Robinhood CEO Vlad Tenev on Dumb Money, Day Trading, and Retirement

Channel: Alex Kantrowitz

Published at: 2024-01-31

YouTube video id: ZmUB_bstySc

Source: https://www.youtube.com/watch?v=ZmUB_bstySc

CEO and co-founder of Robin Hood joins
us to talk about what happened to the
mem stock investors after the memes and
how his company is positioned against
traditional financial institutions all
that and more coming up right after this
welcome to Big technology podcast a show
for cool-headed nuance conversation of
the tech world and Beyond we have an
amazing guest for you today uh Vlad tenv
is here he's the CEO and co-founder of
Robin Hood obviously a company that has
a lot of intrigue and plenty of brand
new products that you may or may not
know about so we're going to talk about
that all today with you um here we're
going to also talk about the state of
the market and of course how robinhood's
customers have evolved Vlad welcome to
the show great to see you thanks for
having me thanks for being here I'm kind
of curious like you've had a lot of the
investors that were investing in
GameStop part of that memestop craze um
how did they evolve as investors because
I imagine they stayed on the platform
afterwards so what can you tell us about
that yeah um I mean even before GameStop
and I should say there were so many
things about you know Co era that was
extraordinary um one of them being just
everything came together to make it
really attractive for for people to
invest in stocks and and
cryptocurrencies all at the same time
right interest rates going down to zero
uh stimulus hitting the market um and
sort of like
lack of other means for people to spend
their disposable income so you saw
savings growing through the roof um and
you know in the years after covid when
um sort of the the economy and Society
digested all of that you saw a a sharp
correction so interest rates instead
started seeing the the highest ramp in
several decades you're seeing savings
being being depleted and you're seeing
um sort of like movement away from more
speculative Investments and and
cryptocurrencies and I think uh our
Focus has always been on making sure we
serve the customers and give them the
best tools no matter what market
conditions are I mean we we've been
known for our trading products and the
way we serve active Traders but if you
look at what Robin Hood's really been
investing in over the past few years
even from preco um we've rolled out
retirement products uh where we offer uh
the first and only built-in match uh on
the market and you're seeing that you
know continuing to resonate we have our
gold offering with high yield on
uninvested cash where you can actually
benefit as a customer from rates going
up I mean historically rates going up
was considered a prime opportunity for
banks to pad their bottom lines because
if you have a traditional checking
account or a savings account in a large
bank or or other financial institution
you're used to
getting under 1% low singled digigit
basis points and we've kind of turned
that model on its head where if you're a
Robin Hood gold customer you're getting
a very competitive rate on your cash and
so I think you've seen Robin Hood evolve
with our customers in the same way that
our customers have been interested in a
broader variety of things earning
earning more interest on their cash
investing for
retirement um increasing their time
Horizon I think the company is evolved
and has sort of like transformed our
business model our service model the way
we serve our customers to make sure that
we're even more relevant and even more
important to our customers holistic
Financial lives and and the way they
think about building their wealth yeah
and we're going to talk about all that
as we go through this conversation but
one of the things that happened in this
in the mem stock craze was a lot of
investors who never bought a stock they
entered and they entered through Robin
Hood right and so like that's what my
question is gearing at like of course
the market has incentivized different
behaviors but you've seen it happen like
you've seen these people come in and
become Traders for the first time in
their lives by the way probably at a
younger age than most people do so get
exposure to the market have they now
moved Beyond doing some of the day
trading that they were doing in the
beginning and maybe this like yoloing
the money and of course like you've
built the products that have
incentivized making what I would say are
smarter decisions financially have they
followed suit like have they actually
said okay have like have you seen
customers who got in and said I'm going
to buy a share of GameStop and are now
investing in you know ETFs and
retirement things like that like what is
the behavior path been for them yeah uh
absolutely I mean we've seen uh in many
many cases customers coming in through
buying a individual stock or or even
buying a cryptocurrency and they kind of
um see the potential of building their
wealth and then they see all the things
that we're offering particularly you
know with with the gold offer what what
we see and what we've kind of been
trying to your premium service that you
pay what $6.99 a month and you can get
some added benefits
yeah so it's a it's a premium uh service
it's like um a membership and the way I
kind of think about gold is you know if
if you um you can get some of these
benefits that we offer like high yield
on cash um low commission on on trades
of course for us it's no commission but
if if you're a highet worth individual
at a bank you can get a lot of these
similar types of benefits for example if
you're a Chase Private Client customer
or private wealth management customer
and they select for this group of
customers based on their wealth right
you have to hit a threshold of several
million dollars of net worth in some
cases even more and then you can
actually earn some interest on your cash
and you get a dedicated person to talk
to you can get access to like premium
products institutional grade money
market funds and and a higher level of
service um and the way I kind of think
about Robin Hood gold is we can offer
