The Easiest Way to Start Investing Today— No Experience Needed (You Just Need $1!) with Robinhood CEO

29:15So basically, they were like, if you get above, I think it was like$1 ,300 on the SAT, we will let you invest with the dollar amount of your score. It was something like that. And so I was very motivated by this. And so when I got my 1370 and my dad and I kind of, he funded an E-Trade account for me and I started investing. No way. Do you remember your first investment? Yep. Yeah. I bought 3Com, the company that made the Palm Pilot. Yeah. My feeling was that this device was so interesting and they had started giving them out to my parents, who by that point were working at the World Bank. and I was like, all right, well, if the World Bank is using them, this must be a company that is growing and they'll probably be around for a while.

30:12And plus the device was just super cool. Yeah. Pretty soon after my dad brought it home, he didn't know how to use it. So I just took it and started playing with it. And actually through that, I learned a lot about investing because what happened was there was a spinoff. So first it started as 3Com, but then this Palm Pilot business was growing and they spun it off. So then I had two stocks and then I started getting the prospectuses in the mail and voting documents. And I learned all about like shareholder proxy voting and all of this stuff that a normal 12-year-old probably wouldn't have occasion to learn about.

30:53But because I was invested, I actually like felt compelled to learn more. So yeah, I think that really set me off on a lifetime of learning about investing in finance. Yeah. How much, how did you make or lose? At first I was, I was up quite a bit. Then in 2000, I think my, my portfolio dropped to maybe like 20, 30 % of what I started with. And then I think it probably took another 10 years beyond that for that portfolio to be in the green again. Oh, wow. But I mean, I would say it's the great thing about getting started young in general, not just for me. You have plenty of time to actually make up for the mistakes.

31:37And compounding over a long period of time corrects a lot of mistakes. So I think generally speaking, the earlier you can get started, the investing, the better. Yeah. It's fascinating hearing about your own investing journey. And starting at 12 is pretty young. I mean, that's pretty impressive that you were able to compute and factor that in. Have you ever taken an IQ test? Do you know your IQ? I have not, no. Okay, yeah, I was intrigued. Yeah. Just based on everything you've been saying, I'm just like, it's rare that I've met someone who's felt that they've always excelled since an early age.

32:14That's not as common an experience anymore. Yeah. I don't know if you meet people like that. I mean, I do think that Stanford in particular is kind of an interesting amalgamation of people. So you have a lot of people from diverse, modest backgrounds that come to Stanford. And usually those people have excelled academically, which is pretty amazing. And then you also have people that come from wealthy families from all over the world. Yeah, I think some people consider that to be not ideal. Maybe it should all be merit-based and everything. But I think it actually has worked fairly well because what happens is the folks from modest means that have really high horsepower get to make connections.

33:12And you make connections with all these people and it kind of unlocks business opportunities for you. So, you know, a lot of the folks that I met in my undergrad and the different types of people, I think at the time I kind of didn't recognize this, but they ended up helping me in my business career, either because they became journalists that like helped tell the story of Robinhood or they joined venture capital firms and they became indirectly or directly investors in Robinhood or they advised us with certain things. I think everyone is so diffuse in general because people grow up in different places.

33:53But college is one of those moments that people get brought together. And you do, in a place like Stanford in particular, or get to encounter a lot of really special people. And when I came to Stanford, I actually had no conception of going into business. I kind of stumbled into that later. By the time I got to college, I was interested in theoretical physics. That was my passion because I was consumed by this question of why are the laws of the universe the way they are? I had read about relativity when I was in high school. And it was just like, the first time I read like the, you know, Einstein's book of special relativity, it just blew my mind.

34:41And I had to read it like six or seven times to figure out what was going on, you know. And then, you know, you try to understand more and deeper. And the question that really motivated me was like, why do the laws of gravity look like this, but like all the subatomic particles, like all the laws around particle physics look different? And is there one theory that is basic, that unifies both of them? This sort of like unification of quantum gravity was this topic that really interested me. So I came to Stanford to study that, and that's kind of what pushed me into eventually doing math and going to UCLA to study math with a professor named Terry Tao.

35:30But if you think about that group of people, the folks at Stanford who come to study theoretical physics, and you don't do that because there's very little money in it, particularly back then, right? This was like pre-data science and applied machine learning. Um, so yeah, actually by, by the time I got to that point, I was looking around and I'm like, wow, um, I'm the dumbest person here. These are just, I'm surrounded by like some of the smartest people I've ever met. Wow. And, and how did you get distracted from that pursuit? Uh, I was here at UCLA studying math and two things happened. The number one thing was when I decided to go to graduate school and I kind of I think my bubble of the academic world kind of burst a little bit because I had this romantic notion that you would kind of spend all of your time thinking about difficult problems and just like being creative.

36:36It's almost like being an artist. Like maybe there's not much money in it, but you spend a lot of your time just like practicing your craft, right? But then I was given this book. It was called like The Mathematician Survival Guide. And it was like chapters about how to deal with the administration and the bureaucracy of the graduate department, how to advocate for yourself with the department chair, how to make sure that you get a good research fellowship so you don't have to spend all of your time teaching undergraduate classes. And I think at that point I was like, oh man, like this is a career and it's not like the career that I wanted.

37:19Another thing happened at the same time. So my first month in grad school was September of 2008 and Lehman Brothers went under that month. It was a start of the global financial crisis. You and I are basically at the same age, I think, born in 87. This was kind of like, maybe for you, for me, certainly, like the folks that graduated my year of college, some of them went to finance and some of them even went to work at Lehman Brothers. And it was sort of like one month after they joined, you know, there was like photographs of them carrying their stuff out of the offices in boxes. Right. So, yeah, that was a tough time for for a lot of people.

38:09A lot of my friends' parents lost their jobs that year. So it was the global financial crisis. And yes, somewhat oddly, my good friend from college, whose name was Beju Bod, who I ended up starting Robinhood with. He had gotten a job in finance kind of on a whim. And he managed to convince me that this time was the best time to start a finance company. And of course, I wasn't like super committed to my PhD path because of all the other stuff I mentioned. So I was like, you know what? This sounds like an interesting problem. Let's see if we can do something here. So we rented a little house in South San Francisco in the South Mission where we were paying like$300 a month in rent.

38:59We're all living together. I had to take care of this lady's cats, which was why the rent was so cheap. That was kind of my first experience with entrepreneurship. What attracted me to it was kind of the same thing that attracted me about math and physics. It was the act of creating something with, you didn't really have to listen to anyone telling you what to do. you could use your entire mental faculties and your creativity to determine your own success and your outcomes. Just a couple of people who are really passionate and committed could build something and actually use it as a vehicle to sustain themselves economically.

39:46So that idea, when I discovered it, and I never really thought of myself as an entrepreneur before. I mean, it wasn't really something that was common in the East Coast, to be honest, or in Bulgaria. I mean, you had some, but not technology entrepreneurship, really. And then when I kind of started doing it, I started like programming and writing code, then I just like found the whole thing really intoxicating. So even though we didn't have success. Basically, our first idea failed within a year. I just kind of knew that I wanted to do it. So that gave me the confidence to drop out of UCLA, start something a little bit different.

