Israel Kalush - VP of Engineering at eToro

(Joel Beasley at 00:00:00) Hello, my friends. Today we are talking to Israel, the VP of Engineering at eToro, and we discuss the evolution of cryptocurrencies over the past decade, how their game-changing technology allows you to copy other successful investors, and how to approach recruiting talent when experiencing insane growth. All of this right here, right now on the Modern CTO Podcast. Here we go. This is the Modern CTO Podcast.

(Joel Beasley at 00:00:36) Where are you calling in from today?

(Israel at 00:00:39) Actually, I live near Tel Aviv. Don't know if you ever had the chance to visit.

(Joel Beasley at 00:00:44) I have not.

(Israel at 00:00:46) Oh, you should. You know, once this COVID thing will end up—I mean, who knows when—but, you know, definitely a place worth visiting.

(Joel Beasley at 00:00:57) Yeah, I'm excited. I've actually had a number of friends that have gone there and have had great stories coming back talking about it. It's just one of those—I just recently started traveling about two or three years ago internationally. And since then, I've gotten to go to cool places like Belize and Sweden and just all over, but I hadn't gotten to go out there yet.

(Joel Beasley at 00:01:19) And that was on my list of the top 10 places that I wanted to go visit just because of the people that go there. Whether it's for their birthright trips or whatever it may be, they will go there and have amazing stories about it. And so I'm excited at that potential. We just need to get over this COVID hump, you know.

(Israel at 00:01:39) Absolutely. Absolutely. Who knows? Really, who knows? Who believed, like, one year ago that we'll be here in February and it's going to be still absolutely the same?

(Israel at 00:01:49) It's been insane. Although there are, you know, things here—there is some evolution here. I don't know if you had the chance to hear about it, but we're getting vaccines like crazy, like around 40% of the population has already got the shots. So hopefully there's a light—we can start seeing the light at the end of the tunnel—but, like, who knows? I mean, we are literally the beta testers of the vaccine.

(Israel at 00:02:19) So hopefully we won't grow any, you know, any tails or whatever.

(Joel Beasley at 00:02:24) If you do, that's interesting. I'm sure you could find a way to make some money off of it.

(Israel at 00:02:28) Absolutely. We haven't tried that, though.

(Joel Beasley at 00:02:31) Right, right. I actually—one time I mentioned I was on this podcast with a bioengineering firm. They're publicly traded. And I don't know if we cut it out or not, but I asked them how long until we have wings, because they were talking about how they could do all sorts of appendages in the future and all of this bioengineering.

(Joel Beasley at 00:02:49) And she was like, "No comment." And I was like, "Whoa." She said it in a way that made me think that they were actually doing, like, building wings on people.

(Israel at 00:02:56) No, no. That sounds like fun. I mean, da Vinci already envisioned that, like, hundreds of years ago, right?

(Joel Beasley at 00:03:03) We wanted to fly since day one.

(Israel at 00:03:05) Yeah, absolutely. So, yeah, these days are absolutely insane. Like, I mean, since COVID started—like, here, you know, the outbreak was in March, like, March 2020. You know? So literally, we had to adjust overnight. So it was really, really intense. Really, really intense.

(Joel Beasley at 00:03:28) Yeah. And, I mean, I'm a holder of digital currency, and that's just been taking off. And that's your business, right?

(Israel at 00:03:35) That's a big part of our business. Yes, yes. Actually, what are you investing in? Like, what specific coins?

(Joel Beasley at 00:03:44) What specific coins? Stellar.

(Israel at 00:03:47) Okay.

(Joel Beasley at 00:03:48) Bitcoin. Let me see. What's the other one that I do? I messed around with—I've got a friend who's really into it, and he makes a lot—he has a big company that does it, right?

(Joel Beasley at 00:04:00) And he was getting me in on this coin or talking to me about it. But basically, it's like a DeFi-type coin, and I couldn't buy it on the normal crypto exchanges. I had to go off exchange, but you basically stake it. You could stake it for, like, 10 years, and it provides you some huge amount of interest.

(Israel at 00:04:18) Interest. Yeah.

(Joel Beasley at 00:04:19) Yeah. And so what I like to do with that stuff, really, I think it's the currency of the future. And so I just take a percentage of my total portfolio and put it into just considerable—you know, I'm not going to touch it for 10 years. It's just fun to have. And recently, I just bought—I don't know what it's called—it's the hardware wallet, like, the really popular hardware wallet.

