20VC: Robinhood's Vlad Tenev on Founder Mode | Building 8x $100M Revenue Lines | Lessons from Raising $5BN and the Gamestop Saga | The Future of Artificial Intelligence, Wealth Management and Home Ownership

0:00So now Robinhood has eight business lines that generate a hundred million a year or more in revenue. And that's up from I think three a few years ago. And some of them benefit from higher rates, some of them benefit from lower rates. I do think Robinhood is actually stronger in a declining interest rate environment than in a rising. This is 20 VC with me Harry Stebrings and oh my gosh, I was blown away by that. 8 lines of revenue with over 100 million in revenue. Incredible. I'm so excited to welcome Vlad 10 after the show's day. Vlad is a co -founder and CEO of Robinhood, the commission -free stock trading and investing app with a market cap today of $20 .7 billion.

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3:28For yourself, by visiting Fundrise .com, slash 20VC. Carefully consider the investment material before investing, including objectives, risks, charges and expanses. This and other information can be found in the Innovation Funds perspective at fundrise .com slash innovation. This is a paid partnership. You have now arrived at your destination. Vlad, dude, we've known each other for a while. I'm so excited to have you in the studio. Thank you for joining me. Well, thanks for having me. It's good to meet you in person and be here in person. You know, it's so lovely to do it in person. I want to go from like, you know, very cheery, happy start to actually kind of reflect Like to one which is, I think we were just talking about the slabitization of CEOship, seeing people on television, seeing the strong leader and everything just looks up into the right.

4:12And I think we are shaped a lot by our past. When you think about your past, what challenging moment do you think defines who you are today most? Being an immigrant moving from Eastern Europe to the US, that was probably like one of my earliest memories, right? When my family actually, right after the Berlin Wall fell, had an opportunity to move to the US. Like very little travel was happening from Bulgaria, which is where I was born to the Western world. But these people from University of Delaware came and were impressed by my dad, who was a professor of economics in Varnable Garia. He got an opportunity to come to the US.

4:53But of course, we didn't have the money to sent the whole family. So it was like him coming by himself for a year, just trying to make it work, trying to build a stable foundation. And then my mom came a year after him. I was living with my grandparents and like they were taking me to school. And I didn't see my dad for about a year and a half. My mom for at least six months. And my aunt, who I think was a teenager at the time, She was like into grunge music. She loved Nirvana and Sound Garden. She took me to America on what was my first plane flight and I remember when I when I kind of landed at JFK JFK's kind of the it was like the new Ellis Island right where the migrants would would first come I landed in JFK and I saw my parents and I hadn't seen my dad for a year and a half It was almost like meeting strangers in a way and I was just like very shy.

5:51Took me a little bit of time to open up. I was hiding behind my aunt's leg, just sort of like peaking with one eye out. Being, being apart from my parents, I think was tough, but also had the benefit of making me independent. And, you know, moving around to different schools, going from the school in Bulgaria, near my parents' apartment, to the school near my grandparents' apartment, to being dropped in kindergarten in the US without speaking any English. And it was a little bit terrifying. Like, you're just in this new place, you can't even speak the language, you're in school. It was a little bit scary at the time, but it taught me to just adapt to different situations and to be very flexible.

6:33And I think that's helped me much later in life. You know, I've interviewed 800 of the best founders over the last decade. And the single biggest commonality in the most successful founders is a high frequency of moving in childhood. You're forced to assimilate with different environments, different cultures, different people, make new friends, enemies, whatever that is. That's right. Yeah. It's a really interesting trait. Can I ask you, when you think about moving there and America being the land of opportunity that it was, do you think it's still that land of opportunity? I think this with the UK, like to the best time I don't want to come to London.

7:04And the answer to me is no. Do you think America is the land of opportunity that it was when you went? I think so. And for me, entrepreneurship didn't really become a viable option until relatively recently. I grew up on the East Coast. People weren't really starting technology companies on the East Coast. To me, as I've kind of gotten older, I moved to Stanford, California, really because when I was a kid and my family took our first road trip. Once we got in a little bit of money and my parents felt comfortable taking vacations financially, they took me to California for a road trip. And I remember being in San Francisco one morning and this was in the summer.

7:45So I had to buy a jacket because it was just like too cold to be outside. We took the 45 minute drive to Stanford, California to check out the campus. It was like 85 degrees perfect. The students were like sunbathing in the main quad. everyone just looked so happy and like they were having a great time and I wanted to be a lawyer at the time I'd seen a few good men which was a Tom Cruise movie and I was like man that's cool like I want to be that guy and I had this video this photo of me in front of the law school But yeah, I wanted to go to Stanford because because of that feeling that I got it wasn't because I wanted to be an Entrepreneur or that I wanted to be in Silicon Valley so to me it's felt more and more like the land of opportunity the older I get.

