20VC: Robinhood's Vlad Tenev on Founder Mode | Building 8x $100M Revenue Lines | Lessons from Raising $5BN and the Gamestop Saga | The Future of Artificial Intelligence, Wealth Management and Home Ownership

Vlad Tenev is a Co-Founder and CEO of Robinhood, the commission free stock trading and investing app with a market cap today of $20.7BN. Over the incredible 11 year journey Vlad has raised over $5BN from some of the world’s best investors including Sequoia, a16z, DST, Ribbit and Index. Before Robinhood, Vlad started two finance companies in New York City. In Today’s Episode with Vlad Tenev We Discuss: 1. Surviving a Scandal: The Gamestop Saga: What was the single hardest element of the sage for Vlad? What did the sage teach Vlad about how to tell stories effectively? What did Vlad not do in the period that he wishes he had of done? What did he do that he wishes he had not done? What advice does Vlad have for any founder going into a crisis? 2. Founder Mode and The Biggest BS Myths of Leadership: How does Vlad analyse and assess Paul Graham’s “Founder Mode”? Where is Founder mode right? Where is it dangerous? What canonical leadership statements and lessons does Vlad most disagree with? How has Vlad changed most significantly as a leader? 3. 8x $100M Revenue Lines: Scaling a Juggernaut: What have been the single biggest challenges of scaling 8 lines of revenue each with over $100M in them? What have been Vlad’s biggest lessons on when and how to release new products? Why did Vlad decide to abandon the Europe launch? Was it right with the benefit of hindsight? What did Vlad not invest in with Robinhood that he wishes he had of done?

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

• 0:00Speaker 00

  So now Robinhood has eight business lines that generate a hundred million a year or more in revenue. And that's up from, I think, three a few years ago. And some of them benefit from higher rates, some of them benefit from lower rates. I do think Robinhood is actually stronger in a declining interest rate environment than in a rising.

• 0:22Harry Stebbings?

  This is 20VC with me, Harry Stebbings. And oh my gosh, I was blown away by that. Eight lines of revenue with over a hundred million in revenue. Incredible. I'm so excited to welcome Vlad Tenev to the show today. Vlad is a co-founder and CEO of Robinhood, the commission-free stock trading and investing app with a market cap today of $20.7 billion. And over the incredible 11-year journey, Vlad has raised over $5 billion from some of the world's best investors, including Sequoia, Andreessen, DST, Ribbit, and Index, to name a few. But before we dive in, what do Henry Ford and AI have in common? Neither could change the world without automation. In the future, there will be two types of businesses, those that have automated and those that wish they had.

• 1:07Harry Stebbings?

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• 3:14Harry Stebbings?

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• 3:46Harry Stebbings?

  You have now arrived at your destination.

• 3:49Harry Stebbings?

  Vlad, dude, we've known each other for a while. I'm so excited to have you in the studio. Thank you for joining me.

• 3:54Speaker 00

  Well, thanks for having me. It's good to meet you in person and be here in person.

• 3:57Harry Stebbings?

  You know, it's so lovely to do it in person. I want to go from like, you know, a very cheery, happy start to actually kind of a reflective one, which is, I think we were just talking about the celebrityization of CEOship, seeing people on television, seeing the strong leader. And everything just looks up and to the right. And I think we are shaped a lot by our past. When you think about your past, what challenging moment do you think defines who you are today most?

• 4:22Speaker 00

  Being an immigrant moving from Eastern Europe to the US, that was probably like one of my earliest memories, right? When my family actually, right after the Berlin Wall fell, had an opportunity to move to the US. Like, very little travel was happening from Bulgaria, which is where I was born, to the Western world. But these people from University of Delaware came and were impressed by my dad, who was a professor of economics in Varna, Bulgaria. He got an opportunity to come to the US. But of course, we didn't have the money to send the whole family. So it was like him coming by himself for a year, just trying to make it work, trying to build a stable foundation. And then my mom came

• 5:07Speaker 00

  a year after him. I was living with my grandparents and like they were taking me to school and I didn't see my dad for about a year and a half, my mom for at least six months. And my aunt, who I think was a teenager at the time, she was like into grunge music. She loved Nirvana and Soundgarden. She took me to America on what was my first plane flight. And I remember when I, when I kind of landed at JFK, JFK is kind of the, it was like the new Ellis Island, right? Where the migrants would first come. I landed in JFK and I saw my parents and I hadn't seen my dad for a year and a half. It was almost like meeting strangers in a way. And I was just like very shy, took me a little bit of time to open

• 5:52Speaker 00

  up. I was hiding behind my aunt's leg, just sort of like peeking with one eye out. Being, being apart from my parents, I think was tough, but also had the benefit of making me independent and, you know, moving around to different schools, going from the school in Bulgaria near my parents' apartment to the school near my grandparents' apartment, to being dropped in kindergarten in the US without speaking any English. And it was a little bit terrifying. Like, you're just in this new place. You can't even speak the language. You're in school. It was a little bit scary at the time, but it taught me to just adapt to different situations. Situations and to be very flexible. And I think that's helped me much later in life.

• 6:35Harry Stebbings?

  You know, I've interviewed eight hundred of the best founders over the last decade. And the single biggest commonality in the most successful founders is a high frequency of moving in childhood. You're forced to assimilate with different environments, different cultures, different people, make new friends, enemies, whatever that is.

• 6:51Speaker 00

  That's right, yeah.

• 6:51Harry Stebbings?

