Vlad Tenev (Part 1)

Summary

Tetragrammaton with Rick Rubin
Episode: Vlad Tenev (Part 1)
Date: May 27, 2026

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Episode Overview

In this episode, Rick Rubin sits down with Vlad Tenev, co-founder and CEO of Robinhood, for an in-depth conversation about the origins, evolution, and vision of Robinhood. Vlad traces the journey from his early days as a math and physics student, through building trading infrastructure for hedge funds, to revolutionizing retail investing with commission-free stock trading. The discussion unpacks the intersection of finance and technology, the cultural shifts in trading, regulatory hurdles, the backlash from industry incumbents, and Robinhood’s ambition to become a “financial super app.” Along the way, Vlad reflects on serendipitous moments, the inspiration drawn from Silicon Valley, the dynamics of competition, product design philosophy, privacy, and the future of financial services.

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Key Discussion Points & Insights

The Genesis of Robinhood

• From Institutional Software to Retail Revolution:

  • Vlad recounts a pivotal 2012 party conversation in San Francisco where, after describing his trading software business, a partygoer’s question—“Why can’t I have this?”—sparked the idea for a retail product.
    • “I was explaining to this person at the party what we were doing ... and this guy was like, so you’re telling me ... they pay next to nothing. Why can’t I have that?” (Vlad, 00:48)
  • At the time, traditional brokers charged high fees and had high minimums, with little thought for younger customers or mobile access.

• Institutional vs. Retail Trading:

  • Vlad and his co-founder realized there were no fundamental barriers to offering retail customers the same low-cost, high-speed execution as hedge funds. The primary constraint? No one had bothered to build it.
    • “We just realized there’s no fundamental reason.” (Vlad, 02:55)
    • “It’s just no one had done it.” (Interviewer, 03:06)

• Startup History and Motivations:

  • The duo’s journey started in academia—bonding over graduate-level physics and mathematics at Stanford, but found their passion slowly veered away from academia to entrepreneurial pursuits.
  • The 2008 financial crisis presented an opening to experiment with trading algorithms and later, software for institutional clients.

The Shifting Landscape of Trading (07:39)

• Wall Street’s Evolution:

  • The financial collapse marked a transition from “football player” style, manual trading to automated, quantitative trading led by mathematicians and engineers.
    • “Afterwards, trading became electronic, and the action moved ... to these data centers in New Jersey. ... The quants gradually took over.” (Vlad, 08:10)

• The Opportunity for Innovation:

  • With deep knowledge of both institutional finance and the rising mobile economy, Vlad’s team was uniquely positioned to merge the two—paving a new path for fintech.

Building Robinhood: Regulatory, Cultural, and Technical Hurdles

• Regulatory Hurdles and Fundraising (14:24)

  • Early days involved navigating complex regulations (FINRA, SEC) and raising seed capital without proof of demand (couldn’t market pre-license).
  • “We probably talked to between 75 and 100 investors to raise the initial million dollars of seed capital.” (Vlad, 24:05)

• Mobile-First, Delightful Design:

  • Inspired by Apple’s user experience, Robinhood launched as a mobile-first, user-friendly, and free-to-use platform, accessible in five minutes or less.
  • “We were always ... inspired by Apple.” (Vlad, 16:36)

• Overcoming Skepticism:

  • Initial investor doubts: “Mathematicians, the ones I know, don’t really build great user interfaces.” (Vlad, 21:34)

Market Disruption and Mainstream Adoption

• Competing With Incumbents:

  • Robinhood drove fees to zero, forcing industry-wide commission changes and triggering consolidation among legacy brokers.
    • “A very interesting thing happened in September of 2019 .... within pretty much a week of each other, [the incumbents] lowered their commissions to zero.” (Vlad, 35:37)

• Public Reception and Industry Backlash:

  • Early press was positive, but as Robinhood scaled, criticism grew—especially regarding “payment for order flow.”
    • “That was the beginning of our negative press ... around this whole payment for order flow topic.” (Vlad, 37:50)
    • “I don’t think it was organic ... probably talking to the incumbents, the big guys, talking to journalists, also ... in Washington ... raising a stink.” (Vlad, 39:19)

• COVID-19, Stimulus, and Explosive Growth:

  • The pandemic, stimulus checks, zero interest rates, and stock market volatility fueled massive user and revenue spikes.
    • “2020, we had close to a billion in revenue. So 3 to 4x increase and over 2,000 employees.” (Vlad, 42:21)

Expanding the Product Suite (43:00)

• Options, Crypto, and Prediction Markets:

  • Added no-fee options trading (making Robinhood the world’s top options broker), then crypto, and most recently, prediction markets.
    • “A huge chunk of global options volume flows through Robinhood.” (Vlad, 43:50)
    • On prediction markets: “[They] are the best tool created to get to ground truth on the likelihood of a future event happening.” (Vlad, 56:32)

• Robinhood Gold & the Gold Card:

  • Robinhood Gold offers “Amazon Prime for finance”—products like high-yield checking, access to research, and a solid gold credit card with industry-leading rewards.
    • “It’s the same combination of things ... amazing user experience and amazing economics.” (Vlad, 49:13)

Global Expansion and Tokenization (67:10)

• The Push Beyond the U.S.:

  • Robinhood is live in the UK and parts of Europe.
  • Developing tokenized stocks on crypto rails to unlock 24/7 trading and eventually, fully on-chain ownership.

• Tokenized Stocks Explained:

  • Three-phase rollout: 1) Mint a crypto token for each real stock bought. 2) Build liquidity for trading tokens directly. 3) Move to decentralized (DeFi) trading.
    • “What this unlocks for the user is 24/7 trading, which I think is really interesting ... the last frontier is like Saturdays and holidays.” (Vlad, 71:37)

Philanthropy and New Initiatives

• Trump Accounts for Newborns:
  • Robinhood is the broker and trustee for an initiative providing $1,000 investing accounts for every newborn in the U.S., seeded by government and private philanthropy.
    • “Every newborn in the country gets $1,000 in a brokerage account ... So that they can start investing from birth for free.” (Vlad, 55:06)

The Public Company Journey & Democratizing Access

• Going Public and Reinventing Earnings Calls (86:07)

  • Post-IPO, Robinhood transitioned from dry, traditional public company communications to live, interactive broadcasts featuring questions from retail investors, analysts, and media.
    • “We have all these fans ... Let’s just ... engage with our community, get together ... once a quarter ... celebrate.” (Vlad, 88:38)
    • “We went from five people watching our earnings calls to 55,000. ... It’s literally like 10,000x improvement.” (Vlad, 92:22)

• Vlad’s ‘Latest Crusade’:

  • Advocating for earlier and broader retail access to private companies, so individual investors aren’t left out of enormous tech gains.
    • “The big thing for me is making sure the gains don’t just accrue to a small group of people with the access or the deal flow.” (Vlad, 95:54)

User Demographics, Privacy, and Social Features (52:53, 82:20)

• Young, Tech-Savvy Customer Base:

  • Average user is 35; focus is on retaining generational relevance.
    • “We’ve been spending a lot of time on Gen Z. We’re already thinking about Gen Alpha and Gen Beta.” (Vlad, 53:03)

• Privacy and Social Investing:

  • Developing features for verified, optional sharing of trades to boost collaborative investing, while keeping privacy the default.
    • “Of course, by default it’s private. But I think there are some people ... willing to share ... in controlled ways.” (Vlad, 84:23)

• Security and Cyber Threats:

  • Only minor breaches; cybersecurity is a top priority, given the evolving threat landscape.

Candid Reflections & Philosophy

• On Building for Meaning:

  • “Am I really going to be proud of myself for building this tool for hedge funds ... This always felt like being in the gym ... But that other thing [Robinhood] is going to be what I’m really excited about.” (Vlad, 18:05)

• On Disrupting the Old Guard:

  • “Our biggest differentiator ... has become commoditized. But then I would get all these messages ... congratulating me.” (Vlad, 35:51)

• On Luck and Serendipity:

  • “...random conversations can lead to total life changes.” (Interviewer, 17:44)

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Notable Quotes & Memorable Moments

• “It would be almost like if all the car makers got together in response to the Tesla threat and said, ‘We’re going all electric, full bore in the same week.’” (Vlad, 36:00)
• “I think it’s an honor to be public ... it was sort of like the dream, a goal.” (Vlad, 96:51)
• “Every newborn in the country gets $1,000 in a brokerage account so that they can start investing from birth for free.” (Vlad, 55:08)
• “Privacy? ... there’s just this assumption of privacy because financial products typically are single-person experiences.” (Vlad, 82:23)
• “You see them doing it already, like posting your account on social media, getting feedback, getting feedback on trading ideas ... So there are definitely opportunities for collaboration.” (Vlad, 84:18)

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Timestamps for Important Segments

| Timestamp | Topic/Quote | |---------------|------------------------------------------------------------------------------------------------------| | 00:23 | Vlad tells the origin story of Robinhood (the party anecdote) | | 07:39 | Shifting from manual to electronic trading—Wall Street culture shakeup | | 14:24 | Regulatory and fundraising hurdles | | 16:35 | The Apple/Steve Jobs-inspired philosophy—mobile-first, delightful design | | 35:37 | Industry incumbents go commission-free; Robinhood’s disruptive impact | | 39:19 | Payment for order flow controversy; origins of industry backlash | | 42:21 | Robinhood’s COVID-19 growth and the effect of stimulus checks | | 43:50 | Expansion into options and crypto, building the “financial super app” | | 49:10 | Debut of the Robinhood Gold Card, “Amazon Prime for finance” | | 55:06 | Role in “Trump accounts”—every newborn gets a $1,000 investing account | | 56:32 | Philosophy and value of prediction markets | | 67:10 | Robinhood’s global strategy; tokenized stocks explained | | 86:07 | Robinhood goes public—changing how earnings calls engage with a retail community | | 95:54 | Vlad’s “crusade” for expanding retail access to equity in private tech companies |

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Closing Summary

Part 1 of Rick Rubin’s conversation with Vlad Tenev provides a detailed look behind the curtains of a tech company that fundamentally changed how Americans invest. Vlad’s candor opens windows on the scrappy years, industry disruption, and the mission to make finance more accessible. The episode blends entrepreneurial storytelling, commentary on evolving markets, product strategy, philosophy, and glimpses of what’s next for both Robinhood and the democratization of financial opportunity.

