> #1 aim is to acquire consumers (millenials preferably), gain scale, and then figure it out
The definition of a bubble, if there ever was one.
It's a super risky strategy but a bubble? It's VCs throwing their money into a gambling pit, which is par for that industry.
Re:Robinhood raises $50M
by ShinyCyril on Thursday May 07, 2015 @01:00PM
(#9506531)
That's interesting that Transferwise are making a loss given that they are charging a commission. What is their monetisation strategy?
It's very simple. 50bps of every transaction that you make. They will need MANY transactions to justify a $1B valuation :)
They're investing heavily now (at a loss) in marketing and in international expansion (note the recent US launch). Have you seen their recent marketing campaign in the UK? If you refer 3 paying users, you get £100 ($155) cash. Their cost of acquisition is therefore £33/user if not more. Assuming a 0.5% margin, they are therefore implying that each paying user will make at least £7,000 ($10,000) in transfers with them. And that's just to break even...
It's a long term play. They're going to be loss-making for a while. Their VC backers can handle it. It's like Transferwise (similar backers) who launched three years ago and who are still loss-making even though they've already processed >$1 billion in transactions...