Robinhood CEO: Making Everyone An Owner

Vlad Tenev built Robinhood by breaking every rule Wall Street wrote: zero commissions when competitors charged $10, mobile-first when "serious" investors demanded desktop, a brand that made finance feel like rebellion instead of a club you'd never join. By 2021 they'd forced every major brokerage to slash fees and attracted millions who'd never owned a stock, but then GameStop happened: trading restrictions during the meme stock frenzy triggered congressional hearings, user fury, and a two-year brand crisis that nearly buried them despite the real culprit being antiquated clearing mechanics no one understood. Now Tenev's pushing an even more radical vision—tokenizing private company shares so retail investors can own stakes in AI giants before IPO, turning prediction markets into "truth machines" that beat polls and pundits, and building what he calls the end of financial nihilism: a platform where your seventy-year-old parents and your Gen Z cousin both manage everything from retirement accounts to election bets in one place. The question isn't whether traditional finance survives this; it's whether Robinhood can move fast enough to own the entire wealth transfer before someone else does. Timestamps 0:00 - Introduction 2:53 - Financial Relationships vs. Pinterest Boards: The Higher Bar 4:28 - Building in a Regulatory Catch-22 7:16 - Three Simultaneous Contrarian Bets 12:00 - From Institutional HFT to Retail Revolution 17:21 - January 28th: The Day Trust Died 27:40 - “Simple Lie More Powerful Than Complicated Truth” 29:03 - Tokenization: The Antidote to T+1 Settlement 32:34 - IPO Access: From Asking For Favors to Everyone Wanting In 38:22 - "Series D Was Called an IPO" 43:07 - WTF Happened in 1971? 46:42 - Going Broad While Going Deep 52:27 - The $120 Trillion Wealth Transfer 57:17 - Debunking “Financial Nihilism” 58:45 - “Speculation Is Critical For Functioning Markets” Follow Vlad Tenev on X: https://x.com/vladtenev Follow Alex Rampell on X: https://x.com/arampell Follow Erik Torenberg on X: https://x.com/eriktorenberg Stay Updated: If you enjoyed this episode, be sure to like, subscribe, and share with your friends! Find a16z on X: [https://x.com/a16z](https://x.com/a16z) Find a16z on LinkedIn: [https://www.linkedin.com/company/a16z](https://www.linkedin.com/company/a16z) Listen to the a16z Podcast on Spotify: [https://open.spotify.com/show/5bC65RDvs3oxnLyqqvkUYX](https://open.spotify.com/show/5bC65RDvs3oxnLyqqvkUYX) Listen to the a16z Podcast on Apple Podcasts: [https://podcasts.apple.com/us/podcast/a16z-podcast/id842818711](https://podcasts.apple.com/us/podcast/a16z-podcast/id842818711) Follow our host: [https://x.com/eriktorenberg](https://x.com/eriktorenberg) Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see [a16z.com/disclosures](http://a16z.com/disclosures).

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  It's our truth machines. Like, we're constantly being bombarded by all this information and noise. Anyone can be an influencer, anyone can have a podcast. How do you sift through that and figure out what's actually gonna happen?

• 0:12Alex Rampell?

  Massachusetts banned their residents from buying into the IPO of Apple Computer.

• 0:17Speaker 00

  Yeah.

• 0:18Alex Rampell?

  Because it was too risky. Forty-nine other, like, states, you're okay. Like, no nanny state there, but Massachusetts, uh-uh, too dangerous. And like, Apple's gone up in like ten billion times.

• 0:27Speaker 00

  They have like, one of the largest and most robust state lotteries at the same time.

• 0:32Alex Rampell?

  Which is, which is so bonkers. There's a funny website called WTF Happened in 1971, when you decoupled from the gold standard. Wages were kind of stagnant, but asset prices went up a lot. If you own an asset, that's right. You benefit from all of these amazing new things like the iPhone, right? Like, you're now an owner, you participate in the ownership economy. If you just get paid cash, and some people get paid a lot of cash, they just get left behind.

• 0:54Speaker 00

  I think we learned a lot of valuable lessons. A simple lie is much more powerful than a complicated figure.

• 1:01Alex Rampell?

  Yep.

• 1:02Speaker 00

  So yeah, the Robin Hood's colluding with hedge funds.

• 1:05Alex Rampell?

  Right.

• 1:05Speaker 00

  Very compelling story. It's like, ah, Robin Hood, look, they're actually stealing from the poor and giving to the rich.

• 1:11Alex Rampell?

  Right.

• 1:11Speaker 00

  It just writes itself. Like, if I was in charge of marketing for a, as an editor, I'd probably come up with that, right? It would be a good one. If you look at AI as a category, you have the fastest product adoption of any products in history. And at the same time, it's the most hated category. Interview people, and their perception of AI is worse than social media. Because nobody's worried social media is gonna take their jobs. But there's this underlying fear that these companies are automating everything. And, you know, where's my job in that list? People are freaked out about that. And I think we could figure out how to be a little bit more egalitarian in the ownership.

• 1:50Speaker 00

  Like, it shouldn't just be owned by a small fraction of, of VCs. In fact, we should make sure that there's ways to distribute it.

• 2:04Erik Torenberg?

  In January 2021, Robinhood had the fastest growing financial app in America, number one in the App Store ahead of Instagram and TikTok. Then, in a single day, they had to restrict trading on GameStop and became the most hated company in finance. Here's what almost no one understood. Robinhood didn't have a solvency problem. They had a collateral problem created by an antiquated clearing system that still takes days to settle trades that happen instantly on your phone. The same system that once took five days to clear trades in the 1970s. Vlad Tenev, Robinhood CEO, made a bet that seems obvious now, but was heretical then. That your phone would become your primary financial device. That normal people would want to trade stocks, not just buy index funds. That you could build a brokerage that made money without charging commissions.

• 2:47Erik Torenberg?

  He was right, but being right almost destroyed the company. Today, Robinhood has 11 businesses doing over 100 million each. They're tokenizing private company shares, running prediction markets that outperform polls, and quietly becoming the big account for a generation. We talk about why you can't have a working market without speculation, how to recover from a brand crisis, and why the future of finance looks nothing like the past.

• 3:13Erik Torenberg?

  Vlad, welcome to the podcast.

• 3:14Speaker 00

  It's a pleasure to join you, gentlemen.

• 3:17Erik Torenberg?

  Alex, so we at A and Z, we've invested in Robinhood from seed to much later stage at various stages of the company. Alex, why don't you just give some perspective on why you've continuously found Robinhood to be such a compelling company even through the highs and lows?

• 3:31Alex Rampell?

  Well, I really can't take credit for the seed for two reasons. Number one, exactly. Number one.

• 3:35Speaker 00

  It was Ronnie Conwy.

• 3:36Alex Rampell?

  Yes. Number one, it predated. And then number two, it was just like the Oprah Winfrey, like you get a car. It was a little bit of, we just invested in a lot of companies back then at seed because it was a small amount of money. Again, I would love to take credit. So I remember we invested and I didn't really get it as an outsider. But it turns out, like, here's one thing that I'll say. There are very, very few financial services companies, number one, because having a financial relationship is a lot different than having like a Pinterest board, nothing against Pinterest, right, or having like a Facebook account, but like really trusting somebody with your financial life and money, that's a higher level of commitment. That's like the live-in girlfriend or boyfriend kind of thing. It's like the bar is up higher for that. And then number two, it's very rare to see companies that just get organic traction.

• 4:16Speaker 00

  Yeah.

• 4:16Alex Rampell?

  So I like to say, especially in financial services, with that high bar to having a relationship, you should probably just buy Google stock or Facebook stock versus investing in most companies, because that's where all the money goes. Like, you raise an A round or a seed round, you're like, oh, shoot, I need to get users. And then you just spend like all of your money on Google Ads, and then you have no more money left. Google has lots of money, and then Google wins and you lose. And I would say like Robinhood, I mean, you obviously know this story so much better than I do, but there were very, very few companies that really figured out how to hack organic distribution in a very meaningful way. And Robinhood is probably the most successful of them all. That's not meant to cheapen everything else that has been built around the product. I mean, the other thing that Eric and I were talking about in advance, which is a lot of really

• 4:58Alex Rampell?

  smart people in finance go into finance, but they don't go into like product finance.

