>> So, Night Capital had this issue where they kept, you know, if you post an order at a particular price, like there's not really, I mean, for a brokerage customer, like you're going to get the market order, everything out, but if you are a sophisticated investor or trading company, you people will just, it's kind of an adversarial process. So, they kept saying, uh, there was like this infinite loop of we'll sell something that's like $50, we'll sell it for 5. And guess what people like in 5 minutes the company completely ran out of capital. Um and this was a large public company and then it was rescued by Gecko if you remember Gecko which was one of the original high frequency trading companies and then that became KCG. So, Night Capital Get this merger, but I as a consequence to this, I understood Regge NMS pretty well, um, and how marketmaking works and how payment for order flow works and why it's actually not like it sounds like this scary thing, but it's not because you're internalizing trades. Like, normally you would post a trade to an exchange, but if I see the buy and the sell and I can kind of match them on the spot, you can actually offer the customer a better price than if it showed up on the exchange. So I was just very very confident that the business model was a good one. Um the clearing house model was stupid.

And to give you context on this um like I think in the 1970s we were at T+5 clearing. It took 5 days because if I buy a stock from you, right? It's not like as soon as I put that order in like I own the stock, you have the cash. It looks like that, right? It's like it looks like I have the stock. It looks like you have the cash, but actually it takes 5 days for that to formally settle. And then it went to like T+ 3. That happened like after a decade. Yeah.

>> Then it went to T+2. Now we're at T+1.

>> But it's just kind of comical how long it takes um to settle a trade, which I think is a great way to talk about tokenization a bit.

>> And by the way, it wouldn't have gone to T+1 if I hadn't pushed for T plus Z.

>> Well, it should be T plus like it it's just this absurdity. And then because there is risk,

>> that was one good positive consequence of the whole GameStop fiasco. They they went behind my policy proposal to shorten settlement times.

>> But but the reason why this is ridiculous and it's it's again it's complicated to explain to people that don't get this. But I am going to sell you stock, you're going to give me cash, but the value of the stock can change a lot in those one or two or three or five days. So beyond just saying I'm going to give you the stock and here's here's my stock certificate, I have to post collateral for that as well. And the more success that that you see, the more collateral you have to post. But it's kind of dumb because it's all you have the underlying cash or the you have the underlying stock. And that was the part that just didn't make any sense, right? Um I mean it it's how the clearing houses function. But there was no solveny issue, right? There was no it's like

>> you just need Well, number one, hopefully when we fast forward 10 years, this whole system will be antiquated and we'll have something much much much better. But this was a result of people loving and using Robin Hood too much, if you will.

>> Yeah.

>> Um versus anything that was wrong. It's not like, you know, I started a firm and we had a crisis, uh I would call it the March of 2020 crisis where imagine being a lending company to consumers when everybody loses their job, right? Which means that they're not going to buy in the future and they're not going to pay off their loans in the past. So that seemed like cat like game over. Like we had an emergency round for a firm right around the same like right around like the beginning of COVID because it's like well nobody's going to pay their bills. Um and like we're kind of on the hook for that and then nobody's going to buy stuff and like that's going to be catastrophic. Um but that was like a real problem with the business model when everybody loses their job as opposed to like if people are trading and the way that collateral is handled is just kind of dumb like that's that could be solved. So that that was kind of like my analysis. I mean you probably had a much closer to the metal analysis. It's like oh wow this is a bad day. Yeah. Um but it was like there's actually like and Mickey Mika is a very close friend of mine. I love that guy to death

>> and um he's doing it and it's like I trust that guy. I trust uh I trust Robin Hood. Like it it kind of was a no-brainer. I mean it was a large check for something where it's like wow this isn't good. Um, but it in hindsight it obviously worked out, but it seemed like there wasn't really a systemic issue with the company and that that's where you get a little bit more nervous as an investor. But I would love your take because you were obviously in the in the inside.

>> I mean at at the time I think at at the end of that day we it was pretty clear that we were averting liquidity and and solveny risk wi-i which is probably the the biggest concern that you have. you know, through through our actions and also the market, I think we were able to avert that, juxtapose that with also we were number one in the app store and and not just number one in the in the in the finance section, but number one overall ahead of Instagram and Tik Tok.

>> Um, and I I think that was a a pretty pretty potent combination. So the the third thing that probably you had to consider at the time as an investor was the brand impact. Like you have a lot of people who are mad at what you did.

