recently you were on a podcast you said there's more Millennials on your platform than Schwab Fidelity erade Vanguard all combined that's right if we become the place where Millennials hold all their assets and wealth uh that's tens of trillions of assets right there you know 75 plus trillion of wealth is going to move from Baby Boomers down to Gen X and Gen Y and Beyond in the next few decades I recently had the privilege of speaking with Vlad tenup co-founder and CEO of Robin Hood markets vlad's vision of democratizing Finance has empowered millions of retail investors and his work continues to challenge and redefine the traditional Financial landscape in this conversation we're going to Deep dive into the future of Finance the role that technology has on shaping financial decisions the challenges and opportunities that lie ahead and the vision that drives Vlad to keep pushing the boundaries of what's possible thank you to Vlad and the amazing team at Robin Hood for help setting up this call but without further Ado please enjoy this ation with Vlad tenv yeah I wanted to ask you not just about the the quarter because I think there's going to be a bunch of CopyCat questions on that I kind of want to pick your brain on the future of Robin Hood and how you sort of Envision it over the long term or or Finance in general because you guys are right at the Forefront super Cutting Edge and I think that that's important yeah yeah um so over the very long run uh I see Robin Hood At as a global company with customers all over the world anyone with a smartphone should be able to use Robin Hood and uh all of their financial assets and all of their transactions should be custody at Robin Hood and should go through Robin Hood and um you know that that's like fairly expansive uh basically if we accomplish this we would be the world's largest financial company by some measures so it's kind of like how do we get there in a short amount of time and that's through three things the core is uh the active Trader business that's how we generate our Revenue that gives us the the tools and the ability to do other things uh this and and you know the active Trader business is Investments that we make there and product improvements that we make to that business basically turn into uh customer value and revenue immediately so so the delay is very short if we make an Improvement to our options trading product that impacts The Firm like instantaneously um so so that's kind of the first Arc and I think it'll reach maturity reach its climax in the very near future so call it like next one to two years but then we're also investing in the second Arc of our business uh which is that we want to be the primary financial institution for the Next Generation for for Millennials and gen Z beyond that and so we want all of your assets to be with Robin and for us to serve you across uh the wide range of of Consumer Finance products and use cases that's where Robin Hood gold comes in with high yields with retirement with the Robin Hood gold credit card which has been very very popular and all of our work in advisory and wealth management and you can kind of track our progress there with gold subscribers and overall assets under custody and then kind of the the third uh phase of that is taking what we've built for active Traders and for kind of growing wallet share with the Next Generation and turning it into a system that we can scale internationally as quickly as possible without without like too many modifications and also serving uh other uh other types of customers like businesses institutions you know small and large like if if you think about some of the things that we offer uh they're useful to businesses as well as consumers institutions Love Low margin rates 24-hour trading of all sorts of assets really nice clean customer interface that just works so so I think in the long run you'll see a company that serves customers really well with awesome interfaces low cost serves businesses and does so across um a global footprint in you know every Major Market world worldwide and and kind of active Trader I would a good analogy is that's kind of our Tesla Roadster right it's sort of like what gives us the resources and the tools to be able to expand our Ambitions further and like serve a broader market so it's it's a small it's kind of a niche market it's small but it's very lucrative and uh it's it's super high value it's been amazing to watch you guys sort of transition from you know the reputation in trajectory of going from small dollar like active Trader accounts to fully fledged Financial Services where you're getting into saving now spending I really want to talk on the credit card as well but essentially the way that I'm looking at it is Robin Hood gold every product that you guys offer from cash sweep to buying and selling stocks or options you guys in some form of another make money with very little risk the credit card is a quite a different step than that and you guys are offering unbelievable benefits 3% cashback uh on on every purchase this is not category card this is a full-on credit card are is there any concern that that is going to be uh a losing like profit generating uh new product for you guys like are the credit card is going to be quite uh risky no well um one way to kind of look at this business is um you can look at companies that do this very very well right uh some of them are public like Capital One for instance and you you can they actually do it really nicely I don't know if you've uh you you probably spent a lot of time parsing through 10ks but uh you can you