复盘 Robinhood 风波：对话 CEO 弗拉德·特内夫

Jason Calacanis (00:00:00): Now, wait, Vlad, you have to turn your camera off, and then I'm gonna do my little bit where the besty guesting door knocks. Chamath Palihapitiya (00:00:05): No. No. Jason, No? Let's not do that. Jason Calacanis (00:00:08): This is silly. Here we go. I can Vlad Tenev (00:00:10): do it. It's very easy for me. Jason Calacanis (00:00:12): Don't worry about it. Don't worry about it. These guys don't wanna do it. They don't like my they don't like my bets. -- 3, 2. -- David Friedberg (00:00:19): to let Jason Calacanis (00:00:20): your winter slide. Rainman David Sachs. David Sacks (00:00:26): And I said -- We open source until the fans Jason Calacanis (00:00:29): and make discoveries. David Sacks (00:00:29): Love US Ice, Queen Jason Calacanis (00:00:38): Hey, everybody. Hey, everybody. Welcome to another episode of the all in podcast with us. Again, the queen of Kin Wai himself. David Friedberg, the rain man. Definitely counting cards. Yeah. Burn Baby. David Saxes with us, Chamath Palihapitiya. the dictate. David Friedberg (00:00:59): By the way Chamath Palihapitiya (00:00:59): and -- By the way, go ahead, Jake. Jason Calacanis (00:01:02): I'm Jake Howell. AKA baby c l. David Sacks (00:01:05): Jake Could you take longer with the intros? I mean, this is like this is like your one moment to shine with Chamath Palihapitiya (00:01:11): the intros. David Sacks (00:01:12): I know. See, he's driving in. Jason Calacanis (00:01:13): branding here. I'm branding you guys a characters on the show. Chamath Palihapitiya (00:01:17): I do wanna I do wanna give a big shout out and congratulations for David Friedberg, wedding his beak in a big way. The story by the way, we should actually have founder crazy founder stories, and we should have Friedberg tell the story of Metro Mile, but it closed its SPAC transaction and went public, and it's doing great and congrats Congratulations. David Friedberg (00:01:39): Thank you. Thanks, guys. Jason Calacanis (00:01:40): Well, golf clap. David Friedberg (00:01:41): I'll give Jason Calacanis (00:01:41): it a little more of time for you. David Friedberg (00:01:42): Thank you. Thank you. Jason Calacanis (00:01:43): Very nice. And joining us this week as our 2nd bestie guestie, after a triumphant performance by Draymond Green on the last all in podcast is Vlad Teniv, who is. the cofounder and CEO of a new startup. We wanted to introduce everybody to. It's called Robin Hood, Flat, tell everybody what is Robinhood? And what's the mission of this new start up you've you've got? Vlad Tenev (00:02:13): Thank you for for having me having me here hanging with you guys. Robin Hood's mission is to democratize finance for all. It's somewhat new. We've been around for a little bit over 5 years, and We have a mobile app and a website that allows customers to invest in stocks, options, cryptocurrencies, We offer a debit card and a high yield savings product as well, commission free and with no account minimums. David Sacks (00:02:39): Vlad, you've done an amazing job building this company, and you guys have done an amazing job democratizing access to to to the ability trade. Can we fast let's fast forward to to the issue that I mean, this we discussed, I guess, a few pods ago because -- Yeah. Jason Calacanis (00:02:55): -- David Sacks (00:02:55): there was intense interest in this. I think it's our highest rated pot ever was discussing the GameStop issue. So you had these these traders from Wall Street bets, these editors, who, like you said, they perceive themselves as the heirs to occupy Wall Street. They're they're trading for profit also for revenge. And and then, you know, you you guys, I guess, get a call in the middle of the night from the clearinghouse, and you have to freeze the buy side of the trade the next day. I guess let's fast forward to that because that was the thing that, you know, got everybody up in arms. Could you, I guess, talk to us about kinda what happened? And I'm sure you didn't wanna have to freeze trading. Right? But you were being compelled by this clearinghouse. Can you kind of explain what they told you and why you had to do it? And and and and why not just ask them to give you the order in writing so you could post it on your website so everybody would know you didn't have a choice. Could is that something you could have done? Vlad Tenev (00:03:52): Well, I think the challenge was that, no doubt, we could have communicated this a little bit better to customers. Right? by the time by the time we restricted these securities to PCO and it was 13 securities that we limited to sell only. That process is actually operationalized within Robinhood. So It's we do it from time to time under various circumstances like corporate actions. So when something has a reverse stock split or something like that, we can PCO it for a little bit. So there's a button in a dashboard that, you know, you can click and automated emails get sent out. So it's a it's an operational process that I think in hindsight, we probably should have exceptionalized to to make it to make it clearer why we were doing this. Just given all of the swirl around all these meme stocks online, But by the as soon as those emails went out, the conspiracy theories immediately started started coming. So my phone was blowing up with, you know, How could you do this? How could you be on the side of the hedge funds? And, of course, we're not on the side of the hedge funds. I mean, we're we're we're building products for our customers, and we just had to do what we did to meet our deposit requirements because if we didn't do that, we would be in violation. And the consequences of that could have been much, much worse than simply halting buying in the 13 stocks? Chamath Palihapitiya (00:05:22): I think that's where, you know, when you were on CNBC with Sorkin, People either thought you were obfuscating or you were lying. You know? And part of it is sort of the the the guts of your business is that at some point as well, you guys decided to self clear. Right? And then going into self clearing, you become liable for every single trade that happens on your platform. Like, if you look back from Jason Calacanis (00:05:48): those to the audience, what self clearing means? Chamath Palihapitiya (00:05:50): It means that, you know, typically, you can work with a wholesaler to offload the risk. So Vlade acts as a transaction layer and as a UI and somebody else is responsible. At some point, these guys for economic reasons decided to take that responsibility on themselves. But when you do that, you take on the full fledged liability of the value of every single trade on behalf of your customers. Vlad Tenev (00:06:12): Yeah. I I would think about it. I would explain it as there's, like, pre trade, right, then the trade and then post