>> There was a looming congressional testimony that that ended up doing. But yeah and and actually the brand thing was a real thing because

>> when the dust settled on our acute issue, I probably spent the next two to three years um and it was very very clear. You know, they always say that trust can be lost in a day and and and takes a long time to to earn. You can earn it rather slowly. I think we experience that even now when we post when I tweet, you'll have the people saying, "Oh, but you know, we'll always remember January 28th." And most of them don't get into the details of clearing mechanics and settlement.

Most of them were probably not even affected directly. Like they weren't trading GameStop or AMC, but they just heard something from someone who heard something from someone that Robin Hood's like in cahoots with hedge funds and going going against the little guy. And so that that's been the hard part to to navigate. And I think that, you know, there was a lot of adrenaline. We had to solve the immediate issues on January 28th, which we got past. And then after that, there was just a two-year period of slowly clawing our way out of this uh brand hole um that I think we're, you know, now mostly out of. I think we just a couple of months ago, we're able to say that if if you look at our NPS, um we were sort of like ahead of where we were pre GameStop. So, that was a momentous occasion.

Besides time, what do you think are the actions that contributed most to the to to the brand getting back to where you wanted to be?

>> Yeah, I mean really there's very few spikes upward. GameStop was like a downward spike, right? Um I think time is by far the biggest element. People forget, you know, you have new young people, new users coming in, replacing the ones that really upset. Uh, and then it's just looking at what things people complain about that you can resolve and addressing those.

And then I think a couple of years ago, we started doing these product events which I think had not just practical value but also I think the they cultivated a community of shareholders and and customers. And I think around our events, we noticed there was actually a pretty big Yeah. increase. Like if we do get mini spikes of a couple of points. It's around those events.

>> But also like every other brokerage paused trading in GameStop and AMC, right?

>> Pretty much. Yeah. I think there were a few that didn't. Um

>> because even the ones that did, I feel like I I remember Interactive Brokers like they like

>> Oh, yeah. like they all they eventually got there and it wasn't because but it's just it's hard to explain to somebody who's not a lay person because it's like well wait a minute I sell you stock right I get cash you get stock well it's done well and it's like no no no there's this like deposit trust clearing corporation it's like what are you talking about you crazy conspiracy theorists no no this is how it works and it just it's so complicated to explain because there's all it's like the duck that paddles furiously behind you know underneath the surface like I have the cash you have the stock what are you talking about and It's like, "No, no, no. There's this other stuff happening." And that's the hard part to explain.

>> I think we learned a lot of valuable lessons. A simple lie is much more powerful than a complicated tradition.

>> So yeah, the Robin Hood's colluding with hedge funds, right?

>> It's very compelling story. It's like, ah, Robin Hood, look, they're actually stealing from the poor and giving to the rich, right?

>> It just writes itself like it's it's good. If I was in charge of marketing for a a competitor, I'd probably come up with that, right? It would be a good one. Um, and this whole thing about collateral and DoddFrank and financial solveny and protecting the financial system, it's a a complicated truth at at best, right? Um,

>> it's an order of magnitude more time to refute than to produce it. That's the other one.

>> Yeah. Yeah. And everyone the simple I think the simple antidote would be to just point the finger at someone. It's like, oh, this thing that that's that's the enemy.

>> Which a lot of the other brokers were able to do by pointing the finger at their clearing firms or Apex Clearing or, you know, one of the other folks and saying, you know, we disagree with their decision, but they did this. Um, so that that was also a learning probably find someone to blame uh who isn't us uh a little bit earlier. But of course, we're we're very uh chivalous folks. We don't like to we don't I don't like the idea of blaming someone. and I prefer to take responsibility for everything even if it's not my fault. So that ended up biting me a little bit I guess.

>> But it feels like you're getting even now because it's like going back to the whole like it took 5 days to settle a trade then three then two then one. Yeah.

>> Right. versus the future that you're helping build which is if you tokenize everything like there is no more of this middleman that can oh you got to post collateral but wait a minute why am I posting collateral on top of the stock that I'm giving you or on top of the c like well because the the stock price can change by 50%. That's why there's always a logical reason for it but like why is it that in 2025 it takes one whole day to settle a trade right?

