Penguin Business describes Starling Bank founder Anne Boden’s “Banking On It” as the “first-hand account of one woman’s quest to rebuild Britain’s broken banking system.” Written with the help of a ghost writer, Boden relates how she came up with the idea to found a challenger bank and the many obstacles she faced along the way.
Fewer than 300 pages, the book parachutes the reader immediately into a cab journey in Ireland that Boden is taking post-financial crisis, when bankers weren’t exactly close to the public’s heart. Everything had changed. Yet, concludes the future Starling founder, the big banks had learned nothing and were determined to continue with business as usual. Thus, the scene is set for why a woman in her fifties would be ambitious enough to start a bank of her own.
I wouldn’t characterize Boden’s story as a page-turner in its entirety, but from then on in there’s more than enough narrative drive to get any fintech aficionado to where they want to go, including an account of Boden’s split with former Starling CTO Tom Blomfield, who left with other early members of the management and engineering team to found rival challenger bank Monzo.
As someone who has had the pleasure of speaking to and spending time with a number of people on both sides who were there when the alleged “coup” took place, this section made for uncomfortable reading. And, of course, it’s worth remembering that Boden’s book shares just one side — her side — of the story, which she has every right to own. However, we are yet to get Blomfield’s version of events directly (and may never), while others who were there have already reportedly disputed Boden’s account following the publication of an abbreviated extract in the Sunday Times two weekends ago.
Although the book presented very few surprises for a journalist who has spent the last five years obsessively covering Europe’s fintech industry, there were still one or two “a ha” moments, not least that Boden’s first contact with Harald McPike, the wealthy hedge fund manager who would go on to back Starling, came via a cold inbound message from a member of McPike’s team.
The Starling founder nearly ignored the message completely, but what followed was an offer not just to invest in Starling’s seed round but to do a mega-round released in tranches. This meant that Boden, who had struggled to raise traditional venture capital from VCs in London and beyond, could focus on recruiting a new team and building out the infrastructure required to launch an actual bank.
She paid a high price, giving away a majority stake in the process. As one former Starling employee told me, having diverted from the VC playbook, lower-ranking staff at the challenger bank would sometimes scratch their heads as the money taps kept running without the numerous fundraising rounds typically required. Now we know how.
This is not my memoir, right. You know, people at the end of their career write memoirs. I’m at the beginning.
There is also the £1 million in debt that Boden racked up employing management consultant firms to help her with the bank license application process. The issue of that debt, and who should take responsibility for it, would add further complications and conflict during the founding team’s split amid Starling’s fundraising woes.
What we don’t always get is a tremendous amount of introspection, with Boden telling me that “Banking On It” is not a memoir but a business book, even though it often reads like one. “This is not my memoir, right. You know, people at the end of their career write memoirs. I’m at the beginning,” she says, in an exclusive interview with TechCrunch.
Boden said she isn’t going to retire any time soon and that Starling isn’t planning to sell to a big bank. Instead, her sights are set on an IPO. “I’ve had a long career, which is full of interesting things. And the next challenge is in front of me,” she says, with Starling aiming to be profitable by Christmas or early next year.
During our conversation, Boden dispelled one media myth (which my own sources confirm): There was never any kind of gagging order or confidentiality agreement prohibiting parties from talking about the Starling-Monzo split. Instead, by both camps, the media were sold a line designed to avoid a “he said, she said” scenario, creating the clear space needed for each bank to develop its own narrative. If everyone involved was free to talk after all, it seems that Boden has grabbed first-mover advantage.
It’s often said that history is written by the victors, but in the Starling-Monzo split story, it’s still not clear which bank will be victorious, while a less emotional assessment points to both upstarts having already won. For the real enemy was never “Anne” nor “Tom,” but an incumbent banking industry that had grown not just too big to fail but too big to listen and respond to a generation of digital-savvy customers who wanted a more modern banking experience. And it’s within this context that, regardless of who chooses next to disclose their account of events, the real Starling-Monzo story is still being written.
