Vlad Tenev (Robinhood CEO) on AI, Options & the Wealth Transfer | U Got Options | Ep.6
Summary
Market Insights: Vlad Tenev discussed the impact of high inflation rates in Bulgaria during his childhood and how it shaped his perspective on wealth preservation, highlighting the importance of modern financial tools like Robinhood to democratize trading.
Investment Tools: Robinhood is expanding its offerings to include futures, short selling, and options, providing retail investors with tools traditionally reserved for institutional players, thus leveling the playing field.
AI Integration: The integration of AI in Robinhood's platform aims to simplify complex trading strategies for retail investors, making it easier to simulate and visualize options outcomes and manage trades effectively.
Market Dynamics: The discussion highlighted the historical performance of various asset classes during inflationary periods, noting that equities are not always a hedge against inflation, and emphasized the importance of diversification.
Business Strategy: Robinhood is focusing on enhancing its platform to attract a broader demographic, including older generations, by expanding its product offerings and improving user experience.
Social Trading: Robinhood's new social features aim to foster a community where users can share verified trades and insights, potentially influencing market dynamics by enabling coordinated retail trading efforts.
Future Outlook: The company is committed to further developing its AI capabilities and expanding its product suite to include more sophisticated financial instruments, positioning itself as a comprehensive financial platform.
Transcript
[Music] You got you got you got your trade. You bet. You bet. You bet. You bet. Your money just got made. [Music] >> Welcome to You Got Options, an exciting series right here on Top Traders Unplugged, hosted by none other than Jim Carson, one of the sharpest minds when it comes to understanding what's really driving market moves beneath the surface. In this series, Jim brings his deep expertise and unique perspective honed from years of experience on the trading floor to candid conversations with some of the brightest minds in the industry. Together, they unpack the shifting tides and underlying forces that move markets and the opportunities they create. A quick reminder before we dive in. You got options is forformational and educational purposes only. None of the discussions you're about to hear should be considered investment advice. As always, please do your own research and consult with a professional adviser before making any investment decisions. Now, what makes this series truly special is that it's recorded right from the heart of the action on the trading floor of the SIBO. That means you might catch a little background buzz, phones ringing, traders shouting as Jim and his guests unpack realorld insights in real time. We wouldn't have it any other way because this is as authentic as it gets. And with that, it's time to hear from those who live and breathe this complex corner of the markets. Here is your host, Jim Carson. Welcome back to another episode of You Got Options from the Sibo floor, brought to you by Thai Media and Top Traders Unplugged. Today we're at the Robin Hood Hood Summit here in Las Vegas, and we get to talk to no other than the man himself, Vlad Tenner, the CEO of Robin Hood. and made some incredible announcements today. But we start at the beginning with him talking about copper pots and his experience in Bulgaria all the way to the macro environment in and democratizing all of the things that your retail trader uh needs to have to navigate this environment. I hope you enjoy this one. >> Yo, live it up. Don't settle for less. You got options. Put your skills to the test. It's your call. Time to strike. Make your move. Grab the mic. You got you got you got execute your trade. You bet. You bet. You bet. You bet. Your money just got made. Time to trade the fade. It's the nexus of the game. [Music] >> Welcome back to another episode of You Got Options today. Vlad Tennv here at the Robin Hood Summit. Looking forward to having a conversation. >> Yeah. Thanks for having me. >> I know we have a lot in common actually. Um my grandfather came from Bulgaria and uh >> Oh, that's amazing. Yeah, I remember hearing about uh your story about copper pots. I wanted to kind of lead off with a little personal anecdote. Do you mind telling the audience about kind of uh that experience for you and how it shaped your >> Yeah. So, I moved from Bulgaria to the US in 1992. Uh I was the third person in my family. So, my dad moved in '91, my mom moved a year later, and I came 6 months after after she did. So, we didn't have enough money to like send the whole family at once. It was kind of like my dad had to get established, my mom had to make sure, you know, everything was actually in order. And then I came with my my aunt who was like a teenage punk rock person. >> How old were you? >> I was five. >> Five. >> And so 1991, my my last year in Bulgaria, the inflation rate was something like 150%. Quite high um compared to what we're seeing in the US. the, you know, 5% whereabouts inflation, which is making people crazy, right? But, you know, 150% in 1991. In 1997, which was I I'd been in America for 5 years, Bulgaria had the unfortunate distinction of the highest inflation rate in the world at like 2,000%. So my uh grandparents who were still in Bulgaria basically had their pensions evaporate. You know, they were retired. Um and you know, my my grandfather was a doctor for uh a naval ship and and so he had some friends that you know were importing and exporting things in the ports. So So he had the idea of investing in copper cookware. Of course, Bulgaria didn't have Robin Hood back then, so he had this closet full of copper pots and pans and and that's how he would store his wealth. And you know, I thought there would have to be a better way. So, with smartphones and technology, now we can prevent you from needing to do that. >> That's amazing. I can totally relate cuz in Turkey the last couple years where my family is from, >> yeah, >> uh there is there's been 80% pluslation recently. Yeah. >> In the last couple years >> and they're trading a lot of crypto. They're holding crypto, >> a ton of crypto. Everybody I know, everybody in Turkey has an app on their phone to trade exchange at least FX. >> Yeah. >> So they can hedge the currency. Um and that's a day-to-day occurrence. So um I think it's really interesting. Some of the things you guys announced today are particularly apppropo given some of these macro uh things that we're seeing, right? The the introduction of futures >> uh in particular. I think um you know short selling >> uh options, right? and the ability to hedge and play kind of dimensionality. >> Yeah. >> Um really really amazing >> even social so you can track trends and you know learn learn from your peers. We have a lot of smart people that are trading on Robin Hood and if you could tap into that wisdom of the crowd I think this very powerful tool. >> I completely agree and uh and then we have AI right which allows us to bring it all together >> make sense of all the information that's out there. >> That's right. democratize a lot of the uh the trading that's that institutions have now done through other periods. If you think about the 1960s and 70s, which is the inflationary period that most people are historically aware of here in the US, >> um that was an incredibly difficult period for equity and bond holders. >> Yeah. >> Bond holders is obvious to people, but most people don't realize from 1968 to 1982 that the S&P 500 lost 50% of its value in real terms. Yeah, >> you know, equities are often not a hedge to inflation, right? Um because uh the multiple contraction that you get, right? The the if you can get a 20% bond for 10 years from the US government, which you could in 1982, you're going to demand a much higher earnings yield from your equities, right? And what was the best performing asset 1968 to82? Gold, right? Yeah. >> Um copper did pretty well, too. Um but energy uh which was about 5% in ' 68 in 1982 was 30% of the S&P 500. It's kind of mind-blowing stat. >> That is wild to think about. Yeah. I mean S&P 500 in particular the turnover in the companies is is pretty amazing. I mean you look now versus 2000 I think 2000 Exon Mobile was the highest market cap company in the S&P 500. It was absolutely. >> Yeah. And now it's what not even in the top 20, right? >> Correct. Correct. 