The Wolf Of All Streets - Robinhood’s $100 Trillion Master Plan | Vlad Tenev

Starting point is 00:00:00 I think if I talk about it enough, eventually it'll happen. It's called manifesting. One of the innovations is that the advisory fee as a percentage actually goes down as your assets go up. But the other reality is millennials and Gen Z are going to inherit over a hundred trillion in the great wealth transfer over the next few decades. This is going to be the largest transfer of assets in human history. I was already convinced that Robinhood was going to be

Starting point is 00:00:29 the financial powerhouse of the future. And then I sat down with their CEO in person, Vlad Tenev at Bitcoin Las Vegas. And now I'm really convinced that Robinhood will be bigger than Charles Schwab, Morgan Stanley, and Goldman Sachs combined. Wait until you hear about all the things that they're building and have planned for the future and how deeply crypto and blockchain rails will be integrated. You cannot miss

Starting point is 00:00:53 this conversation if you're interested in just how important the future of crypto will be. So, Robin Hood seems to be taking over the world. Every time I turn on the news or open my feed, you have some other huge announcement that seems to get lost among all the other huge announcements. So you've obviously become more than just an exchange. It seems you're now offering the full breadth of financial services. I've continued to say it looks like you're going to be the Schwab of the future. So maybe talk about the strategic decisions that Robinhood has been making and the plans for expansion, because it really feels like you're offering everything.

Starting point is 00:01:45 Yeah, the path from a pretty early point was to go beyond trading and to really be the place where our customers can buy, sell, or hold any financial asset or conduct any financial transaction through Robinhood. If I think about how we got there, I think we got there in a few steps. I think our first market was active trading.

Starting point is 00:02:10 And the sort of like near-term priority is to win the active trader market. So I like to think of that as almost our Tesla roadster. So active trader market is pretty niche. Not everyone trades actively, but there's a relatively small and growing group of premium customers that trade a lot. And they push us to be at the frontier of technology and innovation in financial services.

Starting point is 00:02:41 So I think that's been going well. I mean, we've been just roaring on the active trader front. We have a new desktop platform called Legend. We've been adding more crypto capabilities. We're doing prediction markets. We added futures. And you can think of this for the business as fuel to help us pursue our other arcs, which are longer term.

Starting point is 00:03:06 And the second one is how do we be the place where we get full wallet share of our customers? So from your deposit into your bank account to all of your spending with the card to your retirement and long-term investments, we wanna basically be the financial home for all of our customers. And then also we see an opportunity over the long run, and this is sort of our 10-year arc,

Starting point is 00:03:31 to go from U.S. primary to global and from retail only to business and institutional. So it's a lot, but I think the challenge is like, how do we do these things in the right order so that we don't get indigestion from trying to consume too much? And how can we do a really good job and pick the right opportunities at the right times? But that's truly the full suite of financial services. You're a bank now, right? We are offering banking products. Banking products.

Starting point is 00:04:05 Excuse me. Not formally a bank, but we partner with a lot of great banks. Partnering with banks, custodian. Yes. So it really is everything. How do you consider then each step, as you just talked about? So obviously, you've dominated the trading market. I think everybody knows that.

Starting point is 00:04:23 You mentioned all these other things that you're doing. But as you start to compete, or maybe even more appropriately, as your 25-year-olds and 30-year-olds become 40- and 50-year-olds, how do you make sure that you're offering the product that they want so they stick with you forever? Yeah, and I think that many, many different ways. Your friend Rob Baldwin being one of them, right?

Starting point is 00:04:46 I think that there's a big emphasis on multi-generational offerings. Right now, our customer base, predominantly Millennials and Gen Z. I think there's two things. One is we don't wanna just get stuck with what worked for Millennials and become sort of like a

Starting point is 00:05:09 Company whose customers eventually age out and the company becomes irrelevant I think you see that as the the downside scenario for the legacy brokers. They were kind of like Generationally stuck but the other reality is Millennials and Gen Z are gonna inherit over a hundred trillion in the great wealth transfer Over the next few decades This is gonna be the largest transfer of assets in human history inherit over 100 trillion in the great wealth transfer over the next few decades. This is going to be the largest transfer of assets in human history. You know, nobody's really thinking about how to capture that by building a great experience, not just for your customers, but their parents and their children. Can we actually make an experience that gets better the more family members you have using Robinhood?

Starting point is 00:05:47 And I don't think anyone's actually building products with that goal in mind. So I think we're relatively early, but when you see trade PMR get integrated and some of the new products that we're designing come to market, I think it'll crystallize how much better financial services can be with the entire family in mind. Yeah, that makes perfect sense. And we're here at the Bitcoin Conference. And your speech was largely about tokenization.

Starting point is 00:06:15 So clearly, that's a huge focus and something that you believe will be fundamental in the future for Robinhood. So how do you see tokenization playing out? And how do you see incorporating it into Robinhood? I think if I talk about it enough, eventually it'll happen. It's called manifesting. Yeah. It's pretty amazing how that works.

