Retail Investing 3.0

A New Era of Consumer Investing Platforms

Jay Drain Jr.
Maven Ventures
12 min readApr 22, 2021


Leonardo DiCaprio as a 1980’s stock broker in The Wolf of Wall Street

1.0: The Birth of the Retail Investor

It’s the year 1989. It’s a Thursday in June and you’re getting paid tomorrow. You’re walking to Penn Station to take the train back home and you’re wearing your favorite shoes. You’re happy and confident. You decide to put some more money in the stock market; “let the good times roll,” you think to yourself. You pull out your cell phone (it has a large antenna), and call your broker at Charles Schwab; you tell Bobby, your broker, you’d like to buy some Microsoft stock. You tell Bobby to purchase 1000 shares for you when the market opens on Friday; he tells you Microsoft closed at $0.47 a share today. Bobby reminds you of the $70 commission you’ll pay for the trade and confirms the details of your order. You thank him, hang up the phone, and smile. You’re living in retail investing 1.0.

For decades, retail investing was a largely offline, costly, time-intensive, and high-friction process. The very first online trading service, TradePlus, went live in Summer 1983 as a computerized order entry system allowing customers to access time-delayed market information and place trades during market hours. A nearly $200 sign-up fee and the $15 monthly subscription earned customers just one hour of connect-time each month.

In 1992, retail trading was reborn when E-Trade launched as the first deep discount online brokerage platform. They abandoned monthly subscriptions in favor of flat rate trading fees and free market data, allowing customers to transact securities at just $40 per trade. In 1994, as stock investing grew rapidly in popularity, E-Trade became the fastest growing private company in the United States.

After the founding of the World Wide Web in the mid-1990’s, as companies like Fidelity, Charles Schwab, and Ameritrade joined the party, online brokerage platforms were off to the races. With the proliferation of the internet, competition grew, costs and friction fell, and access to information expanded. From 1995 to 2000, the number of online trading firms exploded from 12 to more than 100 and commissions fell as low as $7 per trade. A 1998 survey from the Yankee Group found the top three reasons households executed trades online were low transaction fees (80%), access to online research (45%), and convenience (42%). Retail investing 2.0, however, proved online brokerage platforms were only in their infancy.

2.0: Robo-Advisors & Early Alternatives

It’s a cold, brisk day in January 2012. You’re sitting in front of your computer looking at your credit card statements. With the holiday season in your rear view mirror, you find that you spent drastically less on Christmas gifts and your holiday trip to the Bahamas than you had budgeted. Feeling proud, you open up your Fidelity online brokerage account. You spend 45 minutes looking at a number of high-growth tech companies to invest in before analysis paralysis sets in and you close out of the window. You open up your Wealthfront account and move the cash you’d earmarked for your credit card bill to Wealthfront instead. You breathe a sigh of relief. You’re living in retail investing 2.0.

In 2.0, many components of retail investing were democratized — most notably, traditional financial assets and early alternative assets. Like many of the paradigmatic shifts in consumer technology, 2.0 began with changing consumer behaviors and were fueled by the great strides made by technology over the decades. By the 2010’s, young millennials had lived through two recessions — the former brought on by the collapse of the Dot-Com Bubble and the attacks on 9/11, and the latter induced by the Global Financial Crisis of ’08 and ’09. These experiences instilled in millions of consumers a deep distrust in global financial institutions and financial advisors. Meanwhile, younger generations were becoming increasingly comfortable with the growing role of technology in their everyday lives.

With the inflection point in consumer behavior, robo-advisor platforms emerged with Wealthfront (fka KaChing) and Betterment leading the early charge. These startups automated the jobs of financial advisors using algorithms to manage consumers’ investments. Whereas financial advisors were typically expensive, time consuming, and known for dedicating their best efforts and resources to only their top clients, robo-advisors were cheap, quick, and could yield one customer’s $100 the same return it’d provide another’s $1M if their investment objectives aligned. In some cases, using a robo-advisor could be as simple as depositing the money, choosing your target time horizon, and selecting your risk tolerance on a scale of 1–10. After some robo-advisor startups showed early success (Betterment, Wealthfront, and LearnVest raised a total of $95M in venture funding in just a two-week span in April 2014!), newer startups like Ellevest and Acorns emerged, and traditional online brokerage platforms like E-Trade, Fidelity, Vanguard, and Schwab rolled out robo-advising as well. The straightforward nature of robo-advising lent itself to the creation of easy to use, consumer-friendly mobile apps. As mobile device penetration continued to surge, retail investors gradually moved from desktop-native applications to investing from their iPhone, Androids, and smartphones.

Wealthfront: One of the defining companies of 2.0

With robo-advisors leveling the playing field for consumer investing in traditional assets — stocks, bonds, ETFs, and mutual funds — early alternatives came next. Real estate, the most commonly known alternative asset, had historically been a high-performing, consistent, low-volatility asset, reserved only for high net worth individuals and enterprises. That all changed when Fundrise, a real estate crowdfunding platform, launched its first project in 2012, raising $325,000 from 175 individual investors. Other entrants like Crowdstreet and Realty Mogul immediately joined the space and higher-end offerings like Cadre followed in the ensuing years bringing tokenized real estate to investors who otherwise would likely not have access.

