Pod Insights The Knowledge Project The Near Death Experience of RobinHood | Vlad Tenev, Co-Founder About this episode In January 2021, Vlad Tenev made a decision that nearly destroyed Robinhood. Wall Street called it betrayal. Customers called it cowardice. He has never fully explained what happened — until now.
Vlad Tenev built Robinhood into a financial titan, navigated the unprecedented GameStop crisis, and completely re-engineered the company to thrive after losing the vast majority of its market value.
He breaks down the brutal transition from bloated hyper-growth to a lean machine, why a "juicy falsehood is more powerful than a boring truth", and the 3 distinct phases of AI integration separating the winners from the dead.
Believe it or not, GameStop was not his hardest moment.
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Approximate Timestamps:
(00:00) The Unprecedented Crisis
(00:33) The Truth About GameStop
(09:30) Why False Narratives Win
(10:39) Surviving an 80% Market Crash
(16:02) Firing the Nice Founder & Going Founder Mode
(24:25) Rules for High Performance
(28:50) The Young Talent Advantage
(35:13) First Principles Storytelling
(39:07) 3 Phases of AI Integration
(50:03) Building AI That Reasons
(01:02:59) Fixing Private Market Access
(01:20:04) Deciding What to Build Next
(01:22:05) Surviving 1800% Inflation
(01:31:22) How Robinhood Makes Money
(01:39:51) Redesigning the Modern Bank
(01:47:47) The Definition of Success
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Check out Vlad:
https://investors.robinhood.com/management/vlad-tenev
https://www.linkedin.com/in/vlad-tenev-7037591b/
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Transcript 18,194 words · 4 speakers
0:00 Speaker 03 I wanna come to GameStop for a moment. You need billions in collateral. You make a decision to restrict the trading. How did you make that decision?
0:09 Speaker 01 It was a situation which had no precedent.
0:12 Speaker 03 The narrative that came out was you were in bed with the hedge funds.
0:16 Speaker 01 A juicy falsehood is more powerful than a boring truth.
0:19 Speaker 03 What did you think of the movie Dumb Money when you watched it?
0:22 Speaker 01 I didn't see the entire thing, but I did see the clips that I was in.
0:26 Speaker 03 Wait, come on, you haven't watched it.
0:28 Speaker 01 And I think what most companies suffer from is
0:34 Speaker 03 I wanna come to GameStop for a moment. So take me back to the moment your phone rings. You need billions in collateral. Maybe set the scene for us and you make a decision to restrict the trading. How did you make that decision?
0:50 Speaker 01 I have very fuzzy recollection of that time. You know, sometimes you talk to uh uh
0:58 Speaker 03 Trauma victims.
0:58 Speaker 01 tr or like uh
1:02 Speaker 01 I I've heard a lot from people that have many children, uh, including myself. I have more than one. It's like uh you Uh my wife says, you know, it's very the pregnancy and the childbirth very, very painful, but for some reason I don't remember it. And then that sort of like uh evolutionarily gives gives you the signal that you should do it again. Um and I think we're doing uh yeah, I think um I was at this IPO roundtable at the SEC uh about making the IPOs great again. And with ro with Robinhood Ventures, we're taking that fun public. So we're doing another IPO, and I joked that um Yeah, it's kind of like that, the IPO process. I remember being painful
1:44 Speaker 01 and I didn't like it, but I don't really exactly remember why. And now I kind of want to do it again. Um,
1:51 Speaker 01 but yeah, that's a big aside that has nothing to do with GameStop, um, other than yeah, that that was a very challenging time. It was towards the end of COVID, and I felt like everyone was going a little bit crazy. They'd been cooped up at home for about a year without much human to human interaction. I think from a crisis management standpoint, it was very difficult to deal with because we're doing these like conference video calls with all these different stakeholders. The regulators weren't in office. And so um, yeah, basically what happened was we got this like automated file in the middle of the night, and it had big numbers on it, right? It it had big numbers
2:36 Speaker 01 that kept changing. And uh it was a situation which had no precedent. And um, you know, we we had to make a tough call to uh put GameStop and a bunch of other uh companies on position closing only, which basically meant uh you couldn't open up new positions, take on more risk uh for a period of about one day. So wasn't even that long. But because there was this narrative that had taken over social media, this like viral narrative that It was the the retail investors taking down the hedge funds. And we were kind of the tool.
3:18 Speaker 03 Yeah.
3:20 Speaker 01 Um people wanted to put it was like a good versus evil thing. And and I think what was just um what would have at any other time for any other stock been kind of an innocuous risk management decision to control our internal risk turned into Robin Hood's on the side of the hedge funds colluding against the retail investor. And I think the fact that the name of the company was Robinhood made this like a juicy false narrative to. Uh that that continue to go viral. So I remember in the beginning of the in the middle of the night when I woke up, my phone was basically unusable because it was like those videos you see of what happens if a Kardashian turns off uh do not disturb on their phone. It just
4:05 Speaker 01 is a constant buzzing thing. Um so that that was that was my morning. I was like. The phone is completely unusable. I can't even get on a Zoom call because there's just random people calling me, uh telling me to to turn it back on, you know?
4:24 Speaker 03 Uh just to give people context a little bit, um, if they're unfamiliar with the situation, the narrative that came out was you were in bed with the hedge funds because the hedge funds were trying to close their short positions on a stock that was basically going parabolic.
4:40 Speaker 01 Right.
4:40 Speaker 03 Um, and it was a unprecedented. Situation. I've never seen it before anyway. I I can't. But you also
4:47 Speaker 01 That's never happened before.
4:48 Speaker 03 one of the interesting details of this story that I don't think many people know is you had given GameStop shares to people when they signed up for Robinhood, didn't you? Like that
4:57 Speaker 01 That's absolutely right. So you can make the argument that we kind of started the whole thing. You know, if everyone, if if you were joining Robin Hood in the year 2020 leading up to the whole GameStop thing, uh which by the way, a lot of people joined Robin Hood that year, GameStop was one of the Collection of free, free stocks that was given to customers. So yeah, a lot of people, you know, just came in, get got their free GameStop share, and maybe they weren't engaged that much. But then when they saw GameStop going up, suddenly those shares were were worth a lot of money.
5:31 Speaker 03 what's one thing the world still gets wrong about that time?
5:34 Speaker 01 I mean, I think the major thing is just that Robinhood colluded with hedge funds to shut down trading. There was also another false narrative that I think is funnier. I Uh but yeah, Sequoia had to refute this. Someone put on the internet that uh the White House actually called uh Sequoia Capital, one of uh venture capital investors, and got them to pressure us to shut down GameStop. So um, yeah, that that was a particularly funny one. But if you look on Reddit, that had like thousands of reposts. Um
6:13 Speaker 01 Yeah, I think that I mean we don't really have any business with with hedge funds. So the the idea that somehow a hedge fund would collude to have us shut down trading of a of a stock um I mean always seems silly to me, but I think what we learned is
6:32 Speaker 01 a juicy falsehood is more powerful than kind of a a boring truth.
6:37 Speaker 03 Yeah, and you can't fight story with facts. It's like so weird.
6:42 Speaker 01 Yeah.
6:42 Speaker 03 Like that once a narrative gets any traction whatsoever, it doesn't matter how crazy or false it is. Facts do not tend to refute that. You see this in politics all the time, right? Once somebody tells a story and the mind share goes to that story, no amount of evidence or data will ever overturn that story. And they'll believe it for like 20 years.
7:04 Speaker 01 Yeah.
7:05 Speaker 03 It's crazy. Uh, one of the byproducts of that, though, is you got to talk to Mark Zuckerberg and Daniel Eck. I'm curious about like what you learned during that period of time from those two. I think Daniel had talked to you about like going through a PR crisis or
7:22 Speaker 01 Oh yeah. Um actually I didn't talk to Daniel at that point, but I did call him when he was um Dealing with his Joe Rogan thing. I don't know if you remember that.
7:34 Speaker 03 Oh, totally.
7:35 Speaker 01 Yeah, like Joe Rogan was in the process of getting canceled. And uh I mean, Spotify was getting immense pressure from both sides, right? Do they deplatform Joe Rogan or
7:47 Speaker 03 Yeah.
7:48 Speaker 01 do they piss off all the people that want de Joe Rogan to be deplatformed? Um, so that that was probably I mean, Daniel's, I'm sure, dealt with his share of of uh Crises, but that was probably his GameStop moment. So yeah, I called him to pay it forward, to to offer whatever support uh I could have, and and hopefully that was helpful to him. But he's actually um, yeah, probably wiser and uh and better than me in these things. So I don't know if he needed it. But yeah, at that time Mark Zuckerberg called me and Elon Musk called me, Mark Benioff called me, and uh a nice positive side effect was.
8:31 Speaker 01 These people probably wouldn't have cared about little Robin Hood at at the time. And suddenly I think uh I got to talk with these business magnates that have uh have built massive companies and they're giving me their perspective on the whole situation.
8:46 Speaker 03 One of the things that I love that you did during that period of time was you went on a clubhouse with Elon. I don't know if you regret that now. Um
8:54 Speaker 01 No, no, I thought that was probably the the best uh media appearance of the week for sure. Not saying much because I I had some bad ones, but
9:02 Speaker 03 what did you think of the movie Dumb Money when you watched it?
9:07 Speaker 01 I didn't see the entire thing, but I did see the clips that I was in. And
9:11 Speaker 03 Wait, come on, you haven't watched it.
9:14 Speaker 01 um
9:16 Speaker 01 well, I did see the parts that I was in, which was about six minutes. Um uh and some of the rest. Uh I I actually thought, you know, I know it didn't do very well, but uh I found it more or less entertaining. My favorite part, which maybe wouldn't uh wouldn't be other people's favorite part, or or maybe it would for for some ladies there, was that my character um was played by a very good looking actor, Sebastian Stan, which you know I wasn't displeased about. Um, I would have thought Adam Driver would also be good, but um Sebastian Stan maybe a slightly less good actor, but probably uh easier on the eyes, right? And
9:59 Speaker 01 the thing that I enjoyed most is that in every single scene, he was shirtless. So it was like in the kitchen grinding a smoothie, talking about, you know, GameStop, or in the bathroom shaving. Just the idea of me. Being shirtless dealing with all these complicated business situations just made me laugh a little bit.
10:22 Speaker 03 You're gonna be the first physics math person on the cover of GQ, I think.
10:27 Speaker 01 I mean, I see what they were doing. Uh I'm I'm flattered. But yeah, I I was I I wasn't solving all these business problems, uh, you know, grinding my smoothie, finishing my workout.
