Vlad Tenev: Robinhood hits 11 nine-figure revenue lines, prediction markets double every quarter

little bit further away from the camera and you're getting closer and in 10 years when we're interviewing you for the 50th time, you're going to be right up. You're going to be in the studio actually. Yeah. Yeah. Maybe just be in person. Just come to LA. Uh the next time you're in Hollywood, please. You're welcome.

Um but anyway, uh let's get to what's new in your world. Uh take us through what's top of mind. There's a lot going on, but break it down. Let's see. Uh we did our earnings yesterday and earnings was incredibly strong.

Basically just relentless product velocity continuing uh leading to just increased market share across all assets. You have all the blue chip assets that we've had for a long time, equities, options, crypto, but then prediction markets have just been ripping.

You know, we we've been doubling every quarter, quarter over quarter since we launched just about a year ago. And so far in October, October's been bigger than all of Q3 put together. Wow. And and we started uh at the beginning of Q3, we had nine business lines that generated 100 million plus of annual revenue.

Get the gong. Now we have 11. They have 11 now. Right here. The gong. So we're hitting the gong for 11. nine figure revenue [music] business lines. Amazing.

What uh Oh, I love that you guys also haven't gone that one, [laughter] not with it, but uh take me through uh like like what what are the second order readings on how your business is doing? Like there's one read where I could say, okay, if Robin Hood's doing well, that means the market's booming.

Maybe there's higher volatility, so people are trading in and out. There's a general trend of people uh trading uh maybe more on their app or more on their phone. There's younger people getting into the market. There's all sorts of different reads.

Like, did you learn anything this quarter about the trend of uh your like how Americans are participating in the economy broadly? Are there any lessons that stuck out? I mean, I think that uh you're right. I think we also get this question of like how much of your success is driven by the broader market, right?

Yeah, that's why we try not to delude ourselves and get too confident when volumes are going up and we also try not to beat ourselves too bad if if uh volumes are going down in the broader market. We really look at market share and we publish these numbers.

It's in the slide deck on earnings market share uh growing across pretty much all the assets because there is just a very old legacy infrastructure of like you know the we've all seen Wolf of Wall Street like there's the stock broker that calls you uh that's probably going out of fashion and you're kind of eating that dinosaur one bite at a time probably but that's the part that people don't necessarily see because they're familiar with you and the company and the product.

Um, but you are taking market share every single quarter probably something like that. And we're still very small actually in the grand scheme of things.

Like we have a a third of a trillion of assets on the platform which sounds like a big number but there's going to be 120 plus trillion in assets handed down from older generations to younger over the next few decades. I call that the great wealth transfer. What was the number?

120 trillion plus in the great wealth transfer. So that's wild. Robin Hood currently is like less than a third of a percent of that. I think we've got a lot of room to run. Yeah. And if if you're a young person in this country, millennial, Gen Z, soon to be Gen Alpha.

Uh you don't really want to do your finances at a brickandmortar store. You don't want to call someone on the phone. Uh, I mean, you'd like to have someone available if you do want that. But these are digitally sa savvy, digitally native people that are comfortable doing everything on the smartphone.

So, what they care most about is having great technology. Yeah. And I think Robin Hood has a real shot at being not just your primary, but also your secondary financial account. We want to be both. So, um, we're we're just marching along on that vision. talk to me about how research is changing.

I had this interesting we Jordy and I have been joking about we want to uh get into buying a lot of land. I went to I went to uh chatbt and I said how can I buy land whether I have a $100 or a million dollars? What are the options? What's the most underlying asset that's maybe in an ETF or a REIT?

And it gave me some options. And I feel like this idea of people coming up with investment thesis from listening to stuff, but not necessarily getting like a specific ticker or a specific portfolio and then they want to go and construct that and actually build something that expresses their belief.

Maybe they believe in America and they want and they want to express it that way. Um, how can how do you think uh research is changing and actually surfacing the assets in more of a conversational way? Maybe there's AI in there, but how are you thinking about research changing?

I think one of the things we're seeing is it's becoming more granular and a lot of people thought that it wouldn't happen necessarily in this way. You know, for a while the the the trend was really toward indexing and ETFs as a as a new product got adoption. They started getting tons of assets.

