We're back. Last week we looked forward to a very futuristic vision that you are building flux data centers in space, solar panels in space. Now we're going to take a little bit of a walk down memory lane. I think maybe we start again with what we have here in the office. I think it's called the chalkboard of destiny where you originally scoped out the idea for Robinhood. Tell us a bit about that.
Yeah, this chalkboard has been with me and with my co-founder for many, many years. It was originally in our—we lived together off campus at Stanford for—
You guys like super close to Stanford.
Yeah, we were besties at Stanford. We took all the same classes together. We're both, you know, only children, both children of immigrants. Both grew up in Virginia. Families both moved to the US because our parents were pursuing higher educations here.
Both had some variation of this haircut when we met. And we were both studying physics and math and took a lot of the same classes together, became very good friends. Coincidentally, one of our very good math friends is a fellow by the name of Andrew Armola, who happens to be heading up engineering here, which I think might be right around the corner.
So, it's a new thing, but a continuation, I guess, too, right? Yeah. Very cool. Chalkboard has a lot of good juju.
Love it. So I read that 75 VCs rejected you guys.
Is that—was it more hundreds? In the seed round. So take us back. What was the idea?
Dark memory about that many, those damn VCs.
Yeah. Um, what was it like back in the day getting rejected by a lot of people? What did they miss, I guess?
Well, I remember it quite well. So let me tell you the criticisms. Number one, young people will never invest in the stock market. Number two, you'll never figure out how to build a business here. There's no—what's the business going to be? How are you ever going to build a business? Number three, you have no idea how to do this. You're a math kid. So is your co-founder. Like, you have no—I don't see Google on your resume anywhere. I don't see any of the big tech companies. You don't know how to build consumer products. Also, you'll never get, you know, any of the capital to do this because we're rejecting you, amongst other reasons. Those top three are pretty—that one's a bit self-referential, the last one. But yeah.
Isn't it how that works? So what? Like, why don't you just go and build a photo sharing app? Like, just why are you doing this? Just go build a photo sharing app. Go build a social network. You know, that's where all the interesting stuff is happening. This finance thing, it's not going to work. Don't worry. Don't worry. Don't worry. Don't worry about it. What would you look for now if you were on the other side trying to find the next Baiju and Vlad? What would you be looking for to not miss it?
The people. Yeah. I think this is the thing—at the seed stage, the early stage, like whatever you're working on, then it's probably going to change. And if it doesn't change, then you're a bad entrepreneur. Because as a good entrepreneur, you have to be aware of the circumstances and like be willing to iterate on ideas, right? Like, I actually think kind of one of the hallmarks of being a good entrepreneur is being a person that changes their mind a lot. What does that mean? It means you're testing your ideas out. You drive the stake in the ground. This is what I think it is. And you sort of test the idea. And if you learn something new, you're not the dogmatic one that says, 'Well, I'm going to stick to my original idea.' You're like, 'No, I'm going to basically, you know, gradient descent my way to the thing that I think is going to work.'
So, I think actually at the early stage it's so much about the entrepreneur. Are they in it? Do they have that dog in them? Are they going to be relentless in figuring out how to get to success? And is the opportunity big and interesting? Right. Yeah, I think this is also kind of looking back much more clear is if you think of the sliding scale of like easy ideas versus hard ideas, they're kind of all hard. Like building a company is just hard, hard.
And if you start on something that looks easy to begin with, it might turn out to be hard in a different way. It's like it's easy to understand, therefore a lot of people understand it, therefore it's super crowded and competitive versus something that looks really hard and therefore nobody's working on it. If you have a strong first principle-based view on what the idea there is.
And the people, you'll cut through.
Rather than pattern matching too much. Okay, we're going to try and get a little tactical here for some of the entrepreneurs listening. Let's do it. So you've launched the product. When did you have a sense that it was working? When was the moment you were like, 'Okay, we've got some product market fit here.'
Very early. It was the day that we released the version, the first version of the website.
Yeah. It's pretty startling. And I had not seen product market fit for a consumer product before this. I've been looking for it. That was kind of the thing that I was very, very keenly interested in figuring out, which is how do you build something that millions of people that you've never met will find useful? How do you do that? What's the playbook on that? Like where's that? Give me the textbook. Like how do you do this?
And it frankly seemed like magic when people would figure it out. And this is like the thing about finding product market fit with a consumer product is it's—you know it when you see it.
Yes. It's like catching lightning in a bottle.
Yes. It's very, very elusive. But you guys had a super creative website launch. I remember at the time like a countdown.
Waitlist. But it was like pretty innovative.
Yeah. In turn, I think there was a lot of people that then kind of did the same thing afterwards.
No idea. Imitation is the most sincere form of flattery.
There was a company back in the day called Mailbox. Do you remember that?
It was an iPhone app that was like an inbox app.
And I remember being like, 'Holy cow, this is like the best design product I've ever seen before.' Yeah. I think they were then acquired—I think they were acquired by Dropbox if I remember correctly. And I think no longer exists, but they had a waitlist mechanism where when you signed up for it, it showed you the number of people behind you in line to use their product.
