It starts with PR. If there was one moment for a company to be brutally honest, it was for Robin Hood yesterday. They didn't get in front of this story, they didn't explain the issue in detail - instead, they blocked the trades, posted a bullshit information-free blogpost, and have their CEO doing rounds on the news smiling and spewing zero-information noise.
This isn't a business model problem, it's customer relationship management problem. They screwed it up big time. Like corporations usually do with their ISO standard PR, but then usually there isn't a critical mass of angry customers looking for blood (some of which are really angry, because they're already operating in the "I'll YOLO what I have on a chance to make Wall Street pay for the pain they inflicted on my parents in 2008" mode).
because people are mad at them? you think they shouldve gone public during a high-volume, high-volatility feeding frenzy with tens of billions flying around and said "we're insolvent, but its ok we're taking action to recover our position"?
it looks to me like their actions were totally rational and at least a good-case scenario, if not best-case. platforms have been deleted in the past due to circumstances like these, and i think the CEO going on TV and saying theyre on the verge of massive legal and financial problems is suicide. keeping their business alive is supporting their customers. no if, ands, or buts.
calling this a PR problem is a bit obnoxious. its like saying theres no technical problem, but people think there is, so the company has to not only continue providing their free services but also make their users feel good while doing so. RH had to navigate dangerous waters, with bankruptcy to the left, bankruptcy AND lawsuits on the right, and only lawsuits ahead. im not sure how they couldve done better.
> you think they shouldve gone public during a high-volume, high-volatility feeding frenzy with tens of billions flying around and said "we're insolvent, but its ok we're taking action to recover our position"?
Sure, why not? Everyone knows the situation is extremely unusual and not indicative of RH's ordinary performance. This way, they'd stay on the friendly side of everyone.
> its like saying theres no technical problem, but people think there is, so the company has to not only continue providing their free services but also make their users feel good while doing so.
I'm not saying they should've allowed people to continue buying GME and other meme stocks. I'm saying they should've honestly communicated the actual reasons behind their decision.
because if youre having liquidity problems, telling everyone that creates an incentive for them to liquidate on your platform and leave, creating a death spiral resulting in the destruction of your company and preventing everyone from liquidating in the first place. a bank run, but for RH and their clearing firm(s).
in other words, they were and are doing whats best for their customers.
This isn't a business model problem, it's customer relationship management problem. They screwed it up big time. Like corporations usually do with their ISO standard PR, but then usually there isn't a critical mass of angry customers looking for blood (some of which are really angry, because they're already operating in the "I'll YOLO what I have on a chance to make Wall Street pay for the pain they inflicted on my parents in 2008" mode).