Interview with Spencer Jakab, Author of The Revolution That Wasn’t

The story of what happened to GameStop isn’t just about finance. It’s also a story about the power and danger of online collective action, as well as economic frustrations that have been simmering for decades.

The story you heard

Here’s what you probably already know. In 2020, the video game retailer GameStop (also referred to by the stock symbol GME) was in a bad way.

As a chain of brick-and-mortar stores, it hadn’t coped well with the gaming industry’s shift to e-commerce, and, like many companies, it had been further mauled by the pandemic.

In his book, Jakab characterizes GameStop in 2020 as a “dying business.” Its stock price, which in 2015 had hovered around $40 per share, had fallen to under $4. Large, institutional investors, such as hedge funds, were short selling it.

Reddit enters the fray

Although most people thought that GameStop’s days were numbered, not everyone agreed. One investor, Keith Gill, more commonly known by the monikers Roaring Kitty and DeepFuckingValue, believed that the company was healthier than it appeared.

Gill outlined his rationale in a series of YouTube videos and posts on the Reddit forum (or “subreddit”) r/WallStreetBets, a once-obscure, now-infamous community where online investors discuss their trades, often in spectacularly colorful language.

Although Gill’s thesis was cogent, initially it mainly attracted ridicule. However, it eventually caught on, especially after several prominent investors sank money into GameStop, including Ryan Cohen and Michael Burry (who you might recognize from The Big Short—he was played by Christian Bale).

The short squeeze

Separately, while Gill was pushing his theory that GME had a hidden “deep fucking value,” other Reddit users realized that the company had been shorted so heavily by certain hedge funds that it left them in a vulnerable position.

If GME’s price did rise, the sellers would be forced to scramble to buy the shorted shares back at unfavorable prices. This, in turn, would drive the price still higher, creating a vicious cycle. In financial parlance, this is known as a short squeeze.

The events that followed could have filled a book (and eventually did—Spencer Jakab wrote it). Briefly, an army of Redditors formulated a plan to trigger the squeeze and executed it to the letter.

Largely by using the investing app Robinhood, they bought GME shares in huge numbers, causing the price to spike and putting the short-selling hedge funds in a bind.

David against Goliath

Some of the people who hopped onto the GME train just wanted to make money. However, an increasingly large number of them were imbued with a kind of revolutionary fervor.

These were young people whose economic prospects had been shattered by the one-two punch of the 2008 recession and the COVID-19 pandemic. They’d come of age in a time of staggering income inequality and been frustrated by the perceived failure of the Occupy Wall Street movement. Here was a chance for them to lash out at The System™, which was embodied by hedge fund managers—people who had spent the previous decade getting wealthier while leaving them in the dust.

It was a classic David vs. Goliath tale, and when the mainstream press began to take note, that was how they reported on it.

• On one side: There was a group that was almost comically easy to hate—mega-rich Wall Street insiders who were trying to make money by betting on the failure of a beloved gaming company.
• On the other: There was a motley crew of pseudonymous Redditors who, armed with nothing but their smartphones and sheer cheek, were buoying up a struggling business and giving several billion-dollar hedge funds a black eye in the process.

It’s a compelling story, right? The denizens of WallStreetBets certainly thought so. They fed on their own developing legend, pushing each other to stay the course, to buy GME, to keep buying, and above all, to never sell.

Amazingly, this Reddit-organized collective action worked. The price of GME doubled and then doubled again, reaching highs of more than $500 (from just over $17 at the beginning of January and under $4 a year earlier).

Robinhood backstabs the revolutionaries

At the climax of all of this, with GameStop’s price poised to go to the moon and beyond, the Reddit revolutionaries were stabbed in the back.

Several major stock brokerages, most famously Robinhood, shut down trading of GME shares, as well as other “meme stocks” that had gotten caught up in the excitement.

Robinhood allowed people to sell the shares they already had, but not to buy new ones.

Robinhood would later reinstate trading, but in the interim, the hedge funds managed to grab up enough shares to stop the short squeeze.

This, in the eyes of WallStreetBets and many mainstream observers, was a serious betrayal. They alleged that at a critical moment, Robinhood had sided with Wall Street’s powerful institutions instead of the small-time investors who were their actual customers.

There were several attempts later to reinstate the squeeze, but to no avail. The price of GameStop shares had broken and would never fully recover. The GME revolution had fizzled.

The real story (according to Spencer Jakab)

What you just read is a gross simplification of a complex story. I haven’t mentioned payment for order flow, described what a gamma squeeze is, or introduced more than a fraction of its characters, all of which would be necessary to truly explain it.

