How ‘That Swipe Thing’ Led to a €400 million Company
When neobroker NAGA was facing major problems, Benjamin Bilski (founder and CEO) and Michael Milonas (co-founder and joint CEO) took it upon themselves to restructure the entire company. Here, they talk to GOLD about its transformation into one of the fastest-growing neobrokers in the world and the launch of their new financial super-app NAGA Pay.
By Adonis Adoni | Photo by TASPHO
Let us start with an obvious question for you, Benjamin Bilski: how does one go from being a German champion swimmer to founding one of the fastest-growing neobrokers in Europe?
Benjamin Bilski: From when I was little, I always had a passion for online commerce. In 2003, when I was 15 and doing a lot of swimming training, I sold MP3 players on eBay. That was my first experience with the Internet and technology. Later on, I started one of Germany’s first online shops for fishing and outdoor equipment, as fishing was another passion of mine. That business worked really well, so when I decided to quit my swimming career, getting deeper into the Internet, technology, and business was the obvious step for me. In the process, I developed a mobile price comparison app and then another that allowed users to swipe left and right for fashion items. That triggered some interest from investors and one of them told me, “Do that swipe thing for finance!” That is exactly what I did, and here we are with NAGA today!
Michael Milonas, you went from being a DJ at club Versus in Nicosia to leading a law firm with a focus on fiduciary services. That, in itself, was unusual but then you switched to the brokerage industry. How did all that come about?
Michael Milonas: I have always been fascinated with success and the elements that make a difference in people’s lives. At the young age of 17, music and its impact on people moved me, which led me to pursue it with passion and I landed the position of DJ at Versus, a club that has gone down in the annals of Nicosia’s entertainment history; people still talk about it today! I later saw an opportunity in Business and Law. Indeed, that led me to found a forward-thinking Law and Fiduciary Firm that is still going strong today, even though I actively left that field over four years ago. However, my entrepreneurial curiosity and the quest for growth and learning have never stopped, and they led me to pivot to finance and technology by co-founding NAGA alongside Ben. It has been the best school of business and life for me.
Talk to us about NAGA’s first steps. Things weren’t always as bright as they are now, were they?
B.B.: Indeed, it was quite a journey. In a nutshell: NAGA was founded, quickly attracted investors, went public within 20 months, had a successful stock listing, and then struggled to develop a sustainable monetisation strategy to finance all the tech development. In 2019, we had a difficult year and had to make tough decisions alongside our investors. The result was that we both took on the risk and responsibility for the company. We changed the entire team, reorganised the whole company, worked on its culture, and focused on monetising the technology we had built. It was intense – there was a lot of drama but also joy and recognition for how we handled the whole situation. After all, we took over when the company had a valuation of around €20 million. By the end of 2021, it stood at €400 million!
What type of instrument is most in demand on your platform? And what is the profile of the retail investor that you attract?
M.M.: We are a multi-asset platform, so our users appreciate variety. We offer around 1,000 products, including stocks, ETFs, Gold, FX and Crypto. Also, we have a unique tool called “Autocopy” which lets traders follow others who meet specific risk score criteria, and that diversifies the entire trading flow. Our traders are tech-savvy, young and very much into social media and online commerce. A perfect match.
One of the big selling points and key differentiators of neobrokers is that they slash transaction fees and some even eliminate them altogether. Can you provide us a clear picture of how that is possible, as well as an idea of NAGA’s fee structure?
M.M.: Neobrokers usually operate on full automation and use technology to eliminate manual processes. While this is ongoing, it allows us to become leaner as an organisation. NAGA is very competitive in pricing and much better than any other traditional bank or brokerage that is still offline. When it comes to efficiency, we will see blockchain technology taking this even further. Customers know that neobrokers like NAGA are the benchmark when it comes to cost-efficient investing.
Would it be fair to say that neobrokers are doing to trading what the so-called neobanks did to banking, namely levelling the playfield?
B.B.: Yes, absolutely! Traditional brokers still offer a poor user experience. They are slow, complicated and do not meet the needs of the younger generation. Future customers will want mobile, snappy interfaces, and ‘humanless’ automated onboarding and interaction. The market is massive and brimming with potential! Many users don’t like their brokers and are always searching for a modern, user-friendly solution. We feel that companies like NAGA will very soon be the standard for investing and payment services.
While neobrokers stand apart from the traditional financial industry, they are still a part of the broader ecosystem, as evidenced by investments. NAGA, for example, raised US$100 million in 2021. Beyond investments, what can traditional players, including banks, gain from partnering up with neobrokers?
