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Somehow I feel that all these VC backed firms just add employees for the sake of adding employees. I use Tastyworks - another free online brokerage that it alm

Somehow I feel that all these VC backed firms just add employees for the sake of adding employees. I use Tastyworks - another free online brokerage that it almost at feature parity with Robinhood. They have stocks, options, futures and even some selective crypto. They also make money using PFOF just like Robinhood. However on Linkedin, their employee count is less than 100 (99 to be precise) On the other hand, Robinhood was at almost 4000 employees at the start of the year. I think they still have about 80% more employees than where they need to be.

niyazpk 4y ago
Sure, but also, none of my (investing) friends use Tastyworks, and almost all of them are using RH as their primary investing platform! Companies in hyper-growth stages may hire/fire differently than others.
- outworlder 4y ago
  > as their primary investing platform :%s/investing/speculation/g Very few people use RH as 'investing'. Those will be on boring brokers like Vanguard. I have a Tastyworks account too - the fills are way better than Robinhood's. As expected, since they charge some amount per trade. But that means that the "free" platform will definitely have more users, just because it's supposedly free (even though you pay for it in the fills, and get frontrunning trades)
  - kasey_junk 4y ago
    How are you quantifying that the fills are better? I worked professionally on this problem a while ago and it was very hard to do even with full depth feeds direct from the exchanges.
    - sitzkrieg 4y ago
      price and execution time? how much slip or price improvement on limits? or god forbid the casual retail market orders fill vs nbbo and pools at exec
      - kasey_junk 4y ago
        If you are seeing a venue not meeting nbbo you have a whistleblower suit to make which have been quite lucrative. When I was doing this for work the issues we ran into came down to a) making the orders hit the tape close enough to ensure similar priority b) the size of the orders changing execution depending on venue c) differences in performance per symbol. This was in a place that was sending a fair amount of orders in. Even then given the above finding statistical relevance was hard.
    - 0x457 4y ago
      I don't know the situation now, but both used to sell their order flow to the same place. I used both and fills for pretty much the same. However, I used tasty platform to set up options and then execute them on RH most of the time.
  - bostonpete 4y ago
    Wow, TIL you can use sed syntax in vi. I'm not a heavy vi user but that's still a handy trick. :-)
    - acuozzo 4y ago
      It comes from ex (the line editor sitting beneath vi).
  - gruez 4y ago
    >just because it's supposedly free (even though you pay for it in the fills, and get frontrunning trades) Can you provide a source for this? Citadel (one of the companies robinhood sells order flow to) claims in regulatory filings[1] that the overwhelming majority of orders are executed at market price or better, and that they on average save traders money. [1] https://s3.amazonaws.com/citadel-wordpress-prd101/wp-content/uploads/sites/2/2016/09/09175131/FIF-Rule-605-606-WG-CitadelSecurities_Retail-Execution-Quality-Stats_Q1_2019.pdf https://s3.amazonaws.com/citadel-wordpress-prd101/wp-content...
    - qaq 4y ago
      Wha the point of paying for order flow if you "execute at market price or better"? Are you suggesting Citadel is a charity?
      - gruez 4y ago
        >Wha the point of paying for order flow if you "execute at market price or better"? https://www.bloomberg.com/opinion/articles/2021-02-05/robinhood-gamestop-saga-pressures-payment-for-order-flow https://www.bloomberg.com/opinion/articles/2021-02-05/robinh... tl;dr: adverse selection. retail traders are less risky to deal with, so market makers can offer better prices to them. >If the retail trades are random. If retail traders usually buy before the stock goes up, and sell before the stock goes down, the wholesaler would consistently lose money on price risk. (This is called “adverse selection.”) But they don’t. Even now, retail traders tend to be small, dispersed and uninformed. If you sell stock to a retail trader for $58.15, you have no particular reason to think it will go up (or down). The retail traders are trading randomly, which is what allows you to treat this problem as though you were matching them up with each other at a fixed price and collecting a spread. In reality you are matching them up with each other over time, not simultaneously, and the price moves while you are doing it, but the randomness of their trading means that this difference doesn’t matter too much. >Meanwhile market makers on the public exchange are doing something similar, but with institutional traders who tend to be informed and trade large lots of stock, so their trading does carry a lot more risk of adverse selection. If a big institution buys some stock, that does mean the stock is somewhat more likely to go up, so if you sell them the stock you are somewhat more likely to lose money. This is why the spread on the public exchange—the difference between the $58 best bid to buy the stock and the $58.25 best offer to sell the stock—is so much wider than the 5 cents that the wholesaler charges. The wholesaler is just matching up small pleasant random orders and clipping a spread; the stock-exchange market maker is facing a real risk of being run over by an informed trader.
