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Speaker 1: Earners. What's up.

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Speaker 2: You ever walk into a small business and everything just

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Speaker 2: works like The checkout is fast, the receipts are digital,

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Speaker 2: tipping is a breeze, and you're out the door before

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Speaker 2: the line even builds. Odds are they're using Square. We

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Speaker 2: love supporting businesses that run on Square because it just

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Speaker 2: feels seamless. Whether it's a local coffee shop, a vendor

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Speaker 2: at a pop up market, or even one of our

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Speaker 2: merch partners, Square makes it easy for them to take payments,

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Speaker 2: manage inventory, and run their business with confidence, all from

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Speaker 2: one simple system. If you're a business owner or even

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Speaker 2: just thinking about launching something soon, Square is hands down

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Speaker 2: one of the best tools out there to help you start, run,

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Speaker 2: and grow. It's not just about payments, it's about giving

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Speaker 2: you time back so you can focus on what matters

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Speaker 2: most Ready. To see how Square can transform your business,

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Speaker 2: visit Square dot com backslash go backslash eyl to learn

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Speaker 2: more that Square dot com backslash, go backslash eyl. Don't wait,

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Speaker 2: don't hesitate. Let's Square handle the back end so you

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Speaker 2: can keep pushing your vision forward. This episode is brought

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Speaker 2: to you by P and C Bank, a lot of

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Speaker 2: people think podcasts about work are boring, and sure they

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Speaker 2: definitely can be, but understanding of professional's routine shows us

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Speaker 2: how they achieve their success little by little, day after day.

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Speaker 2: It's like banking with P and C Bank. It might

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Speaker 2: seem boring to save, plan and make calculated decisions with

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Speaker 2: your bank, but keeping your money boring is what helps

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Speaker 2: you live or more happily fulfilled life. P and C

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Speaker 2: Bank Brilliantly Boring since eighteen sixty five. Brilliantly Boring since

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Speaker 2: eighteen sixty five is a service mark of the PNC

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Speaker 2: Financial Service Group, Inc. P and C Bank National Association

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Speaker 2: Member FDIC.

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Speaker 3: What factors has attributed to the strong performance over the

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Speaker 3: last twelve years for you guys, for the last twelve

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Speaker 3: months for you guys.

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Speaker 4: I think it's really a couple of things. One is

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Speaker 4: that we actually had to change the strategy of the

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Speaker 4: business quite a bit in twenty twenty two. So in

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Speaker 4: twenty twenty two, interest rate environment changed in the US.

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Speaker 4: We went from kind of a prolonged period of low

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Speaker 4: interest rates that you know, there was a brief pause

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Speaker 4: where the Fed started tightening a little bit in twenty nineteen,

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Speaker 4: but that was quickly interrupted by COVID, and we entered

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Speaker 4: sort of like the largest largest money printing era in

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Speaker 4: recent history by several metrics. And then the recovery of

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Speaker 4: COVID led to sort of like the highest interest rates

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Speaker 4: and the biggest monetary tightening that we had seen in

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Speaker 4: three decades or more.

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Speaker 2: So.

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Speaker 4: Basically, what happens is when interest rates are high, people

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Speaker 4: are less interested in investing. And that's for a couple

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Speaker 4: of reasons. One, if you have the ability to receive

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Speaker 4: five percent risk free on your cash, less of your

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Speaker 4: money is going to go towards the stock market because

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Speaker 4: that cash interest, which is risk free, is much more attractive.

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Speaker 4: The other thing is other people are also doing this analysis,

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Speaker 4: and so you tend to get equity multiples dropping and

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Speaker 4: equity prices decreasing. And so that's why in twenty twenty

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Speaker 4: two you saw the major indices take a big hit.

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Speaker 4: And that also kind of makes people less likely to

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Speaker 4: want to invest. And so we saw all of that,

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Speaker 4: and our business had really been geared towards getting lots

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Speaker 4: and lots of new investors who were interested in the market,

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Speaker 4: getting them into the markets for the first time, and

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Speaker 4: we had to change that. Now The good part is

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Speaker 4: any new environment does present new opportunities which didn't exist before,

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Speaker 4: and in this particular case, what happened was high yield

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Speaker 4: savings products became attractive and the banks were really slow

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Speaker 4: to catch up there because the banks were protecting their

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Speaker 4: own bottom lines and they had been used to paying

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Speaker 4: zero percent interest in customer checking and savings accounts and

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Speaker 4: that was kind of a key part of the model.

