1/23: The debate rages on about whether @RobinhoodApp is “doing good” or “doing harm”. There is no simple answer to this question so it’s best to frame the conceptual issue and then return to the specifics.

2/23: My generalization of the question being asked is: “If a company creates a new business model which shifts consumer behavior is the company accountable for both the good and the bad resulting behaviors?”

3/23: The scientific community debates this question continuously. Increased knowledge about our world doesn’t inherently do good or harm. The application of scientific breakthroughs is where societal and individual good and harm occurs. Two examples:

4/23: The transition from horse drawn carriages to very slow first generation cars to today’s modern automobiles has created societal good but the adoption and evolution of personal transportation can also be directly linked to an increase in accidents, injury and death.

5/23: The struggle to manage pain in patients has been a constant source of research in the medical field. Opioids are very effective at interrupting and shutting off pain signals in the brain but they can also be directly linked to an increase in addiction and suicide.

6/23: A generally accepted “low bar” viewpoint is that once a business knows that their product/service has created an issue that is having a significant negative impact that the business should take reasonable efforts to reduce the impact.

7/23: Because businesses don’t always fix issues that various constituencies are complaining about, regulatory bodies exist to protect consumers, businesses and our environment against “profit at all costs” actors.

8/23: In the case of cars, Federal Motor Vehicle Safety Standards (FMVSS) have been put in place along with some States taking additional measures to protect against harmful emissions.

9/23: In the case of Opiods, the story is still playing out with a likely outcome being more tracking and accountability through a revamping of various States’ Prescription Drug Monitoring Programs (among other major changes)

10/23: And the tech-led start-up ecosystem we live in shouldn’t be immune from this “low bar” line of thinking.

11/23: History suggests that either companies do the job of self-policing such that they can satisfy the “court of public opinion” or regulation emerges to do it for them. Regulation always follows complaints. More complaints = Greater chance of Regulation.

12/23: Unfortunately, Regulation is often needed because companies have shareholders to answer to who typical invest for financial returns and solutions to problems can be costly.

13/23: To return to the original question, in the case of @RobinhoodApp, there’s a lot of good being done by the company. Introducing a new generation of consumers to investing through reduced friction and costs and a UX/UI that they like and understand is good.

14/23: But is there any “known harm” that @RobinhoodApp has become aware of, and if so what are the Executives doing to prevent it? I wrote a post on this specific topic: http://fintechjunkie.com/2020/08/24/to-trade-or-not-to-trade-how-is-the-question/

15/23: An equally interesting thought exercise is whether there’s a “high bar” line of thinking that anticipates negative consequences and designs preventative measures directly in their business models and user experiences.

16/23: By not becoming addicted to user growth or revenue that’s attached to negative outcomes, a business is freed to grow with less overhang associated with squashing user complaints and fighting Regulatory battles.

17/23: Two businesses in the trading space attempting to create “high bar” solutions are @public and @JoinCommonStock and I anticipate there are many more coming around the corner.

18/23: @public is on a mission to build and support the next generation of investors. They’ve thought about pitfalls that could hurt novice investors and have put policies in place to prevent bad behaviors. As an example (quoting one of their press releases):

19/23: “Public isn’t designed for professional investors. In fact the company doesn’t allow day-trading on the service: Trades placed in a cash account require two business days for the funds to ‘fully settle’ before they can be used again to buy and sell stock.”

20/23: @JoinCommonStock is also on a mission and was founded on the belief that 'educating the investor' is an important emerging focal point. While many brokerages are building out content as an extension to their core offering, education is Commonstock's entire business model.

21/23: Like other modern fintech models, gamification is at the core of @JoinCommonStock’s experience, but the gamification is targeted to incent the education/content creators rather than the end-user.

22/23: It will be fun to watch what happens when incentives and social capital are tied to the creation and distribution of quality education/content vs. trading volume and velocity. http://Commonstock.com  could easily go viral (FD: I’m an investor).

23/23: The TLDR is that Businesses get to choose a path. A) Do the hard work of modifying your business to address complaints. B) Let Regulators create rules to address complaints. C) Design the Business model to avoid complaints in the first place.

And of course, comment and retweet if you want to keep the conversation going!