San Diego’s Stock Twits Aims its Social Media Tweets at the Wall Street People Who Matter

8/17/11Follow @bvbigelow

After more than 20 years of experience as a Wall Street investor and entrepreneur, Howard Lindzon has become a connoisseur of stock culture.

He says his disdain for CNBC was the reason he created WallStrip, an offbeat videoblog mix of finance, markets, and humor, in 2007. Eight months later, CBS acquired WallStrip for an undisclosed amount, which was reported by some sources as a $5 million deal.

Lindzon, who runs a small hedge fund called Lindzon Capital Partners, also has made a number of investments in a variety of Internet and new media startups, including Rent.com, Lifelock, Assistly, bitly, Klout, and TweetDeck. In 2008, Lindzon founded StockTwits, a new media startup in the San Diego area as a micro-blogging website that resembles a TweetDeck for traders. The concept enables investors to share their investing ideas, stock tips, comments, charts, and other information in 140-character tweets. In a statement today, StockTwits says it is setting a record for usage in the current earnings period—with a 200 percent increase in the number of tweets over the same earnings season last year.

Howard Lindzon

“If I’m running an institutional trade desk, and following real-time streaming of news, then Twitter is going to rule the world,” Lindzon says. “We’re taking the social Web, which is the greatest thing in the history of the Internet, and applying it to this one little vertical.”

With more than 100,000 registered users, StockTwits distributes its content through the usual social media suspects, such as Twitter, Facebook, and LinkedIn. Francis Costello, StockTwits’ chief operating officer, says the company also has arranged to provide its real-time streaming comments to financial news sources like Yahoo Finance, CNN Money, Reuters, and Bloomberg as a way of monitoring “market sentiment.” Through its overall distribution network, StockTwits estimates that its content reaches a total of 50 million people.

In addition, Costello says StockTwits created the hashtag-like symbol for publicly traded stocks, $(ticker), which has been widely popularized and enables investors to aggregate comments around a particular stock, such as $AAPL or $GOOG.

With the increasing acceptance of the stock ticker tag, StockTwits also has identified its core business and revenue source—the investor relations and public relations units of publicly traded companies. Such companies as Dell, eBay, Hewlett-Packard, and PepsiCo have signed up for a higher level of service (for a monthly subscription fee) that enables each company to “claim” its stock ticker, and to use the tag to distribute corporate information over the Web.

StockTwits is planning additional investor relations services specifically for regulated members of the investment industry, which will enable them to use StockTwits’ social media platform to reach investors in compliance with market regulations

Francis Costello

At the same time, Lindzon and Costello say StockTwits has strived to separate itself from online crazies by rejecting bulletin-board stocks, where much of the pump-and-dump rabble is focused, and by curating the content through a combination of rules and online monitors. “We do rule with an iron fist, so you can’t talk about penny stocks,” Lindzon says. StockTwits also enables users to follow each other—like Twitter—which is another way of building an audience around key market influencers.

“I truly believe in the wisdom of the crowd—I just like to choose my own crowd,” Lindzon says. “The reason I built StockTwits was because I follow certain stocks, and I follow these 40 people who are following these stocks, and so I wanted to mash them up.”

Lindzon says he provided initial funding for the company, which now has 23 employees in a non-descript building in Coronado, CA. Over the past three years, Stock Twits has raised $8.6 million through a Series A round led True Ventures of Palo Alto, CA, and a Series B led by the Foundry Group of Boulder, CO.

In an aside, Lindzon says he founded StockTwits in the San Diego area because he preferred it to Silicon Valley, and frequently came here on vacation from Arizona, where he was previously living. He also says he wasn’t concerned about the scarcity of local venture capital in San Diego, and is now seeing an increase in local tech startup activity. “I’m very bullish on San Diego as a Web capital; I’ve invested in three companies here,” Lindzon says.

In a parting shot, he adds, “Part of the charm is that we’re about as far as possible from New Jersey, which is where CNBC is based.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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