WEBVTT - Robinhood CEO Vlad Tenev on Tokenization and Prediction Markets for Everything 0:00:02.720 --> 0:00:15.840 Bloomberg Audio Studios, Podcasts, radio News. 0:00:18.560 --> 0:00:22.000 Hello and welcome to another episode of the Odd Lots podcast. 0:00:22.079 --> 0:00:24.840 I'm Jill Wisenthal, and I'm Tracy all the way Tracy. 0:00:24.880 --> 0:00:27.280 I think I've mentioned it before, but an idea that 0:00:27.320 --> 0:00:30.720 I've had for podcasts in general, maybe this one one day, 0:00:31.040 --> 0:00:33.680 other podcasts, I want to do everything in two parts. 0:00:34.159 --> 0:00:37.720 So yes, yeah, interview the guests because sometimes it's like 0:00:37.880 --> 0:00:40.240 all of the questions I want to ask are only 0:00:40.320 --> 0:00:41.879 after I've talked to a guest for an hour and 0:00:41.920 --> 0:00:44.120 have some better understanding of the situation. So I want 0:00:44.120 --> 0:00:47.240 to interview the guests, think about it for a few days, 0:00:47.600 --> 0:00:50.920 let the listeners listen to it and have their questions, 0:00:51.200 --> 0:00:52.960 and then it's like, Okay, you know, we've thought about 0:00:53.000 --> 0:00:55.280 it for a few days. Come back. Also, our listeners 0:00:55.320 --> 0:00:56.960 want to know about this and then have the second 0:00:56.960 --> 0:00:59.600 part of the conversation, just like a follow up. I 0:00:59.640 --> 0:01:01.120 want to form a lot. I want to do that one. 0:01:01.160 --> 0:01:02.720 I think it's a good idea. It's also just a 0:01:02.720 --> 0:01:06.280 flywheel of content. It will be never ending that way. 0:01:06.440 --> 0:01:08.080 Yeah, I think that's a good job. 0:01:08.080 --> 0:01:08.520 Security. 0:01:08.560 --> 0:01:11.440 Anyway, we did an episode last year that was great, 0:01:11.760 --> 0:01:14.680 but it also provoked a lot of questions. I'd just 0:01:14.720 --> 0:01:17.000 like jump right into it. So we did an episode 0:01:17.120 --> 0:01:20.360 last year with Lautenant, the co founder and CEO of Robinhood, 0:01:20.640 --> 0:01:24.720 and that was about the company's tokenization efforts, so basically 0:01:24.800 --> 0:01:27.800 his ability to create instruments that would allow users to 0:01:27.840 --> 0:01:30.880 actually trade shares not shares, I guess, but you know, 0:01:31.319 --> 0:01:35.440 quasi equity or equity linked instruments in private companies like 0:01:35.920 --> 0:01:38.399 an open AI or something like that. And then after 0:01:38.440 --> 0:01:41.240 that came out a bunch of people, including the companies, 0:01:41.680 --> 0:01:43.440 a lot of reaction either like what the heck we did? 0:01:43.640 --> 0:01:45.880 Since when did these private companies they are like, since 0:01:45.880 --> 0:01:48.840 when the heck did like we authorize our equity to 0:01:48.840 --> 0:01:50.800 be traded like this or all kinds of stuff. I 0:01:50.800 --> 0:01:53.000 didn't even like really think about that aspect of the time. 0:01:53.040 --> 0:01:54.240 So it's like I wanted to know more. 0:01:54.520 --> 0:01:56.480 I think there's a lot to talk about here. So 0:01:56.840 --> 0:01:59.320 I mean, it does feel like the I guess the 0:01:59.320 --> 0:02:03.320 trajectory history right now is marching towards tokenizing everything and 0:02:03.360 --> 0:02:07.440 just allowing markets in everything and every format, from like 0:02:07.600 --> 0:02:12.160 kind of quasi derivatives to one off event bets like 0:02:12.280 --> 0:02:14.800 that just feels like the trend at the moment, but 0:02:14.880 --> 0:02:17.560 at the same time, there are so many interesting questions 0:02:17.639 --> 0:02:20.600 that this actually raises, not least of which is the 0:02:20.600 --> 0:02:23.560 safety aspect of how much of our lives are just 0:02:23.600 --> 0:02:26.000 going to be watching lines going up or down and 0:02:26.080 --> 0:02:26.799 making bets on. 0:02:26.760 --> 0:02:29.800 Them, absolutely right, you know, like with the prediction markets. 