When we were first starting Robin Hood, we were kind of moving in a different direction and there was some skepticism from investors who thought that everything was just going to be indexed and indirect and it would just be people investing in broad market indices and diversified funds.

and and we we made a bet in the other direction that in fact no uh people want to move away from indexes they actually want to uh express their viewpoints more precisely and so you're seeing more granular investments individual equities but not just individual equities you're seeing options trading the rise of zeroday options same day expir and I think prediction markets are a continuation of that because you're starting to see markets uh for stocks and whether they're going to outperform earnings, for example.

Uh, a lot of a lot of people used to play the presidential election and have a thesis there that they would play by trading stocks or crypto, but now you can do that directly. So, I think I think it's getting even more granular.

People will have very specific thesis that they understand and they have conviction on and and we're giving products for them to express that. And and on the land side, uh that's super interesting because I would bucket that under alternatives. Yeah. Right. Yeah. Like people want access to alternatives.

The only way to have access to alternatives right now is through REITs or these diversified indices. But what people really want is to invest in an individual private company as easily as they can invest in a public stock.

And maybe they want an individual piece of land or a property in a neighborhood that they think is going to do well rather than just some like commercial real estate fund that has that has a portfolio everywhere because they can they can better understand whether that's going to go up or down.

And I think we're moving in that direction. Tokenization is uh is is solving a lot of the technical problems with that. And of course there's regulatory hurdles that once we get through I think will will open up lots of alternative assets to retail investors. Yeah. Yes. Sorry.

What uh what companies and and CEOs do you think the best do the best job at at shareholder engagement and and what do you think are best practices around shareholder engagement today? I think uh I would I would point out Rob like you guys as as a company that does this incredibly well.

I think part of your strategy is maybe like let's do what we want to tell we want other companies to do, right?

Because if the the better that that uh management teams get and companies get at at having and building relationships with shareholders, the better experience it is to be uh a shareholder, but what what have been your kind of inspirations uh that have guided your guys' strategy? And who else do you admire in the market?

Yeah, I mean that's that's such a uh I love talking about this because um yeah, I mean our uh IR team, Chris Kaggel, who leads IR from us, uh has been getting a lot of calls.

Uh I think he's become a little bit of a luminary in the how to engage retail shareholders using traditionally kind of like boring uh forums like earnings. Um and we've been on a journey ourselves.

I remember watching our earnings call a year ago and you know like many people I go on YouTube and I see let's see who's talking about our earnings and there were actually groups of influencers that watch our earnings live and kind of talk about it and I sat through the experience and they were looking at for a long time just a slide deck with our logo in there.

It wasn't even the new brand of our logo.

it was the old one and then [laughter] it's just like you know we were on a polycom the analysts were on the call nobody knew whose turn it was to talk it was a bad experience and we started just by wanting to clean that up so we did our first video earnings call three quarters ago and every quarter we've been thinking about how can we do a little bit more and if if you view it from the perspective of a retail shareholder it can't just be We're reading scripts of information.

It has to be engaging. And so it's video. It's getting more stakeholders that can ask good questions live on video if possible, asking those questions in real time. And you know, you guys have figured it out in your forum. I think that what earnings is is a community event and you should think about it as such.

And I think the best CEOs, the best companies who really care about engaging retail have to move from thinking about it as a chore to actually one more event where you can get your brand and what you stand for out to as many of your stakeholders and community members as possible.

thinking about it like a thinking about it like a product like if you think about like the earnings call is like a product launch where the customer is the shareholder like you know most companies today their earnings calls and and the way they treat earnings does not reflect that at all and it's and it's such a relatively small investment compared to just operating the company at large for potentially much better experience but you were talking about Palanteer um yeah I I mean what what I'll tell you is we're uh helping companies whenever someone comes up to us and asks us how can we improve earnings we uh we we we always want to help like I win if more and more retail access the markets and more companies treat retail as first class citizens so we're more uh aligned there and we have products we've got say technologies which offers shareholder Q&A to retail and [clears throat] we're actually uh piloting a program where, you know, we live stream our own earnings in our app and we'd like to make that available to other companies.

