The Compound and Friends - Inside the Robinhood Revolution With Vlad Tenev

Episode Date: December 5, 2025

On episode 220 of The Compound and Friends, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ are joined by Vlad Tenev to discuss: the Robinhood story, the retail trading landscape, GameStop, prediction markets, and much more! Today’s show is brought to you by Goldman Sachs Asset Management. With Goldman Sachs Active ETFs, you gain more than an investment, you gain access to the innovation, expertise and service of Goldman Sachs. Find out more at https://am.gs.com/relentless. Sign up for The Compound Newsletter and never miss out: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠instagram.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Twitter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠twitter.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠linkedin.com/company/the-compound-media/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TikTok: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠tiktok.com/@thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/⁠⁠⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

So we have a little, we have like an outline and it's going to be linear. Like tell us, you know, we're going to go from the beginning and the cultural impact that Robin and has had and we have some really cool charts. And then we're going to get into the WSJ profile and what you've been saying recently. And then we'll go into some of the big market opportunities for you guys. So I have in here, obviously we'll talk a little bit crypto and options, but we definitely want to get into the RAA stuff, a lot of our listeners or advisors, and there's a lot of curiosity about that. So we'll talk about RAA custody and trade PMR. Prediction markets, I'm fascinated by.

I have some of the most hilarious bets on right now. I'm not using the, I'm on Cal She not Robin Hood. So I don't want to, I don't want to piss you off. But we got to move you over. Do you have a Robin Hood account? Yes. My kid, my kid stole my Robin Hood account. Oh, yeah, yeah. Are they trading on prediction markets? No, he's doing, he's doing stocks and probably crypto. So I think, I think I'm not as bullish as maybe you guys are in the street as on prediction markets. We'll talk about that on the show, obviously.

But I think there's a really fascinating behavioral aspect of this. Yeah. So I bet a lot on football and stuff. And if, so the Giants were minus 370. I'm sorry, the Patriots. Yes. To be the Giants. They were minus 370.

And like just mentally, I don't want to bet $370 to win $100. It sounds like the dumbest thing ever. But if you flip it. and you say you could buy a dollar. Yes or no. No, listen, I'm saying, if you could buy a dollar for $78, then in my mind, I'm like, wait, that's like a 20% return. Like, of course the Patriots is going to be the giant.

It's like 20% free money. Yeah, yeah. So it becomes like an income generating strategy, right? But you just flip it. It's the same numbers. Yes. Because that sounds like a bond that you're buying below par. It's a 20% return when you're buying a dollar for 78 cents.

We should not say it's like a bond. It's free money. But minus $370. It's like a bond that matures. on Monday night. But seriously, minus $3.70. I'm not betting that.

Well, it depends on what the market is, right? Right, right. Have you thought about that aspect of it? Yes. Yes, of course. That's a behavior we're seeing more and more demand for.

And one more thing. So I wouldn't even bet $370 to win 100. But would I put down $8,000 to get $10,000? Because I'm so confident that the Patriots are going to win because that sounds like a 20% return.

Like, it feels like I would put much more money on the same exact bet on the prediction market. is that you have a question in there no it's a statement oh okay do you have to use the word bet can you say trade bet prediction prediction prediction yeah wagers better than bet it's two syllables so it's more sophisticated all right guys how we looking this is it's an important man you have a lot of you have a lot else to do while you're in new york yeah yeah i i ask for it You know, because I travel takes so long that I think you have to just make the most of it.

Yes. And I'm probably not here until January next, so. All right. Here we go. Thank you, big John. Two, what? What is this? Two what?

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Welcome to the compound and friends. All opinions expressed by Josh Brown, Michael Batnik, and their castmates are solely their own opinions and do not reflect the opinion of Riddholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Riddholt's wealth management may make. positions in the securities discussed in this podcast. All right, ladies and gentlemen, welcome to the compound and friends, the world's greatest

investing podcast. I'm your host, Mr. Downtown Josh Brown. Here with me today, my co-host, as always, Michael Batnik. Hello. Our guest is mystified by what's going on here. I am both hosting and producing the show. I'm just surprised you didn't get an office actually downtown. We're in Midtown here.

I know. Midtown, Josh Brown. It's a long story behind that. Our guest today is a dead ringer for Ashton Coucher. His name is Vlad Tenev. He is the co-founder and CEO of Robin Hood Markets. You're too kind. Vlad also co-founded Harmonic in 2023 to build the world's most advanced reasoning engine.

Vlad holds a BS in mathematics from Stanford University and an MS in mathematics from UCLA. More importantly, Vlad is one of the few people. who has literally changed the world from a fintech perspective launching something that I think all of us would agree has been among the most influential platforms in the last 25 years. Vlad, we're so excited to have you here. Thank you so much for joining us. It's a pleasure. That's a big buildup.

Yeah, no, it's an honor and a pleasure. So I told you I watched you on CNBC this morning. We gave you a better intro than they did. So not to brag. Yeah. Okay. All right. We agree.

So we're starting off. All right. So just. No offense to. No offense. They're great. I want those guys. Shout to the notorious Andrew Osorkin and Joe Karnan.

All right. Just to catch people up, and we're not going to, like, do a deep dive into the past. Born in Bulgaria, came here with your parents. They were working with the World Bank. You lived in D.C. You had a very early aptitude for math, and you ended up at Stanford. Is that where the story begins for the purposes of the Robin Hood story? I think that's pretty much right with a couple of twists and turns along the way.

Okay. First off, I immigrated with my aunt. Oh, okay. My family really didn't have much money, so my dad came first. Somebody here is fired. So, okay. It's a common misconception because who would leave their children, you know, behind when you move across the world. But there was desperate times called for desperate measures.

So I live with my grandparents alone for a bit, and then my aunt moved me over when it was clear that, my family would have a future in this country. And then I bought my first stock when I was in middle school. Oh, wow. So I was, I was, I think I was forced into a higher degree than normal of financial sabbiness at a pretty young age, just watching my grandparents in Bulgaria go through hyperinflation. Five years after I moved over, Bulgaria had the unfortunate distinction of having the highest inflation rate in the world at something like 1800%. So, Right. So you came over pre the lifting of the Iron Curtain and the Berlin Wall falling. After. After. Oh, after. Yeah, yeah. Before we couldn't leave.

Okay. Got. Got it. Okay. And then at Stanford, you start getting involved in fintech startups and high frequency trading software and things that probably most college students are not thinking about. But it seems like you were always like a little bit on the edge and a little bit early to some of like the important technologies in finance. even as a university student. And that's how you meet you're a co-founder. Can you talk a little bit about that time? Well, actually, when I came to Stanford, I wanted to be a physicist. And then I met my co-founder through the physics department. We were both aspiring physicists. And then we went to the math department at around the same time.