0:02:29.800 --> 0:02:31.720 And you know something I've been thinking about with prediction 0:02:31.800 --> 0:02:34.959 markets is you can replicate equity through that, right, because 0:02:34.960 --> 0:02:37.760 you could just have like prediction markets on will Tesla 0:02:37.880 --> 0:02:39.600 go up one percent today, we'll go up two percent. 0:02:39.680 --> 0:02:41.720 You could just go up or down. Yeah, you can 0:02:41.800 --> 0:02:44.360 recreate all of these instruments in all these different formats. 0:02:44.400 --> 0:02:46.880 So it definitely feels like a jump ball, especially with 0:02:46.919 --> 0:02:50.359 a very sort of liberal regulatory environment. Anyway, very excited 0:02:50.360 --> 0:02:51.760 to say we're going to get a chance to do 0:02:51.800 --> 0:02:55.440 the second half of that conversation that came out last July. 0:02:55.760 --> 0:02:58.200 So we are rejoined once again by ten of, co 0:02:58.280 --> 0:03:00.560 founder and CEO of Robin Hoods of Lot. Thanks for 0:03:00.600 --> 0:03:01.600 coming back on a lot. 0:03:01.720 --> 0:03:04.560 I'm happy to be here again. And I think from 0:03:04.560 --> 0:03:08.040 the guest perspective, i'd also like this if there was 0:03:08.080 --> 0:03:11.440 an opportunity to replace any of my answers from part 0:03:11.520 --> 0:03:13.040 one with better. 0:03:12.960 --> 0:03:15.000 Necessary now that I know the question to replace them, 0:03:15.000 --> 0:03:16.440 that's going to the first one is going to live 0:03:16.480 --> 0:03:17.200 out forever, but. 0:03:17.280 --> 0:03:21.880 A very interviewer friendly formats that we've created. That's right, 0:03:22.000 --> 0:03:22.639 of course we did. 0:03:22.760 --> 0:03:25.080 Well, let's talk about that, because like we did that 0:03:25.160 --> 0:03:27.919 episode where you talk about these tokenization efforts, and I was, 0:03:28.040 --> 0:03:30.360 I don't know. I didn't even think, like, the companies 0:03:30.600 --> 0:03:33.720 whose private shares are being tokenized, are they cool with this? 0:03:34.040 --> 0:03:36.880 But apparently they weren't. What's going on with that? What 0:03:37.040 --> 0:03:40.120 happened with that? Because it does seem weird to be 0:03:40.160 --> 0:03:43.360 able to offer instruments of privately traded companies when the 0:03:43.360 --> 0:03:45.960 companies themselves like, just to be clear, this is not us. 0:03:46.200 --> 0:03:50.119 I think there was various degrees of disavowal. I think 0:03:50.160 --> 0:03:53.440 a lot of these companies are very concerned about their reputations, 0:03:53.480 --> 0:03:55.960 and if they don't understand something, they don't have time 0:03:56.000 --> 0:03:59.040 to dig into it. They'll just say we had nothing 0:03:59.040 --> 0:04:01.800 to do with this, which I think is fair. I 0:04:01.840 --> 0:04:04.760 think you talk to these AI companies and they all 0:04:04.840 --> 0:04:07.480 kind of say the same thing, which is, yeah, we'd 0:04:07.520 --> 0:04:13.120 love our company to allow retail investors exposure right, and 0:04:13.160 --> 0:04:15.400 we think that would be better for the world. Everyone 0:04:15.560 --> 0:04:19.240 generally agrees with us, but when you get down to 0:04:20.000 --> 0:04:23.039 the details of what that entails, and it is a 0:04:23.080 --> 0:04:25.200 new thing, not a lot of companies are doing it. 0:04:25.560 --> 0:04:27.880 Nobody really wants to be the first, and no one 0:04:28.000 --> 0:04:31.240 wants to mess with the status quo, and from their perspective, 0:04:31.279 --> 0:04:34.640 they want to focus on running their business, increasing their revenues, 0:04:35.200 --> 0:04:38.839 and this is sort of ancillary, but for us, it 0:04:38.920 --> 0:04:41.400 is our business. Our business is all about helping the 0:04:41.440 --> 0:04:44.440 retail investor making sure they have all the advantages that 0:04:44.560 --> 0:04:49.280 institutions have, and so it's very, very important. We've continued 0:04:49.320 --> 0:04:53.520 on this journey. Obviously, the open AI and SpaceX stock 0:04:53.600 --> 0:04:56.760 token giveaways in Europe were kind of step one, but 0:04:56.839 --> 0:05:01.080 it's evolved like we're continuing to pursue that over but 0:05:01.160 --> 0:05:03.400 of course we want to find a US solution for 0:05:03.560 --> 0:05:07.440 US customers as well. And actually this week we are 0:05:07.480 --> 0:05:12.040 taking public Robinhood Ventures Fund one RVII on the NICY, 0:05:12.560 --> 0:05:15.280 which is a closed end fund, so you can think 0:05:15.279 --> 0:05:18.239 of it as a venture capital firm that we're taking public. 