The Exchanges

Q So how would that work? Would Robinhood buy the real estate and then sort of tokenize percentages of it almost like shares? Like, what would be the mechanism for that?

A I think, I think tokenization Uh, as a underlying technology, uh, can be done, but it's not really permissible in, in the US. And, and the reason for that is, um, What you'd be tokenizing is essentially a company. And so when you tokenize a company, it goes into security regulations and security regulations have an established framework that is not currently compatible with, uh, decentralized finance and crypto technology. So that that's one of the things that is being worked out, but there's another mechanism in the U S using sort of traditional rails, Which, uh, which are called 40 act fund structures. And I, I think there's been, uh, well, there, there will be a flurry of innovation in this space, partly because the current administration has declared that they're open to using these vehicles to provide access to alternatives and privates. Um, and the limitations currently are that It's hard to take an individual asset, like a, if it's real estate, an individual property or an individual private company in the, in the, in the sense of late stage privates. Uh, and, and make that tradable, but you can do a portfolio of things. So at least as a passive investment vehicle, we can give people that type of exposure.

AI assessment note: “there's another mechanism in the U S using sort of traditional rails”

Q What's one thing the world still gets wrong about that time?

A I mean, I think the major thing is just that Robinhood colluded with hedge funds to shut down trading. There was also another false narrative that I think is funnier. I, uh, but yeah, Sequoia had to refute this. Someone put on the internet that, uh, the White House actually called, uh, Sequoia Capital, one of our venture capital investors, And got them to pressure us to shut down GameStop. So, um, yeah, that, that was a particularly funny one, but if you look on Reddit, that had like thousands of reposts, um, So, yeah, I think that, I mean, we don't really have any business with, with hedge funds. So the, the idea that somehow a hedge fund would collude to have us shut down trading of a, of a stock, um, I mean, always seems silly to me, but I think what we learned is A juicy falsehood is more powerful than kind of a, a boring truth.

AI assessment note: “the major thing is just that Robinhood colluded with hedge funds to shut down trading”

Q If I was looking from the outside in, is there anything about your hiring process that would stand out as unconventional that works for you?

A Well, I, I should say I'm not super familiar with How every company does it, right? So I'm sure some companies do many of these things, but, um, yeah, yeah. Perhaps one thing that's unconventional, at least in financial services is, uh, emphasis on early career people. I think from a very beginning, we put our company next to Stanford university. We would spend a lot of time, uh, You know, recruiting interns and, and engineers from there. And that was my alma mater and, and Beju, my co-founder as well. So we would spend time actually, when we were individually hiring everyone, going to career fairs at the top tech universities. And, you know, I still spend a lot of time with early career folks and interns. And I think it's very, very good for the company because A lot of the companies in our space tend to get older as they get further along, and the, you know, the folks working there can be more disconnected from, from the young people, and then that puts you, puts you at risk of becoming a more of a generational company in the sense that, you know, Charles Schwab serves baby boomers very well. You had E-Trade coming later that was really a Gen X company, but I think They've struggled a little bit getting the younger generation excited, and I know, you know, they, they try very hard to, to get there, but I think the best way to do it is to actually make sure that the company it…

AI assessment note: “one thing that's unconventional, at least in financial services is, uh, emphasis on early career”

Q are intentional and serious about building something real. If you're ready to approach dating the same way you approach the rest of your life, With clarity and purpose, this is worth your attention. The League. Find someone in yours. Download the app and apply today. How does Robinhood operate internally? Like if you were to distill the operating principles that you use to run the company, what would they be?

A Our values are high performance. So, uh, we make it clear to not just employees, but anyone applying for a job that this isn't meant to be like a cushy, chill job. Like this is for people that want to stretch and to do in One year, what maybe another company would expect you to do in 10 years. Um, so we, we keep a very, very high performance bar and that filters into how we compensate. Like we, we, we reward people disproportionately based on impact and we try to stay away from rewarding people on conventional things. Think about a typical company. People are paid Generally proportional to the org size that they manage. And if you think about what that incentivizes, that incentivizes empire building. I want to have a big org with a big team because then according to traditional HR metrics, I'm more important. Um, but really what we want to incentivize is the opposite. Can you, can you have a lot of impact with the smallest possible team? So high performance is one of them safety. Always. We have a safety always value, which means Sure, we're going to move fast. You know, sure, we're, we're holding ourselves to an absolute performance bar, but you can't use that as an excuse to cut corners or compromise on, uh, the security of customers and, and their money. So that's a very important one. You know, regulatory compliance is very, very important to our business as a, as a trusted…

AI assessment note: “Our values are high performance... We have a safety always value... Lean and discipline.”

