Robinhood CEO: Stop Trusting Experts if You Really Want to Make Money!

Speaker 0:00 Robinhood is a very controversial name-

Jay Shetty 0:02 Mm

Speaker 0:02 ... and I think that's what made it powerful. Because-

Jay Shetty 0:04 Mm

Speaker 0:05 ... you either love it or you're kind of like repulsed by it to some degree. But it doesn't sound like a finance company.

Jay Shetty 0:11 Yeah.

Speaker 0:11 The name itself tells you a lot about what the company stands for and what the products help you achieve. The number one health and wellness podcast. Jay Shetty.

Speaker 0:21 Jay Shetty.

Speaker 0:22 The one, the only Jay Shetty. [laughs]

Jay Shetty 0:26 What's a childhood memory that you have that you feel has impacted the work you do today?

Speaker 0:32 If I think about the childhood memories that I have that stick out, they're all kind of like somewhat traumatic, I would say. But I, I think I had a very happy childhood by and large. Like, I, I wouldn't trade anything. But the, my childhood was full of, uh, significant change. So a couple of the memories that stick out was going to the airport for the first time. You know, I, I grew up in Bulgaria, a very small country in Eastern Europe. Uh, I was born in the '80s, which was a time of communism, so it was sort of like there was the West and then the Iron Curtain, and not a lot of back-and-forth travel. My first time to the airport was actually after

Speaker 1:19 the Berlin Wall fell, communism in Bulgaria had kind of collapsed or was on the verge of collapsing. My father was given an opportunity to, uh, to go to the US to study, which was, you know, the, the events that kind of conspired to allow that to happen could not have conspired, uh, at an earlier time, right? But, you know, he had to go by himself because we just didn't have the money to like send even my mom with him, much less my mom and me. So he kind of went off, uh, by himself to, uh, see if he could make it and make a new life for us in, in kind of this new land. And I think I, they were trying to prepare me for this because I was an only child, and, you know, the weeks leading up to it, you know, my parents were like, "You know, your dad's going to America. You're not gonna see him for, for, for a long time," you know? And it ended up being, I think about two years before, before I saw him again. I'm not a very emotional person. I've kind of been described as stoic. I wasn't a very emotional child. And I just remember like when we got to the gate and I, uh, and my dad kind of like went to the other side and, uh, I wasn't like allowed to, to cross because of course I didn't have a ticket. I just like cried and bawled my guts out because it kinda sank in that I wasn't gonna see him for, for a very long time. That's probably one of the, one of the biggest memories. Another memory, you know, per- perhaps a little bit more relevant to Robinhood, was after I'd moved from Bulgaria to the US and, uh, we had gotten enough money to have a vacation. And of course, the only place to go back on vacation was to see my grandparents back in, in the home country, so we, we'd gone back. And I remember the exchange rate of the currency, right? It used to be sort of like two Bulgarian leva for one dollar, but I came back and it was 2,000. So Bulgaria had gone through this incredible period of hyperinflation where the, the inflation of the Bulgarian leva was the, the highest in the world. This was 1996, and I think 1997 as well. I think there were two years. And so, you know, my grandparents' pensions were just worthless. Everyone in the country was struggling. And I think those early moments were when I developed this like visceral understanding of how important money was, because I think to a kid, money's maybe not so important. But to me, you know, my parents were new in the country. They were just like getting started from scratch, basically, starting from zero. And I always felt like every decision, every family decision had this like layer of like how much money is gonna be spent on this? How important is it? We have to like choose like the, the budget potato chips or shop at Shoppers Food Warehouse rather than Safeway because they have like the dented cans and stuff like that. So I, I think from very early on, um, I got this understanding of like the importance of money and saving it and protecting it, and that that wa- that was just like driving so many of the decisions that my parents were making on a daily basis.

Jay Shetty 4:53 Yeah. Thanks for sharing both of those actually. They're, they're such unique perspectives. With the first one, what was it like when you reunited with your dad after two years and-

Speaker 5:02 Oh, yeah

Jay Shetty 5:02 ... the last time you saw him you were absolutely in tears?

Speaker 5:04 I remember that very vividly too actually. Yeah, because, uh, I landed in JFK Airport. I was five years old. And, um, it was my first airplane flight, and I remember I was just like puking my guts out that entire flight because, uh, you know, they, they had some, they were serving some food on the plane and I was traveling with my aunt, who was like 15 years old at the time, and she was like a punk rock teenager. Like, she loved American music. She had her Walkman on. She liked, you know, Nirvana and grunge. She later settled in Seattle, which, uh, which I think made a lot of sense. But anyway, they, they brought us the food in the plane and, you know, it's funny,

Speaker 5:50 you think plane food was like just this trash and you don't wanna eat it, but I thought it was, it looked amazing, so I just kind of like-

Jay Shetty 5:58 [laughs]

Speaker 5:59 ... engulfed all of it. And then of course, that led to, uh, me puking my guts out. And so I didn't have a very fun, uh, plane ride, so I felt a little off.Coming, coming out on JFK, and I hadn't seen my, my parents in a long time. It was like I spent the, the majority of the past year living with my grandparents. My dad first went, then my mom joined him later, and then I joined with my aunt. And so I was very shy. It was, it was almost like meeting strangers. You know, of course I knew they were my parents, but after not having seen them for a while, I was like kind of hiding behind my aunt's leg, and I would stick one eye out-

Jay Shetty 6:40 [laughs]

Speaker 6:41 ... and get a look at them. And there's this picture of me in the parking lot of JFK Airport when they kind of like showed me the family car for the first time, and, um, it was this like Plymouth Duster from the '80s. I don't know if you know the car, but it-

Jay Shetty 6:58 I don't. Yeah

Speaker 6:59 ... it had a mask. So back in the '80s, cars would have masks out front, and that was kind of the style. Um, and I could tell, uh... You could tell by looking at me that I was like this shy kid, very, very nervous, didn't really know what was going on, you know, landed in a new place, skyscrapers everywhere. You know, there was just... I remember the skyscrapers. You know, just nothing prepares you for that when you're coming from a very, very small country. It took me a little bit of time to like get reacquainted with my parents. You would think I would just like jump into their arms, and it would be like we, we didn't miss a moment, but there, there was definitely a little bit of hesitancy and shyness before I kind of warmed up and, and realized who they were.

Jay Shetty 7:45 Yeah, I mean, it makes sense because you, you had separated so young that it's almost like you maybe haven't even had an opportunity to, to even build a relationship at that age.

Speaker 7:56 Yeah, I mean, when my dad left, I must have been three.

Jay Shetty 7:58 That's what I mean. It's, uh-

Speaker 7:59 Yeah

Jay Shetty 8:00 ... I can't even remember being three.

Speaker 8:01 Yeah, I mean, I have very few memories from before then.

Jay Shetty 8:05 Yeah.

Speaker 8:05 It was, it was basically saying bye to my dad at, at the airport. Maybe my third birthday party, I vaguely remember.

Jay Shetty 8:13 Through pictures maybe.

Speaker 8:14 Yeah.

Jay Shetty 8:14 Yeah.

Speaker 8:14 The first snowfall, but yeah, it's like three or four memories, and that's basically it.

Jay Shetty 8:19 Yeah, and with the, with the second short story you shared about the financial situation and seeing the inflation in Bulgaria and coming back to that world when you, when you went back, how did someone like that, how did a kid like you, shy, separated from parents, seeing that in Bulgaria, get to Stanford? Like, what does that journey look like? Because I can imagine that that wasn't a simple or easy journey. That doesn't seem like a natural-

Speaker 8:44 Yeah

Jay Shetty 8:44 ... natural progression.

Speaker 8:46 So when I got to the US, I didn't know how to speak English.

Jay Shetty 8:49 That's what I was... I was gonna ask that. Was that your first language, like?

Speaker 8:52 Yeah, and, uh, Bulgarian-

Jay Shetty 8:54 Bulgarian

Speaker 8:54 ... was my first language.

Jay Shetty 8:55 Yeah, yeah.

Speaker 8:55 I think it kind of became clear, you know, once my dad, uh, went to the US, then my mom tried to teach me English, but, you know, it doesn't really work unless you're kind of talking to kids and doing it on a daily basis, and I, I was three anyway,

Speaker 9:13 so it, it w- it would've been tough going. So when I first got to the US, and, um, and I went to school in Bulgaria, and I never really like found a, found a good group of friends in school either. I was kind of a, a lonely kid. I mean, it was preschool and kindergarten, so, um, I don't have too many memories of it, but I would always switch schools too. Like, when I moved in with my grandparents, they obviously lived in a different part of town, so I would go in a different school. So I never really li- I didn't like the idea of school, and I remember kind of dreading having to go in this new country, and e- even more so, I didn't speak the language. I remember just like kindergarten was, was really hard. There were all kinds of different types of kids. Um, I couldn't really like navigate my way around. I didn't know who was who. I couldn't even tell the teacher that I needed to go to the bathroom, so I would kind of hold it in all day. And then I remember first grade, um, I have this like one memory from first grade, which was I was in a little reading circle, and, you know, uh, you know, like the kids do these reading circles, and you're reading like these basic books, and I still remember this first-grade reading circle, and I was like, "Man, I can read, and not only can I read, but I'm reading better than all these American kids." So I think that's when I kind of had the realization that maybe I was like intelligent or, uh, I identified as, as a smart person. And I think my parents did this like really valuable thing in hindsight, which was they kind of like advocated for me. So they never got into like the PTA or school activities or volunteering. They, they just didn't have time because my dad was in grad school and working. My mom was working as well just to, to try to supplement. And, um, and they were like, you know, "Our kid, uh, our kid is smart. He should be in the accelerated, like, math. Can, can he skip grades?" They were always trying to like push the teachers to put me in, in another grade, and the teachers were like, "Well, well, he's small, and he doesn't really have that many friends. We don't really think it's a great idea for have, to have him skip a whole bunch of grades." But, um, you know, they, they kept pushing, and, uh, eventually, you know, I was given an opportunity to skip a grade, and, uh, I did like very, very well at school, but I kind of had this fairly early realization that I was smart and kind of good at math and sciences. And then, um, my parents also had this way of like applying pressure, uh, which I think was like kind of honest from their perspective but also might have been a little bit strategic, which was, "We're new to this country. We're immigrants. Like, we're not citizens."We could sort of like get kicked out at any time. There was this like fear of deportation always. And so it was kind of like you got to do well in school because otherwise we might get deported. And for sure, you're going to have to get a scholarship because we're not making any money in this family. So you're going to have to like if you want to go to college and make it in this country and get an education, it's kind of on you. I would kind of hear this and really internalize it at an early age, but it was quite intense. I was like, all right, well, I better just like always ace all my exams and do well because there was like all this pressure of the family making it in this country that I felt a big part. Yeah, I felt a big part of.

Jay Shetty 13:04 Did it ever feel like too much or it felt like it just got you to perform and you locked in? Like, did you find pressure to be your friend or did you find pressure overwhelming?

Speaker 13:14 Yeah, I don't think that it ever felt like too much. I think school felt – school at least kind of in the early days was relatively easy for me. Yeah, I mean I kind of like sailed through elementary school. By the time I got to middle school, I was probably like four years ahead of my classmates, three or four years ahead in mathematics, for example. My dad always emphasized mathematics too. He was an economist in Bulgaria and he was always like, well, if you're good at

Speaker 13:57 math, you can kind of do anything. So all of this other stuff like language arts, you'll figure that out. Math is like the thing. And there was also a little bit of a competitive element because I would be like, oh, dad, how old were you when you figured out like this type of math? Like when did you learn calculus? And he was like, oh, I learned calculus when I was in graduate school. I was like, all right, I'm going to do it in seventh grade.

Jay Shetty 14:25 Did you succeed?