10:39 Speaker 03 Most people assume that GameStop was the hardest time for you and Robinhood, but actually 2022 was harder. What happened?
10:47 Speaker 01 I think 2022 was harder in the sense that it was sort of like a gradual, slower burn. I mean, GameStop was acute and very painful and stressful for a short period of time. But Once we resolved the situation, unlocked the shares of of GameStop so they could start being purchased again. And, you know, I basically like did my congressional hearing and uh did my round table of different podcast appearances, the acute part of it was over. Like the acute part of GameStop was really one day.
11:21 Speaker 03 Yeah.
11:22 Speaker 01 Whereas in 2022,
11:25 Speaker 01 it was a gradual shift of all of like the economic trends that had been. Tailwinds for the business during COVID reversing rapidly into headwinds. So for example, um, I mean, first the
11:43 Speaker 01 the uh COVID relief uh stimulus check stopped,
11:48 Speaker 03 Mm-hmm.
11:48 Speaker 01 right? And then it became clear
11:52 Speaker 01 inflation was ticking up.
11:55 Speaker 03 Mm-hmm.
11:55 Speaker 01 And that was having a a big impact on people's discretionary spending and and investing. And then later on to that, uh The interest rates.
12:07 Speaker 03 Mm-hmm.
12:07 Speaker 01 The government went from a long period of rock bottom interest rates to the highest interest rates in over 30 years. They went to, you know, four or five percent. And when that happens, actually investing becomes less attractive because you can get your average 7% uh rate of return from the stock market after inflation, um, or you could get 5% just sitting in cash.
12:36 Speaker 03 Yeah.
12:37 Speaker 01 So people naturally reallocate a little bit and start holding more cash and and buying less stocks. Um and our business was first timers getting into the stock market, buying, buying stocks. Um so all of the tailwinds for our business turned into headwinds. And of course, when that happened, it was obvious to the market as well. And not fair to be fair, not just Robinhood, but our entire sector got hit hard.
13:05 Speaker 02 Yeah.
13:05 Speaker 01 We went from IPOing at about a $32 billion valuation in 2021
13:13 Speaker 01 to in 2022, we were there, we were trading at like six dollars and change.
13:19 Speaker 03 Yeah.
13:19 Speaker 01 So we lost 80% plus of of our market value since IPO, which, you know, a lot of times if people were calling Robin Hood a broken IPO, right? And I was getting advice that maybe I should try to figure out how to do a buyout and go private or something. Um so Yeah, all of these things start coming up that don't actually have much to do with running your business and building products. They become kind of distracting. So yeah, that that was very, very tough to navigate. And I think
13:54 Speaker 01 it took some solace in the fact that it wasn't just a Robin Hood specific issue. But nonetheless, I mean, uh, we uh as as an entrepreneur, uh,
14:05 Speaker 01 yeah, it's very very competitive, and you really just Uh want to win. And so I said, you know, I'm not going to be one of these people that either gives up, because a lot of founders, unfortunately, we lost a lot of great founders in that time where they just left their companies, right? Uh but uh so I'm not going to give up. I'm also not going to batten down the hatches and say we're just going to ride this out and hope for interest rates to go to zero uh in the future and just like uh not do anything and and turn into an ostrich or a turtle. A lot of businesses were doing that. For example, the mortgage companies. A lot of the mortgage companies, if you if you listen to their public statements, they were like, well, the market's going to improve at some point and
14:48 Speaker 03 Yeah.
14:48 Speaker 01 people want mortgages again. We said, what can we give to our customers that will actually let them thrive in this particular market environment where you see high rates and cash as attractive? And that led to the birth of, or the I should say, the revival of Robinhood Gold, which started with. How do we give customers the absolute highest yield on their uninvested cash so they can put that onto the platform? We followed that up with Robinhood Retirement, which has over one and a half million accounts. I think it's the best retirement product on the market by a wide margin. We give everyone a 3% match if you're a gold member for making contributions into retirement. And so we we really started to think about okay,
15:32 Speaker 01 how can we diversify the business away from trading, but also away from Being sort of like a zero interest uh business that thrives in that environment, but maybe doesn't do as well when when we're in a high interest rate. And so we we ended up doing that. We diversified the business tremendously. And then quicker than I imagined, um, you know, we we become uh a business that has 11 business lines now with uh over 100 million in annual revenue.
16:02 Speaker 03 I talked to somebody uh and they characterize this, and maybe they're wrong, so correct this, as uh you basically fired the nice version of yourself and be turned on like founder mode. I forget their exact words, but uh
16:15 Speaker 01 Yeah.
16:17 Speaker 03 is that true?
16:18 Speaker 01 I don't know if I would characterize that. Uh I still think I'm very nice. Uh
16:25 Speaker 01 basically what it was was it we I had to spend a lot of time thinking about how to fix things. And um
16:34 Speaker 01 I think that
16:37 Speaker 01 when we went through COVID,
16:40 Speaker 01 there was a lot of pressure, not just from what other companies were doing, but also just because we were doing very well during COVID and growing very, very quickly. Right. We went from, I'd say, end of 2019, we had 700 people. And something like 200, 200 and change million in annual revenue
17:04 Speaker 03 Yeah,
17:04 Speaker 01 to in the next year, end of 2020, we had thousands of people and close to a billion in revenue.
17:15 Speaker 03 mm hmm,
17:16 Speaker 01 So it's like a three, three, three X plus in growth. And you look around us, and you know, during COVID, a lot of our contemporary companies were struggling.
17:27 Speaker 03 yeah,
17:27 Speaker 01 Airbnb.
17:28 Speaker 03 yeah, yeah.
17:29 Speaker 01 Which we always to some degree like grew alongside Airbnb, which started at similar times. They were a little bit before. Um, so that what was swirling in the air was we've got to batten down the hatches, COVID, you know, but our business was booming. And in fact, what we were hearing was customer support is getting strained, our engineering systems were strained. We ended up having to hire a bunch of people uh during COVID just to keep up. I think we continued that hiring and became a big company. Very quickly. Things didn't really work very well together. Um, a lot of the people that joined since we were remote had never met in person. Uh and so it it wasn't just that
18:16 Speaker 01 we were being nice or we were like coddling employees. I think that the the inputs that led to that tremendous acceleration in the business and the headcount growth. Um were not sustainable inputs. Like you only have one COVID. And so when that reversed, we actually, it gave us an opportunity to rethink all the changes that we made to keep up and and reset a little bit, which I think at the time was painful, but
18:49 Speaker 01 it led to a much healthier company. It's like um
18:54 Speaker 01 it's like not to use another weightlifting analogy, but they're so good. If you want to get really, really strong, um, there's one way where You just like gradually build up muscle mass and keep your fat uh low over long periods of time. But what what Robin Hood did was we bulked up gigantically and also gained a lot of fat in the process. And then we did like uh a massive leaning out. Um I think that works for for a lot of people, and you end up getting to the same place. And in in retrospect, I'd say
19:31 Speaker 01 maybe maybe. Maybe um
19:36 Speaker 01 it's too much to say that I would have done it differently. I think we we had to we had to adapt to
19:43 Speaker 01 to to what what our reality was at the time. So I don't know if we had
19:47 Speaker 03 Yeah.
19:48 Speaker 01 a great I probably would have done things differently around the edges with the culture and thought about the values and and really um sort of like enshrined them earlier. You know, the values I mentioned earlier, high performance, safety always. Um lean and disciplined, one Robin Hood, but um
20:08 Speaker 03 In practice, fixing things. Everybody says that, but where it sort of like means difficulty is that means undoing something I've already decided. And that means admitting that I was wrong. And so people sort of like tend in general, not everybody, they tend to like slowly sort of like, oh, I'll undo a little bit of it, and then I don't get the any of the results.
20:32 Speaker 01 oh yeah. So I have a good business suggestion. Um usually things uh things get easier if you do them multiple times. And uh you could practice doing this once and making a big show of it. Like actually maybe you take a small thing that you were wrong about that you wanted to undo and just say, I want to tell you about something that I completely screwed up. It was a wrong decision and now we're taking it back. It could be like the snacks in the office or something. Got rid of got rid of uh uh Sichuan food uh catering on Wednesdays. And then, you know, see how it goes, and then you realize, well, maybe it's not so scary that you can do it for
21:16 Speaker 01 a serious thing, and then maybe eventually you can do it for three or four things simultaneously. Um, I'll give you an example. During COVID, we introduced um a lot of uh it was this thing that From the beginning, I just like didn't really like the idea of, but a lot of people felt felt felt very strongly and there was just too many things happening. But yeah, we were like uh we had these wellness days where entire teams would like take a wellness day after working particularly hard. And at one point I was just like, let's kill these wellness days. And there was just a lot of fear. I mean, some people actually legitimately
22:00 Speaker 01 like the idea of wellness days. I was like, I don't want to be a wellness day company. We have generous PTO. Take a PTO. And this whole idea that an entire org or team would take the same day off, that seems like a problem. What if there's an issue and we need someone? The entire org is taking a day off. Doesn't make any sense. Um, I think this was like one of those COVID era things that
22:24 Speaker 01 some companies probably still have. But um yeah, any anyway. Um, and there was fear like we would were taking back a perk.
22:34 Speaker 03 Yeah.
22:34 Speaker 01 From employees.
22:35 Speaker 03 Yeah.
22:35 Speaker 01 They like their wellness days. They'll complain. Well, we took off the wellness days. There was complaining for one day, and then we never heard about it again. So I think when once you start doing these things and you realize our deepest fears about the consequences were wrong. And uh yeah, you you learn some things.
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24:25 Speaker 03 How does Robinhood operate internally? Like if you were to distill the operating principles that you use to run the company, what would they be?
24:34 Speaker 01 Our values are high performance. So uh we make it clear to not just employees, but anyone applying for. A job that this isn't meant to be like a cushy, chill job. Like this is for people that want to stretch and to do in one year what maybe another company would expect you to do in 10 years. Um so we we keep a very, very high performance bar,
25:04 Speaker 01 and that filters into how we compensate. Like we we reward people disproportionately based on impact, and we try to stay away from rewarding people on conventional things. Think about a typical company. People are paid generally proportional to the org size that they manage. And if you think about what that incentivizes, that incentivizes empire building. I want to have a big org with a big team because then according to traditional HR metrics, I'm more important.
25:37 Speaker 03 Yeah.