End of Part 1.
Further topics and Vlad’s personal reflections are expected in Part 2.

Transcript

[Podcast Host]

Tetragrammaton.

[Vlad Tenev]

I was at this party in San Francisco in. I think it was early 2012, and this was still when we were running our second business, the software business, selling the picks and shovels to hedge funds. And I was explaining to this person at the party what we were doing, because, you know, in San Francisco, a lot of people are, you know, tell me about your startup sort of thing. I was like, okay, well, we have this technology. It's really fast. Back then, we weren't competing on cost, but it was all about latency. Like, how quickly can you take a signal from the market, be able to interpret it, and spit out a trade in response? And we were talking microseconds here. So you take the signal.

[Interviewer]

Michael Lewis wrote a book about this.

[Vlad Tenev]

He did, yes. And that book caused a lot of problems for me later on. Yeah, because that book was published right when Robinhood was announced and launched. Effectively, I was telling this person about my business. And, you know, we have these customers that are using our software. They're trading billions of dollars per day in volume with a small team of people. And. And it's really fast. And. And by the way, it's very efficient. They pay next to nothing, right? And this guy was like, so you're telling me these customers, three or four of them that you have, trade tens of billions of dollars a day, and they pay next to nothing. Why can't I have that? I have my Schwab account. They're charging me, I don't know, $10, $20 a trade. Can I use your software? And at first, I was kind of like, that's ridiculous. You can't use the software. You have to be a developer. It's for institutional customers. But then I get to thinking, and I call my partner, who is in New York on a sales trip. The question was, can we go after retail? Is there like a retail product here? And this guy's right. Like, all of the big discount brokerages are charging $10 a trade. And we kind of knew how everything worked full stack, how you can connect to the market.

[Interviewer]

They're also kind of antiquated for young people. I don't think they thought about opening one of those accounts.

[Vlad Tenev]

Yeah, absolutely not. And they had high minimums. Most of them would require $2,000 before opening an account. Nobody had mobile apps. So we started thinking. We're like, well, is there some reason why you can do this for really cheap on the institutional side, but not on the retail side? Are there additional rules and regulations? And we got deeper and deeper and Deeper. And we just realized there's no fundamental reason.

[Interviewer]

It's just no one had done it.

[Vlad Tenev]

Nobody had done it. And it was kind of a new thing. I mean, every 10 or 20 years someone comes and tries, right? But it's not very many people were trying. As a matter of fact, E Trade, which was kind of a disruptor in a similar vein to Robinhood, started in the 80s in Palo Alto, California, oddly enough, with these two older guys. One of them was like a business guy, and the other one was an engineer. And the business guy who I think he was in, in his 60s or 70s, this guy, Bill Porter, had just gotten a Macintosh. And his idea was, I love my Macintosh. It would be really cool to be able to trade stocks on it. And that was kind of the genesis behind E Trade, which. Which became the dominant, sort of like.com first online broker. So, yeah, every. Every 10 or 20 years, something happens where the right people kind of get together and create something. My college best friend and I, we bonded over physics. So we both came to Stanford to study physics. We both met in the physics department as physics majors, and we would challenge ourselves by taking all the graduate classes. And so we really bonded, doing these late nights in the physics building, banging our head against the wall, trying to solve these, like, super difficult problems. Problems.

[Interviewer]

Were they all problems that were already solved?

[Vlad Tenev]

Yeah, yeah, it was like homework problems, things like that. Not unsolved, novel research, at least at that point. And then we both transitioned to math at the same time because Stanford physics department was geared towards creating experimentalists. And I experienced experimental physics. And these are the people that are like working on the massive colliders. And it's basically like a industrial scale project. Right. And what appealed to me was one person, one mind, sitting on a couch, lying down maybe with a chalkboard, and just taking 100% of your mental energy and creating an insight or a novel idea. That's what I really loved about physics. And it turned out that the purest way to capture that is. Is math. And I wasn't as interested in like the laboratory work doing like electronics.

[Interviewer]

So you like the theoretical side?

[Vlad Tenev]

I like the theoretical side. And Stanford was much more towards creating experimentalists. They had some good theorists, but if you wanted to get too theoretical, they sort of sent you to the math department. But yeah, so my co founder and I, we transitioned to math. And then when we graduated, he was one year older than me. He stayed to get his master's in math. And then when I graduated, it was kind of like, what are we going to do next. So I went down to UCLA to get my PhD, and he got a job in finance, kind of on a whim at this hedge fund up in Marin county just north of San Francisco. His first month on the job, my first month in grad school, Lehman Brothers blew up. And so this was the start of the global financial crisis.

[Interviewer]

2008.

[Vlad Tenev]

2008, fall of 2008. And sort of in the wake of this global financial crisis, we decide to start our own financial company. He kind of pulls me into it, right? I was a little bit skeptical, but I wasn't having that much fun in my PhD program. I think my first year, my PhD program, it sort of hit me like a ton of bricks that I entered into math with pure intentions and to be creative. But, like, this was a career. I was signing up for a career. And the aspects of the career that I was confronted with were really not that attractive.

[Interviewer]

So would you say the financial collapse was an opportunity?

[Vlad Tenev]

It was a huge opportunity. But the first opportunity, we didn't get the idea for Robinhood. It was really just, there's a lot of volatility. We can trade for ourselves, create our own trading algorithms, our own hedge fund to capitalize on that. And so that was the first business, and that didn't work out very well.

[Interviewer]

Are most of the people involved in that world super brilliant mathematicians or. Not necessarily.

[Vlad Tenev]

So at that time, there was a bit of a changing of the guard. So in the old days, institutional trading was run by these big banks, you know, the Goldman Sachs, JP Morgan's, they would have institutional trading desks. You imagine like a sea of people on phones. But 2008 was a little bit of. There was a discontinuity there because the machines took over. And past that point, nearly all the trading on financial markets was electronic trading. So it was a little bit of a transition point. To be successful in the world of manual trading, you had to be like this aggressive football player type person, so that when you were in the trading pit, you would kind of tower above all the people and you'd be able to take all the tickets first. A lot of the football players became traders, successful ones.

[Interviewer]

I didn't know that.

[Vlad Tenev]

Afterwards, trading became electronic and the action moved off the pits in New York and the trading floors to these data centers in New Jersey. And then it was kind of like the quants gradually took over. And so in 2009, when we, when we got started with our first business, the big observation was if you were, you know, three smart mathematicians out of Stanford or mit and you had a trading algorithm. You could deploy that and actually compete against the big guys and out compete them because they had old systems. And so we were doing that and then we saw another opportunity which was, hey, if this was a gold rush of algorithmic trading, can we sell the picks and shovels rather than panning for gold ourselves? So we created a second business, which was a software company. We sold technology and infrastructure to Both the startup HFTs, you know, the guys from MIT and all these schools, and to the big banks. And then at that point we became much more of a software company. So I moved back to California to hire software engineers and to grow the engineering office. Pretty soon the engineering office became the main office. But this was a very unique time. When I moved back, it was November of 2011 and that was right when Instagram was getting started in Palo Alto. Uber had just launched Black Car in San Francisco. So we kind of had a foot in both worlds, right? We understood a lot about institutional trading and finance from New York. And then we also got to see the birth of this mobile industry for Robinhood. I think we were the only ones that sort of like were in a position to connect these two ideas, right? It was before fintech was a thing. It was actually like very, very hard to get it off the ground. But I think we were fortunate to have one foot in both worlds, to have this entrepreneurial financial experience in a world where to really understand finance, the typical path would be you'd graduate from school, you'd join as an analyst, some kind of entry level position at a bank. They wouldn't really show you how things work. You'd have to kind of work your way through and maybe 10, 20 years later you would make VP or partner and you get some visibility. But you were still very much kind of a cog in a giant machine.

[Interviewer]

And typically coming from an economics background, not a mathematics background.

