When Kevin Shu, the former YouTube product manager known on Reddit as “Sir Jack-a-Lot,” turned $35,000 into $8 million in stock trading between 2020 and 2022, many assumed his fortune and investment methods had peaked, just as the 2021 meme stock boom has peaked.
But Xu disagrees, and is now building a startup for retail investors that aims to provide the kind of friendly investment advice and community people have enjoyed on platforms like the WallStreetBets subreddit, but with accountability to stop scammers and fraudsters.
AfterHour, which launched in April 2022, allows users to link their stockbrokerage accounts and post their investments to their social feeds under a username of their choice. “The only reason people trust me and Roaring Kitty is because we're transparent,” Xu told TechCrunch. “Why not show us your actual positions or prove that you're actually participating in something? [AfterHour] The level of reliability and trust will be restored. We will work with brokers and share real verified positions and screenshots.”
The company currently has over 23,000 users, which is not an eye-popping number, but the user base is growing and early adopters seem enthusiastic. Xu said that over 70% of users use the app every day. Xu said that the company is currently focused on growth, but has plans for monetization in the future.
“Monday to Friday, 9:30 a.m. to 4 p.m. is the time to go,” Xu said. “When we started, we were very worried that the weekends would be quiet, but on Mondays, people come back. We don't send out any deceptive push notifications to bring people back on Mondays, they just come back naturally.”
The startup recently raised $4.5 million in a seed round led by Founders Fund (Keith Rabois' last investment in the company) and General Catalyst, with participation from Pear VC, Daybreak Ventures, F4 Fund and several others. Xu said AfterHour is now focused on growing its user base and team.
Xu thinks AfterHour's approach works because it gives users a pseudo-anonymity: He recalls feeling awkward talking about stock trading with his YouTube colleagues after hours, and he thinks he's not alone in feeling that way.
But on the other hand, he recognizes that an environment with zero accountability is not a good idea for a platform like his. That dynamic creates the kind of scammers and charlatans we see on Reddit and X who pump and dump their positions or post fake trades to get others to invest.
He added that only actual transactions can be posted, which weeds out a lot of bad actors. Of course, there will be bad actors, but the startup tries to monitor posts and flag any suspicious ones with a system of warnings and community notes, he said, much like X's community-based moderation approach.
Xu acknowledged that such monitoring systems would become less effective as the platform continues to expand. “For now, I'm basically just reminding people that I'm on the app and that independent thinking is attractive,” Xu joked. He added that the company is working on plans to curb bad behavior, considering ideas such as algorithms that can automatically flag posts that appear to be fake.
This deal stood out to me because I think it's a smart strategy to build a service for retail investors. The trajectory of this space is very reminiscent of the crypto world. Though very different, both were investment spaces that had their 15 minutes of fame and, even after fading from the mainstream, continue to have growing communities of passionate investors interested in their approach.
Still, AfterHour is a particularly clever idea because, like cryptocurrencies, there's a lot of money to be made here, but there's just as much to lose. Platforms like this can't guarantee that users will be financially successful, but that doesn't mean the public should be shut out of the stock market altogether. Companies like Robinhood and, more recently, Destiney Tech 100, are working to democratize it.
“There was a big misconception in Silicon Valley that retail deals would be the hot thing in 2021 because of the stimulus,” Xu said. “Retail is only going to grow. The data bears that out.”
Incidentally, 2023 was the most active year on record for retail investor trading: Robinhood's trading volume exceeded $86.6 billion in May alone.
AfterHour isn't the only company realizing the potential of this space. Robinhood's media expansion is a good example. The trading app acquired the retail investor-focused Snacks newsletter in 2019 and more recently launched Sherwood Media, a financial publication aimed at the same readership.
While starting with the stock market, Xu hopes AfterHour will expand into other areas of finance in the future and become a one-stop shop for retail investors.
“After Hours needs to exist,” Xu said. “I've seen the internet of finance and its evolution, and I've been disappointed with every other attempt at it. [to build a similar platform]I was just disappointed.
I'm really thinking long term. I want it to be fun and accessible. I think it's more entertaining than sports, and I think more and more people are seeing that online.”