that to everyone we can democratize it
and it's not free but it'll just cost a
a a very small monthly subscription fee
to to be part of that membership
experience right and I mean like you
guys are building retirement products um
I see you can even buy like you know
fractional shares of of broad range ETFs
on the platform by the way like I am one
of Robin Hood's newest uh customers or
users I just signed in uh last night and
began option trading today so it's my
first option trades that I've made so um
but I've also bought atfs and started
with the retirement products so I feel
like that was like a pretty interesting
experience I can help ground this
conversation and I'll they'll definitely
give you some product feedback if you
want um but I guess like it sounds like
from everything that you're saying that
people came into Robin Hood in this mem
stock moment but started to you know end
up doing more traditional investing you
know smarter investing as it would be
would be called does that sound right to
you well I would say you know Robin Hood
has 23 plus million customers right so
it's it's hard to say that you know each
of them behave the same way we have lots
of different customers that come in for
various reasons I mean you look at that
number 23 million that's yeah didn't all
come in through that but like here's
here's like why I'm bringing it up is
because in that moment you had so many
young people that were starting to trade
for the first time and there was a lot
of scorning I think from you know the
traditional Financial establishment a
because of course they were going after
a hedge fund but B because they called
them the dumb money right I mean name of
the movie right dumb money but it's also
just like these people got exposure to
the financial system so much earlier
than a lot of people and it was great to
like even make some mistakes early on
and then you start to learn and you
start to have strategies where you can
then start to build your wealth and it
seems like that's what happened to a lot
of them and that's what you're providing
I agree with that and that that's really
the thing that bothers me most about
that movie is this idea that retail
investors are are dumb money I I find
that condescending and and offensive so
you know uh a lot of people ask me
what I think about that movie it's like
the the title itself just perpetuates
this type of stereotype that I think is
very very harmful and I think that's a
big part of why not a lot of people saw
it because you know who wants to see a
movie that's sort of like making fun of
even if it is ironic in some way making
fun of uh uh making fun of you as a
retail investor it's interesting because
I would say that that having watched it
it seems like it actually has a much
more flattering portrayal of the quote
unquote dumb money than I think was
largely had in the popular conversation
showing that they're smarter than they
so many people are just gonna look at
the title EXA make their decision you
know I think you're right like if you
actually sit down and parse it and look
at it it is you know sort of like a
glorifying take on on the retail
investor and I think um that part is
good but you know it's sort of under
this Baner of condescension that uh that
I think just pervades the financial
industry well I think a lot of that
condion comes from and this kind of goes
to like the core of the way that Robin
Hood initially built momentum was with
active Traders right like it's popular
to say that day Traders tend to like
95% of day Traders tend to lose money
where if you like Park your money and in
passive ETFs you're going to do well
over time I'm kind of curious what you
think about that
well I think there's there's two things
first of all if you think about uh a
Robin Hood product and this goes to our
active trading products but but really
it's uh consistent with Robin Hood gold
and our high yield product and
retirement as well there's really two
things that I think distinguish us and
make the products interesting in the
marketplace one is the cost like any
Robin Hood product we look into how we
can use technology techology and good
engineering to dramatically increase the
Automation and put more money back in
customers pockets and of course that
originated with zero commission trading
with no account minimums it used to cost
7 to10 do every time you place a
transaction and so we we we were able to
do that but that's not enough for a
Robin Hood product the other thing is
the user experience it has to be
extremely simple and easy to use and you
know we became the First Financial
services company to win Design Awards
for our work you don't really think
about good user centered design and
experience when you think about a
financial product and I think Robin Hood
really changed that and so when you
think about our trading
products really the idea initially was
by by introducing these two things low
cost and
exceptional uh quality and craftsmanship
and design we would actually make it
more approachable to people that had
historically been left behind and that's
um younger folks who don't have a family
wealth manager that can just sort of
like take their account uh these people
were largely being pushed away by the
traditional Financial system until they
were in a position where they had much
more assets and and a nest egg and they
were getting closer to retirement so we
just got them much earlier like in their
early 20s as opposed to early 40s um and
that was in large part due to the low
cost low barrier to entry and user
experience and and what we ended up
seeing was that it actually not only
appeal to people doing it for the first
time but let's say you're an active
Trader you're trading equities and
options at a discount Legacy broker and
you're being charged $7 every trade now
of a sudden you're like wait a minute
you know the these guys here are letting
their
customers trade as essentially
commission free um the the value prop
there is so strong why can't I get that
and of course we saw all of these more
experienced investors coming into the
platform and and using it and I think
that's what ultimately led to um sort of
our model becoming the dominant industry
