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Comment by ulfw | Hacker News Reader

Silicon Valley is broken. Ethics went out the window years ago, replaced by greed. Whether that is Google suddenly wanting to go into China, Facebook lying and spying on everyone and their dog or companies like Uber et al ‘bending the law’. The most recent such bend was now this stock trading company trying to sell customers Checking accounts that were never insured as such.

Time for the old valley of scrappy founders who wanted to change the world for the better to return.

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I'm confused. Are we saying that robinhood is the scrappy kind or not?

I see no reason to be hostile toward them. I think they're undercutting buy fees. It sounds like they announced something and had to retract, but that doesn't hurt anyone. And I bet whatever they do come up with will put pressure on banks to be more competitive.

> And I bet whatever they do come up with will put pressure on banks to be more competitive.

More competitive how, exactly? Robinhood isn't "innovative." They haven't done anything fundamentally different from any other financial institution except skirt regulatory protections for retail investors. You'd think by now we would learn to ask "if this platform is free, how are they making their money?" Robinhood is cutting compliance corners. Period. That doesn't "pressure" other banks to be more competitive. That hurts consumers.

As explained to you in another HN post. HN makes their money via their margin accounts aka Robinhood Gold, and by selling their order flow, like many other brokerages do. It results in better execution for the clients (like myself) and a tighter spread. If it means I get a better price and someone else gets first dibs at the buy or sell side, I honestly don't care. You can use limits if you worry about getting "ripped off by the man".

I understand where their revenue comes from. But if they're doing the same thing as every other bank and not charging for trades what's making up the difference on their bottom line? It's not income. So it must be that they're avoiding costs that the rest of the industry is incurring. Like the cost of compliance.

Maybe they're not making up the difference on the bottom line... maybe they're equivalent to Walmart, running on a lean margin and hoping to make it worthwhile through volume, and the wall street banks are Saks, charging more and earning higher margins.

I don't know what you're talking about. Their SIPC insurance for their regular investors is safe.

As if checking account insurance is effective altruism? And are you saying offering a neo-bank service involving skirting what's possible and passing the value on to customers isn't scrappy? And finally, did someone force you to move your money? Ethically speaking optionality and customer empowerment is good, and forced insurance is fraud.

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