Iāve been asked a few times recently how we got customers to sign up to Monzo in the early years and I havenāt been able to give a satisfactory answer in a sufficiently short space of time. I thought Iād write out my thoughts in a longer piece so I can feel less bad about giving an incomplete answer - anyone who wants to know the details can read this instead.
Letās start with a rough timeline, which Iāll then flesh out below.
2015
- Started the company in February 2015.
- We had a big, ambitious goal - to start a bank - and worked hard to get press coverage before publicly launching.
- Ended the year with 3k āAlphaā cardholders and a waitlist of 20k.
2016
- We launched an early prototype and continuously improved it.
- Scarcity (waitlist) seemed to drive more signups - there was a standard āinvite a friends and weāll bump you up the queueā mechanic.
- A lot of hustle and hard work (100+ in-person events).
- Community + Mission + Transparency - lots of blogging and social media. Crowdfunding.
- Ended the year with about 70k āBetaā cardholders.
2017
- Genuinely great product.
- Market-leading customer service.
- Hot coral card!
- We consciously worked on viral product features & referral mechanics for the first time.
- Ended the year with about 600k āBetaā customers.
2018
- Full banking licence.
- Hit 1m customers in September!
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First, a note about the context. We started the company in the UK in February 2015, when ādigital banksā werenāt yet a popular idea. BankSimple had launched in 2012 with some big plans, but sold to BBVA in early 2014 with about 100,000 accounts, having struggled to raise sufficient funding to continue. N26 started development in late 2013, initially as a card for kids, while Revolut was founded a few months after Monzo, in April 2015. At around the same time, the UK regulator had announced plans to make it easier to start new banks, following the ātoo-big-to-failā mess of the financial crisis, and it was on the back of this initiative that Monzo was born.
We spent the first couple of months of the companyās life furiously writing a banking licence application, believing that the licence might be granted within 12 months. In fact, it took 3 years before we were able to open full bank accounts for the bulk of our customers. Even 12 months felt slow; it had only been a handful of years since Iād gone through Y Combinator with my previous startup, GoCardless, and I was terrified of spending too much time building something without a real indication that customers wanted what we were building. Going back through my notes from the time, I found Iād peppered them with YC mantras like āDo things that donāt scaleā, āLaunch early and talk to usersā and āMake something people wantā. So we looked for ways to get a product into usersā hands as soon as possible.
Pretty quickly we figured out that we could use prepaid debit cards as a sort of hacky prototype for a full bank. Before that point, prepaid cards had only really been used for kidsā accounts (Osper and GoHenry had both been founded in 2012) and the financially excluded - people who couldnāt get full bank accounts. These prepaid cards were horribly loss-making, and lacked about 60% of the functionality of a full bank account, so we budgeted for 10,000 cards. At the time, we couldnāt imagine more than 10,000 people would be willing to test out an incomplete bank account. In fact, we had almost 600,000 active prepaid cards by the time we transferred all customers to the full bank almost 3 years later. Despite the cost, these prepaid cards let us get a product into the hands of real users, who could help us figure out what product features to focus on.
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So, about 3 months after the company was formed, we had a couple of dozen live prepaid cards linked to our backend systems and a very, very basic iOS app. We gave Eileen Burbidge, our first investor, one of the very earliest prototype cards and she was so excited about the payment push notifications that she immediately tweeted about it, which led to a Techcrunch article in May (and a reply from the N26 founder saying that it was nothing special š)
I donāt think we were really ready for the press - we quickly scrambled to get a waitlist up on the website and launched our blog a few days later.
In any case, we got so much interest following the Techcrunch article that we doubled down on PR as a strategy. One of my notes at the time said we were aiming to get āPress at fever-pitchā. Eileen seemed to know everyone in the UK press, and I worked really hard to meet journalists and explain what we were trying to build. More press followed over the next few months:
We were covered in the Guardian, The Memo, Bloomberg (complete with weird sci-fi photoshoot), Business Insider, Techcrunch again, plus a bunch more. Itās important to note that we had zero real customers at this stage. Just two dozen internal test prepaid cards, a very basic iOS app and a lot of storytelling.
I spoke to Kiki recently (now the Director Of Communications at Monzo) about a conversation we had at the time. āI remember you turning up to my office when I was at the Sunday Times, signing me up with a Monzo account and telling me all about your plans to grow the business (and deep fry your Christmas turkey that year!)
