The a16z Show - Robinhood CEO: Making Everyone An Owner

Episode Date: November 21, 2025

Vlad Tenev built Robinhood by breaking every rule Wall Street wrote: zero commissions when competitors charged $10, mobile-first when "serious" investors demanded desktop, a brand that made finance feel like rebellion instead of a club you'd never join.By 2021 they'd forced every major brokerage to slash fees and attracted millions who'd never owned a stock, but then GameStop happened: trading restrictions during the meme stock frenzy triggered congressional hearings, user fury, and a two-year brand crisis that nearly buried them despite the real culprit being antiquated clearing mechanics no one understood. Now Tenev's pushing an even more radical vision—tokenizing private company shares so retail investors can own stakes in AI giants before IPO, turning prediction markets into "truth machines" that beat polls and pundits, and building what he calls the end of financial nihilism: a platform where your seventy-year-old parents and your Gen Z cousin both manage everything from retirement accounts to election bets in one place.The question isn't whether traditional finance survives this; it's whether Robinhood can move fast enough to own the entire wealth transfer before someone else does.Timestamps:0:00 - Introduction3:52 - Financial Relationships vs. Pinterest Boards: The Higher Bar5:27 - Building in a Regulatory Catch-227:53 - Three Simultaneous Contrarian Bets12:15 - From Institutional HFT to Retail Revolution17:40 - January 28th: The Day Trust Died27:40 - “Simple Lie More Powerful Than Complicated Truth”30:02 - Tokenization: The Antidote to T+1 Settlement32:52 - IPO Access: From Asking For Favors to Everyone Wanting In39:22 - “Series D Was Called an IPO”43:06 - WTF Happened in 1971?47:42 - Going Broad While Going Deep53:26 - The $120 Trillion Wealth Transfer58:16 - Debunking “Financial Nihilism”58:40 - “Speculation Is Critical For Functioning Markets”Resources:Follow Vlad Tenev on X: https://x.com/vladtenevFollow Alex Rampell on X: https://x.com/arampellFollow Erik Torenberg on X: https://x.com/eriktorenberg Stay Updated:If you enjoyed this episode, be sure to like, subscribe, and share with your friends!Find a16z on X: [https://x.com/a16z](https://x.com/a16z)Find a16z on LinkedIn: [https://www.linkedin.com/company/a16z](https://www.linkedin.com/company/a16z)Listen to the a16z Podcast on Spotify: [https://open.spotify.com/show/5bC65RDvs3oxnLyqqvkUYX](https://open.spotify.com/show/5bC65RDvs3oxnLyqqvkUYX)Listen to the a16z Podcast on Apple Podcasts: [https://podcasts.apple.com/us/podcast/a16z-podcast/id842818711](https://podcasts.apple.com/us/podcast/a16z-podcast/id842818711)Follow our host: [https://x.com/eriktorenberg](https://x.com/eriktorenberg)Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see [a16z.com/disclosures](http://a16z.com/disclosures). Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

It's our truth machines. Like, we're constantly being bombarded by all this information and noise. Anyone can be an influencer. Anyone can have a podcast. How do you sift through that and figure out what's actually going to happen? Massachusetts banned their residents from buying into the IPO of Apple computer. Because it was too risky. 49 other, like, states, you're okay.

Like, no nanny state there, but Massachusetts is, uh-uh, too dangerous. And, like, Apple's gone up in, like, 10 billion times. And, by the way, they have, like, one of the largest and most robust. state lotteries at the same time. Which is so bonkers. There's a funny website called WTF happened in 1971 when you decoupled from the gold standard. Wages were kind of stagnant

but asset prices went up a lot. If you own an asset, that's great. You benefit from all of these amazing new things like the iPhone. You're now an owner. You participate in the ownership economy. If you just get paid cash and some people get paid a lot of cash, they just get left behind. I think we learned a lot

of valuable lessons. A simple lie is much more powerful than a complicated group. Yeah. So, yeah, the Robin Hood's colluding with hedge funds. Right. Very compelling story. It's like, oh, Robin Hood, look, they're actually stealing from the poor and giving to the rich.

Right. It just writes itself. Like, if I was in charge of marketing for a competitor, I'd probably come up with that, right? It would be a good one. If you look at AI as a category, you have the fastest product adoption of any products in history. And at the same time, it's the most hated category. interview people and their perception of AI is worse than social media because nobody's worried social media is going to take their jobs.

But there's this underlying fear that these companies are automating everything and, you know, where's my job in that list? People are freaked out about that. And I think we could figure out how to be a little bit more egalitarian in the ownership. Like it shouldn't just be owned by a small fraction of VCs. In fact, we should make sure that there's ways to distribute it. In January 2021, Robin Hood had the fastest growing financial app in America. Number one in the app store ahead of Instagram and TikTok.

Then, in a single day, they had to restrict trading on GameStop and became the most hated company in finance. Here's what almost no one understood. Robin Hood didn't have a solvency problem. They had a collateral problem created by an antiquated clearing system that still takes days to settle trades that happened instantly on your phone. The same system that once took five days to clear trades in the 1970s. flat 10 of Robin Hood CEO made a bet that seems obvious now but was heretical debt. That your phone become your primary financial device. That normal people would want to trade stocks, not just buy index funds.

That you could build a brokerage that made money without charging commissions. He was right, but being right almost destroyed the company. Today, Robin Hood has 11 businesses doing over 100 million each. They're tokenizing private company shares, running prediction markets that outperform polls, and quietly becoming the bank account for a generation. We talk about why you can't have a working market without speculation, how to recover from a brand crisis, and why the future of finance looks nothing with the past. Vlad, welcome to the podcast. It's a pleasure to join you, gentlemen.

Alex, so we at A-N-Z, we've invested in Robin Hood from Seed to much later stage at various stages of the company. Alex, one, you just give some perspective on why you've continuously found Robin Hood to be such a compelling company even through the highs and lows. Well, I really can't take credit for the Seed for two reasons. We pre-dated you. Exactly. Number one. It was one. It was predated.

And then number two, it was just like the Oprah Winfrey, like you get a car. It was a little bit of, we just invested in a lot of companies back then. Because it was a small amount of money. Again, I would love to take credit. So I remember we invested, and I didn't really get it as an outsider. But it turns out, like, here's one thing that I'll say. There are very, very few financial services companies, number one, because having a financial relationship is a lot different than having like a Pinterest board, nothing against Pinterest, right?

