The Pomp Podcast - #1457 Vlad Tenev | Robinhood Goes ALL-IN on Bitcoin & Crypto

Starting point is 00:00:00 What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. What's going on, guys? Today, I've got a very special treat for you. I've got Vlad Tenev. He is the co-founder and CEO of Robinhood. Vlad and the Robinhood team have built an amazing

Starting point is 00:00:38 product that has onboarded tens of millions of different users to financial markets. But now they also have pushed very deep into crypto. And we talk about what's going on on the platform, how big it is, and then what he thinks is going to change in financial markets. We talk about 24-7 trading. We talk about tokenization. We talk about crypto and the various assets there. Then we get into things like prediction markets and event contracts, and Vlad gives us his vision for the future. This is a fascinating conversation that gives you a peek into the future

Starting point is 00:01:04 of where financial markets are going, what it means for individual investors, and how you may actually change the way that you invest based on the way that the platforms evolve. Here is my latest conversation with Vlad Tenev. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions

Starting point is 00:01:23 and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Today's episode is brought to you by Meanwhile. Meanwhile is the world's first licensed and regulated life insurance company built for the Bitcoin economy. Operating on the Bitcoin standard, they do everything in Bitcoin. You pay in Bitcoin. They pay claims to your family in Bitcoin. You take out policy loans entirely in Bitcoin when you need liquidity. Meanwhile,

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Starting point is 00:04:45 And it seems like an entire generation is kind of leaving behind public markets. Two things are interesting. One is crypto is very liquid and is obviously trading in, you know, kind of a different type of public market. And so maybe that sentiment is inaccurate. But also Robinhood seems to be doing pretty well. And you started out with a younger kind of investor base. And as that investor base grows and the assets that you offer grows, it seems like maybe that younger generation really does care about both crypto and stock market. What do you think?

Starting point is 00:05:13 I think that public markets are still interesting to people. I mean, there's lots of great companies that are retail favorites that you can only get via public markets. For example, Tesla, if you wanted to catch the EV wave over the past couple of years, then Tesla has seen massive appreciation and a lot of retail interest. and that's only available via the public markets. NVIDIA is a similar story. Meta, you basically look at the top 10 traded stocks and held stocks in Robinhood. You see a lot of companies that build products that people use. And there's communities around these companies too

Starting point is 00:05:56 that have been forming. So I don't think that people are interested in it. Or I don't think people are not interested in investing in public markets. I don't think that's the right the right frame. I do think there is an unmet need, which is there are people that want to invest in something while it's still very small and take advantage of it as it's growing and getting much bigger. So it used to be that a company could IPO at $100 million valuation. Microsoft in the 80s, Apple, these were relatively low by current standards. They're valuations.

Starting point is 00:06:33 And if you held those stocks for a very long time, you would just generate tons of returns. Those companies went public relatively early in their life cycle. I think to some degree, Tesla is the same. They went public very early. But by and large, your typical company waits until billions in revenue to go public. Typical successful company, I'd say looking at our peers. And so that appreciation is really locked in private markets. And that's been institutional offering. There's a lot of problems with making that accessible to retail. And so I do think that retail has this unmet need of investing in something while it's small and sticking with it until it becomes bigger. And I think that that explains the popularity of some of these crypto assets, especially the meme coins and some of these early stage projects. You can get access to it very early and it can start being small.

Starting point is 00:07:36 And they try to accentuate that by putting a lot of zeros in the price sometimes so you can feel viscerally how small it is and ask yourself, what if it gets to a dollar? But yeah, I think underlying it is a big, serious thing of how do we make this a little bit easier for everyone to take advantage of the appreciation in private markets? And I think more flexible standards for getting a company listed is one potential option. Crypto, I think, can play a big role there. Like tokenization of assets, public stocks, and private companies, I think, is a way to do that. And I think the other thing is relaxing the accreditation standards for accredited investors. I think that makes much less sense in the new world than it maybe did 10 or 20 years ago. Another thing that public market investors probably talk about when they critique the either younger investors, kind of the high-flying stock investors or the crypto investors is, oh, these guys don't know anything about valuation.