And my goal, I guess, my picture of what my future career would be like would be a math professor. I thought that I would just be one of those guys. I don't know if any of you know too many of them, but they use a chalkboard, they have a couch, they barely use computers until recently, and you're just solving math problems and

teaching students. So I thought that would be my career path. My co-founder ended up getting a job at a high-frequency trading firm, kind of on a whim. Yeah. And my first month in grad school, so I actually pursued a math PhD at UCLA and I dropped out.

But my first month in grad school, his first month on the job, Lehman Brothers went under. So it was the start of the global financial crisis. And then, you know, one thing led to another. And he has the, in retrospect, brilliant idea that that would be the best time to start a financial company in the depths of the global financial crisis. Right. So one thing led to another and here we are. Was it called Robin Hood when you guys first started working together or when did that idea?

No, the first company we built together was actually called Solaris Trading. The idea was we would do algorithmic trading. We were smart math and physics guys, and we would just do quant trading strategies at low latency. And that company wasn't super successful, but we kind of pivoted into enterprise software for hedge funds and banks. and it was that second company that gave us the idea for Robin Hood. Because I had moved to California to start the West Coast office of our second company because we were both Stanford guys and we had a really hard time recruiting engineers in New York. The good ones were all getting paid astronomical amounts of money at HFT shops.

So we were hiring people from Stanford. And then I thought, okay, rather than trying to convince each of these people to move across the country, why don't we just start there start there right so um so and and that allowed us to kind of have our feet into two separate world simultaneously so we were very close to the the high frequency trading and institutional finance world in new york right but in san francisco it was like the beginning of the mobile revolution so when i moved back there uber was just getting started with black car in san francisco this is like 2009 2010 this is like 2011 Instagram had just started.

So you kind of had the birth of this new mobile app industry. And so I think the genesis of Robin Hood and why we were somewhat early to this was we put both of those ideas together. Like the efficiency and the disruption that high frequency trading brought to bear on institutional finance and proprietary trading combined with the user interface. face disruption that mobile brought on. And we kind of combined these two to create Robin Hood, which was for a long time commission free trading mobile first. I think Michael and I, tell me if you agree with this, the way that we look at the brokerage world now is it's Robin Hood's world. And all of the big brokerages have had to adapt in some way, shape, or form to basically the fact that you guys have bent reality as we know it. Fractional trading was a really big.

deal. Commission free trading, of course, which we could talk about in a second. But the first time I ever heard about Robin Hood was through one of your earliest investors, Angel investor. Howard Linson. Linson. Yeah. So Lenson goes, yeah, you know, these fucking guys, they're doing commission free trading. He was excited about you guys because I think he was excited about you personally. But even he wasn't sure, like, you know, we've all heard commission free trading before. But then he started to get more excited. Probably because the valuation kept going up. Well, we were at the Goldman event.

You remember, was that 2015? I don't know. Howard was very bullish at that point. Were you guys ever at Stocktoberfest or Lindsay and Paloza? I think I might have met you there across Paso, but he went from like. At the hotel del Coronado. Yes. So he went from like, ah, it's commission free trading.

We'll see what happens. And he has a brokerage background. So do why. And then he was like, no, no, no, you guys don't understand. This is the real thing. And then by the time he was that bullish. A lot of people were talking about Robert. We didn't get it.

Like, we were, we were fairly dismissive until I probably start to take you guys seriously, like probably during the pandemic when I look, because I was very late to the app. Like, I was very, very late. And I think that what I misunderstood was to me, the commission free trading, I was sort of like, well, whatever, it's five bucks a trade. Like, it's so cheap, who cares. I didn't appreciate how incredible the user interface was. And to me, that is what distinguishes you from everybody else.

Like Netflix doesn't necessarily have the best content, but the app is light years ahead of their competition. And same thing with you. So probably 2020 is like, all right, this is, uh, this is pretty incredible. So I think I would see the same thing as Michael, but with one added aspect. What I missed was the importance of fractional because I'm in the wealth management world and I'm dealing with people that have millions of dollars. And that's not relevant to them.

I mean, it is now, which we could talk about why. But in that time, it's like, what's the big deal? Just buy a hundred share round lot. like we've been doing for 100 years. Why can't everybody just do that? I think you saw that, and I think a lot of people saw that, and I was kind of in this wealth management world

where it didn't matter. And I think that's part of why when Howard first explained what you guys were doing, I was like, I don't get it, who cares? But also fidelity and Schwab? Like, who the fuck was this guy that he's going to, like, take them, like, do anything, and you did?

Yeah. It's a miracle. Anyway, without like, without like... I appreciate it, yeah. Without bragging, do you see it as it's Robin, world now when you see so many other financial companies being forced to play the game the way that you guys designed it? I think it depends on how concentrically you look at things. So I'd say

in our core business, which is retail trading and regulated brokerage, I would say that we're pretty far ahead and we're kind of like innovating and bringing new things. And I think increasingly when I meet with the luminaries of the industry, like the big discount brokerages, they do sort of look at Robin Hood begrudgingly as taking the mantle for democratizing, investing. I mean, they definitely respect you guys now. Yeah, I think we do get a little bit more respect, whereas maybe five years ago, it would have been like, oh, those kids over there with their toys.

And that's a responsibility we take very seriously, right? I mean, it was pretty amazing that, you know, just this Monday, I was asked to participate in the making IPOs Great Again Roundtable as sort of like the representative of the retail brokerage market. And, you know, if you think about all of the initiatives that are really going on to further the markets and retail. investing, ranging from private market access to the new asset class, getting privates available, getting retail access to IPOs, making earnings calls entertaining and engaging and

not this chore. I think Robin Hood is at the center of that. And not to mention infrastructural changes, not just fractional shares, which has been so important, but also 24-hour markets, which Robin Hood pioneered and really brought into the mainstream and has been pushing. on that. So yeah, I think I'm proud on retail brokerage that we're just sort of like pushing forward and we feel this responsibility to make sure that our capital markets are good as many people as possible, our owners in the great industries that we're building in this country

and we're exporting that to as many places outside the U.S. as well. But there's also a lot of industries where we feel like we've got a lot to prove and maybe there's not as much clarity. We certainly haven't declared victory. I mean, we're getting into banking. We have a great credit card, but, you know, there's giant credit card companies out there that certainly can't declare victory. You're taking on bigger and bigger competitors. Or even the small ones prediction markets. We're out front there, but that's a new market and crypto where, you know, there's a lot of competition, not just in the U.S. but globally. So yes, retail, retail brokerage, I think we've been leaders for a while, but we're not just sitting there. We think of Robin Hood as a

comprehensive financial platform for all of your needs. So I think it goes beyond brokerage at this point. I want to, I want to share a chart that Michael put in the doc that I think illustrates the Robin Hood impact on the, I guess, on the investor community. And really on society, I think it's, I think it's that important. John, the other one, the first one, please. So, Vlad, so listen, this was, you guys. Oh, that's an amazing chart. Isn't that so good? So you guys built an incredible platform and also circumstances happened that the world shut down. People are very bored and they had money and they discovered the stock market.

