Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the Odd Lots podcast.
Speaker 3: I'm Joe Wisenthal, and I'm Tracy Alloway.
Speaker 2: Tracy, here's something that surprised me. Okay, so it's twenty
Speaker 2: twenty five.
Speaker 3: I would have thought, you know, are you surprised it's
Speaker 3: twenty twenty five.
Speaker 2: I'm surprised we made it this long. I'm surprised.
Speaker 3: Fair, that's fair.
Speaker 2: I am surprised, you know. And I think back to
Speaker 2: twenty twenty one and like the crypto boom of that
Speaker 2: ear and the stock, the spac mania and all that stuff,
Speaker 2: that craziness, Like I sort of thought, to some extent
Speaker 2: that would have been a little bit more flash in
Speaker 2: the pan because you know, like ninety nine, two thousand,
Speaker 2: a couple of years later, like people were not talking
Speaker 2: about dot com stocks like two years later. Because I'm like,
Speaker 2: I thought it was going to be a repeat of that,
Speaker 2: all of this retail obsession with options and call options
Speaker 2: and speculation, etc. I thought that'd be a thing, you know,
Speaker 2: short phenomenon. A bunch of people lose their money in
Speaker 2: twenty twenty two and twenty twenty three when some of
Speaker 2: that stuff busts and then they lose interest and they
Speaker 2: go on to other things and sort of forget about
Speaker 2: trading for a while. But I don't think that was
Speaker 2: an incorrect assumption on my part.
Speaker 3: I think people discovered that they really enjoy losing money.
Speaker 3: It is, yes, okay, genuinely. What I would say is
Speaker 3: this all started in the pandemic, right, Yeah, to some extent,
Speaker 3: But I think crypto opened the door to this idea
Speaker 3: that you can have a number on a screen and
Speaker 3: just bet whether it's going to go up or down,
Speaker 3: like basically a synthetic number. Almost right, It's just this token.
Speaker 3: And then what happened during the pandemic is everyone was
Speaker 3: really bored. Game stop became a thing. Everyone kind of
Speaker 3: discovered that momentum was maybe more fun to play than
Speaker 3: boring stuff like value, and I was, you know, it
Speaker 3: did honestly feel like a cultural shift when it came
Speaker 3: to the way people were thinking about trading. And I'm
Speaker 3: not I guess I'm not as surprised that it's it's
Speaker 3: continued to this day, and if anything, this sort of
Speaker 3: tokenization of the stock market, people playing options, people playing
Speaker 3: crypto has become bigger than ever.
Speaker 2: It's just a cultural shift. It's also like everything has
Speaker 2: a price now, which I think is very important. Like today,
Speaker 2: like we're constantly looking at prices for politics right now,
Speaker 2: We're constantly looking for prices related to geopolitical events on
Speaker 2: sites like Kelshi or polymarket, et cetera. It has expanded
Speaker 2: so much so there's crypto, there's options trading there, et cetera.
Speaker 2: Like we are like drenched in a culture of like
Speaker 2: there's a price on something, there's a thing that's going on,
Speaker 2: you can trade it. And I now think, you know,
Speaker 2: it's gonna be with us forever, because it clearly was
Speaker 2: not just like a you know, a one year sort
Speaker 2: of zerp era every on board at home phenomenon.
Speaker 3: Well, it's not just that you could trade it. You
Speaker 3: can trade it really easily.
Speaker 2: Yeah, right.
Speaker 3: You can just open up your phone some things you
Speaker 3: can trade twenty four hours a day and just make
Speaker 3: or lose money as you choose.
Speaker 2: I love making or losing money as I choose. Anyway.
Speaker 2: One of the companies that we really associate with this
Speaker 2: sort of boom and retail participation that era and that
Speaker 2: of course is robin Hood, the company that was famous
Speaker 2: for being the first to introduce fre stock trading just
Speaker 2: kind of mind blowing, and lots of people use it.
Speaker 2: For many people is their introduction to trading options and stocks,
Speaker 2: particularly during the pandemic associated with the meme stock there,
Speaker 2: which kind of still exists. Anyway, we have the perfect
Speaker 2: guest go on what we're gonna say.
Speaker 3: I was going to say, Robinhood in my mind like
Speaker 3: definitely caught the wave of this cultural shift at exactly
Speaker 3: the right time. But it's also, in my mind like
Speaker 3: an ode to the importance of user interface. Genuinely, the
Speaker 3: app is just more interesting, more fun. I guess some
Speaker 3: people would say, more easy to use than a lot
Speaker 3: of other things. This sounds like an ad I don't
Speaker 3: mean it to be, but I remember, for instance, when
Speaker 3: you know, when you used to make trades on robin
Speaker 3: Hood and you would get like a little confetti animation
Speaker 3: every time you did it. Like can you imagine TDAM
Speaker 3: error trade or like Schwab or something doing something like that.
Speaker 2: Uh. The one other thing I'll say about them is
Speaker 2: they're doing phenomenally well. The stock is like back at
Speaker 2: like basically at all time highs. It's not just a
Speaker 2: company that offers free trades I think they have like
Speaker 2: nine different units at one hundred million dollars annual run.
Speaker 2: Raid Truly, I think it is becoming a juggernaut anyway.
Speaker 2: Thrilled to say we have its CEO and founder, Vladteneve
Speaker 2: on the podcast today, so in studio Flad, thank you
Speaker 2: so much for coming on the Outlaws. Thrilled to finally
Speaker 2: be chatting with you.
Speaker 4: Thank you for the warm welcome. It's great to be here.
Speaker 2: That cohort that came into markets in like twenty twenty
Speaker 2: and twenty twenty one, that sort of you know, whatever
Speaker 2: that cohort was, did they behave differently today than say
Speaker 2: the twenty nine teen cohort or the twenty eighteen cohort?
Speaker 2: Is there something about them that if you look at
Speaker 2: say trading in April during the volatility, is there are
Speaker 2: they different?
Speaker 4: Yeah, so I should rewinding four five years at this
Speaker 4: point time ago, there were lots of people that came
Speaker 4: into the market for the first time in twenty nineteen.