40:32And it was the third idea that we had that led to Robinhood. And that was kind of the one that really worked. I think that the actual experience and the mindset of an entrepreneur just resonated with me very, very deeply. And I was having so much fun, unlike anything else that I had done that I just knew I had to keep doing it. Yeah. I mean, democratizing investing is such a, at least at the time as well, was such an ambitious goal to think about trying to get the average person to be able to have access to something that wasn't accessible to them just a few years before, especially in a place that seemed volatile.

41:13You needed a lot of capital to get started. I want to do a bit of investing basics for people who are listening, who may or may not be using your platform already and want to understand a bit more about it. If someone's sitting there going, and I remember being this person, so I remember 2013, I'd just left the monastery that I lived in for three years and I'd gone back into the world of work and I had a mentor who told me exactly which crypto to invest in, in 2013. Which one did he say? Well, at the time he was like... Dogecoin? No, no, I definitely wasn't. At the time it was like Ethereum, Lithium, like...

41:51Oh yeah, Litecoin. Yeah, yeah. And so he was mentioning all these places. And I remember in 2013 with very little capital, very little investment knowledge. You see now, if someone said my mentor and... What did you call him? Your mentor? Yeah, mentor, yeah. If now someone's like, oh, my guru told me which cryptocurrency to invest in, I would be like, hey, you should be a little skeptical of this mentor. But in 2013, that was actually like - I should have listened. That was before the space got a little corrupted, before the pretenders came in. Yeah, no, he'd been successful in tech investing and things for years.

42:33And I'd met him, I was what, 26 at the time? He was 55. Oh, wow. And so he'd been around. He was a very smart, thoughtful person. I didn't really understand anything about investing. And I grew up in a family where we didn't have a lot growing up. There wasn't, I didn't see my parents invest. I didn't see them have that. And so I remember being like, he was just like, just put$1 ,000, put$100 into each of the 100 pounds. I was in London. So he goes, just put 1 ,000 pounds into 100 pounds into each and just see how it goes. And I remember being so risk averse that I didn't even want to put a thousand pounds into it.

43:09And that's probably all I had at that time. I was working a job where I made 31 ,500 pounds a year at Accenture. And I could - You were in the UK, right? I was in the UK, yeah. I could have put a thousand pounds in, I didn't. If I did, it would have been a great investment. But the question I'm asking is, a lot of people don't invest because they don't have enough knowledge, but they also feel they don't have enough money. At what point should you feel confident and comfortable to start investing? what amount. And yeah, let's start there. Yeah. I mean, a lot of Robinhood customers start with as little as$10.

43:44And I think that was actually the innovation that Robinhood unlocked. So before we came into the mix, you used to have to pay a trading fee. And if you started in the UK, you probably paid a trading fee at 2013 as well. I mean, still do. That market hasn't gone zero commission yet. Let's say you have to pay$10 per trade. Well, if you make a$100 investment, that's 10 % of the actual value in the investment. And if you want to sell it, then that gets to 20 % for the round trip. And so it doesn't really make sense to start with$100 in that sense, because you have to count on many years of appreciation to just pay for your transaction fee.

44:31But if you lower the fees to zero, you could start with any amount. Which is what you did. Exactly. And that was kind of our big, that was sort of one of the three big innovations that I think made Robinhood possible and really made it take off. It's eliminating the commissions and lowering the account minimums to zero. Because a lot of brokers also had account minimums. You couldn't even open an account unless you had$2 ,000 or sometimes more in there. And we said, you know what, we really wanted, and the reason, by the way, that they had these account minimums was these companies were not automated enough to service small accounts.

45:12They would just lose money on them. And so we said to ourselves, well, it would be, it would not really uphold the mission of a company named Robinhood to have an arbitrary account minimum. We should make it zero. We should hold ourselves to that standard. And we just should like incent ourselves to make the business as efficient as possible, because I think that would be the long-term correct way to build the business. Like let's point everything towards creating a forcing function for us to be more efficient and more automated and adopt technology more aggressively and be the first to do it relative to the market.

45:53And, you know, a company where everything is pointed towards using technology to lower the cost of things, make things as usable as possible and as automated as possible. That seems like a long-term robust structure for a company. So we kind of like that. But yeah, a lot of customers start with just$10 or even less. And what would you say are the three biggest mistakes new investors make when they don't know what they're doing? I think this is a little bit strange given like so much of Robinhood, at least in the public realm is, you know, meme stocks and meme trading. But I think probably the biggest mistake one can make is buying something just because someone on the internet like thinks that you should buy it and is posting it.

46:42Um, I'm, I'm personally a big believer in thinking for yourself and like buying something because people on social media are saying it's a good idea. It's just like a kind of anathema to me. Like, sure. Use it as a signal, but like make your own decision and, and kind of think through it yourself. Uh, and don't just rely on the opinions and commentary of, of others. Any others? Big mistakes that people make? I think just like waiting to get started. Now, particularly with the tools, with Robinhood entering the market, not just Robinhood, but most of the competitors that at least survive in the space, there's no maintenance fees, no onboarding fees.

47:35keeping money in the savings account, where in particular now with high rates, a lot of the banks are offering you 0%. So your money is just losing money sitting in savings, not doing the simple things to optimize, I think, are mistakes. And there is so much free content out there on the internet, on YouTube, and just spending even 30 minutes to get educated and actually just like getting started and opening an account and creating the habit of investing. Even if you don't think you have much money, the technology is there so that you could actually do the exact same things with$1 as you can with thousands of dollars.

48:23And, you know, through another thing, Robinhood pioneered fractional shares. You can invest any dollar amount in pretty much any stock. You don't need a whole share. So one of the first things that we did, which we thought was very cool, was you have, for example, companies whose share prices are hundreds of thousands of dollars per share, like Berkshire Hathaway A shares, for example. And they would almost pride themselves on having this share price that's inaccessible to normal people. And not everyone could be invited to this club of like shareholders and they have the annual shareholder meeting.

49:03But, you know, Robinhood figured out how to break up these stocks into pieces. You can buy a dollar of it. And, you know, then you had all of these retail investors showing up at the shareholder meetings. And I think that made those guys very angry, actually, in hindsight. But it was very satisfying. How did you even pull that off? How is that even possible? Yeah, it was a big technical challenge. Yeah, big technical challenge. Basically, what happens is the company has to keep inventory in all of these names. And you imagine like, let's say, I mean, the way that this works is probably a little bit more complicated.

49:40But to simplify it, let's say you want to buy a dollar of Berkshire Hathaway. Well, then we would essentially have to keep inventory of a whole share and then allocate internally different pieces of it. And then, you know, when the total sum exceeds one share, then we go out and buy another one. So we're kind of like managing this portfolio of, you know, right around one share in every instrument. Yeah, yeah. And then we can just do that through technology. I mean, we have great engineers and data scientists and brokerage experts that can manage the system. If you were to say that for a new investor, there's certain factors they should understand about a stock before investing, what would you say are the three key things that they should know?