Or having like a Facebook account. But like really trusting somebody. with your financial life and money. That's a higher level of commitment. That's like the live-in girlfriend or boyfriend kind of thing. It's like the bar is up higher for that. And then number two, it's very rare to see companies that just get organic traction.

So I like to say, especially in financial services, with that high bar to having a relationship, you should probably just buy Google stock or Facebook stock versus investing in most companies because that's where all the money goes. Like you raise an A round or a seed round, you're like, oh, shoot, I need to get users. And then you just spend like all of your...

your money on Google ads, and then you have no more money left. Google has lots of money, and then Google wins and you lose. And I would say, like, Robin Hood, I mean, you obviously know this story so much better than I do, but there were very, very few companies that really figured out how to hack organic distribution in a very meaningful way, and Robin Hood is probably the most successful of the mall. That's not meant to cheap, and everything else that has been built around the product. I mean, the other thing that Eric and I were talking about in advance, which is a lot of really smart people in finance go into finance, but they don't go into, like, product finance.

So it's like, I'm going to go work at a high-frequency trading firm and make lots of money, as opposed to I understand the way that everything works. I'm going to get customers for free. I'm going to build a thousand times better product, and I'm going to dominate the world. And you've kind of done all three. So that's why I think Robin Hood's pretty unique. Yeah, I think when we got started, FinTech as a category didn't really exist. I mean, you can look at the Google trends. And around the time, A16Z made their seed investment, which I think was 2013, mid-2013.

nobody was really talking about fintech, right? And the criticism we would get is, well, you're entering a regulated space. You don't have your license yet. There was a lot of uncertainty. And we were kind of in this catch-22 situation where there was uncertainty about whether we would get the license. And also the regulators wanted us to have money, which made it very, very difficult. They don't want a brokerage to go out of business after one year with customers.

So we were in this catch-22 situation and juxtapose that against the climate, which was there was skepticism that people would want to trade. Like there was this belief by a lot of investors too that ETFs and indexing had kind of disrupted and eaten the consumer investing landscape. And so we had a strong point of view that wasn't the case and that actually people were just missing good tools. but there was no way to demonstrate that besides just doing it and showing that it could be done. Yeah, I mean, I remember wealth front, if you know the history of wealth front,

it started off as a site called Kaching. Yeah. You know this, right? So Kiching was kind of a brilliant idea that was ahead of its time. So Andy Rackleff started this company because I think he was on the board of Penn, University of Pennsylvania,

and they had all of these public hedge fund money managers, long short firms, that would outperform the market. and why can't you democratize that in twofold? One is maybe Eric is an amazing money manager but never got handed a fund. And then number two is if he has a great fund, why not let other people just off the street

go invest with him and kind of copy their trades? And that was the original idea of Wealthfront was really kind of very, very active, like believing that people could beat the market. And then for a variety of reasons, that pivoted into the exact opposite, yes, which is quite funny, which is highly commoditized because there are so many other,

I mean, wealth friends are doing very, very well, but there are so many other people that will say, I will do passive indexing for you as well, versus the idea of having a network for finding this undiscovered talent and then allowing anybody to put money behind the undiscovered talent around active investing. That was actually a pretty revolutionary idea that probably just was ahead of its time.

Or I don't know, maybe it wasn't. I think Robin Hood did three simultaneously challenging things that helped make us successful. I think the first thing was we actually had a pretty simple value prop from the very beginning. Everyone else was charging $7 to $10 for a stock trade. We went to zero.

And we had that basically to ourselves for a period of three to four years before the incumbents kind of caught up and had to replicate that because they noticed they were losing all their customers and it was accelerating gap. So that was one. And there was a lot of things.

technology and just it wasn't trivial to actually build a business that could make that happen sustainably. The second was figuring out mobile. And you know when we started, this was actually contrarian because most people that you talked to were playing games on their phones. And it was a little bit of a leap to imagine a world where your phone is your primary financial device. But I remembered something, which was that when I was in high school, I was like interested in buying stuff on Amazon. And my parents were just like, how could you put your credit card onto the computer? It's going to get hacked. And it was just deja vu. When I would talk to people about, you know, trading stocks on their phone, it was the same sort of feedback. Like, how could you

trust your finances with this device? It's so small. What if it did? What if it did? You do? It's, It's hacked. What if you lose it? So it just didn't make sense. So we kind of made a bet that that would actually be primary because there's so many advantages. A lot of people trade during the working day. You can't really have your investments on your work computer. It's a little taboo. So you can just have this device with you to make sure you're on top of things when things are moving. And then I think the third thing was actually the brand. And I'm sure you guys have heard Peter Thiel say this thing that the name of a company is very important. You know, he juxtapose sort of like. Uber the name, and it's, ah, it just sounds like this company that's going to get slammed hard by regulatory scrutiny versus Airbnb, which sounds like this light, airy, like they'll probably have a much easier time. But yeah, there was this whole disillusionment with finances in the wake of the financial crisis, which is basically when I entered my professional career. I graduated Stanford 2008 and started grad school a month before Lehman Brothers went under. And I remember a lot of my friends who were taking their first jobs, some of them felt very secure. The ones that had their

Lehman Brothers internship leading to a Lehman Brothers return offer, they were like, I'm set. I know what my next 10 years is going to be like. I'm going to work here for two years. Then I might go get an MBA and then, you know, I'll transition to this other, you know, associate role and work my way up. But I'm good. The ones that felt the most secure were the first ones to be packing up their cubicles and those cardboard boxes. And not just that, but a lot of people, especially in my circle, you know, financial services was like the hot major. You wanted to get into the industry back then. It was pre-computer science and by forces outside of their comprehension and control, not just their own jobs, but their parents, their family members. And then a lot of the folks that I knew at grad school and in college,

actually participated in these Occupy protests. So this kind of set the stage for a new brand. People were disillusioned with the state of affairs. They thought that the financial system didn't work for them. And I think in many ways, Robin Hood was the practical solution. We know that it works and we can't just burn the system down. And doing so would probably be quite dangerous. But if you can make it work for more people,

we sort of offered that in a simple message, with the brand. And I think that along with mobile, along with commission free and the technology that enabled that allowed us to grow very quickly. But I imagine there was some meandering to kind of get to all three of those

almost like nested if state, like they all turned out to be true. But what was the, I should know those, what was the origin? Like you decide to start a company. Like what was V-Zero? Well, so V-0 was,

we were working on a previous company, which was a software firm that provided high-frequency trading software to hedge funds and banks. And what we noticed there, well, two things. One was our customers were trading many yards a day, many, you know, billions of dollars of trading volume and paying basically nothing. So, and the entire industry had moved from kind of this heavy in-person. trading pit model where the biggest kind of football players would have an advantage to this massive almost like call center situation. And then you had high frequency disrupt this institutional trading market because suddenly two guys out of MIT or Stanford in our case who could just

write code could just disrupt everything and run the trading book of an extremely sophisticated operation at basically one-tenth or one-hundredth of the cost. And so we kind of saw this playing out an institutional, and we started thinking about, okay, can we take this software that we've created for institutions and make it so that anyone can create a trading algorithm. So there was a seed of an idea there, and then we kind of played around with the idea of making it free, and we didn't see a reason not to do it. And simultaneously, I had moved from New York, which is where our previous company was based to San Francisco to start the West Coast Engineering Office.

