Forbes Hungary - Harder, better, faster, stronger

Gergely Korpos


Forbes Hungary - Harder, better, faster, stronger

It’s surprising that the pioneer of broker comparison is a Hungarian company. Brokerchooser’s website allows you to compare broker services at a level of complexity that you can’t find anywhere else. After a tough start, the company is now in exponential growth. We talked to the founders and CEOs, Tibor Bedő and Gergely Korpos, about the challenges of the first four years and about their highly structured planning. We asked them how they became experts of  the Financial Times, and why they are upset about the attitude of the finance world towards Robinhood investors.


You gained momentum by achieving fast growth on global financial markets. What were the most important milestones? When did you realize that what you’ve created could work?


Tibor Bedő: The first validation was when we asked a few people here in Hungary if they’d like an Excel-comparison of brokers and the answer was ‘yes’. Check. 

The next confirmation came from foreigners. They also said that this was interesting and the number of visitors on the site started to increase. Another important step was when the first euro revenues came in.  From that point on, we’ve felt more confident about our idea and business model, where the service is free of charge for the customer and we are getting paid by the broker. 

The next milestone was when our revenues were enough to take care of our tiny team of five.


When was that?


T. B.: Halfway. We started our journey four years ago, the first revenue arrived after one and a half years, and we became profitable two years ago. The best milestone was when we were able to set aside a serious financial reserve. Of course, this can still be lost, but not from one day to the next.


Have you thought about quitting a lot?


T. B.: All the time. We’ve always set the limits, we knew where the burn rate was that we can’t exceed. 

Gergely Korpos: But we were just thinking about the ‘what ifs,’ if we reach these levels. Giving up and quitting was not an option. We just talked about the possibility of one of us going elsewhere to work, if necessary, while the other continues the business, hoping for progress. And we also decided to ask for money from friends and family, if necessary. 


Did you manage to self-finance the business?


G. K.: Yes, and this is quite unique, just like staying cash flow positive for the whole time.

T. B.: VCs (venture capitals) were making enquiries and we were close to a ‘marriage’ twice. But we have just reached significant milestones each time that allowed us to say ‘thanks, but no thanks’ because we could finance the upcoming projects from our revenue. Since becoming cash flow positive with our small team every month, the only remaining question was the right size. We were in the situation of hiring more people than the company could afford twice, but we were eventually saved by growing revenues both times.


How big is the team now?


T. B.: We have a team of  25 now. That means 15 full-time workers, as several colleagues work only  part-time. We work with many subcontractors, just like bigger tech companies do.


How do you divide work between the two of you?


T. B.: Gergő is more of an expert in our field, he takes care of sales and product development. I am responsible for general business management and I also keep an eye on the tech team. 

G. K.: I manage everything related to development, except for IT. 


Only the two of you make decisions or is there a management team?


T. B.: We have weekly meetings for just the two of us, but we already have two partners who received shares in the company. They are the SEO and the CFO-COO, and we’ve just introduced a new weekly meeting of the seven managers, where we discuss delegating and time planning. It might seem early at a company of 25, but we think we need this now.


What were the guidelines when building the organization, as there were no similar companies in the market when you started, and you couldn’t have known what would be the key business areas? How did you figure out the positions and responsibilities?


T. B.: We always try to establish a one size bigger organizational setup that will be able to manage a bigger team later. The team always has the feeling that maybe we wouldn’t need so much administration, or we shouldn’t call ourselves a department, yet. However, this always turns out to be the right approach, considering the pace of growth. 

The necessary expertise is unique indeed, we didn’t know exactly what we needed. First, we thought that we needed economists and developers, and that’s it. Then it turned out that SEO is crucial, and we need journalists, designers and a bunch of supporting functions. We checked other companies with the same revenues of 400 million euro and the same activity, namely comparisons, but in other industries. We looked at firms that compare, for instance, electricity providers.


How did you kick off the business? How have you become acknowledged in your field?


G. K.: I know it may sound cliché, but it’s true: our product is simply good for the clients. We can address first time investors. 

It was obvious that the first step would be building the acquisition team to attract visitors, which allowed us to easily conclude contracts with the brokers, where we send these visitors. Thus, we needed a lot of potential investors, who compare brokers on our platform, so the brokers know that it is worth doing business with us. The number of visitors was increasing fast, but the question has alway been the same: when do you start to monetize? When we were only months away until one of us had to go back to work elsewhere, because we were running out of money, we decided to monetize, even though the volume was not yet optimal.


What does this mean? Did you blitz the brokers?


G. K.: Yes. It turned out that we could already approach smaller European brokers. We told them ‘look, we provide professional and accurate comparisons and quality service, so we can get clients for you. Let’s start it now, we accept your price proposal, and in return we‘ll have a history, which is important for us.’


All your partners want to get prioritized on the list for their money. However, this is contrary to an independent and accurate comparison, which shows you who is the best. What do you say when a potential partner asks for a better place?


T. B.: That this company could grow hundred times more, if the clients are assured that this is a good place and it’s totally unbiased. We have an infinite amount of conflicts because of this, brokers don’t really understand this independent thing, because they are used to being prioritized, if they pay. They say they want more clients, they ask us to move them to the top of the list, they say it’s a win-win. Our answer is this: there will be more clients in a year, when we’ll become bigger. Until then, we tell you what is wrong with your service and what you should change in order to boost it, and then you can be brought forward on the list. Check where we were two years ago, where we are now, and imagine, where we’ll be in two years.

G. K.: You don’t have to believe us when we talk about this unbiased thing, but this can be checked. It’s transparent who we are working with, and they can be compared. And in the tests, there are still so many top brokers with whom we don’t have a contract, yet.