- xoxodave 4y ago
  Tastyworks was founded by the founders, CTO, and CFO of Thinkorswim. I worked on thinkorswim institutional desk for several years back in the mid-2000s. Not great brand recognition but a company built for traders by traders.
  - throwaway_1928 4y ago
  - bombcar 4y ago
    Isn’t thinkorswim just an arm of TDAmeritrade now?
    - AviationAtom 4y ago
      And now a part of Charles Schwab Gobble-gobble, the sound of consolidation.
- ab_testing 4y ago
  Does that matter with brokerages. I don’t know if Robinhood has a chat feature that lets you chat with your friends while trading.
  - fullshark 4y ago
    Customers matter for businesses, and they matter for businesses in winner take all marketplaces which has been the focus of VCs the last 10 years.
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dan-robertson 4y ago
Isn’t Robinhood public rather than VC-backed?
- colechristensen 4y ago
  Well they were VC backed, they recently went public. shrug
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zip1234 4y ago
A startup is designed to grow as fast as possible until they saturate their market.
- cudgy 4y ago
  … and competition comes screaming into their short-lived dominance and leaves them reeling with a mountain of debt and no profits. Barriers to entry are quite small for tech companies, so it always amazes me when analysts and dreamy investors rave about how their favorite “unicorn” tech company will dominate or is “disruptive”. Their disruption and dominance is likely to be short.
hadlock 4y ago
I used to work at a real time brokerage + national bank based out of the Midwest. The entire engineering+ operations team was 128 people, exactly. Including the CIO and his assistant who ruled the 39th floor with an iron fist, a hold over from the dot com era. They're publicly traded. I think they're down to 90 people but still running a functional company with tens of thousands of broker dealers. I have no idea how you need more than 500 tech people to run an online trading platform.
- InCityDreams 4y ago
  >Including the CIO and his assistant who ruled the 39th floor with an iron fist, a hold over from the dot com era. Please explain? Is ruling the 39th floor a particularly [financial] in-joke?
  - hadlock 4y ago
    No that's just the particular floor we happened to be on. I think the bank was on 38 and the trading floor was... 32?, executive suite was 41 or something. We had like five or six floors in the upper third of the 42 story building and a bank branch down in the lobby. They probably would have liked to have contiguous floors but it would have been a lot of work to move the data center and trading floor just to say you had X floors in a row.
  - samizdis 4y ago
    AFAIK, it's just representative of status/power, but I don't know its origins. A listing in The Urban Dictionary defines/describes it as: When an idea, movement or act has become very successful. To be propelled to great heights. [1] FWIW, there's a band called The 39th Floor [2] that I like for its grungy/retro-ish rock. The band's name evokes, for me, the image of "high-powered execs", but I'm not sure how that association got into my head. (Possibly the track Koka Kola on The Clash's album London Calling [3], but that refers to a "51st floor", rather than 39th, to symbolise corporate success/power [4].) [1] https://www.urbandictionary.com/define.php?term=39th%20floor https://www.urbandictionary.com/define.php?term=39th%20floor [2] https://the39thfloor.bandcamp.com/ https://the39thfloor.bandcamp.com/ [3] https://en.wikipedia.org/wiki/London_Calling https://en.wikipedia.org/wiki/London_Calling [4] https://genius.com/The-clash-koka-kola-lyrics https://genius.com/The-clash-koka-kola-lyrics
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eek2121 4y ago
You are actually a bit closer to the truth than most. The goal of a CEO is to generate as much hype early on as possible in order to spur growth. They spend early capital on growing employee count to generate even more hype. This raises their own net worth significantly. When the company goes public, they will dump what they are allowed to, navigate the much more "public" waters for a bit, then walk away with a small fortune. It becomes a game of investor bag holding at some point. The C-Suite is almost never left holding the bags. It is always the investor. I'm not sympathizing with investors, mind you.
bogomipz 4y ago
>"They also make money using PFOF just like Robinhood." What is "PFOF" here?
- erik_seaberg 4y ago
  https://www.investopedia.com/terms/p/paymentoforderflow.asp https://www.investopedia.com/terms/p/paymentoforderflow.asp
tick_tock_tick 4y ago
To be fair their mobile app was really really bad the last time I used it.

