January 30, 2021

What Robinhood Taught us About Gamification

Sam Caucci

Nobody likes an unfair game. So when Robinhood literally made the game stop yesterday, people around the world were rightfully outraged that the app with a self-proclaimed mission of “democratizing finance for all” decided to change the rules mid-game.  More than half of all Robinhood users own at least some GameStop stock, but now they are now unable to freely trade that stock along with other dark horse stocks like AMC, BlackBerry, and Nokia. Yet, hedge funds are still free to trade the stock as they see fit. Now, let’s backtrack a little. To fully understand why people around the world are so infuriated by what’s going on right now, we need to delve into Robinhood’s backstory.  Months before r/wallstreetbets and GameStop were dominating the news cycle, media outlets like The Washington Post were releasing articles that raised concerns about the “gamification” of investing.  Critics claimed that letting investors trade stock on a “fun, game-like phone app” could have disastrous real-life consequences for young, inexperienced investors with little education about financial markets. They worried that making the stock market feel like a game would encourage people to keep trading and spending money even if it wasn’t in their best interest.  The events that unfolded yesterday proved that Robinhood’s users are indeed in danger — but it’s not because they’re inexperienced. It’s because the game is rigged. When Robinhood was founded in 2013, they claimed their purpose was to make the stock market accessible to everyday people by bringing long-ignored investors into the market. Since Robinhood is fee-free and offers fractional stocks, investors who have historically been barred from the stock market by high costs of trading now had an innovative new way to participate. For example, the price of a single Amazon.com Inc. share is $3,200, so traditionally anyone who wanted to invest in Amazon’s stocks would need at least that much to enter the market. That’s where Robinhood came in by lowering the ‘pay to play’ cost that people need to participate in the stock market. By investing through Robinhood’s platform, people were free to buy just a piece of the stock rather than having to afford the whole cake. Initially, it seemed like Robinhood was for the  people. They proudly claimed that “the financial system should be built to work for everyone.”And when the company was criticized for claims that its “gamification tactics” encouraged ordinary people to make potentially risky and uneducated decisions, Robinhood stood its ground.  “Those who dismiss new and younger investors, who come from increasingly diverse backgrounds, as unsophisticated or unserious perpetuate the myth that investing is only for the wealthy,” a Robinhood spokesperson said. Fasttrack back to the present: Yesterday, Robinhood notified it’s users that they are unable to freely trade GameStop and other stocks targeted by the r/WallStreetBets subreddit. So the app is only allowing users to close out their positions, meaning they can sell their stocks but they can’t buy more. Now, many of Robinhood’s users (and millions of people across the internet) have come to the realization that the app claiming to champion the everyman has been rigged all along. Because when ordinary people started beating Wall Street at its own game, Robinhood was quick to side with Wall Street.  The irony of this situation was not lost on Twitter: screen_shot_2021-01-29_at_11.34.20_am screen_shot_2021-01-29_at_11.10.49_am screen_shot_2021-01-29_at_11.10.26_am screen_shot_2021-01-29_at_11.10.08_am At 1Huddle, we obviously believe in the power of games. Games have the power to improve people’s lives and create a positive impact in our communities when they’re implemented correctly.  The problem isn’t that Robinhood gamified investing. The problem is that Robinhood made a game, refused to ever acknowledge that it was a game, then broke it. Put simply, the problem is that the ‘game’ Robinhood created was rigged. Because if you change the rules mid-game, then it’s not really a game at all, is it? It’s just corruption. This is a perfect example of how games can be used for good or bad. Gamification always works, but who does it work for? Is it being designed to work toward the greater good, or is it being designed for nefarious purposes?  Robinhood’s actions have shown that their mission isn’t to “democratize investing.” It’s to maintain the status quo.  This all goes to say that the best games are built from the player’s perspective. They’re designed to give players a great experience that can enrich their lives. The worst games — the games that are truly nefarious — are the ones created to serve the game’s creators rather than its players.

Sam Caucci, Founder & CEO at 1Huddle

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