Below is a transcript of Boden’s interview with TechCrunch, lightly edited for length and clarity.
TechCrunch: Why publish a memoir, and why now?
Anne Boden: As you know, I’ve already done another book, “The Money Revolution.” I like words and I like being able to write things down and convey ideas. So I suppose I always knew that I would write a book. And I spend a lot of time and get inspiration from listening to audiobooks from other entrepreneurs, reading entrepreneurial books, anything about other people’s experiences, I take that information to try to help me on this journey.
Therefore, I came to the conclusion that I also had something to give. And I really wanted to do my best to put down and describe the journey of being an entrepreneur, the journey of a startup, and it’s not easy. I think that I come across lots of people asking me for advice, so I wanted to do that, I wanted to put it all down into a book about entrepreneurship. And of course, there’s no point in having a book about entrepreneurship, that’s sort of academic, you have to put a lot of your own experience into it.
Why now? Well, you know, Starling is going to be profitable by Christmas. And last year, and the year before, I just didn’t have enough bandwidth to do it. I thought the time was right, where I had enough to say about sharing my experiences.
I think the first thing is, never give up. And I think the lesson is that you’ll have ups and downs in any particular venture, and you have to recover, you have to be resilient.
Somebody asked me, “does this mean Anne is planning to retire?”
This is really putting down on paper where we are at the moment. It’s been written over several years, and I’m hoping to use this to inspire a generation of entrepreneurs. But also quite excited about the next phase of Starling, of fintech, of tech. I’m still excited by technology, I still get the real buzz about what it can do. I’ve been very, very fortunate to work in some interesting places, and do some interesting things, [and] I think the world could really, really change in the next 10 years, and I think that fintech could really be part of it. So I’m excited about the future. And to you maybe interviewing me in five years’ time about the next book, and in 10 years’ time about the next book after that. This is all about really passing on the knowledge to date.
So you’re not planning to sell or to try and sell Starling anytime soon?
No, no. Look, I didn’t do all this to sell out to a big bank. And I’ve got my sights on an IPO. I’d very much like to do that. I’ve been very, very fortunate, I’ve had a long career, which is full of interesting things. And the next challenge is in front of me. And no, this is setting my sights on the next challenge. And there’s lots going on.
At times during the book — aside from perhaps the chapter dedicated to the alleged “coup” — it’s not entirely clear what you want the reader to take away from the book. If you could pick your top three takeaways, be that business lessons or things people might not know about you or your thought process, what would they be?
I think the first thing is, never give up. And I think the lesson is that you’ll have ups and downs in any particular venture, and you have to recover, you have to be resilient. And every single entrepreneur gets a near death experience, and you have to come back from it. It’s all about recovery and resilience and using that for the next phase.
I think the second thing is that you can’t do it on your own, you have to do it with lots of different types of people and different sources of knowledge. I read a lot, whether they are Paul Graham essays or Stanford podcasts. I reached out to lots of different people through this process that helped me along the way, and I think that you have to figure out where those resources are and bring them all together.
And I think the third thing is, you’ve got to change. People talk about the project and the product iterating and pivoting, but you have to add your own personality and your own learnings have to do that as well. Because as an entrepreneur, as a leader, you are part of the product, you have to think, you have to absorb things and you have to evolve. I was mid-fifties when I decided that I was no longer working for a big bank, but I was going to be an entrepreneur with a startup. And that was a huge transition. But we all can do transitions, and we can do transitions throughout our life. And I hope that people take away that from the book.
It’s interesting you say that. I guess one of the aspects in the book that I felt was slightly missing was, I didn’t get a sense of what that transition was for you personally, whether that be in your management style, your understanding of the difference between corporate life and startup life etc. Was that on purpose; you didn’t want to do too much personal development and [instead] stick with the business side of the story?
