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Speaker 1: Welcome to Prognosis. I'm Laura Carlson. Before we get started,

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Speaker 1: we still want to hear what holiday season COVID dilemmas

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Speaker 1: you're facing. To have us run your questions by an expert.

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Speaker 1: Record a voicemail by calling six or six four. We

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Speaker 1: may use your voice on the show. It's stay two

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Speaker 1: hundred and twenty six since coronavirus was declared a global pandemic.

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Speaker 1: Today's main story, the addictive money app robin Hood, has

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Speaker 1: been a surprise COVID success story after it made day

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Speaker 1: trading a pandemic pastime. But now the company is trying

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Speaker 1: to figure out how to make money from its devoted fans.

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Speaker 1: But first, here's what happened in virus News today. US

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Speaker 1: daily cases broke records topping eighty thousand on Friday and Saturday,

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Speaker 1: according to data compiled by Johns Hopkins University and Bloomberg.

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Speaker 1: The virus is still hitting the Dakotas, Montana, and Wisconsin hardiest,

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Speaker 1: but the alarming trend has been slowly moving to Illinois, Indiana, Michigan, Ohio,

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Speaker 1: and even Pennsylvania. Cases are also rising in Northeastern states

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Speaker 1: like New York and New Jersey that had kept the

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Speaker 1: virus under control for months, despite the alarming rise in cases.

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Speaker 1: White House Chief of Staff Mark Meadows said in an

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Speaker 1: interview on CNN that the US is quote not going

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Speaker 1: to control the pandemic. Meadows said that the US response

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Speaker 1: will be focused on vaccines and treatments, not containment. Meanwhile,

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Speaker 1: a new study showed universal masking in the US could

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Speaker 1: save some one thirty thousand lives by the end of

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Speaker 1: February wary. The projections were made by some of the

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Speaker 1: nation's top COVID nineteen trackers at the University of Washington

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Speaker 1: and appeared Friday in the journal Nature Medicine. Public health

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Speaker 1: officials don't expect a vaccine to be widely available until

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Speaker 1: March or April, which means wearing masks and other non

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Speaker 1: pharmaceutical measures will likely be the only option to reduce

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Speaker 1: the spread of the virus until then. The researchers analyzed

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Speaker 1: how the virus spread across states, then used those data

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Speaker 1: to project how mask wearing and other variables such as

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Speaker 1: seasonal pneumonia and testing rates would impact virus spread in

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Speaker 1: the future. Finally, Americans are rushing to pharmacies in record

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Speaker 1: numbers for seasonal flu shots public health officials say that

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Speaker 1: may help avoid a so called twin demic. CVS Health

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Speaker 1: has already surpassed the nine million flu shots it gave

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Speaker 1: during the entire previous flu season and expects to double

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Speaker 1: that number by the end of this cycle, according to

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Speaker 1: a spokesman. And now for today's main story, the online

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Speaker 1: trading platform robin Hood has become one of the COVID

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Speaker 1: economy's breakout successes. Americans marooned at home binge watched Netflix shows,

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Speaker 1: went shopping on Amazon Prime, and discovered day trading on

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Speaker 1: their mobile phones. Robin Hood traders became the shorthand explanation

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Speaker 1: for the frenzy of often speculative retail investing in the

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Speaker 1: pandemic lockdowns. Now in the spotlight, robin Hood is racing

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Speaker 1: to prove it can manage a simple online trading platform

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Speaker 1: and overcome a reputation for poor customer service. It has

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Speaker 1: paused efforts to expand into Europe and Asia and gone

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Speaker 1: on a hiring spree. I spoke to reporter Annie Messa

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Speaker 1: about robin Hood's next act. It's an understatement to say

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Speaker 1: probably it's been an odd year for markets, but one

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Speaker 1: trading app robin Hood seems to have had a particularly

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Speaker 1: very good year, and I was wondering if you could

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Speaker 1: talk about some of the successes it's seen. In Sure,

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Speaker 1: robin Hood has been absolutely one of the breakout successes

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Speaker 1: of the COVID economy. I would say it was always

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Speaker 1: out there as a popular trading app and you can

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Speaker 1: trade for free, which has now become the industry standard

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Speaker 1: as of last year. But retail trading really caught fire

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Speaker 1: as people we're at home during COVID nineteen lockdowns this year.

