Holloway Editione1.0.0
Updated August 14, 2024Youβre reading an excerpt of Great Founders Write, by Ben Putano, writer, entrepreneur, and book publisher. Heβs the founder of Damn Gravity Media, a publishing house that inspires and educates tomorrowβs great founders. Purchase now for lifetime access to the book and on-demand video course.
During moments of crisis, be direct. Skip the formalities and business-speak. Give people the information they need.
Vlad Tenev should have been on the front lines communicating with customers during the Gamestop crisis. Instead, he directed his comms team to release an anemic blog post titled, βKeeping Customers Informed Through Market Volatility.β
The first problem with the article is the title. Itβs as generic and bureaucratic as you can get. Using the phrase βmarket volatilityβ on the day of the largest short squeeze in history isnβt just an understatementβitβs misleading. Customers seeking answers on Robinhoodβs blog overlooked the post because it didnβt directly address Gamestop.
The blog postβs problems continued in the first paragraph. Instead of addressing the $GME freeze outright, Robinhood led with their mission statement. Then they said how proud they were of themselves:
Our mission at Robinhood is to democratize finance for all. Weβre proud to have created a platform that has helped everyday people, from all backgrounds, shape their financial futures and invest for the long term.
In a moment when users have tens of thousands of dollars or more at stake, no one cares about your mission statement or your past success. They only care about one thing: their money.
When Robinhood did finally address the short squeeze, they still refused to be direct with customers:
In light of recent volatility, we restricted transactions for certain securities to position closing only. You can see the latest here[Link to blog]. We also raised margin requirements for certain securities.
(Emphasis mine)
Not once did Robinhood mention the Gamestop by name in the post. Users had to visit a different blog post to see the list of restricted stocks. At that point, a concerned customer could only assume Robinhood was being opaque on purpose.
During a crisis, any whiff of dishonesty will shatter your trust with customers.
Robinhood never outright lied during the Gamestop short squeeze, but they withheld crucial information from the public for an entire trading dayβ specifically, the reason why they froze $GME. This lack of transparency was dishonest in its own way.