At the beginning of the previous decade, at the age of 34, Amir Schlecht was the personal assistant to the CEO of Bank Hapoalim, having previously managed the Talpiot unit in the IDF and worked for the consulting firm McKinsey.

When Schlecht was selected for Globes’ list of “40 promising young people”, CEO Zion Keinan said: “I definitely see Amir continuing to advance to senior management positions at the bank.” Schlecht, for his part, added that “a managerial role at the bank is definitely a goal.“

11 years later, Schlecht is not a senior manager at the bank – but the CEO of the Israeli technology company Global.e, which provides solutions for the field of e.commerce, of which he is one of the founders.

The company was recently issued on NASDAQ at a value of about $ 3.6 billion, and in the month since then its value has jumped 89.1% to $ 6.7 billion. With the company’s shares at a current value of about $ 300 million, Schlecht’s decision to leave a direct route to promotion at the bank Today it seems like a sensible decision, but in 2013, when Schlecht and his two partners in founding the company – Nir Debi, who serves as marketing director and Shahar Tamari, operations manager – left senior positions in favor of starting a startup, it might have made less sense.

“We understand we have come up with the right solution”

“At the bank, I worked with Nir Debbie, who ran the Center for Strategic Management. We were both on the fast track to senior management positions,” Schlecht told Globes. “We realized we were both at the same point in life where we had to make a decision whether to get the next job – which means we would no longer do anything on our own. There was a thought that we should try, before the corporate golden cage bars become too thick.“

Schlecht and Debbie thought of a field The fintech, In particular the payments, and consulted with Tamari – “the man who understands the field in the country”, according to Schlecht, also from Bank Hapoalim, who then worked at 888.

“It turned out that he was also at the same point in his career. The three of us were not classic entrepreneurs. We were in positions at the corporation, around the age of 40, families and children. It’s not the ‘come on let’s let go, eat pizza and drink cola and look for cool ideas.‘

Still, they started thinking of ideas and came to the conclusion that there is an unresolved issue in the field of online payments in online commerce. “We were looking for a big market. As former consultants, we built models and talked to potential clients, we did a lot of testing, we threw out a business plan that we worked on for a long time because we didn’t think it had a market.

“One day, Nir got nervous for lunch because he ‘snatched’ a $ 60 payment he didn’t expect when he ordered shoes online. We realized there was a real problem here. We talked to brands and online stores and everyone said ‘obviously there’s a problem, but nothing to do with it.‘ “Everyone also said that if a solution is found – which then seems imaginary – they want to be the pilot. We understood that we came up with the right idea.“

“What we meant, just bigger and more sophisticated”

The need for an understanding of the logistics field led them to consult with the people in the field, owners of Flying Cargo Avi and Danny Reik, who became the first investors in the company. “We saw it was not going to get any better: we have an idea, customers who want it, partners and investors waiting to invest. It was a matter of decision. We shook hands and the next day we resigned and set off. To this day, 9 years later, we do exactly what we said in the first investor presentations – “Just bigger, more sophisticated and with more features, but exactly what we intended.“

Properly coming out of Kinsey, the first presentations included an extensive analysis of the market opportunity for the next 10 years. In fact, the company was run from the beginning as a large company and not as a start.up. According to Schlecht, this is the secret of their success. “We managed Global EI not as a technology start.up – of course there is a lot of technology in it, but we ran it as a business company that had to serve customers and ultimately stand on its own two feet. We never took a gross unprofitable deal. We built marketing, sales, operations. By the way, The three of us have been sitting in the same room since day one and today.The first office we rented was relatively large and yet we sat in the same room, even though there were no more workers; investors who came were surprised, but we said the place is not for everyone to have a bureau but for business to grow. “People are already sitting almost on top of each other.“

“It is in the interest of suppliers to refer customers to us”

Another “success” he says is the people – “Our great pride is that there is a big bunch here that goes with us from the beginning. Among the first 25 employees, 80% are still in the company after 8 years. We managed to create an organizational culture where there is customer service every hour, not because someone compels Us but because there is a responsibility here. “

