Webull CEO Anthony Denier Talks About the Burgeoning World of Commission-Free Investing

In this episode of the Fintech Focus podcast, we talk with Anthony Denier, CEO of Webull Financial, a free trading app from the minds of former Alibaba team members.

Webull started out in China as market data app and quickly gained a following. After it hit more than six million downloads in its first 18 months, its founders decided to expand to the U.S. market as a broker dealer with no fees and no account minimums. Webull offers active traders technical indicators, ratings from research agencies, margin trading, and short-selling for experienced investors while also offering new investors a more user-friendly first step into the financial world.

We speak with Denier about the zero commission landscape in the U.S. and if this world is big enough for multiple commission-free platforms.

[00:00:03] Welcome to Benzinga’s Fintech Focus podcast. Your weekly dive into the world of Fintech featuring conversations with leaders on the frontlines of the financial revolution.

Spencer Israel [00:00:15] Hey everyone welcome to episode 36 of the Fintech Focus podcast. I’m Spencer Israel. Today we’re joined by Anthony Denier the CEO of Webull financial. Webull is a free trading app. If you’ve consumed any financial media in the past year you’ve probably seen their ads. But what you may not know is Webull actually started as a market data app in China and was founded by several veterans of Alibaba and when the app began to build a following had over 6 million downloads in the first year and a half they realized they needed to expand and someone they decided was next logical step was to go to America and open a broker dealer with no fees and no account minimums. And that’s where Anthony comes in. When we recorded this conversation a few months ago the Webull app had just turned 1 year old and they had just launched their web version and so we talk about both of those things we talk about the business model plans for the future and whether there’s enough room in the sandbox for all of these free trading apps. So without further ado here is my chat with Anthony the near from weasel Anthony.

Spencer Israel [00:01:23] Anthony Denier welcome to the Fintech Focus podcast.

Anthony Denier [00:01:26] Spencer thanks for having me.

Spencer Israel [00:01:28] Before we jump into Webull and you’re the CEO there you’ve been there for a couple of years now. Let’s start with your background. You’ve got an institutional background on Wall Street. So walk us through sort of how you ended up at Webull today I come from a traditional professional trading background.

Anthony Denier [00:01:45] Right after I graduated from school I went right on to the trading desk at Credit Suisse which at the time in 99 2000 the largest technology investment bank and that was at the peak of the dot com bubble back in 2000.

Spencer Israel [00:02:01] Walk us through the different stops of your career. So the dot com bubble happened and a lot of people get shaken out, and a lot of people used those years afterwards, people that I’ve spoken to, to sort of pivot their careers and change directions. What do you do after Credit Suisse?

Anthony Denier [00:02:15] Credit Suisse was actually instrumental in getting me to where I am now. They were the innovators of a new technology at the time which they referred to as electronic trading. I want to say the olden days. It’s really not that long ago that in the olden days there would be fifty people that would just trade the New York Stock Exchange names and they’d probably be another 50 people that would only trade the Nasdaq traded names and each of those traders would then set their eyes even further where someone be only bank stocks on the New York Stock Exchange and then there would only be semiconductor stocks on the Nasdaq. So very very specialized. Now what started happening was is we moved from fractions to decimals so margins started getting skinnier and skinnier. And with that started coming a whole round of layoffs. So management looked how can we keep the desk profitable and electronic trading was the answer. And this was when algorithms were pretty new at the time where you could target a volume weighted average price or for an illiquid stock. You can find some liquidity in a dark pool and also use a sniper technique where you would see a larger offering you could take it. All that was being automated so you no longer needed a dedicated body on a desk to identify those opportunities. And our creditors were very early adopters of that technology. I started on the trading desk in 2000. By 2005 probably 90 percent of the orders I got from my institutional customers. I always trading directly on the exchange using an algorithm and I was not signing those orders to an actual position trader or a market maker any longer. So I mean that was a real eye opener for me and I realized that the industry was gardening only going to continue to evolve. I left Credit Suisse and a small European bank started building up the trading desk there and then ended up at a firm called AMG which is a large Dutch institution. I ran the European and non U.S. equity trading desk that sold equity flow and sold products into the US institutional markets. I indeed decided to shut down their equity operations like many banks were doing at the time in the US regulations and cost of compliance were pushing a lot of kind of mid here European banks in that direction. Eventually got an opportunity to be the CEO of a UK based broker dealer for the US often here. That firm was called Alex and I ran that firm for almost five years. It started it off the ground so I was familiar with having a broker dealer up and running. I ran all aspects of H.R. compliance revenue generation. I had an opportunity from my now colleagues coming from China to start a US broker dealer for a very successful market data app known as we. And here we are today.