Starting point is 00:08:46 They're just simply buying a narrative. It's kind of the meme is dominating it, and they'll learn. They haven't been through market cycles before. I personally think that the older generation or more experienced generation is just as susceptible to narratives. You know, I always joke that like Berkshire Hathaway is the like boomer meme and it seems to be going pretty well for them. So how do you see kind of storytelling and narratives and like the investing capital flows follow, given that with the Internet, you know, information travels so much faster. We have things like Twitter. We have the ability for people to kind of show their opinions in financial markets in a way that maybe they couldn't before something like Robinhood. Yeah, I think that investor relations as a discipline is changing fundamentally.

Starting point is 00:09:33 And you have companies that I think are doing a good job of it, and they look very different than the legacy companies. It used to be that investor relations as a public company was going to these conferences and sitting in closed door meetings with big banks and analysts and they're asking questions about your company and you have to be careful because you can't actually share anything that's non-public, but they get the vibe and they recommend to their portfolio managers to buy the stock. But now there's this new phenomenon of retail analysts and retail investors that are becoming a much bigger part of the overall picture and constituency. So you'll see in some cases, retail analysts talk to a lot of them. I mean, some of them cover Robinhood stock and there's like a relatively low number of stocks that seem to be sort of like engaging with the retail community. and actually embracing that as a constituency and they and you see that working because these analysts are then creating youtube videos with really sophisticated analysis where they're like comparing stocks and going very very deep and you know talking to the ceos for for those

Starting point is 00:10:51 that are interested in that and you know we've made a big deal of embracing the retail analyst community and trying to evolve the way that we engage with investors as a public company to be more retail focused than any other brokerage would have been in the past. And I would say that correlation causation are tough to, it's tough to tease it out, but we've done very, very well over the past year. And I think that's coincided with us engaging the broader community of analysts and investors much more. One of the things everyone's talking about is artificial intelligence. And if you kind of look at, hey, that is the tool, but what is the outcome of it? It's really automating away jobs

Starting point is 00:11:36 or inefficiencies, et cetera. People don't talk about Robinhood as an AI company that is doing some crazy automation. But in a weird way, you really did remove the middleman. You used software to say to people, hey, you can now get your information directly off the internet. You can be a self-directed investor. You can come directly to our platform and you can invest into the assets that you want to invest, you no longer need to call up a stock broker or, you know, kind of go through those traditional channels. And I found this quote that you said, speaking about back in Bulgaria, you said, I remember always thinking about finances, being aware of them and recognizing that if you were in control of your finances, that's a superpower. And so this whole idea of

Starting point is 00:12:16 like being able to control the flow of where your money goes without having to call someone and have them talk you out of it seems to be this like automating away of a middleman that's obviously create a lot of value for Robinhood. How do you see that evolving over time? Is it just you build a deeper and deeper relationship with these users and continue to kind of empower them to act, you know, unilaterally or by themselves? I think we throw around this term self-directed a lot when it comes to investing to sort of like differentiate it from advisory and, you know, the big, also big phenomenon of you wanting someone else to manage your money or do your finances for you and i think robin hood started is very much a self-directed platform and i think

Starting point is 00:12:59 what's happening is it's bigger than just finance people are self-directing all aspects of their lives their health you know you're following you know health and wellness people on social media and you know you're going to your doctor for for those of us that go to the doctor regularly with all this information and what someone in in twitter is talking about about nutrition they're self-directing you know their news most of the time you're getting your news more quickly and you know increasing number of people relying on their peer networks for it rather than traditional news media and of course we're involved in the financial aspect of this where you know we want to make the best tool for people to manage their finances and in the past maybe you would have had

Starting point is 00:13:49 an advisor or some professional uh doing things for you because the transactions themselves are out of your reach because you know you couldn't have access to the markets directly you had to call someone to do it um or you couldn't you know send payments or move money around but i think technology has lowered the barrier to that tremendously to the point where you know you don't need a lot of that help anymore you can be self-directed you can make your investments yourself and i think what technology will help you do is move further up the value chain so that you know with generative ai um you can even get those recommendations that advice it can help you plan a strategy um and so like there will be even more power available to you

