people talking about design thinking.

But I often find once you get into the practice, um, there's still, a lot of people have a very, the thin layer of understanding of design thinking. So let's, let's get in and really talk about what it is. Let's build a foundation for the next 14 episodes of the bottom up podcast. So you can go really deep and you might find some particular areas.

If you're a well-practiced designer, builder, entrepreneur, you might find that, you know, some of this material, you might find that there's one or two things you'd like to go deeper on. And if you want to go deep, you can go to bottom-up dot IO, where you can actually get an entire masterclass. It's absolutely free.

So jump in there and this will help you design products from scratch, make existing products better. Um, and as I mentioned earlier, I do think that this is an essential piece. Uh, if you want to build a new company, Okay, so design thinking, um, let's put this in a context of work. I think design thinking is a powerful problem solving tool, which puts the empathy for users at the heart of the process.

Now, the reason that this is so important is way too often. Um, when people think of a new product feature service, um, They're not really sure what problem they're solving or even worse. They assume they're the problem. And the solution and design thinking is all about putting that to the test. No more guessing.

Let's know. That's test learn. Let's validate. So first concept here in defining design thinking, it's a problem solving tool. And if there's a user in this story, then you can use design thinking to solve that problem. So it might be, uh, creating something in the digital world, like a new app. It could be something in the analog world, like how you navigate an airport, you could use design thinking to solve the problem that it takes too long.

To find your flight or to fly, to find your gate, or perhaps you could go for a hike levels, a challenge, but maybe flying makes some people anxious. So you could, again, you could use design thinking for that. Now the question is like, how does it do this and this word that you're going to hear a lot. When we talk about design thinking.

Is empathy. Empathy is really, really central to this. If it's about solving problems. Well, um, the how is really with empathy and I cannot tell you in my life, um, When I've been fortunate enough to be part of a team working on a, on a product that's done really well it's because we solved the problem well for the user and understanding what users really need is, um, so fundamental now what businesses do most commonly in my experience is that they prioritize the business's requirements.

You know, make money, our compliance constraints, whatever it is in terms of the business. So they, that those requirements, um, become more, more important, more primary then the user's needs. Now, nowhere is this more prevalent than financial services? So banking financial services, very highly regulated environment.

So often the need for compliance and regulation or the big one is actually the constraint of legacy systems. These are all business things. They've got nothing to do with what the user is trying to do the job to be done. In the user's mind, what happens is all of these business requirements, tight, the product or service, whether it's, um, if you're at a bank, the teller experience, when you're in branch or when you're online, know your customer, GDPR legacy systems, all those sorts of things, they just get in the way.

Of helping the user. So this is the paradigm that design thinking addresses rather than letting the business requirements, dominate the user experience and push down what the user actually needs. What it actually does, is it prioritizes what the user needs, because the beauty is if you serve the user yeah.

Can thrive too. So design thinking. Is fundamentally problem solving by putting users at P Cole. Now there is a five step process that the Stanford D school has, uh, invented, which is generally become the standard for design thinking. And this five step process. Funnily enough, it starts with empathy, naturally empathy to get out there, to understand the user then to go in a process which uses to define their needs, ideate, how you meet them, then prototype, then test.

Now there's many different, um, variations of this theme, but in essence here, the big takeout put the user first. This is what's key and continually go back to the user. To check in about how you might solve their problems. Now, this is the five step process, which is generally considered the defective standard of design thinking.

If you want to get deeper on that, check out the masterclass at bottom-up dot IO and you can, you can really unpack that, but there's something else that happens on design thinking. When we think about defining it and, you know, For me, it is the capability of design thinking to shift from a guessing paradigm to knowing, to make sure that we are solving a problem.

But what design thinking I can also do is to help you, um, solve a problem. And this is key that is worth solving. So you want to get up to the house, highest order of problems for users. Why, if you not small little problems, but if you solve a really big problem for a user, then guess what they want to use.

This service are lot. Guess what? If you're solving a problem that's worth solving, they will pay for it. And lastly, you can actually frame the technology requirements or the analog constraints very well. When you know, What's viable. I what prepared to pay for, and also what's desirable. You found out how to unlock the aha moment, the wow moment.

They really want this because this is solving a really high order problem. And therefore you can frame the technology to do the job, to unlock, uh, this problem. Perhaps to do it at scale, and to ensure that it is a viable problem to solve because not every problem is worth solving...

. Hello and welcome to Bowman skills. I'm Mike persons', I'm the CEO of quality terms, and this is a great opportunity. To talk about Neo banks, FinTech startups, but most importantly to also bring traditional banks into the conversation. Uh, and today, what we're going to dig into as part of my future banking, uh, keynote is we're going to dig into this question.

What can fintechs and traditional banks learn from each other? I've got eight big ideas for from Revolut. Four from traditional banks. Let's see what we can learn from them and let's see how we can go out there and build better products, better services, better businesses. I hope you enjoy it. All right, let's get into it.

What can fintechs and traditional banks learn from each other? Now, this is a really timely discussion. We hear so much about Syntech. We have venture capitalists writing. Uh, notes that software is going to consume, goes to eat the world. And frankly, we hear so much about fintechs, new banks, challenger banks, there's literally hundreds of new businesses, entrepreneurs building and creating new offerings, new services, and new products in the financial services space.

It is booming. And this is really because it's such a good fit. I mean, you think about it. Um, you know, money very much today is zeros and ones. And so software is just a perfect match, throwing some machine learning and artificial intelligence if you get some really crazy exponential effects when you put technology and finance put together.