trade. So Robinhood obviously does pre trade with that's the app and what's called the introducing broker dealer. Our market makers do the trade. So we route it to you know, all of the firms like Citadel Execution Services to Sigma. And then Robinhood Securities does the post trade, the clearance and settlement. So we manage the exchange of cash and stocks that happens on t+2. So 2 days after after the trade is made. Chamath Palihapitiya (00:06:45): So What was not I mean, if you had to give that answer again when Sorkin said, you have a liquidity issue. Was the answer yes, we have a liquidity issue and here's why, or is it still the same answer it wasn't? Vlad Tenev (00:06:59): So I I stand by what I said, and I'll explain it thank you, by the way, for giving me a chance to explain it. First of all, restricting securities, restricting the buying of securities is something that every pretty much every broker did to some degree during this week. Right? So when you say the l word in financial services, it it reminds you of Lehman Brothers where you literally are not able to operate your business. We met all of our deposit requirements. The new capital that we raised, the Jason Calacanis (00:07:31): 3,400,000,000 Vlad Tenev (00:07:33): wasn't to meet our ongoing deposit requirements. We had met them. And in order to relax them and eventually unrestrict them, we needed to raise some more capital and eventually have more cushion so that if we keep seeing the type of growth that we kept seen, we didn't have to impose position limits again. So I stand by what I said. I think if you described that as you know, the l word, every pretty much every broker would have had that issue. And I think at that point, the word kind of loses its meaning and the the gotcha factor that the journalists are trying to to get out of it. Chamath Palihapitiya (00:08:08): Do you think that the the risk in the business went up when you decided to self clear, or would this risk have been the same if you worked through a wholesaler? Vlad Tenev (00:08:16): Well, I think a lot of the a lot of the other brokers who relied on clearing firms had the same issue. Right? You know, there's there's firms like Apex Clearing, which has introducing brokers. Cash App, for example, clears through a third party as well. And they they all had this issue. And, of course, their response was they they kind of threw their clearing firm under the bus. Right? So obviously, we're not gonna do that because our clearing firm is Robinhood Securities. But I think understanding the space a little bit better since Robin Hood Securities is, you know, a subsidiary of of my company. I realized these clearing firms had to do what what they did. Like, There's no it's not negotiable to meet your deposit requirements. Of course, we can ask what can we do. Are these deposit requirements sensible what can we do to drive change in the system? And I think that's where my what's that? David Sacks (00:09:16): Who sets those requirements? That's the clearing house. Right? Is that the DTCC? Vlad Tenev (00:09:21): Yeah. It's the the DTCC, and a lot of this stuff is actually spelled out in Dodd Frank. So if you look at Dodd Frank, you'll see descriptions of the VAR charge and the various special charges there. But I I do think one thing that I'm very excited about is you know, not going beyond just talking about our problems. Right? We can I've I've talked about our problems a lot, but talking about solutions and how we can create a better financial them in the future. And I really think if you if you understand the underbelly of what t plus two settlement is, you immediately ask yourself Why aren't we settling trades in real time? And I wrote a post on that. I had a tweet storm. I'd also say, you know, some of the feedback that I've gotten is you know, here's Vlad from Robinhood telling us about, you know, trying to change t plus 2 so that he can meet he can lower his deposit requirements. I think there's lots of other systemic issues that fall out of that. In particular, right now, you can short sell more a stock than the shares that are outstanding. Right? So, you know, some of these stocks had a 140 percent short interest. Right? So more more shares were shorted than actually outstanding. And I just think that's pathological, and it stems from the fact that, you know, these shares are tracked on pieces of paper. So they're basically not tracked. And someone can you you can I can lend you my shares. You can short them. The person that's buying them from you can lend them again, and you can do that multiple times. And you end up with this situation that could destabilize the financial markets. Right? So Jason Calacanis (00:10:55): -- Chamath Palihapitiya (00:10:56): What okay. So t plus moving from t+2tplus0, that's one issue. Where do you think margin versus like David Friedberg (00:11:05): That's what I was gonna Where where is your margin -- What's Chamath Palihapitiya (00:11:07): your what's your thoughts on margin? David Friedberg (00:11:09): Yeah. Vlad Tenev (00:11:10): Well so margin wasn't involved in this particular situation. In fact, there was an escalation path. Not a lot of people noticed until Thursday, but pretty much all of the brokers including Robinhood were ratcheting up the margin requirements for for all these securities until they got to a 100%. So by the beginning of the week, they were pretty much all at a 100%, which means you can't use margin to buy them. You have to you have to have them a 100% covered So do you guys have a more specific question on marketing -- Well, Chamath Palihapitiya (00:11:44): I meant I meant more like I meant more like so for example, I think if true. But you tell me if this is not true. You guys paid, like, a $65,000,000 fine to the SEC for Gamifying Robinhood. Right? And Jason Calacanis (00:11:57): -- Vlad Tenev (00:11:58): It's not not exactly true, but go ahead. Chamath Palihapitiya (00:12:01): Okay. Do you wanna do you wanna just tell us what the truth is? Vlad Tenev (00:12:05): Yeah. Well, so the the fine wasn't for gamifying Robinhood. It was for payment for order flow and business model related related things. The gamification 1 is the Massachusetts securities securities 1, which is a separate thing. And look, on the SEC thing, we're a fast growing company. We obviously scaled a lot between the period in question. Obviously, the the Securities And Exchange Commission felt like we could have done things better, and and I own that. I think that We're fine being held to higher standards. We have to hold ourselves to higher standards. And what we can do is just do some of the things we've done, staff up our compliance team, staff up our legal team. We brought on a new chief legal officer who is a former SEC commissioner. 