You invested in forging relationships with the press and that paid dividends for you and Monzo. You were never too important to pick up the phone and explain simple stuff or go for a coffee with a journalist. Something many start-up founders donāt do because they think itās all about finding angles and firing out press releases.ā
PR is not a strategy that works for all early stage startups. Iāve been thinking a little about how it worked so well for Monzo in 2015 and 2016. Timing and context were important - the UK press was getting interested in startups (the Social Network movie honestly felt like a tipping point), but there werenāt actually that many successful startups to write about in the UK in 2015. I had started another startup previously, and Eileen, our first investor, was very well known in the tech press, so I guess journalists were interested in covering us.
Probably more importantly, it seemed like we were embarking on a bold, ambitious project - to build a new bank from scratch - and we felt like underdogs in the way that the British press loves. So we got a lot of press, and I was the very visible figurehead. Iām pretty sure all that press was the reason for the hype and user signups we got by the end of 2015 - we didnāt have a product live with users, nor did we really have any other meaningful marketing activity that year.
Looking back, Iām not sure how I feel about it. At the start, it was exciting to see my face in newspapers and it felt good when my friends and family told me that theyād seen me in an article or on TV. I guess I felt important, and it seemed to drive user signups. It was also a Faustian bargain. When we became a national brand name 4 years later, we were no longer the underdog - we were a big bank that the press could criticise.
Iām also not sure it was great for my relationship with my cofounders - we had 5 cofounders at the start, but it was often just my face in the picture. It was impractical to interview or photograph 5 people. They were busy working. Or at least thatās what I told myself.
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āIs it a bit early to hire a Head of Marketing?ā - conversation with Eileen in June 2015, four months into the life of the company. Throughout June, July and August 2015 we were interviewing marketing candidates.
Although the hiring process was slow and frustrating, we learned a lot. We wanted to assess the paid social media ad skills of one candidate, so we had him set up and run 4 small Facebook campaigns. The first three were focussed on product benefits - āHereās a card that has no FX feesā, āTurn off your overdraftā, āInstant notificationsā. They all performed fine. But the fourth campaign outperformed the others by almost 300% - āHelp us build a bank youād be proud to call your ownā. This was to become a core part of our marketing over the next couple of years.
I eventually interviewed about 10 or 15 candidates, finally picking a woman who had decades of experience at a very large tech company and a UK media company. We hired her as a CMO. Looking back on my notes, all our conversations were about picking the right agency to run PR and another agency to run our paid social campaigns. She was used to running teams that were bigger than the entire headcount of the company at the time. I think she lasted less than 4 months.
At the same time, we interviewed and hired a young guy called Tristan as a community manager - he was in his early twenties, heād graduated in Economics and spent the previous year in Egypt working with a local startup, where heād picked up Arabic. Heād taught himself web development as a young teenager, and seemed to be extremely hands-on and impact-focussed.
Looking back, I think I would have counselled myself to think about what we wanted this person to do for the next ~12 months or so. If you hire a big-name CMO from a large, international brand, they are going to naturally assume thereās a budget to spend on agencies and a marketing team. Even if they talk about being āhands-onā and āscrappyā, thatās probably only true relative to their previous work. For the first 12 months, what we really wanted was someone to write blog posts, respond to social media and edit the copy for our app and website. Tristan was perfect for us because he was representative of our customer base. Young, cosmopolitan lifestyle, socially conscious. He had never employed a marketing agency or really hired anyone at all, so it just didnāt really occur to him to do that stuff. It was just obvious to him that he should write our Twitter posts himself.
We made another Head of Marketing hire later in 2016 who also didnāt work out, and from that point onwards Tristan was put in charge of all marketing at Monzo.
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Before talking about the launch of the product - the Alpha and then Beta programmes, I want to touch on a couple of things that didnāt work.
First, we repeatedly thought about trying to pitch a TV production company to make a fly-on-the-wall documentary about Monzo in the early days. I still think that this might have been a great marketing idea to propel the brand onto a national stage (although may have made the eventual press backlash even harsher), but we just never followed through on it. Maybe it was just a vanity project!