Speaker 4: In twenty twenty, I think right before the pandemic, I
Speaker 4: was in New York and I remember that visit because
Speaker 4: it was sort of like before everything got weird. We
Speaker 4: announced ten million approved accounts on the platform, which was
Speaker 4: a crazy number for US, but Robinhood was already quite
Speaker 4: big even before the pandemic started, So we had ten
Speaker 4: million approved accounts. It was like pretty clear that we
Speaker 4: had created sort of the new era of retail investing
Speaker 4: because before the pandemic we were a Series D company,
Speaker 4: so like late stage private company. I think the valuation
Speaker 4: was something like seven billion. We had a few hundred
Speaker 4: million in annual run rate revenue, and basically the entire
Speaker 4: industry ended up having to replicate our business model in
Speaker 4: order to survive, and not all of them could survive
Speaker 4: as independent entities. You know, tedm Miror Trade had to
Speaker 4: get folded into schwab e Trade, which was sort of
Speaker 4: like the leader of the prior disruptive era in retail trading,
Speaker 4: which was the dot com era, had to get folded
Speaker 4: into Morgan Stanley to survive as a standalone company. And
Speaker 4: so we were already I mean, we had already accelerated
Speaker 4: and kind of turned back the clock. Everyone was saying
Speaker 4: retail trading and investing was over. Everyone was indexing into
Speaker 4: et passive was the new thing. So there was a
Speaker 4: lot of skepticism, but we kind of inverted that, and
Speaker 4: then you had the pandemic, where pretty much across all
Speaker 4: of our business metrics, which we already thought were doing well,
Speaker 4: we kind of increased an order of magnitude. And I
Speaker 4: think the behavior of customers as a result of the
Speaker 4: pandemic is a bit of an intricate question because there
Speaker 4: have been so many things that happened in the macro
Speaker 4: since then, and we have so many different types of customers,
Speaker 4: So to like dramatically oversimplify, you could think of Robinhood
Speaker 4: as having two diametrically different classes of customers. One is
Speaker 4: the active trader, and these are the folks. To give
Speaker 4: like a motorsport analogy, right, the active traders are the
Speaker 4: folks that are like motorheads, Like they care about performance,
Speaker 4: they care about having like really fast cars. They want
Speaker 4: to be at the frontier of technology and innovation.
Speaker 3: Said that people posting loss porn on Wall Street bets.
Speaker 4: Right, not necessarily. I think some of them are. I
Speaker 4: think that that's a more general.
Speaker 2: Can we talk about lost porn later? To keep going,
Speaker 2: These are the folks that are like strapped into their
Speaker 2: battle stations and have like nine monitoring the situation exactly.
Speaker 4: Some of them are incredibly sophisticated and wealthy, and they
Speaker 4: even have Bloomberg terminals, or it would have been sort
Speaker 4: of like the Bloomberg terminal customer. And so that's like
Speaker 4: a higher net worth, very active group, small group, but premium.
Speaker 4: And then we have to come back to the motorsport analogy.
Speaker 4: The folks that buy minivans right the mass market, they
Speaker 4: just want to invest. They want a relatively hands free
Speaker 4: and sort of like low friction way of investing and
Speaker 4: saving for the long term. And we have products that
Speaker 4: serve both of those. So we want to be number
Speaker 4: one in the act trader market. We're rapidly we're rapidly
Speaker 4: gaining market share there. But also we want to be
Speaker 4: the place where if you're a millennial or gen Z customer,
Speaker 4: you put all of your wealth, so you deposit your
Speaker 4: bank account direct deposit in there, you do all of
Speaker 4: your spending with us with our credit card. Of course,
Speaker 4: you do your trading, but you also have your retirement
Speaker 4: account your long term passive investments as well. So we're
Speaker 4: kind of focused on both of these things with two
Speaker 4: very different customer bases. And I say it's oversimplifying because
Speaker 4: you also have customers that have both of these behaviors.
Speaker 4: So a lot of our active traders they also need
Speaker 4: banking tools, they need spending. They have a passive portfolio,
Speaker 4: which can be larger elsewhere, but not everyone is an
Speaker 4: active trader. And so also since COVID, you had a
Speaker 4: whipsaw of low rates, zero interest rate environment which made
Speaker 4: stocks and more speculative, higher growth investments more attractive. But
Speaker 4: then we whipsaw to the highest interest rate environment we've
Speaker 4: seen in multiple decades, and then Robinhood had to respond
Speaker 4: very rapidly and aggressively to survive in that environment. And
Speaker 4: we introduce things like retirement, like the highest apy in
Speaker 4: the industry on cash, so that you could earn interest
Speaker 4: while your cash was sitting there, and you know, just
Speaker 4: a ton of diversification of the business so that our
Speaker 4: customers who became less interested in trading during that time
Speaker 4: could could find ways to you know, take advantage of
Speaker 4: the environment and capitalize with their strategies.
Speaker 3: So, I know, one of the initial competitive advantages you
Speaker 3: had was the zero trading fees, but beyond that, you know,
Speaker 3: I mentioned in the intro that, like, I honestly think
Speaker 3: Robinhood is sort of a I guess a story about
Speaker 3: the importance of user interface, and some people would say
Speaker 3: that's a great thing. You know, users can come on
Speaker 3: and you can transfer money relatively quickly. It's very easy
Speaker 3: to set up and execute a trade. You can basically
Speaker 3: do it without typing very much while you're sitting at
Speaker 3: a bar or in a restaurant or whatever. But you know,
Speaker 3: you also have things like the screen itself is very colorful.
Speaker 3: It photographs well so that people can post those screenshots
Speaker 3: on forums like Wall Street bets. I guess my question is, like,
Speaker 3: to what extent would you attribute the success of the
Speaker 3: company versus old school competitors to that user interface or
Speaker 3: maybe the gamification of stock market trading, which you really,
Speaker 3: you know, you played into at exactly the right moment.
Speaker 4: I reject the gamification premise.
Speaker 3: You don't think the app is designed really well.
Speaker 4: I think it's designed well. But I think when I
Speaker 4: think about so, obviously, I grew up as a gamer,
Speaker 4: so I'm a bit of a student of traditional gamification,
Speaker 4: and when you say gamification to me, it means you know,
Speaker 4: leader boards, social dynamics, and people claim we do all that,
Speaker 4: but we actually do none of it. I think the
Speaker 4: reason Robinhood was successful in the early days is that
Speaker 4: we offered something that nobody else offered, which was commission
Speaker 4: free trading. And I think the reality is if I
Speaker 4: look at the design of the Robinhood app and old
Speaker 4: screenshots of it, I don't think it was particularly easy
Speaker 4: to use. I mean, it was easier to use than
Speaker 4: the competition, maybe because we weren't really competing against traditional
Speaker 4: technology companies that are known for user interface. But I
Speaker 4: think the reality was that the value proposition was so
Speaker 4: strong that people could actually put up with a lot
Speaker 4: of cruft in the user interface to just get the
Speaker 4: core value, which was commission free trading and investing. I
Speaker 4: think over time what happens is as sort of like
Speaker 4: the unique thing we had commission free trading became universal.
Speaker 4: There was like competitive dynamic where the services that reduce friction,
Speaker 4: there's just a natural force to make the services less
Speaker 4: friction full and more easy to use. And I think
Speaker 4: you kind of see that across industries, and that just
Speaker 4: comes from paying close attention to the users, looking at
Speaker 4: their pain points, and having a system where you just
Speaker 4: like systematically reduce those pain points. Like we literally spend
Speaker 4: time sitting with users watching them use the product, see
Speaker 4: the points where they get confused and try to try
Speaker 4: to fix it. And I think you'll see that in
Speaker 4: any technology company. But you know, most companies have become
Speaker 4: technology companies at this point. Any company that's like doing
Speaker 4: a reasonable job, I think will come to the level
Speaker 4: where they're actually doing user feedback and iterations on design
Speaker 4: based on it. If you don't do that nowadays, you'll
Speaker 4: essentially not survive in the in the marketplace.
Speaker 2: Just going back though to that twenty twenty one or
Speaker 2: twenty twenty cohort, you said something interesting, which is that
Speaker 2: some people trade and they have like a more passive
Speaker 2: long term book. They're you know, not people do both.