50:29An amount of information they should have before they go in and put any amount in? I guess without giving people too specific investment advice, because I, yeah, I'm kind of not really allowed to do that. I'm a big proponent in investing in companies that create products that you like and use. If you use the product, if you think that the company that's making those products is improving the products, and if you're bullish on it continuing to be useful and you think it's trending in the right direction, that's been sort of my philosophy. It's how I got started, too. And I think that's why if you look at the Robinhood customer base, and we're now publishing the stocks that our customers are investing in most, we call it the Robinhood Investors Index.

51:25It tends to be consumer companies that make products. They're sort of like heavy in innovation. So, for example, NVIDIA, Tesla, Apple, these are some of the most commonly invested stocks. And it's because our customers are younger. They believe in the future. They tend to be early adopters of technology and innovation. They believe in artificial intelligence, clean energy, electric vehicles. So, yeah, those tend to be like both sort of like some of the most held instruments and some of the first instruments that people kind of buy into. We also have a product, First Trade Recommendations. And it's difficult for the service to recommend individual stocks.

52:16But for someone that actually comes in and they say, you know, I just want to invest. I don't really know. I don't want to pick my own stocks. Over time, we're increasingly getting better and better equipped to serve that customer. So now, you know, you can just answer a couple of questions and we'll recommend a diversified portfolio of ETFs, explain to you what all the pieces are, and then you'll kind of see how it all works mechanically. And I think sometimes just like going through the process of making a trade, it's much simpler than like reading a book on it. I like to say that it's like playing a violin.

52:54You're not going to learn to play a violin really well by like reading a book on how to play the violin. Maybe if you're already really, really good and you're trying to get a little bit better understanding the theory behind it is going to help. But otherwise, it's just sort of like pick up the thing and start practicing and you'll get better the more you do it. One of the things I became interested in when I was an undergrad is options trading. A lot of my students my year were applying to be options traders. That was like before it went fully electronic. That was a job that people had, right?

53:28And there was this book, like options, futures, and derivatives. It was called something like that by Hull. And it was like this thick dictionary explaining how all these option strategies worked. And I just kind of imagine, you know, if someone had to understand that book before kind of like going into options trading or discovering it for the first time, I think that would be just like an incomprehensible barrier. But like you build up some intuition for these things by doing it. And it sort of like makes you more motivated to read the literature. And it also sort of like gives you more real world knowledge than you could ever get from just reading.

54:14So I think just like getting started and doing it is the most important thing. It's a skill like playing a sport or playing a music instrument more than just like an academic pursuit. Yeah. How many of you users do you find going beyond just that first trade? Do you have a percentage of users that you know go beyond their first or second trade and kind of continue on and build and grow versus like they tried something out and kind of just said, oh, it's not for me. I don't know what I'm doing. With consumer technology, there's sort of a funnel for everything. You know, there's people downloading the app.

54:48Not everyone who downloads the app actually ends up creating an account. Not everyone that creates an account funds it. And, you know, we're definitely focused on making sure that we have a really good funnel, that it's clean, that people who, you know, enter are getting exactly what they want. I'd venture to say that our funnel is probably much more efficient than those of our competitors. That said, there are things that certain customers want that we're not ideal at offering now. So, for example, if you want an advisor, a lot of people want a financial advisor. They want someone to manage their money for them, tell them exactly what to do.

55:34We don't have a great comprehensive solution for that yet. Although we're working on it, I think we will get there eventually. Would it be AI advisors? I think AI certainly will be involved. If not, replacing the advisor, certainly augmenting and giving them kind of superhuman capabilities and the ability to service more customers. But yeah, I think that's certainly one of the most interesting applications of AI in financial services. But yeah, right now the platform is like very self-directed. It's for folks that want to be in control of their money. And like, you know, like the most hardcore Robinhood users are the ones that really are just kind of like optimizing everything.

56:22You know, they're optimizing their taxes. They're optimizing all of their fees and commissions. And we do attract some of those people that are really want to be hands on with everything because it's a very easy to use tool. We have we tend to have the lowest pricing across all services that we offer. We sort of like from the very beginning have built with like the self-directed retail customer in mind. So I think for that customer, there's probably no better fit. If you want to be in control over every aspect of your finances and you actually, in some cases, are openly distrustful of other people telling you what to do.

57:05And there's a lot of people like that. They're like, I don't even want to listen to a financial advisor because I feel like they're just going to talk down on me in a good scenario or rip me off in like a bad scenario. And those people are like, yeah, like they tend to gravitate toward Robin Hood. Before we dive into the next moment, let's hear from our sponsors. This fall, Pandora Talisman opens a bold new chapter, a tribute to ancient coins and the power of modern self-expression. Each Pandora Talisman transforms timeless symbols into deeply personal, meaningful statements. On the front, you'll discover powerful motifs like hearts, snakes, moons and stars, each carrying its own rich symbolism.

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1:00:47Like a good neighbor, State Farm is there. And now, let's get back to the episode. At a time when investing is becoming more talked about, more diverse, there's more options. I want to get your personal opinion on people thinking about stocks versus people thinking about property, for example, which of course is far more expensive. But I feel like we've seen a generational shift from people wanting to own their homes, purchase their homes, get a mortgage versus now people moving towards renting more. Are you seeing that trend and are you seeing people move towards stocks? What's your personal take on people choosing between buying and renting versus using that capital elsewhere?

1:01:29For a while, the American dream involved home ownership. Yes. Right. And I have mixed feelings about it, to be honest, because there's a lot of corporate interests that are pushing for more home ownership. I mean, if you're a bank and you're giving people mortgages, a lot of people criticize leverage in the stock market. But if you think about the amount of leverage in a 30-year fixed mortgage, right? It's like ungodly, right? You end up paying much more in interest than even the principal sometimes. Yeah, I mean, again, without getting into investing advice, real estate, I think, has been tempting for people because you can see it, you can touch it.

1:02:22It's sort of like this thing that you can use and it feels like an investment, even though it really isn't, especially when you take into account all the fees, like the brokering fees on either side of the transaction, property taxes, maintenance. Meanwhile, in the stock market, you have it on your phone now, commission-free, some of the lowest fees, access to the widest variety of companies that are really, even though it's the U.S. market by and large, the U.S. market's increasingly global. I think, and I wrote this article back in 2021, investing in the global markets is really the new American dream.

1:03:04And actually, during the hyperinflation episode in Bulgaria in the 90s, my grandparents didn't have access to any tools that allowed them to invest in equities. So my grandfather, who was a medical doctor on Navy vessels in Bulgaria, he had like a contact on the port side who would basically give him access to copper cookware. So he would take his Bulgarian lives from his pension and get copper cookware. We had this closet. They had this closet in their apartment that was just full of copper cookware. And that was like, that was their Robinhood app. Like that's where they would self-custody their wealth.

