The Wartime CEO: Vlad Tenev of Robinhood

0:00At the GameStop stuff, for instance, the things that I had to do was figure out how we communicate to the public what was going on with this very complex situation. And then also raise billions of dollars overnight.

0:34Brian Halligan:you're woken up at 5 a.m by a telephone call saying you need to raise three billion dollars by the end of the day or you're toast it's the ceo's worst nightmare vlad the ceo of robin hood lived through this story came out the other side stronger than ever vlad's become legendary for this unflappable leadership through some of the most intense crises in startup history. Robinhood's now a financial services juggernaut, but Vlad's journey was a roller coaster from the start. With my GameStop trading frenzy that made headlines worldwide and landed him testifying before Congress to a full-day outage during the COVID pandemic, to navigating the 2022 market crash that saw their stock price plummet by more than 90%, Vlad's been in a 4D CEO roller coaster.

1:27Brian Halligan:While most CEOs panic under pressure, Vlad gets clarity. While others make reactive decisions, he builds methodically with a long-term roadmap. Today, you'll hear how to stay calm and make clear decisions when your company is in crisis mode. Why wartime mentality should be your default and not the exception. The art of rebuilding trust after public failures. How to maintain speed and urgency as you scale to thousands of employees. And how to balance long-term vision with short-term agility. You're a founder trying to build resilience into yourself or your company, or if you want to understand what separates good CEOs from legendary ones, keep listening.

2:10Brian Halligan:Vlad, good to see you again. Good to see you. My partner at Sequoia, Andrew, said of you, you're the steadiest hand he's ever met. What do you think he meant by that? Maybe compared to him, he can be a little bit jittery. Bit of a jittery guy, always nervous. When am I going to get the next deal? But I love Andrew. I think what he probably meant was, you know, he's seen Robin Hood go through some downs, not just ups. And maybe, you know, a lot of people would have just called it in and given up. But we persevered and we worked through it. And now I believe we're a much stronger company than we've ever been.

3:01And I think that's an important quality of a founder. it's really just about how do you handle the situation when things are maybe unexpectedly getting worse and you have to respond and make changes and also unexpectedly getting better because that can also be an opportunity you know things change maybe your business gets some tail winds and you also have to be in a position to kind of capitalize on that without being distracted I think maybe by steadiness, he refers to being able to capture things when things are going in our favor and also not getting too discouraged and being able to pivot strategically when things are not.

3:48Brian Halligan:I think so, too. When I look back at HubSpot, I used to describe HubSpot as a roller coaster. You guys are more like a 4D roller coaster where you're upside down the whole time. Like there's been a lot of. Those are my favorite ones. And you're in one. And like just to name a few, like every year for a while, like you had one. The beginning of COVID, you guys had that big outage for a whole day. 2021, of course, all the GameStop stuff. They make a movie about you. You're testifying in front of Congress. 2022, the economy shifted. You lost half your users, pivoted the whole darn company. 2023 the SVB stuff was pretty bad which was the worst and can you talk a little bit about like what it was like going through it and how kind of your body reacted and how you engaged with the company and the market when that was going on because most people freak out yeah a lot of people I think when they talk about our crises they probably would say GameStop because that was the most public.

4:55And I think each one tends to drown out the previous one. So before GameStop, there was a lot of chatter about the outage right at the beginning of the COVID pandemic that you mentioned. Those things, I think in hindsight, weren't that bad to navigate through because it was an acute moment. The worst of it is right at the beginning. And then once you kind of like make it through and you're in the clear it's cleanup you probably you've probably been through some of those yourself i'd say 2022 the market turning was more extreme for me because that was like a little bit of a slow burn first there was signaling by the fed that interest rates were gonna go up because inflation was looking bad so it started out as this general signaling but the market got it, right?

5:48And I would say as one of like the recently IPO growth companies of that era, end of 2021, we kind of got hit first because when people start taking these macro things into effect and, you know, adjusting their portfolios, they take risky assets off first. And so you have crypto for those that are interested in that. And recently IPO growth stocks are in that bucket. And, you know, we were among the most recent IPOs. We just like snuck in kind of right at the end of that window in hindsight without realizing it. I think that if we'd waited a couple more months, we probably wouldn't have been able to go public until maybe 2024.