(Israel at 00:04:40) The Ledger? The drawer? Yeah.

(Joel Beasley at 00:04:43) Yeah, I got the Ledger one because I was keeping it in my account, and then everyone was talking about, like, the whole purpose or the root of this currency was for you to hold it and for not—for it to be not in an exchange. So I bought it, but I haven't actually used it yet.

(Israel at 00:04:59) That's one of the challenges with all those coins. I mean, right now what I'm saying—it's not 100% true, but it's pretty close to that. Right now, it's still a closed ecosystem. So when you actually purchase a coin, I mean, it's easy to get in. It's not as comfortable to get out.

(Israel at 00:05:19) I mean, so it's kind of a closed ecosystem. And one of the challenges of crypto is how quickly it's going to be embraced by not just the general public, but the general financial ecosystem to make it more mundane—kind of, you know, something that's useful for day to day. So nowadays, if you want to go and buy, like, real physical goods with crypto, it's still not very easy. And this is one of the things that I, you know, I personally think is really holding this entire, you know, industry still, you know, holding it back. But I think it's going to change really soon.

(Israel at 00:06:00) I mean, we are actually working on changing that. And once you'll be able to go and just live your life and go to the shop, you know, either swipe your debit card or and pay with crypto, and this will create the linkage from the, you know, digital abstract world to the real physical world—this is where things will start taking off really dramatically. Because nowadays, I mean, people who are holding crypto are either, like, crypto fanatics, visionaries, or some people that are really digitally savvy. But, you know, it's not going to be necessarily like your close family or your parents or your brothers. I mean, like, normal mundane people don't hold that stuff.

(Israel at 00:06:46) It's just too cumbersome, too difficult. Too difficult to understand. People want to look at stuff. But it's definitely going to change the future. I mean, we've been dealing with crypto since 2014.

(Israel at 00:06:59) That's the first time we actually allowed people to buy Bitcoin on the platform. Yoni Assia, which was our founder and CEO, is, you know, a big, you know, a very, very vocal entrepreneur in the crypto industry. And also, yeah, a big visionary in that space. So it started off with investing in Bitcoin in the very, very early days when it was worth really literally cents. So we really introduced the Bitcoin investment, you know, really early in the game.

(Israel at 00:07:38) And actually, in 2017, when it first got, like, really big public awareness, general public awareness, this is where things really started to take dramatically off for us. It was the first time when we, you know, literally had, like, the perfect offering at the real perfect timing when everyone was interested in owning that—owning Bitcoin or owning, you know, Ethereum. And we were one of the very few platforms out there where you could really use, like, regular fiat money deposits, like, you know, deposit dollars easily, like, buy crypto like that with a click of a button without getting through all the really, you know, really complicated hassle of, you know, dealing with public keys, private keys—most of the people don't really understand, don't want to care about it. You just want to own the thing. So in our platform, you could easily, like, cash in and also in the same ease, cash out.

(Israel at 00:08:43) So if you wanted to sell the same—to sell the coin and just realize, realize your profits, hopefully—then, you know, click on the button. You cash out. You have, you know, US dollars in your balance, and, you know, you can do whatever you want. You can, you know, take the money and buy, you know, Google or Facebook stock or, you know, if you want to even cash out. So it was so easy that people really loved it because it saved them from all the trouble of, you know, understanding the mechanics and also the trouble of just, you know, storing it and and holding the keys themselves because we have heard so far, you know, so many stories about people who just lost their private keys and then the money is gone. You heard about the guy—forgot the name—who's going after his old drive in a, you know, in an old dumpster looking, which is apparently holding now $200 million worth of Bitcoin.

(Israel at 00:09:41) It's just literally insane.

(Joel Beasley at 00:09:44) I know. I know. I've so many stories of people going to the dump and trying to figure out where the trash was from their street to dig through it. Yeah. It's—you know, there was an interesting—I like how you talk about how you make it really easy to get in and out.

(Joel Beasley at 00:09:59) When the big first kind of—when Bitcoin came on the scene and all the news started to cover—I think it was two Christmases ago, like, two Decembers ago.

(Israel at 00:10:10) Yeah.