• 5:03Speaker 00

  Yeah.

• 5:03Alex Rampell?

  So it's like, I'm gonna go work at a high-frequency trading firm and make lots of money, as opposed to, I understand the way that everything works, I'm gonna get customers for free, I'm gonna build a thousand times better product, and I'm gonna dominate the world. And you've kind of done all three. So that's why I think Robinhood is pretty unique.

• 5:19Speaker 00

  Yeah, I think when we got started, fintech as a category didn't really exist. I mean, you can look at the Google trends, and around the time A16Z made their seed investment, which I think was 2013, mid 2013, nobody was really talking about fintech, right? And the criticism we would get is, well, you're entering a regulated space, you don't have your license yet, there was a lot of uncertainty, and we were kind of in this catch-22 situation where there was uncertainty about whether we would get the license, and also, the regulators wanted us to have money, which made it very, very difficult. They don't want a brokerage to go out of business after one year with customers.

• 6:01Speaker 00

  So we were in this catch-22 situation, and juxtapose that against the climate, which was, there was skepticism that people would want to trade. Like, there was this belief... By a lot of investors too, that ETFs and indexing had kind of disrupted and eaten the consumer investing landscape. And so we had a strong point of view that wasn't the case and that actually people were just missing good tools, but there was no way to demonstrate that besides just doing it and showing that it could be done.

• 6:35Alex Rampell?

  Yeah, I mean, I remember Wealthfront, if you know the history of Wealthfront.

• 6:38Speaker 00

  Oh, yeah.

• 6:38Alex Rampell?

  It started off as a site called Ka-ching.

• 6:41Speaker 00

  Yeah.

• 6:41Alex Rampell?

  You know this, right? So Ka-ching was kind of a brilliant idea that was ahead of its time. So Andy Rakliff started this company because I think he was on the board of Penn, University of Pennsylvania, and they had all of these public hedge fund money managers, long short firms, that would outperform the market. And why can't you democratize that in twofold? One is maybe Eric is an amazing money manager, but never got handed a fund. And then number two is if he has a great fund, why not let other people just off the street go invest with him and kind of copy their trades? And that was the original idea of Wealthfront was really kind of very, very active, like believing that people could beat the market. And then for a variety of reasons, that pivoted into

• 7:25Speaker 00

  The exact opposite.

• 7:25Alex Rampell?

  The exact opposite, yes, which is quite funny, which is highly commoditized because there are so many other, I mean, Wealthfront's doing very, very well, but there are so many other people that will say, I will do passive indexing for you as well, versus the idea of having a network for finding this undiscovered talent and then allowing anybody to put money behind the undiscovered talent around active investing. That was actually a pretty revolutionary idea that probably just was ahead of its time. Or I don't know, maybe it wasn't.

• 7:52Speaker 00

  I think Robinhood did three simultaneously challenging things that helped make us successful. I think the first thing was we actually had a pretty simple value prop from the very beginning. Everyone else was charging seven to $10 for a stock trade. We went to zero. And we had that basically to ourselves for a period of Three to four years before the incumbents kind of caught up and had to replicate that because they noticed they were losing all their customers and it was accelerating gap. So that was one. And there was a lot of technology and just, it wasn't trivial to actually build a business that could make that happen sustainably. The second was figuring out mobile.

• 8:36Speaker 00

  And you know, when we started, this was actually contrarian because most people that you talked to were playing games on their phones. And it was a little bit of a leap to imagine a world where your phone is your primary financial device. But I remembered something, which was that when I was in high school, I was like interested in buying stuff on Amazon and my parents were just like, how could you put your credit card on the computer? It's going to get hacked. And it was just deja vu. When I would talk to people about, you know, trading stocks on their phone, it was the same sort of feedback. Like, how could

• 9:17Speaker 00

  you trust your finances with this device? It's, it's so small. What if it gets hacked? What if you lose it? So it just didn't make sense. So we kind of made a bet that that would actually be primary because there's so many advantages. A lot of people trade during the working day. You can't really have your investments on your work computer. It's a little taboo. So you can just have this device with you to make sure you're on top of things when things are moving. And then I think the third thing was actually the brand. And I'm sure you guys have heard Peter Thiel say this thing that the name of a company is very important. You know, he juxtaposed sort of like Uber, the name, and it's, ah, it just sounds like this company that's going to get slammed hard by regulatory scrutiny

• 9:59Speaker 00

  versus Airbnb, which sounds like this light, airy, like they'll probably have a much easier time. But yeah, there was this whole disillusionment with finances in the wake of the financial crisis, which is basically when I entered my professional career. I graduated Stanford 2008 and started grad school a month before Lehman Brothers went under. And I remember a lot of my friends who were taking their first jobs, some of them felt very secure. The ones that had their Lehman Brothers internship leading to a Lehman Brothers return offer.

• 10:32Speaker 00

  They were like, I'm set. You know, I know what my next 10 years is going to be like. I'm going to work here for two years, then I might go get an MBA. And then, you know, I'll transition to this other, you know, associate role and work my way up. But I'm good. The ones that felt the most secure were the first ones to be packing up their cubicles and those cardboard boxes. And not just that, but a lot of people, especially in my circle, you know, financial services was like the hot major. You wanted to get into the industry back then. It was pre-computer science. And by forces outside of their comprehension and control, not just their own jobs, but their parents, their family members.

• 11:15Speaker 00

  And then a lot of the folks that I knew at grad school and in college actually participated in these Occupy protests. So this kind of set the stage for a new brand. You know, people were disillusioned with the state of affairs. They thought that the financial system didn't work for them. And I think in many ways, Robin Hood was the practical solution. We know that it works and we can't just burn the system down. And doing so would probably be quite dangerous. But if you can make it work for more people.

• 11:46Alex Rampell?

  Yeah.

• 11:47Speaker 00

  We sort of offered that in a simple message with the brand. And I think that, along with mobile, along with commission free and the technology that enabled that, allowed us to grow very quickly.

• 11:59Alex Rampell?

  But I imagine there was some meandering to kind of get to all three of those, almost like nested. If state like they all, they all turned out to be true, but what was the, I should know those. What was the origin? Like you decide to start a company. Like, what was V zero?

• 12:16Speaker 00

  Well, so V zero was, we were working on a previous company, which was a software firm that provided high-frequency trading software to hedge funds and banks. And what we noticed there, well, two things. One was our customers were trading many yards a day, many, you know, billions of dollars of trading volume and paying basically nothing.

• 12:42Speaker 00

  So and the entire industry had moved from kind of this heavy in-person trading pit model where the biggest kind of football players would have an advantage to this massive almost like call center situation. And then you had high frequency disrupt this institutional trading market because suddenly two guys out of MIT or Stanford in our case, who could just write code could just disrupt everything and run the trading book of an extremely sophisticated operation at basically one tenth or one one hundredth of the cost.

• 13:25Speaker 00

  And so we kind of saw this playing out in institutional and we started thinking about, okay, can we take this software that we've created for institutions and make it so that anyone can create a trading algorithm? So there was a seed of an idea there and then we kind of played around with the idea of making it free and we didn't see a reason not to do it. And simultaneously, I had moved from New York, which is where our previous company was based, to San Francisco to start the West Coast engineering office. And the reason for that was we just couldn't hire engineers in New York. I mean, they're all working, the good ones were working for high frequency firms. And we had this one angle, which was we went to Stanford.

• 14:10Speaker 00

  So we were kind of plugged into the community there and we would go to the career fairs. So we said, okay, why don't we, rather than trying to convince our Stanford friends to move to New York, why don't we just open up our engineering office and be bi-coastal? And when I moved back to San Francisco, it was around the same time that Uber had launched Black Car up in SF, Instagram had just gotten started. So you could tell that mobile was going to be a big thing, but it was not yet evenly distributed, even though it was probably like. You know, four years since the the creation of the App Store. And I think we just put these two ideas together. We put them together at the right time, and I think they ended up being correct.