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Speaker 4: And so we saw an opportunity to come up with

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Speaker 4: a product that gives as much of that interest back

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Speaker 4: to customers as possible, and that became the foundation of

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Speaker 4: our Robinhood Gold product. So we gave customers a really

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Speaker 4: high yield, one of the most competitive yields on the market,

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Speaker 4: which right now is five percent or more for our customers,

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Speaker 4: and you give the high FDIC insurance up to two

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Speaker 4: and a quarter million of protection more than you can

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Speaker 4: get it one bank. And that became the foundation of Gold,

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Speaker 4: which is a subscription offering. And then it's obviously great

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Speaker 4: for customers because they can get this high risk free rate,

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Speaker 4: but it's also great for our business because by growing

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Speaker 4: this offering, we grew the gold business. And the gold

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Speaker 4: business is a subscription kind of recurring revenue stream that

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Speaker 4: is sort of decoupled from trading revenue, which had been

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Speaker 4: sort of like the biggest part of our business and

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Speaker 4: moved up and down with the volatility of the markets.

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Speaker 4: So that happened in fall of twenty twenty two. Then

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Speaker 4: we launched retirement. Retirement's been going very, very well, and

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Speaker 4: that is also less subject to fluctuations in the markets,

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Speaker 4: because when people think about their retirement, they're really thinking

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Speaker 4: with a thirty year time horizon or more, and so

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Speaker 4: money that goes into retirement accounts tends to stay there

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Speaker 4: and it's sort of a different mental calculus. It's less

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Speaker 4: customers thinking about trading. That product has done well, and

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Speaker 4: of course the credit card, which hopefully you guys have

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Speaker 4: seen I have one with me that I can show

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Speaker 4: you if you would like, that's been resonating and it's

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Speaker 4: really just the beginning and kind of the past three

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Speaker 4: months or so, we've seen a resurgence in equity markets

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Speaker 4: as well, and we've been kind of improving those capabilities

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Speaker 4: the entire time too, So really it's just the business

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Speaker 4: strategy has changed, the company has had to adapt. We

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Speaker 4: took advantage of the new environment that we're in and

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Speaker 4: I think the strategy is finally beginning to resonate with

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Speaker 4: more and more public investors, and that's what you're seeing

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Speaker 4: in the stock market.

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Speaker 3: I think you were unfairly criticized for making investing fun

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Speaker 3: and democratized for new investors. But as an entrepreneur, how

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Speaker 3: do you create new innovative products and methods but prevent

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Speaker 3: those attacks from coming Because at the time when you

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Speaker 3: guys were doing that, TD wasn't easy to use, wasn't

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Speaker 3: fun to use. Can you talk to us like, how

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Speaker 3: do you avoid being vilified while innovating in the space

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Speaker 3: which is really conservative.

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Speaker 4: Yeah, I don't think I figured it out yet. To

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Speaker 4: be clear, I think that you know, we're going to

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Speaker 4: get our fair share of criticism, and you know, some

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Speaker 4: of it's fair. I think these are really important issues,

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Speaker 4: and we have to make sure that you know, when

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Speaker 4: we give people powerful financial tools, be it trading, investing,

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Speaker 4: or even consumer credit, each of these have the potential

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Speaker 4: to be abused, and there have been problems with them

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Speaker 4: being abused by certain people in society, and so we

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Speaker 4: have to we actually should be held to a higher

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Speaker 4: standard of scrutiny, and we need to to have answers

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Speaker 4: to those questions. So I think that rather than trying

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Speaker 4: to kind of like avoid the question, my approach has

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Speaker 4: been to kind of lean in and kind of hear

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Speaker 4: the criticism and see, in some cases whether there's improvements

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Speaker 4: we can make to the product to address the kernel

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Speaker 4: of it that may be true, because you know, in

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Speaker 4: all of this criticism, it's not all baseless. I mean,

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Speaker 4: there are people that trade irresponsibly, and there's also people

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Speaker 4: that you know, jump on a bandwagon and just trade

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Speaker 4: something because others are doing it. And we want to

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Speaker 4: make sure that while we strongly believe people have the

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Speaker 4: right to do whatever they want with their money, that

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Speaker 4: they have all the information they need to make the

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Speaker 4: decisions that they want to make, so at least they're

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Speaker 4: going in eyes wide open.

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Speaker 5: Yeah.

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Speaker 1: I mean, last time we spoke, one of the key

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Speaker 1: components that you said of adding to the product was

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Speaker 1: the educational piece. It was one of the things you

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Speaker 1: said that we realize during that crazy and twenty two

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Speaker 1: only one that may have been a little bit asset absence.

