Making stock selection easy: Three US-based friends offer a unique online option

Our enterprise had its origin in the bull run of 2006-7. India was the favoured market destination at the time, but we-Nikhil Badwe, Rushabh Doshi and I-were in the US working for a software firm. We wanted to capitalise on the market high and make extra money, yet when we tried to tap the Internet to do so, we encountered an information overflow. We didn't know where to look for crucial pointers on when to sell, buy or hold stocks. This is when we thought of launching our own Website, one that would offer guidance to aspiring investors in a unique way. We planned for people to share their techniques and methods of making money in the stock market and offering recommendations that we could track. This is how StockEzy took root as an idea in 2008.

For two years, we worked during the day for VMWare (software firm in Silicon Valley) and on the site at night. In 2010, the three of us quit to work full-time on StockEzy. In fact, the three of us have been together for a long time-at the Thadomal Shahani College of Engineering, Mumbai, at the University of Southern California, Los Angeles, and then at VMWare. So being together in the new enterprise seemed like a natural corollaryTo get the business started, we bought our first server for $340 (Rs 15,140) and installed it at home in San Francisco, from where we operate till date. We don't need to put up servers in India because it is expensive. Besides, we have a better alternative: cloud computing. My father has also lent us space in his office at Andheri, in Mumbai, to handle accounts and phone calls. For this office, we hired an office administrator and an accountant in 2008. It is slightly inconvenient to work according to the Indian standard time while being stationed in the US, but we have become habituated to it.

When we set up the site, we had to start accounts under different names, requesting friends and relatives to try it. We spent on hiring freelance engineers and Web developers and spreading the word via Facebook and Google advertisements. We also engaged in PR activities to bring in TV, online and print media to learn and spread awareness about StockEzy. But word of mouth publicity played an important role in ensuring growth. Today, there are 30,000 registered users, including housewives, traders and novice investors, besides 1 lakh visitors a month to the site. People share information on stocks, and based on their recommendations and performance, other members follow them. The better the recommendations, the greater the following. To ensure accountability, we track these suggestions, say, from the time someone points to a stock that should be held to the time he recommends selling it at a particular price. The site doesn't deal with money. One can use it to understand the basics of the stock market and gradually invest as per the advice of fellow investors. Some people use it as a platform to show off what they know of the stock movements, but more than a bragging tool, it is a self-learning instrument.

To avoid misuse of the website by people who make wrong recommendations for personal gains, we have imposed a restriction on stocks, considering those with an average volume of 25,000. This reduces the universe to 2,500-3,200 of the 5,000-odd listed stocks in India.

Expectedly, we faced several problems in the first couple of years and made our share of mistakes. For one, I tried to do too many things at the same time. I have curbed my enthusiasm now and focus on one goal at a time. I also realised that it takes too long to rectify and undo the effects of a mistake. So it is better to evaluate completely before committing to something.

While we got an amazing initial response, there were also disappointments when deals fell through at the last minute. We earned our first revenue, $10,000 (Rs 4.45 lakh) in March 2010, but reinvested it in the business. Our earning was primarily through subscription services (Rs 500 a month to Rs 4,000 a year per product) and Google ads. One of the biggest problems we have faced so far is in getting approval for foreign direct investment by Dorsey Wright and Associates, an investment advisory firm in Virginia, USA, which bought a 19% stake in StockEzy early this year.

Recently, we have also introduced subscription-based, actionable stock recommendations by Dorsey Wright & Associates. This will be different for various users-for traders who have a horizon of 1-5 days, short-term buyers with 1-3 month horizon, and long-term investors looking at holdings for 6-18 months.

We have simplified it for the common investor, making the recommendation very short and explaining the rationale for the strategy. This will be a revenue earner for us. Our pitch is simple and appeals to the retail investor. Be informed, get smart, invest better. 
Source http://economictimes.indiatimes.com/