Kevin Xu once wore a knight’s helmet on MSNBC.
“Hello, I am the Sir Jack-A-Lot, and I’m here wearing a mask because I’m a millionaire and I’d like to stay anonymous,” Xu says straight-to-camera, introducing himself in the 2022 documentary Diamond Hands: The Legend of WallStreetBets.
Xu’s not anonymous anymore (as evidenced by, well, his name). In two years, he’s gone from incognito WallStreetBets guru “Sir Jack” to public-facing startup founder.
"The stock market, to me and I think millions of other people, feels like the most fun reality TV show, and we’re all playing,” Xu told me on Zoom. “There’s twists, turns, there’s earnings seasons, there’s stories every day. And everyone loves a plot twist! Everyone loves a resurrection!”
Xu unmasked himself last year—a kind of resurrection, I’d argue—to begin building social trading app AfterHour, which recently raised its $4.5 million seed round, Fortune can exclusively report. Founders Fund and General Catalyst led the round, and were joined by Pear VC and others. (It was among Keith Rabois’ last deals at Founders Fund before moving back to Khosla Ventures.)
You hear it all the time: VCs are looking for founders with deep knowledge of a problem, and an ironclad motivation to solve it. And, in a lot of ways, who fits that bill more than a former Googler who got online-famous turning $35,000 into millions in the meme stock craze? Right now, Xu says he’s trying to fill a gap, and it’s a gap that’s both generational and informational. If you’re a day-trading Redditor, you probably aren’t interested in a traditional financial advisor.
“There’s this kind of big hole in the middle,” Xu told Fortune. “I'm hoping AfterHour fits that hole for someone, for something that talks to you, and is moving at the speed of the markets, but is also credible…I’m about bringing credibility, transparency, trust, fun, and nativeness back to this space.”
Robinhood has social media features, but much of the discourse surrounding the meme stock craze was famously tied up in Reddit forum WallStreetBets, with traders communicating on social media while making trades on Robinhood—a platform whose trading restrictions have been the subject of controversy among that WallStreetBets crowd. But theoretically, verified users, brokerage capabilities, and solid education should all exist on one platform, Xu argues.
And Xu’s point about credibility speaks directly to one of the key problems at the intersection of retail investing and social media—that you can’t really know who to trust. How do you know who’s being honest about their returns, or their diligence on companies? It’s a space many would say is rife with potential scammers. But there’s a market here: Currently, there are about 16 million users subscribed to WallStreetBets, and retail trading reached its highest volume in 2023.
WallStreetBets is a subject of tension, with Xu at one point telling me he was “exiled”—strangely enough, for disclosing too much. But the strange trajectory of WallStreetBets does evoke a question about AfterHour: How big can something like this get? Many would still consider this to be a niche community. What actually is the total addressable market here? I ask Niko Bonatsos, a partner at General Catalyst.
“This is the hardest thing with consumer-facing companies in particular,” he said. “What was the TAM for Airbnb or fantasy football? At the end of the day, it takes a founder who is formidable to build the product for themselves, because they know that community so well that they can serve and dominate. It’s in the hopes that over time, it could become a more mainstream use case.”
So, the bear case for AfterHour then is this: It’s a limited market with a lot of unknowns, along with the reality that no one has yet totally managed to get social media stock platforms right. (Competitor Commonstock sold to Yahoo in 2023, for undisclosed terms.)
But what about the bull case?
“The bull case is that you’re able to leverage that into a financial institution…acquire users significantly cheaper, and get to a massive scale of retail investing,” said Pear VC partner Ajay Kamat. “Retail investing is growing, right? If you become the company that represents that growth, that’s really very interesting. There was E*Trade, then there was Robinhood, and now we’re kind of looking at the next generation.”
I talked to some of AfterHour’s users in my first-ever Discord town hall, attended by somewhere between 30 and 40 of the platform’s users who had screen names like Dracstar or Seymour_butts21. They talked about their confidence in the credibility of AfterHour, and their confidence in the credibility of one another. One guy talked as he hit a bong.
It felt like the punk rock version of the sorts of meetings that bankers have. But AfterHour doesn’t just want to be part of the system—so it’s making a new one.
In case you missed it…Tempus AI went public, raising about $410 million at a valuation of about $6 billion last week. Shares popped 8% in the SoftBank-backed company’s Nasdaq debut.
See you tomorrow,
Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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