
Robinhood stock trading app confirms $110M raise at $1.3B valuation - jbernardo95
https://techcrunch.com/2017/04/26/robincorn/
======
AndrewKemendo
_“But ‘how are you going to make money long-term?’ has been a question mark”
Bhatt says. Gold has answered that question.” A Gold subscription lets users
borrow up to double the money in their account to trade on margin with
leverage_

Wow, so that's effectively opening up new easy to get credit vehicles for
unsophisticated investors. How could that go wrong?

Even if you are a professional trader you'll take a bath on margin over the
long run. They are incentivizing what is effectively borrowing for gambling
and that is their long term revenue strategy? Might be a great money maker but
it certainly is playing with some really big barrels of fire.

"Three things ruin people: drugs, liquor, and leverage - Charlie Munger"

edit: The point here is not that Margin is a new service, yes every brokerage
has it, it's that it is irresponsible to use Margin if you are not a
sophisticated investor. Its even more irresponsible to push leverage onto
unsophisticated investors.

Not everyone is going to understand the risks of leverage and if Robinhood
makes it as easy as candy crush to trade on leverage, enough gamified users
are "playing" stock market with real money and a margin call happens during a
huge downturn, it will be exceptionally nasty.

~~~
lend000
Wouldn't want to enable people to make their own decisions with their money,
would we? The fact that you have to make a paid account to use leverage
(whereas you can trade indefinitely for free) is deterrent enough for most
people who do not already actively manage their investments.

I think Robinhood is doing a great service -- I just wish they would expose a
better API.

~~~
mabbo
> Wouldn't want to enable people to make their own decisions with their money,
> would we

I think you're missing what the criticism here is.

Let's say you, right now, have $10,000. I say "Hey, lend me that money so I
can play the stock market with it." Would you give me the money? You know
literally nothing about me. You don't know if I've ever traded a stock before.
You don't know if I can ever pay you back. There's a higher than normal
probability that I will never pay you that money back.

Robinhood is taking on a lot of risk and using that as proof that they're a
profitable company.

~~~
lend000
> Robinhood is taking on a lot of risk and using that as proof that they're a
> profitable company.

Margin positions are typically liquidated when they go negative. At worst, the
customer owes Robinhood some leftover slippage after their margin gets called.
And typically, margins are called before your account goes negative.

~~~
mabbo
I agree, it's not _as_ risky as it might be. But there's still something
unsettling about lending money to people to gamble with.

------
pembrook
Enticing millenials to "trade" individual stocks is quite possibly the most
anti- _Robinhood_ thing I can think of. The only thing more ironic would be to
encourage them to take on margin...which as it turns out is literally
Robinhood's business model.

99% of users on the platform will ulimately end up participating in a direct
transfer of their own wealth to a more sophisticated trader or algo (i.e. The
banks and hedge funds who aren't just doing this for "fun" and have the
financial and political backing of the world's elite). Side note: _even those
hedge funds can 't consistently beat the market._

If you are reading this, for your own finacial future I beg of you, please
take your money to Vanguard instead and buy some index funds. Scratch your
"trading" itch by trying to game your asset allocation instead. Future you
will thank present you.

If you don't believe me, please look into any of the academic research that
has been conducted around efficient markets.

~~~
nommm-nommm
I've written this on HN before but Fidelity(1) and Schwab(2) have similar low
cost index fund offerings to Vanguard as well so don't think you are stuck
with Vanguard. Both Fidelity and Schwab also offer the best checking account
you can possibly get (no fees, minimums, plus ATM reimbursement) for free as
well. Additionally, Fidelity has a great 2% cash back credit card. Even if you
don't use Fidelity or Schwab's brokerage accounts it's a no brainer to sign up
for a checking account with one of them.

Vanguard, however, is owned by it's investors if that's important to you.

Last I checked you can also trade some Vanguard ETFs on Robinhood as well. I
just checked, you can buy VOO, among others, on Robinhood as well as iShares
ETFs, which are also low cost index funds.

Basically, if you want low cost index funds you have a lot of options,
including Robinhood

(1)[https://www.fidelity.com/mutual-funds/investing-
ideas/index-...](https://www.fidelity.com/mutual-funds/investing-ideas/index-
funds)

(2)[https://www.schwab.com/public/schwab/nn/m/indexfunds.html](https://www.schwab.com/public/schwab/nn/m/indexfunds.html)

~~~
tanderson92
Schwab has the best checking accounts out there, I use them.