And the reason for that was we just couldn't hire engineers in New York. I mean, they were all working, the good ones were working for high frequency friends. And we had this one angle, which was we went to Stanford. So we were kind of plugged into the community there and we would go to the career fairs. So he said, okay, why don't we, rather than trying to convince our Stanford friends to move to New York, why don't we just open up our engineering office and be bi-coastal? And when I moved back to San Francisco, it was around the same time that Uber had launched black car up in SF. Instagram had just gotten started. So you could tell that mobile was going to be a big thing, but it was not yet evenly distributed.

Right. even though it was probably like, you know, four years since the creation of the app store. And I think we just put these two ideas together. We put them together at the right time. And I think they ended up being correct. And there was a little bit of meandering. But I think the, and there were probably things we could have done better. But the vision was pretty consistent, which is we just wanted to offer free stock trading on mobile.

John, did you ever debate just like, why not make it a dollar? I mean, was it kind of like always obvious at the time, like free is the most disruptive, even though anything would be cheaper than Schwab or, like, it's kind of, you kind of embrace the zero from the very beginning, or did you debate that decision? We didn't debate that decision. Yeah, there were basically two pricing decisions that Bejou and I made at the lunch table in our Redwood City offices. Well, actually, the zero commission's decision was almost there at the genesis of this

idea. We're like, oh, well, what if we actually made it free? That would be very, very powerful. Yeah. So it was almost like that one didn't change because I think it was intuitively clear to us that free would be much stronger to market. Like it would be a much better hook than even 99 cents or $1. there was a decision that we had to make about account minimums.

And this one was a little bit more complicated because most brokerages at the time had some sort of account minimum. You had to put in $2,000. That was a pretty common one to open up an account. And we were like, well, the argument for it is if you have a bunch of people with five cents in their account, it's going to cost you some amount to service them. Right. And you'll probably never make any money.

But, yeah, making money was pretty far. It wasn't a near-term consideration at that point. We just wanted to get something to work. And we made the bet that, hey, let's just set it at zero, see what happens, you know, solve the problems later. And I remember thinking, well, if anything, this should force us to really look at our cost of servicing and make sure we're running a tight ship and we're automating things because you just can't get away with it, right?

Like your cost of servicing an account has to be low enough that you can handle these, you know, five cent accounts without just breaking your model. To fast forward a bit, even though you had this, you know, relatively early success, thanks to these innovations, it wasn't always super smooth sailing to runaway success. Not at all. And so maybe we could fast forward maybe to 2020, 2021 time. Alex, when we're, you know, gearing up to make another investment in the company, how you sort of viewed the company at the company at the, that time and then we could, you know, tell a story from there.

Well, I definitely remember the, uh, the, the, the, the, the, the, the, the, the, stop route. I don't know if you have, like, a name for that round. Um, uh, that was the, fun day of my life route, right? Is that what it was called internally? Exactly. Yeah. I, the round wasn't, um, I mean, the round was like, the good part. I remember that whole saga quite negatively. So yeah, we call it January 28th because, because to us, it wasn't like, oh, we had an amazing financing experience. We, we remember the day. We, we remember the dates of all of our sebs, basically all the big crises. And to us, that's like, I mean, you have, you know, 12, 12, 12, 13. What was it? March, March 3rd or March 2nd, 2020, when we had a full

day trading outage. I'm actually glad I, I've forgotten the exact date of that one. But yeah, to me, it was a sev rather than a financing. But, uh, no, but I remember this is when, uh, but it was, it was during COVID, right? It was. And we went from being in office to work from home forever because that was the future, right? Everybody's going to be in the cloud.

Yep. And, but we started having monthly off-sites that happened to be on-site. So it's kind of this position. So we were at Ben Horowitz's house, and I remember David, George, Ben and I were huddling around. Like, what do we do? But I, there is, I was on, I mean, you know this,

but I was on the board of a large high-frequency trading company called KCG, which had previously been Knight Capital, which had its own little trading issue, once upon a time. But I felt very, very confident. The Facebook IPO, right? No, it wasn't that.

It was bad code. So Knight Capital had this issue where they kept, you know, if you post an order at a particular price, like there's not really, I mean, for a brokerage customer, like you're going to get the market order, everything out.

But if you are a sophisticated investor or trading company, people will just, it's kind of an adversarial process. So they kept saying, there was like this infinite loop of will sell something that's like $50, we'll sell it for $5. And guess what?

Like in five minutes, the company completely ran out of capital. And this was a large public company. And then it was rescued by Getco, if you remember Getco, which was one of the original high frequency trading companies. And then that became KCG.

So Night Capital Getco, this merger. But as a consequence to this, I understood reg NMS pretty well and how market making works and how payment for order flow works and why it's actually not like it sounds like this scary thing, but it's not because you're internalizing trades. Like normally you would post a trade to an exchange, but if I see the buy and the sell and I can kind of match them on the spot, you can actually offer the customer a better price

than if it showed up on the exchange. So I was just very, very confident that the business model was a good one. the clearinghouse model was stupid. And to give you context on this, like, I think in the 1970s, we were at T plus 5 clearing. It took five days. Because if I buy a stock from you, right, it's not like as soon as I put that order in,

like, I own the stock, you have the cash. It looks like that, right? It's like it looks like I have the stock. It looks like you have the cash. But actually, it takes five days for that to formally settle. And then it went to like T plus three that happened like after a decade. Yeah.

Then I went to T plus two. Now we're at T plus one. But it's just kind of comical how long it takes to settle a trade, which I think is a great way to talk about tokenization in a bit. And by the way, it wouldn't have gone to T plus one if I had to push for T plus zero. Well, it should be T plus. It's just this absurdity. And then because there is risk. That was one good positive consequence of the whole GameStop fiasco.

