20VC: RobinHood's Baiju Bhatt on The Importance Of Design in Fintech and Having A 10X Better Product

Baiju Bhatt is the Co-Founder and CEO at RobinHood, the wildly successful stock market trading app with absolutely no commission fees. Since launching RobinHood there have been many amazing milestones including being awarded an Apple Design Award (first Finch company ever to achieve this), funding from the likes of Index, Google Ventures, Andreessen Horowitz and even movie star Jared Leto. They were also nominated for best mobile app at The Crunchies by TechCrunch this year. In Today's Episode You Will Learn: 1.) How Baiju made his way into the world of tech and came to found RobinHood? 2.) How did Baiju deal with the regulatory hurdles heading into the fintech and trading world? 3.) How did Baiju go about building the waitlist for RobinHood to 1m people? What were the defining strategies and channels that made the difference? 4.) What is the thesis behind the design of RobinHood? Will this design enable previously untouched markets to tap into the growing trading market? 5.) What are the biggest challenges for Baiju and RobinHood going forward? What keeps Baiju up at night? What is Baiju's biggest piece of advice to a founder scaling their startup? 6.) How can early stage founders really determine whether they have product market fit and what does this look like? What re the metrics required to suggest serious traction? Items Mentioned In Today's Show: Baiju's Fave Blog or Newsletter: TechCrunch Baiju's Fave Productivity Tool: Slack Baiju's Fave Book: The Case For Mars As always you can follow The Twenty Minute VC, Harry and Baiju on Twitter here! If you would like to see a more colourful side to Harry with many a mojito session, you can follow him on Instagram here!

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

• 0:00Harry Stebbings?

  This is Founder's Friday from the 20 Minute VC with your host Harry Stebbings. And before we dive into the show today, let's try something new. So if you want to visit the world's most famous VCs and founders through the lens of my Snapchat, then follow me on Snapchat with the username H Stebbings. But back into the show, and I'm so stoked to have an incredible founder joining us today. As you might remember, I recently did a tour to San Francisco. And while there, this app was a real constant for me, really is super, super cool. And I'm delighted to welcome Baiju Bat, co-founder at Robinhood, the wildly popular commission-free stock trading app. Now, why are Robinhood so exciting? Well, they were invested in by the likes of Andreessen, Google Ventures, Index, Slow Ventures,

• 0:44Harry Stebbings?

  and many more of the world's best. They're also the first fintech product ever to win an Apple Design Award. They were able to build 1 million people waiting lists pre-product launch. And if that wasn't enough, they were also nominated for Best Mobile App at the Crunchies this year by TechCrunch. As always, I have to thank the awesome team at Matamot for providing all the data and analysis for the show today. And if you're loving the show, then do not forget to sign up for the newsletter on the20minutvec.com. But without further ado, it's time for our chat with Baiju Bat, co-founder at Robinhood.

• 1:23Speaker 01

  You have now arrived at your destination.

• 1:26Harry Stebbings?

  Baiju, awesome to have you on the 20 Minute VC. I'm a huge fan of Robinhood, so thank you so much for joining me today.

• 1:33Speaker 02

  My pleasure.

• 1:34Harry Stebbings?

  Now, I want to start by hearing about the idea for Robinhood, and how two Stanford students came to found one of the hottest fintech startups in the world, I think it's fair to say now.

• 1:45Speaker 02

  Well, thank you. So I'll tell you a little bit about how my co-founder Vlad and I first became what is now like 10-plus-year collaborators, and how a lot of things with Robinhood started. So our story started, I would say it's over 10 years ago now, it was in the summer of 2005. Vlad and I were both students at Stanford at the time, and we were a part of this summer research program through the physics department. We're basically about, there was like 15 kids or something like that, stayed around the summer to do research in the physics department. So just imagine all the kids that go to Stanford, which is kind of... Some of the nerdier, nerdier kids in the US and the world.

