5 ms·

Robinhood is the Instagram of stock trading. Can we really knock the founders of Robinhood for making stock trading so seamless and addictive and amping up the

Robinhood is the Instagram of stock trading. Can we really knock the founders of Robinhood for making stock trading so seamless and addictive and amping up the gamification to its highest level. The legacy brokerages have been guilty of turning stock trading into entertainment for years, thankfully just poorly. CNBC for the most part is entertainment. If anything the legacy brokerages like IB/Schwab/Etrade were incompetent in not making the jump on usability and offering innovations like fractional trading widely. How does one slow down Robinhood to make speculative trading less attractive - make their UI worse? Stop innovations like fractional trading? I feel we as a civilization have uncorked a financial poison pill in the innovations of Robinhood. We will just have to ingest and process it to move forward, there is no way to go back. There will be a price to way in lost savings and lives.

folkhack 6y ago
> I feel we as a civilization have uncorked a financial poison pill in the innovations of Robinhood. We will just have to ingest and process it to move forward, there is no way to go back. There will be a price to way in lost savings and lives. Just look at the toxicity of /r/wallstreetbets if you're looking for the cracks in the wall. Also: https://www.forbes.com/sites/sergeiklebnikov/2020/06/17/20-year-old-robinhood-customer-dies-by-suicide-after-seeing-a-730000-negative-balance/?sh=15c8ecb51638 https://www.forbes.com/sites/sergeiklebnikov/2020/06/17/20-y...
- _iyig 6y ago
  How is r/wallstreetbets toxic? As someone who doesn’t day-trade, I still subscribe for the memes and self-aware jokes. It’s one of the few remaining large subreddits with tons of creative energy and no drama or politics. And as someone who doesn’t day-trade, the “loss porn” regularly posted to r/wallstreetbets has firmly convinced me to stick with index funds.
  - jdhn 6y ago
    >the “loss porn” regularly posted to r/wallstreetbets has firmly convinced me to stick with index funds Same here. I know that I'm neither smart enough nor willing to dedicate time to micromanaging my portfolio. Index funds/ETFs are the way to go, and I only invest in individual stocks (no options/puts for me) if they catch my eye and the research of others has a positive outlook.
- cbozeman 6y ago
  You've got this all ass-backwards, like most posters in this thread. WSB didn't cause these problems, it exposed them. The financial industry is rife with corruption, but because its been legalized, we don't call it that. Same shit as "lobbying". Its bribery, period. Its lipstick on a pig. Another person wanted to call WSB toxic because people don't know what causes a stock to go up or down in price... well goddamn, neither do they. I remember when analysts were squawking about AMD a little over five years ago, downgrading it to a sell. Only a feeeeeewwww analysts had it marked as hold and maybe 1 or 2 as a buy. However, if you knew jack shit about the semiconductor industry, and you saw they hired Jim Keller and Lisa Su, you would have dumped a ton in there. I know I did... I bought 100,000 shares when I heard Jim went back, for the bargain price of $2. I was elated when they hit $16. I was floored when they hit $50. Now that they're thoroughly dominating Intel, I intend to hold until 2022/23, when Intel should start to be competitive again. Most people have no fucking clue why a stock goes up or down... and the years it takes to learn an industry well enough to know not just the companies in play, but the technologies in play, and the people in play...? Most analysts don't have the wherewithal. I'll buy a stock recommended from a 30 year veteran of an industry that knows the players over any Ivy League big shop analyst any day of the week.
  - jessaustin 6y ago
    WSB didn't cause these problems, it exposed them. This kill-the-messenger foolishness is everywhere! People seem to think that if the words they don't like are removed from their favorite social media, those words will just disappear. In reality we should want those words out in the open so we can pay attention to them, respond to them, and if necessary react in a real (i.e., not attempted censorship) way.
mbesto 6y ago
> Can we really knock the founders of Robinhood for making stock trading so seamless and addictive and amping up the gamification to its highest level. Do we knock instagram for mental health issues for youth? Yes. Do we knock tobacco companies for making cheap/addictive products that are detrimental to health? Yes. Do we knock MLM companies for predatory behaviors? Yes. So, tell me, why can't we say the same for Robinhood?
- dntrkv 6y ago
  > Do we knock instagram for mental health issues for youth? Yes. Honestly, I don't think we should knock Instagram for mental health issues, that's really up to the user. Instagram's responsibility should be in providing tools to block users/content you don't want to see. If your child is suffering from Instagram, that's on you as a parent (why the fuck are they on Instagram). You don't need Instagram to be bullied, though social media in general, does increase its reach. But what do you expect when you put your life on display for the internet? > Do we knock tobacco companies for making cheap/addictive products that are detrimental to health? Yes. Tobacco only has one use. There is no benefit to it. Robinhood is an investment tool that has significantly lowered the barrier to entry for all investors (isn't that what everyone has wanted all along?). I would not consider what they are doing gamification, they've just unlocked investment options to the average Joe that make it very easy to shoot yourself in the foot. > Do we knock MLM companies for predatory behaviors? Yes. MLM companies are created for one purpose, scamming people out of money. Robinhood serves a purpose. Instagram serves a purpose. Both services provide a ton of value for millions of people. You can't compare them to entities that only exist to cause harm.