6:33And so, yeah, it was just a slow burn. Stock price consistently and steadily decreasing from a high of, I think, in the 80s right after our IPO to below$8. I think maybe even below$6 would have been our all-time low. We were trading below cash. And that was tough because you have employees wondering what's going on. The street just like turned very bearish. But behind that was a business whose fundamentals did work very, very well in a zero interest rate environment where there was a lot of trading. But in a high interest rate environment, we weren't really built to succeed in that environment.

7:15And I took a little bit of solace in the fact that I felt like we had a lot of levers. We ultimately used that as an opportunity to diversify the business. And a lot of other companies didn't have those levers. So if you were a mortgage company, you basically had to batten down the hatches and figure out how to make it through till rates went back down again, which still hasn't really happened. So I think those companies had a tough situation, but it was painful throughout. And that was a little bit more of like, OK, each day is a little bit worse than the last. and there's a lot of challenges and that goes on for 400 to 500 days at least before you start seeing some of the fruits of the labor that ended up turning things around and like inside of your

8:06Brian Halligan:body you get a call probably at two in the morning about the game stop thing going on in your head do you get clarity do you get confusion you bring your team together like you remember when you got the call yes um you go through a few things right uh are the best people awake are they in need of anything uh and of course if the answer to the first one is no you have to make sure you get them in the room get them right away and you have to know who the best people are which i think requires being intimately familiar with the details and if they need anything we drop everything and make sure they they have those things and then are there things that i need to do that perhaps only i can do in that situation at the game stop stuff the things that i had to do was figure out how we communicate to the public what was going on with this very complex situation and then also raise billions of dollars overnight yeah so then and then you know that was actually kind of nice because those were pretty clear goals?

9:17My guess is when those things are happening

9:21Brian Halligan:and you gather the team at five in the morning on a Zoom, I would imagine people are pretty panicked and that my guess is what Andrew meant is in the face of big adversity and some weird shit going down that you didn't expect, you get clarity and you're very clear with your team and you calm them down. I think that's the opposite reaction of 99 % of humanity. And I think that's part of your special sauce. Yeah, I think that's right. And I wouldn't oversell it too much. I mean, I don't know if I always make the right decisions in that moment, but probably the variance between a decision under fire and one where we're just like in a normal meeting is a little bit lower.

10:07Brian Halligan:I think of HubSpot, we had times of relative peace and some times of war. I kind of enjoyed the wartime. Do you think about it like that? Or is it always wartime? Or how do you think about that? I think it's always wartime. Yeah. Ideally, actually, the wartime is internally created. Because then it's under your control. You're not subject to some other people's wars that are being imposed on you. I think if you get into, oh, this is peacetime, you know, things are going smoothly. In hindsight, I've had moments where, you know, I'm sitting around the table with my co-founder or my executive team.

10:46It's like, oh, there's really not too many problems going on right now. And at the time, it felt good. But in hindsight, I was like, we probably weren't executing aggressively enough.

10:56Brian Halligan:I see. And in all of these cases, you sort of tested your customers' trust in you. and you kind of lost a ton of trust in all those cases, but built it back. Can you just talk about how you thought about building that back? How do you build back trust? What metrics are you looking at? Like you're obsessed with NPS or it's easy to lose trust. It's very hard to build it back. And you've done it multiple times here. What advice do you have for others on this show? Yeah, we do look at NPS. And NPS definitely took a dive during the COVID times, during GameStop in particular, you see it in these public incidents, whether it's the outages or sort of like the GameStop incident.

11:44And it's true that it can go from very high to low practically overnight, but the reverse is rare, right? I mean, maybe if you have a really big announcement that people get excited about, you'll gain five points of NPS. But the gains are always slower and more gradual than the losses. I didn't really believe it when I heard it that, you know, trust is easily lost and hard gained, but I think it's true in the data. So we kind of like look for magic bullets. Like, can we say these magic words or issue a blog post, you know, and make everything okay or come up with some gesture. But really what it is, is just improving your products over time.

12:31And if you keep doing good things, invariably there will be some mistakes along the way for sure, but minimize those mistakes. Make sure you don't do the same mistake over and over again. I think that's a big killer. Then you see that gradual increase. And over many, many years that compounds and you could be back at all-time highs. I think you've seen it happening with some of the great companies. You know, Nike had had their challenges back in the early 90s. Apple certainly had their challenges. Domino's Pizza or was it Papa John's? One of the two, I think, was a famous a famous trust case study.

13:15The pepperoni wasn't that good, but they really just fixed it. So it can happen.

