#1457 Vlad Tenev | Robinhood Goes ALL-IN on Bitcoin & Crypto

Vladimir Tenev is the co-founder & CEO of Robinhood. In this conversation we discuss, embracing crypto trading, how big Robinhood is, what he thinks is going to change in financial markets, 24/7 trading, tokenization, prediction markets, and Vlad gives us his vision for the future. ======================= Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. Protect your loved ones with sound money built to manage life’s uncertainty and a broken financial system. Their BTC-denominated Whole Life Insurance policies allow HODLers to pass more BTC on to their loved ones and a tax-advantaged way to access BTC for liquidity during their lifetime. Visit their website at https://meanwhile.bm/ to join the waitlist for a policy and to learn more. ======================= The Pomp Podcast is powered by BetOnline.ag, the premier crypto-friendly place to gamble on politics and sports, casino, poker and horse racing. BetOnline.ag gives you the ability to use Bitcoin and more than a dozen altcoins to make deposits and withdraw your winnings. There are no crypto transaction fees, and processing is instantaneous and secure. Visit https://promotions.betonline.ag/pomp and use PROMO CODE: POMP100 to receive a 100% matching bonus on any crypto deposit. BetOnline.ag is available in nearly every country around the world, making it the top global gaming destination for crypto users. ======================= Xapo Bank, the world’s first fully licensed Bitcoin-enabled bank, offers military-grade security with an unmatched blend of physical and digital security, as well as pioneering regulatory oversight, so your funds are always protected. Beyond secure storage, they enable you to grow and use your Bitcoin. Earn daily interest in Bitcoin, spend with zero FX fees using a global card, and make instant payments via the Lightning Network for unrivalled access and convenience. Visit https://www.xapobank.com/pomp to join. ======================= Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/ ======================= View 10k+ open startup jobs: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

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

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. What's going on guys? Today I've got a very special treat for you. I've got Vlad Tenev. He is the co-founder and CEO of Robinhood. Vlad and the Robinhood team have built an amazing product that has on-boarded tens of millions of different users to financial markets. But now they also have pushed very deep into crypto. And we talk about what's

• 0:46Anthony Pompliano?

  going on on the platform, how big it is, and then what he thinks is going to change in financial markets. We talk about 24/7 trading. We talk about tokenization. We talk about crypto and the various assets there. Then we get into things like prediction markets and event contracts, and Vlad gives us his vision for the future. This is a fascinating conversation that gives you a peek into the future of where financial markets are going, what it means for individual investors, and how you may actually change the way that you invest based on the way that the platforms evolve. Here is my latest conversation with Vlad Tenov.

• 1:16Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:40Anthony Pompliano?

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• 2:24Anthony Pompliano?

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• 3:21Anthony Pompliano?

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• 4:25Anthony Pompliano?

  All right, Vlad, I thought a great place to start the conversation is every time I talk to a public hedge fund manager, they all tell me the same thing, which is that the younger generation doesn't like public markets, they don't like public stocks, they keep going into venture capital, they want to start companies, they want to invest in these startups. And so the public markets have become less popular. We went from 8,000 publicly traded companies down to 4,000, and it seems like an entire generation is kind of leaving behind public markets. Two things are interesting. One is crypto is very liquid and is obviously trading in, you know, kind of a different type of public market. And so maybe that sentiment is inaccurate, but also Robin Hood seems to be doing pretty well. And you started out with a younger kind of investor base, and as that investor base grows and the assets

• 5:07Anthony Pompliano?

  that you offer grows, it seems like maybe that younger generation really does care about both crypto and stock market. What do you think?

• 5:14Speaker 02

  I think that public markets are still interesting to people. I mean, there's lots of great companies that are retail favorites that you can only get via public markets. For example, Tesla, if you wanted to catch the EV wave over the past couple of years, then Tesla has seen massive appreciation and a lot of retail interest, and that's only available via the public markets. Nvidia is a similar story. Meta, you basically look at the top 10 traded stocks and held stocks in Robin Hood, you see a lot of companies that build products that people use, and there's communities around around these companies

• 5:56Speaker 02

  too, that have been forming. So I don't think that people are interested in it, or I don't think people are not interested in investing in public markets. I don't think that's the right, the right frame. I do think there is an unmet need, which is, there are people that want to invest in something while it's still very small, and take advantage of it as it's growing and getting much bigger. So it used to be that a company could IPO at 100 million valuation, you know, Microsoft in the 80s, Apple, these were relatively low by by current standards, their valuations. And if you held those stocks for a very long

• 6:36Speaker 02

  time, you would just generate tons of returns. Those companies went public relatively early in their life cycle. I think to some degree Tesla is the same, like they went public very early. But by and large,

• 6:51Speaker 02

  Your typical company waits until billions in revenue to go public. Typical successful company, I'd say, looking at our peers. And so that appreciation is really locked in in private markets. And that's been institutional offering. There's a lot of problems with making that accessible to retail. And so I do think that retail has this unmet need of investing in something while it's small and sticking with it until it becomes bigger. And I think that that explains the popularity of some of these crypto assets, especially the the meme coins and some of these early stage projects. You can get access to it very early and it can start being small.