However, broadly, that narrative is what many people left the saga believing. David fought Goliath, then David’s online brokerage backstabbed him and Goliath won.

Again, it’s a pretty good story, even if the ending is a downer. It’s also—if you buy the thesis that Spencer Jakab lays out in his book—almost entirely wrong.

Jakab’s key points, which he outlines over the course of 320 pages, boil down to these:

1. The GME revolution was doomed from the beginning: The short squeeze wasn’t killed when Robinhood halted trading. It was inherently self-limiting; Jakab describes it as being akin to rolling an ever-growing snowball up a hill. There was always a limit to how high this rocket could go and how many one-percenters it was going to catch in its exhaust jet.
2. Robinhood wasn’t protecting the hedge funds: According to Jakab, Robinhood wasn’t really acting to save its friends on Wall Street. It was protecting itself. The sheer volume of the trades it was processing threatened to bankrupt it, leaving it with no other choice, and the evidence of collusion between it and its alleged hedge fund buddies is flimsy at best.
3. Wall Street actually loved the revolution: The critical takeaway of Jakab’s book is that the GME short squeeze didn’t really hurt Wall Street—certainly not in a lasting way. While it’s true that it savaged a handful of unlucky funds, by and large, Wall Street benefits when people come up with wild gambits in an attempt to beat the system, because 99 times out of 100, they’ll be wrong. Put another way, many people on Wall Street would probably like nothing more than for the GameStop “revolution” to happen again.

How Jakab justifies all of this is outside the scope of this article. If you want to know more, go read The Revolution That Wasn’t—and you should read it, by the way. This isn’t a review, but I’ll give you a quick verdict on the book anyway; it’s good, and not just for finance geeks. Jakab’s writing is quick and confident, and it carries that hard-to-define quality that you’ll find in the best journalism, the sense that the writer was as fascinated by their own story as they hope you’ll be.

When we spoke, I asked Jakab a few questions about his creative process and how the world reacted to being told they were wrong. (Spoiler: They didn’t like it.)

The initial creative spark for the book

On the first page of The Revolution That Wasn’t, Jakab describes the moment he realized he wanted to write a book about GameStop and Reddit.

On January 25, 2021, he discovered that two of his three sons, along with a long-time family friend, were members of WallStreetBets. Jakab told me he was in the middle of editing a column for the Wall Street Journal when his son walked over and asked him, “Dad, are you going to read up on GameStop?”

Jakab dropped what he was doing—abandoning his column mid-sentence—to check out what Reddit was up to. Minutes later, he drafted a pitch to his publisher.

The GME saga at first glance

My first question for Jakab was: what made him instantly sure that there was a book in this?

What caught my attention was that many of the most notorious events of the GameStop saga, including the apex of the price spike and Robinhood’s move to restrict trading, occurred after January 25 (when he decided to write his book).

Jakab told me that even though the events were still unfolding when he tuned in, he instantly grasped that they were remarkable.

“After literally ten minutes of reading, I was like, this is the most interesting thing I could write about,” he said. “My initial conception was, this is a David and Goliath story. This is incredible.”

“You can’t legally do it. You just can’t.”

Part of what convinced Jakab was that the events he was witnessing, in almost any other context, would have been wildly illegal.

“I’m very interested in financial history, and this is something that one might have seen prior to the 1930s,” he said. “It was an attempted corner of a stock. That just doesn’t happen anymore, because you can’t legally do it. You just can’t.”

“But,” he went on, “this was a bunch of people basically agreeing out in the open, not in some smoke-filled back room.”

The unprecedented nature of the short squeeze—and the potential for it to inflict “theoretically infinite” losses on the hedge funds it was targeting—convinced him there was a story there.

Things moved quickly after that. Jakab told me that his publisher replied to him almost instantly, which was remarkable given that the publishing industry, in his words, is still “living back in the era of carrier pigeons or something.”

Over the course of two nearly sleepless nights, Jakab dashed off a proposal, and the next thing he knew, he had a book in progress.

A slippery narrative

As any reporter knows, stories don’t always evolve the way one would hope. Simple narratives have a habit of spinning out in unexpected directions.

This can be fascinating—at least to journalists and other nuance-obsessed wonks—but it can also be frustrating. A story that seems clear and gripping in your head can fall apart upon closer inspection.

To an extent, that happened to Jakab. As he said, when he first conceived of his book, he expected it to tell a straightforward David-and-Goliath tale. The story he ended up with was more complex and arguably richer, but it lacked the crowd-pleasing simplicity of “Redditors stick it to the man.”