[Vlad Tenev]

Yeah, they weren't really hiring mathematicians. Actually, when I graduated with my math degree, I did apply for some jobs and I found myself incredibly unemployable. You know, that was kind of my first point at which I was disillusioned by getting my math degree. That was the point where I realized, okay, this is really hard. I'm really competing against like the smartest people in the world for placement in these programs. And whenever I'm talking to these prospective employers, they're just like, can you program? You know, so like they, they didn't really value all this hard theoretical math work that I was doing. And this was before Data science before AI. I think now mathematicians are having much more of a resurgence. Yeah, it was, it was disappointing in a sense, but also, I think lowered the activation energy for me to become an entrepreneur because I didn't really have much to lose. I mean, I was in grad school making $18,000 a year. I didn't really have a cushy job at Google. People weren't fighting over me. And so that put me in a position where I could take some risk without really worrying about what I was leaving behind. Yeah. So I was very lucky in a sense. I was kind of like climbing this treadmill of education, going to the best high school, going to one of the best universities, succeeding really well and getting good grades. But then this math path was sort of like a career dead end. That really gave me an opportunity to reset.

[Interviewer]

Had the system not changed from the football players to the tech pros, would your idea have worked?

[Vlad Tenev]

I think it would have been really challenging because the football players, if every trade had to go through an actual person to get processed, it limits the

[Interviewer]

number of trades that can happen.

[Vlad Tenev]

And it would have been a. It would have limited the cost that, like, you probably couldn't fully automate it and lower the cost. We could lower the cost because everything was electronic. It was all just a purely electronic transaction, which made the idea of it costing $10 kind of ludicrous. And when we'd go talk to customers, we'd ask them, why do you think it costs this much? They all would tell us, well, it's because someone has to be doing something. Right. Of course, none of the big guys were actually processing trades manually at that point. Everything had gone electronic. They were just collecting their margins. Right. And they had brick and mortar stores. They had high overheads. They had, like, processes that were legacy, that they hadn't automated. Yeah. And the benefit is we could kind of like start with a blank slate. And it wasn't only the electronic trading stuff, it was mobile. We could ask ourselves, well, if we could design just for the mobile device, we probably don't have to do everything because, in fact, people expect a simpler experience on mobile. What's like the most valuable kernel of a thing that we could start with that could strike out a little niche for us.

[Interviewer]

How much regulation did you have to figure out and get through?

[Vlad Tenev]

Well, and that was actually one of the biggest constraints that we had at first. We had to raise money, so. So you had to get a license before even marketing that you're a broker and that you can offer commission free trades which is what we wanted to do. That was our big idea. Like take the cost, cut it.

[Interviewer]

So before you were building the technology for that to happen, but you weren't the trader, you were selling the technology to traders.

[Vlad Tenev]

Yeah, exactly.

[Interviewer]

So now you're becoming the trader.

[Vlad Tenev]

First, we became the trader ourselves.

[Interviewer]

Yes.

[Vlad Tenev]

Second, we sold the technology to other institutions. And third, we kind of started from scratch. It turned out we could use the ideas, but the technology had to fundamentally change to support millions of customers. The third step was not just empowering companies to use us, sophisticated companies, but like mass market, individual. We could just sign up, open an account as quickly as possible, five minutes or less, which was a huge innovation before we came along. You'd almost. You would have to like print out a form and fax it to your brokerage and then they'd get back to you a couple of days later, your account would be open.

[Interviewer]

Betting process. It was probably complicated.

[Vlad Tenev]

In the past they were moving papers back in the background and then, you know, you'd have to wire money there. That would take some more time. So we pioneered instant investing, which is just you download the app, you sign up, you can place a trade in one session, just like how you would expect any product that you use on your phone to function.

[Interviewer]

So would you say it was like the stock trading version of Amazon?

[Vlad Tenev]

Yeah, I think there's some parallels. I mean, we take some inspiration from Amazon, from all these companies. Also Apple. I think one criticism you can give Amazon is you use the app, it feels functional, it works, things are kind of in the right place, but it's not really delightful.

[Interviewer]

No, it's not design first.

[Vlad Tenev]

No. Yeah, but we were always. My co founder and I were inspired by Apple. One of the other formative moments is the iPhone came out right when we were graduating college. 2007 was the iPhone, 2008 was the app store. So we would get together and like watch the Steve Jobs videos of when he was unveiling things and also the iPad. And I think that also planted the seed in our minds of it would be really cool to launch a consumer product that actually individuals can use. And that was another motivating factor from going from our enterprise business to the consumer business.

[Interviewer]

I think if it was not for the guy at the party who said, why can't I use it? Yeah, you would have still got to Robinhood. Or that key random event was what led to this company.

[Vlad Tenev]

It's hard to say because, you know, that definitely set in motion a turn of events that led to us focusing fully on Trying to make the retail business happen.

[Interviewer]

So interesting how just random conversations can lead to total life changes.

[Vlad Tenev]

Yeah. And also at that same time, my co founder and our head of BD were in New York on sales trips, and that was like a very bad sales trip. Like, one of our customers went out of business, and so we lost a bunch of revenue that way. Other customers were sort of like, not biting. So we were at the same time having this sort of, like, angst or this existential question of, you know, we have a business that's making a couple million in revenue, we're sort of able to feed ourselves. Maybe if we scratch and claw, we can get to 10 million in revenue. But am I really going to be proud of myself? Like, if I'm, you know, 80 years old, looking back on my life, sitting with my grandchildren and thinking about what I accomplished, am I going to be proud of myself for building this tool for hedge funds to trade and make more money? Yeah. And then I thought about it and I said, not really. This always felt like being in the gym in the sense, like, I'm doing this to, like, get resources or, or get the opportunity to work on something else. But that other thing is going to be what I really. What I'm really excited about. With Robinhood, that changed. And when we got the idea and we started working on it, we knew in our hearts that it was a really big idea. And if we actually brought it into the world successfully, it could change the world.

[Interviewer]

Yeah. How long did it take from the idea until releasing the first model?

[Vlad Tenev]

Yeah. Three years. So we first got the idea at that party in San Francisco in February of 2012. It was right around my birthday, turned 25. And then our app launched to the public in March of 2015.

[Interviewer]

Walk me through that three years.

[Vlad Tenev]

So the first step was once we figured out, hey, this is a really big opportunity, we should go after it. Then we had to figure out, okay, how do we reconcile this with having an existing business that's very, very different, with enterprise customers that we have to support? How can we do that and also do this new thing? And we basically figured out that we should raise some capital to do this. So. And at that time, you know, raising capital from VCs, it had kind of a negative connotation to it. All the people that I knew basically discouraged me from it. They said, VCs are going to take your company and they're just going to install professional management and they're just going to stab you in the back. So we raised some capital from angel investors, a very small amount. I think the initial tranche was maybe a few hundred thousand dollars, and that was kind of enough for us to get going and make some initial hires to get it all set up. Building a broker isn't like building a technology startup. At that time, there was this book that was going around called the Lean Startup. It was sort of like this playbook for how to start a company in this new age of like cloud and mobile. And what it created, what they put into the public, was this notion of a minimal, viable product. Like, the first product has to be a complete solution for a fairly narrow product that you spend as little resources as possible to validate. So actually, if you could validate it without building it, it's the best idea. So they created this strategy that everyone was using at the time of you just put up a landing page that describes your product, but the product doesn't exist yet. And then you just see how people interact with the landing page. Are people clicking? Are people spending time on it? Are they giving you your email address? And so every startup that didn't do this had a little bit of a harder time. So we would go and raise capital and we'd say, well, we're building this brokerage. First of all, do you have your licenses? No. How do you know if anyone is going to want it? Okay. If people get past that, you say, well, we're pretty sure if we can offer this thing that everyone else offering for 10 for free, we should be able to get some traction and it's going to be a great product. Well, you know, you guys are mathematicians. You've never built a consumer product. Mathematicians, the ones I know, don't really build great user interfaces. So it was a lot of skepticism. And moreover, we couldn't do that landing page thing because you're actually not allowed to market brokerage services without getting your license. So there was kind of a chicken and an egg situation where we needed the license to be able to market, but we kind of needed to be able to market and validate some demand in order to get our license. And the regulators wanted to see us with a million dollars in operating capital. If they approve you as a broker that's opening retail accounts, they want to make sure you have enough money to be around for at least a year, because otherwise it's like a mess to unwind those accounts. So they don't want to deal with that. So we were able to, I guess, negotiate a little bit and demonstrate that for a million dollars we could run this brokerage Business for a year.

[Interviewer]

Was that a federal agency you were dealing with or a California agency?

[Vlad Tenev]

Federal, yeah. All brokers are regulated by a body called finra. It's called an sro, a self regulatory organization. So it has a mandate from the sec, which is a federal agency, to essentially self manage the licensure.

[Interviewer]

Are the people who work there government employees?

[Vlad Tenev]

They work for finra? Yeah, again, it's like quasi government, but not formally government because, you know, the government agencies, they don't want to directly oversee every brokerage because there's a lot of them. And the SEC would have to get quite big. So they oversee finra, which, which regulates the brokerages. And then only the serious stuff escalates to SEC approval. So we're registered with the sec but regulated by finra? Yeah. So we had to get licensure, which is another thing that scared people off because this was before fintech. Nobody was really getting licensed. So the solution was we just had to knock on a whole bunch of doors and not give up. So we probably talked to between 75 and 100 investors to raise the initial million dollars of seed capital. And yeah, that, that allowed us to get over the hill, get our license.

[Interviewer]

Was that the first year, would you say?

[Vlad Tenev]

Yeah, we raised $3 million between February of 2012 and mid 2013, and we got our approval in mid to late 2013. And that was a big moment because then we could start marketing and then we created.

[Interviewer]

Still haven't built anything.