niyazpk 4y ago

Sure, but also, none of my (investing) friends use Tastyworks, and almost all of them are using RH as their primary investing platform! Companies in hyper-growth stages may hire/fire differently than others.

outworlder 4y ago
> as their primary investing platform :%s/investing/speculation/g Very few people use RH as 'investing'. Those will be on boring brokers like Vanguard. I have a Tastyworks account too - the fills are way better than Robinhood's. As expected, since they charge some amount per trade. But that means that the "free" platform will definitely have more users, just because it's supposedly free (even though you pay for it in the fills, and get frontrunning trades)
- kasey_junk 4y ago
  How are you quantifying that the fills are better? I worked professionally on this problem a while ago and it was very hard to do even with full depth feeds direct from the exchanges.
  - sitzkrieg 4y ago
    price and execution time? how much slip or price improvement on limits? or god forbid the casual retail market orders fill vs nbbo and pools at exec
    - kasey_junk 4y ago
      If you are seeing a venue not meeting nbbo you have a whistleblower suit to make which have been quite lucrative. When I was doing this for work the issues we ran into came down to a) making the orders hit the tape close enough to ensure similar priority b) the size of the orders changing execution depending on venue c) differences in performance per symbol. This was in a place that was sending a fair amount of orders in. Even then given the above finding statistical relevance was hard.
  - 0x457 4y ago
    I don't know the situation now, but both used to sell their order flow to the same place. I used both and fills for pretty much the same. However, I used tasty platform to set up options and then execute them on RH most of the time.
- bostonpete 4y ago
  Wow, TIL you can use sed syntax in vi. I'm not a heavy vi user but that's still a handy trick. :-)
  - acuozzo 4y ago
    It comes from ex (the line editor sitting beneath vi).
- gruez 4y ago
  >just because it's supposedly free (even though you pay for it in the fills, and get frontrunning trades) Can you provide a source for this? Citadel (one of the companies robinhood sells order flow to) claims in regulatory filings[1] that the overwhelming majority of orders are executed at market price or better, and that they on average save traders money. [1] https://s3.amazonaws.com/citadel-wordpress-prd101/wp-content/uploads/sites/2/2016/09/09175131/FIF-Rule-605-606-WG-CitadelSecurities_Retail-Execution-Quality-Stats_Q1_2019.pdf https://s3.amazonaws.com/citadel-wordpress-prd101/wp-content...
  - qaq 4y ago
    Wha the point of paying for order flow if you "execute at market price or better"? Are you suggesting Citadel is a charity?
    - gruez 4y ago
      >Wha the point of paying for order flow if you "execute at market price or better"? https://www.bloomberg.com/opinion/articles/2021-02-05/robinhood-gamestop-saga-pressures-payment-for-order-flow https://www.bloomberg.com/opinion/articles/2021-02-05/robinh... tl;dr: adverse selection. retail traders are less risky to deal with, so market makers can offer better prices to them. >If the retail trades are random. If retail traders usually buy before the stock goes up, and sell before the stock goes down, the wholesaler would consistently lose money on price risk. (This is called “adverse selection.”) But they don’t. Even now, retail traders tend to be small, dispersed and uninformed. If you sell stock to a retail trader for $58.15, you have no particular reason to think it will go up (or down). The retail traders are trading randomly, which is what allows you to treat this problem as though you were matching them up with each other at a fixed price and collecting a spread. In reality you are matching them up with each other over time, not simultaneously, and the price moves while you are doing it, but the randomness of their trading means that this difference doesn’t matter too much. >Meanwhile market makers on the public exchange are doing something similar, but with institutional traders who tend to be informed and trade large lots of stock, so their trading does carry a lot more risk of adverse selection. If a big institution buys some stock, that does mean the stock is somewhat more likely to go up, so if you sell them the stock you are somewhat more likely to lose money. This is why the spread on the public exchange—the difference between the $58 best bid to buy the stock and the $58.25 best offer to sell the stock—is so much wider than the 5 cents that the wholesaler charges. The wholesaler is just matching up small pleasant random orders and clipping a spread; the stock-exchange market maker is facing a real risk of being run over by an informed trader.
xoxodave 4y ago
Tastyworks was founded by the founders, CTO, and CFO of Thinkorswim. I worked on thinkorswim institutional desk for several years back in the mid-2000s. Not great brand recognition but a company built for traders by traders.
- throwaway_1928 4y ago
- bombcar 4y ago
  Isn’t thinkorswim just an arm of TDAmeritrade now?
  - AviationAtom 4y ago
    And now a part of Charles Schwab Gobble-gobble, the sound of consolidation.
ab_testing 4y ago
Does that matter with brokerages. I don’t know if Robinhood has a chat feature that lets you chat with your friends while trading.
- fullshark 4y ago
  Customers matter for businesses, and they matter for businesses in winner take all marketplaces which has been the focus of VCs the last 10 years.