But I use Merrill Edge as a commission-free brokerage (30 trades per month
with $50k assets, 100 trades per month with $100k assets). The upside (apart
from not being limited to iShares at Fidelity and Schwab at Schwab) is in the
credit card, which beats Fidelity.

Bank of America Travel Rewards rates:

* $50k+ Merrill Edge Balance: 2.25% travel rewards cash back

* $100k+ Merrill Edge Balance: 2.625% travel rewards cash back

Bank of America Cash Rewards:

* $100k+ Merrill Edge Balance: 3.5% groceries, 5.25% gas cash back.

Great deal. Oh, and they'll often pay you about 0.5% (up to $1000) of assets
to transfer your equities in. Holding Vanguard/Schwab/iShares ETFs there is a
dream for a personal finance geek. The credit card deal alone makes it all
worthwhile.

~~~
nommm-nommm
Thanks for sharing your experiences. I know people who use Merrill Edge (owned
by BoA) for index funds as well but I didn't feel comfortable writing about
something I don't have any experience with and only a vague knowledge of.

My point was, while Vanguard is certainly a great option, there's plenty of
other great options out there as well.

------
c0smic
From my experience having used Robinhood for almost two years now, it's fine
up until something happens with your account and you need to talk to someone.
Their customer support seems almost nonexistent, no phone number, only an
email where their response time is anywhere from a day to a week+ and you have
to bug them to follow up. On top of that, the support that I have gotten
hasn't been very clear, like they don't know what's really going on with my
account. When I have several thousand dollars somewhere with active
investments, I don't want to have to wait around and deal with a different
support person for each message.

Just recently I had to email them first to find out that they have an issue
with my account and "any sell, dividend, etc. will have 28% removed and sent
to the IRS." And I "will need to reach out to IRS regarding those funds." They
did not tell me anything when they apparently started doing this. I was paying
for Robinhood Gold too at the time.

I'm sure most people will have OK experiences with Robinhood, but I'm closing
my account and moving to another broker with better support and communication.

------
pillowkusis
Pretty skeptical about the value here.

>A Gold subscription lets users borrow up to double the money in their account
to trade on margin with leverage

Users pay money to be loaned money? How is this different than a microloan
service?

>Robinhood also earns money from rebates its gets for directing its order flow
to broker dealers

That means, presumably, the dealers are profiting in some way by handling
trades from investors less informed than themselves.

At the end of the day, Robinhood may not have trading fees, but the underlying
brokers it works with do. I don't see how a microloans service and some
kickbacks are enough to compensate. Presumably they are hemorrhaging money
right now and the VC money is subsidizing novice investor's trading fees.

Despite the name "Robinhood" like this is giving money to the poor, this
service seems extremely predatory to its users, offering them cheap loans to
gamble with on the stock market and taking kickbacks from the exact type of
people Robin Hood was stealing from.

~~~
wufufufu
Gold subscription is a fixed monthly cost whereas microloan services are
interest based.

[https://support.robinhood.com/hc/en-
us/articles/214681823-In...](https://support.robinhood.com/hc/en-
us/articles/214681823-Introducing-Robinhood-Gold)

~~~
onchance
But the “fixed” monthly cost varies depending on the size of your credit line,
so there is an effective interest rate of 5% or more.

[https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal...](https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal/Robinhood%20Gold%20Pricing.pdf)

------
jessriedel
> Robinhood also earns money from rebates its gets for directing its order
> flow to broker dealers, though Bhatt insists “We do not sell data to anyone.
> We have never sold data to anyone. We just do not do that.”

Just so everyone knows, order flow from unsophisticated investors is
considered a valuable resource because, when filling it, you know that you're
more informed than the person trading against you.