>> Yeah. Uh, I think you're totally right and I mean there are um there are strange things that happen in the crypto world, right? I mean actually probably if if you look at solvency and liquidity issues, you had the Celsius and BlockFi and that whole liquidity crunch there culminating a few months later and the collapse of of FTX. couple of weeks ago you had forced liquidations. I mean, even when Bitcoin dropped below 100,000 a few days ago, it was just uh torrent of forced liquidations. Um it's a little bit more niche, right? It wasn't

>> the the products that are experiencing this, whose customers are experiencing this aren't number one uh in an app store overall getting millions of of new customers a day. So I think it's contained uh and and so we shouldn't we shouldn't make it sound like crypto is just a panacea but but certainly moving forward and improving with technology can solve a lot of these problems.

>> uh yeah with tokenization I think certainly if done right you can prevent that specific issue. You also get 247 trading through holidays and weekends which is very cool. There's also uh something that I probably it's not in my interest to talk about, but in some ways it is. If you self-custody your stocks, you're immune to outages from the broker. You can just sort of like easily replace one brokerage for the other and you don't have to the blockchain would have to be down for you to lose the ability to trade, which I think is very powerful.

Not to mention something you're probably familiar with, the securities lending landscape, which is a huge source of revenue for brokerages and and counterparties um is very opaque and very inefficient. A lot of these trades are still happening over Bloomberg messenger, you know, counterpart like peer-to-peer.

>> If if you if you do it tokenize, then you have these like liquidity pools, uh which just makes that a very simple thing. Like you imagine lending and borrowing your stocks on a or or some equivalent would be much more efficient and much better for the end user than the current morass of securities lending that's you know evolved to to be this way after multiple decades.

>> Is it inevitable that the most popular private companies uh stocks will be tokenized or we talk about the dynamics there.

>> Yeah for sure. Yeah that's that's definitely happening. And um even if they don't want it like how is it going to happen?

>> I think eventually they'll want it but there will be a adjustment period

>> and they'll want it because our customers want or like um why would it

>> I'll give you um I'll give you an analogy that I think is actually pretty close. Um so in 2021 we launched this product IPO access and and the idea is pretty simple. IPOs have been dominated by institutional investors since the dawn of time and we're going to to just make it so that retail can participate in IPOs and and not just private wealth but actual mass market retail and we had this big chip which was we were going public. So we we at the very least could guarantee that they'll get access to ours and and so we at the time had the largest retail allocation I think certainly of any IPO of our size. um it was between 20 and 25%

and then of course we had built all this great technology for ourselves. Let's get everyone else to do it. So we got a bunch of other firms to participate in retail IPO. Most of them we kind of had to ask for favors or strongarm a little bit or use our bankers cuz they didn't get it. They were like this is a strange thing. I'm just trying to get my company public so I could focus on running my business. Everyone's telling me this is a bad idea. We weren't really in the room to advocate for retail allocation much like the bankers were. Uh so it took a lot of work and the allocations we got were also quite small. It was like okay well we'll we'll make these guys happy. Let's give them one or two%.

>> And then the market shut down at the end of 2021. Nobody was going public anymore. And then something interesting happened uh in the middle between the reopening of the IPO market. Um it started becoming clear that stocks that had retail followings were actually being rewarded with higher multiples. I mean you had Palunteer, you had some others. Um somewhat put us in that category as well as a big retail following uh stock. And so people started calling me to ask about their retail strategy. And now you look in the in the past couple of months, pretty much every IPO of consequence is is on Robin Hood. And with increasing allocations, you know, we had Bullish that gave 20% of their IPO to retail. I think Gemini was very similar and we were fortunate to get a big chunk of that.

So, it went from this being from this being this weird thing um that was a little bit I mean we had to be annoying to get people to participate to now everyone kind of gets it and wants it and is like interested in even doing more post IPO. So, I think when you when you ask uh private markets access is is has very similar properties. If you talk to these C CEOs of private companies, they generally are aligned with the the intent and the mission. Everyone's like, "Yeah, I would love normal people to be shareholders and not just these like three layer SPVS. It's at least better than the three layer SPV." So, they kind of agree with it. They're like, "Oh, yeah. Power to the people, you know." um at least not very many people with a straight face have told me no I just want to hold the equity and give it to just the big institutions right you know um and and I think it's genuine most people don't actually love that

>> and and so it's the practicalities that get in the way like this is a new thing I don't want to be an innovator in giving private access to uh retail that's not the point of my business. I don't want to be a guinea pig. Which makes me very confident it's going to evolve in the same way too where they'll start to see it a little bit. It'll become normalized and then the advantages will become clear like you'll have retail fans as a private company many of whom could be your customers or at least your advocates. um and then it'll become much more clear and and I actually think for