deleted 4y ago

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deleted 4y ago

[deleted]

dan-robertson 4y ago

Isn’t Robinhood public rather than VC-backed?

colechristensen 4y ago
Well they were VC backed, they recently went public. shrug

deleted 4y ago

[deleted]

zip1234 4y ago

A startup is designed to grow as fast as possible until they saturate their market.

cudgy 4y ago
… and competition comes screaming into their short-lived dominance and leaves them reeling with a mountain of debt and no profits. Barriers to entry are quite small for tech companies, so it always amazes me when analysts and dreamy investors rave about how their favorite “unicorn” tech company will dominate or is “disruptive”. Their disruption and dominance is likely to be short.

hadlock 4y ago

I used to work at a real time brokerage + national bank based out of the Midwest. The entire engineering+ operations team was 128 people, exactly. Including the CIO and his assistant who ruled the 39th floor with an iron fist, a hold over from the dot com era. They're publicly traded. I think they're down to 90 people but still running a functional company with tens of thousands of broker dealers. I have no idea how you need more than 500 tech people to run an online trading platform.

InCityDreams 4y ago
>Including the CIO and his assistant who ruled the 39th floor with an iron fist, a hold over from the dot com era. Please explain? Is ruling the 39th floor a particularly [financial] in-joke?
- hadlock 4y ago
  No that's just the particular floor we happened to be on. I think the bank was on 38 and the trading floor was... 32?, executive suite was 41 or something. We had like five or six floors in the upper third of the 42 story building and a bank branch down in the lobby. They probably would have liked to have contiguous floors but it would have been a lot of work to move the data center and trading floor just to say you had X floors in a row.
- samizdis 4y ago
  AFAIK, it's just representative of status/power, but I don't know its origins. A listing in The Urban Dictionary defines/describes it as: When an idea, movement or act has become very successful. To be propelled to great heights. [1] FWIW, there's a band called The 39th Floor [2] that I like for its grungy/retro-ish rock. The band's name evokes, for me, the image of "high-powered execs", but I'm not sure how that association got into my head. (Possibly the track Koka Kola on The Clash's album London Calling [3], but that refers to a "51st floor", rather than 39th, to symbolise corporate success/power [4].) [1] https://www.urbandictionary.com/define.php?term=39th%20floor https://www.urbandictionary.com/define.php?term=39th%20floor [2] https://the39thfloor.bandcamp.com/ https://the39thfloor.bandcamp.com/ [3] https://en.wikipedia.org/wiki/London_Calling https://en.wikipedia.org/wiki/London_Calling [4] https://genius.com/The-clash-koka-kola-lyrics https://genius.com/The-clash-koka-kola-lyrics

deleted 4y ago

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eek2121 4y ago

You are actually a bit closer to the truth than most. The goal of a CEO is to generate as much hype early on as possible in order to spur growth. They spend early capital on growing employee count to generate even more hype. This raises their own net worth significantly. When the company goes public, they will dump what they are allowed to, navigate the much more "public" waters for a bit, then walk away with a small fortune. It becomes a game of investor bag holding at some point. The C-Suite is almost never left holding the bags. It is always the investor. I'm not sympathizing with investors, mind you.

bogomipz 4y ago

>"They also make money using PFOF just like Robinhood." What is "PFOF" here?

erik_seaberg 4y ago
https://www.investopedia.com/terms/p/paymentoforderflow.asp https://www.investopedia.com/terms/p/paymentoforderflow.asp

tick_tock_tick 4y ago

To be fair their mobile app was really really bad the last time I used it.