1:03:48I mean, right now you can buy any stock. You can buy crypto. We started offering crypto in 2018 for the lowest fees in the industry. and you can get, you know, you can get access to ETFs. You can have gold ETFs. So really in your pocket, you can diversify and hold pretty much any asset. And you can even do real estate through the form of REITs and other publicly traded ETFs. Yeah, you can get exposure to that asset class. But like real estate investing in terms of buying a primary home. Yeah, I think the story behind that is difficult. It's like very illiquid, high transaction fees. You're kind of like picking a particular neighborhood.

1:04:38So even if the global real estate market does well, something could happen to that neighborhood. You build a power plant next door and you're kind of in big trouble. So even though I'm not making any investment recommendations, I think it's hard to kind of like equate those two. I think really the future is going much more toward investing in publicly traded stocks and cryptocurrencies. Yeah, yeah. That's what I wanted to ask your opinion. So yeah, definitely not official advice. I read an amazing stat that said the next generation is set to inherit an estimated $72 trillion over the next 20 years with$27 trillion going to millennials alone.

1:05:23Yes. And that blows my mind because first of all, I'm like, who are those millennials? That's a big wealth transfer. It's a big wealth transfer. When someone like you hears that, what goes through your mind? What goes through my mind is there's a big opportunity for Robinhood. It was a big opportunity for us because we've got more millennial app users than basically all the incumbent brokerage competitors put together, even more so Gen Z. I think if you look at Gen Z, over 60 % of our competitive set just uses Robinhood. And so we already have relationships with these folks. And we're offering more.

1:06:02We don't just offer stocks. We have an awesome credit card. We have among the best retirement products, an amazing retirement product with the first built-in match in an IRA. We have a high-yield product, and we're adding just more and more over time. And we're making it really easy to transfer your account if you're a customer of a legacy brokerage to Robinhood, so you can take advantage of all these amazing offers and rates and the user experience. So, yeah, I think that we'd like to put ourselves in the position where Robinhood is like the home for all of these assets. And I think we're rapidly getting there.

1:06:46What do you think you've done differently to attract those groups and those communities into your space? Like what's been the big difference? I'd like to say that the way we communicate and the marketing is a big part of it. But I think the biggest thing is like the economics, getting rid of account minimums and trading commissions, removing the friction. These are all barriers that prevented people. Yeah, I think I mentioned to you earlier that, you know, before Robinhood, if you had$100, it would have just been nonsensical to invest. The fees would have just ripped apart your portfolio. And, you know, a lot of times there were barriers that prevented you from getting started in the form of minimum account balance requirements as well.

1:07:36So we got rid of all of those. And basically that allowed a whole bunch of customers that were previously underserved to be able to open accounts. And, you know, unfortunately, a lot of those customers were from disadvantaged historical demographics. and you know i think it's a great thing that we've now kind of opened the doors to basically everyone to open up an account and become an investor yeah similar to the to the property question i wanted to know your take on traditional retirement accounts like the 401k like in comparison to the more aggressive growth strategies in stocks like what's your What's your take there again from an opinion base?

1:08:19Yeah, so 401ks are fantastic for those that are privileged to have an employer that offers one. And in particular, if an employer offers a 401k with a built-in match and they're matching your contributions, that's free money. So that value prop is very, very strong. But not everyone has access to that. And so what we've done is, and actually I think over time, users and kind of end consumers can be less reliant on individual employers. And it used to be that you would have a job and you could like count on that employer's pension to take care of you. You know, maybe you'd work at the same employer for 20, 30 years.

1:09:11Then you'd retire and you would kind of subsist on the pension plan. And then, of course, Social Security kind of filled in some of the gaps. But I'd say the future of Social Security is very much shrouded in a cloud of uncertainty, right? So I think the upshot is people have to take it upon themselves to be responsible for their own finances and their own retirement. I don't think that you can rely on the government. I don't think you can rely on any one employer. Many people aren't sticking around at a single employer for very long now, right? And so what's important is having these investment accounts not tied to the employer and actually tied to the user.

1:10:00You're kind of carrying around your retirement with you. And that's why we launched our IRA products, your individual retirement accounts. So we offer Roths and individual retirement accounts. If you're a Robinhood Gold subscriber, you get a 3 % match on contributions. So basically, you might not have an employer matching you, but Robinhood will match out of our own economics. In a world where you can't rely on a single employer and you have these accounts that should travel with you, I think that it's much more future-proof. And the product's really been resonating. We had end of 2023, which was the first year that we launched our retirement products.

1:10:41We had about$1.7 billion in assets under custody. And that's gone up more than 6x since the beginning of the year. So now we have close to$10 billion in assets in retirement accounts at Robinhood. Was that a more recent development or was that something that was always part of the plan? We had always talked about offering retirement products. Um, there's just, I mean, the, the financial space is so big and there's so much that we want to do, um, that the like order of things becomes important and which what's first. And, you know, there, there's sort of like always a balancing act between innovative new features that you don't find anywhere else, but Robin hood.

1:11:27Um, and those are things like our 24 hour market offering, which allows you to trade stocks 24 hours a day. And we were the first to market with that for individual stocks like Tesla and NVIDIA and Apple. Things like retirement accounts that others offer, but we'd have to kind of like catch up and add them. And of course, we try to put our innovative twist like the matches onto them. And then there's just like scaling the infrastructure. And that includes things like customer support and just making sure that the infrastructure gets more reliable and sophisticated to handle more, which, you know, as we're expanding globally and servicing other customers in different countries is also a giant area of investment for us.

1:12:13It's so interesting, isn't it? Because I feel like you're seeing all these new disruptive platforms, technologies give people so much opportunity that wasn't accessible before, but often they come under even more scrutiny and challenge than banks or anything else did in previous years. I was wondering what your take on the GameStop movie was. I don't know if you saw it. Did you get to see it? I saw some clips of it. Okay, you haven't watched the full thing. No. I mean, I saw the clips that I was in, of course. I wanted to see how I was portrayed. Certainly not out of vanity or anything like that.

1:12:53Did they have to ask permission for that? No, it was kind of the weirdest thing. Your likeness and name can just be kind of taken and monetized. And I don't think the movie made very much money, but yeah, they certainly didn't ask for permission. Right. And then when you saw the clips of you, how did you feel? How did that? I thought they kind of got my mannerisms right. I mean, it made sense because I think they probably looked at interviews that I'd done and, you know, they basically had figured out sort of like my way of speaking. And, you know, the actor that played me was very good looking guy, you know, the winter soldier.

1:13:32I think they had to kind of make him look a little uglier so he could more accurately portray me. But hey, I'm not complaining. The plot was obviously like complete fabrication. I think people really like this whole conspiracy theory thing. And, you know, there was this like conspiracy theory of collusion floating around, particularly at that time. So I don't think they could actually explicitly say the conspiracy theory, but they were just evoking it in all sorts of ways. So those parts were fictional, but I think they got my mannerisms right. And then, I mean, I saw you do, at the time, you did tons of interviews.

