dub - Copy Trading for Teens | Invest with Friends

The Rise of Copy Trading: Dub and the Future of Investing

Social media has fundamentally altered numerous aspects of modern life, including how we consume news and make purchases. Now, Dub, a new platform, aims to revolutionize the world of investing by introducing an influencer-driven marketplace. Users can effortlessly replicate the investment strategies of leading investors with just a few taps on their devices.

Dub's Core Concept and Founding

Dub was established by Steven Wang, a 23-year-old who left Harvard University to pursue this venture. Wang began investing at a young age, encouraged by his parents. The company operates on the principle that success in investing isn’t necessarily about selecting individual stocks, but rather about identifying and following successful investors.

The app enables users to mirror the investment approaches of traders, hedge funds, and even individuals whose strategies align with those of prominent political figures. Instead of independently choosing trades, Dub users can duplicate entire investment portfolios.

Early Traction and Funding

The platform’s concept has resonated with a growing audience. Dub has already achieved over 800,000 downloads and secured $17 million in seed funding, with indications of another funding round on the horizon. A key question remains whether Dub can circumvent the challenges faced by previous fintech startups.

The Evolution of Retail Investing

The landscape of retail investing has undergone significant changes in the last two decades. The era of high trading commissions and cumbersome brokerage platforms was disrupted approximately ten years ago by mobile-first platforms like Robinhood, which offered commission-free trading. Simultaneously, social media is reshaping financial decision-making, particularly among Gen Z.

From Dorm Room to Startup

During the pandemic, while studying at Harvard, Wang observed a convergence of these two trends – the rise of retail investing and the influence of social media on decision-making. Events like the GameStop saga, Elon Musk’s impact on cryptocurrency markets, and the increasing willingness of individuals to follow influential figures led Wang to leave school in 2021 and establish Dub.

Target Audience and User Engagement

Currently, Dub’s typical user is between 30 and 35 years old. However, the platform is gaining traction with a younger demographic. Recent reports indicate that even younger individuals, such as 15-year-olds, are becoming interested in “investing like Nancy Pelosi” after seeing Dub advertisements on Instagram.

It’s important to note that Pelosi isn’t directly trading on Dub; rather, a trader on the platform is replicating her publicly disclosed trades. Nevertheless, this feature has proven popular. According to Wang, “Nancy Pelosi is up 123% on Dub with real capital,” and the portfolio has generated millions of dollars for users.

Revenue Model and Growth Strategy

Dub operates on a subscription basis, charging $10 per month. Additionally, some of the platform’s “top” portfolios impose management fees, from which Dub receives a 25% commission.

The platform’s growth has been fueled by organic expansion. Wang explains that successful traders on the app are incentivized to attract their existing audiences. Dub is also investing heavily in advertising, particularly on Meta platforms like Instagram, to acquire new users.

Navigating Regulation and Addressing Concerns

Dub’s success raises questions about its potential to encounter similar challenges faced by other rapidly growing fintech companies, including increased regulatory scrutiny. Robinhood, for example, faced regulatory hurdles before its 2021 IPO and ultimately removed a feature that rewarded users with digital confetti for each trade.

Proactive Compliance

Dub emphasizes its commitment to regulatory compliance. The company spent over two years collaborating with FINRA and the SEC to ensure its model adhered to financial regulations. Wang asserts, “We didn’t just navigate regulation at Dub — we embraced it.” (Like Robinhood, Dub is a fully licensed broker-dealer.)

Focus on Education and Risk Management

A key differentiator, according to Wang, is Dub’s emphasis on user education. The platform provides risk scores, risk-adjusted returns, and portfolio stability metrics to empower investors to make informed decisions.

Wang believes Dub offers a safer environment for investors than Robinhood. He states, “I have a lot of respect for what [CEO] Vlad [Tenev] has done in making trading free. But at the end of the day, making it super easy to trade without expert guidance, without education, is really just gambling for the broader population.”

Distinguishing from Other Platforms

To illustrate his point, Wang cites the decision by Robinhood, Coinbase, and other exchanges to offer the meme coin TRUMP to customers before President Donald Trump’s inauguration. Despite an initial price surge, the coin’s value has since declined significantly. Wang argues that the incentives of these large, public companies are often misaligned with the interests of their customers, potentially leading to financial losses.

Robinhood’s CEO, Vlad Tenev, has suggested that copy trading may attract greater regulatory attention and that Dub’s smaller size may currently shield it from intense scrutiny.

Addressing Criticisms of Active Investing

Critics argue that stock picking generally underperforms passive investing over the long term, with studies indicating that most actively managed funds fail to outperform the S&P 500.

Wang challenges this criticism, suggesting that many studies are biased. He also points to the success of actively managed hedge funds like Citadel as evidence that skilled investment management can generate superior returns. He notes that wealthy individuals entrust their capital to firms like Citadel because of their consistent performance.

He concludes that the growth of the hedge fund and asset management industries demonstrates the value of active investment strategies. “There’s a reason why it’s growing. It’s because they are making money for their customers.”

• Dub: An influencer-driven investment marketplace.
• FINRA: Financial Industry Regulatory Authority.
• SEC: Securities and Exchange Commission.
• Hedge Funds: Investment partnerships using pooled funds.