• 14:55Speaker 00

  And there was a little bit of meandering. But I think the and there were probably things we could have done better. But the vision was pretty consistent, which is we just wanted to offer free stock trading on mobile.

• 15:10Alex Rampell?

  John, did you ever debate just like, why not make it a dollar? I mean, was it kind of like always obvious at the time, like free is the most disruptive, even though anything would be cheaper than Schwab? Or like, it's kind of, you kind of embrace the zero from the very beginning? Or did you debate that decision?

• 15:27Speaker 00

  We didn't debate that decision. Yeah, there were basically two pricing decisions that Beju and I made at the the lunch table in our Redwood City offices. Well, actually, the the zero commissions decision was almost there at the genesis of this idea. We're like, oh, well, what if we actually made it free? That would be very, very powerful.

• 15:53Alex Rampell?

  Yeah.

• 15:54Speaker 00

  So it was almost like that one didn't change because I think it was intuitively clear to us that free would be much stronger to market. Like, it would be a much better hook than even 99 cents or $1. There was a decision that we had to make about account minimums. And this one was a little bit more complicated because most brokerages at the time had some sort of account minimum. You had to put in $2,000. That was a pretty common one to open up an account. And we were like, well, the the argument for it is if you have a bunch of people with five cents in their account, it's going to cost you some amount to service them. And you'll probably never make any money. But

• 16:39Speaker 00

  Yeah, making money was pretty, pretty far. It wasn't, it wasn't a near term consideration at that point. We just wanted to get something to work and we made the bet that, hey, let's just, let's just set it at zero. See what happens, you know, solve the problems later. And I remember thinking, well, if anything, this should force us to really look at our cost of servicing and make sure we're running a tight ship and we're automating things because you just can't get away with it. Right? Like your cost of servicing an account has to be low enough that you can handle these, you know, five cent accounts without just breaking your model.

• 17:14Erik Torenberg?

  To fast forward a bit, even though you had this relatively early success, thanks to these innovations, it wasn't always a super smooth sailing to runaway success.

• 17:24Speaker 00

  Not at all.

• 17:25Erik Torenberg?

  And so maybe we could fast forward maybe to 2020, 2021 time, Alex, when we're gearing up to, to make another investment in the company. How you sort of viewed the company at that time and then we can tell a story from there.

• 17:38Alex Rampell?

  Well, I definitely remember the, the GameStop round. I don't know if you have like a name for that round.

• 17:44Speaker 00

  That was the.

• 17:45Alex Rampell?

  Fun day of my life round, right? Is that what it's called internally?

• 17:47Speaker 00

  Exactly. Yeah. The round wasn't, I mean, the round was like the good part. I remember that whole saga quite negatively. So yeah, we call it January 28th because, because to us it wasn't like, oh, we had an amazing financing experience. We, we remember the dates of all of our SEVs, basically all the big crises. And to us, that's like, I mean, you have, you know, 1212, 1213. What was it? March, March 3rd or March 2nd, 2020, when we had a full day trading outage. I'm actually glad I, I've forgotten the exact date of that one. But yeah, to, to me it was a SEV rather than a financing, but.

• 18:32Alex Rampell?

  But I remember this is when, but it was, it was during COVID, right?

• 18:38Speaker 00

  It was.

• 18:38Alex Rampell?

  And we went from being in office to being work from home forever because that was the future, right? Everybody was going to be in the cloud.

• 18:46Speaker 00

  Yep.

• 18:46Alex Rampell?

  And, but we started having monthly off sites that happened to be onsite. So it's kind of this, so we were at Ben Horowitz's house and I remember David, George, Ben and I were huddling around like, what do we do? But I.

• 18:59Alex Rampell?

  There is, I was on, I mean, you know this, but I was on the board of a large high-frequency trading company called KCG, which had previously been Knight Capital, which had its own little trading issue, once upon a time, but I felt very, very confident.

• 19:12Speaker 00

  The Facebook IPO, right?

• 19:14Alex Rampell?

  No, it wasn't that. It was bad code. So Knight Capital had this issue where they kept, you know, if you post an order at a particular price, like, there's not really, I mean, for a brokerage customer, like, you're gonna get the market order, everything out, but if you are a sophisticated investor or trading company, people will just, it's kind of an adversarial process. So they kept saying, there was like this infinite loop of, we'll sell something that's like $50, we'll sell it for 5 cents, and guess what? People, like, in five minutes, the company completely ran out of capital. And this was a large, public company, and then it was rescued by Getco, if you remember Getco, which was one of the original high-frequency trading companies,

• 19:58Alex Rampell?

  and then that became KCG. So Knight Capital, Getco, this merger. But I, as a consequence to this, I understood Reg NMS pretty well, and how market making works, and how payment for order flow works, and why it's actually not, like, it sounds like this scary thing, but it's not, because you're internalizing trades. Like, normally, you would post a trade to an exchange, but if I see the buy and the sell, and I can kind of match them on the spot, you can actually offer the customer a better price than if it showed up on the exchange. So I was just very, very confident that the business model was a good one. The clearinghouse model was stupid. And to give you context on this, like, I think in the

• 20:40Alex Rampell?

  1970s, we were at T plus 5 clearing. It took five days, because if I buy a stock from you, right, it's not like, as soon as I put that order in, like, I own the stock, you have the cash. It looks like that, right? It's like, it looks like I have the stock. It looks like you have the cash. But actually, it takes five days for that to formally settle. And then it went to like, T plus 3, that happened like, after a decade.

• 21:01Speaker 00

  Yeah.

• 21:02Alex Rampell?

  Then it went to T plus 2. Now we're at T plus 1, but it's just kind of comical how long it takes to settle a trade, which I think is a great way to talk about tokenization a bit.

• 21:11Speaker 00

  And by the way, I wouldn't have gone to T plus 1 if I hadn't pushed for T plus 0.

• 21:15Alex Rampell?

  Well, it should be T10. It's just this absurdity. And then because there is risk.

• 21:20Speaker 00

  That was one good positive consequence of the whole GameStop fiasco. They went behind my policy proposal to shorten settlement times.

• 21:27Alex Rampell?

  But the reason why this is ridiculous, and again, it's complicated to explain to people that don't get this. But I am going to sell you stock. You're going to give me cash. But the value of the stock can change a lot in those one or two or three or five days. So beyond just saying, I'm going to give you the stock and here's my stock certificate. I have to post collateral for that as well. And the more success that you see, the more collateral you have to post. But it's kind of dumb because it's all, you have the underlying cash or you have the underlying stock. And that was the part that just didn't make any sense. Right? I mean, it's how the clearinghouses function, but there was no solvency issue.

• 22:08Alex Rampell?

  There was no, it's like, you just need, well, number one, hopefully when we fast forward 10 years, this whole system will be antiquated and we'll have something much, much, much better. But this was a result of people loving and using Robinhood too much, if you will.

• 22:24Speaker 00

  Yeah.

• 22:24Alex Rampell?

  Versus anything that was wrong. It's not like, you know, I started a firm and we had a crisis. I would call it the March of 2020 crisis. Where imagine being a lending company to consumers when everybody loses their job. Right? Which means that they're not going to buy shit in the future. And they're not going to pay off their loans in the past. So that seemed like game over. Like we had an emergency round for a firm right around the same, like right around like the beginning of COVID. Because it's like, well, nobody's going to pay their bills. And like, we're kind of on the hook for that. And then nobody's going to buy stuff and like, that's going to be catastrophic. But that was like a real problem with the business model when everybody loses their job.

• 23:06Alex Rampell?