They went behind my policy proposal to shorten settlement times. But the reason why this is ridiculous. And again, it's complicated to explain to people that don't. get this, but I am going to sell you stock. You're going to give me cash. But the value of the stock can change a lot in those one or two or three or five days. So beyond just saying, I'm going to give you the stock, and here's my stock certificate, I have to post collateral for that as well. And the more success that you see, the more collateral you have to post, but it's kind of dumb because it's all, you have the underlying cash or you have the underlying stock. And that was the part

that just didn't make any sense, right? I mean, it's how the clearinghouse's function, but there was no solvency issue, right? There was no, it's like you just need, well, number one, hopefully when we fast forward 10 years, this whole system will be antiquated and we'll have something much, much, much better. But this was a result of people loving

and using Robin Hood too much, if you will, versus anything that was wrong. It's not like, you know, I started a firm, and we had a crisis, I would call it the March of 2020 crisis, where imagine being a lending company to consumers when everybody loses their job, right? Which means that they're not going to buy shit in the future, and they're not going to pay off their loans in the past.

So that seemed like game over. Like we had an emergency round for a firm right around the same, like right around like the beginning of COVID because it's like, well, nobody's going to pay their bills. And like we're kind of on the hook for that. And then nobody's going to buy stuff. And like that's going to be catastrophic. But that was like a real problem with the business model when everybody loses their job

as opposed to like if people are trading and the way that collateral is handled is just kind of dumb, like that could be solved. So that was kind of like my analysis. I mean, you probably had a much closer to the metal analysis. It's like, oh wow, this is a bad day.

But it was like there's actually a like, and Mickey Malca is a very close friend of mine. I love that guy to death. And he's doing it. And it's like, I trust that guy. I trust Robin Hood. It kind of wasn't no-bra. I mean, it was a large check for something where it's like,

wow, this isn't good. But in hindsight, it obviously worked out, but it seemed like there wasn't really a systemic issue with the company. And that's where you get a little bit more nervous as an investor. But I love your take because you were obviously in the inside. I mean, at the time, I think at the end of that day, it was pretty clear that we were averting liquidity and solvency risk which is probably the biggest concern that you have, you know, through our actions and also the market,

I think we were able to avert that. Juxtapose that with also we were number one in the app store and not just number one in the finance section, but number one overall ahead of Instagram and TikTok. And I think that was a pretty potent combination. So the third thing that probably you had to consider at the time as an investor was the brand impact. Like you have a lot of people who are mad at what they were mad. There was a looming congressional testimony that that ended up doing. But yeah.

And actually the brand thing was a real thing because when the dust settled on our acute issue, I probably spent the next two to three years. And it was very, very clear. you know, they always say that trust can be lost in a day and takes a long time to earn. You can earn it rather slowly. I think we experience that. Even now when we post, when I tweet, you'll have the people saying, oh, but, you know, we'll always remember January 28th. And most of them don't get into the details of clearing mechanics and settlement.

And most of them were probably not even affected directly. Like they weren't trading GameStop or AMC. but they just heard something from someone who heard something from someone that Robin Hood's like in cahoots with hedge funds and going against the little guy. And so that's been the hard part to navigate. And I think that, you know, there was a lot of adrenaline. We had to solve the immediate issues on January 28th, which we got past. And then after that, there was just a two-year period of slowly clawing our way. out of this brand hole that I think we're, you know, now mostly out of.

I think we just a couple of months ago were able to say that if you look at our NPS, we were sort of like ahead of where we were pre-game stop. So that was a momentous occasion. Besides time, what do you think are the actions that contributed most to the brand getting back to where you want it to be? Yeah, I mean, really, there's very few spikes upward. GameStop was like a downward spike, right? I think time is by far the biggest element.

People forget, you know, you have new young people, new users coming in, replacing the ones that were really upset. And then it's just looking at what things people complain about that you can resolve and addressing those. And then I think a couple of years ago, we started doing these product events, which I think had not just practically, value, but also

I think that they cultivated a community of shareholders and customers. And I think around our events, we noticed there was actually a pretty big increase. Like if we do get mini spikes of a couple of points, it's around those events. But also, like, every other brokerage

pause trading in GameStop in AMC, right? Pretty much. Yeah, I think there were a few that didn't. Because even the ones that didn't, I feel like, I remember interactive brokers, like they Oh, yeah. Like, they all, they eventually got there, and it wasn't because, but it's just, it's hard to explain to somebody who's not a layperson because it's like, well, wait a man, I sell you

stock, right? I get cash, you get stock. Well, it's like, no, no, no. There's this like deposit trust clearing corporation. It's like, what are you talking about, you crazy conspiracy theorist? No, no, no, this is how it works. And it's just, it's so complicated to explain because there's all, it's like the duct that paddles furiously behind, you know, underneath the surface.

Like, I have the cash, you have the stock. What are you talking about? And it's like, no, no, no, there's this other stuff happening, and that's the hard part to explain. I think we learned a lot of valuable lessons. A simple lie is much more powerful than a complicated group. Yeah. So, yeah, the Robin Hood's colluding with hedge funds.

Right. Very compelling story. It's like, oh, Robin Hood, look, they're actually stealing from the poor and giving to the rich. Right. It just writes itself. Like, it's good. If I was in charge of marketing for a competitor, I'd probably come up with that, right? it would be a good one.

And this whole thing about collateral and Dodd-Frank and financial solvency and protecting the financial system, it's a complicated truth at best, right? It's an order of magnitude more time to refute bullshit than to produce it. That's the other one. Yeah, yeah. And everyone, the simple, I think the simple antidote would be to just point the finger at someone. It's like, oh, this thing.

That's the enemy, which a lot of the other brokers were able to do, by pointing the finger at their clearing firms or apex clearing or, you know, one of the other folks saying, you know, we disagree with their decision, but they did this. So that was also a learning, probably find someone to blame who isn't us a little bit earlier. But of course, we're very chivalrous folks. We don't like to, we don't, I don't like the idea of blaming someone. And I prefer to take responsibility for everything, even if it's not my fault. So that ended up, biting me a little bit, I guess. But it feels like you're getting even now, because it's like going back to the whole, like it took five days to settle a trade, then three, then two, then one.

Yeah. Right. Versus the future that you're helping build, which is if you tokenize everything, like, there is no more of this middleman that can, oh, you got to post collateral, but wait a minute, why am I posting collateral on top of the stock that I'm giving you or on top of the cat? Like, well, because the stock price can change by 50%. That's why. There's always a logical reason for. But like, why is it that in 2025, it takes one whole day to settle a trade, right? Yeah. I think you're totally right. And I mean, there are strange things that happen in the crypto world, right?