• 2:25Speaker 02

  And then you take those people and you narrow it down to the kids that are so nerdy that they wanna stay for the summer. And then you narrow that further to the kids that study physics, which proud to say were some of the nerdiest, so. When I met, when I was in that, that program, I, I met Vlad and I was like, oh, that guy's hair kind of looks like Mick Jagger's hair. And at the time, I kind of had a Mick Jagger thing going on too. And so we kind of bumped into each other a couple of times. And quickly realized that we were, we were gonna be really good friends. We both grew up in Virginia. We were both only children. And our parents had both come to this country because our parents were doing PhDs. So we had kind of a lot of similarities in our backgrounds. And kind of immediately became very good friends, went on to be roommates at Stanford, studied a lot of the same things.

• 3:10Speaker 02

  And when we, when we left school, we decided to work together, try some projects out. That's kind of how our friendship started. And uh, by the time we were starting Robin Hood, which was. The idea for Robin Hood came sometime in the middle of two thousand and twelve, I wanna say.

• 3:24Harry Stebbings?

  Okay. And what was it that made you think, we need to do this, right? We have to do this?

• 3:30Speaker 02

  Yeah, so that motivation definitely came from uh, the Occupy Wall Street movement, I would say. And there was a, there was a period of time. Where before we started Robin Hood, Vlad and I were living in New York. We were building another company uh, called Kronos at the time. Which was building technology for institutional broker dealers, hedge funds, trading firms. And here we were, these fairly scrappy young gentlemen, trying to start a business. And we, we kind of realized that what we were doing was actually in the crossfire of this much bigger thing, which was that. A lot of younger people were very upset with the way the financial services industry operated. And that was the first time that it really got us thinking to ourselves, kind of, what are we doing and why are we doing this?

• 4:15Speaker 02

  Shouldn't we be doing something bigger than this? Like, shouldn't we be taking all the things? That we know about finance and the privilege that we've had getting great educations growing up in this country and. See if we can do something bigger, something better. And so that idea stayed with us, I would say, for about six months before the idea for. For what would be Robin Hood first came out, um, which was actually over a phone call.

• 4:39Harry Stebbings?

  And am I right in saying from idea to being able to announce a product, it was over a year? Is that true? Due to the.

• 4:46Speaker 02

  Oh, it's definitely true. It was way more than a year.

• 4:48Harry Stebbings?

  Okay, so how did you find that delay? I mean, the entrepreneurial excitement, uh, you know, at best I can last a week when I have something new. So how how on earth did you find that uh kind of feedback loop in waiting for the regulatory hurdles?

• 5:01Speaker 02

  It was horrible. Um, it was it was a lot of waiting through the darkness. Um, because we knew we wanted to be able to offer a a free stock brokerage. The ability for consumers to trade stocks for free, that was the thing that we thought was going to be technologically capable and be something that a lot of people would would really like. In order to do that, we had to first be a broker dealer. We had to get a lot of things in place. And that process of getting the green light from the regulators to be able to do business in the United States takes at least about a year and a lot of money. And during that period of time, it's a really bad idea to speak publicly about the things that we were planning on doing, because if we had done so,

• 5:45Speaker 02

  we would have basically been soliciting customers for financial services uh product without the requisite licenses. So that's a big no-no from the regulators. So we had to be, we had to kind of just bite our tongue and wait until we got our licenses and hope we did at the time, because it was definitely a question mark and had to convince a lot of people that the idea was good, even though we had no traction. And the reason we didn't have traction was because we couldn't talk about it, not because it was a bad idea.

• 6:13Harry Stebbings?

  So but I'm intrigued, because you're you're famed for the one million waitlist, yeah? And and so when did you kind of start to generate that core user base? I say core, it's rather a mass user base, that mass user base. When you, because obviously you couldn't talk about it then. So once you got the um the approval from the regulators, that's when you started to grow the list, am I right?

• 6:35Speaker 02

  Yeah, and we got our approval from the regulators. I believe that was in October of twenty thirteen and we're like, all right, we can finally do this thing.

• 6:44Harry Stebbings?

  And and so how did you engender such mass excitement? I mean, a million signups to a waitlist is incredible.