Starting point is 00:14:38 and it'll go higher up in the value chain than just helping you do a transaction and i think Robinhood, we've been investing a lot. I mean, we've been very early in using machine learning. Now, what they call AI is generative AI. And you can see that implemented with our customer support flows, for instance, deflecting a lot of tickets. But I do think there's also potential for products. And I think next year, you'll see the first generative AI infused financial products that people actually want to use that aren't just chat GPT, like being embedded in the product. But I think there's definitely promise for the technology and helping people make financial decisions. I would ask you what those products are, but I'm assuming you're going to wait to

Starting point is 00:15:24 announce them. One product that you've announced and have scaled very significantly is the crypto trading on Robinhood. Again, you guys started out with public equities and many of the maybe popular crypto applications or platforms. They started out with crypto and now they're considering going towards public markets. You guys kind of did the reverse. But it looks like you guys have $30 billion in crypto assets under custody as of November of this year. You've done about $120 billion, $119 billion in notional trading volume in the last 12 months. And to put those numbers in context for people, you're doing a little bit more than 50% of Coinbase's trading volume. in crypto, but you have like one-tenth the number of coins listed. And so talk about this idea of

Starting point is 00:16:14 public stocks and crypto kind of coming together and merging into one area where obviously you have a big public equities business. You've got a really big crypto business too. And it seems like you guys are benefiting from this merging and really owning that relationship with these users that want to invest across both markets. I think the worlds of public equities and crypto crypto will increasingly merge and become one. And I think when a lot of people hear crypto, they're thinking about meme coins or maybe Bitcoin and it seems like this is not a very serious thing. But if you're thinking about what's happening, the time from getting an idea to listing an

Starting point is 00:16:54 asset on a blockchain has effectively gone to zero, right? it's very easy to list an asset and get access to global liquidity in an increasingly large and global market. And juxtapose that with what we were talking about earlier, how difficult it is to take a company public. You have to go through a ton of process. Not a lot of people even want to do it anymore. And so there's this unmet need. And I think these two things will converge eventually. And what will happen is traditional equities, and I think all of this will be accelerated by the new administration, traditional equities will move on to blockchain rails along with all sorts of other real world assets. You'll see private companies going on blockchain rails

Starting point is 00:17:48 as well. Once you have public companies, then you'll have to think through what does it mean to actually go public and list on a blockchain as opposed to on a traditional stock exchange so i think i think we'll have to figure that out and then that opens up private markets as well and what you gain is interoperability so i don't know if you've tried to move stocks from a legacy discount broker to robin hood a lot of people do it and it's it's very very painful um and by the way the the the big brokerage houses don't want to make it easy of course they want to keep those assets there so they'll put all sorts of uh non-technical barriers in the way too but contrast that with how easy it is to move uh you know dollar stable coins or bitcoin

Starting point is 00:18:36 from you know your metamask wallet to your phantom or your robin hood wallet everything just kind of works because the infrastructure underlying the assets and the transactions is all public so you have no need for transfer agents for central clearing houses for payment processors all that's replaced by software and so i think my view of crypto is it's sort of the next step in how financial infrastructure evolves it started with pen and paper and filing cabinet it went to mainframe it went to on-premise and cloud and then crypto is just the the next layer there where you'll see traditional financial services on crypto rails they'll be easier to use better more interoperable and i think the us will have to adopt it the efficiency gains are just going

Starting point is 00:19:28 to be too high to ignore you mentioned um kind of this you know tokenization of stocks essentially and there's a couple of things i want to dig in here so uh first is the friction seems to be both there's a regulation friction but there's also a technology friction and so is it something where if Robinhood tomorrow says, you know what, we're going to create these tokenized stocks, maybe we'll hold the share certificates in some sort of vault and we're going to offer up this tokenization and we're going to be the first ones and we're going to go try to get our friendly competitors to start to accept this technology and it can be an industry-led adoption of this? Or is it a regulatory thing and we got to go get the regulators to all agree to this and then the

Starting point is 00:20:08 technology companies are ready to do it? How do you see us going from where we are today to actually being able to offer this to users? I think I think the impediments are mostly regulatory, by and large regulatory. Yeah, the technology exists and you already see it with dollar stable coins. Right. I mean, dollar stable coins are a primitive form of tokenization. I think the next frontier there is going to be getting the yield passed back to users into their wallets directly and doing that in a very clean way across multiple jurisdictions. But it's a very similar process. The underlying asset, which is traditional dollars in this case, are custodied somewhere in a big bank or in the form of treasuries.

