The recent surge in the stock market and Robinhood downloads has most financial pundits and journalists looking for the answer.
- Is this the bottom or worse is yet to come?
- Why the stock market is up amid chaos?
- Why is there such a massive disconnect with reality on the ground and the stock market?
Two narratives are being played out, one is that
- Feds are basically printing money out of thin air, so that is what drives the market
- second is that all the “Robinhood investors“ are driving the market up.
The second reason is what I am really interested in. It shows the effectiveness of the Robinhood platform that pundits invented a new category of investors by calling them “Robinhood investors.”
Despite some bad news and few glitches with the App, Robinhood downloads soar since March, and it is only going up from here.
This a sign of a great product, Make the core functionality of the product so good that despite a few bugs, the users will continue to adopt the product and even willing to risk their money.
One of the best things Robinhood did is to understand their Customer base, they knew they addressable market really well. And they also figured out who are not their targeted users. They’re not after a sophisticated investor who trades on desktop terminals. To their product team, it is not about Robinhood vs ThinkorSwim. They were also not targeting ultra-rich demographics who instead give money to their financial advisor to invest. Robinhood’s target audience is young millennials with a sense of independence & DIY mentality. ( And some in “Get rich quick” bucket)
This is an excellent lesson for the product designers out there, you must know your audience and create a product around their needs.
So what makes Robinhood a product so successful?
Here is the list of top feature which makes this product desirable and Robinhood as phenomena:
Signup process
To achieve a high number of adoption, Robinhood’s best feature is its signup and boarding process. Unlike other financial platforms, it is as easy as signing up for social media account except for asking for Social security and transferring money.
Kudos to their product team, they turn a very complicated process and made it look straightforward. It is almost like a game. As you move thru the screen, you want to accomplish the next level and move up.
Additionally, the Robinhood referral program is great, you and a friend you recommend get a free stock. They make you scratch off to see which stock you got. It is further gamification that keeps the user engage. Even though My primary broker has been Vanguard, ThinkorSwim from TD Ameritrade. I ended up transferring a small portion of my portfolio to RH. I just could not resist!
Simple Home screen
Robinhood’s home screen is straightforward. It shows you the investment amount and your overall performance in percentage based on 1D, 1W, 3m, 1Y, or ALL, which you can toggle between. It provides instant gratification, especially if you’re in the green!. You can switch between simple chart and candle stick view. Do not expect a detailed chart similar to what other pro-trading platforms offer. Their target demographic is either not aware of all the intricacies of investing or simply don’t care.
Stock details
As you load the app first time, Robinhood loads the default watchlist so you can instantly start engaging with the App. I recently noticed that on Andriod App, they let you create different lists, but I could not see that feature on the iOs App yet. One of my favorite features of the stock detail is that within 10 seconds, you’re able to see the price movement in percentage for any stock for that 1 day, 1 W to all the way to 5Y. This is such a small feature to implement, yet many big platforms miss it. (I am looking at you, ThinkorSwim). I use this feature very often. Compared to other platforms, it does not show every fundamental of the company that a sophisticated investor might need, but it is terrific and easy to use for quick research.
Trading options
I am not recommending anyone to trade options since it is a very risk vehicle to make money. It is also a convoluted process if you ever tried to do it with other brokers and rightly so. With the intelligent design, Robinhood figured out how to explain options easily. If you’re not familiar with options, you can simply pick between, “I think it’s going up,” and you’ll be buying a Call or “I think it is going down,” You end up buying a put. Additionally, RH shows few recommendations: “Short-term-High risk,” Medium-Term, and Long Term. If you pick Call or Put, it uses a simple diagram to illustrate the trade risk and reward. It is an excellent use of simple visuals to explain a complicated concept.
Mobile-First Approach
In my opinion, the secret sauce of their success is their ability to execute a Mobile-first strategy. I remember when RH first started, it was ONLY available as a mobile app. they were not trying to create a new bank, but their goals appear to be to make Trading simple as downloading an App. The limitation of the mobile screen size forced them to make very different design choices by removing a lot of clutter.
Final Thoughts
Do I think this is the best trading app? Of course, no, I don’t even use RH as my primary trading account. I have a small porting of my investment in it, and I use it daily as a swing trader. It is not the most sophisticated App, it does not show you many details or fundamentals of the company. It does not allow you to place complicated trades. However, it is one of the best platforms for new investors. It allowed new investors to participate in the market, and in the long-run, it is an excellent service. The jury is still out about what’s going to happen when market crash, many fears that RH traders will be hurt the most, but my optimistic view is that many will learn a great lesson from market crashes and simply get better at investing.
As a product designer interested in investing, I find this company to be very fascinating, I cannot wait for their IPO, I’ll be waiting in line…
Let me wear my Product Manager hat on
If I am a PM for the Robinhood, what features will I prioritize and create a roadmap for the product?
- Alerts on Robinhood – Ability to create alerts for the price movements, both for Stocks and options
- Mutual Funds – While money is idle in the account to be invested, automatically add it to a Mutual fund!
- Robinhood Desktop App – Allow pro trader to switch to Desktop App once they’re ready to make sophisticated trades – This should be on the roadmap.
If this convinces you to try out Robinhood, don’t forget to use this link to Sign up!