(Joel Beasley at 00:10:11) And every—like, the first time I heard from one of my in-laws, "Hey, can you help me buy some of this Bitcoin stuff?" At that point, I was like, okay, the people who don't know what it is are starting to figure out what it is. And the price was—I think it was, like, 17 or 19,000. It was climbing. But I had—at the time, I had an app development agency, right? And these people came to me, and they said that they had this problem because they built these Bitcoin vending machines. So you could go up to them, you could put in cash. And they said the problem that they had is all the banks, like, clenched on—they didn't know how to deal with it. So they all just overnight shut—if you're doing something with cryptocurrency, they shut your accounts down. So they showed up to this meeting and I was like, "Are you guys serious? Like, is this really a thing?" And because I—I live in the town I was born in, so I know, like, a lot of people. And they had these duffel bags of cash because they could sell the Bitcoin because people put the cash in, but then they couldn't deposit the cash anywhere. And they had this truck just filled with, like, these duffel bags full of cash because they would just drive around and go pick up, you know, empty the machines when they get full, but they didn't have anywhere to deposit it. And they were trying to, like, get connected to a community bank or somebody that would let them take this cash because you can't buy more coin to serve your customers, and then your ATMs become useless.

(Joel Beasley at 00:11:36) And so I was just fascinated by—we didn't do any business together, but the meeting was one of the most interesting meetings I've had.

(Israel at 00:11:44) Yeah, sounds like that. So definitely, I mean, what we're seeing on the traditional, you know, financial system is—at least definitely in 2017, it was extremely concerned and troubled about it. Like, so first of all, you know, there are two aspects to that thing. First of all, it's the technical aspect. So it's a new technology. It's extremely disruptive, depending on how visionary you are and how evangelistic you are. But basically, you know, some may—some even foresee the fall of the entire, you know, banking, banking industry because of crypto. So one thing is the technology. The second is the actual coins. So if you think about the technology itself, so the interesting thing about it is that, you know, as we are—we have two legs buried, one in the old kind of financial technology, and the second one in the new, you know, crypto technology.

(Israel at 00:12:48) So we know it pretty well. So the—when you look at the way the financial system is working, it's literally broken. And what I mean by broken is if you think about, like, something really, really, really simple. Like, if you go and deposit funds in a bank, right, so you have, let's say, $1,000 deposited in your bank. So literally, what—where is the money?

(Israel at 00:13:15) So the money in essence is, you know, a field in the database of that, you know, of that bank's application, right? The money is nowhere. There's no money. So first of all, there's a trust issue, which means that I'm trusting the bank that the numbers that they're saying—representing in the application—are indeed the money that I will get from them. And if you look at the modern Gen Ys of the world, Gen Zs of the world, they don't trust those systems anymore. So that's one aspect. The second aspect is think about, like, when you are transporting money around.

(Israel at 00:13:55) Like, you want to send money to your friend that, now is visiting, you know, let's say, the UK. When you move money around across banks, the money shifts probably like three or four technical hubs. Each hop is just connecting to the other hop because each bank has its own, you know, private technical system. There's no one standard that everyone uses as a technical solution. So and this is even before we're talking about conversions. If you're moving money around, you are paying so many middlemen when you are doing every transaction, which in the new age, with, you know, with the existence of a system like blockchain, the decentralized system like blockchain, all those middlemen are just gone. So if you think from the beginning, like, when you're using a crypto, the entity or individual who holds the coin is yourself. No one is holding the coin on your behalf, right? So you have an absolute trust because you know what you see is what you get. I know that I have, like, two Bitcoins.

(Israel at 00:15:08) So, alright, I can see that and I can trust that. There's no arguments. And now if I want to move the money or some money to my friend, regardless of where he is, it's one hop, right? One hop. I'm not paying any middlemen. I have to pay blockchain fees, which are, you know, equivalent to transaction fees, but there's no need in between. So if you think about the technology as a foundation for the next-generation financial banking system, it's something that's going to dramatically change the tech—the technology or the technical ecosystem—for every financial institution. That's why nowadays, everyone understands that. And you see every major bank now out there has a crypto division that's just investing heavily in it just to understand or to figure out what's going to be their technical approach towards adopting, you know, blockchain technologies. It doesn't necessarily mean that they will use Bitcoin or Ethereum—like, the actual coins—but just adopting the technology and the concept of the technology is going to be a huge game changer for the entire industry. So that's one, you know, dramatic big aspect. And I personally think that, you know, in the next five years—it's probably going to be even less—but you're going to see major financial institutions and even countries issuing their own, probably even probably permissioned blockchains, and making them, you know, a regular and a completely acceptable mean of payment.