Q I want to come back to something you said earlier about how math helps you make decisions at Robin Hood, uh, and just decisions in general. Yeah. What's the connection there?

A I think math is a good way to train your brain into, uh, doing hard things. Right. And it's almost like, If you can deadlift 500 pounds, then picking up your crawling baby, uh, from the floor is very, very easy, right? So no business problem is as complicated as solving a really, really hard math problem. So if, if you, if you get used to the pain and the suffering and like the mental stress, uh, of beating your head against the wall for 12 hours on one single math problem, Which Bajor and I did very, very often when we were in college, we would like pull all nighters working on these problem sets. Um, They think that's really, really good training. It's like going to the gym for, uh, for business problems.

AI assessment note: “no business problem is as complicated as solving a really, really hard math problem.”

Q Two questions. Why do you think like somebody like Amex just doesn't copy that? Uh, can they not? Because it's a structural problem and they can't do it from their cost structure is different than yours. Like what, what prevents them from doing that?

A I think, I think it's a cost structure problem. You look at the big credit card companies and they have tens of thousands of people, right? Tens of thousands of people that are manually, uh, servicing the, these accounts and, you know, that they spend a ton of money on marketing. So, uh, yeah, I think the, the actual economics of, of the card program itself are dwarfed by the economics of like the large headcount needed to, to operate the businesses. And I think those are very, very painful decisions because not only, um, I mean, not, not only are you talking about like shrinking, uh, head count, but also in order to do that, you actually have to have the technology to, to be able to automate the, the entire servicing process and the underwriting. And I think we had an advantage because we were able to build this from scratch. So you could start from first principles. So I, I think, um, Yeah, I think it's a very, very challenging problem to solve. I don't envy them.

AI assessment note: “I think, I think it's a cost structure problem.”

Q We have AI probably in the same bucket, and then we have real estate, which is another one that people sort of talk about and tokenizing. Yeah. How do you think about All three of those different types of assets where I would imagine AI and sort of space are the same. You're tokenizing a private asset that you need to own the underlying shares. Yeah. What about real estate?

A I think real estate is, uh, incredibly meaningful, especially now that Most people are unfortunately at a point where they're, they're having difficulty buying their first home. Um, and I think that could be attacked from multiple angles. One is by breaking it up into little pieces and making it so that, okay, uh, maybe I don't want to take on a mortgage and, and own my own home, but maybe I want to be an investor and be exposed to either one or multiple homes and, you Areas that I think will do well. So I think that'll happen. But my, my priority I think is late stage privates. We launched this thing in the U S called Robinhood ventures, which aims to solve this problem. And we have our first closed end fund, which we filed to go public. Which is in the quiet period right now, so I can't talk in much detail about the mechanics of that. But I think the, the biggest opportunity and the biggest problem is in private markets. And I think there's also opportunity in early stage venture. We want more people to be exposed to companies at the earliest possible stages, even though the risk is greater because The opportunity for upside is also greater. So I think there's, there's interesting opportunities and products there. And if we can streamline, uh, the capital markets aspect and make it easier for entrepreneurs to raise money on the other side, then we could lead to more entrepren…

AI assessment note: “I think real estate is, uh, incredibly meaningful, especially now that Most people”

Q How do you think about what to expand in next? Like what goes into that decision? What are the factors, the variables that you're thinking about in your head as you're looking towards the roadmap the next 10 years? There's all these things we could do. How do we allocate what we are going to do next? Yeah.