• 7:36Speaker 02

  And they try to accentuate that by putting a lot of zeros in the price sometimes. So you can like feel viscerally how small it is and ask yourself, you know, what if it gets to a dollar? But yeah, I think underlying it is a is a is a big, serious thing of how do we? How do we make this a little bit easier for everyone to take advantage of of the appreciation in private markets? And I think more flexible standards for getting a company listed is is one. One potential option crypto, I think, can play a big role there. Like tokenization of assets, public stocks and private companies, I think, is a way to do that.

• 8:19Speaker 02

  And I think the other thing is relaxing the accreditation standards for accredited investors. I think that makes much less sense in the new world than it maybe did 10 or 20 years ago.

• 8:31Anthony Pompliano?

  Another thing that public market investors probably talk about when they critique the either younger investors, kind of the the high flying stock investors or the crypto investors is, oh, these guys don't know anything about valuation. They're just simply buying a narrative. It's kind of, you know, the meme is dominating it and they'll learn. They haven't been through market cycles before. I personally think that the older generation or more experienced generation is just as susceptible. Two narratives, you know, I always joke that like Berkshire Hathaway is the like boomer meme. And it seems to be going pretty well for them. So how do you see kind of storytelling and narratives and like the investing capital flows follow?

• 9:14Anthony Pompliano?

  Given that with the internet, you know, information travels so much faster. We have things like Twitter, we have the ability for people to kind of show their opinions in financial markets in a way that maybe they couldn't before something like Robinhood.

• 9:27Speaker 02

  Yeah, I think that investor relations as a discipline is changing fundamentally. And you have companies that I think are doing a good job of it. And they look very different than the legacy companies. It used to be that investor relations as a public company was going to these conferences and sitting in closed door meetings with big banks and analysts and they're asking questions about your company. And you have to be careful because you can't actually share anything that's that's non-public, but they get the vibe and they recommend to their portfolio managers to buy the stock. But now there's this new phenomenon of retail analysts and retail investors

• 10:12Speaker 02

  that are becoming a much bigger part of the overall picture and constituency. So you'll see in some cases, retail analysts, I talked to a lot of them. I mean, some of them cover Robinhood stock and there's like a relatively low number of stocks that seem to be sort of like engaging with the retail community and actually embracing that as a constituency. And they, and you see that working because these analysts are then creating YouTube videos with really sophisticated analysis where they're like comparing stocks and going very, very deep. And, you know, talking to the CEOs for those that are interested in that. And

• 10:55Speaker 02

  You know, we've made a big deal of embracing the retail analyst community and trying to evolve the way that we engage with investors as a public company to be

• 11:06Speaker 02

  more retail focused than any other brokerage would have been in the past. And I would say that correlation causation are tough to, it's tough to tease it out, but we've done very, very well over the past year. And I think that's coincided with us engaging the broader community of analysts and investors much more.

• 11:26Anthony Pompliano?

  One of the things everyone's talking about is artificial intelligence. And if you kind of look at, hey, that is the tool, but what is the outcome of it? It's really automating away jobs or inefficiencies, et cetera. People don't talk about Robinhood as like an AI company that, you know, is doing some crazy automation. But in a weird way, you really did remove the middleman. You use software to say to people, hey, you can now get your information directly off the internet. You can be a self-directed investor. You can come directly to our platform and you can invest into the assets that you want to invest. You no longer need to call up a stockbroker or, you know, kind of go through those traditional channels. And I found this quote that you said, speaking about back in Bulgaria, you said, I remember always thinking about finances,

• 12:10Anthony Pompliano?

  being aware of them and recognizing that if you were in control of your finances, that's a superpower. And so this whole idea of like being able to control the flow of where your money goes without having to call someone and have them talk you out of it, seems to be this like automating away of a middleman. That's obviously created a lot of value for Robinhood. How do you see that evolving over time? Is it just you build a deeper and deeper relationship with these users and continue to kind of empower them to act, you know, unilaterally or by themselves?

