Let’s set the record straight. I wanted to start an online brokerage that forced radical transparency as an industry standard. The reasons this is important are threefold. First, in finance it’s hard to understand the ways firms are making their money. Many sales are not for an explicit dollar amount in exchange for a product or service. That can lead to shady behavior. Secondly, the nature of investing is that success over many years is strongly affected by annual costs so it’s important to know what those are, which isn’t always easy to untangle. Thirdly, there has been a lot of misalignment between company and investor interests historically and all kinds of transparency is bound to reduce that.
In other words, No one has ever truly put investors’ interests first. It's not well discussed, but Robinhood and other brokerage competitors dangling "free trading" are no better than Facebook, Google and other companies who unfairly profit off of customer data. They sell your order flow, loan out your stocks, collect interest on your holdings and profit on your data without sharing any of that revenue with you. Your data is the gold mine but you’re getting none of the gold. You’re just getting “free”.
The Opportunity for True People Power
Once people realize that their data is their data, and they can make money on it, rather than the companies that hold it, the game changes. Once we show them how they can keep custody of it, their demands change. Once they see that their data is THEIR data, the people take the power back. Imagine if people started to expect FaceBook or Google to start paying them some of the money those companies make off of their data. The social promise they’ve made the bedrock of their business models crumbles and the whole system inverts. That’s the very business model we’ve used to build All of Us from scratch. A new way to look at investing, where our user’s data can be monetized for their benefit.
Free Isn’t Fair
This isn’t to say that our competitors shouldn’t make money, and don’t worry, they make plenty. It’s to postulate that there’s no reason for the industry not to treat people with respect by being totally transparent about how, and how much, they make off of user’s data. That’s my challenge to the industry in setting up a self-directed investing platform. All of Us will keep less for ourselves of our revenue and share a fair amount of it with our users, because that money is being made off of their interactions and activity on our platform. Every keystroke they make, every stock they buy, every time they participate in one of our sentiment questions is valuable data that they should, and will on our platform, get paid for.
That’s how the lure of “free” turns into the promise of “fair”.
A Call To Arms
People say I’m crazy for thinking this way. Many people I’ve asked to invest in the company and help build it with me have asked why I wouldn’t want to make the most money I can by setting up a new investing service. My answer? Because I believe that far more people will want to do business with a company that is ethically-skewed to serve them, rather than to prey on them. I believe we will have millions of users who appreciate that the financial hi-jinks put in place to fool them while they are being taken advantage of are wrong, and they will want to put their hard-earned money and investment on a platform built on total and utter transparency. I believe this will be as powerful a strategy as “free trading”, and I challenge the rest of the industry to follow suit.