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Speaker 1: So even last week when we're talking about memestocks again,

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Speaker 1: it didn't feel like Robinhood was in the news because

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Speaker 1: you guys have made those improvements. Talk about that educational

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Speaker 1: process and add that to the part product and how

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Speaker 1: you guys have made that at the forefront of what

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Speaker 1: you're doing.

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Speaker 4: Yeah, I mean, I think that maybe it doesn't go

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Speaker 4: as much into into like the memestock frenzy that we

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Speaker 4: saw last week because my experiences, these folks that are

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Speaker 4: interested in in the memestocks know what they're doing. By

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Speaker 4: and large, they're doing a very specific thing and they

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Speaker 4: want to make that trade. And we have multiple groups

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Speaker 4: of people that we try to serve with Robinhood. One

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Speaker 4: is active traders, and a big part of our strategy

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Speaker 4: is to be number one in the active trader market.

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Speaker 4: It's it's an important market for us. It is generating

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Speaker 4: a decent chunk of the firm's revenue, and right now

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Speaker 4: we're number two behind the td Schwab combined entity, but

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Speaker 4: we have a path to number one and that's kind

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Speaker 4: of one core component of what we're doing. We also

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Speaker 4: want to grow wallet share with customers and we're building

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Speaker 4: Robinhood and we see potential that this is working because

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Speaker 4: customers are asking us to do more with Robinhood. They

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Speaker 4: love the product so much that they don't want to

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Speaker 4: just use it for their investing. They've shown that they

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Speaker 4: want to use it for retirement. They want to move

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Speaker 4: their spend to it, and that's why we rolled out

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Speaker 4: the credit card. And in the future we see Robinhood

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Speaker 4: being the place where for our customers, all of their

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Speaker 4: assets are held at Robinhood, all of their transactions go

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Speaker 4: through Robinhood, and that's kind of what we're building. Kind

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Speaker 4: of the third thing is going international. Right now, we're

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Speaker 4: largely in the US. We just launched in the UK

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Speaker 4: and in the European Union for Crypto a few months ago,

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Speaker 4: but there's billions of people out there that don't have

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Speaker 4: access to these great tools, and we want to make

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Speaker 4: sure they're available to everyone. And kind of the way

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Speaker 4: that I've been thinking about it is you can ask, like,

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Speaker 4: how can the same company offer you options trading and

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Speaker 4: things like futures, which are these like extremely sophisticated products

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Speaker 4: for traders while also offering you retirement. And the way

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Speaker 4: that I think about it is our active trader products

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Speaker 4: are almost like if we were like an auto manufacturer

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Speaker 4: like Mercedes. There's the F one AMG division which is

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Speaker 4: responsible for building high performance products and they might be

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Speaker 4: for a niche audience. They're not mass market products, but

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Speaker 4: there's a small section of the population that really cares

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Speaker 4: about performance and wants to be at the forefront in

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Speaker 4: innovation in automotive, and so they're building for them. And

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Speaker 4: on the other side, they're selling many and SUVs to

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Speaker 4: the mass market. And so I think it is possible

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Speaker 4: for Robinhood as one brand to serve active traders. And

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Speaker 4: these are the folks that want to be at the

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Speaker 4: forefront of innovation in financial markets and also care about

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Speaker 4: performance and speed and tooling, and we're building for them.

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Speaker 4: But we also think this can be a product that

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Speaker 4: can serve the serious money of millions and millions of

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Speaker 4: people and be very mass market. And we believe we

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Speaker 4: can do that with the same brand.

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Speaker 5: An illegal alien from Guatemala charged with raping a child

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Speaker 5: in Massachusetts. An MS thirteen gang member from Al Salvador

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Speaker 5: accused of murdering a Texas man of Venezuelan charged with

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Speaker 5: filming and selling child pornography in Michigan. These are just

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Speaker 5: some of the heinous migrant criminals caught because of President

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Speaker 5: Donald J. Trump's leadership. I'm christin nom the United States

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Speaker 5: Secretary of Homeland Security. Under President Trump, attempted illegal border

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Speaker 5: crossings are at the lowest lefe ever recorded, and over

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Speaker 5: one hundred thousand illegal aliens have been arrested. If you

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Speaker 5: are here illegally, your next you will be fine nearly

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Speaker 5: one thousand dollars a day, imprisoned, and deported. You will

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Speaker 5: never return. But if you register using our CBP home

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Speaker 5: app and leave now, you could be allowed to return legally.

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Speaker 5: Do what's right, leave now. Under President Trump, America's laws,

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Speaker 5: border and families will be protected. Sponsored by the United

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Speaker 5: States Department of Homeland Security,