2 new chief compliance officers for Robinhood Securities And Financial who had decades of experience. And the level to which we're investing in compliance I mean, the goal is to build the finest legal and compliance team that the financial industry has seen. Chamath Palihapitiya (00:13:14): let me tie it back flat to what to what we were talking about before. So do you think that it's okay if we're trying to build a generation of investors to give them access to margin as easily as some apps including Robinhood does and then separately allows them to trade highly transactional high vol instruments like options On top of that with margin, what do you think about that just as a general philosophy? Forget business building for a second. Jason Calacanis (00:13:45): Well and then also, can you say what the margin you allow is for a new account? I don't think people understand what that is, maybe a little definition there. Vlad Tenev (00:13:52): Well, there's a couple of things I wanna clear up. Number 1, you can't trade options on margin. So options are all fully paid for. Right? Margin is not suitable for everyone. I'll I'll admit that. You have to understand it. And you also have to be a Robinhood Gold customer, which means you to sign up and pay $5 a month. Most brokers don't gate margin behind a premium offering. So we're already a little bit more restrictive on that front. You have to have Jason Calacanis (00:14:20): $2000 Vlad Tenev (00:14:22): in your account before you can borrow. And in December, we did lower our margin rates to 2.5%, which is very a very competitive low rate. But let me tell you a use case for margin that I actually think is quite powerful. So, obviously, one use case is kind of the typical one of buying more stock with your money. But if you build a large portfolio, you can actually use margin as a line of credit And we offer this feature with our debit card. You can turn on what's called margin spending. And what that means is if you invest in your portfolio. You can borrow collateralized by your portfolio at a very low rate, which is 110th of what you would borrow through a credit card. So I I actually think it's a it's a powerful tool. Certainly, customers have to understand it and be suitable for it, but It unlocks the type of borrowing, not just for buying stocks, but for for for meeting your daily purchasing needs that I think is is very useful. Jason Calacanis (00:15:23): If somebody puts $2000 in blood, can they trade 4000 dollars, $6000, $8000? And does it matter what equities they're holding? How does it work? Vlad Tenev (00:15:33): Yeah. The the actual calculations are there there's no blanket formula I can give you because it does depend on the securities that you buy. So the example I gave was, for example, GME and some of these other mean stocks. we raised the requirement on those to a 100%. So those have to be fully paid for. Other stocks have an initial requirement as low as 25%. If it's one that, you know, is deemed by the operational staff in our processes as not being super volatile, and it can it can go in between. So 25 percent initial requirement all the way up to she can trade Jason Calacanis (00:16:12): 4 times your money if it's a really blue chip secure stock? Vlad Tenev (00:16:18): More or less, yeah, with some nuance around that. David Friedberg (00:16:21): You know, time and again, Vlad, there's studies that show that it's really difficult to beat the market and make money, you know, trading in an efficient market like the market we have for Star. or options or or what have you. There's a lot of players. There's a lot of liquidity. There's a lot of people with information. It's, you know, these great fund managers over time underperform just the S and P. Right? And, you know, I I think I mentioned this when we had that pod a few ago that's I was involved in a ForEx trading company and 60 60 percent of accounts eventually ran out of money. Can you share with us what percent of Robinhood accounts run out of money. And and, you know, do we mask generally and I'm not accusing Robinhood specifically of this, but do we mask the idea of investing in businesses as, you know, a way of kind of highlight of of a way of hiding that people are really just using this to trade in and out and try and make money in the short term. And, ultimately, the majority of them end up losing most of their money because the fees and the spread and the margin or whatever it is that, like, that kind of adds up, you know, wipes out the account. That's what I saw this 4 x company I was involved in. Can you share with us, you know, in a very candid way? Like, how many accounts do you go bankrupted Robinhood and how much of that do you really see? Vlad Tenev (00:17:37): First of all, I'd say 4 x is a little bit different because the leverage you get in 4 x is, like, orders back into your entire Jason Calacanis (00:17:43): -- David Friedberg (00:17:44): I'll admit to that. It was, like, 10 to 50 to one leverage. So you're totally right. Yes. Jason Calacanis (00:17:48): 100%. Vlad Tenev (00:17:48): So I I do think the businesses are a little bit different. Most of our customers don't use leverage. Most of our customers aren't active traders or trading options. And if you look at some of the features that we've rolled out, the the theme of this year has been how do you turn a first time investor into a long term investor? So fractional shares, recurring investments, Drip. These tools allow someone to create a diversified portfolio of individual stocks and recurringly buy into them over time. So -- But David Friedberg (00:18:21): is is that the majority of users today or the minority? You know, are you how many accounts do you see kinda cycle down to Jason Calacanis (00:18:27): 0 David Friedberg (00:18:29): over what period of time? Vlad Tenev (00:18:30): I think a very small percentage of accounts have that have that property. I mean, I think if you look back in 2020, we had a huge increase in growth and interest in investing right at the bottom of the market crash in March. Right? And I think people have taken advantage of that. And our our customers in general have benefited from the recovery very, very significantly. So I I wouldn't I I would reject the the means that you know, Robinhood customers are active traders that are just, you know, churning their accounts and and losing all of their money. That's that's just simply not what we're seeing. Jason Calacanis (00:19:11): I know Saks has a question, but one question I had with the conspiracy there is that I would just love to hear, like, a yes no to. Vlad Tenev (00:19:17): Like -- Sure. Jason Calacanis (00:19:18): Did Citadel call you and say stop this madness because they had exposure through one of their hedge funds with GameStop? And did Sequoia call you and say, hey. Stop this madness. Vlad Tenev (00:19:28): Or just Joe Biden, you forgot you