Vlad Tenev, Co-Founder & CEO @Robinhood: The GameStop Saga & The Future of AI | E1222

1. 0:00 – 3:56

   Intro

   1. VTVlad Tenev0:00

      So now Robinhood has eight business lines that generate 100 million a year or more in revenue, and that's up from, I think, three a few years ago. And some of them benefit from higher rates, some of them benefit from lower rates. I do think Robinhood is, is actually stronger in a declining interest rate environment than in a rising.

   2. HSHarry Stebbings0:21

      Ready to go? Vlad, dude, we've known each other for a while. I'm so excited to have you in the studio. Thank you for joining me.

   3. VTVlad Tenev0:38

      Well, thanks for having me. It's good to meet you in person and be here in person.

   4. HSHarry Stebbings0:42

      You know, it's so lovely to do it in person. I wanna go from like, you know, a very cheery, happy start to actually a kind of a reflective one, which is, I think we were just talking about this, the celebritization of CEO-ship, seeing people on television, seeing a strong leader, and everything just looks up and to the right. And I think we are shaped a lot by our past. When you think about your past, what challenging moment do you think defines who you are today most?

   5. VTVlad Tenev1:07

      Being an immigrant, moving from Eastern Europe to the US, that was probably, like, one of my earliest memories, right? When my family actually, right after the Berlin Wall fell, had an opportunity to move to the US. Like, ver- very little travel was happening from Bulgaria, which is where I was born, to the Western world, but these people from University of Delaware came and were impressed by my dad, who was a professor of economics in, uh, in Varna, Bulgaria. He got an opportunity to come to the US, but, of course, we didn't have the money to send the whole family, so it was, like, him coming by himself for a year, just trying to make it work, trying to build a stable foundation. And then my mom came, uh, a year after him, and so I was at, I wa- I was living with my grandparents, and, like, they were taking me to school, and I didn't see my dad for about a year and a half, my mom for at least six months. And my aunt, who I think was a teenager at the time, she was, like, into grunge music. She loved Nirvana and Soundgarden.

   6. HSHarry Stebbings2:17

      (laughs)

   7. VTVlad Tenev2:17

      She took me, uh, to America on what was my first plane flight. And I remember when I, when I kind of, uh, landed at JFK, JFK is kind of the... It was like the new Ellis Island, right, where the migrants would, would first come. I landed in JFK, and I saw my parents, and I hadn't seen my dad for a year and a half. It was almost like meeting strangers in a way, and I was just, like, very shy. It took me a little bit of time to open up. I was hiding behind my aunt's leg, just sort of like, uh, uh, peeking, peeking with one eye out. Um, but, uh, being apart from my parents, I think, I think was tough, um, but also had the benefit of making me independent and, you know, moving around to different schools, going from the school in Bulgaria near my parents' apartment to the school near my grandparents' apartment to being dropped in kindergarten, i- in the US without speaking any English. You know, it's, it was a little bit terrifying. Like, you're just in this new place, you can't even speak the language, you're in school, um, and it was a little bit scary at the time. But it taught me to just adapt to different situations and to be very flexible, and I think that's helped me much later in life.

   8. HSHarry Stebbings3:37

      You know, I've interviewed 800 of the best founders over the last decade, and the single biggest commonality in the most successful founders is a high frequency of moving in childhood. You're forced to assimilate with different environments, different cultures, different people, make new friends, enemies, whatever that is.

   9. VTVlad Tenev3:53

      That's right, yeah.

   10. HSHarry Stebbings3:54

       It's a really interesting trait. Um,

2. 3:56 – 6:21

   Is America Still the Land of Opportunity?

   1. HSHarry Stebbings3:56

      can I ask you, when you think about moving there, and America being the land of opportunity that it was, do you think it's still that land of opportunity? I think this with the UK. Like, does the best talent wanna come to London? And the answer for me is no. Do you think America is the land of opportunity that it was when you went?

   2. VTVlad Tenev4:13

      I think so. And for me, uh, entrepreneurship didn't really become a viable option, i- in terms of I never really considered being an entrepreneur until relatively recently. You know, I- I grew up, and, uh, I grew up on the East Coast, and people weren't really starting technology companies on the East Coast. To me, as, as I've kind of gotten older and, you know, I- I moved to Stanford, California, really because when I was a kid, and my family took our first road trip, uh, once we'd gotten a little bit of money, and my, my parents felt comfortable taking vacations financially, they took me to California for a road trip. And I remember being in San Francisco one morning, and this was in the summer, so I had to buy a jacket, because it was just, like, too cold to be outside. And then we, we took the 45-minute drive to Stanford, California to check out the campus. And, uh, it was, like, 85 degrees, perfect. The, the students were, like, sunbathing in the main quad. Everyone just looked so happy and like they were having a great time. And I wanted to be a lawyer at the time. I'd seen A Few Good Men, which was a Tom Cruise movie, and I was like, "Man, that's cool." Like, "I wanna be that guy." And I had this vid- uh, this photo of me in front of the law school. Um, but yeah, I- I wanted to go to Stanford because, because of that feeling that I got. It wasn't because I wanted to be an entrepreneur, or that I wanted to be in Silicon Valley. So to me, I've just, uh, it's felt more and more like the land of opportunity the older I get, and I think now, e- even with COVID, when there was this narrative of people moving away from Silicon Valley, going to, you know, Miami, or, or places like that, Austin, Texas, now it- it's feeling like the energy is sucking people back in. You know, there's artificial intelligence companies, Palo Alto, Silicon Valley right in the epicenter of that. Big tech companies are, are continuing to innovate, so it, it still feels like the hotbed of innovation,

3. 6:21 – 9:19

   When Have Vlad Turned His Back on the Crowd as a Leader?

   1. VTVlad Tenev6:21

      for sure.

   2. HSHarry Stebbings6:21

      Someone said to me the other day on a show that great leadership is about being a conductor, and to be a conductor, you must turn your back on the crowd. When you think about that statement, when have you turned your back on the crowd most significantly?