  As opposed to like, if people are trading and the way that collateral is handled is just kind of dumb. Like, that's a, that could be solved. So that was kind of like my analysis. I mean, you probably had a much closer to the metal analysis. It's like, oh wow, this is a bad day. But it was like, there was actually like, and Mickey Malka is a very close friend of mine. I love that guy to death. And he's doing it and it's like, I trust that guy. I trust, I trust Robin Hood. Like it kind of wasn't no brainer. It was a large check for something where it's like, wow, this isn't good. But in hindsight, it obviously worked out, but it seemed like there wasn't really a systemic issue with the company. And that's where you get a little bit more nervous as an investor. But I'd love your take because you were obviously in the inside.

• 23:50Speaker 00

  I mean, at the time, I think at the end of that day, we, it was pretty clear that we were averting liquidity and solvency risk, which is probably the biggest concern that you have, you know, through, through our actions and also the market. I think we were able to avert that. Juxtapose that with also, we were number one in the App Store and not just number one in the, in the, in the finance section, but number one overall ahead of Instagram and TikTok. And I think that was a pretty, pretty potent combination. So the, the third thing that probably you had to consider at the time as an investor was the brand impact.

• 24:33Speaker 00

  Like you have a lot of people who are mad at what Robin Hood did. There was a looming congressional testimony that that ended up doing. But yeah, and, and actually the brand thing was a real thing because when the dust settled on our acute issue, I probably spent the next two to three years. And it was very, very clear, you know, they always say that trust can be lost in a day and, and takes a long time to, to earn. You can earn it rather slowly. I think we experienced that. Even now, when we post, when I tweet, you'll have the people saying, oh, but you know, we'll always remember January 28th. And most

• 25:14Speaker 00

  of them don't get into the details of clearing mechanics and settlement. And most of them were probably not even affected directly. Like they weren't trading GameStop or AMC, but they just heard something from someone who heard something from someone that Robin Hood's like in cahoots with hedge funds and going, going against the little guy. And so.

• 25:37Speaker 00

  That that's been the hard part to to navigate. And I think that, you know, there was a lot of adrenaline. We had to solve the immediate issues on January 28th, which we got past. And then after that, there was just a two year period of slowly clawing our way out of this brand hole that I think we're, you know, now mostly out of. And we just, a couple of months ago,

• 26:04Speaker 00

  were able to say that if you look at our NPS, we were sort of like ahead of where we were pre GameStop. So that was a momentous occasion.

• 26:12Erik Torenberg?

  Besides time, what do you think are the actions that contributed most to the to the brand getting back to where you want it to be?

• 26:18Speaker 00

  Yeah, I mean, really, there's very few spikes upward. GameStop was like a downward spike, right? I think time is by far the biggest element. People forget, you know, you have new young people, new users coming in, replacing the ones that were really upset. And then it's just looking at what things people complain about that you can resolve and addressing those. And then I think a couple of years ago, we started doing these product events, which I think had not just practical value, but also I think that they cultivated a community of shareholders and customers. And I think around our events, we noticed there was actually a pretty big

• 27:03Speaker 00

  increase, like if we do get mini spikes of a couple of points, it's around those events.

• 27:08Alex Rampell?

  But also, like every other brokerage paused trading in GameStop and AMC, right?

• 27:14Speaker 00

  Pretty much, yeah, I think there were a few that didn't.

• 27:17Alex Rampell?

  Even the ones that did, I feel like I remember Interactive Brokers, like they

• 27:21Speaker 00

  Oh, yeah.

• 27:21Alex Rampell?

  Like they all, they eventually got there and it wasn't because, but it's just, it's hard to explain to somebody who's not a layperson because it's like, well, wait a minute, I sell you stock, right? I get cash, you get stock, well, it's done. And it's like, no, no, no, there's this like deposit trust clearing corporation. It's like, what are you talking about, you crazy conspiracy theorist? No, no, no, this is how it works. And it's just, it's so complicated to explain because there's all, it's like the duck that paddles furiously behind, you know, underneath the surface. Like I have the cash, you have the stock. What are you talking about? And it's like, no, no, no, there's this other stuff happening. And that's the hard part to explain.

• 27:54Speaker 00

  I think we learned a lot of valuable lessons. A simple lie is much more powerful than a complicated truth.

• 28:01Alex Rampell?

  Yeah.

• 28:02Speaker 00

  So yeah, the Robin Hood's colluding with hedge funds.

• 28:05Alex Rampell?

  Right.

• 28:05Speaker 00

  Very compelling story. It's like, ah, Robin Hood, look, they're actually stealing from the poor and giving to the rich.

• 28:11Alex Rampell?

  Right.

• 28:11Speaker 00

  It just writes itself like it's, it's good. If I was in charge of marketing for a competitor, I'd probably come up with that, right? It would be a good one. Um, and this whole thing about collateral and Dodd-Frank and financial solvency and protecting the financial system. It's a, a complicated truth at, at best, right?

• 28:32Alex Rampell?

  It's an order of magnitude, more time to refute bullshit than to produce it. That's the other one.

• 28:37Speaker 00

  Yeah, yeah. And everyone, the simple, I think the simple antidote would be to just point the finger at someone. It's like, oh, this thing, that, that's, that's the enemy, which a lot of the other brokers were able to do by pointing the finger at their clearing firms or Apex Clearing or, you know, one of the other folks saying, you know, we disagree with their decision, but they did this. Um, so that, that was also a learning, probably find someone to blame, uh, who isn't us, uh, a little bit earlier. But of course, we're, we're very chivalrous folks. We don't like to, we don't, I don't like the idea of blaming someone. And I prefer to take responsibility for everything, even if it's not my fault. So that ended up biting me a little bit, I guess.

• 29:20Alex Rampell?

  But it feels like you're getting even now because it's like going back to the whole, like it took five days to settle a trade, then three, then two, then one.

• 29:28Speaker 00

  Yeah.

• 29:29Alex Rampell?

  Right? Versus the future that you're helping build, which is if you tokenize everything, like there is no more of this middle man that can, oh, you gotta post collateral, but wait a minute, why am I posting collateral on top of the stock that I'm giving you or on top of the cat? Like, well, because the, the stock price can change by 50%. That's why there's always a logical reason for it. But like, why is it that in 2025, it takes one whole day to settle a trade?

• 29:55Speaker 00

  Yeah. Uh, I think you're totally right. And I mean, there are, um,

• 30:03Speaker 00

  There are strange things that happen in the crypto world, right? I mean, actually, probably if you look at solvency and liquidity issues, you had the Celsius and BlockFi and that whole liquidity crunch there, culminating a few months later in the collapse of FTX. Couple of weeks ago, you had forced liquidations. I mean, even when Bitcoin dropped below 100,000 a few days ago, it was just a torrent of forced liquidations. It's a little bit more niche, right? It wasn't the products that are experiencing this, whose customers are experiencing this aren't number one in App Store overall, getting millions of new customers a day.

• 30:47Speaker 00

  So I think it's contained. And so we shouldn't, we shouldn't make it sound like crypto is just a panacea. But certainly moving forward and improving with technology can solve a lot of these problems. Yeah, with tokenization, I think certainly if done right, you can prevent that specific issue. You also get 24/7 trading through holidays and weekends, which is very cool. There's also something that I probably, it's not in my interest to talk about, but in some ways it is. If you self custody your stocks, you're immune to outages from the broker. You can just sort of like easily replace one brokerage for the other. And you don't have to, the blockchain would have to be down

• 31:32Speaker 00

  for you to lose the ability to trade, which I think is very powerful. Not to mention something you're probably familiar with, the securities lending landscape, which is a huge source of revenue for brokerages and counterparties, is very opaque and very inefficient. A lot of these trades are still happening over Bloomberg Messenger, you know, counterpart, like peer to peer. If you do it tokenized, then you have these liquidity pools, which just makes that a very simple thing. Like you imagine lending and borrowing your stocks on AVE or some equivalent would be much more efficient and much better for the end user than

• 32:13Speaker 00

  the current morass of securities lending that's evolved to be this way after multiple decades.

• 32:21Erik Torenberg?

  Yep. Is it inevitable that the most popular private companies' stocks will be tokenized? Or we're talking about the dynamics there?

