Backstory: Tom Blomfield

When you look around you at all of the structures in place, the physical buildings, the transportation system, the laws and rules to society, all of these things were created by people. And everyone has a choice to either live in that world and merely follow the rules. And that's fine.

But I think there's this alternative path where you have the chance to create something, to, in some small way, have an impact on the world and change the rules, change the structures, and have other people interact with the things that you're building. Today, we're joined by Tom Blomfield. He's the cofounder of Go Carthus and Monzo. Which has raised over a hundred million pounds.

I've created companies that will last for the next hundred years. An esteemed founder of not one, but two unicorns. I think choosing that alternative path to create something from scratch has obvious benefits. You get to create products that millions of people use and love, which is so, so rewarding, but it also comes with challenges. The emotional highs and lows are so much more extreme.

You think you're on top of the world, and then two hours later, something goes disastrously wrong, and you're like, it's all over. We're doomed. The UK is tonight officially in recession. Is the bank in trouble? Is the money safe? What happens if they go under? They told us that we needed to start preparing to wind the company down because it was losing a hundred million pounds a year.

Every founder does not truly understand how hard it's gonna be. I started companies because I saw problems I wanted to fix, and it's the most direct way you can have that kind of impact. Impact. I'm Tom Blomfield, and this is my backstory. I was fascinated by computers really from a very early age. I think my parents bought, like, an Apple two or something when I was about seven years old.

I remember playing a game where you had to make as much money as you possibly could from running a small lemonade stand. I just absolutely loved it. And so at the age of 15, I started making money building websites for local businesses. And really, was just gripped. I, you know, I I never thought I could do it as a job. No one I knew worked in computers.

The Internet was really a very, very early thing. Everyone always had these professional careers, and I just assumed that's what I would do as well. My parents from a very young age told me I should go to Oxford and study law and become a corporate lawyer. It seemed like a pretty safe, well paying job, pretty respectable, with a pretty predictable linear career path.

And so sure enough, I applied to Oxford and and got into study law. But it it felt too narrow for me. I was more interested in learning about lots of different kinds of business and figuring out how the world worked and potentially starting something for myself one day.

So while I was at Oxford, I met my first cofounders Haj and Kulvir there, and we started an online student marketplace, which I was running alongside my law degree. And they actually graduated from Oxford and went to do YC, but I dropped out of the startup to do my final exams at Oxford. And I always think about how my life might have been different if I hadn't taken that decision.

But after my law degree, I I had no idea what to do. I got in touch with two guys from Oxford, Matt and Hiroki. I went to start a data website, but they convinced me that would be a bad idea. And instead, we should start a bill splitting app, which is one of YC's, like, classic tar pit ideas. Luckily for us, he got us an interview with YC.

We thought the bar was here, and YC showed us the bar was, like, up here. And we went from thinking we were, you know, absolute top of the class to realizing we were really flunking it, that there was this just much higher caliber of people and ideas and execution. And we were just play acting, honestly.

When we were in London, we were play acting at running a startup, and getting onto y c was like a resetting moment. We just realized the bar was so much higher, and we'd have to focus and work so much harder to get there. And pretty quickly pivoted from this tar pit bill spinning idea into a much better b to b payment idea. So that became GoCardless.

So after IC, we got back to London and launched GoCardless, and growth was pretty slow, honestly, for the first year or two, but we ground away at it. We stuck at it. And month after month, year after year, we added more customers. The biggest challenge for me at GoCardless, though, was I'd never run a small business collecting money.

I couldn't really put myself in the shoes of our customers and didn't speak to me. I wasn't passionate about it. I love the business. I love my colleagues, but the problem we are solving just wasn't close enough to my heart.

And so after three years, I talked with my cofounders, and I told them it wasn't the place I was gonna spend the next five or ten years, and so it's best that I leave the company. And now twelve years in, Hiroki, my cofounder, is still running it. They must be processing tens of billions of dollars of payments in dozens of countries around the world. It's become a really big payment processor.