• 12:36Speaker 02

  I think we throw around this term self-directed a lot when it comes to investing to, to sort of like differentiate it from. Advisory and you know, the, the big, also big phenomenon of you wanting someone else to manage your money or do your finances for you. And I think Robin Hood started as very much a self-directed platform. And I think what's happening is it's bigger than just finance. People are self-directing all aspects of their lives, their health, you know, you're following, you know, health and wellness people on social media and you know, you're going to your doctor for, for those of us that go to the doctor regularly with all this information and what someone in, in Twitter is talking about, about

• 13:19Speaker 02

  nutrition, they're self-directing, you know, their news. Most of the time you're getting your news more quickly. And, you know, increasing number of people are relying on their peer networks for it rather than traditional news media. And of course, we're involved in the financial aspect of this where, you know, we want to make the best tool for people to manage their finances. And in the past, maybe you would have had an advisor or some professional doing things for you because the transactions themselves are out of your reach because, you know, you couldn't have access to the

• 13:59Speaker 02

  markets directly. You had to call someone to do it. Or you couldn't, you know, send payments or move money around. But I think technology has lowered the barrier to that tremendously to the point where, you know, you don't need a lot of that help anymore. You can be self-directed. You can make your investments yourself. And I think what technology will help you do is move further up the value chain so that, you know, with generative AI, you can even get those recommendations, that advice, it can help you plan a strategy. And so, like, there will be even more power available to you and it'll go higher up in the value chain than just helping you do a transaction. And I think

• 14:44Speaker 02

  Robin Hood's been, we've been investing a lot. I mean, we've been very early. In using machine learning, now what they call AI is generative AI and you can see that implemented with our customer support flows, for instance, deflecting a lot of tickets.

• 15:02Speaker 02

  But I do think there's also potential for products and I think next year you'll see the first generative AI infused financial products that people actually want to use that aren't just chat GPT like being embedded in the product. But I think there's, there's definitely promise for the technology and helping people make financial decisions.

• 15:22Anthony Pompliano?

  I would ask you what those products are, but I'm assuming you're going to wait to, to announce them. One product that you, you've announced and have scaled very significantly is the crypto trading on Robinhood. Again, you guys started out with public equities and you know, many of the maybe popular crypto applications or platforms, they started out with crypto and now they're considering going towards public markets. You guys kind of did the reverse. But it looks like you guys have $30 billion in crypto assets under custody as of November of this year. You've done about 120 billion, $119 billion in notional trading volume in the last 12 months. And to put those numbers in context for people, you're doing a little bit more than 50% of Coinbase's trading volume

• 16:06Anthony Pompliano?

  in crypto, but you have like one 10th the number of coins listed. And so talk about this idea of public stocks and crypto kind of coming together and merging into one area. Where obviously if a big public equities business, you've got a really big crypto business too. And it seems like you guys are benefiting from this merging and really owning that relationship with these users that want to invest across both markets.

• 16:31Speaker 02

  I think the worlds of public equities and crypto will increasingly merge and become one. And I think when a lot of people hear crypto, they're thinking about meme coins or maybe Bitcoin and it seems like. This is not a very serious thing, but if you're thinking about what's happening, the time from getting an idea to listing an asset on a blockchain has effectively gone to zero, right? Like, it's very easy to list an asset and get access to global liquidity in an increasingly large and global market. And juxtapose that with what we were talking about earlier, how difficult it is to take a company public.

• 17:13Speaker 02

  You have to go through a ton of, a ton of process. Not a lot of people even want to do it anymore. And so there's this unmet need, and I think these two things will converge eventually. And what will happen is, uh, traditional equities, and I think all of this will be accelerated by, by the new administration. Traditional equities will move on to blockchain rails, along with all sorts of other real world assets. You'll see, uh, private companies going on blockchain rails as well. Once you have public companies, then you'll have to think through,

• 17:52Speaker 02

  what does it mean to actually go public and list on a blockchain as opposed to, uh, on a traditional stock exchange? So I think, I think we'll have to figure that out. And then that opens up private markets as well. And what you gain is interoperability. So I don't know if you've tried to move stocks from a legacy discount broker to Robinhood. A lot of people do it, and it's, it's very, very painful. And by the way, the, the, the big brokerage houses don't want to make it easy. Of course. They want to keep those assets there, so they'll put all sorts of, uh, non-technical barriers in the way too. But contrast that with how easy it is to move, uh, you know,

• 18:34Speaker 02

  dollar stable coins or Bitcoin from, you know, your MetaMask wallet to your Phantom or your Robinhood wallet. Uh, everything just kind of works because the infrastructure underlying the assets and the transactions is all public. So you have no need for transfer agents, for central clearing houses, or payment processors. All of that's replaced by software. And so I think- My view of crypto is it's sort of the next step in how financial infrastructure evolves. It started with pen and paper and filing cabinet. It went to mainframe. It went to on premise and cloud.

• 19:13Speaker 02

  And then crypto is just the the next layer there where you'll see traditional financial services on crypto rails. They'll be easier to use, better, more interoperable. And I think the US will have to adopt it. The efficiency gains are just going to be too high to to ignore.

• 19:30Anthony Pompliano?

