Chapter 1: What led to the GameStop crisis and how did it impact Robinhood?
I want to come to GameStop for a moment. You need billions in collateral. You make a decision to restrict the trading. How did you make that decision? It was a situation which had no precedent. The narrative that came out was you were in bed with the hedge funds. A juicy falsehood is more powerful than a boring truth. What did you think of the movie Dumb Money when you watched it?
I didn't see the entire thing, but I did see the clips that I was in. Wait, come on. You haven't watched it. I think what most companies suffer from is... I want to come to GameStop for a moment. So take me back to the moment your phone rings. You need billions in collateral. Maybe set the scene for us.
Chapter 2: What does 'founder mode' mean for corporate restructuring?
And you make a decision to restrict the trading. How did you make that decision? I have very fuzzy recollection of that time. You know, sometimes you talk to... Trauma victims. Or like... I've heard a lot from people that have many children, including myself. I'm more than one. It's like my wife says, you know, it's very the pregnancy and the childbirth, very, very painful.
But for some reason, I don't remember it. And then that's sort of like evolutionarily gives you the signal that you should do it again.
um and i think we're doing uh yeah i think um i was at this ipo roundtable at the sec uh about making the ipos great again and with rob with robin hood ventures we're taking that fun public so we're doing another ipo and i joked that um yeah it's kind of like that the ipo process i remember being painful and i didn't like it but i don't really exactly remember why and now i kind of want to do it again um
But yeah, that's a big aside that has nothing to do with GameStop.
Chapter 3: How does Robinhood approach hiring and company culture?
Other than, yeah, that was a very challenging time. It was towards the end of COVID, and I felt like everyone was going a little bit crazy. They'd been cooped up at home for about a year without much human-to-human interaction. I think from a crisis management standpoint, it was very difficult to deal with because...
we're doing these like conference video calls with all these different stakeholders. The regulators weren't in office. And so, um, yeah, basically what happened was we got this like automated file in the middle of the night and it had big numbers on it. Right. It had big numbers that kept changing. And, uh, it was a situation which had no precedent.
Chapter 4: How is AI being integrated into Robinhood's operations?
And we had to make a tough call to put GameStop and a bunch of other companies on position closing only, which basically meant You couldn't open up new positions, take on more risk for a period of about one day. So it wasn't even that long. But because there was this narrative that had taken over social media, this like viral narrative that it was the.
the retail investors taking down the hedge funds and we were kind of the tool people wanted to put. It was like a good versus evil thing. And I think what was just what would have at any other time for any other stock been kind of an innocuous risk management decision to control our internal risk turned into Robin Hood's on the side of the hedge funds colluding against the
a retail investor and i think the fact that the name of the company was robin hood made this like a juicy false narrative to uh that that continued to go viral so i remember in the beginning of the in the middle of the night when i woke up my phone was basically unusable because it was like those videos you see of what happens if a kardashian turns off uh do not disturb on their phone it just is a constant buzzing
So that was my morning. I was like, the phone is completely unusable. I can't even get on a Zoom call because there's just random people calling me, telling me to turn it back on, you know?
Chapter 5: What challenges did Robinhood face during the 2022 market downturn?
Just to give people context a little bit, if they're unfamiliar with the situation, the narrative that came out was you were in bed with the hedge funds because the hedge funds were trying to close their short positions on a stock that was basically going parabolic. Right. And it was an unprecedented situation. I've never seen it before anyway. I can't. Yeah, it's never happened before.
One of the interesting details of this story that I don't think many people know is you had given GameStop shares to people when they signed up for Robinhood, didn't you? That's absolutely right. So you can make the argument that we kind of started the whole thing. If you were joining Robinhood in the year 2020 leading up to the whole GameStop thing,
Which, by the way, a lot of people joined Robinhood that year. GameStop was one of the collection of free stocks that was given to customers.
Chapter 6: What is the significance of tokenization in finance?
So yeah, a lot of people just came in, got their free GameStop share. Maybe they weren't engaged that much. But then when they saw GameStop going up, suddenly those shares were worth a lot of money. What's one thing the world still gets wrong about that time? I mean, I think the major thing is just that... Robinhood colluded with hedge funds to shut down trading.
There was also another false narrative that I think is funnier. But yeah, Sequoia had to refute this. Someone put on the internet that the White House actually called Sequoia Capital, one of our venture capital investors, and got them to pressure us to shut down GameStop. So yeah, that was a particularly funny one. But if you look on Reddit, that had like 1000s of reposts.