2 and a half to 3% of the S&P right now >> is in energy. Not I mean that's a bull case for energy. We don't need to talk about that. But there are lots of other stocks that also perform really well in a higher inflationary regime. Um one of them are exchanges like the SIBO. Another one is uh brokerage businesses because input costs don't go up nearly as much as Franks during those periods. So >> yeah, that's true. fortunate that our costs are largely fixed and >> independent of you know tariffs and >> prices of raw materials by and large. Yeah. >> I mean there's >> somewhat compute you can think of as a commodity in some ways and we we use compute but you know not not nearly to the extent that other companies do. >> Agreed. Agreed. and and so I want to kind of dive into all those little announcements you had and uh kind of talk about uh some of what you're most excited about as it relates to them. I do think that they all are in a bit of a bull market. I'll paint this last kind of data picture for people. Um there are $500 trillion globally in long assets and that I include uh equities, bonds, private equity, private credit, real estate. Yeah. Right. These are what the majority of people invest on. Um, and in the last three years, we've seen non-correlated assets, think crypto, think uh precious metals, >> um, also hedge fund assets as well as um, structured products, so options positioning you can get into, >> um, have all grown from four, five trillion just three years ago to 15 trillion. >> Yeah. So you have this massive supply and demand imbalance and people are trying to get more non-correlated at record valuations given some of the things we've talked about you know the the inflationary pressures and the uncertainty um and so I think it's really appropo that you guys have now introduced a lot of these other again uh futures options um and uh short selling so I'd love to kind of start with the commodity piece futures and well the futures trading which also includes uh other things what different commodities do you guys I know you have 40 different uh commodities that you guys look at or that allow people >> Yeah, I mean all the major ones, gold, uh copper, we talked a lot about copper. Um yeah, I mean if it if it's a liquid tradable name, I know we we offer a lot of CME products. Uh I think we offer some SIBO products as well. Um yeah, uh we we'd like to add it to the platform. We also have prediction markets. I mean we not not quite futures outrights but very popular among those that want to hedge their macro risk >> completely. >> So I was looking at you know number we have number of rate cuts between now and the end of the year. Uh next rate cut 81% say it's going to be 25 basis points right CPI print. So yeah it's it's really we're trying to make it so that you can make a targeted trade for any position. >> Yeah. in a more multip-olar world, which we're starting to see, right, for a lot of reasons. Um, you know, in the 60s and 70s, which is a great comparison, we see much more volatility in uh nonequity and bond assets. Actually, >> um, you would think equity volatility would increase. It actually doesn't in a meaningful way in that kind of 60s and 70s period. What you because they're nominal assets, what you actually see is FX and interest rate volatility goes through the roof. >> Mhm. M and that kind of makes sense, right? Um but things like precious metal, which would kind of fall in that bucket, maybe crypto, um are also things that see more volatility and those are great things to trade for your traders. So, um yeah, really excited for what you're kind of opening up here for a much wider audience and as you guys have always done, as Robin Hood implies, kind of democratizing that piece. Yeah. >> Um that's largely been part of a, you know, an institutional crowd set of trades to a much broader audience. >> Yeah. We launched uh futures last year at the first hood summit and we launched a a ladder alongside it but it was all on mobile and we also launched our desktop web product for more proumer investors Robin Hood Legend and this year we're we're kind of like expanding both of these and and merging them. So futures is coming on Legend. We're expanding the ladder um uh which started on mobile to legend as well and to all sorts of asset classes like uh equities and crypto and and so now it's gone from primarily being a mobile app for firsttime investors to a comprehensive financial super app on desktop and mobile so that we can meet traders where they are not just with the products but also the interfaces. is >> yeah. Yeah, I completely agree. >> And then uh I'd be remiss if I didn't talk about options, right? That's my kind of big kind of background and a lot of what we talk about on this show. >> Um >> couple of the things that you guys announced today. One uh 24-hour like overnight trading for index options and several kind of >> um uh different options, which I think is a huge deal given again the B multi-polar world and the the 24-hour nature now of global markets. But also I thought the coolest thing was I think that you know gets somebody like me excited is really the ability to simulate right outcomes with options. Um all too often I talk to retail traders and um and they understand that kind of the two dimensionality of betting on an upside outcome or a downside op out outcome >> but the time decay and the implied volatility effects. I actually talk a lot about third order Greeks or second order Greeks like Ivana and Charm. These things are really important or even a a spread and and you know having multi multiple legs and being able to visualize what that looks like to your P&L at Xbury or at different times you know it can it can be tricky to do that all in your head or on pencil pencil and paper >> and and the options market is like the volume's going through the roof right and that's happening uh I've talked about this on other episodes and other other places but really uh as a function of it being a much more precise and dynamic IC tool to express positioning. >> Yeah. >> Right. Uh you get to play not in two dimensions up and down, >> but really in time and space. You can have any moment on a distribution, right? And bet on that precise outcome. And so, you know, I think of that as a new technology as like this. You're on this kind of tipping point on that. And releasing that simulation allows your retail trader to better absorb that and manage that kind of exposure. It's yeah, it's really about giving people the tools to actually like save time. So, you know, we I was telling you this earlier, we actually go into our options traders homes. They invite us, of course, but we go and watch them trade options. And when we first started doing this, our mind was blown by just how much work they were doing outside of the platform. like they would have these subscriptionbased tools to to do things like what simulator returns on Legend does today. They were paying, you know, upwards of $100 a month. Um they were doing just a lot of mental math or math on approximately pencil and paper. They had their spreadsheets and much of the work was happening off platform and we thought you know why don't we save them this time and and actually automate more and more of that so that the entire trade life cycle happens on our platform and and I think we've been working on that. We've we've still got a ways to go. There's more tools to add but um I I think just like going through that process has been a big reason why we've been growing our market share in options so much. I I it's a huge deal I think bigger than than most appreciate. I mean I know a lot of we run hedge funds. I know other hedge funds that don't even have this level of sophistication that you have uh that that are trading stocks and bonds occasionally options but they themselves struggle with this. Um, so I think you're you're not only giving the broad militia and the people right the weapons and tools they need to compete uh versus some maybe even an advantage and that's that's actually a huge the goal would be to make it so that if you're a retail trader you're at a disadvantage using any other platform and you know you mentioned 24hour 24-hour market on the equity side was kind of a very clear way we delivered that you know stuff happens on weekends Sunday evening evening or after hours. And >> you know, if if you're on another platform that doesn't allow you to trade during those times, you're you're at a disadvantage, not just in pursuing other opportunities, making new trades, but even just risk management, closing your positions, hedging your positions. Um, so yeah, I mean, you look at overnight index options, an extension of that, right? Like now more and more news happens overnight that affects >> the macro but also individual companies and and the goal is to just make it seamless like crypto is 24/7. There's no reason why you know options and and all sorts of traditional assets shouldn't be as well. I I couldn't agree more in the in the 60s and 70s again just to highlight that period because again inflationary period um you know you had a significant uh inequality build that happened as a function of that that flat tax essentially of inflation hitting everybody >> um and a lot of institutional entities had the ability to hedge or to kind of limit their risk. Um nowadays you have access to uh again options were created in 1971 you know the SIBO was created then that's not a coincidence uh the capital efficiency the dynamism and and ability to play dimensionality was why they became so popular during that time >> and I think you know giving access to the tools and ability to >> to focus on those things is uh incredible for the for the average retail investor. >> Yeah I I think a big part also is making sure they know how to use these tools. I think AI plays a big role and and one of the areas we're excited to further develop Cortex is in mapping your intent to an options trade. Also things like what what you guys are doing educating customers talking about the different trades you can put on the different strategies. you know, we do a little bit of that, but it's clear as the products get more sophisticated, the education has to has to kind of keep pace as well >> while still being engaging for people and and sort of like meeting them on the platforms that they use. >> So, I I'm looking forward to having really good options education content on Robin Hood social itself. I think I think that'll be really really cool if we if we become the best place to learn and generate ideas and not just execute the trade. >> Absolutely. Yeah, I definitely want to get to the social part uh as well. But to just to touch on that that that connection between AI and options, I think that's so important. Um you know, we use we have things technologies that have come along um over hundreds and thousands of years that we take for granted that not everybody understands. You plug you know your your cord into an electrical socket. Yes. you don't think about all that's happening on the other side, right? Um I think options are a better technology. They're better a way to play in three dimensions instead of two. >> Yeah. >> The problem is some of the complexity right at this juncture until we bridge that gap for people. Yeah. >> Um