  It's a really interesting trait. Can I ask you, when you think about moving there and America being the land of opportunity that it was, do you think it's still that land of opportunity? I think this with the UK, like, does the best talent want to come to London? And the answer for me is no. Do you think America is the land of opportunity that it was when you went?

• 7:09Speaker 00

  I think so. And for me, entrepreneurship didn't really become a viable option until relatively recently. I grew up on the East Coast. People weren't really starting technology companies on the East Coast. To me, as I've kind of gotten older, I moved to Stanford, California, really because when I was a kid and my family took our first road trip, once we got in a little bit of money and my, my parents felt comfortable taking vacations financially, they took me to California for a road trip. And I remember being in San Francisco one morning, and this was in the summer. So I had to buy a jacket because it was just like too cold to be outside. We took the forty five minute drive to Stanford, California to check out the campus.

• 7:54Speaker 00

  It was like eighty five degrees, perfect. The students were like sunbathing in the main quad. Everyone just looked so happy and like they were having a great time. And I wanted to be a lawyer at the time. I'd seen A Few Good Men, which was a Tom Cruise movie. And I was like, man, that's cool. Like, I want to be that guy. And I had this video, this photo of me in front of the law school. But yeah, I wanted to go to Stanford because, because of that feeling that I got. It wasn't because I wanted to be an entrepreneur or that I wanted to be in Silicon Valley. So to me, it's felt more and more like the land of opportunity, the older I get. And I think now, even with COVID, when there was this narrative of people moving away from Silicon Valley,

• 8:36Speaker 00

  going to, you know, Miami or, or places like that, Austin, Texas. Now it's feeling like. The energy is sucking people back in. You know, there's artificial intelligence companies, Palo Alto, Silicon Valley, right in the epicenter of that. Big tech companies are continuing to innovate. So it still feels like the hotbed of innovation for sure.

• 8:56Harry Stebbings?

  Someone said to me the other day on a show that great leadership is about being a conductor and to be a conductor, you must turn your back on the crowd. When you think about that statement, when have you turned your back on the crowd most significantly?

• 9:08Speaker 00

  Yeah, I think that's an interesting question. You know, I was reading the Rick Rubin book. I don't know if you've you've come across it.

• 9:16Harry Stebbings?

  I have, I've actually just been gifted it.

• 9:18Speaker 00

  Yeah, I was gifted it also. And, you know, it was just sitting on my coffee table for a while, but something compelled me to pick it up. And it's all about artists and how they create. And I think he does a great job of distinguishing an artist from a business person. One, I think his thesis for what makes a great artist is that you don't really care about who's looking at your work. You're building something to make yourself happy. So really, the customer for an artist is yourself. If you're proud of the work and it expresses what you want to communicate at that point in time, it's a great work. And you almost have to like divorce that from whether it's commercially viable or whether anyone likes it.

• 10:00Speaker 00

  And even when you're kind of like showing people your work of art, you have to be really careful not to listen to them too much because good art almost like alienates as many people as it makes really happy. So if you're not like alienating anyone, probably everyone just feels somewhat neutral and it's not going to be memorable. Yeah, business is a little bit different because I think there's an element of art to designing a really good product and you have to be proud of it. And to some extent, you're building it for yourself, but you also keep in your mind what's useful to a customer and what they can benefit from. So in terms of this conducting analogy, I don't think you can turn your back on the

• 10:44Speaker 00

  crowd completely, or at least not through all stages of the life cycle of building a product. I think that. You kind of start with an inspiration and an idea in the best cases has come from within. We've been fortunate to build several kind of really, really good products at Robinhood. And I think the, the initial idea, the spark came from within and it didn't come from customer research or a lot of feedback. But I think customers play a much bigger role in refining the idea. And actually like we ping pong ideas off of customers, use the feedback to adjust the interface.

• 11:20Speaker 00

  And sometimes it changes it quite a bit, but there's a little bit of like art, a little bit of, of business in creating a new product that I think is really interesting.

• 11:30Harry Stebbings?

  Do you think you alienate people enough? And what I mean by that is like, actually, when you think about business, your Nike or your Adidas, your Apple or your Samsung, your McDonald's or your Burger King. I know you guys have Taco Bell and some Chipotle's and other things, so I'm not going to comment because I don't know the comparisons there.

• 11:46Speaker 00

  Right.

• 11:46Harry Stebbings?

  But you are like for or against the brand, do you think you alienate enough?

• 11:51Speaker 00

  Uh, I think we could probably alienate more.

• 11:54Harry Stebbings?

  Yeah.

• 11:54Speaker 00

  I think that it's hard to alienate because people are naturally sensitive to criticism. It hurts more to get sort of like a piece of biting criticism than it feels good to get praise. Creates a natural tendency to avoid alienating people. And you have to almost like exert influence if you want to have your product or your marketing or your message be, be compelling. It's a very tough thing and to some degree it has to start at the top of the organization. But I think for, for myself, I can take more risks. So what I try to do is whenever possible, if, if there's someone whose vision I believe in, e- even if I disagree with it.

• 12:39Speaker 00

  I try to let them try things and be bold and, and have a perspective.

• 12:44Harry Stebbings?

  One of my biggest weaknesses is I really care what other people think and I'm actually quite sensitive. And it, it really hurts when I see shit on any social media about me. You said about sensitivity there. I spoke to so many of our mutual friends and they told me actually that you're an introvert and in the nicest way that you're a maths nerd.

• 13:02Harry Stebbings?

  Said with love, by the way. But are you sensitive? And how do you think about building that muscle to withstand the criticism that comes?

