We're here at the birthplace of Silicon Valley, the HP garage where magic happened almost 100 years ago. We're here talking to many of the 250 greatest living innovators according to Forbes, and we open with Baiju Bhatt, co-founder of Robinhood and now a new venture, Cowboy Space Corp. So serial entrepreneur, Baiju, thanks for joining us.
Why don't you give us again, you're one of the younger members of the 250, congratulations, but you made a huge impact in a short period of time. Maybe give us your journey a little, your innovator's journey, and then we can get into some of the stuff you've been doing.
Yeah, so I started out my entrepreneurship journey after I graduated from Stanford, actually.
You just walked into this area.
Literally did. I actually came out here originally because I was studying physics and math. I was not interested in starting a business back then. I was pretty squarely focused on understanding the mysteries of the universe. And then I ended up graduating, stayed for a little bit longer, did my master's in math also at Stanford. And within about a year or so, I had a job for a little while, decided I wanted to start a company.
It really is. And I teamed up with my college roommate and best friend through most of college, Vlad, to start a company which didn't do so well. And started another one along the way that didn't do so great. And then had the idea for Robinhood. And actually, it's kind of interesting, one of our first offices was right down the street on High Street, I believe, and also was a garage.
Which had, I think, slightly better HVAC than this, but...
So when you started Robinhood, you guys were finance outsiders disrupting a multi-hundred billion, trillion dollar industry. What did you guys see? You have tens of thousands of really smart people working in the industry. What did you guys see that they didn't, and how did you come up with that idea?
That's a polite way of saying we didn't really have a good chance of succeeding. That too. And we were reminded of this early and often, like, what is a couple of scraggly-haired college kids? And at the time, people kind of viewed us as programmers, right? What do you guys know about finance? What makes you think that you can build a finance company that's going to be durable or have this really audacious goal of building a 100-year brand? And I think that the insight that led to a lot of Robinhood was fundamentally a viewpoint on this generation of, now I guess, 10 to 15 years ago, young people then, and on the relationship of the capital markets with the people that live here. So, a little more specific. The backdrop when we had the idea for Robinhood was Occupy Wall Street. And it was a time when a generation of young people kind of looked at the markets, they looked at the capital market system, and they said, 'This is broken. This is not for us, and it favors the very few.' And there was a sentiment around the time of literally occupying Wall Street, tear the system down, come up with something new.
And I think that was Ducatti Park in 2011, 2012, right around there.
2011, 2012, exactly. And I remember at the time, the insight that the two of us had was fundamentally one of outsiders looking in. Because both for me and my co-founder, our families moved to the US so that our fathers could pursue higher education and so that we would have, you know, at least the opportunity to have a better outcome and to be a part of the capitalist system in America. And this is kind of my viewpoint on this also, is like, as an outsider looking in, this system is the envy of everybody in the world. And how could we be growing up in a generation where our peers fundamentally rejected this? It was kind of in dissonance with our lived experience where so many of our peers were not going to be part of the system, right? And we thought if they could be a part of the system and share in the outcomes, whether good or bad, would be another way of addressing the same frustrations that led to that sentiment. Lo and behold, the idea for Robinhood started taking shape. And we viewed access to markets as kind of a microcosm of what people are frustrated about. So if we, as technologists with some insight into how this younger generation of people feel, could address even this problem around the cost and the accessibility of the markets, then we could actually have a real impact on that feeling, even if in a kind of smaller microcosm of what the bigger sentiment was. And I tell you, looking back on it now after all these years, this is the one insight that kind of rings true because the mission of the company has been around democratizing finance for all. If you look back at that generation, if you were to ask a young person, 'How do you feel about your finances? Do you care about this?' A lot of young people would have been like, 'Oh man, that's not for me, you know? I don't care about that stuff.' Which I think is ridiculous. Of course, right? It's like you should care about it because it's your own future. You need it. Of course. Right? It's not for anybody else. It's for you. Where I think if you look and you were to talk to an average young person today, they would say, 'Oh, yeah. Of course I do.' And I think if even if we played a small part in that sentiment change, then I think we did something impactful.
Baiju, did you, when you were kind of developing this, did you get these ideas from talking to people? Was it more that you guys had the idea and again tried to go out and evangelize, or were you on a listening tour and kind of sucked it all in and came up with the thesis? Was it a top-down or bottom-up?
A little bit of both. And which one kind of was driving. So I'll tell you, this is one thing that I think I felt very strongly about and I think was one of the differentiators at least in the early days of the company, is we would spend an inordinate amount of time talking to our customers, even before they were using the product, even when it was kind of in development. We would actually come up with an idea for what the new thing we were working on was, whether we were introducing the product or working on some screen here or there in the app. And what we would do is we would take a small team, usually on the weekends, right down the street to the Stanford coffee shop. And it would usually be like a couple of engineers, maybe a designer, maybe somebody on the compliance team, or just random people within the company. And we'd go and recruit people that were just in school and be like, 'Hey, look at our product. What do you think?' Right? Or if there was, you know, just it was a way of taking people throughout different parts of our company and just being like, 'Let's not guess how people are using our product. Let's actually have them look at it, tell it to us.' And we learned so much in doing that.