forgot the White House 1. No. No. This was a formulaic decision made by Robert with securities due to Jason Calacanis (00:19:37): -- So Citadel didn't call and ask. McCoy didn't call and ask. No. Did the SEC call you and say this has to stop? David Sacks (00:19:45): No. But the clearinghouse did. Right? Vlad Tenev (00:19:47): Yeah. Well, they called, and they said, here are the deposit requirements, and we worked with them to lower the risk so that we could meet the deposit requirement. David Sacks (00:19:56): Got it. And and so just just me pick up on that. So at the same time, that was happening. And I I know this wasn't Robinhood. This is not your company. But But Discord and Reddit were receiving reports that the Wall Street Bet's forum was engaged in in hate speech. and there was an organized effort to get them censored and taken down. And Discord basically fell for it and took down Wall Street bets Reddit Jason Calacanis (00:20:20): -- David Sacks (00:20:20): Yeah. -- to their credit did not. Do you have a take on, you know, what happened there? And mean, I assume you you you you don't think Wall Street Best was engaged in hate speech. Vlad Tenev (00:20:31): Well so that happened Wednesday, I believe. And, yeah, we we were watching it. It was first it was like, oh, wow. Discored. Discored shut down. And then I think Wall Street bets went dark on Reddit for a little bit as well, but I'm not quite sure of the the reasoning behind that. Look. I I mean, I disavow hate speech misinformation. I I'm not, you know, judging which of the posts are hate speech or or not. I think that's the social media companies that that that should take a look at that? Chamath Palihapitiya (00:21:05): The mods. I think the mods closed down, read it for, like, a little bit and then turned it back on. Vlad Tenev (00:21:10): Yeah. Yeah. Jason Calacanis (00:21:10): I mean, a lot of these things get triggered if ten people reported at the same time. It just it sets all -- David Sacks (00:21:16): Well, it seems it seems certainly Jason Calacanis (00:21:17): -- -- David Sacks (00:21:17): bad. yeah, it seems to me that and and certainly this is if if you wanna call it a conspiracy theory, it seemed like you had this Wall Street Bet's group They were on one side of the trade. You had these Wall Street hedge funds that are on the other side of the trade. And there was an effort to weaponize the speech rules of Reddit and Discord to cut off the lines of communication of Wall Street bets. Because the only way that Wall Street bets as a decentralized group of millions of traders can can stick together and compete with these hedge funds as if they can communicate with each other by these services. And so You know, there there it seems like there was an organized effort to try and take them down at the exact same time that that they were frozen out of the buy side of the trade. Chamath Palihapitiya (00:21:57): Flat, do you think that there should be more transparency in the financial markets? Meaning, everything from payment for order flow, how much money companies make lending out their stock? How which company is short? Which stock? Which company is long? Which stock on a more frequent basis? how much margin people are running. Do you think, like, we should move to perfect transparency in the financial markets? Vlad Tenev (00:22:21): I I do think that there should be more transparency And I'm glad you you brought up payment for order flow because it it's something that I'm trying to take on. You guys might have noticed I I I published a post on payment for order flow. I started a tweet storm that is meant to just start the conversation around it. I wanna understand kind of the misconceptions and the theories and and knock them out one by one. And I think that'll lead to some positive discourse around it, and there certainly might be things that'll have to change. And I think the the first step is actually engaging in the conversation and kind of connecting the people that understand the details with the people that have issues with it. And I I don't think that's been happening enough. So for sure. Chamath Palihapitiya (00:23:06): But what about stuff like margin, shorting, you know, short like, do you think that we should move all of this stuff so that it's just out out front for everybody to see? Vlad Tenev (00:23:16): Well, I think I think if we if we migrate to a better settlement infrastructure and move to real time settlement, you get a lot of that stuff for free. Right? So you do get and I know a lot of the crypto people came out after I published my post and said, you know, crypto solves this. You could just put it on on a blockchain, and everyone could see publicly what's going on and which share which shares are are being being held short, where they are, who's owning them. So I think I would be in favor of of more transparency I'm not sure at what point there's sort of, like, negative secondary effects. I haven't kind of unspunned the thread fully, but I think we can we can keep taking it one step at a time and and see more transparency generally, I think, is much better. David Friedberg (00:24:01): Hey, Vlad. When you guys go public, you've talked about having a a listing at some point here soon. Why would you not have all of your shares sold in the IPO through Robinhood to your retail users. Why would you sell any shares to institutional investors? Vlad Tenev (00:24:19): Wow. Good question. It is a an interesting question. It's it's one that I probably that that's probably the one I can't give too much detail on. Hopefully, you guys understand. David Friedberg (00:24:30): My recommendation, if you're gonna democratize access, do it all the way. Fuck the hedge funds and the big guys. if that's the if that's the point, then you give retail equal access, you know, in all these transactions, as you know, institutions get get all the access And the retailer is like -- -- interesting. Right? Give give, like, have your entire listing done through retail? It would be a it would be a game changing transaction. Vlad Tenev (00:24:52): Yeah. So, I mean, a lot of this it's really interesting that this turned into, you know, individuals versus hedge funds because I I think that's a really powerful story. But you also have large institutions like Fidelity that are holders of all these stocks. Right? You have individuals on a lot of forms that were short selling them as well. Not Robinhood because Robinhood actually doesn't doesn't allow short selling by individuals, but a lot of the other brokers do. And you have you add statistics statistics coming out that actually show retail versus institutional and you know, there were some counterintuitive results. So I I think if you actually look deep into the plumbing, the story of, you know, long individuals, short institutions on opposite sides. I think