Cameron and Tyler Winklevoss will never forget their first brush with social networking.
The twins hired fellow Harvard classmate Mark Zuckerberg in 2003 to code and program their fledgling social network website "ConnectU." But Zuckerberg had other ideas and soon formed his own online social networking site "Facebook."
The twins sued, Facebook's popularity exploded, "The Social Network" movie won three Oscars and Facebook (FB) went public in May at a valuation of $104 billion -- one of the biggest tech IPOs in history. The rest, shall we say, is history.
These days the Winklevoss brothers are returning to their social networking roots.
The reportedly $65 million in cash and Facebook stock the twins agreed to late last year as part of their settlement with Zuckerberg has allowed them to launch Winklevoss Capital. The retired Olympic rowers are backing a few hand-picked tech start-ups like SumZero, a 4-year-old social network for professional investors that was founded by their good friend and former partner Divya Narendra (Divya was the third brain behind the "ConnectU" concept).
The twins invested $1 million in SumZero and Cameron Winklevoss says it was just a coincidence that their first venture was a social networking site.
"We didn't really look at SumZero as an investment in a social network," Cameron says in an interview with The Daily Ticker. "It's really more of a financial technology play. It happens to be a social network."
SumZero caters to buy-side analysts in the hedge fund, mutual fund and private equity worlds and its services are open to both U.S. and international investors. The site's 7,500 members post content and recommendations. The "cost" of a membership, says Narendra, "is the time it takes to post research."
Narendra describes his site as a way to "enable professional investors to share their research in a very simple online, centralized searchable way."
He personally reads every application and rejects 75% of them. The site prides itself so much on exclusivity that even the Winklevoss twins were denied membership before their monetary contribution in February.
Narendra says there are two ways the site makes money. One is offering recruiting services for members. The other allows non-professional or "hobbyist" investors to pay $129 a month for access to some of the site's research (Narendra asks the permission of analysts before providing the research). Narendra calls this paid subscription service "SumZero Elite."
He would not disclose the number of paying subscribers and vehemently denies that the site encourages or promotes insider trading.
"We've set up the entire community to be transparent," he notes. "Members' names are associated with everything they post. Their incentive is to post high quality content...not to misrepresent their positions cause it would ultimately hurt their own reputations."
The Winklevoss twins say their decision to support SumZero was two fold. Part of it stemmed from their friendship with Narendra -- "We trust him" says Cameron -- as well as the duo's mutual interest in an alternative to sell-side research.
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