The plan for 10 years ahead also included an IPO, or in light of market conditions did you decide to take the opportunity and get to Wall Street?
“In the model, we had an IPO within 8.10 years, so we ‘hit’ relatively hard. It was important for us to reach EBITDA (profit excluding interest, tax, depreciation and amortization, NIS) and positive cash flow – it happened already in late 2019. We brought the The company to the point where it stands on its own, now we need to think about how to accelerate forward.It is a very efficient company, we are a strange chicken – in growth companies sales and marketing expenses are the biggest expense, 60% .70% of revenue and more, with us they are less than 8% and we have grown 80% .100% – for investors it’s a miracle. For us, it’s a combination of the value we give the customer: the NDR (how many existing customers in one year grew in the following year) is 140% on average, which means customers who work with us increase significant activity; GDR (what percentage of the cycle remains) is over 98%, less than 2% leave us.

“Of course there is also our sales team, but thanks to the value we bring, our partners like DHL ‘market’ us to their customers, Facebook refers customers to us because they understand that they will benefit from advertisements about international sales with our help – the suppliers’ interest is to refer customers.

“Anyway, once we got to the point where we became eligible for the public market, we realized it was the right place to continue to grow and use the money to accelerate business developments, get into new areas and maybe make mergers and acquisitions, which we haven’t done to date.“

The directions, he says, are to expand the product – for example through website translation, which requires a technological.human solution and understanding of each market. Another direction is to create more channels for marketing. In addition, geographical expansion is expected, towards Asia.Pacific.

“Committed to Standard Issue and Not Spock”

Prior to the IPO, did you have any inquiries from SPAC companies?
“They approached us, not much, but when the prey of the spikes began we were already committed to the process of a regular IPO. We are a very orderly company. Spacks can shorten ranges to the public market, but it was clear we would not have a long way to go, so we continued on this path.“

There are many Israeli technology companies today that come to Wall Street at respectable values.
“There are more issues both because there is an opportunity in the market, and also because there is maturation in the Israeli market – both in terms of the management of the entrepreneurs and in terms of their experience and ability to build large companies, thanks in part to money from investors abroad.“

The offering took place in mid.May at a price of $ 25 per share. “It happened to be a horrible day to enter the market, because Nasdaq was in severe declines,” says Schlecht. Despite this, the stock rose on the first day by 2% and has since so jumped by 89.1%.

“This is a healthy conduct of the stock, we are satisfied, but in the end in short periods of weeks one should not get too excited,” he says. The underwriters who accompanied the company to the IPO exercised the option to purchase additional shares at the IPO price and the volume raised to $ 431 million. These banks have recently issued positive recommendations on the stock. The road show prior to the IPO was done virtually, due to the limitations of the corona.

“My father did a physical road show many years ago (his father, David Schlecht, was the CEO of Syneron, S.H.), and I remember; So as hard as it is to sit for 10 hours in front of the zoom, it’s better than two and a half weeks on planes, “Schlecht notes.” It’s pretty amazing that a Nasdaq company can be issued over $ 3 billion without meeting face to face with investors and 90% of staff, except for people Morgan Stanley and Goldman Sachs who have teams in the country.

“Personally, I believe in meetings because there are things that are hard to pick up in a phone call or even a video, but in the absence of any other option it worked. We completed the offering while Operating the Wall Guard, which added another tier.“

The Corona may have prevented you from a regular road show, but has given a serious boost to online commerce around the world. Your revenues jumped by 107% in 2020 to $ 136 million, and the volume of transactions through you jumped by 103% to $ 774 million.
“What Corona has done in our field is not the creation of a new trend – the move to online and Direct to consumer was already a decade before. But it did press the Fast Forward button and run a few years of growth for a six.month period. The trends These were and will continue.We take into account that when the world opens there will be some return to buying in ‘offline’ stores, but it is likely that the vast majority of what Corona did is here to stay. “The budget for opening stores.” It doesn’t make sense. “

“The Brexit caused a dramatic change in the market”

