Q&A: SprinkleBit Sets Out to Crowdsource Active Investing
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start your practice portfolio. Our brokerage charges $8 per trade and regular margin rates. In coming months we will launch premium features that will dramatically simplify your investing for $9.95 a month.
X: Efficient market theory says an individual investor cannot consistently achieve returns that exceed average market returns over the long term. So SprinkleBit might be leveraging the wisdom of the crowd, but isn’t it still active investing? Isn’t the underlying premise that some investors believe they can beat the average by making prescient stock picks?
AW: I wish the market was as simple as the efficient market hypothesis. There will always be asymmetric information in any marketplace. However, with the help of SprinkleBit you can leverage the power of crowdsourced information to give you the informational advantage. For the past 14 months our community has performed better than the market. I’m even more excited to see the comparison in a bear market.
X: Why is it called SprinkleBit?
AW: Five years earlier, my brother Christoffer registered SprinkleBit.com as a domain name, intending to start a business comparable to Alibaba. The name comes from sprinkle–to distribute—and bit—as in information. SprinkleBit was a perfect fit for a platform dedicated to sharing information.
X: How did you capitalize the startup?
AW: At the age of 23, there are not a lot of folks lining up to invest in an idea based on a PowerPoint presentation. With the help of my brother and father we received the startup capital needed from friends and family. We hired two Swedish developers to get a small beta platform out there. Through a former colleague we found a guy who used to work for the Financial Industry Regulatory Authority, the securities regulatory body, to help us get started on our FINRA membership. This limited platform was enough to spark the confidence that we were really on to something.
X: What kind of difficulties have you experienced?
AW: I met Zecco co-founder Stephen Oliveira in early 2012, and he decided to join us. We also hired a bigger team with developers in Cyprus, marketing in San Diego, and brokers in Los Angeles. Everything was looking gravy with a small round of capital raised from friends and family to take us to live trading. I couldn’t have been more wrong. Two months later our clearing firm was acquired and we got tossed after they changed their business model. Four months later, I lost my U.S. visa status, and had to move back to Sweden for half a year to update it.
We continued to … Next Page »