this week on case studies with the biz
doc its Robin Hood a suggestion I took
from you where did they come from
where are they going what’s up with that
five billion dollar valuation and the
story this week that they’re preparing
to go public all of that and more Robin
Hood the financial services company
that’s in the app on your phone in the
palm of your hand
let’s do three things first talk a
little bit about the history the money
they raised and how they got to that
five billion dollar valuation that
they’re talking about today second were
they going there’s a big news report out
that they’re looking for a professional
CFO why because they’re going public and
they want to file an IPO and third I’m
gonna talk about what do I think is
really the essence of Robin Hood how did
they jump into a financial services
sector this got Schwab and e Trade and
all these big companies already there
that are available systems to help you
trade stocks how did they jump in and
what made it so special let’s start with
the history once upon a time back in
late 2013
these two guys beige ubot and Vladimir
10m are working in financial services
they leave to go create Robin Hood they
had a vision to do some very special
things and to make it easier for you and
me to trade specifically to trade for
free but then will pay fees for other
things like interest on money we borrow
because in a margin account some of the
money is yours and some of the money you
borrow the money you borrow you pay
interest it’s like a credit card or a
car loan or any other kind of loan
that’s where they were gonna make their
money but make it really easy to trade
the reason they did that is because they
had talked about and a lot of interviews
that they say look if some guys drop in
$200,000 to buy a big chunk of Facebook
that guy doesn’t care whether it’s a
twelve ninety five trade or a seven
ninety five trade but guess what most
average investors don’t make trades that
big so that’s seven ninety five and
twelve ninety five you know is real
money on a hundred or two hundred or
three hundred dollar trade and why
should people be paying that will make
it for free and will charge them fees
for certain things in the envision
subscriptions downstream and that’s
where they would make the money
meanwhile all the trades who go on
three that was the essence of it in a
way it was kind of a blue ocean and in
the blue ocean framework you know you
eliminate things raise things reduce
things create things and that gives you
a blue ocean doing something different
now this I call a light blue ocean for
reasons I’m going to get into at the
very end of the case study but what did
they do initially they eliminated fees
what did they raised they raised
accessibility there was already access
on the internet for a decade or more for
getting to your stock trading and it was
getting easier and easier and there were
trades you could make right on your
phone connected to your master trading
account they made it even easier and
made the phone app even slicker then
they reduce friction they allowed you to
deposit money very easily and have that
money be immediately available to make
trades today and doing all this they
created what I call a light blue ocean
back at the end of 13 it was December to
be exact at the beginning of 14 they
come out and very quickly they claim to
have a hundred thousand people on a
waiting list to get the app in other
words to be part of the beta or the
launch there was two that were very
close together and it was basically
rolling right out to the market later
that year they claimed they had five
hundred thousand people in the waiting
list and they introduced iOS version of
the app and they were off and running
let’s keep following the subscriber line
that we’re talking about here and then
I’m going to get to the investment in
just a second they go and they’re at
500,000 users but by the end of 16 with
the Android version of it out and the
iOS version now they’ve got both
versions out so anyone in the United
States regardless of what phone you have
can get access to Robin Hood they reach
a million subscribers before the end of
17 1.5 million shortly at the beginning
of seventeen two million in the middle
of seventeen and today they say they’re
at three million or more and going to
the moon suffice is to say they’re not a
public company yet they’re a private
company and these are numbers they’re
announcing nonetheless I believe them
and I think that they’re really off and
running the buzz that you see on the
Internet the number of people using it
number of people talking about it leads
me to believe that I don’t think this is
a start-up getting fluffy with their
numbers I believe these are the numbers
there now let’s step back and take a
look at how they raise the capital well
they started here with a three million
dollar round that was basically their
their seed money from Google andreessen
horowitz
and index and they raised that right
around the end of 14 so they’ve been
showing this to people and people
thought they were on to something
compelling and made that early
investment then here when it launches
they raise 13 million dollars that they
announced in 2014 and I call this the
celebrity round because there were some
very interesting people that were
investing at this point
first of all Snoop yes as in Snoop Dogg
investing in a start-up that’s trading
in stocks you know there’s a million
places where cannabis is very legal and
maybe you would think snoop would be in
that sector of the economy not that he
has any expertise in that area but
instead he’s actually out here investing
