Vlad Tenev (Part 1)
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What inspired Vlad Tenev to create Robinhood?
Tetragrammaton.
I was at this party in San Francisco in I think it was early 2012. And this was still when we were running our second business, the software business selling the picks and shovels to hedge funds. And I was explaining to this person at the party what we were doing. In San Francisco, a lot of people are, you know, tell me about your startup sort of thing. I was like, okay, well, we have this technology. It's really fast. Back then we weren't competing on cost, but it was all about latency. Like how quickly can you take a signal from the market, be able to interpret it and spit out a trade in response. And we were talking microseconds here.
How did Robinhood change the landscape of stock trading?
So you take the signal. Michael Lewis wrote a book about this. He did, yes. And that book caused a lot of problems for me later on. Yeah, because that book was published right when Robinhood was announced and launched. Effectively, I was telling this person about my business. And we have these customers that are using our software. They're trading billions of dollars per day in volume with a small team of people. And it's really fast. And by the way, it's very efficient.
What challenges did Robinhood face during its early days?
They pay next to nothing, right? And this guy was like, So you're telling me these customers, three or four of them that you have, trade tens of billions of dollars a day and they pay next to nothing. Why can't I have that? You know, I have my Schwab account. They're charging me, I don't know, $10, $20 a trade. Can I use your software? And at first I was kind of like, that's ridiculous. You can't use the software. You have to be a developer.
How did the financial crisis influence Robinhood's founding?
It's, you know, for institutional customers. But then I get to thinking, and I call my partner who is in New York on a sales trip. The question was, can we go after retail? Is there a retail product here? And this guy's right. All of the big discount brokerages are charging $10 a trade. And we kind of knew how everything worked full stack, how you can connect to the market.
They're also kind of antiquated for young people. I don't think they thought about opening one of those accounts.
Yeah, absolutely not.
What role did technology play in Robinhood's success?
And they had high minimums. Most of them would require $2,000 before opening an account. Nobody had mobile apps. So we started thinking, we're like, well, is there some reason why you can do this for really cheap on the institutional side, but not on the retail side? Are there additional rules and regulations? And we got deeper and deeper and deeper. and we just realized there's no fundamental reason. It's just no one had done it. Nobody had done it, and it was kind of a new thing. I mean, every 10 or 20 years, someone comes and tries, right?
How does Robinhood approach user experience and accessibility?
But it's not very many people were trying. As a matter of fact, E-Trade, which was kind of a disruptor in a similar vein to Robinhood, started in the 80s in Palo Alto, California, oddly enough. with these two older guys. One of them was like a business guy, and the other one was an engineer. And the business guy, I think he was in his 60s or 70s, this guy Bill Porter, had just gotten a Macintosh. And his idea was, I love my Macintosh, it would be really cool to be able to trade stocks on it. And that was kind of the genesis behind E-Trade, which became the dominant sort of like .com first online broker. So yeah, every 10 or 20 years, something happens where the right people kind of get together and create something.
My college best friend and I, we bonded over physics. So we both came to Stanford to study physics.
What are the future plans for Robinhood's services?
We both met in the physics department as physics majors. And we would challenge ourselves by taking all the graduate classes. And so we really bonded doing these late nights in the physics building, banging our head against the wall, trying to solve these like super difficult problems. Were they all problems that were already solved? Yeah, yeah. It was like, you know, homework problems, things like that. Not unsolved novel research, at least at that point. And then we both transitioned to math at the same time because... Stanford physics department was geared towards creating experimentalists.
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Chapters
8 chapters
1
What inspired Vlad Tenev to create Robinhood?
0:02–1:04
2
How did Robinhood change the landscape of stock trading?
1:04–1:34
3
What challenges did Robinhood face during its early days?
1:34–2:00
4
How did the financial crisis influence Robinhood's founding?
2:00–2:40
5
What role did technology play in Robinhood's success?
2:40–3:17
6
How does Robinhood approach user experience and accessibility?
3:17–4:14
7
What are the future plans for Robinhood's services?
4:14–4:57
8
How has going public impacted Robinhood's operations?
4:57–1:39:06