Martin Mignot, partner at Index Ventures

Podcast

May 28, 2024

Index’s Martin Mignot on where Revolut should list

He also shares his thoughts on hiring senior American talent and when European founders need to move to the US

Amy Lewin

13 min read

Index Ventures partner Martin Mignot has seen plenty of startups boom and bust first hand. 

He sat on the board of delivery company Deliveroo until it listed in 2021; was an angel investor in UK energy supplier Bulb, which crashed in 2022; spent three years on digital bank Revolut’s board; and still sits on HR tech giant Personio and Swedish healthtech unicorn Kry’s boards. 

That means he had plenty of views to share on successfully (and unsuccessfully) scaling, hiring and going public when he joined us on Startup Europe, the Sifted podcast.

He’s also successfully lobbied for stock option reform in Europe via the Not Optional Campaign, which has led to policy changes around employee equity in several European countries, and proposals for changes in others. 

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He moved to New York in 2022, after over a decade in London, to open Index’s office out there and help European founders launch in the US — and help American companies expand to Europe. 

Below is a lightly edited and shortened transcript of our conversation. Listen to the full thing here. 

What’s the startup scene like in New York — and how does it compare to London?

It’s very vibrant. Since 2021, there's been an exodus of people out of the Valley, and into other places — and New York has been the biggest net gainer of all the ecosystems. It's a very diversified city with media, retail, healthcare, finance and banking, insurance, legal service — a lot of very big industries that are all big consumers and big buyers of technology. And there's obviously a lot of talent and a lot of that talent is international.

I find a lot of similarities with Europe — technology is big, but it’s not the only sector in town. New York historically was well-known for fintech, given the proximity of the big banks, and it’s still the case; both B2C and B2B, there’s a lot going on here. One area we were quite surprised to find was prominent in the city is healthcare; consumer-facing services or healthcare tools selling to providers or to insurance companies. In any given quarter, about 20-25% deals are healthcare-related in New York, and there’s a bit of an ecosystem that’s been started here, originally around [cancer care platform] Flatiron Health and [health insurance company] Oscar. They’ve spun off a lot of entrepreneurs. 

What recommendations would you have for a European company looking to expand to the US?

Have at least one of the cofounders move over, if you’re serious about making it in the US. And reach out to me; I set up a group called the Europeans of New York, with 180 venture-backed cofounder CEOs in it, from all over Europe. We have frequent events where we share best practices and learnings. 

If you’re looking at highly regulated, and very specific sectors like healthcare or fintech, you really need to find your niche. One of the mistakes that people can make is to try to replicate a product like for like. If you look at the fintech sector in the US and if you look at consumer, I think [financial adviser] Cleo is probably the only one that has been successful recently. Revolut, Monzo or N26; none of them has succeeded in cracking the US consumer. And that's because the competitive environment, the consumer habits, the regulatory landscape is wildly different — and having a one and for all approach won’t work. You need to come here, identify a niche that you can start with, and then grow from that very specific niche. 

One of the types of companies we really like at Index, and where we had a lot of success, are European companies that used Europe's disadvantage — the fragmentation of the local markets — to their advantage. The European Union has been fantastic, but there are still different currencies, sometimes different languages, certainly different consumer expectations, market structures, infrastructure... Companies that built for that complexity, and built to solve that complexity, can be very successful. Revolut is a good example, [Dutch payments giant] Adyen is an amazing example, [money transfer unicorn] Wise is an amazing example. And you have many of those. Those companies thrive on complexity; FX is a really good example of that, language translation is a good example of that… and then it makes it so much easier for them to scale globally from day one. 

That fragmentation is a problem, but solving that fragmentation can be an amazing product that can then scale globally — and in the US — much more rapidly. 

What are some of the main challenges people in your Europeans in New York group often come up against? 

There are quite a few: they range from the trivial or logistical ones — visas, housing, relocation — to the business ones, like hiring. That’s the number one pain point everywhere and for every stage of company, but especially when you're moving to the US. A lot of the team you're going to be hiring is the go-to-market team in particular, hiring your first senior sales leader, those are really tough decisions. 

