Cake Financial

» see cakefinancial.com as it lived, on the wayback machine

~ the obituary ~

Cake Financial asked for something almost nobody volunteers. You connected a live brokerage account and the site published what your trades had actually done with your money. Paper portfolios and stock-picking games with imaginary cash were everywhere in 2007. Cake used the positions you actually held and the prices you actually paid. Other members could follow you, or they could watch you be wrong in public for a year.

Steven Carpenter started the company in San Francisco in 2006 and took it on stage at the first TechCrunch40 conference on 17 September 2007. Alsop Louie Partners put money in alongside angels. Sven Junkergård ran engineering. By 2010 there were something over twenty people, and the financial press had been reliably interested: Forbes, Kiplinger, BusinessWeek, Barron's. For a company whose only asset was other people's candor about money, twenty-eight months in public is a respectable run.

The premise needed a broker willing to hand its records to a third-party website, and it needed a member willing to let that website print the result. Both of the names in the bidding at the end were American, selling to American retail investors. I have never connected a trading account to anything, and the proposition reads strangely to me even now. That is a limit in me rather than in the product. Plenty of people did it. That was the whole business.

~ the case file ~

~ what a cakedex was ~

The flagship idea was an index built out of the membership. Cake could see what its users held, so it could compute the aggregate. It called that the Cakedex. A stock index assembled not from market capitalization but from the revealed behavior of a few thousand amateurs who had agreed to be watched.

In August 2009 the company put a paid recommendation service on top of it. The closing notice names two subscriptions, Cake Premium and Cake Comparison, and the pitch was that the crowd's aggregate record could be turned into advice worth paying for. Five months later the subscriptions were being refunded.

~ deleted and destroyed ~

Cake posted the notice to its own homepage on 14 January 2010. "As of January 14, 2010, the Cake Financial website will cease operation as an independent service," it read, with the acquisition announced in the same breath. On the question members would care about most, the wording was blunt: the financial information in a Cake account was safe, and "Your information is encrypted and will be deleted and destroyed." Anyone who had paid for Premium or Comparison "will be reimbursed fully."

The notice says nothing about getting your history out. A member who had spent two years building a public record of their own investing woke up to find the record was not a thing that would be handed back.

~ what E*Trade actually bought ~

TechCrunch reported on the day that there had been a bidding war and that The Motley Fool had also been in the running, with Carpenter declining to discuss terms. The same piece read the deal as centering on Cake's team and technology rather than on its user base, and the shutdown notice is the evidence for that reading: a buyer acquiring an audience does not switch the audience off before lunch on announcement day.

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