Crowd sourcing marketing to affiliates

People assume marketing has constraints, that it should be in a TV Format, or display advertising, or adwords, but the in fact marketing over the internet is pure format, you can build any idea/application which could suddenly millions of active viewers.

Marketing is no longer a position that you fill at a company.  Marketing is not a television commercial or a radio advertisement.  Marketing is not a piece of collateral you send off to reporters, bloggers, or journalists.  Marketing is everything you do and every interaction you are involved in. from everything-you-do-is-marketing/

We believe that people out there can do a better job marketing us than we can ever dream of, we built for them an eco-system to shout that they love us, and incentivize them to bring their friends to try our service.  
Incentive’s is not a bad word, we offer people a transition from the past into the future but most people are afraid of change so we help them with
incentive’s to help us 🙂

Marketing has always been about creativity, that’s where the mad man got their fame, and until today the most important part of a “classic” marketing campaign is its creativity. The risk was that you will spend a lot of money trying to market a concept, but it will not work , what’s really cool with eToro Partners (you can be a partner too), is that they can all innovate in their own way, they can invent a way to market eToro, wrap it in an internet product or website, and simply see how it works.

I’ve met numerous affiliates, and most of them are real startups, people with a concept and good internet execution skills, its simply a better business model for them than ad sense, and for us a more customized marketeer than simply a site with ads.

I’m always excited to see what great affiliates can do, I just wish they would work exclusively for us, then possibly they would be more focused and have better campaigns.

Fred Wilson on Marketing, is a great thread that created a lot of buzz and a first comment from Seth Godin (the marketing guru), but what if another startup product is our marketing ? aren’t we supporting them just like a VC would ?

250 MILLION Dollars – Retention is king, Viral coefficient is queen

It was amazing to hear the story behind draw something, to whoever hasn’t heard :
New mobile app, connect with facebook, choose a friend, then word to draw, he needs to guess what you drew, then you need to guess etc’ , very addictive .
30M users in 6 weeks !
12M daily active users in 6 week !
100-200K a day from mobile ads (who said mobile advertising doesn’t work ?)

18 month ago I met Dan Porter, CEO of OMGPop, he told me about social gaming and how they are developing cool games for facebook, i tried convincing him to build with eToro a cool social trading app for facebook, he said they prefer focusing on social games on facebook, and WOW, the rest is history, launched Draw Something, became the fastest growing app in history, and rumored to get a $250M offer from Zynga .

If its 100K a day now, then it could probably reach a million a day, simply add context to drawings, and adapt ads to context or let brands sponsor their Logo as a word (that’s AWESOME) – call it sponsored word, and people start drawing your brand – the bigger the brand more people click it and then each get ad from the brand it self.

Read The future of mobile for more mind boggling insights (and then combine : mobile social trading).

I wanted to start the blog by talking about how retention is so important, they get to daily retention rates, which is amazing, they expect people to come back almost every day. If they have 30M users, and 9M are active daily, that means each user on average is on it at least every 3 days, that’s amazing. Creating such traction, and keeping it is amazing, it means they have 30-40M DAILY IMPRESSIONS of ads.

But that amazing retention rate is no good without its queen, for every day when a user is active he has a viral coefficient, maybe of 0.2 a day, so every 5th time a user logs in, he invites a new friend (through his sharing, actual inviting or word of mouth), for example viral growth model . The trick is very simple, get to viral coeff + retention rate > 1 and you grow every day by that (could be used in Monthly too, would be irrelevant for such growth though) .

Bottom line is simple if every user you have will bring at least one user over the course of his life time, than the company will always GROW without any other source of leads but its viral effect, that’s how the magic is done in the internet, happy users stay and bring their friends. BOOM.

That spreadsheet took me a while, I think it is a good base to model viral growth, you are welcome to comment if you think I need to update it.

Why I Won’t Stop Blogging Any Time Soon

So far, a month after my birthday, I am still consistently writing at least one post a week. I have also noticed that the traffic on the site is jumping to a record of 520 views a day on my early posts, and then going to 250 views a day on my latest posts, and my daily average has increased to 40 views when I am not writing.

I wonder if this means that my earlier posts were better, or that people simply gave me credit before reading 2-3 posts, or that people now check my blog regularly so I have less spikes in traffic.

