E22: Robinhood CEO Vlad Tenev breaks down the GameStop situation

Jason Calacanis 0:00 Now wait, um, Vlad, you have to turn your camera off and then I'm going to do my little bit where the bestie-guestie door knocks.

Chamath Palihapitiya 0:05 No, no, Jason.

Jason Calacanis 0:07 No?

Chamath Palihapitiya 0:08 Let's not do that.

David Sacks 0:08 This is silly.

Chamath Palihapitiya 0:09 This is silly. Let's go.

Jason Calacanis 0:09 Okay, here we go. Three-

Vlad Tenev 0:10 I can do it. It's very easy for me.

Jason Calacanis 0:12 Don't worry about it. Don't worry about it. These guys don't want to do it. They don't like my, they don't like my bits. (laughs) Three, two-

Chamath Palihapitiya 0:18 I'm going all in.

David Sacks 0:19 Don't let your winner slide.

Jason Calacanis 0:22 Rain Man, David Sacks.

Chamath Palihapitiya 0:24 I'm going all in.

David Sacks 0:27 And I said- We open sourced it to the fans and they've just gone crazy with it.

Chamath Palihapitiya 0:30 WSI.

Jason Calacanis 0:31 The queen of quinoa.

Chamath Palihapitiya 0:33 I'm going all in.

Jason Calacanis 0:38 Hey, everybody. Hey, everybody. Welcome to another episode of The All In Podcast. With us again, the queen of quinoa himself-

Chamath Palihapitiya 0:47 (laughs)

Jason Calacanis 0:47 ... David Friedberg, The Rain Man, definitely counting cards, yeah, burn baby. David Sacks is with us. Chamath Palihapitiya, the dictator.

Chamath Palihapitiya 0:59 By the way-

Jason Calacanis 0:59 And-

Chamath Palihapitiya 1:00 By the way, go ahead, J Cal.

Jason Calacanis 1:03 I'm J Cal. (laughs) AKA Baby Seals.

David Sacks 1:05 J Cal, could you take longer with the intros?

Chamath Palihapitiya 1:08 (laughs)

David Sacks 1:08 I mean, this is like, this is like your one moment to shine as the intros.

Chamath Palihapitiya 1:11 This is like fucking torture.

David Sacks 1:12 I know. So he's like drowning it out.

Jason Calacanis 1:12 I like to do a little branding here. I'm branding you guys as characters on the show.

Chamath Palihapitiya 1:17 (laughs)

David Sacks 1:17 (laughs)

Chamath Palihapitiya 1:17 I do want to, I do want to give a big shout out and congratulations for David Friedberg, uh, wetting his beak in a big way.

Jason Calacanis 1:24 Ooh.

Chamath Palihapitiya 1:24 Uh, the story, by the way, we should actually have founder, uh, crazy founder stories and we should have Friedberg tell the story of Metromile, but it closed its, uh, SPAC transaction and went public, and it's doing great and, uh, congratulations Friedberg.

Vlad Tenev 1:39 Thank you. Thanks guys.

Jason Calacanis 1:40 All right. Little golf clap. We'll give you a little golf clap. (clapping)

David Sacks 1:41 Thanks for the support, Chamath. Yeah, thank you. Thank you.

Jason Calacanis 1:43 Very nice.

Jason Calacanis 1:44 And, uh, joining us this week as our second bestie-guestie, after a triumphant performance by Draymond Green on the last All In podcast, is Vlad Tenev, who is the co-founder and CEO of a, uh, new startup we wanted to introduce everybody to, it's called Robinhood. Vlad, tell everybody what is Robinhood and what's the mission of this new startup you've, you've got? (laughs)

Vlad Tenev 2:13 Thank you for, for having me, uh, having me here hanging with you guys. Robinhood's mission is to democratize finance for all. It's somewhat new. We've been around for a little bit over five years, and we have, uh, a mobile app and a website that allows customers to, uh, invest in stocks, options, cryptocurrencies. We offer a debit card and a high yield savings product as well. Um, commission free and with no account minimums.

David Sacks 2:39 Vlad, I think you've done an amazing job building this company, and you guys have done an amazing job, uh, democratizing access to, uh, to, to the ability to

David Sacks 2:48 trade. Can we fast... Let's fast forward to, to the issue that... I mean, this, we discussed, I guess a few pods ago because, um, there was intense interest in this. I think it's our highest rated pod ever, was discussing the GameStop issue. So you had these, these traders from WallStreetBets, these Redditors who, like you said, they perceive themselves as the heirs to Occupy Wall Street. They're, they're trading for profit, also for revenge and, um, and then, you know, you, you guys, I guess, get a call in the middle of the night from the clearinghouse, and you have to freeze the buy side of the trade the next day. I guess-

Vlad Tenev 3:22 Yeah.

David Sacks 3:22 Let's fast forward to that, because that was the thing that, you know, got everybody up in arms. Could you, I guess, talk to us about kind of what happened? And, um, I'm sure you didn't want to have to freeze trading, right? But you were being compelled by this clearinghouse.

Vlad Tenev 3:38 Yeah.

David Sacks 3:38 Can you kind of explain what they told you and why you had to do it? And, and, and why not just ask them to give you the order in writing so you can post it on your website so everybody would know you didn't have a choice? Could... Is that something you could have done?

Vlad Tenev 3:52 Um, well, I think the challenge was that, uh, no doubt we could have communicated this a little bit better to customers, right? Um, by the time, um, by the time we restricted these securities to PCO, and it was 13 securities that we, uh, limited to sell only, um, that process is actually operationalized within Robinhood. So it's, uh, we do it from time to time under various circumstances, like corporate actions. So when something has a reverse stock split or something like that, we can PCO it for a little bit. So there's a button in a dashboard that, you know, you can click and automated emails get sent out. So it's a, it's an operational process that, I think, in hindsight, we probably should have exceptionalized to, to make it, to make it clearer why we were doing this, just given all the swirl around all these meme stocks online. Um, but by the... As soon as those emails went out, the conspiracy theories immediately started, uh, started coming. So my phone was blowing up with, you know, "How could you do this? How could you be on the side of the hedge funds?" And of course, we're not on the side of the hedge funds. I mean, we're, we're building products for our customers and we just had to do what we did to meet our deposit requirements, because if we didn't do that, we would be in violation and the consequences of that could have been much, much worse than simply halting buying-

Chamath Palihapitiya 5:21 So I think-

Vlad Tenev 5:21 ... in the 13 stocks.

Chamath Palihapitiya 5:22 I think that's where, you know, when you were on CNBC with Sorkin, people either thought you were obfuscating or you were lying, um, you know? And part of it is sort of the guts of your business, is that at some point as well, you guys decided to self-clear, right?

Vlad Tenev 5:39 Yes.

Chamath Palihapitiya 5:39 And then going into self-clearing, you become liable for every single trade that happens on your platform. Um, like if you look back on those two weeks-

Jason Calacanis 5:48 Can you explain to the audience what self-clearing means?

