So now Robin Hood has eight business lines that generate 100 million a year or more in revenue, and that's up from I think three a few years ago. Some of them benefit from higher rates, some of them benefit from lower rates. I do think Robin Hood is actually stronger in a declining interest rate environment than in a rising one.
Vlad, dude, we've known each other for a while. I'm so excited to have you in the studio. Thank you for joining me.
Well, thanks for having me. It's good to meet you in person and be here in person. You know, it's so lovely to do it in person.
I want to go from a very cheery, happy start to actually kind of a reflective one, which is I think we were just talking about the celebritization of CEO ship, seeing people on television, seeing the strong leader, and everything just looks up and to the right. And I think we are shaped a lot by our past. When you think about your past, what challenging moment do you think defines who you are today most?
Being an immigrant, moving from Eastern Europe to the US, that was probably one of my earliest memories. Right when my family, actually right after the Berlin Wall fell, had an opportunity to move to the US. Very, very little travel was happening from Bulgaria, which is where I was born, to the Western world. But these people from the University of Delaware came and were impressed by my dad, who was a professor of economics in Varna, Bulgaria. He got an opportunity to come to the US, but of course we didn't have the money to send the whole family, so it was him coming by himself for a year, just trying to make it work, trying to build a stable foundation. Then my mom came a year after him, so I was living with my grandparents, and they were taking me to school. I didn't see my dad for about a year and a half, my mom for at least six months. And my aunt, who I think was a teenager at the time, she was into grunge music, she loved Nirvana and Soundgarden. She took me to America on what was my first plane flight. I remember when I landed at JFK. JFK is the new Ellis Island, right, where the migrants would first come. I landed at JFK and I saw my parents. I hadn't seen my dad for a year and a half, it was almost like meeting strangers in a way. I was just very shy; took me a little bit of time to open up. I was hiding behind my aunt's leg, just peeking with one eye out. But being apart from my parents, I think was tough, but also had the benefit of making me independent. Moving around to different schools, going from the school in Bulgaria near my parents' apartment to the school near my grandparents' apartment, to being dropped in kindergarten in the US without speaking any English. It was a little bit terrifying. You're just in this new place, you can't even speak the language, you're in school. It was a little bit scary at the time, but it taught me to just adapt to different situations and to be very flexible, and I think that's helped me much later in life.
You know, I've interviewed 800 of the best founders over the last decade, and the single biggest commonality in the most successful founders is a high frequency of moving in childhood. You're forced to assimilate with different environments, different cultures, different people, make new friends, enemies, whatever that is.
It's a really interesting trait. Can I ask you, when you think about moving there and America being the land of opportunity that it was, do you think it's still that land of opportunity? I think with the UK, like, do the best talent want to come to London? And the answer for me is no. Do you think America is the land of opportunity that it was when you went?
I think so. And for me, entrepreneurship didn't really become a viable option. I never really considered being an entrepreneur until relatively recently. I grew up on the East Coast, and people weren't really starting technology companies on the East Coast. To me, as I've gotten older, I moved to Stanford, California, really because when I was a kid, my family took our first road trip once we got a little bit of money and my parents felt comfortable taking vacations financially. They took me to California for a road trip, and I remember being in San Francisco one morning. This was in the summer, so I had to buy a jacket because it was just too cold to be outside. Then we took the 45-minute drive to Stanford, California, to check out the campus, and it was like 85 degrees. Perfect. The students were sunbathing in the main quad. Everyone just looked so happy and like they were having a great time. I wanted to be a lawyer at the time. I had seen "A Few Good Men," which was a Tom Cruise movie, and I was like, man, that's cool, I want to be that guy. I had this photo of me in front of the law school. But yeah, I wanted to go to Stanford because of that feeling that I got. It wasn't because I wanted to be an entrepreneur or that I wanted to be in Silicon Valley. So to me, it's felt more and more like the land of opportunity the older I get. I think now even with COVID, when there was this narrative of people moving away from Silicon Valley, going to Miami or places like that, Austin, Texas, now it's feeling like the energy is sucking people back in. There's artificial intelligence companies in Palo Alto, Silicon Valley, right in the epicenter of that. Big tech companies are continuing to innovate. So it still feels like the hotbed of innovation for sure.
