What is your background and how does that help with your business?
It all begun when I was 14 years old. I worked a whole summer in a small little Ice Cream kiosk in the picturesque village of Skärhamn on the west coast of Sweden. After 2 months of hard work, I had $2,000 saved up after the summer. I wanted to save for a car when I turned 18. After discussing with my father I decided to invest in a company called Metro. Two years later I sold off my complete holdings with an average return of 287%. I was hooked, I started looking at other companies and did my own spreadsheets with alternatives. Instead of a car, I kept saving for my college tuition and 4 years later I had enough to pay for college.
During my exchange semester at Harvard I started reading a book called “the wisdom of the crowds – James Surowieki” and the main argument was that the collective wisdom in a room are often smarter than the smartest person in the room, given the right question. Armed with new knowledge about finance after my semester I set back to UCSD to start my research. After 8 months of research, analyzing over 40,000 trades from both individual investors and institutional investors I came up with a formula called the Voting Power Model. It was designed to extract the magnitude of conviction behind every trade instead of looking on the quantity and price. The results were remarkable, the formula only needed 650 transactions to predict with 87% certainty that a stock would outperform its expected return. To prove the thesis, I put together a synthetic portfolio based on the top 25 stocks every quarter and back tested it for 5 years (20 quarters). Even though it was tested during the biggest financial crisis in this century, the portfolio generated a 40% return compared to the market’s 0.08%. It beat the market 18 out of 20 quarters.
Why did you start your business?
The initial idea was simple: to create a platform were people could connect all over the world to discuss investment ideas, and to execute those ideas with both virtual and real money. Through SprinkleBit’s proprietary VPM algorithm, members could quickly get situated in market trends and evaluate investment decisions. It would be a new financial ecosystem without any bureaucracy or borders.
Tell us about your business and what makes you unique.
Never trade alone, the power lays within the community. A great community has the ability to work together toward a common vision. It has the ability to leverage individual accomplishments to spur community success. It is the fuel that allows us common people to attain uncommon results.
Through SprinkleBit's social media platform, you can get crowd-sourced investment advice and follow the motivation behind other members investments. As members implement their investment strategies, a Voting Power Index (VPI) is generated by a proprietary algorithm. This VPI confirms how skilled they are with making investment decisions. This enhances the trust factor between members within the SprinkleBit community. You can, of course, choose to be completely private but we incentivize our members to share their investment ideas with all kinds of investing perks.
For beginners we have a unique four-step process to learn how to invest.
1) Educate oneself through our SprinkleBit University
2) Watch others in the community and see what they do
3) Practice risk-free with our stock market simulator
4) Perform for real with our integrated brokerage platform.
What do you feel are some future trends in your industry?
The information flow is just getting faster and easier to get a hold of. One example of this is when Netflix CEO posted on Facebook last year that they had reach 1 billion hours of video in one month, the stock shot up within minutes. This time it wasn’t Wall Street who benefited from it, it was regular social media users who snapped up the good news.
Crowd-sourcing will make it easier for individuals to help each other with financial services and proof is already here with companies such as Lending Club and Kickstarter. In the future this will grow on a global scale.
How is it being an under 30 year old entrepreneur? What advice would you give to other young entrepreneurs?
Being an entrepreneur, age is irrelevant. It’s about the experience and passion. I would rather invest in someone under thirty with a few years of experience and deep passion to follow with their inspirations, than someone above 30 who has perhaps more experience and education but lacks the conviction on which entrepreneurs thrive.
The best advice I can give is to always listen to people who have experience in the areas you need help with, but as soon as you have the slightest disagreement ask why their way is right. Often you will realize that the optimal solution lays between both of your opinions.