has not allowed us to get to that tipping point. But now we have daily options, we have uh more access, more education, all of those network effects. Right. Now, more volume has allowed it to kind of again reach that tipping point. And I think AI is the key to unlocking that final move to everybody moving from eventually two-dimensional trading to much more um kind of probabilistic uh you know you know looking at different outcomes and saying which which outcome fits what I know and what I believe to be true. Um and I think that's what you guys are doing. Yeah. Uh you know you saw the tools we we showed uh yesterday. It's just very beginning. I think AI tools will be side by side the traditional tools and widgets you have your chart your chain your screener and scanner and you'll see deeper integration not just in the charting and the scanning uh which we're going live with now >> but also in the back testing uh in the simulation and eventually the the execution side as well. Y >> so in the same way that like AI has integrated >> the software engineering tool chain with with things like cursor >> Y >> I think it'll integrate with with trading uh and Robin Hood Legends sort of going to be leading that that charge because we're we're sort of among the few that are working on these tools for retail in in a big way and still iterating and innovating. Yeah, I think you know AI in general particularly here uh the benefits of it will tend to occur in areas where things are more technical and it allow a simplification for an average person right to um to cross >> and when there's so much data and information to pour over it's funny one of the first use cases of Nvidia GPUs you probably remember as as I do Nvidia used to be a gaming GPU company so if you wanted to like play Doom 3 or Crisis at high frames per second. You buy an Nvidia GPU. >> Then they came out with the Nvidia Tesla high performance computing chips. >> Yep. >> And and the CUDA tool chain. This was I want to say 2009. >> And one of the early customers when they expanded beyond graphics was uh trading firms who are using these things to price options. So, so in a way, um, you you had gaming and options trading basically laying the foundations behind the AI revolution that we're in the midst of. >> Yeah. I I honestly wouldn't have gone that there until you brought it up, but I couldn't agree more. Trading has been at the the forefront of neural networks. >> Yeah. Right. Um, and understanding kind of statistical modeling, particularly in the option space. Mhm. >> Um so it's a natural connection for now full to come full circle and now AI really to help take retail and people into that world um and expand their their possibilities there. So I really do see this as a huge unlock for options specifically uh on an institutional level but as well as as re retail. Yeah. >> Um yeah. So but let's let's move on from the options a little bit. You also announced um uh short selling which I actually think is a >> it was it was a big crowd-pleaser for sure. If you if you see our social posts the shorting one just went viral like wildfire. >> And if you think about why right um you're kind of holding, you know, with two arms you're holding one arm behind your back. >> That's true. >> If you're trading only law. >> Yeah. >> And a big differentiator is that institutions don't have that >> totally >> right. Um, and they have a million ways to kind of play both sides and be much more dynamic. >> Yeah. >> So, you've really kind of allowed allowed retail to play with both hands at this point. >> Yeah. There there's been a a longstanding uh belief, I should say, that retail investors don't like shortselling. Um, and but that's not exactly true. Retail investors like short selling just fine. They don't like being at a disadvantage to the institutions. And so I think that that was why this was so wellreceived because I I mean not only is it an interesting product, but it's one of those things that institutions have had access to for a long time that frankly hasn't been accessible to retail and people know when Robin Hood integrates it, um it's going to be easy to use, accessible, lowcost, uh I I think it'll be the best shorting product and we'll integrate it into all of the interfaces that we've rolled out. So obviously standard order ticket but also uh the ladder the equities ladder where we demonstrate it also the chart. So as we sort of like extend the platform and we add new capabilities the value just acrru to our users. I couldn't agree more and it's it's perfect timing. Um not that markets are going to decline tomorrow or whatever but we are at record valuations like in terms of you look at 2000 valuations and you know the probabilities of some two-sided trading right not just number go up all the time uh is more likely. Um, and again, uh, that could be, uh, you know, again, it'll be nice to have that dynamism and and ability to trade both sides if and when that time comes, which it always inevitably does, right? So, >> if we go to Robin Hood as a business, one of the criticisms we've had historically is that >> when we're in like bull market times, the the business is just firing on all cylinders. Metrics are good. People trade a lot >> completely. But the traders tend to get less active when when we get to bare markets. >> Absolutely. >> But um over the past couple of years, we've been working to really change that by giving our active traders more tools. So we've made multi-leg options really easy to use. Uh reduce the friction. It used to be kind of clunky to get into a multileg options trade, but now we have the sidebyside chain. We've got simulated returns. those have been going very well. And and if you look at equities, short selling wasn't an option. Of course, you could get some of that intent with, you know, inverse ETFs and things of that nature, but I think shorting will make the business more resilient on the equity side, too, because it'll give people a way to uh execute on a point of view during, you know, declining markets. Historically, if you look at uh you know, talking about the business a little bit, if you look at uh things like the CME and the CBOE, um they actually can be counteryclical at times like their volumes can actually increase into market declines. Yeah. Um and uh in a in a much more, you know, multiplier world, that's also secularly potentially a major benefit. So, I do think uh whereas asset managers uh uh brokerage firms that are more long only equity focused have significant problems with this. So you've kind of made your business more resilient candidly. Yeah, >> we made our business much more resilient over the past few years for sure because you know when when 2022 hit and it was a difficult time for the markets, you know, we' gone from a zero interest rate environment to the highest rates in 30 years, the highest inflation in 30 years. Um if if you were a lot of companies in our broader sector like if you were a mortgage company they just batten down the hatches and said you know we're going to just >> go through we're going to we're going to make it through the winter and hopefully markets inevitably will improve at some point. >> Yeah. >> And we said you know we're not going to do that. Our approach will be give customers what they need right now. So we had the the high yield products. Robin Hood Gold came out and we really started investing in options and building out futures for precisely that reason because derivatives trading and interest in derivatives actually tends to increase during bare markets. >> Yeah, it's interesting as you know as a firm named Robin Hood, you're essentially aligning your interest with your customers interest. You're making them more resilient and by extension making yourselves more resilient which I think is actually great too. I think there's a misconception that somehow, you know, Robin Hood does well if our customers do poorly and we're misaligned. But if we look at like what's healthy for for Robin Hood, it's, you know, our our revenue scales with assets under custody and we've got about 300 billion in total platform assets on the platform. So over a quarter trillion now. >> And you know, our monetization rates at between 1 to 2% on average. So, the best thing for Robin Hood is for you to fund your account, uh, keep putting money in, do well with your investments, and for your account balance and assets to just increase over time as you as you continue to to be with us. So, in that sense, long-term, we're highly aligned to our customers doing well because the more assets our customers have, the more revenue we generate. So, um, couldn't couldn't be couldn't be further from the truth. the misconception. We really spend a lot of time thinking about how to give customers the tools to to do well and grow their assets over time. >> Absolutely. Before we get to social, which I know you're excited about. I think I am too. Obviously, being somebody who's uh involved in social media as well, I want to talk about the great wealth transfer. We're seeing we're seeing about $50 trillion dollars will change hands from boomers, older people down to a kind of more millennial Gen Z crowd. Uh which is obviously much more your demographic historically, right? Because of the new innovation and all the different things. That's 50 trillion in the next 10 in the next 20 years. It's supposed to be over 100 trillion. >> Over 100 trillion. Yeah. over a h 100red trillion will change hands in uh the great wealth transfer the largest movement of assets of of all time. >> Yeah. I think that's really interesting particularly given you know naturally a lot of your customers are going to be >> playing with a generally a lot more money. Yeah. >> Right. And and uh and you're giving them the tools. I mean, even in my business, I see a lot of people coming to me who are older that are brought to me by their younger, you know, their