What Yoni Assia Of eToro Learned During Dinner with Warren Buffett

Nathan: The first question I ask everyone that comes on is how did you get your job?

Yoni: Well, I’ve always been passionate about trading. I started trading when I was about 13, and I’m a computer scientist by profession so I always loved the intersection of technology and finance. And in 2006, my older brother, who then did some work for Bloomberg, and he was doing an industrial design masters in the Royal College of Arts, and he always used to make fun of me that I have an accountant fetish, that when he looks at what I do it looks horrible with multiple screens and charts and Excels. And we started brainstorming about how can we simplify the user experience? How can we hack the user experience to make trading and investing something that’s accessible for more people? And that’s how we started e-Toro really with a vision of opening the global markets for everyone to trade and invest as simple….

Nathan: Yeah, well, crazy. So a 14 year journey thus far. You guys are now the world’s largest social investment network. Incredible growth. I’m sure anybody watching this has probably seen your guys ads with Alec Baldwin and massive, massive companies. So just to give the audience a little bit of an idea of those who haven’t and are not familiar with e-Toro, that have been living under a rock, can you give us an idea of the scale of users, team,-

Yoni: Sure.

Nathan: … DMV?

Yoni: Sure. So we’re about a thousand employees at e-Toro in 12 global offices. e-Toro today is the world’s largest social investment network. We have 16 million registered users who can create commission free stock trading, crypto currencies, ETFs, commodities, et cetera, within a social network so everybody can actually see, follow and automatically copy top traders from all around the world. So you actually see people from all around the world, you see their performance, you see what they’re investing in, and then if you see someone who generated significant returns over the last five years, you can simply take a thousand dollars and start copying him in the same place where you can buy shares of Google or buy Bitcoin.

Nathan: Yeah. It’s an incredible concept. So many people are thinking and watching, “How the hell did this start?” Where do you start to create an extremely fast growing fintech company, where you guys, you’ve never done this before. Is this your first start-up?

Yoni: For me, this is actually my second start-up. So before that I founded a company called CDRide, where we developed and installed cameras on roller coasters so you would go to a Six Flags and you would get off the roller coaster and then you’d see a video of your entire ride and you’d get it on a DVD. So that was my first start-up, which I joined and founded just as I left my army service.

But I think we were passionate about how to simplify access. We started building the product itself I remember when we went and raised the money. And, again, remember this is … I feel so old … 2007. It’s a bit pre-Cloud. It’s almost pre-social networks. I had a server in my house connected to the Internet and a client desktop app that connected to that server which was running fake quotes just to be able to show what we’re trying to do. And after we did our first round of $1.7 million, in 9 months after we launched the platform to the world, it was extremely interesting because we had really idea where users would come from. But we brought in people that were experts in online marketing and then just users started coming from a hundred different countries.

Nathan: Yeah, wow. Interesting. So how did you guys get your first users?

Yoni: I don’t know if it’s the first … The first were probably friends or family, right? I still remember they have these very low CIDs, that’s the customer identification. But I think what we did is once we launched the platform and everything was operational, we just started spending money to acquire customers. So we just started putting our ads out there and we started seeing customers come in, and ever since … We are very data driven and ROI performance marketing oriented so any place where we spent a dollar and so three dollars come back, we just kept on spending and pushing. So we had a very significant scale. Already the first year of operation we had $5.5 million revenues and in the second year of operation we had $17 million revenues. So compared to some start-ups we really scaled revenues relatively fast.

Nathan: Yeah, wow. And from the sounds of it that’s not … Obviously, network effects was taking place because you created this incredible social investment network but, at the same time, to further fuel and add gasoline to the fire you guys were using paid advertising with a performance marketing mindset and framework? I don’t know if you call it a mindset. Is it a mindset or is it framework, performance marketing?

Yoni: I think it’s probably both. It means you’re very data oriented in the way you think about marketing.

Nathan: Yeah. So what channels were they back then that you were using? Was it mainly ad words?

Yoni: I think back then it was pop-ups. You remember pop-ups?

Nathan: Before my time. [inaudible] then. I [inaudible] online stuff [inaudible] 2013.