But what's really interesting is, um. We've sort of left out the traditional bank in this conversation. And, um, what we're going to do today is we're going to look at both sides of this equation. And the reason for that is low. Let's not forget if you take, this is a out of the world's oldest bank in Italy.

I mean, these guys have 543 years more experience in banking than Revolut. So there's gotta be something for us to learn from traditional banks. And look, we want to build the best products and services period. So let's not only learn from the fintechs of this world, but let's also learn from the traditional.

Banks, and let's really take, you know, the best thinking, the best practices, and putting them into our own products and services. My point here is there is a lot to learn. So what I'm hoping to do today is to share with you four big learnings from traditional banks and for learnings from Revolut who were great proxy of the larger neobank in Syntech.

Well, so we're going to extract full from each. So hopefully in each of those eight ideas, there's something for you that will help you build a better business, a better product, and to delight your customers. All right, let's get into it. Let's go into the world of revenue. Let's see, um, what they have to offer now.

Today I'm only going to show with you. For ideas, um, from Revolut. In fact, I have well over a dozen ideas, uh, from Revolut in the case study that you can [email protected]. Um, and check that out because we don't have enough time now to go to all of them, but I've picked four of the best. So if you'd like to know more, head over to bottom up.io.

Alright. Number one, this is a really powerful lesson from Revolut that we can all win, not only in banking, moreover, but I think as, uh, an entrance into any industry in, into any vertical. And they see their offering. They position themselves when they think about tech and product is they think about it very much in terms of banking as a platform.

And this is really important because this determines how they build. Uh, different features, different elements, different modules in their stack and the choices about how they do that. But it also has a really profound effect on how they look at their business overall. So I wanted to give you an example.

You know, many, uh, traditional banks will go out and license or purchase a card fraud detection system and plug it into their platform and that they'll plug it into. Many other legacy systems, in fact, somewhat of a patchwork of systems, you might say. But not at Revolut because they see what they're doing as building a banking as a platform.

What they do is they've very often, they build the different components of that platform. And here you can see, uh, an example of where they don't show log their own fraud detection system. And what you can see here is you can not only see all the whole architecture, a lot of it's built on. Uh, the Google cloud platform.

But what you'll also see is they saved a ton of money, and actually they're getting some very good results. So 30% of shows for predictions actually turned out to be correct. So this is what happens when you think about building not just a product, but actually an entire platform is that you actually go out and you'll build a really high performance elements that actually sit within that ecosystem.

But there's more. So what we've been very fortunate to do is with sounds a great quote from Nikolai Sternoff ski, the founder and CEO of Revolut, and I think this is really instructional on how banking as a platform can actually affect creating. An amazing business. Let me read to you this quote from the CEO of Revolut.

The reality is, what we're trying to achieve is to build a 10 X better financial services company that is 10 X cheaper as well. And the only way to do it is not by building one product, but building a platform with lots of products on top of it. So there you go. So he says, look, if they want to create customer experiences, 10 X, if they want to offer a service in the world that's actually 10 times cheaper.

The only way they can go about doing that is by banking as a platform and not just as a CEO of product. So there you have it. That's lesson number one from Revolut. Let's go to lesson number two, and this gets very much into. Culture and people and how they work together, some of the behaviors they have in their organization.

And um, in our case study, we sound like Revolut has a pretty hot and sauce high performance culture and it's built around several tenants, one of which is getting it done. And I wanted to share with you a quite from their head of executive recruitment, cause it really paints a picture of what that looks like internally.

And I think we can learn a lot. From it, and this is from Rebecca South at Revolut. Here we go. The individuals that really set themselves apart and really thrive at Revolut are the ones that take the initiative to put themselves out of that comfort zone and take ownership. Of that tech and to learn something.

So they've created a high performance culture about taking ownership, about learning, about putting themselves outside of the comfort zone. And I think, look, any traditional bank can learn from this, but more importantly, I think as entrepreneurs overall, I think this high performance culture really requires this idea of taking ownership.

And this comes from, uh, somebody who is really celebrated. This idea is Jaco willing, a former U S Navy Citadel, um, an amazing and inspirational guy. He wrote the book extreme ownership. So if you do find this a really compelling idea of taking extreme ownership, getting it done, as I would say at Revolut, check out this book from Jaco Willink.

Okay. So that's the first two. The next two we've got coming up right now. And the first one is growth teams. So again, we're also tackling not only the tech and the products and their and their whole stack, but we're also looking at how they organize picture. It's a huge part of getting high performance out of any business.

And growth teams is absolutely at the essence of how reveler launches into new markets. So let's break it down. So I was very fortunate to find some of the key execs talking about how they'd build their growth teams. I think this i...

hello and welcome to the bottom up skills podcast. We are at the fourth installment of our four part series. It is the case study into zoom video. In the previous episode, we would deep in the world of promotion and in particular, Zoom has got some killer full-stack partnerships going on a lot to learn there.

There's been a lot to learn so far, but I promise you, I still have a lot to share with you in this episode because this fourth P as usual, in a case study, we're going to go into profit and I can tell you one thing. Zoom has a very special business model. In fact, it is so good. It has this rare characteristic that it actually gets more profitable.

Over time as they get bigger, they actually make more percentage profit. Now this is incredibly rare, and this is what we call a network effect. I'm going to tell you all about that and plenty more in this, our last part, our last installment of the zoom case study buckle on in get your espresso because this one is going to be great.

It's the zoom case study part for profit. Let's go. Okay, here we are. The fourth P profit. How does zoom put the dollars in the bank? How do they grow? What's the economic model. Are they creating value? Are they capturing value? Well, the answer is yes. Yes, yes. And yes, let's get straight into it. Number one, this is a little bit counterintuitive.