in a stock trading company and Snoop is
joined by Jared Leto and Jared Leto’s
lead singer foots at thirty thirty
Seconds to Mars thank you very much
camera people and producers are useful
along with draftkings or chief strategy
officer or one of their their people
over draftkings back from draftkings had
money he invests as well and then Aaron
Levie who is a guy over a box and other
ones there were celebrities and a lot of
people that were connected in here that
were in this round of 13 with the grand
launch with all this buzz about five
hundred thousand people on a waiting
list then halfway through fifteen and
sixteen fifty million dollars in 2017
big money now we’re talking nine digits
a hundred and ten million dollars is
raised led by DST global and NEA and
with participation from a fund that is
led by Josh Kushner and Josh Kushner is
the brother of a guy who is the
son-in-law of a guy who lives in the
United States at 1600 Pennsylvania
Avenue and likes to tweet at that point
they also announced that they had
crossed 30 billion dollars in total
trades through the life of the platform
that is really impressive you take a
look at that thirty billion dollars in
total trade value and you’ve just
launched this thing basic
April of 2014 that is huge along with
that round they also announced that they
had a 1.2 billion dollar valuation in
other words in just three years it
entered the unicorn Club and we all
remember when a unicorn is it’s a
startup that’s reached over a billion
dollars in valuation well as you can
imagine and you take a look at what they
were saying about subscribers and what
they’re raising here this thing is on
Elon Musk’s rocket to the moon meanwhile
Elon Musk is smoking dope with Joe Rogan
and he’s on the moon we have a massive
round that happens in the beginning of
2018 363 million dollar venture round at
a 5.2 billion dollar valuation now wait
a minute
let’s break that down a little bit 5.2
billion dollar valuation after our 1.2
billion dollar valuation barely a year
prior man you know there’s a word for
that and that is damn they’re not just
in the unicorn Club they’re in the club
and now they’re back in the VIP partying
with a 5.2 billion dollar valuation not
to be content with that they’re adding
to the platform investing they announced
right after this round that now you can
actually trade crypto on it starting
with four states and then getting to 19
states because here in the USA different
states feel different kinds of
regulations are necessary when it comes
to trading crypto that is followed by
right about now and we’re in the third
quarter of 2018 at the time we do this
case study they announced hey we’re
gonna have an IPO well you can say
you’re gonna do an IPO but you can’t say
too much else about it because there’s
laws and I think called the quiet period
and things but you can say I believe
we’re on a path to go public at some
point in time they will file an s-1 an
s-1 is available at SCC gov and anybody
on earth can take a look at it and read
the intricacies into the model find out
whether these subscriber numbers are
really correct find out what other
things are thinking about how do they
view competition all of it by law has to
be contained in the s-1 and is one of
the most magnificent documents you can
read on any company because it’s a case
study on that company that they have to
present to the market and if
shade the truth in it there’s a word for
executives that shade the truth in an
s-1 and it’s inmates so nonetheless they
also say help one and they’re looking
for a CFO and if they’re really looking
for a great CFO they should go look
Manhattan Beach California and find a
guy named Michael Marchetti there’s a
CFO for you anyway I like to step into
part three and what part three is now
that we have the history and we see how
they raise money let’s talk a little bit
about this because a lot of you that
gave me suggestions to do this case
study we’re asking what on earth is up
with Robin Hood e Trade and Schwab you
know in Ameritrade we’ll let you get an
app on your phone and you can do things
on that what is so special about
freaking Robin Hood that everybody’s
going crazy over this thing these guys
had expertise bat intent of working in
the industry had a vision for this and
when they bring this out one of the
things they think about is hey we’re
experts we can do this even better we’re
going to provide more services we’re
gonna do these things now you see why I
call it a light blue ocean because it’s
not a full blue ocean it’s close its
really dramatic but why wouldn’t I call
it a full blue ocean well in addition to
more services that you can ask your
development team and your business
development people to go out and get the
contracts in place and build more
services such as crypto there’s an issue
here and it is ain’t nothing hard to
copy by incumbents and I think you
understand why I got that little arrow
there for incumbent now why wouldn’t JP
Morgan and Merrill Lynch do that well
first they’ve got wealth management
teams that are charging people to put
their money at Merrill Lynch
fees every time they trade most of that
stuff would be counter to them suddenly
offering Merrill Lynch light where you
don’t pay any fees so there’s some
built-in issues there that they couldn’t
copy it exactly but do they have the
technology do they have the
clearinghouses do they have the ability
to say that they could do it like this
do they have the ability basically to
put the same product out and say hey if
you have less than a hundred thousand
dollars in a trading account you can