Yoni: No, so 2007 was pop-up banners. I think that’s completely disappeared. A lot of affiliates … So we still run a very large affiliate network where we, basically, pay for a performance for referring customers to us and we were buying media, this was RTB. Media was very different back then in 2007.

Nathan: Yeah, wow. I bet you it was much cheaper than it is now, right?

Yoni: It was cheaper but eventually the matrix stayed very similar across the years. So we spent $200 to $300 dollars cost per acquisition and lifetime value is significantly higher. And the cost, too, we just scaled this so we’re now at four times higher pace than last year, but the matrix themselves are very similar.

Nathan: That’s interesting. Look, one thing I have noticed because Foundr, our company, we’re very performance driven. We would spend nowhere near what you guys spend, but we spend a lot of money, millions of dollars every year. And the algorithms are getting smarter, no doubt about it. In any of these platforms you can really train those algorithms and they can go out and find audiences, customers. You can tell these platforms now what you want your CPAs to be. So that’s interesting to hear. Obviously, back then CPMs would be significantly lower but it sounds like the algorithms have got so much smarter that it’s interesting to hear you saying that the returns are very similar. So it sounds like you guys are going for, is it above a 3x CAC:LTV?

Yoni: Yeah.

Nathan: Yeah. Okay. Interesting. So, yeah, I’m curious then, so when you raise money for your seed round that was mainly to build the platform not so much on user acquisition?

Yoni: When we raised the initial $1.7 million it was mostly for building the platform but as soon as we started spending money on marketing we did our B round, which was two plus two, so about $4 million and that helped us fuel marketing.

Nathan: Yeah. Got you. And then what happened next?

Yoni: Long journey. First of all this was 2008, right? So my RB round, why as it two plus two? Because it was 2008 and the world was collapsing and for somebody who sets a financial … This was before the term fintech existed so we were like an Internet company that’s also providing financial services and then you realised that the banks where the money of your clients are could all go bankrupt the next day. And there was a huge, “Whoa, what do we do?” And we started taking the money and spreading it across multiple banks because it was really scary, right? You had Lehman Brothers going bankrupt, but it was also very, very exciting times to be in the markets, somewhat similar to today, but this year we haven’t really seen a drop, but we definitely see something very big happening today.

So what we’ve seen, other than that, we constantly try to focus on what succeeded from the product perspective from an engagement point of view. So, again, I would, generally, say this is probably today common knowledge, but you should look at what your users are using your product for and re-figure out what drives engagement of these users and double down on that. And, for us, this was the social features, so we originally launched, basically, the trading platform just with chat and profiles.

So the idea of the social network, the idea of copy trading, came later on because what we saw is that people were asking one another, “What are you trading?” And the constant dialogue of users were, “Hey, you told me yesterday you bought this. Do you still own it?” So we looked at the chat and then we said, “Okay, so if everybody’s asking constantly people what are they doing, let’s just show them what they’re doing,” and that’s how we built the social network. And once we had the social network out there and people’s performance was public, it was a very obvious [inaudible] to say, “Hey, if you can see what other people are doing, why not automatically copy them?”

So that was the progression and, at that point, I think that led us to also raise bigger capital, so we raised I think back then $10 million from Spar Capital, that was our C round, and that was really in the beginning of the social network of figuring out that we are a social investing network.

Nathan: Interesting. So the first version of your product wasn’t what we see today. You’ve built upon it. Yeah, interesting. It’s funny because I thought I would have figured that you guys would have started that way and that’s what I thought. But it makes sense even if you think about it because I actually started trading probably back in 2009/2010 and as part of where I used to do my research was these trading forums, where that’s where a lot of conversation goes down, you want to see who’s legit, who actually knows what they’re talking about, and that transparency, it’s really interesting to see the performance of others.

Yoni: And I think when I was trading I also went to a lot of forums but one of the problems with these forums is people are hiding behind a nickname and you don’t know what they’re doing, and that’s the fun part. At e-Toto, when you talk to somebody, you actually see his portfolio and his track record. So you can’t have somebody tell you he’s good if he is bad, and you actually see what people own in their portfolios, and that’s created a lot of dialogue in the platform and a lot of trust between people on the platform.