25:37 Speaker 01 Um, but really what we want to incentivize is the opposite. Can you can you have a lot of impact with the smallest possible team? So high performance is one of them. Safety always, we have a safety always value, which means sure we're we're gonna move fast. You know, sure we're we're holding ourselves to an absolute performance bar, but you can't use that as an excuse to cut corners or compromise on uh the security of customers and and their money. So that's a very important one. You know, regulatory compliance is very, very important to our business as a trusted financial platform. So we have that one lean and discipline, another one. I always ask how can we do more with less? We scrutinize every dollar and
26:22 Speaker 01 every process as well. Um
26:26 Speaker 01 and uh yeah, I mean, I think that if if I think about culture, uh I won't go through every single value, but uh those are the big ones. If I think about culture, it's it's a few things. It's how we hire um the talent that we that we bring in. How we performance manage and reward people, uh, and also uh the working environment. What's the environment like in in the office? So hiring, uh, it's really top talent. I'd rather have a small team of the best people than a large team of mediocre people. And that goes goes along with uh high performance. Uh how we
27:11 Speaker 01 compensate and performance manage, we want to make it, we want to reward people disproportionately based on impact. And also if it's not working for with someone, we wanna make it as easy as possible, process-wise, for that person to go somewhere else. Right. We don't we don't wanna we don't spend too much time.
27:29 Speaker 03 How quickly does that happen? Is this like, you know, somebody's there for three weeks and you're like, oh, this isn't working out? Or is it, do you give it six months, which sounds like an absurdly long period of time, especially given what you're trying to accomplish?
27:41 Speaker 01 We wanna make it. I mean, sometimes it's pretty obvious that uh, you know, for for whatever reason, um we've made a hiring mistake, usually, that that someone's not a fit. And at that point we wanna make it easy as easy as possible. So yeah, if it's three weeks, it doesn't make sense. For us or for the person to continue.
28:05 Speaker 01 I think six months once you know it's not a fit is way too long. But of course, sometimes we've had people that have come in and for whatever reason they don't hit the ground running right away. But if if we see potential in someone and they're extraordinarily good at a particular thing, um, you know, sometimes they they actually They get there, and that could take six months. But yeah, generally speaking, I think what most companies suffer from is process getting in the way and actually making it very, very difficult for people to uh to get rid of low performers. And I think we try to make that very, very, very easy.
28:50 Speaker 03 If I was looking from the outside in, is there anything about your hiring process that would stand out as unconventional that works for you?
28:58 Speaker 01 Well, I I should say I'm not super familiar with how every company does it. Right. So I'm sure some companies do. Many of these things. But um
29:11 Speaker 01 yeah, yeah, perhaps one thing that's unconventional, at least in financial services, is uh emphasis on early career people. I think from a very beginning, we put our company next to Stanford University. We would spend a lot of time uh, you know, recruiting uh interns and and engineers from there. And that was my alma mater and Beju, my co-founder as well. So we would spend time actually, when we were individually hiring everyone, going to career fairs at the top tech universities. And, you know, I still spend a lot of time with early career folks and interns. And I think it's very, very good for the company because
29:55 Speaker 01 a lot of the companies in our space tend to get older as they get further along. And the, you know, the folks working there can be more disconnected from the young people. And then that puts you. puts you at risk of becoming a more of a generational company. In the sense that, you know, Charles Schwab serves baby boomers very well. You had E Trade coming later that was really a Gen X company. But I think they've struggled a little bit getting the younger generation excited. And I know, you know, it
30:30 Speaker 01 they they try very hard to to get there, but I think the best way to do it is to actually make sure that the company itself has the point of view of of young people.
30:41 Speaker 03 And you're sitting with them, working with them and learning from them at the same time.
30:45 Speaker 01 Yeah. Yeah. Yeah. Sitting right next to them. You know, I I always like to have uh some interns or early career people working on important things. And I like to be around the people that are working on the key priorities as well. So yeah, we we don't just stick them in the basement and and have them fetch coffee. The big thing is we actually want you to have to work on projects that ship to production and and do meaningful work. And what what I like to say is I started off as an intern at Robinhood. I mean, I didn't have any career experience. I went straight from school into becoming an entrepreneur. And so I kind of have empathy for what it's like. And you know, if if I can succeed and become the CEO of uh of a company from an internship and uh
31:30 Speaker 01 then everyone should have the ability to to do that.
31:33 Speaker 03 How do you run your weekly leadership meeting?
31:36 Speaker 01 Yeah. So weekly leadership meeting is a big meeting. Uh there's there's a lot of people involved. And I like uh having large groups of people involved because then everyone can sort of like hear. What's on everyone's mind? I don't like having a lot of one-on-ones. Uh and some people are big one on one fans, but over time I've, you know, my my one on ones are basically on demand when you need something critical or or some important decision needs to be made. Uh so the leadership meetings are either important information that I want to cascade, like
32:15 Speaker 01 They're at the beginning of the week. So a lot of it is, you know, I spent some time thinking over this weekend about this, or we should be moving faster on this. Or it's uh we we also review goals. So I I like a very simple mechanism for uh sharing progress on goals. It's either green, yellow, or red. If it's green, we don't really have to talk about it. If it's red, I think it deserves some scrutiny. So, you know, sometimes we go through the red goals and see how we can help turn it around as quickly as possible. And that involves a little bit of ceremony. You know, I have a gavel and I I hit the gavel on
32:56 Speaker 03 Do you actually? That's awesome.
32:58 Speaker 01 Yeah. Yeah. Um and yeah, you know, it's uh I I think that sometimes it's it's really nice to lighten up some extremely serious things so that people actually enjoy uh talking openly about you know goals that things that aren't going well. Because uh the the assumption is everyone in the leadership team is uh if not exceptionally strong, at least very, very strong. So usually if things aren't going well, um, you know, there there's a good reason. It's usually not for lack of effort. And sometimes having the perspective of multiple people can can really help us quickly improve things and turn them around.
33:40 Speaker 03 Are there any other meetings that you have on a weekly basis? Like I I think about a founder's time being the most valuable and most highly leveraged.
33:48 Speaker 01 Yeah.
33:48 Speaker 03 And then where do you get involved uniquely as a founder to add that leverage to the organization? And where do you sort of like get hands off?
33:56 Speaker 01 Yeah. I mean usually I'm I'm involved in uh the most critical product launches or or projects that are going on at any given time. And a lot of times we are so we do a lot of product events. I think this year we're gonna have five of various sizes and scales, but but usually the product events tend to have themes. So actually we're doing one in a couple of weeks. Um well, I should probably be more explicit about the date. We're doing one on December 16th of this year, so uh towards the end of the year, and it's called Yes No. So it's an event on prediction markets and uh and AI. And I s we spend a lot of time just
34:42 Speaker 01 making sure the messaging is right, the design of the the event, the look and feel, of course, the products that go into it. Um so yeah, there there's a big component that's just making sure that the next event that we're gonna do is
34:55 Speaker 03 Are you in the weeds on that?
34:57 Speaker 01 uh yeah, so um I, you know, present at the events and I introduce the products, not not just me, but with with the teams that are that are working on them. So the the event is like um television show. Yeah.
35:12 Speaker 03 I'm excited to watch. What what factors do you think makes your marketing communication so good? Like your it seems so clear and crisp and like on point.
35:20 Speaker 01 Well, thank you. It wasn't always the case. Um, I think we have great people that think uh entirely about the storytelling of of what we're doing, what the purpose is. I think the events themselves are a good forcing function because if you're communicating a new product to 20 million people,
35:41 Speaker 01 it really forces you to distill it into the essence of what 20 million people can understand. So I think where where I tend to uh sometimes make make mistakes in communication is I can get too jargony, too in the details. Um, because I just assume the average person watching is in the details of the business like I am, which I think is uh not a great assumption. So I think like really thinking about it from first principles, if you're someone who has never heard of a prediction market, for example. How do you explain what a prediction market is and
36:23 Speaker 01 why, why it's innovative, why it's important for society, for these things to exist? We we start there. And then I think once you have the foundation, you try to make sure all the products plug into that foundation. You you you tell a coherent story.
36:39 Speaker 03 Is that
36:39 Speaker 01 I think it's it's really just about storytelling and you have to spend time and have people thinking about it. And, you know, if uh if I don't think about it, or if the CEO doesn't think about it, then I don't think the story gets told. So As a founder and CEO, you have to spend a lot of time personally getting involved in that, I think.
36:57 Speaker 03 I as you were saying that, you know, what came to mind is like Steve Jobs and features and benefits.
37:03 Speaker 01 Yeah.
37:03 Speaker 03 He he didn't come out and say, like, um, you know, here's 32 gigs of music capacity, he's like a thousand songs in your pocket. Is that what you mean by that?
37:13 Speaker 01 Well, actually, yeah, you know, when we started doing this events, that was a huge inspiration. We're like, well, we should just make them exactly like the Apple events because they've perfected it. But then, you know, now now we're on our fifth event this year. We started it last year. And it's really just we don't think about the Apple events at all. We I I think I think it's almost like um
37:36 Speaker 01 Learning to play a new instrument, right? When you first learn to play an instrument, you know, you just have to practice and do what the other greats have composed in the past. But then once you get to a certain level, you you know enough to to innovate and to like break rules and to change things. Um so yeah, now now we really like try to make it different each time. Like how how can we from first principles make this event as as good as possible? And uh we we don't feel like we have to be tethered to the the old Apple model, which some people just replicate. Um but to answer your questions, no, I I think
38:16 Speaker 01 I don't think that was necessarily a rule that Apple had for the events. Actually, in a lot of their events, they get really into the technical details of the computers and they share the megahertz of the processors and they'll they they even had bake offs where you know they would load a website with a PC and they would load it with a Mac and obviously the Mac would load ten times faster and everyone would be like, oh my God. You know. One second, 1.5 second load time versus 7.9. Um
38:43 Speaker 03 Well, Jobs was like, I mean, he had this element and you see it throughout history and and showmanship, right? Like there was a
38:49 Speaker 01 absolutely.
38:50 Speaker 03 story to it, there was a presentation, there was like you were anticipating, you were like you could feel what was going on.
38:58 Speaker 01 Yeah, and I think, you know, he was basically uh an artist. He was probably the the greatest of all time at at that particular element of it.
39:07 Speaker 03 How are you guys using AI internally? Like, what would surprise me about how you're using it?