(Israel at 00:16:51) It's just around the corner. Like, everyone is working on this.

(Joel Beasley at 00:16:55) That—that's how I found Stellar, because I was following Stellar a little bit, and then the Ukraine picked them as their company—like, found the Stellar Foundation as the company that's going to help Ukraine come online with cryptocurrency. And when I saw that news happen, I said, "Oh, okay. If a country is picking them, this is going to be something that's interesting to hold." The other one that was interesting was XRP. And I think that Ripple was—I got to talk to the—I got to interview the guy, like, the CTO of Ripple.

(Joel Beasley at 00:17:27) Yeah. Interesting. Super smart guy. You know, we talk to those people who are just way smarter than you and you just feel like a monkey. Yeah.

(Joel Beasley at 00:17:35) Yeah. So I got to talk to him about one of the questions I had for him was about quantum computers breaking the algorithms. Apparently, there's quantum-safe algorithms, and it's a ten-year-out problem. It's not something we're working with today. But I was curious. I just got off on a tangent. I apologize. But with the XRP, that sounds like they were trying to solve the problem that you were describing. Because before, they would always say we're gonna make it easy for banks to move money around, but I didn't understand what you just explained. I did not know that was happening. That's why I'm getting charged so much for wires and things like that, or international things have to hop and then everyone gets a piece along the hop.

(Israel at 00:18:12) Exactly. And when you think about it, there's no real reason. But the fact that those systems are built on layers and layers of legacy systems, that's the only reason why it's out there, why you have to pay those pieces for every transaction you're making. And with modern technologies, there's no need because it needs to be just one hop from one way to the other. And this is why a lot of, you know, those middlemen are really nervous because it's going to take their business. Absolutely.

(Joel Beasley at 00:18:47) Yeah. You should write a book on it and call it Technical Debt.

(Israel at 00:18:52) We are drowning in this. We know that.

(Joel Beasley at 00:18:55) But that's actually what's happening. This generation is paying literally the technical debt of the systems being stacked on through bank fees.

(Israel at 00:19:04) That's right. And absolutely right. That's why you're seeing so many people, the rise of people that want to be first, be unbanked, and are looking for innovation and new technologies and solutions that are way more accessible and adhere to their desires and even their dreams. Because you see that the generation — I mean, I read an article that Gen Ys and Gen Zs of the world, they would rather go to a dentist than go to the bank. I haven't been to the dentist for fifteen years, so I don't know. But literally, I mean, if you look at the stuff that we're doing nowadays, people that join our platform are basically getting access to the financial markets and the wisdom — the general wisdom of the crowd.

(Israel at 00:20:03) And this is something that you cannot get at any traditional financial institution. So right now in the States, we are only offering crypto services. But in the rest of the world, it is broader. So, for example, users that join eToro, you know, from Europe, for example, they have the ability to buy or invest in a wide set of financial instruments, including — obviously — equities, indices, commodities, currencies, cryptocurrencies. And what it makes, it makes everything extremely accessible.

(Israel at 00:20:46) So if you want right now to invest and make sure that your investment is well-diversified, there are very few places that can allow you to do this so easily. So if you want to hold, investing in Google stock and hedge your risk, and also bitcoins, and maybe some gold or oils — I mean, we had very interesting stories around all of this year when oil prices, you know, went negative, which was another insane outcome of COVID — then there are very few, you know, establishments in which you can actually do that. So people, when they use our services, easily open, you know, open an account, go through the, you know, the regulated KYC process.

(Israel at 00:21:32) And afterwards, they can deposit and start investing globally. So literally globally. And it frees you. I mean, it really makes you a citizen of the world. So it's really, really cool.

(Joel Beasley at 00:21:46) One of the things I like about it — and I'm a relatively new customer, so I haven't gotten to dive too deep into it — but the thing that hooked me that I haven't had at any of the other sites like the Coinbases or any other competitors is I can follow traders. So I can see their returns, and then I can follow them. And not only that, but I can set it up to automatically invest as them. That's the dream, man. That is the dream.

