UK Edition
Sunday interview: Digital business bank Tide 'shooting at open goal'
George Bevis, the affable 39-year-old founder of digital business bank Tide, has a film recommendation, which he says provides an unlikely portrayal of what it’s like to work in London’s burgeoning tech start-up scene.
“The best film about small business is A Most Violent Year,” he says. By its own billing this movie is “a searing crime drama”, depicting the ordeals of a small heating-oil company owner. Played by Oscar Isaac, in Eighties New York, the entrepreneur is trying to make it amid “simmering rivalries and unprovoked attacks” from mafia bosses and political kingpins. It sounds intense.
“The trailers are all people with guns and whatever,” he concedes. “But really it is all about the incredibly difficult negotiations of a small-business owner. For two hours, to understand the real moments of suffering in a small-business owner’s life, you couldn’t do it better.”
What similarities are there with life in trendy East London’s tech hub, with its hipsters, fixie bikes and soy flat whites?
“I don’t think anyone runs around shooting anyone else. Our experience is not as dramatic,” he laughs.
“However, I absolutely know entrepreneurs who have had moments of high drama. There are constantly examples of deals that have been agreed on a handshake, where later on one of the parties to the deal denies what was agreed on the handshake and there’s no written record of that. In the business I used to run, SpeedSell, a number of times we got close to not being able to hit payroll. We did always, I probably had to fund it out of my own bank account a few times.
“But these things are much more common than I think is widely understood, because people who run businesses have to keep it secret.”
That was then and this is now. Bevis’ life currently bears little resemblance to that of the put-upon, scrimping and saving entrepreneur.
His latest venture, Tide, is making waves in the previously staid world of business banking, offering current accounts, lending and other related financial services primarily to SMEs. It is growing fast.
Currently 7pc of all new business current accounts being opened in the UK are with Tide and it has tens of thousands of customers. What’s more it is well-capitalised, backed with $14m (£10.6m) of funding from well-known tech entrepreneurs including Zoopla founder Alex Chesterman and Lovefilm founder William Reeve, as well as Spotify investor Creandum.
The company now employs 50 people and is recruiting for 26 more roles. Tide’s is an unusual business model – it sits between the customer and a financial services organisation, FCA-licenced PPS, with funds ultimately held in a ring-fenced Barclays account. So the added value from Tide is in the software and clever aggregation of services.
Sat in a glass meeting space in the roof garden on top of Tide’s office block in Clerkenwell, which it shares with other start-ups, he explains how business banking is a market ripe for a shake-up and how he has learnt much from a previous business failure.
Bevis is a former banker – he has stints at Capital One, Barclaycard, RBS and WorldPay on his CV – and knows all too well where big lenders have been letting small businesses down. But after quitting his full-time job in 2008 his first venture was in retail eCommerce, with SpeedSell.
“It was a crazy decision, as most entrepreneur decisions are,” he says. “I think I had enough cash in the bank to sustain me for 12 weeks. Even in retrospect I have no idea how I managed to get it through three years.”
With SpeedSell Bevis built a website that could calculate the second-hand price of an item using data crunched from eBay and Amazon and it would then send a van around to pick it up, check it and resell it.
“There was one minor flaw in it – the margins were terrible.” He says it was a formative experience. “Those experiences, they toughen you up.”
After SpeedSell Bevis did some consultancy work and also political work helping draw up a small business strategy for Ed Miliband’s Labour Party. In 2015 he founded Tide. He says he is a “nerd” for sorting out the “cr---- admin” banking problems blighting business customers.
So Tide’s app offers an integrated suite of services including instant invoicing, automatic book-keeping, and most recently instant loans. An international payments service will soon follow.
“The key thing to understand about Tide is it is not about banking, it is about doing what you love and spending as little time banking as possible,” he says.
Tide makes “better margins” than rival banks due to an “unbelievably low cost base” and revenues from two routes, a 20p charge on faster payments and the standard transaction fee every time a Tide card is used, which is invisible to customers but paid via the Mastercard network.
Business banking has until recently been dominated by big players. A Competition and Markets Authority study into the SME banking sector three years ago found that the largest four lenders accounted for more than 85pc of current accounts and 90pc of business loans at the time.
Tide’s customer numbers have been “rocketing”, Bevis says, but his ambitions are much loftier.
“We want to grow a massive global business,” he says. “We have a target to work with 50m customers by 2026.”
Bevis is adamant he and his early investors will not sell up. He is reluctant to talk about the firm’s valuation saying it is “a rabbit hole” but puts it at “tens of millions”. Temptation enough for early owners to potentially agitate for an exit.
The company’s “tightly defined” business culture – which he requires all investors and staff to sign up to – also guards against selling up, he says.
Two of the key principles in the document are “humility” and being “mission driven”, and one of the ways the firm’s commitment to humility manifests itself is “we never hire anyone, however gifted they, are if they show arrogance at the interview stage at all”, he says. He stresses Tide is a comparative oasis of calm next to the general rough and tumble in tech.
The dawn of so-called Open Banking from early 2018, requiring banks to make customers’ financial information shareable, with consent, due to an EU regulation change, could create more competition. But he sees it as an opportunity rather than a challenge and says big banks will struggle to adapt.
Bevis is confident of further growth, saying Tide is “shooting at an open goal” when it comes to bettering established lenders’ business banking services. But the field of play will quickly become more crowded, forcing Tide to keep on its toes.