[00:05:03] You get approached to start Webull. And Webull was already a thing prior to you joining correct?

Anthony Denier [00:05:09] Webull was a market data app that distributed globally on the iOS and the Android store.

Spencer Israel [00:05:15] And the idea was you would come in and grow it into a broker dealer.

Anthony Denier [00:05:20] Exactly. So my previous experience has been in starting broker dealers from zero till fully functioning. That was my role here and Webull to get Webull off the ground get the FINRA BD license and launch we built zero commissions are a free platform for US investors.

Spencer Israel [00:05:37] Let’s talk a little bit about Webull and how it works. Commission-free trading that seems to be one of the cruxes of the platform.

Anthony Denier [00:05:44] Commission-free is it’s a great concept especially when you have a chance like I do to go to the different summits and trade meetings. I was at an online broker summit in Chicago and all the big, we call on them big three right. We had TD, Schwab, Fidelity there on a platform with the mediator and the first thing the mediator said to kick off the discussion was “OK guys we have to get this question off the table it’s the elephant in the room: the race to zero. And immediately the first thing that comes to my mind is what race the race is over. It’s been over. I mean look at the success of our competitors look at our success. Zero commission is now going to be the standard and my firm belief is that the traditional brokers although a lot of them are starting to come off the commission as their backbone sort of revenue model Schwab’s done a great job of that interactive broker has done a great job. But you look at the TDA you look at E-Trade there’s still 65 70 percent of their revenue is still based on commission. They have a very large staff and it’s tough for them to get off that. So the race is over zero commission is the future.

Spencer Israel [00:06:54] So commissioner-free trading, what are the other key differentiators of the Webull platform?

Anthony Denier [00:07:02] As soon as you download Webull and you open it you can tell when you put a side to side on that any other zero commission platform available. You’ll see that we have depths and depths of information available at your fingertips and that’s you know that’s always how we envision Webull to be. So we always want to give all the tools that a professional trader has to the everyday investor. When I explain it to people that are not in the business or probably people that most people that listen as podcast are probably in the business but you want to get a mover. You swipe right a car shows up at your doorstep. That’s technology. That’s a beautiful transition. To this day and age that we’re in. But when you go to buy a car you don’t just swipe right because of price flashes in front of you. You want to know the color of the car the Model that make the trim or you want to know if it’s been flooded. You want to see the details underneath just the price. And I think it’s the same way for successful trading and successful investing. You can’t just say Apple okay it’s trading at 200 dollars. I think that’s a great price. I want to buy it. Well what makes it a great price? Put up a chart compared to its peers. Look what it’s done historically when our earnings coming out? Are insiders making any buying and selling transactions on the stock? There’s so many different things that go into the movement of a stock price in order to do it well and do it successfully you have to have the underlying information and that’s where Webull differentiates ourselves from every other zero-commission platform.

Spencer Israel [00:08:26] What’s talk about just zero commission in general. Is this a sustainable business model.

Anthony Denier [00:08:32] Absolutely. Absolutely. I wrote a letter actually an open letter not too long ago that basically explains how zero commission brokers make money because one thing I’ve learned is that’s the first question I get whenever I speak to anyone tell them what I tell them what Webull is I tell them about the zero commission platform. The first question response is always how do you make money. It’s a simple answer. We make money the same way every other broker dealer makes money. We just take out the commission revenue line item right. So we’re making money on payment for order flow so as every other broker dealer. We’re making money by lending out the stock that you have in your portfolio to other such short sellers, it’s called fully paid for stock lending. Every other broker dealer has that system as well in place. We make money on the uninvested cash you have in your account, which every other broker does as well. Fourthly we also make money on margin lending on the Webull platform you can take leverage without a fee on your positions and you will pay 6.99 percent and lower for that land and we make money on that as well.