They make lots of money because they have a strong freemium model. And the reason that this is counterintuitive is obviously you're giving away a really good product for free, but here's how it makes sense. This is the biggest money earner ever for them, because here's how it works. What they discovered is that if you try the free one, you will go on to buy the premium one, but I'm going to put another twist on here.

This is not just the SAS direct to consumer model. This even works on really big clients. Check this number out. 55% of hundred thousand dollars or highest revenue customers were started by a single employees, free trial, 55%. So in really big enterprise clients with hundreds of thousands of licenses from Zune.

Over half of those started with one employer, one employee having a free trial. So if you ever were in doubt about the freemium model, this is all the proof you need. So by giving it away by giving their product to people, to trial, to have a basic version, then they end up converting them, not just for a hundred dollar deals, but well, in excess of a hundred thousand dollar deals.

Okay. That's number one. So I like free freemium. It's a working for them. Now, the crazy thing here, and this is really unique. This is even to a greater extent than Revolut in our recent case study. What zoom enjoys is one of the biggest addressable markets I've ever seen because frankly who's their market.

Well, it's kind of everyone and, um, well, how you quantify that? I can't put a number to it, so I'm not going to go there. But I'm going to show you what happens when you've done all the things we've talked about and how your market just explodes under the right conditions. So what I've done is I've taken a year's worth of data, uh, from Google search.

It's a worldwide and I've compared what happened when quarantine and covert all happened. I can compared zoom with Skype, WebEx, uh, Google Hangouts, and blue jeans. And the data is off the charts then nearest competitor. When we talk about the volume of search is maybe 20% and that's Skype, maybe Skype got 20% of the increase of interest and a search queries to that of zoom.

Said differently. Zoom was always ahead pre COVID, but when COVID hit, it was such a perfect storm that all of the things I've been describing on this case study came together and they're business boomed and I'm talking, boom did not like twice. Three times as much as the nearest competitor, I'm talking like a five X return.

So because they are so well positioned, they have enjoyed a higher spike than any of their competitors and massive degree. This demonstrates how big their addressable market is and how well they've set up, not only their product, but also their brand to enjoy the bump when it came. Now we're going to get a little bit into some micro economics of how the business works, but this one is killer.

This one is the utopia of all economists, uh, of all, uh, chief financial officers, free cash flow. But what we're going to see is something bigger than that. We're going to see economies of scale. This is something that businesses often talk so much about. Um, you know, the classic thing is when two big companies merged together, they talk about, uh, you know, economies of scale and thing and things like that, which by the way, rarely ever work out to be so true.

But what is really crazy is over time, zooms efficiency actually increases whilst they are growing. So, this is really substantial, said differently as they're growing, as they're getting bigger. And remember bigger is often the thing that always holds companies back. You know, if you're a large fortune 50 company, if you get anywhere close to double digit growth, you're like, A superstar, right?

Yeah. Cause as it gets bigger, it gets harder to manage and to manage more complexity, so on and so forth. But I want you to check out, I want you to have in your mind the number of 82%, and then we're going to explain why it matters. So let's do a comparable, let's dig into the bottom line. Let's dig into their financial reporting and see where these economies in scale take place.

Where is the proof that this thing kind of gets more efficient as it grows? Here we go in the year ending January, 2017 operating expense to sales with 79%. The same as it was in 2019. So what they're saying here is basically the operating expenses to sales were 79% for two or three years running, but meanwhile, zooms gross margin increased from 79% to 82.

So their percentage of costs didn't change. They able to keep hold of that. So they delivered to more customers for the same rate, but the top line grew from 79 to 82 gross margin increased. This means. That just as they grow, they don't only make, uh, the total volume of profit is bigger, but what is actually it's percentage of revenue increases because they're able to control their expenses.

And I think what you will see here, this is because they're super focused as a company on one thing, video, super focused on being cloud-first so they can scale much easier. I have a great culture. They're retained people really, really, really well. So they're not turning customers, their greatest advocates that go out and market the company are their employees and their customers.

They are primed and ready for this sort of, uh, um, sort of it's a real rarity in business, which is, they genuinely just get better as they grow. This is truly rare. What is even rare is still is if you look at it, What is happening with people, product and promotion. They are also in extremely good shape.

So to sort of pull together the profit picture, strong, uh, freemium offering, uh, this is fantastic. They just give away their product and somehow they make money. This is fantastic. Um, you know, those large enterprise clients start with just a free trial or a freemium version. There are product for everyone, which is just wonderful.

It means billions of potential customers, and they just get more efficient over time. So they have it. That is the fourth part of a deep dive into the business. Uh, and the universe of zoom, uh, video. I hope you've enjoyed looking at how they make money because I got a ton of learnings out of this one.

Okay. So now it's time to do a recap. You have been sort of blitz if you will, with, uh, 12 different ideas around people, product profit and promotion. I think it is now the exercise of great discipline and simplicity. Let's try and pull it all together. ...

hello and welcome to the bottom up skills podcast. I'm your host Mike Parsons. I'm the CEO of quality QualityNet. And today we have arrived at the third. Of four parts in our zoom video case study. And in the last one, we learned all about people and culture and how they build teams in particular, apart from the culture of happiness, they have this huge North there's a vision.

If you will, a frictionless video and they just obsess about it. Sort of helps them make all their decisions. And today we're going to go back onto the outside of the County. We want to learn how they market their product and they do some very cool things. In fact, I would say they even do some contrarion things.