~~~
joshdance
Can you extrapolate on order flow from unsophisticated investors? Why is it
valuable?

~~~
harryh
It has to do with how people/companies called "market makers" make money.
Let's say you want to buy a share of stock. Generally you don't end up buying
it from another random person who happens to want to sell a share of stock at
the exact same time. There might not even be another random person that wants
to sell right now.

Instead you are likely buying from a market maker. For pretty much any stock
there are many market makers who are offering to both buy stock and sell it at
the same time. The trick is they'll buy for, say, a penny less than they are
willing to sell for. So if they can keep their buys/sells even they make a
penny for every share they move. They're middle men.

Make sense so far?

OK, but there is a problem. Say that REALLY BIG HEDGE FUND has proprietary
knowledge that some company is probably going to go up in value soon. So they
go out and buy a lot of stock from a market maker. And then the stock goes up.
Uh oh. The market maker sold a bunch of stock at PRICE and now instead of
buying an equal amount at (PRICE - 1 penny) and making money the market maker
has to buy an equal amount at (PRICE + the_stock_went_up_amt) and loses money.

Basically market makers would prefer not to trade with sophisticated investors
making big trades with proprietary knowledge. When that happens and they lose
it's called getting picked off. They want to trade with people like you and me
who aren't trading because of any special knowledge but because we're just
putting our regular $1,000 in our 401k for the month.

Retail brokerages like Robinhood are a good source of these types of trades.

(As with a lot of topics, there is a lot of nuance and detail underneath this
relatively short description, but this is the gist of it.)

~~~
kasey_junk
It's worth noting that "sophistication" is not really the defining
characteristic that makes retail order flow appealing, it's that it's non-
correlated with other market events.

Retail flow is driven by things like needing money for purchases or having
excess cash lying around.

Also retail flow is less execution cost sensitive.

That's what people mean when they say less sophisticated.

~~~
harryh
Indeed that is a more clear explanation of what I meant. Thx!

------
creeble
Wow. Am I the only one here that remembers that feeling of 1999, when all
stocks were going up, and one could do no wrong with leverage and a Quick and
Reilly account?

Good idea for Robinhood to target millennials, who definitely _aren 't_ old
enough to remember.

~~~
unknown_apostle
Yup. Exactly this.

Some measures suggest the current bubble is even bigger than the one in 1999.
Or at least more broadly carried, in the sense that in 1999 the bubble was
limited to a fairly narrow range of tech stocks.

This time it's all over the place. It's not limited to a few stocks. It's not
even limited to the broader stock market or to subprime credit. Today even
government bonds are in a very special place.

PS: it's also very interesting that so many people here in these comments
think that shaving a penny off on order flow is all there is to say about HFT.

And the comments also make me wonder about the staggering popularity of ETFs.
ETFs are much bigger than in 2007. In themselves a sound idea, I do wonder how
things like the 3x Inverse Synthetic Foobar ETF consisting of 99% bond meat
with 1% mystery spices will fare during a real panic.

~~~
pembrook
The difference however, is that interest rates were 5.5% in 1999. They
currently sit below 1% (and it's been almost 10 years where they've been below
that level). Interest rates are lower for longer than they've ever been in US
history. And interest rates are _extremely_ influential.

~~~
unknown_apostle
That's what I mean by government bonds being in a special place; like a
balloon pushed underwater by the ever escalating central banking interventions
of the last decades.

And it's not just in US history, we may be talking about all of history. And
not just on the short end. In 2016, a country like Belgium, where the
government has huge unfunded liabilities, was able to borrow on 10yrs for
around 0.2%. Japan is even worse.

The price of all credit ultimately relates back to these bonds. That's why the
entire financial market is setting new records, for the 3rd time in 20 years.
That's why in some sectors being profitable is once again not being considered
as important as various metrics of "growth potential". And, to get back to
Robinhood, that's why they can offer margin trading rather cheaply to the
masses.

It's a massive bubble, and some comments here reflect that. The only thing we
can't know is when it finally pops and where the epicentre will be this time.

(My guess would be somewhere in the nexus between ETFs and the bond market.
Throw in bipolar, on/off liquidity and high volatility-of-volatility caused by
modern versions of program trading-style hedging and HFT and you can have a
panic with a whole new look and feel.)

------
duren
I have a modest amount of money in Robinhood. I love the app and they way it
has encouraged me to learn about markets.

I started in March of 2016. I was naïve and I made a lot of silly mistakes
early on, but I was able to learn a lot of fundamentals when the stakes were
low.

I view it more as a gaming app than investing — it's a supplement, not a
replacement for investing and asset management.

~~~
tekromancr
Absolutely! The app lives in my phone's "games" folder. I have a relatively
small amount of money, just enough that it would sting a bit if I lost it all.
I find that even having a tiny stake in things makes learning about investing
and finance actually interesting, whereas the majority of my invested assets
are all "Vanguard, take the wheel"

~~~
Gustomaximus
\+ This. I keep a similar smaller trading account where I effectively gamble
with stock picking. I do this as I enjoy researching and understanding
businesses and find things more interesting, and you see opinions more
honestly when I put money where my mouth is. And it helps you stay engages
with your reading. I leave the 'retirement' investments elsewhere.