son or their daughter, right? >> We see a lot of that, too. Yeah. >> I mean, investing in your brokerage used to be passed along by >> parent to child. So, it's it's a real real incentive, particularly for those that have more assets and are a little older. >> Yeah. And I think maybe the argument had been, you know, oh, that's not a they don't have the ability to do X or Y. Yes. You know, I think expanding the offering, right, going headto-head with the Maril Lynches, the Goldman Sachs, whoever, right, actually puts you in a position to really make a a strong argument for why those bigger chunks of money should also be at Robin Hood. Yeah. A lot of a lot of our customers, or I should say non-C customers largely, the general public said, "Well, who's going to have their life savings in Robin Hood? People aren't going to trust it. It's not really the brand." And the reality is brand follows product. So they were they were actually right that we weren't the best place for that. We weren't the best brand for that. It's because we didn't have the product. Right. >> For a long time we didn't have retirement accounts. We didn't have joint accounts. You couldn't name a beneficiary. >> Um and you know, frankly, we still have work to do. We don't support fixed income natively. We don't have bonds. Uh up until fairly recently, we didn't have futures. or good multi-leg support or desktop, but we're moving through things very quickly. And I think the Robin Hood this year is very, very different than last year and it's going to continue to improve. So, pretty soon I think the best way to to make sure Robin Hood is the best beneficiary of the great wealth transfer is to get, you know, baby boomers and silent generation on the platform. And we've been having more success with that. I I think actually there's no reason why you know, your parents and uh and grandparents for those of us that are fortunate to still have them around uh should be there's no reason why they can't be on Robin Hood. >> Yeah, completely agree. You guys announced eight different things right like today. That's that's amazing. That's incredible progress. >> Yeah. >> Um I was actually counting through them >> and actually two extra things that were customer feature requests that we promised to build. So >> yeah, >> really 10 to 11 products. >> That's pretty amazing. Let's talk about social, which is like I think the last one we didn't really talk about. I know it's kind of where you guys started. >> Yeah. >> And uh I'd love to hear kind of whatever you talk about. I hear an extra little tinge of excitement from you about that. Maybe that's because that's kind of where it started. Talk to me a little bit about what you guys are doing and and what you're most excited about there and uh you know, let's dive in there a little bit. >> So, we asked ourselves, okay, as a as a financial platform, how can we differentiate ourselves? because you don't want to just build another social network that that space is well served by lots and lots of of incumbents. But one thing we have is real transactions >> of incredible variety. So we have you know a huge amount of equities trading going on the platform. One of the largest options brokers as well. Futures recent asset but we're growing very quickly there as well. prediction markets. We're one of the largest prediction markets platforms. So, you have all of these assets, all these unique ways to express your point of view uh about something in the real world, whether it's macro or a football game, >> right? >> And uh and what we can do is actually tie your opinion and just like commentary to an actual trade, >> right? >> And and and that I think creates a very high signal. we can we can have actual trades, real performance, make sure you have real skin in the game and then this gives you a signal for who you should pay attention to and I think we'll we'll pull on that thread and see where it goes. >> I actually think it one of the things that interested me the most as somebody who looks at market structure a lot and you know is that you allow so seamlessly and easily for people to follow into a trade too. Yeah. if they really like uh the opinion or the trade uh within a click or two they can be in the trade and be following it. >> Yeah, almost we want to make that as easy as possible. We still want the end customer to make the decision and to actually make the trade but um we know that people want to do that. that they they want to be able to trade from directly from the screen where they're doing their analysis whether it's a chart and we we've done a lot with trading from the chart or the ladder where you can interact with the order book or a social post where you're seeing some deep fundamental analysis you want to trade right away and I know this isn't your intention or you know not not something that you guys control but my guess is that you know we've had essentially a bunch of Wall Street bets like or you know uh little pockets where people coordinate and talk and think about you know I don't and coordinate, but but think about ideas together and bet together. >> Um, and I find it interesting that now you could in theory be widening that out and broadening it together >> and you could kind of be creating a uh, you know, a a broader army. Um, and I do think that'll have some really interesting effects on market structure. retail has been a huge has had a huge impact on markets more broadly and if you actually allow them to come together in a much more kind of dynamic way uh that could really change things uh in a major way. >> Yeah. >> And an advantage to to some of that crowd actually. >> Yeah. I mean if you look at Wall Street Bets and some of the other subreddits that have become very popular. I mean I think Wall Street Bets has something like 20 million subscribers. >> Yeah. Um, and you look at the screenshots on on that subreddit. I mean, the lion share of those screenshots are Robin Hood screenshots. So, a lot of our users are using that as a platform to share ideas and they've been asking for verified trades for a long time because they they feel this painoint. You know, this is a screenshot. Someone's telling me they're doing this trade. Seems a little outlandish. Is there any way Robin Hood can attach a certificate to it so you can actually see what's going on? And so one of the things we're launching in tandem with social is verified posting of these widgets and trades to external platforms. And and I think that's something that >> it's a big deal. >> You know, our our community members, even if they're outside of Robin Hood, have been wanting for a long time. >> I I started in the business in 97. So my first kind of experience was 98 99 2000. Yeah. Right. was that uh retail boom that happened at the end of that bubble. >> That's when I started trading. >> Oh, did you realize that? So, so I think that and certain things run, right? I mean, we not only valuation wise, but we have a tremendous amount of liquidity being pushed into the system. Yeah. Right now um and more to come probably. Um, so I do think this year some of that social stuff, it's like again a perfect time to kind of get people uh betting on some of those outcomes together and talking about and navigating a what's a volatile potentially uh wild ride, >> right? Yeah. I mean, you had um in, you know, the 97 to 2000 period the the dot internet super cycle, right? where you had uh just a ton of speculation around this new technology and I think new technologies sometimes lead to bubbles. >> Yep. >> Right. Uh then you had cloud, broadband, mobile right after that. Um that that was a little bit muted because you had the global financial crisis >> liquidity coming out of the system right during that time. A lot of people are saying, you know, AI, there's just a huge capital expenditure going into these data centers. A lot of money is flowing into a lot of AI stocks. Uh and and people are wondering whether >> there's a bubble or not. And I I think now we we have the tools to actually express that point of view. Who who knows, you know, even even if there's a bubble, >> um they can go on for quite a while. >> Well, I want to be clear. A lot of people made a ton of money trading in ' 989 and even through 2000. >> Yeah. >> And especially again by managing shorts, by using options, by trading multi-dimensionality of interest rates and FX, right? Um I think there's again you guys are introducing all the right things at just the right time. Last thing just to wrap this up, you talked a lot about what you did today, right? And what you guys have been working on the last year. What are you most excited for next year and in five years? What what do you see as the next chapter? You guys have introduced so much. You guys are moving so fast. >> Yeah. Just >> there's a lot of things that we've announced that we now have to roll out fully and and keep iterating upon. >> So I mean even social we've announced it, people are excited. Now we have to deliver tokenization great progress in Europe but um there's much more to be done. We really want to have 247 roundthe-clock onchain markets for all assets including publics and privates. Uh and and we're at the very beginning of that journey. And then the the AI super cycle. I mean, we're we're a big participant there and we've made such progress with Robin Hood Cortex, including some of the things that we saw yesterday with um indicators, custom indicators and scanner generation that we're going to go much further. So, we announced an AI event that we're going to be hosting in December of this year. >> So, not quite next year, but it'll be our fifth product event of the year. and and I think there will be some surprises there that some things that our traders aren't expecting. So looking forward to that. >> I think the integration AI is going to be a huge deal in the next year. >> Yeah. And I don't think any of our competitors are really trying. So one of the criticisms of Robin Hood is, hey, you guys are just launching products that have been around for a while. Your competitors have had them. you're maybe putting a nice UI, but at least in AI and crypto, I think we're very much at the frontier and and and really innovating. So, I'm excited to share more and more of that with our customers. Well, I I'm excited about the AI and the options piece most of all, but it all sounds absolutely amazing. Excited to see what happens in the next year. Thank you, Vlad, for joining us. Really appreciate it. >> Yeah, thanks for having me. You bet. You bet. Your money just got made. >> Thanks for listening to Top Traders Unplugged. 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Vlad Tenev (Robinhood CEO) on AI, Options & the Wealth Transfer | U Got Options | Ep.6