I mean, actually, probably if you look at solvency and liquidity issues, you had the Celsius and Blockfi and that whole liquidity crunch there, culminating a few months later in the collapse of FTX. A couple weeks ago, you had forced liquidations. I mean, even when Bitcoin dropped below 100,000 a few days ago, it was just a torrent of forced liquidations. It's a little bit more niche, right? It wasn't the products that are experiencing this, whose customers are experiencing this,

aren't number one in an app store overall, getting millions of new customers a day. So I think it's contained. And so we shouldn't make it sound like crypto is just a panacea. But certainly moving forward and improving with technology can solve a lot of these problems. Yeah. With tokenization, I think certainly if done right, you can prevent that specific issue. You also get 24-7 trading through holidays and weekends, which is very cool. There's also something that I probably, it's not in my interest.

to talk about, but in some ways it is, if you self-custody your stocks, you're immune to outages from the broker. You can just sort of like easily replace one brokerage for the other. And you don't have to, the blockchain would have to be down for you to lose the ability to trade, which I think is very powerful. Not to mention something you're probably familiar with, the securities lending landscape, which is a huge source of revenue for brokerages and counterparties, is very opaque and very inefficient. A lot of these trains are still happening over a Bloomberg messenger, you know, counterpart like peer to peer. If you do it tokenize, then you have these like liquidity pools, which just makes that a very simple thing. Like you imagine lending and borrowing

your stocks on ABE or some equivalent would be much more efficient and much better for the end user than the current morass of securities lending. That's, you know, evolved to be this way after multiple decades. Yeah. Is it inevitable that the most popular private companies of stocks will be tokenized? Or we'll talk about the dynamics there? Yeah, for sure. Yeah.

That's definitely happening. And even if they don't want it, like, how is it going to happen? I think eventually they'll want it, but there will be an adjustment period. And they'll want it because their customers will want or like, why would it? I'll give you an analogy that I think is actually pretty close. So in 2021, we launched this product IPO access. And the idea is pretty simple. IPOs have been dominated by institutional investors since the dawn of time.

And we're going to just make it so that retail can participate in IPOs. And not just private wealth, but actual mass market retail. And we had this big chip, which was we were going public. So we at the very least could guarantee that they'll get access to ours. And so we at the time had the largest retail location. I think certainly of any IPO of our size, it was between 20 and 25%. And then, of course, we had built all this great technology for ourselves. Let's get everyone else to do it.

So we got a bunch of other firms to participate in retail IPO. Most of them, we kind of had to ask for favors or strong arm a little bit. or use our bankers because they didn't get it. They were like, this is a strange thing. I'm just trying to get my company public so I could focus on running my business. Everyone's telling me this is a bad idea. We weren't really in the room to advocate for retail allocation, much like the bankers were. So it took a lot of work.

And the allocations we got were also quite small. It was like, okay, well, we'll make these guys happy. Let's give them one or two percent. And then the market shut down at the end of 2021. nobody was going public anymore. And then something interesting happened in the middle between the reopening of the IPO market, it started becoming clear that stocks that had retail followings were actually being rewarded with higher multiples.

I mean, you had Palantir, you had some others. Someone put us in that category as well as a big retail following stock. And so people started calling me to ask about retail strategy. And now you look in the past couple of months, pretty much every IPO of consequence is on Robin Hood and with increasing allocations. You know, we had Bullish that gave 20% of their IPO to retail. I think Gemini was very similar. And we were fortunate to get a big chunk of that. So went from this being, from this being this weird thing that was a little bit, I mean, we had to be annoying to get people to participate to now everyone.

kind of gets it and wants it and is like interested in even doing more post IPO. So I think when you when you ask private markets access is has very similar properties. If you talk to these CEOs of private companies, they generally are aligned with the intent and the mission. Everyone's like, yeah, I would love normal people to be shareholders and not just these like three layer SPBs. It's at least better than the three-layer SPV. So they kind of agree with it. They're like, oh, yeah, power to the people, you know. At least not very many people with a straight face have told me, no, I just want to hold the equity and give it to just the big institutions, you know.

And I think it's genuine. Most people don't actually love that. And so it's the practicalities that get in the way. Like, this is a new thing. I don't want to be an innovator in. giving private access to retail. That's not the point of my business. I don't want to be a guinea pig,

which makes me very confident it's going to evolve in the same way too, where they'll start to see it a little bit. It'll become normalized. And then the advantages will become clear. Like, you'll have retail fans as a private company, many of whom could be your customers or at least your advocates.

And then it'll become much more clear. And I actually think for AI companies, it's the most critical because if you look at AI as a category, you have the fastest product adoption of any products in history with Chad GPT and all these, you know, cursor and all that, fastest revenue ramps. And at the same time, they're kind of the, it's the most hated category. You interview people and their perception of AI is worse than social media because nobody's worried social media is going to take their jobs, right? But there's this underlying fear that, you know, these guys, these companies are automating everything and, you know, where's my job in that list? Is it easy to automate? Is it hard? People are freaked out about that. And I think we could end up in a very bad place if we don't

figure out how to be a little bit more egalitarian in the ownership. Like, it shouldn't just be owned by a small fraction of VCs. In fact, we should make sure that there's ways to distract. It's the best way to not fight against something, as we've seen in public markets with these retail stocks. If you're an owner of it, you'll defend it. Not a lot of people are defending the AI companies and the public markets. It's like it's both the DCs. The BCs are defending them because they own them. But it's offensive defense, right?

Because, I mean, to your point, you have this virtuous cycle where it's like how many people that bought Tesla stock, how many of, like, this has become almost, I don't want to call it a meme stock, but it's become a very, very popular retail stock. Absolutely. Right? And a lot of the people that bought Tesla and, like, the Tesla bowls are all people that own the car.

Right. And, like, there's a virtuous cycle there. And the flip of that is exactly as you said, it's like, hey, you know what? Everybody's going to be an owner of these things. And I think it's a little bit of a back-to-the-future thing, which is, I think when Amazon went public, they had like a $600 million market cap.

Like, 25 years ago or 30 years ago, like the normal, like there was no such thing as a series D, right? Series D was called an IPO. And it's funny, there's a covenant our portfolio that just raised a series K. Oh, yeah. And H-I-J-K, right? It's like, you know, like Series I, you got to go public by the Series I, right? Like, that's IPO.