0:05:18.480 --> 0:05:22.360 We raise capital from retail investors in some institutional as well, 0:05:23.160 --> 0:05:26.480 and we use that capital to invest in private companies, 0:05:26.560 --> 0:05:29.679 which we've already invested in quite a few. 0:05:29.920 --> 0:05:32.159 These are things that traditionally would be limited to a 0:05:32.480 --> 0:05:33.600 credit investors. 0:05:33.400 --> 0:05:36.000 But it's not a credited vehicle and also no carry. 0:05:36.800 --> 0:05:38.840 So actually, one of the things we've been hearing is 0:05:39.160 --> 0:05:42.839 from a perspective of an LP that invests in venture 0:05:42.880 --> 0:05:46.360 capital firms and has to give up that performance fee 0:05:46.480 --> 0:05:50.000 to the manager. This is a disruptive vehicle. And for 0:05:50.080 --> 0:05:54.040 all of the Robinhood Ventures portfolio companies, and these are 0:05:54.040 --> 0:05:57.680 companies like Data Breaks or a Revolute, I think I 0:05:57.720 --> 0:05:59.200 have to go through all of them because I don't 0:05:59.200 --> 0:06:02.920 want to pick out a particular Boom Hypersonic. 0:06:03.000 --> 0:06:04.200 Oh yeah, we had their CEE you on. 0:06:04.440 --> 0:06:09.120 Yeah, Mercore and Stripe which we've signed and not closed, 0:06:09.279 --> 0:06:12.160 and I'm probably forgetting some, but yeah, these are all 0:06:12.200 --> 0:06:16.880 companies that are excited to have Robinhood and retail be 0:06:17.120 --> 0:06:20.160 a part of the picture. And they filmed videos explaining 0:06:20.200 --> 0:06:22.640 why they chose to be part of this. So there 0:06:22.680 --> 0:06:25.320 are people that want to be the first And of 0:06:25.360 --> 0:06:28.920 course this is a different product than tokenization of an 0:06:28.920 --> 0:06:32.839 individual name, and so it's like a little bit more 0:06:32.880 --> 0:06:35.760 palatable to most of these companies, But I think it 0:06:35.920 --> 0:06:38.200 ends up in the same place. I think there's going 0:06:38.240 --> 0:06:42.919 to be a gradual acclimatization to retail access to these companies, 0:06:43.480 --> 0:06:46.320 and you know, Robinhood is going to be leading the 0:06:46.360 --> 0:06:49.240 way across all aspects of this journey. But you know, 0:06:49.279 --> 0:06:52.600 our approach to it has evolved a little bit. You know, 0:06:52.880 --> 0:06:55.840 now we're at the point where we're actually surprised how 0:06:55.880 --> 0:06:58.440 many companies are interested in it and are engaging and 0:06:58.520 --> 0:07:01.039 view it as a differentiator. So I think, at least 0:07:01.080 --> 0:07:03.680 for a bit, we're going to be less aggressive than 0:07:03.720 --> 0:07:06.200 we've been in the past and just get into these 0:07:06.240 --> 0:07:08.240 companies and make sure they want to be part of 0:07:08.279 --> 0:07:10.040 what we're doing willingly and openly. 0:07:10.400 --> 0:07:12.480 I definitely have a lot of questions on the venture 0:07:12.520 --> 0:07:15.080 fund in particular, and you promised to answer all of 0:07:15.120 --> 0:07:17.920 our geekiest questions about like the technical structure of how 0:07:17.960 --> 0:07:20.960 it works. But before we go any further, I have 0:07:21.440 --> 0:07:25.280 one conceptual question, which is, when you think about the 0:07:25.400 --> 0:07:30.760 difference between I guess investing, trading, and gambling, how would 0:07:30.800 --> 0:07:33.840 you differentiate those three activities, Because I think a lot 0:07:33.880 --> 0:07:37.440 of the tension that arises from something like tokenizing stocks. 