[Vlad Tenev]

Still haven't built anything. I mean, we started, we ran some experiments.

[Interviewer]

It's still setting the stage to allow it to happen.

[Vlad Tenev]

Exactly. So we built a mobile app, actually, that was sort of like a social network for traders. And we said, okay, the plan initially was if we could create this community of traders and get them engaged and then get our approvals and layer the brokerage on top, this would be a way to make progress during that period

[Interviewer]

before you had permission to be a broker. Yeah, that's a good idea.

[Vlad Tenev]

Yeah. And it didn't work out super well because we were never really able to build a super engaged community.

[Interviewer]

But good problem solving.

[Vlad Tenev]

Yeah, yeah. And you know, sometimes I think, well, crypto was in our radar. What if instead we built the same functional thing, a broker, but launched with crypto first and then expanded into stocks? Would that have worked a little bit better?

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[Interviewer]

When did Coinbase start?

[Vlad Tenev]

I think they started around that time. 2012, 2013. A few years before us. I think crypto was still pretty niche. If you were kind of like a cyberpunk sort of techno optimist person, it was very much on your mind. Like I remember reading about Bitcoin and doing a little mining back in 2011, and I think it first hit the public consciousness in 2013 actually, because that was when the price of bitcoin had its first major surge and hit $1,000 a coin, up from maybe like $20. So massive, you know, it was on the news, it was on NPR. $1,000 a coin. People were going kind of crazy and then it crashed back down to 60 and people were like, okay, this is a Fad. And then four years later it had its second huge run, up to 20,000 a coin. And that was when Robinhood launched Crypto. During that second run up, yeah, that was the idea. Launch a social network for traders while we're getting all this licensure going. And then maybe we could parlay that into a big financial community that was also trading. What happened was we tried all the growth tactics, all the tricks. It wasn't a fantastic product, to be honest. I think we were just kind of experimenting. We never really figured out how to make it truly great and give you a reason to try it. And so, you know, we would struggle having 100 users, 200 users. We thought, okay, why don't we just like reset, this is a new opportunity. When we got our approvals, we thought, why don't we simplify things? Rather than having, you know, a social network where you can DM and you can share news and you can maybe layer trading in or what's the essence of it? And the essence of it is get in as quick as possible, get out of the user's way and just have a button that you can buy a stock.

[Interviewer]

Did it look like a ticker tape? You could watch the market on the app or no?

[Vlad Tenev]

No, actually one of the early design decisions that we made was every other broker that was out there kind of hid your money from you. We didn't really know why that was the case, but you really had to like go into the sort of like in the basement of these sites to figure out, how much money do I have? How much am I up in the day? So we thought, why not put that front and center? You know, I open up the app, I see my account balance, I see how up I am in the first day, I see my positions. And the bet was that that's the most important information. We wanted to make it as easy as possible to get into that. And there was a bunch of trade offs involved in that. But I think that was the big bet that's survived to this day. Like give your account balance right in front of you. Don't try to hide it. And you know, maybe we thought they wanted to hide it because customers maybe weren't doing so well. So make them go through some more effort to actually see how poorly they were doing. Not sure if that's true, but that was kind of, that was always the hypothesis.

[Interviewer]

Would there be any information that would assist a person in choices of what to buy and what not to buy?

[Vlad Tenev]

Yeah, I mean, there's a bunch of stuff like this, again, highly regulated. Because one of the things we've always had to be very careful with is we have to make it clear when we're making a recommendation or putting our thumb on the scale versus not. So we do make recommendations. We have some of this data stuff that, you know, helps like people that have invested in this one stock also invest in these other stocks. And that lets you discover other things. You can see what's moving. I mean, now we're integrating all these AI tools and a big use case for the AI Tools is you can do some screening, right. You can be like, tell me who the AI chip makers are, you know, and which ones have been growing revenue more than 50% per year. And so we're getting into all of this stuff while making sure we navigate the inherent complexity. And on the brokerage business, making sure we're just giving information, not making recommendations, while also on the side of the business where we're a fiduciary, where we'll actually manage your money, giving you the best returns and the best recommendations.

[Interviewer]

That's a later evolution of the product, though.

[Vlad Tenev]

Later evolution? Yeah. At first it was just we give you the information you need, the data, basically the real time market data, and

[Interviewer]

sign up in five minutes and you can buy stock.

[Vlad Tenev]

Buy stock for no commissions and no minimums.

[Interviewer]

Yeah.

[Vlad Tenev]

So you can sign up for $5 and at this time, the competitors would onboard you. It would take a week. The commissions were seven to $10 on average. Most of the big guys also had $2,000 minimums. So you were, if you were, you know, a 22 year old, just out of college, started your first job, it was cost prohibitive to start investing. And so what we did was we lowered the barrier. Now you could start investing with $5 or with $100.

[Interviewer]

Did the old guard of this business embrace you guys?

[Vlad Tenev]

No. No.

[Interviewer]

What was that like?

[Vlad Tenev]

So for the first couple of years it was just dismissive, like, oh, you know, our customers actually don't mind the commissions. They recognize that the service we provide is like, worth it. And I think for some of the customers, that's probably true. Or, you know, these guys are taking the customers that we don't want. Young people that have no money. Yeah, you know, short sighted. But I think there is a tendency to explain away potential business threats or competitors because you don't really want to have to deal with it. Right. It's like, I've got my own priorities. What is this thing? It's in the interest of, of my sanity to be able to explain it away and not worry about it too much, which is a mistake that people make.

[Interviewer]

Was there ever a smear campaign against you guys?

[Vlad Tenev]

You know, later on? I'd say for the first three or four years since we launched to the public, the press and everything around Robinhood was pretty universally positive. It was like, you know, we're rooting for these guys. This is like new. They're kind of young. It's kind of a David and Goliath story where they're going up against these giants. So it's like, oh, amazing, Robinhood is doing well. And then 2019 came. So we've been live for about four years and in this environment, we were basically just eating the market. Right. If you look at mobile app downloads, we had like 60% market share. So out of every 10 downloads in the entire brokerage space, Robinhood was six out of 10.

[Interviewer]

Wow.

[Vlad Tenev]

And, you know, we had gone from a $75 million valuation in 2014, that was our series A round to seven and a half billion.

[Interviewer]

Amazing, right?

[Vlad Tenev]

100x in four years. And a very interesting thing happened in September of 2019. Remember, this was right before COVID All of the major incumbent competitors, within pretty much a week of each other, lowered their commissions to zero. So they saw this and like one of them moved first, I think it was Interactive Brokers lowered the commissions to zero and then it was clear they all had like a playbook that they had prepared. All of them went to zero. I don't think anything's happened like that in, in business history, as far as I'm aware. It would be almost like if all the car makers got together in response to the Tesla threat and said, we're going all electric full bore in the same week. And so what happened was the ones that were public and trading oriented, TD Ameritrade and E trade were the two big ones. Their stocks fell by like 35% in one day. Just cratered. Right. Schwab, who was less dependent on trading commissions, they had more of a retirement advisory business, sort of stickier. They fell, but more like 10%. And I had sort of like two feelings about it. Right. One was, holy shit, this is a little scary. Our biggest differentiator, like, the reason why you would tell someone to use Robinhood, you're free, has become commoditized. But then I would get all these messages streaming in of people kind of congratulating me, like, amazing, thank you. You saved, you know, people in their retirement accounts don't have to pay fees anymore, which was kind of nice. And the. The outcomes of that were E Trade and TD Ameritrade didn't continue as standalone companies. They had to get gobbled up by. By larger incumbents. So TD was eaten by Schwab, E Trade got gobbled up by Morgan Stanley, and so the space consolidated. But another thing happened. So I thought that the public narrative would be very positive and it would be, look what Robinhood did. They change the industry. And we had some of those articles.

[Interviewer]

Now it's better for everybody because of Robinhood.

[Vlad Tenev]

Exactly. But we didn't get much of that. And instead, that was the beginning of our negative press. And when things got very, very negative for Robinhood. And it was around this whole payment for order flow topic that Michael Lewis popularized with his book. And the gist of it was, well, you know, they say they're commission free, but this payment for order flow thing, like, they're not really talking about that. And it was positioned as some kind of cat.

[Interviewer]

Is that part of Robinhood, though, the payment for order?

[Vlad Tenev]

Yeah, it was almost as if they were claiming we invented it. But the reality was all of the incumbents, pretty much they all accepted the commissions and the payment for order flow. And if you look at the numbers,

[Interviewer]

it was the industry standard at that time.

[Vlad Tenev]

No, and still has been. Right. So, for example, TD Ameritrade, you look at their financials at the time, they made about $11 a trade. $10 of it was from the trading commission. The $1 was payment for order flow. So when we remove the commissions, their stock went down 35% for a reason. As a company, they were making much less money. But, yeah, the public positioning was actually. Is Robinhood making even more from the payment for order flow thing than they would have been if they had charged commissions? And is this even. Is this like a worse thing for customers?

[Interviewer]

How do you think that idea started?

[Vlad Tenev]

Now I kind of understand how these things work. I don't think it was organic. Right. I think it was probably just on background, probably talking to the incumbents, the big guys, talking to journalists, also simultaneously talking about us in Washington and getting the regulators riled up. I mean, it would be foolish for me to think that they had the business model, the lowering commissions to zero part of the playbook worked out. I mean, that's actually really hard. The easier stuff is to talk bad about you on background to reporters and journalists and to sort of like, raise a stink in Washington. And so I think that was the beginning of that in a way that

[Interviewer]

tells you you were successful in that moment.

