It's Not Just the Confetti

How Robinhood made stock trading easy, approachable— and maybe too hard to resist

- Misyrlena Egkolfopoulou, Annie Massa, and Anders Melin

In Silicon Valley, Nir Eyal is the habits guy. Want to understand how to get app users to come back again and again? Then Eyal is your man. A former lecturer at Stanford’s Graduate School of Business and an angel investor, he’s studied how companies such as Facebook Inc. and Twitter Inc. encourage users to spend time on their platforms. He didn’t invent the techniques, some of which were also being observed and taught by others on the Stanford campus by the 2010s. The place was a hotbed of behaviorally informed design. But Eyal summed up what he saw in a PowerPoint-friendly four-step model that showed how the smartest designers were turning their products into habits. In blog posts and articles in 2012, he called it “the desire engine.”

It was around this time Eyal says he was approached in a Palo Alto coffee shop by a young techie named Baiju Bhatt with a bold plan for a no-fee stock-trading app. He wanted to show it to Eyal.

A year later, Bhatt and his business partner, Vlad Tenev, would launch their company, Robinhood. Their app popularized the zero-commission brokerage, eventually forcing its major competitors to follow, and introduced millions of millennials and Gen Zers to the market. It’s also attracted critics, including U.S. lawmakers and a state securities regulator, who say Robinhood makes investing very real money feel too much like a game and encourages frequent trading by its novice users.