0:07:37.560 --> 0:07:40.320 Is this idea that like, well, you know, when you 0:07:40.360 --> 0:07:44.080 buy a stock, you're buying equity. The clues in the name, right, 0:07:44.120 --> 0:07:46.640 You're buying equity in the company that's supposed to come 0:07:46.640 --> 0:07:49.480 with certain rights. It's supposed to lead to a virtuous 0:07:49.480 --> 0:07:52.040 circle of you know, the investors putting capital in the 0:07:52.040 --> 0:07:55.720 company and the company talking back to its investors. And 0:07:55.760 --> 0:07:57.160 so I think if we just step back for a 0:07:57.200 --> 0:07:59.600 second and talk about how you see the differences between 0:07:59.600 --> 0:08:01.800 those three activities, that would be really helpful. 0:08:02.200 --> 0:08:06.440 Yeah. I think that the difference between investing and trading 0:08:07.080 --> 0:08:12.760 is really one of velocity. I think the mindset of someone. 0:08:13.240 --> 0:08:15.600 And by the way, it's not always different people. It 0:08:15.600 --> 0:08:19.840 could also be different activities within one person. So in fact, 0:08:19.880 --> 0:08:22.120 we have a lot of customers who have multiple accounts 0:08:22.120 --> 0:08:26.440 that they have for different purposes. So investing, to me 0:08:26.960 --> 0:08:30.360 is the mental model is I'm buying something and I 0:08:30.400 --> 0:08:33.800 never intend to sell it, right, So it's sort of 0:08:33.880 --> 0:08:38.280 like accumulating assets and you intend to have them only grow, 0:08:38.360 --> 0:08:40.760 and of course maybe you'll sell it if you actually 0:08:40.800 --> 0:08:44.280 need the money, but the intent is always I'm holding 0:08:44.280 --> 0:08:49.240 onto this and I'm building like a monotonically increasing portfolio 0:08:50.080 --> 0:08:53.840 trading is I'm going to move in and out because 0:08:53.840 --> 0:08:57.280 I see an opportunity, and that opportunity might not exist 0:08:57.360 --> 0:09:01.360 in one day or three months. But there's like a 0:09:01.520 --> 0:09:07.520 very particular thesis that I have that's time bound and systematic. 0:09:08.360 --> 0:09:12.760 And I think gambling is like mostly emotional driven, Like 0:09:12.880 --> 0:09:16.440 maybe I really like this team, right and they're my 0:09:16.640 --> 0:09:20.800 local team, so I'll just you know, put some for 0:09:21.200 --> 0:09:22.839 entertainment purpose behind it. 0:09:23.160 --> 0:09:25.760 On tokenization specifically, just to go back to this question, 0:09:25.880 --> 0:09:29.240 you mentioned that you're through the regulatory environment or you're 0:09:29.280 --> 0:09:31.440 able to move a little bit more aggressively in Europe 0:09:31.480 --> 0:09:35.480 in the US. But setting aside Europe or US, if 0:09:35.480 --> 0:09:38.439 someone buys something that on the robin Hood platform is 0:09:38.440 --> 0:09:40.760 called an open Aye token, Yeah, what are they getting? 0:09:40.960 --> 0:09:43.679 Do you have equity that has been like backing it? 0:09:43.720 --> 0:09:45.559 Is it a sort of swap where the only thing 0:09:45.600 --> 0:09:48.880 backing it is your promise to like redeem the token 0:09:49.280 --> 0:09:51.480 at some price, Like what is the token? 0:09:51.679 --> 0:09:55.440 Yeah? So all of the tokens that we have offered 0:09:55.720 --> 0:10:00.880 in Europe, including the SpaceX and open Ai giveaway, so 0:10:01.000 --> 0:10:04.960 those haven't been unlocked for trading. It's basically just we 0:10:05.000 --> 0:10:08.199 gave our customers a gift that they hold in their accounts, 0:10:08.760 --> 0:10:12.480 and that's because or actually private markets even in Europe 0:10:12.800 --> 0:10:16.520 for tokenization or sort of like working through Since we're 0:10:17.120 --> 0:10:18.959 the first to do this at least that I'm aware of, 0:10:19.040 --> 0:10:22.400 we're working with the regulators to make sure that when 0:10:22.440 --> 0:10:25.800 we unlock those for trading, the product is safe and 0:10:26.440 --> 0:10:29.480 is sort of like answers all the questions and meets 0:10:29.520 --> 0:10:33.600 all of the requirements for making sure customers are clear 0:10:33.640 --> 0:10:36.280 on how it works. So the intent is for that 0:10:36.320 --> 0:10:38.920 to happen later this year. So we're working on it. 0:10:38.960 --> 0:10:42.480 But as of now, private stock tokens aren't tradable, they're 0:10:42.559 --> 0:10:46.839 just gifts, and all stock tokens are backed by underlying 0:10:46.920 --> 0:10:51.760 equity or like equity equivalent position in for example, open 0:10:51.800 --> 0:10:54.319 ai doesn't have traditional equity because. 