The Man Who Made Trading Cool Again | TCAF 220

So, we have a little we have like a an outline and it's going to be linear like tell us you know we're going to go from the beginning and um the cultural impact

that Robin Hood has had and we have some really cool charts and uh then we're going to get into the WSJ profile and what you've been saying recently and then we'll go into some of the big

market opportunities for you guys. So I

have in here um obviously we'll talk a little bit crypto and options but we definitely want to get into the RAA stuff. A lot of our listeners are

stuff. A lot of our listeners are advisers and I know there's a lot of curiosity about that. So we'll talk about RA custody and trade PMR prediction markets I'm fascinated by. I

have some I have some of the most hilarious bets on right now. Um I'm not using the I'm on Koshi not Robin Hood so I don't want to I don't want to uh piss you off but >> we got to move you over. I'm going to

move over.

>> Do you have a Robin Hood account?

>> Yes. My My kid my kid stole my Robin Hood account.

>> Oh, yeah. Yeah.

>> Are they trading on prediction markets?

>> No, he's doing he's doing stocks and uh probably crypto.

>> So, I think I think I I'm not as bullish as maybe you guys are in the street is on prediction markets. We'll talk about that on the show obviously, but I think that's a really fascinating behavioral aspect of this.

>> Yeah.

>> So, I bet a lot on football and stuff >> and if So, the Giants were minus 370.

I'm sorry. The Patriots be the Giants or minus 370.

>> And like just mentally, I don't want to bet 370 bucks to win 100. It sounds like the dumbest thing ever. But if you flip it and you say you could buy a dollar, >> yes or no?

>> No, listen. You I'm saying if you could buy a dollar for 78, then in my mind I'm like, wait, that's like a 20% return.

Like, of course, the Patriots could be the Giants. That's like 20% free money.

the Giants. That's like 20% free money.

>> Yeah. Yeah. So, it becomes like a income generating uh strategy, right?

>> But you just flip it. It's the same numbers but mentally cuz that sounds like a bond that you're buying below par.

>> It's a 20% return when you're buying a dollar for 78. It's like

>> you should not say it's like a bond.

>> It's free money but but minus 370 it's like a bond that matures on Monday night.

>> But seriously - 370 I'm not betting that.

>> Well, it depends on uh what the market is. Right.

is. Right.

>> Right. Right.

>> Have you thought about that aspect of it?

>> Yes. Yes, of course. That's that's

that's where that's a behavior we're seeing more and more demand for.

>> And and one more thing. So, I wouldn't even bet 370 to win 100, but would I put down 8,000 to get 10,000 because I'm so confident the Patriots are going to win?

Cuz that sounds like a 20% return. Like,

it feels like I would put much more money on the same exact bet on on the prediction market.

>> Is that you have a question in there?

>> No, it's a statement.

>> Oh, okay.

>> Do you have to use the word bet? Can you

say trade?

>> Bet.

>> Prediction. Wager. Prediction.

>> Yeah, wager is better than bet. It has

two syllables, so it's it's more sophisticated. All right, guys. How we

sophisticated. All right, guys. How we

looking?

>> This is This is an important man.

>> Indeed, he is.

>> You have a lot of You have a lot else to do while you're in New York.

>> Yeah. Yeah. Um

>> I'm sure they fill you up.

>> Yeah. I I asked for it, you know, cuz I travel takes so long that I think you have to just make the most of it.

>> And I'm probably not here until January next. So,

next. So, >> all right.

>> Here we go.

>> Thank you, Big John. 20.

Today's show is brought to you by Goldman Sachs Asset Management. With

Goldman Sachs active ETFs, you gain more than an investment. You gain access to the innovation, expertise, and service of Goldman Sachs. When markets turn on a moment's notice, we seek to uncover and

apply in-depth insights to help your clients navigate change and achieve their goals. Powered by an unwavering

their goals. Powered by an unwavering pursuit of excellence anchored in what serves your clients best. Active ETFs

from Goldman Sachs. Not just active, relentless. Find out more at

relentless. Find out more at am.gs.com/reentless.

am.gs.com/reentless.

All investing involves risk, including loss of principal. Alps Distributors,

Inc. is the distributor of the Goldman Sachs ETF funds.

>> What is this? Who? What? I'm always

surprised. All right, ladies and gentlemen, welcome to the Compound and Friends, the world's greatest investing podcast. I am your host, Mr. Downtown

podcast. I am your host, Mr. Downtown Josh Brown. Here with me today, my

Josh Brown. Here with me today, my co-host as always, Michael Batnik.

Hello.

Our guest is mystified by what's going on here. I am both hosting and producing

on here. I am both hosting and producing the show.

>> I'm just surprised you didn't get an office actually downtown. We're in

Midtown here.

>> I know.

>> Midtown. Josh Brown. long story behind that. Uh, our guest today is a dead

that. Uh, our guest today is a dead ringer for Ashton Kutcher. His name is Vlad Tennv. He is the co-founder and CEO

Vlad Tennv. He is the co-founder and CEO of Robin Hood Markets.

>> Vlad also co-founded Harmonic in 2023 to build the world's most advanced reasoning engine. Vlad holds a BS in

reasoning engine. Vlad holds a BS in mathematics from Stanford University and an MS in mathematics from UCLA. More

importantly, Vlad is one of the few people who has literally changed the world um from a fintech perspective, launching something that I think all of

us would agree has been among the most uh influential platforms in the last 25 years. Vlad, we're so excited to have

years. Vlad, we're so excited to have you here. Thank you so much for joining

you here. Thank you so much for joining us.

>> It's a pleasure.

>> That's a big buildup.

>> Yeah. No, I It's an honor and a pleasure.

>> So, I told you I watched you on CNBC this morning. We gave you a better intro

this morning. We gave you a better intro than they did. So, not to brag.

>> Yeah. Okay. Yeah. All right, we agree.

So, we're starting off. All right, so just >> no offense to their brain. I love those guys.

>> Shout out to shout out to uh the notorious Andrew Sorcin and Joe Caron.

All right. Um just to catch people up and we're not going to like do a deep dive into the past. Um born in Bulgaria, came here with your parents, they were

working with the World Bank, you lived in DC, you had a very early aptitude for math, and you ended up at Stamford. Is

that uh where the story begins for the purposes of the Robin Hood story?

>> I think that's pretty much right with a couple of twists and turns along the way. Okay.

way. Okay.

>> For first off, I immigrated with my aunt.

>> Oh, my family really didn't have much money. So, my somebody here is fired.

money. So, my somebody here is fired.

So okay.

>> It's okay. It's a it's a a common misconception because >> Okay.

>> Who would leave their children, you know, behind when you when you move across the the world? But the there was desperate times called for desperate measures. So I lived with my

measures. So I lived with my grandparents alone for a bit and then my aunt moved me over when it was clear that my family would have a future in this country. And then uh I bought my

this country. And then uh I bought my first stock when I was in middle school.

>> Oh wow. So, I was I was um I think I was forced into a higher degree than normal of financial savviness at a pretty young age. Just watching my grandparents in

age. Just watching my grandparents in Bulgaria go through hyperinflation.

5 years after I moved over, Bulgaria had the unfortunate distinction of having the highest inflation rate in the world at something like 1,800%. So,

>> So, right. So, you came over pre the lifting of the Iron Curtain and the Berlin Walling >> after. Oh, after before we couldn't

>> after. Oh, after before we couldn't leave.