model and everyone else having to
replicate it and a huge wave of
consolidation like you're seeing now
with Schwab and TDM a trade and Morgan
Stanley and trade where you know a lot
of these big competitors that were under
the Legacy brick and mortar models and
they they couldn't compete in the New
World um couldn't survive as Standalone
entities so um I I let me go back then
to the question
right yeah which yeah which is if if 95%
of people who day trade lose like why
would someone do
it well I think these statistics are are
always a little bit tough and I'll tell
you why I mean people cite these studies
that
um that that you know day Traders lose
money and all these things but those
studies a lot of them were from the 90s
or earlier and you see the dominant
Factor being commissions it's like oh
they're they're trading a lot and so the
commissions are eating up like nearly
all of the returns and now you know we
remove commissions the entire study
basically needs to be uh needs to be
sort of like revalidated but I think
that the the broader point is since
we're a self-directed platform like I
would think about Robin Hood as a tool
Builder like we're providing these tools
and may maybe in the same way as a ma a
major national Securities Exchange like
if you're the NASDAQ or or the NY you
know you're providing an interface
you're providing Market access we happen
to do that for for for retail but uh the
industry has strict separation between
people that provide these tools as
Brokers and then investment advisers
that are actually trying to influence
and determine what their customers uh
invest in and so as an impartial tool
Builder our goal is to provide a
reliable service make sure that you know
uptime reliability user experience is
good lower the costs of transacting and
in doing so we enable lots of different
activities of course there's like
activities that are active trading and
more speculative and then there's the
retirement and wealth building stuff all
all on that platform and infrastructure
and since we're not uh a registered
investment advisor we actually have to
stay away from like recommending
particular stocks or investment
strategies um and you know I have my own
personal opinions for what the best way
to invest in and right what stocks to
buy but I can't really influence
platform decisions at all Bas based on
those exactly I will tell you though
that one of the things that's been
really interesting over the past year
is um if you look at all these forums
that um sort of celebrate passive
investing like r/ bogleheads for example
or r/ investing um you're seeing Robin
Hood mentioned more and more in these
forums it in a way where maybe two or
three years ago um it would be dismissed
and it's because people are looking at
the value props of these retirement
matches and uh and they're kind of
seeing they're saying that Robin Hood is
the best place to have quote unquote
lazy portfolio so even if you're just
putting money there and you're going to
set and forget it it's actually a great
place for for portfolio building and I
think you're seeing the brand perception
change as we're adding all these tools
um and you know I I'd love nothing more
than to be the company that did for uh
long-term retirement savings and
Investments what we did for um you know
Meme stocks and and and more more active
trading um I think we've got some
headwinds there because I mean as as a
media person yourself um the stories
about people investing in B Bor boring
sort of like long-term
uh uh retirement don't tend to be the
most compelling stories to tell right
everyone wants to you know everyone's
talking about the relatively small
number of people that are trading
actively and you know doing more
speculative activity and I don't think
too many of the stories about you know
the folks that are stashing money away
slowly over long periods of time and
doing sensible things get told as much
even though you actually see that being
uh a much larger group of people and a
much higher percentage of the the
overall activity I don't know Vlad I
mean you're here and we're going to talk
about those boring stash it away type of
fund so um you know I definitely think
it's worth giving air time to and it was
interesting for me opening up a
retirement account on Robin Hood last
night just going through it and sort of
you you pick the different type of
strategy that you want based off of like
your risk tolerance and I love how it
was like you have a high tolerance risk
or highest tolerance for risk or low
tolerance for risk or lowest tolerance
for risk and it does enable you to like
even put I think I put $20 to work at a
like pretty Diversified Group maybe six
different groups of stocks like
fractional ownership of them it was
pretty interesting so I'd love to hear
your perspective I mean you know why are
these companies uh or these forums
starting to talk about Robin Hood as a
place for retirement and how have how
have your users started to gravitate
towards towards this type of buying
I mean I think uh these folks are um
smart first of all they're Savvy
investors that you know read the fine
print of everything and they're making
calculations they're like okay if you
know I'm investing at a discount
brokerage or I have an advisor and you
know I'm paying a 25 to 100 basis point
annual fee they run spreadsheets and see
how the that affects their their returns
right and they see what these advisers
are doing in large part you know they're
they're kind of handholding they're
providing a sounding board they're
calming customers down when the markets
are exceptionally volatile and telling
and they're kind of a steady hand at the
ship the asset allocation is pretty
commoditized I mean we know we know the
algorithms there um and you know some
some advisers and Brokers are still out
their charging commissions because you
know maybe their clients prefer to talk
to them on the phone they have higher
costs of servicing they like to go into
a brick-and mortar location to to make
their Investments um but for our
customers they're younger they tend to
be much more digitally Savvy they're
early adopters of Technology they want