Chamath Palihapitiya 5:50 It means that, you know, typically you can work with a wholesaler to offload the risk. So Vlad acts as a transaction layer and as a UI, and somebody else is responsible. At some point, these guys, for economic reasons, decided to take that responsibility on themselves.... but when you do that, you take on the full-fledged liability of the value of every single trade on behalf of your customers.

Vlad Tenev 6:12 Yeah, I would think about it, I would explain it as, there's like pre-trade, right, then the trade, and then post-trade. So Robinhood obviously does pre-trade with, uh, that's the app and what's called the introducing broker-dealer. Our market makers do the trade, so we route it to, you know, all of the firms like Citadel Execution Services, Two Sigma. And then Robinhood Securities does the post-trade, the clearance and settlement, so we manage the exchange of cash and stocks that happens on T plus two, so two days after, after the trade is made.

Chamath Palihapitiya 6:45 So, what was not... I mean, if you had to give that answer again when Sorkin said, "You have a liquidity issue," was the answer, "Yes we have a liquidity issue and here's why," or is it still the same answer it was then?

Vlad Tenev 6:59 So I, I stand by what I said, and I'll explain it. And thank you, by the way, for giving me a chance to explain it. Um, first of all, restricting securities, uh, restricting the buying of securities, uh, is something that every, pretty much every broker did to some degree during this week, right? So when you say the L word in financial services, it, it reminds you of Lehman Brothers, where you literally are not able to operate your business. We met all of our deposit requirements. The new capital that we raised, the 3.4 billion, wasn't to meet our, our ongoing deposit requirements. We had met them, and in order to relax them and eventually unrestrict them, we needed to raise some more capital and eventually have, uh, more cushion so that if we keep seeing the type of growth that we kept seeing, uh, we didn't have to impose position limits again. So I stand by what I said. I think if you describe that as, you know, the L word, every, pretty much every broker would have had that issue, and I think at that point, the word kind of loses its meaning and the, the gotcha factor that, uh, the journalists are trying to, to get out of it.

Chamath Palihapitiya 8:08 Do you think that, um, the, the risk in the business went up when you decided to self-clear? Or would this risk have been the same if you'd worked through a wholesaler?

Vlad Tenev 8:16 Well, I think a lot of the, um, a lot of the other brokers who relied on clearing firms had the same issue, right? Um, you know, there's, there's firms like Apex Clearing, uh, which has introducing brokers. Uh, Cash App, for example, clears through a third party as well, and they, they all had this issue. And of course, um, their response was, um, they, they kind of threw their clearing firm under the bus, right? So obviously we're not gonna do that because our clearing firm is Robinhood Securities, um, but I think understanding the space a little bit better since Robinhood Securities is, you know, a subsidiary of, of my company, um, I realize these clearing firms had to do what, what they did. Like, there's no... It's not negotiable, uh, to meet your deposit requirements. Of course we can ask, "What can we do? Are these deposit requirements sensical? What can we do to drive change in the system?" And I think that's where my-

David Sacks 9:15 Who sets those?

Vlad Tenev 9:15 What's that?

David Sacks 9:16 Who sets those requirements? That's the clearing house, right? Is that the DTCC?

Vlad Tenev 9:21 Yeah, it's the, the DTCC and a lot of this stuff is actually spelled out in Dodd-Frank. So if you look at Dodd-Frank, uh, you'll see descriptions of the VAR charge and the various special charges there. Um, but I, I do think, um, one thing that I'm very excited about is, you know, not going beyond just talking about our problems, right? We can... I've, I've talked about our problems a lot but talking about solutions and how we can create a better financial system in the future, and I really think if you, if you understand the underbelly of what T plus two settlement is, you immediately ask yourself, "Why aren't we settling trades in real time?" And I wrote a post on that, I had a tweet storm. I'd also say, you know, some of the feedback that I've gotten is, you know, "Here's Vlad from Robinhood telling us about, you know, trying to change T plus two so that he can meet, he can lower his deposit requirements." I think there's lots of other systemic issues that fall out of that. In particular, right now you can short sell more stock than the shares that are outstanding, right? So, you know, some of these stocks had 140% short interest, right? So more, more shares were shorted than actually outstanding and I just think that's pathological and it stems from the fact that, you know, these shares are tracked on pieces of paper, so they're basically not tracked and someone can... You, you can, I can lend you my shares, you can short them. The person that's buying them from you can lend them again and you can do that multiple times and you end up with this situation that could destabilize the financial markets, right? So-

Chamath Palihapitiya 10:56 What... Okay, so T plus... Moving from T plus two to T plus zero, that's one issue. Um,

Chamath Palihapitiya 11:02 where do you think, uh, margin resp-

David Friedberg 11:05 Yeah, that's what I was gonna ask. Where, where is your margin limits today, Vlad?

Chamath Palihapitiya 11:07 What's your, what's your thoughts on margin?

Vlad Tenev 11:09 Yeah. Well, so margin wasn't involved in this particular situation. In fact, there was an escalation path not a lot of people noticed until Thursday, but pretty much all of the brokers, including Robinhood, were, uh, ratcheting up the margin requirements for, for all of these securities, um, un- until they got to 100%. So by the beginning of the week, they were pretty much all at 100%, which means you can't use margin to buy them. You have to, you have to have them 100% covered. Um, so do you guys have a more specific question on margin, like margins was a-

Chamath Palihapitiya 11:44 Well I meant, I meant, more like, I meant more like, so for example, I think it's true, but you tell me if this is not true, you guys paid like a $65 million fine to the SEC for gamifying Robinhood, right? And-

Vlad Tenev 11:57 It's not, not exactly true but go ahead.

Chamath Palihapitiya 12:01 Okay, do you wanna, do you wanna just tell us what the truth is?

Vlad Tenev 12:05 Yeah, well, so the, the fine wasn't for gamifying Robinhood. It was for, um, payment for order flow and business model-related, uh, related things. Um, the gamification one is the, um, Massachusetts, uh, securities, uh, securities one, which is a separate thing. And look, on the SEC thing, um, we're a fast-growing company. We obviously scaled a lot between the period in question. Um, obviously, uh, the, the Securities and Exchange Commission, uh, felt like we could have done things better, and, and I own that. I think that we're fine being held to higher standards. We have to hold ourselves to higher standards. Um, and what we can do is just do some of the things we've done, staff up our compliance team, staff up our legal team. We brought on a new chief legal officer who was a former SEC commissioner, two new chief compliance officers for Robinhood Securities and Financial who had decades of experience. And the level to which we're investing in compliance, I mean, the goal is to build the finest legal and compliance team that the financial industry has seen.

Chamath Palihapitiya 13:14 Let me tie it back, Vlad, to what, to what we were talking about before. So do you think that it's okay if we're trying to build a generation of investors to give them access to margin as easily as some apps, including Robinhood, does, and then separately allows them to trade highly transactional, high vol instruments like options on top of that with margin? What do you think about that just as a general philosophy? Forget business building for a second.

