← The Iced Coffee Hour
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- [00:00]
Vlad Tenev
Get yourself ready for a trip through McDonaldland. There's thick shaped volcanoes. You'll even find a French fry patch. Now just turn around and see if.
- [00:15]
Jack Selby
You won't find a hamburger patch as.
- [00:19]
Vlad Tenev
You head in for order the McDonaldand.
- [00:23]
Graham Stephan
Meal today and get the Mount McDonaldland.
- [00:25]
Vlad Tenev
Shake with your very own character souvenir kit. We are seeing a phenomenon that I have never seen. The weapon of choice for these new.
- [00:35]
Jack Selby
Traders are platforms like Robinhood. GameStop shares tanking today.
- [00:39]
Graham Stephan
Robinhood and other brokers making it tougher to trade the stock. How tired are you of talking about it? It's okay, you can be honest. So you created Robinhood, the financial app that introduced probably millions of people to investing. Do you think that there should be stronger guardrails and disclosures in place?
- [01:03]
Vlad Tenev
I think it's hard for me to imagine a world where I would say no.
- [01:07]
Jack Selby
So what is your prediction in terms of where the US economy might be headed over the next few years?
- [01:12]
Vlad Tenev
I think technology wise, we're in probably the most interesting time ever. You have AI which has the potential to change every single aspect of our lives and the way we interact with the world. You've got cryptocurrency reshaping money itself. And that's why trading and finance have to evolve, too.
- [01:31]
Graham Stephan
So if you were to answer the not so simple question of why did you disable GameStop buy button? How would you now answer?
- [01:48]
Jack Selby
Vlad, thank you so much for coming on the Iced Coffee Hour. I feel like this is something we've been trying to do for years at this point. All of us have used Robin Hood. We're big fans. However, we have never seen you and Roaring Kitty together in the same room.
- [02:02]
Vlad Tenev
Yeah.
- [02:03]
Jack Selby
How can we confirm you're not the same person?
- [02:05]
Vlad Tenev
I mean, I never claimed to not be the same person. I've tried getting in touch with him in the past, but I don't know. He's. I'm not convinced he's a real person.
- [02:14]
Graham Stephan
He's very elusive.
- [02:15]
Vlad Tenev
He's a little elusive, yeah. Have you guys met him?
- [02:18]
Jack Selby
No.
- [02:18]
Graham Stephan
We would love to. If he's watching this by any chance. Keith, please. We would love to have you on the show. We'll be phenomenal.
- [02:25]
Jack Selby
We've reached out and I don't think he's ever responded. He's never seen it, as far as we're aware.
- [02:31]
Vlad Tenev
Yeah. Well, maybe the next one you can interview both of us together. That would probably be.
- [02:36]
Jack Selby
I think that would break the Internet, that really?
- [02:37]
Vlad Tenev
Yeah. That would be the first definitive proof that we're not the same person.
- [02:41]
Jack Selby
That's so funny. So I'm curious. So we have a chart here I want to show you. Why do you think the average retail investor does so poorly in the markets?
- [02:50]
Vlad Tenev
That's a good question. I'm trying to think whether it's actually true from my perspective, that the average retail investor does poorly. So because we publish Robinhood data around this, we have the Robinhood Investors Index, and that tracks how our customers do relative to the market, also what their top 10 holdings are. And, you know, it fluctuates quite a bit. You can Compare it against QQQQ and other other tech stocks and ETFs. And our customers tend to be overweight in innovation and technology and also crypto. So in times when those do poorly, which happens from time to time, our customers tend to do less well than the indices. But, you know, in times like right now, where innovation, technology, crypto is doing well, they tend to do very well. So I think, I think that historical number might be, if I had to guess from a time where there were commissions on every trade. And a lot of the studies that show retail investor underperformance assume a $10 commission. And obviously that amount eats into your returns as you trade more and more. The difference is now we have zero commissions on equity trades. And so a lot of those analyses don't make sense. And, and I think a lot of the conventional wisdom around retail underperformance has been under these sort of antiquated assumptions.
- [04:38]
Jack Selby
Is there anyone you think that should not be investing? Is there a type of person maybe, where, hey, this is probably not for you.
- [04:46]
Vlad Tenev
What we try really hard to avoid is people investing in things accidentally or things that they don't understand. So I think disclosure is very, very important. It should be clear to the user what the instrument is. I mean, it should be clear that, for example, it's a cryptocurrency. It should be clear if it's equity or some type of leverage. If they want to trade options, it should be clear that, you know, they're, they're suitable for options. But once, once you get to that, if someone's really telling you, you know, I want to invest in this IPO or I want to trade options, I think, I think it's hard for me to imagine a world where I would say, no, you know, you shouldn't be doing that. So.
- [05:41]
Graham Stephan
So you created Robinhood, the financial app that introduced probably millions of people to investing that would have never been investors otherwise, with $0 trades and a very beautiful UI. While that's really good because I think, I think everyone should be investing. If you're not investing, I think that you're losing out and you're not doing your future self a service.
- [06:00]
Vlad Tenev
Yeah.
- [06:00]
Graham Stephan
There's also the counter side of that which is it could introduce some people that are not super knowledgeable in the markets or don't have the expertise to be investing to investing and they can end up losing money. Do you think that there should be stronger guardrails and stronger disclosures in place to prevent people without the knowledge to be investing or do you think it's a better thing that everyone just kind of goes in and it's, you know, the, the survival of the fittest.
- [06:24]
Vlad Tenev
I think that more people should be investing. We, we give people lots of options now. Right. So obviously for our active traders we have to be at the frontier there and you can trade options, futures, prediction markets. I mean we, we pride ourselves on having very comprehensive selection, low fees, rock bottom margin rates for the active trader market. But not everyone wants to actively trade or is suitable for it. And so we have Robinhood strategies which, which I think is the best robo, the best digital advisor on the market with some of the lowest fees in there. A fee cap if you have above $100,000 and just like a beautiful interface. And that's been off to a fast start. We rolled that out just a couple months ago and it's already at over half a billion in AUM with a hundred thousand customers. So it's growing quickly. We also have retirement, We've got over 20 billion in retirement assets on the platform to my knowledge. I think it's the fastest growing IRA product that I've heard of. Gone from 0 to 20 billion in just a few years. And if you look at what we incentivize, Robin, retirement is actually what's incentivized because there's a built in match into the product on every contribution. So we'll match 1% for retirement and 3% if you're a Robinhood Gold member. And you know, we run match promos and things like this. But if you actually think about what's like intrinsically incentivized, it's our retirement products. And I think the true story is a lot of people have money in different buckets so you'll have someone with you know, a few thousand dollars, maybe more that are, that they're discretionary trading and then they'll have a big retirement portfolio and they'll use Robinhood strategies as well. So if, if you think about the discretionary bucket, the sort of like area of the portfolio. People are self directing, taking risk. I think I've always viewed that as sort of like competing with the consumption bucket. So this is probably money you would have spent otherwise, you know, you'd have spent it on entertainment, you maybe would have like bought stuff on Amazon. And that's what we saw from, from the very beginning when we were looking at Robinhood and where the money that these young people were investing was coming from. It wasn't usually coming from another competitor because Robinhood was their, their first account. And we talked to customers, they'd say, if it wasn't for Robinhood, I wouldn't be an investor. I'd probably be spending this money. And so Robin Hood actually, I think took money from the consumption bucket and put it in investing. And I think when you take that lens, that discretionary bucket looks a little bit different.
- [09:18]
Graham Stephan
That's what I tend to agree with is it seems like Robin Hood kind of took those people that would be spending it on extra streaming services or spending it on random luxury goods or things that they don't necessarily need and they put it into. Usually with Robinhood, the old connotation, I don't know exactly how it's being used now, was that they would put it into like slightly riskier stocks or more fun sort of investments, which is, I still think, I mean, magnitudes better than just spending it on some random, you know, extra expense.
- [09:44]
Vlad Tenev
Yeah. And I think also a lot of the people that really like there, there's some customers that are all in on discretionary trading. Right. They trade options, they trade futures. And you talk to these people and they're basically entrepreneurs. A lot of those folks are entrepreneurs. Right. And you know, we have meetings with them and sometimes we do dinners with our best customers. These people want complete control over all of their finances. They have very strong points of view around many things. And I think that Robinhood and trading is a way to reflect that point of view. They think certain companies are going to do well. They feel like they deeply understand cryptocurrencies. Some of them are sports junkies and they have like an incredibly deep understanding of different sports teams and what's going on. They're tracking the, in the injury reports. So I think there's a big parallel between self directed trading and entrepreneurship. If you think about me, very few entrepreneurs actually succeed. And if, if you think about what it is, it's like a complete 100% leveraged bet on like one undiversified thing. And you know, is should we have less entrepreneurship. I don't know. I think we should have more, even though, you know, it doesn't always work.
- [11:07]
Jack Selby
I did a short recently that got a lot of views, and it was on Robinhood.
- [11:11]
Vlad Tenev
Oh, gosh. It wasn't the one where you're like, I'm closing my Robinhood account. Here's why. Was it.
- [11:16]
Jack Selby
No, it was this one. Turn it up. So I bought robinhood stock at $32 a share.
- [11:24]
Vlad Tenev
Okay.
- [11:25]
Jack Selby
And it dropped as low as 7. Oh, I saw this double down, and I bought more. The reason it went down was because I told Jack, yes, Robinhood, I saw this immediately. Goes on his phone, buys it immediately. And I kid you not, the day he bought it once, that's a 10. And I told Jack on the podcast, I'm like, dude, you got to sell the stock. And he says, I'll put. Flip a coin, and if it's heads, I'll sell. If it's tails, I'll keep it. I said, it's fine. He flips it. Sure enough, he has to sell the stock.
- [11:50]
Graham Stephan
Sells the stock.
- [11:50]
Jack Selby
The next day, it's up 10%. The next day, there was a big announcement that they received an investment. At first, you were telling me kind.
- [11:57]
Vlad Tenev
Of a joke, but you genuinely believe this?
- [11:59]
Jack Selby
Yes.
- [11:59]
Vlad Tenev
I actually came across that clip on social media, and I was expecting, like, some very deep fundamental or technical analysis about your investment philosophy. So it. It gave me a little chuckle. No, it just got funnier and funnier as it went along.
- [12:16]
Jack Selby
Honestly, my only analysis was that I genuinely like Robinhood as a company, and it's all I see on social media, on WallStreetBets and on Twitter, everyone just posts their Robinhood screenshots.
- [12:26]
Vlad Tenev
Yeah.
- [12:27]
Jack Selby
And very few people ever post Swamp. And I thought just by the metrics of that and the price it was trading, it just. It made sense to me. And then. Jackbot.
- [12:36]
Graham Stephan
Yeah. So I'm curious if you map out all of the users on Robinhood across a line. And this is like, people that make a lot of money, high risk, people that lose a lot of money, high risk. And then in the middle, you have, like, the very conservative investors. Where would you say Robinhood falls? Like, what does this chart look like on Robinhood as opposed to other brokerages? If you take Vanguard, for example, or you take Schwab or any other sort.