And you did that because Schwab, who they democratized access to securities way before you did. But them and TD Meritrade, if you weren't there, this chart would not exist. It just wouldn't. I had no disrespect to those two companies that we both work with. But the chart that we're looking at is the value of equities held by the bottom 50% of households. And this is, it went vertical in 2020 from call it $125 billion or so up to, I don't know, is that $6 or $700 billion today? That is serious wealth creation.

And you guys were a huge part of this. You see that bump right around 2010, that leg down. And then it sort of flatlines for, 10 years. You know what the articles were saying for 10 years? Retail investing is dead. Retail investing is dead. Millennials have no interest in stock. Young people will never be as avid in terms of investing as their parents' generation were. Article after article after article. And then once the dam broke, it was like a completely different world. And to Michael's point, maybe that line trends higher during the pandemic.

because people got stimulus checks, people were sitting at home, there was no sports on TV. I don't think it does that without the impact of Robin Hood. And even if you dislike some of the speculation that people were engaging in,

you can't deny that having that be a gateway moment for 30 million people or whatever the number is, is super important. I'm sure you feel that way, but can you talk a little bit about that era and that moment in time

and how meaningful that was to the company? very meaningful. And a lot of people mention meme stocks. But I think if you think about the, the OG meme stock, in my opinion, it was Tesla. So if you look right before... That's actually a really good point. Yeah, right before that huge spike up in 2020, I remember very vividly that end of 2019, we saw something happening on the platform. There was like, a surge in activity that couldn't really be explained by macro. And what we noticed was people were just like reawakened by Tesla. And remember, this was, the institutional community and the media was quite negative at that point on the company.

Super bearish on Tesla. Super bearish. And I don't think people realized broadly that it was going to be such a massive thing until at least one year later. But I think retail was early to that. And when I think about Robin Hood's growth and the impact on the bottom 50%, and kind of reawakening the retail investor, the millennials who had basically been disillusioned since 2008, I also very much tie that with a reawakening of American innovation. Because you look from the period of 2008 to, you know, the end of the last decade, 2019, it was almost like the doldrums of innovation. Like, there were companies that were building, but it wasn't front and center. Now you have AI.

You've got SpaceX launching rockets once a day, if not more. So like the space industry is headquartered here. you've got prediction markets in crypto. So it's very much... GLP-1s, flying cars. Yes. Waymo. You've got online game...

Are we using the word gambling? Predicting. Online predicting. Sports betting. Like, you've got all these things that did not really exist. New industries. Yeah, new industries and a very, I think a very engaged audience of investors at every level of the income scale.

Absolutely. Like people are trying to find, people are trying to find opportunities no matter who they are. And that's very different. There's a chicken and an egg question here. Like, did the retail investors make these companies successful, give them the resources and the attention that they needed to thrive? Or is the success of these companies driving retail investing activity? And I think there's a little bit of reinforcing cycle. Retail investors, how many offerings did Tesla do that gave them money?

that they really needed to survive, like a lot. So, Vlad, I don't know if you've ever seen this chart, but I've shared this multiple times, and I think you're going to like this one quite a bit. We're looking at the market cap of Schwab, divided by the market cap of you guys. And not too long ago, like literally in 20, in 2023, Schwab was almost 23 times the size of Robin Hood.

And now you are on its heels. It's only one and a half times bigger than you. And I want to ask you, do you think, do you think that daily active users are driving the metrics? Like, is that the metric? Because if somebody were to look at your financials and just compare it to Schwab, like, this is a joke. They have like 1 30th of the revenue. I'm making the number up. But just on traditional metrics, it looks like in so insane.

But John, just throw this next chart up. So I don't have you saw this week from Bank of America. Robin Hood is the biggest online platform. And it's showing the split of daily active users comparing you to. You're in navy blue here. To Fidelity and Schwab and everybody else. And you are almost, not the entire probably, but my God, 50% of the daily active users of online platforms are at Robin Hood. So I think if you break down, and by the way, we're immensely proud of the progress we've made here.

I think there's a lot more to do. There's a lot of people that still don't know about Robin Hood, surprisingly, that I think, think we have yet to get to in the U.S. You have to get into the retirement communities. I have been saying this. Dude, you know what? We are. We're spending a lot of time, actually.

We have a great retirement product. They would enjoy this more than they think they will. But my wife knows who you guys are. I said, I'm interviewing the CEO of Robina today. She's like, oh, like the crypto company, it's like, sort of. Like, and if my wife knows, you're in that space too. You're close. So I think your question about daily active users.

So ultimately, I think, at least over the long run, stock price is driven by financial performance. And I think one interesting stat to look at. Of course, people look at revenue and they look at EPS and all of these. But do you guys ever look at Rule of 40? Yeah, of course. So Rule of 40, I think, is an interesting number because... Profitability and revenue growth.

Yeah, yeah. Yeah, and you add those two. And that's what you're getting credit for in your multiple that some of the incumbents aren't. Yeah, and Rule of 40, Robin Hood, I think. is a huge outlier. There was a chart floating around on social media that had, you know, this graph and every other company in the S&P 500 is kind of in this cluster, and it's like Palantir and Robin Hood all the way out here. So I think we've been unique in that we've been able to grow margins while simultaneously growing revenue. And then you ask, okay, what are the things that drive

that upstream in the business? It's the ability to attract, assets at an accelerating rate. We announced that earnings that we had over a third of a trillion of assets, which was a doubling year over year at large scale, but also us really utilizing technology to keep the cost slow so that as we scale, as we launch new products and get more assets and get more customers, we keep our costs growing much more slowly than our revenues. And certainly daily active users, to some degree, drive some elements of this. But we've got products that actually are very, very valuable products that aren't daily active usage products. I mean, for example, we have an amazing credit card, our retirement offering, increasingly, you know, a new business that we think we're going to do very well.