   3. VTVlad Tenev6:33

      Yeah, I think that's an interesting question. You know, I was reading the, uh, Rick Rubin...... uh, book. I don't know if you've, you've, uh, you've come across it.

   4. HSHarry Stebbings6:43

      I, I have. I've actually just been gifted it-

   5. VTVlad Tenev6:45

      Yeah.

   6. HSHarry Stebbings6:45

      ... and I haven't read it yet. (laughs)

   7. VTVlad Tenev6:46

      I was gifted it also, and, you know, it was just sitting on my coffee table for a while, but something compelled me to pick it up, and, and it's all about, uh, artists and how they create. And I think he does a great job of distinguishing an artist from a businessperson, because, um, kind of, like, o- o- one, I think his thesis for what makes a great artist is that you don't really care about who's looking at your work, you know? You just... You're building something to make yourself happy. So, really, the customer for an artist is yourself. If you're proud of the work, and, and, you know, it, it expresses what you wanna communicate at that point in time, it's a great work. And you almost have to, like, divorce that from whether it's commercially viable or whether anyone likes it. Even when you're kind of, like, showing people your work of art, you have to be really careful not to listen to them too much, because, uh, good art almost, like, alienates as many people as it makes really happy. So, if you're, if you're not, like, alienating anyone, probably everyone just feels somewhat neutral, and it's not gonna be memorable. But, um, yeah, business is a little bit different, because, uh, I think there's an element of art to designing a really good product, and you have to be proud of it, and to some extent, you're building it for yourself. But you also keep in your mind what's useful to a customer, and what they can, uh, they can benefit from. So, in, in terms of this conducting analogy, I don't think you can turn your back on the crowd completely, or at least not through all stages of the life cycle of building a product. I think that you kinda start with an inspiration and an idea, and if, if you sort of, like... I think that, in the best cases, has come from within, right? Like, I think we, we've been fortunate to build several kind of really, really good products at Robinhood, and I think the, the initial idea, the spark came from within, and it didn't come from customer research or a lot of feedback. But I think customers play a much bigger role in refining the idea, and actually, like, we ping-pong ideas off of customers. We use the feedback to adjust the interface. And sometimes, it changes it quite a bit, but there's a little bit of, like, art, a little bit of, of business in creating a new product that I, I think is

4. 9:19 – 10:48

   Does Vlad Think He Alienates Enough to Build a Strong Brand?

   1. VTVlad Tenev9:19

      really interesting.

   2. HSHarry Stebbings9:19

      Do you think you alienate people enough? And what I mean by that is, like, actually, when you think about business, you're Nike or you're Adidas, you're iPh- Apple or you're Samsung, you're McDonald's or you're Burger King. I know you guys have Taco Bell and some Chipotles and other things, so I'm not gonna comment 'cause I don't know the comparisons there.

   3. VTVlad Tenev9:36

      Right.

   4. HSHarry Stebbings9:36

      Uh, but you are, like, for or against the brand. Do you think you alienate enough?

   5. VTVlad Tenev9:41

      I think we could probably alienate more. (laughs)

   6. HSHarry Stebbings9:44

      Yeah, yeah.

   7. VTVlad Tenev9:44

      I think that it's hard to alienate, because I think people are naturally sensitive to criticism, and it hurts more to get sort of, like, a piece of biting criticism than it feels good to get praise. So, so I think this creates a natural tendency to avoid alienating people. And you have to almost, like, exert influence if you wanna, if you want to have your product, or your marketing, or your message be, uh, be compelling. So, I, I think that's a... Yeah, it's, it's a, it's a very tough thing, and to some degree, it has to start at the top of the organization. But I think for, for myself, uh, I can take more risks. So, what I try to do is, whenever possible, if, if there's someone whose vision I believe in, uh, e- even if I disagree with it, I try to, you know, let them, let them try things, and be bold and, and have a perspective.

5. 10:48 – 13:29

   How Vlad Builds Resilience to Handle Criticism?

   1. VTVlad Tenev10:48

   2. HSHarry Stebbings10:48

      One of my biggest weaknesses is I really care what other people think, and I'm actually quite sensitive. (laughs)

   3. VTVlad Tenev10:53

      Yeah.

   4. HSHarry Stebbings10:53

      And it, it, it really hurts when I see shit on any social media about me. You said about sensitivity there. I spoke to so many of our mutual friends, and they told me, actually, that you're an introvert, and in the nicest way, that you're a maths nerd. (laughs)

   5. VTVlad Tenev11:07

      (laughs)

   6. HSHarry Stebbings11:07

      Said with love, by the way. But are you sensitive? And how do you think about building that muscle to withstand the criticism that comes?

   7. VTVlad Tenev11:17

      Um, I wouldn't say I'm an introvert. If there's actually, uh, one thing that I struggle with, uh, on a personal level, it's, like, being alone, you know? Like, I, I get a little bit uncomfortable, uh, being alone, and, you know, I-

   8. HSHarry Stebbings11:35

      Wh- Why is that?

   9. VTVlad Tenev11:36

      I don't know. I, I think that, you know, maybe, maybe it comes from childhood. You know, I'm, I'm an only child, and when I grew up, I actually spent a lot of time alone. And, you know, my, my parents never aff- were able to afford a babysitter until I got older and didn't need one, right? So, as a kindergarten, uh, as a kindergartner, I would, uh, basically walk home from the bus stop to my apartment. I had the key in my backpack. You know, I was a latchkey child. This is very rare now, I've been told. Uh, you can't really do this in 2020. People are more protective over their kids. But I would let myself in, do my homework. Maybe I would, you know, call my parents at work or they would call me to make sure I, I got home okay, and, you know, play with my friends sometimes, but, uh, a lot of times I was just sort of, like, alone. And then, when I got to college, it w- it was always, like, living with roommates, or with a bunch of people in...... in a house. Um, when I'd go out places, I would have, you know, a lot of, a lot of friends with me. So, you know, sometimes I hear about people doing, like, solo traveling or living by themselves for an extended period of time, and it, it feels like somewhat foreign and actually kind of scary to me. So I, I think my, uh, my area of discomfort is less being with other people. I, I get energy from other people, and, uh, and it's more like-

   10. HSHarry Stebbings13:09

       I find the hardest time actually-

   11. VTVlad Tenev13:10

       ... being alone.

