5 ms·

How are you going to make money?

by agsqwe 2y ago

socks 2y ago
their pricing page states > We plan to make money by helping clients secure additional financial products like secured lines of credit, margin, and insurance, all in a fiduciary manner.
ddulaney 2y ago
Presumably a combination of a flat-rate fee ($1/user/month) and payment for order flow. PFOF is a big moneymaker for Robinhood, but you get paid the more your users trade so people doing buy-and-hold index funds probably earn you less that way. If you can keep expenses super low maybe this can work. But my sense is that costs are pretty flat regardless of how many users you have, so this probably needs to get pretty big to finance itself.
- thanksgiving 2y ago
  PFOF is so incredibly dirty that I can't believe it is legal. If you could explain it to all the voters without putting them to sleep, I am convinced most people would not support it. It may be legal but it is definitely unethical. That being said I can't see how else OP can payback YC without doing these shady things. At a dollar per user per month, even if every adult in the US joined, YC will probably shut down OP without a second thought if that was the only revenue possible. > so people doing buy-and-hold index funds probably earn you less that way. You will be constantly buying and selling because you need to rebalance your "index" every time the market moves... Once you go down this unethical rabbit hole, there are endless possibilities.
  - ddulaney 2y ago
    I’m not sure what the objections to PFOF are. Do you think you get worse execution than the public market? If so, it’s easy to prove: compare the price you got to the public markets price at that time. I don’t think you’ll see a worse price. You should be insulted that somebody is willing to pay for the privilege of trading with you. You can reasonably object to the amount of PFOF vs. price improvement. But it’s not unethical to say “we want your business so much we’ll pay for it”.
deleted 2y ago
[deleted]
jjmaxwell4 2y ago
We charge $1/month. Longer term, we think there are additional revenue streams we can enable that are similar to existing broker-dealers like Robinhood, Fidelity and Schwab. That means things like cash float, margin lending, stock lending and payment for order flow. Currently we are not a broker-dealer.
- taway789aaa6 2y ago
  Ah yes, the old "we'll buy stocks for you and then turn around and lend them out to short sellers that actively want you to lose money. Promise we care about you!" I do not trust any institution that makes money off of lending MY shares out to predatory short-sellers who's sole purpose is to decrease the value of MY shares.
  - ramon156 2y ago
    Sorry if this sounds uninformed, but what is the alternative? Even the bank and pensions gamble with your money, its how they move. I wish it wasn't the case either
    - short_sells_poo 2y ago
      The bigger issue is that it's basically just well hidden fees. You can add a decent amount of income to your portfolio by lending out the stocks to short sellers. Particularly in a market crash, the fees for borrowing stocks skyrocket (can easily be in high double digit %). Good firms allow you to lend out your stocks and give you the fees. Less good firms claim to give you a very cheap deal, but then basically shaft you by claiming these benefits for themselves. If this business proposes to be profitable by harvesting the borrow fees, then them being cheap is really disingenuous because they give you with one hand and take from you with the other.
    - taway789aaa6 2y ago
      The alternative is to not fall for the "its basically free!" schtick. If its free, then you're the product. If its $1/month, then you're still probably the product. In the case of my investments, I do not want the firm that I invest with -- to whom I trust my assets -- to turn around and lend out my assets to other organizations that have no obligation to me to act in my best interest. Share lending is almost always to lend to short-sellers that are trying to decrease the price of the asset being borrowed. > Even the bank and pensions gamble with your money, its how they move I guess its not worth having an opinion that this is not a good thing then? Bring back Glass-Steagall to separate out banks and gamblers.

How are you going to make money?

by agsqwe 2y ago

How are you going to make money?

their pricing page states > We plan to make money by helping clients secure additional financial products like secured lines of credit, margin, and insurance, all in a fiduciary manner.

ddulaney 2y ago

Presumably a combination of a flat-rate fee ($1/user/month) and payment for order flow. PFOF is a big moneymaker for Robinhood, but you get paid the more your users trade so people doing buy-and-hold index funds probably earn you less that way. If you can keep expenses super low maybe this can work. But my sense is that costs are pretty flat regardless of how many users you have, so this probably needs to get pretty big to finance itself.

thanksgiving 2y ago
PFOF is so incredibly dirty that I can't believe it is legal. If you could explain it to all the voters without putting them to sleep, I am convinced most people would not support it. It may be legal but it is definitely unethical. That being said I can't see how else OP can payback YC without doing these shady things. At a dollar per user per month, even if every adult in the US joined, YC will probably shut down OP without a second thought if that was the only revenue possible. > so people doing buy-and-hold index funds probably earn you less that way. You will be constantly buying and selling because you need to rebalance your "index" every time the market moves... Once you go down this unethical rabbit hole, there are endless possibilities.
- ddulaney 2y ago
  I’m not sure what the objections to PFOF are. Do you think you get worse execution than the public market? If so, it’s easy to prove: compare the price you got to the public markets price at that time. I don’t think you’ll see a worse price. You should be insulted that somebody is willing to pay for the privilege of trading with you. You can reasonably object to the amount of PFOF vs. price improvement. But it’s not unethical to say “we want your business so much we’ll pay for it”.

deleted 2y ago

[deleted]

jjmaxwell4 2y ago

We charge $1/month. Longer term, we think there are additional revenue streams we can enable that are similar to existing broker-dealers like Robinhood, Fidelity and Schwab. That means things like cash float, margin lending, stock lending and payment for order flow. Currently we are not a broker-dealer.

taway789aaa6 2y ago
Ah yes, the old "we'll buy stocks for you and then turn around and lend them out to short sellers that actively want you to lose money. Promise we care about you!" I do not trust any institution that makes money off of lending MY shares out to predatory short-sellers who's sole purpose is to decrease the value of MY shares.
- ramon156 2y ago
  Sorry if this sounds uninformed, but what is the alternative? Even the bank and pensions gamble with your money, its how they move. I wish it wasn't the case either
  - short_sells_poo 2y ago
    The bigger issue is that it's basically just well hidden fees. You can add a decent amount of income to your portfolio by lending out the stocks to short sellers. Particularly in a market crash, the fees for borrowing stocks skyrocket (can easily be in high double digit %). Good firms allow you to lend out your stocks and give you the fees. Less good firms claim to give you a very cheap deal, but then basically shaft you by claiming these benefits for themselves. If this business proposes to be profitable by harvesting the borrow fees, then them being cheap is really disingenuous because they give you with one hand and take from you with the other.
  - taway789aaa6 2y ago
    The alternative is to not fall for the "its basically free!" schtick. If its free, then you're the product. If its $1/month, then you're still probably the product. In the case of my investments, I do not want the firm that I invest with -- to whom I trust my assets -- to turn around and lend out my assets to other organizations that have no obligation to me to act in my best interest. Share lending is almost always to lend to short-sellers that are trying to decrease the price of the asset being borrowed. > Even the bank and pensions gamble with your money, its how they move I guess its not worth having an opinion that this is not a good thing then? Bring back Glass-Steagall to separate out banks and gamblers.