Jason Calacanis 13:45 Well, and then also, can you say what the margin you allow is for a new account? 'Cause I don't think people understand-

Vlad Tenev 13:50 Sure.

Jason Calacanis 13:50 ... what that is. Maybe a little definition there.

Vlad Tenev 13:52 Well, there's a couple of things I want to clear up. Number one, you can't trade options on margin. So options are all fully paid for, right? Um, margin is not suitable for everyone. Um, I'll, I'll admit that. You have to understand it, and you also have to be a Robinhood Gold customer, which means you have to sign up and pay $5 a month. Most brokers don't gate margin behind a premium offering. So we're already a little bit more restrictive on that front. You have to have $2,000, uh, dollars in your account before you can borrow. And in December, we did lower our margin rates to 2.5%, which is very, a very competitive low rate. But let me tell you a use case for margin that I actually think is quite powerful. So, uh, obviously one use case is kind of the typical one of buying more stock with your money, but if you build a large portfolio, you can actually use margin as a line of credit, and we offer this feature with our debit card. You can turn on what's called margin spending, and what that means is if you invest, uh, in your portfolio, you can borrow collateralized by your portfolio at a very low rate, which is 1/10 of what you would borrow through a credit card. So I, I actually think it's a, it's a powerful tool. Certainly customers have to understand it and be suitable for it, but, um, it unlocks a type of borrowing, uh, not just for buying stocks, but for, for, for meeting your daily purchasing needs that, um, I think is, is very useful.

Jason Calacanis 15:24 If somebody puts $2,000 in Vlad, can they trade $4,000, $6,000, $8,000? And does it matter what equities they're holding? How does it work?

Vlad Tenev 15:33 Yeah, the, the actual calculations are, um, uh, there, there's no blanket, uh, formula I can give you because it does depend on the securities that you buy. So the example I gave was, for example, GME and some of these other meme stocks, we raised the requirement on those to 100%. So those have to be fully paid for. Um, other stocks have an initial requirement, uh, as low as 25% if it's one that, you know, is deemed by the operational staff and our processes as not being super volatile, and it can, it can go in between. So 25% initial requirement all the way up to 100%, which is-

Jason Calacanis 16:11 So you can trade four times your money if it's a really blue chip secure stock.

Vlad Tenev 16:17 Um, more or less, yeah, with some nuance around that.

David Friedberg 16:21 You know, time and again, Vlad, there's studies that show that it's really difficult to beat the market and make money, you know, trading in an efficient market, um, like the market we have for stocks, uh, or options or, or what have you. There's a lot of players. There's a lot of liquidities, a lot of people with information. It's, um, you know, these great fund managers over time underperform just the S&P, right? And, um, you know, I, I think I mentioned this when we had that pod a few ago that I was involved in a forex trading company and 60, 60% of accounts eventually ran out of money. Can you share with us what percent of Robinhood accounts run out of money and, and, you know, do we mask generally, and I'm not accusing Robinhood, uh, specifically of this, but do we mask the idea of investing in businesses, um, as a, you know, a way of kind of highlight, of, of a way of hiding that people are really just using this to trade in and out and try and make money in the short term, and ultimately the majority of them end up losing most of their money because the fees and the spread and the margin or whatever it is that, that, that kind of adds up, you know, wipes out the account? That's what I saw at this forex company I was involved in. Can you share with us, you know, in a very candid way, like how many accounts do eventually go bankrupt at Robinhood and how much of that do you really see?

Vlad Tenev 17:37 First of all, I'd say forex is a little bit different 'cause the leverage you get in forex is like orders of magnitude higher, right?

David Friedberg 17:43 Yeah. Yeah. I'll, I'll admit to that. It was like 10 to 50 to 1 leverage. So you're totally right. Yes. 100%.

Vlad Tenev 17:48 Yes. So, um, I, I do think the businesses are a little bit different. Most of our customers don't use leverage. Most of our customers aren't active traders or trading options. And if you look at some of the features that we've rolled out, the, the theme of this year has been how do you turn a first time investor into a long term investor. So fractional shares, recurring investments, drip, um, these tools allow someone to create a diversified portfolio of individual stocks and recurringly buy into them over time. So, um-

David Friedberg 18:21 But is, is that the majority of users today or the minority? You know, are you... How many accounts do you see kind of cycle down to zero, um, over what period of time?

Vlad Tenev 18:30 I think a, a very small percentage of accounts, uh, have that, have that property. I mean, I think if you look back in 2020, we had a huge, uh, increase in growth and interest in investing right at the bottom of the market crash in March, right? And, uh, I think people have taken advantage of that. And, uh, our, our customers in general have benefited from the recovery very, very significantly. So, I, I wouldn't... I would, I would reject the, the meme that, you know, Robinhood customers are active traders that are just, you know, churning their accounts and, and losing all of their money. That's, that's just simply not what we're seeing.

Jason Calacanis 19:11 I, I know Sax has a question, but one question I had with the conspiracy theories-

David Sacks 19:16 (laughs)

Jason Calacanis 19:16 ... that I would just love to hear like a yes-no to, like-

Vlad Tenev 19:18 Sure.

Jason Calacanis 19:18 ... did Citadel call you and say, "Stop this madness," because they had exposure through one of their hedge funds with GameStop? And did Sequoia call you and say, "Hey, stop this madness"?

Vlad Tenev 19:28 Or Joe, Joe Biden-

Jason Calacanis 19:29 Was there pressure?

Vlad Tenev 19:29 You forgot, you forgot the White House one. No, no, this was a formulaic decision, um, made by Robinhood Securities due to deposit requirements.

Jason Calacanis 19:37 Right. So Citadel didn't call and ask?

Vlad Tenev 19:40 No. No.

Jason Calacanis 19:40 Sequoia didn't call and ask.

Vlad Tenev 19:41 No.

Jason Calacanis 19:42 Did the SEC call you and say, "This has to stop?"

Vlad Tenev 19:45 No.

David Sacks 19:46 But the clearinghouse did, right?

Vlad Tenev 19:48 Yeah. Well, they called and they said, "Here are the deposit requirements." And we worked with them to lower the risk so that we could meet the deposit requirement.

David Sacks 19:56 Got it. And, and so just, just let me pick up on that. So at the same time that was happening, um, and I, I know this wasn't Robinhood, this is not your company, but, um, but Discord and Reddit were receiving reports, uh, that the WallStreetBets forum was engaged in, in hate speech, and there was an organized effort to get them censored and taken down. And Discord basically fell for it and took down WallStreetBets. Reddit-

Vlad Tenev 20:20 Yeah.

David Sacks 20:20 ... to their credit, did not. Do you have a take on, you know, w- what happened there? And, uh, I mean, I assume you, you, you don't think WallStreetBets was engaged in hate speech?

Vlad Tenev 20:31 Well, um, so that happened Wednesday, I believe.

David Sacks 20:35 Mm-hmm.