Starting point is 00:20:55 It's tokenized. There's software that makes sure that it's one-to-one. and then the tokens trade cleanly on exchanges, I think that same concept can be applied to any asset and will be. So technology is there. It's just a question of the regulations. And I think actually in Europe, MECA regulations a little bit further ahead. And so when that goes live, this will become possible. That's interesting because a lot of crypto people I talked to will say the MECA regulations are hurting the crypto side and they don't like them and they think they're kind of overbearing. But maybe there's some nuance here of it may hurt

Starting point is 00:21:35 crypto, but help the public markets become more tokenized. Is that true? I mean, I think that it's all relative. I think that some regulation by its nature sort of like limits what you can do, right? But by doing that, it creates trust with customers. they know that there's some guardrails. And I think there are a lot of people in crypto that just feel like they should do whatever they want, and that it's software and technology. And I think that's not very realistic. But you compare that with what's happening in the US. And in the US, there's a lack of clarity. Companies have been just getting sued left and right. And there's almost been a disincentive to come in and talk to the regulator. Because if you

Starting point is 00:22:23 come in and talk to the regulator that increases the odds of getting a well's notice so this this whole come in and register thing was a fiction it was like almost a honeypot to get you to come in and and prepare prepare a well's notice for you so certainly it's better than that um and i think that we can we can find a good middle ground where people can get the protections companies can innovate pretty freely. Maybe it's not the Wild West, but at least it's like a healthy balance between these two opposing forces. You mentioned the new administration may be able to help with some of this. Obviously, you have President-elect Trump who's coming in and he's really positioning himself as kind of the first pro-Bitcoin, pro-crypto president. It seems like a lot of

Starting point is 00:23:14 the cabinet appointees own Bitcoin or crypto assets. His family is even launching crypto coins and kind of participating in different ways. And then you have Paul Atkins, who's coming in as the SEC chair, who also seems to be much more friendly to crypto. Is it something just as simple as, hey, top-down message, let's be less abrasive, let's embrace this, and that should help us on the regulatory front? Or are there still, in your opinion, open questions around how do we deal with decentralized assets or, you know, issuance, disclosures and things like that? I think there's a lot of things that still need to be worked out. One area is stablecoin treasury management and just the framework around which you can actually deliver yield to holders.

Starting point is 00:24:03 Do they have to be KYC? Can you receive the yield in non-custodial wallets? all of that is very murky in the us now um there's also uh the security status of coins themselves is a particular coin a security or a commodity and you're probably familiar with this if it's a security it would be regulated by the sec if it's a commodity it's cfdc but which one is which and you know for the securities we'd like to be able to offer those too so then we would need a framework for those that are securities, because I don't think I think right now the approach that the at least regulated cryptocurrency players in the U.S. have been taking is everything they list is a commodity. They don't want to they can't conform to the securities laws. They don't want

Starting point is 00:24:51 to. And so they've been listing commodities. But I also don't think everything is a commodity. I think there are things that are securities and people would benefit from being able to trade them. which requires a framework for actually listing crypto asset securities in a way that doesn't actually get rid of all the advantages of using crypto rails. So you want to we want to figure out how to list them on public blockchains where they're interoperable with the broader crypto ecosystem. And then tokenization, I think, raises its own challenges that if we solve the first set of problems I outlined,

Starting point is 00:25:32 I think you'll get to a world where tokenization is also permissible. One of the other things that potentially is a promise of tokenizing these stocks is 24-7 trading. And it's a little weird because it feels like the public market is moving towards that 24-7. We used to have kind of traditional hours of operations. Now there's the overnight trading, which isn't still 24-7. It's kind of sort of open to some people. And it feels like kind of like inching there but tokenization where there is not only the uh ability to kind of move assets between these different venues but also trade at all hours of the day seems like it would be a pretty big accessibility you know increase and also uh probably would be a much more global

Starting point is 00:26:15 approach to allowing people to access financial markets what are you guys seeing there well we basically popularize that offering uh with 24-hour market um so we offer more than a thousand stocks uh 24-5 to your point not 24-7 um and i think that that galvanized the broader ecosystem to try to figure out how they can offer it now you've got exchanges saying that they're looking at how to extend the trading hours to 24-5 um but it's been hard and we had to build a lot of technology to stitch together these market centers and seamlessly kind of move a customer's orders from core market trading at one exchange to after hours to overnight so it's a lot of heavy engineering work to stitch this together in a way that is not a terrible user experience for the end user