- [12:59]
Vlad Tenev
Of exchange, I think that. Well, first, it's. It's hard to actually compare, because no brokerage, they don't have that data. Data to that granularity. I mean, we can track Our market share. And, and we sort of like goal on that. And, and actually the, the goal is to be number one in market share across every asset that we offer. Equities, options, crypto margin, which has been growing very, very well. So we don't have a goal on the precise decomposition. But at a high level, one of the things we really track very, very closely is customer retention. So it benefits Robinhood if customers do better over the long run because our revenue is actually, I mean if you, if you look at our revenue and divide that by our assets under custody, the total platform assets on the platform, that number has been fairly consistent over, over the years. It's kind of like in the 2% range, you know, sometimes a little bit higher, sometimes lower, but basically our revenue scales with the assets under management. So long term we're very aligned for our customers to do well because if they do well, their account balances increase, our AUM increases and we're, we're a healthier company. And a few interesting things. 1 Aum now is over a quarter trillion, which is a big number. I can now say trillion when I describe our AUM, even though it's less than 1. But still, I think a quarter of a trillion is a big milestone for us, particularly as such a young company. Average account size broke 10,000 per customer. And criticism of Robin would be these are tiny accounts, a few thousand dollars, Schwab's at hundreds of thousands. How, how is this ever going to be a serious broker? But you know, account balances are growing and our customers are getting wealthier. They're putting more and more of their dollars into Robinhood and I think we'll get there to the point where our customers have, you know, six figure, six figures, average account size.
- [15:13]
Jack Selby
How much of that though is just the market has gone up so much over the last few years in terms of average account size that if the market were to fall, you would see it big discrepancy, although really quick. Before we go into that, you have to ask yourself the question, what makes a leader stand out? Because it's not just about taking charge, but about setting new standards and embracing bold moves. That's why if you lead by example and live with passion, then our sponsor, the Range Rover Sport is made for you. Every model of the range over Sport offers a unique blend of dynamic sophistication and sporting luxury. It's where refined elegance meets visceral power. With focused on road performance and world renowned off road capability, this vehicle rises to every occasion.
- [15:54]
Graham Stephan
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- [16:23]
Vlad Tenev
Yeah, I mean we also look at net deposits. Net deposits is the portion of it that's I guess under our control. And last year was 50 billion in net deposits, which is a big number. Big number. And this year we're on track to exceed that, right? We did. We've had two of our top three net deposit quarters in the history of the company in the first two quarters of this year. You know, Q4 of last year was, was quite strong as well. But yeah, Q1, Q2 have been strong. Q3 is off to a good start. So it's not just the market, people are also putting more money but, but we want to benefit from market appreciation too because if you look historically, you know, market goes up by 10% ish per year and that compounds. So we want to be winning in net deposits. We want to make sure our, I mean up to our control, our, our customers are invested in stocks and other assets that have long term appreciation potential. I think the combination of those two make for, for a great company.
- [17:29]
Graham Stephan
How much do you look at specific user data? For example, if you have one trader that's wildly outperforming everyone else on Robin Hood, maybe they're Getting like consistent 1000% returns every single year. You said you reach out to these people and you'll take them to dinners and stuff like that. But do you ever feel like incentivized to copy trades and is that even legal to do to like look at all the user data? You see one account just consistently crushing?
- [17:54]
Vlad Tenev
Yeah, yeah, we don't really do that. I mean we don't do that. And yeah, actually I think traders in particular are pretty sensitive about their privacy. And that's why, I mean, I think we have certain regulatory.
- [18:09]
Graham Stephan
So it's not to do that.
- [18:12]
Vlad Tenev
Um, I'm not sure it would. I, I don't know about the legality of it. Um, but it would at the very least be frowned upon. I mean depending on what exactly we're doing. Of course there's certain regulatory obligations that we have like we have to do surveillance and look out for things like market manipulation and, and things of that nature. But yeah, yeah, generally, like looking at who's making money and trying to understand their, their, their, you know, trading strategies. We, we don't do that.
- [18:44]
Jack Selby
That's what Jack wants to do.
- [18:44]
Graham Stephan
That's.
- [18:45]
Jack Selby
See, that's the thing.
- [18:45]
Graham Stephan
If I own Robinhood, I would just go straight to Chris Camillo's portfolio. If you don't know who Chris Camillo is.
- [18:50]
Vlad Tenev
I do know him.
- [18:51]
Graham Stephan
Yeah, Yeah. I would just go straight to that portfolio.
- [18:53]
Jack Selby
Just be like, all right, you know, what is Chris?
- [18:55]
Graham Stephan
Hire an assistant and just map out every single trade he's doing.
- [18:57]
Jack Selby
Here's what we were talking about earlier. What I would love to see is a voluntary opt in feature where you could opt in and share your trades to other people publicly. And all people would see on you because you would stay anonymous is just.
- [19:11]
Graham Stephan
Your account balance and comment on a feed and be like, I just made this trade. And it's like, account balance 20 million. And people like.
- [19:17]
Jack Selby
And someone else, jazz at 10,000.
- [19:20]
Graham Stephan
Yeah, I'm going all in on Dogecoin. And people like, okay, maybe.
- [19:23]
Vlad Tenev
Okay, so that, that's a fundamentally different thing than, you know, us just looking at the data and trading for our own corporate account. So I definitely think there's value in what you're saying if it's clear to the customer that, although really quick, I.
- [19:39]
Jack Selby
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- [21:27]
Vlad Tenev
If it's clear to the customer that, you know, I can opt into sharing my trades and other people can track me and see how my portfolio is doing and maybe, you know, follow along and copy my trades within some type of parameters, I think that would be an interesting product. Actually when Robinhood started, I don't know if you guys know this, but we, we launched in 2013 as a social network. So the name before we changed it to Robinhood was Analyst. And the idea was that we have all these retail investors on social media and the Internet and they should have the ability to share their point of view of stocks. So we took the idea of an institutional analyst, you know, the folks that read stocks buy, sell or hold set price targets. And the attempt was to like democratize that so anyone can be an analyst. We created the social network where people could rate stocks and write comments. And our, our initial vision was that once we got approved to be a broker we would sort of like layer on trading so you can not only analyze a stock and, and, but, but you can also, you know, buy it and you can see your real portfolio. And sometimes I think about, we ended up making the decision that like these are two very complicated businesses independently to put together and the demand for, for commission free trading was, was so high that we just like abandoned all of that for the time being and just focused on making the, the trade button as simple and streamlined and easy as possible. But sometimes I think about that because very much in our DNA to, to build those types of products and who knows, maybe Maybe some point we'll revisit.
- [23:17]
Jack Selby
I would love to see that and be able to track people based on their percentage return, dollar amount return and account value.
- [23:25]
Vlad Tenev
And would you, Would you. You. You'd sign up for that network and be willing to. You, you'd be willing to opt in?
- [23:31]
Jack Selby
Absolutely.
- [23:32]
Vlad Tenev
And share your trades with followers?
- [23:33]
Jack Selby
Yeah, but as long as it's anonymous, as long as people didn't know it was me, all it would show is the account size and what I'm buying and selling. I do not want to be, I.
- [23:42]
Graham Stephan
Think to be anonymous or not, I think because I personally wouldn't care if I was, you know, if I could show my trades. A big Jack Selby just made this trade and then you.
- [23:50]
Jack Selby
Then you do the opposite.
- [23:51]
Graham Stephan
Do the opposite of whatever.
- [23:52]
Vlad Tenev
Yeah, I think most people would probably want to be known and they could build a following. But yeah, I mean, I think, I think if, if you. I could see the use case for wishing to remain anonymous too. But. But I think there, that raises a question of like, who is this person and why would I follow them?
- [24:09]
Graham Stephan
You know, so we've spoken to a lot of people on the podcast that have either been acquired or they've IPO'd and they said after that massive landmark event, their quality of life can slip a little bit and they can feel, you know, some sort of like purposelessness or meaninglessness because they, you know, this is. That was their entire existence was building up this company. And then you have this massive event to kind of for forgo a lot of your equity and ownership of. Of the company. How have you noticed that work with your life? Did you notice after you guys IPO there was a quality of life slip? Or would you say that that was not your experience?
- [24:45]
Vlad Tenev
There was definitely a little bit of a quality of life slip, but I don't know if it was the IPO itself or the timing of it. So we went public in July of 2021 at sort of like the peak of the secular bull market before things went really south. And we were actually one of the last IPOs before the window got shut. I think Rivian went after us by a couple of months, but I think the IPO window shut for many, many years shortly after us. And you could tell the vibe was shifting right around the time we were going public. Like we didn't have a particularly hot roadshow. It wasn't, you know, like some IPOs where it was 60x over subscribed. So you could tell there was a little bit of a vibe shift. Like Everyone was kind of understanding government's printing a lot of money, inflation is creeping up, so something's going to have to change. And so pretty soon after our ipo, our stock took a pretty big hit. You know, we went public at $38 per share. We traded. I was actually looking recently when one was the exact day we hit the bottom mid-2022. We closed at like six eighty something. So huge drop. Right.
- [26:03]
Jack Selby
What did that feel like at the time to see that?
- [26:05]
Vlad Tenev
It felt rough. It felt rough. And I mean they, they tell you that you should ignore the stock price and focus on building your business. It's especially hard for a company like Robinhood, whose business is the stock market, to ignore stock. Our own. And, and also I think it's harder to ignore on the way down than on the way up because on the way down, you know, people get concerned about, you know, the, the long term viability of the company, their compensation. If, if you look at employees so hard to ignore, especially on the way down. And I think they really look to leadership to point a way out. Right. Like show direction and inspire people so that they know it's a company that's, that's worth betting on. So I don't think it was the IPO itself, but going through a hard time post IPO where we went public after the GameStop stuff, there was a little bit of like short lived euphoria around the time of our ipo and then afterward like the reality set in of we're a business that was compared to now, much more fragile. We went through Covid, we transitioned to being a remote first company. We blew out our headcount and grew our headcount 5,6x. People weren't working well together, we weren't shipping. And then the macro environment, which was a tailwind during COVID rapidly reversed and became a big headwind and people stopped trading. So, you know, all that happens simultaneously. And so, so I didn't have the problem that you were suggesting, which is, oh my, my job is done, like mission accomplished. It, it was more just like being hit by several freight trains of like unique challenging problems and you know, having to like stop them or dodge them and, and having to navigate that. So, so I felt there was no loss of purpose. It was in, in. It was like a slow burn of like different mini crises.
- [28:17]
Jack Selby
Do you think, do you think that was an overreaction? Because I remember at that time you were trading at a market cap that was equivalent to your cash on hand.
- [28:26]
Vlad Tenev
Yeah.
- [28:27]
Jack Selby
And I remember seeing that and thinking how how is this not a buy at this price? Because you're basically buying, buying dollar for dollar, the cash you have.
- [28:36]
Vlad Tenev
Yeah.
- [28:36]
Jack Selby
How does that make any sense?