   12. HSHarry Stebbings13:11

       ... nighttime, which is when the lights go out, and you're kind of in bed with your own thoughts.

   13. VTVlad Tenev13:16

       Yeah.

   14. HSHarry Stebbings13:16

       And, you know, you have a much busier life than me, but it, it's busy now, and it's just, it's the only time when it's, like, silence.

   15. VTVlad Tenev13:23

       Yeah. Well, not, not at, not usually at my house. I usually have multiple crying kids. And,

6. 13:29 – 20:13

   Lessons From GameStop Times

   1. VTVlad Tenev13:29

      uh-

   2. HSHarry Stebbings13:29

      (laughs) It changes a lot. I totally get that. I was chatting to, to Mickey, and he said, "Listen, the game..." You know, he said, "You are in the best CEO version of yourself right now, but that was in large part, I think, because of the experience you had over the last few years." He said, "One you've got to ask is GameStop was a, was a tough period for him as a leader. What did it teach you about telling stories?"

   3. VTVlad Tenev13:49

      That is a tough one. Um-

   4. HSHarry Stebbings13:52

      Mickey's good at asking questions. (laughs)

   5. VTVlad Tenev13:54

      And I, I think to your point, when you, you mentioned the introverted thing, uh, I think before GameStop, um, to some degree I was, like, never really comfortable in, uh, a media setting. I think this is a little bit different because this feels more like a conversation, but, like, you're on, you know, CNBC or Bloomberg or one of these shows, and you have three to five minutes. You have this, like, artificial situation where you have to deliver sound bites. You can't really explain yourself. Um, that one was during COVID, so all of these interviews that at, at least I'd normally be in a studio for are happening over my Zoom connection. Uh, very little sleep. You know, it's... And it wasn't just the night before the, the GameStop fiasco. It was probably, like, the month leading up to it, where volumes were just going, like, going vertical. The crypto markets were exploding as well, and we were, we were a major player in that. Robinhood was the number one app in the App Store. And my feeling at the time was, you know, ev- everyone was sort of like, "Wow, you should be really happy. You're the number one app in the App Store, ahead of Instagram and TikTok, not just financial app, but everything." And, um, like, inside I, I, I had to, like, juggle the happiness of, of that, that moment, but also just, like, the fear that, you know, something could happen, I don't know what, and it could go off the rails. Like, it- it was, it was almost, like, too much, too much growth. Um, and, and so all this was happening at the same time, and you're running all these threads in your brain, like, "I have this issue. I wanna dispute this point. I want to, like, appear confident and, like, uh, like I'm on top of things." Um, and I, I had that not really going for me because, you know, I was 32 years old at the time, and I hadn't done much media, and I looked rather young. I think that whole episode sort of, like, aged me, you know? I look at pictures of myself in 2020, I look much younger. My big takeaway is I think you almost have to, like, clear out all of those voices in, in your brain and just, like, uh... Wh- when everything goes away, you could actually get much more clarity about how to communicate, and I think storytelling is a big part of that. I mean, when, when people... If, if you clear out your brain and remove what you think you should be saying or what messages you wanna convey, I think what's left is, is the stories. Like, because I tend to picture things in my mind, you know? And when I think about GameStop, I, I think about, like, being cooped up in my little house and not really being able to eat for days because I was just, like, pacing around. Small kids at the time, they were just kind of running around, and, uh, yeah, it was, it was just, like, a very unsettling period.

   6. HSHarry Stebbings17:05

      What would you have said differently was another one of Mickey's, which is, like, when you review kind of what you did say, what did you say or not say that you wish you had done the opposite of?

   7. VTVlad Tenev17:14

      I think that when I, uh, when I did, uh, I, I did a Clubhouse with, uh, Elon Musk on Sunday. It was like, uh, Thur- Thursday was when the GameStop trading restrictions, uh, were p- first put into place, and then we were a little bit nervous about sharing all of the details. Part of we- par- part of it was we wanna make sure we didn't get anything wrong, because if we got anything wrong, then we would have to correct it, and that looks bad. That, that, that tends to, uh... I mean, you, you've got people into all sorts of conspiracy theories, right? And we were, you know, people thought there was this whole collusion narrative with, uh, with Citadel that ended up being disproved. And so we wanted to make sure that we communi- we communicated everything correctly and we didn't leave anything out or make any mistakes. That made us communicate a little bit later than perhaps I would have liked, um, but it came out in pieces. It was like one detail here, the other details there, and then it was, um, Sunday when I kind of gave the full play-by-play on a Clubhouse, uh, being interviewed by Elon Musk.And, of course, uh, in all the lawsuits and litigation that followed, all the other details came out over the following several years. But I think in hindsight, maybe like not saying anything until giving the entire story of, of how everything happened, I think, would've, would've probably worked better. Uh, there was like this... I felt this pressure to get out there and communicate as early as possible, but I think in hindsight, taking my time a little bit, and just saying like, "Hey," you know, "We're working through solving the problem. I'm gonna release a statement or get out there as soon as I can, uh, you know, after cleaning up the mess." You know? I, I think that probably would've been a little bit better.

   8. HSHarry Stebbings19:16

      Who do you call when the lawsuits are dropping, when the shit is really hitting the fan?

   9. VTVlad Tenev19:20

      Oh, I mean, like, lots of lawyers. (laughs)

   10. HSHarry Stebbings19:24

       (laughs) Right, who's the friend?

   11. VTVlad Tenev19:25

       What was really interesting was I started getting phone calls from all sorts of people that maybe I wouldn't have had an opportunity to talk to. You know, people were connecting me with, uh, you know... I, I never talked to Elon Musk before, but he kinda wanted to give me some advice on how to handle the situation. I talked to Zuck, Marc Benioff. The one benefit was, you know-

   12. HSHarry Stebbings19:47

       Amazing network expansion.

