A Conversation with Robinhood co-founder and CEO Vlad Tenev

I want to come to GameStop for a moment. You need billions in collateral. You make a decision to restrict the trading. How did you make that decision? >> It was a situation which had no precedent. >> The narrative that came out was you were in bed with hedge funds. >> A juicy falsehood is more powerful than a boring truth. >> What did you think of the movie Dumb Money when you watched it? >> I didn't see the entire thing, but I did see the clips that I was in. >> Wait, come on. You haven't watched it? I think what most companies suffer from is >> I want to come to GameStop for a moment. So, take me back to the moment your phone rings, you need billions in collateral, maybe set the scene for us, and you make a decision to restrict the trading. How did you make that decision? >> I have very fuzzy recollection of that time. You know, sometimes you talk to um >> uh >> trauma victims >> or like uh I I've heard a lot from people that have many children uh including myself. I have more than one. It's like uh uh my wife says, you know, it's very the pregnancy and the child birth very very painful, but for some reason I don't remember it. And then that sort of like uh evolutionarily g gives you the signal that you should do it again. Um, and I think we're doing a Yeah, I think um I was at this IPO round table at the SEC uh about making the IPOs great again and with Rob with Robin Hood Ventures were taking that fund public. So, we're doing another IPO and I joked that um yeah, it's kind of like that the IPO process. I remember being painful and I didn't like it, but I don't really exactly remember why and now I kind of want to do it again. Um but yeah, that's a big aside that has nothing to do with GameStop. Um other than yeah, that that was a very challenging time. It was towards the end of COVID and I felt like everyone was going a little bit crazy. They'd been cooped up at home for about a year without much humanto human interaction. I think from a crisis management standpoint, it was very difficult to deal with because we're doing these like conference video calls with all these different stakeholders. The regulators weren't in office and so um yeah, basically what happened was we got this like automated file in the middle of the night and it had big numbers on it, right? It it had big numbers that kept changing and uh it was a situation which had no precedent and um you know we we had to make a tough call to uh put GameStop and a bunch of other companies on position closing only which basically meant uh you couldn't open up new positions take on more risk uh for a period of about one day. So, wasn't even that long. But because there was this narrative that had taken over social media, this like viral narrative that it was the the retail investors taking down the hedge funds and we were kind of the tool. um people wanted to put it was like a good versus evil thing and and I think what was just um what would have at any other time for any other stock been kind of an innocuous riskmanagement decision to control our internal risk turned into Robin Hood's on the side of the hedge funds colluding against the the retail investor and I think the fact that the name of the company was Robin Hood made this like a juicy false narrative to uh that that continued to go viral. So, I remember in the beginning of the in the middle of the night when I woke up, my phone was basically unusable because it was like those videos you see of what happens if a Kardashian turns off uh do not disturb on their phone. It just is a constant buzzing thing. Um, so that that was that was my morning. I was like, the phone is completely unusable. I can't even get on a Zoom call because there's just random people calling me uh telling me to to turn it back on, you know. Uh just to give people context a little bit um if they're unfamiliar with the situation. The narrative that came out was you were in bed with the hedge funds because the hedge funds were trying to close their short positions on a stock that was basically going parabolic, >> right? Um, and it was a unprecedented situation. I've never seen it before anyway. I I can't. But you also >> It's never happened before. >> One of the interesting details of the story that I don't think many people know is you had given GameStop shares to people when they signed up for Robin Hood, didn't you? Like >> that's absolutely right. So, you can make the argument that we kind of started the whole thing. you know, every everyone if if you were joining Robin Hood in the year 2020 leading up to the whole GameStop thing, uh which by the way, a lot of people joined Robin Hood that year, GameStop was one of the collection of free free stocks that was given to customers. >> So, yeah, a lot of people, you know, just came in, get got their free GameStop share, and maybe they weren't engaged that much, but then when they saw GameStop going up, suddenly those shares were were worth a lot of money. What's one thing the world still gets wrong about that time? >> I mean, I think the major thing is just that Robin Hood colluded with hedge funds to shut down trading. There was also another false narrative that I think is funnier. I uh but yeah, Sequoia had to refute this. Someone put on the internet that uh the White House actually called uh Sequoia Capital, one of our venture capital investors, and got them to pressure us to shut down GameStop. So, um yeah, that that was a particularly funny one. But if you look on Reddit, that had like thousands of reposts. Um, so yeah, I think that I mean we don't really have any business with with hedge funds. So the the idea that somehow a hedge fund would collude to have us shut down trading of a of a stock um I mean always seems silly to me, but I think what we learned is a juicy falsehood is more powerful than kind of a a boring truth. >> Yeah. And you can't fight story with facts. It's like so weird. >> Yeah. >> Like once a narrative gets any traction whatsoever. It doesn't matter how crazy or false it is, facts do not tend to refute that. You see this in politics all the time, right? Once somebody tells a story and the mind share goes to that story, no amount of evidence or data will ever overturn that story and and they'll believe it for like 20 years. >> Yeah. >> It's crazy. Uh, one of the byproducts of that though is you got to talk to Mark Zuckerberg and Daniel Ek. I'm curious about like what you learned during that period of time um from those two. I think Daniel had talked to you about like going through a PR crisis or >> Oh, yeah. Um, actually I didn't talk to Daniel at that point, but I did call him when he was um dealing with his Joe Rogan thing. >> I don't know if you remember that. >> Oh, totally. >> Yeah. like Joe Rogan was in the process of getting cancelled and uh I mean Spotify was getting immense pressure from both sides, right? Do they deplatform Joe Rogan or >> Yeah. >> do they piss off all the people that want Joe Rogan to be deplatformed? Um so that that was probably I mean Daniel's I'm sure dealt with his share of of uh crises, but that was probably his GameStop moment. So yeah, I called him to pay it forward to to offer whatever support uh I could have and and hopefully that was helpful to him, but he's actually um yeah, probably wiser and uh and better than me in these things. So I don't know if he needed it. But yeah, at that time Mark Zuckerberg called me and Elon Musk called me, Mark Beni off called me and uh a nice positive side effect was these people probably wouldn't have cared about little Robin Hood at at the time and suddenly I think uh I got to talk with these business magnates that have uh have built massive companies and they're giving me their perspective on the whole situation. One of the things that I loved that you did during that period of time was you went on a clubhouse with Elon. I don't know if you regret that now. Um, >> no, no, I thought that was probably the the best uh media appearance of the week for sure. Not saying much because I I had some bad ones, but >> what did you think of the movie Dumb Money when you watched it? >> I didn't see the entire thing, but I did see the clips that I was in. And >> Wait, come on. You haven't watched it? Um, well, I did see the parts that I was in, which was about six minutes. Um, uh, and some of the rest. Uh, I I actually thought, you know, I know it didn't do very well, but, uh, I found it more or less entertaining. My favorite part, which maybe wouldn't uh wouldn't be other people's favorite part or or maybe it would for for for some ladies there, was that my character um was played by a very good-looking actor, Sebastian Stan, which, you know, I wasn't displeased about. Um I would have thought Adam Driver would also be good, but um Sebastian Stan maybe a slightly less good actor, but probably uh easier on the eyes, right? And the thing that I enjoyed most is that in every single scene he was shirtless. So it was like in the kitchen grinding a smoothie talking about, you know, GameStop or in the bathroom shaving. Just the idea of me being shirtless dealing with all these complicated business situations just made me laugh a little bit. >> You're going to be the first physics math person on the cover of GQ, I think. I mean, I see what they were doing. Uh, I'm I'm flattered, but yeah, I was I I wasn't solving all these business problems. Uh, you know, grinding my smoothie, finishing my workout. Most people assume that GameStop was the hardest time for you and Robin Hood, but actually 2022 was harder. What happened? >> I think 2022 was harder in the sense that it was sort of like a gradual, slower burn. I mean, GameStop was acute and very painful and stressful for a short period of time, but once we resolved the situation, unlocked the shares of of GameStop so they could start being purchased again, and you know, I basically like did my congressional hearing and uh did my roundt of different podcast appearances, the acute part of it was over. Like the acute part of GameStop was really one day. >> Yeah. Whereas in 2022, it was a gradual shift of all of like the economic trends that had been tailwinds for the business during COVID reversing rapidly into headwinds. So for example, um I mean first the the uh COVID relief uh stimulus check stopped, >> right? And then it became clear inflation was ticking up >> and that was having a a big impact on people's discretionary spending and and investing. And then layer on to that uh the interest rates >> government went from a long period of rock bottom interest rates to the highest interest rates in over 30 years. they went to, you know, four or 5%. And and when that happens, actually investing becomes less attractive because you can get your average 7% uh rate of return from the stock market after inflation. Um or you could get 5% just sitting in cash. >> Yeah. >> So people naturally reallocate a little bit and start holding more cash and and buying less stocks. Um, and our business was first timers getting into the stock market, buying buying stocks. Um, so all of the tailwinds for our business turned into headwinds. And of course, when that happened, it was obvious to the market as well. And not fair to to be fair, not just Robin Hood, but our entire sector got hit hard. We went from IPOing at about a $ 32 billion valuation in 2021 to in 2022 we were we were trading at like $6 and change. >> So we lost 80% plus of of our market value since IPO which you know a lot of time people were calling Robin Hood a broken IPO >> right and I was getting advice that maybe I should try to figure out how to do a buyout and go private or