So there's some really good stuff to learn from zoom video. We're going to go to the third paid promotion. It's the third part of our case study. It's zoom. Let's go now. This is perhaps one of the most powerful things that I've discovered in studying zoom to kind of work out how they've, uh, worked in their category.

What's really interesting here is that they've slow at what I call full stack partnerships in the productivity suite. And this is a rather contrarian approach because generally what people tend to do in a market is everybody competes. Uh, for example, for the same search queries in Google, uh, or Facebook, uh, everyone is in like, They say we do this 10%.

Uh, the competition comes in and says we do it 11% and it's all very tactical, um, uh, really lowly differentiated. Well, I always call it hand to hand combat. What was really interesting is the following insight that actually zoom built their business in a slightly contrarian way in a, in a different way to the competitive set.

So what happens is if you look at the website of zoom and the website of WebEx, you notice that there's this really interesting difference in the most related websites. So when you look at all of the data, when a Google and other tools say what sites are related to zoom.us, the main website for zoom, you notice something very different.

Zoom has a pattern. Zoom is highly related to complimentary products, not to competitive products. So here's what I mean by that. The one website that is most related to zoom is actually Google calendar. The next one is a sauna and the next one is Calendly. What's the insight here? Well, these are all, um, complimentary tools that go with zoom together that help you get a job done.

Help you be productive, help you work from home when you take WebEx on the other hand. What's really striking is that actually the first website that is most related is actually a help website, but then it's other conferencing tools and there is one or two other tools like stack over file, I guess, and maybe Salesforce, but to a far lesser degree.

What is the point here? Zoom went out and made deep. Strong product level partnerships. So they are embedded in other people's products. So they are deeply related to the job to be done. Be productive, connect with others, do a deal, have a meeting, present, share collaborate, rather than that. Highly competitive world that they're super attached to the fight between them hanging out since guy who's the best, um, video conferencing tool.

This is really, really massive because by embedding their product and integrating their product through partnership, they have achieved huge growth. Even pre, uh, quarantine and pre work from home. So when we all had to work home, what you're going to see is their business took off because they're already embedded in the workflow of others rather than competing for search queries and search terms in Google.

Really powerful. Now here's the other crazy thing. I want you to remember, I'm going to talk about the second big insight. So first one is how did they grow? How did they tell their story? A through partnerships really embedding themselves in the productivity step. The second thing is they just bring people together and they have a signature event called zoom, zoom, Topia.

Now the crazy thing is here. I want you to remember this is a video conferencing tool. And if you take a look at zoom Topia, this is more like a Ted event or to me, like there's so many lasers and people getting pretty excited about what's going on. You'd think it's like a rave, but like the point here is that they can create so much excitement around their mission or their vision.

A frictionless video and bringing happiness to others. They can actually pull together a massive event with thousands of people that all come and get really pumped about zoom. Now, if you were to look at this and you said, Mike, while this looks like this looks good as an event, maybe it's as good as Salesforce and their Vinco Dreamforce, but here's the thing I dare you to imagine.

Do you think people would get excited like this for a Skype event? Or would anyone even turn up for a Google Hangouts event? I mean, here's my point to get this much excitement around a really utilitarian product. This is really exceptional. And it goes to speak to the stories that they tell and how much they resonate with their community.

Last one, we're going to kind of. You know, we are going to put down the glowsticks for a second. That's enough raving. We're going to go to the hard graft of sales of enterprise sales. And what I discovered is they have a very deep and rigorous way in which they train their sales team. And this is really powerful.

So check this out. So, what they do is when you join a zoom as a sales person, here's what they do. They actually get you to jump into their Academy, where they give you a general onboarding to this is how the company works. This is the way we think and so forth. And then they move you into bootcamp. And boot camp is very different.

It's not sort of a general onboarding. This is a very specific, specific job, specific role specific boot camp. Where they get very deep into in your job, you will need to learn how to do this. Here's how you do it. Now. What's really interesting about these two is that they are largely taught by existing execs and team members inside of the company who come to do the teaching.

So you're taught by your peers and your colleagues, which I think is very powerful. But they keep it going. So once you fully on board, and then they put you in their elevate program, this is all about your own personal growth and seeing to it that you grow, that you're challenged. If you're fulfilled and satisfy, this is pretty solid, pretty robust.

Now what's really killer though. What's the twist here is zooms is SAS company. Yet they have bought some of the best practices of enterprise sales. And you're going to see a bit later on that this really pays off for them, but this is the third thing that they do around people and culture. So let's do a quick recap.

They have, I'm sorry, this is not around people in coaching. It's about promotion. What am I saying? So what are the three things they do to tell their story? It is number one. Full-stack partnerships, number two. Zoom Topia. This is about bringing people together. And lastly, this is about customized sales showing really deep and really professional.

I think what really stood out to me here is that they had this contrarian approach to grow their business, tell their story by being embedded in other people's products, to be part of the larger productivity story. While a lot of their competition, we're all fighting for like the best rates. On the same keywords, they were doing something completely different.

So that's promotion. That's how zoom promotes, tells their story, grows their business. I can't wait to share with you the final pay of the zoom business, and that's going to be profit. So there you have it. That's a wrap for this episode of the bottom up skills podcast. I hope you've enjoyed it. And re...

022-bu-zoom-people3

[00:00:00] hello and welcome to the bottom app skills podcast. I'm your host Mike Parsons. I'm the CEO of quality. And you have joined us for the second installment of our four part series doing a case study on zoom video. And we learned a lot in the last episode, we learned that they're essentially, as a company, zoom are obsessed with video quality.

