James M. Palladino, President and CEO of BullsNBears.com, talks with the Opportunist’s Managing Editor Leslie Stone about his new social networking site for the financial community and his premier real-time stock market quotation service for the self-directed investor.
James Palladino began his highly successful career on Wall Street as a stockbroker and eventually became involved in raising capital for both private and public companies. “In my professional financial career I’ve had exposure to many facets of the investment community ranging from managing money for high-net-worth individuals, all the way to institutions on the investment banking side,” he says.
Eventually, Palladino naturally segued into the public and investor relations (PR and IR) realm creating investor awareness campaigns in both print and digital media. “I often witnessed disreputable companies and unscrupulous environments in the PR and IR side of the business,” he says. “I saw a lot of unsavory things and pump and dump type of environments and thought there’s got to be another way to get a good or quality company public relations besides using high pressure tactics. At the same time I was witnessing the rapid changes coming to the investment community following the birth of the information age. Before then, investors really didn’t have access to the information they have now. As the Internet and social media progressed, I saw the handwriting on the wall. There was now access to a lot more information but you had to know where to find it. You could literally spend your whole day surfing around the Internet trying to find the right content and then you have to worry about the integrity and honesty of the source and then further make sure there are no hidden agendas for the content provided. Assessing the situation, I realized there was a way to exploit the inefficiencies in gathering investment data while at the same time leveling the playing field for the average investor.
“My goal was to leverage social media to reach self-directed investors, and put together a business model for financial professionals and legitimate small cap issuers to come in and show their products and services on a level playing field in one portal. My first step in entering the arena was to acquire the BullsNBears.com domain name. Conceptualized back in 2009, but without the requisite resources or technology connections, my plans were then shelved until my situation changed in 2012.”
In early 2012, Palladino launched BullsNBears.com, Inc. and began designing a financial networking portal to fill the perceived gap that existed between the financial community and investors. “We aren’t just another financial website,” he says. “We consider ourselves a financial social media network offering an informational and business gathering place for investors, public and private companies, brokers, S.E.C. attorneys and accounting firms all in one location.”
Opportunist: What happened that made it possible for you to proceed with BullsNBears?
Palladino: Technology evolved and the entry point into the space became less expensive, due to cloud and data storage efficiencies and capabilities. These days, you can basically pull an application out of a box, open source it and custom tailor it for your needs. So, from a monetary and technological standpoint, I decided it was time to launch. Looking at the successes of Facebook, LinkedIn and Twitter convinced me that the timing was right to launch my financial portal. And, of course, seeing the valuations and purchases of other social media companies such as Instagram and Tumblr didn’t hurt either.
Opportunist: Please tell us about your business model.
Palladino: We’re a one-stop digital financial-investing and informational solution. There was a very real need within the industry for an aggregation of financial products, content and services. No one I know of has bundled all these products in one suite of services, least to say in one location/portal. I have personally had a need for and used all of them in the past, resulting in me having to spend countless numbers of hours researching and identifying the proper products and services because everything was scattered and fragmented all over the Internet.
My idea was to bring everything together into one centralized location, so the information was right at your fingertips—where and when you need it. We are creating a one-stop gathering place for this and as far as I know, we are the only ones doing this. Some portals have one product or service, some have two but nobody else has bundled together what we have, in one application.
I also really wanted to help self-directed investors, by developing a solution to benefit them, as well as create value for my shareholders. According to a recent article, online trading accounts increased 5 percent last year to over 40 million accounts [Forbes: ‘Quants-R-Us? Algorithmic Trading Trickles Down To Individual Investors’ by Jeremy Bogaisky, Sept. 4, 2013]. This article just confirms what we already knew and what inspired us to build this business in the first place—that there are tens of millions of investors who could possibly benefit from our service offerings.
Opportunist: What’s different about BullsNBears?
Palladino: We’re trying to build a solution that: a) makes sense; b) makes money; and c) fills the void that nobody in this space has filled yet—all while remaining a neutral type of platform. We are not promoting any one company or any one product. We are giving all our investors and all our members the same opportunity within our network.