1:14:16I think you did a clubhouse with Elon, and there were a bunch of different things that I saw that you did at the time. what does it feel now reflecting back on that time because i imagine that there was so much scrutiny there was so much conspiracy there was how how have you felt about it since then like now you can look backwards eye on it i guess as opposed to at that time where you're looking right at it what's changed over the last three years yeah you know from time to time i do look at like some old clips um of of my interviews back then and you know i kind of feel bad for myself because I was like a little kid.

1:14:54The company was private. I was always, particularly at that time, I was just very focused on getting the technology to work. I didn't really want to be in the public eye. I certainly didn't see myself as some kind of political figure wrapped up in some kind of political quarrel over investing or regulation. I think what happened was GameStop, for better or worse, put Robinhood firmly into the zeitgeist. Before, it was a little fringe. We still had a lot of customers, but we, we weren't, we weren't like a politicized brand. Um, and I think at that point, I really had to learn really quickly, not just how to like build technology and lead teams to do it, but also how to represent the company.

1:15:50And, you know, it's like, you can see in those interviews, I'm kind of like reading a script and that was my approach to interviews for a while. It was like reading my points and trying to communicate the facts of the message. But, you know, now I know, now that I'm much more wise and mature and still not nearly as experienced as you, you've probably done thousands of these, right? But it doesn't really resonate with our audience to just like read the facts. You have to give some emotion and some feeling and have some empathy. And, you know, there has to be a little bit more. So I've had to kind of learn all that stuff.

1:16:34And now they just look incredibly inauthentic and robotic. And I think the more time has passed, the more I'm kind of trying to be as authentic as possible in my appearances. And I think that had to be something that I learned. and doing so, especially in that time where the stakes were super high and we were about to go public and, you know, you have like all sorts of advisors and lawyers and, you know, professionals that are trying to protect me and the firm saying, don't say this, be careful not to say this, be careful when you're kind of making this point that you don't make people think that you're actually meaning this.

1:17:19So, and you know, if you're kind of running the algorithm through your head of like what you can't say and what you should say and how what you're saying could be kind of like interpreted. It's exhausting hearing that. Exactly. Yeah, eventually to some degree, like you practice enough and it becomes second nature and you can kind of rip up all the guidelines and be pretty confident that you're doing the right thing. But I think it has to be authentic. And back then I was just like very inexperienced at all of this stuff. I sort of undervalued it. And I think it took a while for me to get to like a basic level of competency.

1:17:59Yeah, no, I mean, I think it's fair. I think that every founder goes through that journey of like, you've been building something in private in a room or an office for so many years. And all of a sudden your company gets notoriety in mainstream culture. And then all of a sudden you're having to do things that you don't necessarily set out to do as a founder. I feel like even actors go through that where you're just working on a movie on a set. And then you have to go promote the movie, but, or you're seen in public and something impacts the movie. And that wasn't necessarily what you signed up for.

1:18:30What were the actual ramifications or consequences of all of that? Like what actually, how did that actually affect Robin Hood apart from the cultural propelling? Well, I think a lot of, a lot of people who were just like looking at me at the time and maybe were not Robin Hood users themselves. Maybe some of them were Robinhood users, but others were kind of thinking about it and were aware of it. I think some people got the impression that I just like maybe didn't care about our customers. I think that was the part that actually like pained me and kind of stayed with me over time. They're like, oh, look at him.

1:19:09He doesn't have any emotions. And he's just like talking about these clearinghouse regulatory requirements. but he doesn't understand the pain that kind of customers went through who wanted to, you know, buy GameStop or AMC or all these other things. I mean, like, I definitely understood the pain. That was, those were some of the most painful sleepless nights for me going through that whole ordeal. But yeah, my approach was always just, I don't, I don't want to like talk about doing stuff. I like to do stuff. So I'm not going to like, maybe, maybe I'm not going to be like super emotive with my customers, but I'm just going to build them great products that save them tons of money and give them a great experience so that they can learn to invest and manage their money.

1:19:57I think that was painful. Obviously the collusion narrative was painful because it was like false. But it was never proven. There was no, there was no like. It was disproven. I mean, learning how to communicate and actually like, to some degree, like going through a crisis and then surviving and then sort of like learning from it and building back better so that you don't actually repeat the same thing again. I mean, Robin Hood's had our share of issues over the years. Like we definitely haven't been perfect, but I mean, one thing I'm proud of is they're all like, we've made mistakes, but they're a, they're a series of original mistakes.

1:20:42So we tend not to make the, you know, same mistake twice. And so like throughout all of these, we've just like built up a ton of scar tissue and learnings and have been a much stronger company. And I think all of this, all, all of the crises, you know, I remember the dates, You know, it's like January 28th, 2021 or December 12th, 2018 or March 2nd, 2020, right at the beginning of COVID when we had a day-long trading outage. So you kind of remember all of these events and kind of take different things away from them. but um i mean at the end of the day we've been a company for 10 years and you're gonna if if you're in a disruptive space where you're kind of challenging the status quo and and trying to change things uh some people are yeah if some people are going to be unhappy right and uh you have to have thick skin to kind of get through that yeah it's an interesting dynamic isn't it When companies are doing something for the first time, it's inevitable that there's going to be mistakes and mismanagement and challenges.

1:21:56And it's almost like, you know, if you're being too careful, if you actually make zero mistakes, you might not be successful. You're probably not going to be successful because you're just like not pushing hard enough. Like it's like at some point, not taking any risk is like the biggest risk of all, particularly in like a hot competitive market. So you just, you have to know the right amount. I think it's somewhat of a fine dance, but it's certainly not acceptable to like play everything super safe in the world of business. And I guess the challenge is because it's dealing with people's money, it's even a more heightened...

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1:26:28All right. Thank you to our sponsors. Now let's dive back in. What were some of the biggest mistakes that you felt and the lessons you learned from them that were so pivotal that you think would be useful for other founders, for customers to hear, for other people to just be aware of like, this is how you now look at it versus at the time when you're like, well, we need to be risk, pro-risk, try things out. designing our infrastructure with scalability in mind from day one probably would have saved us quite a bit of grief because we've had to rewrite and redo multiple times. The conventional wisdom is you don't want to prematurely optimize anything.

1:27:10The Silicon Valley tombs are littered with corpses of startups that had perfect infrastructure and no users. So it's always hard to do the counterfactual on these things because like, you know, if we had, if we had over-invested in those things, maybe we like wouldn't have customers and then no problems, but no customers. Right. I think we can end up being like tormented by our past too much. So I don't even, I don't know how helpful it is. Yeah. That's, that's an interesting take. I, I can see why I can definitely see why. I mean, the only thing that stood out to me was you saying that your most difficult period was in 2022 when Robin Hood's business took a hit amid the market downturn.

