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When former YouTube product manager Kevin Xu, known as \u201cSir Jack A Lot\u201d on Reddit, turned $35,000 into $8 million trading stocks between 2020 and 2022, many people thought his fortunes, and his way of investing, had peaked, just like 2021\u2019s memestock craze had.<\/p>\n
Xu doesn\u2019t agree, though, and he\u2019s now building a startup for retail investors that aims to bring the good-natured investing advice and community that people used to enjoy on platforms like the WallStreetBets subreddit, but with a layer of accountability that discourages scammers and grifters.<\/p>\n
Launched in April 2022, AfterHour lets users link to their stock brokerage accounts and, under a username of their choosing, post their investments to a social feed. \u201cThe only reason people trust me and Roaring Kitty is that we are transparent,\u201d Xu told TechCrunch. \u201cWhy not show your actual positions or prove you are actually in something? [AfterHour] brings back a level of credibility and trust. You connect your brokerage and share real verified positions and screenshots.\u201d<\/p>\n
The company currently has more than 23,000 users, and while that\u2019s not an eye-popping number by any means, its user base is growing, and early adopters seem dedicated \u2014 Xu said that more than 70% of its users are on the app every single day. The company is currently focused on growth, Xu said, but has plans of how to monetize in the future. <\/p>\n
\u201cMonday to Friday, 9:30am to 4pm is the game,\u201d Xu said. \u201cWhen we started, I was so scared that it would be quiet on the weekends, but on Monday, people just come back. We don\u2019t do any scammy push notifications to get people back on Mondays, but they naturally come back.\u201d<\/p>\n
The startup recently raised a $4.5 million seed round led by Founders Fund \u2014\u00a0Keith Rabois\u2019 last investment at the firm \u2014\u00a0and General Catalyst. Pear VC, Daybreak Ventures and F4 Fund also participated, among several others. Xu said AfterHour is now focusing on growing its user base and its team.<\/p>\n
Xu believes letting users be pseudo-anonymous is why AfterHour\u2019s approach works. He recalled that he used to feel awkward about the thought of talking to his colleagues at YouTube about trading stocks during his off hours, and thinks he\u2019s likely not alone in feeling that way.<\/p>\n
But on the flip side, he recognizes that an environment that encourages zero accountability is not a good idea for a platform like his. That dynamic breeds the grifters and scammers like you see on Reddit and X, who are looking to pump and dump their positions, or post fake trades to get other people to invest.<\/p>\n
He added that because people can only post their actual trades, it weeds out a lot of the bad actors. Of course, there will be some bad apples, but Xu said the startup works to monitor posts, and flag anything suspicious with a system of warnings and community notes \u2014 not unlike X\u2019s community-based approach to moderation.<\/p>\n
Xu acknowledged that such a monitoring system won\u2019t remain effective as the platform continues to scale. \u201cRight now it is basically me being in the app and reminding people that independent thinking is sexy,\u201d Xu joked. He added the company is working on a plan to curb bad behavior, and is thinking of ideas like an algorithm that can automatically flag posts that look fake.<\/p>\n
This deal stood out to me because I think it\u2019s a smart play to build services for retail investors. The trajectory of this space reminds me a lot of the crypto world. While very different, they are both investing areas that had their 15 minutes of fame, but as they faded from the mainstream, they still kept dedicated and growing communities of people interested in their approach.<\/p>\n
Still, AfterHour is an especially smart idea because, as with crypto, there is much money to be made here \u2014 and just as much to lose. Such platforms can\u2019t guarantee their users will find financial success, but that doesn\u2019t mean average people should be fully locked out of the stock markets, which companies like Robinhood, and more recently Destiney Tech 100, have worked to democratize.<\/p>\n
\u201cThe big misconception in the valley was that retail trading was a fad in 2021, referencing the stimulus check,\u201d Xu said. \u201cIt\u2019s only growing. The data backs it up.\u201d<\/p>\n
For context, 2023 was the most active year ever<\/a> for retail trading. Robinhood saw more than $86.6 billion in trading volume<\/a> in May alone.<\/p>\n AfterHour isn\u2019t the only company realizing the potential of this space \u2014 Robinhood\u2019s media expansion is a good example. The trading app bought the Snacks newsletter, focused on retail investors, back in 2019. More recently, it launched Sherwood Media, a financial publication aimed at the same audience.<\/p>\n While he\u2019s starting with the stock market, Xu hopes that AfterHour will move into other areas of finance down the line to become the one-stop-shop for retail investors in the future.<\/p>\n \u201cAfterHour needs to exist,\u201d Xu said. \u201cI see the internet of finance and how it is evolving, and I\u2019m disappointed in all the other attempts [to build a similar platform]. They were just disappointing.<\/p>\n I\u2019m thinking really long-term. I want it to be fun and accessible. I think it\u2019s more entertaining than sports, and I think a growing number of people online do, too.\u201d<\/p>\n<\/div>\n