And I'd like to be the leader in that business and not too long. RIA custody, it's not a daily active usage product. product, but, oh, it will be. Let's put a pin in that, though, because perhaps, perhaps for the B2B aspect. Yeah, I want to ask you about that later. There's a CAC advantage here, though, that's a big part of the story. You guys went viral, still, I guess still viral. You are one of the most downloaded financial apps in, in the app store. And you have the kind of app that people, once they learn how to use it, which doesn't take long, they can't wait to show their friends. That is something that your competitors still don't have, at least that I'm aware of. And that, I think, gives you an

advantage on acquiring your next million customers, your next million customers. How important has that been to the story? I think that having ARPU and LTV, sorry, to be jargony, making sure that the revenue that we generate from each customer that has a relationship with us being greater than the cost of acquisition is a big advantage. At the end of the day, I think if we look at business and app metrics, the one I like to look at is retention. So if you look at, and this is publicly available data, if you compare Robin Hood app's retention curves, meaning of the people that download Robin Hood today, what percentage will be using

at 30 days from now, 90 days from now, 3654 days from now, we plateau at a much higher point than any of our competitors. And Robin Hood's a huge outlier. And what that allows us to do is you be much more efficient with our customer acquisition and the money we spend. Because if double our customers stick around to our competitors, then we can pay theoretically a much higher amount. But we don't. We actually pay less. But that just like gives us more margin with which we can operate our business. It's so funny. We have a similar, we have a similar client. acquisition philosophy, when people come to any financial advisor to potentially do business, it could take six months, 12 months before they either even say yes or no, let along how

long it takes them to actually move money over. When people come to us, in many cases, they've already decided they want to become a client. As a result, we have a pretty good idea that most people have come to us, we can invest a lot of time upfront because we know ultimately they're going to become clients. A lot of firms are like, we can't, we can't do four meetings with somebody before they're paying us. We can because of that, that CAC and that efficiency. So it's a real,

I think it's a really underrated part of why you guys have been so successful. Not to dwell in the past, but Michael and I wanted to ask you about the GameStop Mania moment. And I was thinking like it must have been bittersweet. It all worked out great in the end. And it was your coming out part. party, not just in finance, but like as a pop cultural phenomenon. And I know that has like good and bad aspects to it.

In the heat of the moment, what was it like responding to regulators, battling misinformation on the internet? Raising money. Raising money, trying to keep like your employees from losing their minds, trying to make sure clients were being taken care of. People on the internet very mad at you. Yeah. So from the outside end, it looked like.

you were in a maelstrom and somehow you held it all together until the storm passed and then you were a stronger company on the other side of that. I'd love to just hear like the personal aspect of being the person in the center of it all. Yeah, I think that the acute issue of GameStop was almost less stressful for me than just like the long burn of the three years or so after that. So GameStop was basically one day of like extreme stress, you know, waking up to a collateral call of... A net cap issue that you had to resolve immediately. Or not exactly net cap. I think net cap was fine, but it was some other clearinghouse NSCC deposit thing.

But yeah, it was like waking up to the collateral call. And by the way, by the time I woke up, my phone was unusable from. all of the phone calls from angry customers who thought I was colluding with Citadel for whatever reason. Yeah, learned a lot. Obviously, up until that point, I wasn't really that out there in the media. I mean, my co-founder and I both were really like, we're builders, we're going to build, we're going to quietly launch our products.

So even 2020 kind of surprised us, you know, when we started appearing on the covers of magazines and like, well, these folks put us on the cover and they never even talked to us. You know, that was kind of a strange feeling. And I think I just didn't have enough reps to be prepared for what the public relations stuff. Nobody could be prepared for, you were probably like, I should have just been a math teacher. Like you have like famous people on Twitter screaming at you You have the op-ed pages of every newspaper in America Yelling at you You were like a villain for a minute

TV you were sort of like a villain Definitely Not anymore, it's come full circle Now you're a hero And I wanted to I wanted to just say though We don't hear about any of the shit That people were saying then Like Michael Lewis has left the building

The Flash Boys, the HFT The Payment for Order Flow That when I say you've been the universe. Now, everyone's like, yeah, big deal. I pay a penny in a trading transaction. I don't see. And as a result, I could do hundreds of trades a day. I don't care. I like it this way better. So now everyone has come around and said, you know what, actually, all that stuff we were mad about, it turns out, this is better than the way it used to be. And you've come all the way full circle, I think, as an industry. Do you see it that way?

I think that we've definitely gone through our share of controversies. And I think I've learned how to handle things better. I mean, we've also evolved a lot. To be honest, I think that at first, I didn't really see myself as a spokesperson for the industry. And so, you know, then I was in the mode of, all right, responding to criticism about Robin Hood or me personally. And I don't think that was the right path. I mean, at the end of the day, it's really Robin Hood's model has become the standard model. Right. They're all doing it now.

Kind of like an attack on Robin Hood is basically an attack on retail investing in America. And I think when we started thinking about it that way, it became much easier to communicate about what we were trying to do in our business. Because really, yeah, I mean, the model has become the default model. There's certain things that we want that I think are not just good for us. they're good for the industry. I don't know. I don't see many other people trying to do them, but yeah, we believe in free markets. We think as many people as possible should be owning equity at an early age as possible. IPOs should be better. Public companies should have a better brand, and it shouldn't be like being public. The perception out there is nobody should ever go

public. It sucks. It's a chore. I think we have to reverse that. The thing I worry about most right now is we're in the midst of this AI revolution. Very few people have access to the interesting AI companies. I mean, you have Google, which is public, thankfully, and NVIDIA, but those are at $4 trillion, and everything else is basically inaccessible. How much more upside could there be relative to the smaller private companies that might revolutionize? You'd have to believe a lot.

Yeah. Yeah, and that's one thing I'm very passionate about making it. so that anyone can have access to private opportunities. It's not just the wealthy. Vlad, your business is extraordinarily pro-cyclical. People are more likely to trade when they're making money. They make money in a bull market. The options contracts.

By the way, your deck, I listen to your earnings call every quarter. Whoever does your deck is the best in the world that you get a raise. I'm a huge fan of your deck. Oh, thank you. Very well done. Pass that along to Chris Kagle, who's a head of IR at Robin Hood. So your options contracts up 38% year over year. The crypto, crypto, notional volumes, and there's a transaction here, but through the roof.