Speaker 14:27 No, maybe it was like 11th grade or something, pre-calculus maybe. Then I started doing it outside of school. I started doing all these camps. Like there was this one camp called CTY. I don't know if you've heard of it. I did that in middle school. And basically the way it worked was you take the SAT. So the SAT is the, for any listener who's not American, college entrance exam here. I think it's required again now. For a while it wasn't required. But basically you have to take it to get into a good college. And for this camp CTY, you basically took it as a middle schooler. And then depending on how well you did on this test, you could like qualify for certain classes. In eighth grade, I got a pretty good score. I think I got a 1370. And I had skipped a grade, so I was like a younger eighth grader too. And at that point, I had this math teacher in my middle school. And he had to like sign some stuff to have me go to this camp. He's like 770 on the math and the SAT. Like that's higher than I ever got when I was in college. So I think at that point, I just, I kept getting this reinforcement that I was really great at math. I should keep doing it. And I guess Stanford, how I came to Stanford was an interesting story. The second vacation that my family took after we moved to America, they took me to California. And my dad was like reading all these travel books. And he had this book like the thousand and one places to see before you die. And a lot of them were on the West Coast. So like the Grand Canyon and Sequoia National Park where you could drive your car through this like big tree. I don't know if you've seen pictures of that.

Jay Shetty 16:24 Yes, yes, yes, yes.

Speaker 16:24 We drove through the tree and we kind of did this road trip through California. And there was this one day where we drove through San Francisco and we spent the night there. And it was the middle of summer and it was raining. It was like close to zero degrees Celsius. So I had to actually buy a jacket because I was just unprepared for this. And so kind of this miserable day. And then we drove down to Stanford, which was in Palo Alto, about 45 minutes south of the city. And everything cleared up. The sky was blue, not a single cloud in the sky. It was sunny. There were like, I think summer school was in session. So kids were like throwing frisbee at the oval. And there were like kids picnicking in the main quad. And I just remember it felt so idyllic, particularly juxtaposed against how horrible San Francisco was that day, that I was like, this is where I want to go. Like my parents have been spending all this time talking about college. This seems like a fantastic college. So back then I wanted to be a lawyer. So there's this photo of me on that road trip in front of the law school at Stanford. And I'm like, yeah, this is where I'm going to go and be a lawyer. I had seen A Few Good Men, you know, the Tom Cruise movie.

Jay Shetty 17:46 Yeah.

Speaker 17:46 I thought being a lawyer was so cool because you get to like really get the people with like these intense arguments. I think I always remember that. Even when I applied for college, I applied early to Stanford as a result. But the lawyer thing I kind of grew out of. For a while, the American dream involved home ownership. And I have mixed feelings about it, to be honest, because 401ks are fantastic. And in particular, if an employer offers a 401k with a built-in match and they're matching your contributions, you know, that's free money.I think there are a couple of problems with traditional credit cards. One is-

Jay Shetty 18:33 Was Robinhood the story ever a part of your early life, or was that just a name that stuck out as a name in and of itself?

Speaker 18:41 Yeah.

Jay Shetty 18:41 Did you watch the cartoon when you grew up, or did you read the book?

Speaker 18:44 I did.

Jay Shetty 18:44 Yeah.

Speaker 18:45 Yeah, yeah, yeah. No, I, I watched the cartoon. I was a big fan of that, and of course Men in Tights, uh, was, was another great one.

Jay Shetty 18:52 Yeah.

Speaker 18:52 The origin of Robinhood the name was... You know, the finance industry had a bad rap in the,

Speaker 19:00 in the early part of the last decade.

Jay Shetty 19:02 Mm-hmm.

Speaker 19:03 Still does really. Still does. So, um, you know, uh, my, my girlfriend, uh, Selena, uh, my wife now, but my girlfriend at the time, she was kind of like she started dating me, I was this entrepreneur, I had this idea, and she had to kind of explain to her friends what I was doing and, and she was like a doctor and medical researcher at the time, so it's very concrete thing.

Jay Shetty 19:30 Mm.

Speaker 19:30 You know? Her friends were mostly researchers and doctors. So she was like, "Well, uh, Vlad, you know, he's in finance," but then there'd be like this groan, like, "Oh," you know, they thought I was some kind of investment banker or something. She's like, "No, no, no, but not that kind of finance. They're like the Robin Hood of finance. They're trying to help the little guy, giving them tools to, to invest and manage their money." And so when we were kind of coming up with the name, that was a name that, that we got excited by. And there were a couple of other names too, like, uh, we thought about naming the company Omaha, actually, and, uh, w- we got pretty close to that one. And in hindsight, you know, Warren Buffett and Charlie Munger were, were never big fans of Robinhood. They were-

Jay Shetty 20:13 [laughs]

Speaker 20:13 They were kind of like crapping on us from time to time publicly. So sometimes I think if we had named the company Omaha, maybe we wouldn't have had that element.

Jay Shetty 20:22 [laughs]

Speaker 20:23 I'd also never been to Omaha, so that kind of like, uh, that sealed it for me.

Jay Shetty 20:28 Yeah.

Speaker 20:28 So Robinhood was a very controversial name-

Jay Shetty 20:30 Mm

Speaker 20:31 ... and I think that's what made it powerful because-

Jay Shetty 20:33 Mm

Speaker 20:33 ... you either love it or you're kind of like repulsed by it to some degree, but it's not boring. I think-

Jay Shetty 20:39 It doesn't sound like a normal finance company.

Speaker 20:41 It doesn't sound like a finance company.

Jay Shetty 20:43 Yeah.

Speaker 20:43 And, and in, and I think in hindsight that was a really good thing because it's just memorable and it's like emotionally gripping, and the name itself kinda tells you a lot about what the company stands for and what the products should like help you achieve.

Jay Shetty 20:59 Yeah. How old were you when you first started investing?

Speaker 21:02 Yeah. You know, it, it ties into what we were talking about earlier. I was at home during the summer 'cause, you know, my parents were working, and I spent a lot of time with computers. Um, and one of the early things I discovered was like building a portfolio on Yahoo Finance, actually, and this was 1997, 19... late '90s.

Jay Shetty 21:25 Wow. Early, yeah.

Speaker 21:26 Um, so during the dot-com boom when

Speaker 21:29 somehow, uh, I don't even know how I came across this, but I was building a portfolio of companies that I recognized like, uh, Yahoo, uh, 3Com, which made the PalmPilot, one of the first consumer PDAs at the time.

Jay Shetty 21:45 PDAs, oh my gosh. [laughs]

Speaker 21:46 Yeah. Yeah, yeah.

Jay Shetty 21:47 Yeah, I remember PDA. [laughs]

Speaker 21:49 Um, well ahead of their time, right?

Jay Shetty 21:51 Yeah, very.

Speaker 21:52 I did decently well. Uh, in hindsight everyone was doing well on all those stocks for quite a long time 'cause it was the, the dot-com bubble. But, um, my parents basically saw an opportunity to motivate me to do well on the SAT to qualify for this camp that, that we were talking about earlier. So basically they were like, "If you get above, uh," I think it was like, uh, "1300 on, on the SAT, we will let you invest with like the dollar amount of your score." It was something like that. And so, you know, I was like very motivated by this. Um, and so when, when I got my 1370 and my dad and I kind of, uh, he funded an E-Trade account for me, and I started investing.

Jay Shetty 22:39 No way.

Speaker 22:39 Yeah.

Jay Shetty 22:39 Do you remember your first investment?

Speaker 22:41 Yep. Yeah. Uh, I bought 3Com, the, the company that made the PalmPilot.

Jay Shetty 22:47 Yeah.

Speaker 22:47 My feeling was that this device was so interesting and they had started giving them out to my parents, who by that point, uh, were working at the World Bank.

Jay Shetty 22:58 Mm.

Speaker 22:58 And I was like, "All right, well, if, if the World Bank is using them, this must be a company that, you know, is, is growing, and they'll probably be around for, for a while." And plus the device was just super cool.

Jay Shetty 23:11 Yeah.

Speaker 23:11 And, you know, pretty, pretty soon after my dad brought it home, he didn't know how to use it, so I just took it and started playing with it. So, um, and actually through that I learned a lot about investing because what happened was there was a spinoff. So first it started at, as 3Com, but then this PalmPilot business was growing, and they spun it off. Uh, so then I had two stocks, and then I started getting the prospectuses in the mail and voting documents, and I learned all about like shareholder proxy voting and, and all the stuff that a normal 12-year-old probably wouldn't, wouldn't, uh, have occasion to learn about. But because I was invested, I actually like felt compelled to learn more. So yeah, I, I think that really set me off on a lifetime of learning about investing and finance.

Jay Shetty 24:01 Yeah. How much, how much did you make or lose?

Speaker 24:03 At first I was, I was up quite a bit. Then in 2000 I think my, my portfolio dropped to maybe like 20, 30%-

Jay Shetty 24:13 Mm-hmm

Speaker 24:13 ... of what I started with, and then it, I think it, it probably took another 10 years beyond that for, for that portfolio to be in the green again.

Jay Shetty 24:22 Oh, wow.

Speaker 24:22 But, I mean, I would say it's the great thing about getting started young in general, not just for me, you have plenty of time to, to actually like make up for

Speaker 24:32 the mistakes. And, you know-Compounding over a long period of time corrects a lot of mistakes. So I, I think generally speaking, the earlier you can get started the investing, the better.

Jay Shetty 24:44 Yeah. That's... It's fascinating hearing about your own investing journey, and starting at 12 is, is pretty young. I mean, that's, that's pretty impressive that you were able to compute and factor that in. Have you ever taken an IQ test? Like, do you know your IQ?

Speaker 24:59 I have not, no.

Jay Shetty 24:59 Okay. Yeah, I'm just... I was intrigued. Yeah.

Speaker 25:01 Yeah.

Jay Shetty 25:02 Just based on everything you've been saying, I'm just like, it's, it's rare that I've, I've met someone who's, who's felt that they've always excelled since an early age. Like, that's not as common an experience anymore.

Speaker 25:13 Yeah. Yeah.

Jay Shetty 25:13 I don't know if you meet people like that.

Speaker 25:15 I mean, I do think that Stanford in particular, uh, is, is kind of a interesting amalgamation of people.

Jay Shetty 25:23 Mm.

Speaker 25:23 So, uh, you have

Speaker 25:27 a lot of people from, like, diverse, modest backgrounds, uh, that come to Stanford, and usually those people have, like, excelled academically-

Jay Shetty 25:38 Mm-hmm

Speaker 25:39 ... whi-which is pretty amazing. And then you also have people that, uh, come from, like, wealthy families from all over the world. Yeah, I think some people consider that to be not ideal, like maybe it should all be merit-based and everything. But I, I think it actually has worked fairly well because what happens is, um, the, the folks from modest means that have, like, really high horsepower get to make connections.

Jay Shetty 26:08 Mm-hmm.

Speaker 26:08 And you make connections with all these people, and it kind of unlocks business opportunities for you. So, you know, a lot of the folks that I met in my undergrad and the different types of people, I think at the time I kind of didn't recognize this, but they ended up helping me in my business career, either because they became journalists that, like, helped tell the story of Robinhood, or they joined venture capital firms and they became, uh, indirectly or directly investors in Robinhood, or they, they advised us with certain things. I think everyone is so diffuse in general because people, people grow up in different places. But, like, college is one of those moments that people get brought together, and you do in, in, in a place like Stanford in particular get to encounter a lot of, uh, a lot of really special people. And, you know, when I came to Stanford, I, I actually had no conception of going into business, you know, that I kind of stumbled into that later. By the time I got to college, I was interested in theoretical physics. That was, like, my passion because I was consumed by this question of like, why are the laws of the universe the way they are?

Jay Shetty 27:24 Mm.

Speaker 27:25 I, I had read about relativity when I was in high school, and it was just like... The, the first time I read, like, the, you know, Einstein's book of special relativity, it just blew my mind, and I had to read it like six or seven times to figure out what was going on, you know? Um, and then, you know, you try to understand more and deeper. Um, and the question that really motivated me was like, why are, why, why do the laws of gravity look like this, but, like, all the subatomic particles, like, uh, all the laws around particle physics look different? And is there one theory that is basic that unifies both of them? This, this sort of like unification of quantum gravity was this topic that really interested me. So I, I came to Stanford to study that, and that's kind of what, what pushed me into, into eventually doing math and, and going to UCLA to study math with, uh, with a professor named Terry Tao. But, like, i- if you think about that group of people, the folks at Stanford who come to study theoretical physics, um, and you don't do that bec- there, there's very little money in it, uh, particularly back then, right? This was like pre-data science and-

Jay Shetty 28:41 Mm-hmm

Speaker 28:42 ... uh, applied machine learning. Um, so yeah, actually by, by the time I, I got to that point, I was looking around and I'm like, "Wow, I'm, I'm the dumbest person here. These are just... I'm surrounded by, like, some of the smartest people I've ever met."