there's a little bit more nuance to it than that. Chamath Palihapitiya (00:25:41): Flat, if you had to do it over or actually forget about the past. Think about the future. Yep. What do you change inside the company? Vlad Tenev (00:25:50): Well, let's see. I think the 3,400,000,000 in extra capital certainly helps. I think I'm I'm very proud of the transition that we made between Thursday Friday. So Thursday, we had the blunt hammer of PCO ing these stocks, right, which obviously was not ideal. By Friday, we had moved to a much more sophisticated system where intraday, we adjust the position limits in it was up to 50 stocks. and we published that on our website. So that that gave us a lot more granular control over it and is a better system, and we're gonna only improve that and kind of take the learnings to other parts of the business. So I think the great thing about, you know, these sorts of crises is sort of months and and years' worth of work get compressed and people are just, like, super aligned on the key priorities we need to do to to move the business forward, and we saw that. And then the third thing I'd put is just maybe you guys have seen you know, I I feel like I've evolved as the chief executive and as a leader. I I didn't used to be on social media telling our story very much, but I'm out there trying to encourage more Jason Calacanis (00:27:03): I would say much better today than with Elon, much better with Elon than Sorkin. So progress has been made. I haven't just a basic question. I know we got a wrap soon. When things get superheated and you have this viral momentum where I don't know how many people try to sign up on that day But maybe you could give us an idea. On that Wednesday or Thursday, was it, you know, 5 figures, 6 figures or 7 figures worth of new accounts? Why not throttle the new accounts and say, hey. where you're on the wait list. We onboard 10,000 people a day. Your day is gonna be next Thursday so that you don't get caught in this you know, everybody uses the fact that it's friction free to sign up to do an emotional bat in a, you know, let's call it mob behavior. Right? Like, This turned into a mob. And and I guess some people believe it's a good mob to go up against the hedge funds, but it it could have equally been something, you know, something more deranged and even more edge case is gonna happen. So when that does happen, and a 1000000 or 10,000,000 people sign up, Can't you just pause it and say we're not gonna do any new accounts today? We've reached our limit. Vlad Tenev (00:28:07): We actually did do that. So we we have been pausing new account approvals off and on. Depends depending on on the load. And, you know, customers have been experiencing, in some cases, short delays with account approvals. obviously not an ideal solution from our standpoint, but, you know, if if we have to do that, we will do it and we have done it Jason Calacanis (00:28:29): How many people signed up on that Wednesday? Like, just ballpark. Like, was it 100 of 1000? Millions? Chamath Palihapitiya (00:28:33): Jason, are we are we running an ad for Robinhood stock? No. I'm just curious to see scope on the list. None of us cares. None of us cares. Vlad's last question. Vlad Tenev (00:28:40): Hit me. Chamath Palihapitiya (00:28:41): Hey. Listen. If you had to pick 2 different CEO's reactions to how you dealt with it. Let's say Tim Cook on one end of the spectrum and Zuck on the other. How do you think they would score what Robin Hood did? and what they are doing. Tim Cook Zuckerberg. Vlad Tenev (00:28:59): You know, I'm I'm not sure. I think that I think I'm proud of of of how the firm navigated this. I think, obviously, there's ways to improve upon it. I think that anytime you get a phone call in the middle of the night, saying you have to put up $3,000,000,000, all sorts of things run through your head. Right? Chamath Palihapitiya (00:29:21): I've had it happen. I know. Jason Calacanis (00:29:26): That was just money from the cage for poker. Vlad Tenev (00:29:29): I got a lot of people reaching out to me, which was amazing. David Sacks (00:29:33): If you have to do it over again, why not just post a blog that morning saying, hey. We gotta call in middle of the night. We have to do this. Is that is is that the thing you'd do over again? Chamath Palihapitiya (00:29:45): No. Because if he's throwing his own company under the bus, he'd have to say, Robin Hood Securities is telling Robin Hood the broker to post this money because Robin Hood Securities is being told by their downstream clearing So it's like you're you're in you're in a you're in a dick Jason Calacanis (00:29:58): you're saying. David Sacks (00:29:58): You're saying it now, so better to say it at the time it all happened, and it would have defused the whole crisis. Right? David Friedberg (00:30:04): Well, Vlad Tenev (00:30:04): 1st of all, I'm not throwing anyone under the bus. We we did the team did what they had to do. I don't think there was any way to navigate that differently. I think the automated emails that went out to customers saying your stocks are you're restricted from buying these stocks probably could have been handled a little bit better. We probably could have offered more detail into that. With the foresight that maybe customers would think that a hedge fund forced us to do it or something like that. So, certainly, Certainly, there's areas we can improve upon across the board. And when an early investor called me throughout this and said, hey. chin up, you know, navigating a crisis successfully unlocks the next level of value creation for the company. And I've had that in mind the entire time, and I'm just doing what I can to to make that feature a reality. Both for Robinhood and for the financial I think that this could lead to some really positive change industry wide. David Sacks (00:31:04): Yeah. And I'll I'll just this this one last softball here. This is not about what happened. that that with GameStop. We've had a debate on this pod. It got kinda heated between Chamath and Jason about the nature of Jason's investment in Robinhood. David Friedberg (00:31:19): Can you David Sacks (00:31:19): tell us can you tell us your side of the story of what happened at at Antonio's nut house? Vlad Tenev (00:31:24): Okay. David Sacks (00:31:25): And how much how much stumbling was involved precisely. Vlad Tenev (00:31:27): Okay. I'm I'm very glad you brought this up because I've been meaning to call Jason out on it. He has this great story of how, you know, we met at Antonio's nut house, and he he wrote a check. I think the the real story is that on On Robinhood launch day, which was a Saturday, and we violated every rule of PR and marketing by launching inadvertently on a Saturday. I gotta reach out from from launch who who is one of the first one of the first outlets