can see the economics of the credit card business pretty clearly and the economics kind of break down in a couple of different categories right there's interchange Revenue um which you typically uh net against the rewards expense which is kind of a contra revenue and then there's um there's like net interest margin which is actually the bulk of it um and uh sort of like not specifically Contra Revenue it's another line item in the expense column are loan loss Provisions um right uh so so when you take a look at um at at sort of like these uh traditional credit card companies that are at scale and you know Capital One for instance has $150 billion loan book so massive scale uh for the credit card business you can see that uh if you if you take the overall revenue and divide it by the transaction volume over the course of a year for the business you get to a number but between five and 6% right so if if you kind of normalize everything based on uh annual transaction volume they make between five and six% uh now why can't they give 3% cashback to customers I think is a is a reasonable question um the biggest line item isn't uh credit risk uh and it's not loan loss Provisions it's marketing and advertising and headcount like tremendous headcount businesses where you know they have tens and tens of thousands of employees um now the the the idea behind Robin Hood is can we make the value prop and the reward rewards so good that we don't have to actually spend money to acquire customers credit card companies are spending $500 plus uh to acquire a customer and have signup incentives um can we just take all of that and put it into the economics of the product and acquire customers for free um so far that seems to be the part of the model that's proven out like an unbelievable benefit the the organic growth on this card I see it every everyone is talking about your card it's crazy people love the card so far it's five star review on the App Store they love everything about it I mean the customer experience the design of the card itself particularly solid gold the rewards are really good um so you know we can grow this card for the foreseeable future without spending anything on marketing which which is Big um and and we can do it as a technology company in a very Capital efficient manner without needing you know thousands of people which is which is also really really important and then uh uh and I know there's a lot of frustration from people about you know I I just want to get it sooner this roll out is is going slowly and we announced that we rolled out to about 50,000 card holders um and we're very confident the card will work in the long run right um but it might take uh some iteration and if you look at other successful card launches in the past we kind of right there I mean they tend to launch to tens of thousands uh below 100,000 card holders in year zero right and then they can kind of like expand very very quickly uh as as the economics are proven out and what we want to do is minimize the amount of that iteration that is being done uh uh sort of like with lots of customers because even though we're confident you know we we want to avoid as much of the downsides and footfalls uh as possible so you know we're we're we're actually like rolling out uh at a very reasonable Pace relative to other successful card programs in the past um yeah the the demand is just so high it makes it look slow exactly like people just want the card so much that yeah of course you know if you have millions of people on the wait list uh you're going to see some noise and you know we want to serve them but we also want to make sure that like we can go slow so that we can go faster uh down the line when it really matters so with this card you require an annual subscription on gold right your gold subscription so this was really interesting in q1 you talked about how the new cohorts of that quarter about 20% of the people that were signing on to Robin Hood were getting the gold subscription your total base this quarter went from 7even to 8.2% I think it was of total gold subscriptions do you guys have an end Target for where you think that that's going to get like I'm sure not everyone on your your platform with you know very little balances needs a gold subscription but on the more like high up you go the definitely the benefits scale um does is this something where you get it to 50% over the midterm or something like this yeah I think that you know Robin Hood uh Robin Hood gold is never gonna be um it's never going to be Costco where subscription actually Gates access to the core service okay um so it's probably more akin to other subscription products like Spotify or Amazon Prime where you still get a decent amount of value and you can try the service without signing up for a subscription but as soon as you get you know uh as soon as you get even a little bit of value you're going to want to sign up for a gold subscription and uh there's like a strong incentive to consolidate all of your activity onto the platform and for us consolidating activity basically manifests in like uh wallet share across multiple products so customers in general um you know there's some customers that use multiple brokerages and you know multiple bank accounts and savings products but your typical customer will only use uh one per category but they'll use different products for different categories so I think that's very different from e-commerce where if you're shopping um you know you shop at lots of stores generally um and so I think for us Robin Hood gold is really an incentive to get the best of