Waze Co-Founder Skips Google to Try Startup World Againby
Uri Levine still has the entrepreneurial bug. After selling map-software provider Waze to Google for $1.1 billion last June, the 49-year-old Israeli decided not to join the ranks of his famous acquirer.
Instead, he turned his attention to his next startup, FeeX, which debuts today. Similar to how Waze tackled one of life's biggest aggravations -- getting stuck in traffic -- the new company takes on another major irritant: hidden fees on financial services.
FeeX wants to bring daylight to those hidden or obscure costs and show its users cheaper alternatives for financial services such as retirement saving accounts and life insurance.
"If the fees are hidden it means banks are charging way too much," Levine said at a recent dinner with Israeli venture capitalists in New York.
FeeX originated in Israel, but the startup relocated its headquarters to the U.S. in January, following in the footsteps of many companies that have gone abroad, a trend that the Middle Eastern country's government is trying to curb . Some startups leave the country seeking venture capital or to go public. Others relocate because they were acquired by a foreign company.
In FeeX's case, the company moved to New York because it wanted to focus on the larger U.S. market. Americans spend $600 billion annually on hidden or obscure financial fees, according to data compiled by the startup.
"Tech companies which democratize access to sophisticated financial management tools have a big future because the performance of traditional financial services often doesn't justify the high fees they charge," said Andreas Stavropoulos, a partner at venture capital firm Draper Fisher Jurvetson in Menlo Park, California.
Hidden costs can eat as much as 30 percent of a person's retirement savings, according to Robert Hiltonsmith, an economist who specializes in retirement policies at Demos, a nonprofit advocacy group for political and economic equality.
Hiltonsmith, who last year advised FeeX on its entry in the U.S., said FeeX is a good idea and "will be very helpful at educating people about the obscure financial fees."
Another service that helps consumers avoid hidden fees is BillGuard, a mobile app that tracks credit and debit card transactions. Similar to FeeX, it began in Israel . It later partly relocated to New York.
Levine came up with the idea for FeeX in 2012 after he questioned his bank about a $250 annual charge. In response, the bank reimbursed him and waved future fees. That led him to ask co-founders Yoav Zurel, 28, and David Weisz, 29, whom he was mentoring as part of an Israeli entrepreneurship program, to search for more hidden financial services fees.
Zurel, FeeX's CEO, eventually found out that his parents spent one third of their retirement savings on fees that their financial statements vaguely called "exp ratio."
FeeX finds hidden fees by analyzing crowdsourced financial data of its users through Yodlee, a provider of online banking services that tracks customer transactions while keeping them anonymous. The company's algorithm shows users the fees they're paying by compounding them over time and comparing them with those of other users. FeeX points users to lower cost alternatives.
Levine financed the company, which was also co-founded by Eyal Halahmi, 49, with an initial investment of $100,000. In August, FeeX got $3 million in financing from Blumberg Capital.
FeeX is a free service that will eventually add optional premium features. The service will initially focus on individual retirement accounts and later expand to credit cards, life insurance, mortgages and 401(k)s, Zurel said.
However, Hiltonsmith said that leaving an employer-sponsored 401(k) plan is often neither possible nor advisable because the portion matched by the company is a significant part of the plans' returns.
"It's easier to switch in between IRA plans, but rolling over into an alternative plan often costs a penalty," he said.