So yeah, I think that I mean, we don't really have any business with with hedge funds. So the the idea that somehow a hedge fund would collude to have us shut down trading of a of a stock. I mean, always seems silly to me. But I think what we learned is a juicy falsehood is more powerful than kind of a boring truth. Yeah. And you can't fight story with facts.
Chapter 7: How does Robinhood plan to expand access to private markets?
It's like so weird. Yeah. Like once a narrative gets any traction whatsoever, it doesn't matter how crazy or false it is. Facts do not tend to refute that. You see this in politics all the time, right? Once somebody tells a story and and the mindshare goes to that story, no amount of evidence or data will ever overturn that story. And they'll believe it for like 20 years. Yeah. It's crazy.
One of the byproducts of that, though, is you got to talk to Mark Zuckerberg and Daniel Ek. I'm curious about what you learned during that period of time from those two. I think Daniel had talked to you about going through a PR crisis or something. Oh, yeah. Actually, I didn't talk to Daniel at that point, but I did call him when he was dealing with his Joe Rogan thing.
I don't know if you remember that. Oh, totally. Yeah, like Joe Rogan was in the process of getting canceled and – I mean, Spotify was getting immense pressure from both sides, right? Do they de-platform Joe Rogan? Or do they piss off all the people that want Joe Rogan to be de-platformed?
So that was probably... I mean, Daniels, I'm sure, dealt with his share of crises, but that was probably his GameStop moment. So... Yeah, I called him to pay it forward, to offer whatever support I could have. And hopefully that was helpful to him. But he's actually, yeah, probably wiser and better than me in these things. So I don't know if he needed it.
But yeah, at that time, Mark Zuckerberg called me and Elon Musk called me. Mark Benioff called me. And a nice positive side effect was these people probably wouldn't have cared about little Robin Hood at the time. And suddenly I think I got to talk with these business magnates that have built massive companies and they're giving me their perspective on the whole situation.
One of the things that I love that you did during that period of time was you went on a clubhouse with Elon. I don't know if you regret that now. No, no.
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Chapter 8: What is Vlad Tenev's vision of success for Robinhood?
I thought that was probably the best media appearance of the week for sure. Not saying much because I had some bad ones. What did you think of the movie Dumb Money when you watched it? I didn't see the entire thing, but I did see the clips that I was in. Wait, come on. You haven't watched it? Well, I did see the parts that I was in, which was about six minutes and some of the rest.
I actually thought, I know it didn't do very well, but I found it more or less entertaining. My favorite part, which maybe wouldn't be other people's favorite part, or maybe it would for some ladies there, was that my character was played by a very good-looking actor, Sebastian Stan, which I wasn't displeased about. I would have thought Adam Driver would also be good, but...
Sebastian Stan may be a slightly less good actor, but probably easier on the eyes, right? And the thing that I enjoyed most is that in every single scene, he was shirtless. So it was like, in the kitchen grinding a smoothie, talking about, you know, GameStop or in the bathroom shaving.
Just the idea of me being shirtless, dealing with all these complicated business situations just made me laugh a little bit. You're going to be the first physics math person on the cover of GQ, I think. I mean, I see what they were doing. I'm flattered. But yeah, I was I wasn't solving all these business problems, you know. grinding my smoothie, finishing my workout.
Most people assume that GameStop was the hardest time for you and Robin Hood, but actually 2022 was harder. What happened? I think 2022 was harder in the sense that it was sort of like a gradual, slower burn. I mean, GameStop was acute and very painful and stressful for a short period of time.
But once we resolved the situation, unlocked the shares of GameStop so they could start being purchased again. And, you know, I basically like. Did my congressional hearing and did my roundtable of. different podcast appearances, the acute part of it was over, like the acute part of GameStop was really one day. Yeah.
Whereas in 2022, it was a gradual shift of all of like the economic trends that had been tailwinds for the business during COVID, reversing rapidly into headwinds. So for example, I mean, first, the the COVID relief stimulus checks stopped, right? And then it became clear inflation was ticking up. And that was having a big impact on people's discretionary spending and investing.
And then layer onto that inflation, the interest rates. Government went from a long period of rock bottom interest rates to the highest interest rates in over 30 years. They went to 4 or 5%. And when that happens, actually,
investing becomes less attractive because you can get your average seven percent uh rate of return from the stock market after inflation um or you could get five percent just sitting in cash yeah so people naturally reallocate a little bit and start holding more cash and and buying less stocks And our business was first timers getting into the stock market, buying stocks.
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