AI companies it's the most critical because if you look at AI as a category you have the fastest product adoption of any products in history with chat GPT and and all these you know cursor and all that fastest revenue ramps and at the same time uh they're kind of the it's the most hated category you interview people and their perception of AI is worse than social media media because they're wor no nobody's worried social media is going to take their jobs right but there's this underlying fear that you know these guys these companies are automating everything and you know where is my job in that list is it easy to automate is it hard um people are freaked out about that

and and I think we could end up in a very bad place if we don't figure out how to be a little bit more egalitarian in the ownership like it shouldn't just be owned by a small fraction of of VCs in fact, we should make sure that there's ways to distribute it because the best way to not fight against something as as we've seen in public markets with uh these retail stocks, if you're an owner of it, you'll defend it. You not not a lot of people are defending the AI companies and the public.

>> It's kind it's like uh it's both the VCs are defending them because they own them.

>> Well, it's offense and defense, right? Because I mean to your point, you have this virtuous cycle where it's like how many people um that bought Tesla stock, how many of like this has become almost I don't want to call it a meme stock, but it's become a very very popular retail stock.

>> Absolutely

>> right. And a lot of the people that bought Tesla and like the Tesla bulls are all people that own the car, right? And like there's a virtuous cycle there. And the flip of that is exactly as you said. It's like, hey, you know what? Everybody's going to be an owner of these things. And I think it's a little bit of a back to the future thing, which is I think when Amazon went public, they had like a $600 million market cap, like 25 years ago or 30 years ago, like the normal like there was no such thing as a series D,

>> right? Series D was called an IPO.

>> Um, and it's funny, uh, there's a company in our portfolio that just raised a series K. Oh yeah.

>> And HIJK, right? It's like, you know, I like series I you got to go public by the series I, right? Like that's IPO. But

>> we felt a little funny. I think we did a series G.

>> Yeah. It's like that's that's when you're getting up into the upper letters, the upper consonants of the alphabet.

>> The GameStop round was really a series H.

>> Yeah. I mean, it's like that that's a lot of consonants. And uh you're better off like you get that like this is so counterconventional wisdom. I love it when conventional wisdom is wrong or experts are wrong. And this is a big one, right? which is like to your point it's like oh you got to have like Tro and Fidelity like buy into your IPO and that's that's what's going to give you like a great multiple and actually no no no that's completely false like the fact that Palunteer is like a runaway tech favorite or sorry retail favorite uh and trades at a very high multiple and like it's not just about like trading at a high multiple like that's beneficial if you're a CEO of a company you want to hire and reward talent.

>> Yeah.

>> Right. If you want to retain people like and if you want to buy a company, having a high a high high currency is actually very very valuable to you. And retail is actually part of that. And by the way, retail actually benefited from all this stuff 30 years ago.

>> Yeah.

>> But then when series G's and H's and I's and everything else kind of started staying in like the private domain and accessible only to accredited investors, one of my one of my favorite uh stories is from I think it's 1986 in the Wall Street Journal. You know this one. Uh you'll might remember in a second Massachusetts banned their residents from buying into the IPO of Apple IPO. Yeah.

>> Because it was too risky.

>> It was a little earlier, right? 1981.

>> Oh yeah. It was like in the 80s, but you can just Google like dangerous Massachusetts, Wall Street Journal, Apple IPO. So 49 other like states, you're okay. Like no nanny state there, but Massachusetts. Uh-uh. Too dangerous. And like Apple's gone up in value like 10%. By the way, they have like one of the largest and most robust state lotteries at the same time,

>> which is which is so bonkers. But uh and it's just sad that you used to be able to like companies would go public so much earlier and DoddFrank actually not DoddFrank Sarbain Oxley made this a little bit harder. So like coming out of Enron, it's like okay, we have to have more controls. It's expensive to be a public company. So you don't want to go public until you get to a certain level and therefore nobody goes public until probably conventional wisdom right now is like three $400 million minimum revenue and then it might be worth it.

>> And actually for the best companies it's it's a bit of a adverse selection because the companies going public at 300400 million are actually probably lower than the ones that are at a billion. the ones the ones that are just like growing like crazy. They're incentivized to stay private longer and

>> is why have this volatility like my my favorite uh way of framing what private equity firms do? I won't say venture capital, I'll say private equity firms, is they launder volatility

>> because every day what is the price of an asset? It's like whatever anybody will pay for it. But if you're an investor in a private equity firm, it's like wow, like this crash happened on this day. Like my value in this private equity fund didn't fall at all. It's like that's not really true. And there's actually a benefit to having these things be liquid and not the volatility.