13:20Brian Halligan:So in all those cases, trust took a hit. NPS went from way down. in your head, you're like, in 12 months, I can get it back up to where it is. In six months, how do you think about that? We had an outage at HubSpot in 2019 on the last day of the quarter. And we lost a lot of customers, our NPS tubed. And it was about a year and a half before the NPS caught back up to where it was. Yeah, I think it can take years. Of course, we have goals. We try to minimize it. But there's really no better way that I found than just improving the other things other than, you know, maybe the acute brand episode that you had.

14:05I don't think you can kind of counteract that. But if you just keep making your business better, then the effects of, you know, any individual crisis over time will fade. But then the effects of improving your product are persistent, right? Those just will continue.

14:24Brian Halligan:Okay, I spent a lot of time, Vlad, coaching about 20 different scale-up CEOs. A lot of the companies that are scaling get frustrated that the intensity in the company goes down, the tempo goes down. My sense of you guys is the tempo has stayed high and you're very quick. Like, CalShare got approved as a trading platform. Within a couple of weeks, you're alive with that system. What advice do you have for founders who are scaling that don't want to turn into a big, slow company? I think the main thing is you actually have to care about it. You know, a lot of these people are sitting around the table saying, gosh, you know, we're moving a lot slower now.

15:08They complain about it, but do they really care enough to fix it? I think that you have to talk about it, not just to the public or to your friends, but also to your team. You have to measure it. So if you say, oh, we want to move faster, we want to have high velocity, we want to ship more, how do you do that? And how do you know that you've got that? So I think measurement is important. You have to communicate that it's important. You have to measure it. You have to have strategies for how to improve it, right? And that involves looking at areas where maybe it's not doing so well and comparing it with the areas where you are moving a little bit faster and seeing, you know, what are those folks doing over there that you should incorporate?

15:58Brian Halligan:There was always a struggle in my mind at HubSpot, like we'd roll something out and some things take a while. And sort of a tension in my mind between kind of urgency and patience on stuff. Do you feel that tension in your head? Like you've got to be patient. This is going to take time. It's a big initiative. It's going to take a while. Versus like always pressing and creating urgency on everything. I think that there's sort of a difference between the tactical and the strategic urgency. I think that if you have a lot of uncertainty in what the right thing to do is, it makes sense to gather more information.

16:37When the right thing to do is clear and everyone is aligned, at that point, you have to move through with maximal urgency. And I think a lot of times what can be a trap is sort of like urgency quality tradeoff, right? If we move fast, we'll end up having to cut corners. My experience is you have to demand both. It's like you have to move fast and I don't want any corners cut. But if you look at a really good engineer, the best engineers move the fastest and also have high quality code with no bugs. It's not really a tradeoff. It's sort of like you can find it within one person. And then if you get a team of those people together and you sort of like create the right incentive structures for you to have incredibly high density of great people like that, then I think you don't have that trade-off you know for some people moving faster does lead to more mistakes but but not for everyone I think you have to find you have to for the best people

17:43Brian Halligan:it's not true I used to call that the tyranny of or everyone bring me or and I'm like how about an and just once let's do an and yeah and they also say if you need something done give it to your busiest person, right? So there's some counterintuitive advice there where, you know, people just, great people just find a way. I kind of agree. Okay, one of the hacks that some of these founders are doing is they're requiring people to be in the office seven days a week. Yeah. What's your take on that? What I noticed, like my generation, we sort of followed the Steve Jobs playbook. It feels like this generation follows the Elon playbook and both playbooks are great.

18:25Brian Halligan:Elon's playbook is a little bit of like, you're working 180 hours a week, you're in the office, you're sleeping in the office. And a hack is a minimum of the 996, 996 days a week, but a lot of them are like seven days a week. And it doesn't scale, but I'm seeing them push it beyond 100, 200 employees. It's interesting. Any take on that? That's an extreme approach. It works for some people. The trade-off is you're not going to get people that are sticking around the company very long, right? Because it's hard to work seven days a week for 10 years if, you know, you want to have a girlfriend or children that you see.

19:04So there's an extreme for sure. The right balance is like some number greater than 40, but perhaps less than 180. And I'm not exactly sure what the number is. I mean, obviously, we like to push it and work hard here and hold ourselves to a high standard.