39:12 Speaker 01 Yeah. Um I think we haven't talked too much publicly about it, but we're doing an AI event on December 16th, which is our first uh Our first big event focused on AI as well as prediction markets, but AI is going to be a big part of it as well. Um, I think that when when we talk about internal operations, what we told the team from the very beginning is look, there's two areas where we want to start with and be absolute best in class in our space. And that's customer service and software engineering. Because if you think about what really moves the needle,
39:52 Speaker 01 those are the big teams that have multiplicative impact. Customer service interacts with You know, all of our customers that are having issues or need help with the platform. And traditionally, that's been a big cost center for our peers and competitors because it scales with uh with number of customers on platform. Um, and so we've we've done so much innovation there. By and large, if you interact with customer service on Robinhood, you're you're interacting with our AI agents. Um and and I think we are Best in class on that side. On the software engineering side, you can think of it as accelerating product velocity and development.
40:37 Speaker 01 So we've seen tremendous increases in product velocity from our engineering teams because
40:46 Speaker 01 from a very early point, we made it as easy as possible to use every AI tool. It started with a GitHub Copilot because that was the only game in town. And then, of course, Cursor and Windsurf until that got acquired. And then, of course, uh Claude Code has been a very popular uh command line interface tool recently. And and I think the important thing about AI adoption is you have to track the right metrics and actually look at them very, very carefully. And I think the the great thing about software engineering and customer support is the metrics are pretty easy, right? For customer support, you have to look at AI deflection rate.
41:27 Speaker 01 How many what percentage of tickets that would otherwise be going to an agent are actually being fully self-served by AI? Uh, and you you want to drive that up as high as possible. And for software engineering, you're looking at percentage of code commits generated by AI, but you also want to check that with
41:48 Speaker 01 is the total engineering velocity or the are the total monthly commits per engineer continuing to increase? Because um You want to make sure that it's not just AI is doing a larger and larger percentage of the software engineering contributions, but that in aggregate, you're you're making more contributions and being more productive. And so I think we started with those internally. And now we're we have it baked into the process where we almost think of it as headcount. Okay, how much, how much compute do you need next year? Uh, instead of this headcount, how hard have you tried to like use AI agents in the workflow for every team?
42:28 Speaker 01 And I think the next frontier where we're going to see really interesting stuff is on creative and marketing. So you can imagine to create really high-quality advertising collateral would have taken a lot of like deep work over a long period of time by great artists. But if you can empower those artists with the best tools, 11 labs, mid-journey, runway, you know, the total amount of creative can increase by 100 or 1,000 X. And you can actually make them much more personalized. So, so I think that's that's the next frontier that companies aren't really talking about. But I think we'll get to the point where next year you'll see, you'll see a big step change.
43:13 Speaker 03 So what does that mean though? Walk me through the second and third order effects of that. Like if you can do that, that means anybody can do that. And if anybody can do it, well, all of a sudden, like what is the consequence of that?
43:24 Speaker 01 I actually don't think anybody can do that. Um, I think these are really hard problems to to get right. Um,
43:33 Speaker 01 yeah, because it's not just, of course, most people don't even have metrics to track this stuff, which is uh I can give them the metrics. Hopefully they're they're useful to listeners. But thinking about let's just say customer support, for example,
43:51 Speaker 01 I like to break down customer support, progress, and AI into three stages. Uh and and you'll you'll see, or more uh more phases
44:03 Speaker 01 than stages, I should say.
44:06 Speaker 01 Phase one, phase two, and phase three. Phase one is uh a company puts the help center into the AI chatbot. And so the chatbot can answer. Any question from the help center. Most companies doing AI for customer support are in this phase, right? Where it's just that's pretty easy to to get going. Most people just
44:28 Speaker 03 Almost like a better search function.
44:30 Speaker 01 yeah. Better. Well, you know, and it's better than actually having links to the help center that you'd have to navigate, which actually I think probably still most companies aren't using AI for customer support and they're still pushing you towards just navigating a help center. We were there too, probably. Five years ago, five to ten. Phase two is
44:53 Speaker 01 all right, you're getting a little bit more sophisticated. You're not just taking the data from your help center and feeding it into the AI, but now the AI can actually go into the database.
45:01 Speaker 03 Hmm.
45:02 Speaker 01 And they can say, okay, I can see Shane's account. He's got, you know, $50,000 in there and he just deposited some money yesterday from Chase Bank. Okay, so you can pull that data and you can use it to provide better contextual support, but it's still read only.
45:18 Speaker 03 Yep.
45:18 Speaker 01 Right. So I'm rough numbers. Let's say 90% of companies are in phase one. 90% of the ones that aren't in phase one are probably in phase two. Then you have phase three, which is okay, now I can actually do non read only actions. I can change stuff. Maybe I'll refund you if you're not happy with your purchase. You can refund your gold subscription fee. Um, so that involves actually some pretty deep.
45:48 Speaker 02 Mm-hmm.
45:48 Speaker 01 Work deep integration into all of like the back end systems. So you can imagine the utility goes up as you get deeper, but the cost also goes up. Um and so actually I think very few are in phase three. That that's where Robinhood's in. Um and uh yeah, it's it's it's actually not easy. And I I think that most companies are vendoring this, and this is the thing that vendors are hard at because you know, vendors are not going to be able to. Save you much time in the actual process of plugging into all your systems. That's going to be work that your engineers internally are going to have to do. But I think what made it easier is from a pretty early point,
46:34 Speaker 01 we wanted to make our data easily queryable internally because we wanted to run good analytics to understand what was going on. And so once your data is queryable, it makes it so that you you generally have good systems hygiene. It's, you know, in one place. Uh It's like got clean interfaces. You spend time making sure that it's correct. Um, and and I think the work that we did, not really thinking about AI, made it a little bit easier to plug plug in these models and and actually run inference and you know, build build agents. And and that's just the stuff we do internally. In the product, we have Robinhood Cortex, which is our AI model. And um
47:18 Speaker 01 the most visible use case of it in Robinhood right now is. Stock in crypto digest. So if you go to a stock that's moved, it'll give you uh a real time view of what's actually driving it. I think some of our competitors have done this as well. Um, but I think what makes our offering especially compelling is it updates basically every minute. Uh it it updates whenever new information comes in. Whereas, you know. I think most companies do it once per day, and it's just it's it's basically stale for companies in which lots of news happens.
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49:07 Speaker 03 If you're a founder, you know naming your startup takes forever. You finally land on the perfect name only to find out that Peter from Delaware got to the dot-com first. So you're stuck with two bad options pay up and fund Peter's retirement or tack on random words until your domain looks like a Wi-Fi password. But after all the time and money spent on naming, you don't want that. And thanks to dot tech domains, you don't have to. With dot tech, you get the name you actually want. It's clean, sharp, no compromises. It instantly tells investors and customers that you're building technology. CES dot tech, the world's biggest consumer tech event, uses dot tech domain. So does OneX.tech, an OpenAI backed startup along with hundreds of thousands of tech companies worldwide.
49:52 Speaker 03 So don't waste another minute negotiating. Go to GoDaddy, Namecheap, Cloudflare, or wherever you buy your domains and get your dot tech domain today. You have an AI company now too. Right?
50:05 Speaker 01 Yes, that's right.
50:07 Speaker 03 Talk to me about the limitations of how we train the models and and what the implications are. I think about this in the sense of You know, the models are trained on the whole internet. There's a lot of garbage out there.
50:19 Speaker 01 Yeah.
50:19 Speaker 03 They're predictive in the sense of they're really uh, you know, to the walk me through maybe the prediction versus reasoning, pure reasoning from first principles up, and how you think um the current limitations are and where we're going with this and what the alternatives are.
50:34 Speaker 01 Sure. Um
50:37 Speaker 01 Yeah, and basically the company that I started a couple years ago that I'm chairman of uh is called Harmonic, and it's building mathematical superintelligence, which is AI that can solve math problems at a level exceeding uh humans, the best human mathematicians. And Uh it's not quite at a level exceeding all of the best human mathematicians, but it certainly exceeded my level, which I didn't think it would do so so quickly. But yeah, earlier this year, we actually achieved gold medal performance at the International Mathematical Olympiad, which is the world's most prestigious mathematics competition. Um, these are like cracked high schoolers. Like
51:21 Speaker 01 f five people got perfect scores in the International Mathematical Olympiad. And uh Just to contextualize, I say high school, but I bet you I would struggle solving a single IMO problem. Uh yeah, yeah, right now. So Aristotle, which is our model, solved five out of six. And um the bet always was that
51:48 Speaker 01 this would actually generalize to other things. So if you're good at math, as a human, I felt this because I was a math major. If you could figure out how to solve a math problem, you could solve pretty much any problem. So that that could generalize to General problem solving, like to be better at making business decisions, for instance. Um, and so we've tested that. Actually, over the past few weeks, uh they released a uh product for mathematicians and researchers, and it's been used to solve unsolved math problems.
52:21 Speaker 03 I saw that.
52:22 Speaker 01 You saw the the Erdosh problem?
52:24 Speaker 03 Yeah, yeah.
52:24 Speaker 01 Yeah. So Paul Urd
52:26 Speaker 03 I didn't understand it. I just saw that you solved it.
52:28 Speaker 01 Yeah. I mean, um, yeah, the problem itself is too complicated for me to understand and solve. Um But Paul Urdush was this like um very prolific mathematician. He would actually travel around the world, stay at people's houses, and work with them for a week or two weeks at a time, solving math problems. And so there's like a collection of articles and books of uh problems that Urdush conjectured. They're usually conjectures, like, it seems like this thing is true mathematically, but I can't prove it. And so now there's, you know, websites that collect these things. There's something like 1,100 Urdush problems. Uh, about half of them are open, unsolved. And um yeah,
53:14 Speaker 01 Harmonic solved at least one of them. There's always some debate like, is it solved somewhere else on the internet and nobody found it? Um, so you know, there's always some controversy around these announcements. But I mean, it's solving an unsolved problem that people care about is a big deal. And you've seen making the jump from competition math. To solving unsolved Urdish problems in a couple of months. And the goal is to ladder that up to unsolved problems that everyone cares about that are of like massive importance. And actually, yesterday they released an update that uh Aristotle learned to write computer code too.
53:54 Speaker 01 So on a software verification benchmark, it hurt it hit a new state of the art of something around 97%.
54:02 Speaker 03 Amazing. What's different about how you're training that versus how somebody like anthropic or open AI, like what's different about the model itself?
54:12 Speaker 01 Yeah, two things. One is um They tend to train uh so I mean they they do a lot of little things to train these models. And I think these models used to be like a monolithic LLM. Now they're actually a network of agents, which which Aristotle is. It's it's actually a network of agents that are optimized for slightly different things. Um I guess at the highest level, uh, the interesting thing about math is you can pose a math problem as computer code.