something. Um, so yeah, all of these things start coming up that don't actually have much to do with running your business and building products. They become kind of distracting. So yeah, that that was very very tough to navigate. And I think I took some solace in the fact that it wasn't just a Robin Hood specific issue, but nonetheless, I mean, uh, we, uh, as as an entrepreneur, uh, yeah, it's very competitive and you really just, uh, want to win. And so I said, you know, I'm not going to be one of these people that either gives up because a lot of founders, unfortunately, we lost a lot of great founders in that time where they just left their companies, right? Uh but so I'm not going to give up. I'm also not going to batten down the hatches and say we're just going to ride this out and hope for interest rates to go to zero uh in the future and just like uh not do anything and and turn into an ostrich or a turtle. A lot of businesses were doing that. For example, the mortgage companies, a lot of the mortgage companies, if you if you listen to their public statements, they were like, "Well, the market's going to improve at some point and people will want mortgages again." We said, "What can we give to our customers that will actually let them thrive in this particular market environment where you see high rates and cash is attractive?" And that led to the birth of or the I should say the revival of Robin Hood Gold which started with how do we give customers the absolute highest yield on their uninvested cash so they can put that onto the platform. We followed that up with Robin Hood Retirement which has over one and a half million accounts. I think it's the best retirement product on the market by a wide margin. We give everyone a 3% match if you're a gold member for for making contributions into retirement. And so we we really started to think about, okay, how can we diversify the business away from trading, but also away from being sort of like a zerointerest uh business that thrives in that environment, but maybe doesn't do as well when when we're in a high interest rate. And so we ended up doing that. We diversified the business tremendously. And then quicker than I imagined, um, you know, we become a business that has 11 business lines now with, uh, over 100 million in annual revenue. >> I talked to somebody, uh, and they characterized this, and maybe they're wrong, so correct this, as uh, you basically fired the nice version of yourself and be turned on like founder mode. I forget their exact words, but uh, >> yeah. >> Is that true? >> I don't know if I would characterize that. Uh, I still think I'm very nice. Uh, basically what it was was I had to spend a lot of time thinking about how to fix things. And um I think that when we went through co there was a lot of pressure not just from what other companies were doing but also just because we were doing very well during COVID and growing very very quickly right we went from I'd say end of 2019 we had 700 people and something like 200 200 200 and change million in annual revenue. >> Yeah. >> To in the next year end of 2020 we had thousands of people and close to a billion in revenue. >> So it's like a three threex plus in growth. And you look around us and you know during co a lot of our contemporary companies were struggling >> Airbnb >> which we always to some degree like grew alongside Airbnb we started at similar times they were a little bit before >> um so that >> what was swirling in the air was we've got to batten down the hatches co you know but our business was booming and in fact what we were hearing was customer support is getting strained our engineering systems were strained we ended up having to hire a bunch of people uh during COVID just just to keep up. I think we continued that hiring and became a big company very quickly. Things didn't really work very well together. Um a lot of the people that joined since we were remote had never met in person. Uh and so it it wasn't just that we were being nice or we were like coddling employees. I think that the the inputs that led to that tremendous acceleration in the business and the headcount growth um were not sustainable inputs like you only have one COVID. And so when that reversed, we actually it gave us an opportunity to rethink all the changes that we made to keep up and and reset a little bit, which I think at the time was painful, but it led to a much healthier company. It's like um it's like, not to use another weightlifting analogy, but they're so good. Um, if you want to get really really strong, um, there's one way where you just like gradually build up muscle mass and keep your fat uh, low over long periods of time. But what what Robin Hood did was we bulked up gigantically and also gained a lot of fat in the process and then we did like a massive leaning out. Um, I think that works for for a lot of people and you end up getting to the same place. And in in retrospect, I'd say may maybe um it's too much to say that I would have done it differently. I think we we had to we had to adapt to to to what what our reality was at the time. So I don't know if we had >> a great I probably would have >> done things differently around the edges with the culture and thought about the values and and really um sort of like enshrined them earlier. you know the values I mentioned earlier high performance safety always um lean and disciplined one Robin Hood but um >> in practice fixing things >> everybody says that but we're it sort of like meets difficulty is that means undoing something I've already decided and that means admitting that I was wrong and so people sort of like tend in general not everybody they tend to like slowly sort of like oh I'll undo little bit of it and then I don't get the any of the results. >> Oh yeah. So I have a good business suggestion. Um usually things uh things get easier if you do them multiple times and uh you could practice doing this once and making a big show of it. Like actually maybe you take a small thing that you were wrong about that you wanted to undo and just say I want to tell you about something that I completely screwed up. It was a wrong decision and now we're taking it back. It could be like the snacks in the office or something. Got rid of >> got rid of uh uh Sichuan food uh catering on Wednesdays and then you know see how it goes and then you realize well maybe it's not so scary then you can do it for >> a serious thing and then maybe eventually you can do it for three or four things simultaneously. Um I'll give you an example during co we introduced um a lot of uh it it was this thing that from the beginning I just like didn't really like the idea of but a lot of people fel felt very strongly and there was just too many things happening but yeah we were like uh we had these wellness days where entire teams would like take a wellness day after working particularly hard >> and At one point I was just like, "Let's kill these wellness days." And there was just a lot of fear. I mean, some people actually legitimately like the idea of wellness days. I was like, I I don't want to be a wellness day company. We have generous PTO. Take a PTO. And this whole idea that an entire org or team would take the same day off, >> that seems like a problem. What if there's an issue and we need someone the entire org is taking a day off? Doesn't make any sense. Um I think this was like one of those COVID era things that some companies probably still have. But um yeah, any anyway um and there was fear like we were were taking back a perk >> from employees. They like their wellness days. They'll complain. >> Well, we took off the wellness days. There was complaining for one day and then we never heard about it again. So I think when once you start doing these things and you realize our deepest fears about the consequences were were wrong and uh yeah you you learn some things. >> You're in meetings all day. You're trying to stay present but you're also worried you'll forget the decision, the action item, the important next step. That's where Granola comes in. Granola is an AI powered notepad for meetings. You jot down rough notes like you always do. And in the background, Granola transcribes and turns them into clear, useful notes when the meeting ends. There are no bots joining your calls, no distractions, just a clean notepad that helps you focus. During or after the call, you can chat with your notes. 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How does Robin Hood operate internally? like if you were to distill the operating principles that you use to run the company, what would they be? >> Our values are high performance. So, uh we make it clear to not just employees, but anyone applying for a job that this isn't meant to be like a cushy, chill job. like this is for people that want to stretch and to do in one year what maybe another company would expect you to do in 10 years. Um so we we keep a very very high performance bar and that filters into how we compensate like we we we reward people disproportionately based on impact and we try to stay away from rewarding people on conventional things. Think about a typical company. People are paid generally proportional to the org size that they manage. And if you think about what that incentivizes, that incentivizes empire building. I want to have a big org with a big team because then >> according to traditional HR metrics, >> I'm more important. >> Um, but really what we want to incentivize is the opposite. Can you can you have a lot of impact with the smallest possible team? So high performance is one of them. Safety always. We have a safety always value which means sure we're going to move fast. You know, sure we're we're holding ourselves to an absolute performance bar, but you can't use that as an excuse to cut corners or compromise on uh the security of customers and and their money. So that's a very important one. You know, regulatory compliance is very very important to our business as a as a trusted financial platform. So, we have that one. Lean and discipline. Another one I always ask, how can we do more with less? We scrutinize every dollar and every process as well. Um, and uh, yeah, I mean, I think that if if I think about culture, uh, I I won't go through every single value, but uh, those are the big ones. If I think about culture, it's it's a few things. It's how we hire um the talent that we that we bring in, how we performance, manage and and reward people. Uh and also, uh the working environment, what's the environment like in in the office? So, hiring uh it's really top talent. I'd rather have a small team of the best people than a large team of of mediocre people. And that goes goes along with the high performance uh how we compensate and performance manage. We want to make it we want to reward people disproportionately based on impact. And also if it's not working with someone, we want to make it as easy as possible process-wise for that person to go somewhere else, right? We we don't want to we don't spend too much time. >> How quickly does that happen? Is this like, you know, somebody's there for 3 weeks and you're like, "Oh, this isn't working out." Or is it do you give it 6 months, which sounds like an absurdly long period of time, especially given what you're trying to accomplish? >> We want to make it I mean, sometimes it's pretty obvious that uh you know, for for whatever reason, um we made a hiring mistake usually that that someone's not a fit. And at that point, we want to make it easy as easy as possible. So yeah, if it's three weeks, doesn't make sense for us or for the person to to to continue. Um >> I think six months