Jay Shetty 28:57 Wow. And d- and how did you get distracted from that pursuit?

Speaker 29:00 Uh, I was here at UCLA studying math, and two things happened. Um, the number one thing wa-was when I decided to go to graduate school, and, uh, I, I kind of, I think my bubble of the academic world kind of burst a little bit because I had this romantic notion that you would kind of spend all of

Speaker 29:27 your time thinking about difficult problems and just, like, being creative. It's al-almost like being an artist.

Jay Shetty 29:34 Mm-hmm.

Speaker 29:34 Like, maybe there's not much money in it, but you spend a lot of your time just, like, practicing your craft, right? But then I, I was given this book, it was called, like, The Mathematician's Survival Guide, and it was, like, chapters about how to deal with the administration and the bureaucracy of the graduate department, how to advocate yourself with, for, for yourself with the department chair, how to make sure that you get, like, a good research fellowship so you don't have to spend all of your time teaching undergraduate classes. And I think at that point I was like, "Oh man," like, [chuckles] "this is a, a career and it's not, like, the career that I wanted." Another thing happened at the same time. So my first month in grad school was September of 2008.

Jay Shetty 30:22 Mm.

Speaker 30:22 And Lehman Brothers went under that month, and it was, it was the start of the global financial crisis. You and I are basically the same age-

Jay Shetty 30:31 Right

Speaker 30:31 ... I think. Born in, uh, '87, right?

Jay Shetty 30:33 I'm, yeah, '87, yeah.

Speaker 30:34 This was kind of like, uh-And maybe for you, for me certainly, like my, uh, the, the folks that graduated my year of college, some of them went to finance and-

Jay Shetty 30:46 Mm-hmm

Speaker 30:47 ... some of them even went to work at Lehman Brothers, and-

Jay Shetty 30:50 Yeah, yeah

Speaker 30:50 ... it was sort of like one month after they joined, you know, there was like photographs of them carrying their stuff out of the offices in boxes, right? So yeah, that, that was a, a tough time for, for a lot of people. A lot of my friends' parents lost their jobs that year. So it was the global financial crisis. And, um, yeah, so somewhat oddly, my good friend from college, whose name was Baiju Bhatt, who I ended up starting Robinhood with, he had gotten a job in finance kind of on a whim, and, and he managed to convince me that this time was the best time to start a finance company.

Jay Shetty 31:31 [laughs]

Speaker 31:31 And of course, I wasn't like super committed to my PhD path because of, of all the other stuff I mentioned. So I was like, "You know what? This sounds like an interesting problem. Let, let's see if we can do something here." So we rented a little house in South San Francisco, uh, in the South Mission, um, where we were paying like, uh, $300 a month in rent. Uh, we were all living together. Uh, I had to take care of this lady's cats, which was why the rent was so cheap. That was kind of my first experience with entrepreneurship. What attracted me to it was kind of the same thing that attracted me, um, about math and, and physics. It was the act of creating something with... Y- you didn't really have to listen to anyone telling you what to do. Uh, you could use your entire mental faculties and your creativity to like determine your own success and your outcomes. You know, just like a couple of people who are really passionate and committed could build something and, you know, actually use it as a vehicle to sustain themselves economically. So, um, that idea, when I kind of discovered it, and I never really like thought of myself as an entrepreneur before. I mean, it, it wasn't really something that was common in the East Coast-

Jay Shetty 32:54 Mm-hmm, mm-hmm

Speaker 32:54 ... to be honest, or in Bulgaria. I mean, you, you had some, um, but not technology entrepreneurship really. And then when I kind of started doing it, I started like programming and writing code, then I just like found the whole thing really intoxicating. So, um, even though we didn't have success, it... Basically, our first idea failed within a year, um, I just kind of knew that, that I wanted to do it. So that, that gave me the confidence to drop out of, of UCLA, start something a little bit different, and it was, uh, it was the third idea that, that we had that led to Robinhood, and that was kind of the one that really worked. I think the, the actual experience and the mindset of an entrepreneur just like resonated with me very, very deeply, and I was having so much fun, like unlike anything else that I had done, um, that I, I just knew I had to keep doing it.

Jay Shetty 33:51 Yeah. I mean, democratizing investing is such a, at least at the time as well, was such an ambitious goal, to think about trying to get the average person to be able to have access to something that wasn't accessible to them just a few years before, especially in a place that seemed volatile. You needed a lot of capital to get started. I wanna do a bit of investing basics for people who are listening-

Speaker 34:15 Yeah

Jay Shetty 34:16 ... who may or may not be using your platform already and want to understand a bit more about it. If someone's sitting there going, and I remember being this person. So I remember 2013, I'd just left the monastery that I lived in for three years, and I'd gone back into the world of work, and I had a mentor who told me exactly which, uh, crypto to invest in in 2013.

Speaker 34:37 Which one did he say?

Jay Shetty 34:38 Well, at the time he was like-

Speaker 34:40 Dogecoin?

Jay Shetty 34:41 No, no [laughs] it definitely

Jay Shetty 34:42 wasn't.

Speaker 34:42 [laughs]

Jay Shetty 34:43 At the time is was like, um, Ethereum, Lithium, like, uh-

Speaker 34:47 Oh, yeah. Litecoin. Yeah.

Jay Shetty 34:48 Yeah, yeah. And so he was, he was mentioning all these places. And I remember in 2013, with very little capital, very little investment knowledge, going-

Speaker 34:57 You see now if someone said, "My, uh, mentor," and, uh, what, what did you call him? Your guru?

Jay Shetty 35:04 Yeah, mentor. Yeah, yeah, mentor. Yeah.

Speaker 35:06 If, if now someone's like, "Oh, my guru told me the, which cryptocurrency to, uh, invest in," I would be like, "Hey, you should be a little skeptical of this mentor."

Jay Shetty 35:16 Yeah.

Speaker 35:16 But in 2013, that was actually like, uh-

Jay Shetty 35:19 I should've listened. [laughs]

Speaker 35:19 That, that was before the space got, uh, got a little, a little corrupted, before the, the pretenders came in.

Jay Shetty 35:26 Yeah, no, he'd been successful in tech investing and things for years, and-

Speaker 35:29 Yeah

Jay Shetty 35:30 ... I'd, I'd met him. He was, I was what? 26 at the time. He was 55.

Speaker 35:34 Oh, wow. Okay.

Jay Shetty 35:34 And so he'd, you know, he'd, he'd been around. He was, he was a very smart, thoughtful, thoughtful person. I didn't really understand anything about investing and, and I grew up in a family where we didn't have a lot growing up. There wasn't... I didn't see my parents invest. I didn't, I didn't see them have that. And so I remember being like... He was just like, "Just put $1,000. Put $100 into each." 100 pounds.

Speaker 35:55 Mm-hmm.

Jay Shetty 35:55 I was in London. So he goes, "Just put 1,000 pounds into, 100 pounds into each and just see how it goes." And I remember being so risk-averse that I didn't even wanna put 1,000 pounds into it, and that's probably all I had at that time. I was working a job where I made 31,500 pounds a year at Accenture.

Speaker 36:11 Mm-hmm.

Jay Shetty 36:12 And I could-

Speaker 36:13 You were in the UK, right?

Jay Shetty 36:14 I was in the UK, yeah. I could have put 1,000 pounds in. I didn't. If I did, I, it would've been a great investment. Um, but the question I'm asking is, a lot of people don't invest because they don't have enough knowledge, but they also feel they don't have enough money. At what point should you feel confident and comfortable to start investing? What amount? And yeah, let's start there.

Speaker 36:35 Yeah. I mean, a lot of Robinhood customers start with as little as $10.And I think that was actually the innovation that Robinhood unlocked. So before we came into the mix, uh, you used to have to pay a trading fee, and if you started in the UK, you probably paid a trading fee at 2013 as well. Um, I mean, still do. The, that market

Speaker 36:58 hasn't gone zero commission yet. Let's say you have to pay $10 per, per trade. Well, that's, you know, uh, if, if you make $100 investment, that's 10% of the, of the actual value in the investment, and if you wanna sell it, you know, then that gets to 20% for the round trip. And so it doesn't really make sense to start with $100, uh, in that sense because you have to count on many years of appreciation to just pay for your transaction fee. But if you lower the fees to zero, you could start with any amount.

Jay Shetty 37:31 Which is what you did.

Speaker 37:32 Exactly. And, and that was kind of our big, uh... Uh, uh, that was, that was sort of one of the three big innovations that I think made Robinhood possible and really made it take off. It's eliminating the commissions and lowering the account minimums to zero, because a lot of brokers also had account minimums. You couldn't even open an account unless you had $2,000 or sometimes more in there. And we said, "You know what? We really wanted..." And, and the reason, by the way, that, um, they had these account minimums was these companies were not, uh, automated enough to service small accounts. They would just lose money on them. And so we said to ourselves, "Well, it, it would be, uh... It, it would not really uphold the mission of a company named Robinhood to have an arbitrary account minimum. We should make it zero. We should hold ourselves to that standard, and we just should, like, incent ourselves to make the business as efficient as possible." Because I think that would be the long-term correct way to build the business. Like, let's point everything towards, uh, creating a forcing function for us to be more efficient and more automated and adopt technology more aggressively and be the first to do it relative to, to the market. And, you know, a company where everything is pointed towards using technology to lower the cost of things, make things as usable as possible and as automated as possible, that seems like a long-term robust structure for a company. So we, we kinda like that. But yeah, a lot of customers start with just $10 or even less.

Jay Shetty 39:10 And what, what would you say are the three biggest mistakes new investors make when they don't know what they're doing?

Speaker 39:17 I think it... This is a little bit strange given, like, so much of Robinhood, at least in the public realm, is, you know, meme stocks and meme trading, but I, I think probably the biggest mistake one can make is buying something just because someone on the internet, like, thinks that you should buy it and is posting it. Um, I'm,

Speaker 39:40 I'm personally a big believer in thinking for yourself, and, like, buying something because people on social media are saying it's a good idea, I- it's just like, uh, kind of anathema to me. Like, sure, use it as a signal, but, like, make your own decision and, and kind of think through it yourself. Uh-

Jay Shetty 40:00 Mm

Speaker 40:00 ... and don't just rely on the opinions and commentary of, of others.

Jay Shetty 40:06 Mm. Any others? Big mistakes that people make.

Speaker 40:09 I think just, like, waiting to get started.

Jay Shetty 40:12 Mm.

Speaker 40:13 You know, now particularly with the tools, it... There, there's, you know, with, with Robinhood, uh, kind of entering the market, not just Robinhood, but most of the competitors that at least survive in the space, there's no maintenance fees, no kind of, uh, onboarding fees. Keeping money in the savings account, where in particular now with high rates, you know, a, a lot of the banks are offering you 0%, so your, your, your money is just losing money sitting in savings. Not op- not doing the simple things to optimize, uh, I, I think are mistakes, and there is so much free content out there on the internet, on YouTube, and, um, you know, that just spending even 30 minutes to, to get educated, uh, and actually just, like, getting started and opening an account and creating the habit of investing. Even if you don't think you have much money, uh, the technology is there so that you could actually do the exact same things with $1 as you can with thousands of dollars.

Jay Shetty 41:19 Mm.