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Speaker 1: So maybe you could walk us through just how robin

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Speaker 1: Hood going in and what its story was up until

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Speaker 1: robin Hood started in and it always staked its reputation

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Speaker 1: on this idea that trading should be for everyone, Everyone

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Speaker 1: should be included in investing and you know, empowered to

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Speaker 1: trade stocks and other financial instruments, and that resonates with people,

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Speaker 1: but but never quite like this year. So what happened

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Speaker 1: this year is it just like the customers surged in

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Speaker 1: the first four months of the year. You had three

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Speaker 1: million new users signing up for robin Hood accounts. Now,

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Speaker 1: let's remember these investors are a little bit like smaller

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Speaker 1: typically like smaller account size investors. Half of their new

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Speaker 1: users were new to investing at all this year, and

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Speaker 1: I think that speaks to how this has been a

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Speaker 1: different year while people are you know, stuck at home

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Speaker 1: during the pandemic and you know, without things like sports

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Speaker 1: games to bet on. And that raises a really interesting point.

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Speaker 1: I know in your article you mentioned the quote unquote

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Speaker 1: gamification of trading, and I was wondering if you might

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Speaker 1: go into this concept of how robin Hood, in many

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Speaker 1: ways has capitalized on on making trading essentially a game. Yeah.

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Speaker 1: So robin Hood is interesting because it started as an

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Speaker 1: app native experience. It was built for the iPhone, and

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Speaker 1: that's different from Fidelity or e Trade, Schwab, any of

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Speaker 1: the legacy brokerages. Some of these, you know, these have

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Speaker 1: decades of history, these these platforms, and they certainly were

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Speaker 1: not built with originally with an app in mind. Now,

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Speaker 1: of course they've got the apps of their own, but

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Speaker 1: robin hoods really a standout in that it was built

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Speaker 1: to be used on your phone, and the whole idea

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Speaker 1: is to make trading really seem us and something a

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Speaker 1: lot of the executives talked about. The executives that I

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Speaker 1: interviewed for the story talked about is the idea that

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Speaker 1: they want to even make the experience delightful. That's kind

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Speaker 1: of a Silicon Valley term that's thrown around on user experience.

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Speaker 1: So they want to make trading delightful. Now, that's not

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Speaker 1: something that you hear a lot of people on Wall

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Speaker 1: Street talk about experience wise, that they want the experience

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Speaker 1: of using something they're producing to be delightful to customers.

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Speaker 1: But it's very Silicon Valley and it it kind of

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Speaker 1: reflects the way robin Hood has laid out their app.

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Speaker 1: Now some of the differences that you might see between

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Speaker 1: the robin Hood app and and maybe another kind of

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Speaker 1: brokerage account. It's super easy. It takes just a couple

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Speaker 1: of minutes to set up your account. Everything built really

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Speaker 1: with the phone in mind, so you know, you can

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Speaker 1: be sitting on the couch, lounging, on the go wherever

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Speaker 1: you are, taking out your phone and trading. And it

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Speaker 1: has little other quirks, like kind of cheeky little ideas

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Speaker 1: like when you first place a trade, you get this

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Speaker 1: confetti blast animation. You know, you can invite friends and

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Speaker 1: get a free stock for inviting your friends and it

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Speaker 1: and robin Hood makes it easy to just connect contacts

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Speaker 1: from your phone. It's really built more so than other

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Speaker 1: investment platforms with the brand new user in mind and

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Speaker 1: what we'll get this person to come back again and again.

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Speaker 1: And that also raises in an interesting perhaps comparison point

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Speaker 1: of robin Hood, as you said, has done extremely well

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Speaker 1: during the pandemic as people have been at home with

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Speaker 1: very little else to do. Have other investment platforms done

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Speaker 1: similarly well? Or is robin Hood really the standout star. Yes,

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Speaker 1: that is a really good question. It's true that while

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Speaker 1: robin Hood has really captured this zeitgeist, the retail trading

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Speaker 1: frenzy that we've seen this year has lifted all of

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Speaker 1: those classic retail brokerages and they've all gone gangbusters this

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Speaker 1: year with new accounts and and trading activity. So it's

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Speaker 1: been an industry wide trend with this delightful aesthetic or

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Speaker 1: experience that they're cultivating and the many kind of game

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Speaker 1: like features of the platform. I was wondering if you

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Speaker 1: might dig deeper into what is a typical robin Hood user.

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Speaker 1: You said that they are oftentimes first time traders, but

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Speaker 1: is there anything else that makes a robin Hood user

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Speaker 1: stand apart from a user to say of a traditional

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Speaker 1: brokerage or investment platform. Absolutely, while they don't release very

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Speaker 1: detailed demographic data, you can tell at least by the

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Speaker 1: people online and Reddit forums who are very visible robin

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Speaker 1: Hood users that there is, you know, a heavy mail contingent.

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Speaker 1: And I think something else that sets a robin Hood

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Speaker 1: user apart from other brokerage platforms that a lot of

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Speaker 1: them are are hyper connected to this entertainment ecosystem that's

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Speaker 1: risen up alongside of the comeback of retail trading this year.