once you know it's not a fit is way too long. But of course, sometimes we've had people that have come in and for whatever reason they don't hit the ground running right away. But if if we see potential in someone and they're extraordinarily good at at a particular thing, um you know, sometimes they they actually they get there and that could take six months. But yeah, generally speaking, I think what most companies suffer from is process getting in the way and actually making it very very difficult for people to uh to to get rid of low performers. and and I think we try to make that very very very easy. >> If I was looking from the outside in, is there anything about your hiring process that would stand out as unconventional that works for you? >> Well, I I should say I'm not super familiar with how every company does it, right? So, I'm sure some companies do many of these things, but um yeah. Yeah. Perhaps one thing that's unconventional at least in financial services is uh emphasis on early career people. I think from a very beginning we put our company next to Stanford University. We would spend a lot of time uh you know recruiting uh interns and and engineers from there and that was my alma mater and and Beiju my co-founder as well. So we would spend time actually when we were individually hiring everyone going to career fairs at the top tech universities and you know I still spend a lot of time with early career folks and interns and I think it's very very good for the company because a lot of the companies in our space tend to get older as they get further along and you know the folks working there >> can be more disconnected from from the young people and then that puts you puts you at risk of becoming a more of a generational company in the sense that you know Charles Schwab serves baby boomers very well. you had Erade coming later that was really a Gen X company, but I think they've struggled a little bit getting the younger generation excited. And I know, you know, it they they try very hard to to get there, but I think the best way to do it is to actually make sure that the company itself has the point of view of of young people >> and you're sitting with them, working with them, and learning from them at the same time. >> Yeah. Yeah. Yeah, sitting right next to them. You know, I I always like to have uh some interns or early career people working on important things and I like to be around the people that are working on the key priorities as well. So, yeah, we don't just stick them in the basement and and have them fetch coffee. The big thing is we actually want you to have to to work on projects that ship to production and and do meaningful work. And what I like to say is I started off as an intern at Robin Hood. I mean, I didn't have any career experience. I went straight from school into becoming an entrepreneur. And so, I kind of have empathy for what it's like. And, you know, if I can succeed and become the CEO of a of a company from a internship and uh then everyone should have the ability to to do that. >> How do you run your weekly leadership meeting? >> Yeah. So, weekly leadership meeting is a big meeting. Uh there's there's a lot of people involved and I like uh having large groups of people involved because then everyone can sort of like hear what's on everyone's mind. I don't like having a lot of one-on- ones. Uh and some people are big one-on-one fans, but over time I've, you know, my my one-on- ones are basically on demand when you need something critical or or some important decision needs to be made. Uh so the leadership meetings are either important information that I want to cascade like they're at the beginning of the week. So a lot of it is you know I spent some time thinking over this weekend about this or we should be moving faster on this or it's uh we we also review goals. So I I like a very simple mechanism for uh sharing progress on goals. It's either green, yellow or red. If it's green, we don't really have to talk about it. If it's red, I think it deserves some scrutiny. So, you know, sometimes we go through the red goals and see how we can help turn it around as quickly as possible. And that involves a little bit of ceremony. You know, I have a gavvel and I I hit the gavvel on the >> Do you actually? That's awesome. >> Yeah. Yeah. Um, and yeah, you know, it's uh I I think that sometimes it's it's really nice to lighten up some extremely serious things so that people actually enjoy uh talking openly about, you know, goals that things that aren't going well because the assumption is everyone in the leadership team is uh if not exceptionally strong at least very very strong. So usually if things aren't going well, um you know there there's a good reason. It's usually not for lack of effort and sometimes having the perspective of multiple people can can really help us quickly improve things and turn them around. >> Are there any other meetings that you have on a weekly basis? Like I I think about a founders's time being the most valuable and most highly leveraged. >> Yeah. And then where do you get involved uniquely as a founder to add that leverage to the organization and where do you sort of like get hands off? >> Yeah, I mean usually I'm I'm involved in uh the most critical product launches or or projects that are going on at any given time. And a lot of times we are so we do a lot of product events. I think this year we're going to have five of various sizes and scales, but but usually the product events tend to have themes. So, actually we're doing one in a couple of weeks. Um well, I should probably be more explicit about the date. We're doing one on December 16th of this year. So, uh towards the end of the year, and it's called Yes No. So, it's an event on prediction markets and uh and AI. And I we spend a lot of time just making sure the messaging is right, the design of the the event, the look and feel, of course, the products that go into it. Um, so yeah, there there's a big component that's just making sure that the next event that we're going to do is >> Are you in the weeds on that? >> Uh, yeah. So, um, I, you know, present at the events and I introduce the products, not not just me, but with with the teams that are that are working on them. So the the event is like um television show. >> Yeah. >> I'm excited to watch. What factors do you think makes your marketing communication so good? Like you're it seems so clear and crisp and like on point. >> Well, thank you. It wasn't always the case. Um I think we have great people that think uh entirely about the storytelling of of what we're doing, what the purpose is. I think the events themselves are a good forcing function because if you're communicating a new product to 20 million people, it really forces you to distill it into the essence of what 20 million people can understand. So I think where where I tend to uh sometimes make make mistakes in communication is I can get too jargony, too in the details um because I just assume the average person watching is in the details of the business like I am, which I think is uh not a great assumption. So I think like really thinking about it from first principles. If you're someone who has never heard of a prediction market for example, how do you explain what a prediction market is and why why it's innovative? Why it's important for society for these things to exist? We we start there and then I think once you have the foundation, you try to make sure all the products plug into that foundation. You you you tell a coherent story. I think it's it's really just about storytelling and you have to spend time and have people thinking about it and you know if uh if I don't think about it or if the CEO doesn't think about it then I don't think the story gets told. So as a founder and CEO you have to spend a lot of time personally getting involved in that. I think >> I as you were saying that you what came to mind is like Steve Jobs and features and benefits like he he didn't come out and say like um you know here's 32 gigs of music capacity he's like a thousand songs in your pocket. Is that what you mean by that? >> Well actually yeah you know when we started doing this events that was a huge inspiration. We were like well we should just make them exactly like the Apple events because they've perfected it. But then you know now now we're on our fifth event this year. We started it last year and it's really just we don't think about the Apple events at all. We I I think I think it's almost like um learning to play a new instrument, right? When you first learn to play an instrument, you know, you just have to practice and do what the other greats have composed in the past, but then once you get to a certain level, you you know enough to to innovate and to like break rules and to change things. Um, so yeah, now now we really like try to make it different each time. Like how how can we from first principles make this event as as good as possible and uh we we don't feel like we have to be tethered to the the old Apple model which some people just replicate. Um, but to answer your questions, no, I I think I don't think that was necessarily a rule that Apple had for the events. Actually, in a lot of their events, they get really into the technical details of the computers and they share the megahertz of the processors and they'll they they even had bake offs where, you know, they would load a website with a PC and they would load it with a Mac and obviously the Mac would load 10 times faster and everyone would be like, "Oh my god." Yeah. >> You know, 1 second, 1.5 second load time versus 7.9. Um, >> well, Jobs was I mean, he had this element and you see it throughout history and showmanship, right? Like there was a >> absolutely >> a story to it. There was a presentation. There was like you were anticipating. You were like you could feel what was going on. >> Yeah. And I think you know he was basically uh an artist. He was probably the the greatest of all time at at that particular element of it. >> How are you guys using AI internally? Like what would surprise me about how you're using it? >> Yeah. Um, I think we haven't talked too much publicly about it, but we're doing a AI event on December 16th, which is our first uh our first big event focused on AI as well as prediction markets, but AI is going to be a big part of it as well. Um I think that when we talk about internal operations, what we told the team from the very beginning is look, there's two areas where we want to start with and be absolute best-in-class in our space. And that's customer service and software engineering. Because if you think about what really moves the needle, those are the big teams that have multiplicative impact. customer service interacts with, you know, all all of our customers that are having issues or need help with the platform. And traditionally that's been a big cost center for our peers and competitors because it scales with uh with number of customers on platform. Um and so we've we've done so much innovation there. By and large, if you interact with customer service on Robin Hood, you're you're interacting with our AI agents. Um and and I think we are best-in-class uh on that side. On the software engineering side, you can think of it as accelerating product velocity and and development. So, we've seen tremendous increases in product velocity uh from from our engineering teams because from a very early point, we've made it as easy as possible to use every AI tool. Uh it started with a GitHub copilot because that was the only game in town and then of course cursor and wind surf until that got acquired and then of course uh claude