------
Leader2light
I use Robinhood daily and love it. Low level traders could care less if HFT
are making a penny off them. Also you can put limit orders.......

No way I could trade the way I do and still make money if I was paying 7$ or
more per trade. Crazy the industry can charge that much.

~~~
harryh
This is a good time to trot out that old tech company adage: if you aren't
paying for the product, you are the product.

How does Robinhood make money? By selling order flow to market makers. Why do
market makers want Robinhood's order flow? Because Robinhood's customers are,
collectively, unsophisticated investor with no particular knowledge about the
future performance of a stock making them the perfect customers for purchasing
liquidity a penny at a time.

Worth keeping in mind as you trade stocks every day.

~~~
metalliqaz
And why is that a bad thing? If I make a couple of $100 trades in a day and
make $10, what do I care if the pros used me for liquidity? I believe the same
would happen even if I was paying $7 at Fidelity to make the trades.

Not trying to be argumentative, just want to make sure I understand the
conversation here.

~~~
harryh
Most Robinhood customers will not reliably make more money trading every day
than they would buying and holding Vanguard Index funds ($VTI is a good place
to start).

~~~
JBReefer
Given how frequently this is said, I'm shocked that people still don't get it.

The only way you know more than analysts is:

A. be a full time analyst B. work at the company you're trading

If you're on Robinhood, you're not A. And if you're B, you're in touchy legal
waters.

The average unsophisticated trader loses money vs those ETFs in even small
time frames.

~~~
devopsproject
> The only way you know more than analysts is

is to flip a coin: [https://finance.yahoo.com/news/coin-flip-beats-listening-
wal...](https://finance.yahoo.com/news/coin-flip-beats-listening-
wall-203001989.html)

Now you could argue that diversification is key and that the best way to
diversify is to choose an index vs picking your own asset mix. But deifying
analysts is absurd

------
beezle
Their margin rates are very high at best and potentially usury at worst. They
are counting on you not using the full amount of margin on the tier you paid
for and further, counting on you being too lazy to downgrade to a lower (or
no) tier when you no longer need it. There was nothing I could find in the FAQ
about them automatically dropping the tier as your use declined.

For comparison - and I have no vested interest here - Interactive brokers
currently charges 0 - 100,000 2.41% (BM + 1.5%) and 100,000.01 - 1,000,000
1.91% (BM + 1%) on USD margin loans.

If you think you will be an active user of margin I would go elsewhere unless
you can justify savings on the commission side against paying 0.005/shr
elsewhere.

~~~
webninja
My Robinhood margin rate for $6,000 is only 5%/year. It also provides extended
pre-market trading, after-market trading, and instant deposits. Interactive
brokers charges commissions on trades. Also you don't have to use margin with
Robinhood, it's not required.

~~~
beezle
That 5% rate only applies if you fully utilize the margin for the entire year.
If you do not, and do not drop out of the gold tier when not using the margin,
your effective rate sky rockets.

As to IB, again my point was there is a trade off between paying nothing for
commissions and overpaying for margin vs paying a low commission and getting a
market margin rate that only kicks in when in use.

------
rl3
Nice, now hopefully they can deliver on a public API, short selling, and a
desktop app.

~~~
szirka
I would be pretty surprised if they introduced short selling. There's no
question that a good chunk of Robinhood's user base are novice investors.
Those that do not understand short selling may land themselves into a lot of a
hot water. There may be measures RH could take to prevent novice users from
dangerous short selling plays. I'd be curious to see how they introduce it.

~~~
GeneralMayhem
They could introduce put options, at least.

~~~
rl3
Just so they offer some form of betting against the market. I don't care how.

Creating beta-neutral systems with Robinhood would then be possible.

~~~
pmalynin
(Not trading advice, yada yada)

Well,

The way I approach betting against the market is inverse leveraged ETFs. If
you want to bet against S&P 500, ProShares has a 2X inverse offering, and you
can probably balance it with 3x leveraged gold JNUG / JDST as they track the
market.

~~~
rl3
Nice, I never knew inverse ETFs existed. Thanks for this!

------
lexo
Robinhood will lend people money, so they can invest with that. Buying stocks
with money that isn't yours. What could possibly go wrong here?

~~~
mortehu
People do this when buying houses all the time, and often at a 5x or 10x
margin, rather than just 2x. Even Vanguard supports this.

