The tale of Robinhood

Quote of the Day

A Whopper taught me about net neutrality. It’s stupid, but true.”

Market Snapshot

• Strong earnings pushed the S&P and the Dow to new records.
• European markets closed mostly down after the ECB didn’t raise rates.
• The dollar rebounded slightly from three-year lows.
• Tesla reported (potentially) further delays on Model 3 production, sending its stock down 2.4%.

Robinhood Is Bringing Free Trading to Crypto

“The value of Robinhood Crypto is in growing our customer base and better serving our existing customers.”—Robinhood CEO Vlad Tenev

Call up your crypto broker and give him the boot—free stock trading app Robinhood is introducing crypto trading to its platform. As of next month, you’ll be able to trade Bitcoin and Ethereum free of charge, while monitoring the price changes of 14 other altcoins. Our best guess is PonziCoin won’t be one of them.

What we do know is Robinhood presents an immediate threat to other fee-based crypto exchanges—namely, Coinbase—which charge customers anywhere from 1.5-4% per transaction.

A quick little tale about Robinhood…

You might know Robinhood as the app that democratized trading—a way for anyone to instantly “buy the dip” and sell at the tip. But did you know 75 investors rejected the idea when it first started? Or that its founders—Baiju Bhatt and Vladimir Tenev—had never built a consumer-facing product before?

Eventually, Marc Andreessen and...get this...Snoop Dogg invested (he loved the green branding). And after posting a website with ten simple words: “Commission-free trading, stop paying up to $10 per trade," Robinhood blew up.

By the end of its first year (2013), 1 million users signed up—and as of last year, Robinhood had 3 million users, raised $176 million at a $1.3 billion valuation, and saved traders over $1 billion in transaction fees.

Impressive, no doubt

But its 3 million users still pale in comparison to the community on Coinbase—the crypto exchange also founded in 2013. The recent rise of crypto catapulted Coinbase to 13 million users so quickly, it got Vlad Tenev thinking.

What if Robinhood could use its free trading model to undercut the market and steal some of those users?

And considering 95% of surveyed Robinhood users said they’d go crazy for crypto (and a knock-off crypto app offering free trades, Cobinhood, raised $10 million overnight), this plan just might work.

Trade Talks Heat Up in Snowy Davos

Switzerland’s famed reputation as a “neutral site” took a hit this week, as the possibility of a U.S.-sparked trade war (countries imposing tariffs on each other’s goods) gained steam at the World Economic Forum in Davos.

And what a week it was:

Monday: The Trump administration slapped 30% tariffs on imported solar panels, boosting small American manufacturers but likely harming the industry as a whole.

Wednesday: To the surprise of nearly everyone, Treasury Secretary Steven Mnuchin appeared to attack the U.S. dollar, saying “Obviously, a weaker dollar is good for us as it relates to trade and opportunities.” Yes, but it also devalues U.S. debt and reduces Americans’ purchasing power abroad.

Thursday: President Trump walked back Mnuchin’s comments, saying he generally supports a stronger dollar. He’d also revisit the Trans-Pacific Partnership trade deal, given better terms for the U.S.

Friday: Trump is about to give a widely anticipated speech on the U.S.’ role in the global economy. We’ll have coverage on our Twitter feed in case you can’t watch the speech yourself.

BuzzFeed Climbs Over China’s Firewall

BuzzFeed has figured out that if you can’t beat China’s censors, you join...someone who can. The listicle giant announced a distribution partnership with the Beijing content platform Bytedance.

The licensing deal will allow BuzzFeed’s video content verticals—Tasty (food), Goodful (wellness), Nifty (DIY), and Bring Me (travel)—to be distributed across Bytedance’s social media services. Plural:

* Toutiao, a news and video aggregator that’s as if Facebook’s News Feed had a baby with Twitter’s Timeline.
* Xigua, a YouTube-like platform of Vine-length videos which receive 3 billion daily views.
* TopBuzz, a one-stop-shop app for content discovery and recommendations.

With ~200 million daily active users in China and other markets, Bytedance is BuzzFeed’s low-risk ticket to a new market (and going viral) without access to Facebook, which is currently blocked by the Chinese government. Powered by AI and ambition, Bytedance has been gaining steam as a media platform. Last year, it acquired mobile app Musical.ly for $800 million and tried to buy Reddit. Yeah, that one.

Good news/bad news: When one media door opens, another closes. CNN is shutting down YouTube filmmaker Casey Neistat’s video-sharing business, Beme, after buying it in 2016 for a reported $25 million.

Alt-cig IQOS' FDA-Approval Chances Not Entirely Up in Smoke

Hear that? It’s the slight sigh of relief coming from tobacco giant Philip Morris (-2.81%). A 9-member FDA advisory panel voted on whether or not IQOS, a tobacco-heating (not burning) smokeless device, can be marketed and sold as a “modified risk” in the U.S. The panel’s findings will head to the FDA for a final decision.