- [28:38]
Vlad Tenev
I don't know if it was an overreaction as much as sort of us having to build trust with a new set of investors. And I felt like we had to do this when we were a private company. You know, we. We raised. As a private company, we raised different rounds of funding. Seed Series A all the way up to series G, which was our. Our last round before IPO in 2021. And in a lot of those rounds, you bring in a new investor for the first time. And I always felt like there was a period of having to earn the trust of the new investor. Maybe they don't really understand how we operate. They're trying to figure out, did they make a mistake, did they overpay for the company. They don't really know us that well. And I felt like for each new one, there was a period where, okay, we had to prove ourselves. This is a new person. They don't know us. We had to build trust. And I think when we went public, it was very much the same, you know, different set of investors. You know, you had the hedge funds, you had the long onlys, you had retail, which for. For Robinhood is a big chunk. But, you know, you think we always have retail, but no, it was a private company. We didn't have any retail. So that was new for us. And. And I think that there was a period where we had to earn the trust of that shareholder base, and I think we've managed to do that. Finally, I could see the. The tide turning in 2024, kind of last year. Yeah.
- [30:07]
Jack Selby
From my perspective, it seems like there's still that discrepancy between Robinhood, where people still associate to some degree with more like childish or like, it's a bunch of early 20s with something like a Vanguard or. Or a Schwab that seems to have more that, like, legacy push behind it. How do you intend to bring Robinhood to that level?
- [30:28]
Vlad Tenev
A couple years ago, our best customers maybe would have hundreds of thousands of dollars in their Robinhood account, maybe millions. But then as we've added more things and we become more established, I started talking to customers who are moving over tens of millions. You know, now I'm talking to customers that are moving over hundreds of millions into their Robinhood accounts. And, you know, my. My aspiration would be someone like me, you know, whatever classification I'm in should be able to have all of their wealth in Robin Hood and that should be just optimally managed at the lowest cost. If we can serve someone like me all of their financial needs, that should then accrue to, to everyone. And I think the problem that the incumbents are ignoring is, is there's a great wealth transfer that's, that's underway. According to Some statistics, over 120 trillion is going to be handed down from baby boomers and silent generation to younger generations. And I think I see increasingly that Robinhood has the potential to be the main beneficiary of this. Right. The young people already have Robinhood accounts. We're increasingly building tools to make Robinhood more useful to you if your family members are on it. Not just your kids and your spouse, but also your parents. And, and nobody's thinking about that problem. The incumbent brokerages, they kind of get worse for you if you, if you add family members accounts. But Robin Hood's going to get better. We already have this with banking and with credit card, but it's going to, it's going to come to investing as well. There's going to be a multi generational experience and I, I think Robin Hood eventually for, for the mass market will play a role similar to what a family office would do for a high net worth individual. We can put a family office in your pocket that can manage not just your finances, but like all of your strategic life decisions when it, when it comes to your family. And I think we'll get there much more rapidly and with a much higher quality product than, you know, anyone in our industry.
- [32:36]
Graham Stephan
So on a personal level, how has your approach to money changed? Going from someone who didn't have maybe a ton of money to now someone who has plenty of it, especially post ipo. And with the recent stock growth of Robinhood, how has your approach to money changed? And also on top of that, we had Michael Saylor on the podcast a while ago. Oh yeah, it's very interesting because that day microstrategies went down like a few percent. And we had calculated he had lost.
- [33:04]
Jack Selby
Like hundreds of millions, hundreds of millions.
- [33:06]
Graham Stephan
Of dollars in personal net worth. And, and we're sitting with him and then after the podcast he checks his phone, probably checks MicroStrategy stock for the first time that day.
- [33:15]
Vlad Tenev
Yep.
- [33:16]
Graham Stephan
And he was just, you know, meanwhile he's losing hundreds of millions of dollars. Like how, how does this work for you on a personal level? And once again, the approach to money, how has that changed?
- [33:27]
Vlad Tenev
I think one thing that hasn't changed is, you know, I, I'm an Immigrant. I grew up in a household where we were very conservative about all of our spending, and I think that imbued in me. Once. Once I got a little bit of money, I still have this deep need to make sure I'm getting a good deal on stuff, even if it's irrational. So every time I purchase anything, I look at it from an investment lens. Am I getting a good deal? Am I buying some asset that'll depreciate? I would be very reluctant to buy a new car. Right. The only time I would consider buying a new car, if it's literally like the first one in a model and it's so good and, like, I can't find a used one.
- [34:17]
Jack Selby
Yeah.
- [34:17]
Vlad Tenev
But, you know, I buy used cars.
- [34:19]
Graham Stephan
You buy used cars?
- [34:20]
Vlad Tenev
Buy used cars.
- [34:22]
Graham Stephan
What. What's the last used car you bought?
- [34:25]
Vlad Tenev
A20.21. 911 Turbo S. Actually, I didn't buy it. That's a lease. That's a lease.
- [34:32]
Graham Stephan
Why'd you lease it instead of buying it?
- [34:35]
Vlad Tenev
Got a good deal.
- [34:37]
Jack Selby
How often do you look for good deals? And, like, where else do you save money?
- [34:40]
Vlad Tenev
In everything that I do, I look for good deals.
- [34:43]
Graham Stephan
What does your wife think of this? Does she think like, you know, come on, we can get the new car. We can. We're at the point now we don't have to worry about these things. Don't need to buy the manager special flank steak for 70% off.
- [34:55]
Vlad Tenev
That was. I think she complains about it a little bit, but sort of jokingly, because she also understands it's, you know, the way. The way that I've always been, the way that I am. And so it's you. You take the. It's. It's what she loves about me.
- [35:08]
Jack Selby
It's the principle of it, though. It's like, you don't. Even though you can waste the money, you shouldn't.
- [35:14]
Vlad Tenev
Yeah. And, you know, I think. I think there's a bit of confidence. It's a good feeling to feel like, all right, at least I don't have to worry that someone's going to take advantage of me financially because this guy's just gonna, like, do a colonoscopy on any potential transaction.
- [35:31]
Jack Selby
Does that ever.
- [35:32]
Vlad Tenev
So I think that's very comforting in a way.
- [35:34]
Jack Selby
But when you go and negotiate something, does it ever hurt when they look you up and they're like, oh, this guy could afford it, Like, I could charge whatever I want.
- [35:40]
Graham Stephan
Yeah. They can just look up your name and net worth, and if there's a B after your name, like, it's you know, I feel like that's a different.
- [35:47]
Jack Selby
From car salesmen to buying a house to like having tradesmen over. Like everybody, I feel like, would just give a premium just because they can.
- [35:55]
Vlad Tenev
Yeah. Yeah. But you know, there, there's ways that you can turn that into a positive too. Yeah. I mean, if you think about wealthy people, a lot of times they get free stuff because, you know, you can just be like, well, how awesome would it be to tell other customers of your business that, yeah, you know, what's your, you know, selling Lady Gaga address? Right. So they get, they get luxury items for free a lot of times.
- [36:19]
Graham Stephan
What's the craziest free thing you've ever gotten? Do you ever have a really successful trader make a bunch of money? Like, I gotta send him a gift?
- [36:25]
Vlad Tenev
Yeah, I'm not allowed to accept those, unfortunately. I think, I think we have to donate them to charity by and large.
- [36:32]
Graham Stephan
I gotta change that.
- [36:33]
Vlad Tenev
Yeah, yeah. So, yeah, I don't, I don't get a lot of gifts or at least not a lot of gifts that I can keep.
- [36:41]
Graham Stephan
And so what about your own personal investing philosophy? How has it changed now? Do you go into more like asset protection mode or how do you view money as you've climbed up this, this money ladder?
- [36:53]
Vlad Tenev
It hasn't changed very much because still the like, vast majority of my net worth is in Robinhood shares.
- [37:01]
Graham Stephan
And how does that feel then? Like on a swing up or a swing down? I mean, Robinhood was like up 1% today.
- [37:07]
Jack Selby
Yeah. You hit an all time high this morning.
- [37:09]
Vlad Tenev
Oh, amazing.
- [37:10]
Jack Selby
You didn't know that?
- [37:11]
Vlad Tenev
I didn't know that. I mean, I knew in the past week we've been doing well, but how.
- [37:16]
Jack Selby
Do you not check the share price every day? Because even on my account, I check.
- [37:20]
Graham Stephan
I feel like it would drive you.
- [37:21]
Jack Selby
Crazy multiple times a day.
- [37:24]
Vlad Tenev
I don't want to make it seem like I don't check the share price because I do. Even though I try not to, but I do try not to. Yeah. Because it can be really distracting. Like, I don't want to feel. Because if it's down, you know, 4 or 5%, which sometimes it is for no reason. I don't want to have a bad day. Right. So. And I also don't want to get too excited and think that I'm winning if it's up for no reason.
- [37:49]
Graham Stephan
That's exactly true. Same thing for the podcast. It's like if we have a video that does really well. I try not to let myself feel good because I know if I Do then when videos do poorly for who knows what reason, then I try not to let myself feel bad. It's like you have to remove your emotions from the reality of the situation.
- [38:05]
Vlad Tenev
It's exactly like that.
- [38:06]
Jack Selby
Yeah, but really quick. One thing that I've noticed from talking to a lot of real estate investors on the channel is that once you go beyond a few units, managing your finances could be a bit messy. Like all of a sudden you have rents coming in from multiple different sources, property taxes, insurance, vendor expenses out the wazoo. You blink and thousands of dollars worth of expenses disappears in places you didn't even realize.
- [38:30]
Graham Stephan
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- [38:53]
Jack Selby
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- [39:06]
Graham Stephan
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- [39:11]
Jack Selby
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- [39:23]
Graham Stephan
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- [39:32]
Jack Selby
So what is your prediction in terms of where the US economy might be headed over the next few years?
- [39:37]
Vlad Tenev
I think there's, there's a cloud of uncertainty around these things always. Right. So I think you have to, you have to counterbalance the sort of like bearish indicators which are sort of like productivity growth historically has been pretty low in the, in the US and nobody's really been able to figure out why. I think outsourcing of the industrial base has been a big contributor to that. You have us printing money, right? And in, in a way that's us borrowing from future generations to, to fund our spending now, which, which I think is a problem. Countries that have typically been big buyers of Treasuries have kind of gotten out of that market. China probably being the, the best example there. And you know, there's like seeds of geopolitical conflict or outright war brewing. And that's just. Those are kind of the bearish indicators, right?
- [40:37]
Jack Selby
Yeah.
- [40:38]
Vlad Tenev
But there's some bullish indicators too that make me feel very optimistic. I think technology wise, we're in probably the most interesting time ever. Like technology keeps marching forward. You have AI that has the potential to solve some of these issues, including productivity and the borrowing from the future through massive GDP growth. If you know AGI or ASI is unlocked and it looks like the US is leading in that, particularly Silicon Valley, which makes me feel very good. You've got cryptocurrency again, which the US very much in some ways companies are leading. And I think we're looking to onshore some of the innovation that's gone offshore in the past few years. And I think you have some things that we're proud to be a part of, which are ways to reverse the borrowing from the future to fund the present, and instead use the present to fund the future. Like this Invest America initiative that somehow miraculously passed and was part of the reconciliation bill which would actually fund every new child born in this country with a thousand dollars in great American companies, which I think is very cool.
- [41:55]
Jack Selby
What's Robinhood's plan with the thousand dollar Trump account?