One of the typical mistakes that we see being made is founders not moving or relying on a senior American employee from day one, and saying, ‘Oh, they're gonna take care of the US part of the business’. That never works, period; we've never seen that work. If you're a European company, typically US candidates won’t know about you; they won’t know your name, they won't care about it. And so you will have no chance of attracting the very best talent, especially not the very best senior talent. So the adverse selection is going to be massive. And as a result, you're gonna have someone who's just not that good, most likely, and they’re gonna be very expensive.

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They can be very good at interviews, that's something a lot of Americans are very good at — but they will definitely not be very good at building your team and your brand and your business in the US. There is no shortcut; that’s why we say one of the cofounders has to come, and you have to hire junior people to start with, and get them ingrained in your culture and your way of doing things. They will bring the knowledge of the US market, but you still need to bring your culture, your processes, your product adapted to the market, and you have to grow it organically from there. There is no magical senior US person that is going to help you; you have to go and do it yourself. 

On the subject of talent — but returning to Europe — you played a big role in the Not Optional campaign to improve stock options around Europe. Why did you choose that cross to bear? 

Talent is the most important thing for startups. And stock options are the only competitive edge that startups have versus a Google or Microsoft or Meta, large banks or large consulting firms or any large corporate that can pay much higher salaries and give you liquid stocks. So stock options and the promise of appreciation — and of outsized appreciation if the company is successful and if that company performs well — is the only way that startups can attract top talent. And so making this process as advantageous and easy to manage as possible for companies is the biggest lever we felt we could act on. 

There were two issues when we started looking into it; you have as many stock option policies as you have nation states across Europe; and some were really good and some were really bad. The Baltic countries are the best in the world — they have the most business forward-thinking and employee forward-thinking policies in the world; and Germany was so bad that no company would have actual stock options, they all had virtual stock options which come with all sorts of pitfalls and potential issues. 

Stack ranking each European country really got the competitive juices of politicians flowing. The positive thing with fragmentation is you can play each country against each other. In the same way that Italian city states in the Renaissance were competing against each other; we’re recreating the same dynamic where France wants to go above the UK, and Germany now doesn’t want to be left behind. And so as a result we’ve had 11 countries that have changed their stock options as a result [of the campaign]. We estimate it’s about €5bn that has moved to the hands of employees thanks to those changes. 

What work still needs to be done to get employees to care about stock options? 

They’ll care about it when they start seeing the actual impact of them. It’s as simple as that. 

What are the other big talent challenges that you see European startups and scaleups facing at the moment? 

When you reach the stage where you have a couple of thousand employees and a few hundred million in revenue, you have very very few people based in Europe who have done that before. You can think of five or maybe 10 companies max that have gone through that journey in Europe. And so as a result the talent pool of these people who have had that experience is very small. And a lot of people don’t necessarily want to do it again. 

So you end up having a lot of European companies having to hire and try to attract US-based talent — or Europeans who have been successful and spent time on the West Coast — and try to relocate them. That’s one of the big, big, big challenges. 

I think anything politicians can do to facilitate visas and relocation and make it super attractive for top talent to either move back or move to Europe would be massively helpful. 

What have been some good courtship tactics you’ve seen used to lure those people over? 

At the end of the day, they’re not here to do tourism. So the number one thing they care about is the company’s prospects. Do they see it as realistic that this company is going to go from 1000 employees to 5,000 or 10,000 employees? And does it have a prospect of going public over the next three to five years? These are business people — and they wouldn’t even consider changing their life for anything other than a very clear career prospect and financial upside. Let’s be real about it. 

European quality of life is extremely attractive, especially to US talent; the education, healthcare, food, culture… Europe has a tremendous advantage on those topics, and US talent is well aware of it, and value it very highly. 

The one typical barrier people have is not for themselves; it’s for their partner. Kids are typically fairly easy, they’re excited to move; the partner is usually the hardest one to move over. So focus on the partner — that’s typically where things break. You have a very excited candidate, you’ve gone through all the hoops, they’ve come to Munich or Berlin or Paris or London and they love it, they can really picture themselves there, and then they come home and the wife, husband or partner puts a bit of a cold shower on the idea and says, ‘Well you know I’ve got my job here, I’ve got my friends here, I’m not moving’. So anything you can do to facilitate that transition can really go a long way. 