0:10:54.240 --> 0:10:58.240 Okay, but there is just to be clear, someone acquired 0:10:58.320 --> 0:11:01.520 some equity at some point in a VC round or 0:11:01.559 --> 0:11:05.400 whatever it is, and when someone buys an open ai token, 0:11:05.880 --> 0:11:09.880 that link exists to an actual asset that someone has. 0:11:09.720 --> 0:11:12.760 With the caveat that nobody's buying the open ai token 0:11:13.000 --> 0:11:15.640 through robinhood. Currently it's just been gifted. 0:11:15.760 --> 0:11:20.040 So someone holds those they've been gifted, but those are the. 0:11:20.080 --> 0:11:22.280 Token holder doesn't have the equity. It's in the like 0:11:22.360 --> 0:11:24.120 special purpose vehicle, I assume. 0:11:24.400 --> 0:11:28.760 So yeah, technically, the way this works is it's kind 0:11:28.760 --> 0:11:31.719 of similar to a stable coin. So you have your 0:11:31.800 --> 0:11:35.600 bag of traditional assets that are governed by traditional rules 0:11:35.640 --> 0:11:38.319 and legal covenants and whatnot here, and then you mint 0:11:38.400 --> 0:11:41.880 and burn tokens against that. But yeah, as of now 0:11:42.080 --> 0:11:47.080 in Europe, it's a derivative product, and that's also subject 0:11:47.080 --> 0:11:49.280 to change. You can think of this as kind of 0:11:49.280 --> 0:11:52.760 the paperwork around the technology. The technology is the same, 0:11:53.240 --> 0:11:56.160 but we have been hearing from customers that they're a 0:11:56.200 --> 0:11:58.960 little bit concerned, you know, with traditional stocks. In the 0:11:58.960 --> 0:12:02.920 event of bankruptcy of Robinhood or something, it's very clear 0:12:02.960 --> 0:12:05.800 what happens. Yeah, and so in V one, I think 0:12:05.840 --> 0:12:09.120 a lot of those questions were ambiguous. But since then 0:12:09.320 --> 0:12:11.920 we've continued working and we're going to have a V 0:12:12.080 --> 0:12:15.760 two and eventually a phase three of this offering where 0:12:16.000 --> 0:12:18.720 we believe we'll have a path to actually addressing all 0:12:18.760 --> 0:12:21.040 those concerns. So now you're at the point where if 0:12:21.040 --> 0:12:24.920 you buy something that's tokenized, maybe it's a little clunky, 0:12:25.000 --> 0:12:28.560 and it is slightly worse as a product than if 0:12:28.600 --> 0:12:32.520 you have the traditional equity right, if you have access 0:12:32.520 --> 0:12:34.880 to that, some people don't have access to it, so 0:12:35.160 --> 0:12:38.439 it's actually much better for them. But I think you're 0:12:38.480 --> 0:12:40.720 going to get to the point within the next year 0:12:41.240 --> 0:12:44.600 where it's superior in all practical ways, and I think 0:12:44.600 --> 0:12:47.280 that's where things really start to get interesting. 0:12:47.760 --> 0:12:49.480 And just on the ventures fund, I know you said 0:12:49.480 --> 0:12:51.840 it was a closed end fund, but is that like 0:12:52.120 --> 0:13:10.800 a forty act thing or a act? Okay, Yeah, I 0:13:10.840 --> 0:13:14.640 find financial engineering interesting and it certainly gives us a 0:13:14.640 --> 0:13:16.240 lot to talk about. But on the other hand, it 0:13:16.240 --> 0:13:19.520 seems like so much work. Would it not just be 0:13:19.600 --> 0:13:23.480 simpler to try to lobby for the accredited investor rules 0:13:23.520 --> 0:13:25.920 to actually be changed, Like, how are you making the 0:13:25.960 --> 0:13:29.040 decisions too? We're going to create all these new products, 0:13:29.080 --> 0:13:31.480 which I assume are a lot of work for you guys, 0:13:31.600 --> 0:13:34.480 take a lot of discussion with the regulators versus just 0:13:34.600 --> 0:13:37.599 lobbying for these old rules to actually get overhauled. 