the service to just work and they can
have technology sort of solve a lot of
these more transactional problems that
you know you've had to go into a branch
office or or make a phone call to do in
the past and then um you look at the
costs you look at the ease of use and
then you take these matches um for
example the 1% in uh non-old and then
the the 3% for gold accounts you carry
that over over a long time period say
you know multiple decades which is which
is what these customers have for for
retirement and that adds up to like uh
pretty strong economically rational
argument for for investing with us um
and now I'd also add that um you know
there's
uh I was going to make another point but
uh I got while you think of that let me
ask you about the match how are you able
to do the match I mean the money comes
into Robin Hood it goes right into
stocks so you're passing it along into
the equity and you match like I mean I
think I put you know $20 in yesterday
and free money from Robin Hood like a
free 20 cents came in from Robin Hood um
where are you getting that money like
how is that how is that even feasible
for your business I mean the way we
think about it is retirement
relationships particularly are long-term
relationships those accounts um like we
we believe that if we serve those
customers well over time they're going
to continue to contribute it contribute
to to their accounts they'll grow and
also they'll do more things with us you
know and there is this thing where the
more assets you have with one platform
the more services you use the more
likely you are for uh the next service
that we offer for for you to be a
customer there and you know we have been
seeing it the more customers use our
services the more assets they put on
Robin Hood generally the the happier
they become and they become product
evangelists and we think all these
things are going to coales into these
being profitable relationships over the
long
run and why do you think people are not
getting um these services from like the
traditional Financial system is it if
they have like less money that just
doesn't care about them or like why
would people open up a retirement
account with Robin Hood versus like a JP
Morgan
Chase well I think it's it's again those
two things that that make Robin Hood
products differentiated in the market
it's the economics which for retirement
it's not just the lack of commissions
and minimums on on trades but it's also
the the the compelling matches and the
second thing is the user experience you
know you don't want to fill out a PDF
and fax things when you create an
account you you don't necessarily want
to have to go to a branch office I could
see the the value of a branch office
being there for like exceptional
scenarios but for your like typical
day-to-day work you just want to take
out your phone and and do the action and
have that completed seamlessly and
that's that's what we do better I
believe than than anyone else and you
know you've probably seen the onboarding
experience yourself the team has spent a
lot of time crafting uh particularly the
retirement onboarding and how we
construct those recommended portfolios
um we've won Design Awards for that
product and I I don't think that you can
say that about other retirement products
on the marketplace I mean when no I I
thought it was excellent of a retirement
product winning a a design award you
know yeah no going through the flow I
thought it was excellent so you know for
a lot of companies in the economy
everything sort of flipped when we hit
you know 5% interest rates going from
zero like within a year a year and a
half I can't imagine a company who would
change life for more than yours right
where people like in the zero interest
rate environment are going to be more
active trading equities and now like you
might be more interested in putting your
money in a money market that will give
you that five you know six% so what have
you seen there and how has that changed
like your mentality for the way that you
do
business yeah I mean what we've seen is
um a lot of the Casual firsttime
investors have sort of retreated from
the market and they're interested in in
other things uh like earning yield on
their cash and if you think about it
again from the economics perspective
it's a economically rational change
because if you're earning five plus
percent risk-free rate on your cash and
you look historically at what the
Market's been able to do um you know
getting that 5% risk-free is a
compelling value proposition and a zero
rate environment you know you you you
basically get nothing risk-free and so
you've seen kind of these macro flows
away from from equities into you know
things like money market funds high
yield accounts and you know more more
and more of sort of like the the excess
cash is going into these vehicles um in
terms of active trading I'd say active
Traders tend to be more resilient
because they engage in more
sophisticated strategies you know they
can they have strategies that um they
deploy to take advantage of falling
markets or or markets that tend to be
like up and down and so we have been
continuing our focus on active Traders
and in fact
um we're much closer to active Traders
than we were in the early Robin Hood
days active Traders have always used our
products but you know before before
recent years we kind of Built For the
First Time Mass Market consumer and we
didn't really get deep into the needs of
of active Traders and solving their
problems and we've been able to do a ton
of work starting in the year 2020 that
you know builds towards us being the
best platform for for active Traders and
we've got some more wood to chop but
active Traders
are much happier on our platform now
than they were at the beginning of 2022
yeah they must love the volatility I
mean with the vix as high as it's been
over the past few years years well also
just like the user experience you know
it's like basic things like um making
sure that customers who are trading
options actively can continue to trade
them if they're marked pattern day
Traders and having a good cash account
experience where you can continue to
trade options in cash accounts not just
