You might not know a lot about the stock market. You might not even own stock — just over 50 percent of people do. But you might have developed an insatiable interest in the stock market over the past few weeks as a bunch of yabbos on Reddit collaborated to take down billion-dollar hedge funds by artificially inflating the artificially deflated price of stock in a nothingburger video game retailer.
And then you might have become even more enthralled as people became enraged at an investing app you’d never even heard of for doing A Thing, and maybe you’ve even developed a hatred for something called Robinhood for something something rich hedge fund managers and screwing over the little guys.
It’s fascinating that an app that, though niche, has been developing its brand for seven years and become a platform of choice for retail traders (the aforementioned “little guy”) has suddenly become a pariah among people who don’t even own stock. They’ve managed to torpedo their brand in a matter of hours — and the ironic thing is, if they’d just picked a different name, this furore might have been at least a little less furious.
That’s pure speculation on my part. And we’ll never know, of course, because the app did call itself Robinhood, and it’s going to take a long time before the world forgets about the time it (in some eyes) stole from the poor to help out the rich.
The Situation
I won’t even try to explain the entire conflict — NBC does a great job of that, and on Medium, SharkFin has an even easier explanation — but here it is vastly oversimplified: Wall Street hedge funds have a way (called “short selling”) of selling stock when it’s expensive(ish), driving the price down, and buying it again when it’s cheap. A bunch of nobody investors on Reddit found out this was going to happen to GameStop stocks (GME) and, largely in an effort to Stick It To the Man, did a thing (called a “short squeeze”) where investors can buy stock to drive the price back up, so instead of making money, the hedge funds had to pay tons of money to buy their shares back. This made those super-rich hedge funds super-poor, sometimes to the point of bankruptcy.
(Again, this is vastly oversimplified. There’s market manipulation. There’s the entire idea of borrowing stocks to buy and sell. There’s the very existence of billionaire hedge fund managers. I have neither the time nor the expertise to go into it all.)
Enter Robinhood, the app by which many retail traders (including a lot of the Redditors) made their purchases. Robinhood presents itself as the trading app for the common man — “on a mission to democratize finance for all,” sez they — but at the same time hedge funds were getting shirty about the taste of their own medicine, Robinhood was temporarily blocking purchases of GME, AMC, and other stocks.
This meant the little guys could sell their shares (thus helping the hedge funds close their positions while limiting loss) but not purchase more (which would continue to drive the stock prices up and make the hedge funders sad). (And honestly, the big hedge funds were mostly buying and selling via their own brokers, leaving the retail investors the only ones affected by Robinhood’s limitations, adding a nice “breaking it off” element to the perceived “sticking it in.”)
The Fail
For risk-management purposes, it might have been the right call for Robinhood to limit trading and thus volatility. For brand-management purposes, it was… not a good look. If you’re an app named after a fictional character who robbed from the rich and took from the poor, “Sorry, poors, we’re not going to let you make more money because the rich asked us not to” (whether or not that’s an accurate characterization of what they did) doesn’t line up. Whether or not limiting trading was a good move (and hell, I’m not in finance, I don’t know), minding the brand should have been a simultaneous process. For instance, an attentive marketing team might not have sent emails like this one:
It’s been a tough day, and we’re grateful to you for being a Robinhood customer. In light of the extraordinary market conditions this week, we temporarily limited buying for certain securities this morning. Starting tomorrow, we plan to allow limited buys of these securities. We’ll continue to monitor the situation and may make adjustments as needed.
This was a temporary decision made to best continue serving you, and was not an easy one to make. We know it’s led to frustration and confusion, and wanted to provide some clarity.
[…]We stand in support of you, our customers. Democratizing finance for all means giving more people access, not less.
Seeking sympathy for your tough day isn’t going to resonate with the customers who feel betrayed by you. The fact that it was a difficult decision to, from their angle, screw them over wasn’t going to make them feel any better. And said customers, for the record, have reported they felt neither sympathetic, clarified, nor supported.
The Lesson
It’s easy not to think about things like branding and crisis PR in the midst of the actual crisis — advertising stuff is frequently the first thing to fall by the wayside. But it’s important to do it. When you make a potentially controversial move to help your customers, it’s crucial to make sure your customers feel like they’re actually being helped.
Robinhood said the move was in the interest of protecting their customers, and that may well have been the case. But it in no way explained how those actions were protecting their customers. Public statements are easy — backing them up is hard. If you say you’re looking out for your customers, but their perception is that you’re screwing them over, it’s actually worse — now, on top of everything else, you look like a liar. “I’m doing this for your own good” is an angry parent, not a company that cares about its customers.
Explain, in as simple terms as you can, how the volatile situation is affecting your customers as investors and what the potential impact could be on them if things weren’t allowed to settle down a bit. Explain how a move that appears to favor The Rich over The Poor actually is in line with their Robin Hood-y image. (And don’t make a play for sympathy for people who think you just betrayed them.)
Your message can’t be, “We’re doing this thing you’ll hate, and this is why.” It has to be, “We care about you and want to keep you safe, and that’s why we’re doing this thing you’ll hate.” Always think of your audience first, always give them what they need in addition to what they want, and always follow through on your promises. Convey that through your copy, your visuals, your messaging, everything you do in the wake of this crisis, because once the dust has settled, all you have left is your promise and your customer base.
Your brand is how people know you. They know your product, they know your customer service, but they know you through your brand — your name, your face, the promises you make and keep. You can’t ignore that just because you’re busy dealing with something else.
Robin Hood, good. Robinhood, bad.
Post Malone has a li’l heart tattooed on his face, but nobody’s convinced he’s a font of love and affection. Robinhood may well have set their limits because it was the only way to protect the company and its investors, serving them just like Robin Hood served the poor people he showered with little leather pouches full of gold coins. They certainly said it, but none of its customers were actually convinced that it was anything but an empty statement. And, like Post Malone’s face tattoos, it made things worse and not better.
Put your customers first — and that means looking into their minds and thinking about what they might think about whatever you’re trying to say. And it means remembering the promise you made to them, so you aren’t just a faceless corporation trying to wriggle out from under a scandal but someone they know and trust to have their back.
(And a note to the World Wide Robin Hood Society: Thanks! I do feel welcome. I don’t agree that Kevin Costner was the best Robin Hood, but I do agree that Alan Rickman was a flawless Sheriff of Nottingham.)