We felt a little funny. I think we did a Series G. Yeah, it's like that's when you're getting up into the upper letters, the upper consonants of the Al-Q. The GameStop round was really a series eight. Yeah, I mean, it's like that that's a lot of consonants. And you're better off. Like, you get that, like, this is so counter conventional wisdom. I love it when conventional wisdom is wrong or experts are wrong.

And this is a big one, right? Which is, like, to your point, it's like, oh, you got to have, like, T. Roe and fidelity, like, buy into your IPO. And that's what's going to give you, like, a great multiple. Yeah. And actually, no, no, no, that's completely false. Like, the fact that Palantir is, like, a runaway tech favorite, or sorry, retail favorite and trades at a very high multiple.

And, like, it's not just about, like, trading at a high multiple. Like, that's beneficial if you're a CEO of a company, you want to hire and reward talent. Yeah. Right? If you want to retain people, like, and you want to buy a company, having a high currency is actually very, very valuable to you. And retail is actually part of that. And by the way, retail actually benefited from all this stuff 30 years ago. Yeah.

But then when Series G's and H's and I's and everything else kind of started staying in, like, the private domain and accessible only to accredited investors, One of my favorite stories is from, I think it's 1986 in the Wall Street Journal. You know this one? You might remember in a second. Massachusetts banned their residents from buying into the IPO of Apple Computer. Because it was too risky. It was a little earlier, right, in 1981. Oh, yeah.

It was like in the 80s, but you can just Google like dangerous Massachusetts, Wall Street Journal, Apple IPO. So 49 other, like, states, you're okay. Like, no nanny state there. but Massachusetts is, uh-uh, too dangerous, and, like, Apple's gone up in value, like, 10 billion times. And, by the way, they have, like, one of the largest and most robust state lotteries at the same time. Which is so bonkers.

But, uh, and it's just sad that you used to be able to, like, companies would go public so much earlier. And Dodd-Frank, actually, not Dodd-Frank, Sarbanes-Oxley made this a little bit harder. It's, like, coming out of Enron, it's like, okay, we have to have more controls. It's expensive to be a public company. So you don't want to go public.

until you get to a certain level, and therefore nobody goes public until probably conventional wisdom right now is like $3, $400 million minimum revenue, and then it might be worth it? And actually, for the best companies, it's a bit of an adverse selection because the companies going public

at $300 to $400 million are actually probably lower... Yeah, than the ones that are at a billion, right? The ones that are just like growing like crazy, they're incentivized to stay private longer is why I have this volatility. Like my favorite way of framing what private equity firms do, I won't say venture capital.

They'll say private equity firms is they launder volatility. Because every day, what is the price of an asset? It's like whatever anybody will pay for it. But if you're an investor in a private equity firm, it's like, wow, like this crash happened on this day. My value in this private equity fund didn't fall at all. It's like, that's not really true. And there's actually a benefit to having these things be liquid and not launder the volatility.

Yeah, but, yeah, it's kind of. compelling. And that's actually one of the reasons why companies like to stay private and don't like the idea of a real-time price, you know, which is an element if stock is tokenized. But we're working to solve this problem through tokenization in the EU and also through Robin Hood Ventures in the U.S., which is a closed-down fund that we're going to be taking public. And the idea there is, yeah, using whatever means we have necessary, can we get through our retail channels exposure to these assets. And I think I'm personally very involved in this and like driving it forward. I'm going and giving companies term sheets because I think it's so important. And I think it's not just important for us as a business. We'll undercut, we work to undercut fees across anything. So it's not just that it will be a business for us.

but I think it'll make technology adoption of these frontier technologies go much more smoothly. We don't want the people to be against AI because ultimately regulation follows the will of the people. And so I think that if we can get them on board with the technology, we'll just have better outcomes as an industry. Yeah, have everybody be an owner. I mean, this is one of, there's a, there's a funny website called WTF happened in 1971, which is kind of when you decoupled from the gold standard, amongst other things. But wages were kind of stagnant, but asset prices went up a lot. So you would say, I mean, people agreed that there was inflation in 2022.

That's why we had all the, you know, the Fed kept raising interest rates. But that was like inflation for like milk and eggs, like things you would buy every day. But meanwhile, for like dozens of years, the price of assets have been inflating massively, which is great if you're on the side of that, like, if you own an asset, that's great. But if you just get paid cash, I did a, I, I, I, I, I've wrote a little blog on this where do you think home prices in the Bay Area have gotten more expensive or cheaper in the last 25 years? What would be your guess? In the last 25 years since 2000.

Have they gotten more expensive or less expensive? Recall it 20 years, even. Yeah, that's a good question. I feel like it must be a trick. It is a trick. Nominally more expensive. They've gotten cheaper if you price it in a basket of tech stocks, not gold. Oh, yeah.

Gold, they've still gotten more expensive. But how many shares of Apple stock? Does it take, you know, split-adjusted? Like, if, so I built, like, an index of every single Bay Area employer market cap-weighted. Yeah. How many shares does it take to buy a house today versus 2005? It's a lot less today. Yeah.

Which is kind of this, like, and unfortunately. Well, Apple stock is a unique benchmark to use there. But this is why it's in before iPhone came out. Sure. But it's, but it's, it's, this is important for the same reason that you mentioned, I think, which is if you are paid in assets, right? or if you own assets, you benefit from all of these amazing new things like the iPhone, right? Like, you're now an owner.

You participate in the ownership economy. Yeah. If you're not, if you just get paid cash, and some people get paid a lot of cash, but, like, they just get left behind versus people that are able to own assets. And it turns out, like, all, like, if I just own stock, you know, pick a different day, 2009, 2002, like, you, these other assets have gotten cheaper. Yeah. And that's the thing that ideally as a society, we want to, it's not like a fix, but you want everybody to be invested. Like I love this thing. You were participating in this, right? Like the new, what's the new, the thousand dollars when you're born as a kid? The Invest America Trump accounts. That's awesome, right? It's like give everybody a thousand dollars, get them invested. So now they're an owner. This compounds so much. There's another chart that I love that shows the Delta and like Social Security basically that earns nothing in his kind of quasi-ponsie scheme versus if you would just put.

money in the S&P 500, what does that turn into over the next 50 years? It's just like these things really compounding. You want people invested in capitalism. Otherwise, they're not going to like capitalism. Totally. Yeah, capitalism has kind of become a controversial word.

Yes. But, yeah, people need to have skin in the game and own this stuff. And that'll just lead to a more stable society. And great. Alex, we wanted to ask about company strategy I know you had a question you asked about going deep for scoring broad and it'll tee you up for it.