Starting point is 00:06:34 No, you've been hearing a lot about tokenization from me, also from some of our competitors. And I think that this year will be the first year where it will just turn into real products that customers can use. And I think there's two benefits, really. One is in much like stable coin is making it easier for people outside the US to get exposure to US dollars. Tokenized securities will make it easier for people outside the US to get access to US securities. Over the past few years, stablecoin transaction volumes have just skyrocketed overseas and a lot of it is driven by

Starting point is 00:07:21 people from developing countries whose currencies are losing value rapidly. So these types of folks used to hoard American Express travelers checks, right? They would just take their local currency, figure out whatever way they could to put it into dollars or dollar proxies. And so stablecoin has just kind of subsumed that. You know, hundreds of millions of people around the world have crypto wallets They can already access exchanges. So when stable coins actually made headway there, they were adopted very rapidly So I think it's gonna be huge for people outside the US I think it's gonna be great for companies to have access to this new increasingly global pool of capital

Starting point is 00:08:07 companies to have access to this new increasingly global pool of capital and great for entrepreneurs. If we can make it easier for people to raise primary capital through crypto, it could unlock a ton of innovation in this country. So I think it's an important thing to pursue. I think it'll also do a lot to silence the skeptics. A lot of people think crypto is just Bitcoin and memes, and those are powerful things, but I think it's also going to be incredibly powerful to unlock the technology and have it power more and more of traditional financial services. And I think crypto securities are actually this big opportunity. I mean, multiple trillions that's just in plain sight.

Starting point is 00:08:48 So what does that look like for the end user on Robinhood? We start tokenizing US stocks, tokenize Tesla, tokenize Amazon. Are they traded the same way that they would trade equities on the platform already? Is it a different platform? Does it completely replace trading the actual equities as they are now? Will everything be tokenized? Yeah, I mean, I don't want to get into too much detail

Starting point is 00:09:11 before we announce any products. But I think the best products hide the complexities of the underlying technology until the point where you need them So I think what tokenized products are gonna look like is it's gonna feel like trading stocks on Robin Hood or crypto Probably crypto is the more apt Comparison, but you'll have the ability to self-custody over time and one thing that's very painful right now With the traditional brokerage account is

Starting point is 00:09:46 if your broker has an issue, like if there's an outage or some kind of technology issue, you're stuck. And also if you want to move your assets to another broker, it's very painful. It takes multiple days. You usually have to talk to someone on the phone. And so you're kind of stuck again. And I run're kind of stuck again. And I run into lots of people. I mean, I had someone come up to me earlier, and they were like, I've tried moving my assets to Robinhood, and I just keep getting thwarted by paperwork and hassles. And, you know, I gave up because it's so painful.

Starting point is 00:10:23 But you know, moving Bitcoin from one wallet to the other, fairly easy, even if it's a little expensive and time consuming, it's nothing like ACAD transfers between brokerage accounts. And I think in the future, you could unlock the full potential of DeFi and self custody, and you could actually be not reliant on a broker at all. Your assets could be yours and you could plug them into DeFi protocols like you do with

Starting point is 00:10:51 crypto tokens and just go from one brokerage app to the other seamlessly without actually moving assets at all. And I think that's pretty powerful. Will it be 24 7, 365? Yeah. And I think that's pretty powerful. Will it be 24-7, 365? Yeah, I think that's I mean, blockchains all run 24-7, 365. So that's huge. Right now, Robinhood equities in the US is 24-5. And it's almost there.

Starting point is 00:11:22 But yeah, weekends and holidays are tough. It requires the DTCC to be open on holidays and weekends. So that's kind of the final frontier. But we saw how hard it is even to get to 24.5 in traditional equities. Yeah, the crypto technology takes care of a lot of the heavy lifting for you. But is this a situation where the incumbents like the DTCC? Incorporate the technology or do they get replaced or do they fight like hell to make sure that there's not 24 7 365 markets? Yeah, it's unclear how it plays out with the incumbents I mean, I know that they've been exploring and doing various pilots with blockchain technology for many many years

Starting point is 00:12:05 But yeah, it's unclear. I think that they'll have some role, obviously. But yeah, all of this is hypothetical because we don't have real product in customers' hands. But I think that'll come. So one of your recent pieces of news was the acquisition of wonderfye in Canada, which crypto people, we all looked at that and said Robinhood is leading with crypto into Canada,

Starting point is 00:12:31 right? The crypto first tip of the spear. Is that reflective of how you'll approach entering new markets? Generally, was that just a good deal to do in that case? How do you enter new regulatory arenas, new countries and decide what products you're going to lead with, what you can even allow those customers to do? We've done both. So in the UK, we're live with brokerage, but not crypto yet, even though we obviously came into an agreement to acquire Bitstamp. So once that closes, Bitstamp has crypto in the UK. So we'll offer that through

Starting point is 00:13:15 the family of companies. In the EU, we have crypto. So we want crypto first there. Singapore, we've announced that Singapore is going to be our APAC headquarters. So we're going to serve a large part of Asia from there. And then we'll continue to expand. So I think it just depends on what's going on in each market. And right now, those teams can run independently. So if the crypto team decides that going into a jurisdiction makes sense, they have the autonomy to do that.

