I am generally an optimistic person with a positive outlook. Yes, I spot the problems with ideas, but generally, that is in order to find better solutions. What is different now is a background hum in my mind alluding to the bursting of one or more bubbles.
Two things have struck me recently — one with Revolut and the second with WeWork.
Taking WeWork first, it seems that as I walk around the City of London every other building is badged “WeWork”. With its USP of warehouse chic, soft furnishings and craft beer the buildings appear to house the entrepreneurial millennials of countless fintech and other startups.
If I understood a recent analyst’s report, the business model is quite precarious with huge liabilities on long leases reliant on high occupancy rates. It seems ironic that their alignment with their clients’ is contradictory, i.e. if a client company is successful and grows it will need to move out of WeWork for its own premises. Similarly, when the majority fail one way or another (not being pessimistic, just realistic) they too will stop paying WeWork.
So WeWork’s occupancy rate relies on a steady stream of startups which are currently being funded by easy money (unlocked by a Powerpoint deck and a smile?) from investors desperate to make their money earn more than the prevailing paltry interest rates.
I can’t quite articulate why, but this does not feel sustainable – too many unstable factors – and feels like my first bubble waiting to burst.
Next, I look at Revolut, a fintech company whose product I like and use, who have recently gained a banking licence in Lithuania which by virtue of the prevailing regulations means they can be a bank across Europe. This is despite clearly not understanding, or alternatively disregarding, what makes a banker. When their clever(?) anti-money laundering algorithms started producing too many false-positives, i.e. flagging problems that were not real, they believed that the right answer was to turn the algorithms OFF.
These are part of the global fight on terrorism, drugs and other criminal activity, but it appears for three months Revolut just looked the other way, or rather did no look at all. Yes, they reported themselves to the authorities, but frankly that should never have been needed. Instead they should have dealt with all the suspicious reports while also fixing their computer logic.
Then this last week we have seen something of the culture operating inside Revolut and the reportedly, somewhat despotic-style of its it senior management. Of course some of it will have been exaggerated, but there is rarely smoke without fire and there seems to be enough support for the majority of the claims that I, for one, would not want to work there.
I attended a meeting in the Revolut HQ a few weeks back and left feeling uncomfortable, but with these latest revelations, this too feels like a bubble waiting to burst, though for different reasons.
So with personal doubts about two of the brave new world's brand celebrities, I find the hairs standing on the back of my neck and my optimism a little challenged. I guess only time will tell if my senses are correct, but I am reminded of the old adage that if something seems too good to be true then it probably is.
Ian J Sutherland is a highly skilled director with expertise in governance, partnerships and regulation and almost four decades of experience serving as a powerful catalyst for change for organisations of all sizes and sectors. He thrives on identifying areas for innovation and improvement, forming effective strategies to drive efficiency and create bottom-line results. He has a proven capacity to serve as a bridge between organisations and functions, creating unity and operational coherence. A personable and creative leader, with a unique insight and the ability to see the big picture and provide constructive challenge, he writes on many matters including the delivery of change in today's world and is an opportunistic photographer who seeks to capture images that interest him. He enjoys good beer, good company and good music - not necessarily in that order.