54:45 Speaker 03 Mm-hmm.
54:46 Speaker 01 And if you pose it as computer code, there's actually a way to machine check the validity of the proof.
54:54 Speaker 03 Oh, yeah.
54:55 Speaker 01 Yeah. So it can be checked automatically. And what that allows you to do is to create a synthetic data pipeline. And so all of the data that uh the the vast majority of the data that trains uh Aristotle is actually data that we generate. It's not, you know, internet data. And what happens is you ask a question. The model reasons about it. It tries to solve it. And on the way to solving it, it solves, it generates some lemmas and facts that are proved. And because you can machine check them, you know that they're correct. And if they're correct, you sort of like put them into the training.
55:37 Speaker 01 And so as it as it solves problems, it gets smarter and smarter. And that's basically the idea. So there's similarities. It's probably closer to training a model to play chess really, really well. Than it is to training just like a English language LLM. But I think the the fundamental techniques tend to overlap. I mean, there's a lot of reinforcement learning and post-training. There's pre-training as well. Um,
56:09 Speaker 01 but yeah, the the main difference is this ability to machine check the results, which gives you a a good reward signal for your reinforcement learning.
56:19 Speaker 03 What do you think the limitations are on the way that we're sort of like doing the large scale language models now in the sense of training on huge data sets and being more predictive than I would say bottoms up first principles? If that makes sense.
56:34 Speaker 01 Yeah, I mean. I think that
56:39 Speaker 01 we've already shown an ability to create new knowledge. Um, and I think that's going to continue. So, you know, right now, let's say you can easily at low cost produce a proof that's
56:53 Speaker 01 10 pages long. And actually, we can produce longer ones, but just uh as an example, per per unit cost and time, you can produce a 10 page proof. Well, in a year it'll get to 100 pages. In three years, it'll get to 100,000 pages. And then you can say, okay, what type of problem has a hundred thousand pages? Page proof. That's probably some of the deepest problems in mathematics. And at the same time, that same thing is not just going to happen in mathematics, but all dependent fields physics, computer science. And, you know, what uh what's the equivalent of a a really deep result in physics? I mean, we could we can understand the fundamentals of um unification, which has been a big problem for.
57:39 Speaker 01 It's been the problem in theoretical physics for 50 years. Like, how do you align the theories of uh gravitation with the other with the other forces? Um, and we we haven't had much progress in that. And probably AI could help with that. And then if we can figure that out, the consequences for building new engineering is uh are profound.
58:06 Speaker 03 Do you think AI is going to be like one model sort of like takes all? Or do you think it's going to be fairly like you're going to have multiple models that maybe are slightly nuanced, a little bit better at different things? Like, how do you see this playing out in the next, you know, five or ten years?
58:22 Speaker 01 I think it depends on uh Uh I I think there's going to be multiple models, and it's really going to depend on the data that is used to feed them. So, for example, one thing that's great about Aristotle, which is harmonics model, is you've got mathematicians that are using it to ask very complex math
58:41 Speaker 03 Mm-hmm.
58:41 Speaker 01 questions. So if you've if you've got all the mathematicians using the model, then you basically have an advantage with mathematics data. And I think that's true in other domains. Um I think that generally people tend to use Chad GPT as a first crack. But it's, you know, it's a it's a good general model. It'll probably give you a reasonable answer. But I don't think they're gonna spend the time to go deep on every single domain. And I think that's why you're already starting to see a little bit of specialization. Um, Anthropic has a very good coding model, and they've basically done very well in the enterprise for software engineering. They've kind of specialized there.
59:24 Speaker 01 Um, Google, obviously, very, very strong model in general reasoning. You know, Gemini 3 came out and surprised some people. Though if you were looking at the Robin Hood prediction market, we had a prediction market for uh for the majority of the year on what's going to be the top AI model by the end of the year. I think it became pretty clear mid year that Gemini was going to take it.
59:47 Speaker 03 Interesting. I mean, they should based on the data access that they have. They have probably the highest quality data source in the world, uh and full access to it with very few restrictions.
59:54 Speaker 01 Yeah.
59:57 Speaker 01 And uh limitless compute and big printing lots of net income to fund it. Yeah, they've got they've got some advantages for sure.
1:00:06 Speaker 03 I would say Chat GPT.
1:00:07 Speaker 01 And they and they actually compete with uh harmonic. So they have a similar mathematics model called um Alpha Proof.
1:00:16 Speaker 03 Oh, interesting.
1:00:17 Speaker 01 Yeah, which is uh again, it converts mathematics from English into a programming language, and uh you get that reward signal. And actually, interestingly enough, Alpha Proof was the first AI model to get a silver medal, to achieve silver medal performance at the IMO last year.
1:00:35 Speaker 03 Okay.
1:00:36 Speaker 01 But Alpha Proof, uh, they did not announce a gold this year. So yeah, we were we were uh we were the harmonic team was excited about that. That, you know, in in a year we were able to surpass Alpha Proof capabilities.
1:00:50 Speaker 03 I will say Gemini uh has far passed on my usage of um just in the last two weeks. Like it blows away Chat GPT.
1:00:59 Speaker 01 A lot of people have been saying that. Yeah.
1:01:01 Speaker 03 Yeah. And and I love the race as a consumer. Like it's it's great. And you know, better technology for everybody is sort of and competition is good for everybody. Like it pushes everybody to be better and work harder and get ahead.
1:01:14 Speaker 01 Absolutely. Yeah, I mean, I I heard there were reports of OpenAI calling a code red. And it's funny because when Chat GPT came out uh in 2022, Google called a code red,
1:01:27 Speaker 03 Yeah.
1:01:27 Speaker 01 right? And they said this is uh
1:01:28 Speaker 03 Yeah.
1:01:29 Speaker 01 Existential threat to Google search. And then at that time, everyone was counting them out. They're like a big slow company. How are they ever going to catch up? They're just getting disrupted. Look at the Google search market share. So it's just amazing how quickly the narrative can shift. Um
1:01:44 Speaker 03 Yeah.
1:01:46 Speaker 01 but yeah, I think Sundar and and Sergei and the team have uh have done an amazing job. You know, you got to tip your hat off to them.
1:01:54 Speaker 03 I want to come back to something you said earlier about. How math helps you make decisions at Robinhood and just decisions in general.
1:02:03 Speaker 01 Yeah.
1:02:03 Speaker 03 What's the connection there?
1:02:05 Speaker 01 I think math is a good way to train your brain into uh Doing hard things, right? And it's almost like
1:02:15 Speaker 01 if you can deadlift 500 pounds, then picking up your crawling baby uh from the floor is very, very easy, right? So no business problem is as complicated as solving a really, really hard math problem. So if if if you if you get used to the pain and the suffering and like the mental stress. Uh of beating your head against the wall for 12 hours on one single math problem, which Beijer and I did very, very often when we were in college. We'd like pull all nighters working on these problem sets. Um I think that's really, really good training. It's like going to the gym for uh for business problems.
1:02:58 Speaker 03 What are you obsessed with lately?
1:03:01 Speaker 01 Um I am obsessed with the business world. Uh I the the thing that I'm most focused on right now in sort of my my life as Robin Hood founder and CEO is getting more people into the markets and in particular giving access to private markets.
1:03:25 Speaker 01 I think that's the biggest iniquity in capital markets today. And I think it's it's very important because you see all of these companies who are building AI models. We're in the midst of possibly the greatest technology revolution, not just of our time, but of all time. And there's going to be disruption, there's going to be large scale dislocation. And it's simultaneously the fastest growing technology and product out there, but among the the least popular. People are worried AI is possibly going to take my job. Do I really like it? And and of the majority
1:04:08 Speaker 01 of AI companies out there are private companies, even though some of them are in valuations of tens of billions or even hundreds of billions of dollars, which means retail investors can't invest in them. And juxtapose that with the fact that going public as a company keeps getting more challenging. There's more process, less companies are doing it. There's more opportunities for institutional capital to fund private companies. And you get an inadvertent situation where retail investors are shut out of some of the most important companies. And it's not just AI. I think AI is the most important. But there's also space technology,
1:04:51 Speaker 01 right? You look at SpaceX, it's valuation in the hundreds of billions. It's basically the largest and most impactful private space company. Uh retail's been shut out from the very beginning there. And so uh I'm trying to figure out how to correct that and reverse it, give people exposure to these companies and make it so that
1:05:16 Speaker 01 everyone's an owner of our industry. And if we make sure everyone is an owner, if you own something, you want to protect it. And I think we're more likely to have. A a stable and prosperous future.
1:05:30 Speaker 03 Well, I was going to start with how you operate internally, but let's dive in right here about tokenization and how we sort of allow retail access to private, otherwise private investments. But maybe the way to talk about that. So we we have space, which is arguably one of the most important technologies over the next, you know, we can anticipate over the next 50 years. We have AI, probably in the same bucket. And then we have real estate, which is another one that people sort of talk about and tokenizing.
1:05:58 Speaker 01 Yeah.
1:05:59 Speaker 03 How do you think about all three of those different types of assets? Where I would imagine AI and sort of space are the same. You're tokenizing a private asset that you need to own the underlying shares.
1:06:11 Speaker 01 Yeah.
1:06:11 Speaker 03 What about real estate?
1:06:13 Speaker 01 I think real estate is uh incredibly meaningful, especially now that most people are unfortunately at a point where they're they're having difficulty buying their first home. Um and I think that could be attacked from multiple angles. One is by breaking it up into little pieces and making it so that, okay. Uh maybe I don't want to take on a mortgage and and own my own home. But maybe I want to be an investor and be exposed to either one or multiple homes in areas that I think will do well. So I I think that'll happen.
1:06:51 Speaker 01 But my my priority, I think, is late stage privates. We launched this thing in the US called Robinhood Ventures, which aims to solve this problem. And we have our first closed end fund, which we filed to go public. Which is in the quiet period right now. So I can't talk in much detail about the mechanics of that. But I think the the biggest opportunity and the biggest problem is in private markets. And I think there's also opportunity in early stage venture. We we want more people to be exposed to companies at the earliest possible stages, even though the risk is greater, because the opportunity for upside is also greater. So I think there's there's interesting opportunities and products there.