to cover our launch on Saturday. And Jason's Jason's friend Simon ex employee who ended up running social for us for a bit was a big fan of Robinhood. So he joined us as kind of our first social person. He introduced me to Jason. I met Jason at Sequoia, Jason, where you agreed to invest. And then 6 months later, we met at Antonio's Nuthouse when we were raising our series a, and I think you you gave me the advice to to go with Index Ventures. Jason Calacanis (00:32:36): No. I know. I said Sequoia all the way. Don't get me a drama. James employer. I I promise Michael Moritz, Doug Leota, whoever's watching. I told him Vlad Tenev (00:32:45): what to call it. Sequoia was great. They they they unfortunately passed on our series a as as did a lot of other funds. David Sacks (00:32:51): Yeah. Alright. Jason Calacanis (00:32:52): Listen. Thanks for coming on the pod. We really appreciate you taking the time and continued success. And -- David Friedberg (00:32:59): Vlad, I'm really glad we didn't give you a job offer back in 2008. Sounds like it was the right move for you. Vlad Tenev (00:33:04): Funny how things word out David Friedberg (00:33:06): know, apparently, I interviewed him in 2008 for a job, and he didn't get the job. Vlad Tenev (00:33:10): It was you and Alex Alex Matalka was my guy. was my my main interviewer, but it's funny. I graduated with a math degree. Right? I was I was doing pure math. which in 2008 made me unemployable. David Friedberg (00:33:25): We were the only people hiring at that point. Yeah. Yeah. You were Vlad Tenev (00:33:28): the only people that would interview me. Yeah. Everyone else was like, where's your computer science degree? Can you code? So I ended up going to math grad school, which was one of the few options that I ad and ended up dropping out and and here I am. So funny how things work. David Friedberg (00:33:43): Well, good for you. Jason Calacanis (00:33:44): Alright. Continued success, and thanks for coming on the pod. We'll see you soon. Vlad Tenev (00:33:47): Thanks, Vlad. Thanks for having me. Jason Calacanis (00:33:51): Wait. Vlad's back? Wait. Vlad's back. Vlad Tenev (00:33:55): Sorry. I I I asked I thought I was supposed to leave. I didn't know if you guys Chamath Palihapitiya (00:33:58): wanna be. You could stay I was saying you can stay I was saying after a year of Jason asking us to run ads. He's found a way of trying to make this a Jason Calacanis (00:34:08): 45 Chamath Palihapitiya (00:34:08): minute infomercial for Robin. Absolutely. Jason Calacanis (00:34:10): I listen. I'm right or die. I'm glad you know that. I'm right or down in my calendar. -- Vlad Tenev (00:34:14): for that, and I you don't need it. We're just trying to keep keep everything up and let all the people safe, Lou, and who have been banging on our door. Jason Calacanis (00:34:23): How how much have you been sleeping, Vlad? Have you been able to sleep? I mean, this gotta be exhausting. Chamath Palihapitiya (00:34:29): Oh my god. Really? Can you ask him something? Like, at least, semi fucking challenging, honestly. David Friedberg (00:34:35): That's not my job. Jason Calacanis (00:34:36): That's why you guys are here. David Friedberg (00:34:37): if you're walking down the road and a Robin Hood customer this is a tough one. I'm sorry. You thought you were over this, but you logged yourself back in. So and a Robinhood customer that lost all this money when they got locked out of trading that day comes up to you and screams and cries, I lost all my money. What do you say to them? you know, I got completely destroyed. My life savings is wiped out. I mean, I've read a bunch of these comments on different boards and so on. Like, what do you say because I I know that's a tough one to swallow, and I know that, you know, we've heard the the the story around what happened. But but what do you say to that person? Vlad Tenev (00:35:11): Well, first of all, I'd be very very empathetic. I'd probably wanna understand how someone could lose money. when they couldn't buy a stock at the all time high. So I think the details around that I mean, if you look back And, obviously, this had nothing to do with the decision. Right? But Thursday was the all time high. David Sacks (00:35:32): Yeah. Yeah. But but that's but the reason for that is because the ability of Wall Street bets to continue the trade was was basically interrupted. Right? They were they were engaged in a short squeeze against these big hedge funds. And in order for this to keep driving the squeeze up and up and up, they needed it basically to to be able to buy. And then once they got frozen out of all the online broker accounts, not just you guys, but all of them, that was that that that that broke the trade. Right? Vlad Tenev (00:35:59): Maybe. I mean, hypothetically. David Sacks (00:36:02): But that's what their subs but that's what they were so upset about is because they got they got locked out of the buy side of the trade. They weren't locked out of the sell side. Right? They got locked out of the buy side, and that allowed the the big hedge funds 24 hours to regroup and and cover the trade. The price went down, and that basically cracked the whole thing. David Friedberg (00:36:23): Right? Vlad Tenev (00:36:23): Well, I'm not sure about the the exact details there on the on the hedge fund side or what happened. Look. What I can say is we're gonna do our best to make sure that we get better and we serve our customers whenever whenever they wanna buy stocks, and we'll do that, and and we're gonna get better and better every day. Jason Calacanis (00:36:43): And the truth is if you had had the money in the bank account to for DTCC to be compliant, you would have been. Like, you weren't trying I mean, you're in the business of letting people try -- Vlad Tenev (00:36:53): Without question. Yeah. Jason Calacanis (00:36:54): Yeah. You you make nothing if people stop trading. You need people to trade. It's a core of the business. Right? Vlad Tenev (00:37:01): Yeah. The wasn't, you know, a value judgment or some kind of moral stance, and we weren't pressured into doing it by anything other than our regulatory deposit requirements. Chamath Palihapitiya (00:37:12): What do you think is the future of payment for order flow and revenue sharing on sort of like the the the ways in which, like, meaning much do you think of that payment for order flow revenue should you share with customers? Vlad Tenev (00:37:27): Yeah. That's a good question. I mean, this is all highly regulated and it's it's become the industry standard business model. Right? So I'm not sure. We're we're excited to have a conversation about it. I do think exchanges are here to stay. Market Making is here to stay. Market Making is a profitable enterprise, and so some level of revenue share between the market maker and and the broker makes