The legendary archer of Sherwood Forest is taking aim at the stock market. Robinhood is a new trading app that promises users free trades and no account minimums.
That's a big departure from the $7 to $10 fees per trade that other brokers which cater to the masses like E*Trade (ETFC) and Charles Schwab (SCHW) charge. These firms offer discounts from time to time, but only if a customer has a large account or uses other services.
Plenty of people are excited about $0 commission trades on Robinhood. The app is still in beta test phase, but nearly 340,000 people have signed up on the company's website to gain early access.
The startup knew there would be interest, but they didn't expect this kind of reception.
The roll out process is reminiscent of the early days of Gmail, Gilt Groupe and the Mailbox app: There's an aura of exclusivity, and if you refer more friends, you move up the wait list.
Perhaps it's not a surprise that Robinhood is taking this approach since Google Ventures is one of the company's key backers, and a former Mailbox app employee is now part of Robinhood's 15-person team in Redwood City, California.
In December, the company said it was targeting "early 2014" for launch. Now they plan to open the app up to more people on the wait list in the coming weeks and have it available in app stores later in the summer.
"Rest assured when you use it, it will be unbelievably cool," Baiju Bhatt, one of the co-founders, told CNNMoney.
They have worked hard to make the app easy to use on the go. For example, the home screen changes colors depending upon if the stock market is open or closed.
"Our one design principle was building an interface so it's useful in 15 to 30 second bursts like when you're standing in line waiting to order coffee," Bhatt says.
Robinhood was founded by former Stanford roommates Vladimir Tenev and Bhatt who worked on Wall Street after getting master's degrees in math.
Tenev began trading at age 14. Bhatt is a more recent "convert" and calls his own portfolio "remarkably uninteresting."
The team made its first trade on March 28, according to the @robinhoodapp Twitter feed. For now, trades are limited to U.S. stocks only.
The company's business model is to make money on margin trading, interest on cash deposits and payment for order flow, a fancy way of saying making money by trading faster or slower than others.
Tenev and Bhatt's job on Wall Street was to build high-frequency trading (HFT) platforms for financial institutions.
"At the time, HFTs were commonly paying a tenth of a penny per trade, which enabled the business model to operate with razor thin margins," Bhatt says. "We had a head scratcher moment where we asked ourselves, 'Why do we pay $10 when we trade our personal accounts?'"
There are skeptics about this approach. Robinhood would need huge volume to make money without any fees. But if the wait list is any indication, there's demand for a lower cost service.
The startup is also exploring ways to partner with other apps by sharing API access and offering premium services.
The founders chose Robinhood as the logo to underscore the spirit of bringing trading and investing to the masses.
Apparently, babies do get old.
ETrade (ETFC) recently retired its long-running ad campaign featuring a talking baby boy telling people how easy it is to invest.
The company's official line is that the child star quit.
There's even a web site marking the milestone, babyquits.com, which redirects you to a Facebook page showing an out of office sign on the baby's crib.
Over the years, the baby, who was never given an official name, MOREHeather Long - Apr 12, 2014 1:00 PM ET
E*Trade shares sank Thursday after the online brokerage said one of its biggest investors would sell its stake.
Chicago based hedge fund Citadel plans to sell more than 27 million E*Trade shares in a sale set to occur next week.
That sent shares of E*Trade (ETFC) down 7.5% to $10.93 in afternoon trading.
The news that Citadel was selling its 9% stake in E*Trade signaled to investors that the brokerage will not be MOREBen Rooney - Mar 14, 2013 3:35 PM ET
E*Trade is looking for a new chief executive.
The online brokerage firm said Thursday that CEO Steven Freiberg has left the company as it works on strengthening its financial position. Last month, E*Trade reported a 24% drop in second-quarter earnings to $35.9 million, or 14 cents per share.
The company did not say why Freiberg left the company but E*Trade has been struggling for years with losses on mortgage-related assets and the continued MOREBen Rooney - Aug 9, 2012 1:22 PM ET
Nasdaq is going to spend $40 million to compensate for trading losses caused by glitches during Facebook's stock market debut last month, but that doesn't mean much for small investors who got burned.
Most average investors put in orders for Facebook shares on opening day through brokerages like Fidelity, Charles Schwab (SCHW) and Scottrade, but those firms aren't direct recipients of Nasdaq's payout.
"Nasdaq's accommodation program is an agreement between the exchange and its MOREHibah Yousuf - Jun 7, 2012 11:00 AM ET
Not a member yet?Sign up now for a free account
|Wall Street bets on prison growth from broder crisis|
|A dozen McDonald's outlets closed in Russia|
|Denny's aimed at 1% opens in New York with $300 Grand Slam|
|Slow Comcast speeds were costing Netflix customers|
|How young tech millionaires invest|