B.B.: They can learn a lot. They can see and experience how a relatively small group can build systems that handle billions of volumes and develop products that automatically convert users into customers. I think that’s also why investors have made educated bets on Fintech and crypto companies. It is not only running a Fintech but also the attitude: we build products in a highly competitive space in a short time, and we must, by default, find smart solutions to a complex ecosystem. Every corporate or established financial institution can learn this part from us.
In 2021, NAGA showed great traction. On top of the aforementioned investment, it onboarded a record number of some 250,000 users and transacted more than a quarter of a trillion dollars in volume, among others. What factors have driven this growth spurt?
B.B.: We had prepared ourselves. We built a compelling platform with all the social features and technology. Also, the markets were bullish, and a lot of users came into the space. The combination of being well-prepared and having an innovative product with the right offering allowed us to scale up quickly. Our team was constantly evolving and handled the growth extremely well. Last year was, therefore, a pivotal one for NAGA and a strong confirmation of our vision.
On a more personal note, are you both active investors? If so, how do you approach the market?
M.M.: Absolutely. Every entrepreneur is naturally an investor. I am not a trader but I am always looking for companies that have substance, are led by the right people and can scale. I then go in. Ben loves trading the markets. He is particularly excited about crypto trading.
You, Michael Milonas, are heavily involved in motor racing. What lessons have you learned behind the wheel that can help with running a successful neobroker?
M.M.: That is a great question! Motor racing is all about conquering your fears, pushing the boundaries and operating within limits. Business success has similar elements, especially when challenging the norm and creating disruptive technology. Furthermore, racing is the only way for a person who lives under pressure and stress to offload and refresh. A few minutes on the racing track give me years of life!
You have recently launched NAGA Pay, which is advertised as a financial super-app. Tell us more about this.
M.M.: NAGA Pay is our pride and joy, the result of years of experience in technology and finance, and it combines our whole ecosystem. It is a simple-to-use app where customers can sign up and provide documentation seamlessly and in a fully automated way. Once live, they can use NAGA Pay as their daily payment method to send or receive money and pay online and at points of sale. They can choose whether to pay using their euros or cryptos – which is unique – and they can trade the markets directly from their payments app. We are already seeing a lot of traction and signups in the system and we expect it to scale fast as we increase marketing.
NAGA Pay has joined forces with Bank-as-a-Service provider Contis to launch a crypto programme in the EEA, which will allow consumers to buy goods and services using both fiat and crypto. How does this work?
M.M.: Indeed, we have our very own crypto wallet, developed under our crypto arm NAGAX, integrated into NAGA Pay. At the point of sale, the user can choose the payment method in either crypto or fiat. The system converts the spot rate of crypto at that moment on our exchange in milliseconds, and the vendor always receives euros. The user has a beautiful experience, utilising his crypto assets as a payment method and not just as a store of value.
The discussion is still ongoing as to whether cryptos will ever evolve beyond their status as speculative assets. It seems that you believe otherwise. So, how can crypto become a successful payment mechanism – or better yet, a decentralised mode of exchange?
B.B.: Crypto is just getting started. Widespread adoption is about to come and, as a monetary tool, crypto is already much better than money: faster, direct and without the middleman. Of course, we need proper regulation but also friendly and tech-savvy regulators. The market, customer demand and the world are heading toward decentralisation; people want to be in control, and we see that with data privacy concerns, freedom of speech and general diversity. So, freedom should not end with money. People should be in control of money and how it is stored – crypto will solve this issue.
Going back to one of our first questions, how does the NAGA of now compare with those first rough years in terms of vision and ambition?
B.B.: Life and business are both a journey, not a destination. We learn and evolve; this never ends. Our vision is as clear as ever and our ambition is fierce. We feel stronger and wiser, as the challenging times we went through sharpened us and prepared us for the next chapter of challenges and success. NAGA has matured – we have the best people by our side, who live and breathe for this great company. We are extremely fortunate in this.
And, finally, what is next for the company?
B.B.: NAGA is ready to scale now to become a global leader in the verticals in which we operate. We are looking to expand with offices in Singapore and Southeast Asia, Latin America (with Brazil being first), Dubai and the Middle East, and Australia. We will naturally strengthen our presence in Europe as well. The market is ready and so are we. Our investors have tasked us with global expansion and future listings for the Group on larger markets, like the NASDAQ in the US, and this is precisely what we are going to deliver.