We spent more time on a second idea - hackathons and developer relations. A lot of the early team (including me) were software developers and we were really excited about the idea of a bank account with an API. We ran 3 or 4 hackathons early on (even before we had live prepaid cards) and folks came up with a handful of interesting ideas, but we realised pretty quickly that this wasnāt going to be a big growth mechanic. We only got 300 extra users, but it definitely helped hire several early engineers.
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We finally got the āAlphaā prepaid debit card programme live to the public by November 2015 - it was a chance for people to get a card, try out the app and give us feedback to help improve the product. We capped the number of customers at 3000 because I think that was the limit for Testflight. There wasnāt even a public release of the app you could download from the App Store.
What was the rationale here? The product wasnāt even nearly ācompleteā - the list of things that were missing before you could call it a full bank account spanned several pages. Customers had to come to an event at our office to pick up the card because we hadnāt yet built the functionality to collect customersā postal addresses or post out cards. As a consequence, I met all 3000 of these users face-to-face - many of them would turn up to company events for the next 6 years and greet me with a smile.
Even though the app wasnāt polished, exclusivity & scarcity was a big part of the strategy early on (drawing on early Gmail launch tactics). I read somewhere that human brains are basically wired to seek out scarce resources and perceive them as more valuable than those that are abundant. Being āin the knowā - the first amongst your peers to get access to some new product or service - is a badge of honour amongst early adopters, and we harnessed that. Even the physical cards had āAlphaā printed on them - people would brag years later how early theyād signed up to Monzo. For these people, finding a bug wasnāt an annoyance - it was proof that they were experiencing something at the bleeding edge of development, and they were excited to help improve the product. So we ran with that.
This is the first archived version of our website I can find - āWeāve only got 3000 invites for our Alpha Preview. Sign up now to be in with a chanceā
It turns out this strategy also works on tech journalists. The early preview accounts we gave to Techcrunch and Business Insider journalists led to great coverage.
This strategy also let us organise events at a number of Londonās top companies. We would promise to come along with 50 or 100 Monzo cards, give a 20 minute presentation during the lunch break, and enable attendees to skip the waiting list. This proved irresistible - I got into companies like Transferwise, McKinsey and the BBC. Much like the hackathons, it didnāt actually turn out to be a very effective way to sign up users, but it was an incredibly strong recruiting strategy. Weād get a flood of inbound CVs a week or two after each talk.
Looking back, itās quite surprising how many major pieces of functionality were missing from the app. You couldnāt make bank transfers or pay bills, for example, because we didnāt yet have access to the payments infrastructure we needed. Instead, we obsessed over the tiny details that we could control - accurate merchant logos that represented your spending, rather than the cryptic data you normally find on bank statements. Jonas (one of our cofounders) first came up with the idea to add emojis to the push notification customers received to alert them about spending. Plane tickets might show š«, while spend at a coffee shop would show ā. I have so many notes from that first year about improving the logos - I even wrote some of the early code to put the right emojis onto transactions. We really cared about making it a delightful experience.
Even before weād opened up the product to the full waitlist, we decided to run a Ā£1m crowdfunding campaign early in 2016. Again, we ran the āscarcityā and āexclusivityā playbooks. We anticipated the round would sell out, so we set up a pre-registration system so that our customers could invest before the general public, and we capped individual investment at Ā£1000 to maximise the number of people who could invest. Along with owning shares in the company, investors would get āInvestorā printed on their debit card (and this is still honoured to this day). Investors would also be able to skip the main queue and get access to a Monzo card if they didnāt already have one.
The campaign turned out to be a huge PR coup, but mainly for reasons we had not anticipated. Approaching the launch date, we told our crowdfunding partner to expect larger than normal volumes of people looking to invest, as we already had 6500 pre registrations. For whatever reason, they did not take this warning very seriously, and their servers buckled under the load just seconds after the round opened on Monday. This was very annoying and stressful at the time, especially since 6500 simultaneous visitors is not a huge amount of load. We quickly decided weād rebuild the investment registration page ourselves, and planned to relaunch the campaign a few days later.
While our engineers rebuilt the site, we thought about how to communicate this to the press and our customers. It was an absolute gift of a PR story - we had so much demand to invest that the crowdfunding site had crashed. This story ran continually over the next couple of days. By Thursday, the campaign relaunched and sold out in 96 seconds, making it the fastest crowdfunding in history, and the press attention was intense.