- [41:59]
Vlad Tenev
Yeah, I think it goes very much into our strategy of making financial platform that's multi generational work for the entire company. So right now to have a Robinhood account you have to be over the age of 18. And I think this is one lever by which we'll expand it to folks that are under 18. And you know, whether, whether you're 0 years old or you know, 100 years old, you should, you should have an amazing Robin Hood experience tailored to your needs.
- [42:28]
Graham Stephan
I'm curious if you, I mean maybe you can't even comment on this, but are there any regulatory provisions or rules that you think are just dumb and should go away? I think you should be able to invest if you're under 18. And I think if you got all those, a lot of people, they front load loss. Because when I first started investing, I had no idea what I was doing. And I tried, you know, selling calls and I was making money and I got greedy and I started buying calls and then I lost everything.
- [42:53]
Vlad Tenev
Yeah.
- [42:53]
Graham Stephan
And, and it made me learn so many valu lessons. But I started doing that once I already started making decent money. And so I lost an amount of money that, you know, is a little uncomfortable to lose. Granted I'm in a different position now than I still was back then. But I think it's good if you're just getting into investing to have some money that you can lose. And most of the time if you're like 16, 15, 17 and you've made a few hundred dollars over the summer, so much better to lose that than after working for 10 years, learning about saving, learn about investing, then finally trying and then losing that hard earned cash and then maybe taking a 10 year break from investing because of experience.
- [43:28]
Jack Selby
Funny, I have a story about that. I was 14 or 15, I made a Scott trade account when they had $7 trades and about $2,000 that I had saved up into that account. And I was on a penny trading forum and I found some like random stocks that people were saying like, oh this, this whole chart is going to go up. And I doubled my money from 2 to 4000 and I got very confident that how easy that was to make $2,000. Lost it all. But we were. That lesson was amazing. Scott Trade. And then I got lucky. I made it all back. I put it into Ford stock. I had like $400 left over and I bought Ford stock at like a dollar something a share in 2009 and just forgot about it. And it just made it, made it back eventually. But it took, you know, a solid like seven years to make it back.
- [44:15]
Vlad Tenev
But I did, I started investing. I opened up a brokerage account at e trade in 1999. So my, my dad had given me an incentive because I was part of this program where you had to take the SAT as a middle schooler. And if you take the SAT and do well, you get into the summer program where you basically get to do math. Do like one year of math in three weeks. I don't know. You guys heard of this? It was called cty. So anyway, he incentivized me. He's like, if you get above a 1300 on the SAT, I will give you your score in cash. So I got very motivated. I was very excited because you know, I was like 12 years old and I don't think he, he thought that I would do it because 1300 as a 12 year old, good score. Anyway, I got a 1370. And he said, all right, I'll give you a little bit more than, than that, but it's going to be in a brokerage account where you're not going to be able to just withdraw the money. I think back then it was even hard to, to do that. And that was in 1999, mind you, right before the dot com bubble burst. So I invested in a bunch of companies. There was a time period where I made a lot of money and felt very, very confident. And then I had to navigate the crash and, and what happened subsequently. But I learned a lot of lessons. I learned what happened when I learned about company mergers and reorganizations because I bought stock in this company, 3Com, I don't know if you guys remember. No, but 3Com made the palm Pilot and there was a spinoff. So for every 3Com share I had a Palm share. And I would get the prospectus and I'd be like, oh wow, I got these free shares. What happened? So I learned about mergers and reorganizations. I learned about bankruptcies. What happens when the company that you, that you invested in because you were driving past its office building on the Dulles Toll Road in Virginia and you thought the office building looked very nice, so you bought stock in it and then it goes bankrupt and what happens to your stock? And I think these are very boring things to read about in a book and actually understand. But once you experience it with your own money and your own shares, you understand it very deeply and viscerally and it's like engaging to you. So I always said like, investing in trading is similar to playing a violin. Like you can't learn to play a violin well by just like reading music theory in a textbook. You have to pick it up and play it and the first time you play it it's going to sound very, very bad. But if you keep playing it for 10, 20 years, the sky's the limit. And I think investing in trading have a lot of similarities with that or playing a sport.
- [47:06]
Jack Selby
Do you see any other rules though that are out there that you just think to yourself, why does this exist?
- [47:12]
Vlad Tenev
Oh yeah, I think that many, the accredited investor rule, probably a prime candidate. So if you guys are not familiar with it or the viewers are, basically, you can't invest in a private company unless you're a high net worth individual. So there's either an income threshold or a net worth threshold which shuts out 80% of people from investing in private companies. I think it's particularly pernicious now when we have all these AI companies, a lot of which are private, or SpaceX for instance, which is, you know, the leading company in the space revolution, which is very, very exciting. It's very, very exciting to a lot of people, A lot of potential. But it's private. So you're, you're shut out of it. And I think one fear that I do have about the future is that you've got the Gini coefficient at a historic high income. Wealth inequality is historically high. AI and those technologies appear, or at least there's risk of this. It's not clear how it'll shake out, but it appears that they'll have a centralizing effect. So they'll probably put more wealth in the hands of fewer and fewer organizations. And my fear is that if that wealth leads to an inflection point in wealth and income inequality and kind of the political unrest and the stressors and like the civil unrest that, that, that could cause could actually stop progress or thwart progress or at the best case, lead to lots of distractions. I think that's why I'm so compelled to make sure that, you know, we have more people bought into capitalism and particularly with these AI companies that, you know, more normal people can be invested and exposed to the upside. There's. Because otherwise, I think, yeah, I think we could have some negative effects.
- [49:07]
Graham Stephan
What would you say is your strongest doomsday argument for America's economy and what the average person should be doing about that? And then on the other side, the strongest argument for a flourishing economy over the next 10 years?
- [49:22]
Vlad Tenev
I think the strongest argument for a flourishing economy will navigate this, this technology and societal transition. Well, right. Like, we're aware of the problem. We're gonna, we're gonna make the fixes, we're gonna invest and make sure the US is at the center of these technological shifts and we'll kind of like make the necessary adjustments to our policies to ensure that that's the case, making it easy for the best talent around the world to come here working for our companies. Encourage capitalism, which means protecting it and making sure that more and more people are bought into the system as investors, which I think we can keep, we can play a strong role. And then GDP growth inflects and actually compensates for the spending and we balance the budget that way. So I think that's a nice scenario. Negative scenarios, you know, you look at people losing confidence in our currency, getting into conflict, increasing spending much more aggressively, and much further losing talent to other countries that are more business friendly. Yeah, those, those are all negative things and could lead to instability.
- [50:49]
Jack Selby
Although really quick, before we go into that, don't worry, this isn't a sponsor, but we do need your help right now.
- [50:54]
Graham Stephan
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Jack Selby
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Graham Stephan
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Jack Selby
Honestly, even if it's just a dollar, it'll help make such a huge difference in somebody's life. Again, that link is down below. Thanks so much. And now let's get back to the episode.
- [51:22]
Graham Stephan
So, being able to have access to massive amounts of investor data, financial data, how do you think that people's personal financial approach will be completely different a decade from now with how fast things are moving? I'm sure you have your finger on the pulse of what people want to be investing in, the changes they want made.
- [51:42]
Vlad Tenev
I think that what we're seeing now is that a lot of our customers are heavily invested in innovation names on the public side. So you have Nvidia, Tesla, Apple, Amazon, a lot of like mag7 investing is happening. And I think people are making a bet that, you know, those are going to be the industries that drive the future. And, and I think so far, at least this year, it seemed like a prescient bet. I think another lens is looking at what the wealthy people are doing. Wealthy people are diversifying. They're investing in private companies, they're investing in real estate. As I'm sure you guys know, I saw real estate in your chart as well. Has, has done very, very well. So wealthy people have access to these things. And right now, retail investors on Robinhood have, like, not great access, admittedly. I think that's going to change and we're going to open up the floodgates to that. And what that's going to do is I think there will be a positive downstream effect of more entrepreneurship. More people will be starting companies. If you have access to retail capital and the, you know, quarter trillion on Robinhood and other platforms, what I don't think will change.
- [53:03]
Graham Stephan
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- [54:14]
Vlad Tenev
Sponsoring this episode is the appeal of investing. I think investing will become more attractive, it'll become more necessary. I think everything that we're seeing with AI and even if you believe in these scenarios where you'll have large scale labor force disruption, job loss in some sectors, you kind of saw a preview of what that looked like in 2020 at the beginning of COVID and what happened was lots more people started investing in the markets. So I think that's a durable effect. And, and I think that if, if I had to guess, investing will be much bigger portion of, of every individual's life 10 years from now than it is today.
- [54:56]
Jack Selby
Here's what, here's what I'm thinking is that 10 years from now we're gonna have 24, 7 trading where I could go online or on Robinhood and trade at 2 o' clock in the morning. And I want to see shares prices go all the time.
- [55:08]
Vlad Tenev
Well, you basically already have that. I mean we have 24 hour market, right? Except on Saturdays and early part of Sundays.
- [55:16]
Jack Selby
Exactly. But I want, I want more of that throughout, everywhere. And then I also want it so that I could send individual shares from one person to another. So if I want to give Jack one share of Robinhood, I'm able to transfer it like I would have Venmo. And then lastly is I think no one has been able to truly get real estate in such a way that you could like swipe up and buy something or cut out all the middleman involved in real estate or somehow securitize a property. And every platform that I've seen, I would never put my Money in these things. But I think there's a way where you could turn a house into some sort of like a swipe up or co co ownership with people.
- [56:02]
Vlad Tenev
That third one I'm very interested in. Yeah, yeah, big opportunity.
- [56:05]
Jack Selby
I want to see a place where if real estate continues going at the same pace, that I could own a house with like three other people equally in a way that just works online. I don't know how that would work logistically, but I think that's the direction things are at least heading.
- [56:22]
Vlad Tenev
Yeah, and real estate's a big market, so it's a big potential. And if you look at high net worth individual, 10% of your portfolio is, is real estate. So yeah, I think, I think that that's one that I care about.
- [56:35]
Jack Selby
What are your plans to get into real estate?
- [56:37]
Vlad Tenev
Well, we have, we have mortgages now through a partnership with Sage Home Loans and I think, I think that's been a good use case. Proves to us that our customers care about homeownership, they care about real estate both in terms of like buying a home themselves, but, but also they think about it as an investment. So I think, I think, I think we'd get into it in two ways and I'll speak, speak to it generally. I think there's one viewpoint where it's an investment and you know, it's part of a diversified portfolio. And I think over time, as with any investment that's a part of your portfolio will want to have access to the highest quality assets and make them available to retail. The other thing is there are certain investments and people think about them as investments, but they're like physical things that people own. I mean like watches, a good example. A lot of people invest in watches, they collect them. You invest in art, but maybe you don't really want 1 64th of a painting. You actually want to take custody of your art and hang it up on your house. Or you invest in classic cars, right? I mean, yeah, classic car market, collectibles market has been very active market and I think we'll want to open up access to that too because there's a whole realm of investments that you think of as investments, but you want to hold it in your hand. I think we're starting to explore that a little bit in our banking product and with the credit card right now you can redeem your rewards points into physical gold bars and, and that's actually a very attractive offering to people, believe it or not. And of course you can buy gold ETFs and get exposure, but there's something about holding a piece of gold in your hand and putting it in your safe that, that people really, really love. They like to touch and look at. Yeah. Their investments. So we'll get into that as well. Okay.
