Back in 2011, John Fawcett and Jean Bredeche had the dream of democratizing investing. They envisioned a platform that would make quantitative analysis and investment accessible and understandable for anyone who was keen to give it a try, kicking down doors for the everyman that had mostly been open to hedge funds or super-rich angel investors until that point.
Quantopian was launched off the back of that dream. A platform that taught users about quant investment and gave them a platform to write and save their own code, Quantopian was supposed to be the first crowd-sourced hedge fund. For years, users iterated on each other’s code as a community developed on the platform, full of users with and without financial backgrounds. These users would pit their algorithms against one-another, and Quantopian would go on to use the winning equations to manage investor assets, giving the winners some returns.
Fawcett and Bredeche would go on to raise $48.8 million for Quantopian in the meantime. In 2016, Steven Cohen announced that he would be teaming up with Quantopian to the tune of $250 million, relying on some of the user models Quantopian managed and investing in Quantopian itself.
In February, the first cracks in the city wall took hold. For at least two years, Fawcett said in an interview, Quantopian’s low-risk, market-neutral strategy model hadn’t been yielding results. Fawcett and Bedeche announced that the company would be returning investor money and switching strategies in an attempt to keep things afloat, asking that users now develop models beyond the market-neutral ones the company had relied on for years.
Now, the dream is dead.
This week, Quantopian abruptly announced that it would be shutting down its community services and that users would lose access to all their materials if not saved locally by November 14. No reason was given for the shutdown. Quants across the finance community expressed equal parts shock and disappointment that Quantopian had come crashing down.
“Our mission was to break open quant finance and make it accessible to everyone,” Fawcett wrote in a blog post on Quantopian’s website. "You helped realize this mission and came together to form the biggest community of quants the world has ever seen. For that, I am extremely proud and grateful. I sincerely hope that Quantopian is just one milestone in your journey through quantitative finance.”
The announcement was met with mixed reception. Some users gave tearful goodbyes to the platform and expressed interest in crowdfunding the site, while others expressed outrage at the seemingly abrupt decision.
"Was there a heads-up so we could retrieve our results? backtests? :("
"My god no. is there any way to save the quantopian community site ??? why is this site closing down???"
"0-day notice! Are you kidding me > where is all the code ???"
Fawcett gave no answers. Users wondered the extent to which Quantopian would disappear; would the lectures and learning resources be preserved online somewhere? Would they be able to recover assets of theirs which had already been taken down? Where would they go to chat and organize with other quants and finance junkies?
The name Quantopian gave itself proved to be an ominous foreshadowing of its eventual fate. All utopias must fall, and Quantopian’s democratic dream had turned to sand and fallen through users' fingers before they could come to grips with what was happening.
In 2020, Quantopian’s dream of “democratizing finance” isn’t unique. Trading app Robinhood touts the exact same mission, and it’s trying to pick up where Quantopian left off. Yesterday, Fawcett announced that Quantopian and Robinhood would be coming together in what he described as a natural fit for the two companies.
“Quantopian has always stood for greater access and deeper education, so we are fundamentally aligned with Robinhood’s mission to democratize finance for all,” Fawcett wrote. “Our merry band of Quantopians should fit right in as we work together to further expand access to financial information and education, and inspire greater participation in the financial markets.”
Fawcett offered little details as to how this deal would take form, but one thing was clear: the Quantopian of old would no longer exist.
These platforms are more than the sum of their parts, and Quantopian’s community structure — the factor which most makes it unmistakably itself — will not be preserved by Robinhood.
Robinhood has grown to considerable size and been downloaded by an ever-increasing number of users during the COVID-19 pandemic who are using it to invest and, hopefully, make a little extra money during trying times. Or, if they’re lucky enough, make it big.
But although Robinhood shares the same mission as Quantopian at first glance, it is propped up on something much uglier than Quantopian ever was. Robinhood lacks a community element, and what implementations it has tried have had disastrous impacts. A read through the replies to Quantopian’s shutdown announcement reveal the deep histories users had on the platform.
“Within a few months after joining in 2016, I'd learned Python, programmed all of my Excel-based strategies, entered and won Contest 22, [and] started live trading in IB,” user Roman Parker wrote. “With no relevant degree or experience, I was interviewing at large NYC funds. Q was changing my life.”
"Never in my life have i seen a place where so many smart people were willing to share so much information with me without expecting anything in return. I am and will forever be grateful for what you have done for me." — Quantopian user Mattias Lamonte
The communities that have sprouted up around Robinhood’s success are much darker. Communities like r/wallstreetbets and viral videos like the infamous “wsb yolo,” which shows a man losing tens of thousands of dollars on the app in real time, keep sincerity at an arm’s length and sustain themselves with desperate humor. Though the output of Quantopian’s community was ultimately gobbled up by Quantopian itself and its investors, what Quantopian provided to its users was collaboration and experience. Robinhood’s frenzy is about who can win big, and who can lose bigger.
Even if the business end couldn’t keep itself afloat, the utopia existed, for a time, for the site’s users, many of whom had their lives and careers changed by Quantopian’s open platform and its catalog of resources. Today, other services like Quantiacs and QuantConnect operate off similar models to Quantopian’s. The first to do something isn’t always the best to do it, and perhaps one of these companies will perfect what Quantopian initially set out to do.
These lives wouldn't have been impacted if Quantopian had not put out the rallying call, but ultimately, users didn't need Quantopian as much as Quantopian needed them. Quantopian gave them the first rocks and sticks, and the community used it to build cities. In the end, it was the failure of the company itself, not those who used its tools, to deliver on the promise that attracted such a large community to begin with.