WEBVTT - Robinhood CEO Vlad Tenev Talks Prediction Markets Growth

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news taking a look at

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<v Speaker 1>shares of Robin Hood's slightly lower on the day the

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<v Speaker 1>fintech platforms in a year over year decline in crypto

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<v Speaker 1>trading volume offset by record results in its options and

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<v Speaker 1>prediction markets business. You put it all together, you still

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<v Speaker 1>had a clean beat on both the top and the

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<v Speaker 1>bottom lines, but a lot of questions about growth going forward.

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<v Speaker 1>Who better to pose those questions to than the chairman

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<v Speaker 1>and CEO hand co founder of Robinhood, Lad ten.

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<v Speaker 2>I great to see if Lad pleasure me true.

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<v Speaker 1>The numbers are decent. I mean, let's ignore, for example,

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<v Speaker 1>the one and a half percent drop you're seeing in

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<v Speaker 1>the shares here. I want to talk about growth and

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<v Speaker 1>where the next leg of growth comes. You had a

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<v Speaker 1>huge bump up and growth in the prediction markets business.

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<v Speaker 1>I understand it's a new business, so obviously the growth

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<v Speaker 1>would be there. Was that just sort of one off

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<v Speaker 1>in terms of the growth because of the World Cup

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<v Speaker 1>and all the other things that have been going on

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<v Speaker 1>in the world, or is that sustainable?

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<v Speaker 2>Prediction Markets has been growing consistently since launch. It's the

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<v Speaker 2>fastest growing business in our history, well into the mid

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<v Speaker 2>hundreds of millions of annualized revenue. So that's been strong

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<v Speaker 2>and we expect it to continue to be strong. We

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<v Speaker 2>have football season on the sports side coming up, as

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<v Speaker 2>well as the midterms, which, if you remember the origin

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<v Speaker 2>of prediction markets and this current supercycle, it really started

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<v Speaker 2>with the twenty twenty four election, so we're expecting that

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<v Speaker 2>this election is similarly going to be a big event.

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<v Speaker 2>But you know, also one of the stories of the quarter,

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<v Speaker 2>Robinhood has begun to diversify, and that's accelerated over time.

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<v Speaker 2>We now have thirteen business lines generating over one hundred

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<v Speaker 2>million in annualized revenue, including Robinhood Legend, which is our

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<v Speaker 2>pro trading platform, as well as the Robinhood credit card.

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<v Speaker 1>That's what I'm curious about, I mean, because yes, it

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<v Speaker 1>is incredibly diversified now, but when we look at certain growths,

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<v Speaker 1>I mean, some people are wondering, does the prediction market

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<v Speaker 1>become sort of one of the bigger parts of this

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<v Speaker 1>business over time or is your goal to try to

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<v Speaker 1>keep at least some of the main components of those

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<v Speaker 1>thirteen lines relatively in balance.

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<v Speaker 2>Yeah. The way we do our business planning is we

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<v Speaker 2>have general managers that are running running relatively autonomous business units,

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<v Speaker 2>and you give.

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<v Speaker 1>Them a lot of freedom to just well their.

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<v Speaker 2>Goal to make their businesses as big as possible and

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<v Speaker 2>when in market share across each of these So our

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<v Speaker 2>goal is to be number one in all categories that

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<v Speaker 2>we offer products to customers. And in fact there's a

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<v Speaker 2>flywheel in effect, and it's it's actually continuing to expand

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<v Speaker 2>we get more customers. Those customers bring more assets onto

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<v Speaker 2>the platform and they become Gold subscribers. They use more

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<v Speaker 2>of our products, which gives them an opportunity to deploy

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<v Speaker 2>their assets across all sorts of different areas. Retirement, they

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<v Speaker 2>can spend with our car products, they can earn a

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<v Speaker 2>high rate, including on our FDIC insured deposits sweep. Also

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<v Speaker 2>our Robinhood earn crypto backed product which offers seven percent

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<v Speaker 2>apy that's been growing really quickly. So we have all

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<v Speaker 2>these things that we enable you to put your money

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<v Speaker 2>to work, and then those in turn bring in more customers.