Someone said to me the other day on a show that great leadership is about being a conductor, and to be a conductor, you must turn your back on the crowd. When you think about that statement, when have you turned your back on the crowd most significantly?
Yeah, I think that's an interesting question. I was reading the Rick Rubin book. I don't know if you've come across it. I have, I've actually been gifted it. It was just sitting on my coffee table for a while, but something compelled me to pick it up. It's all about artists and how they create, and I think he does a great job of distinguishing an artist from a business person. His thesis for what makes a great artist is that you don't really care about who's looking at your work. You're building something to make yourself happy. So really, the customer for an artist is yourself. If you're proud of the work and it expresses what you want to communicate at that point in time, it's a great work. You almost have to divorce that from whether it's commercially viable or whether anyone likes it. Even when you're showing people your work of art, you have to be really careful not to listen to them too much, because good art almost alienates as many people as it makes really happy. So if you're not alienating anyone, probably everyone just feels somewhat neutral, and it's not going to be memorable. But business is a little bit different, because there's an element of art to designing a really good product. You have to be proud of it, and to some extent you're building it for yourself, but you also keep in your mind what's useful to a customer and what they can benefit from. So in terms of this conducting analogy, I don't think you can turn your back on the crowd completely, or at least not through all stages of the life cycle of building a product. I think you start with an inspiration and an idea, and in the best cases it has come from within. We've been fortunate to build several really good products at Robin Hood, and the initial spark came from within. It didn't come from customer research or a lot of feedback. But I think customers play a much bigger role in refining the idea. We ping-pong ideas off customers, use the feedback to adjust the interface, and sometimes it changes it quite a bit. There's a little bit of art and a little bit of business in creating a new product that I think is really interesting.
Do you think you alienate people enough? What I mean by that is, when you think about business, your Nike or your Adidas, your Apple or your Samsung, your McDonald's or Burger King. I know you guys have Taco Bell and Chipotle and other things, so I'm not going to comment because I don't know the comparisons there, right? But you are like for or against the brand. Do you think you alienate enough?
I think we could probably alienate more. I think it's hard to alienate because people are naturally sensitive to criticism. It hurts more to get a piece of biting criticism than it feels good to get praise. So I think this creates a natural tendency to avoid alienating people, and you have to almost exert influence if you want your product, marketing, or message to be compelling. So I think that's a very tough thing, and to some degree it has to start at the top of the organization. But for myself, I can take more risk. So what I try to do is, whenever possible, if there's someone whose vision I believe in, even if I disagree with it, I try to let them try things and be bold and have a perspective. One of my biggest weaknesses is I really care what other people think, and I'm actually quite sensitive. It really hurts when I see shit on any social media about me.
You said about sensitivity there. I spoke to so many of our mutual friends, and they told me actually that you're an introvert and, in the nicest way, that you're a math nerd. Said with love, by the way. But are you sensitive and how do you think about building that muscle to withstand the criticism that comes?
I wouldn't say I'm an introvert. Actually, one thing that I struggle with on a personal level is being alone. I get a little bit uncomfortable being alone. Why is that? I don't know. Maybe it comes from childhood. I'm an only child, and I spent a lot of time alone. My parents never were able to afford a babysitter until I got older and didn't need one. So as a kindergartener, I would walk home from the bus stop to my apartment. I had the key in my backpack. It was a latchkey child. This is very rare now, I've been told you can't really do this in 2020. People are more protective over their kids. But I would let myself in, do my homework, maybe call my parents at work or they would call me to make sure I got home okay. Play with my friends sometimes, but a lot of times I was just alone. Then when I got to college, it was always living with roommates or with a bunch of people in a house. When I'd go out places, I would have a lot of friends with me. So sometimes I hear about people doing solo traveling or living by themselves for an extended period of time, and it feels somewhat foreign and actually kind of scary to me. So I think my area of discomfort is less being with other people. I get energy from other people. It's more that I find the hardest time is nighttime, when the lights go out and you're in bed with your own thoughts. You have a much busier life than me, but it's busy now, and it's the only time when it's silence. Well, not usually at my house. I usually have multiple crying kids and it changes a lot. I totally get that.
I was chanting to Mickey, and he said, listen, the G, he said you were in the best CEO version of yourself right now, but that was in large part because of the experience you had over the last few years. He said, you've got to ask, is GameStop was a tough period for him as a leader. What did it teach you about telling stories?