Nathan: Yeah, no. And then obviously accelerated network effects. Probably I assume you had some refer a friend?

Yoni: Yeah.

Nathan: Yeah, yeah. Very smart. Okay. Interesting. So what happened next? What was the next step change of growth that happened?

Yoni: The next step was when we did our D round and that was led by …… from China, and then we decided to, basically, expand e-Toro into Asia, into Australia as well, although we’re just doubling down now on Australia, which as been very successful this year. So we did two things then: one, is we had strategics come in. So three large financial institutions invested in e-Toro and we were trying to explore how can we work together with financial institutions. That eventually led us to a complete and utter failure of realising you can’t work with financial institutions. This was in 2015/16. It still burns, but maybe now things are a bit different.

But we really wanted strategics to invest in e-Toro so we can work with a bank, and what we found out in all of these cases is the bank has a ventures arm and they would invest because they like what you do and they want to see it maybe in the bank, but the bank has a brokerage arm which is competing with you, and it’s very, very hard to overcome that cannibalization. And that is changing now but historically banks view any type of software company as a vendor so you would go to a bank and you’d say, “I want to do this in this corporation,” traditionally the bank would say, “So give me a quote for your software fees and give me your quote.” That’s how banks work. They don’t want to share revenues or share information with anyone. I think now that’s changing but this was really swimming against the current trying to work with large financial institutions back then.

Nathan: Why did you want to work with large financial institutions? Why not stay independent?

Yoni: So we constantly looked at the fact that we are spending more and more marketing dollars to constantly bring more and more users, and one of the key challenges of building a fintech company is you need to gain a lot of trust because people trust you with their money, right? So when you open an account in e-Toro you set up a brokerage account and you deposit, whether it’s $200 or $20,000, you [inaudible] that company with e-Toro. And we realised that we needed somehow to bridge that trust gap and we thought potentially if a large bank took our platform that could be a great way for both the bank to bring us users, so instead of the marketing dollars we have a distribution channel plus, you as the user, should be very comfortable sending us a lot of money if it’s in the bank, right? So that’s how we thought about it. And I think now we’re actually resetting this thinking as we’re thinking about new markets.

Nathan: Hey, guys. I hope you’re enjoying this episode and learning a tonne. As you know, in this series we interview some of the greatest founders of our generation to find out how they did it. However, if you’re thinking of starting your own business and you want to hear from some incredible stories from everyday people like you or I who are actually in the trenches only been building their business for maybe one year or two years, they’re building right now and they’re really in the early stages but they’re getting success, you should come and check out our new podcast From Zero to Founder. Hosted by our community manager, Molly Flynn, these are in the trenches stories from our very own successful students that have gone through some of our programmes, people just like you who are deep within the process of building their very own successful business. These are the founders of tomorrow. You can find them From Zero to Founder Podcast on all platforms. And remember it’s Foundr without the E. All right?

Now, let’s jump in the show.

And you said you obviously tried three or four years ago to go down this path, how did you work out that it wasn’t possible back then and how did you work out to say, “We need to scrap this project?” Because I think when you have a company that has traction and when you are winning, sometimes, as a founder, you can feel invincible and you tend to persist sometimes longer than you should. So how did you, in this instance, gauge that this was a project worth abandoning or putting pause on?
Yoni: So, first of all, I have a great management team. So in a lot of cases I’m the classic entrepreneur, I want to do everything at the same time, but then reality keeps track on you. So I think in all of these cases eventually management or a specific vice president came and said, “Listen, the ROI on this project is simply not good enough. We keep on spending more and more efforts and I don’t think we’re going to see results from this project.” And I think when we see something that is being a bit futile then we learned how to close it or shut it down.

Nathan: And what would you say to founders that are watching and listening that perhaps they are working on a project right now and they don’t have a next level management team? How do you train that, I guess, gut intuition or just to know when to say, “No,” or when to stop and move onto the next thing? You know what I mean? Because it is tough, right?