(Israel at 00:22:17) Yeah. So this is really, really cool. And it's one of our really interesting unique solutions. So basically, think about it. If you think about investment or in general, you know, general trading or investment, you need to understand what you're doing. I mean, investing serious money requires knowledge or extreme luck. So let's stick to knowledge. So it requires knowledge from one side. From the other side, it requires time because, you know, you have to be engaged with the markets. You have to know what's going on, and you have to be able to take timely decisions of, I wanna, you know, buy now. I wanna go long now. I wanna go short now.

(Israel at 00:22:59) I'm gonna realize my profit or losses right now because, you know, I'm looking at the markets and I'm reacting. So it's very time-consuming. And also, until very recently, it was a lonely experience. You were alone with your, you know, with the screens, with all the gizmos, and you had to take decisions. And it's tough. For the average Joe, it's very tough. So what we've actually said is that we wanna use the same, you know, model that Facebook introduced to the world and just piggyback on this. So prior to the introduction of our social community, investment or your portfolio used to be considered as IP. So if you know what you're doing, it's your own IP and you would like to keep it private.

(Israel at 00:23:55) Right? It's your secret sauce how to win and make money in the markets. And what we said is that we actually redefined this the same way people are going and presenting pictures of their families in Facebook, and they're posting this — something that, you know, not too long ago were pictures that you naturally would place in your drawer, right? And no one would see.

(Israel at 00:24:22) Now it's out there. So what we said is people are going to be posting their financial data or financial KPIs out there for everyone to see. And by default, everyone who joins eToro, their entire portfolio is exposed. You obviously can opt out, but very few opt out. It's very few. So every financial indicator is just out there. People know — not how much money you have in your portfolio — but they know your entire allocation. They know your risk score. They know your financial indicators such as, you know, drawdowns, obviously gains, and they can drill down to the individual transactions you performed over the past. So they can know you extremely intimately and understand whether you are, you know, someone they appreciate or not.

(Israel at 00:25:19) So let's assume, Joel, that you wanna start investing in crypto and you know nothing about crypto. Then what you do with eToro, you're actually going and using our big data discovery tools to look for an investor who shares your, you know, a similar risk appetite. You can look at his story and say whether, you know, he's investing in the right stuff that is in line with what you want to invest. And you can actually even discuss, you know, exchange thoughts and exchange information with them. And if you like them, you can decide that you want to take some, you know, amount of money and have the system copy trade. So if you take, let's say, take 50K and copy trade me, then basically the system will open a subaccount with those 50K. And from that point onwards, any action that I'll do will be automatically taken, will automatically take place in your subaccount with the same proportion, in the same time, and with the same rates. And we actually call this process a democratization of money management because in essence, the talent, the investment talent does not really lie — or definitely not exclusively lie — within the traditional old or legacy institutions, but it lies within the world.

(Israel at 00:26:44) So you can imagine that, you know, within our customers, there are quite a few individuals who know what they're doing. So what you can do is create extremely smart portfolios and actually harness the power of the wisdom of the crowd in your favor. So you want to be exposed 20% of your portfolio to crypto? Just copy one individual or a few individuals that are specialized in crypto. You want to be exposed to the Nasdaq? No problem.

(Israel at 00:27:16) Let's copy those individuals specializing in just beating the Nasdaq. So you can really create very smart portfolios that are basically comprised of talent and not necessarily of instruments you invest yourself. So it's really the community working for you. And the nice thing about it is that it's also free. You don't pay extra for using that service.

(Joel Beasley at 00:27:41) And there's so much money there too. So for three years, I built financial software. I had a business partner who owned a wealth management company, and I went in there, understood, learned the business from the ground up, and built the software and the team to basically optimize what they were doing so that they could scale and make multiple locations. So I got to see all the revenue and how there was so much busy work from moving the money when you get a new customer. Let's say you get a wealthy person there, a doctor. They've got 2 or $3 million. The amount of work it takes to get their money over into you and then into the brokerage and then managed and all — there's so much. And then on top of that, there's a lot of profit there, right, of holding the funds and managing them. And so I really like that you're — I guess that you've chosen the perfect word — you're democratizing it.

(Joel Beasley at 00:28:30) You're allowing me to say, hey, where is that really great person? The person that aligns perfectly with what I want for this chunk of money. And there's — there may be in the old days, I guess, currently, maybe a rock star, one or two smart people in this category at this firm or this category at that firm, and at night they're on eToro. And so we could just go directly to them and save a bunch of overhead.