code has been very popular uh command line interface tool recently and and I think the important thing about AI adoption is you have to track the right metrics and and actually look at them very very carefully and I think the the great thing about software engineering and customer support is the metrics are pretty easy, right? For customer support, you have to look at AI deflection rate. How many what percentage of tickets that would otherwise be going to an agent are actually being fully self-s served by by AI? Uh, and you you want to drive that up as high as possible. And for software engineering, you're looking at percentage of code commits generated by AI. But you also want to check that with is the total engineering velocity or the are the total you know monthly commits per engineer continuing to increase because um you want to make sure that it's not just AI is doing a larger and larger percentage of the software engineering contributions but that in aggregate you're you're making more contributions and and being more productive. And so I think we started with those internally and now we're we have it baked into the process where we almost think of it as headcount. Okay, how much how much compute do you need next year? Uh instead of this headcount, how hard have you tried to like use AI agents in the workflow for every team? And and I think the next frontier where we're going to see really interesting stuff is on creative and marketing. So you can imagine to create really high quality advertising collateral would have taken a lot of like >> deep work over a long period of time by by great artists. But if you can empower those artists with the best tools, 11 Labs, Midjourney, Runway, you know, the the total amount of creative can increase by 100 or a thousandx and you can actually make them much more personalized. So, so I think that's that's the next frontier that companies aren't really talking about, but I think we'll get to the point where next year you'll see you'll see a big step change. >> So, what does that mean though? Walk me through the second and third order effects of that. Like, if you can do that, that means anybody can do that. >> And if anybody can do it, well, all of a sudden, like what is the consequence of that? >> I actually don't think anybody can do that. Um, I think these are really hard problems to to get right. Um, yeah, because it's not just, of course, most people don't even have metrics to track this stuff, which is, uh, I can give them the metrics. Hopefully, they're they're useful to to listeners. But thinking about, let's just say customer support, for example, I like to break down customer support, progress in AI into three stages. uh and and you'll you'll see or more uh more phases than stages I should say. Phase one, phase two, and phase three. Phase one is uh a company puts the help center into the AI chatbot. And so the chatbot can answer any question from the help center. Most companies doing AI for customer support are in this phase, right, where it's just >> that's pretty easy to to get going. Most people just >> like a better search function. >> Yeah. Better. Well, you know, and it's better than actually having links to the help center that you'd have to navigate, which actually I think probably still most companies aren't using AI for customer support and they're still pushing you towards just navigating a help center. We were there too, probably five years ago, 5 to 10. Phase two is all right, you're getting a little bit more sophisticated. You're not just taking the data from your help center and feeding it into the AI, but now the AI can actually go into the database. >> They can say, okay, I can see Shane's account. He's got, you know, $50,000 in there and he just deposited some money yesterday from Chase Bank. Okay. So, you can pull that data and you can use it to provide better contextual support, but it's still read only. >> Yeah. >> Right. So, um rough numbers, let's say 90% of companies are in phase one. 90% of the ones that aren't in phase one are probably in phase two. Then you have phase three, which is okay, now I can actually do non- readonly actions. I can change stuff. maybe I'll refund you if you know you're not happy with your purchase. I can refund your gold subscription fee. Um, so that involves actually some pretty deep >> work, deep integration into all of like the backend systems. Uh, so you can imagine the utility goes up as you get deeper, but the cost also goes up. Um, and so actually I think very few are in phase three. That that's where Robin Hood's in. Um, and uh, yeah, it's it's it's actually not easy. And I I think that most companies are vendoring this, and this is the thing that vendors are hard at because, you know, vendor is not going to be able to save you much time in the actual process of plugging into all your systems. That's going to be work that your engineers internally are going to have to do. But I think what made it easier is from a pretty early point, we wanted to make our data easily queryable internally because we wanted to run good analytics to understand what was going on. And so once your data is queriable, it makes it so that you you generally have good systems hygiene. It's, you know, in one place. Uh it's like got clean interfaces. You spend time making sure that it's correct. Um and and I think the work that we did not really thinking about AI made it a little bit easier to plug plug in these models and and actually run inference and you know build build agents and and that's just the stuff we do internally in the product. We have Robin Hood Cortex which is our AI model and um the most visible use case of it in Robin Hood right now is stock in crypto digest. So, if you go to a stock that's moved, it'll give you uh a real time view of what's actually driving it. I think some of our competitors have done this as well. Um, but I think what makes our offering especially compelling is it updates >> basically every minute. uh it it updates whenever new information comes in whereas you know I think most companies do it once per day and it's just it's it's basically stale for companies in which lots of news happens >> you know people talk a lot about product market fit sales tactics or pricing strategy but the truth is success in selling often comes down to something much simpler the system behind the sale that's why I use and love shop pay because nobody does selling better than Shopify. They built the number one checkout on the planet. And with Shop Pay, businesses see up to 50% higher conversions. That's not a rounding error. That's a gamecher. Attention is scarce. Shopify helps you capture it and convert it. If you're building a serious business, your commerce platform needs to meet your customers wherever they are. 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And basically the company that I started a couple years ago that I'm chairman of uh is called Harmonic and it's building mathematical super intelligence which is AI that can solve math problems at a level exceeding uh humans, the best human mathematicians. And uh it's not quite at a level exceeding all of the best human mathematicians, but it certainly exceeded my level, which I didn't think it would do so so quickly. But yeah, earlier this year, we actually achieved gold medal performance at the International Mathematical Olympiad, which is the world's most prestigious mathematics competition. Um these are like cracked high schoolers. like five people got perfect scores in the International Mathematical Olympiad. And uh just to contextualize, I say high school, but I bet you I would struggle solving a single IMO problem. Uh yeah. Yeah. Right now. So Aristotle, which is our model, solved five out of six. And um the bet always was that this would actually generalize to to other things. So if you're good at math as a human, I felt this because I was a math major. If you could figure out how to solve a math problem, you could solve pretty much any problem. So that that could generalize to general problem solving, like be better at making business decisions, for instance. Um and so we've tested that actually over the past few weeks. uh they released a a product for mathematicians and researchers and it's been used to solve unsolved math problems. >> I saw that >> you saw the the Erdos problem. >> Yeah. Yeah. >> Yeah. So Paul Erdos >> I didn't understand it. I just saw that you solved it. >> Yeah. I mean um yeah the problem itself is too complicated for me to understand and solve. Um but Paul Erdos was this like um very prolific mathematician. He would actually travel around the world, stay at people's houses and work with them for a week or two weeks at a time solving math problems. And so there's like a collection of articles and books of uh problems that Erdos conjectured. They're usually conjectures like it seems like this thing is true mathematically, but I can't prove it. And so now there's, you know, websites that collect these things. There's something like,00 Erdish problems. uh about half of them are are open unsolved and um yeah harmonic solved at least one of them. There's always some debate like is it solved somewhere else on the internet and nobody found it. Um, so you know there there's always some controversy around these announcements, but I mean it's solving an unsolved problem that people care about is a big deal. And you've seen making the jump from competition math to solving unsolved Erdish problems in a couple of months. And the goal is to um ladder that up to unsolved problems that everyone cares about that are of like massive importance. And actually yesterday they released an update that uh Aristotle learned to write computer code too. So on a verifi software verification benchmark it it hit a new state-of-the-art of something around 97%. >> Amazing. What's different about how you're training that versus how somebody like anthropic or open AAI like what's different about the model itself? >> Yeah, two things. one is um they tend to train uh so I mean they they do a lot of little things to train these models and I think these models used to be like a monolithic LLM now they're actually a network of agents which which Aristotle is it's it's actually a network of agents that are optimized for slightly different things um I guess at the highest level uh the interesting thing about math is you can pose a math math problem as computer code. >> And if you pose it as computer code, there's actually a way to machine check the validity of the proof. >> Oh yeah. >> Yeah. So it can be checked automatically. And what that allows you to do is to create a synthetic data pipeline. And so all of the data that uh the the vast majority of the data that trains uh Aristotle is actually data that we generate. It's not you know internet data. >> And what happens is you ask a a question. >> The model reasons about it. It tries to solve it >> and on the way to solving it. It solves it generates some lemmas and facts that are proved and because you can machine check them you know that they're correct and if they're correct you sort of like put them into the training and so as it as it solves problems it gets smarter and smarter and that's basically the idea. So there's similarities. It's probably closer to training a model to play chess really really well than it is to training just like a English language LLM. But I think the the fundamental techniques tend to overlap. I mean there's a lot of reinforcement learning and post-training. >> There's pre-training as well. Um but yeah, the the main difference is this this ability to machine check the results which gives you a a good reward