Confessions of a Robinhood User by@juliawu

Confessions of a Robinhood User

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Robinhood is set to IPO in 2021. The company's S-1 filing was filed four years ago. The IPO is expected to be the first of its kind in the U.S. market. Robinhood makes up half of all new app downloads among mobile investing and trading platforms. Founder and CEO: "Robinhood is not the sexiest investment app I’ve ever seen -- it’s the sexyiest app, period. Robinhood's creative, user-obsessed design is what helped Robinhood “get away” with a lot of its controversies and hiccups.
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Julia Wu

Engineering at Brex, Apple, Microsoft. I write about fintech, crypto and China

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Exactly four years ago, I was a young and vulnerable college senior with an inkling to invest her savings from internships and campus jobs into stocks and cryptocurrency. In 2017, I started my investing journey with two apps, Robinhood and Coinbase, which defined my financial story in ways that my “traditional” retail bank doesn’t come close to. Four years later, both apps are now IPO-ing in 2021. I remember watching the Coinbase IPO livestream with watery eyes and a racing heart in April. Back then, I wasn’t expecting that a few months later, I would be participating in the Robinhood IPO through its IPO Access feature. What follows is a collection of highlights from the Robinhood S-1, and some personal reflections on my past four years with the product.


S-1 Highlights

Extracted from the original Robinhood S-1 filing


To democratize finance for all.


  • Creative Product Design: Intuitive, elegant experiences that efficiently address customers' needs. Informative: Integrates info through Robinhood Learn and the news feed, which offers free news from trusted sources.

  • Mobile-first: Robinhood is the go-to mobile investing experience. It makes up half of all new app downloads among mobile investing and trading platforms.

  • Category-defining Brand: Symbol of retail investing and finance in America. Fresh, people-centric approach. Delightful, engaging customer experience. Built a relationship with their customer that leaves them wanting to talk about Robinhood with their friends and family.

  • Financial Services at Internet Scale: People-centric approach drives customer enthusiasm and engagement, resulting in the rapid adoption of products. Accessible information. Push notifications, widgets, customized updates to customers

  • Vertically integrated platform: App-based platform supported by proprietary cloud-based technology. Broker-dealer, tech stack, control over product development end-to-end, faster development cycles, better customer experience and stronger unit economics, greater flexibility, and robust/dynamic risk management. Enables rapid introduction of new products such as cryptocurrency trading, dividend reinvestment, fractional shares, recurring investments, and IPO access.

  • Innovative and Compelling Business Model: No commission fees or account minimums → rapid growth and strong unit economics. Strong brand and platform accessibility created a network that enabled onboarding millions of customers with minimal marketing. The revenue payback period was ~13 months, average revenue payback period improved to less than 5 months in 2020

  • Founder-led company, passionate and experienced team: Founded in 2013 by Vlad Tenev and Baiju Bhatt. Exec team is full of seasoned industry veterans with a notable track record.


Many of us who have used Robinhood naturally tend to harp to our friends and family about its compelling user experience, or trades and new stocks/funds we discovered on the platform. Somehow, talking about stocks and investing became as fun (if not more) as discussing TV shows at dinners and parties. Robinhood is not the sexiest investment app I’ve ever seen -- it’s the sexiest app, period. I would argue that this creative, user-obsessed design is also what helped Robinhood “get away” with a lot of its controversies and hiccups in the past few years.

One of my biggest takeaways from working at Apple was that to change the world, you must captivate people with magical experiences. Robinhood demonstrates this.

Growth Strategies

  1. Add new customers to the platform
  2. Grow with customers
  3. Continue product and technology innovation
  4. Expand internationally


  • Safety First
  • Participation Is Power
  • Radical Customer Focus
  • First Principles Thinking

Commitments to customers

  • No commission fees
  • Quality execution
  • High-security standards
  • Extra protection
  • Dedicated support
  • Transparency

Quick Stats

  • Net Cumulative Funded Accounts: 18M
  • Monthly Active Users (MAU): 17.7M
  • Assets Under Custody (AUC): 81B
  • Adjusted EBITDA: 115M (3 months ending on 3/31/2021)

In 2020:

  • Revenue by 12/31/2020: $959M, up 245% from $278M in 2019
  • Net income by 12/31/2020: $7M, compared to a net loss of $107M in 2019
  • Adjusted EBITDA: $155M, up from negative $74M in 2019

Throughout the 3 months ending 3/21/2021:

  • Revenue: $522M, up 309% from $128M in the first 3 months of 2020
  • Net loss: of $1.4B, compared to a net loss of $53M
  • Adjusted EBITDA: $115M, compared to negative $47M

Risk Factors

It turns out that S-1s have pretty exhaustive lists of risk factors, so I will spare the reader and just mention those I found worthy of note:

  • The majority of Robinhood’s revenue is transaction-based (including payment for order flow). So a reduction in spreads in securities pricing, the reduced levels of trading activity generally changes in business relationships with market makers, bans on PFOF, or similar practices can reduce profitability and increase compliance costs as well as negative publicity.
  • Robinhood needs to maintain capital to satisfy liquidity needs (see GME) and support business growth and objectives.
  • Litigation matters are expensive and time-consuming. And there are plenty of lawsuits.