“Journalism is the first draft of history,” Jakab said. “Journalists do the best they can, but the [first] things you remember reading about an event, whether it’s political or financial, are sometimes going to be a bit wrong. Then, later, there’s going to be a more thoughtful take, but it’s not going to get read as much.”

Diving into unfamiliar territory

Jakab has an immense financial background. Prior to becoming a journalist, he worked as a stock analyst at Credit Suisse. WallStreetBets presented a rare challenge—a facet of the finance world that he wasn’t familiar with.

I wondered if he found reporting on it at all intimidating. After all, there’s no swifter path to humiliation than to try to ape the in-group lingo of a subculture of significantly younger people.

“I’m 54 years old … I’m not super duper au fait with the jargon,” he admitted.

(For those not in the know, au fait is a French term meaning “familiar with.” In my notes, I have it written as “offay”; I’m not super duper au fait with the jargon, either.)

The skeptical world of Very Online investors

Jakab highlighted the relative newness of the online retail investing subculture, not quite noting that this was virgin territory for everybody, not just him.

He pointed out that in the year leading up to the GME revolution, in the midst of the pandemic, there was a “real explosion” of young people opening brokerage accounts.

Many of these inexperienced investors were contemptuous of the established wisdom in the finance industry, as well as those who dispensed it.

“Warren Buffet doesn’t know what he’s talking about,” said Jakab, describing their attitudes. “And that guy on TikTok who’s been investing for three months who I don’t really know, who has no financial credentials, he’s completely right. The stocks that he talked about went up, and Warren Buffett sold his airline stocks at the bottom. What a moron.”

Interviewing anonymous internet randoms (and the difficulty thereof)

I asked Jakab how many of these contrarian, novice investors on Reddit he was actually able to interview. His story has a huge cast of characters, ranging from Wall Street lifers to internet nobodies, but although he showcases many public posts from the latter group, his account is light on quotes that seem to have come from interviews.

“I reached out to lots and lots of Redditors,” said Jakab. He told me that he spoke to several, but that relatively few of them were willing to go on the record.

Ironically, it was much easier to get high-profile finance gurus to talk to him. Public figures have an obvious incentive to get their quotes featured in a book by a Wall Street Journal reporter. (Jakab told me he had “filters out the wazoo” blocking these people from spamming him with emails.)

By contrast, anonymous Redditors had nothing to gain from speaking to him, and as a credentialed member of the capital-E Establishment, he was a figure of no small suspicion in the countercultural circles on Reddit.

“It’s extremely difficult to get people like that to talk to you, for sure,” he said.

Jakab’s book came out one year after the GME short squeeze. At the time, emotions around it were still running high.

Many of the people who’d been involved had heavily bought into the David vs. Goliath metaphor that initially characterized the events.

They liked being fiery iconoclasts who’d been backstabbed at a crucial moment. They didn’t like having a Wall Street Journal editor saunter into their midst and tell them that the popular narrative was wrong, that they weren’t the plucky revolutionaries they’d been portrayed as.

Still, despite their strong feelings, when Jakab’s book was announced, they responded with grace and maturity, challenging him to a spirited but reasoned public debate.

Just kidding. They review-bombed his book on websites like Amazon and Goodreads.

What exactly is review-bombing?

Review-bombing is the practice of leaving negative reviews on books or other media to discourage people from buying them.

In most cases, review-bombers don’t actually read the books they target. As Jakab pointed out in a post on his blog quirkily entitled Be Like Ron Weasley, many of the people who gave his book one-star ratings on Amazon couldn’t possibly have read it—because it hadn’t come out yet.

Several of them even openly discussed their campaign on Reddit.

Most of these negative reviews have since been deleted. As of February 2024, The Revolution That Wasn’t has a respectable 4.2 stars out of 5 on Amazon, and the one-star reviews that remain seem to be from people who at least bought and read it.

Still, review-bombing campaigns can do real damage to a book’s prospects before they’re recognized and brought under control. Recounting this nearly two years later, Jakab still sounded slightly bitter about what had happened.

He described his frantic writing process—it wasn’t uncommon for him to fall asleep while working in his rush to finish by the anniversary of the events—only to have people viciously attack his book based on nothing more than the title and his identity as a Wall Street insider.

“Obviously I try not to be too sensitive, but it’s hard not to,” he said.

Not entirely unexpected

I asked Jakab whether, having spent a year immersed in communities like WallStreetBets, he was surprised by his book’s negative reception. Did he realize he was poking the hornet’s nest?

Although he characterized the review-bombing as “hurtful,” he told me it wasn’t a surprise. “I have three sons who were very online and who were concerned that it would happen to me.”