signal for your reinforcement learning. >> What do you think the limitations are on the way that we're sort of like doing the large scale language models now in the sense of training on huge data sets and being more predictive than I would say bottoms up first principles if that makes sense? Yeah, I mean I think that we've already shown an ability to create new knowledge. Um, and I think that's going to continue. So, you know, right now, let's say you can easily at low cost produce a proof that's 10 pages long. And actually, we can produce longer ones, but just uh as an example, per per unit cost and time, you can produce a 10-page proof. Well, in a year it'll get to 100 pages. In three years it'll get to 100,000 pages. And you can say, okay, what type of problem has a 100,000 page proof? That's probably some of the deepest problems in in mathematics. And at the same time, that same thing is not just going to happen in mathematics, but all dependent fields, physics, computer science, and you know what uh what's the equivalent of a a really deep result in physics? I mean we can we can understand the fundamentals of um unification which has been a big problem for it's been the problem in in theoretical physics for 50 years like how do you align the theories of uh gravitation with the other with the other forces um and we we haven't had much progress in that and probably AI could help with that and then if we can figure that out the consequences for building new engineering is are profound. >> Do you think AI is going to be like one model sort of like takes all or do you think it's going to be fairly like you're going to have multiple models that maybe are slightly nuanced a little bit better at different things? Like how do you see this playing out in the next, you know, five or 10 years? I think it depends on uh I I think there's going to be multiple models and it's really going to depend on the data that is used to feed them. So for example, one thing that's great about Aristotle which is harmonics model is you've got mathematicians that are using it to ask very complex math questions. So if you if you've got all the mathematicians using the model then you basically have an advantage with mathematics data and I think that's true in other domains. Um, I think that generally people tend to use chat GPT as a first crack, but it's, you know, it's a it's a good general model. It'll probably give you a reasonable answer, but I don't think they're going to spend the time to go deep on every single domain. And I think that's why you're already starting to see a little bit of specialization. Um, Anthropic has a very good coding model and they've basically done very well in the enterprise for software engineering. They've kind of specialized there. Um, Google obviously very very strong model in general reasoning. You know, Gemini 3 came out and surprised some people though if you were looking at the Robin Hood prediction market, we had a prediction market for uh for the majority of the year on what's going to be the top AI model by the end of the year. I think it became pretty clear midyear that Gemini was going to take it >> interest. I mean they should based on the data access that they have. They have probably the highest quality data source in the world uh and full access to it with very few restrictions >> and and uh limitless compute and big printing lots of net income to fund it. Yeah, they've got they've got some advantages for sure. I would say chat GBT >> and they and they actually compete with uh harmonic. So they have a similar mathematics model called um alpha proof. >> Oh interesting. >> Yeah. Which is uh again it converts mathematics from English into a programming language and uh you get that reward signal. And actually, interestingly enough, Alpha Proof was the first AI model to get a silver medal to achieve silver medal performance at the IMO last year. >> Okay. >> But Alpha Proof uh they did not announce a gold this year. So yeah, we we were uh we were the harmonic team was excited about that that you know in a year we were able to surpass alpha proof capabilities. I will say Gemini uh has far passed on my usage of just in the last two weeks like it blows away chat GPT. >> A lot of people have been saying that. Yeah. >> Yeah. And I love the race as a consumer like it's it's great and you know better technology for everybody sort of and competition is good for everybody like it pushes everybody to be better and work harder and get ahead. >> Absolutely. Yeah. I mean, I I heard there was reports of OpenAI calling a code red. And it's funny because when Chad GPT came out, uh in 2022, Google called a code red. >> Yeah. >> Right. And they said, "This is a existential threat to Google search." And then at that time, everyone was counting them out. They're like, "A big slow company. How are they ever going to catch up? They're just getting disrupted. Look at the Google search market share." So, it's just amazing how quickly the narrative can shift. Um, >> but yeah, I think Sundar and and Sergey and the team have uh have done an amazing job. You know, you got to tip your hat off to them. >> I want to come back to something you said earlier about how math helps you make decisions at Robin Hood. Uh, and just decisions in general. >> Yeah. >> What's the connection there? I think math is a good way to train your brain into uh doing hard things, right? And it's almost like if you can deadlift 500 lb, then picking up your crawling baby uh from the floor is very very easy, right? So no business problem is as complicated as solving a really really hard math problem. So if if if you if you get used to the pain and the suffering and like the mental stress uh of beating your head against the wall for 12 hours on one single math problem, which Beiju and I did very very often when we were in college. We'd like pull allnighters working on these problem sets. Um they think that's really really good training. It's like going to the gym for uh for business problems. >> What are you obsessed with lately? Um, I am obsessed with the business world. Uh, I the the thing that I'm most focused on right now in sort of my my life as Robin Hood founder and CEO is getting more people into the markets and in particular giving access to private markets. I think that's the biggest iniquity in capital markets today. And I think it's it's very important because you see all of these companies who are building AI models. We're in the midst of possibly the greatest technology revolution, not just of our time, but of all time. And there's going to be disruption. There's going to be largecale dislocation. And it's simultaneously the fastest growing technology and product out there, but among the the least popular. People are worried AI is possibly going to take my job. Do I really like it? And and of the majority of AI companies out there are private companies, even though some of them are in valuations of tens of billions or even hundreds of billions of dollars, which means retail investors can't invest in them. and juxtapose that with the fact that going public as a company keeps getting more challenging. There's more process, less companies are doing it. There's more opportunities for institutional capital to fund private companies and and you get an inadvertent situation where retail investors are shut out of some of the most important companies. And and it's not just AI. I think AI is the most important, but there's also space technology, right? You look at SpaceX, it's valuation in the hundreds of billions. It's basically the largest and most impactful private space company. Uh retail has been shut out from the from the very beginning there. And so, uh, I'm trying to figure out how to correct that and reverse it, give people exposure to these companies and make it so that everyone's an owner of our industry. And and if we make sure everyone is an owner, if you own something, you want to protect it. And I think we're more likely to have a a stable and prosperous future. Well, let I was going to start with how you operate internally, but let's dive in right here about tokenization and how we sort of allow retail access to private otherwise private investments. But maybe the way to talk about that. So, we have space, which is arguably one of the most important technologies over the next, you know, we can anticipate over the next 50 years. We have AI probably in the same bucket. And then we have real estate, which is another one that people sort of talk about and tokenizing. Yeah. Yeah. >> How do you think about all three of those different types of assets where I would imagine AI and sort of space are the same? You're tokenizing a private asset that uh you need to own the underlying shares. >> Yeah. >> What about real estate? >> I think real estate is uh incredibly meaningful especially now that most people are unfortunately at a point where they're they're having difficulty buying their first home. Um, and I think that could be attacked from multiple angles. One is by breaking it up into little pieces and making it so that okay, uh, maybe I don't want to take on a mortgage and and own my own home, but maybe I want to be an investor and be exposed to either one or multiple homes in areas that I think will do well. So, I think that'll happen, but my my priority, I think, is latestage privates. We launched this thing in the US called Robin Hood Ventures which aims to solve this problem and we have our first closed end fund which we filed to go public which is in the quiet period right now. So I can't talk in much detail about the mechanics of that but I think the the biggest opportunity and the biggest problem is in private markets and I think there's also opportunity in early stage venture. We we want more people to be exposed to companies at the earliest possible stages even though the risk is greater because the opportunity for upside is also greater. So I think there's there's interesting opportunities and products there and if we can streamline uh the capital markets aspect and make it easier for entrepreneurs to raise money on the other side then we could lead to more entrepreneurship and innovation too. Yeah. And and real estate is interesting to us as well. And I think the way real estate's been done is not amazingly inspiring. I mean, it's sort of like generally lowquality properties in random parts of the world, commercial properties. So, I think that I mean, real estate is so visual. uh the the purchasing experience of just going on a Zillow or a Trullia and browsing has gotten really good and and I think it's far ahead of the experience of actually investing in real estate and I think those don't exactly overlap. So I do think there's room for a real estate investing product that is actually legitimately good and lowcost and and easy to understand. >> So how would that work? Would Robin Hood buy the real estate and then sort of tokenize percentages of it almost like shares like what would be the mechanism for that? I think I think tokenization uh as a underlying technology uh can be done but it's not really permissible in in the US and and the reason for that is um what you'd be tokenizing is essentially a a company and so when you tokenize a company it it goes into security regulations and security regulations have an established framework that is not currently compatible with uh decentralized finance and crypto technology. So that that's one of the things that is being worked out. But there's another mechanism in the US using sort of traditional rails which uh which are called 40act fund structures. And I I think there's been uh well there there will be a flurry of