~~~
scurvy
At the end of the day, you can't live in a stock.

~~~
devopsproject
but it does still exist

~~~
ceejayoz
[https://en.wikipedia.org/wiki/Bankruptcy](https://en.wikipedia.org/wiki/Bankruptcy)

------
aerovistae
These announcements always remind me of this.

[https://m.signalvnoise.com/press-release-basecamp-
valuation-...](https://m.signalvnoise.com/press-release-basecamp-valuation-
tops-100-billion-after-bold-vc-investment-c221d8f86ad7#.9lqnwvrs6)

------
97s
Why is there no browser version? Some of us don't like using our phones for
this type of stuff. Just because I don't like little screens. Other than that,
it is about time someone broke up this market. I welcome our new free
overlords.

------
webninja
I've been using Robinhood for the past year and made a 14% return which
amounted to an extra $1500 in my pocket that I wouldn't otherwise have. There
is so much negativity surrounding Robinhood here and I think it's coming from
speculative people who haven't actually used Robinhood and can't assess it
empirically. They charge _0_ fees. What's so anti-robinhood about that? If
you're concerned about them making money off of order flows, just use limit
orders. I _only_ place limit orders.

~~~
myroon5
To play devil's advocate, the S&P 500 is also up by over 14% for the past year
with likely less risk and drawdown due to diversification.

~~~
bricestacey
Reminds me when my friend told me he was up like %30 using Wealthfront and I
should complete his referral. And I told him the S&P was up the same amount
over the past year, but I only paid a 0.05% fee.

------
colourincorrect
"hey guys! lets take a model that has been proven effective by many years of
fierce market competition, and _disrupt_ it by doing for free!"

------
hotgloupi
"Additionally, Robinhood earns revenue by collecting interest on the cash and
securities in Robinhood accounts, much like a bank collects interest on cash
deposits."

I wonder if selling (or using) data from their customer is more profitable
than the Gold plan.

------
thro1237
Is there a chance of losing money that is invested in RobinHood? I am not
talking about trading losses -- but some thing like RobinHood going under and
me losing money as a consequence of that? Are there any protections for
consumers?

~~~
neuralFatigue
Robinhood is SPIC insured upto $250,000. So you can get upto 250,000 worth of
securities value back if company goes under. Scroll down on the link
[https://www.robinhood.com/](https://www.robinhood.com/)

------
rayj
This is gambling for almost all users, and yes I used robinhood for a couple
trades. Use [https://stockfuse.com](https://stockfuse.com) and you won't
actually lose your money.

~~~
devopsproject
that link kills the back button. also, you can't make money so why bother

~~~
jameskegel
Can you explain the latter half of your statement please?

~~~
devopsproject
you can't make money trading with fake money in a simulated stock market.

------
michaelmarkell
If Robinhood bundles user debt and sells it at varying ratings (depending on
information about the stocks being bought, perhaps) they could protect
themselves from a large default and probably make money doing it

~~~
akhatri_aus
It wouldn't necessarily protect them. Typically the broker sells off your
shares/etfs on your behalf before they are owed anything net over your account
deposit or margin.

------
malanj
My understanding is that if you trade through a platform like this, that's
monetizing through order flow, you're getting screwed by HFTs. I.e. AFAIK
Robinhood doesn't need to be selling the data to HFTs (which they don't do),
for you to get screwed by them.

Anyone here in the space who can quantify the "hidden" cost you incur because
of more sophisticated traders trading against you?

It feels like working with a broker who's explicitly charging you might
actually be cheaper if you take this "cost" into account?

~~~
supster
All the major retail brokers sell their order flow, so you generally eat this
cost no matter who you use. In addition, the hidden cost is fractions of a
penny on the dollar (so still better than the $5-7 a regular broker charges
per trade anyways).

~~~
mr_turtle
What's the long play then? Surely Robin Hood isn't absorbing the the
transaction fees as a loss leader just to increase it's user base? If that's
the play, any other company can emulate that.. The incentive seems to be this
may cause a price war with existing brokerages.

~~~
scott00
There aren't actually any transactions fees to absorb. Wholesale brokers
(think Citadel) pay retail brokers (think Robin Hood) for the privilege of
executing their orders.

~~~
hn9780470248775
Why?

