Connecting Self-Directed Investors to Top Stock Pickers
Shoots Issue 10: Trade Exchange
Welcome to the 10th issue of Shoots!, where I feature examples of 21st century entrepreneurialism. Each Shoots! issue features businesses emerging from unexpected places or demonstrating principles of increasing importance.
I am posting two pieces simultaneously after several months of silence. Throughout the second half of 2020 there was no shortage of Shoots! all around me — from churches to restaurants to the arts to new businesses — but I have been too busy to feature them.
What have I been doing?
Among other projects, I have been working with the Trade Exchange, a startup here in New York that connects self-directed investors to top stock pickers. The company was founded by Michael Anton and built through a combination of entrepreneurialism, creativity and relentlessness, along with a drive to deliver investment insight to an underserved population. Mike has worked in and created small business in fishing equipment, real estate and fitness. A stock market investor since childhood, he decided to pursue a career in the field.
Strong Demand for Investment Ideas but the Current Experience Is Fragmented
Mike spent several years interacting directly with individual investors and professional stock pickers in different roles. He discovered an insatiable demand for investment ideas and a willingness to pay top dollar for them, along with many shortcomings:
1) Experts struggle to get their messages out to large audiences
2) Individual investors seek to master technical trading skills, but many can’t do so themselves
3) Many top subscription sites don’t deliver specifics on trades beyond what to buy
4) All stock picks require the investor to subsequently log into their brokerage account to trade
5) Most importantly, investors fall prey to bad actors who misrepresent or overstate their performance.
Mike was determined to bridge the gap between self-directed investors and idea publishers.
He sat with trading experts and technologists to understand every nuance of trading and how it’s translated into code. What types of buy/sell orders are necessary? How are orders sent to exchanges and processed? What is the logic behind each? He studied regulatory requirements defining what publishers and brokers are allowed to do.
The Covid-19 Shutdown Provides Tailwinds
Mike recruited a virtual engineering team. Covid restrictions allowed them to make more rapid progress than expected. He obtained trading APIs from leading online brokerages and a patent for his performance analytics. The team built an end-to-end solution within months:
Experts entering ideas including tickers, entry / exit prices and commentary
· Text messaging to mobile phones delivering ideas and updates to customers
· Workflows for customers to receive ideas, pay for them and execute trades all in a mobile app
· Patented performance analytics
· Per idea pricing beginning at $29 where customers only pay for winners
The beta platform delivered a “proof of concept” in late Spring, motivating well over a dozen investment experts to begin entering stock picks and build a performance track record. Trade Exchange has over 60 signed contracts with experts now. The team launched its commercial app in September.
In the meantime, interest in self-directed investing skyrocketed. Over the past year, hundreds of thousands of new online brokerage accounts have been opened every month. Robinhood has captured significant press attention and experienced the greatest growth, but new customers have also flocked to established online brokerages like TD Ameritrade, E*Trade and Interactive Brokers.
The Reddit r/wallstreetbets phenomenon highlighted the increasing influence of the individual investor. Volatility in stocks like Gamestop highlighted the risks of following people with unverified track records.
I’m Drawn In
I began advising Trade Exchange early in 2020, consistent with advisory or consulting relationships with other startups. I began to add to my commitment as the team progressed.
As noted in the previous issue of Shoots!, I attended the virtual East Meets West 2021 startup conference in Hawaii two weeks ago. In the pre-conference emails I noticed there were opportunities to pitch VCs. I took the plunge. I re-wrote the Trade Exchange pitch so I could deliver it and pitched to four firms over three days. On the morning of the conference’s final day, I received an email congratulating me on being selected as Top Pitch and asking that I pitch Trade Exchange to the entire conference! I realized that a combination of Mike’s entrepreneurial grit and my experience as an executive, consultant and marketer is compelling.
Mike and I discussed potential ways for me to take a greater stake in Trade Exchange and quickly arrived at a solution. I am now Trade Exchange’s president, devoting considerable time on securing investors, acquiring customers, leading the team and connecting with our experts. Mike remains CEO and is now focusing deeply on product refinement and continuing to support relationships with investment experts, customers and fundraising.
My Ask
We always welcome additional customers and are seeking investors to help add functionality and support paid marketing campaigns. To that end, I am asking for your help:
· Become a customer: download the Trade Exchange app and check out the experience. It’s a great way to stay connected with the market and play a more active role with your investments. Start with a small amount until you’re comfortable.
· Tell your friends: during my runs in Central Park, I now overhear more conversations about the stock market than about Covid or the President! Let your friends know Trade Exchange provides valuable trading insight from experts on what to do and when.
· Introduce me to potential investors: if you know people who invest in early-stage companies (seed or venture funds), please introduce me. I value meeting them, whether it results in an investment or is limited to constructive feedback.
Mahalo (thank you) for reading! If you enjoy reading these stories and seek to learn more about Market Junctions and how we can help businesses of any size, please reach out to Kyle Okimoto at kyle@marketjunctions.com.
Kyle Okimoto is the founder of Market Junctions, which helps businesses and leaders harness the power of disruption to generate positive change. He is also the president of Trade Exchange, a startup focused on connecting self-directed investors to top stock pickers. Kyle is a consultant, advisor and investor in startups ranging from Eargo (direct to consumer hearing aids — IPO October 2020), AltoIRA (self-directed retirement accounts for alternative investments — Series A, $16m raised), Cadence (high yield short term alternative investments — Series Seed, $4m raised) and ARIS Technology (robotic quality control laser scanning).