Vlad Tenev 20:36 Um, and yeah, we, we were watching it. It was first... It was like, "Oh, wow, Discord, Discord shut down." And then I think WallStreetBets went dark on Reddit for a little bit as well, but I'm not quite sure of the, the reasoning behind that. Um, look, I, I mean, I disavow hate speech, misinformation. Um, I, I'm not, you know, judging which of the posts are hate speech or, or not. I think that's the social media companies that, that, that should take a look at that.

David Sacks 21:05 The mods, I think the mods closed down Reddit for like, uh, a little bit and then turned it back on.

Vlad Tenev 21:10 Yeah, I think that's, that's what I heard.

Jason Calacanis 21:10 Yeah, I mean, a lot of these things get triggered if 10 people report it at the same time, it just, it sets off a circuit breaker-

David Sacks 21:17 Well, it seems, it seems to me that... Yeah, it seems to me that... And certainly this is, if, if you want to call it a conspiracy theory, it seemed like you had this WallStreetBets group. They were on one side of the trade. You had these Wall Street hedge funds that were on the other side of the trade. And there was an effort to weaponize the speech rules of Reddit and Discord to cut off the lines of communication of WallStreetBets. Because the only way that WallStreetBets, as a decentralized group of millions of traders, can, uh, can, can stick together and compete with these hedge funds is if they can communicate with each other via these services. And so, um, you know, there, it seems like there was an organized effort to try and take them down at the exact same time that, um, that they were frozen out of the buy side of the trade.

David Sacks 21:57 Vlad, do you think that there should be more transparency in the financial markets? Meaning everything from payment for order flow, how much money companies make lending out their stock? How, what, which company is short which stock? Uh, which company is long which stock on a more frequent basis? How much margin people are running? Do you think like we should move to perfect transparency in the financial markets?

Vlad Tenev 22:21 I, I do think that there should be more transparency, and I'm glad you, you brought up payment for order flow, because it, it's something that I'm trying to take on. You guys might have noticed, I, I pub- I published a post on payment for order flow. I started a tweet storm that, um, is meant to just start the conversation around it. I want to understand kind of the misconceptions and the theories and, and knock them out one by one. And I think that'll lead to some positive discourse around it, and there certainly might be things that'll have to change. Um, and I think the, the first step is actually engaging in the conversation and kind of connecting the people that understand the details with the people that have issues with it. Um, and I, I don't think that's been happening enough, so for sure.

David Sacks 23:06 But what about stuff like margin, shorting, you know, uh, short, like do you think that we should move all of this stuff so that it's just out, out front for everybody to see?

Vlad Tenev 23:16 Well, I think, I think if we, if we migrate to a better settlement infrastructure and move to real-time settlement, you get a lot of that stuff for free, right? So you do get, um... And I know a lot of the crypto people came out after I published my post and said, "You know, crypto solves this." You could just put it on, on a blockchain and everyone could see publicly what's going on and which share, which shares are, are being, being held short, where they are, who's owning them. Um, so I think I would be in favor of, of, uh, more transparency. I'm not sure at what point, uh, there's sort of like negative secondary effects. I haven't kind of unspun the thread fully, but I think we can, we can keep taking it one step at a time and, and see, uh... More transparency generally, I think is much better.

David Sacks 24:01 Hey Vlad, when you guys, um, go public, you've talked about having a, a listing at some point here soon. Why would you not have all of your shares sold in the, uh, IPO through Robinhood to your retail users? Why would you sell any shares to institutional investors?

Jason Calacanis 24:19 (laughs)

David Sacks 24:19 Wow, good question.

Vlad Tenev 24:20 Yeah, uh, it, it is a, an interesting question. It's, it's one that I probably... That, that's probably the one I can't give too much detail on. Hopefully you guys understand.

David Sacks 24:30 My recommendation, if you're gonna democratize access, do it all the way.

David Friedberg 24:33 Fuck the hedge funds and the big guys. If that's the, if that's the point and you give retail equal access, you know, in all these transactions, as you know, institutions get, get all the access and the retailer is left paying the price.

Vlad Tenev 24:44 Well, here's something interesting, right?

David Friedberg 24:45 Like, give, give a... Have your entire listing done through retail. It would be a, it would be a game-changing transaction.

Vlad Tenev 24:52 Yeah. So I mean, a lot of this, it's really interesting that this turned into a, you know, individuals versus hedge funds, because I, I think that's a really powerful story. But you also have large institutions, like Fidelity, that are holders of all these stocks, right? You have individuals on a lot of platforms that were short-selling them as well. Uh, not Robinhood, 'cause Robinhood actually doesn't, doesn't allow short-selling by individuals, but a lot of the other brokers do. And you have, you had statistics, um, statistics coming out that actually show retail versus institutional and, you know, there were some counterintuitive results. So I, I think if you actually look deep into the plumbing, the story of, you know, long individuals, short institutions, uh, on opposite sides, I think, uh, there's a little bit more nuance to it than that.

Chamath Palihapitiya 25:41 Vlad, um, if you had to do it over, or actually forget about the past. Think about the future.

Vlad Tenev 25:46 Yeah.

Chamath Palihapitiya 25:46 Um, what do you change inside the company?

Vlad Tenev 25:50 Well, let's see. Um, I think the 3.4 billion in extra capital certainly helps. Um, I think I'm, I'm very proud of the transition that we made between Thursday and Friday. So Thursday, we had the blunt hammer of PCOing these stocks, right, which obviously was not ideal. By Friday, we had moved to, uh, a much more sophisticated system where, intraday, we adjust the position limits in, uh, it was up to 50 stocks, and we published that on our website. So that, that gave us a lot more granular control over it and is a better system, and we're gonna only improve that and kind of take the learnings to other parts of the business. Um, so I think, um, the great thing about, you know, these sorts of crises is, um, sort of months and, and years worth of work get compressed and people are just like super aligned on the key priorities we need to do to, to move the business forward, and we saw that. And then the third thing I'd put is just, maybe you guys have seen, um, you know, I, I feel like I've evolved as the chief executive and as a leader. I, I didn't used to be on social media telling our story very much, but, um, I'm out there trying to encourage more transparency and openness.

Jason Calacanis 27:03 I would say much better today than with Elon. Much better (laughs) with Elon than Sorkin.

Vlad Tenev 27:08 (laughs)

Jason Calacanis 27:08 So progress has been made. I have a, just a basic question. I know we gotta wrap soon. When things get superheated and you have this viral momentum where... I don't know how many people-

Vlad Tenev 27:17 Yeah.

Jason Calacanis 27:17 ... tried to sign up on that day, but maybe you could give us an idea. On that Wednesday or Thursday, was it, you know, five figures, six figures, or seven figures worth of new accounts? Why not throttle the new accounts and say, "Hey, we're, you're on the wait list. We onboard 10,000 people a day. Your day-"

Vlad Tenev 27:33 Yeah.

