GZV #30: Robinhood's Problem (not GameStop)
Startups. Trends. Markets. All from a Gen Z view.
Apologies for the delay in this weeks GZV, had a 4-page single space essay to write yesterday. With that, I decided to take a small break and only write an essay for this week. See everyone next week!
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Robinhood’s Problem (Besides GameStop)
Since Robinhood was founded a few years ago it has been a great place for first time investors to go and deposit their first $25 into the stock market.
The issue is, these people grow up. I know a few of my friends who got Robinhood when they were 18, but now as they have become more sophisticated, they graduated to places like TDAmeritrade or Fidelity. So Robinhood has a problem with retaining their users for longer than I’d say 5 years.
What can they do to change that? Well I’ll try to explore that question.
Robinhood Levels. In my mind one of the reasons that users leave Robinhood is it’s lack of sophistication. The inviting and gamified UI/UX invites first time users looking to have fun, but doesn't really invite the more sophisticated investors. My recommendation is a setting where you can change your layout to 3 different styles. Robinhood Original, Robinhood Novice, and Robinhood Advanced. Obviously better and more intriguing names, but you get my point. Each one of these levels would have a few different visual and operational changes to help fit the current stage of the investor using their platform. This could result for users to stay on Robinhood’s platform for longer instead of “graduating” to other brokers.
Build or buy another brokerage. Alright, I know this sounds crazy, but hear me out. The name Robinhood is not an attractive name for advanced traders. Instead of pushing users off the platform after they pass the beginner stage, you can push them toward your other app: Magnan (short for magnanimous, a synonym for Robinhood) (It’s just a quick idea, if you have better ideas post in the comments). Building a separate platform definitely has it’s costs, but I think there is a lot of space for a “modern brokerage”. Although Robinhood is already considered the “modern brokerage”, it is mostly used by amateurs. If you take the same UI/UX team and tell them to make a more advanced brokerage, but keep the modern look, they should come out with a pretty great product.
I think this is one of many problems for Robinhood, but from the Gen Z view this is what I have noticed the most. The solutions aren’t exactly easy, but I believe it’ll be worth it and significantly lower the 5-yr churn rate over the long term.
Happy Trading.
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thomas@genzvoice.com