[Vlad Tenev]

I mean, we were successful, and then we announced we had 10 million customers in the U.S. a lot of people think, oh, Covid is really when I started hearing about Robinhood and when it really grew, and that's true, we basically tripled the business in 2020.

[Interviewer]

You think it's because people had more time?

[Vlad Tenev]

I think it was a confluence of factors. I mean, certainly people had more time, and a lot of people weren't working anymore. And we kind of lowered the barrier to the point where if you were a service industry worker, for example, you were On Robinhood, you didn't really have alternatives because we were just so much cheaper. So our customers probably had more time on their hands. You had the market crashing in March of 2020, so the market just dropped by a huge amount, which if you're an older customer, like a retiree, you end up kind of turtling and getting into a defensive posture. The market crashes, okay, I'm going to sell my stocks and put it in safer assets. But our customers were younger. If you're a younger customer, the psychology flips and instead you're like, I've been waiting for a good entry point. You know, I have a long time horizon. I want to pick up these stocks when they're on sale. So that was good for us. Actually. Big, big crashes historically have been some of our biggest days of purchasing stocks and then, you know, interest rates going to zero. I mean, the government, the Fed immediately intervened when Covid started and lowered the rates from like 2 1/2% at the time down to zero. And that has an effect because if you've got two and a half percent rates, what that means is if you can put your money in a high yield savings product, you can get a 2.5% risk free rate of return. So like, investing in stocks becomes less attractive, but when the rates go to zero, stocks become more attractive because there's opportunity costs leaving your money in cash. So you see these flows into stocks and of course the stimulus, you know, the helicopter money sent to people, a lot of people didn't need it, fortunately or unfortunately. And those people deployed it into their Robinhood accounts.

[Interviewer]

When the stimulus checks went out, did you see a big uptick in business? Huge.

[Vlad Tenev]

You know, that year 2020, so end of 2019, we had something like 700 employees at Robinhood. We made something like 270 million of revenue. End of 2020, we had close to a billion in revenue. So 3 to 4x increase and over 2,000 employees, the bulk of which hired remotely. Once we transitioned to Covid era work from home.

[Interviewer]

What can you do on Robinhood now? Beyond trading?

[Vlad Tenev]

Yeah, now Robinhood is a comprehensive financial super app.

[Interviewer]

What was the first thing you added?

[Vlad Tenev]

Well, first I'd say the big thing was giving people more to trade. Right. So we started with stocks, and then a big acceleration in the business was when we added options. And options are even more expensive than stocks. So we were able to offer options for zero commissions and zero contract fees, which usually options, you're charged twice. You have the commission per trade and then you also have a per Contract charge. And we cut both to zero, which was really transformative. And that led us to. Now we're the top options broker, I think, in the world. A huge chunk of global options volume flows through Robinhood. Then we added crypto.

[Interviewer]

What year was that?

[Vlad Tenev]

2018. So relatively late for a crypto company, but the first traditional financial company, which we were at the time.

[Interviewer]

New traditional?

[Vlad Tenev]

Yeah, the first new traditional to add crypto. And that blew people away. People had never seen crypto alongside traditional assets, and we had to kind of contend with that. And now recently we have prediction markets, which is another thing. Like, we added prediction markets to the whole package. And we were the first broker to add prediction markets, too. So we always try to make sure that if. If you're trading, if you want to trade, we have every action, each of these things yourself.

[Interviewer]

For prediction markets, do you do that independently or do you partner with a prediction market company?

[Vlad Tenev]

Typically with Tradfi, crypto is a little bit different. The regulators have set it up so that there's. There's sort of like separation of concerns. So the broker is a separate entity than the exchange and the clearinghouse. So they try to separate into three chunks, broadly. The broker, which deals with the clients, the exchange, which has the concern of matching orders, and then the clearinghouse, which does kind of the back office record keeping. So we've always started in each of the assets as being the broker, because the thing that is our differentiator is the customer relationship, the user interface. But for some of the assets, we do all three and we vertically integrate and we just sort of do it all. And because we have so many customers, there's economies of scale, and it's sort of where we vertically integrate depends on whether we can use those economies of scale to kind of negotiate good deals on the back end to lower the costs, or if it's like a newer market, we vertically integrate so we can control our own costs. Because at the end of the day, from the very beginning, one of the reasons to use Robinhood is because it's cheaper than the competition. So we just have to work hard to make sure it's actually cheaper and that we have kind of these structural advantages. The second big idea besides trading that allowed us to expand is around this yield question. So the observation was this, okay, well, if you open up a checking account or a savings account, the trick there is that they don't pay you any yield. You have to do a lot of work to get the yield. And in particular, they make it so that you really have to Move your money and optimize for it. It doesn't happen automatically and in checking you're not going to get any yield. Typically it's zero savings at most places. You get very little also. So the, the sort of incentive for the bank is for you to keep all of your money in these low yield generating accounts so that they can make more money off of you. And if you look at the big banks, I mean trillions of assets that are, they're basically taking all the margin on. So we asked ourselves, you know, can we take advantage of this to make a great yield product for customers and can we make it so that you get the lion's share of the margin, which right now is between 3.5% and 4.25 and we make a little bit margin but call it like 1/10 right in that ballpark. So still fair. And then can we just create a stickier product? Another factor of this that I didn't really like as a business person is that your revenues are highly dependent on what the interest rate is by the Fed. If interest rates are high, you're making a lot of money. If interest rates are low, you're not. So you're kind of not controlling your destiny. But if you commit to operating at a certain spread or margin, then you just tick up the rate that you give your customers up or down depending on what the Fed does, and that's much more sustainable. So the second big idea was can we take this yield thing and just turn it into a great product for customers? And that is sort of like what pushed us into gold subscription product which now has 4 million plus paid subscribers in the U.S. what is that? So gold subscription. The best way to explain it is you mentioned Amazon. Think of it as kind of Amazon prime for financial services or the Costco subscription. Can it just be the best financial membership so that you get good value if you're a Robinhood customer. But if you want insane, no brainer value, you become a Robinhood Gold member and then the incentive is, well, you should know you're getting great value across the entire suite of products. So if you're in the market for another one of our products, it just like pushes you to, to try everything out.

[Interviewer]

I thought you were going to say it was to buy gold.

[Vlad Tenev]

We also offer that. And actually I should show you, I have a, a physical product that there's probably two great quintessential products that Robinhood has launched. Commission free trading. The initial one, that's one of them and this is the other one. Not Evenly distributed yet. But that's the Robinhood gold card.

[Interviewer]

That's really beautiful.

[Vlad Tenev]

Yeah. So that one is solid gold.

[Interviewer]

Wow.

[Vlad Tenev]

Yeah, 10 karat gold. Because if it's higher carats, it gets too softer. Yeah, I mean, we can't make them fast enough. It's like people still complain that they're on the wait list, even though it's sort of like, yeah, among the fastest growing cards in history. And what this gives you, it's again, it's the same combination of things that make Robinhood successful. You know, if I had to distill it into two things, it's amazing user experience and amazing economics. Can we lead in both of those? And I think one of the two gives you a good product. But if you nail both, if you give people the best economics and the best customer experience, then it's really strong. So this card, what's special about it? 3% cash back on all categories. So the next highest you'll be able to find is two. So it's like head and shoulders above the rest.

[Interviewer]

How are you able to do it?

[Vlad Tenev]

In a nutshell, it's also the same playbook, which is if you look at the big credit card companies like Capital One, for instance, and you look at how much revenue they generate over their transaction volume, you get to something like 6%. So they actually, if you look at all aspects of the credit card business, add them together, it's like 5 to 6% volume yield. Now, why can't they do 3%? Well, they have something like 20,000 employees. They're spending billions to tens of billions on marketing. So the observation is, if we can cut that, operate much more efficiently, spend less on marketing. In fact, we put the vast majority of our resources on the actual core economics that are easy to understand, then it becomes so good that the customers market for you.

[Interviewer]

Yeah.

[Vlad Tenev]

And that's why, you know, anytime I tweet on social media, I usually have a bunch of people replying to me asking where their gold card is, because they've been waiting for months or years in some cases.

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[Interviewer]

Tell me about the users. How old are people on Robinhood?

[Vlad Tenev]

It's largely millennials and Gen Z. So when we first got started it was kind of like a millennial company, right? But one of my big focuses is to make sure we're not just millennial company because that's where you kind of get stuck with customers that eventually like age out. Right? You've got Schwab, quintessential baby boomer company. You've got E Trade, which is kind of Gen X. So one of the big things we think about is how do we always stay relevant to the next generation. So we've been spending a lot of time on Gen Z. We're already thinking about Gen Alpha and Gen Beta. How can we make sure you know or your first brokerage account regardless of how old you are, and not get stuck in the generational rut as our predecessors? But yeah, right now customers are kind of 35 on average, 34 on median. So a little bit younger than me. It used to track pretty closely with my age, but we have been somewhat successful getting younger and younger customers. So my age is outpacing the average customer age now.

[Interviewer]

And you said there's crypto now is the crypto aspect of it buying and selling?

[Vlad Tenev]

Yeah, buying and selling. There's staking as well.

[Interviewer]

What is staking?