>> Yeah. But yeah, that's it's compelling and that's actually one of the reasons why companies like to stay private and don't like the idea of a realtime price, you know, which is an element if if a stock is tokenized. But um we're working to solve this problem through tokenization in in the EU and also through Robin Hood Ventures in the US which is a closed end fund that um we're going to be taking public and the idea there is yeah using whatever means we have necessary can we get through our retail channels exposure to these assets um and and I think I'm I'm personally uh very involved in this and like driving it forward. I'm I'm going and giving companies term sheets, you know, um

>> because I think it's so important and I think it's not just important for us as a business.

>> We we'll we'll undercut uh we work to undercut fees across anything. So, it's not just, you know, that it'll be a business for us, but I I think it'll make technology adoption of these frontier technologies go much more smoothly. We don't want to be we don't want the people to be against AI because ultimately regulation follows the will of the people and so I think that if we can get them on board with with the technology we'll just have better outcomes as an industry.

>> Yeah. Have everybody be an owner. I mean this is one of there's a there's a funny website called uh WTF happened in 1971. This is kind of when you decoupled from the gold standard amongst other things. But wages were kind of stagnant but asset prices went up a lot. So you would say I mean people agreed that there was inflation in 2022. That's why we had all the, you know, the Fed kept raising interest rates, but that was like inflation for like milk and eggs, like things that you buy every day. But meanwhile, for like dozens of years, the price of assets have been inflating massively, which is great if you're on the side of that that per like if you own an asset, that's great. But if you just get paid cash, I I did a I wrote a little um blog on this where do you think home prices in the Bay Area have gotten more expensive or cheaper in the last 25 years? What would be your guess? uh in the last 25 years since 2000.

>> Have they gotten more expensive or less expensive? Or call it 20 years even.

>> Yeah. Um that's a good question. I feel like it must be a trick. They've gotten nominally more expensive.

>> They've gotten cheaper if you price it in a basket of tech stocks. Not gold. Gold. They've still gotten more expensive, but they've How many shares of Apple stock does it take, you know, split adjusted? Like if So I I built like an index of every single Bay Area employer market cap weighted.

>> Yeah. How many shares does it take to buy a house today versus 2005? It's a lot less today.

>> Yeah.

>> Which is kind of this like and

>> Apple stock is a unique uh benchmark but this is like before iPhone came out. Right.

>> Sure. But it but it's it's this is important for the same reason that you mentioned I think which is if you are paid in assets, right? Or if you own assets, you benefit from all of these amazing new things like the iPhone, right? Like you're now an owner. You participate in the ownership economy. Yeah,

>> if you're not if you just get paid cash and some people get paid a lot of cash, but like they just get left behind versus people that are able to own assets and it turns out like all like if I just own stock, you know, pick a different date, 2009, 2002, like you these other assets have gotten cheaper.

>> Yeah.

>> And that's the thing that ideally as a society we want to it's not like a fix, but you want everybody to be invested. Like I love this thing. you were participating in this, right? Like the new uh what's the new the $1,000 when you're born as a kid,

>> the Invest America Trump accounts.

>> That's awesome, right? It's like give everybody $1,000, get them invested. So now now they're an owner. This compounds so much. There's another chart that I love that shows the delta and like social security basically that earns nothing and is kind of quasi Ponzi scheme versus if you had just put money in the S&P 500. Um what does that turn into over the next 50 years? It's just like these things really compound and you want people invested in capitalism otherwise they're not going to like capitalism.

>> Totally. Yeah. Capitalism has kind of become a controversial word, right? But um yeah, people need to have skin in the game and and own this stuff. Um and that'll just lead to a more stable society.

>> Agreed. Alex, we wanted to ask about company strategy. Uh I know you had a question you ask about going deep versus going broad. Maybe we'll tee you up for it. I kind of think of when you were building this and maybe this goes back to the origin story of sorts, but uh Robin Hood is is effectively like a bank account for a lot of people now, right? Which is not the origin story.

>> A lot of people think about think of it as

>> it's like I have I have a Robin Hood card um which I use my little green card, right? Which well I don't even have the physical card. I just use it on on my Apple wallet.

>> Who hooks you up with the gold one?