- [58:37]
Jack Selby
But for mortgages, why not do that yourself? Why not do everything in house?
- [58:43]
Vlad Tenev
Yeah. I mean, there's different parts of a mortgage. Right. There's the servicing and the user experience, which actually means, you know, selling you the mortgage, communicating the, the value of it, taking, doing the billing and, you know, putting it in your budget.
- [58:57]
Jack Selby
Right.
- [58:58]
Vlad Tenev
And I think that's integral to the customer experience in, in many ways. So I think over time you'll see us get deeper and deeper there and we'll, we'll probably own the customer experience and the servicing. Then there's the actual loan itself. You know, giving someone the money and taking that risk. And I, I just think like, that's more of a utility product. There's thousands of banks and different types of lenders in the US that would be willing to compete for the actual economics of that. And I just think we might do some of it in the future. But Robinhood is less differentiated in providing the utility loan service.
- [59:39]
Jack Selby
But why not then allow other users to fund loans? I mean, peer to peer lending of some sorts.
- [59:47]
Vlad Tenev
That's been tried before for sure. I mean, you know, lending clubs started with that model. And I think what they find over time is the peer to peer aspect becomes a little bit more of a gimmick. And the people that are like driving the volume tend to be sort of like institutional lenders and players that have large amounts of money. I think individuals are less interested in these types of loans as sort of like investment opportunities. I mean, we don't hear them being in high demand. They'd prefer to invest in other things. But if it changes and suddenly we have all these assets and we want to give customers the option to invest in loans or fund them. The philosophy is go where customers are demanding and if they want that type of selection, we would certainly consider it.
- [60:43]
Jack Selby
And what about with tokenization and the future of that?
- [60:46]
Vlad Tenev
So tokenization is very interesting. I think it's the biggest innovation in capital markets in well over a decade. And there's two ways to think about it. One is for outside the US I think tokenization will be the best and simplest mechanism to get exposure to U.S. stocks and other assets. So in the same way that Stablecoin has become the best way to get access to US dollars, if you're outside the US Tokenization of EQUITIES will be the best mechanism to get exposure to US equities and other assets outside the US Will become the best platform for US stocks. It'll become sort of a global unified platform where you can, you can invest in stocks inside the US you get 24.7trading, you get instant settlement, you get a lot of back office improvements to how a company like Robinhood can operate that lead to lower costs which eventually be passed on to consumers in different ways. And you also get the capability to take any asset, no matter how illiquid or scarce, to be tradable 24. 7 Just like a stock or crypto asset. And so I think the, the biggest opportunity in the US would be tokenizing private companies and actually making them tradable real time, just like public stocks and, and making them understandable, easy to use, liquid. So yeah, we're excited about that and we, we've built the technology. We, we have a working Tokenized tokenization of U.S. equities in the form of stock tokens is live in the EU right now. And, and you saw we demonstrated tokenization with private companies as well with the SpaceX and OpenAI.
- [62:40]
Jack Selby
What's the risk of that? Is there a risk that the tokenization price just goes up so high that it's worth fundamentally underlying company?
- [62:48]
Vlad Tenev
Yeah, there, there's certainly that risk for, for privates and you know, in, in some places for publics where it's completely untethered from the real market there, there's that risk as well. But for our stock tokens in the eu, the, the two are tethered. So right now we call it phase one of our stock tokens offering. Every trade actually is backed by a one for one trade that happens in the traditional market. So if you buy, for example, an Apple token in the EU will go out and actually buy a real share and then mint the token. So then you know, you're getting, you're getting a good price because it's the price that's available on the best of the exchanges. Now the downside is there's no 24,7. But what will happen in phase two when we list the tokens on Bitstamp is you'll basically get the best of both worlds. If the traditional markets are open, you'll get the best price available on the traditional markets if it's better than, you know, the price on the secondary token markets. And if the traditional markets are closed, you'll be able to trade. So I think that's how the problem will be solved.
- [64:08]
Jack Selby
Who thinks of these ideas is this you or is it a team?
- [64:12]
Vlad Tenev
Well, we have an amazing crypto team, a lot of great engineers. Johan, who's the GM of our crypto business, started off as an engineer here. So the team is very, very good. And back in the depths of the crypto winter, I think it was 2022 when, when we were talking about tokenization, we, we actually said, you guys remember DeFi summer in 2020? So this was like when Defi became popular and it was the kickstart of the crypto bull run in end of 2020 and 2021. So they called it Defi Summer and it kicked off the broader resurgence of the crypto market around that time. So we said to ourselves, okay, what would it take to actually get out of this bear market and, and get a new crypto bull market? Wouldn't it be cool if Robinhood actually instigated that? So we called the project Robinhood Summer internally. And then I think it's a little bit early to tell, but tokenization is definitely becoming a bigger thing. I wrote a opinion piece in the Washington Post and gosh, the number of questions I got about that opinion piece and the number of our competitors that suddenly made, made tokenization a top business priority after that was, was staggering. So I do think the next crypto summer will be by and large driven by real world assets tokenized on blockchains. I think, I think you're starting to see that with the stable coins too. Yeah, stable coins, like a tokenization primitive.
- [65:55]
Jack Selby
Yeah.
- [65:55]
Graham Stephan
What about the increase in prominence of AI? How do you expect that to affect the overall stock market? Do you think that, that a few companies are going to be massive winners? Or do you think that the broad access to AI is going to lift a lot of the smaller companies that now can do things at a low cost, like the big companies used to use economies of scale. Now everyone has access to AI, which just decreases the cost of labor and production.
- [66:22]
Vlad Tenev
I think thus far what seems to be happening in public markets is the gains seem to be accruing to a relatively small portion of companies. You know, Mag7, the companies that are leaders in AI are definitely getting centers.
- [66:37]
Graham Stephan
Ones though, you write, typically the ones that own the centers themselves.
- [66:41]
Vlad Tenev
Yeah, I mean, you have, you have, you have the infrastructure layer for sure. And also the chip makers, Nvidia, I mean, all these companies that are training models are by and large doing it on Nvidia chips. Now Nvidia is the world's most valuable company. But yeah, it's still, if you, I'm sure you guys have looked at this chart. If you look at the S P500 and compare the returns of Mag7 over the past year to everyone else, it's like Mag7 is huge. Everyone else is kind of flat. Which indicates to me that there's sort of like a centralizing effect to this. Now, I don't know if that's going to be indefinite. I would think as the AI tools get better, you'll have more. My prediction over the long run is you'll have more single person companies. Like one individual will be able to use AI as a huge accelerant to starting a business. And in the same way that, you know, if you wanted to start a software company in the 90s, you'd have to like manage your own data center. But you know, AWS came along, the cloud software providers came along, and suddenly you no longer, you no longer need that data that those 50 people to like buy servers and rack and stack. If you want to start an Internet company, I think you can think of AI as fulfilling a lot of these specialized functions that you would have had to spend a lot of your time thinking about. And then, you know, if Robin Hood gets in and you have something close to capital as a service where you can press a button and get money in your bank account for starting your venture, I think we'll have a lot more more companies.
- [68:14]
Jack Selby
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- [68:41]
Graham Stephan
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- [69:15]
Jack Selby
Post a job today and hire tomorrow with Upwork.
- [69:18]
Graham Stephan
So head to upwork.com that is up w o r k.com or you can just click the link down below in the description. Seriously guys, I've used them plenty of times and had amazing experiences, so I highly recommend it. Upwork.com thank you so much to Upwork for sponsoring this episode.
- [69:32]
Jack Selby
Now really quick, I just want to say that when Jack and I first started the Iced Coffee Hour, we had to figure out everything ourselves. From the best cameras to use, the best editing equipment, how to get guests every day presented new challenges. That of course is why today's sponsor is so helpful and so relevant. And that would be Shopify.
- [69:48]
Graham Stephan
Shopify is basically your all in one business partner. They power millions of businesses worldwide, from major brands like Mattel and Gymshark to entrepreneurs just getting started. And here's a fun fact, if you've shopped online in the us, there's a really good chance it was through Shopify because they handle, I kid you not, about 10% of all American e commerce.
- [70:05]
Jack Selby
What's great about Shopify is that they give you access to a complete design studio with hundreds of ready to use templates to build a beautiful online store that perfectly matches your brand. There's no coding needed. Plus their AI tools even help you write product descriptions and enhance your product photos.
- [70:20]
Graham Stephan
Shopify also make marketing extremely easy with simple email and social campaigns to reach customers wherever they're scrolling. Plus they handle literally everything from inventory to shipping to returns. Basically all of the complicated stuff you do not want to deal with.
- [70:34]
Jack Selby
So if you're ready to sell, you're ready for Shopify. Turn your big business ideas into so.
- [70:39]
Graham Stephan
Sign up for a $1 per month trial@shopify.com ich guys, it is $1 a donut, a carrot. I don't know what else costs a dollar. You can create a million dollar business with a $1 per month trial at shopify. We've had so many people on this podcast that have made millions of dollars with Shopify and you can too with a $1 per month trial. Try out that business. Make the money shopify.comich thank you so much to Shopify for sponsoring this episode. As a CEO of a massive public company, a concern of many people is that AI is going to be taking everyone's jobs. Do you notice this to be somewhat the case? Like if you don't replace some labor with AI, you're just going to lose out to competitors. And do you think that that's a valid fear? Or how do you as someone with many Employees see AI competing with the labor force. How do you see that relationship?
- [71:35]
Vlad Tenev
Jobs certainly will change over time. Some, some things that you can now do entirely with AI should be done entirely with AI. I think, I think, I think we have to shift as a society and not artificially protect those jobs, but work on making sure the people that are on that path are, are able to pivot and do something that, you know, is, is more valuable to society in the same way that, you know, you wouldn't protect lamp lighters, right? And it was funny. It's very romantic in a way. People used to come with those torches and light all the lamps. I think I was in London last Thanksgiving, and they have one part of the city where they're still, like, protecting the lamplighters. I do think humans will still be at the center of things and there will be lots of opportunities for, for human ingenuity, at least for the foreseeable future. I think the jobs will change and nobody can think about. You know, you've heard this term the singularity, right? The singularity. RAY kurzweil INTELLIGENCE EXPLOSION and I think it's inherent in singularities that they're hard to think about. But I think we have pretty good clarity over what the next two to three years, at least, is going to look like. Probably five to 10. I think we're still far away from, you know, humanoid robots coming into our houses and, you know, burping our, our children or putting them to sleep. So, yeah, I, I think, I think humans are going to be calling the shots for a while, which means that there will be new and more interesting human jobs. And in the same way that those of us that were early adopters of smartphone technology in the 2000s, or early adopters of the Internet, or early adopters of, like, spreadsheets in the 80s, if you were an accountant, for instance, you have a huge advantage. And what I've been telling folks here is at some point it's going to go from being an advantage, which I think we're in now, if you really use these AI tools, you're at an advantage to everyone else. And at some point, probably rather quickly, I mean, we probably don't have five years, I'd say we have two or three, to a point where if you're not AI native and if you're not conversant in these tools, you'll be at a disadvantage relative to anyone else. So I don't think people should worry about AI taking their jobs. I think people should worry about someone that's AI. Conversant being more valuable than them in the market. And you should prepare yourself for that scenario. Do.