0:13:37.840 --> 0:13:39.880 Yeah, I think we're doing that as well. I think 0:13:39.960 --> 0:13:44.480 the accredited investor rule needs to go. Frankly, it doesn't 0:13:44.520 --> 0:13:47.600 make any sense, But I don't think that answers all 0:13:47.679 --> 0:13:50.960 of the problems that people have with private market investing. 0:13:51.400 --> 0:13:55.000 The other problem is just liquidity, Like I don't even myself, 0:13:55.080 --> 0:13:57.560 right who has access to these things. I don't want 0:13:57.559 --> 0:14:00.880 to have my capital locked up for ten years possibly 0:14:01.000 --> 0:14:04.400 more for these companies to go public, and some of 0:14:04.400 --> 0:14:07.160 them might never go public, right, So there's a liquidity, 0:14:07.559 --> 0:14:11.560 there's also just access and I mean, Robinhood. Part of 0:14:11.559 --> 0:14:14.600 what we're doing here is we're out there hustling getting 0:14:14.600 --> 0:14:18.280 into these deals because I'm in Silicon Valley, our team 0:14:18.400 --> 0:14:21.480 is there, unlike most of these financial companies that are 0:14:21.520 --> 0:14:23.840 here in New York. So we happen to kind of 0:14:23.880 --> 0:14:26.720 be in the epicenter where the deals are getting done, 0:14:26.800 --> 0:14:31.160 where the companies are based. The no carry obviously, and 0:14:31.320 --> 0:14:33.440 the accreditation. You know, if we could solve that through 0:14:33.480 --> 0:14:37.600 other ways, that will become interesting. But Chairman Atkins of 0:14:37.640 --> 0:14:41.600 the SEC actually specifically called out close down funds as 0:14:42.280 --> 0:14:46.200 the preferred vehicle for having access to privates. So you know, 0:14:46.400 --> 0:14:49.120 we're we're doing our part working with the regulators to 0:14:49.160 --> 0:14:51.080 try to open this up. I think they agree that 0:14:51.240 --> 0:14:53.400 it's a problem, and you know, I don't think that 0:14:53.480 --> 0:14:55.920 it's going to be the end state necessarily. I think 0:14:55.960 --> 0:14:59.600 this thing will evolve, but we want to serve customers 0:14:59.680 --> 0:15:03.000 and work with regulators at all stages of it. So 0:15:03.720 --> 0:15:06.600 and you know, you do this once. The fact that 0:15:06.640 --> 0:15:10.200 it's hard is also kind of attractive because it makes 0:15:10.240 --> 0:15:13.640 it so that we're unique, Like we figure it out. 0:15:13.720 --> 0:15:17.320 We have qualities that we can bring to bear that 0:15:17.840 --> 0:15:21.040 not all of our competitors can. For example, you really 0:15:21.120 --> 0:15:25.400 need to have both sides. You need retail to actually 0:15:25.760 --> 0:15:28.400 be on the platform and to be serving customers who 0:15:28.440 --> 0:15:31.000 are interesting in these products. You also need to get 0:15:31.040 --> 0:15:34.000 the supply, and I think Robinhood is somewhat unique in 0:15:34.120 --> 0:15:37.240 being able to actually do both of these things simultaneously. 0:15:37.480 --> 0:15:39.240 And then we figure it out once and then we 0:15:39.280 --> 0:15:41.560 turned the crank. So you know, you notice we named 0:15:41.560 --> 0:15:45.280 it our VII Robinhood Fund one. We do anticipate there 0:15:45.280 --> 0:15:47.720 will be other funds. We already have lots of ideas 0:15:48.040 --> 0:15:50.720 of unique products we can offer, so it's really just 0:15:50.880 --> 0:15:51.560 the first step. 0:15:51.840 --> 0:15:54.160 So you mentioned being in Silicon Valley and being able 0:15:54.200 --> 0:15:56.320 to source these deals, and this is the other thing 0:15:56.360 --> 0:15:59.680 I wanted to ask you, because getting into a hot 0:15:59.720 --> 0:16:03.960 price tech company at the moment seems incredibly competitive. And 0:16:04.080 --> 0:16:05.520 Joe and I we go out when we talk to 0:16:05.520 --> 0:16:07.880 a lot of venture