  - mbesto 6y ago
    > You can't compare them to entities that only exist to cause harm. All of the entities I mentioned (including Robhinhood) have created a ton of wealth/jobs/income/etc. for a lot of people (easily 100k+ individuals). How do you reconcile that with "only exist to cause harm"?
    - dntrkv 6y ago
munchbunny 6y ago
> Can we really knock the founders of Robinhood for making stock trading so seamless and addictive and amping up the gamification to its highest level. Yes and no. Yes, because they absolutely know what they are doing and the human cost of it. You don't get this successful with your product without also seeing primary evidence of the negative effects (lives you've ruined). But also no, because there has to be a baseline of personal responsibility on the part of someone who chooses to take on financial risk by betting on the stock markets. This is a cat that doesn't go back in the bag, but I think the way to think about Robinhood isn't as an evolution of stock trading, but as straight up gambling, because that's what Robinhood is. It's giving you an easy way to bet money in a high risk environment where the "house" has a massive institutional and informational advantage, and it's gamified. Without knowing more about Robinhood, I think the first question to ask is "what are the biggest footguns that are catching people who don't know better?"
zarkov99 6y ago
I think we can knock them, or at least I personally would not sleep very well if I worked there. RH is making it incredibly easy (and addictive) for naive investors to access complex financial instruments and is selling their order flow at a high premium to the most advanced trading firms on the planet. That does not unsettle you?
- tptacek 6y ago
  No, it doesn't: most retail brokerages "sell" their order flow to execution firms that specialize in actually filling orders. That's approximately how it's supposed to work. This is the problem with Taibbi's technical writing. I'm not a domain expert in trading --- my knowledge of it comes from several years spent doing security assessments of order routers and exchange systems, and talking to lots of people in the field and reading books. But Taibbi simply doesn't know what he's talking about.
  - kasey_junk 6y ago
    Robinhood was receiving a premium for their flow compared to the other brokers last I looked. That at least gives me pause in that it means the market feels like being on the other side of those trades is more valuable for some reason & Robinhood has a disincentive to change it if that reason is “Robinhood’s UX makes bad decisions easy.”
    - tptacek 6y ago
      That's a super interesting point! Way subtler than what Taibbi is saying. I heard something, I can't remember from where, about the economics of promoting meme stocks --- which Robinhood is guilty of --- but that might just have involved shorting loan fees.
      - zarkov99 6y ago
        Taibbi made the same point in the article: > These firms pay more significantly more for Robinhood’s order flow than they do for the order flow of other firms: an average of 17% more, according to a Bloomberg analysis.
akhilcacharya 6y ago
Biggest appeal for me is free options trading and (previously) no commissions trades. Now the latter is built into every brokerage service that exists - what's the appeal if you're just buying stocks? The Robinhood website is barely better than the Vanguard website - it might be even less reliable.
godot 6y ago
Pre-Robinhood, were we (as a society) really only a polished-product away from mass adoption of stock trading in general? Like, is it really true that prior to Robinhood, most people outside of the wealthiest ones avoided stock trading only because it was so hard to use any of Schwab/Fidelity/Scottrade/Etrade/etc.?
- sooheon 6y ago
  Anecdotally, yes. Until fintech apps started actually functioning in the country where I live, the activation energy to set everything up to gain exposure to equity markets was too high for myself and everyone my age that I knew. I'm very happy with the app I use now that lets me hold equity in markets globally(!) for some minor transaction fees, much happier than I was back when I got my first paychecks and my only realistic options were to watch it sit in a bank account or spend it.
joezydeco 6y ago
What's old is new again. I went through my daytrading phase in the late 90s. Hell, everyone was doing it. ETrade's online portal was hot shit. You could wake up 20 minutes before the market opened, get an order in on whatever IPO was happening that day (Webvan? The Globe.com?), if you lucked out and got a block early in the open you watched it tick up +10 and were out and on your way to work with another $1,000-$2,000 in your account. Then it all fell apart in 2000. And it will fall apart again. Like it always does, and you're left holding the bag.