This is their only product. This is the product they obsess about. And that's why the quality is superior. Particularly when you're getting into large groups, it's so superior to any of the competition. So, if that's what's happening on the outside of the company today, we're going to go on the inside of the company.

We're going to have a look at what's happening with people and culture and teams and all that good stuff. We're going to learn how they build a great culture and how they kick ass and take names. [00:01:00] So we're on the second part of the zoom case study. It's all about people and culture. Let's go. And this is really great because if a company is really doing really well on the outside, my hypothesis is, you know, great products are built by great teams.

So let's go and have a look now and see what they're doing on the inside. Okay. What I find really important, uh, when we think about what happens inside of zoom is it starts with one of three ideas and the first one. Is that they have a real North star. They have like a vision of what they're fighting for.

They have a vision of the perfect world that they want to create and they call it frictionless video. And frankly, again much like the product simple, it just works. But also having lived in four different countries, I can tell you, I've used a lot of [00:02:00] video conferencing in my life. Um, Talking to colleagues in, um, the us and Europe, uh, until zoom came along, there was no real great solution.

And I can tell you what this frictionless video really speaks to me. And it's actually kind of at the heart of how the company was created. So let's have a listen now to the founder of zoom, Eric wan, and let's get a little sense of what frictionless video means. I spend a lot of time talking. There's a costumers customer, really happy about it.

The WebEx X experience, I now feel like it's time to build in the next generation of WebEx. And no matter which device you are using, like a mobile device, desktop, or conference rooms, you should make sure your video experience is perfect. You know, to have that experience. If you got to do Peter something from scratch, when it comes to building a word scalable company, how to organize [00:03:00] all the team members from all over.

Work working together and make sure that incurred the productivity is very important. So all the positive several years, the company grew very rapidly. We have Ola half a million penis customers. Not only do we build a technology or service, we also build an ecosystem. So meaning we can integrate with a CRM application integrated this like Zendesk or Slack, also integrated with all other hardware solutions as well.

So overall, we want to be very open. Flexible integration with any other software hardware, all business workflow applications to have the best experience we got to take a different approach. You need to take a step back read and a standard customer problem and isn't university or engineered time into the product.

You make sure it's very easy to use. It's too hard. Nobody's going to use it. That's why simplicity is number  to drive the videoconferencing usage in a, we are that [00:04:00] users, right? We've got to make sure. We allow that a solution, if your employee is not happy and guess what they cannot date of happening is through our customers.

So that's why our culture is to focus on dealing with happiness, to each other. They love happiness to our customers. So there you have it. It is all about frictionless video and what he sneaks in just at the end. There's a little bit of a taste for what's to come. Is, you've got to build this from scratch.

You can't, you know, bandaid some old solutions, pull this off the shelf thing from here. And this one from OB you've really got to get in there and build it all from scratch. Curious thing. Exactly the same as Revolut. They've built their entire stack from scratch in order to be world class and control it end to end.

So that is their vision of frictionless video. What's really interesting is that kind of becomes the North star. This is the product we're building. If you look at how they're going to do it, like what's the way in which they're going to operate with themselves, with their [00:05:00] customers. In fact, with all the constituents in their community.

They have this idea of building a culture of happiness, and it really does become sort of an organizing principle by which they decide about how they're going to do things internally. And once again, I've been able to dig up this great little interview with Eric, Juan, the founder, and we're going to have a listen to him talking about this idea of happiness.

It boils down to, you know, how do to feel happy or not. You know, make sure your customer happy, right? If whatever you're doing, you feel like, yes, it's everything and in control. Right? So we feel pretty happy. I just do it all the way it's doing the fall or whatever other state, you know, may or may not apply to you.

So you got to make sure you understand that your team understand your business. I, you know, our case is our culture is to deliver happening right. So everything centers around that if the team can deliver happiness, we do it with Dobbin on that. You know, we feel like something we should not [00:06:00] do because could cause some problems.

We're not looking to do that. So we do not think about, you know, maybe in two years, a double the, they know that your market caviar valuation, you know, or maybe get a lot of other new customers. Maybe it's 300 girls. That's not a, we're not a water we are thinking about every day. We read a thing about, you know, employees happy and as customer happy.

Now the fascinating thing here is that Eric was talking about, we, we obsess about happiness. Are we delivering happiness? We don't think about market growth and all of that in there. Focus on the customer on the video. First on their focus on delivering their happiness. They get to enjoy insane growth anyway.

So what a timely reminder be focused, not on. Just the day to day and getting into that hand to hand, combat of market share and so forth, what's clear is that they make decisions based upon is it going to help us deliver happiness [00:07:00] to our customers and to our employees? And this is really powerful because this is what can organize their culture and help them deliver frictionless.

Video now this next and third thing that they're doing on the inside. So we see that they've got vision with, see that they've got culture is to look at what happens when you capture, when you measure, when you survey those employees, what do you get back? First thing that you get is Glassdoor results off the charts.

So what you were seeing in, in my previous case studies is one of the ways I get to look inside of an organization. And I have not seen results of this. This, these results are as good as maybe a little bit better than Airbnb at its prime. So 4.7 recommendation, a 4.7 stars out of five. So it's almost perfect.

90% would recommend to a friend. This is the point of view of the [00:08:00] employees. 98% approve of their CEO. And lots of pros here, but check this out. ...