margin accounts um giving customers more
data and more advanced charting I think
if if you look at the needs of of these
active customers um we've got a full
road map many many years of of work to
craft the best experience for them and I
think it's it's an exciting challenge
for our teams because you know it pushes
us to make our systems faster make our
experience even better while making that
Simplicity um while keeping the
Simplicity that you know Robin Hood is
known for and I think these are the
types of problems that attract really
great engineers and designers and kind
of um keep us at the Forefront of of
innovation in our space right and you've
mentioned design and like ease of use a
handful of times in our conversation
already which like is it's important
right because it does make this stuff
more accessible to people who might
otherwise be turned off by um platforms
that don't let them in without a minimum
balance for instance or you know just
start design so dauntingly that it
wouldn't it's not worth taking the hours
to go and open a retirement account if
you have $20 and so you've solved that
but you did you did get some Flack you
know in the earlier years about making
it so easy you know on the downside like
for instance making it easy to open
margin accounts and trade trade on
margin um people trading with money they
didn't have or losing more money than
they than they had which is always a
possibility when you do margin trading
have you taken any of that feedback to
heart and changed the product at all
after that early
criticism um I think some of that
criticism is fair
um other parts of it are kind of in the
vein of well commissions are good
because people shouldn't be trading that
much and so you know if you charge
people more they'll do it less but in
reality that's kind of self-serving
criticism in a way because you know none
of these Brokers that were charging
commissions were doing it because of
like yeah I'm not going to stand here
and argue that commission's good I am
not going to do that but but the broader
criticism yeah it's a fair um it's a
different form of that argument to say
that oh it's good that you know our
signup flows are convoluted and you know
confusing and you have to go through all
of these steps because there's got to be
some middle ground though doing to do it
but it's it's not it's because they
haven't invested in engineering and user
experience and you know if if they could
wave wave a magic wand and have a great
customer experience every single
brokerage would do it and I'd say
they're like trying really hard to do it
and that's why you see
um like the the user interfaces of The
Brokerage products that are doing well
have all tended to begin to resemble
Robin Hood's user interface over time
you know it's just like it it's gone
from inspiration to more and more kind
of blatant copying I would say yeah so
you talked in the earlier part of your
response though you said there was some
criticism that valid so like putting
aside the fact that there are some
people that say commissions are good
what do you think about the valid part
of that criticism
then um I mean I think that it's it it's
always good to take into account the
impacts of new technology um on society
right like we have to ask these
questions like you know we're now in a
world where people can communicate with
each other and share ideas what's the
impact of of that going to be on the
markets and on people's well-being and
those questions are being asked you're
seeing a lot of that with AI like what's
the impact of that going to be on
people's Investments and you know
imagine a world where you have an AI
telling you what to invest in or or what
to do um sometimes you do need to
reconsider regulations um in terms of
Investments and what Brokers can and
can't offer to customers there are
existing rules like suitability you know
we have to run suitability checks and uh
there's regulations governing who's
suitable for advanced products like
margin and and options and of course I
think it's entirely reasonable to like
rehash these rules over time reconsider
them see if anything needs to be updated
but I think the right way to do that is
to do that on like a industrywide basis
where there's a Level Playing Field and
to make make sure that you know it's not
just new companies like Robin Hood and
smaller startups that are kind of being
singled out but if you want to change
the rules everyone should have to
everyone should have to be part of that
right and speaking of like examining
things at an industrywide level when it
comes to payment for order flow the SEC
has been investigating that U you made
some comments about that in in the past
I'm curious like that that's been
another place where people look when
they look at Robin Hood business and
they wonder what's up there like should
Robin Hood be you know making that much
money on payment for order flow so I'm
curious like what your perspective is on
that front and if you have any plans to
shift away from
that yeah I mean my my perspective on
that is I mean I've I remember a time
where you know Brokers were charging $10
in in trade commissions it wasn't that
long ago right if if you look back um
let's say in the year 2018 or 201 19 and
you look through um a publicly traded
brokerage retail brokerage is financials
um for example old TD Merit trade uh
financials you can get a pretty good
idea of what the revenue model and how
the business of retail trading looks
like and if if I remember correctly
these are rough numbers but directional
you know they they would say they made
on average $1 of Revenue per trade of
that $1 $10 was commissions and around
$1 was you know order routing revenues
or payment for order flow and of course
what happened when they had to replicate
our business model is that $10 went away
and they were generating some money from
payment for order flow and you know on
the first day when they announced moving
from removing the commissions you see
the the stocks of these active trading
platforms drop by considerable amounts I
think TDM air trade was over 30% in one
day so I think you you look at the
markets don't lie um what happened was