So instead of giving up, just like I’m used to, I’ll set higher targets and grow it with force. The blog had 4000 views in March, and I hope to reach 8000 in April, and if I do I’ll start being really aggressive (I’ll add nude pictures if needed).
It’s interesting to note that one month after I started, 90% of the traffic to the site is coming from social,  with Facebook at #1 Twitter at #2 and Linkedin at #3.

So I’ll blog more often, posts made of short thoughts like this one, and will urge people to comment on my blog. Hey, if you read this, drop a comment. I’ve integrated Facebook comments, as well.

And Maybe one day, I’ll be lucky enough to be featured ass one of 25 CEO blogs every Biz student should read. Maybe I should target business schools in 3rd world countries :).

The best product ever inventned – MONEY (and about Currency 2.x)

Why is MONEY the best product ever made ? Its a data driven conclusion
Today, the most important KPI for an internet companies are simply the number of active users (facebook 800M etc’), as long as that number is growing the product is doing well. 
(Other KPI’s can be you have cohorts of active users, seperation of aquisition (and costs), retention and ARPU/LTV, etc’ etc’ , these are relevant only for business and not to generic products) .

Dealing with number of active users lead me to think what are the greatest inventions if we measure them by the number of active users today, and to get the best products of all times you need to muliply that by the number of years users using it.

After deducting nature inventions (otherwise electricity might take over), and thinking if mentioning God is an active user of the bible (cause then the bible/religion gave a good fight) , I came to a conclusion that MONEY is the best product of all times. First its a actual product, it is tangible, since invented it has taken different forms (like computers, or cell phones) but still you can easily say what is money and how it can be used (buy stuff mostly, pay people) . 

Out of the general population, It is by far the most used product, and used regularly by most people, it is today almost completely virtual, and people perceive it almost as they perceive science or religion, it is how things work, you pay to get X, you prey to get Y.

So why not simply re-invent money, build a smarter money, cheaper, faster more engaging , built it like a modern product , a web 2.0 product, that would be the start of the irrational period. Re-inventing  money on the web, will probably be the biggest product on the web too. (currency 2.x)  

If you don’t believe me, believe Fred
Fred Wilson on bitcoin


bitcoin 2.X (aka Colored Bitcoin) – initial specs

We believe that a new economic framework requires a new form of digital currency (aka the good dollar). The bitcoin protocol is perfect as the underlying technology just as HTTP is the foundation of the web.

Below is the initial spec to build the new framework on top of the Bitcoin network, thus creating an economy of bitcoin 2.x, multiple currencies easily created by any community and deriving its value from the community and protected and secured by all communities.

About Bitcoin

Bitcoin P2P infrastructure for clearing payments has been established as secure, reliable and free way to transfer value between accounts. While the Bitcoin network (protocol) itself is secure and stable, service providers for the Bitcoin Eco-system has been down multiple times, causing damage to Bitcoin reputation and exchange value.
The correlation between the underling technology and the value of the currency is causing people to assume that the technology is not trustworthy and that the value is too volatile.


Bitcoin 2.x is an idea to separate the bitcoin network (technology) from the value of a currency (community) using the bitcoin network to clear transaction and avoid double spending.
bitcoin  2.x aims to provide an easy way to create different currencies on top of the bitcoin network


Genesis transaction

The idea is to use a Genesis transaction to create a new currency

The genesis transaction has a certain amount of bitcoin that was transferd in it. this BTC amount will be used to create all the value in the currency.
The currency ancestor is the address the amount was transferred to and will control the initial distribution of the currency

Thin “currency clients” are then created with a special method for calculating balance.

first we find all the transaction that their last address is the client address. we take each of these transaction and crawl the block chain to see if this transaction was generated from the genesis transaction.
if so we multiply the transaction amount with the initial split* and we get the user balance

* initial split: is the decision to split 0.00001BTC = 1Currency (example)

the distribution of this “currency client” than creates a community around a specific Genesis transaction.  this creates a separation of those “Colored bitcoins” from all other bitcoin and there for the mini-eco-system can have a floating value on top of the bitcoin network utilizing its infrastructure

Colored Bitcoins
Colored bitcoins are ordinary bitcoins that at one point at history where transferred in the Genesis transaction.
since all the history of the each bitcoin is save in the block chain it is possible to check for each bitcoin if he is colored or not.
(colored meas that this bitcoin in one of his previous transaction has been part of the Genesis transaction)