We ultimately raised Ā£1m from 1861 investors, out of the 6500 people who had pre-registered. In comparison, we only had 3000 cardholders who up to that point had only spent Ā£1m in total on our cards. Iām not sure how repeatable this lesson is - lots of companies have tried crowdfunding since, and itās no longer newsworthy. I think we had an incredible amount of hype at the time, and we played the scarcity/exclusivity angles well. It also helped that we already had 45,000 customers on a waitlist, and Ā£5m investment committed from Passion Capital - this was an extra Ā£1m investment that normal people could get access to on the same terms as a VC.
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Soon after the crowdfunding completed, we announced a public Beta in March 2016, the Alpha having capped out at 3000 users (the Testflight limit). This was 13 months after the company was founded.
Anyone (as long as they were an iOS user) could download the Monzo app and see their place in the queue. People could improve their place in the queue by inviting friends to join and a certain number of people at the top of the queue every week would have a card sent out. In the spirit of ādoing things that donāt scaleā, we figured out a basic system for collecting addresses in the app and posting cards directly from our office. When we had a particularly big week of signups, the whole team would have to stop their regular work to help stuff all the prepaid cards into envelopes to catch the last post. I vividly remember stuffing envelopes at the time, thinking āeach of these cards is another person who wants to use our productā. It really felt like customers were signing up faster than we could ship out cards - one of the first indications that we had āproduct-market fitā. It seemed like we were on the verge of something huge.
I think there are a couple of interesting things worth mentioning in 2016 - both related to company values. The first is our name-change. We had been threatened with a trademark lawsuit from a German fintech company which had a similar brand name (we were āMondoā at the time) and considerably more funding than us. I fought this for several months (against the counsel of my board and investors), before accepting we had to change our name. To make the most of a bad situation, we decided weād ask our community members - our customers - to suggest new names. The only constraint was that it had to begin with āMā because we had recently designed a great new logo that we didnāt want to give up. Incredibly, bearing in mind we only had around 20,000 customers at the time, we received 12,000 suggestions in about two weeks. 6 people suggested the name we chose - Matt from Bristol had studied a rock called āMonzoniteā and another customer, Ashley, told us it was slang for money when he was a kid in Scotland. We hosted a big party and live-streamed the announcement of the new name - Monzo.
Predictably, our power-users overwhelmingly hated it, suggesting it sounded too much like āgonzoā (a form of first-person journalism and, later, pornography). It took a little while to stick, but I like it - it sounds much more dynamic and active than āMondoā, which now feels quite staid to me.
The second was our transparent Product Roadmap. In a world where the big banks had huge head offices and enormous marketing budgets, but very little personal trust, we wanted to come across as different. Where big banks were faceless and corporate, we would be human and personal. Where they were impenetrable and secretive, we would be transparent and approachable. So, in May 2016, we announced weād publish the plans for our product, and take input from our community. In other situations, when things went wrong, weād proactively tell our users about it and explain what we were doing to fix the situation. Invariably, this transparency generated more customer goodwill and positive PR.
These two core values - Community and Transparency - permeated almost everything we did throughout the life of the company. They became a fundamental part of our brand. Prior to Monzo, I didnāt really believe in the concept of ābrandā - I thought it was a made-up thing that marketing agencies tried to sell you. And that ābrandā didnāt really extend beyond a companyās name and logo. I now believe it can be a superpower for any company - and particularly consumer-facing businesses.
Thereās been good stuff written about brand-building elsewhere, so I wonāt try to recreate it all - Iāll offer just a handful of thoughts. A great brand is like a promise you make to your customers. Itās a shared set of beliefs, or the āwhyā behind the company. Building your brand is not a one-off thing; you build (or damage) your brand with every decision you make. Events like crowdfunding and the company rename were perfect examples to reinforce the brand. It has to be authentic - a lot of big banksā marketing towards younger customers felt really painful. Monzo, in contrast, felt human and relatable.
And when a brand really resonates with a customer, it becomes an extension of their identity. I wear Patagonia. I drive a Tesla. I use an iPhone. I bank with Monzo. I think a lot of customers were proud to pull out their Monzo card and feel like they were part of something.
In the UK, at least, Monzo has become a verb.