Robin and use all of our ancillary financial services and so cross cell um cross cell is much higher for gold customers gold customers adopt retirement Accounts at something like 5x the rate of non-old yeah um so you know how big can the subscription be some of these great like your Spotify and Amazon Prime uh it can be high double digit percents you know 50% plus um so I think that's the the aspiration is to really look like one of the one of the great subscription businesses out there that uh also gives Great Value to customers and doesn't require the subscription to try it yeah no and I I I think that's amazing now uh just to Pivot a little bit you guys have been buying a couple of different uh you know startups and other businesses I guess um Pluto AI is a very interesting acquisition you Rec just talked about how uh you're looking at it for not only AI services in the business but also as advisory how do you make sure that you know hallucinations don't happen with such an important topic like personal finance that Pluto is able to give advice but also not steer someone in the wrong direction yeah I mean that's a that's a big uh AI research question right now um I think that if if you look at the current generation of models they have uh this this problem of like very confidently saying wrong things and and that's that's uh that's the hallucination issue but I think like the next Frontier of AI models um will everyone's trying to solve that problem in in different ways and so I think you should assume that hallucinations become uh less and less frequent and there's there's tools to uh reduce that that are kind of being built around the models currently like checking things and constraining the output and putting in guard rails in place and some sometimes like training other models to validate the outputs of the models uh so that's maturing but my my thought is that's also going to be eventually replaced by uh less hallucinations in the in the base models as well um so we're not really worried about UC inations and you never you humans also hallucinate right um uh they hallucinate at like some surprisingly High rate and you you don't have to be you don't necessarily have to be perfect or you just have to be 10 times better than a typical financial adviser sure sure so uh just on the topic of AI because I wanted to uh ask you about this how do you even foresee markets heading whether it's how much human intuition and trading behavior is going to stick around as new models are starting to potentially include themselves in people's buying and selling of equities like H how does this play out over the next 10 years yeah and I I should say I'm very pro-human too and I think there will be a large amount of this where humans will be using these AI tools um whether they're advisers um themselves or uh if if you're a Trader and you're kind of using the tool as a research assistant or an analyst that helps you kind of like synthesize information and you know read 10 q's and earnings reports uh really really quickly and like pick out the salience so um I I think there will be a large amount of this just used as a a co-pilot kind of a co-pilot in this case rather than autopilot and and that's true for advisory as well and and we're very pro-human and we want to give these tools to humans the great thing about trading is that um I I think that a great use case for AI are things that humans are doing and are valuable but uh they find boring and they would rather not do and and I don't think trading is that like our customers love it and they want to keep doing it it's not like a chore that they would rather uh Outsource to someone else um sure so so I think in in that sense like the behavior there is uh AI proof or AI resistant to some degree I don't think you have to worry about AI just kind of like making trading obsolete um but I do think that the time scale that the trades occur at is is important so for example if you're trading strategy involves short-term price predictions on the order of seconds um that that's going to become very very competitive that that's a a competitive space right but if you're if your time Horizon uh increases and you're kind of like making long-term predictions and you're buying companies because you think the product road map is trending in the right direction um you you have to worry less about like algorithmic trading and and high frequency for for those types of strategies yeah no I I I like that right the I I I don't know if AI is going to be as good as predicting the next Google or Amazon or something like this is uh much as it is going to be making Fast decisions I guess but um in terms of other Acquisitions bit stamp this was super interesting so you guys are now in the crypto exchange space International crypto uh you know clients now institutional clients why did you guys uh look to acquire this business and what does it mean for the future of Robin Hood I think we always kind of understood that at some point there would need to be a Robin Hood exchange and it was just a question of whether we would build it ourselves or whether we would see an opportunity to uh bring bring a team on board that can accelerate that by you know in this case 18 to 24 months or some something uh something in that in that order of magnitude if you look at bitstamp um what we really liked is this is one of the oldest uh crypto exchanges I think the oldest continually operating and uh 2011 or 2012 something like that yeah sort of like the the first wave um yeah so they've been through a lot and if if you go to Slovenia which is where uh they