• 13:11Speaker 00

  I wouldn't say I'm an introvert. If there's actually one thing that I struggle with on a personal level, it's like being alone. I get a little bit uncomfortable being alone and, you know.

• 13:25Harry Stebbings?

  Why is that?

• 13:26Speaker 00

  I don't know. I think that maybe it comes from childhood. I'm an only child. When I grew up, I actually spent a lot of time alone. My parents never were able to afford a babysitter until I got older and didn't need one, right? So as a kindergartner, I would walk home from the bus stop to my apartment. I had the key in my backpack, you know, the latchkey child. This is very rare now, I've been told. You can't really do this in 2020. People are more protective over their kids. But I would let myself in, do my homework, call my parents at work, or they would call me to make sure I got home okay. Play with my friends sometimes, but a lot of times I was just sort of like alone.

• 14:07Speaker 00

  And then when I got to college, it was always like living with roommates or with a bunch of people in a house. When I'd go out places, I would have, you know, a lot of friends with me. So, yeah, sometimes I hear about people doing like solo traveling or living by themselves for an extended period of time. And it feels like somewhat foreign and actually kind of scary to me. So my area of discomfort is less being with other people. I get energy from other people. And it's more like.

• 14:39Harry Stebbings?

  I find the hardest time, actually, nighttime, which is when the lights go out and you're kind of in bed with your own thoughts.

• 14:45Speaker 00

  Yeah.

• 14:46Harry Stebbings?

  You know, you have a much busier life than me, but it is busy now. It's the only time when it's like silence.

• 14:52Speaker 00

  Yeah, not usually at my house. I usually have multiple crying kids and.

• 14:56Harry Stebbings?

  It changes a lot. I totally get that. I was chatting to Mickey and he said, listen, the game, he said, you were in the best CEO version of yourself right now. But that was in large part, I think, because of the experience you had over the last few years. He said, one you've got to ask is GameStop was a tough period for him as a leader. What did it teach you about telling stories?

• 15:16Speaker 00

  Yeah, that is a tough one. And I think to your point, you you mentioned the introverted thing. I think before GameStop, to some degree, I was like, never really comfortable in a media setting. I think this is a little bit different because this feels more like a conversation, but like you're on, you know, CNBC or Bloomberg or one of these shows and you have three to five minutes. You have this like artificial situation where you have to deliver soundbites. You can't really explain yourself. That one was during COVID. So all of these interviews that at least I'd normally be in a studio for are happening over my Zoom connection.

• 15:55Speaker 00

  Very little sleep. And it wasn't just the night before the the GameStop fiasco was probably like the month leading up to it. Where volumes were just going vertical, the crypto markets were exploding as well. And we were a major player in that. Robin Hood was the number one app in the App Store. And my feeling at the time was, you know, everyone was sort of like, wow, you should be really happy. You're the number one app in the App Store ahead of Instagram and TikTok, not just financial app, but everything. And inside I I had to like juggle the happiness of that, that moment. But also just like the fear that something could happen. I don't know what and it could go off the rails. It was almost like too much growth. And so all of this was happening at the same time.

• 16:40Speaker 00

  And you're running all these threads in your brain, like, I have this issue. I want to dispute this point. I want to like appear confident, like I'm on top of things. And I had that not really going for me because, you know, I was 32 years old at the time and I hadn't done much media and I looked rather young. I think that whole. Episode sort of like aged me. You know, I look at pictures of myself in 2020. I look much younger. My big takeaway is I think you almost have to like clear out all of those voices in your brain. And when everything goes away, you could actually get much more clarity about how to communicate.

• 17:19Speaker 00

  And I think storytelling is a big part of that. I mean, if you clear out your brain and remove what you think you should be saying, or what messages you want to convey, I think what's left is is the stories. I tend to picture things in my mind. When I think about GameStop, I I think about like being cooped up in my little house and not really being able to eat for days because I was just like pacing around. Small kids at the time, they were just kind of running around and it was just like a very unsettling.

• 17:50Harry Stebbings?

  What would you have said differently when you review kind of what you did say? What did you say or not say that you wish you had done the opposite of?

• 17:57Speaker 00

  I did a clubhouse with Elon Musk on Sunday. Thursday was when the GameStop trading restrictions were first put into place. And then we were a little bit nervous about sharing all of the details. Part of it was we want to make sure we didn't get anything wrong. Because if we got anything wrong, then we would have to correct it and that looks bad. That that tends to, I mean, you've got people into all sorts of conspiracy theories, right? And we were, people thought there was this whole collusion narrative with Citadel that ended up being disproved. And so we wanted to make sure that we communicated everything correctly and we didn't leave anything out or make any mistakes.

• 18:38Speaker 00

  That made us communicate a little bit later than perhaps I would have liked. But it came out in pieces. It was like one detail here, the other details there. And then it was Sunday when I kind of gave the full play by play on a clubhouse being interviewed by Elon Musk. And of course, in all the lawsuits and litigation that followed, all the other details came out over the following several years. But I think in hindsight, not saying anything until giving the entire story of how everything happened. I think would have would have probably worked better. I felt this pressure to get out there and communicate as early as possible.

• 19:18Speaker 00

  But I think in hindsight, taking my time a little bit and just saying like, hey, we're working through solving the problem. I'm going to release a statement or get out there as soon as I can after cleaning up the mess, you know? I think that probably would have been a little bit better.

• 19:33Harry Stebbings?

  Who do you call when the lawsuits are dropping, when the shit is really hitting the fan?

• 19:39Speaker 00

  Lots of lawyers.

• 19:41Harry Stebbings?

  But who's the friend?