innovation in this space partly because the current administration has declared that they're open to using these vehicles to provide access to alternatives and privates. Um, and the limitations currently are that it's hard to take an individual asset like a if it's real estate, an individual property or an individual private company in the in the in the sense of late stage privates uh and and make that tradable, but you can do a portfolio of things. So, at least as a passive investment vehicle, we can give people that type of exposure. So you're buying access to a whole bunch of late stage maybe there's sector specific like AI or space or just broadly speaking. >> Yeah. And uh tokenization will work outside of the US. So you might have seen a couple of months ago we did a crypto event for a crypto business in Europe and there we tokenized uh hundreds of public equities and also did a tokenized giveaway of OpenAI and and SpaceX which was very popular and uh and so I think similarly to how stable coin has evolved tokenization will be the primary vehicle for XUS investment uh until we get regulatory clarity And you'll see tokenization of of privates seep into the US as well. Uh and the US already has robust structures for traditional finance that Robin Hood will work to make more digestible and and accessible to retail investors. >> So if that's the first step, what do you see as the second and third order the intended and unintended sort of consequences of that? >> I think it depends on the asset class. So for example for privates I think the uh second order consequence is that for entrepreneurs the other side of the market uh you'll have an easier time raising capital. So rather than going through this opaque process of spending a lot of time meeting investors one-on-one, pitching in person, uh you could imagine a digital fundraising process where you're plugged into, you know, an electronic market and you can push a button and you you get the capital to to run your business. I think that'll happen not just for crypto companies, but for for all types of companies. um secondary liquidity will be much easier. So if you're a early employee of a company or an executive and you have quite a bit of shares locked up, you'll be able to sell easily on a transparent market without the complexity of dealing with paperwork. Um yeah, or or waiting till IPO. So I I think those are the things and I think the third order consequence will be uh an explosion of entrepreneurial activity like if it's easy to get if it's easier to get funding for an early stage venture for example and you don't have to spend full-time as CEO raising capital I think there will be much more much more capital uh for startups and consequence only much more startups. Are there unintended consequences to a company like Stripe where your uh you know they're I would say by and large controlling the price like it's fairly stable uh whereas if it goes to retail and it gets marked by the day that price could change dramatically and then employees who are getting option I'm just trying to think through the chain here if employees are getting options but those options are highly variable because if you're the company you want to tie the employees tenure to the growth of the business and you can kind of distort that couldn't you with secondary marks cuz they would have to consider those marks when they're valuing the company internally for options or no I don't know >> it really depends on the vehicle so for example there's tender offer vehicles uh in the US that allow trading only at uh the NAV the net asset value which is uh sort of like the the the price that these assets are priced by independent valuation bodies. The problem with that is if you're a company that hasn't done a round of financing in four to five years, the NAV is not necessarily reflective of the true cost of the asset. And so there's other vehicles that allow for real time pricing. And I I think that the platonic ideal is for the price of the asset to be driven by, you know, supply and demand and willing buyers and sellers in a in a transparent market. I think that's where everyone gets uh the best outcome because in any other scenario, someone could be taken advantage of, right? like if if uh you know one side has more information than the other um you know you you could you could end up in situations that aren't fair. So I'm I'm generally a proponent of price being discovered transparently through two-sided markets. Now again, that's not necessarily the world we live in today with >> private assets. Um, and so there will be a transition period and not not all companies are going to like the changes. But I I do think it's inevitable to to some degree that this happens because what'll happen is there's going to be active derivative markets on these private shares. I mean, there you've already seen that. >> There already is. Yeah. and the data is getting out. And I think that's a hard genie to put back in the bottle. If if the price is out and then the company's doing a round of financing anyway, it's like, well, why why are the derivatives here and you're pricing the round at at this price? Why don't I just hedge my exposure? Um, so I I think that it's going to be tough increasingly in a global market to have as much control over over the price as maybe private companies have historically had. >> One of the other impacts of that that I can think of off the top of my head is LPs selling their interests in a fund or a vehicle that they have where that is not a liquid market these days. And if it is to the extent that it is liquid, there's often huge discounts or haircuts on LPs trying to exit early. >> There there's been a lot of activity in the space and and I think it'll continue particularly for LP interests and special purpose vehicles that are highly concentrated in one or two companies. I think those are in many ways becoming an alternative to to direct investments in companies. I think our our preference and uh h how we approach access to privates is we we always would prioritize coming through the front door, right? And and making sure that the company wants exposure to retail and you know we want to work with companies who actually see this. And um I think in in the case of the open AAI and SpaceX tokenization, we were sort of running an experiment and we wanted to be the first, you know, if there was a Guinness Book of World Records for the first tokenization of Open AI in SpaceX. I wanted to claim that. Um but you know, it was a small giveaway in the grand scheme of things. I think the scaled solution uh is is best when actually the companies are involved. And what I've seen in the past few months as we've gotten Robin Hood Ventures off the ground is that great companies do want to be a part of this and do see the value of retail. We made a number of investments that have actually been public about how much they love the model and how uh they think this is the future. And we saw the the same phenomenon for our IPO access offering. So, we have a great IPO access offering, which is the number one retail channel for IPO participation. And we started this in 2021, around the time that we went public. And we've done, I think, roughly 50 IPOs since the beginning. And around the beginning of this program, generally, we got a skeptical reception from companies. They didn't understand why they would want to do it. Their bankers would kind of talk them out of it. So, we had to ask for favors and we really had to elbow our way into to getting even small allocations into some of these deals. >> And this year, there's a complete profound change where the best companies that are going public are coming to us and asking for feedback about their retail strategy. And you see the CEOs going on national television and talking about how, you know, they want to contribute to the disruption of the traditional IPO model and giving retail larger and larger allocations as time goes on. So people are embracing it and I think the same thing is going to happen for for private retail access. It's just going to go earlier stage, but the benefits are so strong that I think that they'll be it'll be standardized as time goes on. Uh and I think also we could make it easier for companies to go public. There was actually a round table that I was part of here in New York uh two days ago. It was called make IPOs great again. We had the red hats and everything um at the New York Stock Exchange. And I think that there's improvements. the IPO process has gotten so oified and the branding of it is bad at all stages that you can really just like systematically make improvements across the board. So, um I I think we should do that as well and make it uh improve the brand of of being a public company and also make it easier to to get public and at that point we'll we'll really be attacking the problem from multiple angles. How do you think about what to expand in next? Like what goes into that decision? What are the factors, the variables that you're thinking about in your head as you're looking towards the road map the next 10 years? There's all these things we could do. How do we allocate what we are going to do next? >> Yeah. Um I think like our northstar is really just maximizing equity ownership uh direct equity ownership from retail across the world, right? And you know that that's what we get into. How do we get more people invested in public stocks? Uh can we start at a younger age and uh which is why we're excited about initiatives like Invest America with the Trump accounts. Can we get people outside the US plugged in as well and make that as easy as possible? Uh can we do private markets which are inaccessible to people? Like I think that uh if we if we maximize equity ownership and actually the the percentage of of it held directly by retail, we'll end up in a more stable and prosperous society that that's more uh and and that's a future that I feel much more confident in. So uh we we kind of think through that and that's why we care so much about Robin Hood Ventures, the Trump accounts. Um, I've been talking a lot about multigenerational financial services. How do we make Robin Hood work really well for you, uh, for your whole family and make it work better if your spouse or your parents or your children are on Robin Hood? Um, and I I think that there's a huge wealth transfer uh coming. So, over 120 trillion are going to change hands and go from the old generation into the young. And I think that's a big opportunity to actually accelerate our goals. And and I think if we do that, Robin Hood itself as a business should benefit as uh as as our customers benefit. >> One thing I love and you might have a unique opinion on this given your background, your family's background is giving people a stake in the American economy, the Canadian econ, whatever economy, giving people ownership in that as a means of fending off communism. But you came from a communist country. I mean, your father was there and >> walk me through how you think of that and like how important it is to actually sort of fend that off and fight up front against that. >> Yeah, I mean the year that my father left uh Bulgaria, he he had an opportunity to study at the University of Delaware. So in Bulgaria he was a professor of economics in in tourism uh in on the Black Sea coast which is our warm weather summer capital they call it. So anyway the the Berlin Wall fell the Iron Curtain was lifted and suddenly folks from Bulgaria could leave. People from the west could come in and and we could leave. And so my my dad was given an opportunity to go to the University of Delaware to pursue a