He cited the case of one MarketWatch journalist who wrote an article about a drop in GameStop’s price. The publication date on the piece was displayed incorrectly, making it appear as though he was predicting the slump instead of reporting on it. This, in the eyes of the internet hordes, clearly meant he was involved in a grand conspiracy to drive the price down. A campaign of targeted harassment followed, driving him off of social media.

Jakab also alluded to darker cases—people involved in the GameStop saga whose children received threatening messages and who had to hire private security teams.

To protect himself, before the book’s publication, Jakab took “all kinds of steps,” including paying for a cybersecurity audit to ensure his sensitive information was safe, just in case he was seriously targeted.

“I paid out of my own pocket for some of it because I just didn’t want to deal with that,” he said. Fortunately, the review-bombing campaign was—although by no means pleasant—as far as it went for him, personally.

Again, insofar as The Revolution That Wasn’t has a single, unifying thesis, it’s that the GME short squeeze wasn’t the thumb in the eye of Wall Street that everyone took it as.

After all, it got millions of people to sit up and pay attention to the stock market with a level of focus usually reserved for major sporting events and Taylor Swift’s dating life. It gave people the idea that, although this revolution failed to beat The System™, the next one might be more successful.

The irony is that The System™ benefits from that attitude. Wall Street “likes it when you show up and are very active,” Jakab said. It’s true that wild gambles sometimes have winners, but they mainly have losers, and most of their money ends up in the pockets of hedge funds and other big players.

What an actual Wall Street revolution would look like

The bulk of The Revolution That Wasn’t is a strictly factual account, but in the final pages, Jakab dispenses a bit of actual advice.

There is, he argues, a way that disaffected young people actually can strike back at Wall Street and make money in the process: by not playing their game. That doesn’t mean not investing; it means not trading actively.

The rationale here is that, while any given stock may rise or fall over any given time period, the stock market as a whole tends to go up over time. An oft-cited figure is that on average, it returns 10% of what you invest every year.

Of course, the market doesn’t always go up, but this long-term positive trend has held for as long as we’ve been tracking this sort of thing, and it will probably continue as long as technology keeps advancing and the world’s population keeps growing.

In the past, it was hard to take advantage of these market-wide gains. However, these days, there are index funds that track the rise and fall of the market as a whole (generally by following a particular market index, such as the S&P 500, pictured above).

If you want to get rich off the stock market, Jakab’s advice is to invest in one of these funds. Don’t worry about investing at the right time; just throw your money into the market whenever you can, as early as you can.

Resist the urge to tinker with your stocks or sell them when the economy looks grim. In fact, don’t even look at your shares after you buy them.

That’s how you make money—just tie your fortunes to the market as a whole and otherwise be as lazy and passive as you can.

Jakab is far from the first person to give this advice. The lazy-investor approach was popularized by Jack Bogle, the founder of Vanguard. His followers are known as Bogleheads, and they congregate on a subreddit of their own, r/Bogleheads, which in many ways is the anti-WallStreetBets.

Jakab’s contribution is to point out that if, like many of the people who participated in the GME revolution, you want to lash out at Wall Street, your best move is to follow the Bogleheads approach.

As much as hedge funds love WallStreetBets, they probably hate Bogleheads. It’s easy to make money off of inexperienced investors making impulsive decisions. It’s hard to make money off of people soberly holding index funds for decades at a time.

Jakab stressed to me that he, personally, doesn’t care about hurting Wall Street—he recommends the passive approach because “it’s the best thing to do with your money.” But for those who do care, it will “also make Wall Street really angry. They really don’t like that.”

Good advice that nobody wants to hear

Jakab’s advice is sensible. It’s mathematically, statistically, and historically correct.

But his approach of sticking it to the man isn’t sexy. It doesn’t feel like a revolution. What’s more, it’s slow.

The folks on Bogleheads can pat themselves on the back, knowing that they’re nigh-on guaranteed to come out ahead, whereas the majority of WallStreetBets’ inhabitants probably operate at a loss. But no one on Bogleheads will ever make headlines for making a risky play and becoming an overnight millionaire. Instead, they’ll … be in pretty good financial shape when they turn sixty.

Woohoo.

The next question I posed to Jakab was: does he have anything to offer people who simply aren’t interested in a get-rich-slow strategy?

After all, this is a publication about side hustles. Many of the people reading it—and you, yourself, might be in this group—aren’t lawyers or doctors or engineers, working cushy jobs with plenty of money to put away each month.

What about people who are working two or three jobs just to make ends meet? What about people who are miserable and want a change, not to be told, “Here’s a cautious approach that will let you retire comfortably in 30 years”?