• 6:52Speaker 02

  Yeah, well. We had no idea that was gonna happen. I actually remember we, when we first announced that waitlist, which I think was a about a month or two later at the end of twenty thirteen. The weekend before we put our website live, we were having these conversations of like, maybe we should have a waitlist that shows people where they are online, if they wanna join the product. We were having these conversations, we're like, well, what happens if there's like a hundred people on this list? Like, that's, should we just not show it if it's less than five thousand? There's, we were kind of trying to over-engineer this problem. It's like, well, if it's under five thousand, we'll just tell people they're on a list. And if it's over five thousand, then maybe we'll show their spot. And like, maybe we should change it to twenty thousand.

• 7:36Speaker 02

  So we were kind of like pondering these issues and a couple of days later, one of our engineers was just like, well, let me toss it up on the web because we need to make sure that the domain works and stuff like that. So website was just live. Nobody knew about it. We thought, we were wrong. Somebody had found our website because previously we'd released another financial app called Robinhood, which was kind of in the beginning of twenty thirteen. And we had started redirecting the traffic from that to our new website, thinking that not a lot of people were actually checking it out. So, you know, kind of who cares? Somebody found that link to Robinhood, free stock trading, posted it on Reddit. So it's like a Friday night. And then all of a sudden, we're like, man, we're getting a lot of traffic. Where is this coming from?

• 8:19Speaker 02

  So we, we'd actually hooked up Google Analytics, which thankfully we had, and we started looking at it like, wow, there's lots, like a hundred, there's like a thousand, there's like couple of thousand people on our website right now. And all these referral links are coming from Reddit. So we go and we check on Reddit and we're at the top of every finance subreddit. And we're like, oh, God, I guess we're launching on a Friday at like ten o'clock at night.

• 8:45Harry Stebbings?

  And was the site was the site optimized at that point then for for such traffic?

• 8:50Speaker 02

  No, oh, no, not at all. Like, we we had, we were changing our logo at the time. That was like a week before we had the feather as our logo.

• 9:00Harry Stebbings?

  What do you what do you think caused that kind of virality then? To be, you know, to be brutally honest, if it was just a a simple kind of landing page. What was it? Was it the value proposition that Robinhood was offering, zero percent commission fees?

• 9:13Speaker 02

  Well, I think it's, I think that's definitely a big part of it, but I I think the the bigger thing is that it was, it crossed. Robinhood is one of the products that crosses the ten X better threshold, right? There's this, there's this magical idea that if a product, a new product is ten times better than what's out there. Then that's kind of the requisite for it to have real product market fit. We put all of our efforts into doing the one thing that we thought we could do so much better than what was out there. Would be impossible for a consumer in their right mind to say, we'll use some thing other than Robinhood. And that thing was the trading commissions, right? And it was just so easy to understand. It's like you could pay ten dollars with another brokerage.

• 9:58Speaker 02

  Or you could get the same thing for Robinhood for free. And by the way, it's a really nice designed product. And by the way, it's called Robinhood. And it's a product that speaks to a younger demographic that previously has felt a little disenchanted. So I would definitely say the biggest thing was that we we delivered a ten X improvement on on a very real part of the experience of of what what Robinhood does.

• 10:22Harry Stebbings?

  And having used the app a lot, actually, I I'm I'm proud to say. Um, I I do think probably one of the biggest improvements, so that Robinhood offers that others don't have is the design. And it's the first fintech startup to win an Apple Design Award.

• 10:39Speaker 02

  Yeah.

• 10:39Harry Stebbings?

  Yes, big that up. That's an achievement. So well done on that. But what's the thesis then behind the design? And how's that evolved? What's the kind of general thinking behind it?

• 10:49Speaker 02

  I would I would love to tell you that there's some that there's a big overarching thesis to design at Robinhood. There there is a there is to a certain degree. I would say the dominant factor, though, is that it's just something that we as human beings that make Robinhood, it's one of the things that we just really love. It's like one of our I hate to use this word, but it's one of our passions. Like, we've always really liked the idea of building beautiful things. I think that there's a lot of ways that we have rationalized our love for just building really, really pretty things. In the context of what Robinhood does, having a very simple and elegant design communicates uh a deliberation in the product that we make.

• 11:31Harry Stebbings?

  Mm hmm.

