When former YouTube product manager Kevin Xu, generally known as “Sir Jack A Lot” on Reddit, swapped $35,000 for $8 million in stock between 2020 and 2022, many people thought his fortune and investing style had peaked similar to the 2021 memestock madness had.
Xu disagrees, nevertheless, and is now building a retail investor startup that goals to supply the good-natured investing advice and community that individuals have enjoyed on platforms like the WallStreetBets subreddit, but with a layer of accountability that daunts scammers and grifters.
Launched in April 2022, AfterHour allows users to connect with their brokerage accounts and post information about their investments on a social channel under a username of their selection. “The only reason people trust me and Roaring Kitty is because we are transparent,” Xu told TechCrunch. “Why not show your current position or prove that you are actually involved in something? [AfterHour] restores a level of credibility and trust. You connect your brokerage and share real verified positions and screenshots.”
The company currently has greater than 23,000 users, and while that is by no means an eye-catching number, its user base is growing and its early adopters seem dedicated — Xu said greater than 70% of its users use the app every day. Xu said the company is currently focused on growth but has plans to monetize in the future.
“The game runs from Monday to Friday from 9:30 a.m. to 4 p.m.,” Xu said. “When we started, I was very afraid that it would be quiet on the weekends, but on Monday people just come back. We don’t send any fake push notifications to keep people coming back on Mondays, but they naturally come back.”
The startup recently raised a $4.5 million seed round led by Founders Fund – Keith Rabois’ latest investment in the company – and General Catalyst. Also collaborating were: Pear VC, Daybreak Ventures and F4 Fund. Xu said AfterHour is now focused on growing its user base and team.
Xu believes that AfterHour’s approach works by allowing users to stay pseudo-anonymous. He recalled feeling awkward at the considered talking to his YouTube colleagues about stock trading outside of labor hours, and thinks he’s probably not alone in that.
But on the other hand, he realizes that an environment that encourages zero accountability is not a good idea for a platform like his. This dynamic breeds the scammers and fraudsters you see on Reddit and X who need to pump and dump their positions or post fake trades to trick other people into investing.
He added that because people can only post their actual transactions, it eliminates a lot of bad actors. Of course, there shall be no shortage of bad apples, but Xu said the startup monitors posts and flags any suspicious content through a system of warnings and community notes — just like Xu’s community-driven moderation.
Xu admitted that such a monitoring system wouldn’t be effective as the platform continued to scale. “Right now, I’m basically on the app reminding people that independent thinking is sexy,” Xu joked. He added that the company is working on a plan to curb inappropriate behavior and is considering ideas akin to an algorithm that may routinely flag posts that look like fake.
I discovered this deal particularly attractive because I consider building services for retail investors is a smart move. The trajectory of this space jogs my memory a lot of the cryptocurrency world. While very different, they are each investment areas that had their quarter-hour of fame, but when they faded from the mainstream, they still maintained dedicated and growing communities of individuals interested in their approach.
Still, AfterHour is a particularly smart idea because, similar to with cryptocurrencies, there’s a lot of cash to be made – and just as much to lose. Such platforms do not guarantee their users financial success, but that does not mean that average people must be completely cut off from the stock markets that firms akin to Robinhood and, more recently, Destiney Tech 100 have worked to democratize.
“The big misconception in the valley was that retail was going to be a fad in 2021 because of stimulus checks,” Xu said. “It’s only growing. The data confirms this.”
For context, 2023 was the most significant yr lively yr in history for retail. Robinhood has earned over $86.6 billion trading volume in May itself.
AfterHour is not the only company realizing the potential of this space – Robinhood’s media expansion is a good example. The trading app bought the Snacks newsletter, aimed at retail investors, back in 2019. It recently launched Sherwood Media, a financial publication aimed at the same audience.
Xu is starting with the stock market, but hopes that AfterHour will expand into other areas of finance in the future to change into a one-stop shop for retail investors.
“After Hour has to exist,” Xu said. “I see the Internet of Finance and its evolution, but I’m dissatisfied with all the other attempts [to build a similar platform]. They were just disappointing.
I actually think long run. I need it to be fun and accessible. I think it’s more interesting than sports, and I think more and more people on the Internet are doing it too.”