>> Okay. Got got it. Okay. Um and then at Stamford you get you start getting involved in fintech startups and highfrequency trading software and things that probably most college

students are not thinking about. Uh but

you it seems like you were always like a little bit on the edge and a little bit early to some of like the important technologies and finance even as a university student. And that's how you

university student. And that's how you meet your co-founder. Can you talk a little bit about that time? Well,

actually when I came to Stanford, I wanted to be a physicist and then I met my co-founder through the physics department. We were both aspiring

department. We were both aspiring physicists and then we went to the math department at around the same time. And

uh my goal, I guess my my picture of what my future career would be like would be a math professor. I thought that I would

math professor. I thought that I would just be right >> one of those guys. I don't know if any of you know too many of of them, but they use a chalkboard, they have a

couch, they barely use computers until recently. And you're just uh solving

recently. And you're just uh solving math problems and and teaching students.

So, I thought that would be my career path.

>> My co-founder ended up getting a job at a high frequency trading firm kind of on a whim.

>> Yeah. and my first month in grad school.

So I I actually pursued a math PhD at UCLA and I dropped out. But uh my first month in grad school, his first month on the job, Lehman Brothers went under. So

it was the start of the global financial crisis.

>> And then you know one thing led to another >> and uh he has the >> in retrospect brilliant idea that that would be the the best time to start a financial company in the in the depths

of the global financial crisis. Right.

So One thing led to another and and here we are.

>> Was it called Robin Hood when you guys first started working together or when did that idea and I guess >> no uh the first company we built together was actually called

>> uh Solaris trading. It was the idea was we would we would do algorithmic trading, you know, we were smart math and physics guys and we would just do

quant trading strategies at low latency.

And that that company wasn't super successful, but we kind of pivoted into enterprise software for hedge funds and banks. And it was that second company

banks. And it was that second company that gave us the idea for Robin Hood because I had moved to California to start the West Coast office of of our

second company because we were both Stanford guys and we had a really hard time recruiting engineers in New York.

the good ones were all getting paid astronomical amounts of money at HFT shops. So, we were hiring people from

shops. So, we were hiring people from Stanford.

>> And then I thought, okay, rather than trying to convince each of these people to move across the country, why don't we just >> start there?

>> Start there.

>> Right.

>> So, um, so and and that allowed us to kind of have our feet into two separate worlds simultaneously. So, we were very

worlds simultaneously. So, we were very close to the the high frequency trading and institutional finance world in New York, >> right? But in San Francisco,

>> right? But in San Francisco, it was like the beginning of the mobile revolution. So when I moved back there,

revolution. So when I moved back there, Uber was just getting started with black car in San Francisco >> 09 2010.

>> This is like 2011.

>> Okay.

>> Instagram had just started.

>> So you kind of had the birth of this new mobile app industry, >> right? And and so I think the genesis of

>> right? And and so I think the genesis of Robin Hood and why we were somewhat early to this was we put both of those ideas together like the efficiency and

the disruption that high frequency trading brought to bear on institutional finance and and uh and proprietary

trading combined with the like user interface disruption that mobile brought on. And we kind of combined these two to

on. And we kind of combined these two to to create Robin Hood, which was for a long time commission-free trading, mobile first.

>> I think um Michael and I I tell me if you agree with this. The way that we look at the brokerage world now is it's Robin Hood's world and all of the big brokerages have had to adapt in some

way, shape, or form to basically the fact that you guys have bent reality as we know it. Fractional trading was a really big deal. um commission free trading of course which we could talk

about in a second but the first time I ever heard about Robin Hood was through one of your earliest uh investors angel investor >> Howard Lindon >> Lindon >> so Linden goes yeah you know these guys

they're doing commission free trading he was excited about you guys because I think he was excited about you personally but even he wasn't sure like you know we've we've all heard

commission free trading before but then he started to get more excited probably because the the valuation kept going up >> when we were at the Goldman event. Do

you remember was that 2015?

>> I don't know.

>> Howard was very bullish at that point.

>> Were you guys ever at uh Stocktoberfest or Linden?

>> I think I might have met you met you there or cross paths with you, but he he went from like >> hotel del Coronado.

>> Yes. So he went from like ah it's commission free trading. We'll see what happens. And he has a brokerage

happens. And he has a brokerage background. So do I. And then he was

background. So do I. And then he was like no no no you guys don't understand.

This is the real thing. And then by the time he was that bullish, a lot of people were talking about we didn't get it. Like we we were fairly dismissive

it. Like we we were fairly dismissive until I probably start to take you guys seriously like probably during the pandemic when I look cuz I was very late to the app. Like I was very very late.

Um and I think that what I misunderstood was to me the commission free trading. I

was sort of like well whatever it's five bucks a trade like it's so cheap who cares. I didn't appreciate how

cares. I didn't appreciate how incredible the user interface was and to me that is what distinguishes you from everybody else. Same way like Netflix

everybody else. Same way like Netflix doesn't necessarily have the best content but the app is light years ahead of their competition and same thing with you. So probably 2020 I was like all

you. So probably 2020 I was like all right this is uh this is pretty incredible.

>> So I think I would say the same thing as Michael but with one added aspect. What

I missed was the importance of fractional because I'm in the wealth management world and I'm dealing with people that have millions of dollars and that's not relevant to them. I mean it is now which we could talk about why but

in that time it's like what's the big deal? Just buy 100 share round lot like

deal? Just buy 100 share round lot like we've been doing for 100 years. Why

can't everybody just do that? I think

you saw that and I think a lot of people saw that and I was kind of in this wealth management world where it didn't matter. And I think that's part of why

matter. And I think that's part of why when Howard first explained what you guys were doing, I was like, I don't get it. Who cares?

it. Who cares?

>> But also, Fidelity and Schwab, like who the was this guy that he's gonna like take them like do anything? And you did.

>> Yeah.

>> It's like it's a miracle.

>> Anyway, without like without like um >> I appreciate it. Yeah.

>> Without without bragging, do you see it as it's Robin Hood's world now when you see so many other financial companies being forced to play the game the way

that you guys designed it? I think in the um it it depends on how concentrically you look at things. So

I'd say in our core business which is uh retail trading and and regulated brokerage um I I would say that we're pretty far ahead and we're kind of like

innovating and bringing new things. And

I think increasingly when I meet with the luminaries of the industry like the big discount brokerages um >> they do sort of look at Robin Hood

begrudgingly as uh taking the mantle for for democratizing investing and >> they I mean they definitely respect you guys now.

>> Yeah. I I think I think uh we we do get a little bit more respect whereas maybe 5 years ago it would have been like oh those kids over there with their toys.

Um uh and and that's a responsibility we take very seriously, right? It I mean it it was pretty amazing that you know just this Monday I was asked to participate

in the making IPOs great again roundtable um as sort of like the representative of the of the retail brokerage market >> and

>> you know if you think about all of the initiatives that are really going on to to further the markets and retail investing ranging from private market

access to to the new asset class getting privates it's uh available, getting retail access to IPOs, making earnings calls entertaining and engaging and not

this chore. Um I I think Robin Hood is

this chore. Um I I think Robin Hood is is at the center of that. And and not to mention infrastructural changes, not just fractional shares, which has been so important, but also 24-hour markets,

which which Robin Hood pioneered and really brought into the mainstream and has been pushing on that. So, um, yeah, I think I'm proud on on retail brokerage

that we're just sort of like pushing forward and we feel this responsibility to make sure that our capital markets are good. As many people as possible are

are good. As many people as possible are owners in the great industries that we're building in this country and we're exporting that to as many places outside the US as well. But there's also a lot

of industries where we feel like we've got a lot to prove and and maybe there's not as much clarity. We we certainly haven't declared victory. I mean, we're getting into banking. We have a great

credit card, but you know, there's giant credit card companies out there that um certainly can't declare victory yet.