   13. VTVlad Tenev19:48

       These guys were like-

   14. HSHarry Stebbings19:49

       (laughs)

   15. VTVlad Tenev19:49

       ... "Hey," you know, "I, I saw this on, on TV. I really think you could've done a better job on that Sorkin interview, and, you know, here, here's what you should do next." And, you know, it was interesting to have those discussions. It was like brainstorming on brand, marketing, business strategy, business model with, with some of these folks in a, in, in a very, kind of, very unique time.

7. 20:13 – 21:19

   On Founder Mode

   1. VTVlad Tenev20:13

   2. HSHarry Stebbings20:13

      You, you mentioned some incredible founders there. You are yourself an incredible founder. What did you make of PG's Founder Mode essay, which went incredibly viral recently?

   3. VTVlad Tenev20:22

      My take on it was... I think it's a little bit like a horoscope, in the sense that it was so vague and general that everyone kind of l- thinks that it's relevant to them. It's like, "Oh, yeah, that's me. I'm, I'm in founder mode, uh, not manager mode," you know? And I think that's why it resonated with, with people. It's, it's sort of like you can paint your own picture, but it kinda feels like it's, it's talking about you. You know, ev- every founder that I talk to is like, "Yeah," you know, "PG really gets it. This is exactly how I operate." Every manager or executive was a little bit offended, you know? So, yeah, it-

   4. HSHarry Stebbings21:01

      It's pack- it's packaged very well.

   5. VTVlad Tenev21:02

      Yeah, it was packaged well, but I, I don't think that it was like, um... I think it captured a feeling, but I, I don't think it was like a... If you're looking for a tactical guide to, like, founder decision-making, I don't think, I don't think there's much in the way of specifics

8. 21:19 – 26:07

   Culture Change During COVID

   1. VTVlad Tenev21:19

      there.

   2. HSHarry Stebbings21:19

      How did you think about kind of refinding the culture, and when do you think it broke?

   3. VTVlad Tenev21:24

      I think it, it kind of broke a little bit at the beginning of COVID. And so-

   4. HSHarry Stebbings21:30

      What were the signs that it broke?

   5. VTVlad Tenev21:32

      Well, there, there were a couple of things that happened simultaneously that were very difficult. I think one of them was just going remote fully, and then the second thing was we went through a gigantic hiring burst, right? We went from, I wanna say we were under 1,000 people, um, at the end of 2019, so right before COVID. I think w- right around 1,000, maybe a little bit under, and then in 2022, January of 2022, when we finally announced, you know, that we were a remote-first company after a couple of years of ambiguity, I think we were about 4,000 people. So, we sort of like over 4X-ed in a fully remote setting, and we were opening up offices everywhere.

   6. HSHarry Stebbings22:19

      How many are you now?

   7. VTVlad Tenev22:20

      We are, uh, between 2 to 3,000.

   8. HSHarry Stebbings22:25

      So, you over-hired?

   9. VTVlad Tenev22:26

      Yeah. We over-hired, yeah, in hindsight. I think that, you know, pa- part of it was we were kinda responding to the issues that we had in 2020, which were huge amount of growth, influx of customers. I mean, our revenues went up like 4X in a year from right around 250 million to about a billion. Um, and so-

   10. HSHarry Stebbings22:48

       That's a fun board meeting, isn't it?

   11. VTVlad Tenev22:49

       Yeah.

   12. HSHarry Stebbings22:49

       That's a nice graph to give, yeah. (laughs)

   13. VTVlad Tenev22:51

       I mean, at, at the time, it was fun, but it was also a little bit disconcerting, because I was like, "Well, we haven't really done anything." You know, "This thing happened. Now, we're growing," and you, I think if you're not careful, you can like... There's a tendency to think that you're doing a great job as a leader. "I mean, revenue's going up. Uh, people are using my product. All these other companies that maybe, uh, were hit hard by, by COVID are doing poorly. Does that mean I'm a better chief executive than, than the chief executives of those companies?" I think at the time, um, I was getting some positive feedback, but there were things that were breaking that we had to deal with as well. I think what was kind of not very fulfilling to me was we didn't really ship that many products in 2020 and 2021. We were just kind of trying to, trying to keep the train on the rails, you know? 'Cause we were, we were dealing with infrastructure issues, historic volumes, lots of load, customer support we had to grow, so-

   14. HSHarry Stebbings23:54

       What did you not do that you wish you had done?

   15. VTVlad Tenev23:57

       Well, I mean, uh, in hindsight, since we're in the UK, uh, we decided to abandon our efforts to expand to the UK that year.

   16. HSHarry Stebbings24:09

       I remember this.

   17. VTVlad Tenev24:10

       Yeah.

   18. HSHarry Stebbings24:10

       'Cause, 'cause you were planning. It was publicly known that you were planning it, and obviously me being in the UK, I was excited for it.

   19. VTVlad Tenev24:16

       Yeah, yeah. We announced in the UK. Uh, we went to friends and family, maybe about 1,000 people, and then, uh, COVID hit. So, it was like March of 2020, and, uh, I remember having to make a decision. It was like-We need all the resources we possibly can get on the US side, and, you know, we have this new business in the UK, um, and I think it was a tough decision. I thought about it a little bit.

   20. HSHarry Stebbings24:46

       Why did you make it?

   21. VTVlad Tenev24:47

       And I went back and forth. I think at the time, it seemed like, I mean, the, the US business was so big and it was growing so fast, it was going through an inflection point, and it felt like we had to put everything that we possibly could, um, on making, on making that work and, and shoring it up. And, uh, the UK just seemed like it would be hard and it would be distracting, and I couldn't even travel there most likely. It, it was sort of, like, easy to, to abandon. Uh, and we didn't abandon it fully. I mean, we kept the license and then we went live what ended up being three years later, right? Three, three years later when we, when we finally launched earlier this year. Um, yeah, but sometimes I think about that. And of course I'll always difficult to-

   22. HSHarry Stebbings25:37

       Was that a mistake to not do it then?