1:07:36 Speaker 01 And if we can streamline uh the capital markets aspect and make it easier for entrepreneurs to raise money on the other side, then we could lead to more entrepreneurship and innovation too. Yeah, and and real estate is interesting to us as well. And I think the way real estate's been done is
1:07:58 Speaker 01 not amazingly inspiring. I mean, it's sort of like generally low quality properties in. Random parts of the world, commercial properties. So I think that real estate is so visual. Uh the purchasing experience of just going on a Zillow or a Trulia and browsing has gotten really good. And I think it's far ahead of the experience of actually investing in real estate. And I think those don't exactly overlap. So I do think there's room for a real estate investing product that. Is actually legitimately good and low cost and easy to understand.
1:08:40 Speaker 03 So, how would that work? Would Robin Hood buy the real estate and then sort of tokenize percentages of it almost like shares? Like what would be the mechanism for that?
1:08:49 Speaker 01 I think tokenization as a underlying technology can be done, but it's not really permissible in in the US. And the reason for that is
1:09:04 Speaker 01 what what you'd be tokenizing is essentially a company. And so when you tokenize a company, it it goes into security regulations. And security regulations have an established framework that Is not currently compatible with uh decentralized finance and crypto technology. So that that's one of the things that is being worked out. But there's another mechanism in the US using sort of traditional rails, which uh which are called 40 act fund structures. And I I think there's been uh well, there there will be a flurry of innovation in this space.
1:09:45 Speaker 01 Partly because the current administration has declared that they're open to using these vehicles to provide access to alternatives and privates.
1:09:55 Speaker 01 And the limitations currently are that it's hard to take an individual asset, like a if it's real estate, an individual property or an individual private company for in the in the in the sense of late stage privates, uh, and and make that tradable. But you can do a portfolio of things. So at least as a passive investment vehicle, we can give people that type of exposure.
1:10:18 Speaker 03 So you're buying access to a whole bunch of late stage, maybe there's sector specific like AI or space or just broadly speaking.
1:10:25 Speaker 01 Yeah, and uh tokenization will work outside of the US. So you might have seen a couple of months ago we did a crypto event for a crypto business in Europe. And there we tokenized uh hundreds of public equities and also did a tokenized giveaway of OpenAI and and SpaceX, which was very popular. And uh and so I think similarly to how stablecoin has evolved, tokenization will be the primary vehicle for XUS investment. Uh uh until we get regulatory clarity, and you'll see tokenization of privates seep into the U.S. as well. Uh and the U.S. already has robust structures for traditional finance that
1:11:09 Speaker 01 Robinhood will work to make more digestible and accessible to retail investors.
1:11:14 Speaker 03 So if that's the first step, what do you see as the second and third order, the intended and unintended sort of consequences of that?
1:11:22 Speaker 01 I think it depends on the asset class. So, for example, for privates, I think the uh second order consequence is that. For entrepreneurs, the other side of the market, uh, you'll have an easier time raising capital. So rather than going through this opaque process of spending a lot of time meeting investors one on one, pitching in person, uh, you could imagine a digital fundraising process where you're plugged into, you know, an electronic market and you can push a button and you you get the capital to run your business. I think that'll happen, not just for crypto companies, but for all types of companies.
1:12:08 Speaker 01 Um secondary liquidity will be much easier. So if you're a early employee of a company or an executive and you have quite a bit of shares locked up, you'll be able to sell easily on a transparent market without the complexity of dealing with paperwork, um, yeah, or or waiting till IPO. So I I think those are the things. And I think the third order consequence will be uh a an explosion of entrepreneurial activity. Like if it's easy to get if it's easier to get funding for an early stage venture, for example, and you don't have to spend full time as CEO raising capital,
1:12:53 Speaker 01 I think there'll be much more, much more capital for startups and consequently much more startups.
1:13:00 Speaker 03 Are there unintended consequences to a company like Stripe where you're uh, you know, they're, I would say by and large, controlling the price? Like it's fairly stable. Uh, whereas if it goes to retail and it gets marked by the day, that price could change dramatically. And then employees who are getting options, I'm just trying to think through the chain here. If employees are getting options, but those options are highly variable because you, if you're the company, you want to tie the employees' tenure to the growth of the business. And you can kind of distort that, couldn't you, with secondary marks? Because they would have to consider those marks when they're valuing the company internally for options or no. I don't know.
1:13:39 Speaker 01 It really depends on the vehicle. So for example, there's tender offer Vehicles in the US that allow trading only at uh the nav, the net asset value, which is uh sort of like the
1:13:56 Speaker 01 the the price that these assets are priced by independent valuation bodies. The problem with that is if you're a company that hasn't done a round of financing in four to five years, the nav is not necessarily reflective of the true cost of the asset. And so there's other vehicles that allow for real-time pricing. And I I think that the platonic ideal is for the price of the asset to be driven by, you know, supply and demand and willing buyers and sellers in a in a transparent market. I think that's where everyone gets uh the best outcome because in any other scenario,
1:14:41 Speaker 01 someone could be taken advantage of, right? Like if if uh you know the One side has more information than the other. Um, you know, you you could you could end up in situations that aren't fair. So I'm I'm generally a proponent of price being discovered transparently through two sided markets. Now, again, that's not necessarily the world we live in today with
1:15:08 Speaker 03 Hmm.
1:15:08 Speaker 01 private assets. Um, and so there'll be a transition period, and not not all companies are gonna like. the changes, but I I do think it's inevitable to to some degree that this happens because what'll happen is there's going to be active derivative markets on these private shares. I mean there you've already seen that.
1:15:31 Speaker 03 There it is, yeah.
1:15:31 Speaker 01 And the data is getting out. And I think that's a hard genie to put back in the bottle. If if the price is out and then the company's doing a round of financing anyway. And it's like, well, why why are the derivatives here and you're pricing the round at at this price? Why don't I just Hedge my exposure. So I think that it's going to be tough increasingly in a global market to
1:15:59 Speaker 01 have as much control over the price as maybe private companies have historically had.
1:16:06 Speaker 03 One of the other impacts of that that I can think of off the top of my head is LPs selling their interests in a fund or a vehicle that they have, where that is not a liquid market these days. And if it is, to the extent that it is liquid, there's often huge discounts or haircuts on LPs trying to exit early.
1:16:24 Speaker 01 There's been a lot of activity in this space, and I think it'll continue, particularly for LP interests and special purpose vehicles that are highly concentrated in one or two companies. I think those are in many ways becoming an alternative to direct investments in companies. I think our our preference and uh how we approach access to privates is we we always would prioritize coming through the front door, right? And and making sure that the company wants exposure to retail. And, you know, we we want to work with companies who actually see this. And um I think in in the case of the
1:17:09 Speaker 01 Open AI and SpaceX tokenization, we were sort of running an experiment and we wanted to be the first. You know, if there was a Guinness book of world records for the first tokenization of OpenAI and SpaceX, I wanted to claim that. Um, but you know, it was a small giveaway in the grand scheme of things. I think the scaled solution uh is is best when actually the companies are involved. And what I've seen in the past few months as we've gotten Robinhood Ventures off the ground. Is that great companies do want to be a part of this and do see the value of retail. We've made a a number of investments that have actually been public about how much they love the model and how uh they think this is the future.
1:17:53 Speaker 01 And we saw the the same phenomenon for our IPO access offering. So we have a great IPO access offering, which is the number one retail channel for IPO participation. And we started this in 2021, around the time that we went public. And we've done I think roughly 50 IPOs since the beginning. And around the beginning of this program, generally we got a skeptical reception from companies. They didn't understand why they would want to do it. Their bankers would kind of talk them out of it. So we had to ask for favors and we really had to elbow our way into getting even small allocations into some of these deals. And this year, there's a complete,
1:18:37 Speaker 01 profound change. Where the best companies that are going public are coming to us and asking for feedback about their retail strategy. And you see the CEOs going on national television and talking about how, you know, they want to contribute to the disruption of the traditional IPO model and giving retail larger and larger allocations as time goes on. So people are embracing it. And I think the same thing is going to happen for private retail access. It's just going to go earlier stage, but the benefits are so strong that I think that they'll be.
1:19:13 Speaker 01 It'll be standardized as time goes on. Uh, and I think also we could make it easier for companies to go public. There was actually a roundtable that I was part of here in New York uh two days ago. It was called Make IPOs Great Again. We had the red hats and everything at the New York Stock Exchange. And I think that there's improvements. The IPO process has gotten so ossified, and the branding of it is bad at all stages. That you can really just like systematically make improvements across the board. So um I I think we should do that as well and make it uh
1:19:54 Speaker 01 improve the brand of of being a public company and also make it easier to get public. And at that point, we'll we'll really be attacking the problem from multiple angles.
1:20:05 Speaker 03 How do you think about what to expand in next? Like what goes into that decision? What are the factors, the variables that you're thinking about in your head as you're looking towards the roadmap the next 10 years? There's all these things we could do. How do we allocate what we are going to do next?
1:20:20 Speaker 01 Yeah. Um I think like our North Star is really just maximizing equity ownership, uh direct equity ownership from retail uh across the world, right? And, you know, that that's what we get into. How do we get more people invested in public stocks? Uh, can we start at a younger age? And uh, which is why we're excited about initiatives like Invest America with the Trump accounts. Can we get people outside the US plugged in as well and make that as easy as possible? Uh can we do private markets, which are inaccessible to people? Like I think that uh If we if we maximize equity ownership and actually the the percentage of
1:21:04 Speaker 01 of it held directly by retail will end up in a more stable and prosperous society that that's more uh and and that's a future that I feel much more confident in. So uh we we kind of think through that, and that's why we care so much about Robinhood Ventures, the Trump accounts. Um I've been talking a lot about multi generational financial services. How do we make Robinhood work really well for you, uh for your whole family, and make it work better if your spouse or your parents or your children are on Robinhood? Um and I I think that
1:21:44 Speaker 01 there's a huge wealth transfer uh coming. So over 120 trillion are going to change hands and go from the old generation into the young. And I think that's A big opportunity to actually accelerate our goals. And I think if we do that, Robinhood itself as a business should benefit as uh as as our customers benefit.
1:22:05 Speaker 03 One thing I love, and you might have a unique opinion on this, given your background, your family's background, is giving people a stake in the American economy, the Canadian economy, whatever economy, giving people ownership in that as a means of fending off communism. But you came from a communist country. I mean, you your father was there and Walk me through how you think of that and like how important it is to actually sort of fend that off and fight up front against that.