>> You're taking on bigger and bigger uh competitors >> or even the small ones, prediction markets. We're out front there, but

markets. We're out front there, but that's a new market. and crypto where you know there there's a lot of competition not just in the US but

globally. So yes, retail retail

globally. So yes, retail retail brokerage I think we've been leaders for a while but we're not just sitting there. We we think of Robin Hood as a

there. We we think of Robin Hood as a comprehensive financial platform for all of your needs. So I think it it goes beyond brokerage at this point. I want

to uh I want to share a chart that Michael put in the dock that I think illustrates the Robin Hood impact on the I guess on the investor community and really on on society. I think it's I think it's that important.

>> John, the other one, the first one, please. So Vlad, so listen, this was you

please. So Vlad, so listen, this was you guys.

>> That's an amazing chart. So good.

>> So you guys built an incredible platform and also circumstances happened that the world shut down. people are very bored and they had money and they discovered the stock market and you did that

because Schwab who they democratized uh access to securities way before you did but them and TD Marit trade if you weren't there this chart would not exist it just wouldn't and no disrespect to

those two companies that we we both work with um but the chart that we're looking at is the value of equities held by the

bottom 50% of households um and this is it went vertical in 2020 from call it 125 billion or so up to I don't know is

that 6 or 700 billion today that is serious wealth creation and you you guys were a huge part of this >> you see that bump right right uh right

around 2010 that leg down >> and then it sort of flatlines for 10 years >> you know what the articles were saying for 10 years >> retail investing is dead right >> retail investing is dead millennials

have no interest in stock young people are are will never be as avid in terms of investing as their parents' generation were. Article after article

generation were. Article after article after article. Um, and then when once

after article. Um, and then when once the once the dam broke, it was like a completely different world. And to

Michael's point, maybe that line trends higher during the pandemic because people got stimulus checks, people were sitting at home, there was no sports on TV. I don't think it does that without

TV. I don't think it does that without the impact of Robin Hood. And even if you dislike some of the speculation that people were engaging in, you can't deny

that having that be a gateway moment for 30 million people or whatever the number is is super important. I'm sure you feel that way. But can you talk a little bit

that way. But can you talk a little bit a little bit about that era and that moment in time and how meaningful that was to the company?

>> Very meaningful. And a lot of people mention meme stocks, but I think if you think about the the the OG meme stock,

uh, in my opinion, it was Tesla. So, if

you look right before >> that's actually a really good point.

>> Yeah. Right. Right before that huge spike up uh in in 2020. Um, I remember

very vividly that end of 2019, we saw something happening on the platform.

there was like um a a surge in activity that couldn't really be explained by macro and what we noticed was people were just like reawakened by Tesla and

and remember this was >> the institutional community and the media was quite negative at that point uh on the company >> super bearish on Tesla super bearish and

I don't think people realized broadly that it it was going to be such a massive thing until at least one year later. But I think retail was early to

later. But I think retail was early to that. And when I think about Robin

that. And when I think about Robin Hood's growth and and the impact uh on the bottom 50% and kind of reawakening

the retail investor, the millennials who had basically been disillusioned since 2008, I also very much tie that with a reawakening of American innovation

because you look from the period of 2008 to, you know, the the end of the last decade, 2019, it was almost like the

doldrums of of innovation. Like there

were companies that were building, but it wasn't front and center. Now you have AI, you've got SpaceX launching rockets >> once a day, if not more. Um, so so like

the space industry is is headquartered here. Um, you've got prediction markets

here. Um, you've got prediction markets in crypto. So

in crypto. So >> GLP1s, flying cars. Yes.

>> Um, >> whimo, >> you've got uh online g uh are we using the word gambling?

>> Uh predicting online predicting >> sports betting. Like you've got all these things that did not really exist.

>> New industries.

>> Yeah. New industries and a very I think a very engaged uh audience of investors at every le level of the income scale.

>> Absolutely.

>> People are trying to find people are trying to find opportunities no matter who they are. And that's very different.

There's a chicken and an egg question here. Like did the uh retail investors

here. Like did the uh retail investors make these companies successful, give them the resources and the attention that they needed to thrive or is the

success of these companies driving retail investing activity and and I think there's a little bit of reinforcing retail investors. How many offerings did

retail investors. How many offerings did Tesla do that gave them money that they really needed to to survive?

>> Like a lot. So Vlad, I don't know if you've ever seen this chart, but I've shared this multiple times, and I think you're going to like this one quite a bit. We're looking at the market cap of

bit. We're looking at the market cap of Schwab divided by the market cap of you guys. And not too long ago, like

guys. And not too long ago, like literally in 20ut in 2023, Schwab was almost 23 times the size of Robin Hood.

And now you are on its heels. It's only

one and a half times bigger than you.

And I want to ask you, do you think do you think that daily active users are driving the metrics? Like is that the metric? Because if somebody were to look

metric? Because if somebody were to look at your financials and just compare it to Schwab like this is a joke. They have

like 130th of revenue. I'm making that number up. But just on traditional

number up. But just on traditional metrics, it looks like in so insane. But

John, throw this next chart up. So I

don't know if you saw this this week from Bank of America. Robin Hood is the biggest online platform and it's showing the split of daily active users comparing YouTube navy blue here to

Fidelity and Schwab and and everybody else and you are not the entire pie but my god 50% of the daily active users of

online platforms are at Robin Hood.

>> So I I think if you break down um and by the way we're uh immensely proud of the progress we've made here. I think

there's a lot more to do. Um there's a lot of people that still don't know about Robin Hood surprisingly that I think we we have yet to get to in the US.

>> We have to get into the retirement communities. I have been saying this

communities. I have been saying this >> dude. You know what?

>> dude. You know what?

>> We are we're we're spending a lot of time actually. We have a great

time actually. We have a great retirement.

>> They would enjoy this more than they think they will.

>> Vlad my wife know my wife knows who you guys are. I said I'm interviewing the

guys are. I said I'm interviewing the CEO of Robinood today and she's like oh like uh like the crypto company. I was

like sort of like and if my wife knows you're close. So um I think your

you're close. So um I think your question about daily active users so ultimately I think at least over the long run uh stock price is driven by

financial performance and I think one interesting stat to look at of course people look at revenue and they look at EPS and all of these but um do you guys ever look at rule of 40?

>> Yeah of course >> so rule of 40 I think is a interesting number because >> profitability and revenue growth.

>> Yeah. Yeah. Um, yeah. And you add those two, which mathematically, right, that's what you're getting credit for in your multiple that some of the incumbents aren't.

>> Yeah. And rule of 40, Robin Hood, I think, is a huge outlier. Uh, there was a chart floating around on social media that had, you know, this graph and every other company in the S&P 500 is kind of

in this cluster and it's like Palunteer and Robin Hood all the way out here. Um,

so I think we've been unique in that we've been able to grow margins while simultaneously growing revenue.

>> And then you ask, okay, what are the things that drive that upstream in the business?

>> It's the ability to um attract assets at an accelerating rate. We announced at earnings that we had over a third of a trillion of assets, which was a doubling

year-over-year at large scale. but also

us really utilizing technology to keep the cost slow so that as we scale, as we launch new products and get more assets and get more customers,

we keep our costs growing much more slowly than than our revenues. And and

certainly daily active users to some degree drive some elements of this, but we've got products that actually are very very valuable products that aren't daily active usage products. I mean, for

example, we have an amazing credit card, our retirement offering. Um,

increasingly, you know, a new business that we think we're going to do very well and, uh, I I'd like to be the leader in that business in not too long.

Raia custody. It's not a daily active usage product, but um, >> oh, it it will be. Let's put a pin in that though because >> perhaps perhaps for the >> I want to ask you about that later. Um,

there's a CAC advantage here though.

That's a big part of the story. You guys

went viral. Still, I guess still viral.