  1. now because these colored bitcoin are also regular bitcoin they can be transferred using the bitcoin network from address to address.
  2. because we have a method to identify the colored bitcoins they can be equivalent to rare coins and there for their value can very from the bitcoin value according to the demand of those rare coins

Initial Distribution

At the creation of the currency a single owner has the whole value of that currency.
At the end of the distribution all the value is transferred from the ancestor to the clients.
The process between the two stages is the distribution.
after the initial distribution is finish the ancestor has no centralized role in the economy and the clients can manage their economy in any way they see fit.
in the initial distribution stage the currency can gain its trust. and create the structure of the value distribution across the economy

Distribution  algorithm
the distribution algorithm is the method by which the ancestor chooses to give away his currency to the entities in his economy

a simple distribution algorithm is for example to create a currency for a group of people you know
and distribute it evenly. Than each one of the people installs the client. than the client sends the owner his address.
Than the owner send him (total genesis amount/number of people)BTC from the genesis transaction.
after all the people got their part the ancestor is left with no coins and the coins are distributed evenly between the clients

in a more real use case the owner won’t know the amount of accounts the currency will have.
In addition the owner will not necessarily know all the people he wants to participate in his economy. in which case he can implement some invitation system in which each new potential client is able to invite more clients to the system.
This can go a long way with social network authentication, social graph crawling, vouching systems, sms verification, unique ips, physical identification and so forth.
This methods could be used to minimize fraud in the initial distribution.

another possibility is that the each invitation will cost the new user a certain about of coins to create incentive to bring people that won’t try to manipulate the eco-system.

*Credit goes to Lior Hakim for writing this spec
Bitcoiners, would appreciate your thoughts and help set it up 🙂

Inventing an easy way to make money

Ever since I remember myself I tried to make money. When I was 12 I took my brother’s D&D miniature figures (he used to buy them and paint them) and sell them to my friends at school. At 13 I got the material cost issue and simply took his paintings and copied them and sold copies. At 14, I bought Firecrackers  and sold them at school and so on. 
I learned about the stock markets early too, and was inspired by the way you could buy and sell stocks and make money. I started looking at stocks when I was 14 and started trading when I was 16, msking lots of profit in the Dot-com_bubble (which was mostly lost 2 years later in the crash) and ever since I am looking for a way to break the markets. Both my Bachelor and Masters degrees in computer sciences were focused on auto trading, which seemed like a sure way to make money, trying to invent an algorithm that finds arbitrage in the markets and code it. That never really worked for me (like for most people) as I never found a sustainable algorithms to make me rich. My Bachelor degree final paper was on Minority games (the known El_Farol_Bar_problem) which basically teaches that the markets act in a special way unrelated to the asset class it is based on, and that bubbles and busts are a part of market dynamics.

At eToro we translated the challenge of making money in the markets, to a social challenge, instead of trying to solve the problem – we crowd source it, have as many people as you can bring to try and make money, then give them tools to see and copy what everyone is doing. It should act as a Genetic_algorithm gradually making sure only the best stay at the top .
Why do I believe social trading must work ?
Assuming tools for the crowd help the crowd discover the top traders, and assuming there is such thing as good traders, the crowd will gradually learn how to spot the top traders, or the top spotters, and will be able to magnify the alpha (profit above the market) that the top traders generated.

This is in fact proving a basic concept in economics coined by Adam Smith the invisible hand “by trying to maximize their own gains in a free market, individual ambition benefits society, even if the ambitious have no benevolent intentions” .

Our thesis is that.the bigger the network and efficiency of tools for collaboration, the more profitable the network will become (we have already witnessed significant proof that copying is more profitable than manual trading), and are working with several top universities (MIT and Columbia ) to prove it both mathematically and empirically .

We have so much data now, that the problem became a Big_data problem, with 2M+ trades a month and quants both in-house and external. We are trying to come up with algorithms that analyze the social indicators and find Alpha .
We will build the network and the crowd will find the way to make money (you are welcome to join the crowd – every individual ambition benefits society ).