Spencer Israel [00:09:35] It’s funny you’ve seen different tacks with the way other commission-free trading apps have gone about the payment for order flow thing. You have Robinhood which has tried to downplay it. And I think or at least not talk about as much and I think they’ve gotten some heat for that. And then you have another product like Gatsby which is just as free options trading and there are straight up in your face. This is how we make money. This is what payment for order flow is and seems like you are of that same school has to be transparency up front. Everyone does it. We’re doing it too. There’s no need to hide it. This is an industry standard thing.

Anthony Denier [00:10:08] With our normal investor and the typical user of Webull. They’re saving an extreme multiple amount of money they’re saving so much of their P&L by not paying per trade than they are on if you look at some of our competitors with the advertising how you know they guarantee you a middle price instead of paying the ask when you’re buying or don’t route your order away because you know you’re losing on price improvement. That’s not the case because when they say price improvement they’re talking about a fraction of a penny a share that they may and not guaranteed that they may get for you on our average order is like 20 shares. Right. So we’re not even talking a nickel that you’re saving but you’re still paying that you’re still paying that $5.95 in commission. So we’re saving our users a lot of money and we’re keeping this business sustainable by using that payment for order flow option.

Spencer Israel [00:11:00] The argument by the traditional brokers is we save you a few nickels but charge a few dollars.

Anthony Denier [00:11:06] Exactly.

Spencer Israel [00:11:07] You’re paying a few bucks to save a few nickels. Walk me through the early years of Webull. So the product r as a broker dealer only launched in 2018 I believe correct?

Anthony Denier [00:11:19] We launched May 21st, 2018. It’s really nice for me to think back it feels like 10 years. To be honest we’ve grown so much and it’s been super exciting and I’m so glad to be a part of such an amazing team we have here. On May 21st, 2018 we opened up to the public and we went live and we all kind of had our expectations of you know how many accounts we’d open up, who would care to open up an account, and it’s just been outright overwhelming. A year later as I’m speaking to you we have hundreds of thousands of brokerage accounts that we’ve opened in the past year. Our order flow is just getting healthier and healthier by the day. As you know on a zero commission platform people are more enabled to trade more because they’re not worried about paying that five dollars every time they you know they buy or sell a position. Scalp trading is just much more profitable on our platform. We’re having a lot of day traders coming off some of the more traditional platforms because last month we launched our desktop version which again is full of all the things you would expect on Webull. And it’s been an amazing ride so far and the future is even looking better.

Spencer Israel [00:12:22] Was 2017 mostly about getting the platform built out or was it just like “Let’s launch this thing now and we’ll build it up as we

Anthony Denier [00:12:33] 2017 was the year of the regulators. We spent a lot of effort explaining to them our business model explaining to them how we see the future of retail investing based on a mobile app that they just did not quite understand. So it took a little longer than normal to assure them that this is the way the industry is going and it is a sustainable model.

Spencer Israel [00:12:57] What was the biggest thing you had to reassure them about because there are other commission-free trading apps?

Anthony Denier [00:13:03] There are, there are. The main concern of the regulators was that we would not be profitable until we reached a certain amount of scale. Because we’re only making fractions of a penny per user, that we would have to have an enormous amount of users and trades going through our platform to get us profitable. That was the main thing that they had to wrap their heads around. A traditional broker focuses on you know the million dollar account and they’re very happy to have 5000 million dollar accounts where Webull we’re looking for the scale where we want to have 5 million of the $1000 accounts. They did not understand the internet model, and our founders from Alibaba understand the internet model better than anyone.

Spencer Israel [00:13:52] And I think I read that you’ve gone over nine million users this was as of a couple of months ago. So that number might not even be totally accurate but I think I saw nine million users at least in May according to one of your releases. So you launch in 2018 and then, but how much of the app was already built out by then and how much of it has been the result of user feedback.