How many paying partners do you have and from where?


G. K.: We already have fifty partners, many from Europe, most from London, and also forex brokers from Australia. The US region has just started to kick off, it was pretty hard, but finally we have several partners from the top ten US brokers. For us, it’s a major breakthrough, when a US broker from the top five concludes a contract with us, even when we don’t have a profit from this at the beginning. And this has already happened.


How big is your growth this year, and how did the pandemic and the quarantine affect it? 


T. B.: We have 400,000 visitors per month, and six million since our launch, half of which came this year. All of our curves have increased exponentially, and we hope that this trend will continue. Corona was a major boost, we can quadruple our revenue year on year in 2020. We set a one-million-euro revenue target this year, we are already at 950,000 euro and we will likely exceed the target.

G. K.: When the virus struck, there was a two or threefold jump in our turnover. I thought that it would fall back, but the drop was only minimal.

T. B.: We’re proud that we supported the WHO, when the pandemic broke out, and we challenged the brokers to do the same. Referring to the name COVID-19, we offered 1.9 percent of our profit. A 19 percent donation would have been too much for us.

Forbes Hungary - BrokerChooser Founders

How did you become experts of the Financial Times?


G. K.: It’s an interesting story. A broker recommended us with the idea that UK customers need to be informed of the costs and the quality of the services. A journalist reached out to us and we conducted a study comparing four already existing and four new brokers. This was published by the FT. The broker, who recommended us, didn’t perform well in the study, so they started to attack us, the method, everything.

It was a big lesson. This broker didn’t understand its own pricing, they believed that they were the best. There was another broker, for example, that realized after the article was published that their allocation fee was too high so they decided to cut it. Besides cost comparison, we have also tested completion. We were curious, if the new companies do it worse or not. The tech team developed a robot, which sent the same trade at the same time to several places, and it turned out that there was no big difference.

T. B.: We have been approached by market researchers and hedge fund managers to discuss the broker market, because they don’t get such a comprehensive global picture from anyone else.


Are you working remotely? Still no office?


T. B.: At the beginning, we did everything from a Starbucks for almost one and a half a year. Our home has been the CEU InnovationsLab for years now. We are no longer in the incubator program, but we can stay here, and we really like to be together with the other startups. As to personal meetings, the plan now is to test everybody every month for COVID, and then we get together for a hackathon-like event, where we work together on something that we continue to develop afterwards.


How will your story continue, what is your vision and long-term goal?


T. B.: To cite Daft Punk: harder, better, faster, stronger. We have found something that can be much bigger, we need to push this, with more comparisons and more clients. Another important mission is to help people through their investing journey. We have a couple of plans for this, too.


Wouldn’t you appreciate a bigger boost, for instance VC funds?


T. B.: We are open to talk with quality VCs, but there is no active search at the moment. We’re satisfied with our situation and our prospects.


Let’s talk a bit about the market. The big story now is Robinhood, that has transformed the industry, breaking broker commissions down to zero in the US. This has brought a massive number of new, young investors to the market, who invest in big tech companies and cool brands lifting prices. Isn’t this problematic? 


G. K.: We don’t think that Robinhood clients behave differently. I think it’s strange that they have been pushed out from Wall Street, and they get mainly negative publicity, with the press saying what they are doing is wrong.


But if they really are blowing a balloon that will eventually explode, that is not good.


T. B.: But we don’t know the exact numbers. We have to make strong assumptions about their fortune and trading habits to think that they can move prices. I think it’s pretty unrealistic to assume that Robinhood investors are pushing up prices.

What makes me quite angry is when market players call investors stupid. This kind of attitude exists only in the financial sector. If a retail company would say that their customers are stupid because of their shampoo buying habits, this company would be destroyed right away. In turn, those who buy Tesla shares, get called stupid in our sector. We think that our clients are intelligent people, they just need information.

G. K.: We don’t know how much Robinhood clients have gained and lost, a lot of them are short selling, too. But one thing is certain, financial market players have an arrogant attitude by saying that ‘we are the smart ones, doing this all day, we know everything, and everybody else is stupid.” At the end of the day, this super smart industry makes a living from earning commission from customers, no matter the number of transmissions in the system.

Why can’t they say that ‘yes, in theory we know more, but we help you catch up, tell us what you need’. Yes, it’s possible that a week ago they were gambling and e-sporting, and now they are here in the stock market. But still, they are new clients, we need to try to help and educate them. And it’s still better losing your money because of an unfortunate stock purchase than because of gambling. At least you can learn from your mistakes and chances are that you’ll become a good investor, eventually.

It’s also nonsense that they consider the easy use of the Robinhood platform a negative thing. Everybody should be able to provide this. But I don’t want to defend Robinhood, you can see in our recommendation that they have a lot of serious shortcomings, education and support are both weak, and there are also bad freezing issues on their platform.


What kind of interesting trends do you see as insiders?


G. K.: It’s obvious that the fees are decreasing, and the US is way ahead of us in this. It’s different in Europe, while the old brokers haven't reduced their fees yet, but there are new zero-premium brokers, and the forex-CFD companies came up with zero share offers, too.

It’s also interesting how the roboadvisor business is trending in the US, but it can’t break into Europe. Another trend is the regulatory migration. The European financial surveillance cut the forex-CFD leverage level, so the providers moved to Australia. At the moment, they are tightening the rules there, and as a result they go offshore. Right now, most of the companies have a lot, sometimes as much as six or seven legal entities and licenses. If you come from a given country, you first have to rummage through the information about the possible matches. It’s extremely important to know what kind of investor protection rules of which country apply to you.


Disclaimer: This is a verbatim English translation of the original article published in Hungarian in the October 2020 issue of Forbes Hungary. 


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