You're one of the most downloaded financial apps in in the app store and you have the kind of app that people once they learn how to use it, which doesn't take long, they can't wait to

show their friends. That is something that your competitors still don't have, at least that I'm aware of. And that, I think, gives you an advantage on acquiring your next million customers,

your next million customers. How

important has that been to the story?

>> I think that uh having RPO and LTV, sorry to be jargony, um making sure that the revenue that we generate from from each customer that

has a relationship with us being greater than the cost of acquisition is is a big advantage, >> right?

>> At the end of the day, I I think if we look at business and app metrics, the one I like to look at is retention. So

if if you look at and and this is publicly available data. If you compare Robin Hood apps retention curves, meaning of the people that download Robin Hood today, what percentage will

be using it 30 days from now, 90 days from now, 300 364 days from now? Um we

plateau at a much higher point than any of our competitors. And Robin Hood's a huge outlier. And what that allows us to

huge outlier. And what that allows us to do is we can be much more efficient with our customer acquisition and the money we spend because if double our customers

stick around to our competitors, then we we can pay theoretically a much higher amount. Well, we don't. We actually pay

amount. Well, we don't. We actually pay less, but that just like gives us more margin with which we can.

>> It's so funny. We have a similar we have a similar client acquisition philosophy.

When people come to any financial advisor to potentially do business, it could take 6 months, 12 months before they either even say yes or no, let

alone how long it takes them to actually move money over. When people come to us, in many cases, they've already decided they want to become a client. As a

result, we have a pretty good idea that most people that come to us, we can invest a lot of time upfront because we know ultimately they're going to become clients. A lot of firms are like, "We

clients. A lot of firms are like, "We can't we can't do four meetings with somebody before they're paying us." Um,

we can because of that that CAC um and and that efficiency. So, it's a real I I think it's a really underrated part of why you guys have been so successful.

Um, not to dwell in the past, but Michael and I wanted to ask you about the GameStop Mania moment, and I was thinking like it must have been bittersweet. It all worked out great in

bittersweet. It all worked out great in the end and it was your coming out party, not just in finance, but like as a pop cultural phenomenon. Um, and I

know that has like good and bad aspects to it. Um, in the heat of the moment,

to it. Um, in the heat of the moment, what was it like responding to regulators, battling misinformation on the internet, >> raising money,

>> raising money, trying to keep like your employees from losing losing their minds, trying to make sure clients were being taken care of, >> people on the internet very mad at you.

>> Yeah. So from the outside in it looked like you were in a in a mastrom and somehow you held it all together until the storm passed and then you were a stronger company on the other side of

that. I'd love to just hear like the

that. I'd love to just hear like the personal aspect of being the person in the center of it all.

>> Yeah, I think that the acute issue of GameStop was almost less stressful for me than just like the long burn of the 3 years

or so after that. So, GameStop um was basically one day of like extreme stress, you know, waking up to >> a collateral call of

>> a net cap issue that you had to resolve immediately >> or not exactly net cap. I think net cap was fine, but it was some other uh

clearing house nic deposit thing.

But yeah, it was like waking up to the collateral call and and by the way, by the time I woke up, my phone was unusable from all of the uh phone calls from angry customers who thought I was

colluding with Citadel for for whatever reason.

>> Um yeah, learned a lot. Um obviously up until up until that point, >> um

I wasn't really that out there in the media. I mean, my co-founder and I both

media. I mean, my co-founder and I both were really like, let's we're builders.

We're going to build. We're going to quietly >> um launch our products.

>> So, even 2020 kind of surprised us, you know, when we when we started appearing on the covers of magazines and like, well, these folks put us on the cover and they never even talked to us, you

know, that was kind of a a strange feeling. Um, and I I think

feeling. Um, and I I think I just didn't have enough reps to be prepared for what the public >> No, nobody could be prepared for. You

were probably like, "Oh, I I should have just been a math teacher." Like, you have like famous people on Twitter screaming at you. You have the op-ed pages of every newspaper in America yelling at you.

>> You were like a villain for a minute.

>> You were sort of like a villain.

>> Definitely.

>> Not anymore. It's come full circle. Now

you're a hero. And I I wanted to I wanted to just say though, we don't hear about any of the that people were saying then. Like Michael Lewis has left

saying then. Like Michael Lewis has left the building. The Flash Boys, the HFT,

the building. The Flash Boys, the HFT, the payment for order flow that when I say you've bent the universe. Now

everyone's like, "Yeah, big deal. I pay

a penny in a commit in a in a trading transaction. I don't see. And as a

transaction. I don't see. And as a result, I could do hundreds of trades a day. I don't care. I like it this way

day. I don't care. I like it this way better. So now everyone has come around

better. So now everyone has come around and said, you know what, actually all that stuff we were mad about, it turns out this is better than the way it used to be. And you've come all the way full

to be. And you've come all the way full we've come all the way full circle, I think, as a as an industry. U do do you see it that way?

>> I think that we've definitely gone through our share of of controversies and I think I've I've learned how to handle things better. I mean, we we've also evolved a lot to be honest. I think

that at first I didn't really see myself as a spokesperson for the industry and so you know then I was in the mode of all right

responding to criticism about Robin Hood or or me personally and I don't think that was the right path I mean at at the end of the day >> it's really Robin Hood's model has

become the standard model >> right they're all doing it now >> kind of like an attack on Robin Hood is basically an attack on retail investing in in America. And I think when we

started thinking about it that way, >> it became much easier to communicate about what we were trying to do and in our business because because really Yeah. I mean, the model has become this

Yeah. I mean, the model has become this the default model. There's certain

things that we want that I think are not just good for us, they're good for the industry. I I don't know. I don't see

industry. I I don't know. I don't see any many other people trying to to do them, but yeah, we believe in free markets. We think as many people as

markets. We think as many people as possible should be owning equity at as an early age of as possible. IPOs should

be better. Public companies should have a better brand and it shouldn't be like being public. The the perception out

being public. The the perception out there is nobody should ever go public.

It sucks. It's a it's a chore, right?

>> I think we have to reverse that. Um,

and I'm actually the the thing I worry about most right now is we're in the midst of this AI revolution. Very few

people have access to the to the interesting AI companies. I mean, you have Google, which is public, thankfully, and Nvidia, but those are at 4 trillion and >> everything else.

>> How much more upside could there be relative to the the smaller private companies that might revolutionize?

>> You'd have to believe a lot. Um,

>> yeah. And and that's that's one thing I'm very passionate about making it so that anyone can have access to private opportunities. It's not just not just

opportunities. It's not just not just the the wealthy.

>> Vlad, your business is extraordinarily procyclical. People are more likely to

procyclical. People are more likely to trade when they're making money. They

make money in a bull market. The options

contracts, by the way, your deck, I listen to your earnings call every quarter. Whoever does your deck is the

quarter. Whoever does your deck is the best in the world. They should get a raise. I'm a huge fan of your deck.

raise. I'm a huge fan of your deck.

>> Oh, thank you. Yeah. pass that along to Chris Kaggel, who's shout uh head of IR at Robin Hood.

>> So, your options contracts up 38% year-over-year. The crypto crypto

year-over-year. The crypto crypto notional volumes and there's a there's a transaction in here, but through the roof and these are your two most lucrative businesses. You've been

lucrative businesses. You've been through the shitterter. Like 2022 was not fun, especially for a lot of your customers. It was a really nasty bare

customers. It was a really nasty bare market for crypto, for equities, for the things that were popular. What did you learn then to prepare you guys for the next bare market whenever it should arrive?

