A GameStop Warm Take

Financial Venture Studio
3 min readFeb 26, 2021


By Tom Brown & Ty Griffin

In the FVS tradition of waiting to provide “warm takes” on recent news, we figured that now would be a good time to discuss the GameStop mania that took over the news earlier this month. Is there anything to learn from the experience besides “sometimes people really want tulips for some reason?” We think so.

Most of the hot-takes on the GameStop saga pushed one of two narratives: either it was the glorious revolt of noble citizens against greedy hedge fund elites; or it was a dangerous destabilization of the markets by nihilistic meme-makers. Both perspectives provide a great deal of insight into the politics of the commentator but miss the crucial point: what is happening is a perfectly predictable result of democratizing access to a market and very revealing about where power in our society increasingly resides.

The behavior of the digital mob with regard to GameStop should look familiar to people paying even passing attention to the influence of social media on popular culture. Although GameStop might seem an unlikely object of affection, the mob boosting it behaved in much the same way as the ultra-fans of celebrities and populist politicians.

Technology, and especially social media, has injected a good deal more democracy into our system than it was designed to handle, and not only at the level of politics. Our culture and economy is becoming increasingly democratized, but our political institutions are still based — at least in theory — on representative democracy. In turn, so are many of our institutions, including how we structure and govern the public equity markets that were designed nearly a century ago.

Unfortunately, the instinctual response of institutions to this trend is to halt change, often in the most blunt and counterproductive manner possible. If we have too many people voting for the “wrong” candidate, then make it harder to vote. If there are too many irrational trades, use levers like capital requirements and SEC investigations to slow it down. Innovators reliably push back against any restrictions, arguing for total freedom to disrupt their industries.

The problem with both the reaction and the rejoinder is that neither works very well. Using antiquated regulation to bludgeon new entrants only pushes them to the fringes of regulation, making oversight even more difficult. As just one example, in the spirit of preserving stability, we have made it nearly impossible to open a bank in this country. Since 2010, twenty seven banks have opened nationwide. In 2011, 2012, 2014, and 2016, the number was zero. This is a ridiculous state of affairs in a rapidly expanding (until recently) economy:

The Congressional hearing into the GameStop affair could have been a sober examination of any of these issues or even the real problem at the heart of the episode: the aging and increasingly unreliable infrastructure on which this country relies to move money. Robinhood faced a capital call from DTCC in part because although its users think that they’re “buying” the stocks, options, and other assets visible through the application’s interface, the truth of the underlying mechanics of a purchase on the platform — particularly for a new buyer on the platform (of which there were many during the height of the Gamestop mania) — is more complicated and depends in some cases on Robinhood’s advancing funds to make the purchase.

Unfortunately, delving deep into the bowels of how money moves in the United States or why a firm like Robinhood has to post its own capital to support the desires of its users to buy and sell securities as easily and quickly as they can post videos to TikTok requires a level of attention and study that does not translate well into the currency of our political economy — or Twitter.

Our hope is that we get more “warm takes” on this issue that address the need to open up our insular financial markets while recognizing that the new innovations and consumers that these fintech firms are bringing into the market aren’t going away.



Financial Venture Studio

Building the future of financial services. Want to join us? Get in touch: finventurestudio.com