   23. VTVlad Tenev25:39

       I think it's hard to compare the a- against the counterfactual, which you don't have. Um, certainly it would've been the right decision if, you know, we ended up having some massive infrastructure issue in the US had we not allocated the resources and we had another big problem. But in, in a world where we could have done both, uh, I think, I think learning to be an international company a couple years earlier, um, probably would've

9. 26:07 – 28:55

   Why Prioritize Europe and the UK Over the Larger US Market?

   1. VTVlad Tenev26:07

      been a good thing.

   2. HSHarry Stebbings26:08

      I don't know how to say this without being too direct or blunt, so, j- forgive the word vomit here. Why is Europe and the UK interesting to you at all? Compared to the US market, it's tiny. You look at competitors here like Freetrade, which are bonny average at best businesses. Um, why is it interesting for you?

   3. VTVlad Tenev26:26

      I think from the very beginning, uh, we had a vision that Robinhood would be a global company, that no matter where you are, uh, wherever you are in the world, you'd be able to download our app from the App Store and have access to the best financial products anywhere. And, you know, you could fund with your local currency or cryptocurrency or whatever the easiest way is. You could invest your money, you could, you know, spend it, send it to people. So we, we could help anyone with, uh, any financial need. And I think as a technology company, we feel like we have an advantage to doing that.

   4. HSHarry Stebbings27:08

      What have you decided to not do most recently that was a hard decision? It's a constant game of trade-offs.

   5. VTVlad Tenev27:15

      You know, w- we always have, um... There's lots of things that are great ideas in our space that we know will work, but we haven't gotten around to them yet. So for example, earlier this year, we launched amazing margin rates. We were frankly not very competitive with our margin product in the US up until recently. And then we changed our rates. We were able to do that because we made a lot of investments in risk management. So now we have the best rates. But if you think about the things that we, we offer, great margin rates, 24-hour access to the markets, also particularly relevant in the UK, they are things that institutions want too. So if you're a, a hedge fund, for example, and y- you also want 24-hour access to equity markets, you want access to crypto, not a lot of them can get that easily, you want access to low margin rates, um, and the institutional market's a very big market, you know? And we could take a lot of our infrastructure, adapt it to institutional, and we don't have to rebuild a ton of the technology. Similarly, you look at a company like Fidelity, a big asset manager in the US, they have a big, uh, 401K business. So that's also a B2B business. You're helping startups and larger companies manage their employee retirement plans. Um, and that, that's a good, uh, complement to our retirement offering. So that's something that comes up. Uh, ser- servicing registered investment advisors, that, that's a big market, you know, individuals that manage money on behalf of, of

10. 28:55 – 30:23

    Why Robinhood is Not Big on Crypto?

    1. VTVlad Tenev28:55

       other customers.

    2. HSHarry Stebbings28:56

       You mentioned kind of funding through crypto there. One of your investors said the hard question depends if you wanna go Hard Harry, that one should ask is, why are you not bigger on crypto?

    3. VTVlad Tenev29:06

       Well, on retail, uh, in the US, um, we're kind of like close to the same size as Coinbase. We charge a lot less, so we have less revenue. Um, but in terms of volumes and, and retail volumes, it's pretty close, uh, particularly if you look at supported coins. So, you know, even though we started later, we've generally grown market share quite substantially, uh, over time. And, you know, it's expanding internationally, although we were, uh, we've done that more recently. So we, we've launched crypto in the EU a few months ago. So I, I think that we weren't, uh, originally offering crypto. That was kind of an area we moved into. So we didn't, we didn't launch, uh, at the same time as, you know, some of the original crypto companies. But I think we've been picking up market share and building the product and getting more aggressive over time. We have the Bitstamp acquisition, and that's a global company. That's actually one of the OG exchanges. So I, I think we're gonna continue to invest. But I'd say, I'd say we've done quite well in, in crypto relative to most of our competitors.

    4. HSHarry Stebbings30:21

       You can tell Mickey that one then. (laughs)

11. 30:23 – 32:38

    How Vlad Decides to Build, Buy, or Partner for New Products?

    1. HSHarry Stebbings30:24

    2. VTVlad Tenev30:24

       (laughs)

    3. HSHarry Stebbings30:24

       You mentioned the acquisition there. I think it's, it's a con- constant question for technology leaders today, which is, you know, do we build it ourselves? Do we partner? Do we acquire? How do you think about that build-buy partner decision-making process when adding new products or enhancing existing?

    4. VTVlad Tenev30:40

       We've made some great acquisitions in the past.

    5. HSHarry Stebbings30:43

       Which has been the best one?

    6. VTVlad Tenev30:44

       I'd say that the one that, uh, has led to the most interesting new product, and, you know, they- I guess to some degree it's still early, so I- I can't quite declare full victory, but- but we feel pretty good, uh, has been the credit card. So we- we bought a company called X1. They, uh, they had a really nice credit card product. Right around the SVB crisis, uh, credit companies, um, had quite a bit of trouble. I mean, the- the banking system in the US was- was very, very strained. That hit credit startups perhaps the hardest. So we were able to, uh- we were- we were able to acquire X1 and that led to the Robinhood Gold credit card, which I think if- if you look at the reviews and how initial customers are using and enjoying the product, the reviews are better than- than free trading. I mean, it's- it's the- the best initial feedback that we've gotten on any product that we've rolled out.

    7. HSHarry Stebbings31:49

       What is the single reason why you think it's been a success?

    8. VTVlad Tenev31:52

       I think there's actually three reasons that we've been able to accomplish simultaneously, and, you know, perhaps it would have been still a success if we'd gotten each one of those right, but- but I think the three things are- are very powerful. One is the economics, so 3% cashback on all categories, um, across the board. The second is the digital experience. You can create these virtual cards, one-time-use cards that people really like. And then the design of the card is really nice. It's a solid gold card if you refer ten friends. It's a very nice metallic gold card if- if you don't. But it- it just looks beautiful.