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Transcript
[Music] You got you got you got your trade. You bet. You bet. You bet. You bet. Your money just got made. [Music] >> Welcome to You Got Options, an exciting series right here on Top Traders Unplugged, hosted by none other than Jim Carson, one of the sharpest minds when it comes to understanding what's really driving market moves beneath the surface. In this series, Jim brings his deep expertise and unique perspective honed from years of experience on the trading floor to candid conversations with some of the brightest minds in the industry. Together, they unpack the shifting tides and underlying forces that move markets and the opportunities they create. A quick reminder before we dive in. You got options is forformational and educational purposes only. None of the discussions you're about to hear should be considered investment advice. As always, please do your own research and consult with a professional adviser before making any investment decisions. Now, what makes this series truly special is that it's recorded right from the heart of the action on the trading floor of the SIBO. That means you might catch a little background buzz, phones ringing, traders shouting as Jim and his guests unpack realorld insights in real time. We wouldn't have it any other way because this is as authentic as it gets. And with that, it's time to hear from those who live and breathe this complex corner of the markets. Here is your host, Jim Carson. Welcome back to another episode of You Got Options from the Sibo floor, brought to you by Thai Media and Top Traders Unplugged. Today we're at the Robin Hood Hood Summit here in Las Vegas, and we get to talk to no other than the man himself, Vlad Tenner, the CEO of Robin Hood. and made some incredible announcements today. But we start at the beginning with him talking about copper pots and his experience in Bulgaria all the way to the macro environment in and democratizing all of the things that your retail trader uh needs to have to navigate this environment. I hope you enjoy this one. >> Yo, live it up. Don't settle for less. You got options. Put your skills to the test. It's your call. Time to strike. Make your move. Grab the mic. You got you got you got execute your trade. You bet. You bet. You bet. You bet. Your money just got made. Time to trade the fade. It's the nexus of the game. [Music] >> Welcome back to another episode of You Got Options today. Vlad Tennv here at the Robin Hood Summit. Looking forward to having a conversation. >> Yeah. Thanks for having me. >> I know we have a lot in common actually. Um my grandfather came from Bulgaria and uh >> Oh, that's amazing. Yeah, I remember hearing about uh your story about copper pots. I wanted to kind of lead off with a little personal anecdote. Do you mind telling the audience about kind of uh that experience for you and how it shaped your >> Yeah. So, I moved from Bulgaria to the US in 1992. Uh I was the third person in my family. So, my dad moved in '91, my mom moved a year later, and I came 6 months after after she did. So, we didn't have enough money to like send the whole family at once. It was kind of like my dad had to get established, my mom had to make sure, you know, everything was actually in order. And then I came with my my aunt who was like a teenage punk rock person. >> How old were you? >> I was five. >> Five. >> And so 1991, my my last year in Bulgaria, the inflation rate was something like 150%. Quite high um compared to what we're seeing in the US. the, you know, 5% whereabouts inflation, which is making people crazy, right? But, you know, 150% in 1991. In 1997, which was I I'd been in America for 5 years, Bulgaria had the unfortunate distinction of the highest inflation rate in the world at like 2,000%. So my uh grandparents who were still in Bulgaria basically had their pensions evaporate. You know, they were retired. Um and you know, my my grandfather was a doctor for uh a naval ship and and so he had some friends that you know were importing and exporting things in the ports. So So he had the idea of investing in copper cookware. Of course, Bulgaria didn't have Robin Hood back then, so he had this closet full of copper pots and pans and and that's how he would store his wealth. And you know, I thought there would have to be a better way. So, with smartphones and technology, now we can prevent you from needing to do that. >> That's amazing. I can totally relate cuz in Turkey the last couple years where my family is from, >> yeah, >> uh there is there's been 80% pluslation recently. Yeah. >> In the last couple years >> and they're trading a lot of crypto. They're holding crypto, >> a ton of crypto. Everybody I know, everybody in Turkey has an app on their phone to trade exchange at least FX. >> Yeah. >> So they can hedge the currency. Um and that's a day-to-day occurrence. So um I think it's really interesting. Some of the things you guys announced today are particularly apppropo given some of these macro uh things that we're seeing, right? The the introduction of futures >> uh in particular. I think um you know short selling >> uh options, right? and the ability to hedge and play kind of dimensionality. >> Yeah. >> Um really really amazing >> even social so you can track trends and you know learn learn from your peers. We have a lot of smart people that are trading on Robin Hood and if you could tap into that wisdom of the crowd I think this very powerful tool. >> I completely agree and uh and then we have AI right which allows us to bring it all together >> make sense of all the information that's out there. >> That's right. democratize a lot of the uh the trading that's that institutions have now done through other periods. If you think about the 1960s and 70s, which is the inflationary period that most people are historically aware of here in the US, >> um that was an incredibly difficult period for equity and bond holders. >> Yeah. >> Bond holders is obvious to people, but most people don't realize from 1968 to 1982 that the S&P 500 lost 50% of its value in real terms. Yeah, >> you know, equities are often not a hedge to inflation, right? Um because uh the multiple contraction that you get, right? The the if you can get a 20% bond for 10 years from the US government, which you could in 1982, you're going to demand a much higher earnings yield from your equities, right? And what was the best performing asset 1968 to82? Gold, right? Yeah. >> Um copper did pretty well, too. Um but energy uh which was about 5% in ' 68 in 1982 was 30% of the S&P 500. It's kind of mind-blowing stat. >> That is wild to think about. Yeah. I mean S&P 500 in particular the turnover in the companies is is pretty amazing. I mean you look now versus 2000 I think 2000 Exon Mobile was the highest market cap company in the S&P 500. It was absolutely. >> Yeah. And now it's what not even in the top 20, right? >> Correct. Correct. 2 and a half to 3% of the S&P right now >> is in energy. Not I mean that's a bull case for energy. We don't need to talk about that. But there are lots of other stocks that also perform really well in a higher inflationary regime. Um one of them are exchanges like the SIBO. Another one is uh brokerage businesses because input costs don't go up nearly as much as Franks during those periods. So >> yeah, that's true. fortunate that our costs are largely fixed and >> independent of you know tariffs and >> prices of raw materials by and large. Yeah. >> I mean there's >> somewhat compute you can think of as a commodity in some ways and we we use compute but you know not not nearly to the extent that other companies do. >> Agreed. Agreed. and and so I want to kind of dive into all those little announcements you had and uh kind of talk about uh some of what you're most excited about as it relates to them. I do think that they all are in a bit of a bull market. I'll paint this last kind of data picture for people. Um there are $500 trillion globally in long assets and that I include uh equities, bonds, private equity, private credit, real estate. Yeah. Right. These are what the majority of people invest on. Um, and in the last three years, we've seen non-correlated assets, think crypto, think uh precious metals, >> um, also hedge fund assets as well as um, structured products, so options positioning you can get into, >> um, have all grown from four, five trillion just three years ago to 15 trillion. >> Yeah. So you have this massive supply and demand imbalance and people are trying to get more non-correlated at record valuations given some of the things we've talked about you know the the inflationary pressures and the uncertainty um and so I think it's really appropo that you guys have now introduced a lot of these other again uh futures options um and uh short selling so I'd love to kind of start with the commodity piece futures and well the futures trading which also includes uh other things what different commodities do you guys I know you have 40 different uh commodities that you guys look at or that allow people >> Yeah, I