• 19:42Speaker 00

  What was really interesting was I started getting phone calls from all sorts of people that maybe I wouldn't have had an opportunity to talk to. You know, people were connecting me with Elon Musk before, but he kind of wanted to give me some advice on how to handle the situation. I talked to Zuck, Marc Benioff. The one benefit was.

• 20:01Harry Stebbings?

  Amazing network expansion.

• 20:02Speaker 00

  These guys were like, hey, you know, I I saw this on on on TV. I really think you could have done a better job on that Sorkin interview. And here's what you should do next. And, you know, it was interesting to have those discussions. It was like brainstorming on brand, marketing, business strategy, business model with with some of these folks in in a very kind of very unique time.

• 20:24Harry Stebbings?

  You you mentioned some incredible founders there. You are yourself an incredible founder. What did you make of PG's Founder Mode essay, which went incredibly viral recently?

• 20:33Speaker 00

  My take on it, I think it's a little bit like a horoscope in the sense that it was so vague and general that everyone kind of thinks that it's relevant to them. It's like, oh, yeah, that's me. I'm I'm in founder mode, not manager mode. And I think that's why it resonated with with people. You can paint your own picture, but it kind of feels like it's it's talking about you. Every founder that I talked to was like, yeah, you know, PG really gets it. This is exactly how I operate. Every manager or executive was a little bit offended, you know? So, yeah, it was packaged well, but I think it captured a feeling. I don't think it was like, if you're looking for a tactical guide to like founder decision making, I don't think I don't think there's much in the way of specifics there.

• 21:17Harry Stebbings?

  How did you think about kind of refinding the culture? And when do you think it broke?

• 21:22Speaker 00

  It kind of broke a little bit at the beginning of COVID.

• 21:27Harry Stebbings?

  What were the signs that it broke?

• 21:28Speaker 00

  Well, there were a couple of things that happened simultaneously that were very difficult. I think one of them was just going remote fully. And then the second thing was we went through a gigantic hiring burst. I want to say we were under a thousand people at the end of 2019. So right before COVID, I think right around a thousand, maybe a little bit under. And then in 2022, January of 2022, when we finally announced, you know, that we were a remote first company after a couple of years of ambiguity, I think we were about 4,000 people. So we sort of like over four Xed in a fully remote setting and we were opening up offices everywhere. How many are you now? Between two to 3,000. So you over hired?

• 22:13Speaker 00

  We over hired, yeah. Part of it was we were kind of responding to the issues that we had in 2020, which were huge amount of growth influx of customers. I mean, our revenues went up like four X in a year from right around 250 million to about a billion. At the time it was fun, but it was also a little bit disconcerting because I was like, well, we haven't really done anything, you know, this thing happened, now we're growing. And I think if you're not careful, there's a tendency to think that you're doing a great job as a leader. I mean, revenue is going up, people are using my product, all these other companies that maybe were hit hard by COVID or doing poorly.

• 22:54Speaker 00

  Does that mean I'm a better chief executive than than the chief executives of those companies? I think at the time I was getting some positive feedback, but there were things that were breaking that we had to deal with as well. I think what was kind of not very fulfilling to me was we didn't really ship that many products in 2020 and 2021. We were just kind of trying to keep the train on the rails because we were dealing with infrastructure issues, historic volumes, lots of load, customer support, we had to grow. What did you not do that you wish you had done? In hindsight, since we're in the UK, we decided to abandon our efforts to expand to the UK that year.

• 23:32Harry Stebbings?

  I remember this.

• 23:34Speaker 00

  Yeah.

• 23:34Harry Stebbings?

  Because you were planning, and it was publicly known that you were planning it. And obviously, me being in the UK, I was excited for it.

• 23:39Speaker 00

  Yeah, yeah. We announced in the UK. We went to friends and family, maybe about a thousand people. And then COVID hit, so it was like March of 2020. I remember having to make a decision. It was like, we need all of the resources we possibly can get on the US side. You know, we have this new business in the UK. I think it was a tough decision. I thought about it a little bit.

• 24:03Harry Stebbings?

  Why did you?

• 24:04Speaker 00

  And I went back and forth. I think at the time, it seemed like, I mean, the US business was so big and it was growing so fast. It was going through an inflection point. And it felt like we had to put everything that we possibly could on making that work and shoring it up. And the UK just seemed like it would be hard and it would be distracting. And I couldn't even travel there, most likely. It was sort of like easy to abandon. And we didn't abandon it fully. I mean, we kept the license and then we went live, what ended up being three years later, when we finally launched earlier this year. Yeah, but sometimes I think about that. And of course, always difficult to.

• 24:44Harry Stebbings?

  Was that a mistake to not do it then?

• 24:46Speaker 00

  I think it's hard to compare the, against the counterfactual, which you don't have. Certainly, it would have been the right decision if, you know, we ended up having some massive infrastructure issue in the US, had we not allocated the resources and we had another big problem. In a world where we could have done both, I think, I think learning to be an international company a couple of years earlier probably would have been a good thing.

• 25:10Harry Stebbings?

  I don't know how to say this without being too direct or blunt. Why is Europe and the UK interesting to you at all? Compared to the US market, it's tiny. You look at competitors, they're like Free Trade, which are on the average of best businesses. Why is it interesting for you?

• 25:26Speaker 00

  I think from the very beginning, we had a vision that Robinhood would be a global company, that wherever you are in the world, you'd be able to download our app from the App Store, have access to the best financial products anywhere. And you could fund with your local currency, or cryptocurrency, or whatever the easiest way is. You could invest your money, you could spend it, send it to people. So we could help anyone with any financial need. And I think as a technology company, we feel like we have an advantage to doing that.