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Speaker 1: And by that I mean there there's been a surge

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Speaker 1: of YouTube personalities, TikTok videos, even Instagram, you know financial

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Speaker 1: uh talking heads that are They're just kind of a

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Speaker 1: self styled, often very young group. And you know that

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Speaker 1: millennial contingent is absolutely crucial to robin Hood, both millennial

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Speaker 1: and gen z. But about about um their assets under

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Speaker 1: management come from millennial users. So I would say that

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Speaker 1: one thing that sets apart that robin Hood demographical might

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Speaker 1: set them apart from others is um these traders tend

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Speaker 1: to be kind of hooked into this whole entertainment loop

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Speaker 1: that's online as well on on financial markets. Now, as

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Speaker 1: you mentioned one theory about robin Hood's stunning success during

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Speaker 1: the pandemic was due to the fact that many other

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Speaker 1: outlets for for betting or major league sports were shut

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Speaker 1: down for many months. But of course we're now starting

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Speaker 1: to see a lot of those leagues restart, We're starting

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Speaker 1: to see that come back into play. Has that diminished

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Speaker 1: or have we seen a decline in robin hood use

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Speaker 1: because of that, or or have they stayed strong even

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Speaker 1: despite the return of say Major League Baseball or or football. Yeah,

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Speaker 1: we're still in the early stages, and I think that

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Speaker 1: it's not entirely clear what will happen to that robin

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Speaker 1: Hood use after we've got sports back and you know,

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Speaker 1: in a full fledged way. But it is a really

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Speaker 1: great question, I think an important one for robin Hood.

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Speaker 1: You know, the idea was never for robin Hood to

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Speaker 1: only be a trading app for its entire you know,

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Speaker 1: growth story. Robin Hood wants to have users who grow

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Speaker 1: up and kind of trust it with their financial lives,

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Speaker 1: and they want to offer products like, you know down

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Speaker 1: the line, like I ra A s even or you know, mortgages.

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Speaker 1: So they've got bigger ambitions than this just this trading idea.

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Speaker 1: So I think that robin Hood would say, regardless of

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Speaker 1: whether people stay um trading at those heightened levels that

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Speaker 1: you saw during the pandemic, they have other priorities that

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Speaker 1: they want to address down the line. How has I mean,

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Speaker 1: in your discussions with people at robin Hood, how have

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Speaker 1: they reacted to this unexpected success of and has that

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Speaker 1: changed their direction at all and where to go from

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Speaker 1: here into either or further down the line. I think

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Speaker 1: it has kind of knocked the socks off of people

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Speaker 1: at robin Hood, you know, and and who use the

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Speaker 1: app as well. It's it certainly wasn't like so many

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Speaker 1: things this year. It was hardly a foreseeable occurrence. But

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Speaker 1: I did talk to the co founder of lad ten

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Speaker 1: Of for this piece and he said that, you know,

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Speaker 1: they're they've got more on the horizon that they want

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Speaker 1: to be introducing. So they have had to stop and

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Speaker 1: address some issues that have come up with their massive

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Speaker 1: growth this year. And that includes things like they had

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Speaker 1: a major outage in March, a big tech outage that

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Speaker 1: you know, cast a chill on users and angered them certainly,

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Speaker 1: and they've had issues with around two thousand in the

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Speaker 1: neighborhood of two thousand accounts being hacked, and you know,

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Speaker 1: Robin Hood said that that didn't have to do with

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Speaker 1: their own technology, it had to do with external emails. Still,

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Speaker 1: people you know are upset with customer service, they're upset

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Speaker 1: with UM some of the outages they've seen. And Robin

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Speaker 1: Hood has this year been refocusing on that core brokerage product,

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Speaker 1: I think, in an attempt to get things right before

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Speaker 1: moving on and expanding. But you know, new new things

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Speaker 1: to look out for. It might be something like, you know,

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Speaker 1: an I p O possibly being pulled. Closer by wrote

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Speaker 1: a crazy year they've had this year. That was Annie Massa.

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Speaker 1: And that's it for our show today. For coverage of

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Speaker 1: the outbreak from one and twenty bureaus around the world,

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Speaker 1: visit Bloomberg dot com slash Coronavirus and if you like

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Speaker 1: the show, please leave us a review and a rating

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Speaker 1: on Apple Podcasts or Spotify. It's the best way to

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Speaker 1: help more listeners find our global reporting. The Prognosis Daily

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Speaker 1: edition is produced by Top for Foreheads Jordan Gospure, Magnus

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Speaker 1: Henrickson and me Laura Carlson. Today's main story was reported

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Speaker 1: by Annie Massa. Original music by Leo Sidrin Our Editors

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Speaker 1: are Rick Shine and Francesco Levi. Francesco Levi is Bloomberg's

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Speaker 1: head of podcasts. Thanks for listening, book Abo