master's degree. and the year he left was 1991. So we we couldn't we weren't in a position where my whole family would go. We didn't have the resources for that. And we also weren't sure at the time whether it was going to work out in in America, whether there's a future there. Uh so my dad went in 1991. Uh the inflation rate in Bulgaria was over 100%. So, we talk a lot about, you know, 5% inflation here, but literally it was like tripledigit percentage inflation. And and I remember my mom um would look out the window. We lived in an apartment in Varna and I still remember the line for the the grocery store. Like you had to actually get there at the right time. um or or otherwise there were no eggs available and no milk available you know and the milk would be in these like big plastic bags. So um yeah and there there was also power rationing. So you know when when inflation hits that high you get all kinds of problems not just food shortages but also electricity and power shortages. And so they would have these rolling blackouts. So, I remember being huddled around the radio and the radio was like battery powered and you know the power would go out pretty much every night. So, we would just be like listening to the radio with with my grandparents. Um and then we came to the country uh to the US. My mom came about a year after my dad. I came 6 months after her. And um I remember I was 5 years old so I could still uh I still remember some things like it it was very clear you know I have memories from childhood in Bulgaria and then when I came to the US and one thing that shocked me was that there were bananas in the grocery store. Like you go to the grocery store and you'd see the big thing of bananas. And in Bulgaria bananas were like a crazy delicacy. Well, because you had to get them from Cuba. >> Yeah. >> Right. That was that was our I think that was the banana trading partner. >> So, it's like bananas are what? >> 20 cents. Um, so yeah, that that seemed crazy. And then I also remember when I was a little bit older, so this was 1996, 1997, 5 years after I came, Bulgaria had the unfortunate distinction uh of having the highest inflation rate in the world was 1,800% in one year. So you had the currency essentially collapsed and they they kept having to add zeros to it. It used to be, you know, two Bulgarian leva to one dollar and I think it got to 2,000. Um, so they kept having to like recycle all the bills and add more and more zeros. And at that point, I was I was actually looking at this earlier. Um, my parents had uh the bank statements for my initial savings account. So, my grandparents opened up a savings account for me when I was born. and you see all their deposits and it was like, you know, 10 leva, 20 leva. Uh it got up to 2,000 leva in the mid 90s and then the next one it was like basically zero. Yeah. They they had to do all sorts of crazy things. My my grandfather would uh invest in copper cookware. So he had we had this closet in in his apartment that was just full of copper pots and pans. They would hold value better than the currency. And I I think that if there was an easy way to invest and to protect your wealth, um it would have been much better for for the country uh at the end of the day because you know the the country got set back. It's sort of like the year I was born, 19 1987, maybe the time around that was was the heyday of the country and then for a long time it was just a gradual decline and and I think now there's promising signs but you know I think that um so much of it starts from the will of the people and and and how optimistic they are about the future being able to raise children uh the economy and uh you know I just just saw the impacts of of having a a market system that just didn't work. Um so you know made me appreciate what we have in this country and uh wanting to make it more global exported to to everyone else and and just making it easier for people to own companies that are producing stuff. I >> I love the idea of owning a part of the American dream in that sense. Um, are there is there another leading sort of indicator of that that can change things? Like is it housing affordability? Is it optimism? Like what can be done in a in a way to sort of give people a rung on the ladder, if you will, if you want to think about it in that way. So the ladder is not outreach. >> And I think about that in terms of like how do we get more people invested in capitalism and one of the ways is is ownership of assets. >> Yeah. Uh, and tying that I love what um they're doing with tying that back to education in schools and the portfolios and stuff. What's the other one? Like what is the next big thing that we could do to sort of like give people a stake in capitalism? >> Yeah. I mean, we talked about real estate. Uh, we've definitely talked about real estate in the past. Um, and I want to, you know, I'm a I'm a I'm a proponent of a diversified portfolio. So I I don't want to say one asset is better than another asset. Um I think that if if we make it easier to I I I think the general approach that we have is look at what wealthy folks have access to, what are the tools they have to protect their wealth and and grow their wealth. >> And you know they have access to all sorts of things that are not easily accessible. um a lot of alternative investments, real estate, private credit, private equity, venture capital. And if if we're in a world where it's easy for for the mass market to have access to these, then uh I I think I think we'll be in good shape. >> How do you think about something like Bitcoin? Uh I think Bitcoin has been I think in in hindsight the the top performing asset of the past decade. Um and you're starting to see it becoming more institutionalized. I mean not not just with the DATs but companies putting Bitcoin on on the balance sheet, institutions and asset managers embracing it. I mean, for a long time, Vanguard, one of the largest asset managers, said, "We're not going to offer Bitcoin on our platform." But, you know, even companies like that are changing their tune and and offering it. And um, yeah, I think you should expect that to accelerate. I mean, Bitcoin as the original crypto asset is always going to be singular. nobody else is going to be the first or or original. And I think that's why so many people that's why there's such like a mystique and aura about it, right? Because um >> you know, you go to these you go to these Bitcoin events and there are believers and and they'll tell you it doesn't matter what what's going to happen. It goes up, I buy more, it goes down, I buy more, I'll tell everyone I know to buy it. Um, so, um, yeah, at this point I would I would definitely not, uh, I I I would definitely not be, uh, a long-term Bitcoin bear. >> If trading retail assets uh, and allowing easy access to that, you guys offer no fees on that. How do you make money on that? You still have people to pay. You get an organization to run. If I if I can go buy a share of Tesla or SpaceX or Stripe or whatever through the app, >> how do you make money on that? >> Well, we do have um feebased products. I think that in the beginning um yeah, Robin Hood was a simpler business. We offered equities trading. At the very beginning, we didn't make money and eventually it became payment for order flow and margin lending and interest on on uh on balances. But now Robin Hood is a financial super app. We have 12 we have 11 business lines as of the last earnings call that generate 100 million in in revenue or more. And I I think the general principle is we make money in all of the standard ways transactions interest on assets uh lending based revenue but we like to compress the margins and uh operate much more efficiently. So through the through our use of technology we can offer our services at uh much uh much lower cost and we can actually give to our customers the difference so that you're actually at a financial disadvantage using any other product than Robin Hood. Um so yeah I think unfortunately it's not as simple as like oh free trading or not commissions. We we do make money in other ways, but generally using using Robin Hood should be cheaper, higher value, more cost-effective across our entire product suite than any of our competitors. >> Why do you think your credit card was so successful? Like everybody has a credit card. Yeah, there's a hundred different ones. They're super It's almost like when I saw how simple yours was in a way, I was like, "Oh my god, this is like Steve Jobs coming back to Apple taking 400 product lines and making like no, we're doing four computers. or simplifying everything. >> It's easy to explain the value prop. 3% cash back on all categories, right? And if you're a credit card nerd, which many people are, if you're like one of those people that follows the points guy, um >> there's businesses like related to like just optimizing points. >> Yeah. I mean, but you know, a lot of people don't want to play that game either. They want to say, "Okay, I I don't want to spend my time working in spreadsheets and figuring out, okay, if I spend this much on travel, I use this one card, and for my groceries, I use that, and for my gas, I use this." Um, so it's very, very compelling value proposition is say 3% on all categories. Because what that allows you to do as a as a spender is to say, "This is just my default card. I'm just gonna I'm just gonna this is going to be at the top of my wallet. Sure, I have the opportunity, the ability to do more work. If I want to do more work, maybe I'll pull out some other cards for other scenarios, but I also know that if I don't want to think about it, this card is is really good in general as a default. And I think I mean in in some cases if you look at the really successful e-commerce companies like an Amazon what they've been able to do is do such a good job that they've become the default place you go to buy stuff. And sure, maybe at this point if you want a comparison shop and you want to buy a new belt >> and you really wanted to like save on on the belt, you could probably find it cheaper somewhere else. But they do a good enough job and they serve you well for such a large majority of things that they become the first option. And I think that's what we've been able to to achieve with the credit card. And you know, even even though it's still e even though it's still not completely generally available, we do have over half a million card holders and we're among the fastest growing credit cards. Um, and you know, more people keep joining. It's like credit card companies typically have had to really think about cost of customer acquisition. >> Yeah. >> Because they have to pay for for for customers to come in. But we have such strong word of mouth that customers are coming faster than we can let them off. Um, and that's just entirely from peer-to-peer reviews, uh, existing happy customers posting about how much they love it on social media. I think that's been a huge driver of of its success. >> Two questions. Why do you think like somebody like Ax just doesn't copy that? Uh, can they not? because it's a structural problem and they can't do it from their cost structure is different than yours. Like what prevents them from doing that? >> I I think I think it's a cost structure problem. You look at the big credit card companies and they have tens of thousands of people. >> Yeah. >> Right. Tens of thousands of people that are manually uh servicing the these accounts and you know that they spend a ton of money on marketing. So uh yeah, I think the the actual economics of of the card program itself are dwarfed by the economics of like the large headcount