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We grew from about 3,000 users at the start of 2016 to 70,000 by year-end, which seemed pretty good, but I think we realised in the summer of 2016 that our strategies so far werenāt going to scale to drive the kind of continued growth we ultimately needed. So, towards the end of the year we really started to think about product features with network effects, and referral mechanics. Pretty quickly, this became āMonzo with Friendsā - we aimed to build a product that worked better and better as more of your friends joined. We started working on ideas, but nothing really launched until early 2017, so Iāll talk about this more in the next section.
Before that though, here are two things that failed in 2016. First was the idea of āCampus Insidersā - university students that we employed to represent the Monzo brand and sign up new customers. They required a lot of babysitting and delivered no measurable impact, as far as I can tell. One of our early ideas was to have a custom Monzo card for each university - similar to how we had āAlphaā and āBetaā subtly printed on the corner of the card. Students might get Monzo āOxfordā or Monzo āBirminghamā if they signed up with a student email address. This could have maybe extended into discounts at local shops, but it seemed like too much work and we never followed through with it.
The second was a campaign to work with local businesses in the Old Street area of London in the run up to Christmas. I think we had folks out flyering and offering discounts in local shops, but again it was a lot of manual work with no discernible impact.
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2017 was the year of product-driven growth. We had a slide in several of our early investor presentations that said āViral mechanics will get us to the first million customersā, but investors overwhelmingly didnāt believe it. We set out to prove them wrong.
Iāll make a distinction between two related ideas - viral mechanics and network effects. A āviral mechanicā normally uses the existing customer base to spread the product to friends. Itās sometimes called āmember-get-memberā, and it can be incentivised or free. An example is the way Wordle allowed you to post your āscoreā to social media. Other people see it and sign up for Wordle themselves. The game isnāt really improved in any way by having your friends join - theyāre just curious to check it out. Gmail used a viral waitlist + invitation mechanic in the early days - again, your experience of Gmail wasnāt really improved if you convinced your friends to switch from Outlook.
A network effect is different - the product itself actually improves as more of your network joins. Whatsapp and Skype are great examples. The more of your friends who join, the more people you can communicate with for free. That was a big hook at a time when people paid for SMS and international phone calls.
Great products have both network effects and viral mechanics. Facebookās early photo tagging is an example. āYouāve been tagged in a photoā email - prompts you to sign up for Facebook, see the photos youāre in, upload your own photos, tag more friends, repeat. The network gets more valuable and drives more growth as more users join.
At Monzo we had both of these, and 2017 was the year they really took off.
Iāll talk about āGolden Ticketsā first - a silly allusion to the Willy Wonka story. We had a pretty big waiting list at this point, but the āInvite friends to get bumped up the queueā felt a little old and ineffective. People who wanted an account enough would just create a bunch of throwaway email addresses. We figured that the best people to be making referrals were those who were already actively using the product. Presumably they liked it enough because they kept using it, and theyād all had the experience of having to wait in the queue, so they perceived a Monzo account to be both scarce and valuable.
Rather than paying our users to refer friends like most apps did, we decided that once youād used the account for about two weeks, weād send you a single āGolden Ticketā. This was a one-time-use invitation that you could send to one friend to enable them to skip the queue entirely and get a Monzo account straight away. You can think about the psychology by analogy - youāve queued all afternoon to attend a cool new event in your city, youāve just managed to get in the door, and youāve been able to talk the bouncer into getting your friend a queue-jump ticket. You get the early-adopter social credibility of having known about the event before your friends, plus youāve done your friend a favour by getting them access. It just worked incredibly well - about 40% of our signups in 2017 came from Golden Tickets, and it cost us nothing.
Second, āMonzo with friendsā was our drive to make Monzo work better if you invited your friends to use it. This might sound obvious now, but I canāt really think of any other bank that had previously done this, beyond suggesting you get a joint account with your spouse. If you used Barclays and your friends used Natwest, there was no change in how useful the account was, right? We wanted to change that.