Jason Calacanis 27:33 ... "is gonna be next Thursday," so that you don't get caught in this, you know, everybody uses the fact that it's friction-free to sign up to do an emotional bet in a, you know, let's call it mob behavior, right? Like this turned into-

Vlad Tenev 27:47 Yeah.

Jason Calacanis 27:47 ... a mob, and I, and I guess some people believe it's a good mob to go up against the hedge funds, uh, but it, it could have equally been something, you know, something more deranged and even more edge case is gonna happen. So when that does happen and a million or 10 million people sign up, can't you just pause it and say, "We're not gonna do any new accounts today. We've reached our limit"?

Vlad Tenev 28:07 We actually did do that. So we-

Jason Calacanis 28:09 Huh.

Vlad Tenev 28:09 We have been pausing new account approvals off and on, uh, depending on, on the load and, um, you know, customers have been experiencing, in some cases, short delays, uh, with account approvals. Obviously not an ideal solution from our standpoint, but, you know, if, if we have to do that, we will do it, and we have done it.

Jason Calacanis 28:29 How many people signed up on that Wednesday? Like, just ballpark. Like was it hundreds of thousands, millions?

Chamath Palihapitiya 28:33 Jason, are we, are we running an ad for Robinhood Stock?

Jason Calacanis 28:36 No, I'm just curious what the scope of it was.

Vlad Tenev 28:38 (laughs)

Jason Calacanis 28:38 None of us cares. None of us cares. Vlad, last question.

Vlad Tenev 28:40 Hit me.

Chamath Palihapitiya 28:41 Hey, listen. Um, if you had to pick two different CEOs' reactions to how you dealt with it, let's say Tim Cook on one end of the spectrum and Zuck on the other, how do you think they would score what Robinhood did and what they are doing?

Vlad Tenev 28:55 Ooh.

Chamath Palihapitiya 28:55 Tim Cook, Zuckerberg.

Vlad Tenev 28:59 You know, I'm, I'm not sure. Um, I think that, um... I think I'm proud of, of, of how the firm navigated this. I think, uh, obviously there's ways to improve upon it. Um, I think that, you know, anytime you get a phone call in the middle of the night saying you have to put up three billion dollars, all sorts of things run through your head, right?

Chamath Palihapitiya 29:21 I've had it happen. I know. (laughs)

Vlad Tenev 29:25 (laughs)

Jason Calacanis 29:25 (laughs)

Chamath Palihapitiya 29:25 And that, and that was just money-

Vlad Tenev 29:27 I got-

Chamath Palihapitiya 29:27 ... from the cage for poker. (laughs)

Vlad Tenev 29:29 (laughs) I got a lot of people reaching out to me, um, which was amazing.

David Sacks 29:33 If you had to do it over again, why not just post a blog that morning saying, "Hey, we got a call in the middle of the night. We have to do this." Is that, is, is that the thing you'd do over again?

Chamath Palihapitiya 29:45 No, because he'd be-

Vlad Tenev 29:45 Maybe, maybe-

Chamath Palihapitiya 29:45 ... throwing his own company under the bus. He'd have to say, "Robinhood Securities is telling Robinhood, the broker, to post this money because Robinhood securities is being told by their downstream clearing." So it's like you're, you're in, you're in a, you're in a d-

David Sacks 29:58 But you're saying-

Chamath Palihapitiya 29:58 ... impossible situation.

David Sacks 29:58 But you're saying it now, so better to say it, uh, at the time it all happened and it would have diffused the whole crisis, right?

Vlad Tenev 30:04 Well, first of all, I'm not throwing anyone under the bus. We had, we did, the team did what they had to do. Um, I don't think there was any way to navigate that differently. I think the automated emails that went out to customers saying, uh, "Your stocks are... Y- you're restricted from buying these stocks," um, probably could have been handled a little bit better. We probably could have offered more detail in that, uh, with the foresight that maybe customers would think that a hedge fund, uh...... forced us to do it or something like that. Um, so certainly, um, certainly there's areas we can improve upon across the board and one early investor called me throughout this and said, "Hey, chin up. You know, navigating a crisis successfully unlocks the next level of value creation for the company." And, um, I've had that in mind, uh, the entire time and I'm just doing what I can to, to make that-

David Sacks 30:56 For sure.

Vlad Tenev 30:56 ... future a reality.

David Sacks 30:57 Absolutely.

Vlad Tenev 30:58 Both for Robinhood and for the financial system.

David Sacks 31:00 Right.

Vlad Tenev 31:00 I think that this could lead to some really positive change industry wide.

David Sacks 31:04 Yeah. And I, I, I'll, just, just one last softball here. Uh, this is not about what happened, uh, that, that, with GameStop. Uh, we've had a debate on this pod that got kind of heated between, uh, Chamath and Jason about the nature of Jason's investment in Robinhood.

Vlad Tenev 31:19 Ah, okay.

David Sacks 31:19 Uh, can you tell us, can you tell us your side of the story-

Vlad Tenev 31:22 Yeah, yeah.

David Sacks 31:22 ... of what happened at, at Antonio's Nut House?

Vlad Tenev 31:25 Okay.

David Sacks 31:25 And how much, how much stumbling was involved, precisely? (laughs)

Vlad Tenev 31:27 Okay. I'm, I'm very glad you brought this up because I've been meaning to call Jason out on it.

David Sacks 31:32 (laughs)

Vlad Tenev 31:32 He has this great story of, uh, how, you know, we met at Antonio's Nut House and he-

David Sacks 31:38 Yes.

Vlad Tenev 31:38 ... he wrote a check. I think the, the real story is that, uh-

Jason Calacanis 31:42 Oh.

Vlad Tenev 31:42 ... on-

Jason Calacanis 31:43 Oh. Oh, oh.

David Sacks 31:44 (laughs)

Jason Calacanis 31:45 (laughs)

Vlad Tenev 31:46 ... on Robinhood launch day, um, which was a Saturday and, um, we violated every rule of PR and marketing by launching inadvertently on a Saturday, I got a reach out from a, from Launch, who, who was one of the first, uh, one of the first outlets to cover our launch on Saturday. And, uh, Jason's, uh, Jason's friend, uh, Simon, ex-employee who, uh, ended up running social for us for a bit, um, was a big fan of Robinhood so, um, he joined us as kind of our first social person. He introduced me to Jason. I met Jason at Sequoia, Jason, where you agreed to-

Jason Calacanis 32:26 Yeah.

Vlad Tenev 32:26 ... invest. And then six months later, we met at Antonio's Nut House when we were raising our series A and I think you, uh, you gave me the advice-

Jason Calacanis 32:34 Oof.

Vlad Tenev 32:34 ... to, to go with Index Ventures.

Jason Calacanis 32:37 No, no I said Sequoia all the way. (laughs)

David Sacks 32:38 (laughs)

Jason Calacanis 32:38 Don't get me in trouble.

David Sacks 32:39 (laughs)

Vlad Tenev 32:39 (laughs)

Jason Calacanis 32:39 I'm Team Sequoia. I, I promise. Michael Moritz, Doug Leone, whoever's watching, I totally was Sequoia.