[Vlad Tenev]

There's two ways to look at it from a user standpoint. It's a way to get passive yield for holding. Much like I put cash in and I get my yield if I have Ethereum or Solana, although not yet in the state of California, you can just get yield for holding without trading. And the way it works is you're basically contributing your coins to support the overall network. So you get paid by the network for helping maintain it and processing the transactions. So that's why it's called staking. You're putting your coins at stake for the benefit of the network.

[Interviewer]

I see.

[Vlad Tenev]

So there's a nice sort of like kumbaya aspect to it.

[Interviewer]

Are there any plans for additional services or have you maxed out on all the financial services.

[Vlad Tenev]

Oh, we were adding new services all the time. We're the initial broker and trustee, sole broker and trustee for the Trump accounts, which we announced a couple of weeks ago. So basically this is a new initiative where every newborn in the country gets $1,000 in a brokerage account so that they can start investing from birth for free.

[Interviewer]

It's a government gift.

[Vlad Tenev]

Yeah, government gift. And then some private donors like Michael Dell and Brad Gerstner, who came up with the concept a couple of years ago, they're funding it for certain subsets. Like a lot of people are funding newborns in their state or in their hometown. So there's a lot of philanthropy. And then we're building a really nice gifting flow so that if you're a grandparent or other family member or you want to send out a link for birthdays, you can get people to fund these accounts. And I think that's a really cool initiative. Our first stint as a government subcontractor, but really opportunity to get in front of customers from age 0, which would be pretty cool. Robinhood Banking has been going really well. We launched that a couple months ago. That's been growing. Prediction markets, I mentioned that's the fastest growing business in our history. We launched that a little bit over a year ago.

[Interviewer]

Tell me about your thinking about prediction markets. How do they impact our world?

[Vlad Tenev]

I'd say the genesis of prediction markets being a real useful thing for me was always the election. So I remember I first discovered prediction markets in the 2016 presidential election, which was Hillary Trump. The usefulness for me was how do you cut through the noise? You're watching the news, you're trying to figure out who's likely to win this election. Which way is it going to go? The incentives of the news isn't to give you the information right away that you're looking for, it's to keep you engaged and entertained, so you keep watching. So I think over time, the news has kind of shifted from being the place where you get your information to the place where you get entertainment. And so that's kind of created a gap because there, there is a use case for how are these things going to go? Who's going to win the next election? What's the Fed going to do with rates? And so prediction markets are the best tool that has been created to get to ground truth on the likelihood of a future event happening. And I think that's what makes them super interesting from my standpoint, because it changes Robinhood's place from just being a Transactional platform to. Now you can get your information and that's really the goal. Can we get it so that Robinhood gives you your information? And if you want to know what's happening with news, current events, sports, you just go and you can really quickly see.

[Interviewer]

Would it be obvious to add prediction markets or no?

[Vlad Tenev]

To me it was super obvious. I mean, we were, we were the first to add it. Right. And we just knew that this would change the world. Now, what was not obvious was, is this going to be. At first, was this going to be every four years, like election type thing? Right. Because we could tell the elections were very, very useful. But the other contracts, I don't think had as much activity on them, not as much trading volume. But from my standpoint, I didn't really care because we have so many products, so we can roll out this thing to customers if it's not useful.

[Interviewer]

Also, with prediction markets, I don't think elections was ever part of the original consideration of what was great about them.

[Vlad Tenev]

Yeah, there was a Hollywood one I remember years ago. Yeah. In the, in the early, in the early 2000s. Right.

[Interviewer]

They had a place on La Cieneca Boulevard and they had like a cafe.

[Vlad Tenev]

Yeah.

[Interviewer]

That had the ticker going.

[Vlad Tenev]

Yeah, yeah. I mean, that was. When I've, when I've read about the prediction markets lore, that one always comes up. And then there was the. I think Google internally had a prediction market where people would like make predictions on how delayed features would be.

[Interviewer]

Oh, cool. Just for the staff.

[Vlad Tenev]

Just for the staff.

[Interviewer]

Cool.

[Vlad Tenev]

And these were very accurate because obviously everyone has a disincentive to share bad news publicly. And so they would give you a. They would give, you know, an official rosier picture. But in projects that weren't going well, the, the prediction markets would sort of like surface the issues. And I think they were planning to roll that out, but they decided not to. And then there was the. Which one was it the Iowa prediction markets. So there have been a couple of experiments, but yeah, I'd say when they became really big in 2024, it was the presidential election because that was a mass market event and everyone was kind of searching for the answer to this question of who's winning and how likely is it? And then of course, over the past year it's expanded into sports, where now prediction markets are kind of eating and disrupting traditional sports betting. And I think that's brought with it a lot of controversy, also a lot of battles. But yeah, I think from the standpoint of an active trader, this gives you Lots of things to trade on. Right now you can hyper specialize on all these things like you could be if you're an expert in culture or video games. You have like this new niche of things to trade on and I think that's why it's resonated. And for the general public, the sum total of all that trading activity gives you a truth signal to a large degree. Unbiased, probably not entirely, but very strong signal as to what's true or likely to happen.

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[Interviewer]

Are there limits on what you can predict on or can it be anything?

[Vlad Tenev]

Yeah, I mean in the regulated prediction markets there are definitely limits and we impose limits ourselves. So one of the things we don't offer is these mentioned markets.

[Interviewer]

I don't know what that is.

[Vlad Tenev]

Mention market is basically like, you know, president gives a speech, what are the odds he's going to say a certain word?

[Interviewer]

I see.

[Vlad Tenev]

Yeah. I know some places offer those markets. In our view, they're too easily manipulable. So they sort of like deviate a little bit from something that is a useful, high quality product.

[Interviewer]

Do you guys curate the questions or are they user generated?

[Vlad Tenev]

We curate them.

[Interviewer]

So do you have a staff who. That's their job.

[Vlad Tenev]

Yeah. And we're currently not the exchange. We route to exchanges.

[Interviewer]

I see.

[Vlad Tenev]

So the exchanges actually have to list the contracts. Out of the ones they list, we figure out which ones to offer to customers.

[Interviewer]

Who are your competitors in your overall business?

[Vlad Tenev]

We've got lots of competitors. I think the most obvious ones are the discount brokers. So the big trillion dollar Asset firms like Schwab's and Fidelities.

[Interviewer]

Any upstarts after you that are making an impact.

[Vlad Tenev]

I mean, in the direct brokerage industry, there's kind of this trend of Chinese companies, companies that actually have their teams in China, but they're operating regulated brokerages here. So like Webull, Mumu, they're sort of trying to do certain aspects of what we're doing. There's a lot of companies that are taking the Robinhood playbook and doing it internationally.

[Interviewer]

Do they have any advantage being based in China that they don't have to jump through certain hoops that you've had to?

[Vlad Tenev]

I think the big one is just cost of operations. I see lower cost of operations, you know, high quality engineering. They should be having to jump through

[Interviewer]

the same subject to the same rules.

[Vlad Tenev]

Yeah, I mean, the US Financial services industry has always had, I think, a little bit of trouble in recent years dealing with the offshore platforms in general. I don't know if you remember ftx. FTX was an interesting one where they were basically offshore. The lion's share of their business was based in the Bahamas and technically not open to US customers, but they had like a, a small subsidiary that was regulated in the US that was doing next to no business, but that opened up the door to market locally. So that's why you would see like FTX Stadium, all those commercials. And essentially what was happening was they were sort of like getting customers into the offshore entity and turning a blind eye to it because they weren't supposed to do that. And I don't know, I think at the time for sure, that wasn't as well handled. There wasn't as much scrutiny. I think we've gotten better. But yeah, I think offshore is still a problem. And there's a lot of, like, you can get away with a lot there. And, you know, there's competitors that are offering really high leverage, more products, unrestricted prediction markets on all kinds of things. And, you know, some people that get confused can tend to go there. You've got the big crypto firms that are all sort of trying to converge on the super app vision, doing similar things to us in that sense, the credit card companies. But yeah, I think the, the aspiration is really Robinhood now does a lot of trading. We want to be your financial home for your whole, whole family. So all of your financial needs should be best served by our product. And I think that end state doesn't really exist as one competitor. That's why, you know, we're the first to put in prediction Markets into your overall package with a credit card, with bank accounts, with retirement, with matches the trump accounts. Right. It's like I don't think anyone has solved this on a global scale yet. How can we actually help you with all of your financial needs?

[Interviewer]

And where are you now?

[Vlad Tenev]

Globally, we're still very much like US centric US centric business. We are live in the UK and in Europe, but with a subset of our products in Europe. We're doing an interesting thing where we're trying to rebuild our infrastructure from the ground up on crypto technology. So we don't offer stocks in Europe like we do in the US but they're tokenized stocks. So on chain versions of it, how

[Interviewer]

do the on chain versions impact the stock prices or do they not?

[Vlad Tenev]

I think right now the business is too small for that to really be super meaningful. I mean tokenized stocks as a slice of global stocks are still fairly small. And, and every trade that we do in Europe is sort of like backed by a real trade in the market.

[Interviewer]

Exploring tokenized stocks to me.

[Vlad Tenev]

So the tokenized stocks vision is going to happen in sort of like three phases. And we're in phase one right now. And basically what happens is here is the user, here's your phone. Let's say you wanted to buy some Apple right now what happens is that transaction goes to our backend and the back end sends it to a tradfi broker.

