As part of the Y Combinator startup school event, I attended a talk by Monzo Co-founder Tom Blomfield. In this post, I will share 11 things I learned from him. This post might be particularly helpful to new founders.
Not everyone wants to become a co-founder. You need to learn who wants to start a company.
So if you’re looking to start a company, it’s essential to learn who around you wants to do the work required to make it happen. Otherwise, you’ll be stuck in a situation where decision-making is constantly hampered by people who are only interested in the idea of being a founder, not the actuality of starting and running a company.
The best way to do this, is to simply ask people you think might be interested in joining your team, their level of commitment. If they’re not willing to put in the time and effort required to make your company a success, then it’s probably best to move on and find someone who is.
Remember, not everyone wants to be a co-founder, and that’s perfectly okay. The important thing is that you learn who does want to start a company and then build your team accordingly. With the right people in place, you’ll be well on your way to achieving success.
You need to be realistic when it comes to your startup journey
There’s no denying that the internet has transformed the way we live and work. But when it comes to startups, it’s important to be realistic.
For example, Tom Blomfield didn’t just launch Monzo out of nowhere. He first studied corporate law at Oxford University. That was given he had earned money from building a website for a local estate agent. And while many startup stories focus on the glamorous side of internet-based businesses, the reality is that many startups fail.
So, if you’re thinking of starting a business, remember to be realistic. Do your research, create a solid plan, and don’t expect overnight success. With hard work and a bit of luck, you just might be the next big internet success story.
Learn who you are as a person
Tom has learned that he does not like to follow the rules from his Oxford corporate law life. He realized that all the cool things we see today were created by someone in the past who didn’t play by the rules. So he decided not to become a lawyer but instead became a management consultant after graduation. He wants to create something different.
But before you can create something different, you need to learn who you are as a person. Figure out what your passions are and what makes you tick. Only then will you be able to create something truly unique and special. So take some time to get to know yourself better – it’ll be worth it in the end!
Many problems Tom faced in the past were similar to the problems you face today
1. In 2011, raising funds for startups in London was challenging. Today, new founders face similar challenges when it comes to funding their businesses.
2. Only friends were using Tom’s early GoCardless product in 2011. Today, new startups may have a hard time finding their first customers.
3. The company co-founders were doing fake work, such as hiring accountants or interns, to appear busy. Today, new startups may have a hard time differentiating what the proper priority is.
4. Tom found that the most significant inflection point for the company was when they got support from Y Combinator. Today, new startups may want to consider applying to accelerator programs like Y Combinator to get support for their business.
Don’t scale unless you have the product market fit.
Tom’s experience in group dating app Grouper is a great reminder that you shouldn’t scale your business unless you have the product market fit.
The app may have acquired customers in New York City, but it was clear that there were retention issues. The company founders ignored these issues and kept growing, which eventually led to the company’s demise.
If you’re not sure if your product is ready for scaling, it’s better to err on the side of caution and focus on retention first. Otherwise, you may end up like Grouper and regretting it later.
Timing matters when you start a company
Tom’s timing couldn’t have been better. He arrived back in the UK just as the regulators were starting to look at increasing the number of banks. The 2008 financial crisis had shown them that having only a handful of big banks was risky. And the market for digital banks was beginning to take off, as smartphone technology reached mainstream adoption.
If Tom had come back to the UK a few years earlier or later, he might not have been able to take advantage of this opportunity. But timing is everything in business, and Tom’s timing to start Monzo was impeccable.
As long as you are building something people want, don’t worry if you don’t have experience
Tom Blomfield didn’t have a 10-year of experience in the banking industry when he started Monzo. In fact, applying for a banking license used to take three years and 10,000 pages of documentation. But Tom was able to get Monzo off the ground relatively quickly with just a 3-page application.
In addition, Prepaid cards were laughed at by major banks at the time, but there was a clear need for cards among bankless people and kids. Monzo quickly grew to 600,000 prepaid cards.
These stories show that as long as you are building something people want, you don’t need to worry if you don’t have experience.
Don’t reject an idea unless you actually talk with users
If you’re building a product, it’s important to get feedback from your users early and often. That way, you can make sure you’re on the right track – and avoid making costly mistakes.
One mistake that many product teams make is assuming they know what their users want. This can lead to rejecting ideas outright, without even considering them.
A prime example of this is when Monzo Developers thought that people would be annoyed by the app notifications. On the contrary, early users really liked the Monzo app’s notifications. People tweeted that it was exciting to receive Monzo’s notification faster than getting the money from the ATM cash machine. That tweet alone brought about 1000 users to Monzo.
The Monzo team later realized that the notification brought instant visibility of people’s payments, which would take two days to know if they were successful in the past. A 10x improvement.
So, the next time you’re considering rejecting an idea, make sure to actually talk to your users first. You might be surprised at what they have to say.
Working on hard ideas might be a good idea.
Are you the kind of person who likes to work on hard problems? Do you find yourself constantly drawn to the most challenging tasks, even when there are easier options available?
If so, good news for you. You might be surprised to learn that working on hard ideas might actually be a good idea – especially when it comes to building a startup.
As Tom shared, most people prefer easy ideas and small fixes. But tackling a big societal problem – like healthcare reform – can actually be an advantage. That’s because you can attract the smartest people to work on your team, and you’ll have little competition.
So if you’re looking for a rewarding challenge, don’t be afraid to take on a hard idea. It just might be the best decision you ever make.
Don’t get too caught up in what the media says about you
Tom shared that in the early days of Monzo, when Monzo had 10 hours of downtime, it was pretty bad for the users. But the media were quite encouraging.
Later on, when BBC Watchdog ran a live investigation into Monzo freezing user accounts for a very small group of people, the tone changed somewhat. And when other news outlets started reporting that Monzo’s competitor had gone bankrupt, people began to confuse the bankruptcy with Monzo.
From a company founder’s perspective, it’s important to take media reports with a pinch of salt. You can’t believe everything you read, and sometimes the stories are exaggerated or simply untrue.
So don’t get too caught up in what the media says. Just focus on delivering a great product and service to your customers, and the rest will take care of itself.
Your mental health should not be neglected, especially regarding the downturn.
The mental health of startup founders is often neglected, especially during tough times like the Covid pandemic. This can lead to serious problems, as we saw with Tom.
Tom was under immense pressure as the pandemic hit Monzo hard, with the company losing 60% of its revenue. Investors were pulling out, and the company had to lay off hundreds of people.
Tom spent all day and night thinking about Monzo’s businesses, and it eventually led him to a state where he couldn’t think anymore. His brain stopped working completely. He then had to step down as CEO and become president before eventually leaving Monzo’s leadership.
This is a cautionary tale for all startup founders out there. Taking care of your mental health is important, especially during tough times. Otherwise, you risk burning out and harming your company in the process.
The end
So there you have it. Eleven lessons from Tom Blomfield on how to be a better startup founder. But there’s one more lesson I’d like to share with you as a bonus, and it comes from the audience. One questioner asked how to compete better.
Tom’s answer was clear: don’t worry about your competitors. Startups die of suicide, not murder. The key is to focus on what you’re doing, and not worry about what others are up to.
Thanks for reading!