And these are your two most lucrative businesses. You've been through the shitter. Like, 2022 was not fun, especially for a lot of your customers. It was a really nasty bear market for crypto, for equities, for the things that were popular. What did you learn then to prepare you guys for the next bear market whenever it should arrive? And by the way, I should give a shout out to you. I know Chris Kegel's been getting his flowers. but there is really a big team around earnings, as you guys can imagine.

And I hope you enjoy the live video aspect of it and the Q&A. You didn't mention that part, but that's the part that's near and dear to my heart. I use quarter. I'm after the fact. I know you guys are work with them, but. Yeah, so you don't watch the videos. I'm a listener. Oh, you're a listener.

Oh. You got to watch the video. Wow, what are you doing on these videos? You're sitting at a table? It's like Alex Carp? Like, it's more like. I like to think of it as Anthony Edwards or LeBron James after a good NBA finals game. All right.

I'm in for that. But so what do you guys do the next time we get a bear? I'm wearing a shirt, by the way. It's not just me with a towel on my head. Okay. Great. I'm sorry. So.

Go ahead. 2020 was actually a dark time when a lot of the tailwinds behind the business that drove us during COVID, reversed. So we went from zero interest rates and helicopter money landing in people's bank accounts to the highest interest rates in 30 years. And when interest rates are high, people trade less and they actually invest less. And there's less first timers. And it makes sense, right? If you can get 5% risk-free sitting in cash, the sort of like 7% post-inflation net returns look less attract. You have to rethink all the risk that you're taking. Right. And so I think we could have taken one of two paths. One was just like batten down the hatches and wait for the bull market

to return. And I think a lot of the mortgage brokers, for example, took that path. They're like, well, nobody wants mortgages. We just have to wait for the market to recover and rates eventually will go to zero. We didn't want to do that. We asked ourselves, how can we actually help customers with the products that they really need and they want to use in this environment. So we introduced Robin Hood Gold. And the main value prop during that time period with Robin Hood Gold was the absolute highest interest rate

you can get on your cash among all major platforms, coupled with a really very high level of FDIC protection. And we did that through a cash suite product. Robin Hood Gold is like the premium subscriber tier. Yeah. Was it like five or ten bucks a month? Five bucks a month. Okay. Yeah, 50 a year. And then yeah, at one point, I think the interest rates got quite high. You would get five percent on Robin Hood gold with two and a half million of FDIC insurance. So it's actually better than

leaving money at a bank. At a bank, you get typically a low rate. Nothing. And then you only get $250,000. The bank, you get bronze. You get a basis point. Yeah. So I think that really was the first big product that made us sort of like a company that would thrive in a high interest rate environment. We added retirement to that, which has been very successful. I think it's the best retirement offering in the industry. What's your match? Is it 3%? 3% on contributions for Robin Hood Gold members. And we have over 1.5 million retirement accounts. So I think it's the, among the fastest growing, if not the fastest growing retirement program. These are IRAs? IRAs and Roths. Okay. You're not working with sponsors in the 401k channel yet, are you? Not yet, not yet. Although that's been, well,

we work with companies to help people roll over their 401Ks, but we don't have a direct B2B 401k offering yet, although it's definitely something. I'm sure it's on the map somewhere. Okay. And then it's funny, on the active trader side, we really weren't focused on active traders very much up until 2022. We kind of built an active trader business incidentally. What we were really focused on was first-time investors and making it as easy as possible for them to get onboarded. But by offering rock-bottom fees on equities and options trading, we got active traders who are like, okay, maybe I'll do my research and my charting on a different platform, but no

commissions, no contract fees per options contract are too irresistible. The pricing is too good to pass up. So they sort of like would use Robin Hood, even though it wasn't really built for them. So we reverse that. And now I think we have the best active trader offering. And the mandate was really, if you're an active trader, how do we make it so that you're at a disadvantage using any other platform? And so you saw innovations like 24-hour market, Robin Hood Legend. So you guys played offense as a platform in the bear market.

Big time. And the people who played offense with you, here we are, I don't know, 100% later in the S&P or however 80% percent higher, like the people that played offense in that time look really good right now. I think that's right. Yeah. And now we are in a position as a company where we're much more diversified and resilient. We have 11 business lines at the end of Q3 that generate 100 million in annual revenue or more. I like to, I call them cylinders. So at one point, we were like a V6 engine. And then I was very, I was very excited when we got to V8. Now you're a V11. We'll get to V-12 and then W-16, and then I'll have to change my analogy.

So I want to, John, can you fire this picture for me? So this is, I mean, I look at this as a victory lap and a signal that you are, so this is you on the, I guess it's the cover of the Wall Street Journal. I don't know if this is such thing as a cover, but it's a big feature. And you're surrounded by some of your biggest fans. And this is an annual event that you do in, is this Vegas? Yeah, that was, that was Hood Summit this year. I mean, if you could have.

seen this picture in 2020, you would have told yourself, all right, if I just hang on, this is where things are going. So now you're a hero. And the gist of the piece is that you're not apologizing anymore for the Robin Hood ethos. And you're not trying to be somebody else in the industry. And you've doubled down on what you guys call power users. And that seems to be the new rallying cry. And I want to share this with the audience that have you react to it. This from the article. At one point, Robin Hood temporarily restricted trading of such meme stocks, infuriating users who said they lost money. That February, Tenev told Congress that pattern day traders at the center of that market chaos represented just 2% of Robin Hood's customer base

and most were long-term investors buying plain vanilla products. Since then, Tenev has come to realize that plugged-in aggressive traders are actually key. key to his company's success. It sounds like you guys have realized, this is actually your quote, these are our most engaged customers that generate the lion's share of our revenue. We put our best people on active traders. So whether you meant to build the best active trading platform or not, it sounds like now you guys are embracing that.

And the users who love you the most are the most engaged, those are the people that you're most focused on, which I would argue that's what every great business in America does. I think we're on a path. I think we've got a lot of work to do because active traders are a very demanding clientele. But I think the point of that quote that you read, which maybe is slightly out of context, is there was a time period where we were kind of apologizing for having active traders. And I don't think that was fair to them because these are, I mean, I've gotten to spend a lot of time with active traders. And the media can tend to portray them as degenerate gamblers. And there are some degenerate gamblers.

No, it was worse. They were called dumb money. Yeah. They call them dumb money. Yeah. But you talk to these people. They're not all dumb money and they're not all degenerates, is the point. I mean, they're normal people.

Not all of them. Just like. Just Michael. Some of them are incredibly sophisticated about everything they're doing. And this is like a skill that people can get better at. And, you know, I think one thing that it did for us is we really started thinking about, you know, how we can make the tools better and better. Like, we weren't investing a ton in tools other than making them easier to use.