trade with Merrill Lynch light and get
all these benefits here but pay interest
on your margin dollars that you borrow
well sure they could and that’s why I
say
a real issue here in that the incumbents
if this really takes off they could make
a big step and copy this rather quickly
also the security and regulations and a
little caricature of Elizabeth Warren I
know she’s supposed to look like
American Indian but right now I think
she looks like a Halloween witch plus
we’re almost in the fall so I’m just
gonna go with that regulators can come
out and put additional regulations in
place that could stop this and who might
be lobbying for those regulations Oh
Merrill Lynch JP Morgan Goldman Sachs
might they be lobbying so that a upstart
might face regulations and have a
tougher row you bet they would the same
way
Amazon lobbies in Washington the things
that favors it and we’ve already seen
Google lobbies in Washington for the
things that would favor them that’s the
game the incumbents are gonna draw
barriers to entry using their might and
their political force so what do I think
I think Robin Hood’s a great product I
think it’s really innovative I use it
and I think what they’ve done with some
of their pricing on the loans and the
interest you pay is very novel and
innovative you can get a gold
subscription and pay like six or twelve
bucks a month and it controls the
interest or the amount that you pay or
the amount of money you can borrow like
two hundred dollars a month you can
borrow up to fifty thousand dollars or
something it’s get set up that way so
that these fee structures something’s
got to pay for the service are in place
but they’re commensurate with what you
have but the individual trades are free
so that’s what I think about Robin Hood
but what do you think leave some
comments down below and tell me what you
think about big companies gonna squash
them or some of those big financial
companies maybe one of them comes up and
buy them or will they have a great life
as a company public on the stock market
after a successful IPO interested to
know what you think also interested to
know what companies you want to see me
cover up on this board on case studies
in the future because Robin Hood was one
of your suggestions and I appreciate it
until next time please subscribe to
value tainment the best channel on the
internet for entrepreneurial content and
remember when we get to a million
subscribers which is right around the
corner the first annual value team at
entrepreneur conference will be
announced led by Patrick Beth David and
featuring people such as yours true
the biz doc and other leaders to make
you better your company better and the
people you touch better still until then
I’m Tom Ellsworth the biz doc and I hope I left you better than I found you
doc its Robin Hood a suggestion I took
from you where did they come from
where are they going what’s up with that
five billion dollar valuation and the
story this week that they’re preparing
to go public all of that and more Robin
Hood the financial services company
that’s in the app on your phone in the
palm of your hand
let’s do three things first talk a
little bit about the history the money
they raised and how they got to that
five billion dollar valuation that
they’re talking about today second were
they going there’s a big news report out
that they’re looking for a professional
CFO why because they’re going public and
they want to file an IPO and third I’m
gonna talk about what do I think is
really the essence of Robin Hood how did
they jump into a financial services
sector this got Schwab and e Trade and
all these big companies already there
that are available systems to help you
trade stocks how did they jump in and
what made it so special let’s start with
the history once upon a time back in
late 2013
these two guys beige ubot and Vladimir
10m are working in financial services
they leave to go create Robin Hood they
had a vision to do some very special
things and to make it easier for you and
me to trade specifically to trade for
free but then will pay fees for other
things like interest on money we borrow
because in a margin account some of the
money is yours and some of the money you
borrow the money you borrow you pay
interest it’s like a credit card or a
car loan or any other kind of loan
that’s where they were gonna make their
money but make it really easy to trade
the reason they did that is because they
had talked about and a lot of interviews
that they say look if some guys drop in
$200,000 to buy a big chunk of Facebook
that guy doesn’t care whether it’s a
twelve ninety five trade or a seven
ninety five trade but guess what most
average investors don’t make trades that
big so that’s seven ninety five and
twelve ninety five you know is real
money on a hundred or two hundred or
three hundred dollar trade and why
should people be paying that will make
it for free and will charge them fees
for certain things in the envision
subscriptions downstream and that’s
where they would make the money
meanwhile all the trades who go on
three that was the essence of it in a
way it was kind of a blue ocean and in
the blue ocean framework you know you
eliminate things raise things reduce
things create things and that gives you
a blue ocean doing something different
now this I call a light blue ocean for
reasons I’m going to get into at the
very end of the case study but what did
they do initially they eliminated fees
what did they raised they raised
accessibility there was already access
on the internet for a decade or more for
getting to your stock trading and it was