• 25:59Harry Stebbings?

  What have you decided to not do most recently that was a hard decision? It's a constant game of trade-offs.

• 26:06Speaker 00

  Yeah, there's lots of things that are great ideas in our space that we know will work, but we haven't gotten around to them yet. So for example, earlier this year, we launched amazing margin rates. We were frankly not very competitive with our margin product in the US up until recently. And then we changed our rates. We were able to do that because we made a lot of investments in risk management. So now we have the best rates. But if you think about the things that we offer, great margin rates, 24-hour access to the markets, also particularly relevant in the UK, there are things that institutions want too. So if you're a hedge fund, for example, you also want 24-hour access to equity markets, you want access to crypto, not a lot of them can get that easily. You

• 26:51Speaker 00

  want access to low margin rates. And the institutional market's a very big market. We could take a lot of our infrastructure, adapt it to institutional. We don't have to rebuild a ton of the technology. Similarly, you look at a company like Fidelity, a big asset manager in the US, they have a big 401k business. So that's also a B2B business. You're helping startups and larger companies manage their employee retirement plans. That's a good complement to our retirement offering. So that's something that comes up. Servicing registered investment advisors, that's a big market. Individuals that manage money on behalf of other customers.

• 27:31Harry Stebbings?

  You mentioned kind of funding through crypto that one of your ambassadors said the hard question, depends if you want to go hard, Harry, one should ask is, why are you not bigger on crypto?

• 27:41Speaker 00

  Well, on retail in the US, we're kind of like close to the same size as Coinbase. We charge a lot less, so we have less revenue. But in terms of volumes and retail volumes, it's pretty close. So even though we started later, we've generally grown market share quite substantially. We weren't originally offering crypto. That was kind of an area we moved into. So we didn't, we didn't launch at the same time as some of the original crypto companies. But I think we've been picking up market share and building the product, getting more aggressive over time. We have the Bitstamp acquisition, and that's a global company. That's actually one of the OG exchanges. So I think we're going to continue to invest.

• 28:26Speaker 00

  But I'd say we've done quite well in crypto relative to most of our competitors.

• 28:31Harry Stebbings?

  You can tell Mickey that one then.

• 28:34Harry Stebbings?

  You mentioned the acquisition there. I think it's a constant question for technology leaders today, which is, do we build it ourselves? Do we partner? Do we acquire? How do you think about that build, buy, partner, decision-making process when adding new products or enhancing existing?

• 28:49Speaker 00

  We've made some great acquisitions in the past.

• 28:52Harry Stebbings?

  Which has been the best one?

• 28:54Speaker 00

  The one that has led to the most interesting new product. And I guess to some degree, it's still early, so I can't quite declare full victory. But we feel pretty good, has been the credit card. We bought a company called X1. They had a really nice credit card product. Right around the SVB crisis, credit companies had quite a bit of trouble. The banking system in the US was very, very strained. That hit credit startups perhaps the hardest. So we were able to, we were able to acquire X1. And that led to the Robinhood Gold Credit Card, which I think if you look at the reviews and how initial customers are using and enjoying the product,

• 29:38Speaker 00

  the reviews are better than than free trading. The best initial feedback that we've gotten on any product that we've rolled out.

• 29:45Harry Stebbings?

  What is the single reason why you think it's been a success?

• 29:48Speaker 00

  Three reasons. One is the economics. So 3% cash back on all categories across the board. The second is the digital experience. You can create these virtual cards, one-time use cards that people really like. And then the design of the card is really nice. It's a solid gold card. If you refer 10 friends.

• 30:07Harry Stebbings?

  How spicy am I allowed to be Vlad? Because like Revolut have had these features for years. My question is, and I look at this, like Revolut is a 45 billion dollar company now. And I think it'll probably be a hundred billion dollar company and people shit on me. And then we look at the biggest competitor in the US and it's 15 billion dollars with Chime. And I didn't mean that badly to Chime, but that's a pretty high valuation applied to Chime. Where's the mismatch? Why is it the US has not delivered in a way that a European company has with that?

• 30:37Speaker 00

  Yeah, I mean, it's an interesting question. I'd say Revolut has done well in Europe. They learned how to go international very quickly because, you know, it's not just the UK business, but it expanded into Europe and other markets. My sense is US still early for them, right?

• 30:55Harry Stebbings?

  No one's crack US. Monzo couldn't, Revolut are trying.

• 30:59Speaker 00

  The value prop of cross-border spending is a very relevant value prop in Europe. You know, you have a lot of travelers that need pounds here, need euros when they go over to the mainland. They have a good solution to that. Now, whether the sort of like investing side is, is working particularly well, I'm not sure. I don't really have any, any data there.

• 31:21Harry Stebbings?

  I'm just intrigued, like, is the investing product a better entry wedge and anchor product than a current account?

• 31:28Speaker 00

  I think both work. It kind of depends on what time scale you look at things by, right? I was reading the, the Amazon book and eBay initially was a much larger company than Amazon. And they kind of thought it was very silly that Amazon would build their own fulfillment setters and run their own warehouses. And if you're just kind of a software layer connecting buyers and sellers, yeah, the perspective was like, that's a much better business, much higher margin. But like Amazon- Did something that was very hard and very difficult to replicate. And I think it took, in their case, 20 plus years, but eventually that started compounding. You can also look at Nvidia as an example.