Vlad Tenev 32:45 No, Sequoia was great. They, they, they-

Jason Calacanis 32:47 (laughs)

Vlad Tenev 32:47 ... unfortunately passed on our series A as, as did a lot of other funds.

Jason Calacanis 32:51 Yeah.

David Sacks 32:51 Ouch. Wow.

Jason Calacanis 32:52 All right. Listen, uh, thanks for coming on the pod. Uh, we really appreciate you taking the time and continued success. And, um-

David Friedberg 32:59 But I'm really glad we didn't give you a job offer back in 2008. Sounds like, uh, it was the right move for you.

David Sacks 33:04 (laughs)

Vlad Tenev 33:04 Funny how things work out.

David Friedberg 33:06 You know, apparently I interviewed him in 2008 for a job and he didn't get the job. It's like, where does he get-

Vlad Tenev 33:10 It was you and Alex. Alex Machalka, uh, was my-

David Friedberg 33:14 Oh, he's a great guy.

Vlad Tenev 33:14 ... was my, my main interviewer. But, um-

David Friedberg 33:17 (laughs)

Vlad Tenev 33:17 ... it's funny, I graduated with a math degree, right? I was-

David Friedberg 33:20 Right.

Vlad Tenev 33:20 ... I was doing pure math, which in 2008 made me unemployable.

David Friedberg 33:25 We were the only people hiring at that point. Yeah. Yeah. (laughs)

Vlad Tenev 33:28 You were the only people that would interview me. (laughs)

David Friedberg 33:30 Yeah.

Jason Calacanis 33:31 (laughs)

Vlad Tenev 33:31 Everyone else was like, "Where's your computer science degree? Can you code?" So I ended up going to math grad school, which was one of the few options that I had and ended up dropping out and, and here I am. So funny how things work.

David Friedberg 33:43 Well, good for you.

Jason Calacanis 33:44 All right. Continued success and thanks for coming on the pod. We'll see you soon.

David Friedberg 33:48 Thanks, Vlad.

Vlad Tenev 33:48 Thanks for having me.

Jason Calacanis 33:51 (laughs)

David Friedberg 33:52 Wait, Vlad's back? Wait, Vlad's back. (laughs)

Vlad Tenev 33:55 Sorry. I, I, I accidentally... I thought I was supposed to leave. I didn't know if you guys wanted me to stay.

Jason Calacanis 33:58 No, you, you can stay. I was saying, you can stay. I was saying after a year of Jason asking us to run ads, he's found a way of trying to make this a 45-minute infomercial for Robinhood.

Vlad Tenev 34:10 Yeah.

Jason Calacanis 34:10 Absolutely. I, listen, I'm ride or die of Vlad. You know that. I'm ride or die with my founders.

Vlad Tenev 34:14 I didn't ask for that and I, I don't need it.

Jason Calacanis 34:15 (laughs)

Vlad Tenev 34:15 We're just trying to keep, uh, keep everything up and let all the people safely in who have been banging on our door.

Jason Calacanis 34:23 How, how much have you been sleeping, Vlad? Have you been able to sleep? I mean, this has got to be exhausting.

Vlad Tenev 34:28 Uh-

Jason Calacanis 34:29 Oh my God, really? Can you ask him something, like, at least-

Vlad Tenev 34:32 Yeah.

Jason Calacanis 34:32 ... semi-fucking challenging?

David Sacks 34:34 (laughs)

Jason Calacanis 34:34 Honestly.

Vlad Tenev 34:35 It's not my job.

Jason Calacanis 34:36 Vlad if any-

David Friedberg 34:36 That's why you guys are here. If you're walking down the road and a Robinhood customer... This is a tough one, I'm sorry. You thought you were over this, but you logged yourself back in. So, and a, and a Robinhood customer that lost all this money when they got locked out of trading that day comes up to you and screams and cries, "I lost all my money." What do you say to them? You know, "I got completely destroyed. My life savings is wiped out." I mean, I've read a bunch of these comments on different boards and so on. Like, what do you say? 'Cause I, I know that's a tough one to swallow and I know that, you know, we've heard the, the, the story around what happened, but, but what do you say to that person?

Vlad Tenev 35:11 Well, first of all, I'd be very, very empathetic, um. I'd probably want to understand how someone could lose money, um, when they couldn't buy a stock at the all-time high. So, I think the details around that... I mean, if you look back, uh, and obviously this had nothing to do with the decision, right? But-

David Sacks 35:29 Well, I mean-

Vlad Tenev 35:29 ... Thursday was the all-time high.

David Sacks 35:32 Yeah. Yeah, but, but that's... But the reason for that is because the ability of WallStreetBets to continue the trade was, was basically interrupted, right? They were, they were engaged in a short squeeze against these big hedge funds and in order for this... to keep driving the squeeze up and up and up, they needed it to basically to, to be able to buy. And then once it got frozen out of all the online broker accounts, not just you guys, but all of them, that was... That, that, that, that broke the trade, right?

Vlad Tenev 35:59 Maybe. I mean, hypothe- hypothetically.

David Sacks 36:00 That's when it, that's when it crashed. But that's what they're so upso- but that's what they were so upset about is because they got, they got locked out of the buy side of the trade. They weren't locked out of the sell side, right? They got locked out of the buy side and that allowed the, the big hedge funds 24 hours to regroup and, uh, and cover the trade. The price went down and that basically cracked the whole thing. Right?

Vlad Tenev 36:23 Well, I'm not sure about the, uh, the exact details there on the, on the hedge fund side or what happened. Look, what I can say is, uh, we're gonna do our best to, uh, make sure that we get better and we serve our customers, uh, whenever, whenever they want to buy stocks and we'll do that and, and we're gonna get better and better every day.

Jason Calacanis 36:43 And the truth is if you had had the money in the bank account to, for DTCC to be-... compliant, you would have been. Like, you weren't trying... I mean, you're in the business of letting people trade.

Vlad Tenev 36:52 Oh, without question, yeah.

Jason Calacanis 36:54 Yeah. You, you make nothing if people stop trading. You need people to trade. It's the core of the business, right?

Vlad Tenev 37:01 Yeah. This wasn't, you know, a value judgment or some kind of, uh, moral stance, and we weren't pressured into doing it by anything other than our regulatory deposit requirements.

Chamath Palihapitiya 37:12 What do you think is the future of payment for order flow and revenue sharing on, um, sort of like the, the m- the ways in which... Like, meaning how much do you think of that payment for order flow revenue should you share with customers?

Vlad Tenev 37:27 Yeah. That's a good question. I mean, this is all highly regulated and, uh, it's, it's become the industry standard business model, right? Um, so I'm not sure we're, we're excited to have a conversation about it. Um, I do think exchanges are here to stay. Market making is here to stay. Market making is a profitable enterprise. And so some level of revenue share between the market maker and, uh, and the broker makes sense. And, uh, it is regulated, um, so I'm not quite sure what, if any, changes need to come. But hopefully this will be part of the conversation that, that we can, we can help create and, uh, and work through.