A Um, I think like our North star is really just maximizing equity ownership, uh, direct equity ownership from retail across the world. Right. And you know, that, that's what we get into. How do we get more people invested in public stocks? Uh, can we start at a younger age and, uh, which is why we're excited about initiatives like invest America with the Trump accounts. Can we get people outside the U S plugged in as well? And make that as easy as possible. Uh, can we do private markets which are inaccessible to people? Like, I think that, uh, if we, if we maximize equity ownership and actually the, the percentage of, of it held directly by retail, we'll end up in a more stable and prosperous society that that's more, uh, and, and that's a future that I feel much more confident in. So Uh, we, we kind of think through that, and that's why we care so much about Robinhood ventures, the Trump accounts. Um, I've been talking a lot about multi-generational financial services. How do we make Robinhood work really well for you, uh, for your whole family, and make it work better if your spouse or your parents or your children are on Robinhood? Um, and I, I think that There's a huge wealth transfer, uh, coming. So over a 120 trillion are going to change hands and go from the old generation into the young. And I think that's a big opportunity to actually accelerate our goals. And I think i…

AI assessment note: “our North star is really just maximizing equity ownership”

Q terms of, like, how do we get more people invested in capitalism? And one of the ways is Is ownership of assets. Yeah. And tying that, I love what, um, they're doing with tying that back to education in schools and the portfolios and stuff. What's the other one? Like, what is the next big thing that we could do to sort of like give people a stake in capitalism?

A Yeah, I mean, we talked about real estate, uh, We've definitely talked about real estate in the past. Um, and I want to, you know, I'm a, I'm a, I'm a proponent of a diversified portfolio. I don't want to say one asset is better than another asset. Um, I think that if, if we make it easier to, I think the general approach that we have is look at what Wealthy folks have access to. What are the tools they have to protect their wealth and grow their wealth? And, you know, they have access to all sorts of things that are not easily accessible. Um, a lot of alternative investments, real estate, private credit, private equity, venture capital. And if, if we're in a world where It's easy for, for the mass market to have access to these, then, uh, I, I think, I think we'll be in good shape.

AI assessment note: “easy for, for the mass market to have access to these”

Q What do you think the limitations are on the way that we're sort of like doing the large scale language models now in the sense of training on huge data sets and being more predictive than I would say bottoms up first principles, if that makes sense?

A Yeah, I mean, I think that we've already shown an ability to create new knowledge Um, and I think that's going to continue. So, you know, right now, let's say you can easily at low cost produce a proof that's 10 pages long and actually we can produce longer ones, but just, uh, as an example per per unit cost and time, you can produce a 10 page proof while in a year it'll get to a hundred pages in three years, it'll get to a 100,000 pages. And then you can say, okay, what type of problem has a 100,000 page proof? That's probably some of the deepest problems in, in mathematics. And at the same time, that same thing is not just going to happen in mathematics, but all dependent fields. Physics, computer science, and you know, what, uh, what's the equivalent of A really deep result in physics. I mean, we can, we can understand the fundamentals of, um, unification, which has been a big problem for, it's been the problem in theoretical physics for 50 years. Like, how do you align the theories of, uh, gravitation with the other, with the other forces? Um, and we, we haven't had much progress in that, and probably AI could help with that. And then if we can figure that out, the consequences for building new engineering is, are profound.

AI assessment note: “we've already shown an ability to create new knowledge Um, and I think that's going to continue”

Q just trying to think through the chain here. If employees are getting options, but those options are highly variable, because if you're the company, you want to tie the employee's tenure to the growth of the business, and you can kind of distort that, couldn't you, with secondary marks? Because they would have to consider those marks when they're valuing the company internally for options, or no, I don't know.