the elimination of commissions just led
to a lot more value coming back into the
hands of consumers and it affected the
financials of these large competitors
and that's what happened across the
board um and you know I think it's just
good to level set and remind people that
we're talking about that little bit that
was like the remaining 10% of of
economics in the trade um and in general
you know I'm in favor of examining uh
examining the business models but I
think a return to like commission-based
pricing is going to lead to less money
in in the pockets of consumers and you
don't really want to turn back the clock
here because I think the model has
unquestionably led to um lower costs and
and a better user experience for for
retail investors and you don't think
there's a problem I actually haven't
heard of a compelling alternative I mean
alter or one way or another rewinding to
how things were five years ago right and
what's going to happen is people are
going to pay higher fees and nobody
wants that if they did want that Robin
Hood wouldn't have become so successful
with with our model totally and what
about the side of the argument that says
that you know if you do rely on that it
makes a broker like Robin Hood too close
to the market
makers uh yeah that never really
resonated with me because like market
makers are I mean it's a it's a very uh
commoditized service it's basically like
a utility I mean they they do a lot of
work on the back end but you can look at
our routing table we route orders to
lots of market makers and they all
compete uh over who provides the best
execution quality to our customers and
if you read there there have been
several academic studies that um
actually go through and you know Place
trades at a variety of Brokers and uh
they see how execution quality is
affected by order size and timing of
Trades and you know it paints a very
positive picture I think of of how Robin
Hood conducts that business and you know
that's also a story that's kind of
seldom told everyone likes to kind of
brag on Robin Hood but we put a lot of
investment in making sure that customers
get great execution quality and you know
there's a lot of like data science and
engineering involved in optimizing these
these things for customers and um I
think you know through these academic
studies you can actually see the degree
of sophistication that we put in to make
sure people people get their
executions yeah and I think over time
like over this conversation we've talked
a lot about like the how Robin Hood
Stacks up against Legacy financial
institutions and it is good that you
guys are pressing them because you see
things like for instance I'm banking
with Chase I guess now I'm a Chase and a
Robin Hood customer right and yeah there
are so many things like here's one
example if I want to buy a bond there um
I got to call the financial adviser or
if I want to move a certain amount of
money into an IRA I have to call and the
reason that you have to call is because
that they put you on the line with one
of their financial advisers selling
their financial products that have that
1% commission and that's how they're
making their money and they don't need
to you don't like there's no reason to
physically have to make that phone call
it's just for Chase to try to make money
that 1% off of anything that you have
with them and like that's ridiculous
like the ease of use that you have with
some of these fintech companies actually
does press that and say and says if
you're going to do that there's going to
be Alternatives that will not force
people to make these you know make these
phone calls and be able to do what they
need to do when they need to do it and
the consumer will choose yeah I mean I I
agree with what you said with one caveat
I actually don't think they're capable
right now of providing you that
experience digitally I think what
happened was they have to provide that
experience over the phone with humans
they're running on Main frames and they
have Legacy technology and they use that
opportunity they're saying oh well our
agents on the phone with the customer
anyway like let's see what else we can
sell them while we've got the customer
on the phone so I I don't think um yeah
I think the causality went into the
other direction like really you think
it's a tech
limitation absolutely yeah I mean now
it's trenched right now it's uh sort of
like the service and the sales are one
and the same and that's actually an
impediment to to them providing you the
great experience because you know if if
the engineering team's like we can fix
this this and we can actually completely
digitize it they probably have a sales
team that's like oh but that's our you
know number three channel for getting
new customers and you know it's it it's
sort of like that's going to prevent
them from doing maybe the right thing um
and I think that's the benefit that we
get in part because we really care about
the engineering of of these systems but
also because we are a younger company we
started with a clean slate uh
we had the benefit of like modern
technology Cloud
AWS um we're here in in Silicon Valley
where we have a great team of Engineers
that obsesses over these things um and
so sometimes starting without the Legacy
CR uh gives you an advantage when when
kind of rethinking these things from
first principles we're here with Vlad
ten of the CEO and co-founder of Robin
Hood on the other side of this break
we're going to talk a little bit more
about Robin Hood's push to uh sort of
get the Legacy financial institutions on
their heels with something like credit
cards that might be fun to talk about
and we'll also talk about crypto and the
movies that we're seeing with Bitcoin
and the Bitcoin ETF all right we'll be
back right after this and we're back
here on big technology podcast with
ventive CEO and co-founder of Robin Hood
let's just briefly just talk about
crypto we have a a debate here uh on the
show a lot about why anybody would need
a Bitcoin ETF a Bitcoin had to like you
know the idea was to challenge the
existing Financial system and B you're
just you could just buy Bitcoin with
coinbase like why do you need an ETF