We aren’t trying to compete with any of the other companies providing financial services, products or content, such as Yahoo Finance, Bloomberg or CNBC online. BullsNBears is aggregating everything into a user-friendly portal. We are not a search engine. We are working as a consolidator of products, content and services that are easily accessible in our portal for our self-directed investors who don’t require a retail stockbroker and want to be able to find readily available aggregated content. Our goal has always been to level the playing field with our neutral non-promotional portal. While everyone out there is trying to ram investments down the consumer’s throat we are going to bring them to the water and if they’re thirsty they will drink.
In addition we’ll provide other types of members, such as small cap issuers, the opportunity to profile their companies and/or services and get connected with individuals and companies within the network with whom they share some common interest.
Opportunist: How can a potential investor register with BullsNBears?
Palladino: It’s very simple; all they have to do is click on the ‘Investor’ tab on the BullsNBears.com home page. A drop-down tab labeled ‘Register’ will appear and that will open up a window where they can register and agree to the terms and conditions of the information they’re going to have access to. There is a box they can check to self-qualify themselves as an accredited investor and view our offering documents, but they must be accredited by a third party before they can invest through the company.
Opportunist: Is there a minimum investment requirement?
Palladino: Yes. The minimum investment is $5,000, reserved for accredited investors. [See Private Placement Memorandum 506c dated January 2, 2014 for terms and disclosure.]
Opportunist: What are the advantages to an online platform?
Palladino: With a brick and mortar business you’re limited on multiple fronts as far as inventory, capabilities and reach. The Internet gives us unlimited reach capabilities. There really isn’t a bricks and mortar model unless you’re a licensed and regulated broker dealer in the arena. We are using the digital platform to reach a much larger audience. Another obvious advantage is our costs are lower and this enables us to pass along our savings to our customers. Our platform is also extremely user friendly and allows our users to build and customize their own screen.
Opportunist: How does your site compare with other social networking sites such as Facebook or LinkedIn?
Palladino: In my office I have a page that I pulled out of a PowerPoint presentation. On that page is a list of nine individual social media based companies, such as Bleacher Report, Pinterest and Spotify. They are all social media based companies, but they are also sector and idea-based sites targeted to specific subjects like music, art, cooking, sports, etc. Seeing how social media can be tailored to more specialized subjects, ideas or models, I decided to implement my financial model. In essence, established companies such as Twitter, Facebook and LinkedIn already brought these people together on huge iceberg platforms, and now these smaller social media companies are migrating and bringing people together on their specialty sites. They are all being funded by the way—heavily funded.
Opportunist: What is your B2B Small Cap Issuer Solutions platform and how does it assist public companies in maintaining compliance with S.E.C. mandates?
Palladino: The B2B platform was my idea and came from my experience having headed a small reporting company. It is called BNB Services and it facilitates several important tasks for small reporting companies. i.e., S.E.C. document preparation and filing, including XBRL, news dissemination, and the management of I/R webpage content, again all in one place.
There is nothing magical about XBRL tagging or Edgar filing. The end product is the same, but I knew that we could save small issuers and small reporting companies money on the actual filing and help them stay S.E.C. compliant by imbedding XBRL tagged financial documents, into their website, which is an S.E.C. mandate. It also supplies a level of IT independence.
From the standpoint of news releases, for example, we are also able to save companies money by buying in bulk or through wholesale secure discounted rates that we can pass on to our public issuers.
Finally there is our I/R webpage hosting service, which includes a solution to enhance a public company’s visibility. We have created an iframe, through which we are able to embed all S.E.C. filings, news releases and a real-time company quote, chart, and major market index data. These products and services add to the time and freedom that CEOs and CFOs have to operate and expand their business, plus they reduce the need to be concerned about their digital properties. Probably the biggest plus is the cost savings. From a financial standpoint if I, as a small business owner, can save 25 to 50 percent on the costs of what I have been doing while accomplishing and perhaps improving what I’ve been doing, then I am way ahead.
Opportunist: What has been the most rewarding aspect of creating this venture?