Organizational Structure

Robinhood Markets (RHM) is the umbrella that owns Robinhood Financial (RHF), Robinhood Securities (RHS), and Robinhood Crypto (RHC)




On December 31, 2020, and March 31, 2021, $3.5 billion and $11.6 billion of Robinhood's Assets Under Custody were attributed to cryptocurrencies, respectively. Commission-free buying and selling of cryptocurrency are enabled by Robinhood's subsidiary, RHC. From February 21, 2018, the day before they introduced cryptocurrency trading on the platform, to March 31, 2021, the total cryptocurrency market capitalization has grown from approximately $450 billion to approximately $1.9 trillion.

How Robinhood Makes Money from Crypto

Robinhood makes revenue from routing transactions. More specifically, it gets compensated for routing users' equity, option, and cryptocurrency trade orders to market makers for execution. For equities and options trading, these fees are known as PFOF (Payment For Order Flow). They tend to be based on the size of the publicly quoted bid-ask spread for the security being traded. Robinhood receives a fixed percentage of the difference between the quoted bid and ask at the time the trade is executed. When it comes to crypto trading, there are "transaction rebates" similar to the concept of trading fees. The rebate is a fixed percentage of the order value. Transaction-based revenue is calculated identically among all participating market makers. Robinhood routes equity and option orders to market makers, in a priority order based on which one is most likely to give customers the best execution. In both retail and crypto trading, Robinhood claims to optimize for the best execution rather than transaction fees they can earn. This means that competitive pricing for customers is prioritized over transaction rebates.


Robinhood makes it clear in the S-1 that a “substantial portion of the recent growth in our net revenues earned from cryptocurrency transactions is attributable to transactions in Dogecoin.” As a result, if the demand for transactions in Dogecoin declines and is not replaced by new demand for other cryptocurrencies available for trading on the platform, Robinhood could be adversely affected. In the first three months of 2021, 17% of Robinhood's total revenue came from transaction-based revenues earned from cryptocurrency transactions (vs. 4% in the first 3 months of 2020). Today, Robinhood supports 7 cryptocurrencies for trading, but 34% of transaction-based revenue was attributable to Dogecoin (during the first 3 months of 2021). This remarkable fact raises questions about whether most users are using Robinhood crypto for meme tokens. Other cryptocurrencies supported are ETH, Bitcoin SV, Bitcoin Cash, BTC, LTC, and ETH Classic.

Robinhood discusses plans about supporting deposits and withdrawals of cryptocurrencies in the future. They acknowledge that the custody of customers’ crypto could result in loss, disputes, and other liabilities that can harm Robinhood’s business.

Confessions of a Robinhood User

Robinhood 2020 Year In Review

Robinhood 2020 Year In Review

Now that I’m done paraphrasing the highlights from Robinhood’s S-1, it’s time to share a bit about my journey with it.

On June 23, 2021, I received an email from Robinhood about their new product, IPO Access: A way to buy shares of companies at their IPO price, before trading on public exchanges. I'm traditionally not a fan of buying IPOs, but I thought that doing this with Robinhood — as part of their IPO — would be very meta, and a "once in a blue moon" opportunity I likely won’t forget about.

This IPO access moment represents the role that Robinhood plays in my investment life, and that of many others: A foray into something that seemed intangible; inaccessible. All of a sudden, what was meant for insiders and sophisticated investors is at my fingertips. Investing in the stock market was something my father always talked about while I was growing up. He would spend hours looking at charts with candlesticks and occasionally boasting about how much he made in a trade. He would tell me, "with investing you can make money birth more money." It always fascinated me, but it wasn't until I started depositing paychecks from my jobs during college that the possibility of investing my own money came to mind.

Ironically, I was part of Brown University’s Investment Group, helping pitch stocks and invest a portion of the school’s endowment before I started investing in stocks. I was reading The Little Book that Beats the Market, taking investments classes, going to "super days" at big 4 investment banks, and almost became a trader on wall street before investing my own money. It’s crazy to think how little investing I did, despite being fascinated by the thought of it and satiating my curiosity through “approximate” activities. This is probably because, during the years of 2013 - 2015 (half of my college career), there wasn't a go-to product that made it easy for me and my friends to invest. It wasn't until the summer of 2016, when I went to Square Code Camp, a hackathon and fellowship for women engineers, that a new friend showed me her Robinhood app. I was immediately captivated by the UI: A beautiful white interface with streaks of neon green — it was clean, simple, and beautiful. Since then, the thought of signing up for a Robinhood account never left my mind.

