Robinhood & Public.com — A Tale of Two Brands
Brand is the sum total of everything a company does and how it interacts with the world. One of the benefits of having a clearly articulated brand position is that when events occur, whether internal or external, you have a guide for how to react.
And with the AMC/GameStop stock scenario last week, we were given insight into two brands — one that is mostly business-centric and one that is customer-centric.
Both trading apps Robinhood and Public.com halted the ability to buy AMC Theatres and GameStop stock last week. I won’t get into the details as to why, as it has been exhaustively covered already. But one handled the situation in an opaque and rather sloppy manner. The other not only stuck the landing but used it as an opportunity to modify their business to be even more customer-centric.
Wait, Robinhood gives to the rich?
But when Robinhood stopped the ability of customers to buy, all they did was send out an email and notify customers via the app saying that they were halting functionality due to “market volatility.” This gave the appearance that Robinhood was favoring Wall Street hedge funds over their own retail customers as the funds were not restricted from shorting the stock. Only later in the day, after the brand damage was done, did they send a second email and go on financial TV channels attempting to explain.
Public.com — a customer-centric company
Unlike Robinhood, Public.com was transparent from the start, provided updates, and were able to allow trading of the stocks later in the day. But they went further than that. Both apps got paid by something called Payment for Order Flow (PFOF). Brokerages are paid to route orders to market makers for trade execution, which creates a potential conflict of interest between brokerage and customer. Basically, “if the product is free, you are the product.” Today, after reflecting on whether or not that was really the right thing to do for their customers, Public.com announced they were ending their participation in PFOF.