• 11:32Speaker 02

  And in turn communicates trustworthiness for our consumers. But if I told you that was the real reason that we did it, I would be lying to your face. The reason that we spent a lot of time on design and the reason that today, even today, when Robin is actually a much bigger company that I I spend most of my time on design is just because we love it. Like it, we just really, really like it. We care about it, so I as well spend time on things we care about.

• 11:58Harry Stebbings?

  And that kind of brings me to a question being that trading itself now uh in today's market is still relatively niche. You don't have your mums, your general twenty two year olds. That might be unfair, but it's not, I I don't know. Would you call it mass mass market?

• 12:13Speaker 02

  I I would I would say it's a mass market phenomenon. I think it's it's smaller than some mass market phenomenon, but it definitely is.

• 12:20Harry Stebbings?

  But do you think the design uh implements that you've had, you know, making it so simple, so beautiful, so easy to use, will enable further accessibility to the previously untouched markets?

• 12:32Speaker 02

  Yeah, absolutely, absolutely. I mean, I I think that uh in the U S, if if you look at the number of U S residents that have brokerage accounts, the number is like, I think thirty to forty million people in the U S. So we're talking a solid ten plus percent of the U S population. From that point of view, it's definitely a mass market phenomenon. As as it pertains to demographics, the thing that our product and our design really change, Robin Hood is used a lot by younger people. And that's really different from the rest of the industry. So if you look at The consumers that use products like Fidelity, E-Trade, Scottrade, a lot of, a lot of our competitors.

• 13:12Harry Stebbings?

  Mm-hmm.

• 13:13Speaker 02

  Our customers are on average twenty to thirty years younger than those consumers. Like, the people that use Robinhood are in their twenties. They're, they're young people. They're people that are not thinking necessarily about retirement today. In fact, they probably aren't thinking about it much at all. And what they're thinking about is like, oh, the stock market is cool. I've wanted to buy some stocks for a while. And this is a way that I can start saving a little money or making a little bit of money on the side, not, which is a very different mindset. Um, and I think it's one that, it's a very different mindset than the mindset of like, I need to save, let's say, fifty or a hundred thousand dollars for retirement. And it's just a much, it's a much simpler approach to it, right?

• 13:55Speaker 02

  It's like, oh, if I make a little bit of money, that's great. If I lose a little bit of money, I still have decades and decades of earning potential. So it matters much less. The way that I have, have described it a couple of times to people is that when, when a consumer, when somebody's using Robinhood and say they have five hundred bucks or a thousand bucks in their Robinhood account, we look at some of the worst case scenarios, which is that their stocks just nosedive and they lose money. So it's how much money are they really losing in this situation? Well, even if you assume like they lose all of their money, that's about as bad of an outcome as that same person dropping their iPhone in the toilet.

• 14:37Speaker 02

  That's a shitty thing. Don't get me wrong. Like, I wouldn't wanna drop my iPhone in the toilet. But that's a really, really different situation than saying I have a hundred thousand dollars in the stock market. I just lost, say, twenty, thirty percent. Like, now I might have to work another couple of years. So I think the fact that it's, it's a much simpler, it's a much smaller and simpler commitment makes it so a lot more people are like, yeah, I'll try it.

• 15:04Harry Stebbings?

  A- and talking of, uh, I love that analogy of dropping your phone down a loo. Um, so, so kind of thinking about dropping an iPhone down a, down a loo. Uh, what do you think are the biggest challenges then for you going forward? Uh, you know, what concerns you, uh, as you look to scale the company into the unicorn that it can be?

• 15:26Speaker 02

  No, man. Lots of things, lots of things.

• 15:28Harry Stebbings?

  What's the biggest, do you think? Like, what, what keeps you up?

• 15:32Speaker 02

  Well, I think that the challenge of of actually building a company is is one that's new to us. Um, and one that we're really excited to do, but just building a world-class team and keeping a very high quality of people that join the company as we grow from, you know, I think a year ago, we were fifteen, seventeen, today we're forty-five, fifty, a year from now, we might be seventy-five, eighty.

• 15:57Harry Stebbings?

  So how do you address that scaling as a as a kind of real first-time founder, scaling a company to mass extremes?