So, Open Door after the close today is the first uh company outside of Robin Hood that's streaming their earnings live on video via our app. Um, so I I think and we've gotten a lot of a lot of companies asking us if they can do that.

and we we can come we can put together a whole bunch of things that really center around how to make the experience really engaging. On the topic of retail generally h how are conversations going around uh IPO allocations?

I know in the past you've been very loud about getting more and more uh allocation uh for you know not not even just Robin Hood users but retail broadly. Uh what what's the update there? Yeah.

So when we launched IPO access uh which is our product for getting retail exposure to to IPOs, it was 2021 and we did it in advance of our own IPO. But we always wanted to make it more broadly available. At first people were skeptical. You know CEOs and their bankers would try to talk them out of it.

More often than not they would ask why am I doing this new thing? I should just focus on running my business and get my bankers to, you know, tell me what to do for my IPO. And there was not very much incentive to do things differently.

So, we really had to like claw and scratch and ask for favors to get retail allocations and IPOs back then. Then the IPO window shut for many years, but when it reopened, it's been a huge change.

Now basically every single company comes and asks us about their retail strategy because they've seen what happens in the public markets to companies that engage retail effectively and so allocations have been generally going up. Um retail's more engaged.

CEOs are talking about how you know they're giving bigger and bigger allocations. Uh you guys probably saw bullish which was after Figma uh you know bullish co came out gave retail a huge allocation 20% of his deal uh 10% of that went to Robin Hood and that used to be considered a crazy number.

I mean, when we gave uh retail allocation of 2025% in our IPO, people kind of understood because it's your Robin Hood, but the idea of any company doing that, uh, seemed outlandish. So I we're we're doubling down on that.

Uh I think it's clear to companies what we bring to the table, which in many cases the demand on the Robin Hood platform from retail shareholders is larger than the total amount they're raising. Um which has been a huge a huge thing.

We can give them all sorts of information about the demand curve and how much retail wants at any given price, which is very valuable. So we're building out that business. We're also going earlier stage. We want to give retail access to companies before they go public.

And in the US, we've got Robin Hood Ventures, which is our big initiative towards that vision. Mhm. What uh yeah, how how much can you share on Robin Hood Ventures specifically and and and uh how that will enable more more retail access to privates? Well, I could tell you it's it's a closedend fund.

Um, and it's going to be a diversified vehicle for nonacredited and it'll be uh like closed end funds traded on an exchange. Got it. So, when we looked at what kind of vehicle retail would want to invest in, um, we knew that it had to be liquid. Most people don't like their money uh being tied up.

We knew they wanted highquality names. uh and you know I ideally people would want it to be individual names but that's not uh that's not uh easy to do for unacredited and with liquidity but I think we're we're moving in that direction.

Uh so we're in the quiet period where we're going to we're moving towards an IPO of this fund. Uh, and I think it's just a big step towards our vision of, you know, being the go-to place for investing, whether it be public company or or privates. Yeah.

I've been I've been thinking a lot lately about the the challenge right now that the big labs are going through where there's relatively there's such a relatively small number of people individuals and funds that are you know even these cap tales cap tables have swollen but they they don't have a lot of public support we've seen when they go through kind of rocky periods in the in in the same way that you know if Tesla for example has a bad quarter there's an army of people that are saying I you know, this is just a blip.

We're riding. We're riding, etc. Everyone wants to know about prediction markets. Uh, how are you thinking about partnering uh on other products? I mean, I remember when Robin Hood launched Bitcoin, it was I I don't believe it was in partnership with anyone under the hood, but actually I don't remember.

So how do you think about partnerships, prediction markets, KHI, where everything is going there and and how you how you got even place even did you did you predict how quickly prediction markets would grow? I mean and that's a great question.

In a year they've gone from being like something that were felt like it was just like something that online people talked about and believed in the potential in but tracker. Exactly. That's what it was. Exactly. We went from a presidential tracker to mainstream in a year. So yeah, let's let's let's talk through this.

