Marketing lessons learned from Robinhood, the unicorn rebuilding America’s financial system
Updated: Nov 22, 2020
In 2014, less than 14% of U.S. households owned stocks. As a matter of fact, CNN infamously cited that more people owned cats than had positions in public markets. Thanks to E-Trade, Fidelity, and other hard-to-access stock trading portals, Americans were reluctant to take part. And to top it off, a report by Pew Research showed that the stock market increased the economic gap between income levels, citing a system built for the affluent.
In the fall of 2014, a small startup called Robinhood publicly entered the market, raising $13 million to “democratize the stock market” with its zero-fee trading platform. Founded by two Wall Street entrepreneurs, Robinhood set out to make the stock market, and the financial system, more accessible.
In this series of looking at companies and their marketing strategies, we’re going to take a look at the formative years, and what events, marketing campaigns and messages catapulted them to be category creators. Let’s jump in.
Who is the hero? Who is the villain?
Steven Pressfield infamously said, “the villain drives the story”. Some of the most successful companies in history have identified a villain (usually a process or a person/company) and set out to deliver a better/faster/secure/customer-focused version of the villain. “Democratize”, and “we’re guided by the belief that” tend to be words and phrases that are rallying cries for the underdog.
In Robinhood’s case, their marketing strategy early on was grounded in one simple truth:
The barrier to entry in the stock market is too high
This included the focus on fees, access geared towards the wealthy over the working class, and the complexities that come with big players using terminology few understood. In a blog post at the close of 2014, Robinhood said,
“We believe the stock market is one of the best available tools for individual wealth creation. But too few have reaped the benefits of this powerful, economic force. And it’s no wonder why.”
To start us on our marketing journey, here are the four activities Robinhood did from a marketing standpoint to launch them onto the radars of millions:
They built anticipation. Robinhood delivered a VIP experience to would-be customers even before launch, with invite-only early access and wait list features. A slick, trader-interface that was visually appealing and fun to have in your pocket got the attention of 600,000 people as a result.
They gamified the waiting experience. This has become the norm today with products launched on ProductHunt, but back in 2014, the concept of seeing your rank for access, and having the ability to influence it, drove seriously virality.
They used their public launch to take a stance. Robinhood identified a villian -- “to take on the giants”, and to “make the stock market accessible to all, not just the wealthy” -- and grounded it in a mission of building a solution built for everyone.
They targeted the initial offering at millenials. With any product launch, press release or announcement, the more focused you can be from a marketing standpoint, the better. While some say it’s a weakness, I say it’s super smart. Robinhood found its way to be the defacto platform for millennials and the microinvestor market.
Capitalizing on the data, and momentum
It’s easy to state your mission and have millions of people believe in it. It’s another thing to move the market. Remember that 14% number of households that owned stock in 2014? In 2016, a Federal Reserve Board survey showed that number had risen to 51%.
Robinhood had raised almost $200 million in 2017 and evolved their messaging to be, “The world’s fastest-growing brokerage democratizing America’s financial system”.
They launched in more countries, including China, and hired a former Adidas marketing executive as its first head of marketing.
If I’ve learned anything about marketing, it’s that whoever capitalized on momentum first wins. It’s like when I was a journalist at the Boston Globe, they’d say that great stories are a balance between being right and being first. Sacrifice one over the other and you’re a syndicated piece of news or vulnerable to the truth.
Once Robinhood had been deemed a unicorn by Silicon Valley standards they made an announcement every three months.
They’ve posted more than 10 times on the blog in the last four months, and they’ve been about major product announcements, notable new hires, and (shocker) early VIP messaging about their Crypto network.
Building a network, not a network effect
Pat Kinsel, the CEO and Founder of Notarize always says that the companies who can build networks, as opposed to network effects, are best poised to own the market.
“We’re guided by the belief that America’s financial system should work for everyone”
That’s what Robinhood’s latest messaging is to take that next step and own the market. Since their launch in 2014, Robinhood has more than 6 million users across a Cryptocurrency product, a Stock-trading product, and recently announced its foray into Checking accounts (with 3% interest rates!) — though it was recently shelved for not being SIPC insured.
What Robinhood is trying to do, along with build a brand that has the finesse to reach every ecosystem in financial services, is create that network.
They have the users, brokerage firms paying them for access to said users, and a brand known for disrupting legacy processes and systems.
Network effects, by definition, are products and actions built into a product or brand that take advantage of someone else’s network. To win in today’s market, especially a highly regulated or legally challenging one, I’d argue that being the network is more important.
Those companies face immense marketing challenges. You need to build trust, educate users/stakeholders on new behaviors, and convince a market that you have a vision that can elevate or create a new category.
Robinhood is one of the best case studies in changing behavior and a market to truly open access to a process that wasn’t truly available for all.
Its latest valuation is $5.6 billion.