needed to to operate the businesses. I think those are very very painful decisions because not only um I mean not only are you talking about like shrinking uh headcount but also in order to do that you actually have to have the technology to to be able to automate the the entire servicing process and the underwriting. And I think we had an advantage because we were able to build this from scratch. So you could start from first principles. So I I think um yeah I think it's it's very very challenging problem to solve. I don't envy them. >> No, it's hard when you're the incumbent and you're faced with it. You can run up I I think of this as like uh you know if you're you don't have the resources maybe as like American Express and in some sense you do now but I mean when you started you didn't. Yeah. >> And what do you want to do? you want to run upstairs cuz they're like fat and happy and so it's going to suck to run upstairs but they can't chase you because uh it's going to be they're going to be out of breath. They're going to be panicing. They're going to have heart like they can't keep up with the velocity that you can move at. >> Yeah. And by the way, I think that um if we can put pressure on the the credit card companies to start modernizing, that'll be good for them and for the consumer. So um >> but you don't get 3% like in a transaction fee. Like how is that from balances? Is it from like a you're only paying that out once a year so you get to keep that during the and earn interest on it? Like how does that work? >> Yeah. So here's the great thing. Um the other thing that we have that at least the pure play credit card companies don't have is a a brokerage business >> that ties into it. >> So in order to get the 3% cash back, you actually have to deposit the funds into your brokerage account. And so we've created this flywheel through Robin Hood Gold where by using the credit card you also use the brokerage product. And of course at at the beginning it was mostly the other way. So existing brokerage customers would adopt the credit card but increasingly we're seeing people coming to us for the credit card and then we we we actually get them to use brokerage and our wealth management offerings as well. And what we've seen is that the more products you use of Robin Hood, the more engaged customer you are, it lifts all boats. So each of our other product lines benefit. And I think that's what's really pushed us to more rapidly diversify and add new adjacent product lines rather than just getting deeper and deeper into into into brokerage. So basically uh and we saw this with retirement as well. If someone uses the credit card as their primary card, they put more of their wealth into Robin Hood, more of their money into it, and they become a more profitable customer to us. And that allows us to close the gap between the rebates we get from the networks and the 3% we we pay back to customers. If you had to rank sort of the three products that matter most when it comes to transferring my financial institution, making you the primary financial institution, what would they be? >> Yeah, I mean, making us your primary financial institution is really about coverage and and the goal is for Robin Hood to be not just your secondary, but also your primary account. We want to be both. We can be your secondary account and your primary account, your backup and your and your main. Um, most of the time when you actually ask people what's your primary financial account, they'll talk about where their paycheck lands up, their bank account. >> And you know, for a while we weren't really playing in that space. But you might have noticed uh a couple weeks ago we started rolling out Robin Hood banking. >> And if you look on social media, Robin Hood banking is a hit. I mean, people love everything about the product experience. We've we we've really the team there has really done a nice job sweating the details and building a a comprehensive banking offering and it's a combination of things that you won't get anywhere else like real-time cash delivery uh which is available in New York. So, if you're actually here uh doiciled, you can try that out. That's rolling out more broadly as well. but also just the bread and butter, child savings accounts, joint accounts so that you can have uh shared finances with your spouse, uh a family first experience where you can actually manage the finances of the whole family in one place. Uh so it's yeah combination of differentiated features you won't find elsewhere. amazing economics where you have the opportunity to earn a high rate of interest not just on savings but also on checking which by the way is a huge annoyance for people that the banks play this game of like >> oh yeah >> your money goes in and out of your checking and of course will penalize you if you try to take money in and out directly of your savings too many times for no reason um other than to collect the high spread on checkings. So, so it's it's basically a little bit of a stupid tax where they try to like penalize you for for doing wrong things. And I think that um or sorry, penalize you for doing the right thing. So, I think, you know, not to be too porative, they're running their business and people are uh they provide valuable services for people, but I think that's an opportunity for us to to differentiate. >> It's almost like they're run for the institution versus the customer. That's how I think about it. Whenever I deal with a bank and they do this thing where it's like, oh, if you want to earn interest, you have to open a savings account. It's like, are you incentivized by me opening a savings account? Because like even if it makes it harder for me, so there's a bit of friction and like you get a little bit more float because of that. Like that's oriented around you as a bank, that's not oriented around me as a consumer because me as a consumer, I don't want another bank statement. I don't want another pin card. I don't want another thing that I have to keep track of. Yeah. >> I just want one account. Just pay me the interest on that account. >> Yeah, I I think that's right. Um and I think sometimes to be fair there's a delicate line between these things. Um because you know they they have to they have all kinds of like safety and soundness constraints and all of that. So, >> well, go deeper on that for a second because I would really love to understand why legacy is not adapting quickly to a changing world perhaps in the most optimistic sense or it just remains that way. >> I mean, I I think at one point there was a a rule. I think this was uh uh I I didn't study this so you might have to uh look it up and we might have to correct it but uh I think for a long time banks were actually prevented from paying interest on savings >> and and the fear was that you know if they start competing over paying interest or sorry they were prevented from paying interest on checking >> and the fear was >> if if there was a ton of competition over paying the highest rate on checkings it would affect the safety and soundness of banks and it would lead to more bank failures and and so the you know the the FDIC or OC came in and they said you know no no interest on savings. I think that was later repealed but you know by that time of course the interest you collect from from the checking accounts was such a big line item part of the P&L that it's hard to part with that right and so they they sort of like became structurally reliant on it. Um, and uh, you know, it how do you how do you adapt if you have trillions of dollars in checking that you're used to paying to to earning 5% on and you suddenly are talking about giving the majority of that back to the customer and and taking no profit. Um, you know, you you do that very very quickly and your earnings go down, profitability goes down. if you're public, you know, that that could have an impact on the stock price and suddenly it becomes a safety and soundness concern. >> Yeah. I was thinking about this driving here this morning. I was like, I wonder if the the ultimate endgame is like the mortgage ties people to financial institutions in a way uh because they can tie the mortgage to other products. They can tie it to your paychecks deposited. And then I was thinking, well, Open Door wants to enable like one-click buying of a house. And if they were to integrate with Robin Hood or somebody else or a financial institution, you could literally enable that on the spot. You could enable like, oh, your mortgage is granted. It's approved. Uh, and it seem it'd be like seconds. >> Yeah. And and we have a mortgage uh partnership with Sage Home Loans that gives you 75 basis points off of uh the national average >> because you have better information >> about people too, right? you have history, complete history information, and you can use that with AI, I would imagine, to actually probably generate better predictive outcomes than humans. >> Yeah, I think the hard part about the the mortgage business is very rate dependent. So, um I don't think we necessarily want to get into the mortgage underwriting business or holding mortgages, but we we want to get we want to help people with all of their financial needs. And I think for that one, being a network and allowing different banks to compete over who can offer you the the best possible rate as a consumer is is probably the road we're going to keep going on. But ultimately, isn't doesn't that come back full circle a bit to the tokenization? Uh so like you might pull those mortgages uh at the risk of sounding like 2007 here, pull those mortgages and allow people to retail investors to partake in those mortgages. No, I haven't thought deeply about whether we would securitize mortgages. Um my feeling is that I mean at at at the end of the day um we just want we'll just enable what offers customers the you know lowest cost whether it whether tokenization enables that or you know you can connect directly to a network of banks that can compete over your mortgage traditionally I think remains to be seen. Um, you you could argue actually tokenization at first would have a disadvantage because the banks won't be tokenizing and so you probably have to meet them where they are and give them the the information in ways that they can support. But yeah, over time that's likely to shift uh if if they they they tend to be lagards of of technology. So if you know 5 to 10 years they're doing mortgage mortgage originations and onchain then um you can imagine it it being the the primary market for that. >> We always end these interviews with the same question which is what is success for you? For me personally, I think success is um creating dramatically more value for the world than you create for yourself. So um yeah, I I think I would feel good if the aggregate impact on the rest of the world and I think obviously it should be positive. I I think it is is is much bigger than what happens to me personally. Um and I think that's what's pushing me to, as you said, further ownership. Uh make it so that everyone has skin in the game. Um because I think that if if if I can play a part in doing that across privates, publiclix, all post IPO and make it so that more people own uh the great industries of of this country will lead to not just smarter and more well-off individuals, but also a more stable and and prosperous society. And I think that's the that's a legacy that I would I would get excited to tell my grandchildren proudly uh about when they're, you know, huddled around the the fire on Christmas. >> That's a great answer. Thank you so much for taking the time today. >> Thank you. It's been fun.