Speaker 41:20 And, you know, through another thing, Robinhood pioneered, um, fractional shares. You can invest any dollar amount in pretty much any stock. You don't need a whole share. So one of the first things that we did, which we thought was very cool, was, uh, y- you have, for example, companies whose, uh, share prices are hundreds of thousands of dollars per share, like Berkshire Hathaway A shares, for example. And, uh, you know, they al- they would almost pride themselves on having this share price that's inaccessible to normal people, and not everyone could be invited to this club of, like, shareholders, and they have the annual shareholder meeting. But, you know, Robinhood figured out how to break up these stocks into pieces and you can buy a dollar of it and, you know, then you had all of these retail investors showing up at the shareholder meetings, and I think that made those guys very angry, actually, in hindsight. Um, but it was-

Jay Shetty 42:13 How did you even pull that-

Speaker 42:14 ... very satisfying.

Jay Shetty 42:14 How did you even pull that off? Like, how, how is that even possible?

Speaker 42:17 Yeah, it was a big technical challenge.

Jay Shetty 42:20 Yeah.

Speaker 42:20 Yeah, a big technical challenge. Um, basically what happens is the company has to keep inventory in all of these names, and you, you imagine, like... Let's say, I mean, uh, th- the way that this works is probably a little bit more complicated, but to simplify it, let's say you wanna buy a dollar of-Berkshire Hathaway, while then we would essentially have to keep inventory of a whole share and then allocate internally different pieces of it.

Jay Shetty 42:49 Oh, right, right.

Speaker 42:50 And then, you know, when the total sum exceeds one share, then we go out and buy another one. So we're kind of like managing this portfolio of, you know, right around one share in, in every instrument.

Jay Shetty 43:05 Yeah. Yeah.

Speaker 43:06 And then we can just do that through technology.

Jay Shetty 43:08 Mm-hmm.

Speaker 43:08 I mean, we have great engineers and data scientists and brokerage experts that, that can manage the system.

Jay Shetty 43:15 If you were to say that for a new investor there's certain factors they should understand about a stock before investing, what would you say are the three key things that they should know, an amount of information they should have before they go in and put any amount in?

Speaker 43:31 I guess without giving people too specific investment advice-

Jay Shetty 43:34 Mm

Speaker 43:34 ... because I, yeah, I'm kind of not, uh, not really allowed to do that.

Jay Shetty 43:39 Yeah.

Speaker 43:40 Um, I'm a big proponent in investing in companies that create

Speaker 43:45 products that you like and, and use. You know, if, if you use the product, if you think that the company that's making those products is improving the products, and if you're bullish on it c- continuing to be useful, and you think it's trending in the right direction, um, that- that's been sort of my philosophy. It's how I got started too. And I think that's why if you look at the Robinhood customer base, and, and we're now publishing the stocks that our customers, um, are investing in most, uh, we call it the Robinhood Investors Index.

Jay Shetty 44:21 Mm-hmm.

Speaker 44:21 It tends to be consumer companies that make products. Um, they're sort of like heavy in innovation.

Jay Shetty 44:29 Mm-hmm.

Speaker 44:29 So for example, Nvidia, Tesla-

Jay Shetty 44:32 Mm-hmm

Speaker 44:32 ... Apple, these are some of the most commonly, uh, invested stocks, and it's because our customers are younger. They believe in the future. They tend to be early adopters of technology and innovation. They believe in artificial intelligence, clean energy, electric vehicles. Um, so yeah, that, those tend to be like both sort of like some of the most held instruments and some of the first instruments that, uh, that people kind of buy into. We, we also have a product, First Trade Recommendations.

Jay Shetty 45:08 Mm-hmm.

Speaker 45:08 And it's difficult for the service to recommend individual stocks, but for someone that actually comes in and they say, you know, "I just want to invest. I don't really know. I don't want to pick my own stocks," over time, we're increasingly getting better and better equipped to serve that customer. So now, you know, you can just answer a couple of questions, and we'll, we'll recommend a diversified portfolio of ETFs, explain to you what all the pieces are, and then you'll kind of see how it all works mechanically. And I think sometimes just, like, going through the process of making a trade, it's much simpler than, like, reading a book on it. I like to say that it's like playing a violin. You're not gonna learn to play a violin really well by, like, reading a book on how to play the violin. Maybe if you're already really, really good and you're trying to get a little bit better, understanding the theory behind it is, is gonna help. But otherwise, it's just sort of like pick up the thing and start practicing, and you'll get better the, the more you do it. One of the things I became interested in when I was an undergrad is options trading. A lot of my students my year were applying to be options traders. That was like a... Before it went fully electronic, that was a job that people had, right? And there was this book, uh, like, uh, Options, Futures, and Derivatives, uh, it was called something like that, by Hull, and it was like this thick dictionary explaining how all these option strategies worked. And I just kind of imagine, you know, if someone had to understand that book before kind of like going into options trading or discovering it for the first time, um, I think that would be just like an incomprehensible barrier. But, like, you build up some intuition for these things by doing it, and-

Jay Shetty 46:58 Mm

Speaker 46:59 ... it sort of like makes you more motivated to read the literature, and it also sort of like gives you more real-world knowledge than, than you could ever get from just reading. So I, I think just, like, getting started and doing it is, is the most important thing. It's, it's a skill like playing a sport or, or playing a music instrument more than just like an academic pursuit.

Jay Shetty 47:22 Yeah. How many of your users do you find going beyond just that first trade? Do you have a percentage of users that you know go beyond their first or second trade and kind of continue on and build and grow, versus like they tried something out and kind of just said, "Oh, this is not for me. I don't know what I'm doing"?

Speaker 47:38 With consumer technology, there's sort of a funnel for everything.

Jay Shetty 47:42 Mm-hmm.

Speaker 47:42 You know, there's people downloading the app. Not everyone who downloads the app actually-

Jay Shetty 47:46 Use, yeah

Speaker 47:46 ... ends up creating an account.

Jay Shetty 47:48 Totally.

Speaker 47:48 Not everyone that creates an account funds it. Um,

Speaker 47:52 and you know, we're, we're definitely focused on making sure, uh, that we have a really good funnel, that it's clean, that people who, uh, you know, enter are getting exactly what they want. I'd venture to say that our funnel's probably m- much more efficient than those of our competitors. Um, that said, there are things that certain customers want that we're not, like, ideal at offering now. So for example, if you want an advisor, a lot of people want a, a financial advisor. They want someone to manage their money for them, tell them exactly what to do. Um, we don't have a great comprehensive solution for that yet, although we're working on it. I think we will get there eventually.

Jay Shetty 48:37 Will it be AI advisors or?

Speaker 48:39 I think AI certainly will be involved, um-If not, you know, replacing the advisor, certainly augmenting and giving them kind of superhuman capabilities and the ability to service more customers. Um, but yeah, I, I think that's certainly one of the most interesting applications of AI in financial services. But, uh, yeah, right now the platform is, like, very self-directed. It's for folks that wanna be in control of their money, and like, you know, like the, the most hardcore Robinhood users are the ones that really are just kind of like optimizing everything, you know? They're optimizing their taxes, they're optimizing all of their fees and commissions, and we, we do attract some of those people that are really wanna be hands-on with everything because it's a very easy-to-use tool. We have-- We tend to have the lowest pricing across all, uh, services that we offer. We sort of like from the very beginning have, uh, built with like the self-directed retail customer in mind.

Jay Shetty 49:46 Mm.

Speaker 49:46 So I think for that customer, there's probably no better fit. If you wanna be in control over every aspect of your finances, and you actually in, in some cases are openly distrustful of other people telling you what to do, and there, there's a lot of people like that. They're like-

Jay Shetty 50:03 Mm

Speaker 50:03 ... I don't even wanna listen to a financial advisor 'cause I feel like they're just gonna talk down on me in a, in a good scenario or rip me off in like a bad scenario.

Jay Shetty 50:13 Mm.

Speaker 50:13 And those people are like, uh, yeah, like they, they tend to gravitate toward Robinhood.

Jay Shetty 50:20 At a time when investing's becoming more talked about, more diverse, there's more options, I w- I wanna get your personal opinion on people thinking about stocks versus people thinking about property, for example. Like, which of course is far more expensive, but I feel like we've seen a generational shift from people wanting to own their homes, purchase their homes, get a mortgage, versus now people moving towards renting more. Are you seeing that trend, and are you seeing people move towards stocks? Are you still-- What, what's your

Jay Shetty 50:49 personal take on people choosing between buying and renting versus using that capital elsewhere?

Speaker 50:54 For a while, the American dream involved homeownership.

Jay Shetty 50:58 Yes. Yeah.

Speaker 50:58 Right? Um, and I have mixed feelings about it, to be honest, because there, there's a lot of like corporate interests that are pushing for more homeownership. I mean, if you're a bank and you're giving people mortgages, you know, a lot of people, uh, criticize leverage in the stock market. Um, but if you think about the amount of leverage in a 30-year fixed mortgage-

Jay Shetty 51:24 Mm-hmm. Mm-hmm

Speaker 51:24 ... right? It's like ungodly. Uh, right? You end up paying much more, uh, in interest than, you know, even the, the principal, uh, sometimes. Yeah, I mean, again, without, without getting into investing advice, uh, real estate I think has been tempting for people because, like, you can see it, you can touch it. It's sort of like this thing that you can use, and it feels like an investment even though it, it really isn't. Um, especially when you give it-- when you take into account all the fees, like the brokering fees on either side of the transaction, property taxes, maintenance. Meanwhile, you know, in the stock market, you, you have it on your phone now commission-free, some of the lowest fees, access to like the widest variety of companies that are really, even though it's the U.S. market by and large, the U.S. market's increasingly global. Um, I, I think, and I wrote this article back in 2021, uh, investing in the global markets is, is really the new American dream. And actually, during the hyperinflation episode in Bulgaria in the '90s, my grandparents, um, didn't have access to any tools that allowed them to invest in equities.

Jay Shetty 52:41 Mm-hmm.

Speaker 52:41 So, uh, my grandfather, who was, uh, a medical doctor on Navy vessels in Bulgaria, he had like a contact on the port side who would basically give him access to copper cookware. So he would take his Bulgarian levs from his pension and get copper cookware, and we had this closet. They had their-- this closet in their apartment that was just full of copper cookware.

Jay Shetty 53:07 [laughs]

Speaker 53:07 And that was like, that was their Robinhood app. Like, that's where they would-

Jay Shetty 53:10 Yeah

Speaker 53:10 ... self-custody their wealth. I mean, right now you can buy any stock. Uh, you can buy c-crypto. We started offering crypto in 2018 for, uh, uh, the lowest fees in the industry. And you can get, you know, uh, you can get access to ETFs. You can have gold ETFs. So really in your pocket, you can diversify and, uh, hold pretty much any asset. And you can even do real estate through the form of REITs and-

Jay Shetty 53:40 Mm

Speaker 53:40 ... and other publicly traded ETFs. Yeah, you can get exposure to that asset class. But, like, real estate investing in terms of buying a primary home, yeah, it's, it's, uh... I think the story behind that is, uh, is difficult. It's like very illiquid, high transaction fees. You're kind of like picking, uh, a particular neighborhood. So even if the global real estate market does well, something could happen to that neighborhood, you know?

Jay Shetty 54:08 Mm.

Speaker 54:09 They build a power plant next door, and you're kind of in, in big trouble. So even though I'm not making any, uh, investment recommendations, I think it's, yeah, it's, it's, it's hard to kind of like equate those two.

Jay Shetty 54:23 Yeah.

Speaker 54:24 And I think really the future is going much more toward investing in, in publicly traded stocks and cryptocurrencies.

Jay Shetty 54:31 Yeah. Yeah, that's what I wanted to ask your opinion. So yeah, definitely not official advice. I, I read an amazing stat that said the next generation is set to inherit an estimated $72 trillion over the next 20 years.With 27 trillion going to millennials alone

Speaker 54:48 Yes

Jay Shetty 54:48 And that blows my mind-

Speaker 54:51 Yeah

Jay Shetty 54:51 ... because first of all I'm like, "Who are those millennials?" [chuckles]

Speaker 54:53 That's a big wealth transfer. Yeah.

Jay Shetty 54:54 It's a big wealth transfer. When someone like you hears that, what goes through your mind?