Speaker 2: The word maturation I don't know, a little condescending, but
Speaker 2: has there been a maturation of that base in some
Speaker 2: sense where people who initially got into trading because it
Speaker 2: looked fun or was exciting, or they were bored, et cetera,
Speaker 2: those customers over time of like Oh, and also long
Speaker 2: term buy and hold in indexing is also something that's
Speaker 2: probably a good idea, Like do you see growth among
Speaker 2: that cohort in terms of what they're interested in?
Speaker 4: Generally every person ends up having a need to invest
Speaker 4: now like.
Speaker 2: An actually invest not just trade when you say.
Speaker 4: Yeah, yeah, so not everyone actually sticks with trading becomes
Speaker 4: an active trader. A lot of people trade more actively
Speaker 4: at first and then eventually end up doing like more
Speaker 4: passive investing. Interesting mostly because they don't if you talk
Speaker 4: to these people, they don't want to put in the
Speaker 4: time to like spend that they have other things to do,
Speaker 4: so they prefer all their investments to be hands off.
Speaker 4: Some people end up trading a lot. And I do
Speaker 4: believe that it's a skill that you could actually get
Speaker 4: better at and improve at. And you know, not everyone
Speaker 4: actually wants to put in the time and effort to
Speaker 4: do that, And so we serve those people with other tools,
Speaker 4: you know, retirement accounts. We have a new product that
Speaker 4: we rolled out called Robinhood Strategies that you just deposit
Speaker 4: money and it'll invest for you and of course give
Speaker 4: you the rational.
Speaker 3: Is that like copy trading or is this different?
Speaker 4: It's it's a digital advisory product. Okay, so it's a yeah,
Speaker 4: we have a registerant investment advisor and it will this.
Speaker 2: Is it the closer betterment or something like that sort
Speaker 2: of business like the sort of robo.
Speaker 4: Yeah, it's similar to a robo except there's a couple
Speaker 4: of interesting elements. One is your fee is capped. It's
Speaker 4: capped at two hundred and fifty dollars per year if
Speaker 4: you have one hundred thousand in your account. So most
Speaker 4: robo products, even though they're lower cost than traditional advisors,
Speaker 4: get more expensive for you the more money you put
Speaker 4: in there. And we thought that was like fundamentally broken.
Speaker 4: As you put more money, the service should get more
Speaker 4: compelling for you. You should feel like you're getting more
Speaker 4: value because the overall relationship to Robinhood is much more valuable.
Speaker 4: So we sort of like inverted the model so that
Speaker 4: it actually on a percentage basis, gets cheaper the more
Speaker 4: money you have. And then also we have these personalized insights.
Speaker 4: Every time something happens to your portfolio, you can read
Speaker 4: about it and why we made that change, and you
Speaker 4: can also listen to us explain it via audio, which
Speaker 4: has been really really popular for our customers.
Speaker 3: Well, this leads into something that I want to ask
Speaker 3: you actually, which is you're doing all these different things now,
Speaker 3: and you clearly have ambitions to be a sort of
Speaker 3: like one stop shop for everyone's financial needs. How do
Speaker 3: you actually decide which new products or which new capabilities
Speaker 3: to expand into. Is it a case of like, Okay,
Speaker 3: well people are on the platform, they're trading, so maybe
Speaker 3: they would be interested in some sort of robo advisory service.
Speaker 3: Or is it you look at the competitive landscape and
Speaker 3: you think like, well, this company has you know, they're
Speaker 3: using cobol or something like that, and they can't do
Speaker 3: what we can do with a new tech stack, and
Speaker 3: so there's an opportunity there. How do you assess all
Speaker 3: those different opportunities and then ultimately decide what you want
Speaker 3: to do.
Speaker 4: Yeah, basically our business strategy falls into three buckets, and
Speaker 4: you can kind of align that with time horizon arcs.
Speaker 4: So we have sort of like a near term arc
Speaker 4: which we're in the climax of right now, which is
Speaker 4: to be the number one platform for active traders. If
Speaker 4: you're an active trader, you know, if you're one of
Speaker 4: these people that has the six terminals in front of
Speaker 4: you and you've got your battle station, we want to
Speaker 4: make it clear that you're at a disadvantage using any
Speaker 4: other platform. And these folks are at the frontier of
Speaker 4: technology and innovation. So twenty four Robinhood, twenty four hour
Speaker 4: Market is an example there. It's not just about better
Speaker 4: tools and interfaces, although that's a part of it. It's
Speaker 4: also having things that are not available elsewhere. Twenty four
Speaker 4: hour market being probably the best example there, and that's
Speaker 4: become very, very popular. And you're literally at a disadvantage
Speaker 4: if you're not using Robinhood because if you need to
Speaker 4: manage your risk on a Sunday night, our platform offers
Speaker 4: access to equity markets and you know those aren't easily
Speaker 4: found elsewhere. So that's the near term mark. Then we
Speaker 4: have sort of a medium five year arc, which is
Speaker 4: being number one in wallet share for the next generation
Speaker 4: and that's millennials and Gen Z for now. But we
Speaker 4: don't want to also get stuck in the millennial and
Speaker 4: Gen Z bucket. We always want to be relevant to
Speaker 4: the needs of the next generation as they evolve.
Speaker 3: Of course, Wait, what generation are you saying you are
Speaker 3: of Gen XENX.
Speaker 4: Well, you're in the other direction, Yeah, you're the other
Speaker 4: gen Alpha.
Speaker 3: I thought you were saying that you're really young.
Speaker 2: Oh no, no, no, I want to make sure that there's
Speaker 2: still financial services that cater to old people.
Speaker 4: Gen X. I would say it's a simplification. I mean
Speaker 4: there's Gen X and baby boomers that love Robinhood. I
Speaker 4: think the common ground is actually less your age and
Speaker 4: more how digitally savvy you are. Like, if you're comfortable
Speaker 4: doing digital banking and financial services on your phone, you know,
Speaker 4: you could be eighty years old and really enjoy Robinhood.
Speaker 4: But you know, some people, particularly as they're older, prefer
Speaker 4: to go in person and talk to a human and
Speaker 4: I think we're a laggard in developed those types of services.
Speaker 4: So the second arc medium term mark of being the
Speaker 4: place where you put all of your money, we basically
Speaker 4: look at a few things there. One is where are
Speaker 4: people withdrawing to if you take your money out of
Speaker 4: Robinhood to do something, can we just better serve that
Speaker 4: within our ecosystem. So you know, for example, a lot
Speaker 4: of people took money off of Robinhood to pay their bills.
Speaker 4: So we saw that and we thought that was a
Speaker 4: great opportunity to just allow them to pay their bills
Speaker 4: via us. So we launched the Robinhood Gold Card, which
Speaker 4: you know, in my opinion I'm biased, is the best
Speaker 4: credit card on the market by a wide margin. Three
Speaker 4: percent cash back on all categories, which you have to
Speaker 4: be a high net worth individual to get coupled with
Speaker 4: a very nice user interface that lets you create virtual
Speaker 4: cards on demand. You can add your whole family help
Speaker 4: them build their credit. So that's just an example of
Speaker 4: how we think about it. But for each of these
Speaker 4: products individual, I don't think it's enough to come up
Speaker 4: with the category. I think we have to have a
Speaker 4: great idea for how we can make the economics better
Speaker 4: for users and also how to make the user experience better.
