Is it for real? Can you really invest $1 million virtually and earn real money with no fee and no risk attached. Apparently, it’s possible and people are doing it at UpDown.com. In fact, I’ve already earned a small amount of money for beating the S&P500 in January.
Today, I have the pleasure of inviting Michael Reich, the Co-Founder and CEO of the UpDown.com, for a little virtual chat.
Hi, Michael. Thank you for the opportunity to interview you today. Can you first tell us about yourself?
I have always had an interest in entrepreneurial ventures — I started investing at age 14 and later started a champagne import business while I was doing my undergraduate studies in France.
I first had the idea to start UpDown when I came to the States to pursue my MBA at Harvard (I am originally from Germany). I was taking a lot of finance and investing courses and Harvard Business School, and at the same time I became fascinated by social networks like Facebook, and the concept of wisdom of crowds. I was particularly intrigued by the idea that one could apply the concept of wisdom of crowds to investing.
Now, can you tell us about UpDown.com?
UpDown.com is a social network for virtual investing.
By giving members $1,000,000 in virtual money to invest, we provide a free platform for people to improve their skills through collaboration, competition and aggregated wisdom. In the process, we allow our members to earn real money with zero risk of financial loss.
Specifically, UpDown members earn money whenever their virtual portfolios outperform the S&P 500. They are also compensated for writing stock analysis and referring friends to the site.
Okay, so you have a no-fee web site that pays people real money to beat the S&P 500. Can you share your business model with us?
Today we have a blended revenue model which includes funding from investors, as well as an advertising and sponsorship component that is similar to those leveraged by most social networking sites. Currently UpDown‘s investors are covering the monthly community payouts to members until the advertising revenue ramps up.
Why should people join UpDown.com? What are the benefits? And how can users get the most out of their experience at the site?
Investing and understanding of the stock market is a key factor in maximizing your earnings potential and can be a huge factor in providing a great life for you and your family. Most people don’t realize the power of proper investment and lose out because of fear and lack of knowledge — UpDown.com helps educate consumers about investing in a fun, informative, and compelling way that has never been done before.
For example, if I’m in my twenties and put $10k in a CD returning 3% per yr, after 25 years, I would retire with $20k. If I invest $10k in the stock market which has averaged a return of 8% per year, after 25 years, I would retire with $70k. If UpDown members can do just a little better and earn 11% per year, after 25 years, they would retire with $130k on a $10k investment.
The benefits to joining UpDown are that you get a risk free, challenging and informative online community to practice investing and earn real money without any risk. It also allows you to collaborate with others who share your passion for learning about the stock market and how you can leverage creative investing strategies to make your money work for you!
What is your vision for UpDown.com?
The company’s ultimate goal is to create a hedge fund that mirrors the members’ strategies that consistently out-perform the major indices.
The most interesting and potentially revolutionary opportunity for UpDown lies in the ability to mine data from our community and create new compelling products built upon the aggregated wisdom of our membership, especially those members that consistently out-perform the major indices.
Our ultimate goal is to leverage this data to create compelling products, whether they are financial instruments such as a community based hedge fund, and/or information products for professional investors.
We also plan to expand the business into global markets like India and China, and we are also considering adding the capability for members to trade in other asset classes, such as options, futures, and maybe foreign currency.
Who are your competitors in this space, and why UpDown.com is better?
There are two types of competitors that we see in our space — the larger personal finance websites like Yahoo! Finance, Motley Fool, and TheStreet.com — and the smaller start-ups like Socialpicks.com, Covestor, and Bullpoo.com.
They each have different strengths, but no one is currently offering a free investment platform that allows members to earn money with zero risk of financial loss, like UpDown.
Can you tell us the most money ever made by a single user in one month?
Last month our top earner made $600, bringing his total earnings to more than $2,000 in just a few months!
The amount you can earn is unlimited, but the average payouts really depend on the community’s overall performance — we expect the monthly payout amounts to grow significantly as our membership expands.
Any last word you want to share with my readers?
By arming users with greater knowledge and shared insight to build credible investment track records, UpDown.com is putting more power and control in the hands of the individual investor, as opposed to the investment professional. Because of this, UpDown members are better equipped to challenge the decisions/advice given to them by financial professionals, as opposed to “going on blind faith.”
Companies like UpDown are illustrative of a growing shift in power from the corporation to the consumer, which is the very essence of Web 2.0. As a result of this shift, consumers are now able to “hold the bar higher” when engaging with professionals across multiple industries.
Michael, thank you for your time.
Pinyo is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.