But now you look at Robin Hood Legend. It's getting better every single day. And I think we'll get to the point where Robin Hood Legend is competitive with, like, institutional products. What is Robin Hood Legend? I'm not familiar with that. Robin Hood Legend is our active trader web offering. So it's a more prosumer offering where, you know, if you're...

It's like I think or swim, but like more, more like intuitive for every, every user. Yeah, but it has, it's like Robin Hood on desktop, best charting, best tools, and access to all the things you get on mobile, but with great real estate. There are two markets that you guys, as Michael has pointed out, make a lot of your money from crypto and options. A lot of people would look at that and say, this is scratching the itch for the gamblers or it's too much volatility here. or, you know, whatever critique that people have, and some of the critiques of that kind of activity

are, of course, grounded in reality. Not everybody's going to be an options trading superstar. I think we all agree. When you hear people talk about financial nihilism or the millennial generation doing zero days till expiration before they even make a contribution to a retirement account, what's your reaction to that? Do you think it's unfair or do you think it's over-emphasized and that's not really representative of what most people are doing?

Like, how do you think about that? I mean, I think we definitely intend to win the active trading market. And there's a real market there that it's not just us. All of our competitors are in it as well. You look at the big guys and lots of upstarts. Zero-day options have legitimate use cases. I mean, if you think about it, let's say you want to place a trade on a company and you want to play earnings. You don't want to deal with the time decay of that trade of getting a long-dated option.

So zero days can be the most direct and capital efficient way to sort of like trade your point of view. Just to capture that small window of time. Yeah, because you don't want to deal with time decay. And I think that's part of the reason why they become so popular. but not all of our customers trade options. If you do trade options, though, we want to give you all of the other tools in the arsenal that you need to be successful.

And actually, some of our biggest adopters of retirement accounts are our options traders. The options traders who are most engaged tend to also be the folks that have money in retirement and are taking advantage of the matches. Oh, that's interesting. So they will put money away into one bucket that they don't trade that way.

Yeah, a lot of people talk about, this as a graduation. It's like, oh, well, hopefully you're taking these active traders and you're graduating them to these products, but it's not really what happens. I think what happens is they just tend to add more buckets, which we're making it easier to do with multiple accounts now. So you can have your discretionary options trading portfolio. You can have your retirement portfolio. Maybe you have like buy and hold dividend portfolio. And as we've started to like spend more time. I think what we've seen is as someone's

relationship with Robin Hood grows and deepens, they tend to get to a point where they have multiple money buckets and they're putting, you know, the lion's share of their income into Robin Hood. They're diversifying on your platform the activities that they're involved with. But the active trading actually usually

still remains. They're still have a component that they just like to manage directly. But so you are seeing people do that. We'll get to this in one sec. One of my favorite charts that you guys have been producing for the last couple of quarters is you showed the average, like the net deposit by cohort, this one, the average cumulative net deposits have grown over time across our funded customer cohorts. So people that are starting with you, why don't you explain what this chart is showing? Yeah, so basically this shows people that start on a given month, right? Each line is a cohort, which is a group of customers that started in a given month.

And then, I guess where it hits the Y axis is their initial deposit. So how much money they put in as the first deposit. And then where they end up a few months later. The point is their customers are growing with you. The customers are growing each cohort. And over time, they're starting with more money in their accounts. And the rate of asset growth in the accounts is increasing. So the oldest cohorts, the people that started the longest to go are in the bottom.

Like they put $100 into the app. Yeah, or it looks like about $1,000. Yeah. And now, you know, the shortest ones are in the multiple thousands. So your customers are growing up and you're growing alongside them. And you now sit on top of a company that is worth 100, as of 12, 4 we're recording this, $122 billion freaking dollars. Is this, I know you were ambitious and optimistic, but you have to like pinch yourself

and just, holy shit. And for the listener, there are only three in the capital markets industry larger than Robin Hood, Morgan Stanley, Goldman and Schwab. And they had a bit of a head start, Goldman Sachs. And they might have had a few decades of a head start. This is where you are relative to everyone else. And they're almost, the other names in this group almost can't be seen. Like, interactive brokers is not a small company.

Yeah. And your market cap is four times the size. It's really incredible. I didn't realize they were that small. But, yeah, I mean, it's humbling to see this. Humbling for them, not for you. For me, too. You must be proud.

You must be proud of your team and proud of what you guys are accomplished. Is your stock overvalued? How would you react to somebody that thinks that it is? Well, you've got to look at the rule of 40. Yeah, I tend to not look at the stock price so much. Once in a while. Surprisingly. John, fire chart seven.

Let's make him look at his stock price. This is your market cap. I want to point out to people that the Robin Hood market cap in 2022, that period we just referenced, was $6 billion. So today at $122 billion, the people who are willing to bet on you as a company have also done very well. Next one, this is you versus the S&P 500 in total return on a year-to-date basis. Robin Hood has been annualizing a 37% a year versus the S&P 12 Let's put up his revenue chart

I know we're barraging you with all these great superlatives But we made the charts You guys have done a nice job You're going to do that Last one operating income Which I think is... This is the one

So this point about the profitability Not just the revenue growth Because anybody can get revenue growth You could open a store and say I sell $100 bills for $80. Your stock-based comp you fixed. Yeah.

That was an issue for a lot of companies, not just you. But this is... Well, I relinquished all of my equity, my equity grants back in 2022, which helped. Okay. When you see these... Oh, we have one more, John. Operating income growth.

So, like, obviously that there are aberrant things happening, but the direction is pretty impressive on operating income growth. you've averaged 400% since 2023. It's not awful low base is the issue. But it's pretty remarkable. I want to talk to you about a couple of the couple of things. And then we'll let you get out of here. A couple of things that you're planning for the future.

RAA custody is near and dear to our hearts. We're in RIA. Okay. You're a very wealthy man now and you must have financial advisors. I'm sure it's a family office. I'm sure you're a knee-deeat. in people pitching you wealth management and all sorts of solutions how do you think about the advice industry and and robin hood's future role in it yeah i mean surprisingly i'm

relatively new to having wealth we have an account for him uh after the taping yeah maybe maybe maybe i can be your customer um and maybe i can convince you guys to uh to to custody your your assets We love Rob. We're all yours. Yeah, Rob's great. So I've been, I'm relatively new to this. But, yeah, my perspective is Robin Hood's built a lot of great things from retail or self-clearing or a custodian of assets. And a lot of the things that when we talk to advisors, we hear they want, like exposure to crypto and traditional assets in one place, rock bottom fees, nice access to margin, are things that we have.

offer a great user interface and a mobile app that, you know, frankly, their expectations are quite low. It's like if I could get my balances to update, you know, in real time, that would just be. So we do that stuff. And there's obviously a lot of other things that are part of a comprehensive offering that we don't yet do, but we intend to do. For example, some people are surprised to hear we don't have trust accounts on Robin Hood yet, which is a big thing. Of course, trade PMR does. But That'll be sort of important. It'll be important. As you come into RIA class today, you're going to want to do that.