Anthony Denier [00:14:15] Well we take user feedback very seriously because we do have a large team in China that is solely technology based all the broker dealer operations and customer interactions happen here in the US but our team in China is very very in tune with the feedback that customers give whether in the app or on social media. And we’re always very quick to change. If you look at the average and any app this isn’t just you know a Fintech app but you look across any app store and you look at our updates and we update our app basically every single week and that’s including better UI, that’s bug fixes. It’s just a constant constant constant race to make our app the best it can be. We constantly say we’re going to win the scale of users because our app is just going to be better. I mean we all want to have an app like like an Amazon or I mean that I mean that’s kind of the gold standard how easy it is to use how intuitive it is. We strive to be the same way. So the app if you look at our app from three years ago it’s unrecognizable to what it is today because of that user feedback.

Spencer Israel [00:15:21] That’s one thing I actually I like about it so I have a Webull account and this is a very tough line to walk in my opinion because I personally believe that there is such a thing as too easy. And this is trading and this is real money for people and you don’t want them just gambling their money away. Robinhood is so easy so easy that it is almost too easy in my opinion with the information that they don’t have which is as important as information they do have. Webull I got to say I was kind of surprised and was going through it the first time just how much information you have managed to squeeze into this app. It just there is no wasted screen space. It’s kind of crazy. Everywhere I go I’m just finding anything from financial metrics to technical moving averages to really anything I could think of or I would want from or that I have really in my 401(k) account for example I can log online and look at that. That same type of information is squeezed onto the app so I’m kind of amazed with that first of all but also that you’ve made it easy but it’s not it’s not dumbed down and it’s not too easy. I like I don’t feel like I can draw in a bed, I could roll it back I suppose and make a trade, but for most new investors it shouldn’t be that that simple. That’s kind of where I stand on that end and I don’t feel like it is because you have a lot of information on here that you should understand before diving in. That’s a tough line to walk but I think you’ve walked in and I don’t really know how you did that.

Anthony Denier [00:16:51] It’s a really good point and we think about that every day. If we do walk a very fine line of being too technical. I think our competitors air on the side of being too simple. You know like I explained earlier you need information to make a good investment choice. That’s why we make a very large point in our app. If you look at the updates that we feed to our users we’re constantly pushing educational content and we’re constantly pushing our paper trading features. Right. So you can open you can download Webull without opening up a brokerage account and use our paper trading function. So you have all the functionality that you would have with a regular brokerage account but it’s synthetic money, play money. You can look at, “OK I’m going to I want to try a new trading strategy where I’m going to screen some stocks using the screeners. I’m going to find stocks that are $10 and lower and look for something that is you know tech based that has a lot of insider buying this week.” And you can try that strategy and you can use it in our paper trading and see how that technique works for you and you can get used to the system you can get used to using the different types of orders. It’s not only buy and sell you can short on our platform. It’s not only a buy long set a limit you can set bracket orders at the same time you sell a buy order we have five different types of advanced orders whether it’s one cancels another one cancels the other one triggers the other bracket orders again. We really try to allow you to figure it out because everyone’s trading strategy is going to be different. And we sit in a very very unique spot where a lot of our users are people that I’d like to say are graduating from a Robinhood or a simpler no fee platform because they’re just looking for more. They enjoy trading and they want to learn the craft of trading. We also said, I don’t want to say beneath, but you have a lot of people on a more sophisticated platform whether it be a Merrill Edge or a TD thinkorswim and they’re just tired of paying the $5.95 a trade and we have all the same tools and advanced order types that they offer. So they come to our platform as well. So we sit in a really good spot.

Spencer Israel [00:19:01] I’m glad you mentioned the paper trading contest because you guys do on some contests and you have you know there’s the community aspect to the app the social aspect. How important is that because it seems like there are a lot of broker dealers going that way. Robinhood of course has that. Then you have StockTwits and Trading View and all these new platforms are trying to emphasize this social component to trading. So how important has that been for Webull.

Anthony Denier [00:19:26] It’s been very important not only for getting users more involved in the space but having some of our more seasoned users help some of our new users. You know it’s one thing to send in a request to the Webull helpdesk, say “How do I do this.” It’s another thing to hear it from your peers. We identify a lot of our more active users in the community and ask them to hold some of our new users hands and say “Hey this is how I like to do it this is how I like to set up my buy orders.” It’s been great feedback. Because in today’s day and age it’s not like it was where you know you have that sit down with your parents and you talk about your portfolio. That doesn’t happen anymore. All these conversations now happen in forums online. So we want to be another conversation in that forum by using all the tools that we have and the fact that you know you can do that all for free.