8:29And I think now even with COVID, when there was this narrative of people moving away from Silicon Valley going to, you know, Miami or places like that, Austin, Texas, now it's feeling like the energy is sucking people back in. You know, there's artificial intelligence companies, Palo Alto Silicon Valley right in the epicenter of that big tech companies are continuing to innovate. So it still feels like the hotbed of innovation, for sure. Someone said to me the other day I want to show you that great leadership is about being a conductor and to be a conductor you must turn your back on the crowd.

9:03When you think about that statement, when have you turned your back on the crowd most significantly? Yeah, I think that's an interesting question. You know, I was reading the Rick Rubin book. I don't know if you've come across it. I have. I've actually just been gifted it. I have already. I was gifted it also and you know, it was just sitting on my coffee table for a while, but something compelled me to pick it up. And it's all about artists and how they create. And I think he does a great job of distinguishing an artist from a business person. One, I think his thesis for what makes a great artist is that you don't really care about who's looking at your work.

9:42You're building something to make yourself happy. So really the customer for an artist is yourself. If you're proud of the work and it expresses what you want to communicate at that point in time, It's a great work and you almost have to like divorce that from whether it's commercially viable or whether anyone likes it and Even when you're kind of like showing people your work of art you have to be really careful Not to listen to them too much because good art almost like alienates as many people as it makes really happy So if you're not like alienating anyone probably everyone just feels somewhat neutral and it's not gonna be memorable Yeah, business is a little bit different because I think there's an element of art to designing a really good product and you have to be proud of it and to some extent you're building it for yourself.

10:33But you also keep in your mind what's useful to a customer and what they can benefit from. So in terms of this conducting analogy, I don't think you can turn your back on the crowd completely or at least not through all stages of the life cycle of building a product. I think that you kind of start with an inspiration and an idea. In the best cases has come from within. We've been fortunate to build several kind of really, really good products at Robinhood. And I think the initial idea, the spark came from within, and it didn't come from customer research or a lot of feedback. But I think customers play a much bigger role in refining the idea, and actually like, we ping pong ideas off of customers, use the feedback to adjust the interface.

11:20And sometimes it changes it quite a bit, but there's a little bit of like, art, a little bit of business in creating a new product that I think is really interesting. Do you think you alienate people enough? And what I mean by that is actually when you think about business, you're not a kill, you're a aridass, you're an apple or your Samsung, your McDonald's or your Burger King. I know you guys have Taco Bell and some Chipotle's and other things, So I'm not going to comment because I don't know the comparisons that right, but you are like four against the brand. Do you think you alienate enough?

11:51Uh, I think we could probably alienate more. Yeah. I think that it's hard to alienate because people are naturally sensitive to criticism. It hurts more to get sort of like a piece of biting criticism than it feels good to get praise, creates a natural tendency to avoid alienating people. And you have to almost like exert influence if you wanna have your product or your marketing or your message be compelling. It's a very tough thing. And to some degree, it has to start at the top of the organization. But I think for myself, I can take more risks. So what I try to do is whenever possible, if there's someone whose vision I believe in, even if I disagree with it, I try to let them try things and be bold and have a perspective.

12:44One of my biggest weaknesses is I really care what other people think, and I'm actually quite sensitive. And it really hurts when I see shit on any social media about me. You said about sensitivity there. I spoke to so many of our mutual friends and they told me actually that you're an introvert and in the nice way that you're a maths nerd said would love by the way. But Are you sensitive and how do you think about building that muscle to withstand the criticism that comes? I wouldn't say I'm an introvert. If there's actually one thing that I struggle with on a personal level, it's like being alone.

13:20I get a little bit uncomfortable being alone and, you know, why is that? I don't know. I think that maybe it comes from childhood. I'm an only child. When I grew up, I actually spent a lot of time alone. My parents never were able to afford a babysitter until I got older and didn't need one, right? So as a kindergartener, I would walk home from the bus stop to my apartment. I had the key in my backpack, you know, the latch key child. This is very rare now. I've been told you can't really do this in 2020. People are more protective over their kids, but I would let myself in do my homework, call my parents at work or they would call me to make sure I got home okay.

14:03Play with my friends sometimes, but a lot of times I was just sort of like alone. And then when I got to college, it was always like living with roommates or with a bunch of people in a house. When I go out places, I would have, you know, a lot of friends with me. So, yeah, sometimes I hear about people doing like solo traveling or living by themselves for an extended period of time. and it feels like somewhat foreign and actually kind of scary to me. So my area of discomfort is less being with other people. I get energy from other people and it's more like... I find the hardest time alone. Night time, which is when the lights go out and you're kind of in bed with your own thoughts.

