For a service that is close to zero cost on a per unit basis and falling further every day thanks to Moore’s Law, a Freemium strategy makes sense
The equities broker model has been slammed by two waves of change: 1. End of fixed commissions. 2. Internet. Which brings us to RobinHood RobinHood offers zero cost equities brokerage and plans to upsell to premium services later – a classic Freemium strategy. . The question is about the upsell. If RobinHood creates their own value added premium services they will end up competing directly with the bigger e-brokerage firms. However, if they simply offer an API to anybody who creates value added services they will create an ecosystem that is far more powerful than what any single firm can create. These kinds of Low Cost Active Alpha services are complex, so it is smarter to let other entrepreneurs create them. These entrepreneurs will be quite happy paying RobinHood for customer access. T
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