021-bu-zoom-product-02

. [00:00:00] Hello, and welcome to the bottom up skills podcast. I'm your host, Mike passings. I'm the CEO of QUALITANCE and we have a brand new series here for you. Today. We're going to do a big, deep dive into the world of. Zoom video. That's right. We're going to decode their product, their business. We're going to look at it from upside down, from left to right.

You name it. We're going to look at it because these guys are on fire. They are doing so very well. So we want to break it down and look at some of the practical learnings are for us as builders, creators, designers, entrepreneurs who are trying to build a better future. And you know what? Zoom is doing a lot of things right?

And there is a lot to learn. Are they as hot as say, Revolut our last case study? Who [00:01:00] knows? But there's going to be a ton to learn. We're going to have the classic four PS, people, product, profit and promotion. We're going to break it all down and see what we can learn to build great products too. So stay tuned.

This is the bottom up podcast. Okay, so we're going to start with the product. Uh, the first and most important of all the peas. And. When we think about zoom and we think about its product, I've got lots of things that come to mind, but I, I've kind of compressed it into three big ideas. Now, the first one, it's going to sound a little self evident, but the fact is here, the first idea about why is this product so good.

It's because they're video first. Now, this becomes particularly important when you think about it in context to its competitors. Zoom is built, designed, managed to be a video first product. It is not an old audio product that has had video put [00:02:00] on top of it. It is born a video product from day one. So what this means is everything is about delivering the very best video when you're in a, you know, a conference call or whether you're in a, uh, something a lot bigger, uh, uh, as a women.

So what I did is I hunted around and research and I found that few tests that really reflected my own experience as well. And that is this. Particularly, uh, Skype and even more so Google Hangouts, I find that I'm often presented with really poor video quality, and especially when there's more than two of us on the, on the call.

And, uh, what I've actually been able to do is. I found a video where a group of people actually did the same meeting at the same time in different platforms. So we can see the difference. And the big thing that this calls out is the pixelation of Google Hangouts. Now, when you compare that same meeting now [00:03:00] done in zoom.

All you, all of a sudden you see that the picture quality, the F, their little refinement on the pixels is much, much better. So I want to point out, this is just like a small thing, like the video, I guess on Google Hangouts is. I dunno. Good enough. Ish. It's okay. But what happens with a company like Zune?

They do lots and lots of lots and lots of things that are better, and it's if one is a little bit better and then the second one's a little bit better, all of a sudden if you zoom out, you get this aggregate experience of. All around. The product is just better on so many fronts. So if you look at the difference between the same meeting done in Hangouts versus what you're going to see is just a better video quality, and this just adds up over time.

There's a few things that zoom. Um, can be, um, can [00:04:00] improve. But for the most part, they're doing so many things just that bit better than everybody else. When you actually step back, it's really a significant difference. Now, if you introduce a large scale video conferencing events, so we're talking 30, 40, 50.

Plus people. Zoom stands alone, all the others you're going to experience, first of all, limitations on actually putting that many people in. And if you can, the video's really compromised and we're going to talk about that in some of the technical pieces of, of this case study, because there's actually some really straightforward technical reasons why other products are really inferior.

When we look at scale. So zoom one-on-one. It's good. Zoom at scale with lots and lots of people is absolutely great market leader, and that's really the first big thought that they are video first. Okay. Second number thought. Now. What you have to remember. This is all a bunch of [00:05:00] first actually for the product.

The other thing that they're really first with is they are cloud first. So they are not tied down to legacy technologies that are not designed and built, uh, for the cloud. Classic example is Skype. In order to deliver its video and some of these other features. It's actually got our SharePoint architecture.

And if any of you are old as I am, you'll remember that SharePoint is certainly not a cloud first technology. This creates all sorts of limitations in terms of scale and so forth. So what's really interesting is if you look. At being a cloud based application. What's so uniquely strong about the cloud and the way it performs is it helps you scale.

And what I've been able to do is just break down what Skype is doing in their application architecture that helps them scale. So very much. And remember. December 10 million [00:06:00] sessions a day, April, over 200 million and the thing didn't fall over. So this is worth really, really learning from. Number one, they just have a better network.

What they actually do is they use a distributed network, and this is not unsimilar to how Netflix delivers great quality. Uh, Netflix puts these media appliances in it, the ISP close to the delivery point. So it's a distributed, in the same way a zoom has over 13 data centers, and each of them are trying to work really hard to distribute the workload.

So there's not like, um, to use a traffic analogy, you don't have a one highway, which is trying to deal with all the traffic it's distributed across. I network. The next thing is that they use this thing called multimedia routing, and this helps them deliver more than one stream at a time. Now this feature directly goes back to the first thought, how they do like these really high volume high attendee.

[00:07:00] Coles. It's this feature. So what happens is this multimedia routing enables not just one, but several video streams between people to be used, distributed concurrently. So what does that mean? It means you can have lots of people in a call and the call quality, the video quality is good. Now when we think about particularly the last mile, the third thing that they do is they use this multi bit rating coding.

So what happens is if it's really congested in your local network, maybe at home or by the office, they'll drop the bit rate or the file size that they're trying to deliver of all the audio and video. Um, so that is less load on the network. It has better chance of getting through. So they're adapting, uh, even at that last mile moment.

And what that means is it's just more consistent as an experience for us, the happy users. And the last thing that they do is they have a replication layer that manages the quality of service. The fact that you, you could imagine almost oversees the [00:08:00] three other points that I mentioned. The network. The multimedia routing, the multi bit rating, coding.

Um, it looks at all of those things in managers, the overall to ensure that they're really delivering a, an experience that we, uh, not only expect, but I think that w that we love frictionless as they would say. So the last point here, so we're still in product. We've got the fa...