*Disclaimer – in the pursuit of making money, there is always risk, and in high risk trading you should always be aware of the risks and willing to loose in order to gain. (I passed ethics course)

Why raising funds is good (and fun) – and how we raised $32M

eToro announced today that we completed a round

‘Social’ Investment Network eToro Is Picking Up Another $15 Million …

A lot of people asked me why we raised the money, and when I say that we want to expand and scale our business faster it doesn’t do the trick, I realize its more perception than anything else.
We are building something REALLY REALLY BIG, that will CHANGE THE WORLD.
My father used to tell me when I was 15, “raise money when you can not when you need”, that’s an equity markets known concept saying : you don’t know when markets are bad, and when markets are bad, business is usually bad, so when markets are good, raise money cause you can. This has very powerful impact on a 15 year old. So 16 years later, I still think raising money is ALWAYS good (in good valuation).
So why raise money – ALWAYS raise money if you believe what you are doing will return BIG time for all stakeholders. also raise money when you really need money . also raise money if you can.
(ALWAYS is only true in good valuations, if you are in downround you should consider otherwise)
Money raised, means you have more margin, more margin you can pivot more, you can experiment more, you can grow faster, you can front run product, or front run sales, you can simply do more, it doesn’t matter if you are a small start up and you raise 500K to test an idea, 15M to scale a bigger vision, or 3B to fight google, margin (of error) is good for any business to be able to innovate. That’s why :
So why is it fun ? because it shows someone smart believes in your vision and sees it is happening even better than you (you are already “pot” committed) . When I was 26, and I met my first early angels, I was pitching the vision, still the same vision today “open the markets for everyone”, and the people early on believed in us (the founders) and that the concept can be done, over the next rounds it became the vision, the execution level, management team the KPI’s (yes revenues always help, active users too), but its always first and foremost believing in something big that all our investors share, our envisioned future of finance, and our ability to disrupt towards it and monetize it.
Entrepreneurs are lucky today to have sources of finance, who are willing to invest on the possibility of success/growth (high P/E multiples, or even N/A), this enables to raise money for innovation, since innovation by definition is new, new things need to grow, and in  order to finance growth you need growth or longer term investors.
So if you have a dream, than try building it, and if people believe in your vision and you execute well, and you are constantly lucky, then you will find investors to believe in your vision and be able to make your dreams come true.
My dream is for eToro to be the largest Investment Network in the world when Investment networks are bigger than all the existing investment houses.

Accelerate your dreams. Micro VC’s, Accelerators and your dreams

I am fascinated by the trend of micro VC’s and acceleration, In general I am a big fan of the VC concept in general, in vesting in visionary growth and in entrepreneurs is obviously something I believe in.
In the mgmt2.0 post I said anyone can be a manager, this statements was highly criticized, so I will elaborate, while people assume manager has something to do with managing people, while I believe anybody with a domain responsibility is in fact managing that domain and therefore is a manger.
Now to the point, I believe anyone can be an  entrepreneur, when I mean that, I use a broad form, if you can innovate and start a project from A-Z in your work place you are an entrepreneur in my dictionary, that is the core essence of innovation management. Financing entrepreneur  that want to help make the world a better place (which is most of visionary young  entrepreneur )  can be considered at least in some part charity, since  the value to society whether this works on not, is providing people with a chance to change the world for the better.
That’s why I like great investors, like Spark , BRM  @GuyGamzu and our investors, they invest in a dream, which they see can be bigger than most people can imagine and they help us make that dream a reality. Some of them invested in eToro when it was an idea, a presentation and now they see its the largest investment network in the world, how AWESOME is that ?
So what are micro VC’s doing ? what are these accelerators accelerating ?
They are accelerating idea’s forming into products ! They help MORE people to raise initial funds to try and make their dreams come true, and in the worst case they lost 25K, and the entrepreneurs gained an amazing experience, and companies lead by entrepreneur will always appreciate that experience probably more than any MBA or degree on the resume.
Why is it accelerating ? because instead of one start up with 500K, you suddenly have 20, each raised 25K, this trend did not change the amount of investors in later stages, it simply created better and more qualified (and maybe bit more expensive) deal flow.
So if you have time, an idea and the ability to cheaply execute it do it, succeed and good luck, or fail and become an EIR somewhere, you can read more about this trend here
Here are 50 Accelerators in Europe

“Predicting the future of the Internet is easy: anything it hasn’t yet dramatically transformed, it will.  People, companies, investors and even countries can’t stop this transformation. The only choice you have is whether you join the side of innovation and progress or you don’t.” Chris Dixon (from here )

There are allready ranking to accelerators which make me wonder whether this is a new form of education, where instead of you paying tuition, you get paid to start your idea there .
Instead of university, find an idea, find partners, raise 25K in an accelerator, if you make it – Great !