Speaker 4: And when we have that combination, I think that's the
Speaker 4: ingredient to a successful Robinhood product. I should mention the
Speaker 4: third arc because that's the long term away and it's
Speaker 4: pretty relevant here given the event we just had in
Speaker 4: the South of France. It's called building the number one
Speaker 4: global financial ecosystem and what that.
Speaker 3: Means all just that.
Speaker 4: Yes, so that's a long term mark, so it's going
Speaker 4: to take a while, like ten years, But basically it
Speaker 4: involves expanding Robinhood across two linearly independent vectors. One is
Speaker 4: from US only to fully global and the other is
Speaker 4: from retail only to business and institutional, and that's where
Speaker 4: we get into really interesting platform aspects like tokenization.
Speaker 2: So let me talk to me about equity token here's
Speaker 2: my question, in what year tell me about equity tokenization.
Speaker 2: You know, I'm thinking about like a stable coin is
Speaker 2: a tokenized dollar, right, so obviously a you could do
Speaker 2: the same thing where you have like a stock, tesla
Speaker 2: whatever in crypto form, et cetera, and it trades on
Speaker 2: a chain twenty four to seven. In what year will
Speaker 2: I be able to trade any stock twenty four to
Speaker 2: seven on chain?
Speaker 4: Well, if you are a European customer, definitely twenty twenty five.
Speaker 4: So what we announce in our event to catch a
Speaker 4: token in the South of France is stock tokens by Robinhood,
Speaker 4: which are essentially tokenized US equities and ETFs. We also
Speaker 4: did a giveaway of tokenized shares of SpaceX, which is
Speaker 4: very exciting, and that the technology for both is ready
Speaker 4: right now. It's working for tokenized equities, you can trade
Speaker 4: them twenty four to five right now, but twenty four
Speaker 4: to seven is coming over the next few months and
Speaker 4: will also unlock full on chain capabilities, so swapping, collateralized
Speaker 4: lending and borrowing anything you can do in DeFi. So
Speaker 4: the barrier to adoption in the US kind of mirrors
Speaker 4: what we saw on stable coin. The technology is there,
Speaker 4: it's available in Europe, it'll be available in a bunch
Speaker 4: of jurisdictions. It's all just regulatory clarity, which we're hopeful
Speaker 4: will come later this year. But it's not a technological
Speaker 4: barrier by any means.
Speaker 3: Why is tokenization a part of it if we're not
Speaker 3: really solving a technological problem but a regulatory problem.
Speaker 4: Well, tokenization solves a lot of problems, but the necessary
Speaker 4: piece to make it available to the US is essentially
Speaker 4: a regulatory issue. We just need rules of cryptoregulation and
Speaker 4: for the private stock side, which is also an interesting
Speaker 4: element because there you start to really see the benefits
Speaker 4: of tokenization.
Speaker 3: What does tokenization do? What does it allow you to do?
Speaker 4: Yeah? So tokenization takes an asset and puts it on
Speaker 4: chain and essentially makes it tradable twenty four to seven,
Speaker 4: just like a stock or a crypto asset would be.
Speaker 4: So you can buy or sell it on a crypto exchange.
Speaker 3: But why can't I can buy or sell a stock? Right?
Speaker 1: Like?
Speaker 3: What are we doing here?
Speaker 2: What is the different? What does the tokenization accomplished that
Speaker 2: you can't just do on a database that you can
Speaker 2: buy stock com?
Speaker 4: Yeah? So good? Question, I think the answer is slightly
Speaker 4: different if we're talking about a customer in the US
Speaker 4: versus internationally, and I'll explain why. So in the US,
Speaker 4: we already have a pretty robust financial system. Robinhood exists,
Speaker 4: right and you can onboard on Robinhood and buy stocks.
Speaker 4: You can buy them twenty four or five, which is
Speaker 4: pretty good. So there the delta between the tokenized experience
Speaker 4: and what you have currently would be expanding to twenty
Speaker 4: four to seven. And also, eventually when we plug into DeFi,
Speaker 4: making all of the DeFi aspects which are right now
Speaker 4: a little bit more niche but incredibly powerful available. So collateralize,
Speaker 4: lending and borrowing self custody. Self custody is interesting. So
Speaker 4: right now, your stock in your Robinhood or other brokerage
Speaker 4: account is kind of locked into a broker. So let's
Speaker 4: say that broker has issues, you got tech technical outage,
Speaker 4: You're kind of stuck. But if the stock were to
Speaker 4: be tokenized, not only would it become seamless to use
Speaker 4: another broker you just kind of attached to your wallet,
Speaker 4: but the reliability would be much higher.
Speaker 2: I also want to have to worry about losing my
Speaker 2: seed phrase when I have stock in a traditional brokerage.
Speaker 2: Is that something that people are going to have to
Speaker 2: think about if they're trading tokenized equity.
Speaker 4: It's less concerning with traditional assets because there's always going
Speaker 4: to be a process to connect your token with the
Speaker 4: real asset. So you know, it's a big problem with bitcoin,
Speaker 4: for example, because there's no like physical representation. But if
Speaker 4: you have a tokenized dollar or an asset, you will
Speaker 4: be able to there will be a process where you
Speaker 4: can claim the actual real thing.
Speaker 2: Sorry, just to press on this further, I'm trying to understand. Okay,
Speaker 2: So a tokenized equity and it's gonna I think, what's
Speaker 2: the chain. You're using arbitrum like arbitrum at first, but
Speaker 2: not for long. We're actually rolling out our own blockchain. Oh,
Speaker 2: you're gonna have a base competitor.
Speaker 4: Yeah, in a way. I mean it's just a layer
Speaker 4: on top of arbitrum. Then, uh, it's it's gonna be
Speaker 4: on top of etherium. It's a layer two.
Speaker 2: Okay, so you're building your you're building your own ethereum
Speaker 2: layer two. Huh. Setting asaid Europe or the United States.
Speaker 2: Random person who has as some USDC in Indonesia, will
Speaker 2: they be able to interact with this and then have
Speaker 2: Tesla exposure eventually.
Speaker 4: Yes, that's the plan, and so like.
Speaker 2: Right now, if I want to own Tesla shares through
Speaker 2: robin hood, like I tell you my name and I
Speaker 2: presumably give you some identifying information, etc. But in the future,
Speaker 2: in theory, anyone will be able to get exposure to
Speaker 2: these assets without actually having to reveal anything about themselves
Speaker 2: because they're just interacting pseudanonymously on chain.