1:22:36 Speaker 01 Yeah, I mean, the year that my father left uh Bulgaria, he he had an opportunity to study at the University of Delaware. So in Bulgaria, he was a professor of economics in in tourism uh in on the Black Sea coast, which is our warm weather summer capital, they call it. So anyway, the the Berlin Wall fell, the iron curtain was lifted, and suddenly folks from Bulgaria could leave. People from the West could come in and and we could leave. And so my my dad was given an opportunity to go to the University of Delaware to pursue a master's degree. And the year he left was 1991. So
1:23:19 Speaker 01 we we couldn't we weren't in a position where my whole family would go. Because we we didn't have the resources for that. And we also weren't sure at the time whether it was going to work out in in America. Well, there's a future there. Uh so my dad went
1:23:34 Speaker 01 in 1991, uh, the inflation rate in Bulgaria was over 100%. So we talk a lot about, you know, 5% inflation here, but literally it was like triple digit percentage inflation. And and I remember my mom um would look out the window. We lived in an apartment in Varna, and I still remember the line for the the grocery store. Like You had to actually get there at the right time. Um, or or otherwise there were no eggs available and no milk available, you know, and the milk would be in these like big plastic bags. So, um, yeah, and there there was also power rationing.
1:24:17 Speaker 01 So, you know, when when inflation hits that high, you get all kinds of problems, not just food shortages, but also electricity and power shortages. And so they would have these rolling blackouts. So I remember being huddled around the radio, and the the radio was like battery powered, and you know, the power would go out pretty much every night. So we would just be like listening to the radio with my grandparents. Um, and then we came to the country, uh, to the US. My mom came uh about a year after my dad. I came six months after her. And um I remember I was five years old, so I could still uh I still remember some things. Like it w it was very clear. You know, I have memories from childhood in Bulgaria, and then when I came to the US,
1:25:03 Speaker 01 And one thing that shocked me was that there were bananas in the grocery store. Like you go to the grocery store and you'd see the big thing of bananas. And in Bulgaria, bananas were like a crazy delicacy.
1:25:16 Speaker 03 Gold.
1:25:17 Speaker 01 Well, because you had to get them from Cuba,
1:25:19 Speaker 03 Yeah.
1:25:19 Speaker 01 right? That was that was our, I think that was the banana trading partner. So it's like bananas are what? 20 cents. Um so yeah, that that seemed crazy. And then I also remember when I was a little bit older, so this was 1996, 1997, five years after I came, Bulgaria had the unfortunate distinction of having the highest inflation rate in the world, which was at 1800% in one year. So you had the currency essentially collapsed and they they kept having to add zeros to it. It used to be, you know, two Bulgarian leva to one dollar, and I think it got to 2000. Um So they kept having to like recycle all the bills and add more and more zeros.
1:26:05 Speaker 01 And at that point, I was I was actually looking at this earlier. Um, my parents had uh the bank statements for my initial savings account. So my grandparents opened up a savings account for me when I was born, and you see all their deposits, and it was like, you know, 10 leva, 20 leva. Uh it got up to 2,000 leva in the mid 90s. And then the next one, it was like basically zero. Yeah, they they had to do all sorts of crazy things. My my grandfather would uh invest in copper cookware. So he had we had this closet in in his apartment that was just full of copper pots and pans. They would hold value better than the currency. And
1:26:52 Speaker 01 I I think that if there was an easy way to invest and to protect your wealth, um would have been much better for the country. Uh, at the end of the day, because, you know, the the country got set back. It was sort of like the year I was born, 19 1987. Maybe the time around that was was the heyday of the country. And then for a long time it was just a gradual decline. And and I think now there's promising signs, but you know, I I think that um so much of it starts from the will of the people and and and how optimistic they are about the future, being able to raise children, uh, the economy. And uh, you
1:27:37 Speaker 01 know, I just just saw the impacts of of having uh a market system that just didn't work. Um so, you know, made made me appreciate what we have in this country and uh wanting to make it more global, export it to to everyone else and and just making it easier for people to own companies that are producing stuff.
1:27:58 Speaker 03 I I love the idea of owning a part of the American dream in that sense. And are there is there another leading sort of indicator of that that can change things? Like, is it housing affordability? Is it optimism? Like what can be done in a in a way to sort of give people a rung on the ladder, if you will, if you want to think about it in that way. So the ladder's not out of reach. And I think about that in terms of like how do we get more people invested in capitalism? And one of the ways is is ownership of assets.
1:28:29 Speaker 01 Yeah.
1:28:30 Speaker 03 Uh, and tying that, I love what um they're doing with tying that back to education and schools and the portfolios and stuff. What's the other one? Like, what is the next big thing that we could do to sort of like give people a stake in capitalism?
1:28:44 Speaker 01 Yeah. I mean, we talked about real estate, uh We've definitely talked about real estate in the past. Um and I wanna, you know, I'm a I'm a I'm a proponent of a diversified portfolio. I I don't want to say one asset is better than another asset. Um I think that
1:29:05 Speaker 01 if if we make it easier to I I I think the general approach that we have is look at what wealthy folks have access to. What are the tools they have to protect their wealth and and grow their wealth. And, you know, they have access to all sorts of things that are not easily accessible. Um, a lot of alternative investments, real estate, private credit, private equity, venture capital. And if if we're in a world where it's easy for for the mass market to have access to these, then uh I I think I think we'll be in good shape.
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1:30:45 Speaker 03 How do you think about something like Bitcoin?
1:30:48 Speaker 01 Uh I think Bitcoin has been thinking in in hindsight that The top performing asset of the past decade. Um, and you're starting to see
1:31:02 Speaker 01 it becoming more institutionalized. I mean, not just with the DATs, but companies putting Bitcoin on the balance sheet, institutions and asset managers embracing it. I mean, for a long time, Vanguard, one of the largest asset managers, said we're not gonna offer Bitcoin on our platform, but You know, e even companies like that are changing their tune and and offering it. And um yeah, I think you should expect that to accelerate. I mean, Bitcoin as the original crypto asset is always going to be singular. Nobody else is going to be the first or or original. And I think that's why so many people,
1:31:46 Speaker 01 that's why there's such like uh mystique and aura about it, right? Because um, you know, you you go to these, you go to these Bitcoin events and There are believers, and and they'll tell you it doesn't matter what what's going to happen. It goes up, I buy more, it goes down, I buy more, I'll tell everyone I know to buy it. Um so um yeah, at this point, I would I would definitely not uh I would definitely not be uh a long term Bitcoin bear.
1:32:22 Speaker 03 If Trading retail assets and allowing easy access to that. You guys offer no fees on that. How do you make money on that? You still have people to pay? You get an organization to run. If I can go buy a share of Tesla or SpaceX or Stripe or whatever through the app, how do you make money on that?
1:32:41 Speaker 01 Well, we do have um fee based products. I think that in the beginning, um
1:32:49 Speaker 01 Yeah. Robinhood was a simpler business. We offered equities trading. At the very beginning, we didn't make money and eventually it became payment for order flow and margin lending and interest on on uh on balances. But now Robinhood is a financial super app. We have 12, we have 11 business lines as of the last earnings call that generate 100 million in revenue or more. And I think the general principle is we make money in all of the standard ways transactions, interest on assets, uh lending based revenue. But we like to compress the margins and uh operate much more efficiently.
1:33:31 Speaker 01 So through the through our use of technology, we can offer our services at uh much uh much lower cost, and we can actually give to our customers the difference so that you're actually at a financial disadvantage using any other product than Robinhood. Um So yeah, I think unfortunately it's not as simple as like, oh, free trading or not commissions. We we do make money in other ways, but generally using using Robinhood should be cheaper, higher value, more cost effective across our entire product suite than any of our competitors.
1:34:07 Speaker 03 Why do you think your credit card was so successful? Like everybody has a credit card.
1:34:11 Speaker 01 Yeah.
1:34:11 Speaker 03 There's a hundred different ones. They're super it's it's almost like when I saw how simple yours was in a way, I was like, oh my God, this is like Steve Jobs coming back to Apple. Taking 400 product lines and making like no, we're doing four computers, we're simplifying everything.
1:34:26 Speaker 01 It's easy to explain the value prop. 3% cash back on all categories. Right. And if you're a credit card nerd, which many people are, if you're like one of those people that follows the points guy. Um
1:34:40 Speaker 03 There's some businesses like related to like just optimizing points.
1:34:45 Speaker 01 Yeah. I mean but you know a lot of people don't want to play that game either. They want to say, okay, I I don't want to spend my time working in spreadsheets and figuring out, okay, if I spend this much on travel, I use this one card. And for my groceries, I use that and for my gas, I use this. Um so it this very s very compelling value proposition is say 3% on all categories. Because what that allows you to do as a As a spender, is to say, this is just my default card. I'm just gonna, I'm just gonna, this is gonna be at the top of my wallet. Sure, I have the opportunity, the ability to do more work. If I wanted to do more work, maybe I'll pull out some other cards for other scenarios. But I also know that
1:35:30 Speaker 01 if I don't want to think about it, this card is is really good in general as a default. And I think, I mean, in in some cases, if you look at The really successful e-commerce companies like an Amazon, what they've been able to do is do such a good job that they've become the default place you go to buy stuff.
1:35:49 Speaker 03 Yeah.
1:35:49 Speaker 01 And sure, maybe at this point, if you want a comparison shop and you want to buy a new belt
1:35:55 Speaker 03 Yeah.
1:35:56 Speaker 01 and you really wanted to like save on the belt, you could probably find it cheaper somewhere else. But they do a good enough job and they serve you well for such a large majority of things that they become. The first option. I think that's what we've been able to achieve with the credit card. And, you know, even though it's still not completely generally available, we do have over half a million card holders. And we're among the fastest growing credit cards. Um and, you know, more people keep joining. It's like credit card companies typically have had to really think about cost of customer acquisition
1:36:40 Speaker 03 Yeah.
1:36:41 Speaker 01 because. They have to pay for customers to come in. But we have such strong word of mouth that customers are coming faster than we can let them off. Um and that's just entirely from peer-to-peer reviews, uh, existing happy customers posting about how much they love it on social media. I think that's been a huge driver of of its success.
1:37:04 Speaker 03 Two questions. Why do you think like somebody like Amex just doesn't copy that? Uh can they not, because it's a structural problem and they can't do it from their cost structure is different than yours? Like what what prevents them from doing that?
1:37:17 Speaker 01 I I think I think it's a cost structure problem. You look at the big credit card companies, and they have tens of thousands of people.
1:37:24 Speaker 03 Yeah.