Starting point is 00:13:52 Brokerage is very much the same way. Then we'll have to figure out how to reconcile at some point. We probably wouldn't be offering tokenized stocks and traditional stocks simultaneously in a region but Yeah, we're still we're still not doing that yet. So yeah our acquisitions generally the Least friction the easiest way to go into a new market like that where they've already Gotten all the licenses and where everything's already in place so you don't have to basically reinvent the wheel when you go there Well, actually thus far we've only gone organically international.

Starting point is 00:14:27 TBD, I think we're employing both, but yeah, it's still very early for us as an acquirer. Bitstamp hasn't closed yet. WunderFi obviously was recently announced. So we're very optimistic. We like the teams and they have established businesses. But I'd say generally, we are a build first company. Like we prefer to have one unified platform that we expand and we kind of acquire things that are spokes rather than the hub. But if we see a great team and a great product that could work well with what we have then you know

Starting point is 00:15:09 We've we've been active with acquisitions as well case-by-case basis exactly every every right every Territory is completely different. Yeah I think the things that we really look at for acquisition are is it a great team that matches our DNA Can it accelerate what we're doing by you you know, 18, 24 months plus? You know, if we find the combination of those two things, we get very, very excited. Yeah. And so as you enter all of these, let me just frame it this way.

Starting point is 00:15:39 Right now, what percentage of your business would you say is crypto? I mean, I'm assuming you know, and have you seen that generally rise? And which customers are the most interested in your crypto services? Yeah. I mean, a significant portion of our business is crypto, definitely double digit percent. And in quarters like Q4 and to some extent, Q1. It's a larger percentage if the crypto market is really moving active traders tend to come in and Do a lot of crypto trading and that's that's reflected in the crypto transaction revenues

Starting point is 00:16:18 Going up by you know, yeah 100% year-over-year But the business is diversifying and crypto revenue itself would also diversify over time. I think we see it going from more transaction based to interest on crypto as the service expands. So I think within crypto, it'll start looking like the broader Robin Hood business, which used to be almost entirely transaction but over time has gotten to like 50-50 transaction net interest and subscription. So transitioning from purely trading to that full breadth of financial services but on crypto on Robin Hood.

Starting point is 00:17:02 Yeah. Yeah. And we still have a large traditional business as well. So I think that over time, I think crypto technology will just subsume more and more, but I think that might take some time. So I think there'll be two multiple systems and multiple standards for at least the next five to 10 years.

Starting point is 00:17:26 Are we at a point where the crypto that you hold, crypto adjacent stocks, all of your normal stocks are in a single portfolio that you can take loans against and basically treat as one holistic portfolio? Can that be done on Robinhood yet? To some extent? Yes, I think crypto spot crypto and equities and and also futures where you can get exposure to crypto as well through Crypto futures. Yeah, I think the the interoperability Is still not completely seamless and part part of that is regulatory.

Starting point is 00:18:07 There's not yet a clean way to take leverage against your spot crypto and use it on brokerage. But I think over time, that'll become easier. And you could do that with the Bitcoin ETFs. We have options on crypto ETFs as well. So we just want to give customers all the choices they want to manage their crypto. At this point what are the most exciting products to you that you're launching or that you have? What's coming next? Well we just had our gold event in San Francisco and there we announced

Starting point is 00:18:41 some pretty awesome things. So Robin Hood strategies, which is our digital advice offering basically, this is as close to a Invest button as it gets you just put money in and our system will automatically manage your money At very low cost and in fact one of the innovations is that the advisory fee as a percentage actually goes down as your assets go up. So above $100,000, you don't pay any incremental advisor fee for every additional dollar managed. It caps out at $250 a month. So I think it's a service that's going to get better and more compelling the more money you have with it

Starting point is 00:19:25 Which is very exciting for us most financial services get worse the more money you have gets more expensive You pay more for the same service, but we wanted to kind of invert that Robinhood cortex, which is our AI our first suite of AI products Which helps customers with very, very specific trading needs that they have. That's exciting. And then, of course, Robinhood Banking, which is a premium, almost private banking service, but available to all of our gold members.

Starting point is 00:19:58 So as those roll out, I think those are going to surprise a lot of people. And we also have our crypto event in France in June Where we're gonna unveil some some new products. I know we're about to wrap and we're running out of time What's the timeline do you think for the tokenization process that you discussed? I think that Tokenization you'll I think it's time that you're gonna start seeing some real products and I don't mean just Robin Hood But we've been doing a lot of talking about tokenization as an industry.

Starting point is 00:20:30 And now it's time to get some products into customers' hands. Well, I can't wait to see what you guys do next, man. Thank you so much. Thanks. This episode is brought to you by Binance, the world's number one crypto exchange trusted by over 270 million users worldwide. Start your crypto journey with Binance at Binance.com. Binance is not available in prohibited countries, including the US.

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The Wolf Of All Streets - Robinhood’s $100 Trillion Master Plan | Vlad Tenev

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