started this is like uh there's like an immense amount of pride among those folks and and among slovenians that this is uh this is like one of their iconic companies um and so uh we see a lot of potential there we like the team I think for Robin Hood it gets us into institutional and it accelerates International and it'll help our retail business as well which is kind of an area that I think uh bitstamp had some gaps they they didn't have quite as competitive of a retail direct to Consumer offering um so we we could see it fitting in quite nicely you know P pending the approval got you so uh in terms of I think you spoke on a little bit earlier about businesses wanting your services but could you see institutions also becoming clients of Robin Hood on the equities and uh option side as well yeah absolutely I mean if you look at all the things that we've offered institutions love uh commission free trades no contract fees for options lowest margin rates in the market uh so I I think all these things that we offer could be useful to institutions and we've we've had a lot of Outreach about that over the years now the okay the question as with all of these things is like we don't want to do too much at the same time and we've got a lot of work to do in um in consumer probably the bulk of our work is going on the active Trader side um a decent amount is going into building wallet share and the smallest sort of like most nent component is international expansion and kind of expanding the customer base to include uh businesses so I think that that will reach its its climax probably 10 years from now uh you should assume but we're going to make consistent progress but unlike active Traders you're probably not going to see that in the in the p&l of the company immediately gotcha gotcha um just staying on bitstamp and crypto in general how do you foresee cryptocurrency as a market changing do you see utility in some of these actual tokens not only to uh potentially help your company and Finance in general uh maybe tokenization of assets is sort of the wave that I'm going down but yeah what what do you how's your team sort of focused on that and where do you see the future going yeah I'm a I'm a big believer in uh tokenization of assets I think that that is the future and the reason for that is is we've got a unique vantage point across both of these businesses we we've got a large traditional assets business we also have a large cryptocurrency business and we can compare uh the efficiency of uh of of operating both and uh you can see on the cryptocurrency side um it it's just like much cleaner a lot of the things that are being done by centralized Legacy institutions are being done in software so you've got like transfer agency clearing and settlement I mean there's like large corporations that do that and they're not open on weekends which is something that is preventing us from offering 247 equities trading for instance um but you know all that's being done in software on blockchains and so you get things like you're not only get lower efficiency and cost of operating but you also get more customer facing features uh from built from scratch that are very valuable and that's things like uh in the equities markets you know fractionalization and 247 trading built in and so what what I think will happen is more and more assets will become tokenized that'll become a key use case you're already starting to see it to a certain degree because if you look at where the bulk of blockchain transactions are being done overseas it's all uh dollar stable coin volume so um there there was an article that came out a couple weeks ago that said um usdt on Tron so this is tether stablecoin on the Tron blockchain has exceeded the daily volume of Visa right and so why is that well it's because you have a lot of people in these markets where uh their currencies are hyper inflating and they don't want to hold Bitcoin they want to hold dollars right yeah and and somewhat kind of counterintuitively uh stable coins on crypto rails on non-custodial wallets are the easiest and lowest friction way for them to get their hands on on dollars um and I think that's a big part of the the rising adoption that you've seen and why Tron stablecoin you know the the the Tron blockchain has its share of issues but it has low transaction fees which is very very attractive to people um so you know if you can deliver low transaction fees if you can deliver a low friction way of uh giving people access um and people want access to the thing which you know US dollar is is kind of a prime simple example but you can also see that uh us equities and all sorts of other assets particularly outside of the US um are are highly in demand um I I think you're going to see that so I think you're going to see tokenization take off uh outside of the US and eventually it it will probably be accepted in the US but the US will uh sadly be a lagered here uh for the same reason that um we're kind of a lagered in High-Speed Rail right it's like we have something that kind of works uh good enough um there's existing businesses that have strong interests in preserving the status quo and they're not going to want to uh I mean eventually it'll happen but we'll have to work with those existing businesses over here um and you know PE people are going to fight it whereas overseas I don't think uh I don't think it's going to be as controversial so I think it'll it'll mirror the adoption of High-Speed Rail where ironically like outside of the US will be the lowest friction and easiest way to get access to us assets within the next