Yeah, I mean uh I think that initially before uh the presidential election last year, prediction markets were part of our 2026 plan and we were planning on offering futures outrights like you know oil and gold and all the standard futures contracts and we thought well prediction markets could be a way to make it a little bit more mainstream but they haven't really worked in the past.

Um but then there was something that happened that changed everything and it was the Supreme Court decision allowing presidential prediction markets and we jumped on that as as soon as that result came out. We were about a month before the presidential election. We like reorganized our road map.

We launched uh the presidential election market uh in advance of futures outrights and that did about half a billion contracts in one week which is a big business particularly week one in um and then that's followed with uh the Super Bowl uh which we had to pull back but then we relaunched sports with uh with March Madness and it's just been on a tear ever since.

Yeah, and I think the story is people thought of it as an election only thing, but prediction markets are much broader. We now have over a thousand contracts on the platform.

And in in the same way that, you know, options trades and zero days allow traders to express a more granular viewpoint, prediction markets do the same, but they have this other added benefit that they're a source of news and information.

So even if you don't want to trade, if you want to know about what's happening or what's likely to happen with a sports event or a political event or an election, you're going to those prediction markets as a more accurate source of information in many cases more accurate than polls. Yeah.

How do you think about the the shape of the team at Robin Hood that will uh work on prediction markets? Is it fundamentally a different legal structure or financial team?

like do you have like a desk market making or different market making partners or is it a different technology because I imagine on a lot of the crypto stuff uh you need developers who understand how to write smart contracts at a certain level are prediction markets any different from other products are they fundamentally different or is it somewhat similar to what you've already been doing it's pretty similar to what we're doing I mean uh they're CFTC regulated uh event contracts And so it's under the same license that we use to offer futures.

Um if if you think about it, you've got market data uh coming in and the trades go on an exchange. Right now we partner with two uh Cali and Forecastex. Okay. And market makers plug into those exchanges to provide liquidity. Sure.

From a riskmanagement perspective, in some ways the contracts are even simpler instruments than than options and futures. There's no leverage for instance that poses uh more complicated risk management challenges. Got it. But uh we are investing a lot.

I mean from a product and design standpoint uh I know there's a lot more that we can do and if you're paying attention to the Robin Hood product, it's changing on a weekly basis. Yeah. Yeah, that makes a lot. How do you how do you what's the framework for prioritizing new product lines?

You've now gone from very rarely do companies create a $100 million revenue business and create a second $100 million revenue business and even more rare to go 3 4 5 6 7 8 9 10 11. So now you guys have built the muscle to take new products from 0 to one.

I'm sure that that but at the same time story of Robin Hood is like focus and delivering you know great uh customer uh client experiences. So, I'm curious what the framework is.

What what justifies net new investment when you're already at this massive scale and it's hard to uh when you have these products that have, you know, insane product market fit, you have this incoming wealth transfer that I'm sure a lot of that, you know, will flow to Robin Hood and other other new players.

But how what what what qualifies something as as worthy of, you know, real investment? Yeah, I mean I think the north star is really how do we become your financial super app? How can we get all of your finances uh done on Robin Hood and make it so that you don't have to leave?

Um and and the reason that's our goal, by the way, I I think it's not obvious because a lot of companies have found great success just going super deep and finding a a narrow niche. And you know, we we don't aim to just be the best prediction markets platform, right?

We want to be the home for all of your money, your primary and secondary financial account. And the reason is we found that fundamentally customers love the simplicity of having all of their money and all their financial accounts in one place.

And and there's advantages to that too because if we can if we can handle all of your finances and offer you all these products, then we can actually take a cut we can take a hit on the economics for each one knowing that in aggregate the relationship and the average revenue per user is is still going to be a big number.

So we can operate each one of them at lower margins by virtue of of offering more of these. And you know, you ask our GMs, you you ask Johan what the best uh Johan's our crypto leader, what's the best Robin Hood feature, what's his favorite one?

He'd point to the brokerage business because the main one of the main advantages of having your crypto on Robin Hood is you can easily sell your crypto buying equity even over the weekend. Um and and we're we're the only platform that allows you to trade these things uh in one place.

