BUILDING A BETTER BANK

Robinhood is not alone in wanting to become a financial hub for users. Here, four more fintech startups with broad ambitions.

BETTERMENT

Already the largest of the independent robo-advisers, approaching $10 billion under management, the New York– based Betterment aspires to be much more. When advice is in your company DNA, argues cofounder Eli Broverman, you’re well positioned to add products like insurance, lending, and more.

CREDIT KARMA

With more than 70 million customers, CEO Kenneth Lin has been able to turn an unsexy credit-monitoring business into a powerhouse that also offers Americans recommendations for products such as credit cards, personal loans, and mortgages.

FABRIC

When Fabric launched its debut product this past spring—a life-insurance offering geared toward first-time parents—cofounder and CEO Adam Erlebacher was already setting his sights on savings accounts and retirement planning. “We are very customercentric,” he says.

SOFI

CEO Mike Cagney launched

Sofi in 2011 with a focus on student-loan refinancing, but quickly added personal loans, mortgages, wealth management, and life insurance. Credit cards and checking accounts are expected to launch this year. buying it,” says Card, who further vets his trades by reading financial statements and texting with a group of childhood friends who have also become Robinhood fans. When a popular company like Tesla posts earnings, they discuss the news: “I’ve known these people for years, but we never talked about this stuff before Robinhood.”

While older generations may invest for the sake of retirement, Robinhood’s users, 78% of whom are under age 35, want to both build their savings and develop relationships with brands—just as they have on Instagram and Twitter. “People care about these companies,” says Robinhood cofounder Baiju Bhatt. It’s the millennial version of the baby boomer mantra “Buy what you know.”

Bhatt and cofounder Vladimir Tenev, best friends who met at Stanford, developed Robinhood with a pared-down, intuitive design that makes competing platforms look like relics. On Robinhood company pages, there are just four components: the ticker symbol, the price, a chart showing price changes over time, and a “Buy” button that beckons at the bottom of the screen. (Users can scroll down for news and more detailed stats.) With no fees and no commissions, the app is engineered to help wary would-be investors make a first purchase—and build experience with the markets.

In just three years, Robinhood has executed $75 billion in transactions and amassed more than 2 million users. That’s still short of Charles Schwab’s 10.4 million active brokerage accounts and E-trade’s 3.5 million, but remarkable considering these institutions’ decadeslong head starts. What’s more, the median age of Robinhood users is just 28. Last September, the company launched its first subscription product, Robinhood Gold, which allows users to trade on margin (i.e., borrow money to buy stocks) and during extended market hours. (The product’s success helped the company raise $110 million at a $1.3 billion valuation this past April.) The next phase could be an entire ecosystem of Robinhood financial products. By divorcing the idea of investing from the aging financial institutions that some millennials have come to distrust, Robinhood is ushering a new generation into the stock market, and beyond.

Even when Robinhood was in beta, there were signs that its mobile app had connected with young, first-time investors like Card. For one thing, Bhatt and Tenev, who now serve as co-ceos, had expected the app’s waiting list to top out around 10,000 names. It surpassed 1 million.

“The human brain is really bad at thinking about exponential things,” Bhatt says with the casual shrug of a former math prodigy (he and Tenev both majored in the subject). He slides off his Adidas sneakers and sits cross-legged on a sofa in the middle of Robinhood’s Palo Alto headquarters, where Sherwood Forest–themed murals in green and silver decorate the walls.

Bhatt and Tenev’s earlier startup had a very different purpose: to make banks and hedge funds faster and smarter than their rivals’. Based in New York, they spent their days writing software that facilitated algorithmic trading, which rose to prominence on Wall Street in the lean years that followed the financial crisis.

Bhatt and Tenev (and their halfdozen employees) were in the right place at the right time with their trading software, but they began to question their purpose. “We were making the top 1% of people wealthier,” says Tenev, who sports a surfer-shag of dark hair. Looking for a change, the friends moved back to California, shut down their company (it has since been erased from their Linkedin profiles), and embraced a more egalitarian goal: building a modern retail brokerage, accessible to all, from scratch.

Their early success with Robinhood has come both because and despite the fact that they rejected one of the brokerage industry’s