Robinhood CEO Vlad Tenev has loads to have a good time 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 yr.
Requested about that accolade in current days over Zoom, Tenev was beaming. “After we have been a younger firm and simply bought began, everybody was form of rooting for us,” mentioned Tenev, who oversees roughly 2,500 staff at Robinhood. “Then at one level we began being handled as an incumbent … the vibe turned adverse, [and] throughout COVID, it simply turned unusual. [We] have been rising like loopy, however folks have 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 make the most of 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 permits 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 might be squarely centered on permitting folks to guess on the end result of future occasions.
You possibly can hearken to the entire thing right here; in the meantime, beneath, you could find excerpts particularly pertaining to prediction markets. These excerpts 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 p.c of the overall retail property 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 property [in the world]. Robinhood’s [AUM] is true round $200 billion, so we’ve nonetheless bought a protracted methods to go. We’re larger than once we began, however a few of these guys, just like the Schwabs and the Fidelitys, have $10 trillion in property. So we’re nonetheless rising, however our property are rising 40% plus yr over yr, quite than 2% to three%.
After we final sat down in particular person, this was a a lot smaller firm with ambitions to develop into 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 massive a chance is there, do you suppose?
I’ve been an enormous fan of prediction markets for a very long time, and it turned clear to me comparatively early on that political contracts are the perfect product in that area, as a result of [politics] could 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 evening to determine what’s happening, and for those who’re watching the information, the image they paint could 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 successful the election. You distinction that with the prediction markets … and I feel what’s much more highly effective is simply distilling the place issues stand proper now based mostly on all the knowledge that’s on the market. And that’s a really helpful use case, not essentially for prediction itself, however actually for the information. If you need info as quick as attainable about what’s really happening, I feel prediction markets are actually good.
We didn’t suppose it’d be attainable 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], the crew mobilized. We put quite a lot of nice folks on it, and we went from desiring to launch to really transport in about two and a half weeks, which was loopy and speaks to the tradition and the product philosophy we’ve constructed at Robinhood.
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, it is 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 supplier, and so we have to depend on an alternate functionally to function the again finish of all these trades. And we ended up utilizing ForecastEx as a result of they’d all of the licensure to have the ability to try this. My understanding is that Kalshi is just in a position to supply it to retail instantly, not in a position to serve different FCMs.
I learn that you simply’ve indicated a transfer into sports activities might take the type of occasion contracts, too.
I feel that was taken just a little bit out of context. Actually, our focus is on federally regulated occasion contracts quite than conventional sports activities betting. Proper now, occasion contracts don’t allow sports activities outcomes [but] that may change.
, there’s going to be a brand new CFTC Commissioner [and] lots of people are all in favour of sports activities getting into the federally regulated realm. I feel these merchandise would look very totally different from conventional sports activities betting. However yeah, our focus is on occasion contracts. I feel 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 1,000,000 folks. And so I feel that the primary factor we have been listening to afterward was: Can we’ve got extra contracts? Can this be a more-fleshed-out product and never only for the election?
Clearly sports activities can be big and perennial. What different forms of contracts are you imagining?
There’s quite a lot of prospects. A pure match for Robinhood is financial ones. You possibly can see some examples of, you already know, a Fed hike, a Fed drop … something that’s on the intersection of stories and monetary markets is fascinating 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 lively dealer asset, that lively merchants wish to commerce alongside choices and futures and different issues. However the different is as a passive expertise, the place, for those who simply need the information, occasion contracts could be a strategy to ship that to you in actual time. We’re additionally fascinated about this, and I feel that opens up a broader set of prospects. I imply, you’ll be able to have occasion contracts on just about something from the Oscars and leisure occasions to sports activities to politics. And the classes of occasion contracts nearly develop into just like the sections of a newspaper, proper? Artwork, model, 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.
