Robinhood CEO Vlad Tenev has lots to have fun this vacation season. After a bumpy few years following Robinhood’s 2021 IPO — a interval throughout which shares of the commission-free buying and selling app plummeted by greater than 90% after it abruptly restricted buying and selling in some meme shares — the 12-year-old firm was simply declared Yahoo Finance’s “comeback inventory” of the 12 months.
Requested about that accolade in current days over Zoom, Tenev was beaming. “Once we had been a younger firm and simply received began, everybody was form of rooting for us,” mentioned Tenev, who oversees roughly 2,500 workers at Robinhood. “Then at one level we began being handled as an incumbent … the vibe grew to become detrimental, [and] throughout COVID, it simply grew to become unusual. [We] had been rising like loopy, however folks had been sad, and we hit our low, and now it has been very optimistic.”
It’s what’s across the nook that has Tenev really excited, nevertheless. Like quite a lot of fintech entrepreneurs, he’s feeling very enthusiastic a couple of second Trump administration, on condition that deregulation seems to be a precedence, together with a far hotter embrace of cryptocurrency.
Unsurprisingly, he plans to benefit from the fast-changing panorama. Certainly, throughout our chat, we talked about “exploding” job affords and about crypto. We mentioned copytrading, a buying and selling technique that enables shoppers to routinely replicate the trades of one other dealer. We additionally talked about prediction markets, the place Robinhood plans to more and more compete with still-private startups like Kalshi and Polymarket which are squarely centered on permitting folks to wager on the end result of future occasions.
You possibly can hearken to the entire thing right here; in the meantime, under, you could find excerpts particularly pertaining to prediction markets which have been edited frivolously for size.
I’m seeing that one in 10 People [with brokerage accounts] have a Robinhood account, but you solely have 1 / 4 % of the full retail belongings in america. Can that be proper?
I haven’t heard that stat. I imply, it doesn’t sound loopy to me. There’s trillions [of dollars] of belongings [in the world]. Robinhood’s [AUM] is correct round $200 billion, so we’ve nonetheless received an extended methods to go. We’re greater than after we began, however a few of these guys, just like the Schwabs and the Fidelitys, have $10 trillion in belongings. So we’re nonetheless rising, however our belongings are rising 40%-plus 12 months over 12 months, somewhat than 2% to three%.
Once we final sat down in individual, this was a a lot smaller firm with ambitions to grow to be a monetary companies big; you’ve since gotten into wealth administration and bank cards. I’m questioning about some newer monetary mechanisms, like prediction markets; how huge a possibility is there, do you assume?
I’ve been an enormous fan of prediction markets for a very long time, and it grew to become clear to me comparatively early on that political contracts are the perfect product in that house, as a result of [politics] may be very newsworthy and extremely correlated to market efficiency, so helpful as a hedge.
The one different factor was: Everybody watches the polls and early outcomes on election night time to determine what’s occurring, and in the event you’re watching the information, the image they paint may be very unclear, proper? They’re doing all this math for you and tabulating [votes], however they’re not likely telling you what the percentages are of 1 candidate or the opposite profitable the election. You distinction that with the prediction markets … and I believe what’s much more highly effective is simply distilling the place issues stand proper now primarily based on all the data that’s on the market. And that’s a really helpful use case, not essentially for prediction itself, however actually for the information.
We didn’t assume it’d be potential to launch [our own presidential election market] for this election as a result of there was the lawsuit with the [Commodity Futures Trading Commission, or CFTC], then Kalshi prevailed within the eleventh hour [to offer contracts that pay off as bets on U.S. political elections], and the crew mobilized. We put quite a lot of nice folks on it, and we went from aspiring to launch to really delivery in about two and a half weeks…
Did you ever discuss to Kalshi about doubtlessly shopping for it?
I’ve talked to Kalshi, not about shopping for it. We ended up working with ForecastEx [a CFTC-registered designated contract market (DCM) for forecast contracts]. And, this can be a little bit technical, however we’re an FCM, a futures fee service provider, which is form of just like the customer-facing a part of a futures or swaps vendor, and so we have to depend on an change functionally to function the again finish of all these trades. And we ended up utilizing ForecastEx as a result of that they had all of the licensure to have the ability to do this. My understanding is that Kalshi is just in a position to supply it to retail straight, not in a position to serve different FCMs.
I learn that you just’ve indicated a transfer into sports activities might take the type of occasion contracts, too.
I believe that was taken a bit bit out of context. Actually, our focus is on federally regulated occasion contracts somewhat than conventional sports activities betting. Proper now, occasion contracts don’t allow sports activities outcomes [but] which may change.
You understand, there’s going to be a brand new CFTC Commissioner [and] lots of people are excited by sports activities coming into the federally regulated realm. I believe these merchandise would look very totally different from conventional sports activities betting. However yeah, our focus is on occasion contracts. I believe that’s going to be an enormous factor. The presidential election market proved to us that there’s quite a lot of demand for these kind of merchandise. We had over half a billion contracts traded in a couple of week [by more than] half one million folks. And so I believe that the primary factor we had been listening to afterward was: Can we have now extra contracts? Can this be a more-fleshed-out product and never only for the election?
Clearly sports activities can be large and perennial. What different varieties of contracts are you imagining?
There’s quite a lot of potentialities. A pure match for Robinhood is financial ones. You possibly can see some examples of a Fed hike, a Fed drop … something that’s on the intersection of reports and monetary markets is attention-grabbing to us. For my part, information has more and more began to merge with leisure.
There are two methods to have a look at [event contracts]. One is as an energetic dealer asset, that energetic merchants wish to commerce alongside choices and futures and different issues. However the different is as a passive expertise, the place, in the event you simply need the information, occasion contracts is usually a strategy to ship that to you in actual time. We’re additionally occupied with this, and I believe that opens up a broader set of potentialities. You possibly can have occasion contracts on just about something from the Oscars and leisure occasions to sports activities to politics. And the classes of occasion contracts virtually grow to be just like the sections of a newspaper, proper? Artwork, fashion, leisure, sports activities, enterprise, [the] entrance web page, which is actual time. So you’ll be able to think about the digital equal of a newspaper being delivered through occasion contracts.
Once more, for way more with Tenev, you’ll be able to tune in right here.