When I left GoCardless, it wasn't a big company. It wasn't a big success by any means, and I hadn't accomplished everything I wanted to. And so I wanted to swing bigger. I wanted to see what I could accomplish. If I really put everything into it, what could I create? I chose the path of starting companies because I have these ideas.

I, you know, I just, like, see things that are broken, and I wanna fix them. And it frustrates me so much when someone says, no. No. No. It's not important. You just leave that. I'm just like, how can you how can you exist when this, like, thing is so broken? So we saw all these problems in the banking space, and that's when we started Monzo, the start of 2015.

Banking was excruciatingly painful. And it was like this clunky old interface. It was really hard to navigate, but the people running these banks did not understand what software could do. And that, I mean, that was at its core, like, the very naive view. We can write the software from scratch, then the bank would work better. And it turns out that's true. It's miraculous.

And so what we did at the start of Monzo is we launched a prototype really, really quickly. Leaning on my YC days, I have all the notes from the time. It's full of, you know, launch early and talk to users, do things that don't scale.

And so we launched a prototype of a bank in about three or four months on a prepaid debit card, And it allowed us to get the product into people's hands, and we grew from zero to a million customers in about two and a half years without spending anything on advertising. And it was all through word-of-mouth.

We had a hot cola card that people would spend within a bar, and as soon as they tap to spend, a notification would show up on their phone. I remember the first time I saw someone use a Monzo card who wasn't a member of my family or a friend, and I was standing in line in a coffee shop in London.

And this person pulled out the card to tap it to pay at the counter, and the barista said, is that a Monzo card? I'd be waiting in line to get one. How is it? And this person said, it's it's amazing. It's it's just awesome. And I remember that feeling of watching these people interact talking about a product I'd built. I was indescribable. I think there were a few things that made it successful.

One was we had this big ambitious vision to start a bank from scratch, something that was pretty rare. It's somewhat counterintuitive. Taking on a really hard problem actually makes some things easier. So the smartest, most ambitious people want to come and work with you because they know that's where they'll find other smart, ambitious people.

The press wants to write about you because you're doing something so big. Customers wanna sign up because you've got this bold, ambitious vision. They're they're excited to be part of it. Beyond that, I think the sheer user experience was, so delightful that people loved it, and they showed their friends, and their friends all signed up. Monzo's user growth was like a rocket ship.

And at times, we were just hanging on for dear life. It wasn't smooth sailing the whole way. We spent a lot of time monitoring illegal activity, financial crime, money laundering. Some of the people whose accounts we shut down, didn't like it very much. People threatening to come to the office and throw acid in our face.

There was a Facebook group dedicated to trying to find my my personal home address. I had to change my phone number. I changed my email address. And that was only problem number seven in the stack rank of all the things that I was worried about. And the biggest thing, honestly, was we were processing 50 of payments a year, something like that.

And if we had an outage even for a few seconds, that meant tens of thousands of payments wouldn't go through, meant people's paychecks potentially wouldn't be deposited. We had millions of people relying on us, and the pressure of knowing that the infrastructure was so vital was immense. And we had outages, you know, that lasted sometimes minutes and sometimes hours.

And then the outages would be followed by a negative press cycle. The BBC at one point commissioned an ice sculpture of a frozen Monzo card and dumped this thing outside the front door of our office with a camera crew. What's going on, Zoe, Monzo? This is insane. This is not some tabloid newspaper. This was the BBC, and the press likes to do this.

They like to build up the newcomer until you're big enough, and then it flips, and then they tear you down. I'd been having a tough time. You know, I'd I was pretty anxious. I wasn't sleeping well. I was waking up in the middle of the night in cold sweats thinking about the company. And then COVID hit, and it it all got worse. You must stay at home.

The United States has extended the travel ban on most European countries. Eighteen years of economic growth evaporating in the space of two months. A lot of our revenue came from people using our card overseas, so revenue dropped by about 50%. So I had a hundred million pound funding round lined up. I'd spent the the last nine months traveling around the world to get these investors on board.

