Robinhood is ready for Gen Z

5 min readNov 22, 2020

When Robinhood launched in late 2014, I was one of the few million people on the waitlist to get my hands on this trading platform. Like many others, I had no clue how they managed to provide zero-fee trades and still make money. But I was convinced to give it a shot based on the neat design and simple UI. I couldn’t have found a lower barrier to kick start my investment journey.

Robinhood is on a mission to “democratize the financial system” for all. Unlike Robin Hood the movie, where the outlaws steal from the 1% to give back to society, the company, Robinhood, is about giving regular folks access to tools and an opportunity to become a part of the 1%. In other words, the company provides the tools of capitalist wealth creation and helps people take control of their financial life. The founders, Vladimir Tenev and ‎Baiju Bhatt, believed “the biggest barriers to entry for ordinary people was that every single time you transacted with the stock market, it was costly.” This is why they set out to make investing friendly, approachable, and understandable for newcomers.

Product Overview

In late 2019, it was confirmed that Robinhood had more than 10 million users and “about half of [them] are first-time investors” with a median age of 30. It is clear that Robinhood’s audience is millennials who are technologically savvy having grown up completely immersed in the world of digital technology. This generation is a great target for financial service businesses as they tend to have the longest investment horizon, fewer dependencies, and consequently higher risk tolerance. Having grown up constantly connected to the internet, millennials tend to trust online services and like to take control of their own finances.

Design

To appeal to Robinhood’s young target audience, they have filled their platform with seamless user experiences that can be taken for granted by more advanced users. For starters, Robinhood was built ground up as a clean and straightforward mobile-first product, while not sacrificing any features. By using a minimalistic theme and removing the constant blast of dynamic information, the application allows novice users to easily explore, learn, and get started. This is something young investors trying to kickstart their investment portfolios couldn’t find among traditional financial service institutions.

As Robinhood expanded their products, they managed to translate their simplistic designs into a web interface as well.

One of my favorite features, when I was getting started with Robinhood’s mobile app, was the Order Type Explanation animation. The application provides a clear illustration of how each different order type works and how they can be leveraged to buy or sell a stock. Four common order types are Market, Limit, Stop, and Stop-Limit orders. One of the first questions a novice investor has is in understanding the difference between these order types. It is not necessary to know the difference between these to buy a stock. Although understanding how they work and when to use them can make a huge difference in the price you pay and the return you earn. Robinhood does a great job of helping beginners get started. They provide uncomplicated animations to educate investors with the knowledge to take control of their investments.

Removing Friction

With a simple UI/UX, Robinhood reduces the barrier of entry for new and young investors to start investing. Zero-fee trades, no account minimum, and fractional shares: the application makes it embarrassingly easy to invest in your first stocks with as little as $1. As a matter of fact, Robinhood was the pioneer in providing zero-fee trading, thus forcing other brokerages to drop their fees as well. In late 2019, “six years after Robinhood launched with zero-fee trading, major brokerages are catching up with a wave of fee-eliminating announcements”. As competitors jumped on the band-wagon and millennials grew along with their net worth (theoretically), the company has started to provide a full suite of financial products to meet their needs. Robinhood has started providing cryptocurrency, options, margin trading, and high yield savings accounts. Although the platform allows novice users to get started in their investing journey, they are also well equipped and expanding to handle the more sophisticated needs of their rapidly growing audience. In the next 5–10 years, Robinhood will be a full-scale financial institution, where you can open the app and “get anything you could get by walking into your local Bank of America, with better customer experience and better pricing.”

Social Experience

What better way to attract and incentivize users to get started on their investing journey than to give them exactly what they want, a free stock. Robinhood has managed to gamify the referral program to create a fun and exciting experience. Through referrals, you gain a chance to win an expensive stock from a random reward mechanism. The program incentivizes users to share their experience, so both, the referee and referrer have the opportunity to get rewarded. Since millennials are aggressive social media users who love sharing and influencing others, this makes for a strong network effect and enables explosive growth. This in turn builds a brand ambassador community that advocates on behalf of Robinhood.

Conclusion

Robinhood has successfully positioned itself to be the brokerage of choice for the new generation of investors. Its success is due to its ability to redesign the traditional UI/UX, while disrupting the brokerage business model and gamifying the referral program. Given the company’s explosive success and growth with the Millennial audience, it is clear that the company is well prepared to take on the first digitally native generation, the Gen-Zers.

Stay tuned for a follow-up to this post with more detail on how I believe Robinhood can expand its product and feature suite to attract and retain its growing audience of young investors.

Thanks to Steven Truong and Manoj Vijayasekar for reading the draft of this post, and suggesting edits.