• 32:29Speaker 00

  Yeah, for sure. Yeah, that's definitely happening.

• 32:32Erik Torenberg?

  And even if they don't want it, like, how is it going to happen?

• 32:35Speaker 00

  I think eventually they'll want it, but there will be an adjustment period.

• 32:41Erik Torenberg?

  And they'll want it because their customers will want, or like?

• 32:45Speaker 00

  I'll give you an analogy that I think is actually pretty close. So in 2021, we launched this product IPO access. And the idea is pretty simple. IPOs have been dominated by institutional investors since the dawn of time. And we're gonna just make it so that retail can participate in IPOs. And not just private wealth, but actual mass market retail. And we had this big chip, which was we were going public. So we, at the very least, could guarantee that they'll get access to ours. And so we, at the time, had the largest retail allocation, I think certainly of any IPO of our size. It was between 20 and 25%.

• 33:30Speaker 00

  And then, of course, we had built all this great technology for ourselves. Let's get everyone else to do it. So we got a bunch of other firms to participate in retail IPO. Most of them, we kind of had to ask for favors or strong arm a little bit or use our bankers. Because they didn't get it. They were like, this is a strange thing. I'm just trying to get my company public so I could focus on running my business. Everyone's telling me this is a bad idea. We weren't really in the room to advocate for retail allocation, much like the bankers were. So it took a lot of work. And the allocations we got were also quite small. It was like, okay, well, we'll make these guys happy. Let's give them 1% or 2%.

• 34:12Speaker 00

  And then the market shut down at the end of 2021. Nobody was going public anymore. And then something interesting happened. In the middle between the reopening of the IPO market,

• 34:25Speaker 00

  it started becoming clear that stocks that had retail followings were actually being rewarded Yeah. with higher multiples. I mean, you had Palantir, you had some others.

• 34:36Speaker 00

  Some would put us in that category as well as a big retail following stock. And so people started calling me to ask about their retail strategy. And now you look in the in the past couple of months, pretty much every IPO of consequence is on Robin Hood and with increasing allocations. You know, we had Bullish that gave 20% of their IPO to retail. I think Gemini was very similar and we were fortunate to get a big chunk of that. So went from this being from this being this weird thing. That was a little bit, I mean, we had to be annoying to get people to participate to now. Everyone kind of gets it and wants it and is like interested in even doing more post IPO.

• 35:21Speaker 00

  So I think when you when you ask private markets access is is has very similar properties. If you talk to these CEOs of private companies, they generally are aligned with the intent and the mission. Everyone's like, yeah, I would love normal people to be shareholders and not just these like three-layer SPVs. It's at least better than the three-layer SPV. So they kind of agree with it. They're like, oh, yeah, power to the people, you know.

• 35:52Speaker 00

  At least not very many people with a straight face have told me, no, I just want to hold the equity and give it to just the big institutions, you know. And I think it's genuine. Most people don't actually Yeah. love that. And so it's the practicalities that get in the way. Like this is a new thing. I don't want to be an innovator in giving private access to retail. That's not the point of my business. I don't want to be a guinea pig, which makes me very confident it's going to evolve in the same way, too, where they'll start to see it a little bit. It'll become normalized and then the advantages will become clear.

• 36:32Speaker 00

  Like you'll have retail fans as a private company, many of whom could be your customers or at least your advocates. And then it'll become much more clear. And I actually think for AI companies, it's the most critical. Because if you look at AI as a category, you have the fastest product adoption of any products in history with ChatGPT and all these cursor and all that fastest revenue ramps. And at the same time, they're kind of the, it's the most hated category. You interview people and their perception of AI is worse than social media. Because they're worried, nobody's worried social media is going to take their jobs. Right. But there's this underlying fear that,

• 37:17Speaker 00

  you know, these guys, these companies are automating everything. And, you know, where is my job in that list? Is it easy to automate? Is it hard? People are freaked out about that. And I think we could end up in a very bad place if we don't figure out how to be a little bit more egalitarian in the ownership. Like, it shouldn't just be owned by a small fraction of VCs. In fact, we should make sure that there's ways to distribute it. Because the best way to not fight against something, as we've seen in public markets with these retail stocks, if you're an owner of it, you'll defend it. Because not a lot of people are defending the AI companies in the public.

• 37:56Alex Rampell?

  It's kind of, it's like, it's both.

• 37:58Speaker 00

  The VCs, the VCs are defending them because they own them.

• 38:01Alex Rampell?

  But it's offensive defense, right? Because, I mean, to your point, you have this virtuous cycle where it's like, how many people that bought Tesla stock? How many of, like, this has become almost, I don't want to call it a meme stock, but it's become a very, very popular retail stock.

• 38:18Speaker 00

  Absolutely.

• 38:18Alex Rampell?

  And a lot of the people that bought Tesla and like the Tesla bulls are all people that own the car. Right. And like, there's a virtuous cycle there. And the flip of that is exactly as you said, it's like, hey, you know what? Everybody's going to be an owner of these things. And I think it's a little bit of a Back to the Future thing, which is, I think when Amazon went public, they had like a $600 million market cap. Like 25 years ago, or 30 years ago, like the normal, like, there was no such thing as a Series D, right? Series D was called an IPO. And it's funny, there's a company in our portfolio that just raised a Series K.

• 38:51Speaker 00

  Oh, yeah.

• 38:52Alex Rampell?

  And HIJK, right? It's like, you know, like, Series I, you gotta go public by the Series I, right? Like, that's IPO, but...

• 38:59Speaker 00

  We felt a little funny. I think we did a Series G.

• 39:02Alex Rampell?

  Yeah, it's like, that's, that's, when you're getting up into the upper letters, the upper consonants of the alphabet.

• 39:06Speaker 00

  The GameStop round was really a Series H.

• 39:08Alex Rampell?

  Yeah, I mean, it's like, that's a lot of consonants. And you're better off, like, you get that, like, this is so counter-conventional wisdom. I love it when conventional wisdom is wrong, or experts are wrong. And this is a big one, right? Which is like, to your point, it's like, oh, you gotta have, like, T-Ro and Fidelity, like, buy into your IPO, and that's, that's what's gonna give you, like, a great multiple. And actually, no, no, no, that's completely false. Like, the fact that Palantir is, like, a runaway tech favorite, or, sorry, retail favorite, and trades at a very high multiple. And like, it's not just about, like, trading at a high multiple. Like, that's beneficial. If you're a CEO of a company, you wanna hire and reward talent.

• 39:44Speaker 00

  Yeah.

• 39:44Alex Rampell?

  Right? If you wanna retain people, like, and you wanna buy a company, having a high, a high currency is actually very, very valuable to you. And retail is actually part of that. And by the way, retail actually benefited from all this stuff 30 years ago.

• 39:58Speaker 00

  Yeah.

• 39:58Alex Rampell?

  But then, when Series G's and H's and I's and everything else kinda started staying in, like, the private domain, and accessible only to accredited investors, one of my, one of my favorite stories is from, I think it's 1986, in the Wall Street Journal, you know this one? You might remember in a second. Massachusetts banned their residents from buying into the IPO of Apple Computer.

• 40:20Speaker 00

  The Apple IPO, yeah.

• 40:21Alex Rampell?

  Because it was too risky.

• 40:22Speaker 00

  It was a little earlier, right? 1981.

• 40:24Alex Rampell?

  Oh, yeah. It was, it was like, in the 80s, but you can just Google, like, dangerous, Massachusetts, Wall Street Journal, Apple IPO. So 49 other, like, states, you're okay. Like, no nanny state there, but Massachusetts, uh-uh, too dangerous. And like, Apple's gone up in value like 10 billion times.

• 40:39Speaker 00

  And by the way, they have, like, one of the largest and most robust state lotteries

• 40:43Alex Rampell?

  Yeah.

• 40:43Speaker 00

  at the same time.

• 40:44Alex Rampell?