capital funds and they always give 0:16:07.960 --> 0:16:10.240 us the same pitch, which is, well, we're different. We 0:16:10.320 --> 0:16:15.000 build long term relationships with our investments. How is Robinhood 0:16:15.080 --> 0:16:18.680 actually competing in that space? And what I guess differentiates 0:16:18.720 --> 0:16:20.280 you from a sort of classic VC. 0:16:20.720 --> 0:16:23.320 Yeah. I mean a big one is we can say 0:16:23.320 --> 0:16:26.280 that there's no carry on these funds, and what that 0:16:26.360 --> 0:16:29.200 means is it's just the more we believe a more 0:16:29.200 --> 0:16:33.440 investor friendly vehicle. Right, typical venture capital firm will charge 0:16:33.440 --> 0:16:36.240 the management fee. There's also a carry on top, which 0:16:36.280 --> 0:16:40.760 means every dollar past a hurdle rate, twenty percent of 0:16:40.760 --> 0:16:43.640 that goes back to the fund manager. So it's more 0:16:43.680 --> 0:16:47.840 investor friendly product. The other thing is, I think a 0:16:47.840 --> 0:16:51.280 lot of these companies are interested in retail, and no 0:16:51.480 --> 0:16:56.440 other venture capital firm can say, hey, actually urlp's de 0:16:56.600 --> 0:16:59.880 facto not technically LPs, but the people investing in your 0:16:59.840 --> 0:17:02.720 company and who will get the underlying exposure through this 0:17:02.840 --> 0:17:07.399 fund are normal people, mom and pop, and I think 0:17:07.520 --> 0:17:11.080 that's something that nobody else is offering. So that's a 0:17:11.200 --> 0:17:14.680 unique differentiator, and some people don't like that, to be fair, 0:17:15.040 --> 0:17:18.040 but other people really really like it and for those people, 0:17:18.640 --> 0:17:21.040 and I think in the future less people will not 0:17:21.200 --> 0:17:24.400 like it because of the uncertainty, and that'll just make 0:17:24.440 --> 0:17:28.960 it more attractive. So the headwinds are receding headwinds. Right, 0:17:29.040 --> 0:17:31.000 It's never going to be as difficult as it is 0:17:31.119 --> 0:17:34.320 right now to get companies interested in it, and I 0:17:34.359 --> 0:17:38.320 think it'll actually get substantially easier. We kind of went 0:17:38.359 --> 0:17:40.680 through this with IPO access actually, so we have the 0:17:40.800 --> 0:17:44.760 largest retail platform for access to IPOs where we function 0:17:44.880 --> 0:17:47.920 as a selling group member. And you know, we first 0:17:48.000 --> 0:17:51.359 rolled this out slightly before our IPO. The intent was 0:17:51.560 --> 0:17:54.359 Robinood's IPO would be a big retail offering and I 0:17:54.400 --> 0:17:57.560 think at the time it was the largest for its size. 0:17:57.640 --> 0:18:00.159 It was a north of twenty percent retail allocation. And 0:18:00.880 --> 0:18:04.800 the other companies that allowed us access to their IPOs 0:18:04.840 --> 0:18:08.320 that year, I mean they were early adopters. They saw 0:18:08.359 --> 0:18:11.840 the vision. We also just had to like scratch and 0:18:11.960 --> 0:18:14.400 claw and bang on a lot of doors and ask 0:18:14.440 --> 0:18:17.800 a lot of favors. Right, there was some skepticism. Then 0:18:17.840 --> 0:18:20.840 the IPO market shut in twenty twenty two, and then 0:18:21.119 --> 0:18:24.840 when we reopened, an interesting thing happened. Now everyone's coming 0:18:24.880 --> 0:18:27.800 to us and asking us about retail strategy. Pretty much 0:18:27.880 --> 0:18:30.280 all of the ipoing names are coming to us to 0:18:30.320 --> 0:18:34.159 talk about retail, and so we saw that shift in 0:18:34.640 --> 0:18:36.720 just a few years. I think this will be even 0:18:36.760 --> 0:18:38.040 faster for privates. 0:18:38.520 --> 0:18:41.960 I want to ask, so, okay, you mentioned the advantages, 0:18:42.359 --> 0:18:44.560 is okay, there's no carry, there's things like that that 0:18:44.640 --> 0:18:48.000 all sounds nice. I first see a potential conflict of 0:18:48.040 --> 0:18:50.359 interest that I'd like you to talk to me about. 