Speaker 4: In large part, yes, there's some caveats where, depending on
Speaker 4: the jurisdiction, we might have to like KYC, some elements
Speaker 4: of the experience. For example, minting and burning the actual
Speaker 4: physical stocks and turning them back and forth into tokens
Speaker 4: will likely require KYC. But yeah, in the same way
Speaker 4: that you can transfer a token I stable coin on chain,
Speaker 4: you'll be able to transfer token ise stocks identically and
Speaker 4: kind of in the same for the same reasons that
Speaker 4: stable coins have become more popular and have really gained
Speaker 4: mass adoption outside of the US. First, just because outside
Speaker 4: of the US it's much harder to get a hold
Speaker 4: of US dollars. Token ice stocks I think will gain
Speaker 4: a ton of adoption outside of the US before the
Speaker 4: benefits and the technology accruing to the US and kind
Speaker 4: of disrupting the structure here.
Speaker 3: And so just to be clear, if I have a
Speaker 3: token ied stock, I can stake that right and use
Speaker 3: it to do other things.
Speaker 4: You will be able to connect it to all of
Speaker 4: the DeFi capabilities. Now exactly what those are. I think
Speaker 4: we're going to have a developer ecosystem and they're going
Speaker 4: to have to build a whole bunch of things. But yeah,
Speaker 4: you can put it in pools and to collateralize lending pools.
Speaker 4: Staking is interesting because technically staking is dedicating tokens and
Speaker 4: resource is to support the network itself. And so when
Speaker 4: you say staking a stock, a lot of people actually
Speaker 4: mean lending it, which which I think will be able
Speaker 4: to be done eventually.
Speaker 2: But could you stake it.
Speaker 3: To support the network sort of old school as well.
Speaker 4: I think the way that that would actually work is
Speaker 4: you'd have to convert that into the network gas token
Speaker 4: and and you would stake it that way. But I
Speaker 4: think it's a little bit early for us to get
Speaker 4: into yet.
Speaker 3: So you mentioned that you're only doing this on arbitrump
Speaker 3: for a short amount of time, and then you're transitioning
Speaker 3: to your own tech. Why, I guess is my question, like,
Speaker 3: why start there and then do your your own layer
Speaker 3: versus just starting out with your own thing.
Speaker 4: I think that the ambition is to actually make this
Speaker 4: the best chain for real world assets. So we're starting
Speaker 4: with stocks. We're also doing private stocks as well, but
Speaker 4: we want to tokenize everything that people would want to
Speaker 4: make tradable, so you can imagine real estate in the future,
Speaker 4: you can imagine carbon credits, really anything.
Speaker 3: But if you're going to use ethereum, then why not
Speaker 3: start out with Ethereum rather than arbitrum.
Speaker 4: Ethereum is the base layer one, and the problem with
Speaker 4: transacting directly on ethereum is that the fees can be
Speaker 4: quite high. So that that's why Arbitrum, which is a
Speaker 4: layer on top of Ethereum, they've been able to essentially
Speaker 4: consolidate lots and lots of transactions and sync up to
Speaker 4: the base layer one chain at an infrequent cadence, and
Speaker 4: that way you can kind of like split up what
Speaker 4: would be a large transaction fee into lots and lots
Speaker 4: of small transactions and get the costs down from you know,
Speaker 4: high coction, high congestion. You know, Ethereum could be multiples,
Speaker 4: multiple doll per transaction down to like individual sense, you know,
Speaker 4: a handful of sense.
Speaker 3: And I know we've been having this conversation for years now,
Speaker 3: but what happens to the gas fees? What if this
Speaker 3: really takes off and people start using the service en mass?
Speaker 4: Yeah, I mean, the gas fees are very scalable. Part
Speaker 4: part of the benefits of being a layer on top
Speaker 4: of the chain is to some degree we'll be running
Speaker 4: sequencers and we'll be able to handle the gas fees.
Speaker 4: And I think that the goal would be for this
Speaker 4: to be essentially transaction costs or very very low costs.
Speaker 2: You obviously as part of the core company competitive advantages,
Speaker 2: building tech right and building And one of the things
Speaker 2: that you did several years ago is you built your
Speaker 2: own clearing stack instead of you know, using some third
Speaker 2: party company, I forget what it was, you know, could
Speaker 2: you in your vision for Robinhood, could you ever see
Speaker 2: whitelisting some of your own tech? You know, I think
Speaker 2: about like Amazon and eventually it built its own computers
Speaker 2: and then it started selling them, and then it started
Speaker 2: selling its warehouse capacity. As you build up these capacities,
Speaker 2: could you see selling it to other FinTechs or access
Speaker 2: to these platforms.
Speaker 4: Yeah, and I think tokenized stock tokens is a great
Speaker 4: example of that. So I think that that could become
Speaker 4: a standard. If you're another fintech Yeah, and you know
Speaker 4: you're you may not be offering stocks to your customers.
Speaker 4: Maybe you have a big international presence and you want
Speaker 4: to add stocks. You would just be able to integrate
Speaker 4: with our chain and then those stocks would be available
Speaker 4: to your customers. We also have a service called robinhood Connect,
Speaker 4: which essentially took our trading services at were that we've
Speaker 4: optimized so finally for our own first party app and
Speaker 4: made them available to third party developers. So, if you're
Speaker 4: a non custodial wallet provider like a Moonshot or Uni
Speaker 4: Swap or meta mask, you have this problem of how
Speaker 4: do you streamline people getting their dollars into crypto and
Speaker 4: back out to dollars if they want to. So robinhood
Speaker 4: Connect offers, you know, one of the lowest rates to
Speaker 4: do that, just because we've optimized that so much that
Speaker 4: you know, handing that out and giving that service to
Speaker 4: third parties is now easy for us to do. So
Speaker 4: we're going to continue to iterate on that the chain
Speaker 4: will be full fledged developer platform, made available to third parties,
Speaker 4: and we always will continue to look for opportunities in
Speaker 4: the future to have our tech. I wouldn't call it
Speaker 4: white labeled, but at least made available to institutions and
Speaker 4: other customers.
Speaker 2: You know what's really interesting to me. I was thinking about,
Speaker 2: like several years ago, when crypto started taking off, and
Speaker 2: I used to make fun of these people when cryptos started,
Speaker 2: when crypto started taking off, and you'd get these conferences
Speaker 2: and people would go on panels and they say, well,
Speaker 2: we're really we're really interested in blockchain.
Speaker 3: Tech, not baitcoin, but block We're.
Speaker 2: Really interested in blockchain technology, not bitcoin. And I never
Speaker 2: really knew what it meant, and it didn't seem to
Speaker 2: go anywhere, and it just seemed like a way like, Okay,
Speaker 2: if I like worked for like a big whatever, big
Speaker 2: legacy financial institution, I want to sound smart, I want
Speaker 2: to get invited to panels. I say like, oh, we're
Speaker 2: really excited about the blockchain here totally yeah, But actually
Speaker 2: it kind of sounds like maybe they're being vindicated a little.
Speaker 4: Well, you've noticed that I'm not using the word blockchain
Speaker 4: or web three.
Speaker 2: But you're using it, we're talking about the you're talking
Speaker 2: about the the idea of chains. Yeah, and like I might,
Speaker 2: like I'm kind of sitting here at twenty twenty five,
Speaker 2: and it's like, maybe I shouldn't have made fun of
Speaker 2: those people as much as I did, because it does
Speaker 2: seem like chains per se, I think, as opposed to coins,
Speaker 2: are kind of allowed of the action.