mean all the major ones, gold, uh copper, we talked a lot about copper. Um yeah, I mean if it if it's a liquid tradable name, I know we we offer a lot of CME products. Uh I think we offer some SIBO products as well. Um yeah, uh we we'd like to add it to the platform. We also have prediction markets. I mean we not not quite futures outrights but very popular among those that want to hedge their macro risk >> completely. >> So I was looking at you know number we have number of rate cuts between now and the end of the year. Uh next rate cut 81% say it's going to be 25 basis points right CPI print. So yeah it's it's really we're trying to make it so that you can make a targeted trade for any position. >> Yeah. in a more multip-olar world, which we're starting to see, right, for a lot of reasons. Um, you know, in the 60s and 70s, which is a great comparison, we see much more volatility in uh nonequity and bond assets. Actually, >> um, you would think equity volatility would increase. It actually doesn't in a meaningful way in that kind of 60s and 70s period. What you because they're nominal assets, what you actually see is FX and interest rate volatility goes through the roof. >> Mhm. M and that kind of makes sense, right? Um but things like precious metal, which would kind of fall in that bucket, maybe crypto, um are also things that see more volatility and those are great things to trade for your traders. So, um yeah, really excited for what you're kind of opening up here for a much wider audience and as you guys have always done, as Robin Hood implies, kind of democratizing that piece. Yeah. >> Um that's largely been part of a, you know, an institutional crowd set of trades to a much broader audience. >> Yeah. We launched uh futures last year at the first hood summit and we launched a a ladder alongside it but it was all on mobile and we also launched our desktop web product for more proumer investors Robin Hood Legend and this year we're we're kind of like expanding both of these and and merging them. So futures is coming on Legend. We're expanding the ladder um uh which started on mobile to legend as well and to all sorts of asset classes like uh equities and crypto and and so now it's gone from primarily being a mobile app for firsttime investors to a comprehensive financial super app on desktop and mobile so that we can meet traders where they are not just with the products but also the interfaces. is >> yeah. Yeah, I completely agree. >> And then uh I'd be remiss if I didn't talk about options, right? That's my kind of big kind of background and a lot of what we talk about on this show. >> Um >> couple of the things that you guys announced today. One uh 24-hour like overnight trading for index options and several kind of >> um uh different options, which I think is a huge deal given again the B multi-polar world and the the 24-hour nature now of global markets. But also I thought the coolest thing was I think that you know gets somebody like me excited is really the ability to simulate right outcomes with options. Um all too often I talk to retail traders and um and they understand that kind of the two dimensionality of betting on an upside outcome or a downside op out outcome >> but the time decay and the implied volatility effects. I actually talk a lot about third order Greeks or second order Greeks like Ivana and Charm. These things are really important or even a a spread and and you know having multi multiple legs and being able to visualize what that looks like to your P&L at Xbury or at different times you know it can it can be tricky to do that all in your head or on pencil pencil and paper >> and and the options market is like the volume's going through the roof right and that's happening uh I've talked about this on other episodes and other other places but really uh as a function of it being a much more precise and dynamic IC tool to express positioning. >> Yeah. >> Right. Uh you get to play not in two dimensions up and down, >> but really in time and space. You can have any moment on a distribution, right? And bet on that precise outcome. And so, you know, I think of that as a new technology as like this. You're on this kind of tipping point on that. And releasing that simulation allows your retail trader to better absorb that and manage that kind of exposure. It's yeah, it's really about giving people the tools to actually like save time. So, you know, we I was telling you this earlier, we actually go into our options traders homes. They invite us, of course, but we go and watch them trade options. And when we first started doing this, our mind was blown by just how much work they were doing outside of the platform. like they would have these subscriptionbased tools to to do things like what simulator returns on Legend does today. They were paying, you know, upwards of $100 a month. Um they were doing just a lot of mental math or math on approximately pencil and paper. They had their spreadsheets and much of the work was happening off platform and we thought you know why don't we save them this time and and actually automate more and more of that so that the entire trade life cycle happens on our platform and and I think we've been working on that. We've we've still got a ways to go. There's more tools to add but um I I think just like going through that process has been a big reason why we've been growing our market share in options so much. I I it's a huge deal I think bigger than than most appreciate. I mean I know a lot of we run hedge funds. I know other hedge funds that don't even have this level of sophistication that you have uh that that are trading stocks and bonds occasionally options but they themselves struggle with this. Um, so I think you're you're not only giving the broad militia and the people right the weapons and tools they need to compete uh versus some maybe even an advantage and that's that's actually a huge the goal would be to make it so that if you're a retail trader you're at a disadvantage using any other platform and you know you mentioned 24hour 24-hour market on the equity side was kind of a very clear way we delivered that you know stuff happens on weekends Sunday evening evening or after hours. And >> you know, if if you're on another platform that doesn't allow you to trade during those times, you're you're at a disadvantage, not just in pursuing other opportunities, making new trades, but even just risk management, closing your positions, hedging your positions. Um, so yeah, I mean, you look at overnight index options, an extension of that, right? Like now more and more news happens overnight that affects >> the macro but also individual companies and and the goal is to just make it seamless like crypto is 24/7. There's no reason why you know options and and all sorts of traditional assets shouldn't be as well. I I couldn't agree more in the in the 60s and 70s again just to highlight that period because again inflationary period um you know you had a significant uh inequality build that happened as a function of that that flat tax essentially of inflation hitting everybody >> um and a lot of institutional entities had the ability to hedge or to kind of limit their risk. Um nowadays you have access to uh again options were created in 1971 you know the SIBO was created then that's not a coincidence uh the capital efficiency the dynamism and and ability to play dimensionality was why they became so popular during that time >> and I think you know giving access to the tools and ability to >> to focus on those things is uh incredible for the for the average retail investor. >> Yeah I I think a big part also is making sure they know how to use these tools. I think AI plays a big role and and one of the areas we're excited to further develop Cortex is in mapping your intent to an options trade. Also things like what what you guys are doing educating customers talking about the different trades you can put on the different strategies. you know, we do a little bit of that, but it's clear as the products get more sophisticated, the education has to has to kind of keep pace as well >> while still being engaging for people and and sort of like meeting them on the platforms that they use. >> So, I I'm looking forward to having really good options education content on Robin Hood social itself. I think I think that'll be really really cool if we if we become the best place to learn and generate ideas and not just execute the trade. >> Absolutely. Yeah, I definitely want to get to the social part uh as well. But to just to touch on that that that connection between AI and options, I think that's so important. Um you know, we use we have things technologies that have come along um over hundreds and thousands of years that we take for granted that not everybody understands. You plug you know your your cord into an electrical socket. Yes. you don't think about all that's happening on the other side, right? Um I think options are a better technology. They're better a way to play in three dimensions instead of two. >> Yeah. >> The problem is some of the complexity right at this juncture until we bridge that gap for people. Yeah. >> Um has not allowed us to get to that tipping point. But now we have daily options, we have uh more access, more education, all of those network effects. Right. Now, more volume has allowed it to kind of again reach that tipping point. And I think AI is the key to unlocking that final move to everybody moving from eventually two-dimensional trading to much more um kind of probabilistic uh you know you know looking at different outcomes and saying which which outcome fits what I know and what I believe to be true. Um and I think that's what you guys are doing. Yeah. Uh you know you saw the tools we we showed uh yesterday. It's just very beginning. I think AI tools will be side by side the traditional tools and widgets you have your chart your chain your