Tech platforms that supported consumer investing in early alternative assets ultimately enabled the inception of retail 2.5. In the latter half of the 2010’s, as retail investors became increasingly comfortable investing in alternative assets and through mobile devices, a new generation of investing apps emerged. First came Coinbase, whose mobile app launched in 2013, with a UI quite reminiscent of early Venmo, and allowed users to send and receive Bitcoin payments. Shortly thereafter, an update to the app in early 2015 empowered users to directly invest in cryptocurrency with buy and sell functionality. Today, Coinbase has 56 million users and a public market valuation more than half the size of Goldman Sachs’.

Coinbase’s early UI, 2015

Next came Robinhood. Robinhood launched their mobile app in March 2015, offering users commission free trading of stocks and ETFs. At the time, major brokerages like Fidelity, Charles Schwab, and E-Trade still charged commissions of $7 on the low end. Incumbents didn’t start offering commission free trading until October 2019, but by then Robinhood had already grown to nearly 10 million users. Because of Robinhood’s early success, other no-fee trading apps quickly emerged in the form of Webull, M1 Finance, TradeZero and others. More importantly, however, Robinhood’s zero-commission trading made retail investing fully mainstream; not only did Robinhood lower the barrier enough for everyone to participate, but it encouraged a social, gamified culture and experience around investing.

2015: commissions and minimum deposits across leading platforms (via TechCrunch)

While retail investing 2.0’s legacy was democratizing access to more traditional assets, 2.5 represented the early adoption of crypto and a paradigmatic shift to mainstream, mobile-first investing applications. The dynamics created by Robinhood and Coinbase in 2.5 were critical to the next stage of retail investing as we transitioned to 3.0 at the turn of the decade.

3.0: Creating New Investable Assets & Investors

It’s April 2021. You finish your 5th back-to-back Zoom call and decide to catch up on some reading. You head to Medium and click on an article you’ve been wanting to read for the past few weeks: it’s called “Retail Investing 3.0.” You read through the piece and really enjoy it, especially the final section in which the writer frames 3.0 with an Inception-like scenario. You start to think about how wild the current times are for retail investors, and ironically, you consider purchasing the article as an NFT. How convenient — the writer has already minted an NFT version of the piece and listed it on OpenSea. You, a lover of irony, purchase the piece for roughly $500 in ETH. You’re living in the era of retail investing 3.0.

Retail investing 3.0 is still just a nascent era. But, largely thanks to Covid-19, it’s early innings have been incredibly dynamic. Covid-19’s K-shaped recovery created the perfect breeding ground for what some have deemed the “Boredom Economy.” The confluence of social isolation, disposable income, and quite possibly the largest experience deficit in history transformed investing from an activity to a phenomenon and experience. If your WiFi has been down since 2019, here are few highlights:

Despite these extraordinary events, it’s far too early to define the era. However, these moments and the platforms that have enabled them suggest a common thread for retail investing 3.0: There are essentially no limits to what we can invest in. If it can attract consumer interest, chances are it will attract dollars. What does this suggest about the platforms leading 3.0?

As it stands, I currently see retail investing 3.0 as three relatively distinct buckets. The first bucket is stocks and startups; the second bucket is digital and physical assets (“digi-fizzy”) which include cards, collectibles, sneakers, art, wine, and a host of other cultural assets; the third bucket is made up of cryptocurrencies and, most recently, NFT’s. Despite their distinct characteristics, the platforms that support each of these buckets show a number of parallels. Most importantly, a critical majority are mobile native, have social components, demonstrate incredibly low barriers, and are passion-driven.

Unsurprisingly, many investing platforms of 3.0 are mobile first. The percentage of Americans with smartphones in 2019 was 81%, up from just 35% in 2011. With such a simple, easy (arguably too easy) mobile trading experience, Robinhood laid out the blueprint for others that followed in its tracks. Public, the newest commission free-trading app boasts a similarly effortless, low-friction trading experience. Similarly, Republic (no relation to Public), a platform for investing in startups, advertises its iOS app with the phrase “One-tap investing.”

Many of today’s investing platforms often aim to create a social experience with built-in network effects. Public dubs itself the “Investing Social Network,” and recent YC-grad Finary is “the online community for investors excited to discuss stocks with friends.” Both apps attempt to capture the collaborative, fun, and communal dynamic of r/wallstreetbets or even stock-investing corners of Twitter, and bring it directly to your smartphone. Commonstock serves a similar purpose: users link their brokerage accounts to the platform and the app curates an insights-driven community around its top investors. NFT marketplaces like OpenSea, Foundation, Rarible, SuperRare, and Zora aren’t inherently social like Republic, but enable users to interact with each other’s content through likes or favorites. More direct communication within the community is supported by Discord channels as large as 40k, which might suggest an opportunity to build native communication features. Finally, considering the popularity of visual art on these marketplaces, the four most popular NFT marketplaces have a combined 415k followers on Instagram.