I kind of think of when you were building this, maybe this goes back to the origin story of sorts, but Robin Hood is effectively like a bank account for a lot of people now, right? Which is not the origin story. A lot of people think about it. It's like I have a Robin Hood card, which I use, my little green card, right?

Which, well, I don't even have the physical card. I just use it on my Apple wallet. Who hook you up with the gold one? I got to get the gold one. It's on my to-do list. But you can, you started off with this kind of narrow thing, and then you've built a deeper financial relationship with customers. That's kind of how I thought about it,

which is I can now direct deposit my paycheck into my Robin Hood account. I can use it as effectively a bank account, but it's much, much better, it's cheaper. But also there are different types of traders. Like you could go very, very broad in terms of the types of products that you offer in the trading landscape. And I guess how have you navigated debt? depth versus breath, like go deep with the customer, all the customers that you currently have

right now, or concentrically expand to different types of customers. Yeah. Yeah, it's a great question. And the answer is we're trying to do both. We're probably the only company that is looking to go broad. But as we're going broad, we're looking to deepen in each of those things. So, you know, equities trading, we're very deep in. We were the first to introduce 24-5 trading.

We went self-clearing, so we literally built our own clearing stack. And we actually innovate on the infrastructure there. Same with options trading. Same with crypto. You know, it's not just spot crypto trading. Like many of the neo-banks or folks that are just adding crypto as an asset, we're doing perpetual futures in the EU. We've got crypto futures in the U.S. got staking, tokenization, right? So we're looking to go deep as well. And I think the reason it

works is we can't go deep everywhere simultaneously, but we have to kind of pick the areas where it's most accretive and highest leverage for us, which is active traders. Active traders, like the engineering or the business, it's where new product features translate to revenue most quickly. and, you know, if you improve the active trading product by half of a percent, you immediately see that in the bottom line. And then we can use that as a engine to make further investments. So, yeah, active traders very much were going deep. But then, you know, if we look at the end goal of getting all of your assets into the platform, there's kind of an algorithm that we run, which is how do we make it as easy as possible to deposit and remove all. reasons you would have for withdrawing your money.

And then we can kind of look at, why are people withdrawing money? Where is it going? How easy is it to actually bring that in Robin Hood? And, you know, the great thing about our industry is there's so much to do that even though you see this great product velocity and we're shipping new stuff, you'll sometimes be surprised at the basic things that we don't have. Like up until a couple of years ago, you couldn't actually. do an ACAT transfer in remover.

We added that in 2022. We had one account type individual brokerage account up until a couple years ago when we added IRAs. We still don't have trust accounts and custodial accounts. And so, you know, when I talk to high net worth individuals, and this is, by the way, a new thing, it used to be that when I'm on the phone with our best customers, it was someone that had maybe a couple hundred K or maybe a million in their accounts. then it went to talking to customers that have tens of millions.

And nowadays, I'm routinely talking to customers that are looking to move hundreds of millions and have that in Robin Hood. And so, you know, for a high net worth individual, there's just tons of things that we have to do. But the goal is if you have a family office, you should be able to run that family office on Robin Hood, or we can automate the running of that for you. And you can have tens of billions on there and feel like you're actually, at a disadvantage using any other brick-and-mortar or other brokerage-based solution. To have a question. Would you give Elon Musk a deposit bonus if he put all of his Tesla stock on Robin Hood?

How much does he have? I think he has $200 billion. He did reply to my tweet. He did reply to my tweet with a little fire emoji, which I thought was very nice of him. I think we'd have to have a couple conversations with him. We'd have to see how much he trades. And, yeah, see, make sure we can make money from that. But I would try.

I would definitely work with him to figure out something that works. Duly noted. Yeah. Yelan, if you're listening. Yeah. A few billion dollars you can make right there. Well, actually, there's a little bit of a strange thing. I'm sure as a public company, you have like your RSU provider, your 10B-5-1 manager.

Yeah. And one of the things that pains me is we don't offer those services. So if you're under a 10B-5-1 or you have employee stock rewards We have to use one of our competitors They're so bad, I mean this is why I was This is why I asked the question around like kind of breath versus depth of I'll never

forget this conversation that I had with, do you know who Dan Rose is? He was a head a BD at Facebook. Yeah. Kind of dream like the mega growth period of Facebook. And I ran this payment company called Trial Pay. I'm pitching something to Dan. And what Dan says to me is like, Alex, that's a great idea.

But you're pitching me a gold brick It's like all the way on the other side of the room. And I have all these gold bricks like right around me. And I love what you're talking about. That sounds great. But I got to pick up the gold brick here and here and here. And like come back to me in five years for that gold brick. I've heard you say this, I think, and I've been using it in conversations with people.

Yeah, the reality is there's so many things to choose from. And sometimes there's great uncertainty. Like who would have guessed two years ago that prediction markets would be our fastest growing business. So, you know, it's a lot of this is just conversations with me and the GMs and the leadership team where we make decisions about whether we prioritize something over something else. And it's like, do we have the right person to take on this thing? How much conviction do we have? And, you know, there's the easy stuff that we know we're missing, the product gaps, but you can't just build product gaps. you also have to have things that are available uniquely on Robin Hood.

Because if we're just building to product gaps, we'll probably never catch up fully. And then we'll always be behind. But I like to make sure across some of the product portfolio, we're just doing things you can't find elsewhere. Because you can point to those things like 24-hour market, like prediction markets, like tokenization. And, you know, that's a strong incentive to try Robin Hood. if you can't get our offering anywhere else.

It just feels like that's, like, by starting with product, I mean, there is this giant divide, going back to assets, right? There's this giant divide of, like, the baby boomers have all the money. Yeah. Right. But eventually they won't have all the money. And you have this millennial generation that they're going to use the best product, and I'm not just saying this because I'm a proud owner of Rob.

Like, it's like your, it's just like, try using Schwab. Like, I'm on the board of a company where I get my stock grant in, Morgan Stanley E-Trades. It's like they bought E-Trade, but the Morgan Stanley site doesn't interoperate with the E-trades site. It's just, it's so comically bad. So the younger generation are going to use these things

that are good. They're going to pick the better product, and you have the better product, but now it's like you've got to get the assets. Yeah, and by the way, I talk a lot about the great wealth transfer, $120 trillion moving into the hands of younger generations from the baby boomers and silent,

which I think we, can be the prime better fishery of but that's not our only strategy i'm also i think we can get the baby boomers yeah while they're still alive and we're working very hard towards this and i think we're actually quite successful because i mean you look at customers in their 70s and 80s who use robin hood they're super happy and to them it's like magic like they're used to crappy brick and mortar experiences your gen z or gen alpha customer they're used to instagram and tic tic tic And they're like, why is this app clunky? It should just like instantly load.