So, you get prediction markets, you get crypto, options, futures, equities, all using uniform KYC, uh, great funding rails that make it easy to move money in and out. We've got a great credit card and banking's rolling out.

And because we have all these other products and sources of revenue, we can be super competitive on our banking offering, too. I mean, early reads from customers that are testing it out is that they love earning a competitive rate on checking, for example.

You know, most banks don't give you anything on checking and they make it hard for you. They say, "Okay, well, you know, checking is just for moving money in and out. Savings is what you put where you put money if you want to earn interest.

" Of course, they don't pay much interest in savings either, but that's beside the point. The reason is uh they have to earn money somewhere and and checking is like the the the most simple straightforward way.

So I I think it allows us to break that model a little bit more and offer more differentiated value across all products. Makes total sense.

Uh recently we've seen a number of uh both public and private companies uh doing layoffs and a lot of the messaging they they use around that is around how much efficiency they're getting out of AI.

Our theory or my theory personally is that a lot of these management teams need a good answer for why they're doing a layoff and saying we're getting efficiency out of AI is one of those. How much do you think that that's that's real?

Uh or or do you think a lot of these companies are getting so much efficiency that that the layoffs are justified purely on on the capabilities of AI today?

Yeah, I'm sure you guys have seen that chart on social media that um it has like chat GPT launched in September of 2022 and then SNP goes up and job openings go down. Right. Totally.

and and I chatbt is a great product but it is not replace you know we run a company that does research and creates content which is great at and we have not we have not been able to replace anybody there's that we're still like hungry to to hire people and so in our view even though we're getting leverage out of it I our incredible tool it's an incredible tool but it's not causing us to lay off and it's not causing us to hire any less it's been SAS.

Yeah. Yeah. I mean what I tell you is that chart is interesting, right? Because the time that chat GPT launched also coincides with the time in like startup history where companies were starting to get fit, right? Yeah. And interest and interest rates were going through the roof. Interest rates were going up.

But you had Elon uh taking over Twitter and then you started seeing lots and lots of companies uh doing layoffs. you know, Meta started doing them.

Even Alphabet Google did one which it it became it went from being this taboo topic where almost if you were doing it, it was a sign of your company failing into everyone's doing it. So, it had like this mimemetic quality to it. Um, so I think there's an element of that.

I don't think it's just AI, but I do think AI has significant impact. I mean, we really felt it ourselves. So, so we focus on AI across the business but with a particular emphasis on engineering and customer support. So, we track for example on customer support. One of the top metrics is AI deflection rate.

What percentage of tickets that would have come in anyway are now being handled by AI agents. And on the engineering side, we track what percentage of code is generated by AI and the average amount of code that that gen that engineers contribute on a monthly basis. And what we've seen is that there's real progress.

I mean, we had a an infrastructure issue that affected our AI chat bots a couple of weeks ago. And you know, we saw an immediate influx. The phone started ringing like crazy uh during that time period.

So, it felt very theoretical at first, like maybe you're just seeing these numbers go up, but do you really know the impact?

But yeah, saying saying that we're getting value in engineering and customer experience is like the pra that's like pragmatic and and very real that that to me is the places that companies are getting leverage at scale that's like undeniable.

It's when people when people do a layoff and they're laying off, you know, 10,000 people like and they're not necessarily engineers or customer support, you know, reps, that's when I go like, okay, what were they doing and how is AI kind of replacing their work?

Or maybe they just weren't providing that much value and that's why the layoffs happen. I completely agree that it's a very effective smoke screen because it makes it makes you seem you could argue that it makes the company seem better, right? Oh, they're really front foot on AI.

Um, so anytime there's an opportunity like that, you should assume there's an incentive for companies to overmbellish what's happening. Uh, absolutely. At the end of every interview, we ask you about harmonic. Uh now I'd love to know if there's any sort of change in your thinking.

We were just talking to Brett Taylor and he was saying that uh his one of his predictions is that uh we might have AI that can do advanced science and novel math but still not really requires a whole bunch of harnessing to just you know answer a service ticket effectively and you know his business will continue while AI is doing advanced math.