19:29Brian Halligan:Okay, related to this, I met with a founder yesterday of a Red Hot AI company. And he showed me his phone and he just showed me all the Slack messages, all the email messages, all the texts, all the WhatsApp. And he's like, since we closed our around and we're getting a little bit famous here, I'm completely overcome and inundated with just inbound stuff. And I spend all my day trying to get through that. And he said, Brian, how did you manage the chaos? Yeah. I thought that was a good question. I'm curious how you'd answer that. There's really a finite amount of time and a finite number of those messages that probably deserve and benefit from the founder's attention and decision-making ability.

20:17It's tricky because you want to see them. Sometimes automatic delegation doesn't work because someone's not going to know how to handle it, but you don't want to spend all of your time processing them. So I think the best way is to just have people around you. And, you know, if you don't add them one at a time deliberately, that you can offload the majority of that work, too.

20:45Brian Halligan:You seem to be very good at aligning your vectors over there. How do you decide which bets to play? How do you keep your vectors aligned? How often do you rejigger the priorities? What's your planning look like? Like, how's all that work as you're scaling it up? I think it depends a lot on what's going on. They're like market conditions, what we see doing really well in the business, what we see that we could devote more resources to. I think a lot of times you're kind of like beholden to a structure, right? Annual planning or quarterly planning, you know, MBRs, QBRs, monthly business review, quarterly business review.

21:28there's these structures that make it so that you either have to plan when you don't really need to plan or you're just waiting too long to respond to things because maybe you know something happened but you just had your quarterly business review where you fix the plan and it's locked in and it's this heavyweight thing my push has been to just minimize the time spent planning minimize it to like a couple of days that's that's the goal rather than having it be this multi-week waterfall thing can we do our all of our planning and you know less than a week and then just keep pushing on that until you reach a point where it's obviously too little and then and then we can readjust how's this cycle work with your fiscal year like how do you actually do it usually what we do is we have kind of our long-term vision that goes out 10 years.

22:20How often do you change that? I think from time to time when something major changes, like we have a very clear epiphany or some data from some projects that are at some level of maturation, there can be a pretty big change. So I had a pretty big one a couple of years ago, and it then led to an overhaul of our vision and how we communicate it. And I think the core of it It was the same throughout the entire life of the company. We know where we wanted to get to, which is just everyone using Robinhood for all of their financial needs. The path became more clear. We got better at articulating it.

22:59And it culminated in an investor event that we held in New York in December of last year, where we actually invited our public company analysts, retail analysts as well, this community of folks on YouTube that analyzes companies. We had a nice event where we sort of like brought out our general managers. We talked a lot about the arcs of our business. We answered some questions. I think that was very, very good. Roughly every year, we try to look at the document, revisit it. We get our best people around the company. I try to get together people at all levels who are just, you know, the highest performers.

23:37That's about 150. and we like to and you know there's individual contributors there's folks that are more junior and we like to bring them together from time to time to usually once or twice a year how painful

23:54Brian Halligan:is it coming up with that list and how pissed are people when they're like a director or vp don't get invited to that and the individual contributor that works for them does you just have to make it as meritocratic as possible and generally i find people know who the best people are if you ask someone, they're like, oh, yeah, of course, that that person should be in that gathering. I feel better as like a shareholder and employee knowing that they're in the room. I often found that the individual contributors were the best in those settings. Yeah. What you don't want is just like a meeting of the top executives at the top of the org chart.

24:28Right.

24:29Brian Halligan:I agree with that. Okay. So once a year you do it, so your fiscal year starts, is it the month before? Is it three months before? and how rigid is it when you set it for the next year? I think there's a couple of things, right? So we have the financial plan. And the financial plan, I think we try to hold ourselves to. We have the vision, which is a slightly higher level document where we kind of talk through the big trends that we have in our business and macro, how we're going to respond to them. And then we do a diff, essentially. We say, okay, this is what we thought the world was going to be in our business was going to be last year.

25:07This is where we were wrong. And that happens about once a year. I'd say that's the first part. Then it feeds into sort of like a resource allocation financial plan that we try to hold ourselves to because it ends up being what analysts actually start modeling and, you know, you're public and you have to have some level of revenue and cost predictability. For a while, that's been headcount, resource allocation, what bets are we funding? Now we've been moving towards thinking of AI as another component of that. So how much compute are we investing in? Can we actually track each department or business and compare them to businesses that we consider best in class?

25:58They're using AI as another point of leverage, that's starting to like get into the planning a little bit more. We try to limit the blast radius. So, I mean, with the financial plan and the projections, the finance team's very tightly involved and everyone's aware of it. But it's not like thousands of people are collaborating to create this artifact. I think the folks that own it, it's a relatively limited group of people.