there it's something that Robin Hood
gives service to so yeah so so talk a
little bit more about that oh yeah you
could also buy Bitcoin I actually did
buy some Bitcoin on Robin Hood last
night so um why why the need for an ETF
yeah and and again with our crypto
offering it's um it's also those same
two things the user experience making
sure that's world class and the
economics and it since you mentioned you
transacted with Robin Hood
crypto you could probably appreciate the
effort and Care we've put into uh not
just the experience but like making it
clear to you what the economics of that
transaction are and just how great of a
deal you're getting on Robin Hood
relative to some of the other places um
bit Point ETF
um I think I I see both sides of that
argument and I have to be careful not to
talk about individual Securities on the
platform but what I'll tell you is the
argument Behind These ETFs is there's a
lot of participants in the Legacy
Financial system that maybe don't have
the ability to offer um spot crypto
products directly they don't want to
deal with like the cyber security
Channel challenges of custody these
things appropriately holding on to the
the private Keys doing all of that work
which is new work but they just want to
give their clients exposure to bitcoin
or other cryptos in as easy of a way as
possible and they're already plugged
into the capital markets the regulated
exchanges um if something is listed on a
national Securities Exchange they can
plug it into their security master and
offer it to clients and for them this
lowers the barrier to entry for getting
exposure to this asset class so I think
that that's the argument for it but yeah
for those that are Tech technically
Savvy and you know know how to use Robin
Hood or other platforms I don't know if
it actually changes the the Dynamics so
much what do you think it says about the
Bitcoin dream then that if it's so
intermingled in mainstream Financial
platforms
um yeah I have mixed feelings about that
I I think to some extent like in order
for it to be successful like having a um
you know having having a regulated
framework behind it and having sort of
like acceptance um and integration into
the Legacy Financial system is going to
be a prerequisite um on the other hand I
know that there's like a contingent
Bitcoin Maxis that are
you know very libertarian in their
beliefs and they might disagree with me
there but I think for the the asset to
actually have staying power it it is
going to have to find an equilibrium and
there there is going to have to be
strong integration with Legacy Financial
rails and abilities to to move money and
um traditional kind of compliance
infrastructure right okay got to talk
about credit cards I mean credit card
business is such a fascinating business
right it's so exploitative in some ways
like you get behind on your credit card
payments and you're just in in in store
for a heap of interest and it'll be very
difficult to dig out of it on the other
hand some people love their credit cards
they like there are people who spend
their lives like manipulating the points
on their credit cards and trying to
figure out how to get the highest credit
score and they become kind of obsessive
about it and obviously it underpins a
lot of the lot of the Commerce that we
do today so you've said like you some
parallels uh notably with investing in
that way right I mean it's just like
like any powerful tool that you know
democratizes access to something there's
sort of ways that it can be abused and
and ways that it can be extremely
powerful and I think the challenge is
like how can we how can we make these
products as good as possible like not
throw the baby out with a bath water but
address some of these concerns so that
so what's your answer benefit for
society yeah and what's your answer
there well my answer is um I mean
without getting into the details of
products that we're going to launch I'd
say the philosophy is the same in
general we want to build products that
lower costs to Consumers um and result
in more money in their pockets and we
want the experience to be world class
and and topnotch and not just the pixels
but also how we're communicating in
how you know the the status of your
account whether it's in good standing
and kind of the the transparency into
the internals that we provide um those
are all things that are very important
for any product that that we roll
out now last thing I want to talk to you
about you mentioned a little bit about
AI about how you know we might see AI
start to advise people on trades things
like that what what do you think about I
mean the world of generative AI seems
like it would be perfect especially for
a company like yours who's like walking
people through these complex you know
financial decisions um seems like it
would be perfect addition to your
product right like I go in and I say you
know give me a state of the of of the
accounts that I have within Robin Hood
like where am I winning where am I
losing what should I be thinking about
what is it and then and then education
explain to me what exactly it is to like
have a long long uh call or something
like that um are you thinking about that
can we expect to see that is this going
to be something that I mean obviously if
it gets something wrong yeah it's a
problem but is this something that we're
going to see in a product like Robin
Hood I mean we spent a lot of time
thinking about this um probably would
wouldn't surprise you um I do think that
over time you'll
see AI Technologies going further and
further Upstream I mean if you look
back a couple of years even before you
know gp4 came out you had um machine
learning algorithm ithms that were sort
of like um extremely kind of down funnel
in the financial experience a lot of
companies were using them for fraud
analytics to detect suspicious activity
um all sorts of things like that and
then over time you know especially with
large language models you're seeing that
going further and further Upstream to
the point where like reasoning is now
aided by AI like you can actually help
people make decisions and um yeah I
don't think Financial Services is going