He kind of laid out a bullcase for both harmonic and Sierra coexisting which which you know in the in the singularity didn't really make sense for a while but now I think people are wrapping their minds around it.

Uh have there been any updates to your thinking about AGI super intelligence uh just how tractable attacking science with AI is? Um are we on a decadel long fight for this or do we think we're going to be making breakthroughs sooner? just how's your how's your thinking about uh uh mathematical AI?

Yeah, I think that it's for sure happening and um I'm [snorts] sure your guys' X feeds are a little bit different than mine. I follow all the math researchers and what you've seen happening over the past uh couple of months in particular is mathematicians who are maybe professors at uh at top universities.

There's a UCLA professor, Ernest Rayu, for example, who published a thread. It was pretty uh it went somewhat viral where he's like, "Hey, I used AI to actually like prove this new result uh that that didn't exist before. " And, you know, it was a little clunky. I had to go back and forth with the AI.

Some of the ideas didn't make sense, but there was this one idea that it had that actually ended up being true. Um and then we followed up with uh our our harmonic API and formalized his result. So uh we formalized it so that the machine actually validated its correctness.

But you're starting to see this this happening and I think at first it's going to be in these kind of like obscure small results like a airdush problem or a little challenge here and there but you could see that just like the length of autonomous tasks increases over time the complexity of mathematical proofs is going to increase over time as well.

So, we're on the path and a lot of people predicted it, but there was skepticism about can it do anything new. We're 100% going to get novel mathematical results that are significant.

And and what harmonic can do with our API is make it so that when you have a thousand plus pages of AI generated mathematical proofs, it doesn't take a team of, you know, 10 mathematicians four years to validate the result.

verification is going to be the bottleneck and you're just going to want the machine to to take care of that as well. You mentioned the API what the future is. Yeah, you mentioned the API. Is there a world where uh mathematicians need a like cursor for math on top?

Is there an opportunity for you to do sort of a co-pilot or an application layer product on top of the API just to increase and you know get into the centaur era of the mathematicians daytoday like what is what is enhancing their productivity look like if you're not just oneshotting every math problem but you're actually working collaboratively alongside a mathematician.

Yeah 100%.

I mean what we're building right now is very close to a clawed code for math and if if you think about a lot of mathematicians that are using lean which is the formal theorem prover a programming language that is useful for math uh they're not working on a chalkboard and chalk anymore they're in VS code which cursor is basically a a fork of VS code so mathematics and computer programming ing are converging uh converging into one.

And it's pretty amazing for me as a former mathematician because people thought that math was like nowhere close to being computerized in any real way. Like for a while the big challenge was how do I like type my math formulas so that I can actually like save them to a PDF. Sure. And we figured that out.

But now real mathematics work is is being done on computer for I think the first time in history. Everything is computer. Everything is computer. Yeah. Uh, you know, it's not computer. Our last question, which is a very silly question, but everyone wants us to ask. Uh, what is the biggest fish you've ever caught?

Have you been fishing? We want to know if you've caught any fish, and if so, what's the biggest fish that you've caught? Oh, uh, let's see. Um, my brother-in-law and I, uh, love going fly fishing in Montana.

We we've done some fly fishing in uh on the Blackfoot River down there and uh and I'd have to say um I'm not as good as him. I've I've caught uh I've caught trouts of all kinds. Great. Rainbow trout. Bull trout. About this big. Yeah. Trout. Maybe a little bit bigger, I think. Okay. Okay. Off the screen.

We're off the screen. We're off the screen. That's good. I had some difficulty curling the trout, so it must have been at least 50 60 lbs. Okay. Wow. That's pretty big. There we go. Well, thank you for for playing along with the silly fishing question.

Uh, but we somehow got on fishing yesterday and uh we promised that we would ask all of our guests what the biggest fish they've ever caught was. Uh, but thank you so much for taking the time to come check usate. Always a great time. Always a pleasure, gentlemen. Fun hanging out with you. Have a great one.

Have a rest of your day. Uh, quickly let me tell you about linear. Linear is a purpose-built tool for planning and building products. to meet them system for modern software development streamline issues projects and product road maps. Up next we have Yuri from Overwolf.

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