Palladino: I enjoy the build-out, especially the process of designing applications that are going to enhance an investor’s ability to gain knowledge in the markets. I also liked creating a new financial model to finance this. Instead of going into a 24-to 36-month incubation period and burning through tens of millions of investment models that might be obsolete in a few years, we have created a b-to-c model and also a c-to-c model. In other words, by creating a social media network and building the verticals we are swimming against the current. This has worked for quite a few Internet startups.
Palladino: BNBQuotes is the financial news and quotations platform that we introduced last summer for self-directed investors. It was designed to give the individual investor an edge when buying, selling or trading securities by letting them see what the professional traders and market makers are doing on their end. We don’t own the platform; we signed a strategic ownership agreement and we are marketing it to the investors. The company that owns it sells it to brokerage firms, so what we have is a master licensing agreement to sell it to the consumer under our own brand. There are five companies out there that offer similar technology, but I truly believe we have a better widget in the sense that it’s easy to navigate and has more bells and whistles, plus it costs about 25 percent less than the other platforms.
We are also white labeling this model to potential joint venture partners. We’ve already partnered with three marketing groups to promote the platform under their white label. In 2014 we are looking to bring on another six to 12 marketing groups. These are all financial market databases. The demographic works out perfectly for us because these are people who are buying and selling and trading all the equities in the United States.
Opportunist: Are any strategic alliances and/or joint ventures in the works?
Palladino: We cannot talk about anything that is not signed yet, but I will say that every one of our products and services are of the joint venture or strategic alliance definition from our XBRL tagging Edgarizing partner, to our press release partners and all the other deals that we have in place.
Opportunist: What’s on the drawing board for 2014?
Palladino: Our main focus is to build out our verticals so that we will have the ability to monetize and then interface those verticals upon development of our social media network. The rationale behind building verticals is to leverage our ability to develop models that can increase revenue for the company, because the founder of the company is from Wall Street and not from Silicon Valley. That’s kind of what we want to show the money people—that we aren’t an illusion and we can start making money before year two.
To further the realization of this concept, we are already in the development phase of a funding solution for small cap companies that we expect to roll out in the first quarter of 2014. Once that is realized we will welcome strategic partnerships with brokerage firms and equity and debt lenders that can jumpstart or assist our relationships with our issuers. We are using our company first, with a very concentrated marketing program for digital, print media and radio, to promote or advertise per the Rule 506(c) offering and we will document and archive every procedure we use in the process, to create the exposure out there in the investment community. Then we are going to package it into a solution or a software program that we will offer to other small public companies who need assistance in figuring out how to raise money for themselves. Let me emphasize that we are not raising money for these companies—we are going to teach them how to do it for themselves. This rule has regulations that their S.E.C. attorney will advise them on to keep them compliant, but nobody is really out there to show them how to do it. We are going to give them the road map on how to capitalize on what we are initiating in the first quarter of 2014. So, in essence, we are going to identify the positive sources that we use and let them know what works and what doesn’t so they won’t make the same mistakes others have. We are going to offer that solution to issuers through BNB Services.
During the second quarter we plan to launch an issue-based offering magazine that will feature public company offerings. This will be both a digital and print magazine, which nobody has done before. The new rules for general solicitation are obviously allowing us to venture into uncharted territory and that is definitely a positive move for us. We are going to bring in companies from different sectors and there won’t be more than one company from a specific industry. I anticipate there being seven different sectors and we will identify and spotlight one company per sector per month. The magazine will go out to all the shareholders for each of the seven companies and will be a cross-marketing tool between all the different companies and their shareholders.
Opportunist: Where do you see BullsNBears five years from now?
Palladino: Interesting question. I would hope we would be an acquisition target within five years. Actually, I would say maybe within five years once we execute our model and build out and monetize our verticals. If this happens, I believe we will be well-positioned and on the radar of a number of larger companies in the sector interested in any acquisition.
Leslie Stone is an award-winning writer/editor with more than two decades of experience covering business, finance and lifestyle issues for newspapers, magazines and online publications. Originally from Virginia, she currently resides in Florida. Follow her on Twitter at @les7989.
BullsNBears - http://www.bullsnbears.com/
BNBQuotes (Premier Real-Time Stock Quotes) - http://www.bnbquotes.com/