  You mentioned kind of this, you know, tokenization of stocks essentially. And there's a couple of things I want to dig in here. So first is the friction seems to be both. There's a regulation friction, but there's also a technology friction. And so is it something where if Robin Hood tomorrow says, you know what? We're going to create these tokenized stocks. Maybe we'll hold the share certificates, you know, in some sort of vault. And we're going to offer up this tokenization and and we're going to be the first ones. And we're going to go try to get our, you know, kind of friendly competitors to start to accept this technology. And like, it can be an industry led, you know, adoption of this. Or is it a regulatory thing? We got to go get the regulators to all agree to this. And then the technology companies are ready to do it. Like, how do you see us going from where we are today to actually being able to offer this to users?

• 20:15Speaker 02

  I think I think the impediments are mostly regulatory. By and large, regulatory. Yeah, the technology exists and you already see it with dollar stable coins. Right? I mean, dollar stable coins are a primitive form of tokenization. I think the next frontier there is going to be getting the yield passed back to users into their wallets directly. And doing that in a very clean way. Across multiple jurisdictions. But it's a very similar process. You know, the underlying asset, which is traditional dollars in this case, are custodied somewhere in a big bank or in the form of treasuries. It's tokenized. There's software that makes sure that it's one to one.

• 20:59Speaker 02

  And then the tokens trade cleanly on exchanges. I think that same concept can be applied to any asset and will be. So technology is there. It's just a question of. The regulations and I think actually in Europe MICA regulations a little bit further ahead. And so when that goes live, this will become possible.

• 21:22Anthony Pompliano?

  That's interesting because a lot of crypto people I talk to will say the MICA regulations are hurting the crypto side and they don't like them and they think they're kind of overbearing. But maybe there's some nuance here of it may hurt crypto, but help the public markets become more tokenized. Is that true?

• 21:39Speaker 02

  I mean, I think that it's it's all relative. I think that some regulation by its nature sort of like limits what you can do. Right. But by doing that, it creates trust with with customers. They know that there's some guardrails. And I think there are a lot of people in crypto that just feel like they should do whatever they want. And then that's software and technology. And I think that's not very realistic. But you compare that with what what's happening in the U.S. And in the U.S., there's a lack of clarity. Companies have been just getting sued left and right. And there's almost been a disincentive to come in and talk to the regulator.

• 22:22Speaker 02

  Because if you come in and talk to the regulator, that increases the odds of getting a Wells notice. So this this whole come in and register thing was a fiction. It was like almost a honeypot to get you to come in and and prepare, prepare a Wells notice for you. So certainly it's better than that. And I think that we can, we can find a good middle ground where people can get the protections. Companies can innovate pretty freely. Maybe it's not the Wild West, but at least it's like a healthy balance between these two opposing forces.

• 22:59Anthony Pompliano?

  You mentioned the new administration may be able to help with some of this. Obviously, you have President-elect Trump who's coming in and, you know, he's really positioning himself as kind of the first pro Bitcoin, pro crypto president. It seems like a lot of the cabinet appointees own Bitcoin or crypto assets. His family is even, you know, launching. Crypto coins and kind of participating in different ways. And then you have Paul Atkins, who's coming in as the SEC Chair, who also seems to be much more friendly to crypto. Is it something just as simple as, hey, top down message, let's be less abrasive, let's embrace this, and that should help us on the regulatory front? Or there's still, in your opinion, open questions around how do we deal with decentralized assets or, you know, issuance?

• 23:46Anthony Pompliano?

  Disclosures and things like that?

• 23:48Speaker 02

  I think there's a lot of things that still need to be worked out. One area is stablecoin treasury management and just the framework around which you can actually deliver yield to holders. Do they have to be KYC'd? Can you receive the yield in non custodial wallets? All of that is very murky in the US now. There's also the security status of coins themselves. Is a particular coin a security or a commodity? And you're probably familiar with this. If it's a security, it would be regulated by the SEC. If it's a commodity, it's CFDC. But which one is which? And, you know, for the securities, we'd like to be able to offer those too.

• 24:33Speaker 02

  So then we would need a framework for those that are securities. Because I don't think, I think right now, the approach that the at least regulated cryptocurrency players in the US have been taking is everything they list is a commodity. They don't want to, they can't conform to the securities laws. They don't want to. And so they've been listing commodities. But I also don't think everything is a commodity. I think there are things that are securities and people would benefit from being able to trade them, which requires a framework for actually listing crypto asset securities in a way that doesn't actually get rid of all the advantages of using crypto rails.

• 25:13Speaker 02

  So you want to, you want to figure out how to list them on public blockchains where they're interoperable with the broader crypto ecosystem. And then tokenization, I think, raises its own challenges that if we solve the first set of problems I outlined, I think you'll get to a world where tokenization is also permissible.

• 25:36Anthony Pompliano?