>> And by the way, I should give a shout out to I know Chris Chris Kaggel has been getting his flowers, but there is really a big team uh around earnings as you guys can imagine. Um, and I hope you

enjoy the live video uh aspect of it and the Q&A. You didn't mention that part,

the Q&A. You didn't mention that part, but that's the part that's near and dear to my heart.

>> I use Quarter. I'm I'm after the fact. I

know you guys are work with them, but >> Yeah. So, you don't watch the videos.

>> Yeah. So, you don't watch the videos.

I'm a listener.

>> Oh, you're a listener.

>> Oh, >> but what you got to watch? What are you doing on these videos? You sitting at a table?

>> It like Alex Karp like >> uh It's more like uh I I like to think of it as Anthony Edwards or LeBron James after >> Okay. All right.

>> Okay. All right.

>> After a good NBA Finals game, you know.

>> All right. I'm in for that.

>> But so what do you guys do the next time we get a bear?

>> I'm wearing a shirt, by the way. It's

not just me with the towel on my head.

>> Okay, great.

>> Um I'm sorry. So

>> go ahead.

>> 2022 was actually a dark time when a lot of the tailwinds behind the business that drove us during during COVID reversed. So we went from zero interest

reversed. So we went from zero interest rates and helicopter money landing in in people's bank accounts to the highest

interest rates in 30 years. And you know when when interest rates are high, people trade less and they actually invest less. And there's there's less

invest less. And there's there's less first timers. And it makes sense, right?

first timers. And it makes sense, right?

If you can get 5% risk-free sitting in cash, the sort of like 7% postinflation net returns look less attractive.

>> You have to rethink all the risk that you're taking, right?

>> And so I think we could have taken one of two paths. One was just like batten down the hatches and wait for the bull market to return. And I think a lot of the mortgage brokers, for example, took

that path. They're like, well, nobody

that path. They're like, well, nobody wants mortgages. we just have to wait

wants mortgages. we just have to wait for the market to recover and rates eventually will go to zero. We didn't

want to do that. We asked ourselves how can we actually help customers with the products that they really need and they want to use in this environment. So we

introduced Robin Hood Gold and and the value the main value prop during that time period with Robin Hood Gold was the absolute highest interest rate you can

get on your cash among all major platforms. um coupled with a a really very high level of FDIC protection and

we did that through a cash >> gold is like the premium subscriber tier.

>> Yeah.

>> Was it like five or 10 bucks a month?

>> Five bucks a month. Okay. Yeah. 50 a

year. And then um yeah, at one point I think the interest rates got quite high.

You would get 5% on on Robin Hood Gold with >> two and a half million of FDIC insurance. So it's actually better than

insurance. So it's actually better than leaving money at a bank. At a bank, you get typically a low rate and then you only get 250,000.

>> A bank you get bronze, you get a basis point.

>> Yeah. Um

>> so I think that really um was the first big product that made us sort of like a a company that would thrive in a high interest rate environment. We we added retirement to that which has been very

successful. I think it's the best

successful. I think it's the best retirement offering in the industry.

>> What's your match? Is it 3% >> 3% on contributions for Robin Hood Gold members >> and and then we have over one and a half million retirement accounts. So, I think it's >> it's working.

>> The uh among the fastest growing, if not the fastest growing retirement, >> IAS and Roths. That's

>> okay. You're not working with sponsors in the 401k channel yet, are you?

>> Not yet. Not yet. Although that's

coming. Well, we we work with companies to help people roll over their their 401ks, but we don't have a direct B2B 401k offering yet. Uh although it's

offering yet. Uh although it's definitely something.

>> Okay. And then uh it it's funny on the active trader side, we really weren't focused on active traders very much up until 2022. We kind of built an active

until 2022. We kind of built an active trader business incidentally. What we

were really focused on was first-time investors and making it as easy as possible for them to get onboarded. But

by offering rock bottom fees on equities and options trading, we got active traders who are like, "Okay, maybe I'll do my research and my charting on a different platform, but no commissions,

no contract fees per options contract are too irresistible. The pricing is too good to pass up, right?"

>> So, they sort of like would use Robin Hood even though it wasn't really built for them. So, we we reversed that and

for them. So, we we reversed that and now I think we have the best active trader offering. And the mandate was

trader offering. And the mandate was really if you're an active trader, how do we make it so that you're at a disadvantage using any other platform?

And so you saw innovations like 24-hour market, um Robin Hood Legend, which >> you guys played so you guys played offense as a platform in the bare market >> big time.

>> And the people who played offense with you, here we are, I don't know, 100% later in the S&P or however uh 80% higher. like the people that played

higher. like the people that played offense in that time look really good right now.

>> I I think that's right. Yeah. And uh now we are in a position as a company where much more diversified and resilient. We

have 11 business lines at the end of Q3 that generate 100 million in annual revenue or more. I like to I call them cylinders.

>> So at one point we were like a V6 engine >> and then it was very I was very excited when we got to V8.

>> Now you're V11. We'll get to V12 and then W16 and then I'll have to change my analogy.

>> So I want to John, can you fire this picture for me?

>> So this is I I mean I look at this as a victory lap and a signal that you are So this is you on the I guess it's the cover of the Wall Street Journal. I

don't there's such thing as a cover, but it's a big feature >> and you're surrounded by some of your biggest fans and this is an annual event that you do in is this Vegas?

>> Yeah, that was that was Hood Summit this year. I mean, if you could have seen

year. I mean, if you could have seen this picture in 2020, you would have told yourself, "All right, if I just hang on, this is where things are

going." So now you're now you're hero.

going." So now you're now you're hero.

And the the the the gist of the piece is that you're not apologizing anymore for the Robin Hood ethos and you're not trying to be somebody else in the

industry and you've doubled down on what you guys call power users. And that

seems to be the new rallying cry. And I

want to share this with the audience and then have you react to it. This is from the article. At one point, Robin Hood

the article. At one point, Robin Hood temporarily restricted trading of such meme stocks, infuriating users who said they lost money. That February, Tenev

told Congress that pattern day traders at the center of that market chaos represented just 2% of Robin Hood's customer base and most were long-term

investors buying plain vanilla products.

Since then, Tenev has come to realize that plugged in, aggressive traders are actually key to his company's success.

Um, it sounds like you guys have realized, uh, this is actually your quote. These are our most engaged

quote. These are our most engaged customers that generate the lion share of our revenue. We put our best people on active traders. So whether you meant to build the best active trading

platform or not, it sounds like now you guys are embracing that. and the users who love you the most are the most engaged. Those are the people that

engaged. Those are the people that you're most focused on, which I would argue that's what every great business in America does.

>> I think we're we're on a path. I think

we've got a lot of work to do because active traders are a very demanding clientele. But I think um the point of

clientele. But I think um the point of of that that quote that you read, which maybe is slightly out of context, is there was a time period where we were kind of apologizing for having active

traders. And I don't think that was fair

traders. And I don't think that was fair to them because these are I mean I I've gotten to spend a lot of time with active traders and the media can tend to portray them as degenerate gamblers and

these >> and there are some degenerate gamblers.

>> No, there was worse. They were called dumb money.

>> Yeah. They called them dumb money. Yeah.

But you talk to these people and >> they're not all dumb money and they're not all degenerates is the point.

>> I mean they're normal people >> all of them just like >> just Michael >> some of them are incredibly sophisticated about uh everything they're doing and this is like a skill

that people can get better at. And you

know I think what one thing that it did for us is we really started thinking about you know how how we can make the tools better and better. Like we weren't investing a ton in tools other than making them easier to use. But now you

look at Robin Hood Legend, it's getting better every single day. And I think we'll get to the point where Robin Hood Legend is competitive with like institutional products.

>> What is Robin Hood Legend? I'm not

familiar with that.