- [74:08]
Jack Selby
How should someone prepare themselves for that? Like, what should they learn or what do you recommend people do?
- [74:13]
Vlad Tenev
I mean, think about it like a child, Right. I think like you look at children using computers in the 80s and 90s and they would just like play with them. Right. They'd like, play with. Takes time, it takes interest. I think the problem with, with that a lot of adults have in the workforce are they're very busy, they have existing tasks. And you know, sometimes when you get those tasks done, you're just tired and you don't really have time. And you know, we have other things going on, we have families. But at the end of the day, it. It just takes dedicated time to play with these new technologies and if you can integrate that play with your work, if you can actually like figure out how to use it while you're working.
- [75:02]
Jack Selby
I'm.
- [75:02]
Vlad Tenev
I'm a huge proponent of integr work and play in your personal life. And I think having them be separate worlds is not a long term sustainable strategy. But yeah, you just have to like play with it and tinker. I think that's the best way.
- [75:17]
Jack Selby
Do you ever feel misunderstood by the public, just being who you are and running the company that you do?
- [75:24]
Vlad Tenev
Yeah, I mean, I've gone through the GameStop stuff, so definitely used to it.
- [75:28]
Graham Stephan
But how tired are you of talking about it? It's okay, you can be honest.
- [75:37]
Vlad Tenev
It's just such a complicated thing. Yeah. So sometimes I just don't know what aspect of it to discuss. But that's the thing is.
- [75:44]
Graham Stephan
Is. Is when all of that went down, I remember Graham and I were talking and he was making videos on it, covering it.
- [75:49]
Vlad Tenev
Yes.
- [75:49]
Graham Stephan
I defended.
- [75:50]
Jack Selby
Right. And.
- [75:51]
Graham Stephan
And Graham.
- [75:51]
Vlad Tenev
You did?
- [75:52]
Graham Stephan
Yeah, he came to me and he was like, he was like, do I defend them? Like, like how. What kind of a position do I take on this? Because unfortunately, the way that YouTube works, the way that if you're making video to the masses, you need to have a villain, especially when people are hurting.
- [76:07]
Vlad Tenev
Totally.
- [76:07]
Graham Stephan
And so you can either choose that route, the politically expedient route of making a villain, getting everyone to love that, or you could choose sometimes the, the hard truth, which is the more nuanced approach of like, hey, these things aren't as cut and dry as you guys may think them to be.
- [76:23]
Vlad Tenev
Totally.
- [76:23]
Jack Selby
Yeah. That's what sucked back then because I remembered, I think we had a call and you had done a few podcasts at the time.
- [76:31]
Vlad Tenev
Yeah.
- [76:32]
Jack Selby
And everybody hated the broadcast because you're like, oh, you're just a paid shill for Robinhood, even though you were never paying anybody. It was just. I'm happy to go on and talk about it if you want to hear me out. I'm sure even this. Some people will think, oh, they must have been paid or something. No, it's just like, this is an honor to be here. We've been trying to do this for years. Like, we're just excited about it genuinely. But I remember at that time, and it's still to this day, hey, if you go and defend Robin Hood over GameStop, you're just on. And if you go and say, oh, Robin Hood disabled the buy button because they're in bed with Citadel and all this, everyone's like, oh, yeah, thank you.
- [77:10]
Graham Stephan
Thank you for standing up for the little.
- [77:11]
Vlad Tenev
Yeah, yeah. And. And, you know, if you say, oh, that's. Or that's just conspiracy theory or that's totally wrong, then they're like, oh, of course he would say that. What, do you think he's gonna admit to colluding with Citadel on a podcast cast? But I. I think I've. I've gotten some. Some advice from some people who have unfortunately been through some, like, crisis comms situations. Right. Some crisis comm situations. Daniel Le from Spotify has. Has been through some shit as well. And we had this conversation where he was like, there's, like, various stages to a communications crisis. There's, like, when you see a little bit of smoke happening and then there's like a brush fire is kind of the middle stage, and at some point it becomes an inferno, a conflagration, and you've completely lost control and you can't put out the inferno. You kind of just have to, like, get out of the way because you're not going to control the message. And I think the unfortunate thing with GameStop is the time where it was a small brush fryer or, like, smoke was very short, and it. It actually ended and it turned into a inferno before I woke up. So I was. I woke up and my phone was unusable because I was getting so many, like, text messages and tweets. It was like, if you've seen that video, I think Kim Kardashian posted it at some point where she turned off Do Not Disturb on her phone. And this thing was just like, just the notification. She was just unusable. So it was like that. And what Daniel said is, the conventional wisdom is you kind of just have to hide during the Inferno. And then when everything, when everything is rubble and everything is a mess, then you kind of like poke your head out and do an Oprah interview. So I didn't do that. I actually got out right in the middle of it and I did a bunch of interviews, right? Sorkin, Cuomo. I had the congressional hearing. I did the Elon Clubhouse. And, and you know, sometimes I think about what if I had just. It was very hard at the time because everyone's like, oh, we need to hear from the Vlad. We need to talk. But in hindsight, I probably should have, like, let the dust settle a bit and then did one big interview.
- [79:40]
Jack Selby
No one's ready for nuance. Like, I heard you. And it, it's hard for me to understand because you explained it in such a way that was complicated.
- [79:47]
Graham Stephan
It was way too high level. Your explanations of what actually went down, when you could break it down, if you just made your own piece of media and you were like, this is exactly what happened. This is, you know, they requested this amount of liquid capital to back these things. And then, and, and then this is when I got the text. This is how long we've been a company. This is how much capital we have. What am I supp. Like, there's no option for the company.
- [80:07]
Vlad Tenev
100%.
- [80:08]
Graham Stephan
Like, if you controlled everything and put that out there, instead of more candidly trying to hope that you're able to relay a very nuanced and hard to articulate perspective, like live. That's. That made it a lot more difficult.
- [80:23]
Jack Selby
You explained it like an engineer, even for me. I was like, I have to go and listen to this like twice just to. Okay, that happened. This happened. Okay.
- [80:31]
Graham Stephan
And you have to know how it actually works.
- [80:33]
Vlad Tenev
Yeah.
- [80:34]
Graham Stephan
How the system works.
- [80:35]
Vlad Tenev
I think, I think I, I botched the communications on that to some degree for sure. It was obviously not fatal for the company, but I think obvious. I think I could have done a much better job. I think there were two issues, one of which you point out. I just got out there too early without actually even knowing the full information of exactly what happened, who the players were involved, who was talking to who. There was like a cloud of uncertainty and there was just. We needed to say something and we were getting roasted for like, like, not commuting, not communicating fully and, and properly. Right. Which I would say we communicated properly, but certainly we didn't communicate with the full. There were, there were more details that were released as soon as we got them, and we're. And we're confident in them. And actually, you get in a lot of trouble for both communicating wrong things that you then have to correct. Right. Because that just feeds the, the trolls even more if they're like, oh, we'll see. Yeah, yeah, they were lying. It changed the story. So, so you have to be accurate and truthful and we have to make sure everything is like correct. And you know, so you saw, our communications got more detailed over time, but in hindsight we probably should have just chilled out and like come up with something comprehensive and full as our first thing. The second thing was just sleep deprivation and it was like I was on these interviews after pulling many all nighters because it was all hands on deck during that time time because Robinhood was a small startup and we were dealing with not just this like, issue, but also historic volumes. We were the number one app on the App Store. It was very rare for a, for a finance app ahead of like Instagram and TikTok. Right. And all kinds of things get strained when you're, when you grow too fast as a financial app. So we were dealing with that. And so, you know, I, I came on these podcasts and these interviews and by the way, everyone was remote, so it was actually hard to coordinate. And my face was kind of pale and they're like, oh, he looks kind of like a vampire. That's not, that's not very confidence inspiring. And you know, it was, yeah, all, all conspired to make that not ideal, I guess.
- [82:51]
Graham Stephan
So if you were to answer the not so simple question of why did you disable gamestop buy button, how would you now answer it?
- [83:00]
Vlad Tenev
Oh, I mean, it was just to comply with regulatory requirements. Yeah. Basically if you don't comply with regulatory requirements, they can come in and shut down your business. And, and then what happens is it's not just the people that traded GameStop that can't trade, but nobody can trade. All the buy and hold investors that are just holding, you know, shares in their accounts, they, they, they get hurt.
- [83:28]
Jack Selby
So people are going to ask then who's in charge of the regulation?
- [83:32]
Vlad Tenev
Yeah, so the, the, the tricky part is regulations have multiplied over time. A lot of these things date back to Dodd Frank, which was created in the wake of the global financial crisis. And you know, Lehman went belly up. You had Bear Stearns and they were like, okay, how do we, how do we protect this from happening? We just have to make sure the capital requirements go up early so that we prevent, prevent a huge systemic issue from, from crashing the market. And I don't think they anticipated that. A lot of those Capital requirements would just get triggered by retail investors, you know, buying up meme stocks.
- [84:12]
Jack Selby
But why, why couldn't the price just continue going higher indefinitely? Like, wouldn't you think that at a certain price there's going to be a seller on the other end and if there's not, the price just goes higher and the retail investors just figure it out amongst themselves, like why does there need to be a capital requirement behind that?
- [84:28]
Vlad Tenev
Yeah, I mean, I think part of the reason is that a lot of trades happen on credit, effectively. So you buy the stock and you have to deliver the shares a couple of days later. You have to pay for them a couple of days later. And I think what's happened a lot in the past, when you have these short squeezes and some stock goes up, it then goes down. And then if, you know, you have that two day period where people have to pay for the cash, sometimes they don't show up with the cash and they're like, oh, I made a mistake or yeah, someone else made that trade, it wasn't me. So, so you have reversals and, and I think that's a big problem. So now of course, if there's real time settlement and the cash and the shares exchange hands right away, there's, there's less of an issue. But yeah, I mean there, there's good reasons for these things. I think that you do see a lot of, a lot of strange behavior when there's market euphoria or strange things happening. And a lot of people are like looking out for their best interest as well. The other thing that's interesting is if you look at actually what happened, trading volume was very, very high in those meme stocks during that entire week. And January 28th was a Thursday and then the weekend came and then we had like the Super Bowl. So a lot of people I think blamed Robinhood for, for, you know, the subsequent collapses in, in some of these stocks. But I think a big part of it was it was just the weekend and people moved on to something else. You know how an Internet mobile job doesn't usually hold their attention on one thing. I think they just, you know, market markets were closed, they moved on to something else. And then there was the super bowl and, and so many other things.
- [86:27]
Graham Stephan
Yeah, plus there were other brokerages platforms that disabled the buy button.
- [86:30]
Vlad Tenev
So you saw a huge, just like when, when the market opened on Monday, there was just like a big difference.
- [86:37]
Jack Selby
Do you think something like that could ever hap happen again? Like with, with Gamestop? Because I feel like that was such A once in a lifetime opportunity that I don't.
- [86:45]
Graham Stephan
So which stock is it actually?
