Remember Rich Dad, Poor Dad?
Well, I’m guessing you do. The populist idea to make money behind the book was with buying and selling of stocks and shares at the right time.
You probably do because you love to make money. In fact, we all love to make money. And considering ideas to make money, stock trading has been a staple past time for the patient and tactical minded as the chance to grow your assets off someone else’s sweat remains as lucrative and almost as sweat free as ever.
While stock trading may have been limited to fat pocket class executives, how about every other person in the world being let in on the party?
Robinhood takes centre stage
Walks in Robinhood, the disruptive stock trading application designed to put institutionalized trading firms out of business once and for all by letting not-so-fat and even almost flat-and-out pockets in on the trading action.
This simple tech startup idea which is now taunted as a disruptive behemoth has attracted all classes of investors, from hip hop artists to Hollywood actors to Venture Capitalists who are willing to bet big on the future of the idea behind the brand.
Startup: Robinhood
Founded: 2013
Headquarters: Palo Alto, California
Vision: To offer younger, less-wealthy users a way to start investing (imagined by us).
Website: http://www.robinhood.com
The Pitch (The idea in 20 words)
Robinhood is a stock brokerage application democratizing access to financial markets by enabling customers’ trade US stocks with zero commission.
Industry
Fintech, Financial Services, Stock brokerage, Technology, Mobile
Strategy
Robinhood had a clear market entry strategy from the onset – allowing everyone access to trade in quoted US stocks and ETF on the financial market by offering zero commissions against the $7 – $9.99 commissions charged by its competitors which is just the first of the many innovations it has unleashed from its magic hat.
The app has its eyes set on 18 to 35 year olds, a market not so robust in purse to afford commissions per trade but robust in attitude to make money against all odds and utilising the buzz and zeal which comes with the nod from this demography to steal rich customers from established brokerage firms.
The launch of the Robinhood premium package has been the latest joker strategy with the most profiteering advantage to the company so far, even offering multiple advantages to its users. From early to late trading, beginning 30 minutes before the market opens and 2 hours after the market closes, a strategy once reserved only for institutional investors is made available to all.
Robinhood utilizes technology to run a lean scale model free from the encumbrances which comes with running physical corporate offices; it has strategically positioned itself to share savings with its already privileged users.
The use of a simple mobile only trade application is in tune with trends favoured by the masses which the company’s core target market falls within.
Revenue Model
Robinhood offers a premium feature to generate revenue for its mobile app.
- Users of the premium Gold feature subscribe for only $10 monthly to skip the usual 3 day wait, to immediately make instant deposits and reinvestments and can also purchase higher priced subscriptions of $20 to $50 to generate greater buying power of $4000 to $50,000.
Growth and Market prospects
Robinhood began its accent by reaching out to its pre-registered 300,000 membership base through Reddit and has made inroads into China through its Google-like platform, Baidu. Today, Robinhood is registered as a SEC broker and has membership with FINRA and SIPC. It has over one million registered users in less than four years from launch, dealing in over $12 billion worth of transactions and saving its customers over $200 million in commission fees. The current pre-money valuation of the startup is $1.3 billion.
Founders
The founders are two young Stanford graduates who worked as developers for hedge funds and got the inspiration to build Robinhood during Occupy Wall street protests of 2011.
Baiju Prafulkumar Bhatt – Cofounder
Vlad Tenev – Cofounder
Funding
Robinhood has largely been a VC funded tech startup idea;
Seed: $3 million – Dec 2013
Series A: $13 million – Sept 2014
Series B: $50 million – May 2015
Series C: $110million (most recent funding as of April 2017)
Total Funding: $176 million
Investors
Robinhood has proven to be a Hollywood celebrity investment haven with A listers like Jared Leto and Aaron Levie and hiphop moguls Snoop Dogg and Nas joining institutional venture capitalists investors to take Robinhood to its present billion dollar valuation;
- DST Global
- New Enterprise Associates
- Index Ventures
- Andreessen Horowitz
- Elefund, GV
- IT Ventures
- LocalGlobe
- Machine Shop Ventures
- Snoop Dogg
- Aaron Levie
- Dave Morin
- Howard Lindzon
- Jared Leto
- Jordan Mendell
- Nasir “Nas” Jones
Future Strategy
- The development of the Robinhood web platform to support its mobile first approach.
- Upgrade features of the Gold premium package to offer more enticing services
- Win customer trust to enable storing their money on the application like any brick and mortar Bank
Industry Insights
Financial markets are a global staple which traverses all kinds of businesses in all kinds of industries with proven profits over decades. Hence, the opportunity for a stock trading application offering zero commissions is bound to be oversubscribed.
However utilising technology applications poses security threats to monies stored by users from theft or hacker activities which could see customers scampering to standard trading firms at the point of any breach.
Disrupts
Robinhood is disrupting institutionalized traders who earn on commissions per trade with its zero commission model.
Opportunity for Idea Creators
Robinhood has put up innovations other possible entrants could only envy but could capitalize on and become really profitable even if the tech startup retains first mover advantage.
This is open to innovators across the global stage in customised markets albeit regulatory hurdles must be crossed for bullish startups like Robinhood and its future startup predecessors who wish to take advantage of an landslide opportunity such as this, before entry can be made into any financial market.
On the look out to create more value within this industry sector should be;
- Stock brokers
- Financial Analysts
- Brokerage firms
- Financial service institutions
- And any other crazy head who thinks and can, can make things happen
Could you create a startup like Robinhood or like Jared Leto, Snoop Dogg and Nas, could you invest in a startup that can completely change the way the world invests?
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Disclosure: This review, article or report was first posted on http://www.babeonideas.com blog in 2017. The http://www.babeonideas.com blog no longer exists. Some information may be outdated or a startup may no longer exist in the form or all of its form when it was first reviewed.
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