  One of the other things that potentially is a promise of tokenizing these stocks is 24/7 trading and it's a little weird because it feels like the public market is moving towards that 24/7. You know, we used to have kind of traditional hours of operations. Now there's the like overnight trading, which isn't still 24/7. It's kind of sort of open to some people and it feels like we're kind of like inching there. But tokenization where there is not only the ability to kind of move assets between these different venues, but also trade at all hours of the day, seems like it would be a pretty big accessibility, you know, increase and also probably would be a much more global approach to allowing people to access financial markets. What are you guys seeing there?

• 26:20Speaker 02

  Well, we basically popularized that offering with 24-hour market. So we offer more than 1,000 stocks 24/5, to your point, not 24/7. And I think that that galvanized the broader ecosystem to try to figure out how they can offer it. Now you've got exchanges saying that they're looking at how to extend the trading hours to 24/5. But it's been hard and we had to build a lot of technology to stitch together these market centers and seamlessly kind of move a customer's orders from core market trading at one exchange to after hours to overnight. So it's a lot of heavy engineering work to stitch this together

• 27:03Speaker 02

  in a way that is not a terrible user experience for the end user. And it's still not 24/7 because the mainframes at central clearing need to run on the weekends and people have to do that. You need employees and that's like a big hurdle, right? Compare that with the blockchain, which is just running on servers 24/7. You don't have to do any of that extra work and it's a very nice user experience, particularly for customers internationally where there's less overlap with US East Coast working hours. So that's big. And also fractionalization is big. We had to do a lot of work when we popularized fractional share trading to take

• 27:48Speaker 02

  whole shares of stocks, split them up into little pieces so that you can buy, you know, a dollar of Berkshire Hathaway A shares, which is kind of this magical experience.

• 27:59Speaker 02

  That I don't think Buffett and Munger really appreciated. Then they have all these small shareholders crashing their annual conferences. But, um, but I think, I think it was progress, definitely, definitely progress for the world. But yeah, with crypto, you can just take slices and fractionalize and that's kind of built in. So it's not just efficiencies and costs, but real user experience improvements to end users.

• 28:24Anthony Pompliano?

  Another thing that has become very popular, you're a publicly traded company. You see other publicly traded companies buying Bitcoin and putting it on their balance sheet. Some people are doing it at grand scale, like the micro strategies and they're buying, you know, tens of billions of dollars and it's kind of become like a Bitcoin treasury company. You have many other companies like a Tesla or Block, uh, you know, formerly known as Square. Uh, they bought some Bitcoin, they kind of left it there. They're not really Bitcoin companies. You guys are in the crypto business. Uh, have you guys ever thought about adding Bitcoin or has there been any conversation as to why you should, or maybe there's a good argument as to why you should not put Bitcoin on the balance sheet?

• 28:59Speaker 02

  Yeah, I mean, it comes up from time to time for sure. Um, one of the, one of the reasons it comes up is because we just like are getting more involved in crypto and in some cases that would involve us holding different coins. Uh, and already we have to do the work of accounting for it and, uh, it's essentially on the balance sheet anyway. So there's a real reason of if, if you have to like transact in cryptos, you have to maintain some holdings of them and, and they're kind of there by necessity. Um, then there's the other angle of sort of like showing a sign of support that we're a crypto company, you know, we're, we're here, we buy into the technology and the promise of it being an inflation hedge.

• 29:44Speaker 02

  So, so, so it's kind of there as well. Um, I think the, the reasons to not do it is, you know, if, if you are, um, a public market investor and you're thinking about Robinhood as a company, um, generally speaking, you're not like, it complicates the picture to think of it as like a company, but also this quasi like Bitcoin, uh, holding play. And I think Robinhood stock is already highly correlated with Bitcoin as such, without us even holding it on the treasury. So, um,

• 30:20Speaker 02

  Yeah, I would say we wouldn't rule it out. We haven't done it thus far, but those are kind of the considerations that we have. And to some degree, you could put any asset on your balance sheet and are you or not in the business of being an investment manager. So, you know, I know some companies have done this Airbnb. Actually, I think if I remember made a lot of money doing this with their CFO LT pre IPO, just like managing the cash on the balance sheet and investing it. But that always seemed like a departure from the core of the business, taking that approach.

• 30:59Anthony Pompliano?

  This is free advice. So you're going to get the quality of what you pay for. But I always thought it'd be hilarious if somebody bought a little Bitcoin and also put like a Berkshire stock on their balance sheet and said, hey, we're gonna, you know, we're gonna have one of the new world, one of the old world. But to your point, I don't know if public market investors would be thrilled if you guys were running a prop shop basically with the balance sheet.

• 31:20Speaker 02

  Yeah, I mean, I think that, again, yeah, as long as it's in the context of operating as a business, I think it makes some sense. But yeah, investing the balance sheet of the company, then you get into kind of murky territory.

• 31:36Anthony Pompliano?