folkhack 6y ago

> I feel we as a civilization have uncorked a financial poison pill in the innovations of Robinhood. We will just have to ingest and process it to move forward, there is no way to go back. There will be a price to way in lost savings and lives. Just look at the toxicity of /r/wallstreetbets if you're looking for the cracks in the wall. Also: https://www.forbes.com/sites/sergeiklebnikov/2020/06/17/20-year-old-robinhood-customer-dies-by-suicide-after-seeing-a-730000-negative-balance/?sh=15c8ecb51638 https://www.forbes.com/sites/sergeiklebnikov/2020/06/17/20-y...

_iyig 6y ago
How is r/wallstreetbets toxic? As someone who doesn’t day-trade, I still subscribe for the memes and self-aware jokes. It’s one of the few remaining large subreddits with tons of creative energy and no drama or politics. And as someone who doesn’t day-trade, the “loss porn” regularly posted to r/wallstreetbets has firmly convinced me to stick with index funds.
- jdhn 6y ago
  >the “loss porn” regularly posted to r/wallstreetbets has firmly convinced me to stick with index funds Same here. I know that I'm neither smart enough nor willing to dedicate time to micromanaging my portfolio. Index funds/ETFs are the way to go, and I only invest in individual stocks (no options/puts for me) if they catch my eye and the research of others has a positive outlook.
cbozeman 6y ago
You've got this all ass-backwards, like most posters in this thread. WSB didn't cause these problems, it exposed them. The financial industry is rife with corruption, but because its been legalized, we don't call it that. Same shit as "lobbying". Its bribery, period. Its lipstick on a pig. Another person wanted to call WSB toxic because people don't know what causes a stock to go up or down in price... well goddamn, neither do they. I remember when analysts were squawking about AMD a little over five years ago, downgrading it to a sell. Only a feeeeeewwww analysts had it marked as hold and maybe 1 or 2 as a buy. However, if you knew jack shit about the semiconductor industry, and you saw they hired Jim Keller and Lisa Su, you would have dumped a ton in there. I know I did... I bought 100,000 shares when I heard Jim went back, for the bargain price of $2. I was elated when they hit $16. I was floored when they hit $50. Now that they're thoroughly dominating Intel, I intend to hold until 2022/23, when Intel should start to be competitive again. Most people have no fucking clue why a stock goes up or down... and the years it takes to learn an industry well enough to know not just the companies in play, but the technologies in play, and the people in play...? Most analysts don't have the wherewithal. I'll buy a stock recommended from a 30 year veteran of an industry that knows the players over any Ivy League big shop analyst any day of the week.
- jessaustin 6y ago
  WSB didn't cause these problems, it exposed them. This kill-the-messenger foolishness is everywhere! People seem to think that if the words they don't like are removed from their favorite social media, those words will just disappear. In reality we should want those words out in the open so we can pay attention to them, respond to them, and if necessary react in a real (i.e., not attempted censorship) way.

mbesto 6y ago

> Can we really knock the founders of Robinhood for making stock trading so seamless and addictive and amping up the gamification to its highest level. Do we knock instagram for mental health issues for youth? Yes. Do we knock tobacco companies for making cheap/addictive products that are detrimental to health? Yes. Do we knock MLM companies for predatory behaviors? Yes. So, tell me, why can't we say the same for Robinhood?

