- Robinhood– the no-fee stock trading app – has grown into one of the hottest fintechs since launching over five years ago.
- In an effort to become a one-stop shop for personal finance, the company wanted to create a product where customers could park their cash.
- The product, marketed as “Checking and Savings”, promised an industry-high interest rate of 3%.
- Less than 48 hours after launch, Checking & Savings was scrapped completely, as Robinhood received pushback after promising the accounts were insured despite not checking that was true.
- Business Insider spoke to multiple former Robinhood employees and contracts about the decisions leading up to the launch of Checking & Savings and the company’s overall attitude towards launching new products.
- This is a preview of the full inside story on Robinhood, which is available exclusively to BI Prime subscribers.
- Visit Business Insider’s homepage for more stories.
Robinhood– the no-fee stock trading app – had just raised a massive $US363 million in May 2018 and co-CEOs Vlad Tenev and Baiju Bhatt were looking for the next product that would make their customers say, “Wow.”
At a company-wide meeting that August, amid champagne toasts and confetti poppers, Bhatt announced the company would launch a “checking and savings” account with a wildly high 3% interest rate.
The problem: Robinhood told customers the accounts would be insured, but no one at the company checked to make sure that was actually true.
Business Insider spoke to 10 former Robinhood employees and contractors who said the company’s attitude toward regulations governing the financial industry was to ask for forgiveness later, rather than seek permission first.
When it came to the checking and savings launch, sources said the decision to not reach out to the proper authorities was a deliberate one. When warned by his team, a former executive tells Business Insider, Bhatt’s response was: “Fuck it, we’re doing it anyways.”
Robinhood responded to detailed questions from Business Insider with a statement claiming that this story would be “sensationalised” and “filled with inaccuracies.”
“We’re disappointed by the reliance on assertions from anonymous sources as fact,” the statement said, “without entertaining the possibility that those sources are wrong. We take pride in our ability to move quickly and thoughtfully in building high-quality products that expand participation in our financial system.”
Like Theranos, 23andMe, and Uber before it, Robinhood sought to disrupt a highly regulated industry with the “move fast and break things” startup playbook, only to learn that the rules are there for a reason, and that breaking them has consequences. Business Insider has learned that the company was warned that the checking and savings accounts might not meet regulatory scrutiny but pressed ahead anyway.
Read Business Insider’s full story on Robinhood, available exclusively to BI Prime subscribers.