Look at it this way: stockbrokers share information among themselves. And that’s the best way to explain how Openfolio works: it allows you to see how your portfolio is doing, and to compare how you’re doing to others around you, like friends, coworkers, other people in your demographic – or Warren Buffet.
They also scraped information on 50 key investors so that you can see how you stack up against them.
Not to worry: no dollar amount are reveals, only percentage terms within your network, and you benefit from the wisdom of the crowd. Or at least get a look at how to potentially improve your portfolio and invest smarter.
Founders Yinon Ravid and Hart Lambur, both of whom formerly worked on the Street, explain the upside for you.
Tell us about the product.
Openfolio is a free and open network that lets people share their investment portfolios – no dollar amounts, only percentages. By sharing with each other, investors can help themselves be better informed.
Our mission is to open investing. With an open community, we all learn important things about investing – for example, we’ve seen that people who work in tech invest better than people in finance, and that the community does a great job of choosing low cost funds.
We believe that openness continues to improve our lives: contributions to Wikipedia have created humanity’s largest knowledge base ever, networks help us find great places to eat and live, and Twitter democratizes the news. Investing is ready for the same transformation.
How is it different?
Social validation. Today, all investment services leave you investing in a vacuum. Many services give you a personal assessment as an investor, but then prescribe a set menu of what you should be invested in. Openfolio is different. By allowing you to see how other individuals and groups behave, we give you a better sense of who you are as an investor. For example, if you’re taking more risk than average, or if you are less diversified compared to people your age, it can be helpful to understand that, relative to other real portfolios. Even if it doesn’t change your behavior day one, it makes you aware of how you compare. This feedback is not available to the average investor. The only way to get this today is through a financial advisor who can share their knowledge from a group of clients. Openfolio brings this ability to share and compare to everybody, for free.
What market are you attacking and how big is it?
56% of Americans own an investment or 401k. Demographically, the investable assets Millennials control will grow from $2 trillion today to $7 trillion by 2020. That will accelerate exponentially as they enter their prime earning years.
Financial advisor models are broken. 62% of Millennials think financial advisors have no idea how to connect with them. They have no interest in calling their dad’s stockbroker. 73% would be more excited about a financial service offering from Google, Amazon, Apple, Paypal or Square than from their own bank.
What is the business model?
Today, our sole focus is to create a platform that is useful for anyone that has investments, and fosters a vibrant, engaged community. This is fun, exciting, and keeps us busy. Tomorrow? Actionable information and advice, backed by community driven data, likely delivered through a subscription model. Having said that, our core product will always be a free.
Why did you embark upon this venture?
We were working on Wall Street when we hatched the idea for Openfolio. We noticed how the open culture of our trading desks, where people freely shared ideas and insights, helped everyone succeed. But we also quickly realized that there was no platform, or scalable solution, to replicate that powerful experience in the real world – even though so much untapped wisdom resides in everyone’s extended networks.
We wondered: isn’t sharing information about investing at least as important as sharing information on Foursquare… or Tripadvisor… or Spotify?
That experience inspired the creation of Openfolio. It’s a new, open approach to investing, based on the simple idea that people will share their portfolios, in percentage terms, within their networks. Openfolio is a place where investors share insights and ideas, and watch how others put them into action. We all learn from each other’s successes (and mistakes).
Will we have a January effect this year?
More likely than not, given the market dip at the end of 2014.
From your data, what are the hot areas to invest in 2015?
We don’t try to guess directions, but from our data one area of interest is definitely energy/oil. Also, 2014 was dominated by investment in tech, and that might continue in 2015.
What are the milestones that you plan to achieve within six months?
Our laser focus is on growth, while maintaining high customer satisfaction. When we look back at our user engagement and growth numbers, we will know if we’ve accomplished both. When we get there, we will seek to raise a Series A.
If you could be put in touch with one investor in the New York community who would it be and why?
Howard Morgan, because First Round’s holiday videos are awesome.
Why did you launch in New York?
We all lived and worked in New York before starting Openfolio. It is the financial capital of the world, a great city, and we think it’s quickly becoming a true rival to the valley.
What’s your favorite NYC happy hour spot to avoid the Wall Street crowd?
Neuehouse, our shared workspace provider on 25th and Park, is a great place to grab a beer with lots of entrepreneurial and creative folks.