    9. HSHarry Stebbings32:33

       How spicy am I allowed to be, Vlad? Because, like, Revolut have had these features for years.

12. 32:38 – 35:35

    Why Has Revolut Outpaced US Competitors Like Chime?

    1. HSHarry Stebbings32:38

       My question is, and I- I look at this, like, Revolut is a $45 billion company now, and I think it'll probably be a $100 billion company. Now people will shit on me-

    2. VTVlad Tenev32:46

       Mm-hmm.

    3. HSHarry Stebbings32:48

       ... ............................ But- And then we look at the biggest competitor in the US and it's $15 billion with Chime, and I mean, that's a- if- if- and I didn't mean that badly to Chime, but that's a pretty high valuation applied to Chime. Where's the mismatch? Like, why is it the US has not delivered in a way that a European company has with that?

    4. VTVlad Tenev33:08

       Yeah. Um-

    5. HSHarry Stebbings33:09

       Does that make sense?

    6. VTVlad Tenev33:10

       Yeah, I mean, it- it's an interesting question. Uh, I'd say Revolut has done well in- in Europe, uh, I think that they learned, uh, how to go international very quickly because, you know, it's not just a UK business, but it- it expanded into Europe and- and other markets. My sense is US still early for them, right? Um-

    7. HSHarry Stebbings33:32

       No one's cracked US. Monzo couldn't, Revolut are trying.

    8. VTVlad Tenev33:36

       Yeah. Uh, I think that the value prop of cross-border spending is a very relevant value prop in Europe. You know, you have a lot of travelers that need pounds here, need euros when they go over to the mainland, uh, and- and I think they had a good- they have a good solution to that. Now, whether the sort of, like, investing side is- is working particularly well, I'm- I'm not sure. I don't really have any- any data there, but-

    9. HSHarry Stebbings34:04

       I'm just intrigued, like, is i- the investing product a better entry wedge and anchor product than a current account?

    10. VTVlad Tenev34:10

        I think both work, I mean, obviously. Um, and I think that it kind of depends on what time scale, uh, you- you look at things by, right? I'm kind of reminded of, uh, I- I was reading the- the Amazon book, and, you know, e- eBay initially was a much larger company than Amazon, and they kind of thought it was very silly that, you know, Amazon would build their own fulfillment centers and run their own warehouses, and, you know, if- if you're just kind of a software layer buying- connecting buyers and- and sellers, um, yeah, the- the perspective was like, that's a much better business, much higher margin. Um, but, like, Amazon did something that was very hard and- and very difficult to replicate, and I think it took, in their case, 20 plus years, but eventually that started compounding. And so you- you can also look at, uh, NVIDIA as an example. I mean, NVIDIA started in the early '90s. It was sort of like the last Silicon Valley company that wasn't really doing software. They were still a hardware company. So it's this strange kind of alien thing, and 30 years later, they kind of started taking off. So sometimes it's difficult to judge these things in the first five to ten years, or in the case of Robinhood, the

13. 35:35 – 37:29

    Key Steps to Reach a $100 Billion Valuation

    1. VTVlad Tenev35:35

       first one year.

    2. HSHarry Stebbings35:36

       What one to two things do you need to do to be a $100 billion company?

    3. VTVlad Tenev35:39

       I think that we have, uh, a couple of different vectors of getting there. I think one of them is being number one in the active trading space, so winning the active trader market, and I think just that is- is a large space. You- You have Charles Schwab and TD Ameritrade, which, uh, the combination is kind of the market leader right now. They've got very little international presence, but they serve active traders pretty well. We've been growing our market share. Options was up 20%, close to 20% last year. Equities up 14%. So we are on the path to being number one, and we're getting net inflows, and that- that's gonna require a bunch of things, but- but I think that's kind of our core business, so it's a predictable path. The second opportunity, and the one we're putting more and more focus- focus on, but it's sort of like a- an arc that'll play out over five plus years, say.... that would be being the place where Millennials and, and Gen Z, uh, keep the majority of their assets. I think that one is interesting, because there's over 70 trillion of assets that's gonna be moving from Silent Generation and Baby Boomers down to Gen X, Millennials, and younger. And we've got more Millennial customers than our main brokerage competitors put together. Same with Gen Z. So, if we can actually build a better service for them and, uh, make it a no-brainer to move their accounts over, then, you know, we get a portion of that 70 trillion of assets that are gonna be in motion. Uh, not a very large percentage of that, uh, is needed for us to significantly increase

14. 37:29 – 40:17

    Is Investing in a Home Still Relevant?

    1. VTVlad Tenev37:29

       our revenues.

    2. HSHarry Stebbings37:30

       It's a totally weird one. Do you think it's bullshit that people should buy their own homes? And what I mean by that is, like, you know the American dream of, oh, you buy your own home the minute you can. And actually, there's kind of the wealth effect and actually, you know, young people actually just have a lot more cash and they spend it on Taylor Swift concert tickets, which are thousands of dollars each, and Chanel handbags for thousands of dollars each, because the house is just so far out.

    3. VTVlad Tenev37:49

       Yeah.

    4. HSHarry Stebbings37:49

       It's too expensive. Is that a good thing in some ways, or, or not?

    5. VTVlad Tenev37:54

       I mean, I think it depends on whether you're viewing it as an investment, right? If, if that's sort of, like, your way of investing, I, I think there's probably more efficient... I mean, if you think about real estate, you're paying a lot of taxes. Depending on where you live in the US, the taxes on property can be north of 1%, and, and that's big. Every year, that's kind of layered on. Uh, there's commissions. Every time you buy or sell, it's, it's like 5%. Um, and then you add, you know, maintenance fees and insurance and all of those things, and if, if you kind of look at it as an investment, it starts to, uh, it starts to kind of affect the returns. You, you compare that with investing your money in Robinhood, you're not paying any commissions on equities, you can diversify globally. Um, I, I wrote a piece one time about how investing and access to capital markets is like the- should be the real American dream. Everyone should be doing it like they were talking about home ownership decades prior.