uh probably five years it's so true that that happens all the time these massive Leap Frog Events in technology because a lot of places like even here in Canada we don't adopt some of the newer Technologies because what we have is just simply good enough you know yeah um but uh in terms of um you know 24 uh you were talking about your 245 markets with u blue ocean ATS and everything there's been recent events events that have sort of uh the 247 or sorry 245 markets have had a little bit of trouble when does this become mainstream and have enough liquidity so then there is no problems like is this a one-year time horizon or is this a 10year plus time Horizon for 245 markets to become more mainstream yeah that that actually um so blue ocean ATS which went down on Sunday night um which which was very unfortunate because like the volumes on Sunday night were extreme 3x are typical 24-hour market day and customers really wanted to uh customers wanted that access particularly that day so so that was disappointing but it wasn't a liquidity issue liquidity was fine it was just a straightforward technical infrastructure problem like there were just too many users and too many orders and okay you know they uh I think there there was some kind of issue with their database and it just fell over so um gotta yeah but speaking on liquidity really quickly what are your thoughts on instant settlement and is this ever going to take off it's seeming like we're we're ticking in the right direction t+ one but when do we get t plus zero yeah I think I think it's the same High-Speed Rail analogy I think that it'll go slow eventually it'll happen but like t+ one probably gets us halfway there and I think there's uh there's like folks that'll fight the move to t+ zero settlement for a variety of reasons including you know fairly benign ones like it's going to be a huge investment of resources and technology and they'll have to upgrade the main frames um and you know they they'd probably rather not do that unless sure they're absolutely forced to do that Vlad I got uh one more question for you um the great wealth transfer recently you were on a podcast you said there's more Millennials on your platform than Schwab Fidelity eade Vanguard all combined that's right yeah I saw another article that recently said that Millennials will be the richest generation in history how does Robin Hood benefit from this great wealth transfer and sort of explain the timeline of how this happens because it it might already be starting yeah I think I think it's stting um I think that I mean if if we become the place where Millennials hold all their assets and wealth uh that's tens of trillions of assets right there you know 75 plus trillion of wealth is going to move from Baby Boomers down to genx and uh and Gen Y and Beyond in in the next few decades and what what we're working on is uh three things right making it as easy as possible to transfer your assets into Robin Hood and up until a couple years ago we didn't even have that capability you couldn't move assets into Robin Hood so we we announced and launched aats uh We've layered in incentives and those incentives are going to get better and more personalized and like smarter over time uh even though you know they're they're already pretty good and we can offer those incentives that no one else can we have to have support uh of all of the account types and asset types so trust accounts custodial accounts we just rolled out joint accounts which which are a big step as well and then um you know I've generally been uh I think mutual funds are in some ways an outdated concept but a lot of these assets are stored in mutual funds and a lot of folks are holding fixed income which are assets that we currently don't support so we'll have to add support for those um and uh continue to to make sure the user experience and the capability and the service improve and then I think we we will be the home for a large portion of those assets just really quick I'm sorry but as a CEO running a multi- thousand employee company how do you keep them all hungry and make them or or help them deploy all of these products at such a quick rate because that's the one thing that Robin Hood just excels at you guys are putting out new products which seems like on a weekly basis yeah I mean that that that's a big topic I think like I I have lots of thoughts uh on culture and making sure you have a great team of people and you set goals appropriately um I think like the the one interesting thing if I had to distill it to kind of one sentence is that um your typical financial company is fine with like large numbers of Fairly mediocre people um and you can see that in kind of like Outsourcing and offshoring like they they have an Outsourcing strategy where you can get huge teams of people overseas and of course we we make use of great people overseas but the general principle is we want a small number of like exceptionally Elite people that can do great things and I want the culture to be a culture of like uh the smartest people in the room around you that are bouncing ideas off and pushing each other and I think once you have those types of people they're pushing each other and like I have to do a little bit less right like uh uh my my aspiration is to kind of be like the the dumbest person uh in in any meeting at Robin Hood and and I think that would be a pretty good pretty good end State for the company yeah yeah yeah Vlad thank you so much for joining me man this is this has been amazing thank you always a pleasure hopefully we'll do it again yeah talk soon all right cheers