14:45Yeah. You have a much busier life than me, but it is busy now. Is the only time when it's like silence. Yeah. Not usually at my house. I usually have multiple crying kids and it changes a lot I totally get that I was shouting to Mickey and he said listen the gate You said you were in the best CEO version of yourself right now But that was in large part. I think because of the experience you had over the last few years He said one you've got to ask his game stop was it was a tough period for him as a leader What did it teach you about telling stories? Yeah, that is a tough one and I think to your point You mentioned the introverted thing.

15:22I think before GameStop, to some degree, I was like never really comfortable in a media setting. I think this is a little bit different because this feels more like a conversation, but like you're on CNBC or Bloomberg or one of these shows and you have three to five minutes. You have this artificial situation where you have to deliver sound bites. You can't really explain yourself. That one was during COVID. So all of these interviews that at least I'd normally be in a studio for are happening over my zoom connection Very little sleep and it wasn't just the night before the the GameStop fiasco It was probably like the month leading up to it where volumes were just going vertical the crypto markets were exploding as well And we were we were a major player in that Robinhood was the number one app in the app store and my feeling at the time was you know Everyone was sort of like, wow, you should be really happy.

16:17You're the number one app in the app store. I had an Instagram and TikTok, not just financial app but everything. And inside I had to like juggle the happiness of that that moment, but also just like the fear that something could happen. I don't know what, and it could go off the rails. It was almost like too much growth. And so all of this was happening at the same time and you're running all of these threads in your brain. like I have this issue, I want to dispute this point, I want to like appear confident, like I'm on top of things. And I had that not really going for me because you know, I was 32 years old at the time and I hadn't done much media and I looked rather young.

17:01I think that whole episode sort of like age me, you know, I look at pictures of myself in 2020, I look much younger. My big takeaway is I think you almost have to like clear out all of those voices in your brain and When everything goes away you could actually get much more clarity about how to communicate and I think story telling is a big part of that I mean if you clear out your brain and remove what you think you should be saying or what messages you want to convey I think what's left is is the stories I tend to picture things in my mind when I think about game stop by I think about like being cooped up in my little house and not really being able to eat for days because I was just like pacing around small kids at the time.

17:45They were just kind of running around and it was just like a very unsettling. What would you say differently when you review kind of what you did say what did you say or not say that you wish you had done the opposite of I did a clubhouse with Elon Musk on Sunday Thursday was when the game stop trading restrictions were first put into place. And then we were a little bit nervous about sharing all of the details. Part of it was we want to make sure we didn't get anything wrong because if we got anything wrong, then we would have to correct it. And that looks bad. That tends to, I mean, you've got people into all sorts of conspiracy theories, right?

18:25And we were, people thought there was this whole collusion narrative with Citadel that ended up being disproved. And so we wanted to make sure that we communicate everything correctly and we didn't leave anything out or make any mistakes That made us communicate a little bit later than perhaps I would have liked But it came out in pieces It was like one detail here the other details there and then it was Sunday when I kind of gave the full play -by -play on a clubhouse being interviewed by Elon Musk and And of course, in all the lawsuits and litigation that followed all the other details came out over the following several years.

19:04But I think in hindsight, not saying anything until giving the entire story of how everything happened, I think would have probably worked better. I felt this pressure to get out there and communicate as early as possible. But I think in hindsight, taking my time a little bit and just saying like, like, hey, we're working through solving the problem. I'm gonna release a statement or get out there as soon as I can after cleaning up the mess. I think that probably would have been a little bit better. Who do you cool when the little seats are dropping when the shit is really hitting the phone? Lots of lawyers.

19:40But who's the friend? What was really interesting was I started getting phone calls from all sorts of people that maybe I wouldn't have had an opportunity to talk to people or connecting me with Elon Musk before, but he kind of wanted to give me some advice on how to handle the situation. I talked to Zach, Mark Benioff. The one benefit was amazing network, he's managed it. These guys were like, hey, I saw this on TV. I really think you could have done a better job on that Sorkin interview and here's what you should do next. And it was interesting to have those discussions. It was brainstorming on brand marketing, business strategy, business model with some of these folks in a very kind of, very unique time.

20:24You imagine some incredible founders that you are yourself an incredible founder. What did you make of PG's founder mode essay, which went incredibly viral recently? Might take on it. I think it's a little bit like a horoscope in the sense that it was so vague in general that everyone kind of thinks that it's relevant to them. It's like, oh yeah, that's me. I'm in founder mode, not manager mode. And I think that's why it resonated with people. You can paint your own picture, but it kind of feels like it's talking about you. Every founder that I talked to was like, yeah, PG really gets it. This is exactly how I operate.

21:02Every manager or executive was a little bit offended. So yeah, it was packaged well, but I think it captured a feeling. I don't think it was like, if you're looking for a tactical guide to like founder decision making, I don't think there's much in the way of specifics there. How did you think about kind of refinding the culture? And when do you think it broke? It kind of broke a little bit at the beginning of COVID. What were the signs that it broke? Well, there there were a couple of things that happened simultaneously that were very difficult I think one of them was just going remote fully and then the second thing was we went through a gigantic hiring burst.

