Howard Lindzon has made a lot of money trading for other people as a hedge fund manager.
Now he’s putting nearly $US1 million dollars behind Robinhood, an app that lets people trade stocks whenever they want, with no commission fees.
Lindzon told Business Insider that this is the largest ever contribution his early stage investment fund, Social Leverage, has ever made. On Tuesday, Robinhood announced that Snoop Dogg, Jared Leto and Nas also invested in their $US13 million Series A funding.
Co-founder Baiju Bhatt says that fees are “the worst part of trading,” in this Google hangout with Lindzon. Online brokerage firms charge up to $US10 per trade. Robinhood is cheaper overall, but it will charge for trading stocks listed outside the US, wire transfers and a few other things.
“People have been like ‘well you need millions of dollars to buy and sell stocks,'” Bhatt says in the video. “That sort of idea was thrown out of the window with online brokerages like E*trade and Fidelity, and today, we think that you don’t even need thousands of dollars to trade stocks.”
Bhatt said he started working on the app in mid-2012. The app won’t launch until early 2015 (that’s the target) but Lindzon has been testing it, and he believes it will steal a swath of the market that online brokerage firms could get.
“I think the customers that Robinhood will get at the beginning are younger, smaller accounts that are too hard for Schwab and E*trader to make money off anyway. They have neglected that market … the ability to open a brokerage account in like 10 minutes is cheap, especially for a younger generation.”
He had a warning for the over 500,000 that are on the app’s waitlist, and anyone else who thinks easy stock trading means easy money.
“This is not for children. This is not meant to make the stock market easier … it doesn’t mean you’re suddenly going to make money because of trading. It’s just the idea that I can plug into this and I can execute a trade and I don’t have to click 50 buttons.”
We’ll let you know when Robinhood launches, so you can check it out.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.