• 32:12Speaker 00

  I mean, Nvidia started in the early 90s. It was sort of like the last Silicon Valley company that wasn't really doing software. They were still a hardware company. So it's this strange kind of alien thing. And 30 years later, they kind of started taking off. Sometimes it's difficult to judge these things in the first five to 10 years. Or in the case of Robin Hood, the first one year.

• 32:35Harry Stebbings?

  What one to two things do you need to do to be a hundred billion dollar company?

• 32:39Speaker 00

  A couple of different vectors of getting there. One of them is being number one in the active trading space. So winning the active trader market. I think just that is a large space. You have Charles Schwab and TD Ameritrade. The combination is kind of the market leader right now. They've got very little international presence, but they serve active traders pretty well. We've been growing our market share. Options was up 20%, close to 20% last year. Equity is up 14%. So we are on the path to being number one and we're getting net inflows. That's going to require a bunch of things, but I think that's kind of our core business. So it's a predictable path.

• 33:21Speaker 00

  The second opportunity and the one we're putting more and more focus on, but it's sort of like an arc that'll play out over five plus years, say. That would be being the place where millennials and Gen Z keep the majority of their assets. I think that one is interesting because there's over 70 trillion of assets. That's going to be moving from silent generation and baby boomers down to Gen X millennials and younger. And we've got more millennial customers than our main brokerage competitors put together. Same with Gen Z. If we can actually build a better service for them, make it a no brainer to move their accounts over. We get a portion of that 70 trillion of assets that are going to be in motion.

• 34:07Speaker 00

  Not a very large percentage of that is needed for us to significantly increase our revenues.

• 34:13Harry Stebbings?

  It's a totally weird one. Do you think it's bullshit that people should buy their own homes? And what I mean by that is that, you know, the American dream of, oh, you buy your own home the minute you can. And actually, there's kind of the wealth effect. And actually, you know, young people actually used to have a lot more cash and they spend it on Taylor Swift concert tickets, which for thousands of dollars each and Chanel handbags for thousands of dollars each because the house is just so far out. It's too expensive. Is that a good thing in some ways or not?

• 34:36Speaker 00

  I mean, I think it depends on whether you're viewing it as an investment. If that's sort of like your way of investing, there's probably more efficient. I mean, if you think about real estate, you're paying a lot of taxes. Depending on where you live in the US, the taxes on property can be north of 1% and that's big every year. That's kind of layered on. There's commissions. Every time you buy or sell, it's it's like 5%. And then you add, you know, maintenance fees and insurance and all of those things. And if you kind of look at it as an investment, it starts to kind of affect the returns. You compare that with investing your money in Robinhood.

• 35:18Speaker 00

  You're not paying any commissions on equities. You can diversify globally. I wrote a piece one time about how investing and access to capital markets is like the should be the real American dream. Everyone should be doing it like they were talking about homeownership decades prior.

• 35:35Harry Stebbings?

  I think it was Bill Ackman who said on our show that we should give, I'm forgetting the number, which is kind of the most important part. But I think it was like every newborn baby should be given X amount of money that is put into the S and P and they're able then to bluntly take ownership of that over time. That is the secret to ownership of the American economy for the next generation.

• 35:55Speaker 00

  Yeah, I think that there's a couple of people that are working on that, right? Venture capitalists, Brad from Altimeter, I think it is. Yeah, I think I think it's a noble pursuit, you know?

• 36:07Harry Stebbings?

  Can I ask a bit of a strange one? You mentioned Nvidia. You're a public company CEO. Do you feel that you have to have an AI story?

• 36:14Speaker 00

  Yeah, I think that's an interesting question. I think anytime you see a new trend or something that everyone's talking about, it's always good to ask, is this something that is real and can deliver tangible value? Or is it a fad? Am I just like thinking about it because I hear about it on the news?

• 36:33Harry Stebbings?

  We could have talked about NFTs if this was two years ago and like, how would we store our NFTs in Robinhood? And you could make a big faux pas by being like, we're all in.

• 36:41Speaker 00

  I think NFTs came up and there have been several phases in the past where NFTs have done very, very well. I mean, you look at CryptoKitties back in 2017. It was kind of the first NFT boom. Everyone was buying a kitty and everyone was talking about it. And then, of course, the Apes and all the other things back in the last boom, OpenSea and whatnot. We looked at it at that time because Robinhood had a big crypto business. And we just decided that it didn't make sense, right?

• 37:12Harry Stebbings?

  And for AI?

• 37:13Speaker 00

  And crypto is probably the more general example. Obviously, we entered crypto. But for us as a financial company, I think we do view it as an asset that our customers want to trade and a fundamental technology that could change the financial system more on an infrastructure level. AI, I think, is going to be a powerful platform shift. And we've lived through a couple of them. I think Robinhood in its current incarnation went through a few platform shifts and really that helped distance ourselves from the companies that owned the space before we came. One of them is Cloud, one of the first cloud-based brokers. When we got started, it was very unusual.

• 37:57Speaker 00

  I mean, we were talking to our counterparties for execution, for clearing. We said, hey, we don't have servers in our colo. We're going to use Amazon. And they were like, we don't think that's secure. And it's funny how things have gone in 10 years. Now, the idea of like not trusting Amazon Web Services for hosting your server seems laughable. But back then, it was a real thing.

• 38:18Harry Stebbings?

  But I mean, this question actually is coming back in regards to AI, which is like a lot of large enterprises like I'm not giving OpenAI my data.

• 38:24Speaker 00

  Yeah.

• 38:25Harry Stebbings?

  And so that is actually becoming an increasingly prevalent question again.