screener and scanner and you'll see deeper integration not just in the charting and the scanning uh which we're going live with now >> but also in the back testing uh in the simulation and eventually the the execution side as well. Y >> so in the same way that like AI has integrated >> the software engineering tool chain with with things like cursor >> Y >> I think it'll integrate with with trading uh and Robin Hood Legends sort of going to be leading that that charge because we're we're sort of among the few that are working on these tools for retail in in a big way and still iterating and innovating. Yeah, I think you know AI in general particularly here uh the benefits of it will tend to occur in areas where things are more technical and it allow a simplification for an average person right to um to cross >> and when there's so much data and information to pour over it's funny one of the first use cases of Nvidia GPUs you probably remember as as I do Nvidia used to be a gaming GPU company so if you wanted to like play Doom 3 or Crisis at high frames per second. You buy an Nvidia GPU. >> Then they came out with the Nvidia Tesla high performance computing chips. >> Yep. >> And and the CUDA tool chain. This was I want to say 2009. >> And one of the early customers when they expanded beyond graphics was uh trading firms who are using these things to price options. So, so in a way, um, you you had gaming and options trading basically laying the foundations behind the AI revolution that we're in the midst of. >> Yeah. I I honestly wouldn't have gone that there until you brought it up, but I couldn't agree more. Trading has been at the the forefront of neural networks. >> Yeah. Right. Um, and understanding kind of statistical modeling, particularly in the option space. Mhm. >> Um so it's a natural connection for now full to come full circle and now AI really to help take retail and people into that world um and expand their their possibilities there. So I really do see this as a huge unlock for options specifically uh on an institutional level but as well as as re retail. Yeah. >> Um yeah. So but let's let's move on from the options a little bit. You also announced um uh short selling which I actually think is a >> it was it was a big crowd-pleaser for sure. If you if you see our social posts the shorting one just went viral like wildfire. >> And if you think about why right um you're kind of holding, you know, with two arms you're holding one arm behind your back. >> That's true. >> If you're trading only law. >> Yeah. >> And a big differentiator is that institutions don't have that >> totally >> right. Um, and they have a million ways to kind of play both sides and be much more dynamic. >> Yeah. >> So, you've really kind of allowed allowed retail to play with both hands at this point. >> Yeah. There there's been a a longstanding uh belief, I should say, that retail investors don't like shortselling. Um, and but that's not exactly true. Retail investors like short selling just fine. They don't like being at a disadvantage to the institutions. And so I think that that was why this was so wellreceived because I I mean not only is it an interesting product, but it's one of those things that institutions have had access to for a long time that frankly hasn't been accessible to retail and people know when Robin Hood integrates it, um it's going to be easy to use, accessible, lowcost, uh I I think it'll be the best shorting product and we'll integrate it into all of the interfaces that we've rolled out. So obviously standard order ticket but also uh the ladder the equities ladder where we demonstrate it also the chart. So as we sort of like extend the platform and we add new capabilities the value just acrru to our users. I couldn't agree more and it's it's perfect timing. Um not that markets are going to decline tomorrow or whatever but we are at record valuations like in terms of you look at 2000 valuations and you know the probabilities of some two-sided trading right not just number go up all the time uh is more likely. Um, and again, uh, that could be, uh, you know, again, it'll be nice to have that dynamism and and ability to trade both sides if and when that time comes, which it always inevitably does, right? So, >> if we go to Robin Hood as a business, one of the criticisms we've had historically is that >> when we're in like bull market times, the the business is just firing on all cylinders. Metrics are good. People trade a lot >> completely. But the traders tend to get less active when when we get to bare markets. >> Absolutely. >> But um over the past couple of years, we've been working to really change that by giving our active traders more tools. So we've made multi-leg options really easy to use. Uh reduce the friction. It used to be kind of clunky to get into a multileg options trade, but now we have the sidebyside chain. We've got simulated returns. those have been going very well. And and if you look at equities, short selling wasn't an option. Of course, you could get some of that intent with, you know, inverse ETFs and things of that nature, but I think shorting will make the business more resilient on the equity side, too, because it'll give people a way to uh execute on a point of view during, you know, declining markets. Historically, if you look at uh you know, talking about the business a little bit, if you look at uh things like the CME and the CBOE, um they actually can be counteryclical at times like their volumes can actually increase into market declines. Yeah. Um and uh in a in a much more, you know, multiplier world, that's also secularly potentially a major benefit. So, I do think uh whereas asset managers uh uh brokerage firms that are more long only equity focused have significant problems with this. So you've kind of made your business more resilient candidly. Yeah, >> we made our business much more resilient over the past few years for sure because you know when when 2022 hit and it was a difficult time for the markets, you know, we' gone from a zero interest rate environment to the highest rates in 30 years, the highest inflation in 30 years. Um if if you were a lot of companies in our broader sector like if you were a mortgage company they just batten down the hatches and said you know we're going to just >> go through we're going to we're going to make it through the winter and hopefully markets inevitably will improve at some point. >> Yeah. >> And we said you know we're not going to do that. Our approach will be give customers what they need right now. So we had the the high yield products. Robin Hood Gold came out and we really started investing in options and building out futures for precisely that reason because derivatives trading and interest in derivatives actually tends to increase during bare markets. >> Yeah, it's interesting as you know as a firm named Robin Hood, you're essentially aligning your interest with your customers interest. You're making them more resilient and by extension making yourselves more resilient which I think is actually great too. I think there's a misconception that somehow, you know, Robin Hood does well if our customers do poorly and we're misaligned. But if we look at like what's healthy for for Robin Hood, it's, you know, our our revenue scales with assets under custody and we've got about 300 billion in total platform assets on the platform. So over a quarter trillion now. >> And you know, our monetization rates at between 1 to 2% on average. So, the best thing for Robin Hood is for you to fund your account, uh, keep putting money in, do well with your investments, and for your account balance and assets to just increase over time as you as you continue to to be with us. So, in that sense, long-term, we're highly aligned to our customers doing well because the more assets our customers have, the more revenue we generate. So, um, couldn't couldn't be couldn't be further from the truth. the misconception. We really spend a lot of time thinking about how to give customers the tools to to do well and grow their assets over time. >> Absolutely. Before we get to social, which I know you're excited about. I think I am too. Obviously, being somebody who's uh involved in social media as well, I want to talk about the great wealth transfer. We're seeing we're seeing about $50 trillion dollars will change hands from boomers, older people down to a kind of more millennial Gen Z crowd. Uh which is obviously much more your demographic historically, right? Because of the new innovation and all the different things. That's 50 trillion in the next 10 in the next 20 years. It's supposed to be over 100 trillion. >> Over 100 trillion. Yeah. over a h 100red trillion will change hands in uh the great wealth transfer the largest movement of assets of of all time. >> Yeah. I think that's really interesting particularly given you know naturally a lot of your customers are going to be >> playing with a generally a lot more money. Yeah. >> Right. And and uh and you're giving them the tools. I mean, even in my business, I see a lot of people coming to me who are older that are brought to me by their younger, you know, their son or their daughter, right? >> We see a lot of that, too. Yeah. >> I mean, investing in your brokerage used to be passed along by >> parent to child. So, it's it's a real real incentive, particularly for those that have more assets and are a little older. >> Yeah. And I think maybe the argument had been, you know, oh, that's not a they don't have the ability to do X or Y. Yes. You know, I think expanding the offering, right, going headto-head with the Maril Lynches, the Goldman Sachs, whoever, right, actually puts you in a position to really make a a strong argument for why those bigger chunks of money should also be at Robin Hood. Yeah. A lot of a lot of our customers, or I should say non-C customers largely, the general public said, "Well, who's