Follow the Money
Money and Friends
The camera opens on a young man leaning on a balcony overlooking Central Park. His brow is furrowed; from the side he resembles Matt Damon. The voiceover comes in, underscored by a cello: “My name is Tim Sykes, and I teach people to trade stocks. I am a self-made multimillionaire and I am the No. 1 ranked trader out of 60,000 on Covestor.”
If you were a discerning customer searching for stock advice, you might pause here. What the hell is Covestor?
The site, run out of London and New York, has been around since 2007, and allows “self-directed” investors to broadcast their trades online.
Covestor requires users—small-time, independent professionals as well as guys at home in their bathrobes watching E*TRADE on two monitors—to connect their online brokerage accounts or submit audited records. Every trade, bad or good, is posted online. In other words, it’s oversharing for traders.
A few years ago, Covestor pivoted to emphasize an even weirder business: mirror trading. In addition to merely watching Mr. Sykes make his millions from his Columbus Circle apartment, one can share the wealth by automatically mirroring his moves. Just as television made celebrities out of Jim Cramer and other prognosticators with good cadence, Covestor hopes to make stars out of any old schmucks who prove they can beat the Street.
Money and Friends
Roboinvest, which lets ordinary folks follow each others’ trades in real-time, booted up at the end of January with a partnership with amateur trading clearinghouse E*TRADE. The startup has processed $2.5 million in trades and grown to 1,300 users since then, founder Michael Giles told Betabeat, with only some seed money and a full-time team of two.
The trick to Roboinvest is “one-click copy trading,” the feature that launched just over two weeks ago and got the attention of Bloomberg’s Businessweek. Broadcast your trades in real-time on Roboinvest, and your followers have 30 minutes to decide if they want to copy your move. “Most people know somebody who trades, and they always want to know what they’re doing,” he said. “It’s trading for the rest of us. Anybody with a trading account can use Roboinvest.”
Investing, in all its forms, lends itself to groupthink and follow-ons. Everyone wants to know what everyone else is doing. Did Warren Buffet invest? What does Jim Cramer say? In New York’s venture capital scene, VCs want to follow Fred Wilson. When it comes to plunking down money, most people would like a little assurance that they’re not the only suckers in the game.
Now Roboinvest, a New York startup that raised a seed round and soft-launched in January, has made copycat investing as easy as one click. When someone you’re following broadcasts a trade, you have 30 minutes to copy it and execute the same trade, broadcasting it to your followers in turn.
Want to trade stocks? Have no clue how? Roboinvest is the latest startup to launch out of New York for casual, insecure or curious traders. Like Union Square Ventures company Covester, Roboinvest is a social investing platform built on top of ETRADE that lets users “look over the shoulder of top investors” and follow their moves, sort of like AngelList does for startups and Currensee does for foreign exchange trading. The startup had a soft launch on Friday and opened officially yesterday.