Going into my last year of college, I knew that it would make sense to put my savings to work rather than letting them sleep on negligible interest rates from my retail bank’s savings account. I didn't know if it was possible with my F-1 student visa status though. I decided to give the sign-up flow a try, and surprisingly, it worked! With my Robinhood account activated, and Ben Graham's Intelligent Investor in hand, I wrapped up my college career and began my personal investing journey.

Robinhood 2020 Year In Review

Robinhood 2020 Year In Review

Robinhood says it wants to grow with its customers. It sure has grown with me over the last 4 years. When I was graduating from college, I was a starry-eyed 22-year old with some early savings from internships, determined to start a career in the tech industry and build her wealth. Over the years, Robinhood became home to the majority of my investments (and I do invest most of my savings). I came to trust this platform for deploying most of my money. And it’s also what I used to get some Dogecoin.

Every month, I do a financial review of my expenses and investments. As part of this ritual, I check my Robinhood dashboard and get a mini adrenaline rush when I see the returns compounded over the last few years, from monthly dollar-cost averaging. I was able to grow my salary earnings thanks to the investments I made in index funds, stocks, and ETFs on Robinhood.

What could be better

As with any responsible user or critic, I will also share what I don't find as compelling about Robinhood.

Robinhood 2020 Year In Review

Robinhood 2020 Year In Review

Robinhood Snacks: The attempts at making financial news and content accessible and digestible can sometimes be excessive, or so “punny” that I don’t understand the joke. I like that the weekly newsletter is bite-sized, but I wouldn't rely on that as my primary source of financial news. When I turn 30, I might feel a bit old for material that’s too “hip.”

Robinhood cash and the debit card: I haven't found compelling use cases for this. I wanted the card because it was cool and looked sleek but only used it once since getting it last year. Rewards on my normal credit card are better, and it's not even that good compared to some other cards. I think the Cash account and Crypto are examples of Robinhood going beyond their main entree, which is fine but I am mostly here for what they (currently) do best: retail investing.

More value for Gold members: I’ve been paying for Robinhood every month, and the main feature I benefit from is the instant ability to trade after initiating a transfer from my bank to Robinhood. It feels great, but I wish I had reasons to spend more time on Robinhood and get more bang for my buck. As a Robinhood gold member, I have access to L2 market data and more in-depth research. Perhaps more time on Robinhood could help me assess my portfolio more critically and reallocate/rebalance funds across ETFs, stocks, commodities, etc.

Crypto: Dogecoin is the only token I own on Robinhood, aside from some tiny transactions to test the ETH purchasing flow. I don't see a strong reason to hold much crypto outside of more crypto-specific platforms like Coinbase, Binance, or Metamask. Also, to truly support crypto, you can't just let people buy crypto but not transfer in or out. Maybe it's this lack of functionality that makes me only want to use Robinhood for DOGE. It’s easy to buy on Robinhood, and I do it for fun -- and just in case DOGE moons again (which it hasn’t). If Robinhood wants to grow its crypto arm, it will have to start supporting more crypto functionality and coins. But that comes with added liability and responsibility and competes neck to neck with other platforms that already do this for a living. I don't see a huge need for my stocks app to also support crypto — I'm ok doing that elsewhere, especially if I want to interact with decentralized finance.



Closing Thoughts

I’d like to reiterate the power of magical UX: Say what you want about Robinhood's controversies—whether it's the GME saga or the recent outages and account takeovers—most of us can't help but love the product. It’s a similar story with Uber: It had a lot of controversies but it remains a superior ride-hailing product. No matter how many people tried to boycott it, most users still can't help but use it because it just works. I think a lot of Robinhood’s success comes down to an unrelenting pursuit of customer love. But perhaps what it will need to continue working on is long-term customer trust.

International expansion is interesting. I want my friends in Brazil to be able to invest in Alibaba. I want a self-taught software engineer in Cambodia to be able to invest in Tesla.

Last and certainly not least, I would like to see more of my female friends using Robinhood. I haven’t seen stats about the gender and demographic breakdown among Robinhood users, but my guess is that we are not at 50-50 yet.

I love the practice and thought of investing because markets are the heartbeat of human economic activity. Thank you, Robinhood, for opening the door to markets for me. I hope you will continue to do so for the next billion users.



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