>> Robin Hood Legend is our active trader web offering. So it's a more proumer

web offering. So it's a more proumer offering where you know >> think like a think or swim but like more more like intuitive for every user.

>> Yeah. But it it has uh it's like Robin Hood on desktop. best charting, best tools, and access to all the things you get on mobile, but with uh with great real estate.

>> There are two markets that you guys, as Michael has pointed out, uh make a lot of your money from crypto and options.

Um, a lot of people would look at that and say, "This is scratching the itch for for the gamblers, or there's too much

volatility here, or you know, whatever whatever critique that people have." And

some, you know, some of the critiques of that kind of activity are, of course, grounded in reality. Not everybody's

going to be an options trading superstar. I think we all agree. Um,

superstar. I think we all agree. Um,

when you hear people talk about financial nihilism or the zelennial generation doing zero days till expiration before they even make a

contribution to a retirement account.

What's your reaction to that? Do you

think it's unfair or do you think it's uh overemphasized and that's not really representative of what most people are doing? Like how do you how do you think

doing? Like how do you how do you think about that?

>> I mean I think we we definitely intend to win the active trading market and there's a real market there that it's not just us. All of our competitors are

are in it as well. You look at the the big guys and lots of upstarts. Um,

zeroday options have legitimate use cases. I mean, if if you think about it,

cases. I mean, if if you think about it, let's say you want to place a trade on a company and you want to play earnings.

Um, you don't want to deal with the time decay of that trade of getting a longdated option. So, zero days can be

longdated option. So, zero days can be the most direct and capital efficient way to um, sort of like trade your point of view >> just to capture that small window of time.

>> Yeah. cuz you don't want to deal with time decay and and I think that's part of the reason why they become so popular.

>> But not all of our customers trade options. If you do trade options though,

options. If you do trade options though, we want to give you all of the other tools in the arsenal that you need to to be successful. And actually, some of our

be successful. And actually, some of our biggest adopters of retirement accounts are our options traders. The options

traders who are most engaged tend to also be the the folks that have money in retirement or and are taking advantage of the matches. Oh, that's interesting.

So, they will put money away into one bucket that they don't trade that way.

>> Yeah. A lot of people talk about this as a graduation. It's like, oh, well,

a graduation. It's like, oh, well, hopefully you're taking these active traders and you're graduating them to to these to these products, but it's not really what happens. I think what happens is they just tend to add more

buckets, which we're making it easier to do with multiple accounts now. So you

can have your discretionary options trading portfolio, you can have your retirement portfolio, maybe you have like buy and hold dividend portfolio.

Um, and as we've started to like spend more time, I think what we've seen is as someone's relationship with Robin Hood grows and deepens, they tend to get to a point where they have multiple money

buckets and they're they're putting, you know, the lion share of their income into Robin Hood.

>> They're diversifying on your platform the activities that they're involved with. But but the act of trading

with. But but the act of trading actually usually still remains like they're they're still have they still have a component that they just like to manage directly.

>> But so you are you are seeing people do that. We'll get to this in one sec. Um

that. We'll get to this in one sec. Um

one of the my favorite charts that you guys have been producing for the last couple of quarters is you show the average like the net deposit by cohort.

This one the average cumulative net deposits have grown over time across our funded customer cohorts. So people that are starting with you, why don't you explain what this chart is showing?

>> Yeah. So basically this shows people that start um on a on a given month, right? Each line is a cohort, which is a

right? Each line is a cohort, which is a group of customers that started in a given month. And then uh I guess the

given month. And then uh I guess the where it hits the y-axis is their initial deposit. So how much money they

initial deposit. So how much money they put in as the first deposit >> and then where they end up.

>> The point is your customers are growing with you. the the co the customers are

with you. the the co the customers are growing each cohort uh and and over time they're starting with more money in their accounts and the rate of asset

growth in the accounts is increasing. So

the oldest cohorts, the people that started the longest to go are in the bottom >> like like they put $100 into the app.

>> Yeah. Or looks like about $1,000. Yeah.

>> And now you know the shortest ones are in the multiple thousands. So, your

customers, your customers are growing up and they're you're growing alongside them and you now sit on top of a company that is worth uh 100 as of as of 124

we're recording this 122 billion freaking dollars. Is this I know you were ambitious and optimistic, but you you have to like pinch yourself and just holy

>> And for the listener, there are only three uh in the capital markets industry larger than Robin Hood. Morgan Stanley,

Goldman, and Schwab.

>> And they had a bit of a head start.

Goldman Sachs >> and they might have had a few decades uh of a head start. This is where you are rel relative to everyone else. And

they're almost the other names in this in this group almost can't be seen.

>> Like Interactive Brokers is not a small company.

>> Yeah.

>> And your market cap is four times the size. It's really incredible.

size. It's really incredible.

>> I didn't realize they were that small, but yeah. I mean, it's it's humbling um

but yeah. I mean, it's it's humbling um to see.

>> It's humbling for them, not for you.

>> For me, too. Um,

>> you must be proud. You must be proud of your team and proud of what you guys >> Well, let me ask you a direct. Is your

stock overvalued? How would you react to somebody that thinks that it is?

>> Well, you got to look at the rule of 40.

Um, yeah, I tend to not look at the stock price so much.

>> Come on.

>> Um, once in a while, >> surprisingly. Um,

>> surprisingly. Um, >> John, fire chart 7. Let's make him look at his stock price. Um, this is your market cap. Uh I want to point out to

market cap. Uh I want to point out to people that the Robin Hood market cap in 2022, that period we just referenced was six billion.

>> So today at 122 billion, the people who were willing to bet on you as a company >> have also done very well. Next one, this is you versus the S&P 500 in total

return on a year-to-ate basis.

Um Robin Hood has been annualizing at 37% a year versus the S&P 12. Let's put up his revenue chart. Uh I know we're barging

revenue chart. Uh I know we're barging you with all these great superlatives, but we made the charts. We made the charts. You're going to look at them.

charts. You're going to look at them.

>> Uh last one, operating income, which I think is >> this is the one.

>> So this point about the profitability, not just the revenue growth, cuz any anybody can get re revenue growth. You

could open a store and say, I sell $100 bills for $80.

>> Your stockbased comp you fixed >> like that was an issue for a lot of companies, not just you. Uh this is >> well I relinquished all of my uh my uh equity uh my equity grants back in 2022

which helped.

>> Okay. Um when you see these oh we have one more John operating income growth.

So like obviously like there are there are aberant things happening but the direction is pretty impressive um on on operating income growth. You've averaged

400% since 2023. weird start well off a low base is the the issue, but >> um it's it's pretty it's pretty remarkable. I want to talk to you about

remarkable. I want to talk to you about a couple of the uh couple of things and and then we'll let you get out of here.

A couple of things that you're planning for the future.

Raaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa custody is near and dear to our hearts.

We're an RAA. Okay. Um you're a very wealthy man now and you must have financial adviserss. I'm sure it's a

financial adviserss. I'm sure it's a family office. I'm sure you're kneede in

family office. I'm sure you're kneede in people pitching you wealth management and all sorts of solutions. How do you think about the advice industry and and

Robin Hood's future role in it?

>> Yeah. I mean, surprisingly, I'm relatively new to having wealth.

>> We have an account form uh after the taping.

>> Yeah. Yeah. Maybe maybe uh maybe I can be your customer. Um, and maybe I can convince you guys to uh to to custody your your assets.

>> We're all We're all yours.