I think that this is a business book. You know, I was quite surprised that people started calling it a memoir. And it’s doing really well in the memoir section of Amazon at the moment, so I’m quite flattered. But this isn’t a memoir. This is much more of a practical book about, you want to be an entrepreneur, you want to do a startup, you want to build something that’s never been done before. And the ‘me’ part of it all is to illustrate what happens. This is not my memoir, right. You know, people at the end of their career write memoirs. I’m at the beginning.
I think the pivotal moment in the non-memoir memoir is when Harald McPike said I’m not going to do a seed round, I’m going to do three tranches, so like a mega round, based on very specific and well-aligned milestones tied to the banking license application process.
From my understanding, that allowed you to have some breathing space to get to the stage of a licensed bank. Instead, it could have been, especially when you lost the team, that if you’d got a seed round but then had to almost immediately focus again on trying to raise another round, that may have also been the death of Starling. Do you think I’m over-egging the significance of that funding round coming in tranches and being committed up front?
It is very, very unusual. But it was [also] quite unusual for a startup to have so much documentation, to have so much that had been thought through. I’d been working on Starling for two years, I had a lot of information, lots of research, and I really, really understood the business I was going to build, and I hadn’t raised money. So the first money in was Harald McPike’s money, and I was two years into it all. I had an application for a banking license in three boxes, basically stacked up because they only take boxes and physical paper.
Therefore, I could really define what would be in the three stages, I could really define what you’d get for 3 million, what you’d get for 15 million, what you get for 30. So then I just had to hit those milestones. And hitting those milestones is really, really tough. But I had a lot of experience in running really big projects that are costing hundreds of millions, so I knew very well I could hit those deadlines; I could deal with having to hit the deadline by a certain date and releasing the money. So it was a big advantage that I didn’t have to go back out and fundraise. That was an advantage. But it was also an advantage and a disadvantage that I was two years in. If I advise anybody in a startup, it’s raise money early on and try something. It’s much easier to do that than wait two years whilst you have everything ready, and then raise a big round.
But do you think that had you, at that very moment in time — you know, Route 66 had dropped out, there was another potential seed investor — if you had got 3 million from somebody else, right, and not had the tranches committed by someone like Harald McPike, do you think that still may have led to the slow death of Starling?
I think I was pretty unique in getting the Harald McPike investment. It was pretty transformational. And it did mean I could really focus on getting the job done. And I’ll never know what it would be like if I’d taken Route 66 or that had gone through. It would probably have been a different sort of profile. But I could actually build the bank I really wanted to, and the thing about Starling is that we’ve got huge deep infrastructure. We have built something that’s never been done before. It is the best banking system, well I think, in the world.
Now, we didn’t have to rush to market to do a pre-paid card on somebody else’s platform in order to get some traction to raise the money. I could basically really focus on doing something that had never been done before. And that was transformational for us. And that is what’s giving us the strength we have at the moment. We have more lines of business. We have more complex banking we’re doing, and we are going to be profitable and very, very soon. Being able to invest so much of my energy upfront in building this, and not having to, you know, carry on knocking on doors, has led to where we are today.
And obviously that required giving up a tremendous amount of equity so early, which I would imagine, psychologically, was probably quite a dilemma. In one sense, you were raising money at the worst possible time because you’re raising it when you need it, rather than to give yourself that runway, so that’s a weaker negotiating position.
On the other hand, you write in the book that it was actually McPike’s idea and he said, “look, you can’t do this on 3 million, let’s either do it properly or not at all.” But you gave away a lot of equity for that. Was that a difficult decision? Or were you in such a weak position by then it was kind of both a blessing and something you had to just suck up?
No, it was a huge transformation. You know, overnight, I went from having a huge stake in Starling to having a much smaller stake and not having control. And I remember meeting somebody and saying I no longer was the majority owner of Starling and they were consoling me. And I felt “no, no, with this funding, with this backing, I can do something and I can take on Barclays. This is not small, this needs to be scaled, this needs to be big. One day, if we are bigger, if we grow, I will lose control. You know, I’m losing it early, but I have a better chance of getting there.”