Yeah. So, you know, we're aware of all the things. And so we're thinking about it, how can we give the best of Robin Hood to RIAs? And our customers, I think I have a deep appreciation for RIAs because a lot of our customers are entrepreneurs. I'm an entrepreneur. RIAs think of themselves as entrepreneurs. You're running a small business or a big business in your case. How can we make it as easy as possible to give you the best tools to succeed and align ourselves with our RIAs?

I think the first thing that we can do very, very easily that we've done is make an economic impact. How can we take our lower cost of servicing and pass that along to lower fees to the advisors? And at the end of the day, lower fees and better economics to clients. And we actually like this because we feel like over time, since you guys are fiduciary, If we can demonstrably show that you get better economics custodying at Robin Hood, you'll sort of like be more and more incented to move activity to us. So we introduced the first of its kind RIA match for assets, custody. How did that go?

I don't know if you're sharing any actual data, but just directionally, was that positive? Well, I think it's certainly positive. The sales cycle for RIAs changing their custodian is certainly a little bit longer than a retail customer, which we're getting used to. But I think you should think of that as the beginning of our new approach. We're going to cut fees. We have a giant retail customer base, many of which are hungry for personal advice that we're going to plug in through the referral program. Referral program for advisors on your platform. You can send the investors who are asking for actual planning help to those advisors. Yeah. So we are cooking a lot. And we are investing

a lot in the space. And I think that if I think about the RIA business for us, just from a business perspective, I think that all things being equal, it should grow faster in terms of assets than our retail business. Because for the retail business, you kind of have two layers of compounding. Like we get more customers, and those customers get wealthier over time. But in the advisory business, there's an additional one. We can serve more. advisors. We get more advisors. Those advisors get more customers. Those customers increase their assets over time. So all things being equal, a mature, innovative RAA custody business should grow assets and be a more effective asset capture vehicle than retail brokerage. And we know,

and I've talked, you've probably talked to Rob about this. One thing that we really aligned on is that the opportunity in multi-generational financial services is a big one. There's going to be $120 trillion changing hands from older generations to younger. And I don't think any of our competitors are really thinking about this as an opportunity. But what we're doing is we're designing all of our products, including the future of R.A. custody around the family experience. We want Robin Hood to be better for you, the more of your family members and the more of your trusts and entities are on the platform.

In that way, I think that the best way to have Robin Hood's business benefit from this is for everyone to already be on Robin Hood. And actually, our oldest customers, the folks in the 70s and 80s that are using Robin Hood are some of our happiest. Like, they love Robin Hood. So I think that over time, you'll be surprised at how well we serve the customers that maybe you wouldn't think that we'd be serving. Somebody said, somebody said no RIA is going to move their whole customer. base over to Robin Hood. And my response was, well, wait two years. Nobody's got to move anyone anywhere because the customers are already going to be there.

And that's a really big part of your strategy. You're going to have millions and millions of people who are already Robin Hood native. They love the app. So if somebody can come on that platform and advise them there, they're thrilled. They don't want to leave. I don't think people appreciate this yet. But I think the smart RIAs are trying to figure this out. There's going to be a huge advantage.

to those that are first on the RAA custody platform when we launch our referral platform because the one thing we're really good at is taking advantage of all the tools we have on user interface and experience to actually get people to engage with good content. So, you know, if you're among the first advisors that's willing to trust the platform

when we launch referrals, I think, you know, the opportunity and the reward is going to be much bigger than people realize. And I think people are getting really excited about their referral program. And the advisor facing offerings are going to get better at a much faster rate here than at any of our competitors because we've got so many advantages in terms of technology that we're going to increasingly bring to bear in the space. I want to show you a funny graphic.

Michael, explain what this is. So our friend Michael Kitzis made a financial advisor tech solutions map probably like, I don't know, 10 years ago or so. And there was like 70 companies, maybe now there is what, like 400? There is 15 categories. It is every one of these logos. Unbelievable. It's a company, not a feature, an individual business that's selling technology to a wealth management firm like ours or to a Morgan Stanley or both. And there are hundreds of companies in different.

categories. We're not even on this chart, huh? No, no, no. I was going to say this is your list of potential acquisitions. There might be five or ten gems on here, where it should not be a company. It should be a feature of a bigger platform. You've got Dropbox on this chart. I didn't make this chart. But I think Dropbox, I think you'll see like gigantic. Advisors store their files. But look like the investment data analytics. There's, what is there, 30 logos under that? I mean, so, right, everything from Morningstar all the way down. to like, Vlad, you have a lot of homework to do. 20 companies you've never heard of.

Anyway, this is your roadmap, but if you want to acquire RIAs or at least start working with RIAs, they're all customers of these companies. And it might be a Trojan horse method to get them more accustomed to working with you. I think this just shows me how big the space is. It's gigantic. How much opportunity and how much opportunity there is for us to simplify and cut costs because it must be annoying to have to deal with. Maybe how many vendors do you have?

Globally wealth management is a $100 trillion business. So that's a... It's a lot. That's a market I'd like to serve well. This is the last thing I promise, prediction markets. So I think this is a really cool thing. I think everybody's drunk. Hold on.

I want to do the pro and the con. For me, the pro is I know everything and I know what's going to happen. And I'm really good. Do you believe this guy? I have bets that Jacob Allorty is going to win a nomination for Best Supporting Actor in Frankenstein. This is what I'm busy with. No, I just think it's fun. I don't know that I'm going to launch a fund for other people to invest in my predictions.

I just think it's a lot of fun. But you've thought about it. Oh, I've thought about it. But you're super bullish? Michael thinks it's like, you think it's a fad that people will do it once? I'm super bull on the category, yes. So I'll give you the mic in a second. I think it's very cool.

And I think it's fun, I think the size, I don't think it's going to be nearly as big a market as did Tarek, say from Cali should say it's going to be bigger than the equity market? Or am I making that up? Well, I don't agree with that. I don't think it's going to be close. I think it could be a big opportunity, but nowhere near the attention that it's getting. The thing is they're not investments because they end. The thing happens or doesn't happen. Yeah, I think people will get bored.