[00:00:00] Mike Parsons: hello and welcome to the bottom up podcast. I'm Mike Parsons and I'm the chief innovation officer of Qualitance and this is our fourth instalment of a fantastic case study, diving deep into the world of Revolut; who some might call them the Amazon of banking. And so far we've looked at three parts of their business; the product, the people, and the promotion.

And there's a ton of learnings, that we can take from them. Most of them goods, they've obviously had some challenges on the people and the culture side of things. But the real question is. Does this all add up to the dollars and cents really come together to make this a profitable business and a business that can do really well in the longterm.

I've collected a few insights here that are all taken from our case study that you can get at  bottomup.io; you can get it all for free. It's [00:01:00] a total deep dive for an hour on all the learnings or the inspiration that we can take from a Revolut. They've done some pretty crazy things. Probably their biggest achievements so far apart from raising a lot of money and being valued at over 5 billion, is that they've generated over 10 million customers in five years, and they've largely done that, without much paid advertising.

At all. So we're looking at a pretty interesting business from a profit sense. So let's dive now into just a few key thoughts that we've discovered about how they build their business and how it all adds up. I'm going to give you three big ideas on how they make money, how their profit model looks, and some of the thinking behind it.

Thought number one, this is the big one. they have removed the middleman from their banking infrastructure. So what do we mean by that? Well, if you look at the traditional bank, [00:02:00] over the last 10 or 20 years, they have accumulated. Tens and wait for this. Sometimes hundreds of services from different technology providers, right? 

From login or Auththenitcation, fraud detection, you name it. So when they deliver to you, let's say three or four, services, or products, let's say a checking account. A loan of some sort, maybe a stock account, et cetera, et cetera. It takes them like series of, vendors and datasets and services to integrate and to sort of, I don't know, bandaid almost sometimes together and deliver to you.

What happens over time is when you keep patching in all these different third parties, the system gets heavier. It gets bogged down, and, this has been actually a massive problem for the folks that are in the banking world because the infrastructure becomes so heavy, you can't move fast. In fact, if you [00:03:00] have a look at the case study at bottomup.io, we found this study from fraedom and they're basically saying that.

Almost half of the banks that they surveyed named their legacy system as the biggest blocker to them actually growing as a business. So it wasn't a sales problem, but it wasn't a marketing or a brand problem. They're literally strangled by their legacy legacy infrastructure. Now, what's really interesting here is that.

Revolut have decided not to be dependent on third parties. And what's particularly interesting about this is that many other neobanks have not made this decision. So what is really special about Revolut is they're one of the few that have doubled down and said. All in. We're going to build it all ourselves.

We're going to provide all of the services so it's not just a checking account and we're going to build this, craft this together. Now, there's two parts to this story. First, I want to give you a little quote from Nicholas Stranovski and I'm going to read you what he has [00:04:00] said about this, and then we're going to unpack it.

Okay? Is what he said about their longterm business model:"effectively. When you run all of the infrastructure in house, you can actually make money out of this business and the business becomes quite profitable". So that's Stranovski CEO and founder of Revolut. And what he's really saying here is that once they've built their own infrastructure, and I think you got to remember that's a law of capital investment in the upfront.

That's why they've raised so much money, over $800 million. But they're building all this infrastructure. And what happens is because they've built it, they don't have a very many third party dependencies, both either in terms of technology or in terms of pricing. So what happens is that as they introduce these new services, and as they have the network effect, they get more and more customers.

They're actually making more money than their competitors do because they can move faster and they're [00:05:00] actually got less. Cost per transaction. So this is a really powerful idea. It is a risky idea. It is a bold idea because you're effectively saying, we're going to go all in and we're going to build it all ourselves.

And for a lot, I would say majority of banks, this is too big of a risk, but in this case, Revolut have taken a huge risk and they're going out in the world and delivering. A full range of services on infrastructure that largely has been built by themselves. And if you go back to the, product, episode of the show, you'll remember that I dove into a special case of where they built their own feature for a card fraud detection.

And you, if you go back to that episode, you can hear how we break that down and look at what they've done and some of the economics behind it. Again, if you are interested, jump over to bottom app.io and have a look at the, the full case study. It's, it's pretty cool. Okay, so that was idea number one.

They've removed the middleman. They've done this vertical integration or a to Z [00:06:00] or end-to-end. There's a lot of different ways people call this. The point is this, is that they've, they're doing a build versus buy strategy. But number two is that they're way more than just a savings account. So the crazy thing is if you have a look at all the different products that they're offering within the one unique experience, you've got subscriptions.

You've got, opportunity to make money on transaction fees, money transfers, internationally, perks, insurance trading, ah, loans, overdraft, business accounts. It goes on and on. So what you can see, idea number one, they've built the stack, they've removed the middleman. Now they're just offering more and more things on top of that stack and making more and more money, and that's a lot of good revenue in those products.

The other thing that gets really interesting is that they can offer more products more quickly because they control their own stack, the moving at great speed, and then they get the network effect. People like them. Because they're more than just a checking account or a savings account. So more people get [00:07:00] on, they make more money, so they invest more to make more features.

So more people get on, and this is a classic network effect, and you'll start to see some, some really exponential growth characteristics as they get a full set of services in cross or markets. To give you an example, right now, they've only just started a very basic offering in the U S so this is early days for them.

And. I think there's a lot more growth in store for the company. Okay. So that's the first two ideas. They removed the middleman and they've got a multiple products and services that they offer across the platform. I think the other really powerful thing that generates a lot of money generates a lot of positive business growth for them is their premium membership.

