This new-to-Houston startup is simplifying trading for the next generation of investors
Easy options option
Say you're a young, working professional who wants to get involved in trading. Where do you start?
If you get involved in options, which are contracts that give investors the ability to buy or sell a stock at a specific price on or before a specific date, you might go the traditional route and seek out a brokerage that focuses on options trading. There's a major catch, though: most brokerages tack on a fee of anywhere between $7 and $20 per trade, says Andre Norman, founder of Jellifin, an online options trading platform, is disrupting that norm.
The company works with individuals and brokers to provide an options trading platform at a flat monthly fee. This allows investors to trade as frequently or infrequently as they please, and to not factor in the cost of a trade fee when considering what's best for their portfolio.
"A lot of people don't invest because of the high costs associated with trading," Norman said. "We allow them to get into investing without having to pay huge amounts of money."
Jellifin was founded in early 2017 in Gainesville, Florida, but relocated to Houston in 2018. Norman moved for his then-fiance's job, but had little to no expectation for the city.
"I did light research, and realized it was trying to foster an entrepreneurial community, as well as innovation, so I came in with no expectations," he says. "When I got involved with Station Houston, I was blown away by what's being done and what's currently in play. It was a great move. This is where we're going to stay forever."
Pivoting Jellifin
When he started the company, Norman says his goal was to provide investors with a cheaper way to trade options. Originally, the company worked commission free — same way of trading at a reduced price. The company worked that way until 2018, when Jellifiin pivoted toward more of a B-to-B clientele — brokerage firms, trading companies, and trading companies. It became more of a white label company where the brokerages could license the software.
"We realized our core expertise was in the software development itself, and we realize customers like our product, but we saw more opportunity in working with brokerage firms which will then inadvertently disperse our platform toward their customer base," Norman says. "So, in the end, we're still serving the same core customer and the same demographic, but now we figured out a way to target them more effectively at a larger scale."
The pivot was ultimately a good move, but it didn't mean it made things easier for Norman and his team — in fact, the opposite happened.
"Surprisingly, it's increased our workload. When we started working with brokerages, one of the core problems we realized is that they're small, and they don't have the in-house expertise or resources to build their own trading platforms," he says. "Our value proposition to them is that we can be their support."
How it works
The brokerage firms that use Jellifin's services license the trading platform — they agree to a minimum of two years — and they pay a monthly subscription fee.
"It's a volume-based pricing system — the brokerage payment covers what [the individual customer] would pay," Norman explains. "The brokerage pays for the software itself, and whatever sort of arrangement that the user has with the brokerage is up to them."
The current industry norm is $7 per options trade, Norman says, plus the contract fees. An option trade could run you anywhere from $7.50 to over $20 per trade.
"That's a big problem in the industry," he says. "What we've brought to the user base is [the ability to spend] $9.99 per month for unlimited trading. The actual cost per trade is pennies on the dollar, but brokerage firms still mark it up thousands of percent, because the average user doesn't understand what goes on when they click 'Place Trade.'"
Because of this ease of use, the company has attracted millennials — specifically the age range of 28 to 33.
"They invest quite frequently — I wouldn't say they're day traders, but they're very actively invested in the stock market," he says. "They're not a passive investor. They trade on a weekly basis."
Norman says, based on their assessment, that their average user earns an income of anywhere from $70,000 to $120,000 annually.
Weighing the options
The company plans to grow — and is even looking for sales and marketing hires.
"Right now, we're a team of six, and we're all engineers," Norman says. "I would say we're hiring, but for the right positions. … we're looking to grow more organically and not raise huge amounts of capital. We work closely with our partners, and we grow as they grow."
So far, the company has raised just under $500,000 to date, but is planning to raise an amount in the millions of dollars.
"We will be raising a new round hopefully sometime soon, but there's no rush to get to that," Norman says. "For us, personally, our generating capital from the companies we work with."