“If Robinhood exists to democratize markets, we exist to democratize information.”
In today’s episode, I sat down with Commonstock Founder & CEO David McDonough to learn how Commonstock is creating a community that amplifies insights from top investors, backed by the performance and portfolio of their linked brokerage accounts.
To be honest, I came into the episode skeptical of yet another retail investing app. However, QED’s Frank Rotman had mentioned to me “you should get David on your show. He’s amazing.”
Fast forward to today, and I am an absolute believer in Commonstock…joining Frank as well as Social Capital, Floodgate, and VCs who have invested in the company.
David has all of the traits you would want in a founder — he’s energetic, driven, a great storyteller, scrappy, and just obsessed with the problem he’s solving.
David in some ways is the poster child of the retail investor movement. He’s a former college athlete (squash at one of the world’s top programs) who didn’t know a thing about investing. After graduating, he planned to play squash for a year before going to medical school. However, as he saw the financial crisis unfold around him, he and his teammates “would meet in the pro shop of these squash clubs and say ‘Hey, we need to figure out investing and personal finance.’”
With beginner’s luck, or maybe the sign of a future pro, David got on E*Trade, bought Citi stock for $1 a share, and soon after sold it for a 10x gain. That lucky break sent him on a decade-long journey to teach himself everything he could about finance, turning a spontaneous interest into a lifelong career.
David started discussing investment theses in group chats and meetups with friends, and decided he wanted to commit himself full-time. After graduating, he scrapped his way into an investing role, calling himself the “Rudy of Private Equity,” doing anything he could to add value. While working, he took economics classes at the local community college and studied 10-Ks in his spare time, all while continuing to invest.
As he continued his self-education, David noticed two things:
- There had to be a way to make investing & learning with others more fun.
- Anywhere stocks were discussed on the internet would immediately “descend into chaos.”
During a stint at Google where he also taught himself to code, David began building a prototype of this product for him and his friends.
Realizing the opportunity of his side project, David left in 2017 to build Commonstock full-time with the goal of amplifying the knowledge of great investors and making investing fun.
What is Commonstock?
Commonstock is an investing community where members can link their existing brokerage accounts and share their real-time portfolio, performance, and trades (by percent only — $ amount is never shared). All participants are able, and encouraged, to share their investment theses, industry takedowns, and more while critiquing each other. Other social features include focused groupchats, leaderboards, comments sections, and the ability to view and support people’s portfolios.
The app is driven by a news feed, much like Public.com, but where it differentiates is the extreme thoughtfulness that goes into the analysis. I was blown away by the posts people were putting together, including earnings takedowns, macro industry analysis, company stock picks, and more. I signed onto the app while writing this (have been a bit addicted), and these were two of the first posts I saw:
The engagement in comment sections and group chats is even more impressive, with people sparring in a friendly, academic manner.
When asked if he paid anyone to post, David said absolutely not. Then how did he get these super-users that any startup would kill for?
He emphasized that Commonstock is just capitalizing on the existing passion economy where investing influencers build loyal followings on Twitter, Substack, and elsewhere. Where Commonstock differs from these platforms is it gives them the opportunity to list their portfolios publically (by %), track how followers are investing alongside them, and encourage academic debate in the comments.
Here’s a sample portfolio of Eric Pelnik, one of the founders of Commonstock. You can see not only how many followers he has, but the total assets of his followers, as well as:
- Returns vs. S&P
- His current portfolio (by %)
- Every trade he’s made
- Memos he’s written
- Comments he’s made
When asked about the company’s monetization strategy, David seemed to be leaning much more “Substack” than “Robinhood.”
Check out Commonstock for yourself here!
In this episode, we also cover:
- The Robinhood and Gamestop fiasco
- How learning Robinhood’s business was “like seeing the green binary codes in The Matrix”
- Other business models such as Public
- What people get wrong about the retail investor
- His secret weapon in fundraising (that helped him get such a star-studded list of investors)
- And a rapid-fire round with some of his amazing stock successes (and some misses caused by paper hands)
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Ryan Zauk is an MBA Candidate at The Wharton School, where he runs the Wharton FinTech Podcast. He currently works with the US International Development Finance Corp looking at technology impact investments in developing markets. He has a passion for music, media, and all things FinTech.