Starting point is 00:27:09 and it's still not 24 7 because the mainframes at central clearing need to run on the weekends and people have to do that you need employees and uh and and that's like a big hurdle right compare that with the blockchain which is just running on servers 24 7 you don't have to do any of that extra work and it's a a very nice user experience particularly for customers internationally where there's less overlap with us east coast working hours um so that's big and also fractionalization is big we had to do a lot of work when we popularized fractional share trading to take whole shares of stocks split them up into little pieces so that you can buy you know a dollar of berkshire hathaway a shares which is kind of this magical experience um that

Starting point is 00:27:59 i i don't think buffett and munger really appreciated um then they have all these small shareholders uh crashing their annual conferences but um but i think i think it was progress definitely definitely progress for the world but yeah with crypto you can just take slices and fractionalize and that's kind of built in so it's not just efficiencies and costs but real user experience improvements to end users another thing that has become very popular your publicly traded company you see other publicly traded companies buying bitcoin and putting it on their balance sheet some people are doing it at grand scale like the micro strategies and they're buying you know tens of billions of dollars and it's kind of become like a bitcoin treasury company

Starting point is 00:28:40 you have many other companies like a tesla or block uh not you know formally known as square uh they bought some bitcoin they kind of left it there they're not really bitcoin companies uh you guys are in the crypto business uh have you guys ever thought about adding bitcoin or has there been any conversation as to why you should or maybe there's a good argument as to why you should not put bitcoin on the balance sheet yeah i mean it comes up from time to time for sure um one of the one of the reasons it comes up is because we just like are getting more involved in crypto and in some cases that would involve us holding different coins uh and already we have to do the work of accounting for it and uh it's essentially on the balance

Starting point is 00:29:21 sheet anyway so there's a real reason of if you have to like transact in cryptos you have to maintain some holdings of them and and they're kind of there by necessity um then there's the other angle of sort of like showing a sign of support that we're a crypto company you know we're we're here we buy into the technology and the promise of it being an inflation hedge so so so it's kind of there as well um i think the the reasons to not do it is you know if you are um a public market investor and you're thinking about robin hood as a company um generally speaking you're not like it complicates the picture to think of it as like a company but also this quasi like bitcoin uh holding play and i think robin hood stock is already highly correlated with

Starting point is 00:30:14 bitcoin as such without us even holding it on the treasury so um yeah i i would say we wouldn't rule it out we haven't done it thus far um but those are kind of the considerations that uh that we have and to some degree you could put any asset on your balance sheet and are you we're not in the business of being an investment manager so uh you know i know some companies have done this airbnb actually i think if i remember made a lot of money doing this with uh their their cfo lt pre-ipo just like managing the the cash on the balance sheet and investing it but that all that always seemed like a departure from the core of the business taking that approach um this is free advice so you're going to get the quality of what you pay for but i always thought it'd be

Starting point is 00:31:04 hilarious if somebody uh bought a little bitcoin and also put like a berkshire stock on their balance sheet and said hey we're gonna you know we're gonna have one that one of the new world one of the old world uh but to your point i don't know if public market investors would be thrilled if uh if you guys were running a prop shop basically with the balance sheet yeah i mean i think that um again yeah as long as it's in the context of operating as a business i i think it make some sense. But yeah, investing the balance sheet of the company, then you get into kind of murky territory. And then I guess I never thought about it, but like you guys probably do hold Bitcoin on the balance sheet. You're not doing it from an investment standpoint or a capital

Starting point is 00:31:42 allocation standpoint. But as you mentioned, kind of the operational components, you've got that exposure and then obviously your customers are highly correlated. Do you see customers going back and forth like, you know, hey, there are public equity investors during the bear market of crypto then all of a sudden they're switching over and becoming you know very highly correlated and deploying a lot of capital into crypto in the bull market and then going back or are they pretty much uh bifurcated like the crypto people are the crypto people and the public market people are not what we've seen is someone will typically come in for either stocks or crypto because usually the crypto is because they want to trade or buy a specific coin that they know we offer so