  Well, and then I guess I never thought about it, but like you guys probably do hold Bitcoin on the balance sheet. You're not doing it from an investment standpoint or a capital allocation standpoint. But in, as you mentioned, kind of the operational components, you've got that exposure and then obviously your customers are highly correlated. Do you see customers going back and forth like, you know, hey, there are public equity investors during the bear market of crypto, then all of a sudden they're switching over and becoming, you know, very highly correlated and deploying a lot of capital into crypto in the bull market and then going back? Or are they pretty much bifurcated? Like the crypto people are the crypto people and the public market people are not?

• 32:09Speaker 02

  What we've seen is someone will typically come in for either stocks or crypto because

• 32:17Speaker 02

  Usually the crypto is because they want to trade or buy a specific coin that they know we offer. So they come in and onboard for that. On the equity side, it can be a little bit broader. They just want to start investing and they have some money that they want to put away. So they might not have as specific of an idea, but they know they want to start building their portfolio. So they'll come in for one thing, then they adopt Robinhood Gold. And we've seen the Robinhood Gold attach rates really increase over the past year. We look at seven day attach rate, quarter attach rate, and it's been going up. And once they adopt Robinhood Gold.

• 32:54Anthony Pompliano?

  Explain what Robinhood Gold is, just so people understand.

• 32:56Speaker 02

  Robinhood Gold is basically a premium subscription product. So it starts at $5 a month, although there's an annual plan that recently rolled out. We're actually running a promotion called Gold Monday. The first week of December, it started and it gives people a discount on the annual plan. So it's been very successful. It gives people a really high interest rate on their cash, even when they're not investing it. So rather than having your cash earning close to zero at a bank, you can deposit it at Robinhood. And if you're a Gold member, it earns an industry-leading rate with high FDIC insurance

• 33:41Speaker 02

  protection. It gives you a 3% match on IRA contributions. So if you have a retirement account on Robinhood, we'll match you, even if you don't, you don't need an employer to match you, we'll do that. And then more recently, we rolled out Robinhood Gold Credit Card, which has been very popular as well. So yeah, typically, they'll come in through something, they'll subscribe to Robinhood Gold, and then they'll discover all of our products because we try to introduce an even better value prop for our Gold customers across all of our products.

• 34:14Anthony Pompliano?

  You also have Robinhood Legend. Talk about Robinhood Legend and what you guys have rolled out there.

• 34:19Speaker 02

  Yeah. So basically, we have a couple of different customers that we are building for. One of them is active traders. Which are the people that want the best tools, they care a lot about having the best pricing. And a lot of them trade on multiple screens. I mean, you've probably seen them on Twitch or others where they have, you know, the candlestick charts and they have their trading battle stations. And I think we got a lot of these customers incidentally at first without really focusing on them. Because they just like the ease of use and the low costs of the Robinhood platform.

• 35:00Speaker 02

  Even though we were building for first time investors, we kind of got active traders incidentally. So a couple of years ago, we basically mobilized our company, put a lot of our most hardcore people on really serving active traders. And I'd say the recent culmination of that was Hood Summit, which was an event we held in Miami where we launched a couple of things. Index Options, Futures and Robinhood Legend, which was the first desktop platform we designed specifically with active traders. And we emphasized charting, customization, powerful, quick access to markets where you can trade from pretty much any widget. And actually today, we're rolling out crypto on Robinhood Legend.

• 35:44Speaker 02

  So we went very deep on equities and offered options in the first launch. We were originally not going to launch crypto until 2025, but the team's just been sprinting. And so crypto's launching on Robinhood Legend. And alongside that, we're going to be, it's the first time we're launching direct exchange routing. So in the past through Robinhood, we would route your order through market makers. And you wouldn't have the exchange routing directly. Now you can see the order book and you can actually directly trade on the order book through, through Robinhood Legend, which a lot of active traders really care about because they want that finer grain control over their orders.

• 36:24Anthony Pompliano?

  Yeah, it's really interesting. Like you, as a business, you continue to grow and as you attract these active traders, you obviously start to offer them very unique products that fit their kind of use case. But you've also been doing this, I think, with kind of the demographic growth of your user base. You know, you started with generally younger investors who were kind of, you know, starting their investing journey. Well, you've been doing this a while, like they're starting to get older, they're starting to get married, they're having kids, they're, you know, getting bigger jobs, their income is going up, they have different needs, expenses, et cetera. Talk about kind of building additional financial products outside of just stock investing as your user base kind of, you know, grows both older but also larger.

