With 70,000 users, “on paper” savings of $300 million in the US and in Israel, and savers whose pensions will increase by hundreds of thousands of shekels, FeeX has succeeded in waking sleepy financial markets consumers. The road ahead is long, but the fact that there are more people today who open their quarterly advanced training fund (keren hishtalmut) or pension reports, scan them, try to understand whether or not they are being taken for a ride, and act accordingly, indicates that the company is succeeding in gradually educating the market.
This revolution could have been buried, were it not for a series of events that led young entrepreneurs Yoav Zurel and David Weisz to where they are today. The two took part in the Zell Entrepreneurship Program at the Interdisciplinary Center Herzliya, but while the other teams moved forward toward creating real businesses with their ideas and innovations, Zurel and Weisz were left behind.
“We tossed out five ideas after we had decided to develop, to build a team, and conduct market research,” explains Zurel, “We had an idea for sharing articles on content websites where you could send an article to a friend with the important passages already marked. This is relevant for millions of people in the world, and it annoys people daily, but it doesn’t solve a dramatic problem in life. We also thought about jogging, and how to make the experience more user-friendly. But this wasn’t dramatic enough either. The problem was that both David and I, as young entrepreneurs, were people who weren’t familiar with many world problems. We went for problems we knew, but they weren’t painful and significant enough for millions of people.”
A crazy rollercoaster ride
After six months of ideas that came and went, says Zurel, they arrived at the conclusion that, as young entrepreneurs, they didn’t have the ability to think of big problems. “We understood that we needed to talk to older, more experienced people,” he said. The entrepreneurs turned to their Zell Program mentor, Uri Levine, who was one of the founders of navigation app Waze, which was sold to Google for $1 billion. Levine spoke with them about the insurance companies and financial institutions, and the exorbitant management fees they charge. It was then that the idea for FeeX was born - to allow users to scan the quarterly and annual reports that they receive from the pension companies, advanced education funds, and provident funds, and to harness the wisdom of the crowd to learn how much they pay in management fees relative to others. Thus, the user receives information indicating how much could be saved if he or she were to reduce management fees, and a set of tools with which to approach the financial institutions in order to make a detailed request to reduce management fees.
“If Uri would have come to us with this idea from day one, we wouldn’t have gone along with it. Because of our egos, we wanted our own idea. We needed half a year of suffering to open our minds and accept someone else’s idea,” says Zurel, but quickly adds, “If Uri hadn’t brought us the idea, we would have come up with another. It probably wouldn’t have been FeeX, because we were not aware of the problem in the financial markets, but I am sure we would have found something.”
“Wasn’t there a moment during all these months in which you thought that maybe you weren't cut out to be an entrepreneur?”
“I would be lying if I were to say that I didn’t ask myself 30 times a day whether or not I was cut out to be an entrepreneur. This journey is difficult; a crazy rollercoaster ride. Every day, every hour, you go up and down, and you are never sure you have it in you to go on. Now, we have two years of experience and confidence, and I feel much more ready and mature. But can I manage a team of 50-100 people, with more risk, more users, and more of a global presence? Hand on heart, I can, but only time will tell. I still have the fears.
“It’s not just me. In conversations with other entrepreneurs, I’ve learned that everyone has it, but no one talks about it. Among themselves, they project false assurance that everything is great, that everything is smooth as clockwork. But inside, there is a crazy rollercoaster, and they are unsure whether they are fit to be CEOs, and uncertain regarding a reality in which one day users love your product, and the next, they don’t remember you exist.”
According to Zurel, the rollercoaster stems from the relationship with the users, but also the relationship with investors. “I was a combat officer in Operation Cast Lead, and I entered Gaza with my soldiers, into uncertainty. But in raising capital from investors, there is even greater uncertainty - one day, the investment round is at such and such an amount, and the next day, it drops,” he says.
Levine brought the idea, his friend Eyal Halahmi, who served with him in the army and has come a long way in the Israeli high-tech world, the first investment in the company, and also himself as a founder-partner, chairman of the board, and in-house mentor. Despite the fact that 20 years separate Levine and Halahmi and Zurel and Weisz, the business runs very smoothly. “It has created an amazing dynamic. They bring experience and patience, and we bring spirited boldness. It has created a culture without ego, where every idea that is raised is considered - it doesn’t matter who raised it. Altogether, our mission at FeeX has created a situation where the team feels it is half-volunteering, but with high-tech salaries.”
Working closely alongside Levine has made the two especially close, and you can find them wandering around tech conventions together, but also with their life partners on vacation abroad. “Uri went from being a mentor, to being a partner, investor, and friend. He is a mentor for business matters. I have come to him and said: ‘Uri, tomorrow the company is closing!’ Then he comes and calms you down and explains that this is a dynamic that in which every day you feel as though you are falling off a cliff.
“At the end of the day, a start-up is a pendulum that swings between crazy euphoria and insane anxiety, especially in a company like FeeX. Nonetheless, at FeeX we took a difficult mission upon ourselves. The market is sedated, and the financial institutions invest tens of millions of shekels in Israel and tens of millions of dollars in the US to maintain the status quo. And you come with a little PR, and a little money from Facebook campaigns, and make users open an envelope that until now they filed away, and scan the report inside, and you motivate them to take action that will ultimately save them a lot of money.”
”Far from a business model”
“We help the users at FeeX, but we don’t want the insurance companies and financial institutions to make less money,” says Zurel, “I want us, the public, to know how much we pay in shekels, not in percentage points. So you can compare pension fund A to pension fund B. If, by transparent means, they are still able to make enough money, what do I care?”
FeeX’s service is free to users, which raises questions about the company’s business model. “We are a year-and-a-half away from a business model - because of focus considerations,” says Zurel. “We need a model that includes customer retention. If users return on a quarterly basis, the business model has to succeed based on this. We are still examining who will pay and for what. We had an idea that businesses would pay for the service for their employees, but the model will have to be sharp and soundly based."
Zurel explains that the confidence that has been established among FeeX users in the financial market, where it is hard to trust the big players, may create an opportunity. “We are creating a crisis of confidence in insurance agents and financial advisors. I must start to ‘feed’ you added value, because people trust us more. I am not ruling out the possibility that we will become a financial player ourselves. I am not sure it will be called the same thing, but we will need to see, when and if it happens.”
FeeX
Activity: Saving pension fund fees
Founders: Uri Levine, Yoav Zurel (CEO), David Weisz, Eyal Halahmi
Founded: 2012
Employees: 30
Capital raised: $9.6 million.
Investors: Horizon Ventures, Blumberg Capital, Uri Levine