People will get bored with it. Like, all right. So assets is not the right way to look at it. Assets is wrong. I think in terms of number of markets and diversity of markets, it's already exceeded the number of stocks listed. So? So I think that the reason that matters is because I think stocks, trading of stocks, if you're an active trader, has some complexities to it. One, you don't exactly know how the inputs, let's say you understand a company really well like Tesla.

You have a pretty good idea how many deliveries they're going to make, what their net income is going to be. It's not always straightforward to translate those inputs into what the stock price is going to move. 100%. It's not binary. And you don't know, even if you have the information, you don't know what the impact will be on the stock price. Also, exit criteria becomes complicated. When do I sell my position? You know, prediction markets kind of deal with that for you.

And the other thing is you can specialize in lots more things. So, you know, there's prediction market traders that are experts in Fed funds rate, economic contracts, Oscars. Personally, I keep track of AI models and capabilities. So I'm a fan of those. And I feel like I kind of understand things. everyone can probably find at least one area that they understand things better than conventional wisdom. And I think that's an interesting opportunity. There's a data. There's a data benefit to this, though, that I think trumps every positive aspect, which is, I trust these more than I trust

surveys and polls. 100%. Because people lie in surveys, people lie in polls, but they tell the truth when there's money on the line. And I think we've already seen a pretty remarkable situation with the presidential election. The prediction markets knew Trump was going to win, even when most of the polls said it was 50-50 coin toss up until a few days before the election. That was ground zero that started at all of the presidential election. That was a massive moment. That was the first prediction market we listed. So I have two takes. Number one, I think the binary outcome of this is going to make the average retail participant a little bit bored. Wait a minute. I lost all my money, eventually they're going to get tired of losing all their money, even though someone won,

granted, I think for real pools of money, for institutional investors, for hedge funds, if there is enough liquidity, to Josh's point, you might be like, yeah, I think Nvidia's going to smash, but I don't know how the stocks can react because I don't know what's priced in. If you are a macro hedge fund and you want to bet on interest rates or currencies or whatever, and there is like, or a Fed funds rate or whatever, and there's a binary outcome of, I don't need to predict the derivative. I just, I want to make the prediction of yes or no, and there's enough pool and liquidity to do that. That's where I think...

So it sounds like you agree with me. That's where I think the huge opportunity is, but I don't think it's going to be with, like, the average audience, the retail participant. Well, what we're seeing with the average retail participant is that prediction markets

are the fastest growing business we've had. People love creating it. It's fun. Yeah, but usually things... I mean, we've launched a lot of new businesses. It went from zero to... We just announced three billion contracts in November. That has a lot of contracts.

Which is 30 million in revenue. So that's over 300 million run rate in less than a year of operating. So I agree with all these things. But I think that it's much bigger than we thought. And we're still at the very beginning. You're going to run into two things. And you don't have to have an answer for these today. Obviously, the gaming commissions at the various states that have actual casinos are probably looking at the

prediction markets getting into sports or having already gotten into sports, seeing that as head to head competition. They're not happy about politics either. No. Oh, I bet. So that's one. You're going to have all these agencies and departments come out of the woodwork, which I'm sure you expect. That'll keep the public affairs people busy for a while and the lawyers. But then the other thing, insider trading. So if I know for sure that a company is going to to get acquired or there's going to be an approval of a drug or a certain shipment amount for Tesla's, let's say. And I'm not supposed to know this, but I do. Yeah. Why would I bother with options and stocks? I can go right to a contract that lets me make that bet. And we don't

even have legislation for this on the books. Like, what is insider trading in the prediction markets? And is it even illegal? It's like too early. I think, I think, basically all of the major platforms ban it. Yeah, they've not sure they do. But what do you mean? It's not permissible. And in fact, one of the- Can you enforce it the same way that they have a mechanism to enforce it in the stock market?

Absolutely. Yeah. And actually, one of the criticisms that the traditional gaming industry has is, well, you know, we know the right thing to do. We have all these controls. Sure they do. The financial industry has been dealing. with market integrity for a long period of time. We have trade surveillance. Yeah, because

this isn't a unique problem to sports. You could have some inside information about a company's earnings. And, you know, I think we've basically figured out mechanisms to surveil for that. Well, they watch the options market. They see somebody that's never placed an options trade before buying out of the money calls the day before a stock goes up 20%. They're going to put the person in jail within a year. Right. They know. They know where to look for it and what it looks like. So, I mean, there's all kinds of like offshore prediction markets, platforms that aren't regulated. But because these trades go into CFTC regulated entities, there's all kinds of like market surveillance infrastructure that goes into play.

So I think it's an evolving space for sure. But, yeah, the financial industry has dealt with exactly these types of challenges. So the idea that somehow were at a disadvantage relative to literal casinos in doing market integrity seems just kind of a silly argument. Because these prediction markets are so small, the volume. I want yesterday to look, will Janus be traded before the deadline? And there was like $220 in there. Like literally, I would have moved the market if I bet $100. So if you're going to bet a lot of money on an outcome, it's going to get flagged in two seconds.

Yeah. They'll find you relatively quickly because there are so few people trading. right some of these things all right we don't have to dwell on that i want to say thank you so much for joining us today i know we kept you a little bit longer than we promised but um our audience definitely appreciates hearing from you and we love chatting with you uh i want to let people know that they should be following robin hood.com for new developments and new things that you guys are launching anything big that we should be on the lookout for any big events coming up there's a big event that we have on december 16th okay called robin hood presents yes no it's

going to focus on... This is the prediction market. It's going to focus on prediction markets and AI and what that means for the future of trading. And then we're going to do a bunch next year, including Synergy, which maybe you're familiar with. So look out for all the great things we're doing to serve RIAs. Should we come to that? Should Michael not come to that?

I think you should. It's an RAA. Where is it? Next year, I think it might be in Washington, D.C. Oh, it's easy for us. All right. Yeah, but I'm not sure. I don't think it's been finalized.

Vlad Tan, if you are obviously iconic and you are taking a victory lap all over Wall Street and we're happy for you. We're proud of you. Shout out to the whole Robin Hood. Unity, thank you so much for joining us. And guys, thank you for listening. Thank you for watching. And by all means, follow Robin Hood. And get yourself up to speed on what's going on the markets. All right, that's it from us this week. We appreciate you. We'll call you soon. And so that is the information.