We started with peer-to-peer payments, based on the contact-list of your mobile phone. For US audiences, this was Venmo, but inside your bank account. UK banks already allowed you to pay any other UK account holder instantly, for free, but you needed to know their account number and sort-code, and the interface was really clunky. It basically worked, but it wasnāt a delightful experience. We asked people to share their phone contact lists (using some clever encryption so that weād never actually saw your friendsā mobile phone numbers), and then allowed you to pay your friends on Monzo with just a couple of taps. For contacts who werenāt on Monzo, thatās where Golden Tickets came in! It was a really slick interface, and we allowed you to include longer-than-normal messages with the payment, including emoji. Later that year, we added āReactionsā - if youād received money from a friend, you could send a quick response - just a single emoji. This was just a quick way of saying āthanks, payment receivedā. And we let people quickly upload profile pictures to make it feel more personal.
We then added āSplit the billā functionality for a single payment, plus a more general āRequest moneyā feature, and finally more complex āShared Tabsā for multi-day trips away with friends and family that might include dividing several payments. If your friends werenāt on Monzo, you could still request money with your personal Monzo.me link, which would allow folks to pay you using another bank card or Apple/Google Pay (and Monzo covered the transaction fees), and included a little upsell for Monzo at the end. Mine is https://monzo.me/tomblomfield. If you clicked on this link with a Monzo app installed, it would just deep-link straight into the Monzo account with all the payment information pre-populated.
Alternatively, if you went for dinner or drinks and wanted to split a bill with someone who already had Monzo, but who wasnāt in your phoneās contact list, you could securely broadcast your account details by bluetooth, so you could pay each other without having to type in any account information. Itās an incredibly slick experience that I am proud of to this day.
Peer-to-peer payments drove massive adoption - time and time again we saw Monzo take hold in a new group of friends and then quickly spread to the entire group. At the start of 2017, only 5% of our users had 10 or more friends on Monzo. By the end of 2017, more than 40% of our users had 10+ friends on Monzo. Today, the average Monzo user has more than 100 friends on Monzo. This is network effect in full force.
2017 was also the year that we really got a handle on our metrics - particularly retention. There are much more complete retention guides out there, but Iāll give a quick summary here. Say 100 users sign up for Monzo, complete KYC, register a card and load money into the account. Thatās the denominator - 100 funded accounts. Fast forward say three months - how many are still using the account? Maybe 60? Thatās the numerator. So we have 60% (60/100) retention at Month 3 (or day 90). You can draw a curve to show how quickly retention falls off day by day since signup.
What does āstill using the accountā actually mean? We decided to count āat least one financial transaction in the 7 daysā would make you a Weekly Active User (WAU). āAt least one financial transaction in the preceding 30 daysā would make you a Monthly Active User (MAU). Clearly, a WAU was more engaged than a MAU. I dug out our stats for 2017 - about 60% of our signups were WAU on day 90.
These retention rates still strike me as surprisingly high, especially considering that every user had to proactively add money to the account every time they ran low on funds. This wasnāt (yet) a bank account where you sort of ādefaultedā into retention once a customer set up the account - users could not deposit their salary into the account until 2018, and there was no auto-top up functionality.
Monzo started 2017 on 70k users and ended the year on around 650k - averaging just under 5% compounding weekly growth for 52 weeks of the year.
So why did it grow organically and retain so well? First of all, I think the day-to-day product experience (for all its functional limitations) was world-class - it was a delight to use, especially compared to the clunky old banking apps in the market. Without that, basically nothing else would have mattered. The customer service was also exceptional - this was often mentioned in our NPS surveys (NPS was around +70 at the time).
Secondly, I think the brand we had started to build really resonated with people. Our mission and values (mainly transparency and community) seemed to strike a chord with customers. Even the card itself was visibly different to traditional banks. The Monzo card was āhot coralā (aka bright pink) - the colour alone often started a conversation when customers pulled it out of their wallets to pay. Our tone of voice was youthful, direct and extremely personal. By 2019, Monzo was the single most recommended brand in the UK.
And third, the network effect really started to kick in - if you had 3+ friends on Monzo when you joined, you had a 70% chance of being a WAU by day 90, versus only a 50% chance if you didnāt have any friends on the platform.
As a result of these things, Monzo hit 1 million customers in September 2018, without having spent any significant money on marketing.
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This feels like a good place to draw this chapter of a story to a close. There are other topics Iād like to write about - getting a full UK banking licence, fixing unit economics, and spending money on paid advertising to catapult the bank from 1m to 4m customers - but they will have to wait for another time.