Already available in more than 25 countries—and frequently sold in what look like Apple stores—the alternative cigarette is pending approval from the FDA under the claim that it’s less harmful than traditional cigarettes. That’s one of the many claims Philip Morris presented to the Tobacco Products Scientific Advisory Committee during a two-day meeting and vote.

Here’s what the panel thought of Philip Morris’ claims:

It disagreed that:

Switching completely to IQOS can reduce the risk of tobacco-related diseases.
There is less risk of harm than continuing to smoke cigarettes.
Consumers would accurately understand the usage risks based on labeling and advertising.

It agreed that:

IQOS significantly reduces the body’s exposure to harmful chemicals.
Not great news for Philip Morris. BUT, that last point of agreement is the exact claim the FDA would need to consider if it approved the request to advertise IQOS as safer than traditional cigarettes.

Hear that? It’s the rest of Big Tobacco holding its breath.

What Else Is Happening…

• 50-Cent is now a Bitcoin millionaire.
• Airbnb says, “Welcome!” to American Express CEO Kenneth Chenault, who is set to join its board in the next month.
• Early Uber investor Benchmark Capital finally ended its lawsuit against Travis Kalanick.
• The XFL could be coming back.

Economic Calendar

• Monday     Earnings: Netflix (+/-), UBS (-)

                    Economic Events: Chicago Fed National Activity Index (+)

• Tuesday    Earnings: Johnson & Johnson (+), P&G (+), Travelers (+), Verizon (-)

                  Economic Events: Rich Fed Mfg Index (-)

• Wednesday    Earnings: Comcast (+), DFS (-), Ford (-), GE (-), Novartis (+)

                        Economic Events: PMI (-), Existing Home Sales (+/-)

• Thursday   Earnings: 3M (+), American Airlines (+), Caterpillar (+), Celgene (+), Intel (+), Northrop Grumman (+), Southwest (+), Starbucks (+)

                   Economic Events: Jobless Claims (-), New Home Sales (-)

• Friday       Earnings: Honeywell, Rockwell Collins

                 Economic Events: Durable Goods, GDP

Taking Inventory: Book Recommendations from the Brew Community

Yesterday, we provided a short list of books our team is currently reading, and you replied by the hundreds with books you are reading, from novels to memoirs to business classics.

And instead of keeping all these great suggestions in the black hole that is our inbox, we’ve decided to share them with you. From Brew reader to Brew reader, here are some books we could all dive into:

The Intelligent Investor by Benjamin Graham

“The book is about Graham’s personal strategies when it comes to investing and avoiding large amounts of risk. Without knowing where to start, the Intelligent Investor has helped me begin investing in stocks and other investment vehicles while minimizing my potential losses. The book came out in 1949 but is still completely relevant today.” —Ricardo (Miami Lakes, FL)

Daring to Drive by Manal Al-Sharif

“It’s a riveting memoir of her activism in her country of Saudi Arabia, giving a window into the culture, religion, role of women and the influence of social media in her country.” —Jane (Stamford, CT)

Machine, Platform, Crowd by Andrew McAfee and Erik Brynjolfsson

“It’s about the rebalancing that’s occurring between minds and machines, products and platforms, and the core and the crowd and the implications for businesses and society. I would recommend it because it’s a good road map for the future and it outlines principles that you can use to stay on top of the breakneck speed and scope of technological change today.” —Bradley (Birmingham, AL)

Reset by Ellen Pao

“This is a timely book, as we look to rethink the systemic gender bias that pervades American work culture. She provides a thoughtful perspective on what it is like to be an ambitious woman in today's business climate. Both men and women will find it enlightening as we start to build more diverse business cultures in the future.” —Laura (Chicago)

This is just the tip of the iceberg. There are many more great books recommended by Brew readers.

The Breakroom

Question of the Day

Nell Computers wants to hire Overnite Delivery Service to truck computers from the warehouse to stores. Overnite has 2 trucks—1 large and 1 small. The large truck is twice as high, twice as wide, and twice as long as the small one. Overnite has decided to charge $500 per shipment for each delivery made with a fully loaded small truck.

Assuming that charges are based on each truck's volume, what should Overnite charge for each delivery made with a fully loaded large truck?

(Answer located at the bottom of newsletter)

Business Trivia

Yesterday, we wrote about SoftBank’s Vision Fund investing in Katerra. Can you list three other startups the fund has invested in?

(Answer located at the bottom of newsletter)

Stat of the Day

10%—At least how much money hackers have stolen from over $3.7 billion worth of ICOs. Speaking of which, our Morning Blockchain ICO should be right around the corner.

Breakroom Answers

Question of the Day: $4,000 (Explannation)

Business Trivia: Uber, WeWork, Slack, Roivant, Guardant Health, Fanatics