getting easier and easier and there were
trades you could make right on your
phone connected to your master trading
account they made it even easier and
made the phone app even slicker then
they reduce friction they allowed you to
deposit money very easily and have that
money be immediately available to make
trades today and doing all this they
created what I call a light blue ocean
back at the end of 13 it was December to
be exact at the beginning of 14 they
come out and very quickly they claim to
have a hundred thousand people on a
waiting list to get the app in other
words to be part of the beta or the
launch there was two that were very
close together and it was basically
rolling right out to the market later
that year they claimed they had five
hundred thousand people in the waiting
list and they introduced iOS version of
the app and they were off and running
let’s keep following the subscriber line
that we’re talking about here and then
I’m going to get to the investment in
just a second they go and they’re at
500,000 users but by the end of 16 with
the Android version of it out and the
iOS version now they’ve got both
versions out so anyone in the United
States regardless of what phone you have
can get access to Robin Hood they reach
a million subscribers before the end of
17 1.5 million shortly at the beginning
of seventeen two million in the middle
of seventeen and today they say they’re
at three million or more and going to
the moon suffice is to say they’re not a
public company yet they’re a private
company and these are numbers they’re
announcing nonetheless I believe them
and I think that they’re really off and
running the buzz that you see on the
Internet the number of people using it
number of people talking about it leads
me to believe that I don’t think this is
a start-up getting fluffy with their
numbers I believe these are the numbers
there now let’s step back and take a
look at how they raise the capital well
they started here with a three million
dollar round that was basically their
their seed money from Google andreessen
horowitz
and index and they raised that right
around the end of 14 so they’ve been
showing this to people and people
thought they were on to something
compelling and made that early
investment then here when it launches
they raise 13 million dollars that they
announced in 2014 and I call this the
celebrity round because there were some
very interesting people that were
investing at this point
first of all Snoop yes as in Snoop Dogg
investing in a start-up that’s trading
in stocks you know there’s a million
places where cannabis is very legal and
maybe you would think snoop would be in
that sector of the economy not that he
has any expertise in that area but
instead he’s actually out here investing
in a stock trading company and Snoop is
joined by Jared Leto and Jared Leto’s
lead singer foots at thirty thirty
Seconds to Mars thank you very much
camera people and producers are useful
along with draftkings or chief strategy
officer or one of their their people
over draftkings back from draftkings had
money he invests as well and then Aaron
Levie who is a guy over a box and other
ones there were celebrities and a lot of
people that were connected in here that
were in this round of 13 with the grand
launch with all this buzz about five
hundred thousand people on a waiting
list then halfway through fifteen and
sixteen fifty million dollars in 2017
big money now we’re talking nine digits
a hundred and ten million dollars is
raised led by DST global and NEA and
with participation from a fund that is
led by Josh Kushner and Josh Kushner is
the brother of a guy who is the
son-in-law of a guy who lives in the
United States at 1600 Pennsylvania
Avenue and likes to tweet at that point
they also announced that they had
crossed 30 billion dollars in total
trades through the life of the platform
that is really impressive you take a
look at that thirty billion dollars in
total trade value and you’ve just
launched this thing basic
April of 2014 that is huge along with
that round they also announced that they
had a 1.2 billion dollar valuation in
other words in just three years it
entered the unicorn Club and we all
remember when a unicorn is it’s a
startup that’s reached over a billion
dollars in valuation well as you can
imagine and you take a look at what they
were saying about subscribers and what
they’re raising here this thing is on
Elon Musk’s rocket to the moon meanwhile
Elon Musk is smoking dope with Joe Rogan
and he’s on the moon we have a massive
round that happens in the beginning of
2018 363 million dollar venture round at
a 5.2 billion dollar valuation now wait
a minute
let’s break that down a little bit 5.2
billion dollar valuation after our 1.2
billion dollar valuation barely a year
prior man you know there’s a word for
that and that is damn they’re not just
in the unicorn Club they’re in the club
and now they’re back in the VIP partying
with a 5.2 billion dollar valuation not
to be content with that they’re adding
to the platform investing they announced
right after this round that now you can
actually trade crypto on it starting
with four states and then getting to 19
states because here in the USA different
states feel different kinds of
regulations are necessary when it comes
to trading crypto that is followed by
right about now and we’re in the third
quarter of 2018 at the time we do this
case study they announced hey we’re
gonna have an IPO well you can say
you’re gonna do an IPO but you can’t say
too much else about it because there’s
laws and I think called the quiet period
