Interview Published December 13, 1999|
Michael Witz, StockJungle.com
I recently had the chance to talk to Michael Witz, Chairman and CEO of Culver City based StockJungle.com (http://www.stockjungle.com), which is one of the many local companies turning traditional business models upside down. StockJungle has an unique twist on the mutual fund--a set of funds which all the buying, selling, and other activity is viewable on their web site--not to mention a fund driven in part by visitor input on the site.
BK: How did you decide to start StockJungle, and how did you get funding to get it off the ground?
MW: I've always been an active individual investor and I had this little website I was running to display my own personal investment portfolio. It didn't take long before I started getting requests from friends, family and even strangers who wanted me to invest their money for them. The idea that they could follow along through the website really had appeal for them. I figured a mutual fund on the Internet could do this on a large scale and I set out to develop the idea into a business. I presented the idea to the Managing Director of an investment bank I was working for and he encouraged me to continue to pursue it. Eventually the investment bank faciliated the initial seed capital to get us going as a full-fledged business (but not before they tried to discourage me from pursuing it futher a couple of times!).
BK: What is your concept of "Naked Mutual Funds", and how do they work?
There is a lot of mystery and complexity surrounding the traditional mutual fund product. Our goal as a company is to pull back the curtain on what a mutual fund is and how it operates. We're stripping away all the secrecy and confusion -- hence, Naked Mutual Funds. The idea is that investors deserve more from their mutual fund company. Naked Mutual Funds put investors first by showing them each and every day how their money is being invested, therefore making the fund management more accountable to its investors. Naked Mutual Funds also feature low, easy to understand fees because we want our investors to understand how much they are being charged and why. We also think they deserve to be able to invest their money without exorbitant -- and often hidden -- fees. The bottom line is that we are committed to being 100% truthful with our investors about every aspect of their mutual fund investment -- factually truthful and truthful in spirit. Naked Mutual Funds are about Naked Portfolios, Naked Fees, and the Naked Truth.
BK: How does StockJungle make money, and where do you see your growth coming from in the future?
MW: The business model has three revenue streams: 1) Asset Management Fees - We charge 1% of total assets on our fee-based funds, 2) Advertising - We generate fresh content that provides us with a large inventory of page views and 3) E-Commerce Partnerships - We plan to partner with financial service companies to offer our community products outside our area of expertise, such as online banking, brokerage, and financing. The mutual fund industry is huge, there are some 77 million Americans who currently own mutual funds, and these people are just starting to look to and trust online sources for financial advice and management. Going forward, we plan to stay focused on the investment management segment of the financial industry.
BK: What do you think is the most important thing you've learned in the course of developing your web site/business?
MW: The Internet is incredibly fluid and I think the best businesses are those that are able to adapt quickly and capitalize on new opportunities. Remember when Yahoo! was just a directory site? StockJungle.com has moved through so many phases in its short life span, I know that if it's to be successfull it needs to always be receptive to moving in new directions. The trick, of course, is to stay true to your core principles and to avoid travelling too far down any dead end streets.
BK: Finally, what advice would you give other entrepreneurs looking to start their own company?
MW: Trust your instincts and find great people to join your cause.
Copyright (c) 2001 by Benjamin F. Kuo. All rights reserved.
May not be reprinted without permission.