• 38:28Speaker 00

  I think there's details like that that have to be worked out, but the point that I was laboriously getting to was I I think AI is going to be a huge technology shift. That's going to change our space, going to change the financial services.

• 38:41Harry Stebbings?

  But do you need to have anything today saying, oh, we are doing X with AI to make ourselves sexy?

• 38:48Speaker 00

  We're looking at several ways in which AI products could help our customers. And I do think that AI is going to change financial services. And I think the products that work, this might be a little bit of a hot take when a lot of a lot of people ask like, well, which AI products? You probably think of this as an investor, like, what am I going to invest in? What's going to get traction? I think to me, if there is right now, an existing market of people paying a human to do a service for them that AI could replicate at much lower cost, I think that's a real business. And you can think of that outside of financial services with like self-driving, right? There's Uber, there's Lyft, I pay someone to drive me to somewhere.

• 39:33Speaker 00

  That's a valuable service that you can attribute value to. If a car can do that without the driver, and I I would be willing to pay possibly just as much. It'll cost less over time, but there's a value to that. So I I think that'll be successful. In financial services, customers pay for financial advice and they pay a lot of money, very valuable. On the low end, it's sort of like 2% of your assets under management. On the high end, it's like half a percent, and that scales to hundreds of millions of dollars in some cases. If you can replicate the service.

• 40:07Harry Stebbings?

  Do you think you can replicate the service? When you think about nuance, ambiguity, risk profiles, preferences, how they change at different times.

• 40:15Speaker 00

  There's a couple of different things there. One is the asset allocation algorithm side of it, taking your risk profile and recommending a portfolio. That doesn't actually require AI and a lot of advisors are, you know, using software to do that. The real value is kind of in this concierge service. I mean, if you have a wealth manager or a family office, they can kind of like abstract your entire financial life for you. They take care of your budgeting, they take care of your trust in estate, they take care of your insurance, they help you with any legal things managed well simultaneously. And these are expensive financial professionals. If you can deliver that type of service to the mass market, to people that don't have,

• 40:58Speaker 00

  you know, millions of dollars, I think that would be very valuable. And I think AI, you'll see it impacting the space in two ways. One is a tool to existing advisors. I mean, some people aren't going to be comfortable trusting a machine with all of those things, but it can help an advisor serve more clients simultaneously. And then some, some customers will be comfortable with a full technology solution as long as it does more than just the asset allocation. And so I think you will see that in the next couple of years really start taking off and good products have recently become possible with like the latest models that can reason and make better decisions. The models are likely going to get better and better. I think you'll start seeing them replace more traditional knowledge workers.

• 41:43Harry Stebbings?

  One final one just on market, which is like, when you think about like interest rate changes, volatility, it's a really hard business for you in the way that actually your business can change so much dependent on something completely outside of your control, which is like interest rate changes will drive a mass amount of buying or pullback. Do you just get comfortable with that?

• 42:00Speaker 00

  The best way to actually compensate for that is diversifying the business. So now Robinhood has eight business lines that generate a hundred million a year or more in revenue and that's up from, I think, three a few years ago. So we've got eight unique business lines that are nine figures a year and some of them benefit from higher rates, some of them benefit from lower. For example, when rates are low, money tends to move from interest on cash and kind of yield products, low risk products into equities, crypto and options. When rates are low, margin is more compelling. So you tend to see increases in your margin book and we're getting more, we've gotten more competitive there. So we've been growing our market share.

• 42:45Speaker 00

  I think over time, I do think Robin Hood is actually stronger as in a declining interest rate environment than in a rising. But, but over time, as we continue to diversify the business.

• 42:57Harry Stebbings?

  You get a smoothing out of revenues.

• 42:59Speaker 00

  We'll get a smoothing out of revenues, just like, you know, diversification helps smooth out investment returns, right?

• 43:06Harry Stebbings?

  There's a reason why we have thirty at seed, my friend. Listen, I'm going to do a quick fire with you. So I say a short statement, you give me your immediate thoughts. Does that sound okay?

• 43:14Speaker 00

  Sure.

• 43:15Harry Stebbings?

  What book written before nineteen sixty five would you most recommend?

• 43:19Speaker 00

  I actually recently, if I had to think about what I've been reading, The Story of Civilization has been very interesting. Have you read that one?

• 43:27Harry Stebbings?

  No.

• 43:27Speaker 00

  By Will Durant and Ariel Durant is very good, probably in the early sixties or, or late fifties.

• 43:34Harry Stebbings?

  I don't tend to read things longer than a tweet, but um, give it a go.

• 43:38Speaker 00

  You can have AI summarize it for you.

• 43:40Harry Stebbings?

  There we go. How has becoming a father changed you as a CEO?

• 43:44Speaker 00

  It's made me more patient. Having small children tests one's patience. You're used to kind of like getting what you want largely. And if you don't, there's really a rational explanation, but with, with kids, you don't get that as much. They really want what they want and they have tantrums if, if they don't get it.

• 44:02Harry Stebbings?

  You can't get angry at them also and they throw yogurt at you. I mean, it's not like you can like shout at them.

• 44:07Speaker 00

  I mean, you can try, yeah, but uh, they've got me beat in the throwing yogurt side of things.

• 44:12Harry Stebbings?

  What's been the biggest near death experience for the company that you remember? When I say near death experience, you go, oh, that time.

• 44:18Speaker 00

  I mean, GameStop is up there for sure.

• 44:20Harry Stebbings?

  What moment was it? Was there, there was a call in the middle of the night, no, when your phone was in another room because of your sleep hygiene?