And all the paperwork was agreed. It was due to close on Monday morning. And on Friday afternoon, the world went into lockdown. The investors phoned up and said, all investments are on pause. So this hundred million pound funding line that was vital to the survival of the company got pulled seventy two hours before closing. I'm a sorry. I always get very emotional when talk to this.

No one knew what was gonna happen. The financial regulators were terrified. The banking system as a whole, was it gonna stand up? Monzo, they're of the newest banks that was losing a hundred million pounds a year, was that gonna stand up? And they told us that we needed to start preparing to wind the company down. Meanwhile, we were fighting tooth and nail to keep it alive.

Whenever I was worried about things or, you know, we were struggling to raise money, I would go and do an all hands in front of, like, 2,000 people, and I would talk about all of the stuff that was going wrong. And the vulnerability created this immense bond.

We're working seven days a week, you know, sixteen, seventeen hours a day to try and figure out what other revenue we could drive, what cost we could cut to support the company. But, really, I was at my at the end of my tether. And I talked to my board and investors about what I could do. I talked about taking a step back. And the answer was always the same as, yeah. Yeah. Yeah. Absolutely.

In two or three years, you can absolutely take a step back. And it got to the point where I was just not functioning anymore, honestly. You know, I knew there was an alternative, and the alternative was was stepping away, was giving up this huge part of my identity. Like, the company in my identity was so intertwined. It was like any newspaper article. It was always my face. You know?

And I was Monzo Tom. And stepping away was like letting all of that go. But I knew it was the only way I was gonna survive. And I went to my investor and said, look. It's I can't do this anymore. And they said, yeah. Yeah. Two or three more years.

And I said, I'm sorry. Maybe you've got two or three more weeks, but that's all I can do. And so I stepped back from the company. But I was so lucky that I had a new CEO and a new COO who just started, and I feel incredibly grateful. Those two, along with the existing exec team, Jonas, my cofounder and CTO, they carried it through.

I think Monzo now has more than 8,000,000 customers in The UK, which is 15 to 20% of the entire adult population, and Monzo is now profitable. So I'm hugely, hugely grateful to those two and the whole team that's put in so much work over the last three years to turn Monzo from a this, like, scrappy, fast growing start up into a huge profitable bank.

After I left Monzo, I took a year off, just recovering, really. And then eventually, one of my previous investors sent me an investment they were doing. They said, it's a fintech. We'd love to get you involved. You can write an angel investment if you'd like. And then they said, would you, maybe if you're feeling up to it, have a conversation with the founder?

He'd love to learn from your experience. So I I spent thirty or forty minutes talking to this guy, and I could feel my brain, like, coming back to life. I could feel the questions he was asking just made my brain fire, and I was all of the things he was going through, I could identify with. And I told him all the different ways I'd screwed up in the past and how he would avoid that.

And I really loved that process of engaging with newer founders. And so I started angel investing. And because I can't do anything in moderation, I went from that one investment to making 75 investments in the next nine months or so. I went a bit overboard, but I just love the process of engaging with these smart founders working on hard problems.

And it was after about those 60 or 70 investments that I got an email from YC. It said, basically, hey. It's seems like you're enjoying this investing thing. Have you ever thought about doing it full time? And so I joined Y Combinator as a visiting partner. And just this year, I got my visa and then my green card, and I got the full group partner job here at YC.

So it looks like I'm here for the long term now. Rejoining YC felt like coming home. I mean, a lot of the people who were there in 2011, Haj and Gary and and others, are back here today. YC has played such a pivotal part in my career.

I really couldn't have done it without YC, that it feels amazing to be kind of on the other side giving back in some small way and helping the next generation of founders. I think this technological progress is so good for the world. This prosperity, this whole economy is driven by building and growing businesses.

All of these things were created by people no smarter or harder working than than you or me. You have the chance to create something, to define the rules, and make the world all different.