[Interviewer]

What is a tradfi broker?

[Vlad Tenev]

A tradfi broker you can think of as Robinhood in the US they deal with the real stocks, the non tokenized versions and they go to the market center as well. So the market center. So you can think of this as a traditional exchange like the NASDAQ or the nyse. So you take the order, you get the ack, and then you send it to what's called a tokenization engine. So every time you get a share back, say it's a share of Apple, it goes into the backend, the backend will mint one token, one for one for each share and it'll store it and then it'll return that token to the user.

[Interviewer]

So if it's one to one, it's no different than buying the stock really.

[Vlad Tenev]

Yeah, that's true. So each trade essentially results in the minting of one token and you get the token and then if you sell, then we actually the token engine burns the token and then we end up selling it. So that's phase one. And in phase one, as you're building the liquidity and building the supply of the tokens. Each trade goes to the traditional market. Now phase two is where things start to get really interesting. So we have an exchange that we acquired about a year and a half ago called bitstamp. It's actually the oldest and the longest continuously running exchange older than Robinhood. And then what happens is we connect the tokenization system to bitstamp. And what happens then once you want to sell or buy the token Apple, you have an option. You can either go to the tradfi market or you can go to bitstamp and get the token directly. So in this flow it's token to token, so you don't have to go to the tradfi market.

[Interviewer]

So in the second case it doesn't impact the price of the stock?

[Vlad Tenev]

Not directly.

[Interviewer]

Not directly, Yeah.

[Vlad Tenev]

I mean obviously there's, you can imagine in phase two, there's arbitrage bots and everything. So if the stock moves in one place and doesn't in the other, like there will be an economic incentive to draw them closer together. And this happens also because there's multiple exchanges already that trade the same stock, like between NICE and nasdaq. That could happen. Or also a foreign exchange if a stock is listed in Canada and in the U.S. but yeah, there's a market mechanism to do that, but nothing forces it automatically. But what this unlocks for the user is 24. 7 trading, which I think is really interesting because right now what we have is 24. 5 in phase one.

[Interviewer]

And even 24. 5 is new.

[Vlad Tenev]

24. 5 is new. Yeah, we've pioneered that in 2023 with 24 hour market. Yeah, so now the last frontier is like Saturdays and holidays basically because you can trade from 5pm Sunday to late Friday. And then phase three is where things really start to get interesting. And this is where you can interact directly with the blockchain. So underlying the token engine is the blockchain, which is where all the tokens are settled and stored. That's kind of the backbone. And right now the only interface to the on chain transactions is through our front end. But in phase three, the tokens leave our walled garden and enter your wallet into the world of defi.

[Interviewer]

So then they become the coins.

[Vlad Tenev]

Yeah, we mint and burn them.

[Interviewer]

You mint and burn?

[Vlad Tenev]

Yeah, and that might change over time, but yeah, for now we control everything. And we also have Robinhood chain, which is the chain that's going to be underlying this. That's in testnet right now with over 100 million transactions. So it's actually one of the most successful testnet chain launches. So that's going to be going live on Mainnet in the coming months.

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[Interviewer]

Tell me about the percentages of your business. Is the majority of the business now the stock trading?

[Vlad Tenev]

No, it's gotten much more diversified over time. Last public number we announced was over 11 business lines, generating nine figures, 100 million plus in annual revenue each of the. Each of the. Each of the 11 businesses. So yeah, crypto is like 15 to 20% of our revenue. Stock trading by itself is, I want to say less than five.

[Interviewer]

Wow.

[Vlad Tenev]

Options trading is the largest.

[Interviewer]

It's just interesting because that's what was the basis of the whole thing.

[Vlad Tenev]

Yeah, it was the start of everything. It's still a nice business. We make a few hundred million in revenue, but options trading is much bigger. Options trading is I think our first 10 figure line of business. And then we have a big subscription business now with more than 4 million gold subscribers. Those are paying $5 a month or $50 a year. So that's a multi hundred million in annual revenue just from subscription. So yeah, it's gotten much more diversified.

[Interviewer]

So what are the blockages in terms of being totally global?

[Vlad Tenev]

So each country has definitely regulations are kind of diffuse, but also behaviors can be different as well. So in different markets, people like different things.

[Interviewer]

Is Europe one market?

[Vlad Tenev]

Europe is one market in some ways in that they have some common regulatory structures and regimes underlying crypto and securities. But there's also country specific Taxes, there's country specific incentives where for example, if you're in Germany, the plumbing behind how you get like pensions and taxes is slightly different. So each country kind of has freedom to incentivize its own behavior. In the uk, obviously post Brexit, they've diverged quite a bit and they have their own standards and rules. But yeah, if I had to kind of condense the differences into a couple of buckets, number one, onboarding is a little bit different. So each country has their own rules for how you accept customers, what questions you have to ask them, how you collect their tax status, funding is different. So how you move money into and out of the account, that's sort of unique on a per country basis with some places like Europe being pretty standardized, some have local markets that they care about. UK has London Stock Exchange where you can get some unique local stocks, Burberry for instance. And then retirement and tax advantage wrappers tend to differ, but it's doable. Yeah.

[Interviewer]

And is that the plan long term?

[Vlad Tenev]

If you look at our business in terms of three arcs, right, the first arc, which is the short term one, which we're kind of in the heyday of, is to be the, the number one platform for active traders. Medium term arc, which is sort of a five year, is how do we go from just being useful to traders to being truly your financial home? Can we be where you do your banking, your retirement, give you a physical human advisor? Which we offer by the way, if you want someone to actually help you with all of your financial needs.

[Interviewer]

Is that part of the gold?

[Vlad Tenev]

It's separate. We acquired a company called Trade pmr which is essentially a platform, a marketplace for human advisors. And some people, you know, they like having someone to talk to when they're navigating all this stuff, right? Particularly with multi generational issues and setting up trusts and wills and estates, doing their taxes. So we offer that. That's the second arc. How do we become number one in wallet share? How can we build your financial home for your whole family? The third arc, which is the longer term, I call it number one global financial ecosystem. And that's basically how do we go from US only or US Primary to fully global? And how do we go from retail only, which is dealing with individuals, to business and institutional? Can we take the same things we've built for individual customers and kind of go backwards back to our origins? Serve hedge funds, serve like developers serve advisors. And I think that one is a big business opportunity, even if it's slightly less kind of democratic in A sense because the institutions want the same things that that retail wants. Rock bottom rates, high quality access to markets, lots of different assets, crypto and traditional assets in one place. And if you look at the space of institutional products, they're probably at this point further behind retail in terms of user experience, thanks to you. Yeah, I think we've made some progress. So now the institutions are knocking on our door asking when they can have some of these things. 24, 7 access to markets, big one.

[Interviewer]

The benefit if you can pull all that off is the economy of scale translates across the board.

[Vlad Tenev]

Yeah, exactly. I mean the same infrastructure that we're serving, retail can also be amortized across institutional. You also have to navigate, well, what's happening with AI. How is that going to change how we invest? You know about Vibe coding, is there going to be Vibe trading where you have your agents working autonomously on your behalf and finding opportunities?

[Interviewer]

Do you have any open claws, customers who buy on your platform?

[Vlad Tenev]

Well, we certainly have seen API usage and you know, people sort of like reverse engineering our APIs, posting them on GitHub and you can kind of like at this point get your claw to use your computer and it's indistinguishable from a human. So I'm sure we do. I think it's still a fairly niche thing for a couple of reasons. Number one, a lot of people just like don't want to hand their keys off completely to these things that can make mistakes and be unpredictable. You have to be really sophisticated to set these things up particularly safely. And there's a lot of fear. Right. So there's definitely people trying it. Like we're very, very early. But I think there's got to be, there's going to be a lot of product thinking to turn it from its sort of like grotesque state now into something that's useful for the mass market.

[Interviewer]

How important is privacy?

[Vlad Tenev]

Privacy? I mean, I think in our space there's just this assumption of privacy because financial products typically are single person experiences. And actually when you want someone to see the information, it's fairly selective, you know, paths. Like maybe you have a joint account with your spouse or a custodial account for your child or you want your accountant or your financial advisor to see your data. We are experimenting with this. So we rolled out a product, Robinhood Social Media. The question there in my mind is can we actually go from being useful to people when they're making the transaction to helping you generate the idea? Can you get all of your information not just from prediction markets, but Also from other people on the platform that are uncovering things. And so that's the idea there. And the one unique thing that we have as a big differentiator is because all the transactions happen on our platform, we can validate them. So when someone posts a trade or some kind of idea, we can actually connect that with what they're doing on the platform. And it's not like a fake screenshot. You can have confidence that the person's actually putting their money where their mouth is. And so far it's been going really well. Actually, it's kind of exceeded our expectations. So we've been iterating on it, trying to improve it on once or twice a week basis. Of course, by default it's private. But I think there are some people that are willing to share some aspects of what they're doing in controlled ways. And I think it's like a very powerful thing to enable that because you see them doing it already, like posting your account on social media, getting feedback, getting feedback on trading ideas. So there are definitely opportunities for collaboration.

[Interviewer]

Has Robinhood ever been hacked?

[Vlad Tenev]

Not like a full system breach exploit sort of thing, but we've had some instances where relatively small amount of customer data was compromised. I think the biggest instance was back in. I think it was 2021, end of 2021, one of our support agents got compromised and yeah, relatively small set of customers had their names and other information revealed. So still not great. But I think the impact was fairly well contained.