1:27:55Yeah, that's true. And I feel like what was so tough for you personally about that? I mean, yeah. Some people might hear that and be like, that's crazy. How can that compare to GameStop? I think the thing about GameStop was very acute difficulty. And it was like, almost like a roller coaster ride. It's intense, but it's over in three minutes, and it's kind of clear what you have to do to get out of that difficult situation. We navigated it. We became a stronger company. 2022 was like a slower burn, right? And we had just gone public in middle of 2021, kind of at the end of the window. The window has kind of been basically shut since then for IPOs, right?

1:28:46And we kind of squeezed in right before things got really bad. And so what happened was you had this period where it became clear that inflation was getting completely out of hand and that freaked everyone out. And then it became clear that the Fed was going to hike rates. And we had kind of like, everyone was prepared for a multi-year period of like zero rates. And, you know, to tame inflation, the Fed, who hadn't really dealt with inflation for 30 years, had to hike rates up at the fastest pace in the past several decades. And what happens was when rates go up, people typically invest less. Because you imagine if If you can get 5 % on your cash just sitting there and the stock market appreciates 7 % to 10 % each year pre-tax and you can get that 5 % rate without taking on market risk, that becomes much more compelling relatively.

1:29:55So you'll have less investing. And then that's what we saw. Less people were interested in opening up brokerage accounts and investing for the first time. and that was like our whole business. That was the core of our business and we didn't really have anything for a high rate environment at that time. And there was some criticism of this when we went public and some questions. The analysts and investors would be like, well, Robinhood, you've done really well during COVID and during this extended period of zero rates, the company has gone to 20 million users in that time, But how are you guys going to do in an environment where the interest rates are higher?

1:30:35Is Robinhood a zero interest rate phenomenon? Of course, we had answers to that. But until you prove that, people don't really believe you. And so we actually had to like go through an incredibly challenging process of like changing the strategy of the company, effectively refounding the company in 2022 when, you know, the entire macro environment shifted. And I think we did a really good job. I mean, within six months after that, we had gone adjusted EBITDA positive. In 2023, we had gap profitability at the first time. We now have eight business lines that are generating$100 million in revenue or more.

1:31:24So the business is very diversified. More than half of the revenue is interest rather than transactions. And now we're starting to get the question, And wow, like Robinhood is doing so well in this high interest rate environment. The Fed's going to cut rates. What are you guys going to do when the Fed cuts the rates? And like you can't have these like high interest rate revenue streams firing on all cylinders now. So now we have to go backwards and prove that customers still would want to trade options and crypto and equities. So it's been interesting. Yeah, it's funny how it just keeps oscillating between or cycling, I guess.

1:32:04Well, the more times you do that cycle, I always felt like when we were private, every time we raised a new round of funding, we had to kind of like reprove ourselves to these new investors that came in and just didn't understand the company. But then, you know, the longer we lasted as we got up to like Series H, I think, in private funding. And, you know, by that point, the Series A, B, C investors had developed such a deep understanding of the company. They had so much trust. And I think it's the same with a public company, or at least I'd like to think so. You know, you pick your investors, your investors pick you.

1:32:44and the more cycles we go through, we are building institutional knowledge as a public company. And I do think that, you know, the market is starting to recognize that, hey, maybe this founding team, the management team of this company knows what they're doing. And the more cycles we go through, I think the more we'll prove that out. Yeah, and I think I read somewhere where you were saying that that time really changed how you looked at being a CEO and a leader and reprioritizing the company was, what was, you just talked there about almost what you did in terms of building product, diversifying income streams, having all of the portfolio of how people could use Robinhood.

1:33:28What was that like for you internally from a leadership perspective? What changed about how you led? Yeah, so there was this exercise that I would go through with some of my team where I would imagine if a new person came into the role as CEO. And I've told this story a couple of times. And it's not like I imagined myself being fire. I was worried about that or anything like that. But it was almost like, okay, this thought exercise of, let's say I didn't come with any of the baggage of having founded the company and made all the decisions to get us to this point. If I could look at it from, with a beginner's mind and just say, hey, I'm here, I'm seeing this company, this is kind of the state of affairs, what would I do differently?

1:34:21And, you know, I came up with a bunch of things that like a stereotypical, like top CEO coming in would do differently. They would pull back on remote first and get people in the office so they could collaborate and work together in person. And even though I had turned Robinhood into a remote first company not too long before, I reversed my own decision there, which was kind of tough from a self-consistency standpoint. People have a very hard time being inconsistent with their prior selves. So I think that's like one mental barrier to get past. Um, another one was I just made this realization that, you know, if you look at our business, a lot of our revenue is generated by, you know, relatively small component of very active traders.

1:35:12And we actually weren't building products specifically for them. And as a matter of fact, we looked at kind of this customer base very deeply in 2022. And these folks tend to be more sophisticated. So actually, when the markets are crashing or moving sideways, they tend to actually be more resilient because they can deploy more sophisticated strategies that can take advantage of all sorts of market environments. And what we saw was the more active someone traded, ergo, the more revenue they generated for us, the less happy they were with Robinhood. So actually, our most active customers had the least customer satisfaction with the platform.

1:35:58So then when we kind of grokked this, we were like, this is a five-alarm fire. Any healthy business, you don't have to be an MBA from Wharton to realize that your most valuable customers being unhappy with you is a big problem. So, but what was remarkable was when we kind of like shifted focus towards making these active traders really, really happy, we fixed it like that, like much faster than I thought possible. I think within six months, we had basically like solved the problem. Yeah, it's kind of interesting. A lot of introspection to how we ended up sort of like ignoring the active trader audience for so long.

1:36:44I think once we sort of like refocused on that and really started treating them like the important constituent part of the user base that they are, the company just started doing much better. I think by and large, that was the biggest part of our turnaround as a company since going public. That's fascinating. I mean, to discover that your deepest users are unhappy. Yeah. It must be like such a... Yeah. And part of it was like Robinhood was historically very targeted, very focused on the first timers. We want to be someone's first brokerage account. We want to make it as easy as possible to get started with$5.

1:37:27Right. But what happened was, one, a lot of the people that got started with us then became really sophisticated and wanted more advanced tools and had more specialized needs, but still loved Robinhood and loved the simplicity and the ease of use of the interface. But the other part was, if you think about our options trading platform, for example, we're one of the few, very few that offer options trading for no contract fees. Most of our competitors charge 65 cents per options contract. So if you trade 100 contracts, that's$65. That's real money. And there's some active traders that spend thousands of dollars a month on other platforms paying these contract fees.

1:38:15So even if the platform's not really built for you, there's a really strong economic incentive to use it. So you had a lot of these super active options traders that were using Schwab or E-Trade or others. Maybe they're using their charting from their other platform, but they're putting the trades in via Robinhood just to save fees. So we grew active traders. We also had some using us because the economics were so good. And that way we sort of like built up this large active trader business incidentally while building products for first time novice investors. Yeah. I mean, it's so interesting that since the beginning, everything you talked about from the name, there's always been people who've been disgruntled, slightly angry, as you said earlier, like this feeling of like, oh, these guys are doing something, you know.