Another event affecting Global Island is the Brexit: “In terms of cross.border e.commerce it’s an event like the corona, a dramatic change in the market. Selling from England to France is like selling from the US to Kazakhstan. There are aspects of taxes, currency, borders. There are British brands that have stopped selling to European countries and vice versa because they could not cope with the complexity. There is another drama on the way, of changing the way VAT works in Europe, and there was also a change in VAT in Australia a year or two ago. ”Dealing with all of this is trusted by a team led by the company’s spokesperson, which focuses on regulation and international taxation. Global.E promises its customers that it takes the risks of taxes and currency on itself – “We sell them peace of mind,” Schlecht defines it. In the event that a consumer in Israel purchases a product in pounds and wishes to return it, he will receive the refund in shekels and if there was a significant change in the exchange rate, Global.E will absorb it. “This is a level of complexity that brings a competitive advantage. There are barriers to entry that stem from the knowledge we have accumulated,” he said.

Still, who are the competitors?
“The biggest type is ‘do it yourself’ – brands that localize to some degree to some markets. We estimate that 90% of the market is not covered yet. In Europe, we managed to take over the market. We started in Europe because the market was pristine and in the US there were direct competitors. That Europe is constantly higher anyway so moving from there to the US will be easier, and to my delight we were right.

In the US, the competitors are borderfree (an Israeli.American company) and eShopWorld. Border.Perry was bought by a logistics company and it did it less good, and E.Shop World works mainly with American brands with a ‘heavy’ project for each customer, and they were also purchased by a logistics company. Occasionally we lose deals to them which is good because it keeps us sharp. A third competitor is an American start.up that does a good job, but it is where we were 3.4 years ago. This sounds like a cliché but it’s good to have competitors because it challenges us, and makes the sales process easier.

“The e.commerce market is very unique: there is usually a huge but saturated and non.growing market, like the banking market for example, or a market that is growing very fast but is small. The e.commerce market on the one hand is huge, on the other hand growing 20% ​​per year. It is a mistake because there is a backlash from the market, and we should not assume that we will take the whole market in order to be successful. “

Get a value of billions despite the losses

Wall Street investors in recent months have welcomed rapidly growing technology companies – even if they are not profitable at this stage of their lives. Global Island is actually profitable, unlike other technology companies that have been recently issued, and it ended 2020 with a modest net profit of $ 3.9 million, compared to a net loss of $ 7.5 million in 2019; The first quarter of 2021 ended in a net loss of $ 1.7 million.

Other Israeli companies that came to Wall Street recently, also worth billions of dollars, did so with a negative bottom line. For example, Monday, which was issued at a value of $ 6.8 billion and has since soared to a value of $ 9.4 billion, recorded a net loss of $ 152 million in 2020.

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Wall Street investors seem to be looking at the situation this way: These companies face a huge market opportunity, and in order to take advantage of it, large investments must be made in marketing and sales – revenue growth will eventually reach the bottom line as well.

On the other hand, the cessation of investments will immediately improve the bottom line but may hamper future growth and market penetration. Ilan Paz, CEO of Barclays in Israel, described this recently in an interview with Globes. He said, “Today, the IPO market mainly appreciates revenue growth, at any cost. It does not matter if the company is profitable or not, it is important that it sees growth, and the more – the better. The biggest correlation to value is the speed at which revenues grow. “

ID card Global.E

Occupation: Provides e.commerce solutions
history: Founded in 2013 by Amir Schlecht (CEO), Nir Debi and Shachar Tamari. The company is headquartered in Petah Tikva, and has additional offices around the world.
data: Employs about 350 workers, of whom about 220 in Israel (recruiting more workers these days); Is traded at a market value of $ 6.7 billion. In the first quarter, it recorded revenue of $ 46.2 million, a net loss of $ 1.7 million and EBITDA of $ 5.2 million.

ID card Amir Schlecht

personal: 44 years old, married + 3, lives in Savyon. He holds a bachelor’s degree in mathematics, physics and computer science, a master’s degree in electrical engineering, and a master’s degree in business administration from INSEAD
professional: Co.founder and CEO of Global Island. Previous positions: Personal Assistant to the CEO of Bank Hapoalim during the period of Zvi Ziv and Zion Keinan, Senior Advisor to McKinsey, Commander of the Talpiot Unit in the IDF. Value of his holding in Global Island shares: $ 301 million
Something else: An avid fan of podcasts on science, technology, history and general trivia

By Editor

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