1:37:24 Speaker 01 Right? Tens of thousands of people that are manually uh servicing the these accounts. And you know, that they spend a ton of money on marketing. So uh yeah, I think the the actual economics of of the card program itself are dwarfed by the economics of like the large headcount needed to to operate the businesses. I think those are very, very painful decisions because not only um I mean, uh not only are you talking about like shrinking uh headcount, but also in order to do that, you actually have to have the technology to to be able to automate
1:38:08 Speaker 01 the the entire servicing process and the underwriting. And I think we had an advantage because we were able to build this from scratch. So you could start from first principles. So I I think um yeah, I I think is it's very, very challenging problem to solve. I don't envy them.
1:38:25 Speaker 03 No, it's it's hard when you're the incumbent and you're faced with it. You can run up. I I think of this as like uh, you know, if you're you don't have the resources, maybe as like American Express in some in some sense, you do now. But I mean, when you started, you didn't.
1:38:40 Speaker 01 Yeah.
1:38:40 Speaker 03 And what do you want to do? You want to run upstairs because they're like fat and happy. And so it's gonna suck to run upstairs, but they can't chase you because uh it's gonna be they're gonna be out of breath, they're gonna be panicking, they're gonna have heart attack. Like they can't keep up with the velocity that you can move at.
1:38:54 Speaker 01 Yeah. And by the way, I think that if we can put pressure on the credit card companies to start modernizing, that'll be good for them and for the consumer. So um
1:39:07 Speaker 03 But you don't get three percent like in a transaction fee. So like how is that from balances? Is it from like oh you're only paying that out once a year? So you get to keep that during the and earn interest on it? Like how does that work?
1:39:19 Speaker 01 yeah, so here's the great thing. Um the other thing that we have that at least the pure play credit card companies don't have is uh a brokerage business that ties into it. So in order to get the 3% cash back, you actually have to deposit the funds into your brokerage account. And so we've created this flywheel through Robinhood Gold where by using the credit card, you also use the brokerage product. And of course, at the beginning, it was mostly the other way. So existing brokerage customers would adopt the credit card. But increasingly, we're seeing people coming to us for the credit card. And then we we we actually get them to use brokerage and our wealth management offerings as well.
1:40:04 Speaker 01 And what we've seen. Is that the more products you use of Robinhood, the more engaged customer you are, it lifts all boats. So each of our other product lines benefit. And I think that's what's really pushed us to more rapidly diversify and add new adjacent product lines rather than just getting deeper and deeper into brokerage. So basically, uh, and we saw this with retirement as well. If someone uses the credit card, As their primary card. They put more of their wealth into Robinhood and more of their money into it, and they become a more profitable customer to us. And that allows us to
1:40:44 Speaker 01 close the gap between the rebates we get from the networks and the 3% we we pay back to customers.
1:40:51 Speaker 03 If you had to rank sort of the three products that matter most when it comes to transferring my financial institution, making you the primary financial institution, what would they be?
1:41:02 Speaker 01 Yeah, I mean, making us your primary financial institution is really about coverage. And the goal is for Robinhood to be not just your secondary, but also your primary account. We want to be both. We can be your secondary account and your primary account, your backup and your and your main. Um
1:41:21 Speaker 01 most of the time when you actually ask people what's your primary financial account, they'll talk about where their paycheck lands up,
1:41:28 Speaker 03 Yeah.
1:41:28 Speaker 01 their bank account. And, you know, for a while we weren't really playing in that space. But you might have noticed uh a couple weeks ago we started rolling out Robinhood banking. And if you look on social media, Robinhood banking's a hit. I mean, people love Everything about the product experience. We've we've we've really, the team there has really done a nice job sweating the details and building a comprehensive banking offering. And it's a combination of things that you won't get anywhere else, like real time cash delivery, uh, which is available in New York. So if you're actually here uh domiciled, you can try that out. That's rolling out more broadly as well. But also just the bread and butter, child savings accounts, joint accounts, so that you can have.
1:42:13 Speaker 01 Uh shared finances with your spouse, uh, a family first experience where you can actually manage the finances of the whole family in one place. Uh so it's yeah, combination of differentiated features you won't find elsewhere, amazing economics, where you have the opportunity to earn a high rate of interest, not just on savings, but also on checking, which by the way is a huge annoyance for people that the banks play this game of like
1:42:38 Speaker 03 Oh yeah.
1:42:39 Speaker 01 your money goes in and out of your checking. And of course, will penalize you if you try to take money in and out directly of your savings too many times for no reason um
1:42:50 Speaker 01 other than to collect the high spread on checkings. So so that it's it's basically a little bit of a stupid tax where they try to like penalize you for doing wrong things. And I think that um, or sorry, penalize you for doing the right thing. So I think, you know, not to be too pejorative, they're running their business and people are uh they they provide valuable services for people. But I think that's an opportunity for us to to differentiate.
1:43:18 Speaker 03 It's almost like the run for the institution versus the customer. That's how I think about it. Whenever I deal with a bank and they do this thing where it's like, oh, if you want to earn interest, you have to open a savings account. It's like, are you incentivized by me opening a savings account? Because like, even if it makes it harder for me, so there's a bit of friction and like you get a little bit more float because of that.
1:43:40 Speaker 01 Yeah.
1:43:40 Speaker 03 Like that's oriented around you as a bank. That's not oriented around me as a consumer. Because me as a consumer, I don't want another bank statement. I don't want another PIN card. I don't want another thing that I have to keep track of.
1:43:52 Speaker 01 Yeah.
1:43:52 Speaker 03 I just want one account. Just pay me the interest on that account.
1:43:56 Speaker 01 Yeah. I I think that's right. Um, and I think sometimes, to be fair, there's a delicate line between these things. Um, because you know, they they have to they have all kinds of like safety and soundness constraints and and all of that. So
1:44:12 Speaker 03 We'll go deeper on that for a second, because I I would really love to understand why legacy is not adapting quickly to a changing world, perhaps in the most optimistic sense, or it just remains that way.
1:44:24 Speaker 01 I mean, I I think at one point there was a a rule. I think this was uh uh I I didn't study this, so you might have to uh look it up and we might have to correct it. But uh I think for a long time banks were actually prevented from paying interest on savings. And and the fear was that, you know, if they start competing over paying interest, or sorry, they were prevented from paying interest on checking. And the fear was if if there was a ton of competition over paying the highest rate on checkings, it would affect the safety and soundness of banks and it would lead to more bank failures. And and so the, you know, the the FDIC or OCC came in and they said, you know,
1:45:07 Speaker 01 no no interest on savings. I think that was later repealed. But, you know, by that time, of course, the interest you collect from from the checking accounts was such a big line item part of the PL that it's hard to part with that, right? And so they they sort of like became structurally reliant on it. Um and uh, you know, it how how do you how do you adapt if you have trillions of dollars in checking? That you're used to paying to earning 5% on. And you suddenly are talking about giving the majority of that back to the customer and taking no profit. Um, you know, you you do that very, very quickly, and your earnings go down, profitability goes down.
1:45:53 Speaker 01 If you're public, you know, that that could have an impact on the stock price, and suddenly it becomes a safety and soundness concern.
1:45:59 Speaker 03 Yeah. I was thinking about this driving here this morning. I was like, I wonder if the the
1:46:06 Speaker 03 ultimate end game is like the mortgage ties people to financial institutions in a way. Uh, because they can tie the mortgage to other products, they can tie it to your paycheck, it's deposited. And then I was thinking, well, Open Door wants to enable like one click buying of a house. And if they were to integrate with Robinhood or somebody else or a financial institution,
1:46:22 Speaker 01 Yeah.
1:46:26 Speaker 03 you could literally enable that on the spot. You can enable, like, oh, your mortgage is granted, it's approved. Uh, and it seems it'd be like seconds
1:46:35 Speaker 01 Yeah. And we have a mortgage uh Partnership with Sage Home Loans that gives you 75 basis points off of uh the national average.
1:46:44 Speaker 03 because you have better information about people too, right? So
1:46:47 Speaker 01 Yeah.
1:46:48 Speaker 03 you have history, complete history, information. And you can use that with AI, I would imagine, to actually probably generate better predictive outcomes than humans.
1:47:01 Speaker 01 Yeah, I think the hard part about the the mortgage business is it's very rate dependent. So um I don't think we necessarily want to get into the mortgage underwriting business or holding mortgages, but we we want to get we we want to help people with all of their financial needs. And I think for that one being a network and Allowing different banks to compete over who can offer you the best possible rate as a consumer is probably the road we're going to keep going on.
1:47:33 Speaker 03 But ultimately, isn't that come back full circle a bit to the tokenization? Uh so like you might pool those mortgages uh at the risk of sounding like 2007 here. Pool those mortgages and allow people to retail investors to partake in those mortgages. No.
1:47:49 Speaker 01 I haven't thought deeply about whether we would securitize mortgages. Um my feeling is that
1:48:02 Speaker 01 I mean, at the end of the day, um we just want we'll just enable what offers customers the, you know, lowest cost, whether it, whether tokenization enables that or you know, you can connect directly to a network of banks that can compete over your mortgage traditionally, I think r remains to be seen. Um you you could argue actually tokenization at first would have a disadvantage because the banks won't be tokenizing. And so you probably have to meet them where they are and give them the the information in ways that they can support. But yeah, over time that's likely to shift uh if if they They they tend to be laggards of of technology. So if you know five to ten years they're doing
1:48:47 Speaker 01 mortgage originations and on-chain, then um you you could imagine it it being the the primary market for that.
1:48:57 Speaker 03 We always end these interviews with the same question. Which is what is success for you?
1:49:03 Speaker 01 For me personally,
1:49:06 Speaker 01 I think success is um creating dramatically more value for the world than you create for yourself. So um yeah, I I I think I would feel good. If the aggregate impact
1:49:25 Speaker 01 on the rest of the world,
1:49:28 Speaker 01 and I think obviously it should be positive, I I think it is, is is much bigger than what happens to me personally. Um and I think that's what's pushing me to, uh, as you said, further ownership, uh, make it so that everyone has skin in the game. Um, because I think that if if if I can play a part in doing that across privates, publics, All post-IPO and make it so that more people own uh the great industries of of this country will lead to not just smarter and more well off individuals, but also a more stable and and prosperous society. And I think that's the
1:50:13 Speaker 01 that's a legacy that I would I would get excited to tell my grandchildren proudly uh about when they're, you know, huddled around the the fire. on Christmas.
1:50:27 Speaker 03 It's a great answer. Thank you so much for taking the time today.
1:50:30 Speaker 01 Thank you. It's been fun.
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