  Which is, which is so bonkers. But, and it's just sad. That you used to be able to like companies would go public so much earlier. And Dodd-Frank, actually not Dodd-Frank, Sarbanes-Oxley made this a little bit harder. So like coming out of Enron, it's like, okay, we have to have more controls. It's expensive to be a public company. So you don't want to go public until you get to a certain level. And therefore, nobody goes public until probably conventional wisdom right now is like three, $400 million minimum revenue. And then it might be worth it.

• 41:16Speaker 00

  And actually, for the best companies, it's a bit of a adverse selection because the companies going public at 300 to 400 million are actually probably lower.

• 41:27Alex Rampell?

  Yeah, than the ones that are at a billion, right?

• 41:29Speaker 00

  The ones that are just like growing like crazy, they're incentivized to stay private longer.

• 41:35Alex Rampell?

  Is why I have this volatility, like my favorite way of framing what private equity firms do. I won't say venture capital, I'll say private equity firms is they launder volatility. Because every day, what is the price of an asset? It's like whatever anybody will pay for it. But if you're an investor in a private equity firm, it's like, wow, like this crash happened on this day. And like my value in this private equity fund didn't fall at all. It's like, that's not really true. And there's actually a benefit to having these things be liquid and not launder the volatility.

• 42:03Speaker 00

  Yeah, but yeah, it's compelling. And that's actually one of the reasons why companies like to stay private and don't like the idea of a real time price, you know, which is an element if the stock is tokenized. But we're working to solve this problem through tokenization in the EU and also through Robinhood Ventures in the US, which is a closed-end fund that we're going to be taking public. And the idea there is, yeah, using whatever means we have necessary. Can we get through our retail channels exposure to these assets? And I think. I'm personally very involved in this and like driving it forward. I'm going and giving companies term sheets.

• 42:48Alex Rampell?

  That's great.

• 42:50Speaker 00

  Because I think it's so important and I think it's not just important for us as a business. We'll undercut, we work to undercut fees across anything. So it's not just, you know, that it will be a business for us, but I think it'll make technology adoption of these frontier technologies go much more smoothly. We don't want to be, we don't want the people to be against AI.

• 43:12Alex Rampell?

  Yeah.

• 43:13Speaker 00

  Ultimately, regulation follows the will of the people. And so I think that if we can get them on board with the technology, we'll just have better outcomes as an industry.

• 43:22Alex Rampell?

  Yeah, have everybody be an owner. I mean, this is one of, there's a, there's a funny website called WTF Happened in 1971.

• 43:29Speaker 00

  Yeah.

• 43:29Alex Rampell?

  Which is kind of when you decoupled from the gold standard amongst other things. But wages were kind of stagnant, but asset prices went up a lot. So you would say, I mean, people agreed that there was inflation in 2022. That's why we had all the, you know, the Fed kept raising interest rates. But that was like inflation for like milk and eggs, like things you can buy every day. But meanwhile, for like dozens of years, the price of assets have been inflating massively, which is great if you're on the side of that, that, like if you own an asset, that's great. But if you just get paid cash, I did a, I wrote a little blog on this where, do you think home prices in the Bay Area have gotten more expensive or cheaper in the last 25 years? What would be your guess?

• 44:12Speaker 00

  Uh, in the last 25 years, since 2000.

• 44:15Alex Rampell?

  Have they gotten more expensive or less expensive? Or call it 20 years even.

• 44:18Speaker 00

  Yeah, um, that's a good question. I feel like it must be a trick.

• 44:23Alex Rampell?

  It is a trick.

• 44:23Speaker 00

  Nominally more expensive.

• 44:25Alex Rampell?

  They've gotten cheaper if you price it in a basket of tech stocks. Not gold.

• 44:28Speaker 00

  Oh, yeah.

• 44:29Alex Rampell?

  Gold, they've still gotten more expensive, but they've, how many shares of Apple stock does it take, you know, split adjusted? Like if you, so I built like an index of every single Bay Area employer, market cap weighted.

• 44:40Speaker 00

  Yeah.

• 44:40Alex Rampell?

  How many shares does it take to buy a house today versus 2005? It's a lot less today.

• 44:46Speaker 00

  Yeah.

• 44:47Alex Rampell?

  Which is kind of this like, unfortunately.

• 44:49Speaker 00

  Apple's stock is a unique benchmark to use there.

• 44:52Alex Rampell?

  But this is why it's.

• 44:53Speaker 00

  Right before iPhone came out, right?

• 44:54Alex Rampell?

  Sure, but it, but it's, it's, this is important for the same reason that you mentioned, I think, which is if you are paid in assets, right? Or if you own assets, you benefit from all of these amazing new things like the iPhone, right? Like you're now an owner, you participate in the ownership economy.

• 45:10Speaker 00

  Yeah.

• 45:10Alex Rampell?

  If you're not, if you just get paid cash, and some people get paid a lot of cash, but like, they just get left behind versus people that are able to own assets. And it turns out like, all, like, if I just owned stock, you know, pick a different day, 2009, 2002, like, you, these other assets have gotten cheaper.

• 45:29Speaker 00

  Yeah.

• 45:30Alex Rampell?

  And that's the thing that ideally, as a society, we wanna, it's not like a fix, but you want everybody to be invested. Like, I love this thing, you were participating in this, right? Like the new, what's the new, the thousand dollars when you're born as a kid?

• 45:43Speaker 00

  The Invest America Trump accounts.

• 45:45Alex Rampell?

  That's awesome, right? It's like, give everybody a thousand dollars, get them invested. So now, now they're an owner. This compounds so much. There's another chart that I love that shows the delta in like, social security, basically, that earns nothing and is kind of quasi Ponzi scheme versus if you would just put money in the S and P 500, what does that turn into over the next 50 years? It's just like, these things really compound, and you want people invested in capitalism. Otherwise, they're not gonna like capitalism.

• 46:11Speaker 00

  Totally, yeah. Capitalism has kind of become a controversial word.

• 46:14Alex Rampell?

  Yes.

• 46:15Speaker 00

  But, um, yeah, people need to have skin in the game and own this stuff. And that'll just lead to a more stable society.

• 46:26Alex Rampell?

  Agreed.

• 46:27Erik Torenberg?

  Alex, we wanted to ask about company strategy. I know you had a question you wanted to ask about going deep versus going broad. Maybe I'll tee you up for it.

• 46:33Alex Rampell?

  I kind of think of, when you were building this, maybe this goes back to the origin story of sorts, but Robin Hood is, is effectively like a bank account for a lot of people now, right? Which was not the origin story.

• 46:45Speaker 00

  A lot of people think about.

• 46:46Alex Rampell?

  Right? It's like, I have, I have a Robin Hood card, um, which I use, my little green card, right? Which, well, I don't even have the physical card, I just use it on my Apple Wallet, but.

• 46:55Speaker 00

  Who hook you up with the gold one?

• 46:56Alex Rampell?

  I gotta get the gold one, it's on my to-do list, um, but. You can, you started off with this kind of narrow thing and then you've built a deeper financial relationship with customers. That's kind of how I thought about it, which is I can now direct deposit my paycheck into my Robinhood account. I can, I can, I can use it as effectively a bank account, but it's much, much better. It's cheaper. But also there are different types of traders, like you could go very, very broad in terms of the types of products that you offer in the trading landscape. And I guess, how have you navigated depth versus breadth? Like go deep with the customer, all the customers that you currently have right now, or concentrically expand to different types of customers?

• 47:37Speaker 00

  Yeah. Um, yeah, it's, it's a great question. And the answer is, we're trying to do both. We're probably the only company that is looking to go broad, but as we're going broad, we're looking to deepen in each of those things. So, you know, equities trading, we're very deep in. We, we do 24, we were the first to introduce 24 or 5 trading. Uh, we went self-clearing. So we literally built our own clearing stack and we actually innovate on the infrastructure there. Same with options trading, same with crypto, you know, it's not just spot crypto trading, like many of the neo-banks or folks that are just adding crypto as a asset. We're doing

• 48:21Speaker 00

  perpetual futures in the EU. We've got crypto futures in the US. We've got staking, um, tokenization, right? So, so we're looking to, to go deep as well. And I think the reason it works is we can't go deep everywhere simultaneously, but we have to kind of pick the areas where it's most accretive and, and highest leverage for us, which is active traders. Active traders, like the engineering of the business, it's where new product features translate to revenue most quickly. And, you know, if you improve the active trading product by half of a percent, you immediately see that in the bottom line. And then we can use that as a engine to make

• 49:05Speaker 00

  further investments. So yeah, active traders, very much, we're going deep.