(Israel at 00:28:56) And actually, we have a few examples of people that, you know, instead of going and opening their own firm, they'll just, you know, have their account out there on eToro, and they're telling the customers, just go and copy me. And we actually are also working pretty hard on making sure that that environment stays, you know, as healthy and safe as possible. So we are monitoring the risk appetite within that ecosystem to make sure that people are not doing anything too risky. Because it's easy. It's easy to do the risky stuff.

(Israel at 00:29:31) We just talked about crypto investment. Crypto investments obviously are not risk-free. And we're also making sure within the community that anyone with seriously followed just has to communicate with his followers. So you have to, at least once a week, issue a post explaining, you know, what you are planning for the week and what you expect to go up or go down and just exchange information with your community because they need to know that you're working for them. And think about it. It's something that it's so difficult to get from standard, you know, old-style investment mechanisms.

(Joel Beasley at 00:30:11) Do they get any compensation?

(Israel at 00:30:13) Yeah, sure. Of course. So we have what we call the Popular Investor Program, and the entire package is publicly available out there. But the interesting thing about it is that the costs are getting paid from our profits and not from the users. So if you, as a customer, choose to copy someone, it's absolutely free of charge. So if you invested directly in Facebook or you copied someone investing in Facebook on your behalf, you don't pay anything extra. And the reason why we chose to do that is because, one, we wanted to encourage people to use that tool. And second, we didn't want that mechanism to basically impact people's investment tendencies. So they have to feel that this mechanism is — they have to feel as comfortable as possible to use this mechanism. Otherwise, it just wouldn't fly.

(Israel at 00:31:14) So for the users, it's absolutely free of charge.

(Joel Beasley at 00:31:18) That's amazing. Now you said that you had a million new users in January alone. That's crazy growth. How are you recruiting? How are you finding new people?

(Israel at 00:31:29) You're talking about our talent, our customers?

(Joel Beasley at 00:31:34) Yeah. How do you — I mean, I'm just thinking from an engineering perspective. If you're getting that, if you're having that much growth in your business, how is your engineering team? You must be hiring a bunch of people.

(Israel at 00:31:46) Yeah. So yeah. You touched a very tough point. So basically, we are experiencing insane growth. I feel extremely lucky to be in a situation when, you know, a company of our size, which we're, you know, we are fairly a decent-sized company already, we're still growing, you know, double and triple digits year over year, which is really insane. We started 2020 with 12 million customers, and we ended 2020 with above 17 million. So we put a little bit more than 5 million customers over 2020. So the growth is just insane. It means that myself and my engineering team don't get to sleep a lot.

(Israel at 00:32:32) And we are really, really working really hard on basically, you know, optimizing the system and making sure that, you know, we're scaling out, adding capacity, constantly growing the systems, making sure that, you know, we keep everything nice and shiny. And it's a real challenge. We've experienced from January 2020 to January 21 — I think loads on our systems, you know, grew anything from 600 to 1,100%. So it's massive. It's really, really massive.

(Israel at 00:33:10) So we are hiring like crazy. I'm hiring right now more than 100 additional people to my staff. So we're definitely looking for, you know, great talent that wants to join the force, our forces, and basically revolutionize the fintech space. So if you have good friends with, you know, good capable friends, just let me know.

(Joel Beasley at 00:33:32) Yeah. So you're looking for people. Is there any correlating industries? Like, for example, do you find that people that have a background in maybe advertising, like advertising data, happen to be good fits? Or have you found any niches where they're good to translate over into fintech? Are you looking for only fintech people?

(Israel at 00:33:53) No. No. We're actually — first of all, you know, if you look at our entire platform — so basically, we have many, many paradigms that coexist within the system. So we have the core financial system or the trading system, and this is where definitely knowledge of fintech comes, you know, comes in handy. Although it's never a must, but it's definitely a big plus.

(Israel at 00:34:20) We have all, you know, marketing development-related development, which is definitely — anything that you, any knowledge that you have from the advertising world is definitely relevant. But in general, what we are looking for is really smart people who, you know, are not afraid to just basically work pretty hard, but also, you know, come to make a change in the world. Because we really feel that we are, you know, we are pioneers in this space. We are really — for example, if you look at the stocks trading, we've been offering zero commissions for a few years now. We've been doing this in Europe, and for some time, and really, you know, brought this entire notion of free stocks investment. And now you see the growth and the insane growth for that segment in the States as well.

