With GameStop, Robinhood broke the biggest rule of branding

The epic of Robin Hood is that of a courageous outlaw who steals from the rich to give to the melancholy, while combating and evading the harmful sheriff of Nottingham. As a brand image inspiration, potentialities are you’ll doubtless place essential worse.

So it’s no shock that the brokerage app Robinhood took pride in its namesake, positioning itself as a tool to bring the riches of the stock market to day to day folk. But this week, the company has been within the peep of an absolute sh*tstorm on Wall Avenue. It reacted to a Reddit-fuelled frenzy over shares love GameStop and AMC by limiting the Trading of these companies. That led users to accuse the company of maintaining the institutional investors who had been losing cash on these surges. In level of reality, a hedge fund that’s a most well-known investor in Robinhood used to be losing cash, additional sparking accusations that the company used to be shutting out diminutive investors in verbalize to supply protection to the wide guys. CEO Vlad Tenev told CNN’s Chris Cuomo, less than convincingly, that the change restrictions had been to every give protection to investors and itself against the risk in such a unstable market. (On Thursday, Robinhood acknowledged it used to be raising bigger than $1 billion from investors to motivate with its cash shortage.)

There are sufficient ins, outs, and what-have-yous surrounding this area to require a few explainers, however from a marketing and brand level of gape, this has been an absolute unmitigated ache for Robinhood. High profile folk are echoing the offended voices of the company’s day to day possibilities, all calling the logo out for leaving on the abet of its principles. On Thursday, a class depart lawsuit used to be filed claiming Robinhood rigged the market.

And even giving the company the abet of the doubt that it used to be restricting Trading due to the its contain liquidity concerns on fable of the surge, Robinhood’s total lack of transparency and failure to communicate the motive on the abet of the live has additional angered its possibilities.

Support in 2017, Robinhood cofounder Baiju Bhatt spoke to Like a flash Firm regarding the function that brand image plays in how formative years are attempting to make investments their cash. A Tesla driver desires to opt Tesla stock. A Budweiser drinker desires to opt A-B InBev stock. An Apple fan wants Apple stock. “Folks care about these companies,” acknowledged Bhatt. “It’s the millennial version of the youngster boomer mantra, ‘Lift what you realize.’”

Robinhood used to be an investing tool that spoke to formative years of their contain language, that of social media and cell gaming, mixed with out a transaction prices or fable minimums. And it worked: 32% of app guests are between the ages of 25–34, while half of of the reported 3 million novel accounts in Q1 2020 had been first-time traders. Consistent with a Original York Times evaluation in July, Robinhood users change at vastly increased volumes than their counterparts on E-Commerce and Charles Schwab.

In point of fact that came with a murky aspect. In June 2020, 20-twelve months-aged Alexander Kearns committed suicide after mistakenly believing he used to be down $730,000 after Trading suggestions on Robinhood. Critics had been ringing dismay bells over the final twelve months about how the app’s gamification takes your total dangers of social media dependancy and adds gambling to the mix. NYU prof Scott Galloway made “Robinhood is the novel risk” one in every of his predictions for 2021. It’s absolute best January!

Correct as Bhatt acknowledged, folk care about companies. A brand is repeatedly outlined as the epic a company tells us about itself. But that’s developed within the 21st century to change into the yin and yang between a company’s self-image and its public idea. The nearer the 2 are, the stronger the logo image. And straight away, for more than just a few its most ardent fans, Robinhood has decimated that image by going abet on its preliminary promise to even the playing self-discipline for the limited folk. As an different, the limited folk are realizing that they’re the product, now not the consumer. Put one more system, to the folks in Sherwood Forest, the outlaw is having a watch many of affection merely one more sheriff.

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