>> Yeah, Rob Rob's great. So, I've been um I'm relatively new to this, but um >> yeah, my my perspective is Robin Hood's built a lot of great things from retail

or selfcleing uh or a custodian of assets. And a lot of the things that

assets. And a lot of the things that when we talk to advisers, we hear they want like exposure to crypto and traditional assets in one place. Rock

bottom fees, uh, nice access to margin, um, are things that we offer. A great

user interface and a mobile app that, you know, frank frankly their expectations are quite low. It's like if I could get my balances to update, you know, in real time, that would just be

>> So we we do that stuff. And there's

obviously a lot of other things that are part of a comprehensive offering that we don't yet do, but we intend to do. For

example, some people are surprised to hear we don't have trust accounts on Robin Hood yet, which is a big thing. Of

course, Trade PMR does, but um >> that'll be sort of important as you come into RA class today, you're going to want to do that.

>> Yeah. Um so, you know, we're we're aware of of all the things and and so we're thinking about it. How how can we give the best of Robin Hood to RAAS and our

customers? I I think I I have a deep

customers? I I think I I have a deep appreciation for RAAS because a lot of our customers are entrepreneurs. I'm an

entrepreneur. RAAS think of themselves entrepreneurs. You're running a small

entrepreneurs. You're running a small business >> um or a big business in your case. How

can we make it as easy as possible to give you the best tools to succeed and align ourselves with uh with our RAAS? I

think the first thing that we can do very very easily that we've done is make an economic impact. How can we take our lower cost of servicing and pass that

along to lower fees to the adviserss and at the end of the day lower fees and and better economics to clients. And we

actually like this because we feel like over time since since you guys are fiduciaries, if we can demonstraably show that you get better economics custodying at Robin Hood, you'll sort of

like be more and more incented to move activity to us. So we introduced the first of its kind RAIA match for assets custody.

>> I saw that. How did that go? I don't

know if you're sharing any any actual data, but just directionally was that positive?

>> Well, I think it certainly positive. the

the sales cycle for RAAS changing their custodian is certainly a little bit longer than a retail customer which we're we're getting used to >> but I think you should think of that as

the beginning of our new approach. We're

going to cut fees. We have a giant retail customer base uh many of which are hungry for personal advice that we're going to plug in through the referral program >> referral program for advisers on your

platform. you can send the uh investors

platform. you can send the uh investors who are asking for actual planning help to those adviserss.

>> Yeah. So, so we we are cooking a lot and we are investing a lot in the space >> and I think that >> if if I think about the RAIA business

for us just from a business perspective um I think that all things being equal it should grow faster in terms of assets than our retail business because for the

retail business you kind of have two layers of compounding like we get more customers and those customers get wealthier over time, right? But in the advisory business, there's an additional

one. We can serve more advisers. We get

one. We can serve more advisers. We get

more advisers. Those advisers get more customers. Those customers increase

customers. Those customers increase their assets over time. So, all things being equal, uh, a mature, innovative RA custody business should grow assets and

be a more effective asset capture vehicle than retail brokerage. and and

you know we know and I I've talked you've probably talked to Rob about this. One thing that we really um

this. One thing that we really um aligned on is that the opportunity and multigenerational financial services is a big one. there's going to be 120

trillion changing hands from older generations to younger. And I don't think any of our competitors are really thinking about this as an opportunity, but what we're doing is we're designing

all of our products, including uh the future of RA custody around the family experience. We want Robin Hood to be

experience. We want Robin Hood to be better for you the more of your family members and the more of your trusts and entities are on the platform. In that

way, I think that the best way to have Robin Hood as a business benefit from this is for everyone to already be on Robin Hood. And actually, our oldest

Robin Hood. And actually, our oldest customers, the folks in the 70s and and 80s that are using Robin Hood, uh, are some of our happiest. Like, they love

Robin Hood. So, I think that over time,

Robin Hood. So, I think that over time, you'll be surprised at how well we serve the customers that maybe you you wouldn't think. Somebody somebody said

wouldn't think. Somebody somebody said somebody said no RAIA is going to move their whole customer base over to Robin Hood. And my response was, well, wait 2

Hood. And my response was, well, wait 2 years. Nobody's got to move anyone

years. Nobody's got to move anyone anywhere cuz the customers are already going to be there. And that's a really big part of your strategy. You're going

to have millions and millions of people who are already Robin Hood native. They

love the app. So, if somebody can come on that platform and advise them there, they're thrilled. They don't want to

they're thrilled. They don't want to leave.

>> Huge. Um, I don't think people appreciate this yet, but I think the smart RAAS are trying to figure this out. There's going to be a huge

out. There's going to be a huge advantage to those that are first on the on the RA custody platform when we launch our referral platform because the

one thing we're really good at is taking advantage of all the tools we have on user interface and experience to actually uh get people to engage with good content. So, you know, if if you're

good content. So, you know, if if you're among the first adviserss that's willing to trust the platform when we launch referrals, I think um you know, the the opportunity and the reward is going to

be much bigger than than people realize.

And and I think people are getting really excited about their referral program and the advisor facing offerings are going to get better at a much faster

rate here than at any of our competitors because we've got so many advantages in terms of technology that we're going to increasingly bring to bear in the space.

>> I want to show you I want to show you a funny graphic. Michael, explain what

funny graphic. Michael, explain what this is. So, our friend Michael Kites

this is. So, our friend Michael Kites made a financial advisor tech solutions map probably like I don't know 10 years ago or so and there was like 70

companies maybe now there is what like 400 there is 15 categories >> every one of these logos >> unbelievable >> is a company not a feature an individual

business that's selling technology to a wealth management firm like ours or to a Morgan Stanley or both and there are hundreds of companies in different categories.

>> We're not even on this chart, huh?

>> No, no, no. I was going to say this is your this is your list of potential acquisitions. There might be five or 10

acquisitions. There might be five or 10 gems on here, right?

>> Where they it should not be a company.

It should be a feature of a bigger platform.

>> You've got Dropbox on this chart.

>> Uh I didn't make this chart.

>> Um but I I think Dropbox I think you'll see like >> advisors uh store their files.

>> But look like the investment data analytics. There's what is there 30

analytics. There's what is there 30 logos under that. I mean,

>> so right, everything from Morning Star all the way down to like >> Vlad, you have a lot of homework to do.

>> 20 companies you've never heard of.

Anyway, >> there's a lot of uh >> this is your road map, but if you want to acquire RAAS or at least start working with RAAS, they're all customers of these companies and it might be uh

might be a Trojan horse method to get them more accustomed to working with you.

>> I think this just shows me how big the space is. It's gigantic. how much

space is. It's gigantic. how much

opportunity and how much opportunity there is for us to simplify and cut costs because it must be annoying to have to deal with how many vendors.

>> Uh globally wealth management is a trillion dollar a hundred trillion dollar business. So

dollar business. So >> that's that's a >> it's a lot. Um

>> that's a market I'd like to serve. Well,

>> this is the last thing I promise. Uh

prediction markets. So I think this is a really cool thing.

>> I think everybody's drunk. I

>> Hold on. I I want I want to do the pro and the con. For me, the pro is I know everything and I know what's going to happen and I'm really grateful.

>> Can you believe this guy?

>> I have bets that uh Jacob Allerty is going to win a nomination for best supporting actor in Frankenstein. This

is what I'm busy with. Um I No, I just think it's fun. I don't know that I'm going to launch a fund for other people to invest in my predictions. I just

think it's a lot of fun.

>> But you've thought about it. It seems

like But you're super bullish. Michael

thinks it's like uh do you think it's a fad people will do it?

>> I'm I'm Super Bowl on the category. Yes.

>> So, I'll give you the mic in a second. I

think it's very cool and I think it's fun. I think the size I don't think it's

fun. I think the size I don't think it's going to be nearly as big a market as uh did did Tar say from Cal say it's going to be bigger than the equity market or am I making that up?

>> Well, that I don't agree with.