0:18:50.800 --> 0:18:53.520 In a traditional VC fund, it's pretty obvious, like the 0:18:53.560 --> 0:18:55.000 goal is to make a lot of money, right, You 0:18:55.280 --> 0:18:57.320 make investments and you want them to go up. It 0:18:57.400 --> 0:18:59.800 strikes me and especially when hearing the names of the 0:18:59.840 --> 0:19:03.520 companies in RVII, it's like they're very sexy names, right. 0:19:03.520 --> 0:19:06.040 They're the kind of household names to the extent that 0:19:06.040 --> 0:19:10.000 that exists within private companies and boom and data bricks, 0:19:10.080 --> 0:19:13.639 et cetera. It seems to me like the traditional VC fund, 0:19:14.200 --> 0:19:17.240 like you're going to optimize for making the most money 0:19:17.240 --> 0:19:19.560 the best returns, including names that no one has ever 0:19:19.600 --> 0:19:22.520 heard of. Why should I not think that Robin Hood's 0:19:22.520 --> 0:19:26.119 portfolio has been optimized for retail awareness, not for the 0:19:26.119 --> 0:19:29.600 best returns, but for the collection of companies that will 0:19:29.720 --> 0:19:31.960 spark the most triggers in people's heads to get them 0:19:31.960 --> 0:19:34.439 invests because they've heard of them and they're sexy and 0:19:34.520 --> 0:19:37.760 not necessarily the best options out there in terms of investing. 0:19:37.880 --> 0:19:40.159 Well, I mean, first of all, we are incentive to 0:19:40.200 --> 0:19:44.120 make this firm perform well. Right, everyone will see it. 0:19:44.119 --> 0:19:46.959 It's going to be highly public. The returns will just 0:19:47.080 --> 0:19:51.399 be out there, and you know, we have a fiduciary obligation. 0:19:51.640 --> 0:19:55.080 We've got a great fund manager that we've hired, and 0:19:55.320 --> 0:19:59.119 we're underwriting all of these deals extremely rigorously. 0:19:59.800 --> 0:20:00.119 Think Think. 0:20:00.200 --> 0:20:03.520 The biggest worry that you have with things like this 0:20:03.600 --> 0:20:07.399 is actually adverse selection, right, is are you just going 0:20:07.480 --> 0:20:10.360 to get into the deals of the companies that need 0:20:10.400 --> 0:20:12.760 the money and are desperate for it. This is what 0:20:12.800 --> 0:20:15.760 you run into with like new things. Typically, it's like, 0:20:16.440 --> 0:20:17.360 when am I going to start? 0:20:17.560 --> 0:20:19.040 This seems like what I think because I've got Like 0:20:19.080 --> 0:20:22.160 I mentioned this another episode, someone was like, Joe, someone 0:20:22.280 --> 0:20:24.480 is selling some anthropic shares with this. Interesting. I'm not 0:20:24.600 --> 0:20:27.320 investing in companies I cover in the private market, so 0:20:27.359 --> 0:20:29.159 I'm not gonna do it. But like I always have 0:20:29.240 --> 0:20:31.440 the thought, like, you know, if someone's offering to sell 0:20:31.480 --> 0:20:32.600 it to me, they must really want to. 0:20:32.840 --> 0:20:35.720 When they're asking us. 0:20:34.640 --> 0:20:37.160 When they're like offering the equity to Joe, like that's 0:20:37.200 --> 0:20:39.480 like a bad sign. Not necessarily a bad sign, but 0:20:39.520 --> 0:20:42.280 that adverse selection of like by the time it's getting 0:20:42.320 --> 0:20:45.640 allocated to retail, like a bunch of people have decided 0:20:45.680 --> 0:20:46.359 to part with it. 0:20:46.560 --> 0:20:48.760 We have to flip that on its head. And actually 0:20:48.800 --> 0:20:51.880 all of the deals that we've gotten into have been 0:20:51.880 --> 0:20:54.919 competitive deals, Like we've had to work for these allocations. 0:20:55.400 --> 0:20:57.040 You know, I've had I have a lot of friends 0:20:57.040 --> 0:21:00.840 that are venture capitalists, and I think some of them 0:21:01.080 --> 0:21:03.480 like I've been talking about this for a while, this 0:21:03.640 --> 0:21:06.119 general idea of we want to get in and actually 0:21:06.160 --> 0:21:08.680 start competing with you guys, you know, and they never 0:21:08.720 --> 0:21:11.560 took me seriously. But then we started, you know, getting 0:21:11.600 --> 0:21:14.400