Speaker 54:59 What goes through my mind is there's a big opportunity for Robinhood. There's a big opportunity for us because we've got more millennial

Speaker 55:06 app users than basically all the incumbent brokerage competitors put together. Even more so Gen Z. I think if you look at Gen Z, over 60% of our competitive set just uses Robinhood. Um, and so we already have relationships with these folks. Um, and we're offering more, like we don't just offer stocks. We have an awesome credit card. We have among the best retirement products, an amazing retirement product with the first built-in match, uh, in an IRA. We have a high-yield product, and we're adding just more and more over time, and we're making it really easy to transfer your account if you're, you know, a customer of a legacy brokerage to Robinhood so you can take advantage of all these amazing offers and, and rates and the user experience. So, um, yeah, I, I think that we'd like to put ourselves in the position where Robinhood is like the home for all of these assets, and I think, uh, I think we're rapidly getting there.

Jay Shetty 56:11 What do you think you've done differently to attract those groups and those communities into your space? Like what, what, what's been the big difference?

Speaker 56:19 I'd like to say that, uh, the, the way we communicate and the marketing is a big part of it. But I think the biggest thing is, um, like the, the economics, getting rid of account minimums and trading commissions, removing the friction. These are all barriers that, um, prevented people. Yeah, I, I think I mentioned to you earlier that, you know, before Robinhood, if you had $100, it would've just been nonsensical to invest. The fees would've just ripped apart-

Jay Shetty 56:51 Yeah. Yeah

Speaker 56:52 ... your portfolio, and, you know, a lot of times there were barriers that prevented you from get-getting started in the form of minimum account, uh, balance requirements as well. So we got rid of all of those, and basically that allowed a whole bunch of customers that were previously underserved to

Speaker 57:09 be able to open accounts.

Jay Shetty 57:11 Mm.

Speaker 57:11 Um, and you know, unfortunately a lot of those customers were from disadvantaged historical demographics. Um, and you know, I, I think it's a great thing that we've now kind of opened the doors to basically everyone to open up an account and become an investor.

Jay Shetty 57:27 Yeah. Similar to the, to the property question, I wanted to know your take on traditional retirement accounts like the 401 [k] , like in comparison to the more agress- uh, aggressive growth strategies in stocks. Like what's your, what's your take there again from an opinion base?

Speaker 57:43 Yeah. So, uh, 401 [k] s are fantastic, uh, for those that, you know, are privileged to have an employer that offers one. Uh, and in particular if, if an employer offers a 401 [k] with a built-in match and they're matching your contributions, you know, that, that's free money. So that, that value prop is very, very strong. But you know, not everyone has access to that. And so what we've done is, um... A- and actually I think over time, uh, users and kind of end consumers can be less reliant on individual employers. I mean, it used to be that

Speaker 58:25 you would have a job, and you could like count on that r- employer's pension to take care of you. Uh, you know, maybe you'd work at the same employer for 20, 30 years then you'd retire, and you would kind of subsist on the, the pension plan. Um, and then of course Social Security kind of filled in some of the gaps, but I'd say the future of Social Security is very much shrouded in a cloud of uncertainty, right? So, um, I think the, the upshot is people have to take it upon themselves to, to be responsible for their own finances and their own retirement. I don't think that you can rely on the government. I don't think you can rely on any one employer. Um, many people aren't sticking around at a single employer for very long now, right?

Jay Shetty 59:15 Mm-hmm.

Speaker 59:16 And so what's important is having, uh, these investment accounts not tied to the employer and actually tied to the user, and you're kind of carrying around your, your retirement with you. And that's why we launched our IRA products, your individual retirement accounts. So we offer Roths and individual retirement accounts. If you're a Robinhood Gold subscriber, you get a 3% match on contributions. So basically you might not have an employer matching you, but Robinhood will match out of our own economics. In a world where you can't rely on a single employer, and you have these accounts that should travel with you, yeah, I, I think that it's much more future proof, and the product's really been resonating. You know, we had end of 2023, which was the first year that we launched our retirement products, we had about 1.7 billion in assets under custody, and that's gone up, uh, more than 6X since the beginning of the year. So now we have-

Jay Shetty 1:00:14 Wow

Speaker 1:00:15 ... close to 10 billion in assets in, in retirement accounts at Robinhood.

Jay Shetty 1:00:19 Was that, was that a more recent development, or was that something that was always part of the plan?

Speaker 1:00:24 We had always talked about offering retirement products. Um, there's just-- I mean, the, the financial space is so big, and there's so much that we wanna do, um, that the like order of things becomes important and whi- which, w-what's first and, you know, there, there's sort of like always a balancing act between innovative new features that you don't find anywhere else but Robinhood-Um, and those are things like our 24-hour market offering, which allows you to trade stocks 24 hours a day, and we were the first to market with that for individual stocks like Tesla and Nvidia and Apple. Things like retirement accounts that others offer, but, you know, we, we'd have to kind of like catch up and add them. And of course, we try to put our innovative twist, like the matches onto them. And then there's just like scaling the infrastructure,

Speaker 1:01:18 and that includes things like customer support and just making sure that the infrastructure gets more reliable and sophisticated to handle more.

Jay Shetty 1:01:26 Hmm.

Speaker 1:01:26 Um, which, you know, as we're expanding globally and servicing other customers in, in, in different countries is also a, a giant area of investment for us.

Jay Shetty 1:01:37 It's so interesting, isn't it? Because I feel like you're seeing all these new disruptive platforms, technologies give people so much, uh, opportunity that wasn't accessible before, but often they come under even more scrutiny and, uh, challenge than banks or anything, anything else did in, in previous years. I was wondering what your take on the GameStop movie was. I don't know if you saw it. Did you get to see it or?

Speaker 1:02:05 I saw some clips of it.

Jay Shetty 1:02:06 Okay. You haven't watched the full thing?

Speaker 1:02:08 No.

Jay Shetty 1:02:08 Yeah.

Speaker 1:02:08 I mean, I saw the clips that I was in, of course.

Jay Shetty 1:02:11 [chuckles]

Speaker 1:02:11 I wanted to, I wanted to see how I was portrayed. Uh, certainly not out of vanity or anything like that.

Jay Shetty 1:02:17 [laughs] Did they have to ask permission for that?

Speaker 1:02:20 No.

Jay Shetty 1:02:20 No.

Speaker 1:02:20 It was kind of the weirdest thing. You know, your likeness and name can just be kinda taken and monetized, and I don't think the movie made very much money, but, um, yeah, they certainly didn't ask for permission.

Jay Shetty 1:02:34 Right. And then when you saw the clips of you in it-

Speaker 1:02:35 Yeah

Jay Shetty 1:02:35 ... how did

Jay Shetty 1:02:36 you feel? Like, how did that-

Speaker 1:02:37 I thought they kinda got my mannerisms right.

Jay Shetty 1:02:39 [laughs]

Speaker 1:02:40 I mean, it made sense 'cause I think they probably looked at interviews that I'd done and-

Jay Shetty 1:02:45 Yeah, yeah

Speaker 1:02:45 ... you know, they, they basically had figured out sort of like my way of speaking and, uh, you know, the, the actor that played me was a very good-looking guy.

Jay Shetty 1:02:54 [laughs]

Speaker 1:02:54 You know, the Winter Soldier. Um, I think they had to kind of make him look a little uglier so he could, he could more accurately portray me, but, hey, I'm not complaining.

Jay Shetty 1:03:04 [laughs]

Speaker 1:03:04 Um, the plot was obviously like complete fabrication. I think, um, people really like this whole conspiracy theory thing and, you know, there was this like conspiracy theory of collusion floating, floating around, particularly at that time. So, um, I don't think they could actually like, uh, explicitly say the conspiracy theory, but they were just evoking it in all sorts of ways. So those parts were fictional, but I think they got my mannerisms right.

Jay Shetty 1:03:36 [laughs] And then I, I mean, I saw you do at the time, you did tons of interviews. I think you did a clubhouse with Elon and-

Speaker 1:03:43 Yeah. Yeah

Jay Shetty 1:03:43 ... there were, there were a bunch of different things that I, I s- I saw that you did at the time. What does it feel now reflecting back on that time? 'Cause I imagine that there was so much scrutiny, there was so much conspiracy, there was... How, how have you felt about it since then? Like now you can look backwards eye on it-

Speaker 1:03:59 Yeah

Jay Shetty 1:03:59 ... I guess, as opposed to at that time where you, you were looking right at it.

Speaker 1:04:03 Yeah.

Jay Shetty 1:04:03 What's changed over the last three years?

Speaker 1:04:05 Yeah, you know, from time to time I do look at like some old clips, um, of, of my interviews back then and, you know, I kinda feel bad for myself because I, I was a, I was like a little kid, you know. It just, the company was private. Um, I was always, particularly at that time, I was just very focused on getting the technology to work, and I didn't really wanna be in the public eye, and I, I certainly didn't see myself as, you know, some kind of political figure wrapped up in some kind of political quarrel over investing or regulation. I think what happened was, uh, you know, GameStop, for better or worse, put Robinhood sort of like firmly into the zeitgeist, right? Before it was a little fringe. I mean, we still had a lot of customers, but we, we weren't, we weren't like a politicized brand. Um, and I think at that point I really had to learn really quickly not just how to like build technology and lead teams to do it, but also how to represent the company

Speaker 1:05:15 and, you know, it's like you can see in those interviews, I'm kinda like reading a script and that, that was my approach to interviews for a while. I was like reading my points and trying to communicate the facts of the message. But, um, you know, now, now I know, now that I'm much more wise and mature and, uh, still not nearly as, uh, as experienced as you. You've probably done thousands of these, right? But y- it doesn't really resonate with our audience to just like read the facts. You have to give some emotion and some feeling and have some empathy and, you know, you have, there, there has to be a little bit more. So I've, I've had to kinda learn all that stuff and, uh, now they just look incredibly inauthentic and robotic and, um, I think the, the more time has passed, the more I'm kinda trying to be as authentic as possible in my appearances, and I think that had to be, had to be something that I learned. Um, and doing so, especially in that time where the stakes were super high and we were about to go public and, you know, you, you have like all sorts of advisors and lawyers and, you know, professionals that are trying to protect me and the firm say, "Don't say this. Be careful not to say this. Be careful when you're kinda making this point that you don't make people think that you're actually meaning this." So anywho, if, if you're kinda running the algorithm through your head of like what you can't say and what you, what you should say and how what you're saying could be kind of like interpreted-

Jay Shetty 1:06:54 It's exhausting hearing that.

Speaker 1:06:55 Exactly.

Jay Shetty 1:06:56 Yeah.

Speaker 1:06:56 Yeah. Eventually to, to some degree, like-Uh, you practice enough and it becomes second nature, and you can kind of rip up all the guidelines and be pretty confident that you're doing the right thing. But I, I think it has to be authentic, and back then I was just, like, very inexperienced at all of this stuff. I sort of undervalued it, and I think it took a while for me to get to, like, a basic level of competency.

Jay Shetty 1:07:24 Yeah, no, I mean, I think it's fair. I think that every founder goes through that journey of, like, you've been building something in private in, in a room or an office for so many years, and all of a sudden your company gets notoriety in mainstream culture.

Speaker 1:07:37 Yeah.

Jay Shetty 1:07:37 And then all of a sudden you're having to do things that you don't necessarily set out to do as a founder. I feel like even actors go through that, where you're just working on a movie on a set-

Speaker 1:07:46 Yeah

Jay Shetty 1:07:46 ... and then you have to go promote the movie, but... Or, or you're seen in public and something impacts the movie, and that wasn't necessarily what you signed up for. What were the actual ramifications or consequences of all of that? Like, what actually- how did that actually affect Robinhood-

Speaker 1:08:01 Well-

Jay Shetty 1:08:01 ... apart from the cultural propelling?