>> I got to get the gold one. It's on my to-do list. Um, but you can you you started off with this kind of narrow thing and then you've built a deeper financial relationship with customers. That's kind of how I thought about it, which is I can now direct deposit my paycheck into my Robin Hood account. I can I can I can use it as effectively a bank account, but it's much much better. It's cheaper. Um, but also there are different types of traders. Like you could go very very broad in terms of the types of products that you offer in the trading landscape. And I guess how have you navigated depth versus breath? Like go deep with the customer, all the customers that you currently have right now or concentrically expand to different types of customers?

>> Yeah. Um, yeah, it's it's a great question and the answer is we're trying to do both. We're probably the only company that is looking to go broad, but as we're going broad, we're looking to deepen in in each of those things. So you know equities trading we're very deep in we we do 24 we were the first to introduce 245 trading uh we went selfcleing so we literally built our own clearing stack and we we actually innovate on the infrastructure there same with options trading same with crypto you know it's not just spot crypto trading like many of the neo banks or folks that are just adding crypto as a asset we're doing perpetual futures in uh the EU, we've got crypto futures in the US, we've got staking, um tokenization, right? So, so we're looking to to go deep as well.

And I think the reason it works is we can't go deep everywhere simultaneously, but we have to kind of pick the areas where it's most accreative and and highest leverage for us, which is active traders. Active traders like the engine room of the business. It's where new product features translate to revenue most quickly and you know if you improve the active trading product by half of a percent you immediately see that in the bottom line and then we can use that as a engine to make further investments.

>> So yeah active trader is very much we're going deep. Um but then you know we if we look at the end goal of getting all of your assets into the platform there's a kind of an algorithm that we run which is how do we make it as easy as possible to deposit and remove all reasons you you would have from withdrawing your money then we can kind of look at why are people withdrawing money where is it going how easy is it to actually bring that in Robin Hood

>> um and you know the the great thing about our industry is there's so much to do that even though you see this great product velocity and we're shipping new stuff, you'll some you'll sometimes be surprised at the basic things that we don't have. Like up until a couple years ago, you couldn't actually do an AAD transfer in. We added that in 2022. We had one account type, individual brokerage account. Up until a couple years ago when we added IAS, we still don't have trust accounts and custodial accounts.

And so, you know, when I talk to high netw worth individuals, and this is, by the way, a new thing. It used to be that when I'm on the phone with our best customers, it was someone that had maybe a couple hundredk or maybe a million in their accounts. Then it went to talking to customers that have tens of millions. And nowadays, I'm routinely talking to customers that are looking to move hundreds of millions and and have that in Robin Hood. And so, you know, for a high net worth individual, there's just tons of things that that we have to do. But the goal is if you have a family office, you should be able to to run that family office on Robin Hood or we can automate the running of that for you and you can have tens of billions on there and feel like you're actually at a disadvantage using any other brickandmortar or or other brokeragebased solution.

>> So, I have a question. Uh, would you give Elon Musk a deposit bonus if he put all of his Tesla stock on Robin Hood?

>> How much does he have?

>> I think he has 200 billion.

>> He did reply to my tweet. Oh, he did.

>> He did reply to my tweet with a little fire emoji, which I thought was very nice of him.

>> Um, I think I think we'd have to have a couple conversations with him. We'd have to see, you know,

>> how how much he trades and uh yeah, see make sure we can make money from that. But I would try I would I would I would definitely I would definitely work with him to figure out something that works.

>> Duly noted.

>> Yeah.

>> Elon, if you're listening.

>> Yeah.

>> A few few billion dollars you make right there.

>> Well, actually, there's a little bit of a strange thing. I'm sure as a public company, you have

>> like your RSU provider, your 10B51 manager.

>> Yeah.

>> And one of the things that pains me is we don't offer those services. So, if you're under a 10B51 or you have employee stock rewards, And those products of our competitor, they're so bad, too. I mean, this is why I was think this is why I asked the question around like kind of breath versus depth of I'll never forget this conversation that I had with Do you know who Dan Rose is? He was uh had a BD at Facebook. Yeah.

>> Kind of like the mega growth period of Facebook. And uh I ran this payment company called Trial Pay. I'm pitching something to Dan. And what Dan says to me is like, "Alex, that's a great idea, but you're pitching me a gold brick that's like all the way on the other side of the room, and I have all these gold bricks like right around me, and I I I I love what you're talking about. This sounds great, but I got to pick up the gold brick here and here, and like come back to me in 5 years for that gold brick."