Starting point is 00:32:23 they come in and onboard for that. On the equity side, it can be a little bit broader. They just want to start investing and they have some money that they want to put away. So they might not have as specific of an idea, but they know they want to start building their portfolio. So they'll come in for one thing. Then they adopt Robinhood Gold. And we've seen the Robinhood Gold attach rates really increase over the past year. We look at seven-day attach rate, quarter attach rate, and it's it's been going up and once they adopt robin hood gold explain what robin hood gold is just so people understand robin hood gold is basically a premium subscription product um so it starts at five dollars a month although there's an annual plan that recently rolled out

Starting point is 00:33:08 we're actually running a promotion called gold monday um the first week of december uh it started And it gives people a discount on the annual plan. So it's been very successful. It gives people a really high interest rate on their cash, even when they're not investing it. So rather than having your cash earning close to zero at a bank, you can deposit it at Robinhood. And if you're a gold member, it earns an industry-leading rate with high FDIC insurance protection. it gives you a 3% match on IRA contributions. So if you have a retirement account on Robinhood,

Starting point is 00:33:49 we'll match you even if you don't need an employer to match you, we'll do that. And then more recently, we rolled out Robinhood Gold credit card, which has been very popular as well. So yeah, typically they'll come in through something, they'll subscribe to Robinhood Gold and then they'll discover all of our product

Starting point is 00:34:06 because we try to introduce an even better value prop for our gold customers across all of our products you also have robin hood legend talk about robin hood legend and what you guys have rolled out there yeah so basically um we have a couple of different customers that we are building for one of them is active traders which are the people that want the best tools they're they care a lot about having the best pricing and a lot of them trade on multiple screens i mean you've probably seen them on twitch or others where they have you know the candlestick charts and they have their trading battle stations um and i think we got a lot of these customers incidentally at first without really focusing on them because they just

Starting point is 00:34:55 like the ease of use and the low costs of the robinhood platform even though we were building for first-time investors we kind of got active traders incidentally so a couple of years ago we basically mobilized our company put a lot of our most hardcore people on really serving active traders and i'd say the recent culmination of that was hood summit which was an event we held in miami where we launched a couple of things index options futures and robin hood legend which was the first desktop platform we designed specifically with active traders and we emphasize charting customization powerful quick access to markets where you can trade from pretty much any widget and actually today we're rolling out um crypto on robin hood legend so we went very deep on

Starting point is 00:35:45 equities and offered options in the first launch we were originally not gonna launch crypto until 2025 but the team's just been sprinting and so crypto's launching on robin hood legend and alongside that we're going to be uh it's the first time we're launching direct exchange routing so in the past through robin hood we would route your order through market makers and you wouldn't have the exchange routing directly now you can see the order book and you can actually directly trade on the order book through through robin hood legend which a lot of active traders really care about because they want that finer grain control over their orders yeah It's really interesting. As a business, you continue to grow. And as you attract these

Starting point is 00:36:29 active traders, you obviously start to offer them very unique products that fit their kind of use case. But you've also been doing this, I think, with kind of the demographic growth of your user base. You started with generally younger investors who were kind of starting their investing journey. Well, you've been doing this a while. They're starting to get older. They're starting to get married. They're having kids. They're getting bigger jobs. Their income is going up. They have different needs, expenses, etc. Talk about kind of building additional financial products outside of just stock investing as your user base kind of grows both older but also larger. Yeah, I think that's been a huge focus. We want to not just stay relevant to

Starting point is 00:37:11 every young generation and be the place where you first start investing or trading, but we want to grow with our customers. And actually, we think Robinhood can be a big beneficiary of an enormous wealth transfer that's already started, but is going to result in over $120 trillion of wealth moving from silent generation and baby boomers down to younger generations. And I think we're focused on a couple of things. One is really this idea of making financial products that work for multiple generations. So for example, if you're on Robinhood, it should make it a better experience for you and for your family members if your kids and your parents and the entire family was on the platform as well. The first place where

Starting point is 00:38:04 you're actually seeing this is with the Robinhood credit card, which has great family features for like budgeting and controls and setting limits. But it's very, it's like a first-class experience. And nobody really does that. In the financial space, you can't really think of a great multi-use family experience. And I think that's something we've been thinking about in the context of our recent acquisition of Trade PMR, which is an RIA custody platform. We also think about it with retirement and beneficiaries.