sense, and it is regulated. So I'm not quite sure what if any changes need to come. But, hopefully, this will be part of the conversation that that we can we can help create and and work through. Chamath Palihapitiya (00:38:08): do you -- I Vlad Tenev (00:38:09): think part of the problem is just the opacity of it. You know? It's it's kind of like interchange. Does anyone know that interchange is this sort of like hidden piece of revenue every time you transact with a debit card or a credit card, it's it's sort of analogous in a way. Right? Chamath Palihapitiya (00:38:25): Well, I think I think more people do just because the technology companies that have come around like, you know, Stripe and others will eventually just try to take it to Jason Calacanis (00:38:33): 0. Chamath Palihapitiya (00:38:35): And so if if anything, I think what the the business model or at least the business strategy of all these companies is when you find, to your point, these opaque pools of revenue, the innovation is just to give consumers power by taking these costs to Jason Calacanis (00:38:49): 0. If you've Vlad decided tomorrow to do Robin Hood Pro, you know, higher level than gold and charge 50 bucks a month for 50 trades and then $5 each trade after, that would solve anybody's misgivings about this. Right? You could just offer both options. Vlad Tenev (00:39:09): Well, I think it's it's payment for order flow enabled commission free trading. Right? It helps cover the costs of the business. that that that leads to our ability to offer commission free trading. And moreover, it allows smaller investors to participate. So certainly, I think that model would work, but the the consequence would be smaller investors would Jason Calacanis (00:39:36): -- Vlad Tenev (00:39:36): Yeah. Just give me an option. Jason Calacanis (00:39:37): Right? Or if the option is there, it'd be like Facebook saying we have an option for you to pay and not see ads and be tracked. Right? It would just be great option. Chamath Palihapitiya (00:39:46): What do you think is the difference between investing and trading? And what do you think has to happen so that, you know, back to where you started, if you want people to close the inequality gap, how do you allow them to do it trading versus investing? Vlad Tenev (00:40:01): Well, I think the difference between trading and investing. Investing is a little bit more about accumulation So, typically, you're buying more stock and building up positions over time. Trading comes into play I think when when you're selling. Right? When you're selling sort of strategically and you're doing it not driven by outside needs for the for the capital, but more for for sort of, like, intrinsic needs So I think the question is would we would we ever prevent people from selling? Ideally not. I mean, people have various needs that that they could have for getting out of positions. And I think as a platform, we have to allow for that. Jason Calacanis (00:40:51): Awesome. Your PR people are literally gonna come breaking out. Breaking your glass in your house. she the your peer person is literally running from HQ. She's gonna be start bagging on the back window. You cannot be on the spot. the great job, Vlad. And remember, use the order code bestie and get your your birth free month. Vlad Tenev (00:41:17): Well, thanks for having me, gentlemen. Jason Calacanis (00:41:19): Alright. Thanks. Thanks, man. Great job. Chamath Palihapitiya (00:41:21): Take care. Thanks thanks David Sacks (00:41:22): for thanks Chamath Palihapitiya (00:41:22): for answering our questions. David Sacks (00:41:23): Yeah. Thank you for coming. David Friedberg (00:41:24): You're gonna log back in in 2 minutes. Jason Calacanis (00:41:26): Okay. Yeah. Come back for the chest of booted, and Gavin you some recall, dude. Your PR people will be delighted if you comment on that. Yeah. Are we gonna do a debrief? Chamath Palihapitiya (00:41:38): The debrief, for my opinion, is that I I think that there have they have to really tighten 2 things. 1 is they need to make a decision. How do they wanna make money? Because I think this is the 3rd time these issues have come up. It's probably not gonna be the last then because there's going to be more market volatility, not less. And so you just gotta decide how you wanna make money because there is no amount of money that's possible if you're gonna build a successful business and run into these margin constraints. Right? You can't There's just no amount of money that you could have. Meaning, if you look at the folks that didn't get called were folks that had like Schwab accounts. Why? Because Schwab is investing. And if you look at the folks that did have these margin issues because Robin Hood wasn't the only one, they're all the trading and and sort of like high frequency shops. And so, you know, that's the decision. And then it's back to what David said which is like once you make a decision, you have to be able to tell people like this is what you want to stand for. And you have to have the right internal controls and governance and so You know, if he gets these things right, maybe they can be on the other side of it. Otherwise, they're just gonna continually step on this stuff. And I think that the You know, if folks lose enough money, they're gonna be pretty upset, I think. Jason Calacanis (00:42:48): It sounded to me like David Friedberg. You had a good point about offering the the Robinhood consumer base the ability to buy the shares? David Friedberg (00:42:57): I think a 100% of it should go to the the the retail, and that's he Jason Calacanis (00:43:01): did say no, and he kind of I kinda got the inclination Chamath Palihapitiya (00:43:04): that he was gonna do that. 100% he will not David Friedberg (00:43:08): Yeah. This came out in the past where he said they were gonna offer some of the IPO shares to Robinhood customers. And so that was a few months ago. I I I think I said publicly on Twitter why don't you offer all your shares to IPO customers? Like, why take any of them direct to Jason Calacanis (00:43:23): these exchanges? -- technically become a clearinghouse and IPO people? what it would be with -- -- partnership in it? David Friedberg (00:43:29): Yeah. Like, why don't you just take you know, if Fidelity wants to buy shares, let them buy shares on the open market, like all the retail customers are forced to do. And then the Fidelity argument as well, we're buying 50, $100,000,000 blocks at a time, so we don't wanna have to be in the market doing that. But the marginal cost of buying a single share versus the marginal cost of buying a 1,000,000 shares is much, much higher And, you know, that's the that's the challenge with, you know, with retail access in financial markets that Robin Hood has set out to solve. as have many others. And it would be a really powerful