Yoni: Yeah. It’s tough but, again, I think a part of this is being very data oriented, so I am a freak of data. So every morning when I wake up I have about 40 reports, commission report, daily reports, per region, per channel, acquisition reports. So every day I have these huge amounts of data flooding me and I want to know … I have the German region manager, I’m getting the same report as he does, which is the acquisition report, the revenues report and the data report on Germany, but he’s getting it on Germany, I’m getting it on Germany, but also on all the regions in e-Toro. So it’s 40/50 emails to open my day. And out of that, once you start looking at data and you get hooked to data, I would say if the data shows that something doesn’t work, you eventually need to kill it.

Nathan: That’s really interesting.

Yoni: But that’s also something that’s very important and I think it took us a couple of years to realise that. It’s very important to set your KPIs, and your KPIs are not revenues. Revenues is a derivative of your KPIs because your KPIs are the company’s strategy, right? So if I’m looking for the largest, let’s say, assets under management, potentially I would only bring one client with a billion dollars instead of a million clients with a thousand dollars each. And I think setting that up and being able to crystallise what main KPIs you’re looking at right now, I think that was very important for us.

And I saw something that really amazed me a couple of times and I’m not sure why it still amazes me, is, you take a company and you set a couple of KPIs and then the year goes by and you change the KPIs of the company, you change KPIs to people, you see the entire organisation shift towards something different. It’s almost like you don’t need to do anything else but change KPIs and suddenly you see the entire organisation shift to where you are. So the best way to do it is corporate strategy documents, which says, “Vision, mission, values, this is who we want to become, this is how we want to get there,” and that describes the why, the strategy, and the how, and then once you set to that, clear KPIs, it really helps everybody understand where they’re going.

Nathan: Yeah. I love that. It’s so critical and it’s, for whatever reason, quite common in companies. I found that oftentimes the leaders or the individuals or the team oftentimes don’t know what success looks like, and it’s very, very important to show individuals in your company and in your team what success looks like because people want to achieve, they really do, and if you give them the opportunity and you set the goalposts, like you said with the KPIs and you have a strong compelling vision and then you have strong values, which is the DNA of how you want your organism as a company, as a living being, to operate, then it can be very, very powerful and people will rally behind it.

Yoni: Definitely. And I think it’s also people should educate themselves. So HR and organizational development is a job, right? It’s a profession. I’ve always been relatively close to making sure I understand … For example, I’m a fan of Adizes, who runs Lifecycle of Companies and every manager does this survey to see whether he’s a producer and entrepreneur, integrator or administrator, and then at every stage of the company you need to have different people and even today.

So I remember going to this course in 2010 of Adizes, and now 10 years later, and now I have 50 managers in e-Toro doing courses on the theory of Adizes and organisational behaviour, blah, blah, blah. So I get it’s constantly learn and also remember that you need to teach what you learn. So sometimes, as a manager, you constantly see things and you change your mind and you are here and now you’re here, but you get disconnected from the field and you need to constantly tell them, “Listen, I looked, I realised something, I learned something. This is why I’ve learned what I’ve learned,” and then you teach them what you’ve learned and then they align with you because otherwise they don’t understand … You’re, “Shift here,” and you don’t understand that they’re confused, “Why did we change anything?”

Nathan: Yeah, I agree. Communication, especially as companies scale, is so critical and it becomes a really big problem if it’s not a focus. And yeah, to be honest, that is something that I struggle with personally as a founder. I need to get better at that.

But we’re not talking about me. We’re talking about you. So I’m curious, as well, you said that you get these reports every day on your desk and you’re obsessed with data, is that because you are looking for patterns and trends to further capitalise and allocate resources to fuel growth?

Yoni: It’s to make sure everything works. So if I look at the registrations from yesterday … So, let’s see. I can probably open it up here. So I’m guessing we should have something like 30,000 new registrations yesterday. And, as a manager, I have this pulse to what are, again, the main KPIs? What are the main KPIs? And what are the main ratios that are healthy for the company? So if, for example, I expect registrations to be 30,000 and suddenly they’re not 30,000, they’re 15,000, then I know I need to drill down and figure out why is it 15,000? So what I’ll do is I’ll drill down to the countries and I’ll look at the trend of the countries and then I’ll try to figure out, if it’s not countries, is it channels?