1:39:11So has that kind of like, has that kind of changed now as a company matures and like people see you become established and not obviously competitors, but when you look at the people who felt that way initially, do you find that founders are reaching out? You're more connected to people and as you've become more established as well, or does it get lonelier as things go on? Well, I think in different ways it does get lonelier. But I would say, in general, I think in the past couple of years, especially, we've fixed more problems than we've created, hopefully. And so our customers generally have been getting happier and happier, not just the active traders.

1:39:52But the great thing, when you fix things for active traders, they're like power users of the platform. So the customer experience for a more casual user improves as well. So, yeah, fortunately, you know, again, knock on wood, we've been like, we've been avoiding like major catastrophes in the last few years. Which, you know, the last few years have been hard just with standard business challenges to work through. So that's been really nice. I think like to some degree, I don't expect Robinhood to ever be perfectly understood and non-controversial. So it just comes with the territory, I guess. What's made you comfortable with that?

1:40:36I feel like that's obviously always hard. We always want to be liked. We want what we create to be overall seen in a certain way. What's made you comfortable with that? Well, I think the first time that, for example, I saw negative press about Robinhood, probably it was like 2018, 2019. So for the first four to five years of the company's existence, it felt like everyone was kind of rooting for us. Like the regulators were fans, right? You know, I remember our first FINRA exam. We had, you know, someone kind of looking at what we were doing. FINRA is our primary regulator. And, you know, this was a young guy.

1:41:18He's like, hey, there's never any like new brokerages filing. This is like super interesting. I wish you guys luck. It gave me this feeling of like, wow, every investor and person I talked to is like, run as far away from regulation as possible. You don't want to be a regulated business. It's going to just grind the company to a slow death. So find some way to do it via partnerships or something. When we got started, it was unheard of to be a financially regulated startup. It was really before the word fintech existed, for example. Robin Hood predated that, probably created it to some degree. And then the press was always telling this David and Goliath tale where we were these little guys that were going after the big, established, gigantic competitors.

1:42:11And we had the millennials on our side. And so it was just very, very positive always. And it was like, I don't really get what all of the fuss is about, like all of the negative press and all this stuff that people are talking about that's happening to other companies, maybe not us. Eventually I would get like the comms and marketing people that, um, they would come and show me the clock of like company perception. Have you seen this? I've not. No, I'm fascinated. It's like this clock. And like, basically when you're kind of here, everyone loves you. And when you're kind of here, everyone hates you.

1:42:51I see that. And they were like, so you're here at like four o 'clock, but you should get ready in the next six to 12 months you'll be here. And everyone's going to hate you. And you just haven't seen it yet. And then it keeps going around? Yeah. And then it keeps going around. And they were like, look, Facebook is here. They're like a little ahead of you. Everyone hates them now. They ended up being exactly right. Six to 12 months later, it was like all negative press. But I guess like the way I got used to it was just going through that, right? It's like the first time a negative article hits, you're like, holy shit, it's negative press.

1:43:25I've never seen it before. You kind of feel like it's the end of the world. And then, you know, after the 600th one, you're just kind of like, okay, that's another one of these things. I'm just going to move on and run my business. And then when the press turns positive, you're like positively surprised and you're not expecting it. And so I think that's how I got through it. You just get punched in the face enough and your face contorts to the shape of the fist, right? How have you managed your personal life through all this? Because I feel like, you know, when we started the interview today, you talk so much about your personal life and, you know, how you came to this country and the build.

1:44:08And I feel like, you know, as you're an entrepreneur and your professional and personal life almost become one. And, you know, when you're building something that's growing as fast as you are, you get absorbed and you have to be like, you know, you sleep and dream and eat Robin Hood. Like that's how it has to work. That's how it goes. What's been powerful for you in your personal life that you think has allowed you to reinvent, reboot, stay renewed, stay re-enthusiastic. Like you seem as excited about Robin Hood today as I imagine you would have been in 2013, if not more. And what's been allowed you to renew your enthusiasm so consistently?

1:44:45My kind of analogy of so many things, my mental model for so many things that I use in business and in life is kind of the barbell. I like to get things on opposite sides of the barbell, right? And I tend to ignore the things in the middle, right? So basically for me personally, my work is highly intellectual and that's maybe on one extreme. And what's the opposite of like intellectual, just sort of like the physical. So I really focus on that. And it's just super basic. And, you know, when I started, I would kind of not really spend too much time and effort on my health. But as I've gotten older and the job's gotten more stressful, I noticed that like effort I put in here pays off multiples, right?

1:45:43So now my like wellness routine and my training, I spend more time just dialing it in. So making sure I get the right amount of sleep, that I have an awesome mattress that like I keep my bed at the right temperature. I like to journal before bed and I like to shut off the devices. The devices, by the way, has been the hard part for me. You know, I like try really hard. I have to do unnatural things to like stop from looking at my phone. Like my phone's not with me right now, for example, because, you know, I would just, it's hard to avoid looking at it. And if I know it's in my pocket, you know, then it's almost like too close.

1:46:27So, I mean, actually during the whole GameStop stuff, it was particularly acute for me because I was at home. So there was no boundary between work and personal. and I was going a little bit crazy. And so I had this thing where I would try to sleep with my phone in a different room. So I'm not always just tempted to check out what emergency is happening, which ended up being a big problem the morning of GameStop because it took forever for my team to like get a hold of me. And then now I then for a while I slept with like three phones next to me, which it really backfired. but yeah my health i work out a lot um i've gotten into like hot cold therapy at first i was doing cryo but then i got like a cold plunge at my house that and and that really helped and yeah just like the basics of sleep and diet i think has made a world of difference and just trying to like uh i don't think i've figured out the device thing and sort of like my rhythm of the day perfectly, but that's a, that's a work in progress.

1:47:37And you're married, you're married too, right? You were mentioning, yeah. What's, how's, how's it been like dealing with all of this, but it sounds like you've been together for quite some time. Like it's. Yeah. I've been married for almost 10 years now. Yeah. Got a, got a bunch of kids, great kids, and they don't really know what I do. Same back to how your wife didn't know what you did either. Yeah. Well, she did, but yeah. Show them Robin Hood the cartoon and they'll get it. Oh yeah. They love that cartoon. I think like the credit card, they kind of get a little bit because they know they can use it to buy toys.

1:48:16Yeah. My wife is a great compliment to me. She's very patient. She's very empathetic, all the things that I'm not. And so she's just been an amazing partner through all the crises. And she sort of like knew me before Robin Hood, right? I mean, she kind of helped come up with the name. So I think she feels like Robin Hood's like one of the children, just kind of like I do. Yeah, that's beautiful, man. I wanted to, this I'll probably cut and put back in. You mentioned the credit card there. I'm intrigued as to product you created because you saw the traditional versions of them being ineffective.