What was the biggest aha moment where kind of you had that Newton apple thing where either somebody said something or you guys were programming and you're like, 'Oh my god, this is going to change everything.' You must have had something like that.
Yeah, I think it was the very first time we released the product into the wild. And I remember we had originally had a waitlist. And you don't know how the people are going to use it, it's out there and you're just, yeah, here we go. We kind of assumed at some level because it's like, well, we'll put a waitlist out there. People give us their email address and then we'll see what happens. Maybe we'll get a couple thousand people, maybe a couple hundred people. And we were shocked with the number of people that wanted early access to what would become Robinhood. Yeah. And I think that was the first time in my life I'd ever seen product-market fit. And man, it left an impression on me because I was like, 'Aha, like this is what it looks like.' And I think one of the hallmarks of, at least for consumer product, product-market fit is that whatever you kind of expect to see in terms of people signing up, if it does better than that. And the reason, and this may be a little bit of a tangent, but one of the reasons is that I think as humans it's really difficult to understand how a group of 100,000 people behaves. Like our little brains are not wired, you know, to comprehend groups of people that big. And the first time when you see something that really resonates with people, not a person that I've ever met or person that I've met has ever met, but people that are degrees and degrees of freedom removed, and they see this idea and they're like, 'Oh, I could see how that could fit into my life.'
A lot of what you're talking about is interesting and I wouldn't have thought of it, is you're talking about again field testing and watching how people interact, the personal connection. How much were you kind of looking at, you know, different anecdotes or specific use cases versus the data? Because you also had a lot, you know, I'm sure you had a lot of numbers coming in. And how does an innovator balance that?
I think it's quantitative and qualitative, right? They're two sides of the same coin. So, the simplest way is you use, or at least I, we would use the qualitative side for hypothesis generation. We interviewed 10 people, one-on-one interviews, and we kept hearing this thing. And then you say, 'Hey, maybe a large portion of our customers feel this way.' So the qualitative insights would oftentimes be the place where you get a lot of the ideas and then use data to see if this is a phenomenon that a lot of people really care about. One final thing on this, I think the reason I think this was such a differentiator for our company was it was fundamentally about this generation of people, right? Like young people when we started the company we felt were fundamentally underserved. Their finances were different than what the products that were out there were built for. You know, if you talk to somebody that's in their 20s, the legacy banks took it for granted that they'd have to use them and eventually it'd get interesting to them, but they weren't that interested in small little accounts or...
Yeah. Well, if you're in your 20s and you're talking about, you know, this is a product for somebody that's five years plus or minus from retirement, like those are just totally different needs. Right.
Right. And the thing there was we kind of believed it was important for people to start caring about their finances even if retirement was decades away.
Because you got to understand how this stuff works and you got to invest in yourself.
Of course, the easiest way to retire is to start early. Start early and you're not going to have a problem. It's the people who start late that have a problem.
How did you, you mentioned a couple times you and the team and you guys are working late, and how do you, when you're an innovator and you're in early stages, build a team of innovators? What are you looking for? I think there's, and like I'm kind of living this again right now and it's interesting because the kind of people that thrive in those environments, they tend to be kind of unusual characters, right? And for example, in the early days of Robinhood, there were several people that stopped out of school, they stopped out of college for the first time, super early career, unproven folks that we saw grow become like great leaders, right? Very different from the corporate world. Like you don't see a college dropout being the head of anything, right?
Right. And I'm kind of living that again right now with my new company, Cowboy Space Corporation. Yeah, the kind of people that are innovative, that really thrive in that early environment, they've got a certain sense of, as I think we as the entrepreneurs did, the sense of you don't know what you don't know and you're willing to try stuff, right? And you're willing to fail. Exactly.
What about now? You guys attracted a lot of attention. There was controversy. I mean, you're dealing in a heavily regulated, you know, multi-trillion dollar, you know, a lot of the legacy companies were throwing money at you guys. How did you navigate that as an innovator?
US controversy. What are you talking about? Never heard it. Never experienced that. I mean, look, it was one of the defining challenges of the early days, right? It was a very disruptive company and we did the hard work. We did the investment in actually building the company out, making our systems reliable, staffing up with the regulatory officials, compliance folks, all those sides of the business to make it the durable company that it is, right? And it's work that we continue to invest in and view as very important. But yeah, as an early stage company, we had to grow it pretty quickly.
