Yesterday my friends Baiju and Vlad at Robinhood announced their A round of funding to the public. Robinhood is a free brokerage app, yes, free, like completely free, as in no commissions. Baiju and Vlad both have backgrounds in high frequency trading, and degrees from Stanford. They are some of the brightest you will meet.
They are what I like to call, Economic Terrorists.
What is an economic terrorist? Think about the massive amount of power and influence that globalization and technology has given to transnational terrorists (the real scary kind). Think about the damage that a small group of disenchanted or brainwashed people can do to our society (9/11). Think about the tools they now have at their disposal and the speed at which they can gain a following ISIS. Terrorism isn’t about building new things, it’s about using asymmetric warfare to burn things down to the ground. Terrorists don’t have to win for others to lose, in many cases they aren’t trying to “win†anything. There’s a great line in the last Batman movie where Alfred says “some people just want to watch the world burnâ€.
Economic terrorism isn’t about watching the world burn, or hurting people, it’s about watching an inefficient industry burn to the ground, whether you win or not as the group who did it. Baiju and Vlad are economic terrorists, they are going to burn the brokerage industry to the ground whether they ever make a dollar or not. It’s my belief that they will by the way, there are so many other ancillary services and analytics that you can provide to an installed user base of millions of traders, they shouldn’t have a difficult time building a business.
But will it be the size E-Trade or Schwab? No. It might not even be the size of Interactive Brokers.
But who cares. They don’t own those businesses. They owe nothing to the industry. They can step in with their superior technology and willingness to burn it all down, so that they can give the consumer a much better deal and experience while building a business of their own.