Speaker 1:08:03 Well, I think a lot of, a lot of, uh, people who were just, like, looking at me at the time and maybe were not Robinhood users themselves, maybe some of them were Robinhood users, but others were kind of thinking about it and were aware of it, um, I think some people got the impression that I just, like, maybe didn't care about our customers. Um, and I think that was the part that, that actually, like, pained me and kind of stayed with me over time. Uh, they're like, "Oh, look at him. He doesn't have any emotions, and he's just, like, talking about these clearing house regulatory requirements, but he doesn't understand the, the pain that kind of customers went through, who wanted to, you know, buy GameStop or AMC or all these other things." I mean, like, I definitely understood the pain. That was, those were some of the most painful, sleepless nights for me, going through that whole, uh, uh, ordeal. But yeah, my approach was always just, um, uh, I don't, I don't wanna, like, talk about doing stuff. I like to do stuff. So, uh, I'm not gonna, like... Maybe, maybe I'm not gonna be, like, super emotive with my customers, but I'm just gonna build them great products that save them tons of money and give them a great experience so that they can learn to invest and manage their money. I think that was painful. Obviously, the collusion narrative was painful because it was, like, false and-

Jay Shetty 1:09:28 But it was never proven. There was no, there was no, like-

Speaker 1:09:30 It was disproven.

Jay Shetty 1:09:31 Yeah.

Speaker 1:09:31 I mean, l- learning how to communicate and actually, like, um, to some degree, like, going through a crisis and then surviving and then sort of, like, learning from it and, um, building, building back better so that you don't actually repeat the same thing again. I mean, Robinhood's had our share of issues over the years. Like, we definitely haven't been perfect. But, I mean, one thing I'm proud of is they're all, like, we've made mistakes, but they're a, they're a series of original mistakes, so we tend not to make the, you know, same mistake twice. And so, like, throughout all of these-

Jay Shetty 1:10:13 Mm

Speaker 1:10:13 ... we've just, like, built up a ton of scar tissue and learnings and have been a much stronger company. And I think all of this, all, all of the crises, you know, I remember the dates. You know, it's like-

Jay Shetty 1:10:24 Mm. Wow

Speaker 1:10:25 ... uh, you know, it's like, uh, January 28th, 2021, or, uh, December 12th, 2018, or March 2nd, 2020, right at the beginning of COVID, when we had a day-long trading outage. So you kinda remember all of these events and kinda take different things away from them. But, um, I mean, at, at the end of the day, we've been a company for 10 years, and you're gonna... If, if you're in a disruptive space where you're kind of challenging the status quo and, and trying to change things, uh, some people are... Yeah, if, some people are gonna be unhappy, right? And, uh, you have to have thick skin to kind of get through that.

Jay Shetty 1:11:09 Yeah. It's a, it's an interesting dynamic, isn't it? When, when companies are doing something for the first time, it's, it's inevitable that there's gonna be mistakes and mismanagement and challenges, and I think-

Speaker 1:11:21 And it's almost like, you know, if, if you're being too careful, if you actually make zero mistakes, you might not be successful. You're probably not gonna be successful because you're just, like, not pushing hard enough.

Jay Shetty 1:11:32 Mm.

Speaker 1:11:32 Like, it's like you, at some point not, not taking any risk is, like, the biggest risk of all, particularly in, like, a hot, competitive market. So you just, you have to know the right amount, and I think it's a, it's somewhat of a, a fine dance.

Jay Shetty 1:11:48 Yeah.

Speaker 1:11:48 But it's, it's, it's certainly not acceptable to, like, play everything super safe in, in the world of business.

Jay Shetty 1:11:54 And I guess the challenge is because it's dealing with people's money, it's, it's even a more heightened-

Speaker 1:11:59 There's a heightened sense-

Jay Shetty 1:12:01 Yeah

Speaker 1:12:01 ... of, of safety. Yeah.

Jay Shetty 1:12:02 Yeah.

Speaker 1:12:02 Absolutely. Yeah, and, and people can be very emotional about their money.

Jay Shetty 1:12:06 Of course. I mean, it's, especially if people are putting large sums in. What, what were some of the biggest mistakes that you felt and the lessons you learned from them that were so pivotal that you think would be useful for other founders for, for customers to hear, for, for other people to just be aware of, like, this is how you now look at it versus at the time when you're like, "Well, we need to be risk, pro risk, try things out"?

Speaker 1:12:29 Designing our infrastructure, uh, with scalability in mind from day one probably would've saved us quite a bit of grief because we've, we've had to, like, rewrite and, like, redo multiple times. The conventional wisdom is you don't wanna

Speaker 1:12:46 prematurely optimize anything. The Silicon Valley sort of, like, tombs are littered with corpses of startups that had perfect infrastructure-

Jay Shetty 1:12:53 Yeah

Speaker 1:12:53 ... and no users, you know?

Jay Shetty 1:12:55 Yeah, yeah, yeah.

Speaker 1:12:55 So it's always hard to do the counterfactual on these things because, like-You know, if we had, if we had over-invested in those things, maybe we, like, wouldn't have customers and-

Jay Shetty 1:13:07 Mm-hmm. Mm-hmm

Speaker 1:13:07 ... then, uh, no problems, but no customers, right? I think we can end up being, like, tormented by our past too much. So I don't even, I don't know how helpful it is.

Jay Shetty 1:13:18 Yeah. That's, that's an interesting take. I, I can see why. I can definitely see why. I mean, the only thing that stood out to me was you saying that your most difficult period was in 2022 when Robinhood's business took a hit amid the market downturn.

Speaker 1:13:33 Yeah, that's true.

Jay Shetty 1:13:34 And, and, and I feel like what, what was so... What was, what was so tough for you personally about that? I mean, you've... Yeah.

Speaker 1:13:40 Some people might hear that and be like, "That's crazy." Like, how can that compare to GameStop, right?

Speaker 1:13:46 I think the thing about GameStop was this, like, very acute difficulty. Um, you know, and it was like almost like a rollercoaster ride, you know? It's, like, intense, but it's over in three minutes, and it's kinda clear what you have to do to, to get out of that difficult situation. And, you know, we navigated it. We became a stronger company. Um, 2022 was, like, a slower burn, right? And we had just gone public in middle of 2021, kind of at the end of the window. The window has kind of been basically shut since then for IPOs, right? And we kinda squeezed in right before things got really bad. And so what happened was, um, you had this period where, uh, it became clear that inflation was getting completely out of hand, and that freaked everyone out. Um, and then it became clear that the Fed was gonna hike rates, and we, we had kind of like everyone was prepared for a multi-year period of, like, zero rates. Um, and, you know, to tame inflation, the Fed, who hadn't really dealt with inflation for 30 years, had to hike rates up at

Speaker 1:14:59 the fastest pace in the past several decades. And what happens was when, when rates go up, um, people typically in- invest less because you imagine if you can get 5% on your cash just sitting there, and the stock market appreciates, you know, 7 to 10% each year pre-tax, um, and you can get that 5% rate, uh, without taking on market risk, that becomes much more, much more compelling relatively. So you'll have less investing. And then that's what we saw. Less people were interested in opening up brokerage accounts and investing for the first time, and that was, like, our whole business. You know? That was the core of our business, and we didn't really have anything for a high-rate environment at that time. And, you know, there, there was some criticism of this when we went public and some questions. You know, the, the analysts and investors would be like, "Well, Robinhood, you've done really well during COVID and during this extended period of zero rates. The company has gone to 20 million users in that time, but how are you guys gonna do in a environment where the interest rates are higher?"

Jay Shetty 1:16:13 Mm.

Speaker 1:16:13 You know? Is it, is this just... Is Robinhood a zero interest rate phenomenon?

Jay Shetty 1:16:17 Mm.

Speaker 1:16:17 Um, of course, you know, we, we had answers to that, but un- until you prove that, uh, people don't really believe you. And so we, we actually had to, like, go through, uh, an incredibly challenging process of, like, changing the strategy of the company, effectively refounding the company in 2022, um, when, you know, the, the entire macro environment shifted. And I think we, we did a really good job. I mean, within six months after that, we had gone adjusted EBITDA positive. In 2023, we had GAAP profitability at the first time. We now have eight business lines that are generating 100 million in revenue or more, so the business is very diversified. More than half of the ren- revenue is interest rather than transactions. And now we're starting to get the question, "Wow, like, Robinhood's doing so well in this high interest rate environment. The Fed's gonna cut rates. What are you guys gonna do-

Jay Shetty 1:17:18 [laughs] Yes

Speaker 1:17:19 ... when, when the Fed cuts the rates and, like, you can't, you can't have these, like, high interest rate revenue streams firing on all cylinders now?" So now we have to go backwards and-

Jay Shetty 1:17:29 [laughs]

Speaker 1:17:30 ... and prove that, uh, customers still would wanna trade options and crypto and equities. So-

Jay Shetty 1:17:35 Yeah. Yeah. Wait, it was, I, I think I read-

Speaker 1:17:37 It's been interesting.

Jay Shetty 1:17:38 Yeah, it's funny how it just keeps oscillating between or cycling, I guess.

Speaker 1:17:42 Well, the more times you do that cycle, I, I always felt like when we were private, every time we raised a new round of funding, we had to kind of, like, reprove ourselves to these new investors that came in and just didn't understand the company. Um, but then, you know, the longer we lasted as, you know, we got up to, like, series H, I think, in private funding and, you know, by that point, the series A, B, C investors had developed such a deep understanding of the company. They, they had so much trust, and I think it's the same with, with a public company, or at least I'd like to think so. You know, you pick your investors, your investors pick you, and the more cycles we go through, we are building institutional knowledge as a public company. And I do think that, you know, the market is starting to, to recognize that, hey, maybe this founding team, the management team of this company knows what they're doing. And the more cycles we go through, I think the more we'll prove that out.

Jay Shetty 1:18:43 Yeah, and I think I've read somewhere where you were saying that that time really changed how you looked at being a CEO and a leader and, and reprioritizing the company. Was... What was... You, you just talked there about almost what you did in terms of building product, diversifying, uh, income streams, you know, having all of the portfolio of how people could use-Uh, Robinhood, but what was that like for you internally from a leadership perspective? What changed as how you-- about how you led?

Speaker 1:19:12 Yeah. So, so there, there was this, uh, exercise that I would go through with, uh, with some of my team where I would imagine if, uh, a new person came into the role as, as CEO, and I've told this story a couple of times, and it, it's not like I imagined myself being fired, or I was worried about that or anything like that. But it was al-almost like, okay, this thought exercise of let's say I didn't come with any of the baggage of, like, having founded the company and made all the decisions to get us to this point. If I could look at it from, um, with a beginner's mind and just say, "Hey, I'm here. I'm seeing this company. This is kind of the state of affairs. What would I do differently?" And, you know, I came up with a, a bunch of things, uh, that like a stereotypical, like, top CEO coming in would, would do differently. They would pull back on remote first and get people in the office so they could collaborate and work together in person. And even though I had turned Robinhood into a remote-first company not too long before, I reversed

Speaker 1:20:21 my own decision there, which was kind of tough from a self-consistency standpoint. People have a very hard time being inconsistent with their prior selves. So I think that's, like, one mental barrier to get past. Um, another one was I just made this realization that, you know, if you look at our business, a lot of our revenue is generated by, you know, a relatively small component of very active traders, and we actually weren't building products specifically for them. And as a matter of fact, we looked at kind of this customer base, um, very deeply in 2022, and these folks tend to be more sophisticated. So actually when, when the markets are crashing or moving sideways, they tend to actually be more resilient 'cause they can deploy more sophisticated strategies that can take advantage of all sorts of market environments. And we saw-- what we saw was the more active someone traded, ergo the more revenue they generated for us, the less happy they were with Robinhood.

Jay Shetty 1:21:30 Hmm.

Speaker 1:21:31 So, so actually our most active customers had, like, the least customer satisfaction with the platform. So then when we kind of like grokked this, we were like, "This is a five-alarm fire." Like any healthy business, like, you know, you don't have to be a-

Jay Shetty 1:21:46 Yeah

Speaker 1:21:46 ... an MBA from Wharton to realize that your most valuable customers being, like, unhappy with you is a big problem. So, um, but what was remarkable was when we kinda like shifted focus towards making these active trader-traders really, really happy, we fixed it like that, like much faster than I thought possible. I think within six months we had basically like solved the problem. Yeah, it was kind of interesting. A lot of introspection to how we ended up sort of like ignoring the active trader audience for, for so long. I think once we sort of like refocused on that and, and, and really started treating them like the important constituent part of the user base that they are, uh, the company just started doing much better. I think by and large, that was, uh, the biggest part of our, of our turnaround as a company since going public.