    6. HSHarry Stebbings39:04

       I think it was Bill Ackman who said on, on our show that we should give... I'm forgetting the number, which is kind of the most important part. But I think it was like every newborn baby should be given X amount of money that is put into the S&P, and they're able then to

    7. NANarrator39:18

       (laughs)

    8. HSHarry Stebbings39:18

       ... bluntly take ownership of that over time. And that is the secret to ownership of the American economy for the next generation.

    9. VTVlad Tenev39:25

       Yeah. I think that, uh, there, there's a couple of people that are working on that, right? Um, yeah, a couple, uh, venture capitalists. Brad from, uh, Altimeter-

    10. HSHarry Stebbings39:36

        Yeah.

    11. VTVlad Tenev39:37

        ... I think it is. Um, yeah, I, I think, I think it's a noble pursuit, you know? Um-

    12. HSHarry Stebbings39:42

        Can I ask you a bit of a strange one? You mentioned NVIDIA. You're a public company CEO. Um, do you feel that you have to have an AI story?

    13. VTVlad Tenev39:50

        Yeah, I think that's an interesting question, and I think any time you see, um, a new trend or something that everyone's talking about, it's always good to ask, is this something that is real and can deliver tangible value, or is it sort of like a fad, and am I just like thinking about it because I hear about it on the news?

15. 40:17 – 42:21

    About NFTs

    1. VTVlad Tenev40:17

       Um-

    2. HSHarry Stebbings40:17

       W- we could have talked about NFTs if this was two years ago and like how would we store our NFTs in, in Robinhood and you could-

    3. VTVlad Tenev40:22

       Exactly.

    4. HSHarry Stebbings40:22

       ... make a big faux pas by being like, "We're all in." (laughs)

    5. VTVlad Tenev40:25

       I think NFTs came up and there, there have been a- several sort of like phases in the past where NFTs have, have done very, very well. I mean, you, you look at CryptoKitties back in 2017, it was kind of the first NFT boom. Everyone was buying a, a kitty and, you know, uh, everyone was talking about it. And then, of course, the, the apes and all the other things back in, in the last boom, uh, OpenSea and whatnot. So, certainly, we look at, um, we looked at it at that time, because Robinhood had a, a big crypto business, and we just decided that it didn't make sense, right?

    6. HSHarry Stebbings41:05

       And for AI?

    7. VTVlad Tenev41:06

       And crypto is probably the more general example. Obviously, we entered crypto, but for us as, uh, a financial company, I think we do view it as an asset that our customers want to trade and a fundamental technology that could change the financial system, uh, more on a infrastructure level. AI, I think, is, is gonna be a powerful platform shift, and we've, uh, lived through a couple of them. I think Robinhood in its current incarnation went through a few platform shifts, and, and really that helped distance ourselves from the companies that sort of like owned the space before we came. One of them is cloud. I mean, we were really one of the first cloud-based brokers. When we got started, it was very, uh, unusual. I mean, we were talking to our counterparties for execution, for clearing. We said, "Hey, we don't have servers in our colo. We're gonna use Amazon." And they were like, "We don't think that's secure. We, we don't trust it," right? And it's funny how things have gone in 10 years. Now, the idea of like not trusting Amazon Web Services for hosting your server seems laughable, but back then it was a real thing.

16. 42:21 – 46:20

    Integrating AI

    1. VTVlad Tenev42:21

       Um-

    2. HSHarry Stebbings42:22

       But, but I mean, this question actually is coming back in, in regards to AI, which is like a lot of large enterprises like, "I'm not giving OpenAI my data."

    3. VTVlad Tenev42:28

       Yeah.

    4. HSHarry Stebbings42:29

       And so that is actually becoming an increasingly prevalent question again.

    5. VTVlad Tenev42:32

       I think, I think there's details like that that have to be worked out, but the point that I was laboriously getting to was I, I think AI is gonna be a huge technology shift that's gonna change our space, gonna change the financial services industry-

    6. HSHarry Stebbings42:47

       But do you need to have anything today saying, "Oh, we are doing X with AI to make ourselves sexy"?

    7. VTVlad Tenev42:54

       Well, we, we are, uh, we're looking at several ways in which AI products could help our customers. And I do think that they're gonna, uh, AI is gonna change financial services. And I think the products that work, uh, this might be a little bit of a hot take, when a lot, a lot of people ask like, "Well, which, which AI products?" You probably think of this as an investor, like, "What am I gonna invest in? What's gonna get traction?" I think, to me, if there is, right now, an existing market of people paying a human to do a service for them that AI could replicate at much lower cost, I think that's a real business. And you can think of that outside of financial services, with like self-driving, right? There, there's Uber, there's Lyft. I pay someone drive me to somewhere. That's a valuable service that you can attribute value to. Uh, if a car can do that without the driver, and I, I would be willing to pay possibly just as much. I mean, it'll cost less over time, but there's a value to that. So I, I think that'll be successful. In financial services, uh, customers pay for financial advice, and that they pay a lot of money, very valuable. On the low end, it's sort of like 2% of your assets under management. On the high end, you know, it's like half a percent, and that scales to hundreds of millions of dollars in some cases. So if, if you can replicate the service, and, uh-

    8. HSHarry Stebbings44:28

       Do you think you can replicate the service? Like when you think about nuance, ambiguity, risk profiles, preferences, how they change at different times?