>> I've heard you say this, I think, and I've been using it in conversations with people. Yeah. The reality is there's so many things to choose from

>> and sometimes there's great uncertainty. Like who would have guessed two years ago that prediction markets would be our fastest growing business. So you know it's a lot of this is just conversations with me and the GMs and the leadership team where we're we make discussion we we make decisions about whether we prioritize something over something else and it's like do we have the right person to take on this thing? How much conviction do we have? Um, and you know, uh, there there's the there's the easy stuff that we know we're missing, the product gaps, but you can't just build product gaps. You also have to have things that are available uniquely on Robin Hood cuz if we're just building to product gaps, we'll in some we'll we'll probably never catch up fully and then we'll always be we'll always be behind. But I like to make sure across some of the product portfolio, we're just doing things you can't find elsewhere because you can point to those things like 24-hour market, like prediction markets, like tokenization, and you know that that's a strong incentive to try Robin Hood if you can't get our offering anywhere else.

>> It just feels like that's like by starting with product. I mean, there is this giant divide going back to assets, right? There's this giant divide of like the baby boomers have all the money.

>> Yeah.

>> Right. But eventually they won't have all the money. Um, and you have this millennial generation that they're going to use the best product. And I'm not just saying this because I'm a proud owner of Robin. Like it's like you're it's just so like try using Schwab. Like I'm on the board of a company where I get my stock grant in Morgan Stanley Erade. It's like they they bought Erade, but the Morgan Stanley site doesn't interoperate with the Erade. It's just it's so comically bad. So the younger generation are going to use these things that are good. They're going to pick the better product and you have the better product. But now it's like you got to get the assets.

>> Yeah. And by the way, uh I talk a lot about the great wealth transfer 120 trillion moving into the hands of younger generations from the baby boomers and silent uh which I think we can be the the prime beneficiary of. But that's not our only strategy. I'm also I I think we can get the baby boomers while they're still alive and we're working very hard towards this and I think we're actually quite successful because

>> I mean you you look at customers in their 70s and 80s who use Robin Hood, they're super happy and to them it's like magic. Like they're used to crappy brick and mortar experiences. Your Gen Z or Gen Alpha customer, they're used to Instagram and Tik Tok and they're like why is this app clunky? it should just like instantly load and I should you know they're they're to some degree uh their expectations are much higher which makes it so that we have to work hard to serve them but if we get someone in their 70s who's actually gets over the hump to use Robin Hood like that's a great customer for us and we have more tools so one is we're really leaning into family finance if you use our banking app the family is like a first class tab which makes it really easy to manage you know your partner your children, all all the finances in one place. And then these these matches that we're running because we have better economics and we can split more with with our users is very compelling to someone with a lot of money in their account. You imagine, you know, we offer you a 3% match and you're someone that's 5 years away from retirement and you have $10 million in your IRA. That's 300K. Like you could buy a nice new Corvette immediately that we instantly give you. So that's been a very strong value proposition to um you know our customers parents, their grandparents in some cases

>> or Elon Musk.

>> Yeah. I mean he could get a nice McLaren F1.

>> Exactly. You know exactly move some shares.

>> Could buy an F1.

>> Exactly. You know some pe a small subset of people um will will say this argument. I think it's a lazy argument. I think it's an anti- capitalist argument but I'm curious for the best comeback to it. They'll basically say things like prediction markets, things like crypto, things like trading. Especially among younger set, they'll call it something like a financial nihilism or something. It's small subs. What what is sort of the best comeback to it's not nihilism, but what is it?

>> Could you remind me what financial nihilism is defined as? I remember I looked into this a while ago. I think they they're sort of making this argument that young people because they don't have options elsewhere are getting into sort of you know either prediction markets or crypto and is this kind of like make money make money but I don't know they're sort of accusing this pool of activities as like evidence of some nihilism in some form.