>> I don't think it's gonna be close. I

think it could be a big opportunity but nowhere near the attention that it's getting. The thing is they're not

getting. The thing is they're not investments cuz they they end the thing happens or doesn't happen.

>> I think people get bored. People get

bored with it like >> so assets is not the right way to look at it.

>> Assets is wrong.

>> I think in terms of number of markets and diversity of markets, it's already exceeded the number of stocks listed.

So, >> so, so I think that the reason that matters is because um I think stocks, trading of stocks, if

you're an active trader, has some complexities to it. One, you don't exactly know how the inputs, let's say you understand a company really well like Tesla, you have pretty good idea how many deliveries they're going to

make, what their net income is going to be. It's not always straightforward to

be. It's not always straightforward to translate those inputs into what the stock price is going to move >> 100% >> it's not binary and you don't know even if you have the information you don't know what the impact will be on the

stock price >> also um uh exit criteria becomes complicated when do I sell my position >> you know prediction markets kind of deal with that for you

>> and the other thing is you can specialize in lots more things so you know you we there's prediction market traders

that are experts in uh Fed funds rate economic contracts, Oscars. Um,

personally, I keep track of AI models and capabilities. So, I'm a fan of

and capabilities. So, I'm a fan of those. And I feel like I kind of

those. And I feel like I kind of understand things. Everyone can probably

understand things. Everyone can probably find at least one area that they understand things better than conventional wisdom. And and I think

conventional wisdom. And and I think that's an interesting opportunity for traders.

>> There's data. There's a data benefit to this though that I think trumps uh every positive aspect which is I trust these more than I trust surveys and polls >> 100%.

>> Cuz people lie in surveys, people lie in polls, but they tell the truth when there's money on the line. And I think we've already seen a pretty remarkable situation with the presidential election. the prediction markets knew

election. the prediction markets knew Trump was going to win even when most of the polls said it was 50/50 coin toss uh up until a few days before the election.

>> That was a ground zero that started it all the presidential election.

>> That was a massive moment.

>> That was the first prediction market we listed.

>> So I here I have two takes. Number one,

I think the binary outcome of this is going to make the average retail participant a little bit bored. Wait a

minute. I lost all my money. Eventually

they're going to get tired of losing all their money. Even though some will win.

their money. Even though some will win.

Granted, I think for real pools of money, for institutional investors, for hedge funds, if there is enough liquidity, to Josh's point, you might be like, "Yeah, I think Nvidia is going to smash, but I don't know how the stock's going to react because I don't know

what's priced in." If you are a macro hedge fund and you want to bet on interest rates or currencies or whatever, and there is like or or a Fed funds rate or whatever, and there's a binary outcome of I don't need to predict the derivative. I just I want to

make the prediction of yes or no, and there's enough pool and liquidity to do that. That's where I think

that. That's where I think >> sounds like you agree with me.

>> That's where I think the huge opportunity is, but I don't think it's going to be with like the average audience, the retail participant.

>> Well, what we're seeing with the average retail participant is that prediction markets are the fastest growing business we've had. People love trading it.

we've had. People love trading it.

>> It's fun.

>> Yeah. But usually things I mean, we've launched a lot of new businesses. It

went from zero to we just announced three billion contracts in November.

That is a lot of contracts >> which is 30 million in revenue. So

that's over 300 million run rate um in less than a year of of operating. So um

I agree with all these things but I think that it's it's much bigger than we thought and uh we're still at the >> you're going to run into you're going to run into two things and you don't have

to have an answer for these today.

Obviously, the GA gaming uh commissions at the various states that have actual casinos are probably looking at the prediction markets getting into sports or have having already gotten into

sports, seeing that as head.

>> They're not happy about politics either.

>> No. Um Oh, I bet. So, that's one. You're

going to have all these uh agencies and departments come out of the woodwork. Um

which I'm sure you expect. That'll keep

the public affairs people busy for a while and the and the lawyers. But then

the other thing um insider trading. So

if I know for sure that a company is going to get acquired or there's going to be an approval of a drug or a certain shipment amount for Teslas, let's say, and I'm not supposed to know this, but I

do.

>> Yeah.

>> Why would I bother with options and stocks? I go right to a contract that

stocks? I go right to a contract that lets me make that bet. And we don't even have legislation for this on the books.

Like what is insider trading in the prediction markets? And is it even

prediction markets? And is it even illegal? Uh it's it's like too early.

illegal? Uh it's it's like too early.

>> I think I think basically all the major platforms uh ban it. Um and

>> yeah, they I'm sure they do. But what do you mean?

>> Uh it's not permissible. And in fact, uh >> but can you enforce it the same way that they have a mechanism to enforce it in the stock market?

>> Absolutely. Yeah. And actually one of the criticisms that the traditional gaming industry has is well you know we know the right thing to do. We have all these controls. Uh

these controls. Uh >> sure they do.

>> The financial industry has been dealing with market integrity for a long period of time. We have trade surveillance.

of time. We have trade surveillance.

Yeah. Because this isn't a unique problem to sports. You could have some inside information about a company's earnings. And you know, uh, I think

earnings. And you know, uh, I think we've we've basically figured out mechanisms to surveil for that.

>> Well, they watch the options market.

They see somebody that's never placed an options trade before buying out of the money calls the day before a stock goes up 20%. They're going to put the person

up 20%. They're going to put the person in jail within a year, >> right?

>> They know they know where to look for it and what it looks like. So, I mean, there's there's all kinds of like offshore uh prediction markets platforms that

aren't regulated, but because these trades go into uh CFTC regulated entities, there's all kinds of like market surveillance infrastructure that

that goes into play. So, I think it's an evolving space for sure, >> but uh yeah, the financial industry has dealt with exactly these types of

challenges. So the idea that somehow

challenges. So the idea that somehow we're at a disadvantage relative to literal casinos in doing market integrity seems silly >> because these prediction markets are so

small the volume I went yesterday to look will Giannis be traded before the deadline and there was like $220 in there like literally I I would have moved the market if I bet 100 bucks. So

if you're going to bet a lot of money on an outcome it's going to get flagged in two seconds.

>> Yeah. they'll they'll they'll find you relatively quickly because there are there are so few people trading right c some of these things. All right, we don't have to dwell on that. I want to say thank you so much for joining us

today. I know we kept you a little bit

today. I know we kept you a little bit longer than we promised, but um our audience definitely appreciates hearing from you and we love chatting with you.

Uh I want to let people know that they should be following Robin Hood.com for new developments and new things that you guys are launching. Anything big that we should be on the lookout for? Any big

events coming up? There's a big event that we have on December 16th, okay?

>> Robin Hood presents Yes. No. It's going

to focus on >> this is the the prediction market.

>> It's going to focus on prediction markets and AI and what that means for for the future of trading.

>> And then we're going to do a bunch next year, including uh synergy, which maybe you're familiar with. So, look out for all the great things we're doing to serve.

>> Should we come to that? Should Michael

and I come to that?

>> I think you should. It's an

>> Where is it?

>> Uh, next year. I think it might be in Washington DC.

>> Oh, it's easy for us.

>> All right.

>> Yeah, but I'm I'm not sure. I don't

think it's been finalized.

>> Uh Vlad T, if you're uh you are obviously uh iconic and you are taking a victory lap all over Wall Street and uh we're happy for you. We're proud of you.

Shout out to the whole Robin Hood community. Thank you so much for joining

community. Thank you so much for joining us. And guys, thank you for listening.

us. And guys, thank you for listening.

Thank you for watching and uh by all means follow Robin Hood and uh get get yourself up to speed on what's going on in the markets. All right, that's it from us this week. We appreciate you.

We'll talk to you soon.