And that’s why everything that I look at is yesterday, this week, this month, this quarter, this year, today and same day eight week average. So it’s a very clear way to look at things and just try to identify if something is wrong or you’re on track.

Nathan: Yeah. Got you. So it’s the pulse. You’re looking for a pulse, but trends as well. That’s always interesting too, as well?

Yoni: Yeah.

Nathan: Okay. Switching gears, I’d love to talk about the Warren Buffett dinner.

Yoni: It was awesome.

Nathan: Can you tell us the story?

Yoni: Sure. So, first of all, it’s a reminder to be persistent. By the way, if anything, I would tell entrepreneurs is one word, “persistent.” Be persistent. If a VC doesn’t answer you, send them an email again, send them an email again. And I’m saying that because I’m obviously a big fan of Warren Buffett, read his books. I have capital markets. He represents what capital markets are in all their glory, right? So this person is the person who made the most amount of money in capital markets. And what’s very different between him and others, he always says, “It’s simple.” Anything he does he says, “No, no. It’s simple. Investing is simple. Just invest in companies you understand, invest in companies who have a moat and invest …” Click for 20 years, right?

So there’s stuff like renaissance and hedge funds and algo traders, but he’s a very … He says, “Everybody can and should invest their money in capital markets,” which is really what e-Toro represents as well. So when I saw Justin Sun I was aware that every year there’s, basically, an auction for the … I think it’s usually probably lunch, in our case it was dinner … For lunch with Buffett, and Justin, who’s the founder of TRON, Justin Sun, I think paid $4.6 for it, and the minute I read it, I started sending him emails, telegram, WhatsApp, bombarding him. And after a while he was, “Oh, let me think about it,” and then he disappeared and the dinner was postponed. And then suddenly their guys called me and they’re, “Can you come to Omaha?” I’m, “Yaaaay.”

So I was quite persistent with it, and the dinner itself was, for me, mind blowing, really a life changing event, and the reason is as I grew e-Toro people constantly told me I can’t tell people that investing is easy or that investing is simple. And on the day to day of our life where you’re regulated and you constantly need to give disclaimers and you constantly need to warn people from the risks of what they’re doing, but really the purpose of why we started e-Toro was to make investments something that’s simple and easy. But along the years something put a lot of disclaimers around it, right?

And I was sitting at the dinner and I listened to what Warren Buffett says, and none of it, by the way, was surprising. He was right to the word to the book where I could complete his sentences because I read his books. And suddenly it hit me, “I know what he’s going to say and I know what he’s going to say because he’s super persistent in what he’s always been saying,” and it’s very similar things. And the reason he’s so persistent as a person is because if you ask Warren Buffett, “What would you be if you weren’t the biggest investor in the world?” He said, “A teacher.” And that’s what a teacher does, right? A teacher chooses what to teach and sticks with that and just does that and [inaudible], right? And he says, “There is Benjamin Graham’s book. Read it. The Intelligent Investor. Read it, follow it and you’ll make money. Simple.”

And what’s amazing is how that it’s not common today, this is 70 years after, I think, The Intelligent Investor came out to the market. I think for a lot of people that it’s not common knowledge that investing in the markets is easy and that you can generate double digit returns across many, many years just by investing in companies you believe in and understand. And that was, for me, an aha moment, which was, “Wow,” because it connects to what we’re building in e-Toro.

So the minute I came back I started the training session for our popular investors, the ones who are being copied in value investing, and we created features for value investing. But what it really blew my mind is it’s exactly what we’re doing in e-Toro, what we’re saying in e-Toro, but the real, real benefit is, 10 years from today in e-Toro you’ll see hundreds of thousands of portfolios with 15 years’ track record. Who has these track records, right? It’s hard to build track records, but on e-Toro that’s the basic. Track records are being built and people are actually generating double digit returns across seven years, across eight years, across 9 years.

Nathan: So that dinner, it really solidified some of your thoughts that you had but you, I guess, were being held back because of the disclaimers and all these other things. And now that’s crazy that it wasn’t anything new or profound, you think, oh, you catch up with someone like Warren Buffett, and people ask me this all the time, “Oh, you interviewed Richard Branson. What was the profound thing?” All these different things, but it’s not really that. It’s really people, they get stuff you would read about, it’s stuff that you would know about but that experience really solidifies your thinking, right?