(Israel at 00:35:22) We've been doing crypto for years now. I think we've pioneered crypto, actually, and we are one of the most advanced technologies around that space. So everyone in eToro feels like a pioneer.

(Joel Beasley at 00:35:37) So you're looking for really bright — you're looking for the hardest people to find then.

(Israel at 00:35:43) Yeah. Sounds like it.

(Joel Beasley at 00:35:44) That's it. That's the name of the game. Yeah, you and me both, right?

(Joel Beasley at 00:35:47) So when you go through these, what's your hiring process like? Do you do a culture fit first? Or what is your culture like?

(Israel at 00:35:57) Our culture. All right. So first of all, we are a very dynamic company with a very innovation-savvy culture. We are actually making sure that every year we are introducing at least two major innovations out to the market. If you look at eToro, I mean, definitely, although we are a big company now, we are still trying to really preserve the very dynamic startup culture that we used to have. Obviously, it's getting more and more difficult, but it's something that's embodied very deeply within the company's DNA. It starts from the CEO and founders, and it really rolls down to every employee. So we really foster innovation. We really want to do things in, first of all, a very massive scale, but also we want to disrupt the markets because this is where the real kick comes from. If you're looking at the recruitment process, the first thing is usually a technical interview, you know, getting to know you, getting to understand what's your core expertise and what you're up to. Like, what do you want to do? What gives you the kick? So usually there's one or two technical interviews, and then we also try to understand the cultural fit. So there's also an HR interview. It's a pretty standard process. I mean, we're not doing anything dramatically different, but we really try to understand how well you will fit within this ecosystem, which is really disruptive, really dynamic. And also, it can be pretty challenging.

(Joel Beasley at 00:37:46) Are you remote? Do you allow people to work from all over the world?

(Israel at 00:37:50) So right now, in my organization, we have people from Israel and people from also Europe, Eastern Europe. We are extending more. We started also recruiting a little bit in the States. Definitely, as we are planning to launch our broker-dealer in the States, we're definitely going to do some hires there. But within the company itself, outside of engineering, we have presence in over 12 countries, I think. We have right now about 1,200 employees all over the world. So we are scattered all over.

(Joel Beasley at 00:38:32) Yeah. I'm excited about, as you were describing how the following works of getting to follow these traders. Can I follow crypto traders currently in the US? Or can I—

(Israel at 00:38:44) You can follow everyone. You can also follow stocks investors. Actually, there's also a very interesting thing. I mean, we talked about the manual investment, and then we talked about the copy trading, which is the next abstraction layer. There's another abstraction layer that we've introduced which falls under the thematic investment category. So basically, we call it CopyPortfolios. So if you think about it, manual investment requires you to really know what you're doing. You have to know the market. You're doing the actions yourself. Copy trading requires you to know who you want to follow or who you want to copy. So it still requires some level of understanding. So the next level of abstraction is people who want to actually invest in ideas. So we introduced the notion of CopyPortfolios, which each CopyPortfolio is basically an instrument, a thematic instrument which has a specific theme. And those instruments, we have several types of those instruments. First of all, some of them can be managed by people behind the scenes. So we have, for example, investment in the gaming industry or in big tech companies or, for example, in pharmaceuticals. And by the way, all those portfolios are doing just amazing over 2020, obviously. And we have some other kinds of portfolios which are being managed by AI, which is one of the coolest things out there. So think about it. We own the world's largest social trading network. So we are sitting on this data, understanding and knowing exactly what are the tendencies of everyone, what are the notions within the markets, what are the notions within the ecosystem. And we know the markets because we're tapped to all the markets. So what we've done is we've built a few CopyPortfolios that use this big data and some very smart algorithms to actually achieve better results than the market. So, for example, we have a CopyPortfolio called OutSmart NASDAQ. So the AI behind the scenes, what it does, it looks in the community—and I see you smiling, and you're going to smile a little bit more in just a second. So it looks for people within the community that have the proven analytical capability, predictive capability to beat the NASDAQ. And what it does, it identifies them, and obviously keeps that list refreshed, you know, keeps the list current, and it builds a portfolio of NASDAQ-based instruments based on some smart aggregation of what those people are doing. So this was kind of a semi-technical explanation of a much broader concept, which means I'm investing in the wisdom of the crowd who will manage that investment on my behalf. So basically, think about it. You're investing in talent which is chosen by a machine, and those people are actually beating the NASDAQ for you on your behalf. So you're getting this very smart instrument that has actual brains behind it. It's not just AI because there is investing talent, and talent that applies their own megahertz here to invest in the market. And that portfolio just kicks the hell out of NASDAQ. So it's crazy. And what it means, actually, is that we have very smart and very capable traders in the system. Otherwise, it wouldn't have been able to do that. But it also means that as the customer, the only thing I need to know is that I want to be exposed to the market. So once you made that decision, let the wisdom of the crowd manage the investment on your behalf. So think about that level of abstraction, and I think this is going to be the next generation of financial instruments that will really reshape the markets.