Speaker 4: I think you should make fun of those people a
Speaker 4: little bit because people have been talking a lot about
Speaker 4: this stuff for many, many years. There's been a lot
Speaker 4: of talk, including for me and you know, more.
Speaker 3: Recent we're going to put yeah, let us on the
Speaker 3: block it.
Speaker 2: We're gonna put you know, fancy I still fancy purses
Speaker 2: on the blockchain, which maybe you'll.
Speaker 4: Do it, it'll happen, but yeah, there's been a lot
Speaker 4: of talk and not much action. So yeah, me personally,
Speaker 4: I try very hard not to brand stuff and say
Speaker 4: it's the next big thing. I just want to make
Speaker 4: products available that people use. And I think the best
Speaker 4: buzzwords come out organically because consumers are actually calling things
Speaker 4: and the things arise naturally, right, And I think that
Speaker 4: there's a running.
Speaker 2: Gag that make fun of them less though I really don't.
Speaker 4: Yeah, mass adoption is a year away. It's always kind
Speaker 4: of been a year away.
Speaker 2: Situational is always a year away too, but it happened.
Speaker 4: But yeah, I think that we're finally at the precipice
Speaker 4: of cryptotechnology not being just bitcoin and meme coins and
Speaker 4: actually being applied to things that are useful in the
Speaker 4: real world.
Speaker 3: I will believe it when I see it. But if
Speaker 3: you have tokenized stocks, what regulatory regime does that actually
Speaker 3: fall under in the US at least? Like is that
Speaker 3: a security or is that a derivative or is that
Speaker 3: something else? And how are you navigating that aspect of it?
Speaker 4: Well, so they're they're not permissible in the US yet,
Speaker 4: But our belief is that in the ideal world they
Speaker 4: would not be treated as a derivative, Okay, they would
Speaker 4: instead be treated as a security kind of pari pasue
Speaker 4: traditional stocks. So basically, all of the protections, all of
Speaker 4: the structure that the SEC can kind of promulgate to
Speaker 4: individual stocks should pass through to stock tokens as well.
Speaker 4: And our belief is actually that this doesn't require new legislation.
Speaker 4: The SEC can basically make the rules. They can do
Speaker 4: a rule making, they can even do relief in advance
Speaker 4: of rule making like they did for reggaets. If you
Speaker 4: guys are familiar a few decades ago. So we've been
Speaker 4: working with them, and I think actually the folks at
Speaker 4: the sec HESTER and the Crypto Task Force, you know,
Speaker 4: we've been engaging in a lot of roundtables, including tokenization.
Speaker 4: I think they're pretty keen to make this happen. And
Speaker 4: I actually think the EU launch and showing that you know,
Speaker 4: these tokens are useful. It works well, Customers love it.
Speaker 4: It's a huge efficiency improvement and infrastructure improvement behind the
Speaker 4: scenes that makes all kinds of things that they care
Speaker 4: about easier. My hope is that that'll help kind of
Speaker 4: spur innovation and spur activity and acceptance worldwide, not just
Speaker 4: in Europe.
Speaker 2: The changing administration must be must have been huge for you.
Speaker 4: It was definitely a positive because you know, probably over
Speaker 4: the much of the past, much of the period of
Speaker 4: twenty twenty to twenty twenty four, we had to play defense.
Speaker 4: Our business was under assault from multiple angles, and I
Speaker 4: think at first when the administration changed, having that not
Speaker 4: be a huge factor was a huge relief, just not
Speaker 4: having regulation by enforcement and not having to like spend
Speaker 4: a significant amount of mind share and resources on defending
Speaker 4: our business from this onslaught, and then that shifted into Okay, well,
Speaker 4: we've got to exercise a muscle that we haven't really
Speaker 4: had to exercise before, which is there's an openness to
Speaker 4: create new rules and to like actually move forward and
Speaker 4: encourage innovation. What does that look like? What does it
Speaker 4: look like to actually work with an administration that wants
Speaker 4: to get on the front foot and make the US
Speaker 4: the leader. And I think that's been very welcome. I
Speaker 4: think you saw with the stable coin bill, you'll see
Speaker 4: with market structure that I think we'll be able to
Speaker 4: execute on this.
Speaker 3: What's it been like working with them? Just give us
Speaker 3: some color of like the actual process in this administration
Speaker 3: versus the last one.
Speaker 4: They've been moving fast, which is pretty amazing. I mean,
Speaker 4: bo Hines and David Sachs care a lot about this,
Speaker 4: they care a lot about us being number one in
Speaker 4: crypto as well as AI. They've been engaging industry, and
Speaker 4: they're also like allergic to bureaucracy. I think in the
Speaker 4: previous administration, frankly, it was hard to get a meeting right.
Speaker 4: First of all, I don't know for how long people
Speaker 4: weren't going into offices. But like it was remote meetings,
Speaker 4: it's hard to get the stuff done.
Speaker 2: You made a substantive difference into.
Speaker 4: That made a substantive difference because I think it's really
Speaker 4: hard to solve complex problems with multiple stakeholders remotely. So
Speaker 4: even just something as simp is like having a round table,
Speaker 4: wasn't really done, couldn't couldn't really be done in the
Speaker 4: previous administration because they were all it was all just
Speaker 4: virtual chats. Everyone was working remotely.
Speaker 2: I have another crypto related question. One of the things
Speaker 2: I wonder about is who makes money in crypto? And
Speaker 2: by that I mean like, at one point there was
Speaker 2: a lot of excitement about the specific l ones right
Speaker 2: so Ethereum, ver Solana, et cetera. But it's not clear
Speaker 2: to me that they're gonna like collect tons of fees.
Speaker 2: Especially you know, it's like you're using a layer two
Speaker 2: I don't know how much value, or you're built, and
Speaker 2: then you're gonna build a layer two I don't know
Speaker 2: how much value. Actually, then crews to uh say, Ethereum
Speaker 2: Circle recently came public doing incredibly well that business is
Speaker 2: it seems like it's insanely good. On the other hand,
Speaker 2: they paid a lot of their money to Coinbase for distribution,
Speaker 2: et cetera. So I don't really know if they're gonna
Speaker 2: make a ton of money in the long time. Maybe
Speaker 2: it'll be the distribution. Are you gonna by the way,
Speaker 2: you're gonna get in on that, like we'll circle, Like
Speaker 2: at some point will you be collecting money from the
Speaker 2: stable coin issuers to the customers who hold that coin.
Speaker 4: On your platform. Well, we we announced last year that
Speaker 4: we joined the Dollar Global Network, which is a consortium
Speaker 4: with Paxos, crack In a bunch of other companies to
Speaker 4: create a new stable coin that's going to be global
Speaker 4: in nature and will pay very competitive interests to holders.
Speaker 4: So the goal would actually be to take much of
Speaker 4: those economics and pay them in the form of interest
Speaker 4: to customers. Because if you think about it, if you're
Speaker 4: if you're holding you know us DC or most are tether,
Speaker 4: most other stable coins, h you're not getting interest, which is.