Yoni: Yeah, yeah. I felt like there was a hammer hitting my head suddenly and all of his books suddenly mean something more significant.

Nathan: Yeah, no. That’s really cool, so the experience to the realisation. That’s amazing. So, look, this is an incredible conversation, Yoni. Having a lot of fun chatting with you. So a couple of last questions. One I have ask about, the famous Alec Baldwin ads. They must convert like crazy, right?

Yoni: Yeah. So I’m a big fan of Alec Baldwin. It was amazing, by the way, to meet him and to see him in action. So super talented guy with a very wide range, right? He is a salesperson, he is a comedian, he is a serious person, he’s Trump, and what I thought is funny is my kids are exactly the same age as his kids. So I thought it’s funny because we’re targeting millennials, right? This year is the year of the rise of the millennial investor all around the world, and millennials are reaching their prime, their having kids, right? But when you have kids and a job suddenly you have so much things to do. You don’t have time for you to think, “How do I invest my money?” And that’s why we built copy trading and the popular investor programme so you won’t need to trade on your own all the time and have all the ideas of what to trade and what to buy on your own. You can simply copy other people.

And what I found funny is him being, basically, a young father just like me, although he could be the age, I think he’s 25 years probably older than us.

Nathan: Yeah, no. That’s cool. And I’m curious, when you worked with him did you give a few different ad angles or there was just the one ad angle and the one script and how long did you have with him? How did that work?

Yoni: One day.

Nathan: One day? A whole day?

Yoni: One day, one day, one day. It’s a whole day, yeah. One day, a whole day, fascinating, fun day. And before that a lot, lot of work on the scripts and obviously a couple of days of setting up the shooting place. So a lot of details go into the scripts because it’s not only the scripts. I used to join the creative sessions at the beginning and lay the tone, but then it got broken down to multiple scenes and each scene you need to have from a different angle so that, “Now, move this, move that,” it becomes an operation.

Nathan: Yeah, because you’re want to get as much leverage for that content as possible.

Yoni: For that one day. Exactly.

Nathan: Yes, yes, yes.

Yoni: Exactly.

Nathan: So how many angles or many scripts did you have, just out of curiosity?

Yoni: Hundreds, hundreds.

Nathan: Really? Wow.

Yoni: Hundreds, yeah.

Nathan: And he was shooting that whole day? How long? Six/seven hours?

Yoni: At least. I would even say more.

Nathan: Yeah, okay. Wow. All right. So you got heaps of different angles, heaps of different scripts, ones that you can mesh together and try different hooks at the start, all different things, and you guys-

Yoni: Exactly, exactly.

Nathan: … you guys just tested them all? Yeah. Wow. Fascinating. Okay. Very interesting. Awesome. Well, look we’ll work towards wrapping up, Yoni, because I’m mindful of your time. Two last questions: one, any final words of wisdom that you’d like to share with our audience of early stage start-up founders? And then, two, where’s the best place people can go to find out more about yourself and also e-Toro?

Yoni: Sure. So, again, as I said before, persistence. Find something you believe in and be persistent in getting what you want, be open with others, so don’t try to be secretive. Tell people about what you want to do because that’s the only way ideas can actually grow is through dialogue and brainstorm with more people. And what was the last question?

Nathan: Yeah, where can people find out more about e-Toro and yourself?

Yoni: Ah, it’s very simple. e-Toro.com or download our mobile app and then once you have the mobile app you can actually write Yoni Assia and you’ll see my profile on e-Toro, you will see my track record, which is not bad. I did this year 60% returns and last year I think I did another very nice 55% returns. So you can see my profile, you can see what I’m investing in and you can ask me questions directly on my social network and my product.

Nathan: Love it. Well, look, thanks so much for your time, Yoni. I really appreciate. Congratulations on all of your success and thank you for what you do, you’re building an incredible product and you’re an absolute pleasure to speak with.

Yoni: Thank you very, very much, Nathan. It’s been a pleasure. I hope it helps some entrepreneurs in their way.