and things but you can say I believe
we’re on a path to go public at some
point in time they will file an s-1 an
s-1 is available at SCC gov and anybody
on earth can take a look at it and read
the intricacies into the model find out
whether these subscriber numbers are
really correct find out what other
things are thinking about how do they
view competition all of it by law has to
be contained in the s-1 and is one of
the most magnificent documents you can
read on any company because it’s a case
study on that company that they have to
present to the market and if
shade the truth in it there’s a word for
executives that shade the truth in an
s-1 and it’s inmates so nonetheless they
also say help one and they’re looking
for a CFO and if they’re really looking
for a great CFO they should go look
Manhattan Beach California and find a
guy named Michael Marchetti there’s a
CFO for you anyway I like to step into
part three and what part three is now
that we have the history and we see how
they raise money let’s talk a little bit
about this because a lot of you that
gave me suggestions to do this case
study we’re asking what on earth is up
with Robin Hood e Trade and Schwab you
know in Ameritrade we’ll let you get an
app on your phone and you can do things
on that what is so special about
freaking Robin Hood that everybody’s
going crazy over this thing these guys
had expertise bat intent of working in
the industry had a vision for this and
when they bring this out one of the
things they think about is hey we’re
experts we can do this even better we’re
going to provide more services we’re
gonna do these things now you see why I
call it a light blue ocean because it’s
not a full blue ocean it’s close its
really dramatic but why wouldn’t I call
it a full blue ocean well in addition to
more services that you can ask your
development team and your business
development people to go out and get the
contracts in place and build more
services such as crypto there’s an issue
here and it is ain’t nothing hard to
copy by incumbents and I think you
understand why I got that little arrow
there for incumbent now why wouldn’t JP
Morgan and Merrill Lynch do that well
first they’ve got wealth management
teams that are charging people to put
their money at Merrill Lynch
fees every time they trade most of that
stuff would be counter to them suddenly
offering Merrill Lynch light where you
don’t pay any fees so there’s some
built-in issues there that they couldn’t
copy it exactly but do they have the
technology do they have the
clearinghouses do they have the ability
to say that they could do it like this
do they have the ability basically to
put the same product out and say hey if
you have less than a hundred thousand
dollars in a trading account you can
trade with Merrill Lynch light and get
all these benefits here but pay interest
on your margin dollars that you borrow
well sure they could and that’s why I
say
a real issue here in that the incumbents
if this really takes off they could make
a big step and copy this rather quickly
also the security and regulations and a
little caricature of Elizabeth Warren I
know she’s supposed to look like
American Indian but right now I think
she looks like a Halloween witch plus
we’re almost in the fall so I’m just
gonna go with that regulators can come
out and put additional regulations in
place that could stop this and who might
be lobbying for those regulations Oh
Merrill Lynch JP Morgan Goldman Sachs
might they be lobbying so that a upstart
might face regulations and have a
tougher row you bet they would the same
way
Amazon lobbies in Washington the things
that favors it and we’ve already seen
Google lobbies in Washington for the
things that would favor them that’s the
game the incumbents are gonna draw
barriers to entry using their might and
their political force so what do I think
I think Robin Hood’s a great product I
think it’s really innovative I use it
and I think what they’ve done with some
of their pricing on the loans and the
interest you pay is very novel and
innovative you can get a gold
subscription and pay like six or twelve
bucks a month and it controls the
interest or the amount that you pay or
the amount of money you can borrow like
two hundred dollars a month you can
borrow up to fifty thousand dollars or
something it’s get set up that way so
that these fee structures something’s
got to pay for the service are in place
but they’re commensurate with what you
have but the individual trades are free
so that’s what I think about Robin Hood
but what do you think leave some
comments down below and tell me what you
think about big companies gonna squash
them or some of those big financial
companies maybe one of them comes up and
buy them or will they have a great life
as a company public on the stock market
after a successful IPO interested to
know what you think also interested to
know what companies you want to see me
cover up on this board on case studies
in the future because Robin Hood was one
of your suggestions and I appreciate it
until next time please subscribe to
value tainment the best channel on the
internet for entrepreneurial content and
remember when we get to a million
subscribers which is right around the
corner the first annual value team at
entrepreneur conference will be
announced led by Patrick Beth David and
featuring people such as yours true
the biz doc and other leaders to make
you better your company better and the
people you touch better still until then
I’m Tom Ellsworth the biz doc and I hope I left you better than I found you
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