~~~
scott00
Because, for the most part, retail investors are not well-informed investors
and are willing to cross the bid-ask spread. To simplify dramatically, suppose
Citadel thinks the fair value of a stock is 25.185, the market is 25.18-25.19,
and a Robin Hood customer wants to pay 25.19 to buy 1 share of the stock. If
they buy from Citadel, Citadel makes $0.0050 on average. Given those basic
economics, it makes sense for Citadel to pay, say $0.0018, to make sure that
the Robin Hood customer buys from them instead of from Knight.

------
IAmGraydon
If you're going to gamble, have some real fun with Forex, which commonly
offers 50:1 leverage in the US. Though I'm being a bit sarcastic, highly
leveraged trading can be quite entertaining as long as you treat it exactly as
you would a trip to Vegas - don't bet more than you care to lose, know when to
quit and don't try to make a living doing it.

------
hkon
Never seen a marketing video with so much disclaimers and fine print before as
the one on the robinhood site

------
mstibbard
I think the most surprising aspect is their desire to offer a similar referral
scheme as Uber.

"Now when one user refers someone else who signs up, both get one share of a
randomly selected company from a set that includes Facebook, Apple, RiteAid,
Ford, and General Electric."

------
revelation
This is just a slightly more obfuscated "binary options" betting scam.

 _A Gold subscription lets users borrow up to double the money in their
account to trade on margin with leverage_

Gamble alright.

~~~
akhatri_aus
How is that different from the dozens of other offerings from other brokers?
Margin lending has been around for centuries, binary options on the other
hand..

------
marvel_boy
Somebody knows if there they are planning to operate in UK?

~~~
akhatri_aus
Theres one called Freetrade.io that does the same thing in the UK

~~~
marvel_boy
Thanks, from his portal seems that they will operat in two months.

------
arrty88
i dont use gold for the leverage, but for access to execute trades after
hours... do i automatically fall into dumb millennial trading on margin?

~~~
namlem
That depends, are you day trading without knowing what you are doing, or are
you just buying to hold?

------
x2f10
I've been interested in Robinhood for some time. Does anybody here have
experience with the app (good or bad) they can share?

~~~
jtraffic
I've been using it for a while. I think it's best for longer term positions
(2+ years at least). I realize it's ironic, because in theory, I could trade
all the time with Robinhood, but I find that I don't do that. (Though that may
be because I've learned over time that trading often is difficult, a recipe
for me to lose money, and draining.)

It's really just good, from the customer perspective. It's the brokerage that
needed to exist.

My uncle, who lives off of trading, gave me his transaction list and I saw
that like 12% of his profits were eaten up by trading fees. Ouch.

I think more sophisticated individual investors don't jump on because you
can't trade options. For me, that's a good thing, I'm not tempted to
speculate.

------
celticninja
A unicorn with a revenue stream, how novel.

~~~
metalliqaz
Well, as others have pointed out, that revenue stream may not be so solid.

------
raleighm
Take from the rich to give to the poor to give back to the rich. Brazenly
named.

------
MistaEd
encouraging retail investors to trade frequently and on a margin sounds like a
terrible idea. Basically creating more suckers for the high frequency traders
to trade against. Should rebrand the app and call it Robber-in-a-hood

------
dharma1
Do they have an API?

------
unixhero
Still US only?

 _sigh_

------
brilliantcode
Remember LendingClub which was a money lending business that touted it's
machine learning KYC & AML process would automate the overhead but what
happened was it just let a ton of people with non existent credit to grab
money...that they will never pay back. Techcrunch, news, tv, they had it all.

I'm not saying Robinhood is bad or anything but the business model and the
valuation built on top of it is very questionable.

It's almost like gravity does not exist anymore. It's all about making it
across the IPO finish line and then it's like fuck what happens to everyone
else because I've already got Monssack Fonseca shuffling my untaxable money.

~~~
dragonwriter
> Remember LendingClub which was a money lending business that touted it's
> machine learning KYC & AML process would automate the overhead but what
> happened was it just let a ton of people with non existent credit to grab
> money...that they will never pay back.

Last I checked, Lending club still had strong returns, even after their fees,
for investors (though somewhat less attractive then the figures would suggest
since it is taxable as personal income rather than capital gains), and a
sub-5% default rate. This characterization seems to be pure fantasy.

~~~
brilliantcode
[https://seekingalpha.com/article/4009799-lending-club-
online...](https://seekingalpha.com/article/4009799-lending-club-online-
lender-trouble)