• 44:26Speaker 00

  Yeah, exactly. And that, that was a very short-lived, short-lived experiment to try to sleep better and not be as addicted to technology.

• 44:34Harry Stebbings?

  And so your wife wakes you up and says like, hey, there's a phone call for you.

• 44:37Speaker 00

  Yeah, yeah, yeah. And it's like, we got this, uh, we got this bill in the automated clearinghouse system for three billion dollars. Yeah, that, that was terrifying.

• 44:46Harry Stebbings?

  Do you go back to bed?

• 44:49Speaker 00

  No, I didn't sleep for probably 72 hours after that.

• 44:54Harry Stebbings?

  All right.

• 44:54Speaker 00

  I got my workout in Friday, the Friday afterward.

• 44:58Harry Stebbings?

  Do you still work out when all of that shit hitting the fan?

• 45:02Speaker 00

  I mean, I missed my Thursday workout, but Friday I got back into it. I think after the immediate crisis was like resolved, that Friday afternoon after the market closed was like, you know, the temperature went down from like 110 to probably like 102. And it had been increasing steadily. So that was, that was a nice little break.

• 45:23Harry Stebbings?

  If you were like, no, I went back to bed.

• 45:24Speaker 00

  Yeah.

• 45:24Harry Stebbings?

  I resumed my sleep pattern and I dealt with it in the morning.

• 45:28Speaker 00

  It's very easy and remote work to just end the Zoom call, right? And then the entire problem goes away. It's all in the computer.

• 45:36Harry Stebbings?

  Why do you not think people should care about who you vote for?

• 45:40Speaker 00

  I think that for a similar reason why you shouldn't really care too much what stock someone on the internet is buying. It's useful as a signal, but I think people tend to like copy what others do too much. And I generally think people should think for themselves. I mean, the whole point of Robinhood as a product is that we're building a tool for you to make your own decision as an individual. And fundamentally, people are smart and needs and technology can help them if they're willing to make their own decisions and take control over their own money.

• 46:12Harry Stebbings?

  Penultimate one, what have you changed your mind on most in the last 12 months?

• 46:17Speaker 00

  We were talking a little bit earlier, how the entire culture of the company reverted. I don't think I got a chance to finish what happened after we sort of like got into a bad state during COVID. But we announced that we were a remote first company. I immediately regretted it and then we had to pull that back and ask people to come to the office.

• 46:37Harry Stebbings?

  Why did you regret it? You just saw straight away productivity down.

• 46:40Speaker 00

  I mean, I didn't even see productivity down, but you know, we were kind of struggling with this decision for a while, for many years. And have you ever sort of like decided to flip a coin on something because you were tired and, and you didn't?

• 46:56Harry Stebbings?

  Didn't know what to do.

• 46:57Speaker 00

  You didn't know what to do and you're like, you know, I'll flip a coin. And then when the coin is in the air, you're kind of like, man, I hope it lands on heads.

• 47:03Harry Stebbings?

  That's how I ended up getting married. No, I'm joking.

• 47:07Speaker 00

  It was a little bit like that. It was like, as soon as we made the decision, I had the feeling that that it was a mistake.

• 47:13Harry Stebbings?

  It's a good way to test your true conviction of like, well, let's see what happens.

• 47:17Speaker 00

  Yeah, I think people have different feelings about this. It's a very hotly debated topic, but I do believe that there's a value in, much like reading a book that's still relevant after 50 years, remote work is a pretty new thing. Humans have been like building relationships and working together in person for thousands of years. And I don't think that that's going to go away instantaneously through technology. I think that that's a, it's a pretty high bar to kind of declare that the dominant new working style.

• 47:46Harry Stebbings?

  I completely agree. In the UK, we're all back to all in person. But final one for you. You've done many different interviews. People see you on TV a lot. What do you think someone listening doesn't know about you that you kind of just wish they would?

• 47:59Speaker 00

  I think the one lesson, you can call it storytelling or what have you. I think that it's helped me be happier, be like a happier human and probably a better leader to sort of like think less about what other people think about me because I think it can be pretty distracting. And I think it's natural to be aware of what others think about you. But if you're not kind of rubbing at least some people the wrong way by your existence, you're probably not doing anything interesting. You're probably not being sufficiently interesting. And I don't think the goal is actually to like be interesting to other people too. But I think it's that to have a point of view and to change things. I've

• 48:43Speaker 00

  gotten much happier if once I've sort of like stopped caring about what others think of me to such a degree. Yeah.

• 48:51Harry Stebbings?

  I've so enjoyed doing this in person. Thank you so much for sitting down with me. It's so lovely to make it happen finally in person. So I really appreciate it.

• 48:58Speaker 00

  Yeah, thank you for having me.

• 49:01Harry Stebbings?

  I just want to say on a personal note, Vlad has been a great friend, a great advisor to me personally, and always just been incredibly supportive when there's been nothing in it for him. I always think you see the measure of a person when they have nothing to gain and how they respond and act in those times. And Vlad is truly one of the greats, so a very special man, and I'm so grateful to him for giving up the time to be on the show today. If you want to see more, you can of course find it on YouTube by searching for 20VC, that's 20VC. But before we leave you today, what do Henry Ford and AI have in common? Neither could change the world without automation. In the future, there will be two types of businesses, those that have automated and those that wish they had.

• 49:41Harry Stebbings?

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• 50:23Harry Stebbings?

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• 51:06Harry Stebbings?

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• 51:48Harry Stebbings?

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• 52:21Harry Stebbings?

  As always, I so appreciate all your support and stay tuned for an incredible episode coming on Monday with the one and only Sam Altman at OpenAI.