    9. VTVlad Tenev44:36

       Well, so I think that, um, there's a couple of different things there. One is, uh, I think the asset allocation algorithm side of it, taking a risk profile and recommending a portfolio, that doesn't actually require AI. And a lot of advisors are, you know, using software to, to do that. And I, I think that the real value is kind of in this concierge service. I mean, if you have a wealth manager or a family office, they can kind of like abstract your entire financial life for you. They take care of your budgeting. They take care of your trust and, and estate. They take care of your insurance. They help you with any legal things, managed well simultaneously. And, and these are expensive financial professionals. So if you can deliver that type of service to the mass market, to people that don't have, you know, millions of dollars, I think that would be very valuable. And I think AI, you, you'll see it kind of impacting the space in two ways. One as a tool to existing advisors. I mean, some people aren't gonna be comfortable, you know, trusting a machine with all those things. But it can help an advisor serve more clients simultaneously. And then some, some customers will be comfortable with a full technology solution, as long as it does more than just the asset allocation. Um, and so I, I think you will see that in the next couple of years, really, uh, really start taking off. And good products have recently become possible with like the latest models that can reason and make better decisions. The models are likely gonna get better and better, and I think you'll start seeing them replace more traditional knowledge

17. 46:20 – 47:56

    Managing Market Volatility & Interest Rate Impact

    1. VTVlad Tenev46:20

       workers.

    2. HSHarry Stebbings46:20

       Can I ask you one final one, just on market, which is like, when you think about like interest rate changes, volatility, it's a really hard business for you in the way that actually your business can change so much dependent on something completely outside of your control, which is like interest rate changes will drive a mass amount of buying or pullback. Do you just get comfortable with that?

    3. VTVlad Tenev46:39

       The best way to, uh, actually compensate for that is diversifying the business. So now Robinhood has eight business lines that generate, uh, 100 million a year or more in revenue, and that's up from, I think, three a few years ago. So we've got eight unique business lines that are nine figures a year. Uh, and some of them benefit from higher rates. Some of them benefit from lower rates. For example, when rates are low, money tends to move from interest on cash and kinda yield products, low-risk products, uh, into equities, crypto, and options. When rates are low, margin is more compelling. So you tend to see increases in your margin book, and, and we're getting more com- we've gotten more competitive there. So we've been growing our market share. So I think over time, um, I, I do think Robinhood is, is actually stronger as, in a declining interest rate environment than in a rising. But over time, uh, as we continue to diversify the business, I think-

    4. HSHarry Stebbings47:45

       You get a smoothing out of revenues.

    5. VTVlad Tenev47:47

       We'll get a smoothing out of revenues. Uh, just like, you know, diversification helps smooth out investment returns, right?

    6. HSHarry Stebbings47:53

       Venture funds. (laughs)

    7. VTVlad Tenev47:54

       Yeah.

    8. HSHarry Stebbings47:54

       There's a reason why we have 30

18. 47:56 – 55:00

    Quick-Fire Round

    1. HSHarry Stebbings47:56

       at seed, my friend. Listen, I'm gonna do a quick-fire with you. So I say a short statement, you give me your immediate thoughts. Does that sound okay?

    2. VTVlad Tenev48:02

       Sure.

    3. HSHarry Stebbings48:03

       What book written before 1965 would you most recommend?

    4. VTVlad Tenev48:07

       Actually recently, if, if I had to think about what I've been reading, The Story of Civilization, uh, has been very interesting. Have you read that one?

    5. HSHarry Stebbings48:15

       No.

    6. VTVlad Tenev48:16

       By Will Durant and Arielle Durand. Yeah.

    7. HSHarry Stebbings48:20

       Yeah. I, I, I've actually had it recommended to me before.

    8. VTVlad Tenev48:22

       Yeah. It's very good. Probably, probably, uh, probably in the early '60s or, or late '50s is that one.

    9. HSHarry Stebbings48:29

       I don't tend to read things longer than a tweet, but, um, I'll give it a go. (laughs)

    10. VTVlad Tenev48:33

        You can have, uh, AI summarize it for you.

    11. HSHarry Stebbings48:35

        Ah. Th- th- there we go. How has becoming a father changed you as a CEO?

    12. VTVlad Tenev48:39

        I mean, I'd like to think that it's- it's made me more patient. Yeah, having, having small children tests one's patience sometimes because you're used to kind of like getting what you want largely, and you know, it's like if- if you don't, there's really a rational explanation. But with, with kids, you don't get that as much. They really-

    13. HSHarry Stebbings48:59

        Also-

    14. VTVlad Tenev48:59

        ... want what they want, and they c-... have tantrums if, if they don't get it.

    15. HSHarry Stebbings49:04

        You can't get angry at them, also. You know, they throw yogurt at you. I mean, it's not like you can, like, shout at them. It's like-

    16. VTVlad Tenev49:09

        (laughs)

    17. HSHarry Stebbings49:09

        ... "Fuck, okay." (laughs) What's been-

    18. VTVlad Tenev49:12

        I mean, you, you can try, yeah. But, uh, yeah, they've, they've got me beat in the throwing yogurt side of things.

    19. HSHarry Stebbings49:18

        What's been the biggest near-death experience for the company that you remember? When I say near-death experience, you go, "Ugh, that time."

    20. VTVlad Tenev49:25

        I mean, GameStop is up there, for sure. I think-

    21. HSHarry Stebbings49:27

        What moment was it? Was there, like ... There was a call in the middle of the night, no? When your phone was in another room because of your sleep hygiene.

    22. VTVlad Tenev49:34

        Yeah, exactly, and that, that was a very short-lived, uh, short-lived experiment to try to sleep better and not be as addicted to technology.

    23. HSHarry Stebbings49:42

        And so your wife wakes you up and says, like, "Hey, there's a phone call for you."

    24. VTVlad Tenev49:45

        Yeah. Yeah, yeah, yeah. And it's like, "Yep, we got this, uh, we got this bill, uh, in the automated clearing house system for $3 billion." Yeah, that, that was terrifying.

    25. HSHarry Stebbings49:56

        Do you go back to bed? (laughs)

    26. VTVlad Tenev49:59

        No, I didn't sleep for probably 72 hours after that.

    27. HSHarry Stebbings50:04

        (laughs) All right, I'll do-

    28. VTVlad Tenev50:04

        I got my workout in, uh, Friday, the, the Friday afterward. Um-

    29. HSHarry Stebbings50:09

        Do you still work out when all of that shit is hit- hitting the fan?

    30. VTVlad Tenev50:12

        I worked out ... I mean, I missed my Thursday workout.

Episode duration: 55:00