That is a tough one. Mickey's good at asking questions. I think to your point, when you mentioned the inverted thing, I think before GameStop, to some degree I was never really comfortable in a media setting. I think this is a little bit different because this feels more like a conversation, but like you're on CNBC or Bloomberg or one of these shows, and you have three to five minutes. You have this artificial situation where you have to deliver sound bites. You can't really explain yourself. That one was during COVID, so all of these interviews that I'd normally be in a studio for are happening over my Zoom connection. Very little sleep. It wasn't just the night before. The GameStop fiasco was probably the month leading up to it where volumes were just going vertical. The crypto markets were exploding as well, and we were a major player in that. Robin Hood was the number one app in the app store. My feeling at the time was everyone was sort of like, wow, you should be really happy, you're the number one app in the app store ahead of Instagram and TikTok, not just financial app, but everything. And inside, I had to juggle the happiness of that moment but also the fear that something could happen. I don't know what, and it could go off the rails. It was almost like too much growth. All of this was happening at the same time, and you're running all these threads in your brain. I have this issue, I want to dispute this point, I want to appear confident and like I'm on top of things. I had that not really going for me because I was 32 years old at the time and I hadn't done much media and I looked rather young. I think that whole episode aged me. I look at pictures of myself in 2020, I look much younger. My big takeaway is I think you almost have to clear out all of those voices in your brain, and just like when everything goes away, you can actually get much more clarity about how to communicate. I think storytelling is a big part of that. When you clear out your brain and remove what you think you should be saying or what messages you want to convey, I think what's left is the stories. I tend to picture things in my mind. When I think about GameStop, I think about being cooped up in my little house and not really being able to eat for days because I was just pacing around. Small kids at the time, they were just running around. Yeah, it was just a very unsettling.
What would you have said differently? It was another one of Mickey's, which is like, when you review what you did say, what did you say or not say that you wish you had done the opposite of?
I think that when I did a Clubhouse with Elon Musk on Sunday, it was Thursday when the GameStop trading restrictions were first put into place. We were a little bit nervous about sharing all the details. Part of it was we wanted to make sure we didn't get anything wrong, because if we got anything wrong, then we would have to correct it, and that looks bad. That gets people into all sorts of conspiracy theories. People thought there was this whole collusion narrative with Citadel that ended up being disproved. So we wanted to make sure we communicated everything correctly and didn't leave anything out or make any mistakes. That made us communicate a little bit later than perhaps I would have liked. But it came out in pieces. It was one detail here, the other details there. Then it was Sunday when I kind of gave the full play-by-play on a Clubhouse being interviewed by Elon Musk. Of course, in all the lawsuits and litigation that followed, all the other details came out over the following several years. But I think in hindsight, maybe not saying anything until giving the entire story of how everything happened would have probably worked better. There was this pressure to get out there and communicate as early as possible, but in hindsight, taking my time a little bit and just saying, hey, we're working through solving the problem, I'm going to release a statement or get out there as soon as I can after cleaning up the mess, I think that probably would have been a little bit better.
Who do you call when the lawsuits are dropping, when the shit is really hitting the fan?
Oh, I mean, lots of lawyers. Like, who's the friend? What was really interesting was I started getting phone calls from all sorts of people that maybe I wouldn't have had an opportunity to talk to. People were connecting me with... I never talked to Elon Musk before, but he kind of wanted to give me some advice on how to handle the situation. I talked to Zuck, Mark Benioff. The one benefit was amazing network expansion. These guys were like, hey, I saw this on TV, I really think you could have done a better job on that Sorin interview, and here's what you should do next. It was interesting to have those discussions. It was like brainstorming on brand marketing, business strategy, business model with some of these folks in a very unique time.
You mentioned some incredible founders there. You are yourself an incredible founder. What did you make of PG's founder mode essay, which went incredibly viral recently?
My take on it was I think it's a little bit like a horoscope in the sense that it was so vague and general that everyone thinks it's relevant to them. It's like, oh yeah, that's me, I'm in founder mode, not manager mode. I think that's why it resonated with people. It's sort of like you can paint your own picture, but it feels like it's talking about you. Every founder I talked to was like, yeah, PG really gets it, this is exactly how I operate. Every manager or executive was a little bit offended. So it's packaged very well. But I don't think it was like... I think it captured a feeling, but if you're looking for a tactical guide to founder decision making, I don't think there's much in the way of specifics there.