• 37:05Speaker 02

  Yeah, I think that's been a huge focus. We want to not just stay relevant to every young generation and be the place where, you know, the, you first start investing or trading, but we want to grow with our customers. And actually, we think Robinhood can be a big beneficiary of an enormous wealth transfer that's already started, but is going to result in over $120 trillion of wealth moving from silent generation and baby boomers down to younger generations. And I think we're focused on a couple of things. One is really this idea of making financial products that work for multiple

• 37:48Speaker 02

  generations. So for example, if you're on Robinhood, it should make it a better experience for you and for your family members. If your kids and your parents and the entire family was on the platform as well. The first place where you're actually seeing this is with the Robinhood credit card, which has great family features for like budgeting and controls and setting limits. But it's very, it's like a first-class experience. And nobody really does that. In the financial space, you can't really think of A great multi-use family experience. And I think that's something we've been thinking about in the context of our recent acquisition

• 38:32Speaker 02

  of Trade PMR, which is an RIA custody platform. We also think about it with retirement and beneficiaries. But yeah, I think when we're successful, you'll have just a great multi-generational experience and Robin Hood will be better for you if the whole family is on there. And right now, over 70% of people who inherit money end up firing their parents advisor. So actually, I think there's a ton of low-hanging fruit here. I mean, there's no reason why that number should be so high. And I think within the Robin Hood ecosystem, we can just drive it a lot lower.

• 39:09Anthony Pompliano?

  Yeah, that's a fascinating statistic. One of the things that you all also introduced that I thought was unique is that these event contracts are now getting regulatory approval in the United States. And so people know about polymarket and Kalshi, and those seem to be purpose-built for event contracts. And yeah, these prediction markets obviously got a lot of press coverage around the presidential election, but Robin Hood added a event contract for the presidential election. And I think to me, what I saw from that is like, okay, stocks to crypto, you know, it makes sense. It's an evolution. Event contracts really opened my eyes to like, oh, Robin Hood has the relationship with users and should be able to really open the aperture of different financial products that it offers to these individuals.

• 39:54Anthony Pompliano?

  And so talk me through kind of launching that and what the thought process was and then will you guys do more event contracts in the future?

• 40:01Speaker 02

  Yes, yeah. We heard loud and clear from customers that they love that product and it works really, really well within Robin Hood. It did over half a billion contracts in less than a week. I mean, we launched it about a week ahead of the election. And by the way, the time span from getting the idea to launch it, which was the Kalshi CFTC case where the stay was lifted. So from the, from the time we decided we want to get into the market and actually offer this to customers to when we shipped it was like two and a half weeks. So the team was just sprinting hard and really executing in an insane way to make it happen.

• 40:43Speaker 02

  And I think what made it, you talked a little bit about the bridge like stocks to cryptos is pretty clean, but where do event contracts come in? Well, these event contracts are CFTC regulated futures or swaps contracts. And so at the hood summit, we already announced future trading of outright futures. And event contracts basically uses all of that regulatory infrastructure, a lot of the technical infrastructure because underlying it, these are derivative swaps. And it's really, if you think about it, the elections affect people's portfolios, they affect the markets.

• 41:25Speaker 02

  You saw that on election night when crypto and a lot of US equities, particularly ones affected by changes in the regulatory climate, just had an immediate tick up when it became clear what the results of the election were. But these are imperfect proxies. And actually, for sophisticated people to hedge, these contracts serve a very valuable purpose. And we believe anything that a sophisticated person uses to hedge should be, should be available to retail as well. So I'm very excited about the offering. I think we'll expand it. And I also think like it's got one use case as an active trader offering where people want to trade it, they're going to trade it in and out, there's some hedging, but it's also a new source of information.

• 42:10Speaker 02

  And, and one thing that I believe is, you know, over time, the news has turned into entertainment, which leaves a gap as to where you're getting news from. And I think markets can come in and, and fill that gap across a wide spectrum of different events, like elections, a great example. If you're watching the news, they don't really want to tell you who's winning the election as quickly as possible because their incentive is to keep you engaged and watching. And so they're going to, they're going to kind of extend it. But if you were looking at the prediction markets, it became clear pretty early on. And so I think there's, I think, I think these products are the evolution of, of news. And if you just want immediate access to information, taking all of the inputs and

• 42:56Speaker 02

  all of the information that's out there and just giving you an answer to a yes or no question, or, you know, a multiple choice question, I think prediction markets are, are great at that.

• 43:06Anthony Pompliano?

  Yeah, it makes complete sense and you know, it's kind of this idea of like markets eventually find out the facts and there's a lot of ways to kind of twist information, whatever. But at the end of the day, people are putting skin in the game. Definitely is a unique data point.

• 43:20Speaker 02

  And a lot of people say like, is it, a lot of people sort of like gravitate towards, are they right? Did they predict correctly? But I think that's almost beside the point because there's value in just distilling all the information and in putting it together as a real time view, even if the prediction ends up being ultimately wrong. At that time, it's the most accurate prediction of, it should be the most accurate prediction of the future event and how it shakes out.

• 43:50Anthony Pompliano?

  Yeah, well, there's like the binary outcome, but there's also kind of the real time directional change in odds that also can feed you stuff, right? You know, I laughed that people going into the most recent Fed cut, you know, there's a lot of people thought the Fed was going to cut and they thought that stocks would go up afterwards. The Fed did cut, but stocks go down. And so just because you get one data point correct, doesn't mean you get kind of the full story correct. And so having as many of these data points is pretty important.

