Social media modified every part from information consumption to procuring. Now, Dub thinks it could possibly do the identical for investing by means of an influencer-driven market the place customers can comply with the trades of high traders with just a few faucets. Consider it as TikTok meets Wall Avenue.
Based by 23-year-old Steven Wang — a Harvard drop-out who started investing in second grade along with his dad and mom’ blessing – Dub is betting the way forward for investing isn’t about selecting shares however selecting individuals. The app permits customers to comply with the methods of merchants, hedge funds, and even these mimicking high-profile politicians. As a substitute of creating particular person commerce choices, Dub customers can copy total portfolios.
The idea has struck a chord. Dub has already surpassed 800,000 downloads and raised $17 million in seed funding – with a brand new spherical seemingly within the works. Much less clear is whether or not Dub can keep away from the pitfalls of earlier fintech startups.
Impressed by GameStop
Retail investing has advanced dramatically over the previous twenty years. The times of $7 buying and selling commissions and clunky brokerage interfaces have been blown aside roughly a decade in the past by mobile-first platforms like Robinhood that invited individuals to commerce at no cost. On the similar time, social media is reshaping how individuals, and significantly members of Gen Z, make monetary choices.
As a Harvard pupil in the course of the pandemic — one who was buying and selling from his dorm room “since you couldn’t actually do something in school” — Wang got here to consider these two traits, retail investing and influencer-driven decision-making, have been on a collision course. Between the GameStop saga, Elon Musk’s potential to “transfer the Dogecoin and Bitcoin markets with each tweet,” and folks’s willingness to “actually comply with concepts and people to a complete new stage,” Wang determined to drop out in 2021 and begin constructing Dub.
Proper now, the platform’s common consumer is between 30 and 35, says Wang, although New York-based Dub is clearly discovering its means in entrance of a good youthful viewers. In latest weeks, this editor’s 15-year-old has requested greater than as soon as about “investing like Nancy Pelosi” after marinating in Dub advertisements on Instagram.
Pelosi isn’t personally buying and selling on Dub; it’s only a dealer on the platform mirroring her disclosed strikes. Nonetheless, the concept has caught hearth. “Nancy Pelosi is up 123% on Dub with actual capital,” says Wang, “and we’ve made our clients hundreds of thousands of {dollars} since that portfolio was launched on the platform.”
Dub isn’t free. Wang was decided to generate income from the outset, and Dub does that at the moment by means of a $10-per-month subscription mannequin. Wang says additional that some “high” portfolios on the platform cost administration charges and Dub takes a 25% reduce of these charges.
Within the meantime, Dub has scaled partially by means of natural development. “Creators who’re good merchants on the app are incentivized to convey their viewers,” says Wang, whose dad and mom immigrated from China and who grew up in Detroit.
Dub can be investing aggressively in promoting, leaning closely into Meta advertisements particularly to amass customers, together with on Instagram. “We’ve been actually fortunate the place I feel the broader American inhabitants actually believes there are different individuals on the market which have an edge over them in relation to the investing world,” says Wang.
Preventing phrases
The query now could be whether or not Dub will comply with the same path as different fast-growing fintech startups, a lot of which have discovered themselves within the crosshairs of regulators. Robinhood disrupted finance by making buying and selling free, however it additionally confronted regulatory scrutiny forward of its 2021 IPO, finally ditching a function that showered customers with digital confetti each time they made a commerce.
Dub says it’s eager to keep away from the identical errors. The corporate spent greater than two years working with FINRA and the SEC earlier than launching, making certain its mannequin complied with monetary laws. “We didn’t simply navigate regulation at Dub — we embraced it,” Wang says. (Like Robinhood, Dub is a completely licensed broker-dealer.)
A giant distinction, argues Wang, is that Dub is designed to coach customers, not simply encourage blind hypothesis. The platform shows danger scores, risk-adjusted returns, and portfolio stability metrics to assist traders make knowledgeable choices, he says.
He suggests it’s safer for traders than Robinhood. Says Wang: “I’ve numerous respect for what [CEO] Vlad [Tenev] has carried out in making buying and selling free. However on the finish of the day, making it tremendous straightforward to commerce with out knowledgeable steerage, with out schooling, is absolutely simply playing for the broader inhabitants.”
To underscore his level, Wang factors to the choice of Robinhood — together with Coinbase and different exchanges — to make the meme coin TRUMP out there for patrons forward of President Donald Trump’s inauguration. Whereas it initially surged in value, its value has plummeted since. Says Wang, “I feel essentially the incentives are simply misaligned between these large platforms which might be public firms now that must become profitable” and that “typically” their clients have “in all probability misplaced cash.”
(Value noting: in a separate, latest dialog with Robinhood’s Tenev about Dub, Tenev proposed to TechCrunch that replicate buying and selling might develop into of better curiosity to regulators, and that Dub might not but be underneath the “magnifying glass” due to its comparatively smaller measurement.)
Both means, not everyone seems to be offered on Dub’s imaginative and prescient. The largest knock towards such platforms, says critics, is that inventory selecting underperforms passive investing over the long term, with research displaying that almost all actively managed funds fail to beat the S&P 500.
It’s a criticism with which Wang is acquainted — and on which he’s fast to push again. For one factor, he argues that many such research are “cherry-picked.” (“I guess numerous these are sponsored by the passive investing index firms,” he says.)
Additional, says Wang, there’s a motive that actively managed hedge funds like Citadel are thriving. “In case you have a look at what the extremely rich can do, they’re giving their cash to Ken Griffin of Citadel, [because] they’re persistently placing up non-correlated returns 12 months after 12 months after 12 months,” he says.
If yet another broadly “seems to be on the development of the hedge fund house and the asset administration house,” continues Wang, “there’s a motive why it’s rising. It’s as a result of they’re being profitable for his or her clients.”
