Morning Coffee: Memo discloses toxic culture at top fintech firm. Brexit’s hospitality woes
“There’s an expectations gap. They think that because they’re joining a startup they’ll be hanging out, drinking beer, playing ping pong and going home at 6pm.” That’s what Alan Chang, VP of operations at Revolut, recently told us regarding the rumored high turnover rate at the fast-growing fintech startup. His unapologetic view of the company’s culture now appears to be a massive understatement. A new report from Wired suggests that the app-based bank is employing a burn-and-churn philosophy where employees are pushed to the limit only to soon quit or be fired.
One former country manager said he worked every waking hour of the day, including weekends, in an effort to hit near-impossible and extremely rigid targets. Another who complained of bullying by senior managers told Wired that there were seven country managers when he joined in 2017. A year later, only one remained, with two being let go within seven weeks of starting. A memo sent last spring to all staff by CEO Nikolay Storonsky provides a window into the culture Wired details.
“There is a simple rule in place: [product owners] and team members with performance ratings ‘significantly below expectations’ will be fired without any negotiations after the review,” Storonsky wrote, adding that managers would receive a zero bonus if their team didn’t hit their target, “even if you are a great contributor.”
The same memo said team leaders who were below target were expected to work weekends to catch-up. A former employee claimed that Chang would constantly interrupt staff who tried to explain their failure to meet demanding goals, saying "next," on the Sunday night/Monday morning calls to discuss attainment.
Revolut told Wired that it has a staff turnover rate of less than 2.6%. However, the outlet’s analysis of 147 Revolut employees on LinkedIn found that 80% lasted less than a year, with half leaving after less than six months. Storonsky had earlier told Business Insider that the company philosophy was to “get sh*t done” – a slogan that now adorns the walls of Revolut’s London office in neon lights. That philosophy appeared to be on full display with one of the U.K. company’s former recruiting practices.
One candidate told Wired that, after passing a first-round video interview, she was asked to complete a small task to move forward in the process: recruit at least 200 clients to deposit money into the app over the next week. “The thinking was this might not get us the best candidate, but at least we will get a lot of free sign-ups,” a former manager told Wired, noting that none of the applicants were paid for the money they brought in. Revolut’s head of communications said the practice was shut down “immediately” after the company became aware of it. Chang told us that Revolut receives around 1,000 CVs every week, yet the company currently has around 200 open positions on its website.
Thursday was a particularly rough day for Revolut’s PR staff. Soon after Wired dropped its expose, the Times reported that the startup had launched an internal investigation into whether it violated money laundering rules by failing to block potentially suspicious transactions. Five hours later, the Times published another article revealing that Revolut’s chief financial officer, former J.P. Morgan banker Peter O’Higgins, resigned in January. The company insisted that the departure wasn’t linked to the ongoing investigation into its compliance systems.
Elsewhere, J.P. Morgan has put together a ‘no-deal’ Brexit plan that illustrates just how crazy the situation has become for financial firms. The bank has leased additional office space on the outskirts of Paris so it can temporarily accommodate up to 200 foreign employees that it considers vital to keeping its continental European business running smoothly. As part of the plan, J.P. Morgan has also taken out short-term leases on a number of apartments and hotel rooms in Paris and in other European cities in an effort to prepare for a messy divorce. JPMorgan clearly won’t (and shouldn’t) secure additional permanent space in Paris until it knows if a Brexit deal is reached. It seems like a good time to be in the hospitality industry in continental European financial centres as a result.
Score one for the humans. With the New York Stock Exchange soon to allow bond, commodity and currency ETFs to list on its main floor, a need has been created for more designated market makers to oversee the trading and ensure liquidity. (Bloomberg)
J.P. Morgan has hired a half-dozen commercial bankers in Europe and named new leaders in APAC as it seeks to grow its commercial banking business overseas. (Reuters)
Here’s the story of a North Carolina entrepreneur who bought nearly 100 companies, two jets, a 214-foot yacht and multiple properties around the country. At least part of the cash was diverted from a group of life insurance firms he began purchasing in 2014. (WSJ)
After more than five years of legal proceedings, the Commodity Futures Trading Commission is conceding defeat against Donald Wilson Jr. and his firm, DRW Investments, who the CFTC accused of market manipulation back in November 2013. It’s a bit of a landmark case considering most CFTC suits end in settlements before ever going to trial. Though lawyers seem to be the real winner here. (WSJ)
Hiring someone based on the pedigree of their MBA may not work out all that well. New research has found that top MBA programs – and business degrees in general – don’t produce CEOs who are better at running companies when looking at stock price as a barometer. (Institutional Investor)
People shouldn’t begin embarking on full-time careers until they reach age 40, according to a Stanford psychologist. Of course, that would mean the average age at retirement would be around 80. “People are working full-time at the same time they’re raising children. You never get a break. You never get to step out. You never get to refresh…We go at this unsustainable pace, and then pull the plug.” (Quartz)
A 39-year-old former trader who hid behind the code name Batman has agreed to plead guilty to money laundering charges in the U.S. for accepting bribes from commodity traders to secure contracts for petroleum products at discounted prices. (Bloomberg)
The Financial Conduct Authority has proposed several “near-final” rules around Brexit, including giving financial firms a 15-month grace period to comply with changes the FCA has had to introduce in the event of a no-deal Brexit. (FT)
Here’s a list of the “rising stars” in Wall Street recruiting. (Business Insider)