>> Yeah. I mean the the first thing I would say is uh everything is growing like we're seeing record growth and retirement too. I I think a lot of people sort of like look at this as two different users. Like you have your active traders or nihilists or degenerates and then the folks that are doing respectable things. But in reality um the most engaged users actually use more of our products and have more accounts. So the path uh the path that someone takes when they use Robin Hood typically they come in because they want to buy one stock or one crypto and then some of them are more active others are not but the active ones are the ones that paradoxically adopt retirement adopt products like strategies and the way they grow with us is not necessarily more trading but just expanding into more accounts and putting more assets onto the platform. form. Um,

so we we don't see it. I I think there's not a huge trend where, you know, the percentage of our assets as an economy that are margined or in high-risk investments is growing. The whole pie is growing. Um, and I think that takes with it the speculative activity. Now, now a lot of people will will say, well, you know, there's a lot of speculation and is this is this good? Is this bad? So my take on that and prediction market is probably a great example where the big debate now is well wait a minute is this is just gambling that that's what we get asked all the time. It's been asked about every new financial asset that gets traded. There was a big debate when futures uh was created as an asset whether people are just speculating here and it's because speculation is just critical to the functioning of every financial market. You can't have a working market without speculation. Um,

and I'm not uh not to say that everyone should speculate with all of their money, right? Um, I think that probably most of it should be either passively managed or or retirement or in sort of lower risk, lower volatility investments, but I think you should have a bucket. Um, and and most people do have a bucket where, you know, they invest and and they exercise discretion. And I think for that one we compete over who can offer the the highest diversity of products and can we give you that ideal product for you that allows you to sort of like trade your precise point of view.

I think prediction markets are are a great example of that because if you if you had a view that you know Trump was going to win the election before prediction markets you would have had to maybe buy equities in crypto, right? Yeah. you'd say, "Okay, Trump, I I believe Trump's going to win the election and Trump is pro crypto, so Bitcoin is going to go up." And that somewhat worked, but it's a little bit indirect. And a lot of people have the same view on companies with earnings. They think, "Okay, I'm pretty sure Tesla is going to blow out, for example, blow out their deliveries in a given quarter, so I'm going to buy the stock." But then you have weird things like they blow out their deliveries. Maybe a company beats on EPS and revenue and the stock goes down, right?

And and to me, for a trader, this is an inefficiency because I have a point of view. I want to trade that. And these proxies make it a little bit less efficient. And prediction markets solve that. Which is why I think for traders, it has the potential to become a really big market. And for mass market consumers, it could be a better source of news and forecasting. Like I I I I came out with a statement a couple months ago about how I think prediction markets are truth machines. Yeah. Like we're constantly being bombarded by all this information and noise. Anyone can be an influencer. Anyone can have a podcast. How do you sift through that and figure out what's actually going to happen?

>> Well, prediction markets actually take advantage of all of these sort of like forces to consolidate into a more accurate forecast. That's not a guess. It's it's not a a poll. It's you know a price formed by people with real skin in their

>> Well, you remember that DARPA pioneered this 25 years ago. You know this?

>> No.

>> So so DARPA is the defense defense advanced research projects agency. So the internet came out of it was originally Dar it was Darpanet and then it became Arpanet became the internet right um

>> the Alpine in they have the uh the plaque right

>> right um so DARPA was like how do we get good at knowing who's going to win this foreign election well we could hire lots of CIA agents that like go bribe people and all this kind of stuff but you know what let's have a prediction market and they designed this in 2002

>> was that the Iowa uh

>> uh they eventually shut it down because there was just too much controversy Like you don't want to have the government build something because and part of it is I think this is the interesting thing with prediction markets although of course it's true for the stock market as well like if I have a prediction market will for like will something bad happen to Eric tomorrow. Yeah.

>> And it pays out $1 if true and $0 if false. Well, I could do something bad to Eric tomorrow, right?

>> And now I can change the market. It's like the insider trading version of prediction markets which is not relevant for the weather. Um well maybe it is like you could do cloud seating or something but that was part of what DARPA wanted to know was like they wanted a truth machine

>> and this is a much more efficient truth machine than like the central intelligence agency if you think about it right

>> right for exactly because like markets are efficient

>> I remember the truth will get out

>> Google had an internal prediction market where people would speculate on which products would actually ship on their ship dates and it was a much more accurate uh

>> yeah it's always more accurate um but It's it's good to see it live in practice now.

>> Yeah. And and there are real questions like how granular are these contracts going to get uh and and and how do you ensure safety?

>> Yeah. which you know they're regulated and and I think that's the best argument for doing prediction markets inside a regulated framework because if if we don't um they could go offshore much like a lot of the crypto business and you know if it's offshore um it's much difficult to to contain the negative externalities.

>> Yep. Yep.

>> Yeah. I love this idea you know speculation as as curation as accountability. Um Vlad thanks so much for coming on and talking to us about the story. for Robin Hood.

>> Thank you guys. It was fun.