• 16:04Speaker 02

  It's it's a challenge. I mean, day-to-day, it's a challenge. I think that we're fortunate that we have a critical mass of really, really smart people. Um, we hire a lot of engineering talent from places like Stanford and Google and Facebook, so that that helps us a lot. Um. I like to be very involved in all the different things that we do and make sure that I'm not too far removed from our engineering, or I'm not too far removed from our product development, I'm not too far removed from our customer support, so that as I'm as I'm watching these teams go around me, I try to keep my my finger on the pulse of what the day-to-day work is. That that's my way of, that's my way of staying very in touch with what's happening as our company is growing.

• 16:48Harry Stebbings?

  What would be your biggest piece of advice to a young founder scaling a startup or looking to scale their startup? From your experience?

• 16:56Speaker 02

  Yeah, I there's one, one definite thing, which is get product-market fit just right.

• 17:01Harry Stebbings?

  Okay, and how do you how do you assess product-market fit? That's a really interesting thing that obviously we don't have on the schedule, but I ha- I have to ask then, how do you know when you've hit product-market fit? And then and then what do you do once you've hit it?

• 17:12Speaker 02

  Oh, gosh. Yeah, that's a really tough one. I think it's a, I think it's a really tough question to answer and it it it falls into the categories of like, there's so many different ways of quantifying it or qualifying it or saying, well, this happens and that happens. But the the fact of the matter is, it's this product-market fit is there when the product in its early days grows at a pace that was unexpected, right? If there is unexpectedly fast growth, people are sticking around, that's a really good indication that there's product-market fit. So that's kind of the thing that I look for even as we continue to build new things. Is there something here that's growing much faster than we thought it was going to?

• 17:55Speaker 02

  Even if we plan for quote-unquote fast growth?

• 18:00Speaker 02

  Whenever something happens that's unexpected, that's nonlinear, that's usually a good sign of there being product market fit. And I think a good, an example of that with Robinhood is, Robinhood Instant has, I think, very strong product market fit. In the first twelve hours after we announced it, we had about a hundred thousand people that had signed up to use it. So that was like, holy shit. For, for founders, entrepreneurs, first timers, newcomers, look for things that are, that have unexpected growth. Cause that's usually a really good sign. If something's growing faster than, than you expect, then there's something special there.

• 18:35Harry Stebbings?

  And before we dive into the quick fire round, I have to touch on the incredible cap table that, that exists with Robinhood. You know, you've got Index, Andreessen, G V, even movie star Jared Leto. So, so how did you come to meet your investors? And what were the, the defining reasons for choosing the investors you did?

• 18:53Speaker 02

  The way we met most of our, our investors was from pitching them and pitching them and pitching them and pitching them. Having a few of them saying, yes, we'll give you a little bit of money to play around with. Yeah, we're very fortunate to have some world-class investors. Um, it's really great having the team at Index. They've been with us for a very long time. I think their, their domain expertise in financial services is very helpful. And day to day kind of surprises us with just how useful they can be. Um, we've had a lot of, we've had a lot of, uh, celebrities join as investors in Robinhood, which I think frankly, it very squarely falls into the category of, holy shit, this is really cool.

• 19:39Harry Stebbings?

  But how important are celebrities on the publicity and marketing side? Is that a big bonus?

• 19:44Speaker 02

  Uh, yeah, for sure, for sure. I think it, I mean, I, I really like hanging out with all those people. And I think it gives us some cool perspective on what it means to do things that a lot of people care about. Getting a shout out from Snoop and Jared Leto on Twitter every now and again is definitely like.

• 20:01Harry Stebbings?

  That's a highlight.

• 20:02Speaker 02

  It's pretty cool, yeah.

• 20:04Harry Stebbings?

  Uh, that's brilliant. Uh, okay. Well, I want to dive into a quick fire round now with you.

• 20:08Speaker 02

  Yeah, do it.

• 20:09Harry Stebbings?

  So your most read blog or newsletter?

• 20:12Speaker 02

  Probably TechCrunch.

• 20:14Harry Stebbings?

  Okay, good answer. Uh, uh, we're, yeah, we're, we're often on TechCrunch, so that's a winner. Uh, and then what's been the highlight of the Robinhood journey for you?