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<v Speaker 2>And now we also have advisors, So we have advisors

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<v Speaker 2>joining the network. You can get a human advisor on

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<v Speaker 2>Robinhood to help give you even more personalized guidance. The

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<v Speaker 2>more advisors we bring on that in turn feeds the

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<v Speaker 2>flywheel and over time increases the number of customers.

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<v Speaker 3>Well, speaking of customers, you have now seven million children

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<v Speaker 3>about signing up for these Trump accounts. When do you

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<v Speaker 3>anticipate that actually translates to more regular Robinhood users? I mean,

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<v Speaker 3>not the baby that just got the account, but maybe

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<v Speaker 3>they're family members a parent here. When does that actually

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<v Speaker 3>contribute to more users?

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<v Speaker 2>Yeah? Well, remember the Trump accounts just launch earlier this

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<v Speaker 2>month on July fourth, and it's been Secretary Beson called

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<v Speaker 2>it the most successful program launch in government history. And

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<v Speaker 2>what happens is, given the tremendous success of the program,

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<v Speaker 2>there's more and more things to build. We're growing it

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<v Speaker 2>bigger and bigger. Donors are coming up, So I think

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<v Speaker 2>this can become the default philanthropic donor solution, and we

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<v Speaker 2>can collect all of the donors, which bring in more

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<v Speaker 2>assets to the platform because it gives a direct option

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<v Speaker 2>for charitable giving. We're getting the employers on board. A

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<v Speaker 2>lot of employers, including Robinhood and many other companies, are

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<v Speaker 2>giving to the Trump accounts of their employees who are

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<v Speaker 2>having children. And over time, we expect to go from

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<v Speaker 2>seven million children signed up to closer to the seventy

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<v Speaker 2>million in the addressable market. And you know, as the

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<v Speaker 2>kids grow, when they turn eighteen, these rollover into traditional

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<v Speaker 2>retirement accounts. So it's a long term play, but yeah,

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<v Speaker 2>we believe it. It's probably the most important thing we

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<v Speaker 2>could be doing for the future of the country.

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<v Speaker 1>I do want to ask about one of your other

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<v Speaker 1>lines of business, the Robinhood chain. I mean, we said

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<v Speaker 1>in the intro the crypto business was down in the

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<v Speaker 1>most recent quarter. You're building out a business that's effectively

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<v Speaker 1>kind of built on the back of sort of a

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<v Speaker 1>crypto technology. Is this sort of a play towards not

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<v Speaker 1>just crypto long term but tokenization. Give me some sense

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<v Speaker 1>here as to what you actually want this business to be.

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<v Speaker 2>Yeah, so tokenization is one of the areas that we're

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<v Speaker 2>a leader in. And the idea is when you say

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<v Speaker 2>crypto is down, really a lot of that is just

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<v Speaker 2>talking about the trading of crypto assets. But our view

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<v Speaker 2>is that the future of crypto is that it becomes

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<v Speaker 2>the infrastructure layer among trading all kinds of assets, including

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<v Speaker 2>real world assets. You know, even though we're fans of memes,

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<v Speaker 2>we also like real world assets. Yeah, and so what

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<v Speaker 2>we've done is tokenized stocks, put them on chain through

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<v Speaker 2>our stock Tokens product, and making them available to over

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<v Speaker 2>one hundred and twenty countries around the world. We also

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<v Speaker 2>have a stable coin lending product which allows customers to

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<v Speaker 2>earn seven percent API, and that's up to two hundred

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<v Speaker 2>million in balances in just a short number of weeks.

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<v Speaker 2>And so even the crypto business line, if you look

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<v Speaker 2>at it, is diversifying. There's now lending revenue, there's assets revenue,

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<v Speaker 2>there's chain sequencer revenue from Robinhood chain. So you'll see

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<v Speaker 2>that get more diversified and less reliant on the day

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<v Speaker 2>to day price of bitcoin, for example, the market volatilty.

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<v Speaker 3>Yeah, absolute, because it's happening. Ten OF, great to see you,

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<v Speaker 3>thanks for joining us.

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<v Speaker 2>Always a pleasure to be here in person. Thanks you much.

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<v Speaker 3>That's ten OF, Chairman and CEO of Robinhood