• 49:11Speaker 00

  But then, you know, if we look at the end goal of getting all of your assets into the platform, there's a kind of an algorithm that we run, which is how do we make it as easy as possible to deposit and remove all reasons you would have for withdrawing your money?

• 49:27Alex Rampell?

  Yeah.

• 49:27Speaker 00

  And then we can kind of look at why are people withdrawing money? Where is it going? How easy is it to actually bring that in Robinhood?

• 49:37Speaker 00

  And, you know, the great thing about our industry is there's so much to do that even though you see this great product velocity and we're shipping new stuff, you'll sometimes be surprised at the basic things that we don't have. Like up until a couple of years ago, you couldn't actually do an ACAD transfer in Robinhood. We added that in 2022. We had one account type, individual brokerage account up until a couple of years ago when we added IRAs. We still don't have trust accounts and custodial accounts. And so, you know, when I talk to high net worth individuals, and this is by the way, a new thing. It used to be that when I'm on the phone with our best customers, it was someone that had maybe a couple hundred K or maybe a million in their accounts.

• 50:22Speaker 00

  Then it went to talking to customers that have tens of millions. And nowadays I'm routinely talking to customers that are looking to move hundreds of millions and have that in Robinhood. And so, you know, for a high net worth individual, there's just tons of things that we have to do. But the goal is if you have a family office, you should be able to run that family office on Robinhood or we can automate the running of that for you and you can have tens of billions on there and feel like you're actually at a disadvantage using any other brick and mortar or other brokerage based solution.

• 50:57Alex Rampell?

  Do I have a question? Would you give Elon Musk a deposit bonus if he put all of his Tesla stock on Robinhood?

• 51:04Speaker 00

  How much does he have?

• 51:05Alex Rampell?

  I think he has 200 billion.

• 51:06Speaker 00

  He did a reply to my tweet.

• 51:08Alex Rampell?

  Oh, he did?

• 51:08Speaker 00

  He did reply to my tweet with a little fire emoji, which I thought was very nice of him.

• 51:15Speaker 00

  I think I think we'd have to have a couple of conversations with him. We'd have to see, you know, how much he trades. And yeah, see, make sure we can make money from that. But I would try, I would, I would, I would definitely, I would definitely work with him to figure out something that works.

• 51:32Alex Rampell?

  Duly noted.

• 51:33Speaker 00

  Yeah.

• 51:33Alex Rampell?

  Yolanda, if you're listening.

• 51:35Speaker 00

  Yeah.

• 51:35Alex Rampell?

  A few, a few billion dollars you'd make right there.

• 51:37Speaker 00

  Well, actually, there's a little bit of a strange thing. I'm sure as a public company, you have like your RSU provider.

• 51:43Alex Rampell?

  Right, right.

• 51:44Speaker 00

  Your 10B51 manager.

• 51:46Alex Rampell?

  Yeah.

• 51:47Speaker 00

  And one of the things that pains me is we don't offer those services. So if you're under a 10B51 or you have employee stock rewards.

• 51:55Alex Rampell?

  And those products are so, they're so bad. I mean, this is why I was, this is why I asked the question around like kind of breadth versus depth. Of, I'll never forget this conversation that I had with, do you know who Dan Rose is? He was, had a BD at Facebook.

• 52:08Speaker 00

  Yeah.

• 52:08Alex Rampell?

  Kind of during like the mega growth period of Facebook. And I ran this payment company called TrialPay. I'm pitching something to Dan. And what Dan says to me is like, Alex, that's a great idea. But you're pitching me a gold brick that's like all the way on the other side of the room. And I have all these gold bricks like right around me and I, I love what you're talking about. That sounds great, but I gotta pick up the gold brick here and here and here. And like, come back to me in five years for that gold brick.

• 52:34Speaker 00

  I've heard you say this, I think, and I've been using it in conversations with people. Yeah, the, the reality is there's so many things to choose from.

• 52:41Alex Rampell?

  Right.

• 52:42Speaker 00

  And sometimes there's great uncertainty, like who would have guessed? Two years ago, that prediction markets would be our fastest growing business. So, you know, it's, a lot of this is just conversations with me and the GMs and the leadership team where we're, we made discussion. We, we made decisions about whether we prioritize something over something else. And it's like, do we have the right person to take on this thing? How much conviction do we have? And you know, uh, there, there's the, there's the easy stuff that we know we're missing, the product gaps, but you can't just build product gaps. You also have to have things that are available uniquely on Robinhood.

• 53:23Speaker 00

  So if we're just building to product gaps, well, in some, we'll, we'll probably never catch up fully, right? And then we'll always be, we'll always be behind. But I like to make sure across some of the product portfolio, we're just doing things you can't find elsewhere. Cause you can point to those things like 24 hour market, like prediction markets, like tokenization. And you know, that, that's a strong incentive to try Robinhood.

• 53:48Alex Rampell?

  Yeah.

• 53:48Speaker 00

  If you can't get our offering anywhere else.

• 53:50Alex Rampell?

  It just feels like that's like by starting with product. I mean, there is this giant divide, going back to assets, right? There's this giant divide of like the baby boomers have all the money.

• 53:59Speaker 00

  Yeah.

• 54:00Alex Rampell?

  Right? But eventually they won't have all the money. And you have this millennial generation that they're going to use the best product. And I'm not just saying this because I'm a proud owner of Robin. Like it's like you're, it's just like try using Schwab. Like I'm on the board of a company where I get my stock grant in Morgan Stanley, E-Trade. It's like they, they bought E-Trade, but the Morgan Stanley site doesn't interoperate with the E-Trade site. It's just, it's so comically bad. So the younger generation are going to use these things that are good. They're going to pick the better product and you have the better product. But now it's like, you gotta get the assets.

• 54:36Speaker 00

  Yeah. And by the way, uh, I talk a lot about the great wealth transfer, 120 trillion moving into the hands of younger generations from the baby boomers and silent, uh, which I think we can be the, the prime better fish here of, but that's not our only strategy. I'm also, I, I think we can get the baby boomers.

• 54:55Alex Rampell?

  Yeah.

• 54:56Speaker 00

  While they're still alive and we're working very hard towards this. And I think we're actually quite successful because I mean, you, you look at customers in their seventies and eighties who use Robinhood, they're super happy. And to them, it's like magic, like they're used to crappy brick and mortar experiences. Your Gen Z or Gen Alpha customer, they're used to Instagram and Tik Tok and they're like, why is this app clunky? It should just like instantly load and I should, you know, they're, they're to some degree, uh, their expectations are much higher, which makes it so that we have to work hard to serve them. But if we get someone in their seventies who's actually. Gets over the hump to use Robinhood. Like, that's a great customer for us, and we have more tools.

• 55:40Speaker 00

  So one is, we're really leaning into family finance. If he was our banking app, the family is like a first-class tab, which makes it really easy to manage, you know, your partner, your children, all the finances in one place. And then these, these matches that we're running, because we have better economics and we can split more with, with our users, is very compelling to someone with a lot of money in their account. You imagine, you know, we offer you a 3% match, and you're someone that's five years away from retirement, and you have $10 million in your IRA. That's 300K. Like, you could buy a nice new Corvette immediately, that we instantly give you. So that's been a very strong value proposition to, um,

• 56:22Speaker 00

  you know, our customers' parents, their grandparents in some cases.

• 56:26Alex Rampell?

  Or Elon Musk.

• 56:27Speaker 00

  Yeah, I mean, he could get a nice McLaren F1.

• 56:31Alex Rampell?

  Yeah, exactly, exactly.