- [86:48]
Vlad Tenev
Now there's this thing about how people are asking Chad GPT for what stock to buy, right? And you know what happens if it just has a billion users and it tells everyone the same stock? Yeah, yeah. I mean, I don't think it's going to be exactly like GameStop. It's rarely the same exact thing. But I think something analogous could happen. And you know, I think this thing of like, let's say the same AI model develops a very, very deep relationship with, you know, all of the users. ChatGPT might get to a billion weekly active users before the end of the year. And what if that gets them to all buy the same stock?
- [87:30]
Jack Selby
See, I'm thinking, why is there not? Or maybe this is highly illegal. Illegal? What's to stop somebody from making an AI company that just recommends at the same time every day one stock to buy and that's it. And people could just choose to buy that stock.
- [87:46]
Graham Stephan
Highly illegal. That's like market regulation.
- [87:49]
Jack Selby
I don't know if it's. If it's AI and it's random and you're not trading ahead of everyone else. Who's to say that I can't post open source?
- [87:58]
Graham Stephan
Anonymous.
- [87:58]
Jack Selby
I'm just saying. Who's to say I can't post every morning? I'm buying this shit share. I am buying this share. I am buying this share.
- [88:05]
Vlad Tenev
I mean, if you think about it, that's some of the concern around copy trading, which, you know, not very popular in the U.S. but like, you know, in Europe, copy trading has become a thing. And I think that's the criticism about it hurting. It's called.
- [88:22]
Graham Stephan
Graham and I have this idea and we honestly, it wasn't in our outline to bring up, but I just thought of it right now and I wanted to run this box.
- [88:29]
Vlad Tenev
You.
- [88:29]
Graham Stephan
So we were thinking, what if every single day there is one coin flip and you can either on a prediction market, bet heads or tails, that's it. And you have to bet on a certain side. For every like dollar you put up on heads, there has to be a dollar put up on tails or I don't know, you know, however that would be figured out, how that middle amount would be figured out. But basically you could bet heads or tails. One coin is flipped every single day. It's a massive cultural moment for the coin flip. Everyone tunes in 12pt or something like that. It's 50, 50 and you can do it.
- [89:03]
Jack Selby
Yeah, no house advantage.
- [89:04]
Graham Stephan
No house. You, you know Robin Hood could do this and take tokenize it and take, you know.01%. And the only overhead, the only overhead is one quarter.
- [89:16]
Jack Selby
Jack Daniels is proudly served in fine establishments, questionable joints and everywhere in between.
- [89:24]
Graham Stephan
So no matter where you go and.
- [89:26]
Vlad Tenev
Every bar, you'll always know someone by name.
- [89:29]
Jack Selby
Jack. Jack and Coke shot at Jack.
- [89:32]
Graham Stephan
Jack Daniels please.
- [89:33]
Vlad Tenev
Right away.
- [89:34]
Jack Selby
That's what makes Jack Jack.
- [89:37]
Vlad Tenev
Please drink responsibly. Responsibility.org Jack Daniels and old number seven are registered trademarks. Copyright 2025 Jack Daniels Tennessee Whiskey.
- [89:44]
Graham Stephan
40% alcohol by volume 80 proof.
- [89:47]
Vlad Tenev
This episode is brought to you by Amazon prime from streaming to shop. Prime helps you get more out of your passions. So whether you're a fan of true crime or prefer a nail biting novel from time to time with services like Prime Video, Amazon Music and fast free delivery, prime makes it easy to get more out of whatever you're into or getting into. Visit Amazon.comprime to learn more.
- [90:14]
Graham Stephan
You gotta flip the quarter.
- [90:16]
Vlad Tenev
That's it.
- [90:16]
Graham Stephan
And you could film it, you know, and live stream it and that could happen every single day. That should exist.
- [90:21]
Vlad Tenev
I think that's an interesting idea. Yeah, I mean that, that could be a prediction market, right?
- [90:25]
Graham Stephan
The daily, just the daily one quarter flip. And that, that's such like a free marketing opportunity because I just know for a fact that would go viral.
- [90:31]
Jack Selby
Oh, I know.
- [90:32]
Graham Stephan
So simple. We just don't have the infrastructure to be able to make that happen. Like there's.
- [90:36]
Jack Selby
I would love 6pm every day, but.
- [90:38]
Graham Stephan
We want to do it and I would participate, you know, and I'll be like today Heads. Who's like part of the Heads gang, you know.
- [90:43]
Vlad Tenev
Yeah.
- [90:43]
Jack Selby
And just have it like a hundred bucks maximum them.
- [90:46]
Vlad Tenev
I think, I think there will be a nice novelty effect for that. But I would be surprised if it has a lot of longevity. I think it's kind of like HQ trivia. Like it's, it's very nice for a little bit. But then there's so many interesting prediction markets that are now available on Robin Hood. I mean we keep adding more and more varieties. You can look at best AI model at the end of 2025. That's an interesting one to me. Right. Because I think right now I was looking. Gemini is like 53%. Chad GPT I think was below 20%. So I think, I think there, there's lots of interesting things you can do that would probably eventually take people's attention away from the, the coin flip and, and I think a lot of people like track these things so you know, you can do the Emmys now Emmys are interesting.
- [91:37]
Jack Selby
So I could, I could put money on the Fed rate decision.
- [91:40]
Vlad Tenev
Fed rate decision. The economic ones have been, have been, have been cool. The sports like there's pro baseball. So there's a, a wide variety of things to choose from which make me think it's, it's interesting but probably something that would have a short lived.
- [91:57]
Graham Stephan
It would be really cool if you forced it. So people could only put in $1 and you can cash out at any time but it does 10 days in a row and it caps at 10 days because you know, one to the power of 10 or whatever. The thing is it's like it's a million dollars and so you can try to turn $1 into a million dollars but you could only ever put in and you can like parlay into the next one and you could cash out anytime and you maybe in the beginning select. Yeah heads heads, tails heads, tails, tails.
- [92:24]
Jack Selby
Heads and up to 10 and then somebody, if 100,000 people do it, there's going to be.
- [92:29]
Graham Stephan
Yeah, people that make million become millionaires off of $1. That would be the coolest marketing opportunity I'm telling you.
- [92:36]
Jack Selby
I would love that actually.
- [92:37]
Vlad Tenev
Yeah, yeah.
- [92:38]
Jack Selby
Just put on a dollar and then after 10 days it resets.
- [92:40]
Vlad Tenev
Yeah, well you know, if the folks said Kalshee are watching, that's true. Yeah. Might be interesting. Yeah.
- [92:47]
Jack Selby
Because because then at that point when do you turn from investing just to straight up gambling? That's a dollar at that point.
- [92:52]
Graham Stephan
Yeah, yeah, investing.
- [92:54]
Vlad Tenev
I, I think, yeah, I think, I think with this particular one it, it'd be hard to argue that there's a particular predictive skill involved.
- [93:03]
Jack Selby
Is, is that how the predictive markets are able to operate in such a way? That's not considered gambling because there is, it's not random chance that you could have, have specific knowledge on something and feel like you have more experience to bet on that outcome.
- [93:20]
Vlad Tenev
Yeah. Or a hedging benefit. Yes. Right. So could, could there be knowledge or skill involved or is there a hedging benefit or a speculation benefit to these markets? I mean if you think about it, if you're trading futures and these are prediction markets are by the same regime, the CFTC that regulates futures. Do you know, do you have a deep understanding of like the price of copper or corn? You know, some people do, some people actually study this. A lot of people have some dependency elsewhere in their life on the price of copper and, and they're hedging against it. And so what makes a, a vibrant derivatives market is three different market participants in equilibrium. You have the speculators who have a point of view on what the price should be, and they're speculating. And some people call speculators gamblers. But if the technical derivatives parlance, it's, it's speculators. But you need them also because you also have the hedgers, and the hedgers are trying to offload risk. But not everyone can be hedging because then the price gets out of whack. So you need the speculators to actually bring the hedgers into equilibrium. And then you have the third group, which is the arbitrageurs. The arbitrageurs are basically playing a low risk, low latency game. They're connected to every market and they're like, oh, corn's at a dollar here and at, it's at $2 here. I'm gonna buy up all the corn for a dollar and sell it at the same time for two. And they provide a valuable service too, because you want to make sure that if you're hedging or speculating, you don't really care about which market you're going into because there's overhead in that. So they make sure the prices are, are uniform across, across everything. So there's a lot of people that just think trading in general is gambling. I, I reject that premise. I think that these are useful markets and, and people are, people are providing valuable services and kind of hedging their risk. Speculating or sharing a point of view.
- [95:29]
Graham Stephan
And how does your own personal portfolio look today? And how do you allocate across public markets, private markets, stocks, bonds, crypto, real estate.
- [95:41]
Vlad Tenev
Yeah, the vast majority of my portfolio is Robinhood, so I'm, so I'm highly concentrated. I do have some public markets exposure, but basically when we went public, I had to lose discretion over all of that. So, yeah, I don't have discretion over, you know, the, the lion's share of my trades. Meaning they, they happen in a trust that other people kind of decide and, and manage for me. And I, I think the, the idea behind that is because I run Robinhood. Robinhood's a, a big company. Even the perception of like somehow being exposed to data and using that to make, make trades could be risky. So, so we just decided to handle that by me not having discretion over any trading.
- [96:34]
Graham Stephan
That's interesting. Yeah, but you, you get reports, you know, every, every month or two from your wealth managers that say, okay, you know, we put some money into this, we did this, but you don't have any discretion over that because you're worried people would paint it in some sort of a picture of like. Oh, you're using user data.
- [96:49]
Vlad Tenev
Exactly.
- [96:50]
Graham Stephan
To make trades. Copying Chris Camillo.
- [96:53]
Vlad Tenev
Yeah, yeah. So, yeah, that, that could be like a distraction at best. And so interesting. And you know, it's relatively small because I'm, you know, 90 plus percent Robinhood.
- [97:05]
Jack Selby
Anyway, speaking of Robinhood, why, what does Robinhood focus more on? Live customer service reps where you could just easily. One number like Amex Platinum, where they pick up on like the first ring and you talk to a person.
- [97:19]
Vlad Tenev
We actually do have that. We recently rolled out something called Robinhood Concierge, where, you know, if, if you, if you have a lot of money in Robinhood or your trading activity is high, you can be eligible for Robinhood Concierge and you have a person that you can actually text with and then so. So it's kind of like barbell strategy. I don't think we can give every person Robinhood Concierge, but we can do it to a small portion of people and usually those are people that have needs. I mean, if you have a large Robinhood portfolio, if you can't get a hold of a person, that becomes a problem for you. So we do that offering and actually more and more people are in that category. So we're going to have to continue to scale that and make that better. And then for everyone else, we've been making huge investments in our AI customer support, where I actually think we're best in class. And we've been making lots and lots of innovations and the goal would be key to get the best customer support experience delivered to the mass market with AI. And eventually it won't just be chat and email, but you'll be able to call our AI. And you know, some people actually don't like it. You know, they immediately, when they figure out they're dealing with an AI, they want human, human, human. But the AI is getting very good and even now it'll probably, I think we should probably do a better job of the AI convincing people that it can be helpful. Say, are you sure I can help you solve your problem? I think over time, the percentage of people that don't want to deal with AI as they get confidence that it's, that it's actually going to solve your problem is going to go down.