Starting point is 00:38:38 beneficiaries but um yeah i think when we're successful you'll have just a great multi-generational experience and robinhood will be will be better for you if the whole family is on there and right now um over 70 percent of people who inherit money end up firing their parents advisor so actually i think there's a ton of low-hanging fruit here i mean there's no reason why that numbers should be so high. And I think within the Robinhood ecosystem, we can just drive it a lot lower. Yeah, that's a fascinating statistic. One of the things that you all also introduced that I thought was unique is that these event contracts are now getting regulatory approval in the United States. And so people know about PolyMarket and Calshi, and those seem to be

Starting point is 00:39:26 purpose-built for event contracts. And these prediction markets obviously got a lot of press coverage around the presidential election, but Robinhood added a event contract for the presidential election. And I think to me, what I saw from that is like, okay, stocks to crypto, you know, it makes sense. It's an evolution. Event contracts really opened my eyes to like, oh, Robinhood has the relationship with users and should be able to really open the aperture of different financial products that it offers to these individuals. And so talk me through kind of launching that and what the thought process was, and then will you guys do more event contracts in the future? Yes, yeah. We heard loud and clear from customers that

Starting point is 00:40:06 they love that product, and it works really, really well within Robinhood. It did over half a billion contracts in less than a week. I mean, we launched it about a week ahead of the election. And by the way, the time span from getting the idea to launch it, which was the CalSheet CFTC case where the stay was lifted so from the from the time we decided we want to get into the market and actually offer this to customers to when we shipped it was like two and a half weeks so the team was just sprinting hard and really executing um in an insane way to to make it happen and um i think what made it you talked a little bit about the bridge like stocks to cryptos is pretty clean but where do event contracts come in? Well, these event contracts are CFTC-regulated futures or

Starting point is 00:40:58 swaps contracts. And so at the Hood Summit, we already announced futures trading of outright futures. And event contracts basically uses all of that regulatory infrastructure, a lot of the technical infrastructure, because underlying it, these are derivative swaps. And it's really, if you think about it the elections affect people's portfolios they affect the markets um you saw that on election night when crypto and a lot of u.s equities particularly ones affected by changes in the regulatory climate just had an immediate tick up when when it became clear what the results of the election were but these are imperfect proxies and actually for sophisticated people to hedge these contracts serve a very valuable purpose um and we believe

Starting point is 00:41:49 anything that a sophisticated person uses to head should be should be available to retail as well so i'm very excited about the offering i think we'll expand it and i also think like it's got one use case as an active trader offering where people want to trade it they're going to trade it in and out there's some hedging but it's also a new source of information and and one thing that i believe is you know over time the news has turned into entertainment which leaves a gap as to where you're getting news from and i think markets can come in and and fill that gap across a wide spectrum of different events like election is a great example if you're watching the news they don't really want to tell you who's winning the election as quickly as possible because their

Starting point is 00:42:35 incentive is to keep you engaged and watching and so they're gonna they're gonna kind of extend it but if you were looking at the prediction markets it became clear pretty early on um and so i think there's uh i think i think these products are the evolution of of news and if you just want immediate access to information taking all of the inputs and all the information that's out there and just giving you an answer to a yes or no question or you know a multiple choice question i think prediction markets are are great at that yeah it makes complete sense and you know it's it's kind of this idea of like markets eventually find out the facts and uh there's a lot of ways to kind of twist information whatever but at the end of the day people are putting skin in the game

Starting point is 00:43:16 uh definitely is uh a unique uh data point and a lot of people say like is it a lot of people uh sort of like gravitate towards are they right did they predict correctly but i think that's almost beside the point because there's value in just distilling all the information and and putting it together as a real-time view even if the prediction ends up being ultimately wrong at that time it's the most accurate prediction of it should be the most accurate prediction of of the future event and how it shakes out yeah well there's like the binary outcome but there's also uh kind of the real-time directional change in odds that also can feed you stuff right you know i laughed that um people going into the most recent fed cut you know there's a lot of people