A It really depends on the vehicle. So for example, there's tender offer vehicles, uh, in the U S that allow trading only at, uh, the nav, the net asset value, which is, uh, sort of like the, uh, the, the price that these assets are priced by independent valuation bodies. The problem with that is If you're a company that hasn't done a round of financing in four to five years, the nav is not necessarily reflective of the true cost of the asset. And so there's other vehicles that allow for real time pricing. And I, I think that the platonic ideal is for the price of the asset to be driven by, you know, Supply and demand and willing buyers and sellers in a, in a transparent market. I think that's where everyone gets, uh, the best outcome because in any other scenario, someone could be taken advantage of, right? Like if, if, uh, you know, one side has more information than the other, um, you know, you, you could, you could end up in situations that aren't fair. So I'm, I'm generally a proponent of Price being discovered transparently through two-sided markets. Now, again, that's not necessarily the world we live in today with private assets. Um, and so there will be a transition period and not, not all companies are gonna like the changes, but I, I do think it's inevitable to, to some degree that this happens because what'll happen is There's gonna be active derivative markets on the…

AI assessment note: “It really depends on the vehicle. So for example, there's tender offer vehicles”

Q Are there any other meetings that you have on a weekly basis? Like I, I think about a founder's time being the most valuable and most highly leveraged. Yeah. And then where do you get involved uniquely as a founder to add that leverage to the organization and where do you sort of like get hands off? Yeah.

A I mean, usually I'm, I'm involved in, uh, the most critical product launches or, or projects that are going on at any given time. And a lot of times we are, so we do a lot of product events. I think this year we're going to have five of various sizes and scales, but, but usually the product events tend to have themes. So actually we're doing one in a couple of weeks, um, Well, I should probably be more explicit about the date. We're doing one on December 16th of this year. So, uh, towards the end of the year, and it's called yes, no. So it's an event on prediction markets and, uh, and AI. And I, we spend a lot of time just making sure the messaging is right. The design of the event, the look and feel, of course, the products that go into it. Um, so

AI assessment note: “usually I'm, I'm involved in, uh, the most critical product launches”

Q As you were saying that, you know, what came to mind is like Steve Jobs and features and benefits. Yeah. He, he didn't come out and say like, uh, you know, here's 32 gigs of music capacity. He's like a thousand songs in your pocket. Is that what you mean by that?

A Well, actually, yeah, you know, when we started doing this events, that was a huge inspiration. We were like, well, we should just make them exactly like the Apple events because they've perfected it. But then, you know, now, now we're on our fifth event this year. We started it last year. And it's really just, we don't think about the Apple events at all. We, I think, I think it's almost like, um, Learning to play a new instrument, right? When you first learn to play an instrument, you know, you just have to practice and do what the other greats have composed in the past. But then once you get to a certain level, you, you know, enough to, to innovate and to like break rules and to change things. Um, so yeah, now, now we really like try to make it different each time. Like how, how can we from first principles make this event as, as good as possible? And, uh, we, we don't feel like we have to be tethered to the, the old Apple model, which some people just replicate. Um, but to answer your questions, no, I, I think, I don't think that was necessarily a rule that Apple had for the events. Actually, in a lot of their events, they get really into the technical details of the computers and they share the megahertz of the processors. And they'll, they, they even had bake-offs where, you know, they would load a website with a PC and they would load it with a Mac and, Obviously the Mac…

AI assessment note: “to answer your questions, no, I, I think, I don't think that was necessarily”

Q If you had to rank sort of the three products that matter most when it comes to transferring my financial institution, making you the primary financial institution, what would they be? Yeah.

A I mean, making us your primary financial institution is really about coverage. And, and the goal is for Robinhood to be not just your secondary, but also your primary account. We want to be both. We can be your secondary account and your primary account, your backup and your, and your main. Um, most of the time when you actually ask people, what's your primary financial account? They'll talk about where their paycheck lands up, their bank account. And, you know, for a while we weren't really playing in that space. But you might have noticed a couple weeks ago, we started rolling out Robinhood banking. And if you look on social media, Robinhood banking's a hit. I mean, people love everything about the product experience. We've, we've really, the team there has really done a nice job sweating the details and building a comprehensive banking offering. And it's a combination of things that you won't get anywhere else, like real-time cash delivery. Uh, which is available in New York. So if you're actually here, uh, domiciled, you can try that out. That's rolling out more broadly as well, but also just the bread and butter child savings accounts, joint accounts so that you can have, uh, shared finances with your spouse, uh, a family first experience where you can actually manage the finances of the whole family in one place. Uh, so it's yeah. Combination of differentiated features yo…

AI assessment note: “They'll talk about where their paycheck lands up, their bank account.”