How did you think about refining the culture, and when do you think it broke?
I think it kind of broke a little bit at the beginning of COVID. The signs that it broke? Well, there were a couple of things that happened simultaneously that were very difficult. One was going remote fully. The second was we went through a gigantic hiring burst. We were under a thousand people at the end of 2019, right before COVID. I think around a thousand, maybe a little bit under. Then in January 2022, when we finally announced that we were a remote-first company after a couple of years of ambiguity, we were about 4,000 people. So we sort of over 4X'd in a fully remote setting, and we were opening up offices everywhere. How many are you now? We are between 2,000 and 3,000. So you overhired. We overhired, yeah. In hindsight, part of it was we were responding to the issues we had in 2020, which were huge amount of growth, influx of customers. Our revenues went up like 4X in a year, from around 250 million to about a billion. That's a fun board meeting, isn't it? That's a nice go to get. Yeah, at the time it was fun, but it was also a little bit disconcerting because I was like, well, we haven't really done anything. This thing happened, now we're growing. If you're not careful, there's a tendency to think you're doing a great job as a leader. Revenue is going up, people are using my product, all these other companies that were hit hard by COVID or doing poorly. Does that mean I'm a better chief executive than the chief executives of those companies? I think at the time I was getting some positive feedback, but there were things that were breaking that we had to deal with. What was not very fulfilling to me was we didn't really ship that many products in 2020 and 2021. We were just trying to keep the train on the rails because we were dealing with infrastructure issues, historic volumes, lots of load, customer support. We had to grow.
What did you not do that you wish you'd done well?
In hindsight, since we're in the UK, we decided to abandon our efforts to expand to the UK that year. I remember this because you were planning it. It was publicly known that you were planning it, and obviously me being in the UK, I was excited for it. Yeah. We announced in the UK, we went to friends and family, maybe about a thousand people, and then COVID hit. It was March 2020. I remember having to make a decision. It was like, we need all the resources we possibly can get on the US side, and we have this new business in the UK. It was a tough decision. I thought about it a little bit, went back and forth. I think at the time it seemed like the US business was so big and growing so fast, it was going through an inflection point, and it felt like we had to put everything we possibly could on making that work and shoring it up. The UK just seemed like it would be hard and distracting, and I couldn't even travel there most likely. It was sort of easy to abandon. We didn't abandon it fully. We kept the license and then we went live what ended up being three years later, right? Three years later when we finally launched earlier this year. Sometimes I think about that, and it's difficult to was that a mistake to not do it then? It's hard to compare against the counterfactual which you don't have. Certainly it would have been the right decision if we had some massive infrastructure issue in the US had we not allocated the resources and we had another big problem. But in a world where we could have done both, I think learning to be an international company a couple of years earlier probably would have been a good thing.
I don't know how to say this without being too direct or blunt, so just forgive the word vit here. Why is Europe and the UK interesting to you at all compared to the US market? It's tiny. You look at competitors here like FreeTrade, which are bnny average at best businesses. Why is it interesting for you?
I think from the very beginning, we had a vision that Robin Hood would be a global company. No matter where you are in the world, you'd be able to download our app from the app store and have access to the best financial products anywhere. You could fund with your local currency or cryptocurrency or whatever the easiest way is. You could invest your money, you could spend it, send it to people. So we could help anyone with any financial need. I think as a technology company, we feel like we have an advantage to doing that.
What have you decided to not do most recently that was a hard decision?
It's a constant game of trade-offs. We always have lots of things that are great ideas in our space that we know will work, but we haven't gotten around to them yet. For example, earlier this year we launched amazing margin rates. We were frankly not very competitive with our margin product in the US up until recently, and then we changed our rates. We were able to do that because we made a lot of investments in risk.
Management so now we have the best rates but if you think about the things that we offer: great margin rates, 24-hour access to the markets, also particularly relevant in the UK. They're things that institutions want too. So if you're a hedge fund for example, and you also want 24-hour access to equity markets, you want access to crypto - not a lot of them can get that easily - you want access to low margin rates. And the institutional market is a very big market, and we could take a lot of our infrastructure, adapt it to institutional, and we don't have to rebuild a ton of the technology. Similarly, you look at a company like Fidelity, big asset manager in the US, they have a big 401(k) business, so that's also a B2B business - you're helping startups and larger companies manage their employee retirement plans. And that's a good complement to our retirement offering. So that's something that comes up. Servicing registered investment advisors, that's a big market - individuals that manage money on behalf of other customers.