• 20:22Speaker 02

  Yeah, I would probably say the highlight was that day that it blew up on Reddit.

• 20:27Harry Stebbings?

  Really?

• 20:28Speaker 02

  Yeah, for sure, because.

• 20:29Harry Stebbings?

  Any funding round clothes or Snoop Dogg or.

• 20:33Speaker 02

  Nah, nah, that stuff was all cool, but like that day that basically was leaked on Reddit and. Hundred thousand people signed up over like the next couple of weeks. That one day that that it leaked and all of a sudden all those people signed up. That's when we were like, holy shit, we have product market fit.

• 20:49Harry Stebbings?

  And then.

• 20:49Speaker 02

  Definitely one of the most exciting days of my life.

• 20:52Harry Stebbings?

  And then your favorite productivity tools, what what keeps you kind of focused on it, keeping Robin Hood, you know, powering away.

• 20:59Speaker 02

  I'd say three things, Slack, pretty awesome tool, um, the Notes app by Apple, also quite awesome. And I tend to also really like paper and and a pen.

• 21:12Harry Stebbings?

  Absolutely. And then your favorite book and why?

• 21:16Speaker 02

  I really like The Case for Mars. I'd say that's probably my favorite book of the last year.

• 21:21Harry Stebbings?

  Okay, and then when you were younger, you wanted to be.

• 21:24Speaker 02

  I wanted to be either a physicist or an astronaut. And I was one of those for a long time and I plan on being the other one someday.

• 21:35Harry Stebbings?

  And and then talk to me about expansion into European markets. Is it on the cards?

• 21:41Speaker 02

  Yeah, oh, absolutely, absolutely. Um, there's there's definitely gears that are in motion to make that happen. I would like to be able to say, ah, yes, on such and such date, we will be doing that, but. Realistically, in every new market we enter, there's there are regulatory challenges, there's just a lot of procedural stuff. So we're starting our processes and we hope to, we hope to be able to do business there at some point, pretty soon.

• 22:06Harry Stebbings?

  And then in that vein, the next five years for you and for Robin Hood, what's what's in the pipeline?

• 22:11Speaker 02

  I would like to see Robin Hood become an international financial services company. I would like to see us. Scale like internet company scale, not like techno or not like financial services companies. I would love to be live across.

• 22:26Speaker 02

  All of Europe, I would love to be doing business in most of Asia, South America. Think at five years, it'll be really interesting if we're talking about how can we let people in places like Africa start saving their money in the US stock market. I mean, that kind of gets at the heart of the point of what Robinhood is. Robinhood is a really cool app and it lets people trade stocks for free, which is also really cool. But when we start thinking about Robinhood as a company that connects people's savings account from around the world, we think that the really broader mission of Robinhood is to act as an equalizing force by allowing everybody in the world to be able to invest in the best investment products, the likes of which we really haven't seen before.

• 23:10Harry Stebbings?

  Well, we're seeing it now with Robinhood and, and Baiju, thank you so much for coming on the show. It's been an absolute pleasure chatting to you today.

• 23:17Speaker 02

  My pleasure, my pleasure. Thank you, sir.

• 23:21Harry Stebbings?

  What a fantastic founder and such a chilled chap. Really was a pleasure chatting to Baiju today. And I do have to say, I'm thrilled to announce that we have Greylock Week next week. Yes, that means we have the likes of Josh Elman and Sarah Tavel joining us on the 20 Minute VC to discuss all the happenings at Greylock, the investment strategy, the tactics, their thoughts on the market and much, much more. And also I'd like to remind you, if you're loving the show, then do sign up for our newsletter on the20minutvc.com. You can also follow me on Snapchat at H Stebbings and follow the20minutevc on Twitter at 20minutevc, all in letters. As always, thank you so much for listening to the show. Your support really does mean the world to me.

• 24:04Harry Stebbings?

  I'm so grateful and any feedback sent to harry@thetwentyminutevc, I respond to all emails. Not that fast according to Steve O'Hare at TechCrunch, but I do respond hopefully. So thank you so much for all your support and I look very forward to seeing you for Greylock Week next week.