Robinhood: Payment for Order Flow

When Robinhood launched in 2013, the product was simple: stock trades for free, while every other brokerage charged five to ten dollars a pop. It pulled in millions of first-time investors, forced the whole industry to drop commissions, and went public in 2021 with tens of millions of accounts. But "free" is never actually free — the revenue had to come from somewhere, and where it came from drew an SEC settlement and a hard question about who the real customer was.

For founders and operators, this is a case about reading a business by following the money all the way through, not just the part the marketing shows you. Third-party-funded "free" models are legitimate, but the payer's incentives may quietly diverge from the user's. The case sharpens how you map who pays versus who uses in your own business — and where that gap creates risk or misalignment you'd rather know about now.