(Joel Beasley at 00:43:08) I fully agree. Man, you're going to eat Robinhood's lunch. Good. All I'm thinking about is where I'm going to go sign up for the newsletter announcement. I mean, I have an account now at eToro, so I guess I'll get the notification because it knows I'm in the US. So the moment that that's up—and Robinhood can't do anything except for transact. You can just purchase and sell, right? And that's the tool I use. So to be able to do all of this other stuff and have people basically making me money. It's like, versus—now I pick my stocks usually based off of interviews. So I'll interview somebody, and I'll talk to them, and I'll learn about their company. And then afterwards, if they happen to be able to publicly trade it and I can pick up on their executive team being that magical type of team, then I go buy some. And it's worked out so well, especially with the Zoom stock.

(Israel at 00:44:11) Zoom is an amazing company. I mean, it really allowed us. We've been using Zoom even prior to COVID, and we used it only in our physical conference rooms. When we had to—it was a Thursday, and when we felt that something was going to be really wrong, and then Thursday evening, we had to send an email to everyone saying, "On Sunday, don't come back to the office if you don't have to." And just the fact that Zoom is one of our primary tools—I mean, they really built an amazing product. Kudos, really well done.

(Joel Beasley at 00:44:51) Yeah. And they're a great team too. I follow their CEO, Eric, and he just jumps in on Twitter for support requests. He's just a really good guy. And then I've had Harry on the show twice, their CIO, and he's just so chill. He's just such a cool, calm, collected guy with a lot of experience. One question I do have for you. Will regulation prevent any of these interesting features from happening in the US?

(Israel at 00:45:17) So the answer is no. I mean, our application included all those copy trading elements. So we're going to be launching this in the States as well. I mean, we made sure together with the regulators that everything is acceptable and clean. I mean, one of our core strengths within the company is because we are operating really worldwide. I mean, we have customers from over 150 different countries. So we are working really closely with many regulators all across the world, with all the leading ones, making sure that everything falls into the right track. Because in the end of the day, this is the only way you can really scale up your business. So you have to work really closely with them, make sure that everything's fine, everything is acceptable. So it's going to be the same in the States.

(Joel Beasley at 00:46:16) Nice. Nice. I'm excited. I really am excited.

(Israel at 00:46:19) We do.

(Joel Beasley at 00:46:19) So as we start to wrap up, I want to make sure that we hit on the recruiting thing again. So if people are interested in learning more about working at eToro, what do they do?

(Israel at 00:46:30) Yeah. So first of all, you can check our career site. Definitely just go and check it out. We have everything listed out there. So if you find anything that's of interest to you, just go and apply. We are basically looking for every possible profession. So I guess everyone can find something and just go ahead and apply from there. It's the easiest thing possible. So, you know, although these are very difficult and very tough times for everyone, I mean, this is also a wake-up call for literally everyone, right? So you could really see how businesses that were natively online and could adapt to the new situation really flourished. And I think we were able to basically also take advantage of this phenomenon as well. Obviously, we're a B2C business on steroids. So definitely, anyone who wanted access to the market could use our services and get easy access. So from that perspective, we could really take advantage of that situation. And I think that 2021, on all fronts, I mean, nothing is going to remain the same. The habits that people developed during 2020 are here to stay.

(Joel Beasley at 00:47:58) Thank you so much for listening. And if you found this episode useful, please share it with a friend or colleague who you think would get value from it. And if you have topics that you would like to hear discussed on the podcast, either add me on LinkedIn or send me an email, [email protected]. Every time I get an email or LinkedIn message, it absolutely makes my day and inspires me to keep going.