Jay Shetty 1:22:43 Hmm. That's, that, that's fascinating. I mean, to, to discover that your deepest users are unhappy-

Speaker 1:22:49 Yeah

Jay Shetty 1:22:49 ... it must be like such a-

Speaker 1:22:51 Yeah, and part of it was-

Jay Shetty 1:22:52 Yeah

Speaker 1:22:52 ... like Robinhood was historically very targeted, very focused on the first-timers.

Jay Shetty 1:22:58 Mm-hmm.

Speaker 1:22:58 We wanna be someone's first brokerage account. We wanna make it as easy as possible to get started with $5, right? But what happened was, um, one, a lot of the people that got started with us then became really sophisticated and, like, wanted more advanced tools and had more specialized needs, but still loved Robinhood and loved the simplicity and the ease of use of the interface. But the other part was, if you think about our options trading platform, for example, we're one of the few, um, very few that offer options trading for no contract fees. Most of our competitors charge sixty-five cents per options contract.

Jay Shetty 1:23:40 Hmm.

Speaker 1:23:40 So if you trade 100 contracts, that's $65. That's real money.

Jay Shetty 1:23:44 Mm-hmm.

Speaker 1:23:45 And there's some active traders that, you know, spend thousands of dollars a month on other platforms paying these contract fees. So even if like the platform's not really built for you, um, there's like a really strong economic incentive to use it. So you had a lot of these like super active options traders that were using Schwab or E-Trade or others. Maybe they're using their charting from their other platform, but they're putting the trades in via Robinhood-

Jay Shetty 1:24:12 Hmm

Speaker 1:24:13 ... and just to, to save fees. So, you know, we grew active traders. We also had some using us because the, the economics were so good.

Jay Shetty 1:24:23 Yeah.

Speaker 1:24:23 And, and that way we sort of like built up this large active trader business incidentally while building products for first-time novice investors.

Jay Shetty 1:24:33 Hmm. Yeah. I mean, it, it's so interesting that since the beginning, everyth-everything you talk about from the name, there's always been people who've been disgruntled, slightly angry, as you said earlier. Like

Jay Shetty 1:24:46 this feeling of like, "Oh, these guys are doing something," you know?

Speaker 1:24:49 Yeah.

Jay Shetty 1:24:49 Has, has that kind of like... Has that kinda changed now as the company matures and like people see you become established and, not obviously competitors, but when you look at the people who felt that way initially, do you find that founders are reaching out, you're more connected to people and as, as you've become more established as well? Or does it get lonelier as things go on?

Speaker 1:25:09 Well, I think in different ways it does get lonelier. Uh, but I would say-In general, um, I think in the past couple of years especially, we've like fixed more problems than we've created, hopefully. Uh, and so our customers generally have been getting happier and happier, not just the active traders, but, uh, you know, the great thing when you fix things for active traders, they're like power users of the platform. So the customer experience for a more casual user improves as well. So yeah, fortunately, you know, again, knock on wood, uh, we, we've been like, we, we've been avoiding like major catastrophes in the last few years. Um, which, you know, the last few years have been hard just with standard business challenges to, to work through. So that's been really nice. I think like to some degree I, I don't expect Robinhood to ever be perfectly understood and non-controversial, so it just comes with the, comes with the territory, I guess.

Jay Shetty 1:26:12 What's made you comfortable with that? I feel like that's obviously always hard. We always wanna be liked. We want what we create to be, you know, overall seen in a certain way. What, what's made you comfortable with that?

Speaker 1:26:23 Well, I think the first time that, for example, I, I saw negative press about Robinhood, uh, probably was like twenty eighteen, twenty nineteen. So for the first four to five years of the company's existence, it felt like everyone was kind of rooting for us. Like the regulators were fans, right?

Jay Shetty 1:26:40 Yeah, yeah.

Speaker 1:26:41 You know, I, I remember our first FINRA exam. Um, uh, we, we had, you know, someone kind of looking at what we were doing. FINRA's our primary regulator and, you know, this was a young guy. Um, he's like, "Hey, there's never any like new brokerages filing.

Speaker 1:27:00 This is like super interesting. I wish you guys luck." It gave me this feeling of like, wow, I... Every investor and person I talk to is like, "Run as far away from regulation as possible. You don't wanna be a regulated business. It's gonna just grind the company to a slow death, so find some way to do it via partnerships or something." When we got started, it was unheard of to, uh, to like be a financially regulated startup. It was really before the word fintech existed, for example. Robinhood predated that, probably created it to, to some degree. And then, you know, the press was always telling this David and Goliath tale where we were these little guys that were going after the, you know, uh, big established, gigantic competitors. Um, and you know, we had the millennials on our side and, and so it was just like very, very positive always. And it kind of... I, I was like, I don't really get what all of the fuss is about. Like, all of the negative press and all this stuff that people are talking about, that's happening to other companies, maybe not us. Eventually, I would get like the comms and marketing people that, um, they would come

Speaker 1:28:16 and show me the clock of like company perception. Have, have you seen this?

Jay Shetty 1:28:20 I've not, no.

Speaker 1:28:21 Where it's like-

Jay Shetty 1:28:21 I'm fascinated

Speaker 1:28:22 ... it's like this clock and like basically when you're kind of here, everyone loves you, and when you're kind of here-

Jay Shetty 1:28:28 Oh, I haven't seen-

Speaker 1:28:29 ... everyone hates you

Jay Shetty 1:28:29 ... I need to see that.

Speaker 1:28:30 And, and they're like, "So you're here at like four o'clock, but you should get ready in the next six to twelve months you'll be here, and, and everyone's gonna hate you, and you just haven't seen it yet."

Jay Shetty 1:28:40 And then it keeps going around?

Speaker 1:28:41 Yeah, and then it keeps-

Jay Shetty 1:28:42 Yeah

Speaker 1:28:42 ... going around, and they're like, "Look, Facebook is here. They're like a little ahead of you. Everyone hates them now." [laughs]

Jay Shetty 1:28:47 [laughs]

Speaker 1:28:47 They ended up being exactly right. [laughs]

Jay Shetty 1:28:49 [laughs]

Speaker 1:28:50 Six to twelve months later it was like all negative press, but I guess like the way I got used to it was just going through that, right?

Jay Shetty 1:28:57 Yeah.

Speaker 1:28:57 It's like the first time a negative article hits, you're like, "Holy shit, it's negative press. I've never seen it before." You, you kind of feel like it's the end of the world, and then-

Jay Shetty 1:29:08 Yeah

Speaker 1:29:09 ... you know, after the 600th one, you're just kinda like, "Okay, that's another one of these things."

Jay Shetty 1:29:15 Yeah.

Speaker 1:29:16 "I'm just gonna move on and, and run my business."

Jay Shetty 1:29:19 Yeah, exactly.

Speaker 1:29:19 And then when the press turns positive, you're like positively surprised-

Jay Shetty 1:29:24 [laughs]

Speaker 1:29:24 ... and you're not expecting it. So I think that's how I got through it. You just get punched in the face enough, and your face contorts to the shape-

Jay Shetty 1:29:32 [laughs]

Speaker 1:29:32 ... of the fist, right? [laughs]

Jay Shetty 1:29:34 What, what... How have you managed your, your personal life through all this? Because I feel like, you know, when we started the interview today, you talked so much about your personal life and, you know, how you came to this country and, and the build, and I feel like, you know, as you're an entrepreneur and your professional and personal life almost become one, and, you know, when you're building something as- that's growing as fast as you are, you get absorbed and you have to be. Like, you know, you sleep and dream and eat Robinhood. Like, that's how it has to work. That's how it goes.

Speaker 1:30:02 Yeah.

Jay Shetty 1:30:02 What's been powerful for you in your personal life that you think has allowed you to reinvent, reboot, s- stay renewed, stay re-enthusiastic? Like, you seem as excited about Robinhood today as I imagine you would've been in 2013, if not more, and what, what's been allowed you to renew your enthusiasm so consistently?

Speaker 1:30:23 My kind of, uh, sort of like analogy of so many things, my mental model for so many things that I use, uh, in business and in life is kind of the, the barbell. Like, I like to get things on opposite sides of the barbell, right? And I tend to ignore the things in the middle, right? So, so basically for me personally, my work is like highly intellectual, and that's maybe on one extreme. And what's, what's the opposite of like intellectual? Just sort of like the physical. Um, so I really focus on that, and it's just, uh, super basic. And, you know, when I started, I would kind ofNot really spend too much time and effort on my health, but as I've gotten older and the job's gotten more stressful, I notice that, like, effort I put in here pays off multiples, right? So now my, like, wellness routine and my training, I spend more time just dialing it in, so making sure I get the right amount of sleep, that I have an awesome mattress-

Jay Shetty 1:31:33 Mm-hmm

Speaker 1:31:33 ... that, like, I keep my bed at the right temperature. I like to journal before bed, and I

Speaker 1:31:38 like to shut off the devices. The devices, by the way, has been the hard part for me. You know, I, like, try really hard. I have to do unnatural things to, like, stop from looking at my phone.

Jay Shetty 1:31:49 Like?

Speaker 1:31:50 Like, my phone's not with me right now-

Jay Shetty 1:31:52 Yeah

Speaker 1:31:52 ... for example, because, you know, I, I would just... It's hard to avoid looking at it. Um, and if I know it's in my pocket, you know, then it's almost, like, too close. So I mean, actually, during the whole GameStop stuff, it was particularly acute for me because w- I was at home, so there was no boundary between work and personal, and I was going a little bit crazy. And so I had this thing where I would try to sleep with my phone in a different room, so I'm not always just tempted to check out what emergency is, is happening, which ended up being a big problem the morning of GameStop because-

Jay Shetty 1:32:33 Oh, gosh

Speaker 1:32:33 ... it took forever for my team to, like-

Jay Shetty 1:32:35 [laughs] Get through

Speaker 1:32:36 ... get ahold of me. Yeah. [laughs] And then now I s- Then for a while, I slept with, like, three phones next to me, which it really backfired. But yeah, my health, I work out a lot. Um, I've gotten into, like, hot cold therapy.

Jay Shetty 1:32:49 Mm-hmm.

Speaker 1:32:50 At first I was doing cryo, but then I got, like, a cold plunge at my house that, and, and that really helped. And yeah, just, like, the basics of sleep and diet, I think has, has made a world of difference.

Jay Shetty 1:33:02 Mm.

Speaker 1:33:03 And just trying to, like... Uh, I don't think I've figured out the device thing and sort of, like, my rhythm of the day perfectly, but that's a, that's a work in progress.

Jay Shetty 1:33:14 Mm. And you're married, you're married too, right? You had mentioned-

Speaker 1:33:17 Yeah.

Jay Shetty 1:33:17 Yeah, yeah. What's- How's, how's it been like dealing with all of this? But it sounds like you've been together for quite some time. Like, it's-

Speaker 1:33:24 Yeah.

Jay Shetty 1:33:24 Yeah.

Speaker 1:33:25 I've been married for, uh, almost 10 years now.

Jay Shetty 1:33:27 Yeah.

Speaker 1:33:28 Yeah. Got a, got a bunch of kids. Um, great kids. And, uh, they don't really know what I do. [laughs]

Jay Shetty 1:33:36 [laughs] Same back to how your wife didn't know what you did either.

Speaker 1:33:40 Yeah. Um, well, she did, but, uh-

Jay Shetty 1:33:42 Yeah

Speaker 1:33:43 ... yeah. Um-

Jay Shetty 1:33:44 Show them Robinhood, the cartoon, and they'll get it.

Speaker 1:33:46 Oh, yeah. They love that cartoon. I think, like, the, the credit card, they kind of get a little bit 'cause they know they can use it to buy toys.

Jay Shetty 1:33:53 [laughs]

Speaker 1:33:54 Yeah. My, my wife is a, a great complement to me. She's very patient. She's very empathetic, all the things that I'm not. Um, and so she's just been a, an amazing partner through all the crises, and-

Jay Shetty 1:34:08 Mm

Speaker 1:34:08 ... she sort of, like, knew me before Robinhood, right? I mean, she, she kinda helped come up with the name. So I think, I think she feels like Robinhood's like one of the children, just kinda like I do.