Starting point is 00:44:04 thought the fed was going to cut and they thought that stocks would go up afterwards the fed did cut but stocks go down and so just because you get one data point correct doesn't mean you get kind of the full story correct and so having as many of these data points is uh is pretty important um yeah same thing with earnings company can beat revenue and eps and the stock goes down so um yeah sometimes you just want uh to trade the specific event that you want to trade and not some proxy for it. Correct. One of the things I really respect, I think, about you and Robinhood is that you guys have gone through tons of controversies over the years. Some of them have been external market-based things. Some of them have been things that you guys have had more

Starting point is 00:44:42 kind of control over. But it seems like every time that we do this, you personally, but also the company is much better. You guys have improved. You're kind of better suited for the public market. You've got a better business. Things are growing. You're serving more users, etc. As you look over the lifespan of Robinhood, what do you think are some of the biggest lessons you've taken away having gone through so many of those different controversies? Have you changed the way you run the business internally? Yeah, I think that we've gone through lots of stages. I think that, for example, in the early days, we didn't have executives. Beju and I were running the company and we were just going around doing everything at some point we figured we need to we

Starting point is 00:45:28 need to have some help here some people that actually know what they're doing should be should be helping us run the company so so we did that um good decision and then i yeah yeah and actually like our our cfo who's uh who's been amazing uh joined us in 2018 one of the first executives we hired we uh and of course chief legal officer dan gallagher's former sec commissioner joined us in 2020 uh so we hired some great executives but then we got a little bit too executive happy you know c-suite in every position um then the company got a little bit unwieldy difficult to manage when the market shifted in 2022 and we had to kind of refocus the company on active traders and changed a lot of what we were doing um we realized that that wasn't helping

Starting point is 00:46:19 us anymore so we ended up kind of like slimming down and going to a very very small executive team and more recently you know maybe we're thinking it's a little bit too small so we we brought on board a few more we just brought on board uh our cto uh jeff pinner who's been fantastic as well and so i think it's it's just a learning process i think that the the conditions that drive your success or failure at any given stage also create conditions for you to overreact and i think i think that we've embraced setbacks we've learned from them as long as a setback is not catastrophic i think that it's a opportunity to improve and the whole organization is kind of like an organism and you know we we try to make it the best possible organism it could be

Starting point is 00:47:09 incentivize the right things and i think i think most of all what i care about is people working extremely hard challenging themselves and their colleagues and just relentlessly shipping better features and new things to customers i think that product velocity is really what distinguishes robin hood in what's a competitive market and the faster you can move the faster you can respond to what customers need, the faster you iterate. A lot of things go well if you can pull that off. Well, a company is like an organism. It continues to evolve and grow and change. And I think you guys are really just managing that. Speaking of evolution, if you look out 10, 20 years into the future, what do you expect Robinhood to look like then? The mission seems very clear, but do you

Starting point is 00:48:00 have any sort of predictions about where the world is going and kind of how you guys can help us get there i think that robin hood as a company will expand across two independent vectors one being predominantly us to global which should be available across every country and anywhere there's an app store internet connection you should be able to access robin hood the other access is from retail only to business and institutional and if you think about it some things we've talked about tokenization non-custodial wallet technology 24-hour markets those are attractive not just to retail but to institutions and businesses as well and that's a big market i think right now robin hood you look last 12 months it's between 2 and 3 billion

Starting point is 00:48:47 in revenue there's the the overall market if you look at kind of the three arcs of active traders number one in wallet share for the next generation and being like a truly global financial ecosystem is north of 600 billion in annual revenue so we're still a very very small fish but um no matter where whether you're a person or a business you should custody all of your assets at robin hood uh because you want to because it's the best experience in deal and all of your financial transactions should go through robin hood when when we're successful that would It would be a pretty big business if you can pull that off. So I'm cheering for you.

Starting point is 00:49:26 If people want to find more about Robinhood Gold or Robinhood Legend, where should we send them? The website is always good, robinhood.com. I also, I mean, X is always good. You can find me on there directly engaging with our customers and some other people, too. So that's always fun. Yeah, we've seen a lot of executives use X very intelligently lately. So if people are not following you, I highly suggest they do. And I appreciate you taking the time to do this.

Starting point is 00:49:56 We'll do it again in the future. Thanks, Pomper.

The Pomp Podcast - #1457 Vlad Tenev | Robinhood Goes ALL-IN on Bitcoin & Crypto

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