The number of people in front of you in line to use the product.
And I thought that was just super compelling. And so we ended up doing a variation of that with—
With the first announcement. So it was, you know, zero commission stock trading. And if you typed in your email address, you would get early access and we'd show you where you were online.
And that value proposition was compelling enough that just loads, tons of people signed up basically.
But that is the hard part.
Yeah. To figure out what that was.
What is that thing? A lot of people didn't like it. That's not necessarily something people were looking for, you know. So it's like how do you communicate what the thing is and how does it fit into people's lives? Did you already know how you would make money down the road when you guys were offering this thing for free or you like, 'Hey, let's just get loads of users on, we'll offer this thing for free and we'll figure it out in time.'
A little bit of column A, a little bit of column B. I mean, I think that the approach was so different and like the way the business would operate would be so different that we knew how traditional online brokerages made money. Like we would look at the public filings and kind of try to infer what the business model could be, but it's so dependent on how many people use it, what kinds of people use it, meaning is it a bunch of wealthy people or is it, you know, what ended up being the core user base, which was frankly a lot of younger, college-age Americans.
That was kind of the core bread and butter. It was young people that used it.
Yeah. Was such a cool inversion of the existing business model.
Yeah. And I took real issue with the way that it had operated before.
Because again, this is kind of my viewpoint and paraphrasing here a little bit, but my view was like before Robinhood, before we created the primary use case for investing in the stock market was for retirement-age Americans, retirement-age families. It was plus or minus a handful of years. This is a tool to help you with retirement. By extension, the majority of people that use these products were of that age range. And I remember that juxtaposed with the backdrop of Occupy. You remember that?
Where our generation was—I mean they were angry. They were angry about the way the financial system worked.
Yeah. Occupy Wall Street.
They were angry about the way it worked and I remember thinking to myself, this is kind of genesis of the company, there's another way here, right? There's one way in which what a lot of people are advocating for which is you tear the system down, right? The system's broken, like we got to start over from scratch. At the same time, as a child of immigrants to this country, I'm like, what is going on here? Like this does not make any sense. This financial system is the envy of the whole world. People literally give up their lives and relocate here because this is a land of opportunity, right?
Like I live this, my family did this. And to see a generation of young people be like, 'This thing's broken. It's not for us. Like tear it down.' We're like there's another way here which is you can actually have more people be a part of the capital markets and more people share in the outcomes good or bad and not feel disconnected from it and therefore sort of feel like they're not participating in it. And so the other option was you get everybody to be a part of it.
I want to come back to that point. Um, okay. In terms of your—did you have a north star metric when you guys did start growing that you were focused on? And what were the growth channels that worked best for you guys as you went from, I guess, zero users to now millions of users?
Yeah, there was a lot of organic growth. There was people sharing links to using Robinhood on social media. That was kind of the bread and butter in the early days.
It was almost entirely word of mouth.
So, just have an amazing insight and product that grows virally. That would be the best way. But did—was it—I mean, you know—
Build something really useful for people.
And if you do, people will use it and communicate it in a way where we talked about this earlier. It's that property of transitivity. Like this is—by the way this is kind of the key.
Can you elaborate on that?
Yeah. This is a math concept applied to building consumer products. Does the messaging that you have have the property of transitivity? Meaning if I explain what the product is to you and you explain it to somebody else, what is the version that you explain it to somebody else? Like if you play the game of telephone like after three or four hops or people are like, 'Oh yeah, it's a Chinese restaurant.' And you're like, 'Oh, we're the online stock brokerage.' You know, like what do we—it just totally got lost in translation of clarity. And so what I really focused on then was spending a lot of time with actual customers or I guess not even actual customers, hypothetical customers, people in the real world and being like, 'Here's what we built. What is this? Like how would you explain this to somebody? How would you explain this to a friend? How would you explain this to a family member?' And through that very, very simple thing, you can learn more about why your product exists, why it will work, why it will fail than talking to any number of professionals in the industry. Just go directly to the primary research. How do you have an idea for the product, you've written it down on a website, it's in an email, it's in marketing documents, whatever, right? Put it in front of people and be like, 'Explain this. Like your job is now to explain this thing to a friend. Like what are you gonna say?' I remember like looking for that to draw insights and be like, 'Oh, we interviewed 10 people or our team interviewed 10, 20 people, right?' And we kept hearing this way of describing it and it really synced. Like I like the way it sounds or like, you know, it's a very colloquial way of describing it and we just take that and incorporate that into the messaging.
It's amazing. It sounds so easy but it's actually very hard to do this right because it requires such clarity of thought what goes into the product and I think saying no to so many things. So it sounds easy the way you're describing it and I definitely think the focus on primary research is sensible but having built, you know, quite a few products myself, it's much harder to deliver on it in practice which is why it's quite rare. Um, also coming back to Steve Jobs, I remember one of his famous interviews quotes is like around attention that people give. People don't give a [__]—
No, you do not give a [__] what you're working on.
Totally self-interested on whether—
People are in their own little zones, right? So, if you're going to make something and you want other people to find it useful, you don't have a lot—like human nature dictates that you are not going to get much attention from people.