Now, what y...

 [00:00:00] Hello and welcome to the bottom Up podcast. I'm Mike Parsons broadcasting to you from the work from home studio in a world of isolation, but what's not. On its own, uh, the learnings from Revolut, the Amazon of banking. And yes, we're doing our case study and on this show we're going to be doing part three of what we can learn from Revolut.

And so first of all, we did product where we learned that they are building everything themselves. They have a huge focus on simplicity and ease, and they're really building FOS have over 10 million. Users. In the second show, we learned that they have a pretty hard fast and culture in terms of people.

That's the second P and that's definitely created some challenges for them. When you consider the fact that, um, [00:01:00] you know, they churned a lot of employees at the, at the beginning of that. They learned from that, and they have overcome. The third P is promotion. And what's particularly interesting is everybody knows about Revolut.

Uh, particularly in Europe. It's huge. It's just launched in the U S as recently launched in Australia. So there's a pretty high familiarity with the brand. But what's really quite interesting is how little they've spent in paid traditional advertising to build their brand. So they've really used the product at the heart of it.

And that's why I'm excited to share with you this third part of our case study on Revolut. Okay. Promotion marketing, brand growth. How do they do it? Well, there are a lot of learnings from Revolut. I am going to give you a bunch of them. Please remember that. If you want to go deeper, we have a whole master class, uh, on Revolut at bottomup.io where you can get all sorts of goodies.

So [00:02:00] check that out. All right. Lesson number one, it's called growth teams. Now that growth teams are these small, agile, decentralized teams, very local that they deploy and they're, well, let's be honest, they're just kind of skunkworks teams or agile teams or scrum teams, if you wanted to call them that, and they're very small.

And these growth teams are all about getting a bunch of cross functional people, get them into one team, setting a audacious goal and grow like crazy. So usually in their case, they have like the country manager and then a marketer business developer. Comms manager and community manager in the team. So you can imagine that the community is about activating the community.

A comms manager is going to be more about messaging a business developer might be about choosing the right products, features, services, um, maybe bring in some partners. And the market [00:03:00] is all about pulling together a campaign to kind of activate, maybe sign up ah deposits, whatever goal that they have.

These growth teams are really important. And one of the things that is strongly inferred about how they work internally is that this is not dissimilar to how they build their product teams as well. So there's a lot to learn from this idea of growth teams. So you've kind of got the inside piece there.

Let's, let's shift a little bit to the outside piece and let's have a look at how they thought about customers. And there is a huge lesson in Revolut in terms of segmentation. Here's what I mean by that. They focus not on. You know, the mainstream or the, the casual customer, not the early adopter. They went right up into the cutting edge to what they call the innovator segment.

And that's where they've started. Now, this innovator segment, they kind of influence the early adopter who influenced the early majority, [00:04:00] the late majority, and the laggards. So they've really focused on what they saw was sort of a tipping point segment that. Kind of creates a snowball effect across their entire audience, which is everyone, because everyone, every adult over 18 needs a bank account.

Now, what was really interesting about these innovator segment, or archetype or persona, is that they really love entertainment, shopping, and travel and eating out. And this works very nicely with their product because you use Revolut in a lot in all of those activities. So when you're traveling or you know, restaurants, splitting bills.

So this was brilliant. So they picked a segment that had high application, high relevance to the product. So a lot of their success was really finding this high influence, uh, this kind of snowball effect with this early segment. So there you go. You've know that they've got their growth teams, they focused on the innovator.

Let's have a look now at the third [00:05:00] learning, which is all about baking the marketing into the product. This is where they actually kind of made the product itself kind of viable. And the greatest example I can give you is bill splitting. Um, they've made this, um, really seamless to throw a bunch of friends on the list, split the bill.

It goes out to everyone. It happens in just a few clicks. And what's so great about this is. Every single time you use the product, you're potentially recruiting a new customer for them. Now, here's the other thing that they did, and they did a lot of kind of classic tactics, but an absolute classic one out of the marketing playbook is the waitlist.

So what they've effectively gone and done is they've created scarcity, interest, and curiosity around the product. So here we start to see that the way they're promoting is a bit more like Dropbox. So you might say that the product inspiration is kind of Uber like. But if [00:06:00] you look at the promotion and the way Dropbox build itself, this is Revolut is doing a classic Dropbox here.

They're creating scarcity and interest. And if you go and recruit friends, it's good for you. Everybody wins. And um, I think that although it sounds sort of like, so what a wait list. It's a marketing classic. And when done correctly, just like Revolut does, it works a treat. Okay, so let's zoom out and have a look at how they've built this mega brand without many marketing dollars.

One growth teams. They've done a really good job of organizing their internal teams around these audacious stretch goals. They had laser like precision focus on a segment that was not only viable in itself, but they knew would be, um, creating this snowball effect, this kind of contagion, uh, amongst friends.

Next thing they did is they'd put the marketing right in the product. So every [00:07:00] time you're bill spitting, traveling, sharing money. All of these things are generating a member acquisition. And lastly, I deployed the classic white list and they did a lot of other things, but this really captures the broad extent to which the really reframed how to do growth marketing for a neobank or in the larger financial services market.

I think this. Is really cool too, to their success. So there's a lot to learn there from Revolut when we think about our third P promotion and I can't wait to see you for our last episode, which will be around profit, where this perhaps the biggest insight yet. So I hope you've enjoyed it so far I'm Mike Parsons; chief innovation  officer atQualitance

We'll see you on the next episode of BottomUp skills. [00:08:00]