Brokerage 2.0 Is Here...The Opportunity and TAM is Ginormous

Good morning…

I hope everyone had a fun 4th of July.

We are in Coronado, which is always a special place to be on July 4th weekend.

I moved to The Unites States (Arizona) for business graduate school back in 1989 and have been lucky to be an American since (green card 1997). I am so grateful.

I say here often that one of the greatest American freedoms is the capital markets.

I mean what other place could you be President and skim $2.2 billion from your token drops and be gifted a Qatari 747 for ‘nothing’ in return. Also where else could I so freely (fingers crossed) call the miserable man out so freely.

Even assuming, as I do, that the markets are rigged, our capital markets are second to none in their, breadth, depth and liquidity.

For the last 30 plus years I have been fascinated by and invested in our capital markets. For the last 20, I have been making seed investments in financial service and fintech startups. Seed investments have included Wallstrip, Lifelock, Stocktwits, Y Charts, ChartIQ, Etoro, Robinhood, Alpaca and GoTrade.

I am going to call this era - which has probably peaked in 2026 - ‘Brokerage 1.0’.

I say peaked because we have entered what I called last week the ‘perp wars’… an era of almost infinite small and large dollar degenerate choices (trading, betting and investing).

In the United States, Robinhood is the dominant 1.0 brokerage, but Kalshi, Polymarket, Coinbase and a few others are vying for all that dribble down money coming from us old farts holding our assets at Schwab, Fidelity, Morgan Stanley et al.

My friend Mo, the founder of FREC.com (a Social Leverage fund 4 investment) really got me thinking about peak brokerage 1.0 with his coining of the term ‘Brokerage 2.0’. Have a read below…

While we may be at peak ‘Brokerage 1.0’, in terms of choices and the winners and losers, the TAM is still growing at a rapid rate as the world is onboarded to US capital markets. Brokerage 1.0 is thriving.

Brokerage 2.0 though is in its infancy.

For some context in how early this trend is, AQR, the leader in long-short direct indexing company has $200 plus billion under management. They have done this for only very high net worth clients ($3 million minimums). FREC has focused on democratizing this category with $20,000 minimums and has just passed $1 billion in assets.

Below is a demo/snapshot of a FREC account holding a long-short Russell 1000 position (a position I also hold). If you click here you can tour the page and click on all the key features highlighted in yellow…

Brokerage 2.0 has incredible tailwinds coming from demographics, AI, and the global fintech rails built out with Stablecoins and companies like Alpaca.markets (fund 3).

Since 2018, our firm Social Leverage has invested in many ‘wealthtech’ companies including Secfi.com, Frec.com, Fiscal.ai, 11th.com, Syntheticfi.com, Useseeds.com, Lea Technologies, Archive Intel and Seeds. Now that Mo has gotten ‘brokerage 2.0’ in my head, I have started to think about this crop of investments differently. They all fit into a brokerage 2.0 world.

All our founders from this crop talk to each other regularly because their customers are so dispersed and share so much in common.

Robinhood and their competitors will come for Brokerage 2.0 as well, but it will not be easy offering and selling these products to a base of young customers used to ‘the degenerate economy’ interfaces. In addition, the average size of a Robinhood account today is probably under $5,000 and for FREC in the hundreds of thousands.

My guess is we will converge, but there is so much opportunity in the meantime.

If you have a ‘Brokerage 2.0’ (Wealthtech) product, please do reach out to me anytime.