Speaker 2: FI users are getting interest indirectly though, right if they
Speaker 2: hold us DC on Coinbase and Circle remis money to Coinbase,
Speaker 2: and then Coinbase remix money to the user.
Speaker 4: They are they are getting rewards uh, which is which
Speaker 4: is true, But I think it's a little bit different
Speaker 4: than interest, and I think it's also not universal. I mean,
Speaker 4: you have to be holding it custodially. You can't be
Speaker 4: just like holding it on chain, and you're certainly not
Speaker 4: getting it if you're using tether or one of these others.
Speaker 4: So yeah, I think I think they can get rewards
Speaker 4: and incentives, but I think over time they'll have to
Speaker 4: They'll have to get interest as well, because if you're
Speaker 4: not getting interest, you don't really have an incentive to
Speaker 4: hold US dollars. In the form of stable coin, the
Speaker 4: incentive would just be converted immediately and put it in
Speaker 4: a bank, which I think most crypto people would tell
Speaker 4: you it It kind of defeats the whole point of
Speaker 4: using crypto. I think internationally it's okay because those people
Speaker 4: just want convenience. Yeah, so you can you can get
Speaker 4: rid of I think it's a good enough value proposition
Speaker 4: for now, but I think over time, as the interest
Speaker 4: is unlocked, the best state coins will actually the ones
Speaker 4: that ultimately gain market share are going to pay a
Speaker 4: very competitive interest rate. So that's going to become an
Speaker 4: access for competition, and the end user will benefit. So actually,
Speaker 4: to cut to the chase, I'm not sure that's a
Speaker 4: long term, sustainable, large revenue stream. I think it'll get
Speaker 4: competed away.
Speaker 2: Maybe no one will make money in cryptoni benefit of
Speaker 2: the consumer.
Speaker 3: Well, okay, this is exactly the question I wanted to ask. Okay,
Speaker 3: so who makes money here? When I think about capital markets,
Speaker 3: Like if I'm an old school investor or an old
Speaker 3: school economist thinking about capital markets, I think like, okay, well,
Speaker 3: an investor comes along and they give a company money
Speaker 3: and they get equity in return, and the company uses
Speaker 3: that money to go out and expand their business, and
Speaker 3: eventually they pay back the investor. And then I look
Speaker 3: at investing nowadays. I'm sure you've heard this criticism before,
Speaker 3: but so much of it seems extremely synthetic. You know,
Speaker 3: tokens built on top of tokens on top of tokens.
Speaker 3: I guess my question is, like, to you, what is
Speaker 3: the actual purpose of capital markets and this type of training.
Speaker 4: I do think that there's a valuable purpose of capital formation.
Speaker 4: I think it's gotten a little bit lost, or i'd
Speaker 4: say the retail investor in the US has gotten disconnected
Speaker 4: from that purpose because not too many companies are going
Speaker 4: public nowadays. I think past few months have been an
Speaker 4: exception locally, but if you look out broadly, you know,
Speaker 4: back in the eighties or late seventies, you used to
Speaker 4: be able to get into a public company at IPO
Speaker 4: at a pretty low evaluation and kind of get a
Speaker 4: thousand X or ten thousand X return. I mean, if
Speaker 4: you'd invested in Microsoft or Apple at IPO, you had
Speaker 4: a lot of upside left. So companies used to go
Speaker 4: public earlier. Nowadays, you know, you've got SpaceX Open AI
Speaker 4: companies that are worth hundreds of billions of dollars still
Speaker 4: staying private, and those gains are accruing to a smaller
Speaker 4: and smaller set of wealthy insiders. And I think that's
Speaker 4: another potential for the technology because you know, as I mentioned,
Speaker 4: we release SpaceX tokens to consumers as part of this,
Speaker 4: as part of our to catch a token event. And
Speaker 4: what that will do over time is you'll have twenty
Speaker 4: four to seven liquid markets in private stocks as well,
Speaker 4: and I think that's going to be very exciting in
Speaker 4: the US if those are permissible, which I think requires
Speaker 4: the crypto stuff, but also a relaxation of the accreditation standards.
Speaker 4: I think things start to get really interesting because then
Speaker 4: you unlock capital formation at a greater scale and also
Speaker 4: participation for retail in some of these great opportunities. Like
Speaker 4: if you're a retail and you want to gain exposure
Speaker 4: to the AI boom, your options the US are extremely limited,
Speaker 4: And I actually think that's a huge problem because the
Speaker 4: AI boom is very, very consequential to everyday people.
Speaker 2: Man, I'm also looking at the circle IPO. This thing
Speaker 2: is insane. It goes up like twenty percent a day.
Speaker 2: I have a question about IPOs. I'd love to get
Speaker 2: your take on this. Every time there's an IPO that
Speaker 2: goes up, you have like the sort of like Ninia's like,
Speaker 2: actually this was bad and they left all.
Speaker 3: This money money on the table.
Speaker 2: There have been alternative routes to ipoing for decades actually
Speaker 2: late nineties. Google famously did a Dutch auction when it
Speaker 2: became public, et cetera. Yet the IPO as a thing persists.
Speaker 2: Do you have a theory for why, Like why is
Speaker 2: it that like the IPO model where the big bank,
Speaker 2: the big legacy banks, they get their allocation and their
Speaker 2: best clients get this big bump et cetera, and the
Speaker 2: company leaves money on the table. Why does it persist
Speaker 2: for so long? In your view? What does it say
Speaker 2: about markets?
Speaker 3: Is this a roundabout way of asking why robinhood IPO?
Speaker 2: No? I mean sure maybe, but like, what is it
Speaker 2: about the traditional IPO that's so lindy Well, I think
Speaker 2: it's just the enshrined in regulatory No, it's not. The
Speaker 2: Google did a Dutch auction. There are clearly other ways
Speaker 2: to go. SPACs existed, they're coming back already, and yet
Speaker 2: good companies continue to basically go by the IPO road.
Speaker 4: Yeah, that's a good question. I would say those are
Speaker 4: all kind of variants of the IPO that people have
Speaker 4: experimented with. You have direct listings as well.
Speaker 1: Yeah.
Speaker 4: Downside of course with the direct listing is you can't
Speaker 4: raise primary capital, which I think is useful to a
Speaker 4: lot of companies like they do look at it as
Speaker 4: a financing event. So I think there will be some
Speaker 4: iteration and some experimentation within the IPO sandbox like we've seen.
Speaker 4: But I think you look at tokenization of private companies
Speaker 4: if we kind of pull on that thread, that that
Speaker 4: presents an interesting alternative to to companies as well. Both
Speaker 4: for raising primary capital and for tapping into secondary liquidity
Speaker 4: for shareholders. I think it's not yet clear what the
Speaker 4: impact of that will be long term to capital markets,
Speaker 4: but it's definitely coming.
Speaker 3: So you mentioned the accredited investor limitations regulations in the US,
Speaker 3: and I've never I've never really decided how i feel
Speaker 3: about them, because, you know, on the one hand, they're
Speaker 3: supposed to protect uninformed retail investors. I guess, on the
Speaker 3: other hand, they do seem to lock people out of
Speaker 3: a lot of opportunities in the market. And one thing
Speaker 3: you hear from companies such as robin Hood is this
Speaker 3: idea of democratizing finance, Like that is the buzzword and
Speaker 3: the catchword, and we're going to bring all these offers
Speaker 3: created that.