21:41I want to say we were under a thousand people at the end of 2019 So right before COVID, I think we're right around a thousand maybe a little bit under and then in 2022 January of 2022 when we finally announced you know that we were a remote first company after a couple of years of ambiguity I think we were about 4 ,000 people So we sort of like over 4x in a fully remote setting and we were opening up offices everywhere How many you know between two to three thousand see over hide we overhired yeah Part of it was we were kind of responding to the issues that we had in 2020, which were huge amount of growth, influx of customers.

22:23I mean, our revenues went up like 4x in a year, from right around 250 million to about a billion. At the time, it was fun, but it was also a little bit disconcerting because I was like, well, we haven't really done anything. You know, this thing happened. Now we're growing. And I think if you're not careful, there's a tendency to think that you're doing a great job as a leader. I mean, revenues going up, people are using my product, all these other companies that maybe were hit hard by COVID or doing poorly. Does that mean I'm a better chief executive than than the chief executives of those companies?

22:59I think at the time, I was getting some positive feedback, but there were things that were breaking that we had to deal with as well. I think what was kind of not very fulfilling to me was we didn't really ship that many products in 2020 and 2021. We were just kind of trying to keep the train on the rails because we were dealing with infrastructure issues, historic volumes, lots of load, customer support we had to grow. What did you not do that you wish had done? In hindsight, since we're in the UK, we decided to abandon our efforts to expand to the UK that year. I remember this because you were planning and it was publicly known that you were planning it and obviously me being in the UK was excited for it.

23:39Yeah, yeah. We announced in the UK, we went to friends and family, and maybe about a thousand people. And then COVID hit. So it was like March of 2020. I remember having to make a decision. It was like, we need all the resources we possibly can get on the US side. You know, we have this new business in the UK. I think it was a tough decision. I thought about it a little bit. Why did you think that? And I went back and forth. I think at the time it seemed like, I mean, the US business was so big and it was growing so fast It was going through an inflection point and it felt like we had to put everything that we possibly could on making that work and Ensuring it up and the UK just seemed like it would be hard and it would be distracting and I couldn't even travel there most likely It was sort of like easy to to abandon and we didn't abandon it fully.

24:33I mean we kept the license and then we went live what ended up being Three years later when we finally launched earlier this year Yeah, but sometimes I think about that and of course all always difficult to was that a mistake not it then I think it's hard to compare the Against the counterfactual which you don't have certainly it would have been the right decision if you know We ended up having some massive infrastructure issue in the US had we not allocated the resources and we had another big problem. In a world where we could have done both, I think learning to be an international company a couple of years earlier probably would have been a good thing.

25:10I don't know how to say this without being too direct to a blunt. Why is Europe in the UK interesting to a tool? Compared to the US market, it's tiny. You look at compared it to say like free trade, which is a botany average at best businesses. Why is it interesting for you? I think from the very beginning, we had a vision that Robin Hood would be a global company that wherever you are in the world, you'd be able to download our app from the App Store, have access to the best financial products anywhere. And you know, you could fund with your local currency or cryptocurrency or whatever the easiest way is, you could invest your money, you could spend it, send it to people.

25:51So we could help anyone with any financial need. And I think as a technology company, we feel like we have an advantage to doing that. What have you decided to not do most recently that was a hard decision? It's a constant game of trade -offs. Yeah, there's lots of things that are great ideas in our space that we know will work, but we haven't gotten around to them yet. So for example, earlier this year we launched amazing margin rates. We were frankly not very competitive with our margin product in the US up until recently. And then we changed our rates. We were able to do that because we made a lot of investments in risk management.

26:29So now we have the best rates. But if you think about the things that we offer, great margin rates, 24 hour access to the markets, also particularly relevant in the UK, there are things that institutions want to. So if you're a hedge fund, for example, you also want 24 hour access to equity markets. You want access to crypto. Not a lot of them can get that easily. you want access to low margin rates and the institutional market, it's a very big market. We could take a lot of our infrastructure, adapt it to institutional. We don't have to rebuild a ton of the technology. Similarly, you look at a company like Fidelity, a big asset manager in the US.

27:09They have a big 401k business. That's also a B2B business. You're helping startups and larger companies manage their employee retirement plans. That's a good complement to our retirement offering. So that's something that comes up. Servicing registered investment advisors. That's a big market. Individuals that manage money on behalf of other customers. You mentioned kind of funding through crypto that one of your investors said the whole question depends if you want to go hard. One should ask is why are you not bigger on crypto? Well, on retail in the US, we're kind of like close to the same size as Coinbase.