The next hallmark of a 3.0 platform is an incredibly low or nearly non-existent barrier to investing. Recognizing that the average retail investor couldn’t afford to invest in a single share of AMZN, the platforms of 2.0 and 2.5 popularized fractional investing in traditional assets. The platforms of 3.0 have taken it up a notch; nowadays consumers can buy small portions of anything from ETFs to sneakers to GIFs. Not only have many of these platforms lowered the barrier to investing, but they’ve empowered each consumer with educational tools and content. For example, Alinea simplifies stock investing by offering bite-sized research and pairing investors with stocks that fit their interests and are subsequently easier to understand.

Alinea Invest (left) and Public (right)

The last badge worn by retail investing 3.0 technologies is undeniably the most dynamic: they are passion-driven. The platforms that have dominated 2020 and 2021 so far, outside of Robinhood and Coinbase, are intrinsically driven by cultural phenomena enabled by passionate communities. From my observations, the most popular and important of these phenomena are the acceleration of cultural asset creation, widespread acknowledgement of a booming creator economy, and the seemingly overnight adoption of NFT’s.

Investing in cultural assets is certainly not new, but there’s tremendous novelty in the assets we’re able to invest in today, their liquidity, and their zeitgeist. I’ve written and tweeted (ad nauseam) about digital, physical, and “digi-fizzy” Cultural Assets — see here and here. Plus, in the past two months alone, there have been enough think pieces on NFT’s to warrant me not dedicating an entire paragraph to how NFT’s have transformed retail investing.

What few have explored, though, is the intersection of the creator economy and retail investing. I believe it rounds out the theme of passion-driven investing; emerging 3.0 technologies allow consumers to invest in creators and their content. The creator economy has become such a buzzword in the last 12 months that it encompasses endless trends, occupations, and demographics. The one thing that’s for sure is that there are more creators today than ever before, and the value they’re creating for business, their fans, and themselves is skyrocketing. That means there’s tremendous value in spotting and supporting high-potential talent early. This is a game-changer. If analyzing and picking stocks, real estate or cryptos isn’t your jam, but you have a differentiated skill set for identifying talented musicians, athletes, artists, or designers, the platforms of 3.0 allow you to utilize that by investing in creators.

There are a handful of creator investing platforms that stand out in terms of originality, traction, or approach. In a world where artists are increasingly anti-music labels, Indify connects promising music artists with early-stage partners such as investors, managers, and lawyers (Alexis Ohanian of 776 identified Leah Kate early, and her career has since taken off). Though not the first to do it, Bitclout tokenizes social currency, allowing users to buy or sell a creator’s token based on reputation, following, or even perceived career potential. Most of the tokens to date are of popular athletes, startup founders, investors and the like. As of mid-March, the network had already drawn in more than $160 million in Bitcoin deposits. Finally, depending on whether or not you characterize athletes as creators, PredictionStrike is a performance-based stock market where users can invest in their favorite athletes and yield returns based on their performance.

The investing platforms of 3.0 are unique because they’re an amalgamation of both the old-school strategies of 1.0 and the new school blueprint laid out by 2.0: democratization, socialization, and content creation. But what I find most exciting about them is the speed and depth with which they’re expanding the universe of investable assets and investors. With the platforms of 3.0, there’s no telling who, what, where, when or how we’ll be investing but if history is any indicator, consumers will always find new ways to make more money. That being said, I have a few predictions for where things might go from here. Here’s a stab at how things will look 5 years out, in 2026:

  • Early-stage creators on the leading consumer social and media platforms allow their fans to invest directly in their careers
  • Retail investors make up more than 40% of US-market trading volume on any given day and value a publicly company’s use of meme’s as equally important to its earnings
  • Among a vast graveyard of NFT marketplaces and galleries, Dapper Labs, Basic.Space, and Showtime are +$20bn companies.
  • DAO’s are the new galleries, syndicates, sports team owners, and VC funds
  • Music artists are more independent than ever before. They’ve cut out traditional music labels and a large majority of projects for early-stage artists are either crowdfunded or funded by direct investors and syndicates. Sony, Warner, and Universal Music Group are holding on by a thread.
  • Studying memes and meme culture is a genuine component of diligence for VC’s and hedge funds
  • My collection of Devin Booker moments on NBA Top Shot Moments is valued at over $5 million 😎

If you’ve got ideas or insights on retail investing 3.0 (or even 4.0!), or are building a high-growth consumer investing platform, I’d love to connect. And if I missed any notable startups or trends, or you think I got something completely wrong, please shoot me a note or DM!

Huge shoutout to my friends Jackson Bubala, Halle Kaplan-Allen, Kelsey Willock, and Lia Zhang for lending their FinTech genius and editing skills to this post.

*Disclaimer: Maven Ventures is an investor in Wealthfront



Jay Drain Jr.
Maven Ventures

Chicago native / New York resident | Lover of basketball, food, fashion, and 90’s R&B | Investing @ a16z crypto