If not, send us your CV to

PS – when you grow up would you want to make your dreams come true ? accelericity 🙂

Management 2.0 – My thoughts

As a young CEO of an Internet company, it seems there are many flaws in how the word ‘management’ is perceived by most people. Older people seem to think management is about organization and order, about tasks that must be defined and executed accurately, about wrong perception of hierarchy and that long detailed planning will help with improving quality. 

When the world is changing so fast, how can you plan? How can you order your troops if the terrain is changing and you don’t know who you are fighting? The world is changing so fast, you can only build organizations that work so fast, that there is no chance anyone in the organization can even KNOW what everybody is doing since its changing so fast.
I think  anyone in managerial positions should read the following post by Garry Hemel.

The only way to understand what management is about, is to let go of any type of perception you currently have about management. It is not about anything you think it is about. It is solely about the ability to guide the right people in the right direction. Anything else is simply too rigid and will eventually break in a dynamic environment.

We’ve been working with Don Sull, Professor at LBS, about his work on simple rules for managing strategy, and have implemented it in several processes around the organization. The most interesting thing is it’s constantly evolving.

So, I have laid an example of simple rules for general management, which I believe can be adopted by any organization that needs to move fast.

Simple Rules for management 2.0 

  • Management 2.0 is about guidance, not tasks.
  • Management 2.0 is about innovation, therefore you must leave  a reasonable margin for error.
  • Management 2.0 is simple, therefore anyone can be a manager regardless of hierarchy. 
  • Management 2.0 is open, since everyone can be manager, everyone should have access to all managerial information.
  • Management 2.0 is dynamic, any definition can change , simple rules should replace policies and procedures.

Objectives 2.0 

  • Objectives are built for teams, there can’t be an MBO that is not shared by a team.
  • Objectives are built for measurement,  therefore they must be numbers.
  • Objectives are built for guidance: projects must be defined as simple rules .
  • Objectives are dynamic, they can be changed every quarter.
  • Objective are openly communicated to everyone .

The big challenge is to recruit people who can adapt to management 2.0. Anyone with significant work experience has misconceptions about management. Letting go of these misconceptions is the biggest challenge.

I am adopting management 2.0 as I defined it, without even understanding if its correct. That’s part of management 2.0 (by the time people will “understand” it’s correct, I will be adapting to management 3.0 :).

I will be sending this post to the MIX, which is an organization that is trying to reinvent management, lets see if I can put a ding in their Universe 🙂

Birthday – What Is It Good For?

It is really good for pondering about last year and setting goals for next year.
In this Birthday rant, I picked up my first 31st Bday resolution :

Write As If You Have No Fear

I’ll start writing until people stop reading, I’ll talk about life, work (most of my life right no), family (Mor and Adam), and about anything that’s on my mind. 
This is a follow up of my early 20’s favorite phrase :

“Dance as though no one is watching you. Love as though you have never been hurt before. Sing as though no one can hear you. Live as though heaven is on earth.”

This assumes that if someone is watching you, then you will be afraid, where in today’s social connected open reality TV world, I don’t think that’s the case anymore, so simply “have no fear” works for me better. I know you are watching, and yet, I am not afraid.
“The best time to plant a tree was 20 years ago; the second best time is now” -old Chinese proverb

Wonder what were my last year resolutions ? I’ll start to commit to writing them here once a year at least I’ll have a follow up. 
Another good thing is to loosen up now that I’m older :), but how to I measure its success (writing, i can count posts and readers) ? How-to-Loosen-Up-By-Letting-Go . Maybe loosening up is also about not measuring but just being loose. I can try that for one year, Jedi mentality, If you loosen up it will come etc’ etc’.
Number 3 must be related to Adam which I just changed his Diaper, teach Adam at least 3 things this year.
I feel Catharsis good way to start my new age.
PS – Google+ search results are really being crowded with Google+ results, really aggressive pushing G+.
PS2 – make money on eToro by copying gurus