Speaker 4: By the way, Oh did you that was our mission?
Speaker 4: Democratized finance for all.
Speaker 2: They talked about that, yeah, Trader in ninety nine.
Speaker 3: Also peer to peer lending, like they were all over that. Okay,
Speaker 3: But on that note.
Speaker 4: Well they got it from us, okay.
Speaker 3: But on this note, like, is there a limit to
Speaker 3: how far you can democratize finance or do you believe
Speaker 3: there should be like any guardrails in terms of investor access.
Speaker 4: I think any is a big term. I mean, obviously
Speaker 4: I can think of some examples of things that maybe
Speaker 4: you shouldn't be democratized or at least democratized. First, Like,
Speaker 4: I don't know if retail needs to be trading collateralized
Speaker 4: debt obligations or some of these heavily institutional products. But
Speaker 4: I think with private companies it's a little bit of
Speaker 4: an easier discussion. I think that it's hard to imagine
Speaker 4: an argument for why retail should not have access to that,
Speaker 4: like the an argument that on its face is an
Speaker 4: illogical and you have access to so many things. You
Speaker 4: can just spend your money on Amazon and buy all
Speaker 4: sorts of trinkets that immediately lose value and depreciate. You
Speaker 4: can buy mean coins, right, So the idea that those
Speaker 4: classes of ways to spend your money are okay, But
Speaker 4: buying open ai or SpaceX stock, I think, on its
Speaker 4: face it's illogical. Either we have to ban a whole
Speaker 4: bunch of other things that people do to blow their money.
Speaker 2: Be My issue is that I think in a world
Speaker 2: everything is available, you induce a lot of people to
Speaker 2: essentially find ways to fraud, to create fraud. Whereas a
Speaker 2: trinket is a trinket. Anyway, I think we have to
Speaker 2: let you go. We could talk for a real long time.
Speaker 2: Well everything beyond chain in the future.
Speaker 4: I don't know about everything, okay, but I think anything
Speaker 4: that people want to trade, buy or sell and get
Speaker 4: liquidity on will likely find its way on chain.
Speaker 2: Attend to thank you so much for coming on odlash.
Speaker 2: That was a blast.
Speaker 4: Thank you guys, Thank you.
Speaker 2: Tracy. I really can't believe the degree to which like
Speaker 2: a blockchain. I mean, he didn't say blockchain, but is
Speaker 2: every all these companies have their own chain, so like
Speaker 2: coinbase has its own chain called base, robin Hood with
Speaker 2: its own chain, Like I thought that was so ridiculous,
Speaker 2: the idea of like seven or eight years ago. And
Speaker 2: it's a little different, like they're not putting tomatoes on chain,
Speaker 2: but like the change themselves that were the coin is
Speaker 2: not that important. It sort of took off in a
Speaker 2: way that I wouldn't have guessed.
Speaker 3: Here's my question. If you're a person right now who
Speaker 3: is not trading crypto, Yeah, is there anything in your
Speaker 3: day to day life that is, you know, trading or
Speaker 3: existing or being tracked on chain?
Speaker 2: I don't really think so. Yeah, I don't think so, so,
Speaker 2: but it does.
Speaker 3: But we're so we're still we're still in the wait
Speaker 3: and see mode. People are still talking about it. And yeah,
Speaker 3: I guess, like I'm open to the idea that chain
Speaker 3: technology is going to change things and make things different,
Speaker 3: But I guess, like, why hasn't it happened already? And
Speaker 3: then b it sounds still like the barrier isn't necessarily technology,
Speaker 3: Like we have things that would allow you to do this,
Speaker 3: but it's still regulatory.
Speaker 2: I mean, it sounds like the reason it didn't happen
Speaker 2: is because all the Biden administration people were working from
Speaker 2: home and they couldn't they didn't have around tape. No,
Speaker 2: it does sound like probably that is part of it,
Speaker 2: the sort of changing regulatory environment and the deep suspicion
Speaker 2: towards crypto for better or worse, uh on the part
Speaker 2: of the Democratic Party in the US, Like obviously seems
Speaker 2: pretty real. And I do think it seems like that
Speaker 2: between the Genius Act, definitely change in Congress, and obviously
Speaker 2: the changing of the guard at the Sea See, there
Speaker 2: is a real movement. And to my mind, it's not
Speaker 2: really like and again I always sort of go back
Speaker 2: and think about our episodes with Austin Campbell. To my mind,
Speaker 2: it's not like, okay, like there is some benefit to
Speaker 2: me right now in the existence of chains. But the
Speaker 2: idea that like legacy software for reasons that we all
Speaker 2: know is never get to get its act together to
Speaker 2: have something like twenty four to seven trading for better
Speaker 2: or worse. I don't even know if twenty four to
Speaker 2: seven is trading, but some people want to do it,
Speaker 2: because some people want to trade at three pm in
Speaker 2: the afternoon, And it sounds like or of what I suspect,
Speaker 2: and I think it's probably like real or imminent. Is
Speaker 2: that through change that will that that'll be something that
Speaker 2: becomes fairly common.
Speaker 3: I guess here's where I'm coming from. It seems to
Speaker 3: me that a lot of this is incremental rather than revolutionary,
Speaker 3: and when people were first talking about it, it was
Speaker 3: very much in those revolutionary terms, and now it just
Speaker 3: seems like, you know, like an efficiency improvement.
Speaker 2: I actually I totally agree with that. I mean, one
Speaker 2: thing this is definitely not is some sort of like
Speaker 2: cipherpunk vision where people are trading everything without the government
Speaker 2: being able to look at That is definitely true. But
Speaker 2: you know, like the efficiency improvement is it's nothing like,
Speaker 2: it's not it's not only not nothing. So no, I
Speaker 2: think it's actually kind of a surprise to me because
Speaker 2: the the way people talked about, you know, the thing
Speaker 2: with blockchains is that they're decentralized and costly, and you
Speaker 2: brought up the point of etherorem gaess fees. But if
Speaker 2: everyone can have these sort of basically low fee layer
Speaker 2: twos because they're more they're in large part centrally run,
Speaker 2: you sort of solve some of the compute issues because
Speaker 2: you're not you don't have to like coordinate all these
Speaker 2: different nodes around the world. It's the robin Hood chain,
Speaker 2: it's the coinbase chain, it's whatever. Maybe it is more
Speaker 2: efficient than legacy infrastructure that has been updated and cobbled
Speaker 2: together for like literally decades, and we'll be here decades
Speaker 2: from now.
Speaker 3: It's certainly true that you don't hear the gas fee
Speaker 3: complaints the way you used to write like that that's
Speaker 3: been solved. All right, Well shall we leave it there?
Speaker 2: Yeah, let's leave it there.
Speaker 3: This has been another episode of the Authots podcast. I'm
Speaker 3: Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2: And I'm Jill Wisenthal. You can follow me at the Stalwart,
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