Jakab held the line on his preferred strategy, but he offered an olive branch.

Both Jakab’s father and father-in-law, he told me, were refugees (his father was a Holocaust survivor, one of the few people who made it out of the Jewish ghetto in Uzhhorod, Ukraine). Neither his parents nor his in-laws had much money.

“My dad—who died when I was a kid—was obsessed with the stock market and also playing the lottery,” he said. Although both Jakab’s father and in-laws were smart enough to understand that almost everyone loses money on the lottery, they still played it religiously.

Why?

“They liked the dream. Because the only way that they saw to propel themselves from down there to up here—all those people they saw in fancy stores and fancy cars on TV—was to do it in one big leap.”

Jakab’s point was, he gets it. He understands the impulse to take a risk in the hopes of winning big. But that doesn’t mean it’s the right thing to do.

“Wall Street has all the aces up its sleeves in terms of marketing to you and getting you to pay for stuff,” he said. “That’s their business.”

Is an investing side hustle right for anyone?

All of this paints a fairly bleak picture for anybody who’s stuck in a job they hate and wants to break out of it through investing.

What about people who discover the stock market, find out that they’re genuinely interested in it, and decide they want to put in the time to become a true expert? Is it okay for them to actively trade, or should absolutely everybody just passively follow the market?

Jakab extended another olive branch. Yes, he said, if you really do your homework, it’s possible to make money by researching companies and picking stocks. In fact, “it’s possible, if you’re very judicious, to do better than the pros.”

He recommended two books, One Up On Wall Street and Beating the Street (both by John Rothchild and the legendary investor Peter Lynch), that people who want to learn to invest should read.

He characterized the books as “very, very simple” and full of common sense that “anyone with just a little bit of education can understand.” By following the approach Lynch outlines—which largely boils down to researching the hell out of companies and investing in ones that seem well-run—you can indeed make money. Sometimes. Maybe.

Jakab added several caveats:

1. You should still practice long-term thinking: Jakab was explicit that no matter how smart you are, you should still plan on holding the stocks you buy for years at a time. Even if you have a sensible strategy, the market is unpredictable in the short term. “If [picking stocks] is something you absolutely feel you have to do, then I would say do it on a really, really long time horizon,” he told me.
2. You shouldn’t risk everything on this: “If you like the intellectual exercise of trying to beat the market, don’t do it with all your money.” Jakab recommended putting 80% of your money into a market-tracking fund (or giving it to a Robo-Advisor) and trying to prove that you’re a genius with the remaining 20%, no more.

What’s more, Jakab cautioned not to forget the role of luck. Even the best investor in the world can be wrong on any given day, and many people conclude that they’re geniuses when they simply got lucky.

“The worst thing that can happen to you as an investor is to make a lot of money with the first thing you bought,” he said. “The best thing that can happen to you is if you lose a lot of money initially. You stop and think about what you did wrong and take a more thoughtful approach … it’ll save you more money in the long run if you have some humility.”

For many, the GME short squeeze was a learning experience. Some people—it’s hard to tell just how many, but certainly some—graduated from the University of GameStop and went on to become rational investors, pursuing a strategy more or less in line with what Jakab recommends.

I asked him whether, after three years, he had a feel for the percentages. In his estimation, how many former GameStop revolutionaries took the right lessons from it, and how many are still going all-in on meme stocks (or cryptocurrencies, or NFTs, or whatever the latest investing craze is)?

Jakab’s response was fairly pessimistic.

“People are not a monolith, but I would say that we do have a lot of anecdotes, and we do have some aggregated evidence from things like the amount of trading activity that one sees on Robinhood,” he said.

He suspects that people who ended up “on the straight and narrow” are in the minority, and that the GME fervor will repeat itself in another form.

“I think the weight of the evidence is that the same thing is going to happen,” he said, adding that, “You kind of see the same patterns repeat because humans are the same. Human nature is extremely slow to change.”

He also expressed concern about people who left the saga “embittered,” concluding that the system is rigged and swearing off investing entirely.

Although that’s a very human response to a loss, in Jakab’s view, it’s a big mistake, because despite its flaws, the stock market is still one of the best paths to financial security.

“There’s not a lot of other things that’ll multiply your wealth,” he said. “You can’t make a ton of money putting it in the bank unless you really save everything and make a ton to begin with, right? You need to have that multiplier factor over many years.”

The Revolution That Wasn’t: GameStop, Reddit, and the Fleecing of Small Investors – Spencer Jakab – Portfolio – 320 pages (print)