dntrkv 6y ago
> Do we knock instagram for mental health issues for youth? Yes. Honestly, I don't think we should knock Instagram for mental health issues, that's really up to the user. Instagram's responsibility should be in providing tools to block users/content you don't want to see. If your child is suffering from Instagram, that's on you as a parent (why the fuck are they on Instagram). You don't need Instagram to be bullied, though social media in general, does increase its reach. But what do you expect when you put your life on display for the internet? > Do we knock tobacco companies for making cheap/addictive products that are detrimental to health? Yes. Tobacco only has one use. There is no benefit to it. Robinhood is an investment tool that has significantly lowered the barrier to entry for all investors (isn't that what everyone has wanted all along?). I would not consider what they are doing gamification, they've just unlocked investment options to the average Joe that make it very easy to shoot yourself in the foot. > Do we knock MLM companies for predatory behaviors? Yes. MLM companies are created for one purpose, scamming people out of money. Robinhood serves a purpose. Instagram serves a purpose. Both services provide a ton of value for millions of people. You can't compare them to entities that only exist to cause harm.
- mbesto 6y ago
  > You can't compare them to entities that only exist to cause harm. All of the entities I mentioned (including Robhinhood) have created a ton of wealth/jobs/income/etc. for a lot of people (easily 100k+ individuals). How do you reconcile that with "only exist to cause harm"?
  - dntrkv 6y ago

munchbunny 6y ago

> Can we really knock the founders of Robinhood for making stock trading so seamless and addictive and amping up the gamification to its highest level. Yes and no. Yes, because they absolutely know what they are doing and the human cost of it. You don't get this successful with your product without also seeing primary evidence of the negative effects (lives you've ruined). But also no, because there has to be a baseline of personal responsibility on the part of someone who chooses to take on financial risk by betting on the stock markets. This is a cat that doesn't go back in the bag, but I think the way to think about Robinhood isn't as an evolution of stock trading, but as straight up gambling, because that's what Robinhood is. It's giving you an easy way to bet money in a high risk environment where the "house" has a massive institutional and informational advantage, and it's gamified. Without knowing more about Robinhood, I think the first question to ask is "what are the biggest footguns that are catching people who don't know better?"

zarkov99 6y ago

I think we can knock them, or at least I personally would not sleep very well if I worked there. RH is making it incredibly easy (and addictive) for naive investors to access complex financial instruments and is selling their order flow at a high premium to the most advanced trading firms on the planet. That does not unsettle you?

tptacek 6y ago
No, it doesn't: most retail brokerages "sell" their order flow to execution firms that specialize in actually filling orders. That's approximately how it's supposed to work. This is the problem with Taibbi's technical writing. I'm not a domain expert in trading --- my knowledge of it comes from several years spent doing security assessments of order routers and exchange systems, and talking to lots of people in the field and reading books. But Taibbi simply doesn't know what he's talking about.
- kasey_junk 6y ago
  Robinhood was receiving a premium for their flow compared to the other brokers last I looked. That at least gives me pause in that it means the market feels like being on the other side of those trades is more valuable for some reason & Robinhood has a disincentive to change it if that reason is “Robinhood’s UX makes bad decisions easy.”
  - tptacek 6y ago
    That's a super interesting point! Way subtler than what Taibbi is saying. I heard something, I can't remember from where, about the economics of promoting meme stocks --- which Robinhood is guilty of --- but that might just have involved shorting loan fees.
    - zarkov99 6y ago
      Taibbi made the same point in the article: > These firms pay more significantly more for Robinhood’s order flow than they do for the order flow of other firms: an average of 17% more, according to a Bloomberg analysis.

akhilcacharya 6y ago

Biggest appeal for me is free options trading and (previously) no commissions trades. Now the latter is built into every brokerage service that exists - what's the appeal if you're just buying stocks? The Robinhood website is barely better than the Vanguard website - it might be even less reliable.

godot 6y ago

Pre-Robinhood, were we (as a society) really only a polished-product away from mass adoption of stock trading in general? Like, is it really true that prior to Robinhood, most people outside of the wealthiest ones avoided stock trading only because it was so hard to use any of Schwab/Fidelity/Scottrade/Etrade/etc.?

sooheon 6y ago
Anecdotally, yes. Until fintech apps started actually functioning in the country where I live, the activation energy to set everything up to gain exposure to equity markets was too high for myself and everyone my age that I knew. I'm very happy with the app I use now that lets me hold equity in markets globally(!) for some minor transaction fees, much happier than I was back when I got my first paychecks and my only realistic options were to watch it sit in a bank account or spend it.

joezydeco 6y ago

What's old is new again. I went through my daytrading phase in the late 90s. Hell, everyone was doing it. ETrade's online portal was hot shit. You could wake up 20 minutes before the market opened, get an order in on whatever IPO was happening that day (Webvan? The Globe.com?), if you lucked out and got a block early in the open you watched it tick up +10 and were out and on your way to work with another $1,000-$2,000 in your account. Then it all fell apart in 2000. And it will fall apart again. Like it always does, and you're left holding the bag.