Even if we stick with the idea it’s a business lessons book, you talk about things that went wrong, or things that didn’t go to plan and low points, but you don’t really talk about mistakes. You don’t sort of say, “I did this, and in hindsight, it was a terrible idea.” Why is that?
I think I’ve talked about a couple of mistakes in a big way. Yeah, I think that there are a couple of chapters in the book, which I’m sure you’re going to come to, where it didn’t work out too well. I tactically got things wrong when I went to Marlow for a couple of days, those are mistakes. I think there are areas in the book where I’ve described things that didn’t go to plan.
One of the ones that every academic of startups will say was a mistake, is that you did something very, very un-startup-y.
You went to two major consultancy firms, which you obviously felt you needed to do to help you navigate what — and let’s remind everybody — was a new thing; it was a new way of getting a banking license, so it was not like you had many people to refer to. So you went to these consultancies and you negotiated contingency payment, right?
Yep.
Startup banks were very new to VCs. We were doing something that was very new. Nobody had ever done that. People that normally start banks are already billionaires.
That meant you saddled — albeit when you did, you were the sole founder and had to make a call — but you saddled Starling the company with a lot of debt and venture capitalists hate investing in debt because they see it as money down the drain.
They have very narrow ideas of where the capital should go. So it could be argued that was a rookie mistake doing so much debt before you’d raised a round.
Nobody’s ever started a bank without using a big consultancy firm for a regulatory application. We were really the first startup bank. And you have to prepare a huge amount of documentation, and you have to have the credibility behind you that you are going to look after people’s money. The first digital four were Atom, Tandem, Starling and Monzo. And each one of them used a consulting firm for the application.
Were you surprised when that legacy “debt” came up as a potential blocker for what I would call traditional venture capital?
I think you’ve got the heart of the matter there. I did a deal with PwC and KPMG, that if they helped me, I would then pay them back once I’d raised money and I was not prepared to walk away from that deal. But startup banks were very new to VCs. We were doing something that was very new. Nobody had ever done that. People that normally start banks are already billionaires. This was an individual that hadn’t been an investment banker, that had never been an entrepreneur, [and] decided that she was going to raise money to start a bank, and the VC model does not necessarily work for banking applications, so I was really on new ground.
Would I make the same decision again? Yes, I needed help to get those applications. I needed to do a deal. And the consequence was that I had contingent debt. There was no other way of doing it.
I can see why you would say that now. And that’s always interesting when writing a book on historical events, because where you land can’t be disconnected from the decisions in the process. And I would argue it’s all worked out fine. But was there any point during the process — from trying to raise a seed round, to the fallout with Tom [Blomfield], to recruiting a new team and having to deal with those contingency debts — that you thought it was a mistake, and then you’ve changed your mind, or were you all the way through, ‘that was the way to do it’?
I tend not to look back. I think that you can spend a lot of time telling yourself that you’ve made a mistake, or things should be done differently, and you never actually make any progress. And for every single experience you take away and learning, you get something extra. There’s no perfect startup process. There’s no perfect process of starting a bank. Every step, you learn something and you’ve got to take everything on board and go to the next phase. And, you know, I tend to be an optimistic person, right? It’s all about looking forward and actually taking learnings.
In these type of books, when you read about events that are obviously quite painful and upsetting and a low point, you often get a sense of catharsis, right? That it’s been resolved in some way. And yet, when I read it, I felt maybe you hadn’t quite found closure [on the Starling-Monzo split].
And I’m wondering whether writing about that experience was part of getting closure on it. And yet, given how insular the industry is, maybe it’s gonna have the opposite [effect] and just open up old wounds. Why did you write in such depth about that incident? And has it been cathartic for you to put it down on paper?
I think that people want to know what happened, you yourself have asked me several times what happened. And when you write something that’s very, very high level, people ask the next set of questions. And so I decided that the most sensible thing to do was to give it a chapter, and I think it’s inspiring that you can get to a situation where all things are going wrong, you get to a low point, and you can recover.