David Friedberg 38:08 And, uh, there's nothing stopping him-

Vlad Tenev 38:08 Do you, I think part of the problem is just the opacity of it. You know, it's, it's kind of like interchange. Does anyone know that interchange is this sort of like hidden piece of revenue every time you transact with a debit card or a credit card? It's, it's sort of analogous in a way, right?

Chamath Palihapitiya 38:25 Well, I think, I think more people do just because the technology companies that have come around, like, you know, Stripe and others, will eventually just try to take it to zero. Um, and so i- if anything, I think what the, the business model, or at least the business strategy of all these companies is when you find, to your point, these opaque pools of revenue, um, the innovation is just to give consumers power by taking these costs to zero.

Jason Calacanis 38:51 If you, Vlad, decided tomorrow to do, um, Robinhood Pro, you know, higher level than Gold, and charge 50 bucks a month for 50 trades and then $5 each trade after, that would solve anybody's misgivings about this, right? You could just offer both options.

Vlad Tenev 39:09 Well, I think it's, it's... Payment for order flow enabled commission-free trading, right? It helps cover the costs of the business that, uh, that, that leads to our ability to offer commission-free trading. And moreover, it allows, um, smaller investors to participate. So certainly, I think that model would work, but the, the consequence would be smaller investors would, uh-

Jason Calacanis 39:36 Yeah, just give people the option, right?

Vlad Tenev 39:38 ... not benefit.

Jason Calacanis 39:38 Or if the option is there, it'd be like Facebook saying, "We have an option for you to pay and not see ads and be tracked." Right? It would just be great option.

Chamath Palihapitiya 39:46 What do you think is the difference between investing and trading, and what do you think has to happen so that... You know, back to where you started, if you want people to close the inequality gap, how do you allow them to do it trading versus investing?

Vlad Tenev 40:01 Well, I think the difference between trading and investing, investing is a little bit more about accumulation. So typically, you're buying, uh, more stock and building up positions over time. Um, trading comes into play, um, I think when, when you're selling, right? When you're selling sort of strategically and, um, uh, you're doing it r- not driven by outside needs for the, for the capital, but more for, uh, for sort of like, uh, intrinsic needs. Um, so I think the question is, would we, would we ever prevent people from selling? Ideally not. I mean, people have various needs that, uh, that they could have for getting out of positions. And I think as a platform, we have to allow for that.

Jason Calacanis 40:51 Awesome. Uh, your PR people are literally gonna come-

Chamath Palihapitiya 40:55 Freaking out. (laughs)

Jason Calacanis 40:55 ... breaking your glass in your house. She, l-

Chamath Palihapitiya 40:59 Freaking out. (laughs)

Jason Calacanis 40:59 Your PR person is literally running from HQ. (laughs) She's gonna be starting banging on the back window, "You cannot be on this pod." Uh, no, great job, Vlad. Um, and, uh, remember, use the order code BESTIE and get your...

Vlad Tenev 41:13 (laughs)

Jason Calacanis 41:13 Get your first free month. (laughs)

Vlad Tenev 41:17 Uh, well, thanks for having me, gentlemen.

Chamath Palihapitiya 41:19 All right. Thanks, Vlad.

Jason Calacanis 41:19 Thanks, man. Great job.

Chamath Palihapitiya 41:20 Congrats-

Jason Calacanis 41:21 Take care. Thanks, s- thanks for-

Chamath Palihapitiya 41:22 ... Vlad. Thanks for answering our questions. Yeah, thank you for coming.

David Friedberg 41:24 You're gonna log back in in two minutes, right?

Chamath Palihapitiya 41:26 (laughing) Yeah.

David Friedberg 41:27 Okay. Good. Good.

Jason Calacanis 41:28 Come back for the chess and boudin and, gavin, you some Recall news. Your PR people will be delighted if you comment on that.

Chamath Palihapitiya 41:34 Yeah.

Jason Calacanis 41:36 Are we gonna do a, uh, debrief?

Chamath Palihapitiya 41:38 The debrief from my opinion is that, um, I, I think that they're have, they have to really tighten two things. One is they need to make a decision, how do they wanna make money? Um, because I think this is the third time these issues have come up. It's probably not gonna be the last. And because there's going to be more market volatility, not less. And so you just gotta decide how you wanna make money, because there is no amount of money that's possible if you're gonna build a successful business and run into these margin constraints, right? You can't... There's just no amount of money that you could have. Meaning, if you look at the folks that didn't get called were folks that have like Schwab accounts. Why? Because Schwab is investing. And if you look at the folks that did have these margin issues, because Robinhood wasn't the only one, they're all the trading and, and sort of like high-frequency shops. And so, you know, that's a decision. And then it's back to what David said, which is like, once you make a decision, you have to be able to tell people like, "This is what you wanna stand for." And you have to have the right internal controls and governance. And so, you know, if he gets these things right, maybe they can be on the other side of it. Uh, otherwise, they're just gonna continually step on this stuff. And I think that the, you know, uh, if folks lose enough money, they're gonna be pretty upset, I think.

Jason Calacanis 42:48 Sounded to me like, David, uh, Freiberg, you had a good point about offering the, the Robinhood, uh-... consumer base the ability to buy the shares?

David Friedberg 42:58 I think 100% of it should go to the sh- the, the retail investors and-

Jason Calacanis 43:01 Well, he didn't say "no" and he kind of, I kind of got the inclination that he was gonna do that.

David Sacks 43:06 100% he will not.

David Friedberg 43:08 Yeah, this came out in the past where he said they were gonna offer some of the IPO shares to Robinhood customers and so that was a few months ago. I'm, I, I think I said publicly on Twitter, "Why don't you offer all your shares to IPO customers?"

Jason Calacanis 43:21 Yeah.

David Friedberg 43:21 Like, why take any of them direct to the institutions?

Jason Calacanis 43:23 Well, I mean, could he technically become a clearing house in IPO people?

David Friedberg 43:27 But then what if they said was like-

Jason Calacanis 43:28 Would there be like a partnership in it?

David Friedberg 43:28 ... yeah. Like why don't you just take, um, you know, if, if Fidelity wants to buy shares, let them buy shares on the open market like all the retail customers are forced to do. And then the Fidelity argument is, "Well, we're buying $50,000,000,000,000 blocks at a time, so we don't wanna have to be in the market doing that." But the marginal cost of buying a single share versus the marginal cost of buying a million shares is much, much higher. And, you know, that's the, that's the challenge with, um, you know, with retail access in financial markets that Robinhood has set out to solve, um, as have many others. And it would be a really powerful statement if they said, "You know what? We're gonna show the world that the market can all go direct and be efficient," and actually make all of their IPO shares available. And then, you know what? If the big block trade guys want to buy some, go ahead and buy it from the retail guys in the open market and part-

Jason Calacanis 44:12 Or do 50/50.