1:48:57Yeah. So when you go build a credit card, what's wrong with a traditional credit card that you can get from anywhere else? Like what are you doing differently? I think there are a couple of problems with traditional credit cards. One is that basically the rewards are kind of incomprehensible. I think that anytime there's like websites devoted to like exactly how you should kind of like work through your points to optimize the value you get from all the points, like media empires, like the points guy were created on the back of this. It's like, yeah, if you want to spend 10 hours a week optimizing your points and maximizing the rewards, I think that's pretty good.

1:49:49But we wanted to create something that simplifies all of that. And basically, just by using it for the vast majority of people, you know you get the best rewards. So a simple, clear reward structure that you don't have to be like a PhD to decipher. For people building their credit, if you're a student and you don't have a credit history, typically you have to start out with a really crappy card. You have to upgrade your way to a nicer card once you prove that you're worthy. And there's a crappy starter card for people with no credit history and the premium card for folks that have the means. We ask, can we fix that?

1:50:37Can we actually have a starter card that has the same economics, the same rewards, the same design as a highly premium card? And then the digital experience. Most cards don't really think through how to take all of the things that technology and fintech has given us and sort of like give them to you in the same package. And those are things like virtual cards. I don't know if you've been to a restaurant. You probably go to restaurants where you have to give your credit card to lock down the reservation. Imagine you could create a virtual card so that not every restaurant has your actual card number.

1:51:20And if you want to cancel the reservation, you don't have to call the restaurant. You could just disappear that virtual card, right? Got it. Or, you know, if you want to sign up for a free trial, you can create a virtual card seamlessly. And that can be your free trial card, but you don't have to give them your real phone number. Helps maintain people's privacy. And in fact, there are great innovative businesses, privacy.com created with this notion. We put all three of these things in one package. One card for everyone, the best rewards in the industry, 3 % cash back on all categories, a beautiful physical card, including the solid gold variant, which I have in my wallet I can show you, and a digital experience that's like world class.

1:52:05Um, and we put all these together and it's, it's definitely the best reviewed, most popular product that we've ever rolled out, uh, even more popular than free trading. So it's, it's been quite amazing. And now it's just like, like we, people want to roll it out faster. That's the one limitation. We had over a million people join the wait list for it within a month of announcement. And the bet was that if we make the rewards and the product so good, we wouldn't have to spend the typical like$500 to acquire a credit card user that the big bank spend. We could get it just organically. And that seems to have proven out.

1:52:47Now it's just about getting it into everyone's hands while also validating the economics and the underwriting of a new credit model. Vlad, it's been fascinating talking to you. You're truly an extremely unique individual in a positive sense. Oh, thank you. It's really brilliant. Maybe some negative too, you know. Brilliant to dive into your mind, honestly. It's been really fascinating for me. We end every episode of On Purpose with a final five. So these questions have to be answered in one word to one sentence maximum. So Vlad Tenev, these are your final five. The first question is, what is the best advice you've ever heard or received?

1:53:26Be honest. Don't lie to others, but most of all, don't lie to yourself. Good advice. Question number two, what is the worst advice you've ever heard or received? I think in the context of the company, trusting experts who have done it before is bad advice, generally speaking. I think you have to listen to experts and understand, but I don't think people should blindly trust anything. Question number three, if we saw one of your evening journal entries, what would we learn about you that we haven't learned today? I still really love math. And I spend a non-trivial amount of times trying to solve basic math problems.

1:54:11Really? Yeah. Oh, wow. That's cool. In your journal? In my journal. Yeah. You'll see pictures of like triangles and spheres and stuff in there. That's cool. So fourth question, how would you define your current purpose? I think it's to seek truth. I think if I had to find a personal, I think a lot about what are my personal values? What do I care the most about? And I think my top value is truth, actually. I care about truth. And I mean, in terms of purpose, I really want to understand how the universe works. Mathematically or? Mathematically, physically. Yeah. I mean, we can start with that, but of course, psychologically is good too.

1:55:06Oh, cool. Financially, I think we're closest to that one. Yeah. Pretty close to understanding how it works financially. And how do you define truth? That's a sub question to that, not the fifth. I think that's a really good question. How is truth defined? I think that truth is something that multiple observers will simultaneously agree on. Yeah. So if you had like multiple independent intelligent observers observing an event with like the same information, they should agree on it. And if they agree on it, then you have like high confidence if it's true. Now, of course, if it's something that's fact-based, it's even easier because you can just prove that it's true if it follows from axioms.

1:55:58But probably the more interesting one is if there's some ambiguity. Yeah, I also find it true. But I think you need a notion of verification and also some notion of independence. Yeah, one of my favorite verifications of truth, I feel, in my definition is timelessness. that something being timeless, i.e. it was as true a thousand years ago as it is today. Yeah. There's something powerful about that. Lindy effect, right? Tell me about it. Yeah. Basically, I think it was, I read about her from Nassim Taleb. Okay. Yes, yes, yes, yes. Yeah. So basically, he says a good approximation for how long something's likely to be relevant is how long it's already been relevant.

1:56:45Yeah. So I think the way he kind of describes it is the New York Times bestseller list. If a book sort of like hits the bestseller list and is a bestseller for one week, you can basically assume that it's going to be irrelevant in a couple of weeks. Right. But if, you know, the Holy Bible, people have been reading it for 2000 years. you have pretty high confidence that it might, it's going to be relevant 2000 years from now in a way that you wouldn't with what's on the bestseller list now. Absolutely, absolutely. Fifth and final question. We ask this to every guest who's ever been on the show.

1:57:20If you could create one law that everyone in the world had to follow, what would it be? I think there's too many laws. Yeah, I think deleting laws is the more interesting thing. If there was a law where in order to create a new law, you had to delete at least one, existing law, I would feel much better about it. That's a good law. If you think about overregulation, which I think is a big problem, it's really, really easy for new laws to be created. It's easy for organizations and the government to get bigger. And that creates all sorts of problems. It's impossible to get high-speed rail in California.

1:57:59Right. We need a force to counteract that. And right now it's very easy for these things to get bigger and more laws, but like periodically we've got to go in there and slash laws and make things smaller. And there's a lot of pressure against this. Well said, Vlad. I look forward to many more conversations with you, philosophical, seeking of the truth, psychological. Truly, truly wonderful to get to know you today. And thank you for being so honest. Thank you for being so open and vulnerable. And even though you described yourself as stoic at the start, but I definitely feel you shared a lot of emotion in what you shared.

1:58:39So thank you so much for doing that. I really appreciate it. Thank you for taking the time. You know, it's been a lot of fun. You know, I don't usually do, I don't do too many podcasts in general, but this was a unique experience. Yeah, I'm very grateful. Grateful for your time. Thank you so much. Thank you. Thank you so much for listening to this conversation. If you enjoyed it, you'll love my chat with Adam Grant on why discomfort is the key to growth and the strategies for unlocking your hidden potential. If you know you want to be more and achieve more this year, go check it out right now.

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