Spencer Israel [00:20:15] Is the full universe of stocks and investable securities available or where are the limits to what you can and can’t trade on Webull?

[00:20:25] Right now since we are so early in our development, again you know we’re only one year in, right now it’s all U.S. listed equities and ETFs. We do have plans in the pipeline. We should have options very soon. That’s by high customer demand. We are in conversations to possibly add crypto in a very short term as well. Those are the two main focuses for 2019 that we want to have on our platform as soon as possible. And going forward again how our origination was global view of global markets, I would not be surprised if by 2020 we had access to trade international markets as well because that is also in our gameplan.

Spencer Israel [00:21:10] What’s the average account size?

Anthony Denier [00:21:12] Average account size is anywhere from $1200-$1500 depending on how the market looks for that week and our average user demographic is about 27 years old.

Spencer Israel [00:21:23] And about how many trades a week or a month would you say that they’re making?

Anthony Denier [00:21:28] The average user trades about 10 times a week. So we have very active users. And again that leads to we have a lot of users from Robinhood graduating because they want to be more active in their trading and the zero commission product just allows them to do it.

[00:21:42] Yeah it’s almost like what you said earlier they feel like they either want more or the people on the other side who want what they have but are tired of paying that fee so they can come down that way. What has been the biggest unforeseen challenge since the launch that you’ve come up against?

[00:21:59] There’s been quite a few. There is always the challenge of explaining the zero commission model to people that are not familiar with it or not comfortable. Unfortunately a lot of people hear zero through a commission and I mentioned earlier that you know the first question I always get is how do you make money. But there’s a lot of rumors and myths that are, I don’t want to say started by the traditional community, but there’s a lot of things that are said about zero commission that are just not true. We never take the other side of a trade. You are getting best execution as mandated by FINRA rules. We are not holding your order back, so our market makers can make a spread and then putting it to you know putting it to market. All those things are false. So a lot of the main challenges are telling users and telling the public how zero commission works. There is no disadvantage to trading on our platform versus any other platform. We all execute on the same exchanges and with the same market makers as you know Fidelity and Schwab do.

Spencer Israel [00:22:55] Is this trading app is that the end game for Webull, or are you hoping to expand to other forms of financial services whatever they may be?

Anthony Denier [00:23:07] We do have some further plans down the line. The broker dealer is the start. Eventually we want to use our technology and our background in technology to offer some some more sophisticated products to people that don’t want to look at their phone or look at their desktop and actually actively trade, where we can have a suite of A.I. algorithms to help them make their trades on preset parameters that they feed the machine. Also we are looking into possibly opening up a registered investment advisor to sit alongside Webull for the non active assets that a customer has.

Spencer Israel [00:23:38] What exactly is your day to day like as the CEO. What do you do on a day to day basis?

Anthony Denier [00:23:42] Day to day I manage all aspects of the broker dealer whether that be risk whether it be human resources and partnerships. Mainly recently we’ve been working with a lot of different firms whether public or private to help us expand on the Webull brand and be and have Webull become a more household name. Your listeners may have seen some of our ads on CNBC lately. We’re looking to expand into other markets and take the Webull brand and logo nationwide. Right now is pretty much just the beginning of what you will see. We are going to be very aggressive towards the end of the year and we’re trying to get the name Webull and what we do out to Main Street and then get it off Wall Street.

Spencer Israel [00:24:27] Are there behavioral things you’ve observed with your clients with regards to how they trade, what they trade, I imagine the most popular stocks in general are also the most popular stocks on a Webull, the Apples of the world, but are there any things that you observed from the client base like that?

Anthony Denier [00:24:44] On a weekly basis we publish Webull’s most active stocks and most active ETFs. And you’ll see at the top of those list are always the most volatile names in the market, the ones with the highest beta. The Tilrays, the CRONs, the NIOs of the world. Tesla’s become a fan favorite recently, people trading off of Elon’s tweets which is always fun, because we do allow shorting on the platform as well. You can take either side either side of Elon your on and the activity has been fun to watch.