David Friedberg 44:14 ...icipate.

Jason Calacanis 44:14 You know, offer everybody who's a Robinhood shareholder if they-

David Friedberg 44:17 I just think that they would, if they could fill their demand, their demand on their book for their IPO from retail, do that, and let anyone else ... Let Fidelity sign up for a Robinhood account and buy their shares through Robinhood, you know. Like, um, the, the fact is the big, uh, uh, block buyers always get a discount, right? They pay wholesale pricing in these markets. Um, and that's also part of why it's so difficult for retail to actually find the footing, um, and so it would be a really powerful statement for them to kind of go all the way. Sure, I think it's almost certain they're gonna give some of the shares (laughs) available in the IPO through, to Robinhood customers. It's a great, uh, it's a great kind of, uh, you know, publicity point. But, um, but it would be really powerful if they shifted the whole, the whole thing. I mean, f- years ago when I was at Google and we did the IPO, I don't know if you guys remember this, but it was the first time we tried to do this Dutch auction so it was a reverse pricing.

Jason Calacanis 45:02 Yeah.

David Friedberg 45:02 So anyone, any individual, any retailer, uh, retail customer, and any institution could bid on Google shares and then there was a clearing price that was hit and everyone got their shares at the same time. So there wasn't this order book that was built by going to the big guys that the banks all know and love like Fidelity and T Rowe and so on selling them big discounted shares. It was a, it was a, it was a true market auction. And the direct listing is the new model for this that totally democratizes access to the shares, creates fair and transparent pricing for everyone, and so you don't end up with these, like, discounted shares that pop 80% on day one.

Jason Calacanis 45:32 Okay. Sax, what is your debrief on the Vlad appearance?

David Sacks 45:36 So I think Vlad, uh, did a pretty good job handling our, our questions, um, answering them-

Jason Calacanis 45:41 B+? B-?

David Sacks 45:43 ... d- answering some, deflecting some. I think that, uh, look, I, I think, I, I, I don't think Vlad's a, a, a bad guy. I think he's a good guy. I think Robinhood wanted to do the right thing. I don't think they had any reason to want to freeze their own users out of their accounts. Uh, I don't think they wanted to do what they did. I think that there was a little bit of a blind spot there on his part in terms of understanding the consequences of that freeze out, right? Because it did break the buy side of the trade for WallStreetBets and then that, that basically allowed the hedge funds to recover and that was that moment, you know. And so, um, that, that was, that was a big deal. I think the consequence of that decision were a big deal. Um-

Jason Calacanis 46:21 But it's a counterfactual, right? We don't know, we'll never know if that was-

David Sacks 46:24 I think, I think we know. Of course, look, it was, it was that Thursday where the short squeeze ended because WallStreetBets couldn't keep buying. They couldn't keep engineering their side of the trade.

Jason Calacanis 46:34 Right.

David Sacks 46:34 Obviously, that's why it cracked, right? And Robinhood was a big part of that whole thing collapsing. Now, it was gonna collapse at some point. There's no question that the air was gonna go out of the balloon, but-

Jason Calacanis 46:44 Right, but would it-

David Sacks 46:44 ... have gone to 5 or 600 is the question. Yeah, but, but, but how much money the hedge funds were going to lose, whether they were gonna get busted out of the game for good and who was gonna get left holding the bag, those were all questions that got answered in a completely different way because Robinhood did what it did. Now, I, I don't believe that they had a choice. I think they did it 'cause they were forced to do it, um, but it did have huge consequences.

Jason Calacanis 47:07 I thought he did, he's, he's doing a better and better job explaining this highly technical stuff and, uh, you know, obviously if they can't talk about their IPO, that does tell you certain things. I don't have any inside information, but he obviously, there's thing ... What I get from this is there are things he can talk about and there are things he can't talk about. There might be either things with the IPO or things with confidentiality between them and some of these parties. Like, I have a feeling people are not allowed to talk about this DTCC and what goes on there because there might be some-

David Sacks 47:37 Well, yeah. I would have liked ... I, that, that was an area where I really wanted to hear more details and get more clarity because, I mean, I believe ... Look, the order came down in the middle of the night from the DTCC, right? And so-

Jason Calacanis 47:47 Mm-hmm.

David Sacks 47:47 ... that's why I kept asking, "Why wouldn't you just say to the DTCC, 'Give me that order in writing'"?

Jason Calacanis 47:52 Yeah, I don't think he's allowed to talk about them.

David Sacks 47:54 Okay, fair, fair enough, but-

Jason Calacanis 47:54 That's, that's what I'm reading into it and I don't think ... I think it might be one of these non-disclosures where you can't mention the non-disclosure, which we've all been involved in.

David Sacks 48:02 Maybe, maybe. But, but, but see, that was the heart of my question is if you're ordered by somebody in the middle of the night to take an action that is, you know, adversarial to your own users, well, I would ask them for that in writing and post it on your website, post it on your blog so, to show that you don't have a choice.

Jason Calacanis 48:17 Mm-hmm.

David Sacks 48:17 I mean, I believe that he didn't have a choice, but why didn't he say that from the very beginning, right? I mean ...

Jason Calacanis 48:22 Yeah.

David Sacks 48:23 That's what caused all the problems for them.

Jason Calacanis 48:24 Yeah. All right. There you have it, folks. Everybody go to thesyndicate.com/allin.

David Friedberg 48:29 (upbeat music) Boys, I love you. I gotta go.

Jason Calacanis 48:31 Great job. Talk to you soon. Yeah.

David Friedberg 48:33 Talk to you guys later. Love you guys.

Jason Calacanis 48:35 All right. Love you, bestie. All right, we'll see you all next time. Bye-bye.

David Friedberg 48:39 We'll let your winners ride.

Jason Calacanis 48:42 Rain Man, David Sax. Yeah. What the fuck is going on in here?

David Sacks 48:46 And it's sad. We open sourced it to the fans and they've just gone crazy with it.

Jason Calacanis 48:50 Love you, besties.

David Friedberg 48:51 I'm the queen of quinoa.

Jason Calacanis 48:52 What the fuck is going on in here?

David Friedberg 48:55 Let your winners ride. Let, let your winners ride. Let your winners ride.

Jason Calacanis 48:59 Besties are back.

David Friedberg 49:00 Gold13 says, "Is that my, uh, dog taking a shit in your driveway, Sax?" (laughs)

Jason Calacanis 49:06 (laughs)

David Sacks 49:07 Oh, man.

Vlad Tenev 49:08 My haberdasher will meet me at Linden.

Jason Calacanis 49:10 We should all just get a room and just have one big huge orgy 'cause they're all just useless. (laughs) It's like this, like, sexual tension that they just need to release somehow.

David Friedberg 49:18 Wet your beak. Wet your beak.

David Sacks 49:21 Wet your beak. Beak. Wet.

Jason Calacanis 49:23 (laughs) We need to get merch. Besties are back. I'm going all in. Wooo! I'm going all in.