• 44:17Speaker 02

  Yeah, same thing with earnings. Company can beat revenue and EPS and the stock goes down. So yeah, sometimes you just want to trade the specific event that you want to trade and not some proxy for it.

• 44:31Anthony Pompliano?

  Correct. One of the things I really respect, I think about you and Robinhood is that you guys have gone through tons of controversies over the years. Some of them have been external market based things. Some of them have been things that, you know, you guys have had more kind of control over. But it seems like every time that we do this, you personally, but also the company is much better. You guys have improved. You're, you know, kind of better suited for the public market. You've got a better business. Things are growing. You're serving more users, et cetera. As you look over the lifespan of Robinhood, like what do you think are some of the biggest lessons you've taken away, having gone through, you know, so many of those different controversies? And like, have you changed the way you run the business internally?

• 45:11Speaker 02

  Yeah, I think that we've gone through lots of stages. I think that, you know, for example, in the, in the early days, we didn't have executives. You know, Beijou and I were running the company and we were just going around doing everything. At some point, we figured we need to, we need to have some help here. Some people that actually know what they're doing should be, should be helping us run the company. So, so we did that. Good decision. And then I, yeah, yeah. And, and actually like our, our CFO, who's, uh, who's been amazing, uh, joined us in 2018, one of the first executives we hired. We, uh, and of course, Chief Legal Officer, Dan Gallagher, who's former SEC Commissioner, joined us in 2020.

• 45:54Speaker 02

  Uh, so we hired some great executives, but then we got a little bit too, uh, executive happy, you know, it's C-suite in every position. Um, then the company got a little bit unwieldy, difficult to manage. When the market shifted in 2022 and we had to kind of refocus the company on active traders and change a lot of what we were doing, um, we realized that that wasn't helping us anymore. So we ended up kind of like slimming down and going to a very, very small executive team. And more recently, you know, maybe we're thinking it's a little bit too small. So we, we brought on board a few more. We just brought on board, uh, our CTO, uh, Jeff Pinner, who's been fantastic as well. And so I think it's, it's just a learning process.

• 46:39Speaker 02

  I think the, the, the conditions that drive your success or failure at any given stage also create conditions for you to overreact. Um, and I think, I think that we've embraced setbacks, we've learned from them, as long as a setback is not catastrophic, I think that it's a opportunity to improve and.

• 47:02Speaker 02

  The whole organization is kind of like an organism and you know, we, we, we try to make it the best possible organism it could be incentivize the right things. And I think, I think most of all, what I care about is people working extremely hard, challenging themselves and their colleagues and just relentlessly shipping better features and new things to customers. I think that product velocity is really what distinguishes Robinhood in, in what's a competitive market. And the faster you can move, the faster you can respond to what customers need, the faster you iterate. A lot, a lot of things go well if you can, if you can pull that off.

• 47:41Anthony Pompliano?

  Well, it's, you know, a company is like an organism, but it continues to evolve and, and grow and change. And I think you guys are really just kind of, you know, managing that. Speaking of evolution, if you look out, I don't know, 10, 20 years into the future, what do you expect Robinhood to look like then? And you know, the mission seems very clear, but do you have any sort of predictions about where the world is going and kind of how you guys can help us get there?

• 48:05Speaker 02

  I think that Robinhood as a company will expand across two independent vectors. One being predominantly US to global, which should be available across every country and anywhere there's an app store, internet connection, you should be able to access Robinhood. The other access is from retail only to business and institutional. And if you think about it, some of the things we've talked about, tokenization, non-custodial wallet technology, 24 hour markets. Those are attractive not just to retail, but to institutions and businesses as well. And that's a big market. I think right now, Robinhood, you look last 12 months, it's between two and three billion in revenue.

• 48:49Speaker 02

  There's the, the overall market, if you look at kind of the three arcs of active traders, number one and wallet share for the next generation and being like a truly global financial ecosystem is north of 600 billion in annual revenue. So we're still a very, very small fish, but. No matter whether you're a person or a business, you should custody all of your assets at Robinhood. Because you want to, because it's the best experience in deal. And all of your financial transactions should go through Robinhood when we're successful.

• 49:21Anthony Pompliano?

  That would be a pretty big business if you can pull that off. So I'm cheering for you. If people want to find more about Robinhood Gold or Robinhood Legend, where should we send them?

• 49:32Speaker 02

  The website is always good, robinhood.com. I also, I mean, X is always good. You can find me on there directly engaging with our customers. And some other people too. So that's always fun.

• 49:47Anthony Pompliano?

  Yeah, we've seen a lot of executives use X very intelligently lately. So if people are not following you, I highly suggest they do. And I appreciate you taking the time to do this. We'll do it again in the future.

• 49:58Speaker 02

  Thanks, Pomp.