• 56:32Speaker 00

  If he moves some shares.

• 56:33Alex Rampell?

  Could buy an F1 team.

• 56:35Erik Torenberg?

  Exactly. You know, some, a small subset of people, will, will say this argument, I think it's a lazy argument, I think it's an anti-capitalist argument, but I'm curious for the best comeback to it. They'll basically say things like prediction markets, things like crypto, things like trading, especially among younger set. They'll call it something like a financial nihilism or, or, or something. It's small subset. What is sort of the best comeback to? It's not nihilism, but what is it?

• 57:01Speaker 00

  Could you remind me what financial nihilism is defined as? I remember I looked into this a while ago.

• 57:07Erik Torenberg?

  I think they, it's sort of making this argument that young people, because they don't have options elsewhere, are getting into sort of, you know, either prediction markets or crypto. And is this kind of like, make money, make money? But, I don't know, they're sort of accusing this pool of activities as like, evidence of some nihilism in some form.

• 57:24Speaker 00

  Yeah. I mean, the first thing I would say is, uh, everything is growing. Like, we're seeing record growth in retirement, too. I, I think a lot of people sort of like, look at this as two different users. Like, you have your active traders, or nihilists, or degenerates, and then the folks that are doing respectable things. But in reality, um... The most engaged users actually use more of our products and have more accounts. So the path, uh, the path that someone takes when they use Robinhood, typically they come in because they want to buy one stock or one crypto. And then some of them are more active, others are not.

• 58:07Speaker 00

  But the active ones are the ones that paradoxically adopt retirement, adopt products like strategies. And the way they grow with us is not necessarily more trading, but just expanding into more accounts and putting more assets onto the platform.

• 58:26Speaker 00

  So we, we don't see it. I, I think there's not a huge trend where, you know, the percentage of our assets as an economy that are margined or in high risk investments is growing. The whole pie is growing. Um, and I think that takes with it the speculative activity. Now, now a lot of people will, will say, well, you know, there's a lot of speculation and is this, is this good, is this bad? So my take on that and prediction market is probably a great example where the big debate now is, well, wait a minute, this is just gambling. That, that we get asked all the time. It's been asked about every new financial asset that gets traded.

• 59:06Speaker 00

  There was a big debate when futures, uh, was, was created as an asset, whether people are just speculating here. And it's because speculation is just critical to the functioning of every financial market. You can't have a working market without speculation. Um, and I'm not, uh, not to say that everyone should speculate with all of their money. Right? Um, I think that probably most of it should be either passively managed or retirement or in sort of lower risk, lower volatility investments. But I think you should have a bucket. Um, and, and most people do have a bucket where, you know, they invest and, and they exercise discretion. And I think for that one, we compete over who can offer them the highest diversity of products?

• 59:50Speaker 00

  And can we give you that ideal product for you that allows you to? Sort of like trade your precise point of view. I think prediction markets are a great example of that because if you if you had a view that, you know, Trump was going to win the election before prediction markets, you would have had to maybe buy equities in crypto, right?

• 1:00:14Alex Rampell?

  Yeah.

• 1:00:14Speaker 00

  You'd say, okay, Trump, I believe Trump's going to win the election and Trump is pro crypto. So Bitcoin's going to go up. And that somewhat worked, but it's a little bit indirect. And a lot of people have the same view on companies with earnings. They think, okay, I'm pretty sure Tesla is going to blow out, for example, blow out their deliveries in a given quarter. So I'm going to buy the stock. But then you have weird things like they blow out their deliveries. Maybe a company beats on EPS and revenue and the stock goes down.

• 1:00:44Alex Rampell?

  Right.

• 1:00:45Speaker 00

  And and to me, for a trader, this is an inefficiency because I have a point of view. I want to trade that. And these proxies make it a little bit less efficient. And prediction markets solve that, which is why I think for traders, it has the potential to become a really big market. And for mass market consumers, it could be a better source of news and forecasting. Like I I came out with a statement a couple of months ago about how I think prediction markets are truth machines.

• 1:01:12Alex Rampell?

  Yeah.

• 1:01:13Speaker 00

  Like, we're constantly being bombarded by all this information and noise. Anyone can be an influencer. Anyone can have a podcast. How do you sift through that and figure out what's actually going to happen? Well, prediction markets actually take advantage of all of these sort of like forces to consolidate into a more accurate forecast. That's not a guess. It's it's not a poll. It's, you know, a price formed by people with real skin in.

• 1:01:40Alex Rampell?

  Well, you remember that DARPA pioneered this 25 years ago? You know this?

• 1:01:45Speaker 00

  No.

• 1:01:45Alex Rampell?

  So so DARPA is the Defense Advanced Research Projects Agency. So the Internet came out of, it was originally DARPA, it was DARPA net. Now that became ARPA net became the Internet.

• 1:01:55Speaker 00

  Right. At the Alpine Inn, they have the the plaque.

• 1:01:59Alex Rampell?

  Right. So DARPA was like, how do we get good at knowing who's going to win this foreign election? Well, we could hire lots of CIA agents that like go bribe people and all this kind of stuff. But you know what? Let's have a prediction market. And they designed this in 2002.

• 1:02:14Speaker 00

  Was that the Iowa?

• 1:02:17Alex Rampell?

  They eventually shut it down because there was just too much controversy. Like you don't want to have the government go build something. Because and part of it is, I think this is the interesting thing with prediction markets, although of course it's true for the stock market as well. Like if I have a prediction market for like, will something bad happen to Eric tomorrow?

• 1:02:32Speaker 00

  Yeah.

• 1:02:33Alex Rampell?

  And it pays out $1 if true and $0 if false. Well, I could do something bad to Eric tomorrow.

• 1:02:38Speaker 00

  Right.

• 1:02:38Alex Rampell?

  And now I can change the market. It's like the insider trading version of prediction markets, which is not relevant for the weather. Well, maybe it is like you could do cloud seeding or something. But that was part of what DARPA wanted to know was like they wanted a truth machine. And this is a much more efficient truth machine than like the Central Intelligence Agency, if you think about it.

• 1:02:59Speaker 00

  Right.

• 1:02:59Alex Rampell?

  For exactly, because like markets are efficient.

• 1:03:02Speaker 00

  I remember.

• 1:03:02Alex Rampell?

  Like the truth will get out.

• 1:03:03Speaker 00

  Google had an internal prediction market where people would speculate on which products would actually ship on their ship dates. And it was a much more accurate.

• 1:03:12Alex Rampell?

  Yeah, it's always more accurate.

• 1:03:13Speaker 00

  Yeah.

• 1:03:14Alex Rampell?

  But it's, it's good to see it live in practice now.

• 1:03:17Speaker 00

  Yeah, and, and there are real questions like how granular are these contracts going to get? And, and how do you ensure safety?

• 1:03:25Alex Rampell?

  Yeah.

• 1:03:25Speaker 00

  Which, you know, they're regulated. And, and I think that's the best argument for doing prediction markets inside a regulated framework, because if, if we don't, they could go offshore, much like a lot of the crypto business. And, you know, if it's offshore, it's much difficult to, to contain the negative externalities.

• 1:03:46Alex Rampell?

  Yep.

• 1:03:47Erik Torenberg?

  Yeah. I love the idea of speculation as creation, as accountability. Vlad, thanks so, so much for coming on and talking to us about the story of Brahmanhood.

• 1:03:55Speaker 00

  Thank you, guys.

• 1:03:56Alex Rampell?

  Thank you, Vlad.

• 1:03:56Speaker 00

  It was fun.

• 1:04:00Erik Torenberg?

  Thanks for listening to this episode of the A16Z Podcast. If you liked this episode, be sure to like, comment, subscribe, leave us a rating or review, and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts, and Spotify. Follow us on X at A16Z and subscribe to our Substack at A16Z.substack.com. Thanks again for listening, and I'll see you in the next episode. As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast.

• 1:04:43Erik Torenberg?

  For more details, including a link to our investments, please see a16z.com/disclosures.