Index looked at hundreds of companies to see how the most successful built their teams and scaled. What were some of the key findings? 

We found that very successful founders would typically spend half of their time on people-related matters. In the early days, it would be mostly hiring and onboarding new talent. At the later stages, it would be much more around building the exec team, and creating alignment and culture within that team. It’s not a tax on your time — this is what you’re meant to be doing as a founder CEO. 

When you think about the most amazing founders you’ve worked with, what attributes do they have? 

I used to go on vacation in the south of France, and there they have these night clubs which have these really powerful laser beams to tell people where they were located and to bring customers along. And to me, the very successful founders are like those laser beams. They have very high IQ — the light is very powerful. They're also very focused and obsessive, they're very narrow and pointing at one particular problem and they won’t give up until they’ve solved that problem in the most elegant way. And they’re highly visible; they have very high charisma and an ability to attract people and sell their story.

And they sacrifice a lot. Unfortunately, if you’re going to be building one of those hyperscale companies for a decade, that’s going to be where most of your life is spent. 

You were one of the early investors in Deliveroo, which is kind of a famous example of a company that didn’t have the best time when it listed on the London Stock Exchange. How much of a problem is the tech unfriendliness of the LSE? 

It’s a huge problem. And it’s related to one of the topics I’ve mentioned a few times now, which is ecosystem maturity and the flywheel. The flywheel that is happening on the private side of the tech ecosystem in Europe, where you have people who are intrapreneurs, repeat entrepreneurs, who are starting businesses again and reinvesting their gains in the next generation of entrepreneurs, and VC funds reinvesting their gains into the next generation of European entrepreneurs… That’s not happening in the public market. As a result, the flywheel and the network effects are all happening in the US.

So even if these companies are really successful in Europe, eventually they will go and list in the US. Deliveroo is one of the exceptions. If it were me, and we had to do it again, most likely I would advocate for listing in the US. And I think that’s a big problem. Europe has to make it way more attractive to list here than in the US to break that flywheel, because, all things being equal, folks will prefer to list in the US because that’s where you have more capital, more expertise, investors who really understand growth and love growth and spend all of their time focused on growth tech stocks, which you don’t have in European markets. 

If I were a regulator or a politician, looking at the problem, I would spend time with these high growth tech founders and ask them what is the US not doing well? What can we do? What are your problems — and how can we solve them for you? 

Revolut is one company that has been quite visibly courted by the London Stock Exchange. What will that company be considering when it comes to listing? 

I’m not on the board there anymore, so I’m definitely not going to be the decision maker. This is a UK headquartered company, so if everything was equal, the UK would be a natural place to list. Having said that, these exact same concerns will be in Nik’s minds: the analysts that understand tech stocks are by and large based in New York and in San Francisco; there are more comps listed there that are more similar to what they’re trying to do; the market is very deep, there’s a lot of knowledge and capital. 

For most tech companies in the world, I would say the NASDAQ has to be the first place they think about when they think about listing, regardless of where they’re based in the world. 

We have an amazing homegrown champion which could end up being one of the most transformative and largest tech companies to come out of Europe… If I were the London Stock Exchange, I would think: How do we not make it hard for them? How do we support them? And that goes beyond the stock market. 

Obviously I’m biased, but the way Revolut has been covered by the media and the interaction they’ve had with the regulator hasn’t been great… I would hope for the entire ecosystem to recognise that we have an amazing company that’s employing tens of thousands of employees now, from nothing seven years ago, and growing extremely fast. How can we celebrate that and be helpful to them and make them even more successful and make sure they have everything in place to stay in the UK and be successful in the UK and the rest of Europe? 

Amy Lewin

Amy Lewin is Sifted’s editor and cohost of Startup Europe — The Sifted Podcast , and writes Up Round, a weekly newsletter on VC. Follow her on X and LinkedIn