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Charles Schwab is currently worth ~57 Billion

TD Ameritrade: ~29 Billion

E-Trade: ~11.5 Billion

Fidelity Investments is privately owned, so harder to value, but is probably worth 50-75 Billion




All of those are more than just brokerages. They all have consumer banks (in the case of TD Ameritrade, a decent-sized one). Schwab manages their own mutual funds. Fidelity is one of the top providers of 401k services in the US (and also manages their own mutual funds).

Each of these companies is far more diverse than Robinhood, and their valuations are not comparable.


What prevents Robinhood from diversifying? They've figured out how to get a lot of customers fast. They're executing extremely well, IMHO, and that means they have many growth options. A team that can deliver a constantly improving product quickly for a huge customer-base is kind of unstoppable.

And, it is irrational to compare startup valuations to established companies. They're not the same category. If they were, we'd look at F and GM and wonder why anyone would ever invest in TSLA (though, that's maybe not a great example because I suspect F and GM are better investments than TSLA right now, but not because they are more diverse or whatever...but, because there's a lot of risk built into TSLA due to sloppy management). But, it's easy to find examples of old companies beating new companies that seemed to be stronger investments. Google vs. Yahoo, Amazon vs. Borders, etc.

Robinhood may be the biggest provider of 401k services in ten years. Or, they might partner with storefronts to offer banking+ services. Or, they might just keep bringing in new small dollar customers and eking out tiny profits by being more efficient; there's plenty of room at the bottom. Those other guys charge ten bucks a trade (or more)! You can bet all the people tucking away $100 from each paycheck don't want to lose 10% of it to fees right off the top. McDonald's doesn't make a lot of money from each customer, but they have a lot of customers.

I have an Ameritrade account that I've had for 25 years (well, it was Datek back then), and I have a Robinhood account. I stopped automatic withdrawals to Ameritrade a year or two ago, and now all my trading happens on Robinhood. It's just a lower-friction experience. If Robinhood goes public, I'll consider buying, because it's a good and novel product in a market with a lot of money changing hands.


On the other hand, I just closed my Robinhood due to their dishonest Savings "and" Loan debacle. Not that I don't think my money is safe (they are insured), but that they are pushing any and all areas to grow as much as possible.

Supported by this new big round raise.

https://www.cnbc.com/2018/12/15/robinhood-to-re-brand-saving...


> And, it is irrational to compare startup valuations to established companies.

Uhh, hate to break it to you but startups don't get "special valuations" because someone calls them startups. That's just not how it works. There's a little thing called "comps" that are used when companies get valued and no banker says "oh thats a startup so their valuation is different".

Source: M&A guy.


"Uhh, hate to break it to you but startups don't get "special valuations" because someone calls them startups."

Is this condescending tone necessary?

I was suggesting growth plays a large role in why startups are valued differently than established businesses, and I don't see how you can argue that a rapid growth company will be valued according to the same metrics as a company with very low growth.


> And, it is irrational to compare startup valuations to established companies. They're not the same category.

Is it necessary to be so matter-of-fact and imply that people aren't being rational (and thus inferior to your clearly rational point of view ). You're not wrong, the tone isn't necessary but I guess I was just following your lead.


You're not wrong about that, it was more dismissive than it should have been, though I'm not sure how else to express the idea I had in mind. Perhaps I should have instead said something along the lines of, "I value rapid growth startup companies very differently from established slow-growing companies." without expressing an opinion on whether that's reasonable or not. I'd guess everyone here can make an assessment about how growth is factored into company valuations.


I'm not aware of any connotation of "matter-of-fact" meaning "rude".


Yeah I jumped ship from TD to Robinhood recently too. Ever since TDs commission free ETFs went to shit.


Interactive Brokers ~23 Billion. So between the 5 companies and Robinhood the latter would take ~4% of the market cap.

It's not that much, but I feel you.


I think the target market is the problem; older people have the money, and they're not moving from the places they know and trust.


If Robinhood is playing the long game they are looking to capture the young market now so they are the first stop when the money comes pouring in.


Yes, the long game.

It's very hard to prove that someone is doing the wrong thing when you invoke the term "the long game".


Give it time. Millennials are now the largest generation in the country. Soon enough, they will have the most money.


Every generation will eventually "have the most money". The question that matters is "when?". Will they get the most money because they've earned it or because all prior generations have died off enough for them to inherit it.

I can't think of any mechanism by which wealth owned by the rich (i.e. old) can skip a generation.

The only way this proves to be false is if we eventually discover the secret to healthful immortality and end up with a generation that never dies, and therefore never bequeaths its wealth to younger generations. The longer people live, the longer it will take younger generations to inherit the wealth of older generations.

The only other way this proves false is if there is a massive wealth destroying event such as war, revolution, ecological collapse, etc. such that there isn't much wealth to inherit.


"I can't think of any mechanism by which wealth owned by the rich (i.e. old) can skip a generation."

The IRS can!

See: https://en.wikipedia.org/wiki/Generation-skipping_transfer_t...


Fascinating. Thanks for the link.

That said, I was talking about a generation collectively across all of society, not a specific family.


Isn’t that the problem? That the millennials are not accumulating wealth at the rate of the boomers?


They're not, but when the boomers start to die (we'll they've already started but as the pace picks up), they'll be leaving a lot of wealth to the millennials.


I think most of the boomer money will pass down to GenX and the xennials. Millennials are another 15 years out.


VCs don't have a 30 year time horizon. The way compounding interest works means assets are heavily skewed toward older workers.


Young people get old and accrue wealth.

I still have my Ameritrade account from 25 years ago (then Datek, which was, at the time, revolutionary), so I'm not even the obvious consumer of Robinhood services since there was friction for me to stop using Ameritrade and start using Robinhood, but I switched all of my investment activity over to Robinhood a year or so ago (still have some stock at Ameritrade, but I don't actively trade there).


Company valuations are based on the next 10 years rather than now.


> older people have the money, and they're not moving from the places they know and trust.

Their money is moving, because old people—at a higher rate than young people—become dead people, whose former money is then controlled by someone else, often younger.




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