For many decades, stock trading and investment was largely the preserve of institutional investors. Whopping returns on early-stage public companies were the bedrock of outsized returns for a select few lucky enough to have access to the markets.
A few years back, Robinhood broke onto the scene with a stated mission to democratise finance. Since then, they have grown to become a listed company (yes you can now buy $HOOD), but have been rocked by claims that the gamification of investment has led to crippling debt and psychological trauma among its users. Half of Robinhood’s user base have never traded before, and particularly among young male users on the platform, there is a trend of getting into debt that they cannot afford; with one particularly harrowing case of Alex Kearns’ suicide prompted by a malfunction in Robinhood’s app.
It’s too early to say whether Robinhood’s brand can grapple with the repeated setbacks it has endured, but major players like Public and WeBull are now stealing a march with their “social-focussed” approach and data-analytics offering, respectively. With Robinhood seemingly unable to secure top spot, the net result is a consensus among many top VC firms: there’s still a lot of room for new entrants and scale in the consumer trading space.
Let’s meet the contenders
- Freetrade: “Investing is one of the best ways to grow your savings over the long term. We make it simple for both beginners and experienced investors.”
- Trii: “Trii is a mobile platform that allows retail investors to buy both US and local equities in LatAm.”
- Honesto: “First crypto trading app backed by a Swiss bank. A one stop shop for tokenized assets.”
- Lightyear: “Lightyear is a simple and approachable way to invest your money globally without unnecessary barriers or fees”
- Hapi: “Robinhood for LATAM”
- Strikes: “Strikes is a beautiful, intuitive, and data-driven stocks & options trading app built to help you trade options the right way.”
- Finary: “Finary is an investing social platform where you can talk about investments with friends and make trades on the market.”
- GoTrade: “Gotrade is a fractional share trading startup that enables 150 countries to invest commission-free in fractions of companies.”
- Jaaims: “Jaaims is the first fully automated trading app that analyses, predicts and makes calculated trades on your behalf 24/7.”
- Webull: “0 Commissions and no deposit minimums. Everyone gets smart tools for smart investing.”
- Baraka: “Commission-Free Investment App for the Middle East.”
Robinhood’s most recent numbers reveal a Q2 2021 user base of 22.5m users worldwide. As for eToro - a popular service in the UK - in July 2021, they had around 152,000 monthly active users (MAUs) - down from a peak of 356,000 MAUs in April 2021.
These might sound like big numbers, but the reality is that we are still “late but long-term early” as some investors would say; in other words there’s a lot of market share still up for grabs.
How we’d approach marketing and growing a fledgling consumer trading startups
- Get a toehold not a foothold: Popular startup wisdom out of the noughties and 10s was to establish a beachhead; a foothold in a much wider market (i.e. if Passionfruit was created in 2010, we might initially focus on connecting SMBs with vetted marketing specialists). As we come out of the pandemic and into this startup boom period, we need to reimagine the foothold strategy, and think more about toeholds (i.e. Passionfruit, started in today’s era, initially is focussed on connecting VC-backed tech startups with vetted marketing specialists). It’s not easy to have the bravery to focus on a smaller slice of the pie, but for your product and its corresponding marketing to really land and deliver high-converting leads, it pays to constrain who exactly you’re building for. There’s no shame or lack of ambition in finding product-market fit in a smaller market first, there’s only a better chance of success - as you have a launchpad to move into larger adjacent markets later down the line. If you’re trying to get clear on your messaging, Geoffrey Moore’s product positioning framework is a classic exercise. We encourage all startups to answer every month as they gain a better understanding of their business. If you’re struggling to work out who your product is for, spend some time thinking about your anti-persona - those people who think your product is for them, but are mistaken.
- Demystify Investing: Coinbase is leading the way here by taking content marketing and treating it like a fully fledged media arm. If you’re trying to learn about crypto, they offer you a whole heap of educational value before you’ve even created an account. Again, knowing who you’re building for, and who you’re not building for, is going to help you marshall content creation resources most effectively. Just proclaiming that you’re commission free is not a differentiator any more (improving price and access issues) - the winners in this space won’t just make their customers investors, they’ll make them better investors. The team at Lightyear clearly understand this and we’re fascinated to see how they tackle it:
“Most platforms are execution venues. Little information is available to the customer to really understand the market, portfolio or instruments they are interacting with. [...] How can people make the right decisions based on their risk, ambition or views in life?”
Let’s be clear - this doesn’t mean you have to have a TikTok account, but I would love to see a startup in this group use video better, or develop meaningful partnerships with creators that can help distribute their educational material.
- Learn what it really means to build community, and then start building it now: I love the concept of community in David Spinks’ recent book The Business of Belonging: which, in a nutshell, is all about pushing power as far out into your user base as it will go. His writing is a treasure trove of applicable, practical steps you can take to make this happen - but more than the how, he makes a persuasive case for the why of community; framing it as the ultimate brand defensibility. One pillar of his approach is the idea of the commitment curve - which is also explored by Jordan Odinsky in his piece on Cult Brands. Willa T-F and her team at Public are leading the way in this space - with genuine cross-user collaboration and support now a regular feature on the platform - and new entrants would be wise to do all they can to follow suit.