Spencer Israel [00:25:12] So you join Webull in 2017. So in 2015 andn 2016 were you realizing that this is the future, or did you kind of just stumble or luck out, you know luck is a big part of people’s careers, luck out into this position here.

Anthony Denier [00:25:30] Luck who’s in the back of everything. I always say it’s better to be lucky than smart sometimes. It became obvious you know that this is the zero commission and app-based is the future for not only trading but for everything that we do on our day to day lives. I always think back 10 years ago I would get my bills and I’d have a big stack on my desk at home and I’d have to set aside like an hour an hour and a half every day and write out a check to each one of those billers. Then fast forward five years and I would then log into my bank account my checking account and I’d have all those guys account numbers and routing numbers pre-entered and it would now take me 20 minutes instead of an hour now. For the last probably four years I’m paying my bills on my commute right. I log into the app and I pay my bills directly. Everything is moving in a direction of ease and that’s the same thing for people looking at their investments, people looking at trades. But coming from a professional trading background I always knew that stock trading isn’t meant to be as simplified as swiping right. There needs to be a little more involved in terms of knowing what you’re buying and knowing when to buy it because it’s one thing to buy a stock. It’s another thing to buy a stock and be profitable. And you know you’d much rather be the latter.

Spencer Israel [00:26:48] I don’t know of all the free trading apps I can think of four but I’m sure there are others I don’t even know about. There’s you guys, and then on the other side there is the new age roboadvisors and there’s all these new broker dealers and investment platforms coming into the market. Is there room for everybody in this sandbox?

Anthony Denier [00:27:07] There’s never enough room in the sandbox. I think he will start to see some consolidation because there is going to be a moment when some of the the bigger players are gonna step in to step into our sandbox and bully a lot of us around for sure. I think that’s just inevitable. The hardest thing to do in this business is not to have a new smart and fresh idea. The hardest thing is user acquisition and there’s not many of us in this space that have been successful in launching and continue to acquire users. That’s going to be the big separator right. Because with our zero commission and no fee models that we’re all pushing the margins are so slim that it’s all about user acquisition and without that user acquisition you’re going to operate at a loss and you only have so much runway. So you’re going to see some attrition and then after the attrition you’re going to see could see some consolidation. I think we’re probably about two years away from that.

Spencer Israel [00:28:06] Anthony a question I’d like to ask everyone on this podcast and I imagine you’ll have many answers to this question but what keeps you up at night?

Anthony Denier [00:28:15] Not just one thing but the main thing that keeps me up at night is keeping the regulators happy. As a new platform we’re always looking into doing new things new programs whether it be you know the Webull community, whether it be you know a new advertisement. We have a referral program where users can refer a friend to join the app. If they do, you know we reward them with free shares in the accounts. All these things are closely scrutinized by FINRA and the SEC and being a technology company we move quickly and it’s very difficult to tell the technology to tell the market to slow down and wait for us on the compliance side. So we always have to be ahead of it. What I think about mostly at night is making sure that we’re adhering to all the proper compliance rules to keep our customers safe and to keep their assets safe.

Spencer Israel [00:29:04] Last one. What is the number one thing you want prospective clients or anyone entering the market really to know about Webull?

Anthony Denier [00:29:13] I want any user to know that with Webull not only will you have all the same tools that you’ll get on any fully paid for site but you’ll get them without having to pay a fee to get access to margin to get access to short selling to get access to IPOs to get access to secondary deals. You will not have to pay for an advanced order set up whether it be OCO, OTO, or bracket orders and you will have all the information at your fingertips that you’ll get on any traditional broker dealer site. And of course for free and with the ease of usability of a modern day mobile app.

Spencer Israel [00:29:50] Anthony Denier is the CEO of Webull Financial Anthony thank you so much for the time today.

Anthony Denier [00:29:55] Thanks Spencer. Appreciate it.

[00:29:59] Thanks again to Anthony Denier for his time. I really appreciate it. Don’t forget to like, comment, and subscribe. You know the typical podcast drill. Also don’t forget to subscribe to the Fintech Focuse newsletter. It goes out every morning at like 6:30 a.m. you can get that by going to Benzinga.com, clicking on Fintech and then clicking on newsletter. And that’s all I’ve got. So thanks for listening and we’ll see you next week on the Fintech Focus podcast.