to be immune to this I think Financial
Services will will benefit tremendously
from AI kind of augmenting and
permeating every aspect of of the
financial relationship um and and that
includes investment advice and idea
generation it also includes cross cell I
mean we were we were talking about your
um you know your interaction with with
your bank where you know you were trying
to fund a retirement account and they're
selling you other products well over
time um I think AI is sort of
a good user experience cross cell tool
inside products um you're you're also
going to see that more and more it's
also Vision Pro week are you going to
get a Vision Pro are you guys going to
develop for it um I
I I love um you know uh I love uh new
new things I did actually uh pre-order A
Vision Pro I got very excited about it
so I I can't wait I haven't actually
played with it yet but um yeah I can't
wait to try it out I think that you know
I have mixed feelings when I saw the
initial demo um the battery pack that
you had to kind of carry around with you
also feels pretty
lonely yeah but um you know anytime you
see a new platform release like that and
the last one was the watch that I'm
wearing right now from from Apple to
some extent airpods with podcasting
you've got to pay attention and um you
know I know our designers and Engineers
are are really excited to take a look at
the capabilities and and what we can do
for customers there yeah I'm just
imagining like it's kind of like a scene
for movie right just sitting back with
the Vision Pro and you can like
literally have all your Holdings all
your charts that you would have to go
tab tab tab just all there in front of
you it's like a day Trader's dream but I
want to ask you to reveal your pro your
plans because I know you're in quiet
period but sorry go
ahead I I mean I do think that if you
look at what it gives you it's sort of
like opening up infinite screen real
estate and and that's kind of a
interesting new
paradigm right all right let's end with
this 10 years right at Robin Hood what
is what is surprising urised you and
what do you think the next 10 will look
like
um I think what surprised me is uh how
adaptable uh even a large organization
can be you know I think um I've I've had
the privilege of um you know starting
the company when we were a handful of
people I was a software engineer just
writing a lot of code and seen it evolve
through the various stages and you know
just particularly in the past couple of
years seeing how the company is evolved
into one that predominantly served
novice slactive Traders into one that um
you know serves people in a wide
spectrum of things in retirement and
wealth building and earning more yield
on their on their uninvested cash um and
kind of
the uh the way that small groups of
highly motivated people who are mission
oriented um Can can actually have a huge
impact and I think I'm just continually
amazed at what our people can do and and
how much resilience and kind of passion
for the customer we have and it it makes
me um and I'm just very proud to be to
be working here and uh it's funny like
um I still feel like we're a small
startup because I've kind of have have
seen it but looking back at the 10 years
number and it's really quite shocking
it's a long time long we' been at this
and and how much we've learned yeah
currently a n 9.5 billion company on the
stock market um so what do you think the
next 10 years looks like like in 10
years from now is Robin Hood going to
look the
same um I mean we've we're very
ambitious uh as as you can imagine I
think there's a couple of transitions
that we'll have to make one is like
actually continuing on the process from
not just serving active Traders but
actually serving people's comprehensive
wealth building needs um also we're
still predominantly a US company you
know we we've expanded into some markets
where uh we announced uh launching in
the UK last year in the EU for crypto as
well and uh these are longterm bets that
will materialize over over the long run
and making sure that we success y
navigate the transition from being kind
of a US focused company to to Really
serving uh customers from around the
world and if you look back at our
mission it's absolutely critical that
not just Americans have access to the
the best financial tools but there's
lots of people out there that you know
are in countries without a functional
currency or banking system they don't
have access to easy ways to invest I
mean I saw that myself in the '90s when
you know Bulgaria went through economic
crisis and hyperinflation and like the
the kinds of things that people had to
do to stash away their wealth um were
shocking and if they just had easier
tools that were accessible to everyone I
think that uh we could really help
people on on a much bigger scale what
did they do to stash away their their
wealth copper cookware really yeah my my
grandparents had copper cookware that um
you know was uh they would put their
pension Pension funds in because the
Bulgarian Lev in the 9s um hyperinflated
like a th% which is also funny you know
hear about uh low singled digigit
inflation and um people are rightfully
very concerned about that but having
been through like multi 100% th%
inflation in the 90s you just get a
little bit of a different perspective at
you know how how lucky we are to be in
this country and and and plugged into
this financial system which is sort of
like the the Envy of most of the world
definitely I mean even last year like
you saw inflation rates in Argentina
were 100 or 80 to 100% and you're right
us was going through crisis at something
like seven or eight I mean you know it's
not good in any situation so all right
Vlad thank you so much for coming on
great to see you and thanks so much for
all the insights yeah thank you Alex
really appreciate the time all right
thanks everybody for listening we'll be
back on Friday with actually Ronan Roy
will be here to help you help us break
down the news as always but Joanna Stern
from The Wall Street Journal will talk
about her experience skiing down the ski
slope in The Vision Pro so we'll hope to
see you then and we will see you next
time on big technology
podcast