You mentioned kind of funding through crypto. That one - your investor said the hard question, depends if you want to go hard Harry, that one should ask: why are you not bigger on crypto?
Well, on retail in the US, we're kind of close to the same size as Coinbase. We charge a lot less, so we have less revenue. But in terms of volumes and retail volumes, it's pretty close, particularly if you look at supported coins. So even though we started later, we've generally grown market share quite substantially over time. And it's expanding internationally, although we've done that more recently. So we've launched crypto in the EU a few months ago. So I think that we weren't originally offering crypto - that was kind of an area we moved into, so we didn't launch at the same time as some of the original crypto companies. But I think we've been picking up market share and building the product and getting more aggressive over time. We have the Bitstamp acquisition, and that's a global company that's actually one of the OG exchanges. So I think we're going to continue to invest, but I'd say we've done quite well in crypto relative to most of our competitors. You can tell Mickey that one.
Then you mentioned the acquisition there. I think it's a constant question for technology leaders today, which is: do we build it ourselves, do we partner, do we acquire? How do you think about that build-vs-buy-vs-partner decision-making process when adding new products or enhancing existing?
We've made some great acquisitions in the past. Which has been the best one? I'd say the one that has led to the most interesting new product - and I guess to some degree it's still early so I can't quite claim full victory, but we feel pretty good - has been the credit card. We bought a company called X1. They had a really nice credit card product right around the SVB crisis. Credit companies had quite a bit of trouble - the banking system in the US was very, very strained. That hit credit startups perhaps the hardest. So we were able to acquire X1, and that led to the Robinhood Gold credit card, which I think if you look at the reviews and how initial customers are using and enjoying the product, the reviews are better than free trading. It's the best initial feedback that we've gotten on any product that we've put out.
What is the single reason why you think it's been a success?
I think there's actually three reasons that we've been able to accomplish simultaneously. And perhaps it would have still been a success if we'd gotten each one of those right, but I think the three things are very powerful. One is the economics - 3% cash back on all categories across the board. The second is the digital experience - you can create these virtual cards, one-time use cards that people really like. And then the design of the card is really nice - it's a solid gold card. If you refer 10 friends, it's a very nice metallic gold card if you don't.
But how spicy am I supposed to be, Vlad? Because like Revolut have had these features for years. My question is, and I look at this like, Revolut is a $45 billion company now, and I think it'll probably be a $100 billion company - people shit on me for that. But then we look at the biggest competitor in the US and it's $15 billion, with Chime. And I mean, that's a pretty high valuation applied to Chime. Where's the mismatch? Why is it the US has not delivered in a way that a European company has? Does that make sense?
Yeah, I mean, it's an interesting question. I'd say Revolut has done well in Europe. I think that they learned how to go international very quickly because it's not just a UK business but expanded into Europe and other markets. My sense is it's still early for them in the US - no one's cracked the US. Monzo couldn't, Revolut is trying. I think that the value prop of cross-border spending is a very relevant value prop in Europe - you have a lot of travelers that need pounds here, need euros when they go over to the mainland. And I think they have a good solution to that. Now whether the investing side is working particularly well, I'm not sure - I don't really have any data there.
I'm just intrigued by is the investing product a better entry wedge and anchor product than a current account?
I think both work. And I think that it kind of depends on what time scale you look at things. By the way, I'm kind of reminded of... I was reading the Amazon book, and eBay initially was a much larger company than Amazon, and they kind of thought it was very silly that Amazon would build their own fulfillment centers and run their own warehouses. If you're just a software layer buying, connecting buyers and sellers, the perspective was that's a much better business, much higher margin. But Amazon did something that was very hard and very difficult to replicate. And I think it took - in their case, 20 plus years - but eventually that started compounding. And so you can also look at Nvidia as an example. Nvidia started in the early '90s. It was sort of the last Silicon Valley company that wasn't really doing software - they were still a hardware company, so it's this strange, alien thing. And 30 years later, they kind of started taking off. So sometimes it's difficult to judge these things in the first 5 to 10 years, or in the case of Robinhood, the first one year.