going to have their life savings in Robin Hood? People aren't going to trust it. It's not really the brand." And the reality is brand follows product. So they were they were actually right that we weren't the best place for that. We weren't the best brand for that. It's because we didn't have the product. Right. >> For a long time we didn't have retirement accounts. We didn't have joint accounts. You couldn't name a beneficiary. >> Um and you know, frankly, we still have work to do. We don't support fixed income natively. We don't have bonds. Uh up until fairly recently, we didn't have futures. or good multi-leg support or desktop, but we're moving through things very quickly. And I think the Robin Hood this year is very, very different than last year and it's going to continue to improve. So, pretty soon I think the best way to to make sure Robin Hood is the best beneficiary of the great wealth transfer is to get, you know, baby boomers and silent generation on the platform. And we've been having more success with that. I I think actually there's no reason why you know, your parents and uh and grandparents for those of us that are fortunate to still have them around uh should be there's no reason why they can't be on Robin Hood. >> Yeah, completely agree. You guys announced eight different things right like today. That's that's amazing. That's incredible progress. >> Yeah. >> Um I was actually counting through them >> and actually two extra things that were customer feature requests that we promised to build. So >> yeah, >> really 10 to 11 products. >> That's pretty amazing. Let's talk about social, which is like I think the last one we didn't really talk about. I know it's kind of where you guys started. >> Yeah. >> And uh I'd love to hear kind of whatever you talk about. I hear an extra little tinge of excitement from you about that. Maybe that's because that's kind of where it started. Talk to me a little bit about what you guys are doing and and what you're most excited about there and uh you know, let's dive in there a little bit. >> So, we asked ourselves, okay, as a as a financial platform, how can we differentiate ourselves? because you don't want to just build another social network that that space is well served by lots and lots of of incumbents. But one thing we have is real transactions >> of incredible variety. So we have you know a huge amount of equities trading going on the platform. One of the largest options brokers as well. Futures recent asset but we're growing very quickly there as well. prediction markets. We're one of the largest prediction markets platforms. So, you have all of these assets, all these unique ways to express your point of view uh about something in the real world, whether it's macro or a football game, >> right? >> And uh and what we can do is actually tie your opinion and just like commentary to an actual trade, >> right? >> And and and that I think creates a very high signal. we can we can have actual trades, real performance, make sure you have real skin in the game and then this gives you a signal for who you should pay attention to and I think we'll we'll pull on that thread and see where it goes. >> I actually think it one of the things that interested me the most as somebody who looks at market structure a lot and you know is that you allow so seamlessly and easily for people to follow into a trade too. Yeah. if they really like uh the opinion or the trade uh within a click or two they can be in the trade and be following it. >> Yeah, almost we want to make that as easy as possible. We still want the end customer to make the decision and to actually make the trade but um we know that people want to do that. that they they want to be able to trade from directly from the screen where they're doing their analysis whether it's a chart and we we've done a lot with trading from the chart or the ladder where you can interact with the order book or a social post where you're seeing some deep fundamental analysis you want to trade right away and I know this isn't your intention or you know not not something that you guys control but my guess is that you know we've had essentially a bunch of Wall Street bets like or you know uh little pockets where people coordinate and talk and think about you know I don't and coordinate, but but think about ideas together and bet together. >> Um, and I find it interesting that now you could in theory be widening that out and broadening it together >> and you could kind of be creating a uh, you know, a a broader army. Um, and I do think that'll have some really interesting effects on market structure. retail has been a huge has had a huge impact on markets more broadly and if you actually allow them to come together in a much more kind of dynamic way uh that could really change things uh in a major way. >> Yeah. >> And an advantage to to some of that crowd actually. >> Yeah. I mean if you look at Wall Street Bets and some of the other subreddits that have become very popular. I mean I think Wall Street Bets has something like 20 million subscribers. >> Yeah. Um, and you look at the screenshots on on that subreddit. I mean, the lion share of those screenshots are Robin Hood screenshots. So, a lot of our users are using that as a platform to share ideas and they've been asking for verified trades for a long time because they they feel this painoint. You know, this is a screenshot. Someone's telling me they're doing this trade. Seems a little outlandish. Is there any way Robin Hood can attach a certificate to it so you can actually see what's going on? And so one of the things we're launching in tandem with social is verified posting of these widgets and trades to external platforms. And and I think that's something that >> it's a big deal. >> You know, our our community members, even if they're outside of Robin Hood, have been wanting for a long time. >> I I started in the business in 97. So my first kind of experience was 98 99 2000. Yeah. Right. was that uh retail boom that happened at the end of that bubble. >> That's when I started trading. >> Oh, did you realize that? So, so I think that and certain things run, right? I mean, we not only valuation wise, but we have a tremendous amount of liquidity being pushed into the system. Yeah. Right now um and more to come probably. Um, so I do think this year some of that social stuff, it's like again a perfect time to kind of get people uh betting on some of those outcomes together and talking about and navigating a what's a volatile potentially uh wild ride, >> right? Yeah. I mean, you had um in, you know, the 97 to 2000 period the the dot internet super cycle, right? where you had uh just a ton of speculation around this new technology and I think new technologies sometimes lead to bubbles. >> Yep. >> Right. Uh then you had cloud, broadband, mobile right after that. Um that that was a little bit muted because you had the global financial crisis >> liquidity coming out of the system right during that time. A lot of people are saying, you know, AI, there's just a huge capital expenditure going into these data centers. A lot of money is flowing into a lot of AI stocks. Uh and and people are wondering whether >> there's a bubble or not. And I I think now we we have the tools to actually express that point of view. Who who knows, you know, even even if there's a bubble, >> um they can go on for quite a while. >> Well, I want to be clear. A lot of people made a ton of money trading in ' 989 and even through 2000. >> Yeah. >> And especially again by managing shorts, by using options, by trading multi-dimensionality of interest rates and FX, right? Um I think there's again you guys are introducing all the right things at just the right time. Last thing just to wrap this up, you talked a lot about what you did today, right? And what you guys have been working on the last year. What are you most excited for next year and in five years? What what do you see as the next chapter? You guys have introduced so much. You guys are moving so fast. >> Yeah. Just >> there's a lot of things that we've announced that we now have to roll out fully and and keep iterating upon. >> So I mean even social we've announced it, people are excited. Now we have to deliver tokenization great progress in Europe but um there's much more to be done. We really want to have 247 roundthe-clock onchain markets for all assets including publics and privates. Uh and and we're at the very beginning of that journey. And then the the AI super cycle. I mean, we're we're a big participant there and we've made such progress with Robin Hood Cortex, including some of the things that we saw yesterday with um indicators, custom indicators and scanner generation that we're going to go much further. So, we announced an AI event that we're going to be hosting in December of this year. >> So, not quite next year, but it'll be our fifth product event of the year. and and I think there will be some surprises there that some things that our traders aren't expecting. So looking forward to that. >> I think the integration AI is going to be a huge deal in the next year. >> Yeah. And I don't think any of our competitors are really trying. So one of the criticisms of Robin Hood is, hey, you guys are just launching products that have been around for a while. Your competitors have had them. you're maybe putting a nice UI, but at least in AI and crypto, I think we're very much at the frontier and and and really innovating. So, I'm excited to share more and more of that with our customers. Well, I I'm excited about the AI and the options piece most of all, but it all sounds absolutely amazing. Excited to see what happens in the next year. Thank you, Vlad, for joining us. Really appreciate it. >> Yeah, thanks for having me. You bet. You bet. Your money just got made. >> Thanks for listening to Top Traders Unplugged. 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