Jay Shetty 1:34:21 Yeah. That's beautiful, man. I wanted to... This I'll probably cut and put back in. I was... Uh, you mentioned the credit card there. I'm intrigued as to products you created because you saw the traditional versions of them being ineffective.

Speaker 1:34:35 Yeah.

Jay Shetty 1:34:35 So when you go build a credit card, what's, what's wrong with a traditional credit, credit card that you can get from anywhere else? Like, what, what are you doing differently?

Speaker 1:34:44 I think there are a couple of problems with traditional credit cards. Um, one is that basically the rewards are kind of incomprehensible. I think that anytime there's, like, websites devoted to, like, exactly how you should kind of, like, work through your points to optimize the value you get from all the points, um, like media empires like The Points Guy were created on the back of this, right? It's like, yeah, if, if you

Speaker 1:35:19 wanna spend 10 hours a week optimizing your points and max- maximizing the rewards, um, I, I think that's pretty good, but we wanted to create something that simplifies all of that, and basically just by, like, using it, for the vast majority of people, you know you get the best rewards, so a simple, clear reward structure that you don't have to be, like, a PhD to decipher. People building their credit, if, if you're a student and you are, you know, you, you don't have a credit history, uh, typically you have to start out with, like, a really crappy card. You have to sort of, like, upgrade your way to a nicer card once you prove that you're worthy, and, you know, there's a crappy starter card for people with no credit history and, like, the premium card for, uh, folks that have the means. We asked, "Can we, can we fix that? Can we actually have a starter card that has the same economics, the same rewards, the same design, uh, for a- as, like, a highly premium card?"

Jay Shetty 1:36:25 Mm.

Speaker 1:36:25 And

Speaker 1:36:26 then the digital experience. You know, most cards don't really think through how to take all of the things that technology and, you know, fintech has given us and, uh, sort of, like, give them to you in the same package. Um, and those are things like virtual cards. I don't know if you've been to a restaurant. You probably, you probably go to restaurants where you have to give your credit card to lock down the reservation.

Jay Shetty 1:36:52 Mm-hmm.

Speaker 1:36:53 Imagine you could create a virtual card so that not every restaurant has your actual card number, and if you wanna cancel the reservation, you don't have to call the restaurant. You could just disappear that virtual card, right?

Jay Shetty 1:37:04 Got it.

Speaker 1:37:05 Or, you know, if you wanna sign up for a free trial, you can create a virtual card seamlessly, and that can be your free trial card, but you don't have to give them your, your real phone number.

Jay Shetty 1:37:14 Mm.

Speaker 1:37:14 Helps maintain people's privacy, and in fact, there are great innovative businesses Privacy.com created with, with this notion. We put all three of these things in, in one package, one card for everyone, the best rewards in the industry, 3% cash back on all categories, a beautiful physical card.I- including the solid gold variant, which I have in my wallet, I can show you, and, uh, a digital experience that's, like, world-class. Um, and we put all these together and it's, it's definitely the best reviewed, most popular product that we've ever rolled out. Uh, even more popular than free trading. So it's, it's been quite amazing. And, and now it's just, like, like we- people want it rolled out faster.

Jay Shetty 1:38:03 Mm.

Speaker 1:38:03 That's the one limitation. We had, uh, over a million people join the wait list for it within a month of announcement, and-

Jay Shetty 1:38:10 Wow

Speaker 1:38:11 ... the bet was that if we make the rewards and the product so good, we wouldn't have to spend the typical, like, $500 to acquire a credit card user that the, the big banks spend. We could get it just organically, and that seems to have proven out.

Jay Shetty 1:38:25 Wow.

Speaker 1:38:25 Now it's just about getting it into everyone's hands while also validating the economics and the underwriting of a new credit model.

Jay Shetty 1:38:34 Vlad, it's been fascinating talking to you. You're truly a extremely unique individual in, in, in a positive sense. It's, uh-

Speaker 1:38:40 Oh, thank you

Jay Shetty 1:38:41 ... it's really a brilliant, uh-

Speaker 1:38:42 Maybe some negative too, you know. [laughs]

Jay Shetty 1:38:44 Brilliant, brilliant to dive into your mind, honestly. It's, uh, it's, it's been really fascinating for me. We end every episode of On Purpose with a final five, so these questions have to be answered in one word to one sentence maximum. So Vlad Tenev, these are your final five. The first question is, what is the best advice you've ever heard or received?

Speaker 1:39:04 Be honest.

Jay Shetty 1:39:05 Mm-hmm.

Speaker 1:39:05 Don't lie to others, but most of all, don't lie to yourself.

Jay Shetty 1:39:08 Mm. Good advice. Question number two, uh, what is the worst advice you've ever heard or received?

Speaker 1:39:14 I think in the context of the, of the company, uh, trusting experts who have done it before-

Jay Shetty 1:39:22 Mm

Speaker 1:39:22 ... is bad advice, generally speaking. I think you have to listen to experts and understand, but, like, I don't think people should blindly trust anything.

Jay Shetty 1:39:33 Uh, question number three, if we saw one of your evening journal entries, what would we learn about you that we haven't learned today?

Speaker 1:39:40 I still really love math, and I spend, uh, a non-trivial amount of times trying to solve basic math problems.

Jay Shetty 1:39:49 Really?

Speaker 1:39:49 Yeah.

Jay Shetty 1:39:50 Oh, wow. That's cool. In your journal?

Speaker 1:39:53 In my journal.

Jay Shetty 1:39:54 Okay.

Speaker 1:39:54 Yeah, yeah, you'll see pictures of, like, triangles and spheres and stuff in there.

Jay Shetty 1:39:58 That's cool. Uh, fourth question, how would you define your current purpose?

Speaker 1:40:03 I think it's, it's to seek truth. I think if I had to find, like, a personal... Uh, I think a lot about, like, what are my, what are my personal values?

Jay Shetty 1:40:14 Mm.

Speaker 1:40:14 What do I care the most about? And I think my top value is, is truth-

Jay Shetty 1:40:22 Mm

Speaker 1:40:22 ... actually. I care about truth, and I mean, in, in terms of purpose, uh, I, I really want to understand how the universe works.

Jay Shetty 1:40:35 Mathematically or other?

Speaker 1:40:36 Mathematically, physically, yeah. I mean, we can start with that, but of course, psychologically is good too.

Jay Shetty 1:40:44 Yeah. Oh, cool.

Speaker 1:40:44 Financially-

Jay Shetty 1:40:45 Yeah

Speaker 1:40:45 ... I think we're closest to that one.

Jay Shetty 1:40:47 Yeah.

Speaker 1:40:48 Pretty close to understanding how it works financially.

Jay Shetty 1:40:50 And how do you define truth?

Jay Shetty 1:40:52 That's a sub question to that, not the fifth.

Speaker 1:40:54 I think that's a really good question. How is truth defined? Um, I think that truth is something that multiple observers will simultaneously agree on.

Jay Shetty 1:41:08 Mm.

Speaker 1:41:09 Yeah, so if you had, like, multiple independent, intelligent observers observing an event with, like, the same information, they should agree on it.

Jay Shetty 1:41:19 Mm.

Speaker 1:41:19 And if, if they agree on it, then, uh, you have, like, high confidence if it's true.

Jay Shetty 1:41:27 Yeah. Mm.

Speaker 1:41:27 Now of course, if it's something that's, like, fact-based, it's even easier because you can just, like, prove that it's true if it follows from axioms. But-

Jay Shetty 1:41:36 Mm

Speaker 1:41:36 ... um, probably the more interesting one is if, if there's some ambiguity.

Jay Shetty 1:41:40 Yeah. I also find that truth-

Speaker 1:41:42 But I think you need a notion of verification and-

Jay Shetty 1:41:45 Mm

Speaker 1:41:45 ... uh, and also some notion of, like, independence.

Jay Shetty 1:41:49 Yeah. One of my favorite verifications of truth I feel in my definition is timelessness, that something being timeless, i.e. it was as true a thousand years ago as it is today.

Speaker 1:41:59 Yeah, like the-

Jay Shetty 1:41:59 There's something powerful about that

Speaker 1:42:01 ... Lindy effect, right?

Jay Shetty 1:42:03 Tell me about it.

Speaker 1:42:04 Yeah. Basically, like, um, I, I think it was, uh, I read about it from Nassim Taleb. You know him?

Jay Shetty 1:42:10 Okay. Yes, yes, yes, yes, yes.

Speaker 1:42:11 Yeah. So, so basically, like, uh, he says a, a good approximation for how long something's likely to be relevant is how long it's already been relevant.

Jay Shetty 1:42:22 Yeah.

Speaker 1:42:23 So I think the, the way he kind of describes it is the New York Times bestseller list. If a book, uh, sort of like hits the bestseller list and is a bestseller for one week, uh, you can basically assume that it's gonna be irrelevant in a couple of weeks, right?

Jay Shetty 1:42:40 Mm-hmm.

Speaker 1:42:40 But if, you know, the Holy Bible, people have been reading it for 2,000 years, you have pretty high confidence that it might, it's, it's gonna be relevant 2,000 years-

Jay Shetty 1:42:49 Yeah

Speaker 1:42:49 ... from now in a way that you wouldn't with what's on the bestseller list now.

Jay Shetty 1:42:53 Absolutely.

Speaker 1:42:54 Yeah.

Jay Shetty 1:42:54 Absolutely. Fifth and final question, we ask this to every guest who's ever been on the show. If you could create one law that everyone in the world had to follow, what would it be?

Speaker 1:43:03 I think there's too many laws.

Jay Shetty 1:43:04 [laughs]

Speaker 1:43:05 Yeah, I think deleting laws is the more interesting thing.

Jay Shetty 1:43:08 Ooh.

Speaker 1:43:08 If there was a law where in order to create a new law, you had to delete at least one existing law, I would feel much better about it.

Jay Shetty 1:43:17 That's a good law.

Speaker 1:43:18 If you think about over-regulation, which I think is a big problem, it's really, really easy for new laws to be created. It's easy for, like, organizations and the government to get bigger, and that creates all sorts of problems, like it's, it's impossible to get, you know, high-speed rail in California, right?

Jay Shetty 1:43:37 Mm-hmm.

Speaker 1:43:37 We need a force to counteract that, and right now it's very easy for these things to get bigger and more laws. But like periodically, we've got to go in there and slash laws and make things smaller, and there's, uh, there's a lot of pressure against this.

Jay Shetty 1:43:53 Well said. Vlad, uh, I look forward to many more conversations with you, philosophical, seeking of the truth, psychological. Uh, truly, truly wonderful to get to know you today, and thank you for being so honest.

Speaker 1:44:07 Yeah.

Jay Shetty 1:44:07 Thank you for being so open and vulnerable, and, uh, even though you described yourself as stoic at the start, I definitely feel, uh, you, you, you shared, you shared a lot of emotion in, in what you shared, so thank you so much for, for doing that. I really appreciate it.

Speaker 1:44:20 Thank you for taking the time. You know, it's been, it's been a lot of fun. You know-

Jay Shetty 1:44:23 Yeah

Speaker 1:44:24 ... I don't usually do, uh, I don't do too many podcasts in general, but this was a unique experience.

Jay Shetty 1:44:30 Yeah. I'm very grateful.

Speaker 1:44:31 Yeah.

Jay Shetty 1:44:31 Grateful for your time. Thank you so much.

Speaker 1:44:33 Yeah, likewise.

Jay Shetty 1:44:33 Thank you. Thank you so much for listening to this conversation. If you enjoyed it, you'll love my chat with Adam Grant on why discomfort is the key to growth and the strategies for unlocking your hidden potential. If you know you wanna be more and achieve more this year, go check it out right now.

1:44:53 You set a goal today, you achieve it in six months, and then by the time it happens, it's almost a relief. There's no sense of meaning and purpose. You sort of expected it, and you would've been disappointed if it didn't happen