statement if they said, you know what? We're gonna show the world that the market can all go direct and be efficient and actually make all of their IPO shares available. And then you know what? If the big block trade guide wanna buy some, go ahead and buy it from the retail guides in the open market and Jason Calacanis (00:44:12): -- Or do fiftyfifty? you know, offer everybody who's a Robinhood shareholder if -- David Friedberg (00:44:16): I just think that they would if they could fill their demand their demand on their book for their IPO from retail, do that. and let anyone else let Fidelity sign up for Robinhood account and buy their share through Robinhood. You know? Like, the the fact is the big block buyers always get a discount. Right? They pay wholesale pricing in these markets, and that's also part of why it's so difficult for retail to actually find a footing. And so it would be a really powerful statement for them to kinda go all the way. Sure. I think it's almost certain they're gonna give some of the shares available in the IPO through to Robinhood customers to great it's a great kind of, you know, publicity point, but but it would be really powerful if they shifted the whole the whole thing. I mean, years ago, when I was at Google, we did the IPO. I don't know. you guys remember this, but it's the first time we tried to do this Dutch auction. So it's a reverse pricing. So anyone, any individual, any retailer, retail customer and any institution could bid on Google shares. And then there was a clearing price that was hidden. Everyone got their shares at the same time. So there wasn't this order book that was built by going to the big guys that the banks all know and love, like Fidelity and Tiro and so on, selling a big discounted share. It was a it was a it was a true market auction. And the direct listing is the new model for this that totally democratizes access to the shares, creates fair and transparent pricing for everyone so you don't end up with these, like, discounted shares that pop 80% on day Jason Calacanis (00:45:31): 1. Okay. Sax. What is your debrief on the Vlad appearance? David Sacks (00:45:36): So I think Vlad did a pretty good job handling our our questions, answering us Jason Calacanis (00:45:41): some -- B minus? David Sacks (00:45:43): answering some, deflecting some. I think that look. I I think I I I don't think Vlad's a a bad guy. I think he's a good guy. I think and wanted to do the right thing. I don't think they had any reason to wanna freeze their own users out of their accounts. I don't think they wanted to do what they did. I think that there was a little bit of a blind spot there on his part in terms of understanding the consequences of that freeze out. Right? Because it did break the buy side of the trade for Wall Street bets. And then that that basically allowed the hedge funds to recover, and that was that moment You know? And so that that was that was a big deal. I think the consequences of that decision were a big deal. Jason Calacanis (00:46:21): But it's a counterfactual. Right? We don't know. We'll never know if that was -- -- David Sacks (00:46:25): know. Of course. Look. It was it was that Thursday where the short squeeze ended because Wall Street Pets couldn't keep buying. They couldn't keep engineering their side of the trade. Right. Obviously, that's why cracked. Right? And Robinhood was a big part of that whole thing collapsing. Now it was gonna collapse at some point. There's no questions that the air was gonna go out of the balloon. Jason Calacanis (00:46:44): Right. But would it have gone to 5 or 600 is the question? David Sacks (00:46:47): Yeah. But but but how much money the hedge funds were gonna lose, whether they're gonna get busted out of the game for good, and who is gonna left holding the bag? Those were all questions that got answered in a completely different way because Robinhood did what it did. Now I I don't believe that they had a choice. I think They did it because they were forced to do it, but it did have huge consequences. Jason Calacanis (00:47:07): I thought he did. He's he's doing a better and better job explaining the highly technical stuff. And, you know, obviously, if they can't talk about their IPO, that does tell you certain things. I don't have any inside information, but He obviously there's thing what I get from this is there are things he can talk about and there are things he can't talk about. There might be either things with the IPO or things with confidentiality between them and some of these parties. Like, I have a feeling people are not allowed to talk about this DTCC and what goes on there. because there might be David Sacks (00:47:37): some -- I would have liked I that that was an area where I really wanted to hear more details and get more clarity because I mean, I believe that look. The order came down in the middle of the night from the DTC Right? And so that's why I kept asking, why wouldn't you just say to the DTCC Jason Calacanis (00:47:51): -- You don't think it's something I've talked about them. David Sacks (00:47:54): Okay. Fair enough. That's what Jason Calacanis (00:47:55): I'm reading into it. And I don't think I think it might be one of these non disclosures where you can't mention the non disclosure, which we've all -- Maybe. -- David Sacks (00:48:02): evolved. Maybe. But but but but but but, see, that was the heart of my question is if you're ordered by somebody in the middle of the night to take an action that is, you know, adversarial your own users. Well, I would ask them for that in writing and post it on your website, post it on your blog so to show that you don't have a choice. I mean, believe that he didn't have a choice, but why didn't he say that from the very beginning? Right? I mean -- Yeah. Jason Calacanis (00:48:22): -- David Sacks (00:48:22): that's what caused all the problems for them. Jason Calacanis (00:48:24): Yeah. Alright. They have folks, everybody go to the syndicate.com slash all in. Chamath Palihapitiya (00:48:29): Boys, I love you. I gotta go. Great job. Talk to you soon. Talk to you guys later. Love you, Jason Calacanis (00:48:34): guys. Love you, Betsy. Alright. We'll see you all next time. Bye bye. We'll let your winners ride. Rainman, David Sachs. David Sacks (00:48:47): We open source it to the fans and they've just gone crazy lately. Jason Calacanis (00:48:55): on air when they're flying. Besties are bad. That is my dog thing. I'm missing your driveway. We should all just get a room and just have a think you, George, because they're all these useless. It's like this, like, sexual tension, but they just need to release them out. What? You're the -- BP. flirt. David Sacks (00:49:20): You're a thief. David Friedberg (00:49:22): What? I'm gonna feel it. Jason Calacanis (00:49:23): Where did you get Murkeys are back?