This is my story; this is what it was like for me. And I think I have the right to tell the story and describe how it was for me.
For years, the tech press, and probably even the wider press, have been sold a line [by both sides] that Tom and possibly other members of the early Starling team that walked are prohibited from speaking about events because they signed some kind of NDA or confidentiality agreement.
This is all a red herring… There’s never ever been a mutual agreement not to talk about it. There was no gagging order.
What’s fascinating to me about the Starling-Monzo story is that there are different ways to launch a bank, right? It seems that Monzo took a [more] classic Silicon Valley approach, which is the MVP, pre-paid card, and kind of the user acquisition strategy, and you took a different approach where you said you need to build up the infrastructure of a bank, and really sort of come at it more from a banking point of view.
Was that also a conflict between you and Tom, in terms of a conflict over strategy? Because that isn’t really talked about in the book either.
No, it wasn’t. And we were quite aligned over strategy. The different strategies came when we separated, and were faced with different problems. Monzo raised money almost immediately and they could hire people and build things. And I had to wait two years to raise money, and I used that two years in order to plan. But when I raised the money, I was able then able to really, really focus on delivering those plans. And I think the difference between the two organizations was that I was used to running a big organization, and the challenge was to run a small one. And probably Tom had the opposite problem. So the difference in strategy was formed by the fact that Monzo had money, and we didn’t have money, but then had it two years later in a big chunk. And that really leads to where we are at the moment.
What is also apparent in the book, the non-memoir memoir, is you are a solo founder for a certain period, and I wonder if this was intentional, but it comes across like you don’t really have that co-founder, or that confidant, running throughout the narrative. So even when you had Tom and co. leaving, and you were going to sign an agreement and possibly take 10% in return for either leaving entirely or taking a different title, there’s that lovely scene where you meet an old friend in Starbucks, and he sounds great, but that was serendipitous.
Did you miss that co-founder and that confidant throughout the process and has that been a weakness of the founding story?
Put yourself in my shoes, okay. And, you know, the people that I’m close to, other people that I spent my career with, would never have advised me, in mid 50s, to quit my job to start a bank. Their advice would have been, ‘you’re doing really well, you’ve got a really nice job, just keep your head down, and carry on earning the money. And eventually, you’ll get the next big job’. And people will also tell me that perhaps I shouldn’t be sharing my vision or my thoughts about entrepreneurship in a book. But I have to do it; I had to start a bank, and I had to write a book. It’s not about being safe, it’s actually about doing the right thing and about stretching yourself.
And being surrounded by people who want you to be safe all the time, is not good. I have a lot of ambition to change things for the better. For banking, for the people, for money. I’d love to be in a situation where I can make the world fair, but I can’t do that, I don’t have that much power. But I can write a book about entrepreneurship. And that’s what I wanted to do.
One bit in the book that I find as a reader most difficult is you present Tom resigning as completely out of the blue. Bar the week in America, it feels like there wasn’t a lot leading up to it. And I wonder if that was a process of the editing of the book? Or is that because it really did feel entirely out of the blue?
I think I was shocked that day. And so was the rest of the team. I was shocked. And the rest of the team was shocked.
But surely there were other bust-ups?
I think we were a startup. Actually, Tom and I believe the same thing on strategy. We had a lot more in common than people think. And nowadays, when we sit on panels together — and you know, there we are on the panel: there’s Tom, there’s me, and there’s two traditional, a regulatory guy and there’s a guy from a bank — somebody from the audience asks a question, and Tom and I look at each other and go, which one of us is going to answer the question because we’re both going to answer the question the same way.
And we’ve actually built fantastic banks. Starling is doing really well and growing very fast. And so is Monzo. And we’ve come through it in two different ways. Together we’ve changed an industry. Nobody would have thought seven years ago that new banks would be able to take on the big boys. And we’ve done it!