Jonathan Labed was 14 years old when he realized that there was a hazy line between perception and reality on the internet. It was 1999 and he was watching CNBC. He suddenly realized how after an analyst touted a particular company’s stock, the stock price would rise. Seemed simple enough so Jonathan, an internet savvy kid, opened up an AOL brokerage account under his mother’s name since he was too young to open one himself.
He used the brokerage account to buy a few shares of an obscure penny stock. Then he went on financial message boards like Yahoo Finance and wrote a few posts that used the same language as the CNBC hosts, saying things like he expected the stock to break out and rise to new heights. He would post the message to about 200 financial message boards before he went to school.
Since the information on the internet blurs the source of the information, there was no way that the readers of his posts knew that Jonathan was only 14. Over the next few months, he repeated the process and turned his birthday money into nearly eight hundred thousand dollars.
He kept this practice up until he got a visit from the Securities and Exchange Commission (SEC), who accused him of market manipulation. His actions went public, but soon the SEC realized that what Jonathan did was virtually the same as what market makers on Wall Street were doing. The only difference was that Jonathan was doing it using the internet with very little effort.
While the SEC extracted their pound of flesh from Jonathan in an out-of-court settlement in an effort to quell the media and save face, the real lesson they learned was that the world after the internet had become a level playing field for everyone.
Small companies could appear as if they were international powerhouses and no one was prevented from sharing their opinion. In today’s world, a savvy internet user can use social media to create a huge amount of buzz about their tiny enterprise, essentially making an insignificant company into a major player in no time. Jonathan Labed was able to generate a huge level of buzz from his bedroom while still attending school and so can you!
How effectively are you using the internet to promote your idea or business?