[Interviewer]

And is that a focus? Huge focus, well defended.

[Vlad Tenev]

Yeah, we spend a lot of our best people are on cybersecurity. Yeah. Because we have the crypto stuff and you know, now with these AI tools like I'm sure you've heard about Mythos, you essentially have to have no gaps. There's a very, it's, it's a very high standard of correctness because you can't rely for very much longer on obscurity. Yeah, it used to be that, okay, well the North Koreans can only. They only have so many engineers, so many offensive cyber experts. So you just have to like not be the weak link. But, but now we're entering into a world where you should just assume that you're being probed constantly and that just means that you have to be robust at all times.

[Interviewer]

When did Robin hood go public?

[Vlad Tenev]

2021.

[Interviewer]

Tell me about how that changed things or did it change anything?

[Vlad Tenev]

It was definitely a big change. Yeah, it was a big change for me, but I think that we've kind of made it our own. So I think the first thing about going public is there's a lot of rules. You kind of encounter it through the IPO process itself. So there's like the quiet period. You can't talk about stuff. You have to be extremely careful what information you disclose and when. I think my first approach was, okay, I don't know when I'm breaking the rules. I'm not like super comfortable with this. So maybe I just don't say anything. Let's just like not worry about it. Just focus on the business, not communicate. And then it was sort of like doing the bare minimum public stuff in the way that it's always been done.

[Interviewer]

How long of a period is that?

[Vlad Tenev]

Well, you kind of have it every quarter. So, for example, the quiet period is the period between the end of the quarter and when you announce earnings where you can't be like, you have to be careful not to share any recent numbers, anything non public, not to do any tipping. And then there's another quiet period that's around the time of the ipo. So we had to deal with that too, because I did a second IPO for Robinhood Ventures Fund, one rvi, which is essentially, you can think of it as a venture capital fund that invests in private companies. But we wanted to take it public so that retail investors can get access to those same private companies. It's a very cool product, but yeah, so at first I was kind of going through the motions. Everyone has this impression that being public is kind of a chore, Right? You don't want to do it. You only do it because you have to. And so I was doing earnings the same boring way that everyone was doing them, which is you have your Polycom, you kind of read your script word for word. You open it up to analyst questions from the institutional analysts, and then you have like five listeners on the call. I did, you know, a few earnings calls that way. And then I realized that we have all these fans, all these retail customers, and they're tracking the company performance and how we're doing on YouTube. I started watching their YouTube analysis and you can imagine it's like a bunch of bros hanging out on a video chat with our earnings call. And it's like blank screen because it's no video. Dry, monotonous. Someone reading a script. These live streamers were like almost apologizing for us. Like, I know this is really dry and boring, but you know, hopefully we'll get some good stuff in the Q A. Yeah, but they didn't really get too much good stuff in The Q A, it was, it was by the books. And then I was like, well, you know, we have these fans. The intent of this whole thing is to actually like educate these people. And what happens if we don't think of it as just this chore that we have to do, but instead it's this opportunity to like engage, engage with our community, get together with our community once a quarter and turn it into a thing that we celebrate. So that switch flipped for me about two years after we went public and everything changed and now I'm having much more fun. So we first started doing interviews not just with the press, but with some of our retailers, financial content creator folks. Then we started live streaming on video, our earnings calls. And my model for it was I wanted to be like an NBA post game interview. You know, where they had like the logos in the back, the big mics, you know, NBA post game interviews are fun. If your team loses, it's kind of entertaining because they kind of, the players go out and they're kind of in a bad mood and maybe they'll talk shit about the other players or the coaches. And if they're winning, they come in and they've got the swagger. Like Anthony Edwards has his shirt off and has the towel over his shoulder and he's just like, I'm king, you know. And then we took questions not just from. So the conventional wisdom is you only invite sell side analysts and these are the people that aren't actually making the decisions, but the big banks employ analysts to analyze companies. They write these reports and then the buy side consumes these reports and they

[Interviewer]

figure out, but it sounds really dry.

[Vlad Tenev]

Yeah, it's kind of like people pay for this and there's an established industry. And I was like, well, why is it only sell side analysts? Is there a rule, is there some kind of law that makes it so that we can't make it bigger? And everyone's scratching their heads saying, well, that's how it's always been done. And there would be these made up rules like, oh, the sell side analysts want to make sure that they have time, that they're adequately respected, that they get to ask their questions. But then we started inviting the retail folks in, the retail content creators, they started asking questions. Then the sell side analysts came up to us and they're like, you know, it would be fun to have some buy side folks in here too. They're the ones making the investment decisions. You should hear what they want. And so we invited them and then we started inviting the media too. Awesome journalists.

[Interviewer]

Great.

[Vlad Tenev]

Yeah, I think we kind of like rebuilt all of these things from the ground up, really, from first principles.

[Interviewer]

Has anyone followed that example?

[Vlad Tenev]

Yeah, actually now we offer a service to other companies. So not only can we help you with this, but also if you choose to use our public company services, we can live stream your earnings to our user base on Robinhood. And Open Door was our first customer. And this is another company. They do like buying and selling homes and they have a big retail following. And the CEO of Open Door is a great guy named Kaz. He did an interview recently. He said we went from five people watching our earnings calls to 55,000.

[Interviewer]

Amazing.

[Vlad Tenev]

So it's literally like 10,000x improvement, which is crazy. And I was part of this roundtable hosted by the SEC in New York a couple months ago. It was called Make IPOs Great Again. Because one of the big, I think, tragedies of our time is, you know, it used to be that back in the 80s or 90s, a company like Microsoft or Amazon would go public and then normal people can invest in it at valuations of hundreds of millions. And now you've got these gigantic companies, anthropic rumors of secondary at a 900 billion valuation, OpenAI at 800 and some billion. And these companies might not go public until they're well into the trillions, which means for the customer to get that type of public markets return that they got with Microsoft or Amazon of 1000x, they have to go into the quadrillions. So like the gains are just accruing to a smaller and smaller group of wealthy insiders that just keep getting wealthier and the retail mom and pop normal investors being shut out. So two pronged attack to solve this, making IPOs great again, which I think is not just like lowering the barriers and like lowering the legal risks and just the all of that, but I think it's also changing the perception of being a public company from this chore and annoyance into like it's a cool kind of cool to be a public company. You should like embrace it and use it as an opportunity because there are certain things you get that you just can't get otherwise. And also the second thing is you're probably not going to convince everyone to go public earlier. But if we unlock the privates to retail, the combination of these two things should solve the problem. You know, I, I worry, I don't know if you worry about this stuff. I mean the, the AI backlash among the people here is extreme. And I think you juxtapose that against something like crypto. With crypto, there's like, this army of people that defended against government overreach. And whenever there's a hint of someone coming after your crypto or affecting the price negatively, there's this, like, whole army of people that just mobilizes. Right. And I think the crypto community has been very effective with this in the media and in Washington. And I think a big part of it was from the very beginning a retail investor could hold crypto. And it was actually like retail first, in a sense, because it was first the retail that came in, then the institutional. But with AI, you have this thing where, like, it's hugely disruptive. People are scared. They're worried it's going to take their job or it's going to put a data center in their neighborhood, and they don't own any of it.

[Interviewer]

They can't participate.

[Vlad Tenev]

Yeah. None of the companies that are really leading it, I mean, except for the giant ones that were big already, are available for people to invest. So that's kind of been my.

[Interviewer]

Interesting.

[Vlad Tenev]

My latest crusade. How can we crack that open so that everyone can have access to. And can we do that at earlier and earlier stages? Like, I think the first round of financing that a company does, your seed round and your Series A should have a big retail component, and we're going to make that happen. And I think if we succeed, there's going to be more entrepreneurship in this country.

[Interviewer]

You think for every company that has the opportunity to go public, that's a good choice.

[Vlad Tenev]

The big thing for me is making sure the gains don't just accrue to a small group of people with the access or the deal flow. So if we can accomplish that through other means, that's the thing I care more about. It does resonate. I talked to the guys from Stripe who ended up actually agreeing. I think I managed to convince them or annoy them enough for them to agree, but they were very negative to opening up to retail initially. But then they were one of our first participants in Robinhood Ventures, and they were basically like, look, this is just a small Irish family business. Like, why do you. Why do I have to do anything I don't want to do?

[Interviewer]

Yeah.

[Vlad Tenev]

And I think that kind of resonates with me. Right. If you want to just. If you're following the rules, then you should be able to basically do what you want. So I wouldn't just go as far to say everyone absolutely needs to be public, but.

[Interviewer]

But you think it's a great opportunity.

[Vlad Tenev]

Yeah, I mean, I think it's an honor to be public. I mean, it was something. Obviously, when I first became interested in business in my 20s, it was sort of like the dream, a goal. Yeah. One day, you know, if you. If you could be a public company, not. Not everyone does that. There's very few things like that. And, you know, now I have two. Two bell rings. One a nasdaq, one a nice. Maybe. Hopefully we'll have a lot more, but yeah, very much. It's like core to Robinhood. Robinhood is a big about giving you access to public markets. So I think it would. It makes sense for us, but maybe not for every single company out there.

[Podcast Host]

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[Vlad Tenev]

Tetragrammaton is a website.

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