- [99:02]
Jack Selby
I think once your account gets beyond a certain point, it should unlock automatically. A live rep. Yeah, where it just goes to a cell phone or something like that. Just immediate pickup like Amex Platinum.
- [99:13]
Vlad Tenev
That's Essentially what Robinhood concierge is.
- [99:16]
Jack Selby
And what's the dollar amount that you have to have Sense?
- [99:18]
Vlad Tenev
I don't know if we've publicly shared it. If, if it is, it's, it's on our website. But. And if we haven't, I think it's still early. So we're kind of like tweaking it. But it's not just the dollar amount. It's also, you can have a low dollar amount but be a, a very active trader. Yeah. And that qualifies you as well.
- [99:38]
Graham Stephan
What would you say are the biggest levers Robin Hood has pulled to get ahead of the competitors? For example, obviously initially offering the, the free trading and setting that standard standard, the 3% cash back and the credit card, the 2% acats match, that was.
- [99:56]
Jack Selby
A, that was a massive one.
- [99:57]
Graham Stephan
That was huge. What would you say are the biggest levers that Robin Hood has pulled and how are you going to stay ahead of the competition from here on out?
- [100:05]
Vlad Tenev
Yeah, I mean, I think, I think at the. And it's funny that you mentioned the ACATS match that's gotten more and more sophisticated over time and now we actually have personalized matches. So if you look on social media sometimes there's confusion about this because people post things and they're like, well, I got this match. Well, I got this other one. I think we'll still run our broad marketing matches around events and certain product rollouts. But yeah, they're personalized and I think that takes a lot of technology sophistication to actually deliver people personalization in a safe way way. So I think we're investing a lot there. But I think the underlying thing is just technology. Like we, we want to be at the forefront of technology innovation. I think compared to the incumbents, that gives us a big advantage because we can just be more efficient, roll out products faster, learn from our customers, learn from, you know, what's worked and what hasn't worked for us in the past and iterate more quickly. So I think that's been a big advantage and you know, relative to the smaller startups which do tend to move faster than big companies, I think the scale and the reach and the fact that we have so many customers and so many assets is, is an advantage as well.
- [101:27]
Graham Stephan
So we want to do a lightning round and we're going to mention a few different offerings and then you can say if you plan on implementing them soon, if there are plans far out in the future. And we're just going to go through a of lot list.
- [101:37]
Vlad Tenev
Yeah.
- [101:38]
Graham Stephan
Solo 401k solo.
- [101:40]
Vlad Tenev
401K is interesting. So we, we've done a lot on the retirement side. I think the IRA covers a lot of needs. And then there's a big business opportunity which is slightly different of, of 401ks, which is essentially a B2B offering. I think that one we've been thinking a lot about and we know that we want to do one. We want to expand our offerings to serve businesses as well. But our first bet there is registered investment advisors. I think that's more interesting. So registered investment advisors is the near, near term opportunity that we're tackling there.
- [102:22]
Graham Stephan
Business accounts.
- [102:24]
Vlad Tenev
Business accounts is on our radar. Yeah. Yeah. And I think there's a lot of things that a business account count could be. But yeah, we're definitely, we're definitely looking at it. I, I wouldn't say near term but on, on the radar.
- [102:39]
Graham Stephan
Trusts.
- [102:41]
Vlad Tenev
Big request, big request. Yeah. We've been hearing or we've been hearing a lot about trusts. I think that for a while Robinhood was just one account. Big focus has been on making, making it so that people get the benefits of retirement accounts and all the different things. So it fits into the multigenerational strategy I was telling you about. So I, I can't give you a specific date, but definitely on our radar.
- [103:12]
Jack Selby
Yeah, that to me is the biggest one. And you'll get huge account sizes doing that for sure.
- [103:17]
Vlad Tenev
Yeah.
- [103:17]
Graham Stephan
Insurance.
- [103:19]
Vlad Tenev
Not in your term.
- [103:20]
Graham Stephan
HSAs.
- [103:21]
Vlad Tenev
I think that, yeah. Not, not a huge request. Long term, yes, but not, not. I wouldn't expect it very, very soon.
- [103:30]
Graham Stephan
Some sort of a social platform.
- [103:33]
Vlad Tenev
Well, you know, I talked a lot about how the, how the origins of Robinhood were as a social network. I think that you'll see elements of that that are useful to customers. But in terms of full, full fledged social platform, I think think, I think you'll have to be in suspense. Yeah, I, I think, I think that one, if it comes, you know, it'll, it'll, it'll surprise you guys.
- [104:04]
Graham Stephan
Robin Hood dating account size matching, portfolio strategy matching.
- [104:12]
Vlad Tenev
That would, that would be dependent on social. I think that would, that would have to be a fast follow to the social network, Robin.
- [104:17]
Graham Stephan
So you could have two high risk individuals, you know, or two low risk.
- [104:21]
Vlad Tenev
Individuals with covered cars calls, anything with anything with messaging. I think eventually evolves into a dating.
- [104:30]
Graham Stephan
Wealth management.
- [104:31]
Vlad Tenev
Ah, we already offer it.
- [104:33]
Graham Stephan
There you go.
- [104:34]
Vlad Tenev
Yeah.
- [104:34]
Graham Stephan
Financial education.
- [104:36]
Vlad Tenev
Already offer it like on a.
- [104:38]
Graham Stephan
But I'm Talking like a YouTube channel sort of thing.
- [104:40]
Vlad Tenev
We have a couple of YouTube shows. We have like options content that I think Obi is still doing. And then a podcast called the One Week that Was, which is market commentary with Steph Guild. And then we also have Sherwood Media, which is our media company.
- [104:58]
Graham Stephan
Fixed income products.
- [105:00]
Vlad Tenev
So you. You can trade and buy fixed income ETFs.
- [105:05]
Jack Selby
What about like, annuities or like, you could buy a certain fixed income product?
- [105:09]
Vlad Tenev
Yeah. Bonds don't. Don't currently offer, but yeah, on our radar for sure.
- [105:15]
Graham Stephan
What ideas have you shot down recently?
- [105:17]
Vlad Tenev
I think, I think there's a lot of great ideas that just with. With minimal. With relatively few resources and the ability to focus, it's more of like do it later sort of thing. So I think we've looked at things like 401ks, we've looked at employee stock purchase plans. So if you're an employee of a company and. And you want to buy that stock, could we be the platform that offers that? I think that's an opportunity. I mean, a lot of people get accounts and business that way, but it's just our focus from B2B standpoint has been RIA custody. And I think that's such a big opportunity that we want to make sure we feel good about nailing that before we expand to other businesses.
- [106:08]
Graham Stephan
What ideas do you want to do? But regulation blocks it?
- [106:13]
Vlad Tenev
I think right now in the US Tokenization and private markets are the big ones, like accredited investor rules prevent clear and simple access to private markets. And, And I think eventually we'll have to get there. So that. That's far and away the biggest. I mean, there. There's probably little things here and there, but. But I don't think they're as meaningful as private markets. Access and tokenization.
- [106:41]
Graham Stephan
One of the things that I found most interesting about the Robin Hood story, because I went and did copious amounts of research. I listened to all of your podcasts, all of your interviews, and it seems as though the strategy of Robinhood was to simply take less profit than competitors. That was basically what you guys did with like, you know, free trades with a bunch of different things. With the, the credit card, the 3%, it's just like, do what the other people are doing, but just have less fat in the process.
- [107:08]
Vlad Tenev
I think that's certainly a part of it. I'd say the user experience and just building great products is the core. But in financial services, the pricing model is a key part of the customer experience. It's not like selling iPhones, for example, where the price point of the iPhone, whether it's $1,000 or $500, is a big driver to your decision to purchase because I think people are less sensitive. That's more of like luxury product and the pricing is further away from the value prop. But in financial services the user experience and the price are very, very tightly coupled. So you know, conventional wisdom is you don't want to compete on price, you want to compete on value. But in financial services I think price is, is, is really intricately tied to value. So I don't think for commission free trading or for first product, it was solely offering at a lower price. I think that was a part of it. But it was also having a really nice mobile app. Yeah, nobody was doing that.
- [108:20]
Graham Stephan
I again, instant onboarding.
- [108:23]
Jack Selby
Gosh.
- [108:23]
Vlad Tenev
Being able to like onboard and buy your first stock in one session rather than having to like fax documents.
- [108:30]
Graham Stephan
Dude.
- [108:30]
Jack Selby
For me to go from Scott trade to a bit of a break to Robinhood because I believe Robinhood is the first stock trading app I downloaded. I think was Robinhood.
- [108:40]
Vlad Tenev
Yeah.
- [108:41]
Jack Selby
And I remember it being so incredible that like, oh my gosh, I could buy a stock for free. Like that was for me at the time life changing.
- [108:48]
Vlad Tenev
There were other apps but they were mostly like scrunched down versions of their websites and web view. So they didn't work particularly well yet for a while we were getting questions. How did you guys do your onboarding so good? Like even things as simple as onboarding, I think we put a lot of craft and care into the design. And you know, you mentioned the credit card. There's lots of ways that you could work with the economics of the credit card. I mean some people look at APRs. Should we adjust the APRs? There's the annual subscription fee. There's, there's, you know, the cash back. And so even like making the pricing really good is non obvious because you have to figure out what the levers that work well for, for your particular customer is.
- [109:33]
Graham Stephan
You would be so disappointed to see my Robinhood portfolio. So disappointed. Like I'm such a better investor than what my Robinhood portfolio indicates.
- [109:42]
Vlad Tenev
Well, I mean, I don't know. I think yeah, I wish I could become an investment advisor that now I can. Now I would be able to talk to you about the stuff but. But I have a feeling that you'll do fine.
- [110:00]
Jack Selby
It was funny though. It was the exact next day as soon as he sold out.
- [110:03]
Graham Stephan
It's, it's actually uncanny. Uncanny. I had, I had so much. I had a lot of Robin Hood stock. I had a lot of Robin Hood and I have a ton of Palantir And I had long calls on all of it. And then, you know, this is. I like, went all in right at the peak. I remember it was December of 2020, whichever 2020, the December peak was. And then everything started going down. Someone got margin calls called. They lost. I'm not going to say who. They lost all of their Robin Hood long calls, Robin Hood Equity, as well as Palantir stocks and, and, and calls.
- [110:35]
Jack Selby
Also, I do want to mention, since we're wrapping this up, we are going to be donating to Team Water. Mr. Beast is raising $40 million this month, and it's something that would mean a lot to us. If you're willing to help out down below in the description, come join us. We even have Jeff behind the camera helping us out, the winner of Beast Games. So given that, it would be really neat if you donated. And Vlad, we really appreciate your time on this.
- [110:58]
Vlad Tenev
Thank you, guys.
- [110:59]
Graham Stephan
Thank you for coming on the podcast. Thanks so much.
- [111:01]
Vlad Tenev
Join us for Hood Summit in a couple weeks where we're going to announce some new stuff that I think you'll really enjoy.
- [111:07]
Graham Stephan
Deal. Thanks for watching. Till next time.