And I should, you know, they're, to some degree, their expectations are much higher, which makes it so that we have to work hard to serve them. But if we get someone in their 70s who's actually gets over the hump to use Robin Hood, like that's a great customer for us. And we have more tools. So one is we're really leaning into family finance. If you use our banking app, the family is like a first class tab, which makes it really easy to manage, you know, your partner, your children, all of the finances in one place.

And then these matches that we're running because we have better economics and we can split more with our users is very compelling to someone with a lot of money in their account. You imagine, you know, we offer you a 3% match and you're someone that's five years away from retirement. You have $10 million in your IRA. That's 300K. Like you could buy a nice new Corvette immediately. that we instantly give you. So that's been a very strong value proposition to, you know, our customers' parents, their grandparents in some cases.

Or you on Musk. Yeah. I mean, he could get a nice McClare and F1. Yeah, exactly. Exactly. If he could buy an F1T. Exactly. You know, some people, a small subset of people will say this argument.

I think it's a lazy argument. I think it's an anti-capitalist argument. But I'm curious for the best come back to it. They'll basically say things like prediction, markets, things like crypto, things like trading, especially among younger set, they'll call it something like a financial nihilism or something. It's small subs. What is sort of the best come back to, it's not nihilism, but what is it? Could you remind me what financial nihilism is defined as? I remember I looked into this a while ago. I think it's sort of making this argument that young people,

because they don't have options elsewhere, are getting into sort of, you know, either prediction markets or crypto. And is this kind of like make money, make money? But I don't know, they're sort of accusing this pool of activities as like evidence of some nihilism in some form. Yeah. I mean, the first thing I would say is everything is growing. Like we're seeing record growth and retirement too. I think a lot of people sort of like look at this as two different users. Like you have your active traders or nihilists or degenerates and then the folks that are doing respectable things. But in reality, the most engaged users actually use more of our products and have more accounts. So the path that someone takes when they use Robin Hood, typically they come in because they want to buy one stock or one crypto.

And then some of them are more active, others are not. But the active ones are the ones that paradoxically adopt retirement, adopt products like strategies. And the way they grow with us is not, necessarily more trading, but just expanding into more accounts and putting more assets onto the platform. So we don't see it. I think there's not a huge trend where, you know, the percentage of our assets as an economy that are margined or in high-risk investments is growing. The whole pie is growing. And I think that takes with it the speculative activity. Now, a lot of people will say,

well, you know, there's a lot of speculation and is this good, is this bad? So my take on that, and prediction market is probably a great example where the big debate now is, well, wait a minute, this is just gambling that we get asked all the time. It's been asked about every new financial asset that gets traded. There was a big debate when futures was created as an asset, whether people are just speculating here. And it's because speculation is just critical to the, functioning of every financial market you can't have a working market without speculation um and i'm not uh not to say that everyone should speculate with all of their money right um i think that probably most of it should

be either passively managed or retirement or in sort of lower risk lower volatility investments but i think you should have a bucket um and most people do have a bucket where you know they invest and they exercise discretion and i think for that one we can pete over who can offer the highest diversity of products. And can we give you that ideal product for you that allows you to sort of like trade your precise point of view? I think prediction markets are great example of that because if you if you had a view that, you know, Trump was going to win the election before prediction markets, you would have had to maybe buy equities in crypto, right? Yeah. You'd say, okay, Trump, I believe Trump's going to win the election. You'd say, okay, Trump, I believe Trump's going to

win the election and Trump is pro-crypto so Bitcoin's going to go up. And that somewhat worked, but it's a little bit indirect. And a lot of people have the same view on companies with earnings. They think, okay, I'm pretty sure Tesla is going to blow out, for example, blow out their deliveries in a given quarter. So I'm going to buy the stock. But then you have weird things like they blow out their deliveries. Maybe a company beats on EPS and revenue and the stock goes down. Right. And to me, for a trader, this is an inefficiency because I have a point of view. I want to trade that. And these proxies make it a little bit less efficient. And prediction markets solve that, which is why I think for traders, it has the potential to become a really big market. And for mass market consumers, it could be a better source of news and forecasting. Like I came out with a statement a couple months ago about how I think prediction markets are truth machines. Like we're constantly being bombarded by all this information and noise. Anyone can be an influencer.

Anyone can have a podcast. How do you sift through that and figure out what's actually going to happen? Well, prediction markets actually take advantage of all of these sort of like forces to consolidate into a more accurate forecast. That's not a guess. It's not a poll. It's, you know, a price formed by people with real skin. Well, you remember that DARPA pioneered this 25 years ago.

You know this? No. So DARPA is the defense advanced research projects agency. So the internet came out of, it was originally DARPA net. And then it became ARPANET became the internet. Right. At the Alpine Inn, they have the plaque rate. Right.

So DARPA was like, how do we get good at knowing who's going to win this foreign election? Well, we could hire lots of CIA agents that go bribe people and all this kind of stuff. But you know what? Let's have a prediction market. And they designed this in 2002. Was that the Iowa? They eventually shut it down because there was just too much controversy. You don't want to have the government go build something.

Part of it is, I think this is the interesting thing with prediction markets, although, of course, it's true for the stock market as well. Like, if I have a prediction market for like, will something bad happen to Eric tomorrow? Yeah. And it pays out $1 if true and $0 if false. Well, I could do something bad to Eric tomorrow. Right. And now I can change the market.

It's like the insider trading version of prediction markets, which is not relevant for the weather. Well, maybe it is. Like, you could do clouds eating or something. But that was part of what DARPA wanted to know was, like, they wanted a truth machine. And this is a much more efficient truth machine than, like, the Central Intelligence Agency,

if you think about it. Right. Right, for exactly, because, like, markets are efficient. I remember Google. The truth will get out. Google had an internal prediction market where people would speculate on which products would actually ship on their ship dates.

And it was a much more accurate... Yeah, it's always more accurate. Yeah. But it's good to see it live in practice now. Yeah. And there are real questions like how granular are these contracts going to get and how do you ensure safety? Yeah. Which, you know, they're regulated. And I think that's the best argument for doing prediction markets inside a regulated framework because if we don't, they could go offshore, much like a lot of the crypto business. And, you know, if it's offshore, it's much different.

to contain the negative externalities. Yep. Yeah. I love the idea of speculation as creation as accountability. Flad, thanks so much for coming on and talking to us about the story of Robin Hood. Thank you, guys. Thank you. It was fun.

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