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Steve's ITK: Strings attached


Steve's ITK

February 18 · Issue #14 · View online
Steve's In The Know: Everything I published recently, commentary you won't find elsewhere, write-ups of events I attended or spoke at, and industry rumours.

Opening thought: It's never just about the money
In my latest ’Talk Is Cheap’ episode – a series on TechCrunch where I audio interview founders and VCs – I caught up with Tom Blomfield, co-founder and CEO of digital-only or ‘challenger’ bank Monzo.
We discussed a range of topics, including why on earth anyone would want to start a bank, upcoming EU regulation intended to force incumbent banks to open up their data, whether or not we are in a fintech bubble (spoiler: yes!), and Monzo’s immediate business model.
However, where things got even more interesting is when I asked Blomfield to confirm that the two year old startup has already received an acquisition offer from a major bank – which I’d heard may have been HSBC – and why he decided to decline what I understand to have been a substantial offer.
“It’s never just the money, the money comes with strings and they’re really, really onerous,” the Monzo CEO told me. “… it’s not just legacy IT, it’s legacy culture and legacy thinking. It just stops you taking risks, fundamentally, stops you innovating, that’s the real problem”.
More candidly, Blomfield said that, although you can never rule it out, selling early is the startup bank equivalent to a bailout plan: “It means you haven’t accomplished what you set out to do”.
Bonus: Which British pop star is rumoured to have recently backed a well-known UK startup?
Things I wrote this week
Learner driver ‘platform’ MiDrive loses CEO after raising further £2M
Pleo, a startup that offers a card and app to manage company expenses, gets backing from Creandum
Jaguar Land Rover launches accelerator for mobility and transportation startups
London fintech Soldo launches multi-user expense account for businesses
First look: DatePlay, a new dating app from The Apprentice finalist Vana Koutsomitis
Closing thought: You have voicemail
On the topic of how useless incumbent banks really are, I’m reminded of the day back in Spring 2011 when I called Barclays Bank to try to open a business account for my now defunct startup.
The man who answered the phone fitted the pen-pusher stereotype perfectly; he was nasal in tone and, right from the get-go, had a know-it-all attitude. 
He ran through a rudimentary list of ‘computer says no’-styled questions, one of which was my current occupation.
‘I’m a journalist,’ I said.
‘Oh, a journalist,’ he replied, condescendingly.
If we wanted to open an account, he went on to explain, we would need to have each shareholder visit a branch in-person. ‘That might be a problem,’ I protested, since all of our investors were based in the Czech Republic!
After the call ended, I went into my back garden where my co-founder Pete was enjoying the remnants of the day’s sunshine, and we chatted about the absurdity of what had just happened.
Post-financial crisis, not only were the major banks unwilling to lend small businesses money, but they seemed reluctant to take our money, too. These were the same banks that had brought the British economy to its knees, while the government hoped that Internet startups like ours would help it get back up again.
I glanced at my phone and saw I had a new voicemail: it was the man I had just spoken to from Barclays. Thinking he was leaving a message for one of his colleagues at the bank, he relayed the details of our call, before issuing the following warning:
‘Just be careful. Mr O’Hear says he’s a journalist’
I began laughing, before replaying the message several times to Pete, who also found it hilarious. If the banks had proven to be greedy and corrupt, we could now add incompetent and paranoid to the list. Or perhaps the pen-pusher was simply overextending himself.
No one from Barclays ever did call back.
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Till next time,
Photo credit: Images Money
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